AutoZone 2014 Annual Report Download - page 97

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The 5.750% Senior Notes issued in July 2009 and the 7.125% Senior Notes issued during August 2008
(collectively, the “Notes”), are subject to an interest rate adjustment if the debt ratings assigned to the Notes are
downgraded. Further, all Senior Notes issued since August 2008 contain a provision that repayment of the notes
may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under
our other senior notes contain minimal covenants, primarily restrictions on liens. Under our revolving credit
facility, covenants include limitations on total indebtedness, restrictions on liens, a maximum debt to earnings
ratio, and a change of control provision that may require acceleration of the repayment obligations under certain
circumstances. These covenants are in addition to the consolidated interest coverage ratio discussed above. All of
the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the
scheduled payment date if covenants are breached or an event of default occurs.
As of August 30, 2014, we were in compliance with all covenants related to our borrowing arrangements and
expect to remain in compliance with those covenants in the future.
For the fiscal year ended August 30, 2014, our adjusted debt to earnings before interest, taxes, depreciation,
amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.5:1 as compared to 2.5:1 as
of the comparable prior year end. We calculate adjusted debt as the sum of total debt, capital lease obligations and
rent times six; and we calculate EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-
based compensation expense to net income. We target our debt levels to a ratio of adjusted debt to EBITDAR in
order to maintain our investment grade credit ratings. We believe this is important information for the
management of our debt levels.
Stock Repurchases
During 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to
exceed a dollar maximum established by our Board of Directors (the “Board”). On June 17, 2014, the Board
voted to increase the authorization by $750 million to raise the cumulative share repurchase authorization from
$14.15 billion to $14.9 billion. From January 1998 to August 30, 2014, we have repurchased a total of 136.9
million shares at an aggregate cost of $14.031 billion. We repurchased 2.2 million shares of common stock at an
aggregate cost of $1.099 billion during fiscal 2014, 3.5 million shares of common stock at an aggregate cost of
$1.387 billion during fiscal 2013, and 3.8 million shares of common stock at an aggregate cost of $1.363 billion
during fiscal 2012. Considering cumulative repurchases as of August 30, 2014, we have $869.2 million
remaining under the Board of Director’s authorization to repurchase our common stock.
Subsequent to August 30, 2014, we have repurchased 374,601 shares of common stock at an aggregate cost of
$190.9 million.
10-K