Financing |
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May 10, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Financing | Note H – Financing The Company’s debt consisted of the following:
The Company has entered into a revolving credit facility (as amended from time to time, the “Revolving Credit Agreement”) with a borrowing capacity of $2.25 billion. The maximum borrowing under the Revolving Credit Agreement may, at the Company’s option, subject to lenders’ approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2024, the Company amended the Revolving Credit Agreement to extend the termination date by one year. As amended, the Revolving Credit Agreement will terminate, and all amounts borrowed will be due and payable on November 15, 2028. Revolving borrowings under the Revolving Credit Agreement may be base rate loans, Term Secured Overnight Financing Rate (“SOFR”) loans, or a combination of both, at AutoZone’s election. The Revolving Credit Agreement includes (i) a $75 million sublimit for swingline loans, (ii) a $50 million individual issuer letter of credit sublimit and (iii) a $250 million aggregate sublimit for all letters of credit. Covenants under the Company’s Revolving Credit Agreement 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. As of May 10, 2025, and August 31, 2024, the Company had no outstanding borrowings and $1.7 million and $1.8 million, respectively, of outstanding letters of credit under the Revolving Credit Agreement. The Company also maintained a letter of credit facility that allowed it to request the participating bank to issue letters of credit on its behalf up to an aggregate amount of $25 million. The letter of credit facility was in addition to the letters of credit that may be issued under the Revolving Credit Agreement. As of August 31, 2024, the Company had no letters of credit outstanding under the letter of credit facility, which was terminated in September 2024. In addition to the outstanding letters of credit issued under the Revolving Credit Agreement discussed above, the Company had $150.5 million and $141.6 million in letters of credit outstanding as of May 10, 2025, and August 31, 2024, respectively. These letters of credit have various maturity dates and were issued on an uncommitted basis. Additionally, the Company’s total surety bonds commitment was $97.7 million at May 10, 2025, compared with $48.9 million at August 31, 2024. Since its fiscal year end, the Company has canceled, issued and modified stand-by letters of credit that are primarily renewed on an annual basis to cover deductible payments to its casualty insurance carriers. As of May 10, 2025, the $805.5 million commercial paper borrowings and the $400 million 3.125% Senior Notes due April 2026 were classified as long-term debt in the accompanying Condensed Consolidated Balance Sheets as the Company currently has the ability and intent to refinance them on a long-term basis through available capacity under its Revolving Credit Agreement. As of May 10, 2025, the Company had $2.2 billion of availability under its Revolving Credit Agreement, which would allow it to replace these short-term obligations with a long-term financing facility. On April 15, 2025, the Company repaid its outstanding $400 million 3.250% Senior Notes due April 2025 and its $500 million 3.625% Senior Notes due April 2025. On April 14, 2025, the Company issued $500 million 5.125% Senior Notes due June 2030. Proceeds from the debt issuance were used for general corporate purposes. The Senior Notes contain a provision that repayment may be accelerated if the Company experiences both a change of control and a rating event (both as defined in the agreements). The Company’s borrowings under its Senior Notes contain minimal covenants, primarily restrictions on liens. All of the repayment obligations under its borrowing arrangements may be accelerated and come due prior to the scheduled payment date if covenants are breached or an event of default occurs. Interest for the Senior Notes is paid on a semi-annual basis. The fair value of the Company’s debt was estimated at $8.8 billion and $9.0 billion as of May 10, 2025, and August 31, 2024, respectively, 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 less than the carrying value of debt by $57.9 million and greater than the carrying value of debt by $3.5 million at May 10, 2025, and August 31, 2024, respectively, which reflects the face amount, adjusted for any unamortized debt issuance costs and discounts. As of May 10, 2025, the Company was in compliance with all covenants and expects to remain in compliance with all covenants under its borrowing arrangements. |
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