Best Buy 2000 Annual Report Download - page 40

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38
$ in thousands, except per share amounts
2. Working Capital Financing
Credit Agreement
The Company has a credit agreement (the Agreement) that provides a bank revolving credit facility (the
Facility) under which the Company can borrow up to $100,000. The Agreement expires on June 30, 2002.
Borrowings under the Facility are unsecured. Interest on borrowings is at rates specified in the Agreement,
as elected by the Company. The Company also pays certain commitment and agent fees.
The Agreement contains covenants that require maintenance of certain financial ratios, minimum consoli-
dated net worth and limits owned real estate and capital expenditures. The Agreement also requires that
the Company has no outstanding principal balance for a period not less than 30 consecutive days, net of
cash and cash equivalents. There were no borrowings under the Facility during fiscal years 2000 or 1999.
Inventory Financing
The Company has a $200,000 inventory financing credit line, which increases to $325,000 on a seasonal
basis. Borrowings are collateralized by a security interest in certain merchandise inventories approximating
the outstanding borrowings. The terms of this arrangement allow the Company to extend the due dates of
invoices beyond their normal terms. The amounts extended generally bear interest at a rate approximating the
prime rate. No amounts were extended under this line in fiscal years 2000 or 1999. The line has provisions
that give the financing source a portion of the cash discounts provided by the manufacturers.
3. Long-Term Debt
Capital Leases and Other Loans
As of February 26, 2000, long-term debt consisted of capital leases and other loans bearing interest at rates
ranging from 5.25% to 9.41%. These obligations are secured by certain property and equipment with a net
book value of $35,600 and $42,900 at February 26, 2000 and February 27, 1999, respectively.
During fiscal 2000, 1999 and 1998, interest paid (net of amounts capitalized) totaled $5,300, $23,800 and
$37,700, respectively. The fair value of long-term debt approximates the carrying value.
During fiscal 2000, 1999 and 1998, interest expense totaled $5,100, $19,400 and $37,200, respectively, and
is included in net interest income (expense).
Notes to Consolidated Financial Statements