Best Buy 2008 Annual Report Download - page 55

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lease the location, and the alternative that results in the capitalized operating lease obligations, is our
highest return to our shareholders. debt-to-capitalization ratio. Our debt-to-capitalization ratio
excludes capitalized operating lease obligations in both
The most directly comparable GAAP financial measure to the numerator and denominator of the calculation.
our adjusted debt-to-capitalization ratio, including
The following table presents a reconciliation of the numerator and denominator used in the calculation of our adjusted
debt-to-capitalization ratio, including capitalized operating lease obligations ($ in millions):
2008 2007
Debt (including current portion) $ 816 $ 650
Capitalized operating lease obligations (8 times rental expense)(1) 5,902 5,401
Total debt (including capitalized operating lease obligations) $ 6,718 $ 6,051
Debt (including current portion) $ 816 $ 650
Capitalized operating lease obligations (8 times rental expense)(1) 5,902 5,401
Total shareholders’ equity 4,484 6,201
Adjusted capitalization $11,202 $12,252
Debt-to-capitalization ratio 15% 9%
Adjusted debt-to-capitalization ratio (including capitalized operating lease obligations) 60% 49%
(1) The multiple of eight times rental expense used to calculate our total capitalized operating lease obligations is the multiple used for
the retail sector by one of the nationally recognized credit rating agencies that rate our creditworthiness.
leases in accordance with GAAP. A summary of our
Off-Balance-Sheet Arrangements and
operating lease obligations by fiscal year is included in the
Contractual Obligations
‘‘Contractual Obligations’’ section below. Additional
Other than operating leases, we do not have any information regarding our operating leases is available in
off-balance-sheet financing. We have financed a portion Item 2, Properties, and Note 6, Leases, of the Notes to
of our new-store development program through Consolidated Financial Statements, included in Item 8,
sale-leaseback transactions. These transactions involve Financial Statements and Supplementary Data, of this
selling stores to unrelated parties and then leasing the Annual Report on Form 10-K.
stores back. The leases are accounted for as operating
The following table presents information regarding our contractual obligations by fiscal year ($ in millions):
Payments Due by Period
Less Than More Than
Contractual Obligations Total 1 Year 1-3 Years 3-5 Years 5 Years
Short-term debt obligations $ 156 $ 156 $ — $ — $ —
Long-term debt obligations 412 — 9 403 —
Capital lease obligations 51 14 21 2 14
Financing lease obligations 197 18 38 42 99
Interest payments 217 31 47 36 103
Operating lease obligations(1) 6,832 772 1,477 1,301 3,282
Purchase obligations(2)(3) 2,333 1,311 930 89 3
Unrecognized tax benefits(4) 261
Deferred compensation(5) 74
Total $10,533 $2,302 $2,522 $1,873 $3,501
Note: For additional information refer to Note 4, Debt; Note 6, Leases; Note 8, Income Taxes and Note 10, Contingencies and
Commitments, in the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of
this Annual Report on Form 10-K.
47