| Financing | Note H – Financing
The Company’s long-term debt consisted of the following:
(in thousands) November 18, 2017 August 26,
7.125% Senior Notes due August 2018, effective interest rate of
7.28% $ 250,000 $ 250,000
1.625% Senior Notes due April 2019, effective interest rate of
1.77% 250,000 250,000
4.000% Senior Notes due November 2020, effective interest rate of
4.43% 500,000 500,000
2.500% Senior Notes due April 2021, effective interest rate of
2.62% 250,000 250,000
3.700% Senior Notes due April 2022, effective interest rate of
3.85% 500,000 500,000
2.875% Senior Notes due January 2023, effective interest rate of
3.21% 300,000 300,000
3.125% Senior Notes due July 2023, effective interest rate of
3.26% 500,000 500,000
3.250% Senior Notes due April 2025, effective interest rate
3.36% 400,000 400,000
3.125% Senior Notes due April 2026, effective interest rate of
3.28% 400,000 400,000
3.750% Senior Notes due June 2027, effective interest rate of
3.83% 600,000 600,000
Commercial paper, weighted average interest rate of 1.44% and 1.44%
at November 18, 2017 and August 26, 2017,
respectively 1,056,100 1,155,100
Total debt before discounts and debt issuance costs 5,006,100 5,105,100
Less: Discounts and debt issuance costs 23,116 23,862
Long-term debt $ 4,982,984 $ 5,081,238
As of November 18, 2017, the commercial paper borrowings and
the $250 million 7.125% Senior Notes due August 2018 were
classified as long-term in the accompanying Consolidated Balance
Sheets as the Company had the ability and intent to refinance on a
long-term basis through available capacity in its revolving credit
facilities. As of November 18, 2017, the Company had
$1.997 billion of availability under its $2.0 billion
revolving credit facilities, which would allow it to replace these
short-term obligations with long-term financing facilities.
The Company entered into a Master Extension, New Commitment and
Amendment Agreement dated as of November 18, 2017 (the
“Extension Amendment”) to the Third Amended and
Restated Credit Agreement dated as of November 18, 2016, as
amended, modified, extended or restated from time to time among
AutoZone as Borrower, the several lenders from time to time party
thereto, and Bank of America, N.A. as Administrative Agent and
Swingline Lender, JPMorgan Chase Bank, N.A. as Syndication Agent
(“JPMorgan”), arranged by Merrill Lynch, Pierce,
Fenner & Smith Incorporated (“Merrill Lynch”)
and J.P. Morgan as Joint Lead Arrangers and Merrill Lynch, J.P.
Morgan, SunTrust Robinson Humphrey, Inc., U.S. Bank National
Association, Wells Fargo Securities, LLC and Barclays Capital as
Joint Book Runners (the “Revolving Credit Agreement”).
Under the Extension Amendment: (i) the Company’s
borrowing capacity under the Revolving Credit Agreement was
increased from $1.6 billion to $2.0 billion;
(ii) the Company’s option to increase its borrowing
capacity under the Revolving Credit Agreement was
“refreshed” and the amount of such option remains at
$400 million; the maximum borrowing under the Revolving Credit
Agreement may, at the Company’s option, subject to lenders
approval, be increased from $2.0 billion to $2.4 billion;
(iii) the termination date of the Revolving Credit Agreement
was extended from November 18, 2021 until November 18,
2022; and (iv) the Company has the option to make one
additional written request of the lenders to extend the termination
date then in effect for an additional one year. Under the revolving
credit facility, the Company may borrow funds consisting of
Eurodollar loans, base rate loans or a combination of both.
Interest accrues on Eurodollar loans at a defined Eurodollar rate,
defined as LIBOR plus the applicable percentage, as defined in the
revolving credit facility, depending upon the Company’s
senior, unsecured, (non-credit
On November 18, 2016, the Company amended and restated its
existing 364-Day 364-Day (non-credit 364-Day
The fair value of the Company’s debt was estimated at
$5.052 billion as of November 18, 2017, and
$5.171 billion as of August 26, 2017, based on the quoted
market prices for the same or similar issues or on the current
rates available to the Company for debt of the same terms (Level
2). Such fair value is greater than the carrying value of debt by
$69.1 million at November 18, 2017, and
$90.3 million at August 26, 2017, which reflects their
face amount, adjusted for any unamortized debt issuance costs and
discounts.
All senior notes are subject to an interest rate adjustment if the
debt ratings assigned to the senior notes are downgraded (as
defined in the agreements). Further, the senior notes contain a
provision that repayment of the senior notes may be accelerated if
we experience a change in control (as defined in the agreements).
Our borrowings under our senior notes contain minimal covenants,
primarily restrictions on liens. Under our revolving credit
facilities, covenants include restrictions on liens, a maximum debt
to earnings ratio, a minimum fixed charge coverage ratio and a
change of control provision that may require acceleration of the
repayment obligations under certain circumstances. 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
November 18, 2017, we were in compliance with all covenants
and expect to remain in compliance with all covenants under our
borrowing arrangements. |
