AUTOZONE INC 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk At May 4, 2024, 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 26, 2023 were the $500 million 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 debt issuances, the $300 million 3.125% Senior Notes debt repayment and the $631.3 million net increase in commercial paper. The fair value of the Company’s debt was estimated at $8.8 billion as of May 4, 2024, and $7.3 billion as of August 26, 2023, 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 $236.2 million and $406.6 million at May 4, 2024 and August 26, 2023, respectively, which reflects their face amount, adjusted for any unamortized debt issuance costs and discounts. We had $1.8 billion and $1.2 billion of variable rate debt outstanding at May 4, 2024 and at August 26, 2023, respectively. 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 $18.4 million in fiscal 2024. The primary interest rate exposure is based on the federal funds rate. We had outstanding fixed rate debt of $7.2 billion, net of unamortized debt issuance costs of $44.6 million at May 4, 2024 and $6.5 billion, net of unamortized debt issuance costs of $41.1 million at August 26, 2023. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by $294.3 million at May 4, 2024.