What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-10-27 compared with 2024-10-28 · 68 added, 71 removed, 308 unchanged (31% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are the leading retailer and distributor of automotive replacement parts and accessories in the Americas.

We are a leading retailer and distributor of automotive replacement parts and accessories in the Americas.

We began operations in 1979 and at August 30, 2025, operated 6,627 stores in the U.S., 883 stores in Mexico and 147 stores in Brazil.

Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.

At August 31, 2024, in 5,898 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts.

At August 30, 2025, in 6,098 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provides prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts.

We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com.

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For fiscal 2025, net sales increased to $18.9 billion, a 2.4% increase over the prior year.

Our retail sales and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives aimed at improving parts availability and providing WOW!

Customer Service.

Operating profit increased 9.1% to $3.8 billion, net income increased 5.3% to $2.7 billion and diluted earnings per share increased 13.0% to $149.55 for the year.

Domestic commercial sales increased 6.7%, which represents 31.7% of our total Domestic sales .

Operating profit decreased 4.7% to $3.6 billion, net income decreased 6.2% to $2.5 billion and diluted earnings per share decreased 3.1% to $144.87 for the year.

Fiscal 2025 consisted of 52 weeks whereas fiscal 2024 consisted of 53 weeks.

The inclusion of the 53 rd week in fiscal 2024 resulted in an increase to net sales of $365.9 million and an increase in operating profit of $86.7 million.

Additionally, fiscal 2025 comparisons were negatively impacted by foreign currency exchange rates which had an unfavorable impact to net sales of $273.1 million and operating profit of $88.2 million.

Operating profit comparison was also negatively impacted by an unfavorable net non-cash LIFO impact of $104.0 million.

During fiscal 2025, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 85% of total sales.

While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a decrease in mix of sales of the discretionary category and a slight increase in the maintenance and failure categories compared to last year.

Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, interest rates, levels of consumer debt, fuel and energy costs, prevailing wage rates, foreign exchange rate fluctuations, supply chain disruptions, hiring and other economic conditions.

While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, we have seen a slight decrease in mix of sales of the accessories category and a slight increase in the maintenance and failure categories compared to the previous two years.

Given the nature of these macroeconomic factors, which are generally outside of our control, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future.

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We believe as the number of miles driven increases, consumers’ vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items.

Since the beginning of the fiscal year and through July 2024 miles driven in the U.S.

For the twelve-month period ended July 2025, miles driven in the U.S.

increased 1.0% compared to the same period in the prior year based on the latest information available from the U.S.

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We expect the aging vehicle population to continue to increase as consumers keep their cars longer.

According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road was 12.6 years and these vehicles account for approximately 38% of U.S.

According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road increased slightly to 12.8 years and these vehicles account for approximately 43% of U.S.

According to the U.S.

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Increase in domestic comparable store net sales (4)

Increase (decrease) in international comparable store net sales (4)

(Decrease) increase in international comparable store net sales (4)

Increase in international comparable store net sales (constant currency) (4)

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(1) The fiscal year ended August 31, 2024 consisted of 53 weeks.

(2) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.

(2) The 52 weeks ended August 28, 2021 was negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax).

(3) Fiscal 2025, 2024, 2023, 2022 and 2021 include excess tax benefits from stock option exercises of $58.2 million, $81.4 million, $92.2 million, $63.2 million, and $56.4 million, respectively.

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For the fiscal year ended August 30, 2025, we had net sales of $18.9 billion compared with $18.5 billion for the year ended August 31, 2024, an increase of 2.4%.

This growth was driven primarily by the additional 53 rd week sales of $365.9 million, net sales of $292.4 million from new domestic and international stores and a n increase in total company same store sales of 1.4% on a constant currency basis.

Domestic commercial sales increased $284.3 million, or 6.2%, over domestic commercial sales for fiscal 2023, driven in part by the additional 53 rd week sales of $95.7 million.

This growth was driven primarily by a domestic same store sales increase of 3.2% and net sales of $374.3 million from new domestic and international stores.

Domestic commercial sales increased $329.5 million, or 6.7%, compared to fiscal 2024 domestic commercial sales.

Same store sales, or sales for our domestic and international stores open at least one year, are computed on a 52-week basis and are as follows:

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(1) Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.

At August 31, 2024, we operated 6,432 domestic stores, 794 in Mexico and 127 in Brazil, compared with 6,300 domestic stores, 740 in Mexico and 100 in Brazil at August 26, 2023.

We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 5.9% for fiscal 2024.

Gross profit for fiscal 2024 was $9.8 billion, or 53.1% of net sales, a 114 basis point increase compared with $9.1 billion, or 52.0% of net sales for fiscal 2023.

The increase in gross margin was driven by higher merchandise margins and 47 basis points ($84.0 million net) from non-cash LIFO favorability.

Gross profit for fiscal 2025 was $10.0 billion, or 52.6% of net sales, a 47 basis point decrease compared with $9.8 billion, or 53.1% of net sales for fiscal 2024.

The decrease in gross margin was driven by 55 basis points ($64.0 million charge in the current year versus $40.0 million benefit in the prior year) from non-cash LIFO impact.

Operating, selling, general and administrative expenses for fiscal 2025 increased to $6.4 billion, or 33.6% of net sales, from $6.0 billion, or 32.6% of net sales for fiscal 2024.

The increase in operating expenses as a percentage of sales was primarily driven by domestic store payroll.

The increase in operating expenses as a percentage of sales was primarily driven by investments to support our growth initiatives.

Interest expense, net for fiscal 2025 was $475.8 million compared with $451.6 million during fiscal 2024.

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Weighted average borrowing rates were 4.48% and 4.39% for fiscal 2025 and 2024, respectively.

Our effective income tax rate was 20.2% of pre-tax income for both fiscal 2024 and fiscal 2023.

Our effective income tax rate was 20.3% and 20.2% of pre-tax income for fiscal 2025 and fiscal 2024, respectively.

The benefit from stock options exercised in fiscal 2025 was $58.2 million compared to $81.4 million in fiscal 2024 (see “Note E – Income Taxes” in the Notes to Consolidated Financial Statements).

Net income for fiscal 2024 increased by 5.3% to $2.7 billion, and diluted earnings per share increased 13.0% to $149.55 from $132.36 in fiscal 2023.

Net income for fiscal 2025 decreased by 6.2% to $2.5 billion, and diluted earnings per share decreased 3.1% to $144.87 from $149.55 in fiscal 2024.

The impact on the fiscal 2025 diluted earnings per share from stock repurchases was an increase of $0.26.

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A discussion of changes in our results of operations from fiscal 2024 to fiscal 2023 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking “Investor Relations” located at the bottom of the page.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended August 31, 2024, filed with the United States Securities and Exchange Commission on October 28, 2024, which is available free of charge on the SEC’s website at www.sec.gov and at www.autozone.com, by clicking “Investor Relations” located at the bottom of the page.

Quarterly Periods

Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 17 weeks in 2024 and 16 weeks in 2023 and 2022.

Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16 weeks in 2025, 17 weeks in 2024 and 16 weeks in 2023.

Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income.

The fourth quarter of fiscal year 2025 represented 33.0% of annual sales and 33.5% of net income;

the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income;

the fourth quarter of fiscal year 2024 represented

33.6% of annual sales and 33.9% of net income;

and the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income.

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Net cash provided by operating activities was $3.1 billion in 2025, $3.0 billion in 2024 and $2.9 billion in 2023.

Cash flows from operations are favorable compared to last year primarily due to higher net income partially due to the additional week of sales in the current year.

Our net cash flows used in investing activities were $1.3 billion, $876.2 million and $648.1 million in fiscal 2024, 2023 and 2022, respectively.

Cash flows from operations increased slightly over last year primarily due to favorable changes in deferred income taxes.

Our net cash flows used in investing activities were $1.4 billion, $1.3 billion and $876.2 million in fiscal 2025, 2024 and 2023, respectively.

The increase in net cash used in investing activities in fiscal 2025 was primarily due to an increase in capital expenditures.

We invested $1.1 billion, $796.7 million and $672.4 million in capital assets in fiscal 2024, 2023 and 2022, respectively.

The increase in capital expenditures from fiscal 2023 to fiscal 2024 was primarily driven by our growth initiatives, including investments in new distribution centers and stores to be opened in subsequent periods as well as stores opened in the current year.

We invested $1.3 billion, $1.1 billion and $796.7 million in capital assets in fiscal 2025, 2024 and 2023, respectively.

The increase in capital expenditures from fiscal 2024 to fiscal 2025 was primarily driven by our growth initiatives, including investments in new stores and hub and mega hub store expansions.

We had net new store openings of 304, 213 and 197 for fiscal 2025, 2024 and 2023, respectively.

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We had proceeds from the sale of marketable debt securities of $63.3 million, $40.8 million and $58.4 million in fiscal 2025, 2024 and 2023, respectively.

Our investment in tax credit equity investments was $227.5 million, $98.0 million and $31.5 million in fiscal 2024, 2023 and 2022, respectively.

Our net investment in tax credit equity investments was $111.8 million, $227.5 million and $98.0 million in fiscal 2025, 2024 and 2023, respectively.

Net cash used in financing activities was $1.7 billion, $1.7 billion and $2.1 billion in fiscal 2025, 2024 and 2023, respectively.

The net cash used in financing activities reflected purchases of treasury stock, which totaled $1.6 billion, $3.1 billion and $3.7 billion for fiscal 2025, 2024 and 2023, respectively.

The treasury stock purchases in fiscal 2024, 2023 and 2022 were primarily funded by cash flows from operations and increased borrowings.

During the year ended August 31, 2024, we repaid our $300 million 3.125% Senior Notes due April 2024 and issued $2.3 billion of new debt compared to $1.8 billion in 2023 and $750 million in 2022.

In fiscal year 2024 the proceeds from the issuance of debt were used to repay a portion of our commercial paper borrowings and for general corporate purposes.

The treasury stock purchases in fiscal 2025, 2024 and 2023 were primarily funded by cash flows from operations and increased borrowings in fiscal 2024 and 2023.

During the year ended August 30, 2025, we repaid our $400 million 3.250% Senior Notes and $500 million 3.625% Senior Notes due April 2025 and issued $500 million of new debt compared to $2.3 billion in 2024 and $1.8 billion in 2023.

In fiscal years 2025 and 2023 the proceeds from the issuance of debt were used for general corporate purposes.

The Company had net repayments of commercial paper and short-term borrowing of $629.6 million during fiscal 2024, and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million and $603.4 million during fiscal 2023 and 2022, respectively.

During fiscal 2025, we expect to increase the investment in our business as compared to fiscal 2024.

Our investments are expected to be directed primarily to our supply chain initiatives, which include new distribution centers and new stores, including expanded hub stores and mega hub stores.

In fiscal year 2024 the proceeds from the issuance of debt were used to repay a portion of our commercial paper borrowings and for general corporate purposes.

The Company had net proceeds from commercial paper and short-term borrowings of $168.6 million during fiscal 2025, net repayments of commercial paper and short-term borrowings of $629.6 million during fiscal 2024 and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million during fiscal 2023.

During fiscal 2026, we expect to moderately increase the investment in our business as compared to fiscal 2025.

Our investments are expected to be directed primarily to our growth initiatives, including new stores and expanded hub and mega hub stores.

The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.

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Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio.

We plan to continue leveraging our inventory purchases;

We plan to continue leveraging our

inventory purchases;

however, our ability to do so may be limited by our suppliers’ ability to factor their receivables from us.

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Debt Facilities

On November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the “Revolving Credit Agreement”) pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion.

On November 15, 2022, we amended the Revolving Credit Agreement, extending 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, 2027, but we may make one additional request to extend the termination date for an additional period of one year .

On November 15, 2024, we amended our existing revolving credit facility (as amended from time to time, 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 our 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.

Under our Revolving Credit Agreement, 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.

Covenants under our 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 August 30, 2025, we had no outstanding borrowings and $1.7 million of outstanding letters of credit under the Revolving Credit Agreement.

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Our consolidated interest coverage ratio as of August 30, 2025, was 5.1:1.

We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our behalf up to an aggregate amount of $25 million.

The letter of credit facility is in addition to the letters of credit that may be issued under the Revolving Credit Agreement and had an expiration in June 2022.

On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025.

As of August 31, 2024, we had no letters of credit outstanding under the letter of credit facility.

In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $141.6 million in letters of credit outstanding as of August 31, 2024.

We also maintained a letter of credit facility that allowed us to request the participating bank to issue letters of credit on our 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, we 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, we had $149.1 million in letters of credit outstanding as of August 30, 2025.

These letters of credit have various maturity dates and were issued on an uncommitted basis.

As of August 31, 2024, the $580 million of commercial paper borrowings, the $400 million 3.250% Senior Notes due April 2025 and the $500 million 3.625% Senior Notes due April 2025 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility.

As of August 31, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility.

As of August 30, 2025, the $748.6 million of commercial paper borrowings, the $400 million 3.125% Senior Notes due April 2026 and the $450 million 5.050% Senior Notes due July 2026 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility.

As of August 30, 2025, we had $2.2 billion of availability under our Revolving Credit Agreement, which would allow us to replace these short-term obligations with a long-term financing facility.

On April 15, 2025, we repaid the $400 million 3.250% Senior Notes due April 2025 and our $500 million 3.625% Senior Notes due April 2025.

On April 18, 2024, we repaid the $300 million 3.125% Senior Notes due April 2024.

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On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023.

On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.

On June 28, 2024, we issued $600 million in 5.100% Senior Notes due July 2029 and $700 million 5.400% Senior Notes due July 2034 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No.

On April 14, 2025, we issued $ 500 million 5.125 % Senior Notes due June 2030 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No.

333-266209) (the “2022 Shelf Registration Statement”).

The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions.

The 2022 Shelf Registration Statement allowed us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions.

Proceeds from the debt issuance were used for general corporate purposes.

On June 28, 2024, we issued $600 million in 5.100% Senior Notes due July 2029 and $700 million 5.400% Senior Notes due July 2034 under the 2022 Shelf Registration Statement.

Proceeds from the debt issuance were used to repay a portion of our outstanding commercial paper borrowings and for other general corporate purposes.

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Proceeds from the debt issuance were used for general corporate purposes.

On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement.

Proceeds from the debt issuance were used for general corporate purposes.

The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements).

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As of August 30, 2025, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.

For the fiscal year ended August 31, 2024, 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 2.3:1 as of the comparable prior year end.

For the fiscal years ended August 30, 2025, and August 31, 2024, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.5:1 for both periods.

We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six;

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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”).

The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total authorization to $39.2 billion.

Previously, the Board voted to increase the authorization by $4.5 billion in fiscal 2023 and $5.0 billion in fiscal 2022.

On June 19, 2024, the Board voted to increase the repurchase authorization by $1.5 billion, bringing the total authorization to $39.2 billion.

From January 1998 to August 30, 2025, we have repurchased a total of 155.6 million shares at an aggregate cost of $38.5 billion.

We repurchased 0.4 million, 1.1 million and 1.5 million shares of common stock at an aggregate cost of $1.5 billion, $3.2 billion and $3.7 billion during fiscal 2025, 2024 and 2023, respectively.

Considering cumulative repurchases as of August 31, 2024 we had $2.2 billion remaining under the Board’s authorization to repurchase our common stock.

Considering cumulative repurchases as of August 30, 2025 we had $632.3 million remaining under the Board’s authorization to repurchase our common stock.

We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate.

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Refer to the “Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.

On October 8, 2025, the Board voted to authorize the repurchase of an additional $1.5 billion of our common stock in connection with our ongoing share repurchase program.

Since the inception of the repurchase program in 1998, the Board has authorized $40.7 billion in share repurchases.

Subsequent to August 30, 2025, and through October 20, 2025, we have repurchased 51,543 shares of common stock at an aggregate cost of $215.6 million.

Considering the cumulative repurchases through October 21, 2024, we have $2.0 billion remaining under the Board’s authorization to repurchase our common stock.

Considering the cumulative repurchases and the increase in authorization subsequent to August 30, 2025, and through October 20, 2025, we have $1.9 billion remaining under the Board’s authorization to repurchase our common stock.

Financial Commitments

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Construction commitments

Transferable federal tax credits

(1) Debt balances represent principal maturities, excluding interest, discounts, and debt issuance costs.

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(4) Self-insurance reserves reflect estimates based on actuarial calculations and are presented net of insurance receivables.

Although these obligations do not have scheduled maturities, the timing of future payments are predictable based upon historical patterns.

Although these obligations do not have scheduled maturities, the timing of future payments is predictable based upon historical patterns.

Accordingly, we reflect the net present value of these obligations in our Consolidated Balance Sheets.

(5) Represents commitments to make additional capital contributions to certain tax credit instruments upon achievement of project milestones.

Our tax liability for uncertain tax positions, including interest and penalties, was $22.3 million at August 30, 2025.

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Cash flow before share repurchases and changes in debt

(1) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic.

Reconciliation of Non-GAAP Financial Measure:

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(in thousands, except percentage)

Interest expense

Interest expense, net

Rent expense (2)

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(in thousands, except ratio)

Interest expense

Interest expense, net

Income tax expense

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(1) The fiscal year ended August 31, 2024, consisted of 53 weeks.

(2) The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the 53 weeks ended, August 31, 2024, and the 52 weeks ended August 26, 2023, August 27,2022, August 28, 2021 and August 29, 2020.

For the year ended

(2) The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per Financial Accounting Standards Codification (“ASC”) 842, the most directly comparable GAAP financial measure, for the 52 weeks ended August 30, 2025, the 53 weeks ended August 31, 2024, and the 52 weeks ended August 26, 2023, August 27,2022, and August 28, 2021.

Fiscal Year Ended August

(in thousands)

August 31, 2024

August 26, 2023

August 27, 2022

August 28, 2021

August 29, 2020

Total lease cost, per ASC 842

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See Note A of the Notes to Consolidated Financial Statements for a discussion on recent accounting pronouncements.

Critical Accounting Policies and Estimates

Critical Accounting Estimates

Preparation of our Consolidated Financial Statements requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements, reported amounts of revenues and expenses during the reporting period and related disclosures of contingent liabilities.

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Self-Insurance Reserves

We retain a significant portion of the risks associated with workers’ compensation, general, product liability, property and vehicle liability;

We retain a significant portion of the risks associated with workers’ compensation, general and product liability, property and vehicle insurance;

and we obtain third party insurance to limit the exposure related to certain of these risks.

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however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities.

Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date.

Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet dates.

If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.3 million for fiscal 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis