Best Buy 2012 Annual Report Download - page 50

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assurance that we will continue to generate cash flows at or above current levels or that we will be able to maintain our ability
to borrow under our existing credit facilities or obtain additional financing, if necessary, on favorable terms.
We have a $1.0 billion 364-Day senior unsecured revolving credit facility (the "364-Day Facility Agreement") and a $1.5
billion five-year senior unsecured revolving credit facility (the "Five-Year Facility Agreement" and, collectively the
"Agreements") with a syndicate of banks, with no borrowings outstanding on the Agreements at March 3, 2012. The 364-Day
Facility Agreement expires in October 2012 (subject to a one-year term-out option) and the Five-Year Facility Agreement
expires in October 2016. At April 26, 2012, we had no borrowings outstanding under the Agreements.
We have $794 million available (based on the exchange rate in effect as of the end of fiscal 2012) under unsecured revolving
credit facilities related to our International segment operations, of which $480 million was outstanding at March 3, 2012. Refer
to Note 8, Debt, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and
Supplementary Data, of this Annual Report on Form 10-K for further information about our credit facilities.
Our ability to access our credit facilities is subject to our compliance with the terms and conditions of our facilities, including
financial covenants. The financial covenants require us to maintain certain financial ratios. At March 3, 2012, we were in
compliance with all such financial covenants. If an event of default were to occur with respect to any of our other debt, it would
likely constitute an event of default under our credit facilities as well.
An interest coverage ratio represents the ratio of pre-tax earnings before fixed charges (interest expense and the interest portion
of rent expense) to fixed charges. Our interest coverage ratio, calculated as reported in Exhibit No. 12.1 of this Annual Report
on Form 10-K, was 3.14 and 6.51 in fiscal 2012 and 2011, respectively.
Our credit ratings and outlooks at April 26, 2012, are summarized below. In June 2011, Fitch Ratings Ltd. ("Fitch") lowered our
rating from BBB+ with a negative outlook to BBB– with a stable outlook. In April 2012, Fitch reaffirmed our BBB– rating but
lowered their outlook to negative, citing comparable store sales pressures and competition in the consumer electronics industry.
These changes had no material impact on our current borrowing costs, and we believe they will not have a material impact on
our ability to raise further debt financing in the future or the prospective borrowing costs associated with such debt. The ratings
and outlooks issued by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Rating Services ("Standard &
Poor's") are consistent with the ratings and outlooks reported in our Annual Report on Form 10-K for the fiscal year ended
February 26, 2011.
Rating Agency Rating Outlook
Fitch BBB– Negative
Moody's Baa2 Stable
Standard & Poor's BBB– Stable
Credit rating agencies review their ratings periodically and, therefore, the credit rating assigned to us by each agency may be
subject to revision at any time. Accordingly, we are not able to predict whether our current credit ratings will remain as
disclosed above. Factors that can affect our credit ratings include changes in our operating performance, the economic
environment, conditions in the retail and consumer electronics industries, our financial position, and changes in our business
strategy. If further changes in our credit ratings were to occur, they could impact, among other things, our future borrowing
costs, access to capital markets, vendor financing terms and future new-store leasing costs.
Auction Rate Securities and Restricted Cash
At March 3, 2012, and February 26, 2011, we had $82 million and $110 million, respectively, invested in ARS recorded at fair
value within Equity and other investments (long-term) in our Consolidated Balance Sheets. The majority of our ARS portfolio
is AAA/Aaa-rated and collateralized by student loans, which are guaranteed 95% to 100% by the U.S. government. Due to the
auction failures that began in February 2008, we have been unable to liquidate some of our ARS. The investment principal
associated with our ARS subject to failed auctions will not be accessible until successful auctions occur, a buyer is found
outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments
are due according to the contractual maturities of the debt issues, which range from four to 30 years. We do not intend to sell
our remaining ARS until we can recover the full principal amount through one of the means described above. In addition, we
do not believe it is more likely than not we would be required to sell our remaining ARS until we can recover the full principal
amount based on our other sources of liquidity.