Best Buy 2008 Annual Report Download - page 100

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$ in millions, except per share amounts or as otherwise noted
$1 and $1, respectively. The leases include escalation The Audit Committee of our Board, comprised of all
clauses, and one provides for percentage rent based on independent directors, has responsibility for reviewing
gross sales. The leases expire in 2008 and 2011, related party transactions and presenting them to the
respectively, and have renewal options that could extend Board for approval.
the leases through 2021 and 2023, respectively, at our
option. We entered into the real estate leases with 12. Condensed Consolidating Financial
Mr. Schulze prior to 1990, and the Board negotiated and Information
approved the leases (with Mr. Schulze not voting). The Our convertible debentures, due in 2022, are jointly and
Board relied on one or more of its members who had no severally guaranteed by our wholly owned indirect
financial interest in the properties to review market subsidiary Best Buy Stores, L.P. Investments in subsidiaries
comparisons, look into alternative rental agreements and of Best Buy Stores, L.P., which have not guaranteed the
negotiate with Mr. Schulze. The Board determined that convertible debentures, are accounted for under the equity
these real estate leases were in our best interest and had method. We reclassified certain prior-year amounts as
terms that are competitive with terms available from described in Note 1, Summary of Significant Accounting
unaffiliated third parties. Policies. The aggregate principal balance and carrying
We also lease, on a non-exclusive basis, airplanes from a amount of our convertible debentures, which mature in
corporation owned by the Richard M. Schulze Revocable 2022, was $402 at March 1, 2008.
Trust, of which Mr. Schulze is a trustee. Periodically, the Additional information regarding the convertible
Board reviews the terms of the lease agreement to ensure debentures is included in Note 4, Debt.
that they are competitive with terms available from
We file a consolidated U.S. federal income tax return.
unaffiliated third parties. We pay an hourly rate for use of
Income taxes are allocated in accordance with our tax
the airplanes, without any required fractional ownership.
allocation agreement. U.S. affiliates receive no tax benefit
Our senior management generally use the airplanes when
for taxable losses, but are allocated taxes at the required
it is more economical or practical than flying commercial
effective income tax rate if they have taxable income.
airlines. The total amount we paid to the corporation for
use of the airplanes during fiscal 2008, 2007 and 2006
was $0.7, $0.4 and $0.5, respectively.
92