Fiscal 2008AnnualReport |BestBuyCo.,Inc. 7601 Penn Avenue South Richfi eld, Minnesota 55423-3645 Phone: (612) 291-1000 www.BestBuy.com NYSE symbol: BBY © 2008 Best Buy Co., Inc. Connected World Fiscal 2008 Annual Report | Best Buy Co., Inc. The brands of Best Buy Best Buy operates a global portfolio of brands with a commitment to growth and innovation. Our employees strive to provide customers around the world with superior experiences by responding to their unique needs and aspirations. We sell consumer electronics, home-offi ce products, entertainment software, appliances and related services through approximately 1,300 stores, call centers and Web sites. We operate in the United States and its territories, throughout Canada and in China. 26881_cover.indd 1 5/9/08 1:44:23 PM Best Buy Fiscal 2008 Annual Report Shareholder information Corporate campus Transfer agent Financial releases for fi scal 2009 Best Buy Co., Inc. For questions regarding your stock We normally distribute fi nancial releases 7601 Penn Avenue South certifi cates—such as lost certifi cates, before the market opens. Quarterly earnings Richfi eld, MN 55423-3645 name changes and transfers of ownership, conference calls typically are scheduled at Phone: (612) 291-1000 please contact our transfer agent: 10 a.m., Eastern Time. We do not expect to host a conference call in conjunction with Computershare Trust Company, N.A. Independent registered public the release of December revenue results. P.O. Box 43078 accounting fi rm Providence, RI 02940-3078 Disclosure Estimated date Deloitte & Touche LLP Phone: (877) 498-8861 or First-quarter earnings 6/17/2008 (781) 575-2879 Outside general counsel Second-quarter earnings 9/16/2008 Hearing impaired: (800) 952-9245 Robins, Kaplan, Miller & Ciresi L.L.P. Third-quarter earnings 12/16/2008 www.computershare.com December revenue 1/9/2009 Regular meeting of shareholders Dividend policy Fourth-quarter earnings 4/1/2009 June 25, 2008, 9:30 a.m. (CDT) Financial highlights We pay a quarterly cash dividend to Best Buy corporate campus–theater holders of common shares. The quarterly Shareholders at a glance (U.S. dollars in millions, except per share amounts) Fiscal 2008 Fiscal 2007 (1) Fiscal 2006 If you have a proposal for a future rate was 13 cents per common share As of March 1, 2008, the percentage meeting, please send it to Joseph M. Joyce, at the end of fi scal 2008. of shares benefi cially held by directors Revenue $40,023 $35,934 $30,848 Senior Vice President—General Counsel and executive offi cers (28 people) Comparable store sales % gain 2.9% 5.0% 4.9% and Assistant Secretary, at the company’s Stock split history was 19 percent. Founder and Gross profi t as % of revenue 23.9% 24.4% 25.0% corporate campus in Richfi eld, Minn. Our stock has split eight times in the Chairman Richard M. Schulze held SG&A as % of revenue 18.5% 18.8% 19.7% The deadline for proposals to be included company’s history. almost 70 million shares benefi cially in the proxy for the 2009 regular meeting (approximately 17 percent of shares Operating income as % of revenue 5.4% 5.6% 5.3% Date Split of shareholders is Jan. 15, 2009. More outstanding). Net earnings $ 1,407 $ 1,377 $ 1,140 details are included in our proxy statement. 4/1/1986 Two for one Diluted earnings per share $ 3.12 $ 2.79 $ 2.27 2/23/1987 Three for two As of Dec. 31, 2007, the top institutional shareholders were:* General information 9/2/1993 Three for two Cash, cash equivalents and short-term investments $ 1,502 $ 3,793 $ 3,789 Shareholders may access our SEC fi lings, 4/29/1994 Two for one • Capital World Investors Debt-to-capitalization ratio (2) 15% 9% 10% annual reports and quarterly fi nancial 5/27/1998 Two for one 54.1 million shares Cash dividends per share declared and paid $ 0.46 $ 0.36 $ 0.31 results by visiting the “For Our Investors” 3/19/1999 Two for one • Capital Research Global Investors section of our Web site, www.BestBuy.com. Value of common shares repurchased $ 3,461 $ 599 $ 772 29.3 million shares A Web-based e-mail notifi cation system 5/13/2002 Three for two Total retail square footage (in thousands) (3) (4) 48,580 43,511 35,526 also is available under “E-mail Alerts” to 8/4/2005 Three for two • The Goldman Sachs Group, Inc. Number of stores (at period end) alert subscribers to new fi nancial releases, 25.6 million shares SEC fi lings, upcoming events and other Direct stock purchase and Best Buy — U.S. 923 822 742 • State Street Global Advisors signifi cant postings. dividend reinvestment plan 12.2 million shares Pacifi c Sales (acquired in fi scal 2007) 19 14 – You may purchase our common stock and/ You may also visit our Web site to Magnolia Audio Video 13 20 20 or elect to reinvest your dividend directly obtain product information, company • Vanguard Group through our transfer agent. To obtain Best Buy Mobile (stand-alone) — U.S. 9 5 – background information, current news, 10.9 million shares information on the plan or to enroll: Geek Squad (stand-alone) — U.S. 7 12 12 fi nancial information and our Corporate *Source: FactSet and SEC fi lings Future Shop 131 121 118 Responsibility Report. By Mail: Computershare Investment Plan for Best Buy Best Buy — Canada 51 47 44 Or contact: Geek Squad (stand-alone) — Canada – – 5 c/o Computershare Best Buy Co., Inc.—investor relations P.O. Box 43081 (5) Five Star (acquired in fi scal 2007) 160 135 – Jennifer Driscoll, Vice President Providence, RI 02940-3081 Best Buy (5) — China 1 1 – Charles Marentette, Senior Director By Internet: Please visit the “For Our Wade Bronson, Director (1) Fiscal 2007 included 53 weeks. All other periods presented included 52 weeks Investors” section of our Web site at (2) Represents total debt (including current portion of long-term debt) divided by total capitalization (total debt + total shareholders’ equity) 7601 Penn Avenue South www.BestBuy.com and click on (3) Represents total square footage of our stores at the end of each fi scal year Richfi eld, MN 55423-3645 “Direct Stock Purchase Plans.” (4) Retail square footage for fi scal 2007 and 2006 have been adjusted to report all square footage on a gross basis Phone: (612) 291-6147 (5) Store count on December 31, 2007. China results are reported on a two-month lag basis. Cert no. SW-COC-1865 26881_cover.indd 2 5/9/08 1:44:26 PM “I wouldn’t want to trade places with any other CEO. I believe that putting our full assets at the command of our employees closest to the customer can generate sizeable growth. Moreover, I believe our industry is so attractive, given the transformative change that technology is enabling for customers.” To our shareholders Best Buy made great progress on the core challenges we which was a disappointment to me—but I am very proud undertook at the beginning of fi scal 2008, as we continue of our results, given what turned out to be a much more our customer centricity journey. We extended new and challenging environment than expected. On balance, fi scal improved offerings to the consumer with the launch of 2008 was another year in which the performance of our Best Buy Mobile, the Apple store-within-a-store roll-out and 150,000 employees provided reason for us to believe in the addition of Dell computers, to name a few. We improved a bright future for Best Buy. the level of employee engagement and signifi cantly reduced turnover among store employees. Customer satisfaction also Connecting the digital world rose. These improvements contributed to an increase in our The core of our story, as we look to the future, is based market share to nearly 21 percent in the United States and on the hypothesis that we live in an age when technology more than 35 percent in Canada, where our Best Buy and is producing transformative change, enabling people to Future Shop stores offer the consumer a choice of brands. We accomplish more with their lives than could have been also saw continued strong consumer response to our stores in dreamed possible two or three decades ago. We believe China, which together with our success in Canada gives us that to realize the many potential benefi ts of these changes, further optimism that our international expansion provides a our customers will need a friend who can help them enable huge runway for future growth. their dreams of digital connectivity—and that we will be Our fi nancial performance also saw improvements. that friend, through the talents of our employees. We believe Diluted earnings per share rose to $3.12 in fi scal 2008, consumers in the connected world will use technology to up 12 percent from $2.79 the prior year. Our EPS growth enrich their lifestyles in a tremendous variety of ways, which was driven primarily by the lower average number of shares will challenge our capacity to serve them as never before. outstanding, resulting from $3.5 billion of share repurchases The capabilities we have in our stores, service departments, in fi scal 2008. Our results also refl ected an 11-percent rise call centers, Web sites, in-home solutions and product in revenue, to $40 billion—a major milestone, representing delivery all will have to work together at the command of a near doubling of revenue from fi ve years ago. Our our employees who directly engage with our consumers.