Best Buy 2002 Annual Report Download - page 45

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Best Buy Co., Inc. 43
Convertible Debentures
In January 2002, we sold, in a private offering, convert-
ible subordinated debentures having an aggregate princi-
pal amount of $402. The proceeds from the offering, net
of $6 in offering expenses, were $396. The debentures
mature in 20 years and are callable at our option on or
after Jan. 15, 2007. Holders may require us to purchase
all or a portion of their debentures on Jan. 15, 2007;
Jan. 15, 2012; and Jan. 15, 2017, at a purchase price
equal to 100% of the principal amount of the debentures
plus accrued and unpaid interest up to but not including
the date of purchase. The debentures will be convertible
into shares of our common stock at a conversion rate of
14.4927 shares per $0.001 principal amount of
debentures, equivalent to an initial conversion price of
$69.00 per share, if the closing price of our common
stock exceeds a specified price for a specified period of
time, or otherwise upon the occurrence of certain events.
The debentures have an initial interest rate of 2.25%. The
interest rate may be reset, but will not fall below 2.25% or
above 3.25%, on July 15, 2006; July 15, 2011; and July
15, 2016. The debentures are guaranteed on an unse-
cured and subordinated basis by Best Buy Stores, L.P., our
wholly owned indirect subsidiary. On Feb. 28, 2002, we
filed a Registration Statement on Form S-3 with the
Securities and Exchange Commission to register the
debentures, the guarantee and the underlying shares of
common stock. As of May 1, 2002, the Registration
Statement had not yet been declared effective.
3. Debt
March 2, March 3,
2002 2001
Convertible debentures, unsecured, due 2021,
initial interest rate 2.75% $341 $ —
Convertible subordinated debentures, unsecured, due 2022,
initial interest rate 2.25% 402 —
Subordinated notes, face amount $110, unsecured, due 2003,
interest rate 9.0%, effective rate 8.9% —110
Senior subordinated notes, face amount $150, unsecured, due 2008,
interest rate 9.9%, effective rate 8.5% 5161
Capital lease obligations, due 2006, interest rate 5.9% 39 —
Mortgage and other debt, interest rates ranging from 4.0% to 9.2% 33 25
Total debt 820 296
Less: current portion (7) (115)
Long-term debt $813 $181
The mortgage and other debt are secured by certain property and equipment with a net book value of $43 and $44
at March 2, 2002, and March 3, 2001, respectively.
$ in millions, except per share amounts