Best Buy 2011 Annual Report Download - page 54

Convertible Debentures
In January 2002, we sold convertible subordinated debentures having an aggregate principal amount of $402 million.
The proceeds from the offering, net of $6 million in offering expenses, were $396 million. On January 15, 2007, the
debentures became callable at par, at our option, for cash. The debentures mature in 2022.
Holders may require us to purchase all or a portion of the debentures on January 15, 2012, and again on January 15,
2017, if not previously redeemed, at a purchase price equal to 100% of the principal amount of the debentures plus
accrued and unpaid interest up to but not including the date of purchase. We have the option to settle the purchase price
in cash, stock, or a combination of cash and stock. Since holders may require us to purchase all or a portion of the
debentures on January 15, 2012, we classified the debentures in the current portion of long-term debt at February 26,
2011.
The debentures become convertible into shares of our common stock at a conversion rate of 21.7391 shares per $1,000
principal amount of debentures, equivalent to an initial conversion price of $46.00 per share, if the closing price of our
common stock exceeds a specified price for 20 consecutive trading days in a 30-trading day period preceding the date of
conversion, if our credit rating falls below specified levels, if the debentures are called for redemption or if certain
specified corporate transactions occur. The debentures were not convertible at February 26, 2011, and have not been
convertible through April 20, 2011.
The debentures have an interest rate of 2.25% per annum. The interest rate may be reset, but not below 2.25% or above
3.25%, on July 15, 2011, and July 15, 2016. One of our subsidiaries has guaranteed the debentures.
2016 Notes and 2021 Notes
Subsequent to fiscal 2011, we sold $350 million principal amount of notes due March 15, 2016 (the ‘‘2016 Notes’’) and
$650 million principal amount of notes due March 15, 2021 (the ‘‘2021 Notes’’, and together with the 2016 Notes, the
‘‘Notes’’). The 2016 Notes bear interest at a fixed rate of 3.75% per year, while the 2021 Notes bear interest at a fixed
rate of 5.50% per year. Interest on the Notes is payable semi-annually on March 15 and September 15 of each year,
beginning September 15, 2011. The Notes were issued at a slight discount to par, which when coupled with underwriting
discounts of $6 million, resulted in net proceeds from the sale of the Notes of $990 million.
We may redeem some or all of the Notes at any time at a redemption price equal to the greater of (i) 100% of the
principal amount of the Notes redeemed and (ii) the sum of the present values of each remaining scheduled payment of
principal and interest on the Notes redeemed discounted to the redemption date on a semiannual basis, plus accrued and
unpaid interest on the principal amount of the Notes to the redemption date as described in the indenture (including the
supplemental indenture) relating to the Notes. Furthermore, if a change of control triggering event occurs, unless we have
previously exercised our option to redeem the Notes, we will be required to offer to purchase the Notes at a price equal
to 101% of the principal amount of the Notes, plus accrued and unpaid interest to the purchase date.
The Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and
unsubordinated debt. The Notes contain covenants that, among other things, limit our ability and the ability of our North
American subsidiaries to incur debt secured by liens or to enter into sale and lease-back transactions.
Other
At the end of fiscal 2011, we had $170 million outstanding under financing lease obligations.
Share Repurchases and Dividends
From time to time, we repurchase our common stock in the open market pursuant to programs approved by our Board.
We may repurchase our common stock for a variety of reasons, such as acquiring shares to offset dilution related to
equity-based incentives, including stock options and our employee stock purchase plan, and optimizing our capital
structure.
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