AutoZone 2013 Annual Report Download - page 88

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On April 24, 2012, we issued $500 million in 3.700% Senior Notes due April 2022 under the Shelf Registration.
Proceeds from the debt issuance on April 24, 2012, were used to repay a portion of the commercial paper
borrowings and for general corporate purposes. On November 15, 2010, we issued $500 million in 4.000%
Senior Notes due 2020 under a shelf registration statement filed with the Securities and Exchange Commission on
July 29, 2008. We used the proceeds from the November 15, 2010 issuance of debt to repay the principal due
relating to the 4.750% Senior Notes that matured on November 15, 2010, to repay a portion of the commercial
paper borrowings and for general corporate purposes.
The 5.750% Senior Notes issued in July 2009 and the 6.500% 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. The Notes, along with the 3.125% Senior Notes issued in April 2013, the 2.875% Senior Notes
issued in November 2012, the 3.700% Senior Notes issued in April 2012 and the 4.000% Senior Notes issued in
during November 2010, 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 maximum debt to earnings ratio, and a change of control provision that
may require acceleration of the repayment obligations under certain circumstances. These covenants are in
addition to the consolidated interest coverage ratio discussed above. 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 31, 2013, we were in compliance with all covenants related to our borrowing arrangements and
expect to remain in compliance with those covenants in the future.
For the fiscal year ended August 31, 2013, our adjusted debt to earnings before interest, taxes, depreciation,
amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.5:1 as compared to 2.5:1 as
of the comparable prior year end. 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 “Board”). On June 11, 2013, the Board
voted to increase the authorization by $750 million to raise the cumulative share repurchase authorization from
$12.65 billion to $13.40 billion. From January 1998 to August 31, 2013, we have repurchased a total of 134.6
million shares at an aggregate cost of $12.93 billion. We repurchased 3.5 million shares of common stock at an
aggregate cost of $1.39 billion during fiscal 2013, 3.8 million shares of common stock at an aggregate cost of
$1.36 billion during fiscal 2012, and 5.6 million shares of common stock at an aggregate cost of $1.47 billion
during fiscal 2011. Considering cumulative repurchases as of August 31, 2013, we have $468.4 million remaining
under the Board of Director’s authorization to repurchase our common stock.
Subsequent to August 31, 2013, we have repurchased 355,150 shares of common stock at an aggregate cost of
$149.8 million.
10-K