Best Buy 2006 Annual Report Download - page 85

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$ in millions, except per share amounts
71
PART II
4. Debt
Long-termdebt consists of the following:
Feb. 25,
2006
Feb. 26,
2005
Convertible subordinated debentures, unsecured, due 2022, initial interest rate 2.25% $402 $ 402
Financing lease obligations, due 2009 to 2026, interest rates ranging from 3.0% to 6.1% 157 107
Capital lease obligations, due 2007 to2026, interest rates ranging from 1.8% to 8.9% 27 13
Other debt, due 2010, interest rates ranging from 8.4% to 8.8% 10 23
Master lease obligations, due 2006, interest rate5.9% — 55
Total debt 596 600
Less: current portion(1)(418 ) (72)
Total long-termdebt $178 $ 528
(1)Since holders of our debentures due in 2022 may require us to purchase all or a portion of their debentures on January 15, 2007, we
have classified our debentures in the current portion of long-term debt at February 25, 2006.
Lease obligations and other debt are secured by certain property and equipment with a net book valueof $41 and $98 at
February 25, 2006, and February 26, 2005, respectively.
Convertible Debentures
In January 2002, we soldconvertible subordinated
debentures having an aggregate principal amount of $402.
The proceedsfrom the offering, net of $6 in offering
expenses, were $396. The debentures maturein 2022and
are callable at par, at our option, for cash on or after
January 15, 2007.
Holders may require us to purchaseall or a portion of their
debentures on January 15, 2007; January 15, 2012; and
January 15, 2017, at apurchase 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. We have the option to settle the purchase price in
cash, stock, or a combination of cash and stock. Since
holders may require usto purchase all or a portion of their
debentures on January15, 2007, we have classified our
debentures in the current portion of long-term debt at
February 25, 2006.
The debentures will be convertible into shares of our
common stock at aconversion rate of 21.7391 shares per
$0.001 principal amount of debentures, equivalent to an
initial conversion price of $46.00 per share, if the closing
price of ourcommon stock exceeds aspecifiedprice for 20
consecutive trading days in a 30-tradingday period
preceding the date of conversion,if our credit rating falls
below specifiedlevels, if the debentures are calledfor
redemption or if certain specified corporate transactions
occur. At February 25, 2006, none of the criteria for
conversion had beenmet. Since March 31, 2006, our
closing stock price has exceeded the specified stock price
for more than 20 days, therefore, holders currently have the
option to convert their debentures into our common stock.
As of May9, 2006, no debentures had been converted to
shares of our common stock.
The debentures have an initial interest rate of 2.25% per
annum. The interest rate may be reset, but not below 2.25%
or above 3.25%, on July 15, 2006; July 15, 2011; and
July 15, 2016. One of our subsidiaries has guaranteedthe
convertible debentures.
Credit Facilities
We have a $200 bank revolving credit facility whichis
guaranteed by certain of our subsidiaries. The facility
expires on December 22, 2009. Borrowingsunder this
facility are unsecured and bear interest at rates specified in
the credit agreement. We also paycertainfacility and agent
fees. The agreement contains covenants that require us to
maintain certain financial ratios. This facility replaced a