AutoZone 2004 Annual Report Download - page 37
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NotestoConsolidatedFinancialStatements
(continued)
OnOctober16,2002,theCompanyissued$300millionof5.875%SeniorNotesthatmatureinOctober2012,withinterestpayablesemi-
annuallyonApril15andOctober15.AportionoftheproceedsfromtheseSeniorNoteswasusedtoprepaya$115millionunsecuredbank
termloandueDecember2003,torepayaportionoftheCompany’soutstandingcommercialpaperborrowings,andtosettleinterestrate
hedgesassociatedwiththeissuanceandrepaymentoftherelateddebtsecurities.OnJune3,2003,theCompanyissued$200millionof
4.375%SeniorNotes.TheseSeniorNotesmatureinJune2013,andinterestispayablesemi-annuallyonJune1andDecember1.The
proceedswereusedtorepayaportionoftheCompany’soutstandingcommercialpaperborrowings,toprepay$100millionofthe$350
millionunsecuredbankloandueNovember2004,andtosettleinterestratehedgesassociatedwiththeissuanceofthedebtsecurities.
AsofAugust30,2003,“Other”long-termdebtincludedapproximately$30millionrelatedtotheCompany’ssyntheticleases,withexpira-
tiondatesinfiscal2006,forasmallnumberofitsdomesticstores.AtAugust30,2003,theCompanyrecognizedtheobligationsunder
theleasefacilityandincreaseditspropertyandlong-termdebtbalancesonitsbalancesheetbyapproximately$30million.Allobligations
relatedtothesyntheticleasesweresettledduringfiscal2004.
DuringNovember2003,theCompanyissued$300millionof5.5%SeniorNotesdueNovember2015and$200millionof4.75%Senior
NotesdueNovember2010.InterestunderbothnotesispayableinMayandNovemberofeachyear.Proceedswereusedtorepaya$250
million bank term loan, $150 million in 6% Senior Notes and to reduce commercial paper borrowings. During November 2003, the
Companysettledallthenoutstandinginterestratehedgeinstruments,includinginterestrateswapcontracts,treasurylockagreementsand
forward-startinginterestrateswaps.
OnAugust17,2004,theCompanyfiledashelfregistrationwiththeSecuritiesandExchangeCommissionthatallowstheCompanytosell
upto$300millionindebtsecuritiestofundgeneralcorporatepurposes,includingrepaying,redeemingorrepurchasingoutstandingdebt,
andforworkingcapital,capitalexpenditures,newstoreopenings,stockrepurchasesandacquisitions.Alldebtunderthisregistrationstate-
mentisplannedtobeissuedinthefirstquarteroffiscal2005.Basedonthisplanneddebtissuance,onMarch31,2004,theCompany
enteredintoafive-yearforward-startinginterestrateswapwithanotionalamountof$300millionwithasettlementandaneffectivedate
inOctober2004.Thefairvalueofthisswapwas$4.6millionatAugust28,2004,andisreflectedasacomponentofotherassets.
TheCompanyagreedtoobservecertaincovenantsunderthetermsofitsborrowingagreements,includinglimitationsontotalindebtedness,
restrictionsonliensandminimumfixedchargecoverage.AlloftherepaymentobligationsundertheCompany’sborrowingagreementsmay
beacceleratedandcomeduepriortothescheduledpaymentdateifcovenantsarebreachedoraneventofdefaultoccurs.Additionally,the
repaymentobligationsmaybeacceleratedifAutoZoneexperiencesachangeincontrol(asdefinedintheagreements)ofAutoZoneorits
BoardofDirectors.AsofAugust28,2004,theCompanywasincompliancewithallcovenantsandexpectstoremainincompliancewith
allcovenants.
AlloftheCompany’sdebtisunsecured,exceptfor$6.9million,whichiscollateralizedbyproperty.Scheduledmaturitiesoflong-termdebt
areasfollows:
FiscalYear
Amount
(inthousands)
2005 $ 525,100
2006 152,750
2007 1,400
2008 190,000
2009 —
Thereafter 1,000,000
$1,869,250
Thematuritiesforfiscal2005areclassifiedaslong-termastheCompanyhastheabilityandintentiontorefinancethemonalong-termbasis.
ThefairvalueoftheCompany’sdebtwasestimatedat$1.88billionasofAugust28,2004,and$1.57billionasofAugust30,2003,
basedonthequotedmarketpricesforthesameorsimilarissuesoronthecurrentratesavailabletotheCompanyfordebtofthesame
remainingmaturities.Suchfairvalueisgreaterthanthecarryingvalueofdebtby$11.1millionatAugust28,2004andby$27.3million
atAugust30,2003.