AUTOZONE INC 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk At May 10, 2025, 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 31, 2024, were the issuance of $500 million 5.125% Senior Notes due June 2030, repayments of the $400 million 3.250% Senior Notes due April 2025 and the $500 million 3.625% Senior Notes due April 2025, and the $225.5 million net increase in commercial paper. The fair value of the Company’s debt was estimated at $8.8 billion and $9.0 billion as of May 10, 2025, and August 31, 2024, respectively, 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 $57.9 million at May 10, 2025, and greater than the carrying value of debt by $3.5 million at August 31, 2024, and reflects their face amount, adjusted for any unamortized debt issuance costs and discounts. We had $805.5 million and $580.0 million of variable rate debt outstanding at May 10, 2025, and at August 31, 2024, respectively. At these borrowing levels for variable rate debt, a one percentage point increase in interest rates would have an unfavorable annual impact on our pre-tax earnings and cash flows of $8.1 million in fiscal 2025. The primary interest rate exposure is based on the federal funds rate. We had outstanding fixed rate debt of $8.0 billion, net of unamortized debt issuance costs of $52.4 million at May 10, 2025, and $8.4 billion, net of unamortized debt issuance costs of $55.6 million at August 31, 2024. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by $340.3 million at May 10, 2025.