Debt

Short-Term Debt

Short-term debt consisted of the following:



	November 26, 2011		February 26, 2011		November 27, 2010
U.S. revolving credit facility – 364-Day	$	—	$	—	$	—
U.S. revolving credit facility – Five-Year	—		—		—
JPMorgan revolving credit facility	—		—		500
New Europe revolving credit facility	155		—		—
Europe receivables financing facility	—		455		136
Europe revolving credit facility	—		98		—
Canada revolving demand facility	—		—		—
China revolving demand facilities	8		4		54
Total short-term debt	$	163	$	557	$	690

U.S. Revolving Credit Facilities

In October 2011, Best Buy Co., Inc. entered into a $1,000 364-day senior unsecured revolving credit facility agreement (the “364-Day Facility Agreement”) and a $1,500 five-year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) (collectively the “Agreements”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent, and a syndicate of banks. The Agreements replaced the $2,300 senior unsecured revolving credit facility, as amended (the “Credit Facility”), with a syndicate of banks, including JPMorgan acting as administrative agent. The Credit Facility was originally scheduled to expire in September 2012.

The Agreements permit borrowings 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 the 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% 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.

Europe Revolving Credit Facility

In July 2011, Best Buy Europe entered into a new £400 ($623 based on the exchange rate in effect as of the end of the third quarter of fiscal 2012) unsecured revolving credit facility agreement (the “New RCF”) with ING Bank N.V., London Branch, as agent, and a syndicate of banks to finance its working capital needs. The New RCF expires in July 2015.

Interest rates under the New RCF are variable, based on LIBOR plus an applicable margin based on Best Buy Europe’s fixed charges coverage ratio. The New 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 New RCF. The New RCF also required an initial arrangement fee of 0.75%.

The New RCF is guaranteed by certain subsidiaries of Best Buy Europe and does not provide for any recourse to Best Buy Co., Inc. The New 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 New 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 New RCF replaced the existing £350 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 New RCF also replaced Best Buy Europe’s existing £125 revolving credit facility (the “RCF”) with one of Best Buy Co., Inc.’s subsidiaries and Carphone Warehouse as lenders. The RCF was originally scheduled to expire in March 2013.

Long-Term Debt

Long-term debt consisted of the following:



	November 26, 2011			February 26, 2011			November 27, 2010
2021 Notes	$	648		$	—		$	—
2013 Notes	500			500			500
2016 Notes	349			—			—
Convertible debentures	387			402			402
Financing lease obligations	160			170			173
Capital lease obligations	68			79			57
Other debt	2			1			2
Total long-term debt	2,114			1,152			1,134
Less: current portion⁽¹⁾	(427		)	(441		)	(33		)
Total long-term debt, less current portion	$	1,687		$	711		$	1,101


⁽¹⁾	Since holders of our convertible debentures may require us to purchase all or a portion of the debentures on January 15, 2012, we classified the $387 for such debentures in the current portion of long-term debt at November 26, 2011, and February 26, 2011.

The fair value of long-term debt approximated $2,121, $1,210 and $1,235 at November 26, 2011, February 26, 2011, and November 27, 2010, respectively, based primarily on the ask prices quoted from external sources, compared with carrying values of $2,114, $1,152 and $1,134, respectively.

2016 and 2021 Notes

In March 2011, we issued $350 principal amount of notes due March 15, 2016 (the “2016 Notes”) and $650 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, resulted in net proceeds from the sale of the Notes of $990.

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, we will be required to offer to purchase the remaining unredeemed Notes at a price equal to 101% of their principal amount, 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 to incur debt secured by liens or to enter into sale and lease-back transactions.

Convertible Debentures

In January 2002, we sold 2.25% convertible subordinated debentures due January 15, 2022, having an aggregate principal amount of $402. Since holders of our convertible debentures may require us to purchase all or a portion of those debentures on January 15, 2012, we have classified the remaining $387 of outstanding debentures in the current portion of long-term debt at November 26, 2011.

In December 2011, subsequent to the end of the third quarter of fiscal 2012, we notified the holders of our outstanding convertible debentures due January 15, 2022, that they have an option to require us to purchase all or a portion of such holders' convertible debentures promptly following the January 15, 2012 purchase date and that we elected to pay for any convertible debentures validly surrendered and not validly withdrawn with cash. The purchase price will be equal to 100% of the principal amount of the convertible debentures, plus any accrued and unpaid interest. Holders that do not surrender their convertible debentures for purchase will maintain the right to convert their convertible debentures into common stock pursuant to the original terms of the convertible debentures. The opportunity for holders to surrender their convertible debentures for purchase will expire on January 17, 2012. Our purchase of the outstanding convertible debentures will result in a reduction of the debt balance in our consolidated balance sheet at that time in an amount which is dependent upon the quantity of convertible debentures surrendered for purchase.

See Note 6, Debt, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 26, 2011, for additional information regarding the terms of our debt facilities, debt instruments and other obligations.