Best Buy 2005 Annual Report Download - page 88

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$ in millions, except per share amounts
temporary, the cost basis of the investment is written down
3. Investments in Debt Securities to fair value, and the amount of the write-down is
Our short-term and long-term investments are comprised included in the determination of income.
of municipal and United States government debt During our annual review in the fourth quarter of fiscal
securities. In accordance with SFAS No. 115, Accounting 2005, we reclassified our auction-rate debt securities from
for Certain Investments in Debt and Equity Securities, and cash and cash equivalents to short-term investments or
based on our ability to market and sell these instruments, long-term investments, as appropriate, for all periods
we classify auction-rate debt securities and other presented. The amortized cost of the securities reclassified
investments in debt securities as available-for-sale and for fiscal 2004 was $2,355. The unrealized gain on the
carry them at amortized cost. Auction-rate debt securities securities in conjunction with this reclassification was not
are long-term bonds that are similar to short-term significant.
instruments because their interest rates are reset
periodically and investments in these securities can be We also revised the presentation in the consolidated
sold for cash on the auction date. We classify auction-rate statements of cash flows for the years ended February 28,
debt securities as short-term or long-term investments 2004, and March 1, 2003, to reflect the gross purchases
based on the reset dates. and sales of these securities as investing activities rather
than as a component of cash and cash equivalents, which
In accordance with our investment policy, we place our is consistent with the presentation for the fiscal year ended
investments in debt securities with issuers who have February 26, 2005.
high-quality credit and limit the amount of investment
exposure to any one issuer. We seek to preserve principal The carrying amount of our investments in debt securities
and minimize exposure to interest-rate fluctuations by approximated fair value at February 26, 2005, and
limiting default risk, market risk and reinvestment risk. February 28, 2004, respectively, due to the rapid
turnover of our portfolio and the highly liquid nature of
On an annual basis, we review the key characteristics of these investments. Therefore, there were no significant
our debt securities portfolio and their classification in unrealized holding gains or losses.
accordance with GAAP. If a decline in the fair value of a
security is deemed by management to be other than
The following table presents the amortized principal amounts, related weighted average interest rates, maturities and
major security types for our investments in debt securities:
February 26, 2005 February 28, 2004
Amortized Weighted Amortized Weighted
Principal Average Principal Average
Amount Interest Rate Amount Interest Rate
Short-term investments (less than one year) $2,878 3.22% $2,355 1.59%
Long-term investments (one to three years) 148 3.73% — —
Total $3,026 $2,355
Municipal debt securities $3,019 $2,355
Debt securities issued by U.S. Treasury and other U.S.
government entities 7 —
Total $3,026 $2,355
72