Best Buy 2005 Annual Report Download - page 89

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$ in millions, except per share amounts
4. Debt
Feb. 26, Feb. 28,
2005 2004
Convertible subordinated debentures, unsecured, due 2022, initial interest rate 2.25% $402 $ 402
Convertible debentures, unsecured, due 2021, interest rate 2.75%(1) — 353
Master lease obligations, due 2006, interest rate 5.9% 55 58
Capital lease obligations, due 2005, interest rates ranging from 5.5% to 8.0% 13 16
Financing lease obligations, due 2008 to 2022, interest rates ranging from 5.6% to 6.0%(2) 107 —
Mortgage and other debt, interest rates ranging from 1.8% to 8.9% 23 21
Total debt 600 850
Less: current portion (72) (368)
Total long-term debt $528 $ 482
(1) In June 2004, we redeemed our convertible debentures due in 2021, for $355. No gain or loss was incurred.
(2) In fiscal 2005, we recorded $107 of financing leases as a result of our review of our lease accounting practices. See Note 7,
Leases, for further information.
The mortgage and other debt are secured by certain property and equipment with a net book value of $98 and $97 at
February 26, 2005, and February 28, 2004, respectively.
redemption or if certain specified corporate transactions
Convertible Debentures occur. At February 26, 2005, none of the criteria for
In January 2002, we sold convertible subordinated conversion had been met. The debentures have an initial
debentures having an aggregate principal amount of interest rate of 2.25% per annum. The interest rate may
$402. The proceeds from the offering, net of $6 in be reset, but not below 2.25% or above 3.25%, on
offering expenses, were $396. The debentures mature in July 15, 2006; July 15, 2011; and July 15, 2016. One
2022 and are callable at par, at our option, for cash on of our subsidiaries has guaranteed the convertible
or after January 15, 2007. debentures.
Holders may require us to purchase all or a portion of
Credit Facilities
their debentures on January 15, 2007; January 15,
2012; and January 15, 2017, at a purchase price equal We have a $200 bank revolving credit facility which is
to 100% of the principal amount of the debentures plus guaranteed by certain of our subsidiaries. The facility
accrued and unpaid interest up to but not including the expires on December 22, 2009. Borrowings under this
date of purchase. We have the option to settle the facility are unsecured and bear interest at rates specified
purchase price in cash, stock, or a combination of cash in the credit agreement. We also pay certain facility and
and stock. agent fees. The agreement contains covenants that require
us to maintain certain financial ratios. This facility
The debentures will be convertible into shares of our
replaced a $200 revolving credit facility which was to
common stock at a conversion rate of 14.4927 shares per
expire on March 21, 2005. As of February 26, 2005,
$0.001 principal amount of debentures, equivalent to an
and February 28, 2004, $139 and $197, respectively,
initial conversion price of $69.00 per share, if the closing
were available under these facilities. There were no
price of our common stock exceeds a specified price for a
borrowings outstanding under either of these facilities for
specified period of time, if our credit rating falls below
specified levels, if the debentures are called for
73