Debt

Short-Term Debt

Short-term debt consisted of the following:



	August 27, 2011		February 26, 2011		August 28, 2010
JPMorgan revolving credit facility	$	—	$	—	$	—
Europe receivables financing facility⁽¹⁾	386		455		350
Europe revolving credit facility	—		98		—
Canada revolving demand facility	—		—		—
China revolving demand facilities	6		4		33
Total short-term debt	$	392	$	557	$	383


⁽¹⁾	This facility is secured by certain network carrier receivables of Best Buy Europe, which are included within receivables in our condensed consolidated balance sheets. The total amount available for borrowing under this facility is based on a percentage of the available acceptable receivables, as defined in the agreement for the facility, and was £277 (or $445) at August 27, 2011.

Europe Revolving Credit Facility

In July 2011, Best Buy Europe entered into a new £400 ($642 based on the exchange rate in effect as of the end of the second 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 on July 27, 2015.

Interest rates under the New RCF are variable, based on the London Interbank Offering Rate (“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. The ERF and the RCF were still reflected in our condensed consolidated financial statements at the end of the second quarter of fiscal 2012, as we consolidate the financial results of our Europe operations on a two-month lag.

Long-Term Debt

Long-term debt consisted of the following:



	August 27, 2011			February 26, 2011			August 28, 2010
2021 Notes	$	648		$	—		$	—
2013 Notes	500			500			500
2016 Notes	349			—			—
Convertible debentures	402			402			402
Financing lease obligations	167			170			175
Capital lease obligations	72			79			41
Other debt	2			1			2
Total long-term debt	2,140			1,152			1,120
Less: current portion⁽¹⁾	(444		)	(441		)	(32		)
Total long-term debt, less current portion	$	1,696		$	711		$	1,088


⁽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 $402 for such debentures in the current portion of long-term debt at August 27, 2011, and February 26, 2011.

The fair value of long-term debt approximated $2,169, $1,210 and $1,194 at August 27, 2011, February 26, 2011, and August 28, 2010, respectively, based primarily on the ask prices quoted from external sources, compared with carrying values of $2,140, $1,152 and $1,120, 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.

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.