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Best Buy Co., Inc. Shareholders Meeting Presentation

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  • 1. Best Buy Co., Inc. Regular Meeting of Shareholders June 21, 2006 Richfield, Minnesota 1
  • 2. RICHARD M. SCHULZE Founder and Chairman Director since 1966 2
  • 3. Agenda • Election of Class 1 Directors • Ratification of Appointment of Deloitte & Touche LLP • Management Presentation • Q&A Session 3
  • 4. James C. Wetherbe Director since 1993 4
  • 5. Directors for Election FRANK D. TRESTMAN KATHY J. HIGGINS VICTOR Director since 1984 Director since 1999 ALLEN U. LENZMEIER BRAD ANDERSON Vice Chairman Vice Chairman and Director since 2001 Chief Executive Officer Director since 1986 5
  • 6. Director Voting Results 100% 80% 60% 40% 20% 0% Anderson Lenzmeier Higgins Trestman Victor For Withheld 6
  • 7. Auditor Voting Results 99% 0.50% 0.50% For Against Abstain 7
  • 8. Best Buy Co., Inc. Management Presentation June 21, 2006 Richfield, MN 8
  • 9. Safe Harbor Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995 This presentation may contain forward-looking statements, which are subject to risk and uncertainty. A variety of factors could cause our actual results to differ materially from the anticipated results expressed in such forward-looking statements, including, among other things, factors listed in our Current Report on Form 10-K filed with the SEC on 5/10/06. That 10-K describes additional factors that could cause actual results to differ materially from those contemplated by the forward-looking statements made in this presentation. 9
  • 10. BRAD ANDERSON Vice Chairman and Chief Executive Officer 10
  • 11. Our Journey Fiscal 2006 Fiscal 2007 Before Customer Centricity 11
  • 12. Richfield, MN Store #281 Angela Bruhn and Sarah Zambrano 12
  • 13. SHARI BALLARD Executive Vice President – Human Resources and Legal 13
  • 14. Customer Centricity Invite Employee Ideas Honor Provide Unique End-to-End Customers Solutions 14
  • 15. Engaged, Energized Employees Employee Turnover Engagement Scores 4.1 4.1 81% 69% FY05 FY06 FY05 FY06 Source: Gallup survey, using a 5-point scale Average annualized employee turnover 15
  • 16. BRIAN DUNN President and Chief Operating Officer 16
  • 17. Our Priorities 1. Integrated Customer- Centric Operating Model 2. New Store Growth & Magnolia Home Theater Invite Employee 3. Services Ideas 4. Best Buy For Business Honor 5. International Provide Unique End-to-End Customers Solutions 6. Capabilities for End-To- End Solutions 17
  • 18. DARREN JACKSON Executive Vice President – Finance and Chief Financial Officer 18
  • 19. History of Growth EPS1 wth d g ro n de • 30-percent earnings $2.27 pou Com 25% $1.75 growth in fiscal 2006 $1.44 $1.11 $1.07 • Revenue exceeded $30B, net earnings FY02 FY03 FY04 FY05 FY06 FY02 FY03 FY04 FY05 FY06 exceeded $1B 1Prior year results are shown on a comparable basis. A reconciliation to GAAP results is available on the company’s website. • N. America market Revenue Growth share hit 22% ($ in billions) h growt d ounde Comp • Expanding into new $30.8 % 15 $27.4 $24.5 $20.9 markets – services, $17.7 small businesses, international FY02 FY03 FY04 FY05 FY06 19
  • 20. Superior Returns Return on Equity Returns Invested Capital 58% 42% 21.7% 20.0% 18.7% 25% 22% 17% 8% 2% -1% FY04 FY05 FY06 5-Year 3-Year 1-Year CYTD S&P BBY • Please see the company’s fiscal 2006 annual report • Compounded Annual Growth Rates, including the reinvestment of dividends, through February 25, 2006 for a reconciliation of Return on Invested Capital • CYTD represents calendar-year 2006 stock returns through 6/20/06 20
  • 21. Fiscal 2007 Update First Quarter Annual Guidance $7.0 • Revenue of $34 to $35 $6.1 Billion $0.47 FY06 • Comparable Store sales $0.34 FY07 Gain of 3% to 5% • Earnings per diluted Share of $2.65 to $2.80, Revenue ($ in Diluted EPS billions) An Increase of • Net Earnings Growth of 38% Approximately 20% • SG&A Rate Improvement of 110 Basis Points • Up to 90 New stores in • Revenue of $7B, comparable North America Store Sales up 4.9% 21
  • 22. Our Growth Strategy $350 $100 New Market Growth $80 China $50 $120 Small Businesses Top-Line Services Growth Invite North Potential Employee American Market Ideas CE Market 7.0% Operating Income Bottom-Line Profitability New Honor Provide Stores, Unique IT Customer End-to-End Customers Centricity, Supply 5.3% Solutions Services Chain Best Buy Canada Goal Fiscal 2006 Capabilities 22
  • 23. Your Question Cards 23