Best Buy 2011 Annual Report Download - page 104

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$ in millions, except per share amounts or as otherwise noted
At February 26, 2011, the future maturities of long-term debt, including capitalized leases, consisted of the following:
Fiscal Year
2012(1) $ 441
2013 37
2014 537
2015 36
2016 29
Thereafter 72
Total long-term debt $1,152
(1) Holders of our convertible debentures may require us to purchase all or a portion of their debentures on January 15, 2012. The
table above assumes that all holders exercise their redemption right on that date.
7. Derivative Instruments
We manage our economic and transaction exposure to certain market-based risks through the use of foreign currency
derivative instruments. Our objective in holding derivatives is to reduce the volatility of net earnings and cash flows
associated with changes in foreign currency exchange rates. We do not hold or issue derivative financial instruments for
trading or speculative purposes.
We record all foreign currency derivative instruments on our consolidated balance sheets at fair value and evaluate hedge
effectiveness prospectively and retrospectively when electing to apply hedge accounting treatment. We formally document
all hedging relationships at inception for all derivative hedges and the underlying hedged items, as well as the risk
management objectives and strategies for undertaking the hedge transactions. In addition, we have derivatives which are
not designated as hedging instruments. We have no derivatives that have credit risk-related contingent features, and we
mitigate our credit risk by engaging with major financial institutions as our counterparties.
Cash Flow Hedges
We enter into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on certain
revenue streams denominated in non-functional currencies. The contracts have terms of up to two years. We report the
effective portion of the gain or loss on a cash flow hedge as a component of other comprehensive income, and it is
subsequently reclassified into net earnings in the period in which the hedged transaction affects net earnings or the
forecasted transaction is no longer probable of occurring. We discontinued certain cash flow hedges and reclassified $5
into net earnings during the fourth quarter of fiscal 2011, as the forecasted transactions were no longer probable of
occurring. We report the ineffective portion, if any, of the gain or loss in net earnings.
Net Investment Hedges
Previously, we entered into foreign exchange swap contracts to hedge against the effect of euro and Swiss franc exchange
rate fluctuations on net investments of certain foreign operations. For a net investment hedge, we recognized changes in
the fair value of the derivative as a component of foreign currency translation within other comprehensive income to offset
a portion of the change in the translated value of the net investment being hedged, until the investment was sold or
liquidated. During fiscal 2011, we discontinued this hedging strategy and no longer have contracts that hedge net
investments of foreign operations.
Derivatives Not Designated as Hedging Instruments
Derivatives not designated as hedging instruments include foreign exchange forward contracts used to manage the impact
of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in
104