Best Buy : Non-GAAP Reconciliations (

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 financial measures. Generally, presented non-GAAP financial measures include adjustments for items such as restructuring charges, price-fixing settlements, 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 financial measures as presented herein may not be comparable to similarly titled measures used by other companies.

				Three Months Ended								Three Months Ended
						October 29, 2022										October 30, 2021
	Domestic		International Consolidated Domestic International Consolidated
SG&A	$	1,791				$	150			$			1,941			$	1,962			$	171			$			2,133
% of revenue		18.3	%			19.1	%					18.3	%			17.9	%			18.5	%					17.9	%
Intangible asset amortization1		(21)					-							(21)					(20)					-							(20)
Acquisition-related transaction costs2		-					-							-					(5)					-							(5)
Non-GAAP SG&A	$		1,770				$	150			$			1,920			$	1,937			$	171			$			2,108

% of revenue		18.1 %		19.1 %		18.1 %		17.6 %		18.5 %		17.7 %
Operating income	$	332	$	33	$	365	$	609	$	61	$	670
% of revenue		3.4 %		4.2 %		3.4 %		5.5 %		6.6 %		5.6 %
Intangible asset amortization1		21		-		21		20		-		20
Acquisition-related transaction costs2		-		-		-		5		-		5
Restructuring charges3		25		1		26		-		(1)		(1)
Non-GAAP operating income	$	378	$	34	$	412	$	634	$	60	$	694
% of revenue		3.9 %		4.3 %		3.9 %		5.8 %		6.5 %		5.8 %
Effective tax rate						23.6 %						25.1 %
Intangible asset amortization1						0.1 %						(0.1)%
Restructuring charges3						0.1 %						-%
Non-GAAP effective tax rate						23.8 %						25.0 %
		Three Months Ended			Three Months Ended
			October 29, 2022				October 30, 2021
		Pretax						Pretax
		Earnings	Net of Tax5	Per Share		Earnings	Net of Tax5	Per Share
Diluted EPS					$	1.22					$	2.00
Intangible asset amortization1	$	21	$	15		0.08	$	20	$	14		0.06
Acquisition-related transaction costs2		-		-		-		5		5		0.02
Restructuring charges3		26		19		0.08		(1)		-		-
Non-GAAP diluted EPS					$	1.38					$	2.08

			Nine Months Ended						Nine Months Ended
				October 29, 2022							October 30, 2021
	Domestic	International Consolidated Domestic International Consolidated
Gross profit	$	6,427		$	545		$	6,972		$	7,703		$	624		$	8,327
% of revenue		22.0	%		23.7	%		22.1	%			23.5	%		24.4	%		23.5	%

Restructuring - inventory markdowns4		-		-		-		-		(6)		(6)
Non-GAAP gross profit	$	6,427	$	545	$	6,972	$	7,703	$	618	$	8,321
% of revenue		22.0 %		23.7 %		22.1 %		23.5 %		24.2 %		23.5 %
SG&A	$	5,264	$	449	$	5,713	$	5,647	$	483	$	6,130
% of revenue		18.0 %		19.5 %		18.1 %		17.2 %		18.9 %		17.3 %
Intangible asset amortization1		(65)		-		(65)		(60)		-		(60)
Acquisition-related transaction costs2		-		-		-		(5)		-		(5)
Non-GAAP SG&A	$	5,199	$	449	$	5,648	$	5,582	$	483	$	6,065
% of revenue		17.8 %		19.5 %		17.9 %		17.0 %		18.9 %		17.1 %
Operating income	$	1,104	$	94	$	1,198	$	2,100	$	136	$	2,236
% of revenue		3.8 %		4.1 %		3.8 %		6.4 %		5.3 %		6.3 %
Intangible asset amortization1		65		-		65		60		-		60
Acquisition-related transaction costs2		-		-		-		5		-		5
Restructuring charges3		59		2		61		(44)		5		(39)
Restructuring - inventory markdowns4		-		-		-		-		(6)		(6)
Non-GAAP operating income	$	1,228	$	96	$	1,324	$	2,121	$	135	$	2,256
% of revenue		4.2 %		4.2 %		4.2 %		6.5 %		5.3 %		6.4 %
Effective tax rate						21.4 %						18.1 %
Intangible asset amortization1						0.2 %						0.1 %
Restructuring charges3						0.1 %						(0.1)%
Non-GAAP effective tax rate						21.7 %						18.1 %
		Nine Months Ended			Nine Months Ended
			October 29, 2022				October 30, 2021
		Pretax						Pretax
		Earnings	Net of Tax5	Per Share		Earnings	Net of Tax5	Per Share
Diluted EPS					$	4.07					$	7.23
Intangible asset amortization1	$	65	$	49		0.22	$	60	$	44		0.17
Acquisition-related transaction costs2		-		-		-		5		5		0.02
Restructuring charges3		61		46		0.20		(39)		(27)		(0.11)
Restructuring - inventory markdowns4		-		-		-		(6)		(6)		(0.02)
Non-GAAP diluted EPS					$	4.49					$	7.29

1. Represents the non-cash amortization of definite-lived intangible assets associated with acquisitions, including customer relationships, tradenames and developed technology assets.
2. Represents charges associated with acquisition-related transaction and due diligence costs, primarily comprised of professional fees.
3. Represents charges primarily related to employee termination benefits in the Domestic segment associated with an enterprise- wide initiative that commenced in Q2 FY23 to better align the company's spending with critical strategies and operations, as well
   as to optimize its cost structure, for the periods ended October 29, 2022. Represents adjustments to previously planned organizational changes and higher-than-expected retention rates in the Domestic segment, and charges and subsequent adjustments associated with the exit from operations in Mexico in the International segment, for the periods ended October 30, 2021.
4. Represents inventory markdown adjustments recorded within cost of sales associated with the exit from operations in Mexico for the nine months ended October 30, 2021.
5. The non-GAAP adjustments primarily relate to the U.S. and Mexico. As such, the income tax charge is calculated using the statutory tax rate of 24.5% for all U.S. non-GAAP items for all periods presented. There is no income tax charge for Mexico non-GAAP items, as there was no tax benefit recognized on these expenses in the calculation of GAAP income tax expense.

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Return on Assets and Non-GAAP Return on Investment

The tables below provide calculations of return on assets ("ROA") (GAAP financial measure) and non-GAAP return on investment ("ROI") (non-GAAP financial measure) for the periods presented. The company believes ROA is the most directly comparable financial measure to ROI. Non-GAAP ROI is defined as non-GAAP adjusted operating income after tax divided by average invested operating assets. All periods presented below apply this methodology consistently. The company believes non- GAAP ROI is a meaningful metric for investors to evaluate capital efficiency because it measures how key assets are deployed by adjusting operating income and total assets for the items noted below. This method of determining non-GAAP ROI may differ from other companies' methods and therefore may not be comparable to those used by other companies.

Return on Assets ("ROA")		October 29, 20221			October 30, 20211
Net earnings	$	1,550				$		2,644
Total assets		17,005						19,125
ROA		9.1	%				13.8	%
Non-GAAP Return on Investment ("ROI")		October 29, 20221			October 30, 20211
Numerator
Operating income	$	2,001				$		3,269
Add: Non-GAAP operating income adjustments2		159						148
Add: Operating lease interest3		112						108
Less: Income taxes4		(557)						(864)
Add: Depreciation		816						775
Add: Operating lease amortization5		652						661
Adjusted operating income after tax	$	3,183				$		4,097
Denominator
Total assets	$	17,005				$		19,125
Less: Excess cash6		(692)						(3,692)
Add: Accumulated depreciation and amortization7		5,800						7,090
Less: Adjusted current liabilities8		(9,525)						(10,095)
Average invested operating assets	$	12,588				$		12,428
Non-GAAP ROI		25.3	%				33.0	%

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 trailing 12 months ended as of each of the balance sheet dates.
2. Non-GAAPoperating income adjustments include continuing operations adjustments for restructuring charges, intangible asset amortization, acquisition-related transaction costs and price-fixing settlements. Additional details regarding these adjustments are included in the Reconciliation of Non-GAAP Financial Measures schedule within the company's quarterly earnings releases.
3. 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. The add-back is approximated by multiplying average operating lease assets by 4%, which approximates the interest rate on the company's operating lease liabilities.
4. Income taxes are approximated by 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 of 24.5% for the periods presented.
5. Operating lease amortization represents operating lease cost less operating lease interest. Operating lease cost includes short-term leases, which are immaterial, and excludes variable lease costs as these costs are not included in the operating lease asset balance.
6. Excess cash represents the amount of cash, cash equivalents and short-term investments greater than $1 billion, which approximates the amount of cash the company believes is necessary to run the business and may fluctuate over time.
7. Accumulated depreciation and amortization represents accumulated depreciation related to property and equipment and accumulated amortization related to definite-lived intangible assets.
8. Adjusted current liabilities represent total current liabilities less short-term debt and the current portions of operating lease liabilities and long-term debt.

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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 financial measures. Generally, presented non-GAAP financial 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 financial measures as presented herein may not be comparable to similarly titled measures used by other companies.

					Three Months Ended								Three Months Ended
							October 31, 2020									November 2, 2019
			Domestic International Consolidated Domestic International Consolidated
Gross profit		$	2,604				$			191				$		2,795				$	2,181				$			180				$		2,361
% of revenue				24.0 %					19.0 %				23.6 %				24.3 %					22.5 %				24.2 %
Restructuring - inventory markdowns1				-							36						36						-							-						-
Non-GAAP gross profit	$	2,604				$			227				$		2,831			$	2,181				$			180				$		2,361
% of revenue				24.0	%					22.6	%				23.9	%				24.3	%					22.5	%				24.2	%
SG&A		$	1,948				$			175				$		2,123				$	1,800				$			173				$		1,973
% of revenue				18.0 %					17.4 %				17.9 %				20.1 %					21.6 %				20.2 %
Intangible asset amortization2				(20)							-						(20)						(18)							-						(18)
Non-GAAP SG&A	$	1,928				$			175				$		2,103			$	1,782				$			173				$		1,955
% of revenue				17.8	%					17.4	%				17.7	%				19.9	%					21.6	%				20.0	%
Operating income (loss)		$	612				$			(51)				$		561				$	388				$			7				$		395
% of revenue				5.6 %					(5.1)%				4.7 %				4.3 %					0.9 %				4.0 %
Restructuring - inventory markdowns1				-							36						36						-							-						-
Intangible asset amortization2				20							-						20						18							-						18
Restructuring charges3				44							67						111						(7)							-						(7)
Non-GAAP operating income	$	676				$			52				$		728			$	399				$			7				$		406
% of revenue				6.2	%					5.2	%				6.1	%				4.5	%					0.9	%				4.2	%
Effective tax rate																	29.6	%																	24.8	%
Intangible asset amortization2																	(1.5)%																	0.1 %
Restructuring charges3																	(3.2)	%																	(0.1)	%
Non-GAAP effective tax rate																	24.9 %																	24.8 %
						Three Months Ended									Three Months Ended
								October 31, 2020										November 2, 2019
				Pretax																Pretax
				Earnings			Net of Tax4		Per Share				Earnings			Net of Tax4		Per Share
GAAP diluted EPS																$	1.48																		$	1.10
Restructuring - inventory markdowns1	$	36		$	36				0.14			$	-			$	-				-
Intangible asset amortization2				20					15				0.06						18					14				0.05
Restructuring charges3				111					100				0.38						(7)					(5)				(0.02)
Gain on investments, net				-					-				-					(1)					(1)				-
Non-GAAP diluted EPS															$	2.06																	$	1.13

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							Nine Months Ended										Nine Months Ended
								October 31, 2020										November 2, 2019
			Domestic International Consolidated Domestic International Consolidated
Gross profit		$		6,509				$				521				$			7,030				$		6,303				$				510				$			6,813
% of revenue					23.3 %							21.4 %						23.2 %					24.0 %							23.4 %						24.0 %
Restructuring - inventory markdowns1					-									36								36							-									-								-
Non-GAAP gross profit	$		6,509				$				557				$			7,066			$		6,303				$				510				$			6,813
% of revenue					23.3	%							22.9	%						23.3	%					24.0	%							23.4	%						24.0	%
SG&A		$		5,087				$				473				$			5,560				$		5,233				$				497				$			5,730
% of revenue					18.2 %							19.4 %						18.3 %					19.9 %							22.8 %						20.1 %
Intangible asset amortization2					(60)									-								(60)							(53)									-								(53)
Acquisition-related transaction costs2					-									-								-							(3)									-								(3)
Non-GAAP SG&A		$		5,027				$				473				$			5,500				$		5,177				$				497				$			5,674
% of revenue					18.0 %							19.4 %						18.1 %					19.7 %							22.8 %						19.9 %
Operating income (loss)	$		1,377				$				(19)			$			1,358			$		1,029				$				13				$			1,042
% of revenue					4.9	%							(0.8)	%						4.5	%					3.9	%							0.6	%						3.7	%
Restructuring - inventory markdowns1					-									36								36							-									-								-
Intangible asset amortization2					60									-								60							53									-								53
Acquisition-related transaction costs2					-									-								-							3									-								3
Restructuring charges3					45									67								112							41									-								41
Non-GAAP operating income	$		1,482				$				84				$			1,566			$		1,126				$				13				$			1,139
% of revenue					5.3	%							3.5	%						5.2	%					4.3	%							0.6	%						4.0	%
Effective tax rate																						26.4	%																						22.5	%
Intangible asset amortization2																						(1.1)%																						0.1 %
Restructuring charges3																						(0.8)	%																						-	%
Non-GAAP effective tax rate																						24.5 %																						22.6 %
							Nine Months Ended										Nine Months Ended
									October 31, 2020											November 2, 2019
					Pretax																					Pretax
					Earnings					Net of Tax4				Per Share					Earnings					Net of Tax4				Per Share
GAAP diluted EPS																				$	3.74																						$	2.96
Restructuring - inventory markdowns1	$	36		$	36						0.13			$	-				$	-						-
Intangible asset amortization2					60							45						0.17							53							40						0.15
Acquisition-related transaction costs2					-							-						-					3							2						-
Restructuring charges3					112							101						0.39							41							32						0.12
Gain on investments, net					-							-						-					(1)							(1)						-
Non-GAAP diluted EPS																			$	4.43																						$	3.23

1. Represents inventory markdowns recorded within cost of sales associated with the decision to exit operations in Mexico.
2. Represents charges associated with acquisitions, including: (1) the non-cash amortization of definite-lived intangible assets, including customer relationships, tradenames and developed technology; and (2) acquisition-related transaction costs primarily comprised of professional fees.
3. Represents charges related to asset impairments and termination benefits associated with the decision to exit operations in Mexico and other actions to better align the company's organizational structure with its strategic focus for the periods ended October 31, 2020, and charges and subsequent adjustments related to termination benefits associated with U.S. retail operating model changes for the periods ended November 2, 2019.
4. The non-GAAP adjustments relate to the U.S. and Mexico. As such, the income tax charge is calculated using the statutory tax rate of 24.5% for all U.S. non-GAAP items for all periods presented. There is no income tax charge for the Mexico non-GAAP items, as there was no tax benefit recognized on these expenses in the calculation of GAAP income tax expense.

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