Best Buy 2011 Annual Report Download - page 92

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$ in millions, except per share amounts or as otherwise noted
3. Investments
Investments were comprised of the following:
February 26, February 27,
2011 2010
Short-term investments
Money market fund $2 $2
U.S. Treasury bills 20 —
Debt securities (auction rate securities) — 88
Total short-term investments $ 22 $ 90
Equity and other investments
Debt securities (auction rate securities) $110 $192
Marketable equity securities 146 77
Other investments 72 55
Total equity and other investments $328 $324
Debt Securities
Our debt securities are comprised of ARS. ARS were intended to behave like short-term debt instruments because their
interest rates reset periodically through an auction process, most commonly at intervals of seven, 28 and 35 days. The
auction process had historically provided a means by which we could rollover the investment or sell these securities at par
in order to provide us with liquidity as needed. As a result, we classify our investments in ARS as available-for-sale and
carry them at fair value.
In February 2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in
auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a
maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate
benchmarks. To date, we have collected all interest due on our ARS and expect to continue to do so in the future. Due to
persistent failed auctions, and the uncertainty of when these investments could be liquidated at par, we have classified all
of our investments in ARS as non-current assets within equity and other investments in our consolidated balance sheet at
February 26, 2011.
In October 2008, we accepted a settlement with UBS AG and its affiliates (collectively, ‘‘UBS’’) pursuant to which UBS
issued to us Series C-2 Auction Rate Securities Rights (‘‘ARS Rights’’). The ARS Rights provided us the right to receive the
full par value of our UBS-brokered ARS plus accrued but unpaid interest at any time between June 30, 2010, and July 2,
2012.
During fiscal 2011, we sold $170 of ARS at par, including all, or $88, of the UBS-brokered ARS discussed above. At
February 26, 2011, our entire remaining ARS portfolio, consisting of 22 investments in ARS having an aggregate par
value of $115, was subject to failed auctions. Subsequent to February 26, 2011, and through April 20, 2011, we sold
$14 of ARS at par.
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