AUTOZONE INC 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk At May 6, 2023, the only material changes to our instruments and positions that are sensitive to market risk since the disclosures in our Annual Report on Form 10-K for the year ended August 27, 2022 were the $450 million 4.500% Senior Notes due February 2028 and $550 million 4.750% Senior Notes due February 2033 debt issuances, the $300 million 2.875% Senior Notes debt repayment and the $524.0 million net increase in commercial paper. 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. We had $1.1 billion of variable rate debt outstanding at May 6, 2023 and $603.4 million in variable rate debt outstanding at August 27, 2022. At these borrowing levels for variable rate debt, a one percentage point increase in interest rates would have had an unfavorable annual impact on our pre-tax earnings and cash flows of $11.3 million in fiscal 2023. The primary interest rate exposure is based on the federal funds rate. We had outstanding fixed rate debt of $6.2 billion, net of unamortized debt issuance costs of $36.9 million at May 6, 2023 and $5.5 billion, net of unamortized debt issuance costs of $31.3 million at August 27, 2022. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by $257.5 million at May 6, 2023.