AutoZone 2004 Annual Report Download - page 22
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interestpayableunderthecreditfacilitiesisafunctionoftheLondonInterbankOfferedRate(LIBOR),thelendingbank’sbaserate(as
definedinthefacilityagreements)oracompetitivebidrateattheoptionoftheCompany.
OnOctober16,2002,weissued$300millionof5.875%SeniorNotesthatmatureinOctober2012,withinterestpayablesemi-annually
onApril15andOctober15.AportionoftheproceedsfromtheseSeniorNoteswasusedtoprepaya$115millionunsecuredbankterm
loandueDecember2003,torepayaportionoftheCompany’soutstandingcommercialpaperborrowings,andtosettleinterestratehedges
associatedwiththeissuanceandrepaymentoftherelateddebtsecurities.OnJune3,2003,weissued$200millionof4.375%Senior
Notes.TheseSeniorNotesmatureinJune2013,andinterestispayablesemi-annuallyonJune1andDecember1.Theproceedswere
usedtorepayaportionofouroutstandingcommercialpaperborrowings,toprepay$100millionofthe$350millionunsecuredbankloan
dueNovember2004,andtosettleinterestratehedgesassociatedwiththeissuanceofthedebtsecurities.
AsofAugust30,2003,long-termdebtincludedapproximately$30millionrelatedtosyntheticleases,withexpirationdatesinfiscal2006,
forasmallnumberofourdomesticstores.AtAugust30,2003,werecognizedtheobligationsundertheleasefacilityandincreasedits
propertyandlong-termdebtbalancesonourbalancesheet byapproximately$30million.Allobligationsrelatedtothesyntheticleases
weresettledduringfiscal2004.
DuringNovember2003,weissued$300millionof5.5%SeniorNotesdueNovember2015and$200millionof4.75%SeniorNotesdue
November2010.InterestunderbothnotesispayableinMayandNovemberofeachyear.Proceedswereusedtorepaya$250millionbank
termloan,$150millionin6%SeniorNotesandtoreducecommercialpaperborrowings.DuringNovember2003,wesettledallthen
outstandinginterestratehedgeinstruments,includinginterestrateswapcontracts,treasurylockagreementsandforward-startinginterest
rateswaps.
OnAugust17,2004,wefiledashelfregistrationwiththeSecuritiesandExchangeCommissionthatallowsustosellupto$300millionin
debtsecuritiestofundgeneralcorporatepurposes,includingrepaying,redeemingorrepurchasingoutstandingdebt,andforworkingcapital,
capitalexpenditures,newstoreopenings,stockrepurchasesandacquisitions.Alldebtunderthisregistrationstatementisplannedtobe
issuedinthefirstquarteroffiscal2005.Basedonthisplanneddebtissuance,onMarch31,2004,weenteredintoafive-yearforward-
startinginterestrateswapwithanotionalamountof$300millionwithasettlementandaneffectivedateinOctober2004.Thefairvalue
ofthisswapwas$4.6millionatAugust28,2004,andisreflectedasacomponentofotherassets.
Weagreedtoobservecertaincovenantsunderthetermsofourborrowingagreements,includinglimitationsontotalindebtedness,restrictions
onliensandminimumfixed chargecoverage. Alloftherepaymentobligationsunderourborrowingagreementsmaybeacceleratedand
comeduepriortothescheduledpaymentdateifcovenantsarebreachedoraneventofdefaultoccurs.Additionally,therepaymentobliga-
tionsmaybeacceleratedifAutoZoneexperiencesachangeincontrol(asdefinedintheagreements)ofAutoZoneoritsBoardofDirectors.
AsofAugust28,2004,theCompanywasincompliancewithallcovenantsandweexpecttoremainincompliancewithallcovenants.
StockRepurchases: AsofAugust28,2004,theBoardofDirectorshadauthorizedtheCompanytorepurchaseupto$3.9billionofcom-
monstockintheopenmarket.Suchauthorizationincludestheadditional$600millionthatwasapprovedbytheBoardofDirectorson
March17,2004.FromJanuary1998toAugust28,2004,theCompanyhasrepurchasedatotalof82.2millionsharesatanaggregate
costof$3.675billion.TheCompanyrepurchased10.2millionsharesofitscommonstockatanaggregatecostof$848.1millionduring
fiscal2004,12.3millionsharesofitscommonstockatanaggregatecostof$891.1millionduringfiscal2003,and12.6millionshares
ofitscommonstockatanaggregatecostof$698.9millionduringfiscal2002.
FinancialCommitments: Thefollowing tableshowsAutoZone’s obligationsandcommitmentstomakefuturepaymentsundercontractual
obligations:
Total PaymentDuebyPeriod
Contractual Lessthan Between Between Over5
(inthousands) Obligations 1year 1–3years 4–5years years
Long-termdebt(1) $1,869,250 $525,100 $154,150 $190,000 $1,000,000
Operatingleases(2) 847,883 130,115 221,161 143,241 353,366
Constructionobligations 26,385 26,385 — — —
$2,743,518 $681,600 $375,311 $333,241 $1,353,366
(1) Long-termdebtbalancesrepresentprincipalmaturities,excludinginterest.AtAugust28,2004,debtbalancesdueinlessthanoneyearof$525.1millionare
classifiedaslong-terminourconsolidatedfinancialstatements,aswehavetheabilityandintentiontorefinancethemonalong-termbasis.
(2) Operatingleaseobligationsincluderelatedinterest.
Wehavecertaincontingentliabilitiesthatarenotaccruedinourbalancesheetinaccordancewithaccountingprinciplesgenerallyaccepted
intheUnitedStates.Thesecontingentliabilitiesarenotincludedinthetableabove.