What changed in this filing

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Item 1. Financial Statements

2023-06-09 compared with 2023-03-17 · 70 added, 74 removed, 379 unchanged (28% of the section changed)

33 unchanged sentences

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

18,786 shares issued and 18,467 shares outstanding as of February 11, 2023;

18,900 shares issued and 18,225 shares outstanding as of May 6, 2023;

20,732 shares issued and 19,126 shares outstanding as of August 27, 2022

6 unchanged sentences

( 1,675,687 )

( 3,262,769 )

Total stockholders’ deficit

6 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)

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustments

1 unchanged sentence

Net derivative activities, net of taxes

Total other comprehensive income (loss)

Total other comprehensive income

Comprehensive income

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Four Weeks Ended

Thirty-Six Weeks Ended

(in thousands)

29 unchanged sentences

( 1,388,307 )

( 2,530,823 )

Effect of exchange rate changes on cash

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

Twelve Weeks Ended February 11, 2023

Twelve Weeks Ended May 6, 2023

Comprehensive

(in thousands)

Balance at November 19, 2022

Balance at February 11, 2023

( 4,471,842 )

1 unchanged sentence

Total other comprehensive income

Retirement of treasury shares

( 4,157,637 )

Purchase of 356 shares of treasury stock

1 unchanged sentence

Share-based compensation expense

Balance at February 11, 2023

Balance at May 6, 2023

( 3,824,119 )

( 1,675,687 )

Twelve Weeks Ended February 12, 2022

( 4,301,577 )

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 )

Twenty-Four Weeks Ended February 11, 2023

Thirty-Six Weeks Ended May 6, 2023

Comprehensive

12 unchanged sentences

Share-based compensation expense

Balance at February 11, 2023

Balance at May 6, 2023

( 3,824,119 )

( 1,675,687 )

Twenty-Four Weeks Ended February 12, 2022

( 4,301,577 )

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 )

12 unchanged sentences

(“AutoZone” or the “Company”) Annual Report on Form 10-K for the year ended August 27, 2022.

Operating results for the twelve and twenty-four weeks ended February 11, 2023 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 26, 2023.

Operating results for the twelve and thirty-six weeks ended May 6, 2023 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 26, 2023.

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.

10 unchanged sentences

Early adoption is permitted.

The Company will adopt this standard beginning with its first quarter ending November 18, 2023.

The Company is currently evaluating the new guidance to determine the impact the adoption will have on the Company’s disclosures.

The Company expects to adopt this standard beginning with its first quarter ending November 18, 2023.

The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

Note B – Share-Based Payments

5 unchanged sentences

Stock Options:

The Company made stock option grants for 157,870 shares during the twenty-four week period ended February 11, 2023 and granted options to purchase 164,262 shares during the comparable prior year period.

The Company made stock option grants for 161,510 shares during the thirty-six week period ended May 6, 2023 and granted options to purchase 164,262 shares during the comparable prior year period.

The Company grants options to

1 unchanged sentence

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 11, 2023 and February 12, 2022, using the Black-Scholes-Merton multiple-option pricing valuation model, was $ 760.98 and $ 463.09 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 6, 2023 and May 7, 2022, using the Black-Scholes-Merton multiple-option pricing valuation model, was $ 764.68 and $ 463.09 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 11, 2023, and the comparable prior year period, 96,080 and 123,216 stock options were exercised at a weighted average exercise price of $ 709.98 and $ 584.81 , respectively.

As of February 11, 2023, total unrecognized share-based expense related to stock options, net of estimated forfeitures, was approximately $ 137.7 million, before income taxes, which we expect to recognize over an estimated weighted average period of 3.3 years.

During the thirty-six week period ended May 6, 2023, and the comparable prior year period, 208,482 and 179,440 stock options, respectively, were exercised at a weighted average exercise price of $ 705.52 and $ 574.79 , respectively.

As of May 6, 2023, total unrecognized share-based expense related to stock options, net of estimated forfeitures, was approximately $ 117.5 million, before income taxes, which we expect to recognize over an estimated weighted average period of 3.1 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 11, 2023, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $ 11.7 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.8 years.

Transactions related to restricted stock units for the twenty-four weeks ended February 11, 2023 were as follows:

As of May 6, 2023, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $ 10.1 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.6 years.

Transactions related to restricted stock units for the thirty-six weeks ended May 6, 2023 were as follows:

Average Grant

1 unchanged sentence

Nonvested at August 27, 2022

Nonvested at February 11, 2023

Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) for the twelve and twenty-four week periods ended February 11, 2023, was $ 23.4 million and $ 42.4 million, respectively.

Nonvested at May 6, 2023

Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) for the twelve and thirty-six week periods ended May 6, 2023, was $ 20.0 million and $ 62.4 million, respectively.

For the comparable prior year periods, total share-based compensation expense was $ 18.3 million and $ 49.1 million, respectively.

For the twelve and twenty-four week periods ended February 11, 2023, 156,925 and 122,072 , respectively, stock options were excluded from the diluted earnings per share computation because they would have been anti-dilutive.

For the twelve and thirty-six week periods ended May 6, 2023, 154,041 and 132,965 , 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, 120,515 and 136,994 , respectively, anti-dilutive stock options were excluded from the dilutive earnings per share computation.

11 unchanged sentences

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

February 11, 2023

(in thousands)

5 unchanged sentences

Other long-term assets

At February 11, 2023, 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 6, 2023, 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 11, 2023

(in thousands)

9 unchanged sentences

Asset-backed securities and other

The debt securities held at February 11, 2023, had effective maturities ranging from less than one year to approximately three years .

Securities maturing in less than one year totaled $ 62.5 million and $ 49.7 million at February 11, 2023 and August 27, 2022, respectively.

Securities maturing between one and three years totaled $ 60.5 million and $ 62.8 million at February 11, 2023 and August 27, 2022, respectively.

At February 11, 2023, the Company held 70 securities that are in an unrealized loss position of approximately $ 2.9 million.

The marketable debt securities held at May 6, 2023, had effective maturities ranging from less than one year to approximately three years .

Securities maturing in less than one year totaled $ 42.6 million and $ 49.7 million at May 6, 2023 and August 27, 2022, respectively.

Securities maturing between one and three years totaled $ 81.9 million and $ 62.8 million at May 6, 2023 and August 27, 2022, respectively.

At May 6, 2023, the Company held 60 securities that are in an unrealized loss position of approximately $ 2.0 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.

7 unchanged sentences

The hedges remained highly effective until they expired, and no ineffectiveness was recognized in earnings.

At February 11, 2023, the Company had $ 12.2 million recorded in Accumulated other comprehensive loss related to realized losses associated with terminated interest rate swap and treasury rate lock derivatives, which were designated as hedging instruments.

At May 6, 2023, the Company had $ 13.0 million recorded in Accumulated other comprehensive loss related to realized losses associated with terminated interest rate swap and treasury rate lock derivatives, which were designated as hedging instruments.

Net losses are amortized into Interest expense over the remaining life of the associated debt.

During the twelve and twenty-four week periods ended February 11, 2023, the Company reclassified $ 741 thousand and $ 1.5 million, respectively, of net losses from Accumulated other comprehensive loss to Interest expense.

During the twelve and thirty-six week periods ended May 6, 2023, the Company reclassified $ 531 thousand and $ 2.1 million, respectively, of net losses from Accumulated other comprehensive loss to Interest expense.

During the comparable prior year periods, $ 798 thousand and $ 2.6 million, respectively, were reclassified from Accumulated other comprehensive loss to Interest expense.

4 unchanged sentences

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

Due to recent price inflation on the Company’s merchandise purchases, primarily driven by increased freight costs, the Company’s LIFO credit reserve balance was $ 106.0 million at February 11, 2023, and $ 15.0 million at August 27, 2022.

Increases to the Company’s LIFO credit reserve balance are recorded as a non-cash charge to cost of sales.

Due to recent price inflation on the Company’s merchandise purchases, primarily driven by increased freight costs, the Company’s LIFO credit reserve balance was $ 89.0 million at May 6, 2023, and $ 15.0 million at August 27, 2022.

Increases to the Company’s LIFO credit reserve balance are recorded as a non-cash charge to cost of sales and decreases are recorded as a non-cash benefit to cost of sales.

Note G – Financing

14 unchanged sentences

4.750 % Senior Notes due February 2033 , effective interest rate 4.70 %

Commercial paper, weighted average interest rate 4.68 % and 2.43 % at February 11, 2023 and August 27, 2022, respectively

Commercial paper, weighted average interest rate 5.14 % and 2.43 % at May 6, 2023 and August 27, 2022, respectively

Total debt before discounts and debt issuance costs

7 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 11, 2023, the Company had no outstanding borrowings and $ 1.8 million of outstanding letters of credit under the Revolving Credit Agreement.

As of May 6, 2023, the Company had no outstanding borrowings and $ 1.8 million of outstanding letters of credit under the Revolving Credit Agreement.

The Company also maintains a letter of credit facility that allows 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 is in addition to the letters of credit that may be issued under the Revolving Credit Agreement.

As of February 11, 2023, the Company had $ 25.0 million in letters of credit outstanding under the letter of credit facility, which expires in June 2025.

In addition to the outstanding letters of credit issued under the committed facilities discussed above, the Company had $ 107.2 million in letters of credit outstanding as of February 11, 2023.

As of May 6, 2023, the Company had $ 25.0 million in letters of credit outstanding under the letter of credit facility, which expires in June 2025.

In addition to the outstanding letters of credit issued under the committed facilities discussed above, the Company had $ 107.2 million in letters of credit outstanding as of May 6, 2023.

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

As of February 11, 2023, the commercial paper borrowings and the $ 500 million 3.125 % Senior Notes due July 2023 were classified as long-term in the accompanying 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 February 11, 2023, 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 6, 2023, the commercial paper borrowings, the $ 500 million 3.125 % Senior Notes due July 2023 and the $ 300 million 3.125 % Senior Notes due April 2024 were classified as long-term in the accompanying 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 6, 2023, 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.

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

5 unchanged sentences

Interest for the Senior Notes is paid on a semi-annual basis.

The fair value of the Company’s debt was estimated at $ 6.7 billion as of February 11, 2023, and $ 5.9 billion as of August 27, 2022, 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 $ 298.4 million and $ 182.8 million at February 11, 2023 and August 27, 2022, respectively, which reflects their face amount, adjusted for any unamortized debt issuance costs and discounts.

As of February 11, 2023, 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 $ 7.1 billion as of May 6, 2023, and $ 5.9 billion as of August 27, 2022, 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 $ 229.9 million and $ 182.8 million at May 6, 2023 and August 27, 2022, respectively, which reflects their face amount, adjusted for any unamortized debt issuance costs and discounts.

As of May 6, 2023, the Company was in compliance with all covenants and expects to remain in compliance with all covenants under its borrowing arrangements.

Note H – Stock Repurchase Program

From January 1, 1998 to February 11, 2023, the Company has repurchased a total of 153.3 million shares of its common stock at an aggregate cost of $ 31.9 billion, including 764.3 thousand shares of its common stock at an aggregate cost of $ 1.8 billion (inclusive of excise tax of $ 5.8 million) during the twenty-four week period ended February 11, 2023.

From January 1, 1998 to May 6, 2023, the Company has repurchased a total of 153.6 million shares of its common stock at an aggregate cost of $ 32.8 billion, including 1.1 million shares of its common stock at an aggregate cost of $ 2.7 billion (inclusive of excise tax of $ 14.0 million) during the thirty-six week period ended May 6, 2023.

The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.

On October 4, 2022, the Board voted to authorize the repurchase of an additional $ 2.5 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 $ 33.7 billion.

Considering the cumulative repurchases as of February 11, 2023, the Company had $ 1.8 billion remaining under the Board’s authorization to repurchase its common stock.

During the twenty-four week period ended February 11, 2023, the Company retired 2.1 million shares of treasury stock which had been previously repurchased under the Company’s share repurchase program.

Considering the cumulative repurchases as of May 6, 2023, the Company had $ 843.6 million remaining under the Board’s authorization to repurchase its common stock.

During the thirty-six week period ended May 6, 2023, the Company retired 2.1 million shares of treasury stock which had been previously repurchased under the Company’s share repurchase program.

The retirement increased Retained deficit by $ 4.2 billion and decreased Additional paid-in capital by $ 143.4 million.

During the comparable prior year period, the Company retired 2.5 million shares of treasury stock, which increased Retained deficit by $ 3.3 billion and decreased Additional paid-in capital by $ 294.9 million.

Subsequent to February 11, 2023 and through March 10, 2023, the Company has repurchased 83.5 thousand shares of its common stock at an aggregate cost of $ 210.0 million.

Subsequent to May 6, 2023 and through June 2, 2023, the Company has repurchased 86.7 thousand shares of its common stock at an aggregate cost of $ 219.9 million.

Note I – 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 11, 2023 and February 12, 2022 consisted of the following:

Changes in Accumulated other comprehensive loss for the twelve week periods ended May 6, 2023 and May 7, 2022 consisted of the following:

(in thousands)

on Securities

Balance at November 19, 2022

Other comprehensive income before reclassifications (2)(3)

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at February 11, 2023

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

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at May 6, 2023

(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

Changes in Accumulated other comprehensive loss for the twenty-four week periods ended February 11, 2023 and February 12, 2022 consisted of the following:

Balance at May 7, 2022

Changes in Accumulated other comprehensive loss for the thirty-six week periods ended May 6, 2023 and May 7, 2022 consisted of the following:

(in thousands)

1 unchanged sentence

Balance at August 27, 2022

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

Other comprehensive income before reclassifications (2)(3)

Amounts reclassified from Accumulated other comprehensive loss (3)

Balance at February 11, 2023

Balance at May 6, 2023

(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

(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 11, 2023, the related condensed consolidated statements of income, comprehensive income and stockholders’ deficit for the twelve week and twenty-four week periods ended February 11, 2023 and February 12, 2022, the condensed consolidated statements of cash flows for the twenty-four week periods ended February 11, 2023 and February 12, 2022, and the related notes (collectively referred to as the “condensed consolidated interim financial statements”).

(the Company) as of May 6, 2023, the related condensed consolidated statements of income, comprehensive income and stockholders’ deficit for the twelve and thirty-six week periods ended May 6, 2023 and May 7, 2022, the condensed consolidated statements of cash flows for the thirty-six week periods ended May 6, 2023 and May 7, 2022, 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 17, 2023

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