Letter to Shareholders Company Snapshot Store Count and Map Shareholder Information Directors and Officers Best Buy Review Musicland Review Future Shop Review Magnolia Hi-Fi Review 10-Year Financial Highlights Consolidated Financial Statements Notes to Financial Statements MD&A

Management Discussion & Analysis pg 1 2 3 4 5 6 7 8 9 10 11 12 13 14
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Management's Discussion and Analysis of Results
     of Operations and Financial Condition 

Overview
Best Buy Co., Inc. is North America’s No. 1 specialty retailer of consumer electronics, home office equipment, entertainment software and appliances. In November of fiscal 2002, we acquired Future Shop Ltd. (Future Shop). Future Shop currently operates 95 stores and is Canada’s largest specialty retailer of name-brand consumer electronics, home office equipment, entertainment software and appliances. During the fourth quarter of fiscal 2001, we acquired Musicland Stores Corporation (Musicland) and Magnolia Hi-Fi, Inc. (Magnolia Hi-Fi). Musicland is primarily a mall-based national retailer of prerecorded music, movies and other entertainment-related products with 1,321 stores. Magnolia Hi-Fi is a Seattle-based retailer of high-end consumer electronics with 13 stores. All three acquisitions were accounted for using the purchase method. Under this method, the net assets and results of operations of those businesses are included in our consolidated financial statements from their respective dates of acquisition. We currently operate three reportable segments: Best Buy, Musicland and International. The Best Buy segment aggregates all operations exclusive of Musicland and International operations. The International segment was established in the third quarter of fiscal 2002 in connection with our acquisition of Future Shop.

Our fiscal year ended March 2, 2002, contained 52 weeks. Fiscal 2001 and 2000 contained 53 weeks and 52 weeks, respectively. 

Results of Operations
Consolidated
The following table presents selected consolidated financial data for each of the past three fiscal years ($ in millions, except per share amounts):

 

(1) Pro forma information reflects combined results of operations at Best Buy, Musicland and Future Shop. Musicland’s results of operations are presented as if it had been acquired at the beginning of fiscal 2001 and include amortization of goodwill. Future Shop’s results of operations are presented as if it had been acquired at the beginning of November in fiscal 2001 and do not include amortization of goodwill. Pro forma results are unaudited.
(2) Comparable stores are stores open at least 14 full months, include remodeled and expanded locations and, for all periods presented, reflect Best Buy stores only. Relocated stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores will be included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of acquisition.
(3) The diluted earnings per share amounts above have been restated to reflect a three-for-two stock split effective on May 10, 2002.Next Page

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