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This excerpt taken from the BBY 10-Q filed Oct 9, 2008. Debt and Capital
At August 30, 2008, we had debt outstanding under our Credit Agreement of $1.2 billion, an increase from $120 million at March 1, 2008, due primarily to increased borrowings in connection with our acquisition of Best Buy Europe and for normal working capital needs. See our Annual Report on Form 10-K for the fiscal year ended March 1, 2008, for additional information regarding our debt and capital. In addition, we assumed $281 million of revolver debt as part of our acquisition of Best Buy Europe, which is available under a £350 million (or, $697 million using the exchange rate in effect two months prior to August 30, 2008) facility agreement between CPW, Best Buy Europe and us. CPW agreed to provide a revolving credit facility to Best Buy Europe for which we guarantee up to 50% of the amount outstanding.
On June 24, 2008, we sold $500 million principal amount of notes due July 15, 2013 (the “Notes”). The Notes bear interest at a fixed rate of 6.75% per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2009. See Note 6, Debt, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the issuance of the Notes and the assumption of Best Buy Europe debt, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2008. See our Annual Report on Form 10-K for the fiscal year ended March 1, 2008, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008. There has been no significant change in our significant accounting policies or critical accounting estimates since the end of fiscal 2008.
New Accounting Standards
In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP APB 14-1 beginning in the first quarter of fiscal 2010, and this standard must be applied on a retrospective basis. We are evaluating the impact the adoption of FSP APB 14-1 will have on our consolidated financial position and results of operations.
In May 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 162, The Hierarchy of Generally Accepted Accounting Principles. This standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles in the United States for non-governmental entities. SFAS No. 162 is effective 60 days following approval by the U.S. Securities and Exchange Commission (“SEC”) of the Public Company Accounting Oversight Board’s amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally
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This excerpt taken from the BBY 10-Q filed Jul 10, 2008. Debt and Capital
The amount of debt outstanding at May 31, 2008, was unchanged from the end of fiscal 2008, except for the increase in the amount outstanding under our Credit Agreement, which increased from $120 million at March 1, 2008, to $440 million at May 31, 2008. See our Annual Report on Form 10-K for the fiscal year ended March 1, 2008, for additional information regarding our debt and capital.
On June 24, 2008, we sold $500 million principal amount of notes due July 15, 2013 (the “Notes”). The Notes bear interest at a fixed rate of 6.75% per year, payable semi-annually on January 15 and July 15 of each year, beginning on January 15, 2009. See Note 10, Subsequent Events, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the issuance of the Notes, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2008. See our Annual Report on Form 10-K for the fiscal year ended March 1, 2008, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008. There has been no significant change in our significant accounting policies or critical accounting estimates since the end of fiscal 2008.
New Accounting Standards
In May 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon either mandatory or optional conversion (including partial cash settlement) are not addressed by paragraph 12 of APB Opinion No. 14, Accounting for Convertible Debt and Debt issued with Stock Purchase Warrants. Additionally, FSP APB 14-1 specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. FSP APB 14-1 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We will adopt FSP APB 14-1 beginning in the first quarter of fiscal 2010, and this standard must be applied on a
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retrospective basis. We are evaluating the impact the adoption of FSP APB 14-1 will have on our consolidated financial position and results of operations.
In May 2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 162, The Hierarchy of Generally Accepted Accounting Principles. This standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with generally accepted accounting principles in the United States for non-governmental entities. SFAS No. 162 is effective 60 days following approval by the U.S. Securities and Exchange Commision (“SEC”) of the Public Company Accounting Oversight Board’s amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles. We do not expect SFAS No. 162 to have a material impact on the preparation of our consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand the effect these instruments and activities have on an entity’s financial position, financial performance and cash flows. Entities are required to provide enhanced disclosures about: how and why an entity uses derivative instruments; how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. We will adopt SFAS No. 161 beginning in the fourth quarter of fiscal 2009. We are evaluating the impact the adoption of SFAS No. 161 will have on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141(revised 2007), Business Combinations (“141R”). SFAS No. 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141R, changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No. 141R is effective for fiscal years beginning after December 15, 2008. We will adopt SFAS No. 141R beginning in the first quarter of fiscal 2010, which will change our accounting treatment for business combinations on a prospective basis.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS No. 160 changes the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. This new consolidation method significantly changes the accounting for transactions with minority interest holders. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. We will adopt SFAS No. 160 beginning in the first quarter of fiscal 2010. We are evaluating the impact the adoption of SFAS No. 160 will have on our consolidated financial position and results of operations.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Companies are not allowed to adopt SFAS No. 159 on a retrospective basis unless they choose early adoption. We adopted SFAS No. 159 on March 2, 2008, and did not elect the fair value option for eligible items that existed at the date of adoption.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 establishes a single definition of fair value and a framework for measuring fair value, sets out a fair value hierarchy to be used to classify the source of information used in fair value measurements, and requires new disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. This statement applies under other accounting pronouncements that require or permit fair value measurements. In February 2008, the FASB issued FSPs No. 157-1 and No. 157-2, which, respectively, removed leasing transactions from the scope of SFAS No. 157 and deferred for one year the effective date for SFAS No. 157 as it applies to certain nonfinancial assets and liabilities. On March 2, 2008, we adopted, on a prospective basis, the SFAS No. 157 definition of fair value and and became subject to the new disclosure requirements (excluding FSP 157-2) with respect to our fair value measurements of (a) nonfinancial assets and liabilities that are recognized or disclosed at fair value in our financial
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statements on a recurring basis (at least annually) and (b) all financial assets and liabilities. Our adoption did not impact our consolidated financial position or results of operations. The additional disclosures required by SFAS No. 157 are included in Note 4, Fair Value Measurements.
The deferral provided by FSP No. 157-2 applies to such items as nonfinancial assets and liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods) and nonfinancial long-lived asset groups measured at fair value for an impairment assessment. We are evaluating the impact FSP No. 157-2 will have on our nonfinancial assets and liabilities that are measured at fair value, but are recognized or disclosed at fair value on a nonrecurring basis.
Outlook
In our June 17, 2008, announcement of our results of operations for the first quarter of fiscal 2009, we reiterated the earnings guidance for fiscal 2009 that we provided in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008, of $3.25 to $3.40 per diluted share. Our guidance still anticipates revenue of approximately $43 billion to $44 billion for the fiscal year, driven by the addition of new stores and an expected comparable store sales gain for the fiscal year of 1% to 3%. Our guidance also reflects an unchanged gross profit rate and an increase in our SG&A expense rate as compared to the prior fiscal year. The guidance excludes the impact of our new venture with CPW. We plan to provide an update, if any, of significant elements of our guidance impacted by this new venture in our fiscal second-quarter earnings release. In the June 17, 2008 announcement, we updated the accretion we expect to result from our new venture with CPW, net of the removal of our previously planned $800 million of share repurchases, to be modestly below the previously reported range of 5 cents to 7 cents per diluted share. We revised our expectation based on our decision to report the results of operations of this venture on a two-month lag, consistent with how we report our China operations.
In addition, we updated our fiscal 2009 projections for new store openings in China, to eight to 16 Five Star stores and one to three Best Buy stores, pending governmental approval, down from 20 to 25 Five Star stores and five to eight Best Buy stores. Consequently, the total number of stores we expect to open in fiscal 2009 is approximately 125, down from approximately 140. We also plan to close five Five Star stores in fiscal 2009. These changes have no material impact on our annual earnings guidance.
For additional information on our outlook for fiscal 2009, see the Outlook for Fiscal 2009 section provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 1, 2008.
These excerpts taken from the BBY 10-K filed Apr 30, 2008. Debt and Capital 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. The debentures mature in 2022 and are callable at par, at our option, for cash on or after January 15, 2007. Holders may require us to purchase all or a portion of their debentures on January 15, 2012, and January 15, 2017, 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. On January 15, 2007, holders had the option to require us to purchase all or a portion of their debentures, 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. However, no debentures were so purchased. 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. During a portion of fiscal 2007, our closing stock price exceeded the specified stock price for more than 20 trading days in a 30-day trading period. Therefore, debenture holders had the option to convert their debentures into shares of our common stock. However, no debentures were so converted. Due to changes in the price of our common stock, the debentures were no longer convertible at the holders' option at March 3, 2007, and have not been convertible through April 25, 2008. 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 convertible debentures. At the end of fiscal 2008, $197 million was outstanding under financing lease obligations. Debt and Capital In January 2002, we sold convertible subordinated debentures having an aggregate principal amount of $402 million. The proceeds from the offering, net of Holders The The At This excerpt taken from the BBY 10-Q filed Jan 10, 2008. Debt and Capital
The increase in the amount of debt outstanding at December 1, 2007, compared with the end of fiscal 2007, was due to debt incurred to fund our ASR program. The Credit Agreement had $275 million outstanding at December 1, 2007.
See our Annual Report on Form 10-K for the fiscal year ended March 3, 2007, for additional information regarding our debt and capital.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
With the exception of the Credit Agreement, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2007. See our Annual Report on Form 10-K for the fiscal year ended March 3, 2007, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. There has been no significant change in our significant accounting policies or critical accounting estimates since the end of fiscal 2007.
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New Accounting Standards
In December 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141(revised 2007), Business Combinations. SFAS No. 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, preacquisition contingencies, transaction costs, in-process research and development and restructuring costs. In addition, under SFAS No. 141R, changes in an acquired entity’s deferred tax assets and uncertain tax positions after the measurement period will impact income tax expense. SFAS No. 141R is effective for fiscal years beginning after December 15, 2008. We will adopt SFAS No. 141R beginning in the first quarter of fiscal 2010. This standard will change our accounting treatment for business combinations on a prospective basis.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51. SFAS No. 160 changes the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. This new consolidation method significantly changes the accounting for transactions with minority interest holders. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008. We will adopt SFAS No. 160 beginning in the first quarter of fiscal 2010. We are evaluating the impact the adoption of SFAS No. 160 will have on our consolidated financial position or results of operations.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Companies are not allowed to adopt SFAS No. 159 on a retrospective basis unless they choose early adoption. We will adopt SFAS No. 159 beginning in the first quarter of fiscal 2009. We are evaluating the impact the adoption of SFAS No. 159 will have on our consolidated financial position or results of operations.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurement. SFAS No. 157, as originally issued, was effective for fiscal years beginning after November 15, 2007. However, on December 14, 2007, the FASB issued FASB Staff Position FAS157-b, which deferred the effective date of SFAS No. 157 for one year, as it relates to nonfinancial assets and liabilities. We will adopt SFAS No. 157 as it relates to financial assets and liabilities beginning in the first quarter of fiscal 2009. We are evaluating the impact the adoption of SFAS No. 157 will have on our consolidated financial position or results of operations.
Outlook
On January 11, 2008, we plan to issue a news release regarding our revenue for the fiscal month of December and 10 months ended January 5, 2008. We expect to comment in the news release on our outlook for the remainder of fiscal 2008. We will post the news release on our web site at www.BestBuy.com — select the “For Our Investors” link and then the “News Releases” link.
This excerpt taken from the BBY 10-Q filed Oct 11, 2007. Debt and Capital
The increase in the amount of debt outstanding at September 1, 2007, compared with the end of fiscal 2007, was due to debt assumed to fund our ASR program.
Our Bridge Facility had $1,298 million outstanding at September 1, 2007. On September 19, 2007, we borrowed $1,350 million under our Credit Agreement and used $1,150 million to repay the outstanding balance under the Bridge Facility. At October 10, 2007, $1,050 million was outstanding under the Credit Agreement.
See our Annual Report on Form 10-K for the fiscal year ended March 3, 2007, for additional information regarding our debt and capital.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the Bridge Facility that was terminated on September 19, 2007, and the Credit Agreement, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2007. See our Annual Report on Form 10-K for the fiscal year ended March 3, 2007, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
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Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. There has been no significant change in our significant accounting policies or critical accounting estimates since the end of fiscal 2007.
New Accounting Standards
In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Companies are not allowed to adopt SFAS No. 159 on a retrospective basis unless they choose early adoption. We plan to adopt SFAS No. 159 beginning in the first quarter of fiscal 2009. We are evaluating the impact, if any, the adoption of SFAS No. 159 will have on our operating income or net earnings.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurement. SFAS No. 157 is effective for fiscal years beginning after December 15, 2007. We plan to adopt SFAS No. 157 beginning in the first quarter of fiscal 2009. We are evaluating the impact, if any, the adoption of SFAS No. 157 will have on our operating income or net earnings.
Outlook
In our September 18, 2007, announcement of our results of operations for the second quarter of fiscal 2008, we raised the lower end of our annual guidance and projected earnings for fiscal 2008 in the new range of $3.00 to $3.15 per diluted share, compared with earnings of $2.79 per diluted share for fiscal 2007. Prior fiscal 2008 earnings guidance was $2.95 to $3.15 per diluted share. In the announcement, we also expressed our expectation that the annual earnings per diluted share would be in the top half of our revised guidance range. We revised our guidance based on our results through the end of the second quarter and our expected sales trends and revenue mix in the second half of the year. Our revised guidance assumes that continuing SG&A expense rate improvement in the second half of the year will more than offset our gross profit rate decline. We continue to expect a nominal improvement in our operating income rate for the fiscal year. Our guidance assumes an expected comparable store sales gain near the midpoint of our 3% to 5% range for the fiscal year. While we are pleased with our progress and improved financial performance in the fiscal second quarter, our optimism is balanced by the fact that approximately 70% of our annual earnings occur in the second half of the fiscal year.
As announced on June 27, 2007, we entered into agreements constituting an ASR program to repurchase $3.0 billion of common stock no later than February 2008. We expect the effect of the lower share count to be offset, in part, by lower net interest income related to lower cash and investment balances as well as increased interest expense associated with interim borrowing. Additionally, we expect our effective tax rate to increase to approximately 37% in fiscal 2008 as a result of the lower income from tax-advantaged short-term investments. Our revised earnings guidance includes the impact of the expected share repurchases under our new $5.5 billion share repurchase program, including the ASR program.
For additional information on our outlook for fiscal 2008, see the Outlook for Fiscal 2008 section provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007.
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This excerpt taken from the BBY 10-Q filed Jul 12, 2007. Debt and Capital The amount of debt outstanding at June 2, 2007, was essentially unchanged from the end of fiscal 2007. Subsequent to June 2, 2007, as discussed above, we entered into our Bridge Facility, which had $1.7 billion outstanding at July 10, 2007. Also subsequent to June 2, 2007, we received a commitment letter for a five-year senior unsecured revolving credit facility of $2.0 billion, and terminated our $200 million bank revolving credit facility. For additional information regarding these transactions, see Note 10, Subsequent Events, of the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. See our Annual Report on Form 10-K for the fiscal year ended March 3, 2007, for additional information regarding our debt and capital. Off-Balance-Sheet Arrangements and Contractual Obligations Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases. 32 Other than the Bridge Facility into which we entered in connection with our ASR program, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2007. See our Annual Report on Form 10-K for the fiscal year ended March 3, 2007, for additional information regarding our off-balance-sheet arrangements and contractual obligations. Significant Accounting Policies and Estimates We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. We discuss our critical accounting estimates in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. There has been no significant change in our significant accounting policies or critical accounting estimates since the end of fiscal 2007. New Accounting Standards In February 2007, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits companies to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Companies are not allowed to adopt SFAS No. 159 on a retrospective basis unless they choose early adoption. We plan to adopt SFAS No. 159 beginning in the first quarter of fiscal 2009. We are evaluating the impact, if any, the adoption of SFAS No. 159 will have on our operating income or net earnings. In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. SFAS No. 157 is effective for fiscal years beginning after December 15, 2007. We plan to adopt SFAS No. 157 beginning in the first quarter of fiscal 2009. We are evaluating the impact, if any, the adoption of SFAS No. 157 will have on our operating income or net earnings. Outlook In our June 19, 2007, announcement of our results of operations for the first quarter of fiscal 2008, we projected earnings for fiscal 2008 in the range of $2.95 to $3.15 per diluted share, compared with earnings of $2.79 per diluted share for fiscal 2007. Prior fiscal 2008 earnings guidance was $3.10 to $3.25 per diluted share. We revised our guidance based on our first-quarter performance and revenue trends that we expect will continue, including the shift in mix of sales to lower-margin products. Due to these changes in our revenue mix, we anticipated more pressure on the gross profit rate than we had originally planned. Our revised guidance assumes that lower SG&A expenses will partially offset the additional decline in our gross profit rate. As a result, the revised and current guidance anticipates only a nominal improvement in our operating income rate versus the 30 basis points of improvement we originally projected. Consistent with our original estimate, our guidance assumes anticipated revenue of approximately $39.0 billion for the fiscal year, driven by the addition of new stores and an expected comparable store sales gain for the fiscal year of 3% to 5%. Earnings growth in fiscal 2008 is anticipated to be realized in the second half of the fiscal year. As announced on June 27, 2007, we have entered into agreements constituting an accelerated share repurchase program to repurchase $3.0 billion of common stock no later than February 2008. We expect the effect of the lower share count to be offset by a reduction in net interest income related to lower cash and investment balances as well as increased interest expense associated with interim borrowing. Additionally, we expect our effective tax rate to increase to approximately 37 percent for fiscal 2008 as a result of the anticipated sale of tax-advantaged short-term investments, compared with our prior expectation of a 36-percent effective tax rate. Last, our projected earnings of 33 $2.95 to $3.15 assumed the completion of the remaining $0.8 billion balance of our $1.5 billion share repurchase program; this program was terminated and replaced by a new $5.5 billion share repurchase program, also announced on June 27, 2007. We anticipate a modest benefit to fiscal 2008 earnings per diluted share as a result of the additional share repurchases under the new program. We continue to project 130 to 135 new store openings in fiscal 2008, as more specifically detailed in the Outlook section provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. Also as announced on June 27, 2007, we have increased the number of stores included in our long-term growth plan for the United States and Canada by 400 stores, up to 1,800 stores. This new total assumes 1,400 U.S. Best Buy superstores, up from 1,000 previously; at least 200 superstores in Canada (including both Future Shop and Best Buy stores); and up to 200 Pacific Sales stores. We also remain committed to our expansion of both the Five Star and Best Buy brands in China, and we continue to anticipate the opening of test stores in Mexico and Turkey. For additional information on our outlook for fiscal 2008, see the Outlook for Fiscal 2008 section provided in Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the fiscal year ended March 3, 2007. This excerpt taken from the BBY 10-K filed May 2, 2007. 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. The debentures mature in 2022 and are callable at par, at our option, for cash on or after January 15, 2007. Holders may require us to purchase all or a portion of their debentures on January 15, 2012, and January 15, 2017, 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. On January 15, 2007, holders had the option to require us to purchase all or a portion of their debentures, 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. However, no debentures were so purchased. 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. During a portion of fiscal 2007, our closing stock price exceeded the specified stock price for more than 20 trading days in a 30-day trading period. Therefore, debenture holders had the option to convert their debentures into shares of our common stock. However, no debentures were so converted. Due to changes in the price of our common stock, the debentures were no longer convertible at March 3, 2007, and have not been convertible through May 1, 2007. 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 convertible debentures. During the fourth quarter of fiscal 2005, in connection with the review of our lease accounting practices, we recorded a $107 million financing lease obligation for lease transactions that did not qualify for sale-leaseback accounting treatment. At the end of fiscal 2007, $171 million was outstanding under financing lease obligations. This excerpt taken from the BBY 10-Q filed Jul 6, 2006. Debt and Capital The amount of debt outstanding as of May 27, 2006, was essentially unchanged from the end of fiscal 2006. See our Annual Report on Form 10-K for the fiscal year ended February 25, 2006, for additional information regarding our debt and capital. Off-Balance-Sheet Arrangements and Contractual Obligations Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases. 29
There has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2006. See our Annual Report on Form 10-K for the fiscal year ended February 25, 2006, for additional information regarding our off-balance-sheet arrangements and contractual obligations. Significant Accounting Policies and Estimates We describe our significant accounting policies in Note 1, This excerpt taken from the BBY 10-K filed May 10, 2006.
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. The debentures mature in 2022 and are callable at par, at our option, for cash on or after January 15, 2007. Holders may require us to purchase all or a portion of their debentures on January 15, 2007; January 15, 2012; and January 15, 2017, 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 40 cash, stock, or a combination of cash and stock. Since holders may require us to purchase all or a portion of their debentures on January 15, 2007, we have classified our convertible subordinated debentures in the current portion of long-term debt at February 25, 2006. The debentures will be convertible into shares of our common stock at a conversion rate of 21.7391 shares per $0.001 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. At February 25, 2006, none of the criteria for conversion had been met. Since March 31, 2006, our closing stock price has exceeded the specified stock price for more than 20 days, therefore, holders currently have the option to convert their debentures into our common stock. As of May 9, 2006, no debentures had been converted to shares of our common stock. The debentures have an initial 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, 2006; July 15, 2011; and July 15, 2016. One of our subsidiaries has guaranteed the convertible debentures. In June 2004, we redeemed our convertible debentures that were due in 2021 for $355 million. During the fourth quarter of fiscal 2005, in connection with the review of our lease accounting practices, we recorded a $107 million financing lease obligation for leases that did not qualify for sale-leaseback accounting treatment. At the end of fiscal 2006, $157 million is outstanding under financing lease obligations. We had a master lease program which was used to construct and lease new retail locations. At the end of fiscal 2005, $55 million in leases related to new stores were outstanding under the master lease program. In May 2005, we repaid the outstanding balance of $54 million on our master lease obligation. This excerpt taken from the BBY 10-Q filed Jan 5, 2006. Debt and Capital
In the first nine months of fiscal 2006, we repaid $54 million of debt related to our master lease program. Other than this repayment, the amount of debt outstanding as of November 26, 2005, was essentially unchanged from the end of fiscal 2005. See our Annual Report on Form 10-K for the fiscal year ended February 26, 2005, for additional information regarding our debt and capital.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the repayment of our master lease program in May 2005, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2005. See our Annual Report on Form 10-K for the fiscal year ended February 26, 2005, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
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Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, This excerpt taken from the BBY 10-Q filed Oct 6, 2005. Debt and Capital
In the first six months of fiscal 2006, we repaid $54 million of debt related to our master lease program. Other than this repayment, the amount of debt outstanding as of August 27, 2005, was essentially unchanged from the end of fiscal 2005. See our Annual Report on Form 10-K for the fiscal year ended February 26, 2005, for additional information regarding our debt and capital.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the repayment of our master lease program in May 2005, there has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2005. See our Annual Report on Form 10-K for the fiscal year ended February 26, 2005, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, This excerpt taken from the BBY 10-Q filed Jul 7, 2005. Debt and Capital
On May 4, 2005, we repaid the outstanding balance of $54 million on our master lease program. Other than the repayment of our master lease program in May 2005, the amount of debt outstanding as of May 28, 2005, was essentially unchanged from the end of fiscal 2005. See our Annual Report on Form 10-K for the fiscal year ended February 26, 2005, for additional information regarding our debt and capital.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the repayment of our master lease program in May 2005, there has been no material change in our contractual obligations other than in the ordinary course of our business since the end of fiscal 2005. See our Annual Report on Form 10-K for the fiscal year ended February 26, 2005, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, This excerpt taken from the BBY 10-K filed May 10, 2005. Debt and Capital 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. The debentures mature in 2022 and are callable at par, at our option, for cash on or after January 15, 2007. Holders may require us to purchase all or a portion of their debentures on January 15, 2007; January 15, 2012; and January 15, 2017, 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. The debentures will be convertible into shares of our common stock at a conversion rate of 14.4927 shares per $0.001 principal amount of debentures, equivalent to an initial conversion price of $69.00 per share, if the closing price of our common stock exceeds a specified price for a specified period of time, if our credit rating falls below specified levels, if the debentures are called for redemption or if certain specified corporate transactions occur. At February 26, 2005, none of the criteria for conversion had been met. However, upon the adoption for fiscal 2005 of EITF Issue No. 04-08, the calculation of our diluted earnings per share now includes the conversion of our convertible debentures into 5.8 million shares of our common stock, and adds back related after-tax interest of $6.5 million. The adoption of EITF Issue No. 04-08 reduced diluted earnings per share by $0.03 for fiscal 2005. Prior-year amounts have been restated to conform to the current-year presentation. The debentures have an initial 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, 2006; July 15, 2011; and July 15, 2016. One of our subsidiaries has guaranteed the convertible debentures. In June 2004, we redeemed our convertible debentures due in 2021 for $355 million. During the fourth quarter of fiscal 2005, in connection with the review of our lease accounting practices, we recorded a $107 million financing lease obligation for leases that did not qualify for sale-leaseback accounting treatment. We also have a master lease program which was used for the purpose of constructing and leasing new retail locations. At the end of fiscal 2005, $55 million in leases related to new stores were outstanding under the master lease program. The master lease program was completed in fiscal 2003 and there has been no further new-store development under this program. On May 4, 2005, we repaid the outstanding balance of $54 million on the master lease program. This excerpt taken from the BBY 10-Q filed Jan 6, 2005. Debt and Capital
Other than the redemption in June 2004 of all of our convertible debentures due in 2021 for $355 million, the amount of debt outstanding as of November 27, 2004, was essentially unchanged from the end of fiscal 2004. See our Annual Report on Form 10-K for the fiscal year ended February 28, 2004, for additional information regarding our debt and capital.
Off-Balance-Sheet Arrangements and Contractual Obligations
Our liquidity is not dependent on the use of off-balance sheet financing arrangements other than in connection with our operating leases.
Other than the redemption of our convertible debentures due in 2021, there has been no material change in our contractual obligations out of the ordinary course of our business since the end of fiscal 2004. See our Annual Report on Form 10-K for the fiscal year ended February 28, 2004, for additional information regarding our off-balance-sheet arrangements and contractual obligations.
Significant Accounting Policies and Estimates
We describe our significant accounting policies in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 28, 2004. We discuss our critical accounting policies, and the related estimates, in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended February 28, 2004. There were no significant changes in our accounting policies or estimates since the end of fiscal 2004.
New Accounting Standards
The Emerging Issues Task Force (EITF) reached consensus on Issue No. 04-8, | EXCERPTS ON THIS PAGE: |
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