AutoZone 2005 Annual Report Download - page 43

AutoZone ’05 Annual Report 33
Significant components of the Company’s deferred tax assets and liabilities were as follows:
(in thousands)
August฀27,฀฀
2005
August 28,
2004
Net deferred tax assets:
Domestic net operating loss and credit carryforwards $19,589 $ 30,775
Foreign net operating loss and credit carryforwards 2,298 8,597
Insurance reserves 12,470 23,584
Closed store reserves 3,317 4,437
Pension liability 26,792 7,322
Accrued benefits 6,451 5,398
Other 11,575 2,558
Total deferred tax assets 82,492 82,671
Less: Valuation allowances (9,036) (16,384)
Net deferred tax assets 73,456 66,287
Deferred tax liabilities:
Property and equipment 12,221 25,000
Inventory 30,057 31,565
Derivatives 1,589 1,740
Prepaid expenses 7,630 7,610
Other —12,111
Deferred tax liabilities 51,497 78,026
Net deferred tax assets (liabilities) $21,959 $(11,739)
For the years ended August 27, 2005 and August 28, 2004, the Company had deferred tax assets of $9.2 million and $9.4 million from federal tax
net operating loss carryforwards (“NOLs”) of $26.3 million and $26.9 million, and deferred tax assets of $2.4 million and $11.4 million from state tax
NOLs of $57.4 million and $465.5 million, respectively. For the year ended August 28, 2004, the Company had deferred tax assets of $5.7 million
from foreign tax NOLs of $16.8 million. The federal and state NOLs will expire between fiscal 2006 and fiscal 2024, and relate primarily to the acqui-
sitions of ADAP, Inc. (which had been doing business as “Auto Palace”) and Chief Auto Parts, Inc. in fiscal 1998. The Company maintains a $7.6 mil-
lion valuation allowance against certain federal and state NOLs subject to annual limitations resulting primarily from its acquisition of ADAP, Inc. This
valuation allowance was recorded primarily as part of the ADAP, Inc. purchase accounting and, if reversed, will be allocated to goodwill. Additionally,
the Company had deferred tax assets of $10.2 million at August 27, 2005 and $12.9 million at August 28, 2004, for federal, state, and Mexican
income tax credit carryforwards. Certain tax credit carryforwards have no expiration date and others will expire in fiscal 2006 through fiscal 2014.
Note฀E—Financing
The Company’s long-term debt as of August 27, 2005, and August 28, 2004, consisted of the following:
(in thousands)
August฀27,฀
2005
August 28,
2004
Bank Term Loan due December 2009, effective interest rate of 4.55% $฀ ฀300,000 $ —
5.875% Senior Notes due October 2012, effective interest rate of 6.33% 300,000 300,000
5.5% Senior Notes due November 2015, effective interest rate of 4.86% 300,000 300,000
4.75% Senior Notes due November 2010, effective interest rate of 4.17% 200,000 200,000
4.375% Senior Notes due June 2013, effective interest rate of 5.65% 200,000 200,000
6.5% Senior Notes due July 2008 190,000 190,000
7.99% Senior Notes due April 2006 150,000 150,000
Commercial paper, weighted average interest rate of 3.6% at August 27, 2005, and 1.6% at August 28, 2004 217,700 522,400
Other 4,150 6,850
$1,861,850 $ 1,869,250
The Company maintains $1.0 billion of revolving credit facilities with a group of banks. On May 3, 2005, the expiration dates of the facilities were
extended by one year as permitted under the original agreement. Of the $1.0 billion, $300 million now expires in May 2006 and $700 million now
expires in May 2010. The credit facilities exist primarily to support commercial paper borrowings, letters of credit and other short-term unsecured
bank loans. No amounts have been borrowed against the facilities, but as the available balance is reduced by commercial paper borrowings and
certain outstanding letters of credit, the Company had $661.2 million in available capacity under these facilities at August 27, 2005. The rate of inter-
est payable under the credit facilities is a function of the London Interbank Offered Rate (“LIBOR”), the lending bank’s base rate (as defined in the
facility agreements) or a competitive bid rate at the option of the Company.
Commercial paper and other short-term borrowings are classified as long-term, as the Company has the ability and intent to refinance them on a
long-term basis.