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Item 5. Market for Registrant’s Common Equity

2021-10-25 compared with 2020-10-26 · 15 added, 87 removed, 14 unchanged (88% of the section changed)

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the New York Stock Exchange under the symbol “AZO.” On October 19, 2020, there were 2,021 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.

The principal market on which our common stock is traded is the New York Stock Exchange under the symbol “AZO.” On October 18, 2021, there were 1,936 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.

We currently do not pay a dividend on our common stock.

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During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company’s Board of Directors.

The program was most recently amended on October 7, 2019, to increase the repurchase authorization by $1.250 billion, bringing total value of authorized share repurchases to $23.15 billion.

During fiscal 2020, we temporarily ceased share repurchases under our share repurchase program to conserve liquidity in response to the uncertainty related to COVID-19.

While we have restarted share repurchases during the first quarter of fiscal year 2021, we will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program as we deem appropriate.

The Company did not purchase any shares during the quarter ended August 29, 2020.

The program was most recently amended on October 5, 2021, to increase the repurchase authorization by $1.5 billion, bringing the total value of authorized share repurchases to $27.65 billion.

Beginning in the first quarter of fiscal 2021, we restarted our share repurchases under our share repurchase program, which had been temporarily suspended during fiscal 2020 in response to the uncertainty surrounding the COVID-19 pandemic.

We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program as we deem appropriate.

Shares of common stock repurchased by the Company during the quarter ended August 28, 2021 were as follows:

Total Number of Shares Purchased

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs

Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs

May 9, 2021 to June 5, 2021

1,142,800,316

June 6, 2021 to July 3, 2021

July 4, 2021 to July 31, 2021

August 1, 2021 to August 28, 2021

The Company also repurchased, at market value, an additional 7,611, 8,287 and 17,201 shares in fiscal years 2021, 2020 and 2019, respectively, from employees electing to sell their stock under the Company’s Sixth Amended and Restated Employee Stock Purchase Plan (the “Employee Plan”), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone’s common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions.

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The graph below presents changes in the value of AutoZone’s stock as compared to Standard & Poor’s 500 Composite Index (“S&P 500”) and to Standard & Poor’s Retail Index (“S&P Retail Index”) for the five-year period beginning August 27, 2016 and ending August 28, 2021.

Selected Financial Data

Fiscal Year Ended August

(in thousands, except per share data, same store sales and selected operating data)

Income Statement Data

Cost of sales, including warehouse and delivery expenses

Operating, selling, general and administrative expenses

Operating profit

Interest expense, net

Income before income taxes

Income tax expense (4)

Net income (4)

Diluted earnings per share (4)

Weighted average shares for diluted earnings per share (4)

Same Store Sales

Increase in domestic comparable store net sales (5)

Balance Sheet Data

Current assets

Operating lease right-of-use assets (6)

Working capital (deficit)

Current liabilities

Finance lease liabilities, less current portion (6)

Operating lease liabilities, less current portion (6)

Stockholders’ deficit

Selected Operating Data

Number of locations at beginning of year

Sold locations (7)

New locations

Closed locations

Net new locations

Relocated locations

Number of locations at end of year

AutoZone domestic commercial programs

Inventory per location (in thousands)

Total AutoZone store square footage (in thousands)

Average square footage per AutoZone store

Increase in AutoZone store square footage

Average net sales per AutoZone store (in thousands)

Net sales per AutoZone store average square foot

Total employees at end of year (in thousands)

Inventory turnover (8)

Accounts payable to inventory ratio

After-tax return on invested capital (9)

Adjusted debt to EBITDAR (10)

Net cash provided by operating activities (in thousands) (4)

Cash flow before share repurchases and changes in debt (in thousands) (11)

Share repurchases (in thousands) (12)

Number of shares repurchased (in thousands) (12)

(1) The 52 weeks ended August 29, 2020 was negatively impacted by the charges for additional Emergency-Time Off ("ETO") benefit enhancement for eligible part-time and full-time hourly employees and other expenses in response to COVID-19 of $83.9 million (pre-tax), recognized in the third and fourth quarters.

(2) The fiscal year ended August 31, 2019 consisted of 53 weeks.

(3) Fiscal 2018 was negatively impacted by pension termination charges of $130.3 million (pre-tax) recognized in the fourth quarter and asset impairments of $193.2 million (pre-tax) recognized in the second quarter of fiscal 2018.

See “Note L – Pension and Savings Plans” and “Note M – Sale of Assets” of the Notes to Consolidated Financial Statements for more information.

Fiscal 2018 also includes a benefit to net income related to the Tax Cuts and Jobs Act (“Tax Reform”).

See “Note D – Income Taxes” of the Notes to Consolidated Financial Statements for more information.

(4) Fiscal 2020, 2019, 2018 and 2017 include excess tax benefits from stock option exercises of $20.9 million, $46.0 million, $31.3 million and $31.2 million, respectively, related to the adoption of Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718):

Improvement to Employee Share-based Payment Accounting.

The Company adopted ASU 2016-09 effective August 28, 2016 and applied the recognition of excess tax deficiencies and tax benefits in the income statement on a prospective basis.

Income tax expense, net income and diluted earnings per share amounts presented for prior periods were not restated.

The Company applied ASU 2016-09 relating to the presentation of the excess tax benefits on the Consolidated Statements of Cash Flows retrospectively.

Prior period amounts for net cash provided by operating activities for all years presented above were restated to conform to the current period presentation.

(5) The domestic comparable sales increases are based on sales for all AutoZone domestic stores open at least one year.

Same store sales are computed on a 52-week basis.

Relocated stores are included in the same store sales computation based on the year the original store was opened.

Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing.

All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation.

(6) The Company adopted ASU 2016-02, Leases (Topic 842), beginning with its first quarter ended November 23, 2019 which resulted in the Company recognizing a right-of-use asset (“ROU asset”) and a corresponding lease liability on the balance sheet.

See “Note A – Significant Accounting Policies”.

(7) 26 IMC branches were sold on April 4, 2018.

See “Note M – Sale of Assets” of the Notes to Consolidated Financial Statements for more information.

(8) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.

(9) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases).

For fiscal 2020, average debt is presented net of excess cash of $374.2 million.

For fiscal 2019, after-tax operating profit was adjusted for the impact of the average revaluation of deferred tax liabilities, net of repatriation tax.

For fiscal 2018, after-tax operating profit was adjusted for impairment charges, pension termination charges and the impact of the revaluation of deferred tax liabilities, net of repatriation tax.

See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(10) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six;

divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense.

For Fiscal 2020, adjusted debt is presented net of excess cash of $1.6 billion.

For fiscal 2018, net income was adjusted for impairment charges and pension termination charges before tax impact.

See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

(11) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases.

See Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of Operations .

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

Not required.

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 5. Market for Registrant’s Common Equity