What changed in this filing

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Item 1. Financial Statements

2022-06-10 compared with 2022-03-18 · 62 added, 69 removed, 356 unchanged (27% of the section changed)

33 unchanged sentences

Common stock, par value $ .01 per share, authorized 200,000 shares;

20,650 shares issued and 19,967 shares outstanding as of February 12, 2022;

20,707 shares issued and 19,576 shares outstanding as of May 7, 2022;

23,007 shares issued and 21,138 shares outstanding as of August 28, 2021

14 unchanged sentences

Twelve Weeks Ended

Twenty-Four Weeks Ended

Thirty-Six Weeks Ended

(in thousands, except per share data)

14 unchanged sentences

Twelve Weeks Ended

Twenty-Four Weeks Ended

Thirty-Six Weeks Ended

(in thousands)

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Four Weeks Ended

Thirty-Six Weeks Ended

(in thousands)

16 unchanged sentences

Investment in tax credit equity investments

Proceeds (payments) from disposal of capital assets and other, net

Proceeds from disposal of capital assets and other, net

Net cash used in investing activities

17 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

Twelve Weeks Ended February 12, 2022

Twelve Weeks Ended May 7, 2022

Comprehensive

(in thousands)

Balance at November 20, 2021

Balance at February 12, 2022

( 2,730,731 )

( 1,362,804 )

Total other comprehensive income

Retirement of treasury shares

( 3,137,477 )

Total other comprehensive income

Purchase of 449 shares of treasury stock

( 1,559,998 )

Issuance of common stock under stock options and stock purchase plans

Share-based compensation expense

Balance at February 12, 2022

Balance at May 7, 2022

( 2,138,160 )

1 unchanged sentence

( 3,387,230 )

Twelve Weeks Ended February 13, 2021

Twelve Weeks Ended May 8, 2021

Comprehensive

(in thousands)

Balance at November 21, 2020

( 1,008,537 )

( 1,034,811 )

Balance at February 13, 2021

( 1,801,764 )

Total other comprehensive income

Retirement of treasury shares

( 1,523,573 )

Total other comprehensive loss

Purchase of 663 shares of treasury stock

1 unchanged sentence

Share-based compensation expense

Balance at February 13, 2021

Balance at May 8, 2021

( 1,205,600 )

( 1,635,621 )

Twenty-Four Weeks Ended February 12, 2022

( 1,763,392 )

Thirty-Six Weeks Ended May 7, 2022

Comprehensive

3 unchanged sentences

( 1,797,536 )

Total other comprehensive loss

Total other comprehensive income

Retirement of treasury shares

5 unchanged sentences

Share-based compensation expense

Balance at February 12, 2022

Balance at May 7, 2022

( 2,138,160 )

1 unchanged sentence

( 3,387,230 )

Twenty-Four Weeks Ended February 13, 2021

Thirty-Six Weeks Ended May 8, 2021

Comprehensive

10 unchanged sentences

Share-based compensation expense

Balance at February 13, 2021

Balance at May 8, 2021

( 1,205,600 )

( 1,635,621 )

( 1,763,392 )

See Notes to Condensed Consolidated Financial Statements.

9 unchanged sentences

(“AutoZone” or the “Company”) Annual Report on Form 10-K for the year ended August 28, 2021.

Operating results for the twelve and twenty-four weeks ended February 12, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 27, 2022.

Operating results for the twelve and thirty-six weeks ended May 7, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 27, 2022.

Each of the first three quarters of AutoZone’s fiscal year consists of 12 weeks, and the fourth quarter consists of 16 or 17 weeks.

14 unchanged sentences

Stock Options:

The Company made stock option grants of 164,262 shares during the twenty-four week period ended February 12, 2022 and granted options to purchase 196,161 shares during the comparable prior year period.

The Company made stock option grants of 164,262 shares during the thirty-six week period ended May 7, 2022 and granted options to purchase 196,520 shares during the comparable prior year period.

The Company grants options to purchase common stock to certain of its employees under its equity incentive plans at prices equal to the market value of the stock on the date of grant.

The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date.

The weighted average fair value of the stock option awards granted during the twenty-four week periods ended February 12, 2022 and February 13, 2021, using the Black-Scholes-Merton multiple-option pricing valuation model, was $ 463.09 and $ 299.86 per share, respectively, using the following weighted average key assumptions:

Twenty-Four Weeks Ended

The weighted average fair value of the stock option awards granted during the thirty-six week periods ended May 7, 2022 and May 8, 2021, using the Black-Scholes-Merton multiple-option pricing valuation model, was $ 463.09 and $ 299.99 per share, respectively, using the following weighted average key assumptions:

Thirty-Six Weeks Ended

Expected price volatility

3 unchanged sentences

Dividend yield

During the twenty-four week period ended February 12, 2022, 123,216 stock options were exercised at a weighted average exercise price of $ 584.81 .

During the thirty-six week period ended May 7, 2022, 179,440 stock options were exercised at a weighted average exercise price of $ 574.79 .

In the comparable prior year period, 239,177 stock options were exercised at a weighted average exercise price of $ 513.51 .

As of February 12, 2022, total unrecognized share-based expense related to stock options, net of estimated forfeitures, was approximately $ 85.2 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.1 years.

As of May 7, 2022, total unrecognized share-based expense related to stock options, net of estimated forfeitures, was approximately $ 77.3 million, before income taxes, which we expect to recognize over an estimated weighted average period of 3.3 years.

Restricted Stock Units:

3 unchanged sentences

Grants of non-employee director restricted stock units are made and expensed on January 1 of each year, as they vest immediately.

As of February 12, 2022, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $ 14.1 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.7 years.

Transactions related to restricted stock units for the twenty-four weeks ended February 12, 2022 were as follows:

As of May 7, 2022, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $ 12.3 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.9 years.

Transactions related to restricted stock units for the thirty-six weeks ended May 7, 2022 were as follows:

Average Grant

2 unchanged sentences

Canceled or forfeited

Nonvested at February 12, 2022

Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) was $ 16.4 million for the twelve week period ended February 12, 2022, and $ 13.7 million for the comparable prior year period.

Total share-based compensation expense was $ 30.7 million for the twenty-four week period ended February 12, 2022, and $ 24.2 million for the comparable prior year period.

For the twelve week period ended February 12, 2022, 162,955 stock options were excluded from the diluted earnings per share computation because they would have been anti-dilutive.

For the comparable prior year period, 196,280 anti-dilutive stock options were excluded from the dilutive earnings per share computation.

There were 128,399 anti-dilutive shares excluded from the diluted earnings per share computation for the twenty-four week period ended February 12, 2022, and 248,578 anti-dilutive shares excluded for the comparable prior year period.

Nonvested at May 7, 2022

Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) was $ 18.3 million for the twelve week period ended May 7, 2022, and $ 13.9 million for the comparable prior year period.

Total share-based compensation expense was $ 49.1 million for the thirty-six week period ended May 7, 2022, and $ 38.1 million for the comparable prior year period.

For the twelve and thirty-six week periods ended May 7, 2022, 120,515 and 136,994 , respectively, stock options were excluded from the diluted earnings per share computation because they would have been anti-dilutive.

For the comparable prior year periods, 142,660 and 166,456 anti-dilutive stock options were excluded from the dilutive earnings per share computation.

See AutoZone’s Annual Report on Form 10-K for the year ended August 28, 2021 and other filings with the SEC, for a discussion regarding the methodology used in developing AutoZone’s assumptions to determine the fair value of the option awards and a description of AutoZone’s Amended and Restated 2011 Equity Incentive Award Plan, the AutoZone, Inc.

10 unchanged sentences

The Company’s marketable debt securities measured at fair value on a recurring basis were as follows:

February 12, 2022

(in thousands)

5 unchanged sentences

Other long-term assets

At February 12, 2022, the fair value measurement amounts for assets and liabilities recorded in the accompanying Condensed Consolidated Balance Sheets consisted of short-term marketable debt securities, which are included within Other current assets, and long-term marketable debt securities, which are included in Other long-term assets.

At May 7, 2022, the fair value measurement amounts for assets and liabilities recorded in the accompanying Condensed Consolidated Balance Sheets consisted of short-term marketable debt securities, which are included within Other current assets, and long-term marketable debt securities, which are included in Other long-term assets.

The Company’s marketable debt securities are typically valued at the closing price in the principal active market as of the last business day of the quarter or through the use of other market inputs relating to the securities, including benchmark yields and reported trades.

8 unchanged sentences

The Company’s available-for-sale marketable debt securities consisted of the following:

February 12, 2022

(in thousands)

9 unchanged sentences

Asset-backed securities and other

The debt securities held at February 12, 2022, had effective maturities ranging from less than one year to approximately four years .

At February 12, 2022, the Company held 38 securities that are in an unrealized loss position of approximately $ 1.1 million.

The debt securities held at May 7, 2022, had effective maturities ranging from less than one year to approximately three years .

At May 7, 2022, the Company held 65 securities that are in an unrealized loss position of approximately $ 2.4 million.

In evaluating whether a credit loss exists for the securities, the Company considers factors such as the severity of the loss position, the credit worthiness of the investee, the term to maturity and the intent and ability to hold the investments until maturity or until recovery of fair value.

6 unchanged sentences

The Company’s policy is not to write up inventory in excess of replacement cost.

The difference between LIFO cost and replacement cost, which will be reduced upon experiencing price inflation on the Company’s merchandise purchases, was $ 237.3 million at February 12, 2022 and $ 335.3 million at August 28, 2021.

The difference between LIFO cost and replacement cost, which has been reduced due to price inflation on the Company’s merchandise purchases, was $ 91.3 million at May 7, 2022 and $ 335.3 million at August 28, 2021.

Note F – Financing

12 unchanged sentences

1.650 % Senior Notes due January 2031 , effective interest rate of 2.19 %

Commercial paper, weighted average interest rate of 0.22 % at February 12, 2022

Commercial paper, weighted average interest rate of 0.80 % at May 7, 2022

Total debt before discounts and debt issuance costs

6 unchanged sentences

Under the Company’s 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.

As of February 12, 2022, the Company had no outstanding borrowings and $ 1.8 million of outstanding letters of credit under the Revolving Credit Agreement.

As of May 7, 2022, the Company had no outstanding borrowings and $ 1.8 million of outstanding letters of credit under the Revolving Credit Agreement.

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

As of February 12, 2022, the commercial paper borrowings and the $ 300 million 2.875 % Senior Notes due January 2023 were classified as long-term 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 in its Revolving Credit Agreement.

As of February 12, 2022, the Company had $ 2.2 billion of availability under its Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow it to replace these short-term obligations with a long-term financing facility.

As of May 7, 2022, the commercial paper borrowings and the $ 300 million 2.875 % Senior Notes due January 2023 were classified as long-term 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 in its Revolving Credit Agreement.

As of May 7, 2022, the Company had $ 2.2 billion of availability under its Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow it to replace these short-term obligations with a long-term financing facility.

All Senior Notes are subject to an interest rate adjustment if the debt ratings assigned are downgraded (as defined in the agreements).

2 unchanged sentences

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.

The fair value of the Company’s debt was estimated at $ 6.0 billion as of February 12, 2022, and $ 5.7 billion as of August 28, 2021, 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 $ 128.7 million and $ 413.1 million at February 12, 2022 and August 28, 2021, respectively, which reflects their face amount, adjusted for any unamortized debt issuance costs and discounts.

As of February 12, 2022, the Company was in compliance with all covenants and expects to remain in compliance with all covenants under its borrowing arrangements.

The fair value of the Company’s debt was estimated at $ 5.9 billion as of May 7, 2022, and $ 5.7 billion as of August 28, 2021, 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 $ 163.3 million at May 7, 2022, and greater than the carrying value of debt by $ 413.1 million at August 28, 2021, which reflects their face amount, adjusted for any unamortized debt issuance costs and discounts.

As of May 7, 2022, the Company was in compliance with all covenants and expects to remain in compliance with all covenants under its borrowing arrangements.

Note G – Stock Repurchase Program

From January 1, 1998 to February 12, 2022, the Company has repurchased a total of 151.6 million shares of its common stock at an aggregate cost of $ 28.2 billion, including 1.3 million shares of its common stock at an aggregate cost of $ 2.5 billion during the twenty-four week period ended February 12, 2022.

On December 14, 2021, the Board voted to authorize the repurchase of an additional $ 1.5 billion of the Company’s common stock in connection with its ongoing share repurchase program, which raised the total value of shares authorized to be repurchased to $ 29.2 billion.

Considering the cumulative repurchases as of February 12, 2022, the Company had $ 957.6 million remaining under the Board’s authorization to repurchase its common stock.

During the twenty-four week period ended February 12, 2022, the Company retired 2.5 million shares of treasury stock which had been previously repurchased under the Company’s share repurchase program.

From January 1, 1998 to May 7, 2022, the Company has repurchased a total of 152.0 million shares of its common stock at an aggregate cost of $ 29.1 billion, including 1.7 million shares of its common stock at an aggregate cost of $ 3.4 billion during the thirty-six week period ended May 7, 2022.

On March 22, 2022, the Board voted to authorize the repurchase of an additional $ 2.0 billion of the Company’s common stock in connection with its ongoing share repurchase program, which raised the total value of shares authorized to be repurchased to $ 31.2 billion.

Considering the cumulative repurchases as of May 7, 2022, the Company had $ 2.1 billion remaining under the Board’s authorization to repurchase its common stock.

During the thirty-six week period ended May 7, 2022, the Company retired 2.5 million shares of treasury stock which had been previously repurchased under the Company’s share repurchase program.

The retirement increased Retained deficit by $ 3.3 billion and decreased Additional paid-in capital by $ 294.9 million.

During the comparable prior year period, the Company retired 1.0 million shares of treasury stock, which increased Retained deficit by $ 1.1 billion and decreased Additional paid-in capital by $ 60.0 million.

Subsequent to February 12, 2022 and through March 11, 2022, the Company has repurchased 119,542 shares of its common stock at an aggregate cost of $ 226.9 million.

Subsequent to May 7, 2022 and through June 3, 2022, the Company has repurchased 103,726 shares of its common stock at an aggregate cost of $ 203.6 million.

Note H – Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss includes foreign currency translation adjustments, activity for interest rate swaps and treasury rate locks that qualified as cash flow hedges and unrealized gains (losses) on available-for-sale marketable debt securities.

Changes in Accumulated other comprehensive loss for the twelve week periods ended February 12, 2022 and February 13, 2021 consisted of the following:

Changes in Accumulated other comprehensive loss for the twelve week periods ended May 7, 2022 and May 8, 2021 consisted of the following:

(in thousands)

on Securities

Balance at November 20, 2021

Balance at February 12, 2022

Other comprehensive income (loss) before reclassifications (2)(3)

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at February 12, 2022

Balance at May 7, 2022

(in thousands)

on Securities

Balance at November 21, 2020

Other comprehensive income (loss) before reclassifications (2)(3)

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at February 13, 2021

Changes in Accumulated other comprehensive loss for the twenty-four week periods ended February 12, 2022 and February 13, 2021 consisted of the following:

Other comprehensive (loss) before reclassifications (2)(3)

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at May 8, 2021

Changes in Accumulated other comprehensive loss for the thirty-six week periods ended May 7, 2022 and May 8, 2021 consisted of the following:

(in thousands)

1 unchanged sentence

Balance at August 28, 2021

Other comprehensive (loss) before reclassifications (2)(3)

Other comprehensive income (loss) before reclassifications (2)(3)

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at February 12, 2022

Balance at May 7, 2022

(in thousands)

3 unchanged sentences

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at February 13, 2021

Balance at May 8, 2021

(1) Foreign currency is shown net of U.S.

21 unchanged sentences

Twelve Weeks Ended

Twenty-Four Weeks Ended

Thirty-Six Weeks Ended

(in thousands)

14 unchanged sentences

We have reviewed the accompanying condensed consolidated balance sheet of AutoZone, Inc.

(the Company) as of February 12, 2022, the related condensed consolidated statements of income, comprehensive income and stockholders’ deficit for the twelve and twenty-four week periods ended February 12, 2022 and February 13, 2021, the condensed consolidated statements of cash flows for the twenty-four week periods ended February 12, 2022 and February 13, 2021, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

(the Company) as of May 7, 2022, the related condensed consolidated statements of income, comprehensive income and stockholders’ deficit for the twelve and thirty-six week periods ended May 7, 2022 and May 8, 2021, the condensed consolidated statements of cash flows for the thirty-six week periods ended May 7, 2022 and May 8, 2021, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S.

13 unchanged sentences

Memphis, Tennessee

March 18, 2022

June 10, 2022

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-Q

Item 1. Financial Statements