Best Buy Authorizes $5.5 Billion Share Repurchase Program and 30% Dividend Increase

Best Buy Co., Inc. (NYSE:BBY) announced a new $5.5 billion share repurchase program, which replaces the current $1.5 billion program.

In addition, the company increased its dividend by 30 percent to 13 cents per common share. The company cited anticipated future earnings and cash flow, its strong balance sheet, and the planned capital needed for the company’s growth plans as factors in the announcement.

Best Buy has used a portion of this new share repurchase program immediately to execute an accelerated share repurchase (ASR) program with Goldman Sachs for the repurchase of $3.0 billion of common stock no later than February 2008. Combined with the $462 million of share repurchases to date, the company will have purchased nearly $3.5 billion of stock in fiscal 2008.The company expects to fund the $3.0 billion ASR program through cash, short-term investments and interim borrowing. The remaining $2.5 billion available under the new share repurchase program is expected to be utilized subject to business results, market conditions and Board approval.

Best Buy Co., Inc. sells consumer electronics, home-office products, entertainment software, appliances and related services through approximately 1,200 retail stores across the United States, throughout Canada and in China.

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PAYOUT YIELD ANALYSIS

With 479 million shares outstanding, the $5.5 billion repurchase will yield $11.48 per share if completed in the next 12 months. The annualized dividend of $0.52 combined with the $11.48 from the repurchase program will result in a Total Payout of $12.00 per share over the next 4 quarters. At $47 per share, the Total Payout Yield is projected to be 25.5%.

- Payout Yield Staff

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