Assume that Home and Office City, Inc., provided the following comparative data concerning long-term debt in the notes to its 2011 annual report (amounts in millions):

As indicated, Home and Office City€™s 31„4% Convertible Subordinated Notes were converted into shares of common stock in October 2010. How many shares of stock were issued in conversion of these notes?
b. Regarding the 61„2% Senior Notes, Home and Office City, Inc., also disclosed that €œThe Company, at its option, may redeem all or any portion of the Senior Notes by notice to the holder. The Senior Notes are redeemable at a redemption price, plus accrued interest, equal to the greater of (1) 100% of the principal amount of the Senior Notes to be redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes to maturity.€
Redeemable fixed-rate notes, such as those described here, are similar to callable term bonds. Thinking of the 61„2% Senior Notes on this basis, would it have been possible for Home and Office City, Inc., to redeem (€œcall€) these notes for an amount
1. Below face value (at a discount)?
2. Above face value (at a premium)?
3. Equal to face value (at par)?
What circumstances would have been most likely to prompt Home and Office City to redeem these notes?
c. Recall from the discussion of Cash and Cash Equivalents in Chapter 5 that commercial paper is like an IOU issued by a very creditworthy corporation. Home and Office City€™s note disclosures concerning commercial paper reveal that €œThe company has a back-up credit facility with a consortium of banks for up to $800 million. The credit facility contains various restrictive covenants, none of which is expected to materially impact the company€™s liquidity or capital resources.€ What do you think is meant by this statement?
d. What other information would you have wanted to know about Home and Office City€™s €œCapital Lease Obligations€ when making an assessment of the company€™s overall liquidity and leverage?
e. Regarding the €œInstallment Notes Payable,€ what is meant by €œinterest imputed at rates between 5.2% and 10%€?
f. Why do you suppose that Home and Office City€™s €œUnsecured Bank Loan€ was immaterial in relation to the company€™s total long-term debt?
g. Note that the €œcurrent installments€ due on Home and Office City€™s long-term debt were immaterial in amount for both years presented. Based on the data presented in this case, explain why this is likely to change over the next fiveyears.

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December December 31, 2011 31, 2010 3¼% Convertible Subordinated Notes, due October 1, 2012; converted into shares of common stock of the Company at a conversion price of $15.3611 per share in October 2010 6 % Senior Notes, due September 15, 2015; interest payable semiannually on March 15 and September 15 beginning $1,103 Commercial Paper, weighted average interest rate of 4.8% at 246 Capital Lease Obligations; payable in varying installments 216 180 Installment Notes Payable; interest imputed at rates between 5.2% and 10.0%; payable in varying installments through 2029. 45 27 Unsecured Bank Loan; floating interest rate averaging 6.05% in fiscal 2011 and 5.90% in fiscal 2010; payable in 15 15 Variable-Rate Industrial Revenue Bonds; secured by letters of credit or land; interest rates averaging 2.9% during fiscal 2011 and 3.8% during fiscal 2010; payable in varying installments through 2021 3 9 $1,580 14 $1,566 Less cuent installments .. 29