UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) August 29, 2019
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BEST BUY CO., INC.
(Exact name of registrant as specified in its charter)
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﻿	 	 	 	 	
Minnesota	 	1-9595	 	41-0907483	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(IRS Employer
Identification No.)	
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7601 Penn Avenue South	 	 	
Richfield, Minnesota	 	55423	
(Address of principal executive offices)	 	(Zip Code)	
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Registrant’s telephone number, including area code (612) 291-1000
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:

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Title of each class	Trading Symbol	Name of exchange on which registered	
Common Stock, $0.10 par value per share	BBY	New York Stock Exchange	
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Item 2.02 Results of Operations and Financial Condition.
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On August 29, 2019, Best Buy Co., Inc. (“Best Buy” or the “registrant”) issued a news release announcing its results of operations for the second quarter ended August 3, 2019.
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The registrant is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on August 29, 2019. The earnings conference call is expected to be available live on the registrant’s website at www.investors.bestbuy.com.
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The news release issued on August 29, 2019, is furnished as Exhibit 99 to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that Section unless the registrant specifically incorporates it by reference in a document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
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Item 9.01 Financial Statements and Exhibits.
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(d)  Exhibits.
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The following is furnished as an Exhibit to this Current Report on Form 8-K.

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Exhibit No.	 	Description of Exhibit	
﻿99	 	News release issued August 29, 2019 (furnished pursuant to Item 2.02).  Any internet address provided in this release is for information purposes only and is not intended to be a hyperlink. Accordingly, no information at any internet address is included herein.	
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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﻿	 	 	
﻿	 	BEST BUY CO., INC.	
﻿	 	(Registrant)	
﻿	 	 	
Date: August 29, 2019	By:	/s/ MATHEW R. WATSON	
﻿	 	Mathew R. Watson	
﻿	 	Senior Vice President, Finance – Controller and Chief Accounting Officer	
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Exhibit 99

Best Buy Reports Better-Than-Expected Second Quarter Earnings
Enterprise Comparable Sales Increased 1.6%
GAAP Diluted EPS Increased 3% to $0.89
Non-GAAP Diluted EPS Increased 19% to $1.08
Raises Full-Year Non-GAAP Diluted EPS Guidance Range to $5.60 to $5.75
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MINNEAPOLIS, August 29, 2019 -- Best Buy Co., Inc. (NYSE: BBY) today announced results for the 13-week second quarter ended August 3, 2019 (“Q2 FY20”), as compared to the 13-week second quarter ended August 4, 2018 (“Q2 FY19”).

﻿	 	 	 	 	 	 	
﻿	Q2 FY20	Q2 FY19	
Revenue ($ in millions)	 	 	 	 	 	 	
Enterprise	$	9,536 	 	$	9,379 	 	
Domestic segment	$	8,821 	 	$	8,639 	 	
International segment	$	715 	 	$	740 	 	
Enterprise comparable sales % change1	 	1.6 	%	 	6.2 	%	
Domestic comparable sales % change1	 	1.9 	%	 	6.0 	%	
Domestic comparable online sales % change1	 	17.3 	%	 	10.1 	%	
International comparable sales % change1	 	(1.9)	%	 	7.6 	%	
Operating Income	 	 	 	 	 	 	
GAAP operating income as a % of revenue	 	3.3 	%	 	3.6 	%	
Non-GAAP operating income as a % of revenue	 	4.0 	%	 	3.8 	%	
Diluted Earnings per Share ("EPS")	 	 	 	 	 	 	
GAAP diluted EPS	$	0.89 	 	$	0.86 	 	
Non-GAAP diluted EPS	$	1.08 	 	$	0.91 	 	
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For GAAP to non-GAAP reconciliations of the measures referred to in the above table, please refer to the attached supporting schedule Reconciliation of Non-GAAP Financial Measures.
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“For the second quarter, we are reporting comparable sales growth of 1.6% on top of a very strong 6.2% last year,” said Corie Barry, Best Buy CEO. “We also delivered improved profitability driven by gross profit rate expansion and continued disciplined expense management, demonstrating the culture we have built around driving cost reductions and efficiencies to help fund investments. I would like to thank all of our associates for delivering strong first half results.”
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Barry continued, “During the quarter, we continued to make progress on our Building the New Blue strategy and our purpose to enrich lives through technology. We expanded our commitment to the health and wellness category through expanded assortment and a second acquisition, grew our Total Tech Support membership, added In-Home Advisors and continued to transform our supply chain to improve our speed of delivery to customers. We are excited about our strategic business opportunities and look forward to updating the market on the progress of our strategy during our Investor Update on September 25.” 
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Best Buy CFO Matt Bilunas commented, “The updated FY20 guidance we are providing today narrows our prior top-line range and raises the bottom-line range. This updated guidance factors in the following: (1) our best estimate of the impact of recent announcements regarding tariffs on goods from China, including the increase to

 
30% for List 3 and 15% for List 4; (2) our better-than-expected first half earnings; and (3) general uncertainty related to overall customer buying behavior in the back half of the year.” 
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FY20 Financial Guidance
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Best Buy is updating its full-year FY20 financial outlook to the following:
	·		Enterprise revenue of $43.1 billion to $43.6 billion, which compares to prior guidance of $42.9 billion to $43.9 billion	
	·		Enterprise comparable sales growth of 0.7% to 1.7%, which compares to prior guidance of 0.5% to 2.5%	
	·		Enterprise non-GAAP operating income rate flat to slightly up from the 4.6% rate in FY192	
	·		Non-GAAP effective income tax rate of approximately 24.0%2, which compares to prior guidance of approximately 24.5%	
	·		Non-GAAP diluted EPS of $5.60 to $5.752, which compares to prior guidance of $5.45 to $5.65	
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Best Buy is providing the following Q3 FY20 financial outlook:
	·		Enterprise revenue of $9.65 billion to $9.75 billion	
	·		Enterprise comparable sales growth of 0.5% to 1.5%	
	·		Non-GAAP effective income tax rate of approximately 26.5%2	
	·		Diluted weighted average share count of approximately 267 million	
	·		Non-GAAP diluted EPS of $1.00 to $1.052	
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Domestic Segment Q2 FY20 Results
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Domestic Revenue
Domestic revenue of $8.82 billion increased 2.1% versus last year. The increase was driven by comparable sales growth of 1.9% and revenue from GreatCall, Inc. (“GreatCall”), which was acquired in Q3 FY19, partially offset by the loss of revenue from 13 large-format store closures in the past year.
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The largest comparable sales growth drivers were appliances, tablets, headphones and services. These drivers were partially offset by declines in the gaming and home theater categories. 
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Domestic online revenue of $1.42 billion increased 17.3% on a comparable basis primarily due to higher average order values and increased traffic. As a percentage of total Domestic revenue, online revenue increased approximately 210 basis points to 16.1% versus 14.0% last year.
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Domestic Gross Profit Rate
Domestic gross profit rate was 24.0% versus 23.8% last year. The gross profit rate increase of approximately 20 basis points was primarily driven by the impact of GreatCall’s higher gross profit rate, which was partially offset by higher supply chain costs.
 
Domestic Selling, General and Administrative Expenses (“SG&A”)
Domestic GAAP SG&A was $1.76 billion, or 19.9% of revenue, versus $1.71 billion, or 19.8% of revenue, last year. On a non-GAAP basis, SG&A was $1.74 billion, or 19.7% of revenue, versus $1.71 billion, or 19.8% of revenue, last year. Both GAAP and non-GAAP SG&A increased primarily due to GreatCall operating expenses and higher advertising expenses, which were partially offset by lower incentive compensation expenses. Additionally, GAAP SG&A in Q2 FY20 included an additional $18 million of intangible asset amortization and $3 million of transaction costs related to the company’s acquisitions of GreatCall and Critical Signal Technologies, Inc.
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International Segment Q2 FY20 Results
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International Revenue
International revenue of $715 million decreased 3.4% versus last year. This decrease was primarily driven by a comparable sales decline of 1.9%, which was driven by Canada, and the impact of approximately 120 basis points of negative foreign currency exchange rates.
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International Gross Profit Rate
International gross profit rate was 23.8% versus 23.1% last year. The gross profit rate increase of approximately 70 basis points was primarily due to Canada, which was largely driven by increased revenue in the higher margin rate services category.
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International SG&A
International SG&A was $166 million, or 23.2% of revenue, versus $165 million, or 22.3% of revenue, last year.
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Restructuring Charges
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Restructuring charges of $48 million in Q2 FY20 primarily relate to changes in the company’s Domestic retail operating model. In the prior year, restructuring charges of $17 million relate to the closure of the company’s Domestic Best Buy Mobile stores.
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Dividends and Share Repurchases
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In Q2 FY20, the company returned a total of $363 million to shareholders through share repurchases of $230 million and dividends of $133 million. On a year-to-date basis, the company has returned a total of $595 million to shareholders through share repurchases of $328 million and dividends of $267 million. On February 27, 2019, the company announced the intent to spend between $750 million and $1 billion on share repurchases in FY20.
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Income Taxes
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In Q2 FY20, the GAAP effective tax rate was 22.3% versus 25.7% last year. On a non-GAAP basis, the effective tax rate was 22.8% versus 25.4% last year. The lower GAAP and non-GAAP effective tax rates were primarily due to increased tax benefits associated with stock-based compensation and the resolution of certain discrete tax matters during the quarter.
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Conference Call
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Best Buy is scheduled to conduct an earnings conference call at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) on August 29, 2019. A webcast of the call is expected to be available at www.investors.bestbuy.com,  both live and after the call.
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Investor Update Event
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Best Buy is hosting an Investor Update beginning at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on September 25, 2019. The purpose of the event is to provide an update on the company’s Building the New Blue strategy. A webcast of the presentations and question and answer session will be available at www.investors.bestbuy.com,  both live and after the event.
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Notes:
(1) In Q1 FY20, the company refined its methodology for calculating comparable sales. It now reflects certain revenue streams previously excluded from the comparable sales calculation, such as credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable. The impact of adopting these changes is immaterial to all periods presented, and therefore prior-period comparable sales disclosures have not been restated.
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(2) A reconciliation of the projected non-GAAP operating income, non-GAAP effective income tax rate and non-GAAP diluted EPS, which are forward-looking non-GAAP financial measures, to the most directly comparable GAAP financial measures, is not provided because the company is unable to provide such reconciliation without unreasonable effort. The inability to provide a reconciliation is due to the uncertainty and inherent difficulty predicting the occurrence, the financial impact and the periods in which the non-GAAP adjustments may be recognized. These GAAP measures may include the impact of such items as restructuring charges; litigation settlements; goodwill impairments; gains and losses on investments; certain acquisition-related costs; and the tax effect of all such items. Historically, the company has excluded these items from non-GAAP financial measures. The company currently expects to continue to exclude these items in future disclosures of non-GAAP financial measures and may also exclude other items that may arise (collectively, “non-GAAP adjustments”). The decisions and events that typically lead to the recognition of non-GAAP adjustments, such as a decision to exit part of the business or reaching settlement of a legal dispute, are inherently unpredictable as to if or when they may occur. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.
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Forward-Looking and Cautionary Statements:
This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management’s current views and estimates regarding future market conditions, company performance and financial results, operational investments, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe,” “assume,” “estimate,” “expect,” “intend,” “foresee,” “project,” “guidance,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: competition (including from multi-channel retailers, e-commerce business, technology service providers, traditional store-based retailers, vendors and mobile network carriers), our expansion strategies, our focus on services as a strategic priority, our reliance on key vendors and mobile network carriers, our ability to attract and retain qualified employees, changes in market compensation rates, risks arising from statutory, regulatory and legal developments, macroeconomic pressures in the markets in which we operate, failure to effectively manage our costs, our reliance on our information technology systems, our ability to prevent or effectively respond to a privacy or security breach, our ability to effectively manage strategic ventures, alliances or acquisitions, our dependence on cash flows and net earnings generated during the fourth fiscal quarter, susceptibility of our products to technological advancements, product life cycle preferences and changes in consumer preferences, economic or regulatory developments that might affect our ability to provide attractive promotional financing, interruptions and other supply chain issues, catastrophic events, our ability to maintain positive brand perception and recognition, product safety and quality concerns, changes to labor or employment laws or regulations, our ability to effectively manage our real estate portfolio, constraints in the capital markets or our vendor credit terms, changes in our credit ratings, any material disruption in our relationship with or the services of third-party vendors, risks related to our exclusive brand products and risks associated with vendors that source products outside of the U.S., including trade restrictions or changes in the costs of imports (including existing or new tariffs or duties and changes in the amount of any such tariffs or duties) and risks arising from our international activities.
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A further list and description of these risks, uncertainties and other matters can be found in the company’s annual report and other reports filed from time to time with the Securities and Exchange Commission (“SEC”), including, but not limited to, Best Buy’s Annual Report on Form 10-K filed with the SEC on March 28, 2019. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.
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Investor Contact:	Media Contact:	
Mollie O'Brien	Jeff Shelman	
(612) 291-7735 or mollie.obrien@bestbuy.com	(612) 291-6114 or jeffrey.shelman@bestbuy.com	

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BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
($ and shares in millions, except per share amounts)
(Unaudited and subject to reclassification)
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﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Six Months Ended	
﻿	August 3, 2019	 	August 4, 2018	 	August 3, 2019	 	August 4, 2018	
Revenue	$	9,536 	 	 	$	9,379 	 	 	$	18,678 	 	 	$	18,488 	 	
Cost of goods sold	 	7,253 	 	 	 	7,150 	 	 	 	14,226 	 	 	 	14,134 	 	
Gross profit	 	2,283 	 	 	 	2,229 	 	 	 	4,452 	 	 	 	4,354 	 	
Gross profit %	 	23.9 	%	 	 	23.8 	%	 	 	23.8 	%	 	 	23.6 	%	
Selling, general and administrative expenses	1,922 	 	 	 	1,877 	 	 	 	3,757 	 	 	 	3,707 	 	
SG&A %	 	20.2 	%	 	 	20.0 	%	 	 	20.1 	%	 	 	20.1 	%	
Restructuring charges	 	48 	 	 	 	17 	 	 	 	48 	 	 	 	47 	 	
Operating income	 	313 	 	 	 	335 	 	 	 	647 	 	 	 	600 	 	
Operating income %	 	3.3 	%	 	 	3.6 	%	 	 	3.5 	%	 	 	3.2 	%	
Other income (expense):	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Investment income and other	 	10 	 	 	 	13 	 	 	 	24 	 	 	 	24 	 	
Interest expense	 	(16)	 	 	 	(19)	 	 	 	(34)	 	 	 	(38)	 	
Earnings before income tax expense	 	307 	 	 	 	329 	 	 	 	637 	 	 	 	586 	 	
Income tax expense	 	69 	 	 	 	85 	 	 	 	134 	 	 	 	134 	 	
Effective tax rate	 	22.3 	%	 	 	25.7 	%	 	 	21.0 	%	 	 	22.8 	%	
Net earnings	$	238 	 	 	$	244 	 	 	$	503 	 	 	$	452 	 	
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Basic earnings per share	$	0.89 	 	 	$	0.88 	 	 	$	1.88 	 	 	$	1.61 	 	
Diluted earnings per share	$	0.89 	 	 	$	0.86 	 	 	$	1.86 	 	 	$	1.58 	 	
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Weighted-average common shares outstanding	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	267.1 	 	 	 	279.0 	 	 	 	267.4 	 	 	 	280.8 	 	
Diluted	 	269.4 	 	 	 	283.7 	 	 	 	270.9 	 	 	 	286.0 	 	
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BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited and subject to reclassification)
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﻿	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	
﻿	August 3, 2019	 	August 4, 2018	
Assets	 	 	 	 	 	 	 	
Current assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	1,289 	 	 	$	1,865 	 	
Short-term investments	 	320 	 	 	 	465 	 	
Receivables, net	 	966 	 	 	 	915 	 	
Merchandise inventories	 	5,208 	 	 	 	5,016 	 	
Other current assets	 	409 	 	 	 	510 	 	
Total current assets	 	8,192 	 	 	 	8,771 	 	
Property and equipment, net	 	2,361 	 	 	 	2,432 	 	
Operating lease assets	 	2,774 	 	 	 	 -	 	
Goodwill	 	965 	 	 	 	425 	 	
Other assets	 	686 	 	 	 	365 	 	
Total assets	$	14,978 	 	 	$	11,993 	 	
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Liabilities and equity	 	 	 	 	 	 	 	
Current liabilities	 	 	 	 	 	 	 	
Accounts payable	$	5,045 	 	 	$	5,338 	 	
Unredeemed gift card liabilities	 	264 	 	 	 	275 	 	
Deferred revenue	 	468 	 	 	 	438 	 	
Accrued compensation and related expenses	 	343 	 	 	 	318 	 	
Accrued liabilities	 	799 	 	 	 	813 	 	
Current portion of operating lease liabilities	 	643 	 	 	 	 -	 	
Current portion of long-term debt	 	14 	 	 	 	47 	 	
Total current liabilities	 	7,576 	 	 	 	7,229 	 	
Long-term operating lease liabilities	 	2,230 	 	 	 	 -	 	
Long-term liabilities	 	640 	 	 	 	777 	 	
Long-term debt	 	1,247 	 	 	 	801 	 	
Equity	 	3,285 	 	 	 	3,186 	 	
Total liabilities and equity	$	14,978 	 	 	$	11,993 	 	
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BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to reclassification)
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﻿	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	
﻿	Six Months Ended	
﻿	August 3, 2019	 	August 4, 2018	
Operating activities	 	 	 	 	 	 	 	
Net earnings	$	503 	 	 	$	452 	 	
Adjustments to reconcile net earnings to total cash provided by operating activities:	 	 	 	 	 	
Depreciation and amortization	 	401 	 	 	 	358 	 	
Restructuring charges	 	48 	 	 	 	47 	 	
Stock-based compensation	 	74 	 	 	 	63 	 	
Deferred income taxes	 	10 	 	 	 	5 	 	
Other, net	 	9 	 	 	 	 -	 	
Changes in operating assets and liabilities, net of acquired assets and liabilities:	 	 	 	 	 	
Receivables	 	57 	 	 	 	120 	 	
Merchandise inventories	 	199 	 	 	 	187 	 	
Other assets	 	(29)	 	 	 	(53)	 	
Accounts payable	 	(213)	 	 	 	485 	 	
Other liabilities	 	(243)	 	 	 	(430)	 	
Income taxes	 	(191)	 	 	 	(126)	 	
Total cash provided by operating activities	 	625 	 	 	 	1,108 	 	
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Investing activities	 	 	 	 	 	 	 	
Additions to property and equipment	 	(385)	 	 	 	(375)	 	
Purchases of investments	 	(319)	 	 	 	 -	 	
Sales of investments	 	 -	 	 	 	1,565 	 	
Acquisition of a business, net of cash acquired	 	(125)	 	 	 	 -	 	
Other, net	 	1 	 	 	 	10 	 	
Total cash provided by (used in) investing activities	 	(828)	 	 	 	1,200 	 	
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Financing activities	 	 	 	 	 	 	 	
Repurchase of common stock	 	(328)	 	 	 	(774)	 	
Issuance of common stock	 	27 	 	 	 	29 	 	
Dividends paid	 	(267)	 	 	 	(253)	 	
Repayments of debt	 	(8)	 	 	 	(523)	 	
Other, net	 	 -	 	 	 	(3)	 	
Total cash used in financing activities	 	(576)	 	 	 	(1,524)	 	
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Effect of exchange rate changes on cash	 	(1)	 	 	 	(16)	 	
Increase (decrease) in cash, cash equivalents and restricted cash	 	(780)	 	 	 	768 	 	
Cash, cash equivalents and restricted cash at beginning of period	 	2,184 	 	 	 	1,300 	 	
Cash, cash equivalents and restricted cash at end of period	$	1,404 	 	 	$	2,068 	 	
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BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to reclassification)
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﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Six Months Ended	
Domestic Segment Results	August 3, 2019	 	August 4, 2018	 	August 3, 2019	 	August 4, 2018	
Revenue	$	8,821 	 	 	$	8,639 	 	 	$	17,302 	 	 	$	17,051 	 	
Comparable sales % change	 	1.9 	%	 	 	6.0 	%	 	 	1.6 	%	 	 	6.6 	%	
Comparable online sales % change	 	17.3 	%	 	 	10.1 	%	 	 	16.0 	%	 	 	11.0 	%	
Gross profit	$	2,113 	 	 	$	2,058 	 	 	$	4,122 	 	 	$	4,020 	 	
Gross profit as a % of revenue	 	24.0 	%	 	 	23.8 	%	 	 	23.8 	%	 	 	23.6 	%	
SG&A	$	1,756 	 	 	$	1,712 	 	 	$	3,433 	 	 	$	3,377 	 	
SG&A as a % of revenue	 	19.9 	%	 	 	19.8 	%	 	 	19.8 	%	 	 	19.8 	%	
Operating income	$	309 	 	 	$	329 	 	 	$	641 	 	 	$	596 	 	
Operating income as a % of revenue	 	3.5 	%	 	 	3.8 	%	 	 	3.7 	%	 	 	3.5 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Domestic Segment Non-GAAP Results1	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	$	2,113 	 	 	$	2,058 	 	 	$	4,122 	 	 	$	4,020 	 	
Gross profit as a % of revenue	 	24.0 	%	 	 	23.8 	%	 	 	23.8 	%	 	 	23.6 	%	
SG&A	$	1,735 	 	 	$	1,712 	 	 	$	3,395 	 	 	$	3,371 	 	
SG&A as a % of revenue	 	19.7 	%	 	 	19.8 	%	 	 	19.6 	%	 	 	19.8 	%	
Operating income	$	378 	 	 	$	346 	 	 	$	727 	 	 	$	649 	 	
Operating income as a % of revenue	 	4.3 	%	 	 	4.0 	%	 	 	4.2 	%	 	 	3.8 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Six Months Ended	
International Segment Results	August 3, 2019	 	August 4, 2018	 	August 3, 2019	 	August 4, 2018	
Revenue	$	715 	 	 	$	740 	 	 	$	1,376 	 	 	$	1,437 	 	
Comparable sales % change	 	(1.9)	%	 	 	7.6 	%	 	 	(1.6)	%	 	 	7.0 	%	
Gross profit	$	170 	 	 	$	171 	 	 	$	330 	 	 	$	334 	 	
Gross profit as a % of revenue	 	23.8 	%	 	 	23.1 	%	 	 	24.0 	%	 	 	23.2 	%	
SG&A	$	166 	 	 	$	165 	 	 	$	324 	 	 	$	330 	 	
SG&A as a % of revenue	 	23.2 	%	 	 	22.3 	%	 	 	23.5 	%	 	 	23.0 	%	
Operating income	$	4 	 	 	$	6 	 	 	$	6 	 	 	$	4 	 	
Operating income as a % of revenue	 	0.6 	%	 	 	0.8 	%	 	 	0.4 	%	 	 	0.3 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
International Segment Non-GAAP Results1	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	$	170 	 	 	$	171 	 	 	$	330 	 	 	$	334 	 	
Gross profit as a % of revenue	 	23.8 	%	 	 	23.1 	%	 	 	24.0 	%	 	 	23.2 	%	
SG&A	$	166 	 	 	$	165 	 	 	$	324 	 	 	$	329 	 	
SG&A as a % of revenue	 	23.2 	%	 	 	22.3 	%	 	 	23.5 	%	 	 	22.9 	%	
Operating income	$	4 	 	 	$	6 	 	 	$	6 	 	 	$	5 	 	
Operating income as a % of revenue	 	0.6 	%	 	 	0.8 	%	 	 	0.4 	%	 	 	0.3 	%	
﻿
﻿
(1)For GAAP to non-GAAP reconciliations, please refer to the attached supporting schedule titled Reconciliation of Non-GAAP Financial Measures.

8

 

BEST BUY CO., INC.
REVENUE CATEGORY SUMMARY
(Unaudited and subject to reclassification)
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	
﻿	Revenue Mix Summary	 	Comparable Sales	
﻿	Three Months Ended	 	Three Months Ended	
Domestic Segment	August 3, 2019	 	August 4, 2018	 	August 3, 2019	 	August 4, 2018	
Computing and Mobile Phones	44 	%	 	45 	%	 	0.6 	%	 	4.2 	%	
Consumer Electronics	32 	%	 	32 	%	 	1.0 	%	 	6.8 	%	
Appliances	13 	%	 	12 	%	 	14.0 	%	 	10.3 	%	
Entertainment	5 	%	 	7 	%	 	(13.7)	%	 	8.5 	%	
Services	6 	%	 	4 	%	 	10.7 	%	 	6.6 	%	
Other	 -	%	 	 -	%	 	N/A	 	 	N/A	 	
Total	100 	%	 	100 	%	 	1.9 	%	 	6.0 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	
﻿	Revenue Mix Summary	 	Comparable Sales	
﻿	Three Months Ended	 	Three Months Ended	
International Segment	August 3, 2019	 	August 4, 2018	 	August 3, 2019	 	August 4, 2018	
Computing and Mobile Phones	43 	%	 	45 	%	 	(4.4)	%	 	4.5 	%	
Consumer Electronics	32 	%	 	29 	%	 	1.0 	%	 	0.3 	%	
Appliances	12 	%	 	12 	%	 	11.5 	%	 	35.7 	%	
Entertainment	5 	%	 	6 	%	 	(20.1)	%	 	14.3 	%	
Services	6 	%	 	6 	%	 	4.6 	%	 	11.3 	%	
Other	2 	%	 	2 	%	 	(24.0)	%	 	51.4 	%	
Total	100 	%	 	100 	%	 	(1.9)	%	 	7.6 	%	
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿
﻿

9

 

BEST BUY CO., INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
﻿
The following information provides reconciliations of the most comparable financial measures presented in accordance with accounting principles generally accepted in the U.S. (GAAP financial measures) to presented non-GAAP financial measures. The company believes that non-GAAP financial measures, when reviewed in conjunction with GAAP financial measures, can provide more information to assist investors in evaluating current period performance and in assessing future performance. For these reasons, internal management reporting also includes non-GAAP measures. Generally, presented non-GAAP measures include adjustments for items such as restructuring charges, goodwill impairments, gains and losses on investments, intangible asset amortization, certain acquisition-related costs and the tax effect of all such items. In addition, certain other items may be excluded from non-GAAP financial measures when the company believes this provides greater clarity to management and investors. These non-GAAP financial measures should be considered in addition to, and not superior to or as a substitute for, the GAAP financial measures presented in this earnings release and the company’s financial statements and other publicly filed reports. Non-GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
﻿
﻿
﻿
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Three Months Ended	
﻿	August 3, 2019	 	August 4, 2018	
﻿	Domestic	 	International	 	Consolidated	 	Domestic	 	International	 	Consolidated	
SG&A	$	1,756 	 	 	$	166 	 	 	$	1,922 	 	 	$	1,712 	 	 	$	165 	 	 	$	1,877 	 	
% of revenue	 	19.9 	%	 	 	23.2 	%	 	 	20.2 	%	 	 	19.8 	%	 	 	22.3 	%	 	 	20.0 	%	
Intangible asset amortization1	 	(18)	 	 	 	 -	 	 	 	(18)	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Acquisition-related transaction costs1	 	(3)	 	 	 	 -	 	 	 	(3)	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Non-GAAP SG&A	$	1,735 	 	 	$	166 	 	 	$	1,901 	 	 	$	1,712 	 	 	$	165 	 	 	$	1,877 	 	
% of revenue	 	19.7 	%	 	 	23.2 	%	 	 	19.9 	%	 	 	19.8 	%	 	 	22.3 	%	 	 	20.0 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	$	309 	 	 	$	4 	 	 	$	313 	 	 	$	329 	 	 	$	6 	 	 	$	335 	 	
% of revenue	 	3.5 	%	 	 	0.6 	%	 	 	3.3 	%	 	 	3.8 	%	 	 	0.8 	%	 	 	3.6 	%	
Restructuring charges2	 	48 	 	 	 	 -	 	 	 	48 	 	 	 	17 	 	 	 	 -	 	 	 	17 	 	
Intangible asset amortization1	 	18 	 	 	 	 -	 	 	 	18 	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Acquisition-related transaction costs1	 	3 	 	 	 	 -	 	 	 	3 	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Non-GAAP operating income	$	378 	 	 	$	4 	 	 	$	382 	 	 	$	346 	 	 	$	6 	 	 	$	352 	 	
% of revenue	 	4.3 	%	 	 	0.6 	%	 	 	4.0 	%	 	 	4.0 	%	 	 	0.8 	%	 	 	3.8 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective tax rate	 	 	 	 	 	 	 	 	 	22.3 	%	 	 	 	 	 	 	 	 	 	 	25.7 	%	
Restructuring charges2	 	 	 	 	 	 	 	 	 	0.4 	%	 	 	 	 	 	 	 	 	 	 	(0.3)	%	
Intangible asset amortization1	 	 	 	 	 	 	 	 	 	0.1 	%	 	 	 	 	 	 	 	 	 	 	 -	%	
Non-GAAP effective tax rate	 	 	 	 	 	 	 	 	 	22.8 	%	 	 	 	 	 	 	 	 	 	 	25.4 	%	
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Three Months Ended	 	Three Months Ended	
﻿	August 3, 2019	 	August 4, 2018	
﻿	Pretax Earnings	 	Net of Tax4	 	Per Share	 	Pretax Earnings	 	Net of Tax4	 	Per Share	
GAAP diluted EPS	 	 	 	 	 	 	 	 	$	0.89 	 	 	 	 	 	 	 	 	 	 	$	0.86 	
Restructuring charges2	$	48 	 	 	$	37 	 	 	 	0.13 	 	 	$	17 	 	 	$	13 	 	 	 	0.05 	
Intangible asset amortization1	 	18 	 	 	 	13 	 	 	 	0.05 	 	 	 	 -	 	 	 	 -	 	 	 	 -	
Acquisition-related transaction costs1	 	3 	 	 	 	2 	 	 	 	0.01 	 	 	 	 -	 	 	 	 -	 	 	 	 -	
Non-GAAP diluted EPS	 	 	 	 	 	 	 	 	$	1.08 	 	 	 	 	 	 	 	 	 	 	$	0.91 	
﻿

10

 

﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Six Months Ended	 	Six Months Ended	
﻿	August 3, 2019	 	August 4, 2018	
﻿	Domestic	 	International	 	Consolidated	 	Domestic	 	International	 	Consolidated	
SG&A	$	3,433 	 	 	$	324 	 	 	$	3,757 	 	 	$	3,377 	 	 	$	330 	 	 	$	3,707 	 	
% of revenue	 	19.8 	%	 	 	23.5 	%	 	 	20.1 	%	 	 	19.8 	%	 	 	23.0 	%	 	 	20.1 	%	
Intangible asset amortization1	 	(35)	 	 	 	 -	 	 	 	(35)	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Acquisition-related transaction costs1	 	(3)	 	 	 	 -	 	 	 	(3)	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Tax reform-related item - employee bonus3	 -	 	 	 	 -	 	 	 	 -	 	 	 	(6)	 	 	 	(1)	 	 	 	(7)	 	
Non-GAAP SG&A	$	3,395 	 	 	$	324 	 	 	$	3,719 	 	 	$	3,371 	 	 	$	329 	 	 	$	3,700 	 	
% of revenue	 	19.6 	%	 	 	23.5 	%	 	 	19.9 	%	 	 	19.8 	%	 	 	22.9 	%	 	 	20.0 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating income	$	641 	 	 	$	6 	 	 	$	647 	 	 	$	596 	 	 	$	4 	 	 	$	600 	 	
% of revenue	 	3.7 	%	 	 	0.4 	%	 	 	3.5 	%	 	 	3.5 	%	 	 	0.3 	%	 	 	3.2 	%	
Restructuring charges2	 	48 	 	 	 	 -	 	 	 	48 	 	 	 	47 	 	 	 	 -	 	 	 	47 	 	
Intangible asset amortization1	 	35 	 	 	 	 -	 	 	 	35 	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Acquisition-related transaction costs1	 	3 	 	 	 	 -	 	 	 	3 	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Tax reform-related item - employee bonus3	 -	 	 	 	 -	 	 	 	 -	 	 	 	6 	 	 	 	1 	 	 	 	7 	 	
Non-GAAP operating income	$	727 	 	 	$	6 	 	 	$	733 	 	 	$	649 	 	 	$	5 	 	 	$	654 	 	
% of revenue	 	4.2 	%	 	 	0.4 	%	 	 	3.9 	%	 	 	3.8 	%	 	 	0.3 	%	 	 	3.5 	%	
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Effective tax rate	 	 	 	 	 	 	 	 	 	21.0 	%	 	 	 	 	 	 	 	 	 	 	22.8 	%	
Restructuring charges2	 	 	 	 	 	 	 	 	 	0.3 	%	 	 	 	 	 	 	 	 	 	 	0.1 	%	
Intangible asset amortization1	 	 	 	 	 	 	 	 	 	0.2 	%	 	 	 	 	 	 	 	 	 	 	 -	%	
Non-GAAP effective tax rate	 	 	 	 	 	 	 	 	 	21.5 	%	 	 	 	 	 	 	 	 	 	 	22.9 	%	
﻿
﻿
﻿	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
﻿	Six Months Ended	 	Six Months Ended	
﻿	August 3, 2019	 	August 4, 2018	
﻿	Pretax Earnings	 	Net of Tax4	 	Per Share	 	Pretax Earnings	 	Net of Tax4	 	Per Share	
GAAP diluted EPS	 	 	 	 	 	 	 	 	$	1.86 	 	 	 	 	 	 	 	 	 	 	$	1.58 	 	
Restructuring charges2	$	48 	 	 	$	37 	 	 	 	0.13 	 	 	$	47 	 	 	$	36 	 	 	 	0.12 	 	
Intangible asset amortization1	 	35 	 	 	 	26 	 	 	 	0.10 	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Acquisition-related transaction costs1	 	3 	 	 	 	2 	 	 	 	0.01 	 	 	 	 -	 	 	 	 -	 	 	 	 -	 	
Tax reform-related item - employee bonus3	 	 -	 	 	 	 -	 	 	 	 -	 	 	 	7 	 	 	 	5 	 	 	 	0.02 	 	
Non-GAAP diluted EPS	 	 	 	 	 	 	 	 	$	2.10 	 	 	 	 	 	 	 	 	 	 	$	1.72 	 	
﻿
(1)Represents charges associated with the acquisitions of GreatCall, Inc. and Critical Signal Technologies, Inc. including 1) the non-cash amortization of definite-lived intangible assets, including customer relationships, tradenames and technology, and 2) acquisition-related transaction costs primarily comprised of professional fees.
(2)Represents charges associated with U.S. retail operating model changes for the periods ended August 3, 2019, and the closure of Best Buy Mobile stand-alone stores in the U.S. for the periods ended August 4, 2018.
(3)Represents final adjustments for amounts paid and associated taxes related to a one-time bonus for certain employees announced in response to future tax savings created by the Tax Cuts and Jobs Act enacted into law in Q4 FY18.
(4)The non-GAAP adjustments relate primarily to adjustments in the U.S. As such, the income tax charge is calculated using the statutory tax rate for the U.S. (24.5% for the periods ended August 3, 2019, and August 4, 2018).
﻿
﻿
﻿
﻿
﻿

11

 
Return on Assets and Non-GAAP Return on Invested Capital
﻿
The following table includes a reconciliation to the calculation of return on assets ("ROA") (GAAP financial measure), along with the calculation of non-GAAP return on invested capital (“ROIC”) for total operations, which includes both continuing and discontinued operations (non-GAAP financial measure) for the periods presented.
﻿
The company defines non-GAAP ROIC as non-GAAP net operating profit after tax divided by average invested capital using the trailing four-quarter average. The company believes non-GAAP ROIC is a useful financial measure for investors in evaluating the efficiency and effectiveness of the use of capital and believes non-GAAP ROIC is an important component of shareholders' return over the long term. Effective at the beginning of Q1 FY20, the company adopted new lease accounting guidance that resulted in the recognition of operating lease assets and operating lease liabilities on the balance sheet. Certain changes have been made as described within the footnotes to the calculation as a result of this adoption. This method of determining non-GAAP ROIC may differ from other companies' methods and therefore may not be comparable to those used by other companies.
﻿
﻿
﻿	 	 	 	 	 	 	 	
Calculation of Return on Assets ("ROA")	August 3, 20191	 	August 4, 20181	
Net earnings	$	1,515 	 	 	$	1,055 	 	
Total assets	 	14,357 	 	 	 	12,977 	 	
ROA	 	10.6 	%	 	 	8.1 	%	
﻿	 	 	 	 	 	 	 	
Calculation of Non-GAAP Return on Invested Capital ("ROIC")	August 3, 20191	 	August 4, 20181	
Net Operating Profit After Taxes (NOPAT)	 	 	 	 	 	 	 	
Operating income - continuing operations	$	1,947 	 	 	$	1,822 	 	
Operating income - discontinued operations	 	 -	 	 	 	1 	 	
Total operating income	 	1,947 	 	 	 	1,823 	 	
Add: Operating lease interest2	 	113 	 	 	 	117 	 	
Add: Non-GAAP operating income adjustments3	 	120 	 	 	 	163 	 	
Add: Investment income	 	49 	 	 	 	56 	 	
Less: Income taxes4	 	(550)	 	 	 	(700)	 	
Non-GAAP NOPAT	$	1,679 	 	 	$	1,459 	 	
﻿	 	 	 	 	 	 	 	
Average Invested Capital	 	 	 	 	 	 	 	
Total assets	$	14,357 	 	 	$	12,977 	 	
Less: Excess cash5	 	(1,183)	 	 	 	(2,427)	 	
Add: Capitalized operating lease obligations6	 	1,504 	 	 	 	3,126 	 	
Total liabilities	 	(11,118)	 	 	 	(9,385)	 	
Exclude: Debt7	 	2,716 	 	 	 	1,219 	 	
Average invested capital	$	6,276 	 	 	$	5,510 	 	
﻿	 	 	 	 	 	 	 	
Non-GAAP ROIC	 	26.8 	%	 	 	26.5 	%	
﻿
(1)Income statement accounts represent the activity for the trailing 12 months ended as of each of the balance sheet dates. Balance sheet accounts represent the average account balances for the four quarters ended as of each of the balance sheet dates.
(2)Operating lease interest represents the add-back to operating income to approximate the total interest expense that the company would incur if its operating leases were owned and financed by debt. Historically, the company used an add-back multiple of 30% of annual rent expense; however, as a result of the adoption of new lease accounting guidance, the multiple was recalculated and prior periods have been updated to reflect this change. For periods prior to FY20, the add-back is approximated by multiplying the trailing 12-month total rent expense by 15%. For periods beginning on or after FY20, the add-back is now approximated by multiplying average operating lease assets by 4%, which approximates the interest rate on the company’s operating lease liabilities.
(3)Includes adjustments for tax reform-related items, restructuring charges and acquisition-related costs. Additional details regarding these adjustments are included in the Reconciliation of Non-GAAP Financial Measures schedule within the company’s quarterly earnings releases.
(4)Income taxes are calculated using a blended statutory rate at the Enterprise level based on statutory rates from the countries in which the company does business, which primarily consists of the U.S. (with a statutory rate ranging from 24.5% to 38.0% for the periods presented) and Canada (with a statutory rate ranging from 26.6% to 26.9% for the periods presented).
(5)Cash and cash equivalents and short-term investments are capped at the greater of 1% of revenue or actual amounts on hand. The cash and cash equivalents and short-term investments in excess of the cap are subtracted from the company’s calculation of average invested capital to show their exclusion from total assets.
(6)Capitalized operating lease assets represent the estimated net assets that the company would record if the company's operating leases were owned. Historically, the company used a multiple of five times annual rent expense; however, as a result of the adoption of new lease accounting guidance, the multiple was recalculated and prior periods have been updated to reflect this change. For periods prior to FY20, the asset is approximated by multiplying the trailing 12-month total rent expense by the multiple of four. For periods beginning on or after FY20, capitalized operating lease assets are now included within total assets on the balance sheet.
(7)Debt includes short-term debt, current portion of operating lease liabilities, current portion of long-term debt, long-term operating lease liabilities and long-term debt and is added back to the company’s calculation of average invested capital to show its exclusion from total liabilities.

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