MD&A pg 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 
 
 
Consolidated Results
The following table presents selected consolidated financial data for each of the past three fiscal years
($ in millions, except per share amounts):
 


2003

As-Adjusted
2002(1)

 
2002


2001
Revenue

$20,946

$18,506  $17,711 $15,189
Revenue % change

13%

N/A 17%  22%
Comparable stores sales % change(2)

2.4%

N/A 1.9% 4.9%
Gross profit as a % of revenue

25.0%

24.9% 21.3% 19.8%
SG&A as a % of revenue

20.2%

20.0% 16.2% 15.8%
Operating income

$ 1,010

$ 903 $ 908 $ 611
Operating income as a % of revenue

4.8%

4.9% 5.1% 4.0%
Earnings from continuing operations

$ 622

$ 564 $ 570 $ 401
Loss from discontinued operations, net of tax

(441)

— — (5)
Cumulative effect of change in accounting principles, net of tax

(82)

— — —
Net earnings

99

564 570 396
Diluted earnings per share – continuing operations

$ 1.91

$ 1.75  $ 1.77 $ 1.26
Diluted earnings per share

$ 0.30

$ 1.75 $ 1.77 $1.24

Note: All periods presented reflect the classification of Musicland’s financial results as discontinued operations.
(1) As-adjusted information conforms the accounting for vendor allowances to the fiscal 2003 method and is reflected as if Future Shop had been acquired at the beginning of fiscal 2002. As-adjusted data is unaudited.
(2) Includes revenue at stores and Internet 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. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of acquisition. The calculation of the comparable store sales change excludes Musicland revenue, which is included in discontinued operations.
 

Continuing Operations
Fiscal 2003 Results Compared with Fiscal 2002
Net earnings from continuing operations for fiscal 2003 increased 10% to $622 million, compared with $564 million in fiscal 2002 on an as-adjusted basis and $401 million in fiscal 2001. Earnings per diluted share from continuing operations increased to $1.91 in fiscal 2003, compared with $1.75 as adjusted in fiscal 2002 and $1.26 in fiscal 2001.

The increase in earnings from continuing operations was primarily driven by a 13% revenue increase and a slight improvement in the gross profit rate, partially offset by a higher SG&A rate. The revenue increase resulted from the opening of 67 U.S. Best Buy, eight Canadian Best Buy and nine Future Shop stores in the past 12 months, a full year of revenue from new stores opened in fiscal 2002, as well as a 2.4% comparable store sales gain. Approximately four-fifths of the increase in revenue was due to the opening of new stores in the past two fiscal years. The remainder of the increase was due to the comparable store sales gain.

Our gross profit rate in fiscal 2003 increased slightly to 25.0% of revenue, versus 24.9% of revenue in the prior fiscal year. The improvement in the gross profit rate was primarily due to a more profitable revenue mix at U.S. Best Buy stores, including increased revenue from higher-margin digital products. A more promotional environment limited improvement in the gross profit rate. >>
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