Best Buy 2001 Annual Report Download - page 46

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47
$ in thousands, except per share amounts
4. Convertible Preferred Securities of Subsidiary
In N ovember 1994 , the Company and Best Buy Capital, L.P., a special-purpose limited partnership in which the Company was
the sole general partner, completed the public offering of 4.6 million convertible monthly income preferred securities with a liquidation
preference of $50 per security. The securities were convertible into shares of the Company’s common stock at the rate of 4.444 shares
per security (equivalent to a conversion price of $11.25 per share). In April 1998 , substantially all of the preferred securities were
converted into approximately 20.4 million shares of common stock. The remaining preferred securities were redeemed in June 1998
for cash in the amount of $671.
5. Shareholders’ Equity
Stock Options
The Company currently sponsors non-qualified stock option plans for employees and the Board of Directors. These plans provide
for the issuance of up to 48.8 million shares of common stock. Options may be granted only to employees or directors at option
prices not less than the fair market value of the Company’s common stock on the date of the grant. The options vest over a four-year
period and expire over a range of five to 10 years. In addition, two plans expired in fiscal 1998 that still have outstanding options.
At M arch 3, 2001, options to purchase 17.6 million shares were outstanding under all of these plans.
In connection with the Musicland acquisition, outstanding stock options held by certain employees of Musicland were converted
into options exercisable into the Company’s shares of common stock. These options were fully vested at the time of conversion and
expire based on the remaining option term of up to 10 years. These options did not reduce the shares available for grant under
any of the Company’s other option plans. The acquisition was accounted for as a purchase and, accordingly, the fair value of
these options was included as a component of the purchase price using the Black-Scholes option pricing model.
Best Buy Co., Inc.
N otes