Best Buy 2013 Annual Report Download - page 57

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57
Interest Rate Risk
Short- and long-term debt
At February 2, 2013, our short- and long-term debt was comprised primarily of credit facilities, our 2013 Notes, our 2016
Notes and our 2021 Notes. We currently do not manage the interest rate risk on our debt through the use of derivative
instruments.
Our credit facilities' interest rates may be reset due to fluctuations in a market-based index, such as the federal funds rate,
LIBOR, or the base rate or prime rate of our lenders. A hypothetical 100-basis-point change in the interest rates on the
outstanding balance of our credit facilities at February 2, 2013, and March 3, 2012, would change our annual pre-tax earnings
by $6 million and $5 million, respectively.
There is no interest rate risk associated with our 2016 Notes or 2021 Notes, as the interest rates are fixed at 3.75% and 5.5%,
respectively, per annum. The interest rate on our 2013 Notes is subject to change based on our credit ratings and had a fixed
interest rate of 7.25% at February 2, 2013.
Long-term investments in debt securities
At February 2, 2013, our long-term investments in debt securities were comprised of ARS. These investments are not subject to
material interest rate risk. A hypothetical 100-basis-point change in the interest rate on such investments at February 2, 2013,
and March 3, 2012, would change our annual pre-tax earnings by less than $1 million and less than $1 million, respectively. We
do not manage interest rate risk on our investments in debt securities through the use of derivative instruments.
Other Market Risks
Investments in auction rate securities
At February 2, 2013, we held $21 million in investments in ARS, which includes a $2 million pre-tax temporary impairment,
compared to $82 million in investments in ARS and a $6 million pre-tax temporary impairment at March 3, 2012. Given
current conditions in the ARS market as described above in the Liquidity and Capital Resources section, included in Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations, of this Transition Report on
Form 10-K, we may incur additional temporary unrealized losses or other-than-temporary realized losses in the future if market
conditions were to persist and we were unable to recover the cost of our ARS investments. A hypothetical 100-basis-point loss
from the par value of these investments at February 2, 2013, and March 3, 2012, would result in an impairment of $1 million
and $1 million, respectively.
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