 |
| $ in millions, except
per share amounts |
| Master Lease We have a master lease program which was used for the purpose of constructing and leasing new retail locations. At the end of fiscal 2003, $59 in leases for new stores had been financed under the master lease program. The master lease program is now complete, and there will be no further new store development under this program. The program is set to expire on January 1, 2006, and is renewable for one year, subject to lenders’ consent. The lease is guaranteed by Best Buy Co., Inc. Inventory Financing We have a $200 inventory financing line. Borrowings are collateralized by a security interest in certain merchandise inventories approximating the outstanding borrowings. The terms of this arrangement allow us to extend the due dates of invoices beyond their normal terms. The amounts extended generally bear interest at rates ranging from 1.5% below prime rate to 0.5% above prime rate. The prime rate was 4.25% and 4.75% as of March 1, 2003, and March 2, 2002, respectively. The line has provisions that give the financing source a portion of the cash discounts provided by the vendors. The inventory financing line is guaranteed by Best Buy Co., Inc. and one of its subsidiaries. Amounts outstanding under this agreement are included in accounts payable in the balance sheet. As of March 1, 2003, and March 2, 2002, respectively, $174 and $157 was available under this agreement. Other The fair value of long-term debt approximates $791 and $829 as of March 1, 2003, and March 2, 2002, respectively. These fair values were based primarily on quotes from external sources. |
| The future maturities of long-term debt, including capitalized leases, consist of the following: |
| Fiscal Year | ||
| 2004 | $ 1 | |
| 2005(1) | 1 | |
| 2006 | 61 | |
| 2007(1) | 1 | |
| 2008(2) | 6 | |
| Thereafter | 764 | |
| $ 834 | ||
| (1)
Holders of our debentures may require us
to purchase all or a portion of their debentures on June 27, 2004, and
January 15, 2007, respectively. The potential purchases are not
reflected in the table above. See note 4, Convertible Debentures, for
additional details. (2) Includes $5 of senior subordinated notes due in 2008 related to Musicland, which has been classified as discontinued operations. |
|
5. Shareholders’ Equity Stock Options We sponsor three non-qualified stock option plans for our employees and our Board of Directors. These plans provide for the issuance of up to 73.2 million shares of common stock. Options may be granted only to employees or directors at exercise prices not less than the fair market value of our common stock on the date of the grant. All of the options have a 10-year term. Options issued pursuant to the 1997 employee plan vest over a four-year period. Options issued pursuant to the 1997 directors’ plan vest immediately upon grant. At March 1, 2003, a total of 23.1 million shares were available for future grants under all plans. In connection with the Musicland acquisition, certain outstanding stock options held by employees of Musicland were converted into options exercisable into our 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 our 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. >> |
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