Best Buy 2012 Annual Report Download - page 92

$ in millions, except per share amounts or as otherwise noted
92
The Agreements permit borrowings of up to $2,500 (which may be increased to up to $3,000 at our option under certain
circumstances) and a $300 letter of credit sublimit. The 364-Day Facility Agreement and Five-Year Facility Agreement
terminate in October 2012 (subject to a one-year term-out option) and October 2016, respectively.
Interest rates under the Agreements are variable and are determined at our option as: (i) the sum of (a) the greatest of
JPMorgan's prime rate, the federal funds rate plus 0.5%, or the one-month London Interbank Offered Rate (“LIBOR”) plus
1.0% and (b) a margin (the “ABR Margin”) or (ii) the LIBOR plus a margin (the “LIBOR Margin”). In addition, a facility fee is
assessed on the commitment amount. The ABR Margin, LIBOR Margin and the facility fee are based upon our current senior
unsecured debt rating. Under the 364-Day Facility Agreement, the ABR Margin ranges from 0.0% to 0.525%, the LIBOR
Margin ranges from 0.925% to 1.525%, and the facility fee ranges from 0.075% to 0.225%. Under the Five-Year Facility
Agreement, the ABR Margin ranges from 0.0% to 0.475%, the LIBOR Margin ranges from 0.875% to 1.475%, and the facility
fee ranges from 0.125% to 0.275%.
The Agreements are guaranteed by specified subsidiaries of Best Buy Co., Inc. and contain customary affirmative and negative
covenants. Among other things, these covenants restrict Best Buy Co., Inc. and its subsidiaries' ability to incur certain types or
amounts of indebtedness, incur liens on certain assets, make material changes in corporate structure or the nature of its
business, dispose of material assets, engage in a change in control transaction, make certain foreign investments, enter into
certain restrictive agreements, or engage in certain transactions with affiliates. The Agreements also contain covenants that
require the maintenance of a maximum quarterly cash flow leverage ratio and a minimum quarterly interest coverage ratio. The
Agreements contain customary default provisions including, but not limited to, failure to pay interest or principal when due and
failure to comply with covenants. We were in compliance with all such covenants at March 3, 2012.
Europe Revolving Credit Facility
In July 2011, Best Buy Europe entered into a new £400 ($618 based on the exchange rate in effect as of the end of fiscal 2012)
unsecured revolving credit facility agreement (the “RCF”) with ING Bank N.V., London Branch, as agent, and a syndicate of
banks to finance its working capital needs. The RCF expires in July 2015. Best Buy Europe had £310 ($480) of borrowings
under the RCF at March 3, 2012.
Interest rates under the RCF are variable, based on LIBOR plus an applicable margin based on Best Buy Europe’s fixed charges
coverage ratio. The RCF includes a commitment fee of 40% of the applicable margin on unused available capacity, as well as a
utilization fee ranging from 0.0% to 0.5% of the aggregate amount outstanding based on the percentage of the aggregate
amount outstanding to the total RCF. The RCF also required an initial arrangement fee of 0.75%.
The RCF is guaranteed by certain subsidiaries of Best Buy Europe and does not provide for any recourse to Best Buy Co., Inc.
The RCF contains customary affirmative and negative covenants. Among other things, these covenants restrict or prohibit Best
Buy Europe’s ability to incur certain types or amounts of indebtedness, make material changes in the nature of its business,
dispose of material assets, make guarantees, or engage in a change in control transaction. The RCF also contains covenants that
require Best Buy Europe to comply with a maximum annual leverage ratio and a maximum fixed charges coverage ratio.
The RCF replaced the previous £350 Europe receivables financing facility (the “ERF”) between a subsidiary of Best Buy
Europe and a syndicate of banks, including Barclays Bank PLC acting as administrative agent. The ERF was originally
scheduled to expire in July 2012. The RCF also replaced Best Buy Europe’s previous £125 revolving credit facility (the “Old
RCF”) with one of Best Buy Co., Inc.’s subsidiaries and Carphone Warehouse as lenders. The Old RCF was originally
scheduled to expire in March 2013.
Canada Revolving Demand Facility
We have a $51 revolving demand facility available to our Canada operations including an additional seasonal facility of $50
Canadian dollars that is available from September through December of each year. There were no borrowings outstanding
under the facility at March 3, 2012. There is no set expiration date for the facility. All borrowings under the facility are made
available at the sole discretion of the lender and are payable on demand. Borrowings under the facility bear interest at rates
specified in the credit agreement for the facility. Borrowings are secured by a guarantee of Best Buy Co., Inc.
China Revolving Demand Facilities
We have $126 in revolving demand facilities available to our China operations, of which no borrowings were outstanding at
March 3, 2012. The facilities are renewed annually with the respective banks. All borrowings under these facilities bear interest