AutoZone 2004 Annual Report Download - page 36

37’04฀Annual฀Report
Significant฀components฀of฀the฀Company’s฀deferred฀tax฀assets฀and฀liabilities฀were฀as฀follows:
(in฀thousands)
August฀28,฀
2004 ฀
August฀30,฀
2003
Net฀deferred฀tax฀assets:
฀ Domestic฀net฀operating฀loss฀and฀credit฀carryforwards $฀ 30,775 $฀ 29,181
฀ Foreign฀net฀operating฀loss฀and฀credit฀carryforwards 8,597 1,763
฀ Insurance฀reserves 23,584 29,319
฀ Warranty฀reserves 2,558 28,786
฀ Closed฀store฀reserves 4,437 10,321
฀ Minimum฀pension฀liability 7,322 ฀ 18,072
฀ Total฀deferred฀tax฀assets 77,273 117,442
฀ Less:฀Valuation฀allowance (16,384) ฀ (14,329)
฀ Net฀deferred฀tax฀assets 60,889 ฀ 103,113
Deferred฀tax฀liabilities:
฀ Property฀and฀equipment 25,000 23,401
฀ Inventory 31,565 27,997
฀ Derivatives 1,740 15,710
฀ Other 14,323 ฀ 6,466
฀ Deferred฀tax฀liabilities 72,628 ฀ 73,574
฀ Net฀deferred฀tax฀(liabilities)฀assets $฀ ฀฀(11,739) ฀ $฀ 29,539
For฀the฀years฀ended฀August฀28,฀2004฀and฀August฀30,฀2003,฀the฀Company฀had฀deferred฀tax฀assets฀of฀$9.4฀million฀and฀$9.6฀million฀from฀
federal฀tax฀net฀operating฀loss฀carryforwards฀(“NOLs”)฀of฀$26.9฀million฀and฀$27.5฀million,฀deferred฀tax฀assets฀of฀$11.4฀million฀and฀$12.1฀
million฀from฀state฀tax฀NOLs฀of฀$465.5฀million฀and฀$492.9฀million,฀and฀deferred฀tax฀assets฀of฀$5.7฀million฀and฀$1.8฀million฀from฀foreign฀
tax฀NOLs฀of฀$16.8฀million฀and฀$5.2฀million,฀respectively.฀These฀NOLs฀will฀expire฀between฀fiscal฀2005฀and฀fiscal฀2022.฀The฀federal฀and฀
state฀NOLs฀relate฀primarily฀to฀the฀acquisitions฀of฀ADAP฀(which฀had฀been฀doing฀business฀as฀“Auto฀Palace”)฀and฀Chief฀Auto฀Parts,฀Inc.฀in฀
fiscal฀1998.฀The฀Company฀maintains฀an฀$8.6฀million฀valuation฀allowance฀against฀certain฀federal฀and฀state฀NOLs฀subject฀to฀annual฀limita-
tions฀resulting฀from฀its฀acquisition฀of฀ADAP,฀Inc.฀This฀valuation฀allowance฀was฀recorded฀as฀part฀of฀the฀ADAP,฀Inc.฀purchase฀accounting฀and,฀
if฀reversed,฀will฀be฀allocated฀to฀goodwill.฀Additionally,฀the฀Company฀had฀deferred฀tax฀assets฀of฀$12.9฀million฀at฀August฀28,฀2004,฀and฀$7.4฀
million฀at฀August฀28,฀2003,฀for฀federal,฀state,฀and฀Mexican฀income฀tax฀credit฀carryforwards.฀Certain฀tax฀credit฀carryforwards฀have฀no฀expi-
ration฀date฀and฀others฀will฀expire฀in฀fiscal฀2009฀through฀fiscal฀2014.
Note฀E—Financing฀
The฀Company’s฀long-term฀debt฀as฀of฀August฀28,฀2004,฀and฀August฀30,฀2003,฀consisted฀of฀the฀following:
(in฀thousands)
August฀28,฀
2004 ฀
August฀30,฀
2003
5.875%฀Senior฀Notes฀due฀October฀2012,฀effective฀interest฀rate฀of฀6.33% $฀ 300,000 $฀ 300,000
5.5%฀Senior฀Notes฀due฀November฀2015,฀effective฀interest฀rate฀of฀4.86% 300,000 ฀—
4.75%฀Senior฀Notes฀due฀November฀2010,฀effective฀interest฀rate฀of฀4.17% 200,000 ฀—
4.375%฀Senior฀Notes฀due฀June฀2013,฀effective฀interest฀rate฀of฀5.65% 200,000 200,000
6.5%฀Senior฀Notes฀due฀July฀2008 190,000 190,000
7.99%฀Senior฀Notes฀due฀April฀2006 150,000 150,000
6.0%฀Senior฀Notes฀due฀November฀2003 ฀— 150,000
Bank฀term฀loan฀due฀November฀2004,฀variable฀interest฀rate฀of฀2.26%฀at฀August฀30,฀2003 ฀— 250,000
Commercial฀paper,฀weighted฀average฀interest฀rate฀of฀1.6%฀at฀August฀28,฀2004,฀and฀1.2%฀at฀August฀30,฀2003 522,400 268,000
Other 6,850 ฀ 38,845
$1,869,250 ฀ $1,546,845
The฀Company฀maintains฀$1.0฀billion฀of฀revolving฀credit฀facilities฀with฀a฀group฀of฀banks.฀During฀fiscal฀2004,฀these฀credit฀facilities฀replaced฀
the฀previous฀$950฀million฀of฀revolving฀credit฀facilities.฀Of฀the฀$1.0฀billion,฀$300฀million฀expires฀in฀May฀2005.฀The฀remaining฀$700฀million฀
expires฀in฀May฀2009.฀The฀portion฀expiring฀in฀May฀2005฀is฀expected฀to฀be฀renewed,฀replaced฀or฀the฀option฀to฀extend฀the฀maturity฀date฀of฀
the฀then฀outstanding฀debt฀by฀one฀year฀will฀be฀exercised.฀The฀credit฀facilities฀exist฀primarily฀to฀support฀commercial฀paper฀borrowings,฀letters฀
of฀credit฀and฀other฀short-term฀unsecured฀bank฀loans.฀As฀the฀available฀balance฀is฀reduced฀by฀commercial฀paper฀borrowings฀and฀certain฀out-
standing฀letters฀of฀credit,฀the฀Company฀had฀$380.7฀million฀in฀available฀capacity฀under฀these฀facilities฀at฀August฀28,฀2004.฀The฀rate฀of฀
interest฀payable฀under฀the฀credit฀facilities฀is฀a฀function฀of฀the฀London฀Interbank฀Offered฀Rate฀(LIBOR),฀the฀lending฀bank’s฀base฀rate฀(as฀
defined฀in฀the฀facility฀agreements)฀or฀a฀competitive฀bid฀rate฀at฀the฀option฀of฀the฀Company.฀
Commercial฀paper฀and฀other฀short-term฀borrowings฀are฀classified฀as฀long-term,฀as฀the฀Company฀has฀the฀ability฀and฀intent฀to฀refinance฀them฀
on฀a฀long-term฀basis.