Fitch Affirms 'BBB' Rating On Best Buy; Rating Outlook Stable.Business Editors CHICAGO--(BUSINESS WIRE)--Sept. 18, 2003 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed its 'BBB' rating on Best Buy Co. Inc.'s (BBY BBY Best Buy (stock symbol) BBY Before Battle of Yavin (Star Wars) BBY BeBeyond (Chinese online community) ) bank credit facility and senior unsecured convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. and its 'BBB-' rating on the company's convertible subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before . Approximately $835 million of debt is affected. The Rating Outlook is Stable. The ratings on Best Buy reflect the company's strong customer acceptance and market share, solid operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: and liquid balance sheet. These factors are balanced against the cyclical nature of the consumer electronics industry. The company has resolved several operating issues, in particular the recent disposition of its Musicland subsidiary which has reduced leverage by eliminating off balance sheet liabilities related to rental expense from its mall stores. The company still faces challenges in a competitive market place, with non traditional competitors such as Wal-Mart and Costco increasing their mix of consumer electronics merchandise. However, recent improvements in operating efficiencies as well as a highly liquid balance sheet enable the company to remain competitive. Despite a still weak retail market overall, BBY continues to report above average comparable store sales, which are up 5% year to date, and are expected to remain in this range for the remainder of the year. Sales continue to be driven by consumer demand for digital products and notebook computers. For the LTM LTM abbr. long-term memory ended 8/30/03, total adjusted debt/EBITDAR was 2.7 times (x) and EBITDAR/total interest plus rents was 3.3x. Fitch expects some improvement in credit measures by the company's fiscal year-end Fiscal Year-End The completion of a one-year, or 12-month, accounting period. Notes: The reason that a company's fiscal year often differs from the calendar year and does not close on Dec 31, is due to the nature of company's needs. (March 2004) as off balance sheet debt declines and operations hold steady. In addition, liquidity remains strong with cash on the balance sheet of $1.7 billion as of 8/30/03, and it is likely that cash will rise further over the next 6 months as cost savings initiatives implemented last year begin to impact results. Fitch expects the company to continue to manage itself conservatively as the difficult retail environment persists, and does not expect the company to engage in any material acquisitions in the near term. The company operates more than 706 stores throughout the U.S. and Canada in several different formats. Its 566 Best Buy stores in the U.S. and 120 Future Shops/BBY Canada stores are big box stores that offer a broad array of consumer electronics, music and appliances. The 20 Magnolia Hi-Fi stores, concentrated in the Pacific Northwest, serve a higher end Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. client base. |
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