Best Buy 2005 Annual Report Download - page 110

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$ in millions, except per share amounts
Quarter 1st 2nd 3rd
Fiscal 2004 as previously reported on Quarterly Report on Form 10-Q(1)
Revenue $4,668 $5,396 $6,032
Comparable store sales % change(2) 2.2% 7.5% 8.6%
Gross profit $1,185 $1,372 $1,486
Operating income 114 229 202
Earnings from continuing operations 69 140 122
Loss from discontinued operations, net of tax (24) (5) —
(Loss) gain on disposal of discontinued operations, net of tax (70) 4 —
Net (loss) earnings (25) 139 122
Diluted (loss) earnings per share:
Continuing operations 0.21 0.42 0.37
Discontinued operations (0.29) — —
Diluted (loss) earnings per share (0.08) 0.42 0.37
Note: Certain totals may not add due to rounding.
(1) All quarters presented reflect the classification of Musicland’s financial results as discontinued operations. Refer to
Note 2, Discontinued Operations. During the fourth quarter of fiscal 2005, we reclassified from SG&A into cost of
goods sold certain expenses related to operating our distribution network, consisting primarily of handling and
transportation costs related to moving merchandise from our distribution centers to our stores. We believe that the
revised presentation provides greater consistency for investors by aligning the classification of our distribution costs
with the practice of many other retailers. Prior-year amounts have been reclassified to conform to the current-year
presentation. The reclassification had no impact on previously reported operating income, net earnings, financial
position or cash flows.
(2) Comprised of revenue at stores and Web sites operating for at least 14 full months, as well as remodeled and
expanded locations. Relocated stores are excluded from the comparable store sales calculation until at least 14 full
months after reopening. The calculation of the comparable store sales percentage change excludes the impact of
fluctuations in foreign currency exchange rates.
(3) The fourth quarter of fiscal 2005 includes a tax benefit of $50 due to the favorable resolution of outstanding tax
matters.
(4) During the fourth quarter of fiscal 2005 we adopted EITF Issue No. 04-08. The calculation of diluted earnings per
share assumes the conversion of convertible debentures, due in 2022, into 5.8 million shares of common stock and
adds back the related after-tax interest expense. Prior periods were restated to reflect the adoption of EITF Issue
No. 04-08.
(5) During the fourth quarter of fiscal 2005 we established a sales return liability which reduced gross profit by
$15 pre-tax ($10 after-tax, or $0.03 per diluted share). Additionally, following a review of our lease accounting
practices, we recorded a cumulative charge of $36 pre-tax ($23 after-tax, or $0.07 per diluted share) to correct our
accounting for certain operating lease matters. Of the $36 pre-tax charge, $15 was recorded as a charge to
SG&A, while the remaining $21 was recorded as a charge to interest expense.
94