Best Buy 2008 Annual Report Download - page 50

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$3.8 billion at the end of fiscal 2007. Working capital, the exceeded the aggregate amount of the bids. Substantially
excess of current assets over current liabilities, was all of our auction-rate securities portfolio at March 1,
$0.6 billion at the end of fiscal 2008, down from 2008, has been subject to failed auctions. For each
$2.8 billion at the end of fiscal 2007. The decreases in unsuccessful auction, the interest rate moves to a
cash and cash equivalents, short-term investments and maximum rate defined for each security. To date, we have
working capital were due primarily to the liquidation of a collected all interest due on our auction-rate securities and
substantial portion of our investment portfolio to repay expect to continue to do so in the future. Since March 1,
debt and to fund our ASR program. In addition, at 2008 and through April 25, 2008, we have liquidated
March 1, 2008, we reclassified $417 million (par value) $20 million of auction-rate securities at par value. At
of our short-term investments in auction-rate securities to April 25, 2008, our auction-rate securities portfolio was
non-current assets within equity and other investments in $397 million (par value). The principal associated with
our consolidated balance sheet given the uncertainty of failed auctions will not be accessible until successful
when these investments can be successfully liquidated at auctions occur, a buyer is found outside of the auction
par as a result of the current market failures for process, the issuers establish a different form of financing
auction-rate securities as described below. to replace these securities, or final payments come due
according to the contractual maturities of the debt issues,
In accordance with our investment policy, we invest with which range from 8 to 40 years.
issuers who have high-quality credit and limit the amount
of investment exposure to any one issuer. The primary We believe that the credit quality of our auction-rate
objective of our investment activities is to preserve securities is high and that we will ultimately recover all
principal and maintain a desired level of liquidity to meet amounts invested in these securities. We do not believe the
working capital needs. We seek to preserve principal and current illiquidity of these investments will have a material
minimize exposure to interest-rate fluctuations by limiting impact on our ability to execute our business plans as
default risk, market risk and reinvestment risk. All described below in the Outlook for Fiscal 2009 section of
investment debt securities we own are investment grade. this MD&A.
We do not have any investments in securities that are Our liquidity is also affected by restricted cash and
collateralized by assets that include mortgages or subprime investments in debt securities that are pledged as collateral
debt. The vast majority of our investments in auction-rate or restricted to use for vendor payables, general liability
securities are AAA/Aaa-rated and collateralized by student insurance, workers’ compensation insurance and warranty
loans, which are guaranteed 95% to 100% by the programs. Restricted cash and investments in debt
U.S. government. securities totaled $408 million and $382 million at
Until February 2008, the market for auction-rate securities March 1, 2008, and March 3, 2007, respectively, and
was highly liquid. Beginning February 11, 2008, a were included in other current assets or equity and other
substantial number of auctions began to fail as the investments.
amount of securities submitted for sale in those auctions
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for each of the past three
fiscal years ($ in millions):
2008 2007 2006
Total cash provided by (used in):
Operating activities $ 2,025 $1,762 $1,740
Investing activities 1,464 (780) (754)
Financing activities (3,378) (513) (619)
Effect of exchange rate changes on cash 122 (12) 27
Increase in cash and cash equivalents $ 233 $ 457 $ 394
42