AutoZone 2004 Annual Report Download - page 42
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NoteL—CommitmentsandContingencies
Constructioncommitments,primarilyfornewstores,totaledapproximately$26.4millionatAugust28,2004.
TheCompanycurrently,andfromtimetotime,isinvolvedinvariouslegalproceedingsincidentaltotheconductofitsbusiness.Although
theamountofliabilitythatmayresultfromtheseproceedingscannotbeascertained,theCompanydoesnotcurrentlybelievethat,inthe
aggregate,thesematterswillresultinliabilitiesmaterialtotheCompany’sfinancialcondition,resultsofoperationsorcashflows.
TheCompanyisself-insuredforworkers’compensation,automobile,generalandproductliabilityandpropertylosses.Beginninginfiscal
2004,aportionoftheseself-insuredlossesaremanagedthroughawholly-ownedinsurancecaptive.Thecaptive’sassetsandliabilitiesare
included,netofintercompanyeliminations,intheconsolidatedfinancialstatementsatAugust28,2004.TheCompanyisalsoself-insured
forhealthcareclaimsforeligibleactiveemployees.TheCompanymaintainscertainlevelsforstoplosscoverageforeachself-insuredplan.
Self-insurancecostsareaccruedbasedupontheaggregateoftheliabilityforreportedclaimsandanestimatedliabilityforclaimsincurred
butnotreported.
TheCompanyhad$97.2millioninoutstandinglettersofcreditand$10.8millioninsuretybondsasofAugust28,2004,whichallhave
expirationperiodsoflessthanoneyear.Asubstantialportionoftheoutstandingstandbylettersofcredit(whichareprimarilyrenewedon
anannualbasis)andsuretybondsareusedtocoverreimbursementobligationstoourworkers’compensationcarriers.Therearenoaddi-
tionalcontingentliabilitiesassociatedwiththemastheunderlyingliabilitiesarealreadyreflectedinourbalancesheet.Thelettersofcredit
andsuretybondsarrangementshaveautomaticrenewalclauses.
NoteM—SegmentReporting
TheCompanymanagesitsbusinessonthebasisofonereportablesegment.SeeNoteAforabriefdescriptionoftheCompany’sbusiness.
AsofAugust28,2004,themajorityoftheCompany’soperationswerelocatedwithintheUnitedStates.OtheroperationsincludeALLDATA
andtheMexicolocations,eachofwhichcompriseslessthan3percentofconsolidatednetsales,netincomeandtotalassets.Thefollowing
dataispresentedinaccordancewithStatementofFinancialAccountingStandardsNo.131,“DisclosuresaboutSegmentsofanEnterprise
andRelatedInformation.”
YearEnded
(inthousands)
August28,
2004
August30,
2003
August31,
2002
Primarybusinessfocus:
U.S.Retail $4,727,402 $4,638,361 $4,621,234
Commercial 740,480 670,010 531,776
Other 169,143
148,752
172,500
Netsales $5,637,025
$5,457,123
$5,325,510