Best Buy 2007 Annual Report Download - page 90

$ in millions, except per share amounts
75
PART II
Convertible Debentures
In January 2002, we sold convertible subordinated
debentures having an aggregate principal amount of $402.
The proceeds from the offering, net of $6 in offering
expenses, were $396. The debentures mature in 2022 and
are callable at par, at our option, for cash on or after
January 15, 2007.
Holders may require us to purchase all or a portion of their
debentures on January 15, 2012, and January 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. We have the option
to settle the purchase price in cash, stock, or a combination
of cash and stock. On January 15, 2007, holders had the
option to require us to purchase all or a portion of their
debentures, 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. However, no debentures were so purchased.
The debentures become convertible into shares of our
common stock at a conversion 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 our common stock exceeds a specified price for 20
consecutive trading days in a 30-trading day period
preceding the date of conversion, if our credit rating falls
below specified levels, if the debentures are called for
redemption or if certain specified corporate transactions
occur. During a portion of fiscal 2007, our closing stock
price exceeded the specified stock price for more than 20
trading days in a 30-day trading period. Therefore, debenture
holders had the option to convert their debentures into shares
of our common stock. However, no debentures were so
converted. Due to changes in the price of our common
stock, the debentures were no longer convertible at
March 3, 2007, and have not been convertible through
May 1, 2007.
The debentures have an 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, 2011, and July 15, 2016. One
of our subsidiaries has guaranteed the convertible
debentures.
Credit Facilities
Our Domestic segment has a $200 bank revolving credit
facility which is guaranteed by certain of our subsidiaries.
The facility expires on December 22, 2009. Borrowings
under this facility are unsecured and bear interest at rates
specified in the credit agreement. We also pay certain
facility and agent fees. The agreement contains covenants
that require us to maintain certain financial ratios. We were
in compliance with all such covenants at March 3, 2007,
and February 25, 2006. There were no borrowings
outstanding under this facility for any period presented.
However, amounts outstanding under letters of credit
reduce amounts available under this facility. At March 3,
2007, and February 25, 2006, $200 and $199,
respectively, were available under this facility.
Our International segment has a $21 revolving demand
facility for our Canada operations, of which $17 is
available from February through July and $21 is available
from August through January of each year. There is no set
expiration date for this facility. There were no borrowings
outstanding under this facility at March 3, 2007, and
February 25, 2006. Outstanding letters of credit and letters
of guarantee reduced the amount available under this
facility to $16 and $17 at March 3, 2007, and
February 25, 2006, respectively. All borrowings under this
facility are made available at the sole discretion of the
lender and are payable on demand. Borrowings under this
facility are unsecured and bear interest at rates specified in
the agreement. The agreement for this facility contains
certain reporting and operating covenants. We were in
compliance with all such covenants at March 3, 2007, and
February 25, 2006.
Our International segment also has a $23 revolving
demand facility to finance working capital requirements for
our China operations. This facility may be terminated at any
time and is subject to review by June 30, 2007. At the
balance sheet date, there were $20 in borrowings
outstanding under this facility. Borrowings under this facility
are secured by a guarantee of Best Buy Co., Inc. and bear
interest at rates specified in the agreement. The agreement
for this facility contains certain reporting and operating
covenants. We were in compliance with all such covenants
at the balance sheet date.
Other
The fair value of debt approximated $683 and $693 at
March 3, 2007, and February 25, 2006, respectively,
based on the ask prices quoted from external sources,