22
Please consider the excerpts from Best Buy Annual Report (PDF) for fiscal year 2020 (i.e., the fiscal year ended February 1, 2020) and answer the following questions using only this information.
- Assume the Company measures bad debt expenses as 1% of beginning gross receivables. Calculate the amount of bad debts written off in fiscal year 2020.
23
Please consider the excerpts from Best Buy Annual Report (PDF) for fiscal year 2020 (i.e., the fiscal year ended February 1, 2020) and answer the following questions using only this information.
- What is the number of outstanding shares at the end of fiscal year 2020?
24
Please consider the excerpts from Best Buy Annual Report (PDF) for fiscal year 2020 (i.e., the fiscal year ended February 1, 2020) and answer the following questions using only this information.
- How much dividends, income taxes, and interest did the Company pay during fiscal year 2020?
25
Please consider the excerpts from Best Buy Annual Report (PDF) for fiscal year 2020 (i.e., the fiscal year ended February 1, 2020) and answer the following questions using only this information.
- Refer to the 2028 Notes in the long-term debt footnote. Calculate the interest expense on this note for fiscal year 2025.
February 2, 2019 42.879 32,918 9,961 8,015 46 1,900 February 3, 2018 42,151 32,275 9,876 8,023 10 1,843 Consolidated Statements of Earnings S and shares in millions, except per share amounts February 1, Fiscal Years Ended 2020 Revenue 43,638 Cost of sales 33,590 Gross profit 10,048 Selling, general and administrative expenses 7,998 Restructuring charges 41 Operating income 2,009 Other income (expense) Gain on sale of investments 1 Investment income and other 47 Interest expense (64) Earnings from continuing operations before income tax expense 1,993 Income tax expense 452 Net earnings from continuing operations 1,541 Gain from discontinued operations, net of $0 tax expense Net earnings $ 1,541 Basic earnings per share 5.82 Diluted earnings per share $ 5.75 Weighted average common shares outstanding Basic 264.9 Diluted 268.1 12 49 (73) 1 48 (75) 1,888 424 1,464 1,817 818 999 1 1,464 1,000 S $ 5.30 5.20 $ $ 3.33 3.26 276.4 281.4 300.4 307.1 1 Consolidated Balance Sheets $ in millions, except per share and share amounts February 1, 2020 February 2, 2019 2,229 1,149 5,174 305 8,857 1,980 1,015 5,409 466 8,870 650 2,203 6,286 637 2,119 5,865 579 89 9,228 6,900 2,328 2,709 984 713 15,591 9,200 6,690 2,510 915 606 12.901 S $ Assets Current assets Cash and cash equivalents Receivables, net Merchandise inventories Other current assets Total current assets Property and equipment Land and buildings Leasehold improvements Fixtures and equipment Property under capital and financing leases Property under finance leases Gross property and equipment Less accumulated depreciation Net property and equipment Operating lease assets Goodwill Other assets Total assets Liabilities and equity Current liabilities Accounts payable Unredeemed gift card liabilities Deferred revenue Accrued compensation and related expenses Accrued liabilities Current portion of operating lease liabilities Current portion of long-term debt Total current liabilities Long-term operating lease liabilities Long-term liabilities Long-term debt Equity Best Buy Co., Inc. Shareholders' Equity Common stock, $0.10 par value: Authorized 1.0 billion shares; Issued and outstanding 256,494,000 and 265,703,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total equity Total liabilities and equity $ $ 5,288 281 501 410 906 660 14 8,060 2,138 657 1,257 5,257 290 446 482 982 - 56 7,513 750 1,332 26 27 3,158 295 3,479 15,591 2,985 294 3,306 12,901 2 Consolidated Statements of Changes in Shareholders' Equity $ and shares in millions, except per share amounts Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Equity 2.985 294 3,306 (22) 1,541 (22) 1,541 Common Common Shares Stock Balances at February 2, 2019 266 27 Adoption of ASU 2016-02 Net earnings Foreign currency translation adjustments Stock-based compensation Issuance of common stock 4 Common stock dividends, 1 1 143 143 48 48 $2.00 per - 9 (536) (527) (14) (810) share Repurchase of common stock Other Balances at February 1, 2020 (198) (2) (1,009) (2) 256 26 - 3,158 $ 295 $ 3,479 3 Consolidated Statements of Cash Flows $ in millions Fiscal Years Ended Operating activities February 1, 2020 February 2, 2019 February 3, 2018 Net earnings 1,541 $ 1,464 $ 1,000 740 72 41 143 70 21 (63) 2,565 747 23 46 123 10 (25) 20 2,408 683 0 10 129 162 (13) 170 2,141 (819) - (743) (330) 322 (145) 1 (688) (4,325) 4,018 2,098 (787) 16 (7) Adjustments to reconcile net earnings to total cash provided by operating activities: Depreciation Amortization Restructuring charges Stock-based compensation Deferred income taxes Other, net Changes in operating assets and liabilities Total cash provided by operating activities Investing activities Additions to property and equipment, net of $10, $53 and $123, respectively, of non-cash capital expenditures Purchases of investments Sales of investments Acquisitions, net of cash acquired Other, net Total cash provided by (used in) investing activities Financing activities Repurchase of common stock Issuance of common stock Dividends paid Borrowings of debt Repayments of debt Other, net Total cash used in financing activities Effect of exchange rate changes on cash Increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at $ end of period Supplemental cash flow information Income taxes paid $ Interest paid (895) S08 (1,002) (1,003) 48 (527) (2,004) 163 (409) - (1,505) 38 (497) 498 (546) (6) (2,018) (14) (15) (46) (1) (2,297) 25 (1,498) (1) 171 884 (1,133) 2,184 1.300 2,433 $ 2,355 2,184 1,300 $ $ 514 62 391 71 366 81 4 Accounts receivables Receivables consist primarily of amounts due from vendors for various vendor funding programs, banks for customer credit card and debit card transactions and mobile phone network operators for device sales and commissions. We establish allowances for uncollectible receivables based primarily on historical collection trends. Our allowances for uncollectible receivables were $24 million and $23 million at February 1, 2020, and February 2, 2019, respectively. Inventory Merchandise inventories are recorded at the lower of cost or net realizable value. The weighted average method is used to determine the cost of inventory which includes costs of in-bound freight to move inventory into our distribution centers. Also included in the cost of inventory are certain vendor allowances. Costs associated with storing and transporting merchandise inventories to our retail stores are expensed as incurred and included in cost of sales. Our inventory valuation also reflects markdown adjustments for the excess of the cost over the net recovery we expect to realize from the ultimate disposition of inventory and establishes a new cost basis. No adjustment is recorded for inventory that we are able to return to our vendors for full credit. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdown adjustments or an increase in the newly established cost basis. Our inventory valuation reflects adjustments for physical inventory losses (resulting from, for example, theft). Physical inventory is maintained through a combination of full location counts (typically once per year) and more regular cycle counts. The adjustments for inventory impairments and physical inventory losses were negligible at February 1, 2020, and February 2, 2019, respectively Long term debt Long-term debt consisted of the following ($ in millions): February 1, February 2, 2020 2019 2021 Notes $ 650 $ 650 2028 Notes 500 500 Interest rate swap valuation adjustments 89 25 Subtotal 1,239 1,175 Debt discounts and issuance costs (6) (7) Financing lease obligations (1) 181 Capital lease obligations (1) 39 Finance lease obligations 38 Total long-term debt 1,271 1,388 Less current portion 14 56 Total long-term debt, less current portion 1,257 1,332 a) See Note 10, Leases, for additional information regarding our lease obligations. 2021 Notes In March 2011, we issued $650 million principal amount of notes due March 15, 2021 (the "2021 Notes"). The 2021 Notes bear interest at a fixed rate of 5.50% per year, payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2011. We may redeem some or all of the 2021 Notes at any time at a redemption price equal to the greater of (1) 100% of the principal amount, and (ii) the sum of the present values of each remaining scheduled payment of principal and interest discounted to the redemption date on a semiannual basis, plus accrued and unpaid interest on the principal amount to the redemption date as described in the indenture (including the supplemental indenture) relating to the 2021 Notes. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining unredeemed 2021 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date. The 2021 Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The 2021 Notes contain covenants that, among other things, limit our ability to incur debt secured by liens or to enter into sale and lease-back transactions. 2028 Notes In September 2018, we issued $500 million principal amount of notes due October 1, 2028 (the "2028 Notes). The 2028 Notes bear interest at a fixed rate of 4.45% per year, payable semi- annually on April 1 and October 1 of each year, beginning on April 1, 2019. We may redeem some or all of the 2028 Notes at any time at a redemption price equal to the greater of (i) 100% of the principal amount, and (ii) the sum of the present values of each remaining scheduled payment of principal and interest discounted to the redemption date on a semiannual basis, plus accrued and unpaid interest on the principal amount to the redemption date as described in the indenture (including the supplemental indenture) relating to the 2028 Notes. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining upredeemed 2028 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date. The 2028 Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The 2028 Notes contain covenants that, among other things, limit our ability to incur debt secured by liens or to enter into sale and lease-back transactions. 6 February 2, 2019 42.879 32,918 9,961 8,015 46 1,900 February 3, 2018 42,151 32,275 9,876 8,023 10 1,843 Consolidated Statements of Earnings S and shares in millions, except per share amounts February 1, Fiscal Years Ended 2020 Revenue 43,638 Cost of sales 33,590 Gross profit 10,048 Selling, general and administrative expenses 7,998 Restructuring charges 41 Operating income 2,009 Other income (expense) Gain on sale of investments 1 Investment income and other 47 Interest expense (64) Earnings from continuing operations before income tax expense 1,993 Income tax expense 452 Net earnings from continuing operations 1,541 Gain from discontinued operations, net of $0 tax expense Net earnings $ 1,541 Basic earnings per share 5.82 Diluted earnings per share $ 5.75 Weighted average common shares outstanding Basic 264.9 Diluted 268.1 12 49 (73) 1 48 (75) 1,888 424 1,464 1,817 818 999 1 1,464 1,000 S $ 5.30 5.20 $ $ 3.33 3.26 276.4 281.4 300.4 307.1 1 Consolidated Balance Sheets $ in millions, except per share and share amounts February 1, 2020 February 2, 2019 2,229 1,149 5,174 305 8,857 1,980 1,015 5,409 466 8,870 650 2,203 6,286 637 2,119 5,865 579 89 9,228 6,900 2,328 2,709 984 713 15,591 9,200 6,690 2,510 915 606 12.901 S $ Assets Current assets Cash and cash equivalents Receivables, net Merchandise inventories Other current assets Total current assets Property and equipment Land and buildings Leasehold improvements Fixtures and equipment Property under capital and financing leases Property under finance leases Gross property and equipment Less accumulated depreciation Net property and equipment Operating lease assets Goodwill Other assets Total assets Liabilities and equity Current liabilities Accounts payable Unredeemed gift card liabilities Deferred revenue Accrued compensation and related expenses Accrued liabilities Current portion of operating lease liabilities Current portion of long-term debt Total current liabilities Long-term operating lease liabilities Long-term liabilities Long-term debt Equity Best Buy Co., Inc. Shareholders' Equity Common stock, $0.10 par value: Authorized 1.0 billion shares; Issued and outstanding 256,494,000 and 265,703,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total equity Total liabilities and equity $ $ 5,288 281 501 410 906 660 14 8,060 2,138 657 1,257 5,257 290 446 482 982 - 56 7,513 750 1,332 26 27 3,158 295 3,479 15,591 2,985 294 3,306 12,901 2 Consolidated Statements of Changes in Shareholders' Equity $ and shares in millions, except per share amounts Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Equity 2.985 294 3,306 (22) 1,541 (22) 1,541 Common Common Shares Stock Balances at February 2, 2019 266 27 Adoption of ASU 2016-02 Net earnings Foreign currency translation adjustments Stock-based compensation Issuance of common stock 4 Common stock dividends, 1 1 143 143 48 48 $2.00 per - 9 (536) (527) (14) (810) share Repurchase of common stock Other Balances at February 1, 2020 (198) (2) (1,009) (2) 256 26 - 3,158 $ 295 $ 3,479 3 Consolidated Statements of Cash Flows $ in millions Fiscal Years Ended Operating activities February 1, 2020 February 2, 2019 February 3, 2018 Net earnings 1,541 $ 1,464 $ 1,000 740 72 41 143 70 21 (63) 2,565 747 23 46 123 10 (25) 20 2,408 683 0 10 129 162 (13) 170 2,141 (819) - (743) (330) 322 (145) 1 (688) (4,325) 4,018 2,098 (787) 16 (7) Adjustments to reconcile net earnings to total cash provided by operating activities: Depreciation Amortization Restructuring charges Stock-based compensation Deferred income taxes Other, net Changes in operating assets and liabilities Total cash provided by operating activities Investing activities Additions to property and equipment, net of $10, $53 and $123, respectively, of non-cash capital expenditures Purchases of investments Sales of investments Acquisitions, net of cash acquired Other, net Total cash provided by (used in) investing activities Financing activities Repurchase of common stock Issuance of common stock Dividends paid Borrowings of debt Repayments of debt Other, net Total cash used in financing activities Effect of exchange rate changes on cash Increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of period Cash, cash equivalents and restricted cash at $ end of period Supplemental cash flow information Income taxes paid $ Interest paid (895) S08 (1,002) (1,003) 48 (527) (2,004) 163 (409) - (1,505) 38 (497) 498 (546) (6) (2,018) (14) (15) (46) (1) (2,297) 25 (1,498) (1) 171 884 (1,133) 2,184 1.300 2,433 $ 2,355 2,184 1,300 $ $ 514 62 391 71 366 81 4 Accounts receivables Receivables consist primarily of amounts due from vendors for various vendor funding programs, banks for customer credit card and debit card transactions and mobile phone network operators for device sales and commissions. We establish allowances for uncollectible receivables based primarily on historical collection trends. Our allowances for uncollectible receivables were $24 million and $23 million at February 1, 2020, and February 2, 2019, respectively. Inventory Merchandise inventories are recorded at the lower of cost or net realizable value. The weighted average method is used to determine the cost of inventory which includes costs of in-bound freight to move inventory into our distribution centers. Also included in the cost of inventory are certain vendor allowances. Costs associated with storing and transporting merchandise inventories to our retail stores are expensed as incurred and included in cost of sales. Our inventory valuation also reflects markdown adjustments for the excess of the cost over the net recovery we expect to realize from the ultimate disposition of inventory and establishes a new cost basis. No adjustment is recorded for inventory that we are able to return to our vendors for full credit. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdown adjustments or an increase in the newly established cost basis. Our inventory valuation reflects adjustments for physical inventory losses (resulting from, for example, theft). Physical inventory is maintained through a combination of full location counts (typically once per year) and more regular cycle counts. The adjustments for inventory impairments and physical inventory losses were negligible at February 1, 2020, and February 2, 2019, respectively Long term debt Long-term debt consisted of the following ($ in millions): February 1, February 2, 2020 2019 2021 Notes $ 650 $ 650 2028 Notes 500 500 Interest rate swap valuation adjustments 89 25 Subtotal 1,239 1,175 Debt discounts and issuance costs (6) (7) Financing lease obligations (1) 181 Capital lease obligations (1) 39 Finance lease obligations 38 Total long-term debt 1,271 1,388 Less current portion 14 56 Total long-term debt, less current portion 1,257 1,332 a) See Note 10, Leases, for additional information regarding our lease obligations. 2021 Notes In March 2011, we issued $650 million principal amount of notes due March 15, 2021 (the "2021 Notes"). The 2021 Notes bear interest at a fixed rate of 5.50% per year, payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2011. We may redeem some or all of the 2021 Notes at any time at a redemption price equal to the greater of (1) 100% of the principal amount, and (ii) the sum of the present values of each remaining scheduled payment of principal and interest discounted to the redemption date on a semiannual basis, plus accrued and unpaid interest on the principal amount to the redemption date as described in the indenture (including the supplemental indenture) relating to the 2021 Notes. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining unredeemed 2021 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date. The 2021 Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The 2021 Notes contain covenants that, among other things, limit our ability to incur debt secured by liens or to enter into sale and lease-back transactions. 2028 Notes In September 2018, we issued $500 million principal amount of notes due October 1, 2028 (the "2028 Notes). The 2028 Notes bear interest at a fixed rate of 4.45% per year, payable semi- annually on April 1 and October 1 of each year, beginning on April 1, 2019. We may redeem some or all of the 2028 Notes at any time at a redemption price equal to the greater of (i) 100% of the principal amount, and (ii) the sum of the present values of each remaining scheduled payment of principal and interest discounted to the redemption date on a semiannual basis, plus accrued and unpaid interest on the principal amount to the redemption date as described in the indenture (including the supplemental indenture) relating to the 2028 Notes. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining upredeemed 2028 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date. The 2028 Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The 2028 Notes contain covenants that, among other things, limit our ability to incur debt secured by liens or to enter into sale and lease-back transactions. 6
