AutoZone 2014 Annual Report Download - page 96

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(excluding rent charges) divided by average invested capital (which includes a factor to capitalize operating
leases). The decrease in ROIC is primarily due to the increase in average debt. We use ROIC to evaluate whether
we are effectively using our capital resources and believe it is an important indicator of our overall operating
performance.
Debt Facilities
In December 2013, we amended and restated our revolving credit facility, increasing the capacity under the
revolving credit facility to $1.25 billion. This credit facility is available to primarily support commercial paper
borrowings, letters of credit and other short-term, unsecured bank loans. The capacity of the credit facility may be
increased to $1.5 billion prior to the maturity date at our election and subject to bank credit capacity and approval,
may include up to $200 million in letters of credit, and may include up to $175 million in capital leases each fiscal
year. Under the revolving credit facility, we may borrow funds consisting of Eurodollar loans or base rate loans.
Interest accrues on Eurodollar loans at a defined Eurodollar rate, defined as the London InterBank Offered Rate
(“LIBOR”) plus the applicable percentage, as defined in the revolving credit facility, depending upon our senior,
unsecured, (non-credit enhanced) long-term debt rating. Interest accrues on base rate loans as defined in the
revolving credit facility. We also have the option to borrow funds under the terms of a swingline loan subfacility.
The revolving credit facility expires in September 2017.
The revolving credit facility agreement requires that our consolidated interest coverage ratio as of the last day of
each quarter shall be no less than 2.50:1. This ratio is defined as the ratio of (i) consolidated earnings before
interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest
coverage ratio as of August 30, 2014 was 4.95:1.
As of August 30, 2014, $893.8 million of commercial paper borrowings and $319.1 million of the 5.750% Senior
Notes due January 2015 are classified as long-term in the Consolidated Balance Sheets as we have the ability and
intent to refinance on a long-term basis through available capacity in our revolving credit facility. As of August
30, 2014, we had $1.213 billion of availability under our $1.25 billion revolving credit facility, expiring in
September 2017 that would allow us to replace these short-term obligations with long-term financing.
In addition to the revolving credit facility, we also maintain a letter of credit facility that allows us to request the
participating bank to issue letters of credit on our behalf up to an aggregate amount of $100 million. As of August
30, 2014, we have $100.0 million in letters of credit outstanding under the letter of credit facility, which expires in
June 2016.
In addition to the outstanding letters of credit issued under the committed facilities discussed above, we had $31.4
million in letters of credit outstanding as of August 30, 2014. These letters of credit have various maturity dates
and were issued on an uncommitted basis.
On January 14, 2014, we issued $400 million in 1.300% Notes due January 2017 under our shelf registration
statement filed with the SEC on April 17, 2012 (the “Shelf Registration”). The Shelf Registration allows us to
sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming
or repurchasing outstanding debt and for working capital, capital expenditures, new store openings, stock
repurchases and acquisitions. Proceeds from the debt issuance on January 14, 2014, were used to repay a portion
of the $500 million in 6.500% Senior Notes due January 2014. We used commercial paper borrowings to repay
the remainder of the 6.500% Senior Notes.
On April 29, 2013, the Company issued $500 million in 3.125% Senior Notes due July 2023 under its Shelf
Registration. Proceeds from the debt issuance on April 29, 2013, were used to repay a portion of the outstanding
commercial paper borrowings, which were used to repay the $200 million in 4.375% Senior Notes due June 2013,
and for general corporate purposes.
On November 13, 2012, we issued $300 million in 2.875% Senior Notes due January 2023 under the Shelf
Registration. Proceeds from the debt issuance on November 13, 2012, were used to repay a portion of the
outstanding commercial paper borrowings, which were used to repay the $300 million in 5.875% Senior Notes
due in October 2012, and for general corporate purposes.
10-K