Best Buy 2007 Annual Report Download - page 58

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43
PART II
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):
2007 2006
Debt (including current portion) $ 650 $ 596
Capitalized operating lease obligations (8 times rental expense)(1) 5,401 4,413
Total debt (including capitalized operating lease obligations) $ 6,051 $ 5,009
Debt (including current portion) $ 650 $ 596
Capitalized operating lease obligations (8 times rental expense)(1) 5,401 4,413
Total shareholders’ equity 6,201 5,257
Adjusted capitalization $12,252 $10,266
Debt-to-capitalization ratio 9% 10%
Adjusted debt-to-capitalization ratio (including capitalized operating lease obligations) 49% 49%
(1) The multiple of eight times rental expense used to calculate our capitalized operating lease obligations total is the multiple used for the
retail sector by one of the nationally recognized credit rating agencies that rate our creditworthiness.
Contractual Obligations
The following table presents information regarding our contractual obligations by fiscal year ($ in millions):
Payments Due by Period
Contractual Obligations Total
Less Than
1 Year 1-3 Years 3-5 Years
More Than
5 Years
Short-term debt obligations $ 41 $ 41 $ — $ — $ —
Long-term debt obligations 414 2 9 403 —
Capital lease obligations 24 3 6 2 13
Financing lease obligations 171 14 30 33 94
Interest payments 208 25 38 33 112
Operating lease obligations(1) 6,668 741 1,387 1,224 3,316
Purchase obligations(2) 2,198 1,113 775 291 19
Deferred compensation(3) 75(3)
Total $9,799 $1,939 $2,245 $1,986 $3,554
Note: For additional information refer to Note 5, Debt; Note 8, Leases; and Note 12, Contingencies and Commitments,intheNotesto
Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
(1) Operating lease obligations do not include payments to landlords covering real estate taxes and common area maintenance. These
charges, if included, would increase total operating lease obligations by $1.6 billion at March 3, 2007.
(2) Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding and specify all
significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the
approximate timing of the transaction. Purchase obligations do not include agreements that are cancelable without penalty.
Additionally, although they are not legally binding agreements, we included open purchase orders in the table above. Substantially all
open purchase orders are fulfilled within 30 days.
(3) Included in other long-term liabilities on our consolidated balance sheet at March 3, 2007, was a $75 million obligation for deferred
compensation. As the specific payment dates for the deferred compensation are unknown, the related balances have not been
reflected in the “Payments Due by Period” section of the above table.