AutoZone 2010 Annual Report Download - page 115

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fiscal 2009, the Company used the proceeds from the issuance of debt to repay outstanding commercial paper
indebtedness, to prepay our $300 million term loan in August 2009 and for general corporate purposes. Proceeds
from the debt issuance in fiscal 2008 were used to repay outstanding commercial paper indebtedness and for
general corporate purposes.
The 5.75% Senior Notes issued in July 2009 and the 6.50% and 7.125% Senior Notes issued during August 2008,
(collectively, the “Notes”), are subject to an interest rate adjustment if the debt ratings assigned to the Notes are
downgraded. They also contain a provision that repayment of the Notes may be accelerated if we experience a
change in control (as defined in the agreements). Our borrowings under our other senior notes contain minimal
covenants, primarily restrictions on liens. Under our revolving credit facility, covenants include limitations on
total indebtedness, restrictions on liens, a minimum fixed charge coverage ratio and a change of control provision
that may require acceleration of the repayment obligations under certain circumstances. All of the repayment
obligations under our borrowing arrangements may be accelerated and come due prior to the scheduled payment
date if covenants are breached or an event of default occurs.
As of August 28, 2010, we were in compliance with all covenants related to our borrowing arrangements and
expect to remain in compliance with those covenants in the future.
Our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation
expense (“EBITDAR”) ratio was 2.4:1 and 2.5:1 as of August 28, 2010 and August 29, 2009, respectively. We
calculate adjusted debt as the sum of total debt, capital lease obligations and rent times six; and we calculate
EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net
income. We target our debt levels to a ratio of adjusted debt to EBITDAR in order to maintain our investment
grade credit ratings. We believe this is important information for the management of our debt levels.
Stock Repurchases
During 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to
exceed a dollar maximum established by our Board of Directors. The program was amended in June 2010 to
increase the repurchase authorization to $8.9 billion from $8.4 billion. From January 1998 to August 28, 2010, we
have repurchased a total of 121.7 million shares at an aggregate cost of $8.7 billion. We repurchased 6.4 million
shares of common stock at an aggregate cost of $1.1 billion during fiscal 2010, 9.3 million shares of common
stock at an aggregate cost of $1.3 billion during fiscal 2009, and 6.8 million shares of common stock at an
aggregate cost of $849.2 million during fiscal 2008. Considering cumulative repurchases as of August 28, 2010,
we have $185.4 million remaining under the Board of Director’s authorization to repurchase our common stock.
On September 28, 2010, the Board of Directors voted to increase the authorization by $500 million to raise the
cumulative share repurchase authorization from $8.9 billion to $9.4 billion. We have repurchased approximately
800 thousand shares of our common stock at an aggregate cost of $185.9 million during fiscal 2011.
25
10-K