AutoZone 2011 Annual Report Download - page 91

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29
Reconciliation of Non-GAAP Financial Measure: After-tax Return on Invested Capital
The following table calculates the percentage of ROIC. ROIC is calculated as after-tax operating profit (excluding
rent) divided by average invested capital (which includes a factor to capitalize operating leases). The ROIC
percentages are presented in “Selected Financial Data” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”:
Fiscal Year Ended August
(in thousands, except percentage) 2011 2010 2009 2008
(1)
2007
N
et income ......................................... $ 848,974 $ 738,311 $ 657,049 $ 641,606 $ 595,672
Ad
j
ustments:
Interest expense ........................... 170,557 158,909 142,316 116,745 119,116
Rent expense ................................ 213,846 195,632 181,308 165,121 152,523
Tax effect
(
2
)
................................. (137,962) (128,983) (117,929) (102,345) (98,796)
Afte
r
-tax return .................................. $ 1,095,415 $ 963,869 $ 862,744 $ 821,127 $ 768,515
Average debt
(
3
)
.................................. $ 3,121,880 $ 2,769,617 $ 2,468,351 $ 2,074,738 $ 1,888,989
Avera
g
e (deficit) equit
y
(
4
)
................. (993,624) (507,885) (75,162) 308,401 482,702
Rent x 6
(
5
)
......................................... 1,283,076 1,173,792 1,087,848 990,726 915,138
Average capital lease obligations
(
6
)
. 84,966 62,220 58,901 60,763 27,093
Pre-tax invested capital ...................... $ 3,496,298 $ 3,497,744 $ 3,539,938 $ 3,434,628 $ 3,313,922
ROIC ................................................. 31.3% 27.6% 24.4% 23.9% 23.2%
(1) The fiscal year ended August 30, 2008 consisted of 53 weeks.
(2) The effective tax rate during fiscal 2011, 2010, 2009, 2008 and 2007 was 35.9%, 36.4%, 36.4%, 36.3% and
36.4%, respectively.
(3) Average debt is equal to the average of our debt measured as of the previous five quarters.
(4) Average equity is equal to the average of our stockholders’ (deficit) equity measured as of the previous five
quarters.
(5) Rent is multiplied by a factor of six to capitalize operating leases in the determination of pre-tax invested
capital.
(6) Average capital lease obligations is computed as the average of our capital lease obligations over the
previous five quarters.
Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to EBITDAR
The following table calculates the ratio of adjusted debt to EBITDAR. Adjusted debt to EBITDAR is calculated as
the sum of total debt, capital lease obligations and annual rents times six; divided by net income plus interest,
taxes, depreciation, amortization, rent and share-based compensation expense. The adjusted debt to EBITDAR
ratios are presented in “Selected Financial Data” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”:
Fiscal Year Ended August
(in thousands, except ratio) 2011 2010 2009 2008(1) 2007
Net income ........................... $ 848,974 $ 738,311 $ 657,049 $ 641,606 $ 595,672
Add: Interest expense ......... 170,557 158,909 142,316 116,745 119,116
Income tax expense.... 475,272 422,194 376,697 365,783 340,478
EBIT .................................... 1,494,803 1,319,414 1,176,062 1,124,134 1,055,266
Add: Depreciation expense . 196,209 192,084 180,433 169,509 159,411
Rent expense .............. 213,846 195,632 181,308 165,121 152,523
Share-based expense .. 26,625 19,120 19,135 18,388 18,462
EBITDAR ............................ $ 1,931,483 $ 1,726,250 $ 1,556,938 $ 1,477,152 $ 1,385,662
Debt ..................................... $ 3,351,682 $ 2,908,486 $ 2,726,900 $ 2,250,000 $ 1,935,618
Capital lease obligations ...... 86,656 88,280 54,764 64,061 55,088
Rent x 6 ................................ 1,283,076 1,173,792 1,087,848 990,726 915,138
Adjusted debt ....................... $ 4,721,414 $ 4,170,558 $ 3,869,512 $ 3,304,787 $ 2,905,844
Adjusted debt to EDITDAR . 2.4 2.4 2.5 2.2 2.1
(1) The fiscal year ended August 30, 2008 consisted of 53 weeks.
10-K