AutoZone 2010 Annual Report Download - page 116

10-K
Financial Commitments
The following table shows our significant contractual obligations as of August 28, 2010:
(in thousands)
Total
Contractual
Obligations
Less than
1 year
Between
1-3 years
Between
4-5 years
Over
5 years
Payment Due by Period
Long-term debt
(1)
................................ $2,882,300 $ 632,300 $ 500,000 $1,000,000 $ 750,000
Interest payments
(2)
............................. 617,225 140,600 245,238 155,800 75,587
Operating leases
(3)
............................... 1,740,047 196,291 357,943 284,836 900,977
Capital leases
(4)
................................... 92,745 21,947 44,832 25,966 —
Self-insurance reserves
(5)
.................... 158,384 60,955 43,045 22,688 31,696
Construction commitments ................. 15,757 15,757 — — —
$5,506,458 $1,067,850 $1,191,058 $1,489,290 $1,758,260
(1) Long-term debt balances represent principal maturities, excluding interest.
(2) Represents obligations for interest payments on long-term debt.
(3) Operating lease obligations are inclusive of amounts accrued within deferred rent and closed store obliga-
tions reflected in our consolidated balance sheets.
(4) Capital lease obligations include related interest.
(5) We retain a significant portion of the risks associated with workers’ compensation, employee health, gen-
eral and product liability, property, and vehicle insurance. These amounts represent estimates based on
actuarial calculations. Although these obligations do not have scheduled maturities, the timing of future
payments are predictable based upon historical patterns. Accordingly, we reflect the net present value of
these obligations in our consolidated balance sheets.
We have pension obligations reflected in our consolidated balance sheet that are not reflected in the table
above due to the absence of scheduled maturities and the nature of the account. As of August 28, 2010, our
pension liability is $211.5 million and our pension assets are valued at $117.2 million. Amounts recorded in
accumulated other comprehensive loss are $94.3 million at August 28, 2010. These amounts will be amortized
into pension expense in the future, unless they are recovered in future periods through actuarial gains.
Additionally, our tax liability for uncertain tax positions, including interest and penalties, was $46.5 million at
August 28, 2010. Approximately $28.4 million is classified as current liabilities and $18.1 million is classified
as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an
estimate of the timing of payments due to uncertainties in the timing of the settlement of these tax positions.
Off-Balance Sheet Arrangements
The following table reflects outstanding letters of credit and surety bonds as of August 28, 2010:
(in thousands)
Total
Other
Commitments
Standby letters of credit .................................................................................................................. $ 107,554
Surety bonds .................................................................................................................................... 23,723
$ 131,277
A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual
basis) and surety bonds are used to cover reimbursement obligations to our workers’ compensation carriers.
There are no additional contingent liabilities associated with them as the underlying liabilities are already
reflected in our consolidated balance sheet. The standby letters of credit and surety bonds arrangements expire
within one year, but have automatic renewal clauses.
Reconciliation of Non-GAAP Financial Measures
“Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” include certain financial measures not derived in accordance with generally accepted accounting
principles (“GAAP”). These non-GAAP financial measures provide additional information for determining our
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