Registration Statement for Securities Offered Pursuant to a Transaction · Form S-3
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-3 Registration Statement for Securities Offered 91 533K
Pursuant to a Transaction
2: EX-1 Underwriting Agreement 31 131K
3: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 1 9K
Liquidation or Succession
4: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 61 194K
Liquidation or Succession
5: EX-3.3 Articles of Incorporation/Organization or By-Laws 28 93K
6: EX-4.3 Instrument Defining the Rights of Security Holders 110 319K
7: EX-4.5 Instrument Defining the Rights of Security Holders 13 49K
8: EX-4.6 Instrument Defining the Rights of Security Holders 45 127K
9: EX-4.7 Instrument Defining the Rights of Security Holders 2 12K
10: EX-5.2 Opinion re: Legality 2 11K
11: EX-12 Statement re: Computation of Ratios 1 9K
12: EX-23.1 Consent of Experts or Counsel 1 8K
13: EX-27 · Financial Data Schedule 2 10K
S-3 · Registration Statement for Securities Offered Pursuant to a Transaction
Document Table of Contents
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BEST BUY CO., INC. BEST BUY CAPITAL, L.P.
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
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MINNESOTA DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
41-0907483 41-1790489
(I.R.S. Employer (I.R.S. Employer
Identification Number) Identification Number)
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RICHARD M. SCHULZE
CHIEF EXECUTIVE OFFICER
BEST BUY CO., INC.
7075 FLYING CLOUD DRIVE
EDEN PRAIRIE, MN 55344
(612) 947-2000
(Name, address, including zip code, and telephone number, including area code,
of registrants' principal executive offices and agent for service)
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COPIES TO:
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ROBERT T. MONTAGUE ROBERT E. BUCKHOLZ, JR.
Robins, Kaplan, Miller & Ciresi Sullivan & Cromwell
2800 LaSalle Plaza 125 Broad Street
800 LaSalle Avenue New York, NY 10004
Minneapolis, MN 55402 (212) 558-4000
(612) 349-8500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1)(2) PER SECURITY (4) OFFERING PRICE (4) REGISTRATION FEE
Best Buy Capital, L.P. Convertible
Preferred Securities (2); Best Buy Co.,
Inc. Series A Convertible Preferred
Stock ($1.00 par value) (1)(5); Best
Buy Co., Inc. Depositary Shares (1)(5);
Best Buy Co., Inc. Common Stock ($.10
par value) (1)(5); Best Buy Co., Inc.
Convertible Subordinated Debentures
(3)(5); Best Buy Co., Inc. Guarantee
with respect to Best Buy Capital, L.P.
Convertible Preferred Securities (5)... $230,000,000 $50.00 $230,000,000 $79,311
<FN>
(1) There are being registered hereunder such presently indeterminate number
of shares of Common Stock of Best Buy Co., Inc. into which the Convertible
Preferred Securities or the Convertible Preferred Stock, as the case may
be, may be converted or exchanged (through the Convertible Subordinated
Debentures of Best Buy Co., Inc.).
(2) Includes $30,000,000 of Convertible Preferred Securities which may be sold
pursuant to an over-allotment option granted to the Underwriters.
(3) The Convertible Subordinated Debentures will be issued by Best Buy Co.,
Inc. to evidence the loan by Best Buy Capital, L.P. to Best Buy Co., Inc.
of the proceeds from (i) the offer and sale of the Convertible Preferred
Securities and (ii) other capital contributions to Best Buy Capital, L.P.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(5) No separate consideration will be received for the Best Buy Co., Inc.
Guarantee, the Best Buy Co., Inc. Convertible Subordinated Debentures, the
Best Buy Co., Inc. Series A Convertible Preferred Stock, the Best Buy Co.,
Inc. Depositary Shares or the Best Buy Co., Inc. Common Stock.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 1994
4,000,000 PREFERRED SECURITIES
BEST BUY CAPITAL
% CONVERTIBLE MONTHLY INCOME PREFERRED SECURITIES
("CONVERTIBLE MIPS"*)
(LIQUIDATION PREFERENCE $50 PER SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY, AND CONVERTIBLE INTO
COMMON STOCK OF,
BEST BUY CO., INC.
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The 4,000,000 % Convertible Monthly Income Preferred Securities (the
"Preferred Securities") representing the limited partnership interests offered
hereby are being issued by Best Buy Capital, L.P. ("Best Buy Capital"), a
Delaware limited partnership. All of the partnership interests in Best Buy
Capital, other than the limited partnership interests represented by the
Preferred Securities, are owned by Best Buy Co., Inc., a Minnesota corporation
("Best Buy" or the "Company"), which is the general partner in Best Buy Capital
(in such capacity, the "General Partner"). Best Buy Capital exists for the sole
purpose of issuing its partnership interests and investing the proceeds thereof
in debt securities of Best Buy. The limited partnership interests represented by
the Preferred Securities will have a preference with respect to cash
distributions and amounts payable on liquidation over the General Partner's
interest in Best Buy Capital.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions from Best Buy Capital, at an annual rate of % of the
liquidation preference of $50 per Preferred Security, accruing from the date of
original issuance and payable monthly in arrears on the last day of each
calendar month of each year, commencing , 1994 ("dividends"). See
"Description of Securities Offered - Preferred Securities - Dividends."
(CONTINUED ON NEXT PAGE)
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SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS TO BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
PREFERRED SECURITIES AND THE SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE
RELATED FEDERAL INCOME TAX CONSIDERATIONS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE COMMISSION(1) BEST BUY CAPITAL(2)(3)
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Per Preferred Security.................................... $ (2) $
Total(4).................................................. $ (2) $
<FN>
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(1) Best Buy Capital and Best Buy have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used by Best Buy Capital to purchase
convertible subordinated debentures of Best Buy, the Underwriting Agreement
provides that Best Buy will pay to the Underwriters, as compensation
("Underwriters' Compensation"), $ per Preferred Security (or $ in
the aggregate). See "Underwriting."
(3) Expenses of the offering which are payable by Best Buy are estimated to be
$550,000.
(4) Best Buy Capital and Best Buy have granted the Underwriters an option for
30 days to purchase up to an additional 600,000 Preferred Securities at the
initial public offering price per Preferred Security solely to cover
over-allotments. Best Buy will pay to the Underwriters, as Underwriters'
Compensation, $ per Preferred Security purchased pursuant to this
option. If such option is exercised in full, the total initial public
offering price, underwriting commission and proceeds to Best Buy Capital
will be $ , $ and $ , respectively. See "Under-
writing."
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The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company on or about
, 1994.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
WILLIAM BLAIR & COMPANY
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The date of this Prospectus is , 1994.
(CONTINUED FROM PREVIOUS PAGE)
In the event of the liquidation of Best Buy Capital, holders of Preferred
Securities will be entitled to receive for each Preferred Security a liquidation
preference of $50 plus accumulated and unpaid dividends to the date of payment,
subject to certain limitations. See "Description of Securities Offered -
Preferred Securities - Liquidation Rights."
Each Preferred Security is convertible in the manner described herein at the
option of the holder, at any time prior to the Conversion Expiration Date (as
hereinafter defined), into shares of Best Buy Common Stock, par value $.10 per
share ("Best Buy Common Stock"), at the rate of shares of Best Buy Common
Stock for each Preferred Security (equivalent to a conversion price of $ per
share of Best Buy Common Stock), subject to adjustment in certain circumstances.
See "Description of Securities Offered - Preferred Securities - Conversion
Rights." The last reported sale price of Best Buy Common Stock, which is listed
under the symbol "BBY" on the New York Stock Exchange ("NYSE"), on September 29,
1994 was $38 5/8 per share. See "Market Prices of Best Buy Common Stock." On and
after , 1997, Best Buy Capital may, at its option, cause the
conversion rights of holders of the Preferred Securities to expire. Best Buy
Capital may exercise this option only if for 20 trading days within any period
of 30 consecutive trading days, including the last trading day of such period,
the last sale price of Best Buy Common Stock as reported on the NYSE Composite
Transaction Tape exceeds 120% of the conversion price of the Preferred
Securities, subject to adjustment in certain circumstances. In order to exercise
its conversion expiration option, Best Buy Capital must issue a press release
announcing the date upon which conversion rights will expire (the "Conversion
Expiration Date") prior to the opening of business on the second trading day
after a period in which the condition in the preceding sentence has been met.
The Conversion Expiration Date shall be a date not less than 30 and not more
than 60 days following the date of the press release described above. See
"Description of Securities Offered - Preferred Securities - Conversion Rights."
The Preferred Securities are also subject to exchange in the manner
described herein, in whole but not in part, into depositary shares (the
"Depositary Shares"), each representing ownership of 1/100th of a share of
Series A Cumulative Convertible Preferred Stock, par value $1.00 per share, of
Best Buy ("Best Buy Series A Preferred Stock"), deposited with the Depositary
(as defined herein) upon a vote of the holders of a majority of the aggregate
liquidation preference of all outstanding Preferred Securities following the
failure of holders of Preferred Securities to receive dividends in full for 15
consecutive months. Each Depositary Share will entitle the holder thereof to all
proportional rights and preferences of the Best Buy Series A Preferred Stock
(including dividend, voting, conversion and liquidation rights and preferences).
The Best Buy Series A Preferred Stock will have dividend and conversion features
substantially similar to those of the Preferred Securities (adjusted
proportionately per Depositary Share) but will not be subject to mandatory
redemption. See "Description of Securities Offered - Preferred Securities -
Optional Exchange for Depositary Shares," "- Description of Best Buy Series A
Preferred Stock" and "- Description of Depositary Shares."
In the event that, at any time after the Conversion Expiration Date, less
than 5% of the Preferred Securities remain outstanding, such Preferred
Securities shall be redeemable at the option of Best Buy Capital, in whole but
not in part, at a redemption price equal to the liquidation preference for such
Preferred Securities plus accumulated and unpaid dividends (whether or not
earned or declared). The Preferred Securities are also subject to mandatory
redemption by Best Buy Capital on the 30th anniversary of the date of original
issuance. See "Description of Securities Offered - Preferred Securities -
Redemption."
Best Buy will irrevocably and unconditionally guarantee, on a subordinated
basis and to the extent set forth herein, the payment of dividends by Best Buy
Capital on the Preferred Securities (but only if and to the extent declared from
funds of Best Buy Capital legally available therefor), the redemption price
(including all accumulated and unpaid dividends) payable with respect to the
Preferred Securities and payments on liquidation with respect to the Preferred
Securities (but only to the extent of the assets of Best Buy Capital available
for distribution to holders of the Preferred Securities) (the "Guarantee"). The
Guarantee will be unsecured and will be subordinate to all Senior Indebtedness
(as described herein) of
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* An application has been filed by Goldman, Sachs & Co. with the United States
Patent and Trademark Office for the registration of the MIPS servicemark.
2
Best Buy and will rank PARI PASSU with the most senior preferred or preference
stock now or hereafter issued by Best Buy. The proceeds from the offering of the
Preferred Securities will be invested by Best Buy Capital in convertible
subordinated debentures of Best Buy (the "Subordinated Debentures") having the
terms described herein. Interest payment periods on the Subordinated Debentures
are monthly but may be extended by Best Buy for up to 60 months, in which event
Best Buy Capital would be unable to make monthly dividend payments on the
Preferred Securities. If Best Buy does not make interest payments on the
Subordinated Debentures, Best Buy Capital would not have sufficient funds to pay
distributions on the Preferred Securities. The Guarantee is a full and
unconditional guarantee from the time of its issuance, but does not apply to any
payment of distributions unless and until such distributions are declared. The
failure of holders of the Preferred Securities to receive dividends in full for
15 consecutive months would trigger the right of such holders to obtain
Depositary Shares representing Best Buy Series A Preferred Stock in the manner
described herein. See "Description of Securities Offered - Preferred Securities
- Dividends," "- Description of the Guarantee" and "- Description of the
Subordinated Debentures."
The Subordinated Debentures and the Guarantee are subordinated in right of
payment to all Senior Indebtedness (as defined under "Description of Securities
Offered - Description of the Subordinated Debentures - Subordination") of Best
Buy. As of August 27, 1994, Best Buy had approximately $392 million of
indebtedness constituting Senior Indebtedness.
Application will be made to list the Preferred Securities on the NYSE under
the symbol "BBY pfM."
The Preferred Securities will be represented by a global certificate or
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by the
participants in DTC. Except as described herein, Preferred Securities in
certificated form will not be issued in exchange for the global certificates.
See "Description of Securities Offered-Preferred Securities - Book-Entry-Only
Issuance - The Depository Trust Company."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AND BEST BUY COMMON STOCK AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
3
AVAILABLE INFORMATION
Best Buy is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by Best Buy may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
located at 7 World Trade Center, 7th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such materials may be obtained upon written request from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, such material may also be inspected and
copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005.
Best Buy and Best Buy Capital have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
No separate financial statements of Best Buy Capital have been included
herein. Best Buy and Best Buy Capital do not consider that such financial
statements would be material to holders of Preferred Securities because Best Buy
Capital is a newly organized special purpose entity, has no operating history
and no independent operations and is not engaged in, and does not propose to
engage in, any activity other than as described under "Best Buy Capital."
Further, Best Buy believes that financial statements of Best Buy Capital are not
material to the holders of the Preferred Securities since the Preferred
Securities have been structured to provide a guarantee by Best Buy of the
Preferred Securities such that the holders of the Preferred Securities with
respect to the payment of dividends and amounts upon liquidation, dissolution
and winding-up are at least in the same position vis-a-vis the assets of Best
Buy as a preferred stockholder of Best Buy. See "Best Buy Capital" and
"Description of Securities Offered - Preferred Securities," "- Description of
the Guarantee" and "- Description of the Subordinated Debentures." Best Buy
beneficially owns directly or indirectly all of Best Buy Capital's partnership
interests (other than the Preferred Securities).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 1-9595) pursuant
to the Exchange Act are incorporated herein by reference:
1. Best Buy's Annual Report on Form 10-K for the fiscal year ended
February 26, 1994, filed pursuant to Section 13(a) of the Exchange Act.
2. Best Buy's Quarterly Reports on Form 10-Q for the quarters ended May
28, 1994, and August 27, 1994.
3. All other reports filed by Best Buy pursuant to Section 13(a) or
15(d) of the Exchange Act since February 26, 1994, consisting of its Current
Reports on Form 8-K, dated April 4, 1994, and August 16, 1994.
4. All other documents filed by Best Buy pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering.
5. The description of Best Buy's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission pursuant to
Section 12 of the Exchange Act.
Best Buy will provide without charge to each person, including any
beneficial owner of Preferred Securities, to whom a copy of this Prospectus is
delivered, upon the written or oral request of any such person, a copy of any or
all of the documents incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference in such documents). Requests should be directed to Best Buy Co., Inc.,
7075 Flying Cloud Drive, Eden Prairie, Minnesota 55344, Attn: Corporate
Communications, telephone (612) 947-2000.
4
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONNECTION WITH, THE MORE DETAILED INFORMATION AND THE COMPANY'S FINANCIAL
STATEMENTS INCLUDING THE NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS.
EXCEPT AS OTHERWISE INDICATED HEREIN, THE INFORMATION IN THIS PROSPECTUS ASSUMES
NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE "UNDERWRITING."
THE COMPANY
Best Buy is one of the nation's fastest growing specialty retailers. The
Company offers a wide selection of name brand consumer electronics, home office
equipment, entertainment software and appliances. In 1989, the Company
dramatically changed its method of retailing by introducing its "Concept II"
store format, a self-service, non-commissioned, discount style sales environment
designed to give the customer more control over the purchasing process. Consumer
electronics retailing had traditionally relied on a showroom format presenting
display models on the sales floor and storing the boxed merchandise in a back
room, thus enabling a salesperson to direct the customer to products yielding
the greatest commission. The Company found that an increasing number of
customers had become knowledgeable enough to select products without the
assistance of a commissioned salesperson and preferred to make purchases in a
more convenient and customer friendly manner. With its innovative retail format,
the Company has achieved significant success, as evidenced by comparable store
sales increases in excess of industry averages, moving it into a leading
position nationally in all of its principal product categories. Since the
beginning of fiscal 1993, the Company has added 103 stores and four distribution
centers, and now operates 176 stores, principally in the central United States.
In fiscal 1994, the Company expanded the geographic area it serves by entering
the Atlanta, Detroit and Phoenix markets. In the current fiscal year, the
Company is continuing its expansion to the coasts by entering Los Angeles,
Baltimore/Washington, D.C. and other new markets in Florida, Kentucky, Nevada,
North Carolina, Ohio and South Carolina. The Company anticipates operating 204
stores by the end of the current fiscal year and opening approximately 50
additional stores in fiscal 1996.
During the past year, the Company has been developing a strategy to further
enhance its store format. The strategy, known as "Concept III," features a
larger, redesigned store format created to produce a more informative and
exciting shopping experience for the customer. Through focus group interviews
and other research, the Company determined that customers wanted more product
information and a larger product selection. In order to meet these evolving
consumer preferences, the Company has developed interactive Answer Centers
featuring touch screen monitors from which customers and sales personnel can
immediately access product information. These Answer Centers, to be stationed
throughout the store, will utilize proprietary technology providing audio and
video presentations designed, by the Company, to enable users to compare
products and better understand the features and benefits of product options. The
enhanced store format will also feature more hands-on demonstrations allowing
customers to, among other things, experience audio and video products such as
"surround sound" systems and sample featured compact discs at approximately 100
private listening stations. Finally, these larger stores, generally 45,000
square feet with some as large as 58,000 square feet, will accommodate a larger
product selection intended to be as good as or better than the largest selection
offered by most of Best Buy's competitors in each of its principal product
categories. By the end of this fiscal year, approximately 10% of the Company's
stores will incorporate all of the Concept III enhancements, with most of the
remaining stores anticipated to be converted over the next three to four years.
By reacting quickly to changing consumer preferences, Best Buy has captured
a leading, and in some cases dominant, share in the markets it serves. The
success of the Company's retail format and the increase in the number of stores
operated has resulted in revenue growth of 223% and an increase in earnings of
334% over the last two fiscal years. In fiscal 1994, the Company's revenues
increased 86% to $3.0 billion, while comparable store sales increased 27%.
Fiscal 1994 earnings increased 110% to $41.7 million, before an accounting
change for income taxes. The Company expects that the implementation of its
Concept III strategy will enable it to maintain its market leadership position
as well as increase its market share.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS TO BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE PREFERRED SECURITIES,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
PREFERRED SECURITIES AND THE SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE
RELATED FEDERAL INCOME TAX CONSIDERATIONS.
5
THE OFFERING
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Securities Offered................ 4,000,000 of Best Buy Capital's % Convertible
Monthly Income Preferred Securities, liquidation
preference of $50 per security. Additionally, Best Buy
Capital and Best Buy have granted the Underwriters an
option for 30 days to purchase up to an additional
600,000 Preferred Securities at the initial public
offering price solely to cover over-allotments, if any.
Dividends......................... Dividends on the Preferred Securities will be cumulative
from the date of original issuance of the Preferred
Securities and will be payable at the annual rate of
% of the liquidation preference of $50 per Preferred
Security. Dividends will be paid monthly in arrears on
the last day of each calendar month, commencing
, 1994. The proceeds from the offering of
the Preferred Securities will be invested in the
Subordinated Debentures. Interest payment periods on the
Subordinated Debentures are monthly but may be extended
from time to time by Best Buy for up to 60 months, in
which event Best Buy Capital would be unable to make
monthly dividend payments on the Preferred Securities
during the period of any such extension. During such
period, interest on the Subordinated Debentures and
dividends on the Preferred Securities will compound
monthly. The failure of holders of the Preferred
Securities to receive dividends in full for 15
consecutive months would trigger the right of such
holders to obtain depositary shares (the "Depositary
Shares"), each representing 1/100th of a share of Best
Buy Series A Cumulative Convertible Preferred Stock, par
value $1.00 per share ("Best Buy Series A Preferred
Stock"), as described below under "Optional Exchange for
Depositary Shares." See "Investment Considerations -
Option to Extend Payment Periods; Federal Income Tax
Consequences," "Description of Securities Offered -
Description of the Subordinated Debentures - Option to
Extend Interest Payment Period" and "Description of
Securities Offered - Preferred Securities - Optional
Exchange for Depositary Shares."
Liquidation Preference............ $50 per Preferred Security, plus an amount equal to any
accumulated and unpaid dividends (whether or not earned
or declared).
Conversion into Best Buy
Common Stock..................... Each Preferred Security is convertible in the manner
described below at the option of the holder, at any time
prior to the Conversion Expiration Date (as defined
below), into shares of Best Buy Common Stock, par value
$.10 per share (the "Best Buy Common Stock"), at the
rate of shares of Best Buy Common Stock for each
Preferred Security (equivalent to a conversion price of
$ per share of Best Buy Common Stock), subject to
adjustment in certain circumstances. A holder of a
Preferred Security wishing to exercise its conversion
right shall surrender such Preferred Security, together
with an irrevocable conversion notice, to a conversion
agent acting on behalf of the holders of Preferred
Securities (the "Conversion Agent"), which shall
exchange the Preferred Security for a portion of the
Subordinated Debentures held by
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Best Buy Capital and immediately convert such
Subordinated Debentures into Best Buy Common Stock. On
and after , 1997, and provided that Best Buy
Capital is current in the payment of dividends on the
Preferred Securities, Best Buy Capital may, at its
option, cause the conversion rights of holders of the
Preferred Securities to expire. Best Buy Capital may
exercise this option only if for 20 trading days within
any period of 30 consecutive trading days, including the
last trading day of such period, the last sale price of
Best Buy Common Stock, as reported on the NYSE Composite
Transaction Tape, exceeds 120% of the conversion price
of the Preferred Securities, subject to adjustment in
certain circumstances. In order to exercise its
conversion expiration option, Best Buy Capital must
issue a press release announcing the date upon which
conversion rights will expire (the "Conversion
Expiration Date") prior to the opening of business on
the second trading day after a period in which the
condition in the preceding sentence has been met. The
Conversion Expiration Date shall be a date not less than
30 and not more than 60 days following the date of such
press release or, if Best Buy Capital has not exercised
its conversion expiration option, the earlier of the
date of an Exchange Election referred to below under
"Optional Exchange for Depositary Shares" or two
business days prior to the scheduled date for the
mandatory redemption of the Preferred Securities. See
"Description of Securities Offered - Preferred
Securities - Conversion Rights."
Redemption........................ If at any time following the Conversion Expiration Date,
less than 5% of the Preferred Securities remain
outstanding, such Preferred Securities shall be
redeemable at the option of Best Buy Capital, as a whole
but not in part, at a redemption price of $50 per
Preferred Security together with accumulated and unpaid
dividends (whether or not earned or declared) (the
"Redemption Price"). The Preferred Securities are also
subject to mandatory redemption by Best Buy Capital on
the 30th anniversary of the date of original issuance at
the Redemption Price.
Optional Exchange for
Depositary Shares................ Upon the failure of holders of the Preferred Securities
to receive, for 15 consecutive months, the full amount
of dividend payments, the holders of a majority of the
aggregate liquidation preference of Preferred Securities
then outstanding, voting as a class at a special
partnership meeting called for such purpose or by
written consent, may, at their option, direct the
Conversion Agent to exchange all (but not less than all)
Preferred Securities for all (but not less than all) of
the Subordinated Debentures held by Best Buy Capital,
and to immediately exchange the Subordinated Debentures
on behalf of such holders for Depositary Shares, each
representing a 1/100th interest in a share of Best Buy
Series A Preferred Stock at the Exchange Price (as
defined under "Description of Securities Offered -
Preferred Securities - Dividends"). Each Depositary
Share will entitle the holder thereof to all
7
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proportional rights and preferences of the Best Buy
Series A Preferred Stock (including dividend, voting,
conversion and liquidation rights and preferences). The
Best Buy Series A Preferred Stock will have dividend,
conversion and other terms substantially similar to the
terms of the Preferred Securities (adjusted
proportionately per Depositary Share), except that,
among other things, the holders of Best Buy Series A
Preferred Stock will have the right to elect two
additional directors of Best Buy whenever dividends on
the Best Buy Series A Preferred Stock are in arrears for
18 months (including for this purpose any arrearage with
respect to the Preferred Securities) and the Best Buy
Series A Preferred Stock will not be subject to
mandatory redemption.
Guarantee......................... Pursuant to a Guarantee Agreement (the "Guarantee"),
Best Buy will irrevocably and unconditionally agree, on
a subordinated basis, to pay in full (a) the dividends
(including any Additional Dividends thereon, as defined
under "Description of Securities Offered - Preferred
Securities - Additional Dividends") by Best Buy Capital
on the Preferred Securities, if and to the extent
declared from funds of Best Buy Capital legally
available therefor, (b) the redemption price (including
all accumulated and unpaid dividends) of the Preferred
Securities, to the extent of funds of Best Buy Capital
legally available therefor, and (c) payments on
liquidation with respect to the Preferred Securities, to
the extent of the assets of Best Buy Capital available
for distribution to holders of the Preferred Securities.
The Guarantee will be unsecured and will be subordinated
to all Senior Indebtedness (as defined herein) of Best
Buy and will rank PARI PASSU with the most senior
preferred shares hereafter issued by Best Buy and PARI
PASSU with any guarantee now or hereafter entered into
by Best Buy in respect of any preferred or preference
stock of any affiliate of Best Buy. A holder of
Preferred Securities may enforce Best Buy's obligations
under the Guarantee directly against Best Buy, and Best
Buy waives any right or remedy to require that an action
be brought against Best Buy Capital or any other person
before proceeding against Best Buy. See "Investment
Considerations - Subordinate Obligations Under Guarantee
and Subordinated Debentures; Dependence on Best Buy" and
"Description of Securities Offered - Description of the
Guarantee."
Voting Rights..................... Generally, holders of the Preferred Securities will not
have any voting rights. However, upon an Event of
Default under the Subordinated Debentures (as described
under "Description of Securities Offered - Description
of the Subordinated Debentures - Events of Default"), a
failure by Best Buy Capital to pay dividends in full on
the Preferred Securities for 15 consecutive months
(other than as a result of a deferral by Best Buy of
interest payments on the Subordinated Debentures as
described under "Subordinated Debentures" below) or a
default by Best Buy under the Guarantee, the holders of
the Preferred Securities will be entitled to appoint and
authorize a Special General Partner to enforce Best Buy
Capital's rights
8
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under the Subordinated Debentures, enforce Best Buy's
obligations under the Guarantee and declare and pay
dividends on the Preferred Securities to the extent
funds are legally available therefor. In addition, upon
the failure of holders of Preferred Securities to
receive, for 15 consecutive months, the full amount of
dividend payments as a result of a deferral by Best Buy
of interest payments on the Subordinated Debentures,
holders of the Preferred Securities will be entitled to
call a special partnership meeting for the purpose of
deciding whether to exchange all Preferred Securities
then outstanding for Depositary Shares, as described
above under "Optional Exchange for Depositary Shares."
See "Description of Securities Offered - Preferred
Securities - Dividends."
Use of Proceeds................... The proceeds to be received by Best Buy Capital from the
sale of the Preferred Securities will be invested in the
Subordinated Debentures of Best Buy, which, after paying
the expenses associated with this Offering, will use
such funds to support its expansion plans and for
working capital and other general corporate purposes.
See "Use of Proceeds."
Subordinated Debentures........... The Subordinated Debentures will have a maturity of 30
years and will bear interest at the rate of % per
annum, payable monthly in arrears. Best Buy has the
right to select an interest payment period or periods
longer than one month (during which period or periods
interest will compound monthly), provided that any
extended interest payment period does not exceed 60
months and provided further that an extended interest
payment period may not extend the stated maturity of the
Subordinated Debentures. If Best Buy selects an interest
payment period longer than one month, it will be
prohibited from paying dividends on any of its capital
stock and making certain other restricted payments until
monthly interest payments are resumed and all
accumulated and unpaid interest (including any interest
payable to effect monthly compounding) on the
Subordinated Debentures is brought current. Best Buy
will have the right to make partial payments of such
interest during the extended interest payment period.
The Subordinated Debentures are convertible into shares
of Best Buy Common Stock at the option of the holders
thereof and exchangeable for Depositary Shares
representing Best Buy Series A Preferred Stock as
described above under "Optional Exchange for Depositary
Shares." The payment of the principal and interest on
the Subordinated Debentures will be subordinated in
right of payment to all Senior Indebtedness (as defined
under "Description of Securities Offered - Description
of the Subordinated Debentures - Subordination") of Best
Buy. As of August 27, 1994, Best Buy had $392 million of
indebtedness constituting Senior Indebtedness. See
"Investment Considerations - Subordinate Obligations
Under Guarantee and Subordinated Debentures; Dependence
on Best Buy."
9
SUMMARY FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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FISCAL PERIODS ENDED(1) SIX MONTHS ENDED
---------------------------------------------------------------- --------------------------
MARCH 3, MARCH 2, FEBRUARY 29, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 27,
1990 1991(2) 1992 1993 1994(3) 1993 1994
---------- ---------- ------------ ------------ ------------ ------------ ------------
STATEMENT OF EARNINGS DATA:
Revenues................... $ 512,850 $ 664,823 $ 929,692 $1,619,978 $3,006,534 $ 1,004,899 $ 1,782,575
Gross profit............... 120,341 141,657 181,062 284,034 456,925 168,674 251,136
Operating income........... 13,147 10,976 18,776 35,908 77,178 16,764 29,345
Earnings before cumulative
effect of accounting
change.................... 5,683 4,540 9,601 19,855 41,710 9,110 11,841
Net earnings (loss)........ 5,683 (9,457) 9,601 19,855 41,285 8,685 11,841
Per share amounts:
Earnings before
cumulative effect of
accounting change....... .23 .18 .33 .57 1.01 .23 .27
Net earnings (loss)...... .23 (.38) .33 .57 1.00 .22 .27
OPERATING DATA:
Comparable store sales
increase (4).............. 0.3% 1.0% 14.0% 19.4% 26.9% 21.4% 26.4%
Number of stores (end of
period)................... 49 56 73 111 151 124 168
Average revenues per store
(5)....................... $ 11,500 $ 12,400 $ 14,300 $ 17,600 $ 22,600 $ 19,200 $ 25,200
Gross profit percentage.... 23.5% 21.3% 19.5% 17.5% 15.2% 16.8% 14.1%
Selling, general and
administrative expenses
percentage................ 20.9% 19.7% 17.5% 15.3% 12.6% 15.1% 12.4%
Operating income
percentage................ 2.6% 1.6% 2.0% 2.2% 2.6% 1.7% 1.6%
Inventory turns (6)........ 3.7x 4.5x 5.1x 4.8x 5.0x 5.0x 4.7x
Ratio of earnings to
combined fixed charges and
preferred dividends (7)... 2.27x 1.79x 2.46x 3.35x 3.87x 2.84x 1.89x
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AUGUST 27, 1994
---------------------------
ACTUAL AS ADJUSTED(8)
---------- ---------------
BALANCE SHEET DATA:
Working capital................................................................... $ 318,487 $ 518,487
Property and equipment, net....................................................... 235,126 235,126
Total assets...................................................................... 1,270,905 1,375,905
Long-term debt, including current portion......................................... 220,157 220,157
Total liabilities................................................................. 943,259 848,259
Convertible preferred securities of subsidiary.................................... -- 200,000
Shareholders' equity.............................................................. 327,646 327,646
<FN>
------------------
(1) The fiscal period ended March 3, 1990 had approximately 11 months because
the Company changed its fiscal year to a 52/53 week period ending on the
Saturday closest to the last day in February of each year.
(2) During fiscal 1991, the Company changed its method of accounting for
extended service plans, resulting in a cumulative effect adjustment of
($14.0 million), or ($.56) per share. Profit recognized from the sale of
extended service plans under this accounting method was $10.8 million (on a
pro forma basis), $12.3 million, $11.8 million, $12.0 million and $12.5
million in fiscal years 1990 through 1994, respectively, and was $6.1
million and $7.4 million for the six months ended August 28, 1993 and
August 27, 1994, respectively. This profit is before any allocation of
selling, general and administrative expenses, except for direct selling
expenses, primarily commissions.
(3) During fiscal 1994, the Company changed its method of accounting for
incomes taxes resulting in a cumulative effect adjustment of ($425,000), or
($.01) per share. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 7 to the Financial
Statements.
(4) Comparable stores are stores open at least 14 full months.
(5) Average revenues per store are based upon total revenues for the trailing
12-month period divided by the weighted average number of stores open
during such 12-month period.
(6) Inventory turns are calculated based upon a rolling 12-month average of
inventory balances.
(7) For purposes of determining the ratio of earnings to combined fixed charges
and preferred dividends, earnings are defined as income before income taxes
plus fixed charges other than capitalized interest. Fixed charges consist
of interest costs (including the amortization of deferred debt issuance
costs and capitalized interest), the portion of rental expense that is
representative of an interest factor and preferred dividends.
(8) Adjusted to give effect to the sale of 4,000,000 Preferred Securities in
connection with this offering, before deducting the estimated offering
expenses and Underwriters' Compensation.
10
INVESTMENT CONSIDERATIONS
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS AND SHOULD PARTICULARLY
CONSIDER THE FOLLOWING MATTERS:
SUBORDINATE OBLIGATIONS UNDER GUARANTEE AND SUBORDINATED DEBENTURES;
DEPENDENCE ON BEST BUY
Best Buy's obligations under the Guarantee and the Subordinated Debentures
are subordinate and junior in right of payment to all Senior Indebtedness of
Best Buy. There are no terms in the Preferred Securities, the Subordinated
Debentures or the Guarantee that limit Best Buy's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Subordinated
Debentures and the Guarantee, or the ability of its subsidiaries to incur
additional indebtedness. The Guarantee guarantees payment to the holders of the
Preferred Securities of accumulated and unpaid monthly dividends, amounts
payable on redemption, and amounts payable on liquidation of Best Buy Capital.
In each case, however, such amount is guaranteed only to the extent that Best
Buy Capital has funds on hand legally available therefor and payment thereof
does not otherwise violate applicable law. If Best Buy were to default on its
obligation to pay interest or amounts payable on redemption or maturity of the
Subordinated Debentures, Best Buy Capital would lack legally available funds for
the payment of dividends or amounts payable on redemption of the Preferred
Securities, and in such event holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. See "Description of
Securities Offered - Description of the Guarantee" and "Description of
Securities Offered - Description of the Subordinated Debentures -
Subordination."
Best Buy Capital's ability to pay amounts due on the Preferred Securities is
solely dependent upon Best Buy's ability to make payments on the Subordinated
Debentures as and when required. Since Best Buy is also the Guarantor of the
Preferred Securities, in the event that Best Buy Capital is unable to make
payments on the Preferred Securities as and when required, there is a
substantial likelihood that Best Buy will be unable to make payments on the
Guarantee as and when required.
OPTION TO EXTEND PAYMENT PERIODS; FEDERAL INCOME TAX CONSIDERATIONS
Best Buy has the right to extend interest payment periods on the
Subordinated Debentures for up to 60 months, and, as a consequence, monthly
dividends on the Preferred Securities would be deferred (but will continue to
compound monthly) by Best Buy Capital during any such extended interest payment
period. In the event that Best Buy exercises this right, neither Best Buy nor
any majority-owned subsidiary of Best Buy shall declare or pay any dividend on,
or redeem, purchase, otherwise acquire or make a liquidation payment with
respect to, any of its common or preferred stock or make any guarantee payment
with respect to the foregoing (other than payments under the Guarantee or
dividend or guarantee payments to Best Buy from a majority-owned subsidiary),
during any such extended period and until all dividend arrearages have been paid
in full. No extended interest payment period may extend the stated maturity of
the Subordinated Debentures. See "Description of Securities Offered -
Description of the Subordinated Debentures - Option to Extend Interest Payment
Period." Should an extended interest payment period occur, Best Buy Capital,
except in very limited circumstances, will continue to accrue income for United
States federal income tax purposes which will be allocated, but not distributed,
to holders of record of Preferred Securities. As a result, such holders will
include such interest in gross income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash related
to such income if such a holder disposes of its Preferred Securities prior to
the record date for payment of dividends. See "Certain Federal Income Tax
Considerations - Original Issue Discount."
In the event such a deferral continues for more than 15 months, the holders
of a majority of the aggregate liquidation preference of the Preferred
Securities then outstanding may cause the exchange of all of the Preferred
Securities for Depositary Shares representing interests in Best Buy Series A
Preferred Stock at the Exchange Price.
11
For a discussion of the taxation of such an exchange to holders, including
the possibility that holders who exchange their Preferred Securities for
Depositary Shares may be subject to additional income tax to the extent accrued
but unpaid interest on the Subordinated Debentures is converted into accumulated
and unpaid dividends on the Best Buy Series A Preferred Stock represented by
Depositary Shares received in exchange for the Preferred Securities, see
"Certain Federal Income Tax Considerations - Exchange of Preferred Securities
for Best Buy Stock."
EXPIRATION OF CONVERSION RIGHTS
On and after , 1997, Best Buy Capital may, subject to certain
conditions, at its option, cause the conversion rights of holders of Preferred
Securities to expire. See "Description of Securities Offered - Preferred
Securities - Expiration of Conversion Rights."
POTENTIAL COVENANT RESTRICTIONS
Certain covenants under one or more outstanding debt instruments of Best Buy
may restrict the amount of dividends that may be declared by Best Buy Capital on
the Preferred Securities and, if issued, by Best Buy on the Depositary Shares
representing the Best Buy Series A Preferred Stock. Monthly dividends declared
by Best Buy Capital will, until paid, constitute debt of Best Buy, the
incurrence of which is subject to a limitation on consolidated debt of Best Buy
under one of its indentures. In the event of an exchange of the Preferred
Securities for Depositary shares representing the Best Buy Series A Preferred
Stock, the payment of dividends by Best Buy on the Best Buy Series A Preferred
Stock will be subject to a separate limitation on restricted payments by the
Company and its subsidiaries. For a discussion of these limitations, see
"Description of Securities Offered - Preferred Securities - Dividends" and
"Description of Securities Offered - Description of Best Buy Series A Preferred
Stock."
COMPETITION
Retailing in each of the principal product categories offered by Best Buy is
highly competitive. Best Buy competes in most of its markets against Sears and
Montgomery Ward and in an increasing number of markets against Circuit City and
Incredible Universe (owned by Tandy Corp.). It also competes against computer
superstores such as Computer City (owned by Tandy Corp.) and CompUSA and
entertainment software superstores operated by Musicland, Tower Records and
Blockbuster Entertainment. Certain of these competitors have significantly
greater financial resources than Best Buy. The Company also competes against
independent dealers, discount stores, wholesale clubs, office products
superstores and mass merchandisers. The Company anticipates increased
competition with national competitors in several of the Company's new and
current markets. See "Business - Competition."
QUARTERLY FLUCTUATIONS AND SEASONALITY
Similar to most retailers, Best Buy's business is seasonal, with revenues
and earnings being generally lower during the first half of each fiscal year and
greater during the second half of the fiscal year, which includes the year-end
holiday season. In addition, Best Buy's working capital needs are seasonal, with
the Company's greatest working capital requirements occurring during the second
half of each fiscal year. Accordingly, the Company's operating results may be
affected by holiday spending patterns, as well as the timing of new store
openings and general economic conditions.
12
USE OF PROCEEDS
Best Buy Capital will invest the proceeds from the Offering in the
Subordinated Debentures. Best Buy, after payment of the Underwriters'
Compensation (as defined under "Underwriting") and other expenses of the
Offering, will use the net proceeds of $ ($ if the Underwriters'
over-allotment option is exercised in full) from the sale of the Subordinated
Debentures to Best Buy Capital to support its expansion plans, including to fund
initial new store inventories, to acquire store fixtures and make leasehold
improvements, to remodel and expand existing stores, to pay the cost of land
acquisition and construction pending sale and leaseback of the property, and to
continue to improve its management information systems, as well as for other
general corporate purposes. See "Business - Store Locations and Expansion" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources." Pending application for the
foregoing purposes, the net proceeds will be used to reduce short-term
borrowings and the excess, if any, will be invested in short-term, investment
grade or government securities.
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
Best Buy at August 27, 1994, and as adjusted to reflect the Offering, assuming
no exercise of the Underwriters' over-allotment option. The table should be read
in conjunction with the financial statements of Best Buy elsewhere in this
Prospectus and those incorporated by reference herein. See "Use of Proceeds,"
"Selected Financial and Operating Data," "Management's Discussion and Analysis
of Financial Condition and Results of Operations," and "Description of
Securities Offered - Preferred Securities."
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AUGUST 27, 1994
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ACTUAL AS ADJUSTED
----------- ------------
(IN THOUSANDS)
Short-term debt (including current portion of long-term debt).......................... $ 104,144 $ 9,144
----------- ------------
----------- ------------
Long-term debt:
Capitalized lease obligations (5.3% to 10.5%)........................................ $ 15,097 $ 15,097
Equipment loans (5.3% to 11.5%)...................................................... 24,012 24,012
Subordinated notes (8.6% to 9.9%).................................................... 171,904 171,904
----------- ------------
Total long-term debt............................................................... 211,013 211,013
Convertible preferred securities of subsidiary......................................... -- 200,000
Shareholders' equity:
Preferred Stock, $1.00 par value per share; 400,000 shares authorized; none
outstanding......................................................................... -- --
Common Stock, $.10 par value per share; 120,000,000 shares authorized; 42,067,290
shares outstanding (1).............................................................. 4,207 4,207
Additional paid-in capital........................................................... 226,330 226,330
Retained earnings.................................................................... 97,109 97,109
----------- ------------
Total shareholders' equity......................................................... 327,646 327,646
----------- ------------
Total capitalization............................................................. $ 538,659 $ 738,659
----------- ------------
----------- ------------
<FN>
--------------
(1) Does not include 7,755,851 shares reserved for issuance pursuant to the
Company's stock option plans as of August 27, 1994, or 26,100 shares
reserved for issuance pursuant to outstanding stock options not granted
under such plans.
13
MARKET PRICES OF BEST BUY COMMON STOCK
Best Buy Common Stock is traded on the NYSE under the symbol "BBY." At
August 27, 1994, there were 1,401 holders of record of Best Buy Common Stock and
42,067,290 shares outstanding. The following table sets forth the high and low
sale prices, as adjusted for stock splits, for Best Buy Common Stock, as
reported by the NYSE, for the periods indicated.
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HIGH LOW
--------- ---------
FISCAL 1993:
1st Quarter ended May 30, 1992........................................................... $ 9 11/32 $ 5 7/32
2nd Quarter ended August 29, 1992......................................................... 6 3/8 4 23/32
3rd Quarter ended November 28, 1992...................................................... 11 27/32 5 1/2
4th Quarter ended February 27, 1993...................................................... 15 23/32 10 25/32
FISCAL 1994: 