Item 1. Financial Statements.

AUTOZONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

​	​	​	​	​	​	​
​	​	February 10,		​	August 26,
(in thousands)	​	2024		​	2023
​	​	​	​	​	​	​
Assets	​	​	​		​
Current assets:	​	​	​		​
Cash and cash equivalents	​	$	304,096	​	$	277,054
Accounts receivable	​		501,117	​		520,385
Merchandise inventories	​		5,970,175	​		5,764,143
Other current assets	​		381,668	​		217,844
Total current assets	​		7,157,056	​		6,779,426
​	​	​	​	​	​	​
Property and equipment:	​	​	​	​	​	​
Property and equipment	​		10,847,940	​		10,337,890
Less: Accumulated depreciation and amortization	​		(4,940,456)	​		(4,741,342)
​	​		5,907,484	​		5,596,548
​	​	​	​	​	​	​
Operating lease right-of-use assets	​	​	2,999,294	​	​	2,998,097
Goodwill	​		302,645	​		302,645
Deferred income taxes	​		84,700	​		86,002
Other long-term assets	​		266,475	​		223,160
Total long-term assets	​		3,653,114	​		3,609,904
Total assets	​	$	16,717,654	​	$	15,985,878
​	​	​	​	​	​	​
Liabilities and Stockholders’ Deficit	​	​	​	​	​	​
Current liabilities:	​	​	​	​	​	​
Accounts payable	​	$	7,149,882	​	$	7,201,281
Current portion of operating lease liabilities	​	​	296,509	​	​	257,256
Accrued expenses and other	​		1,214,996	​		1,000,841
Income taxes payable	​		111,222	​		52,478
Total current liabilities	​		8,772,609	​		8,511,856
​	​	​	​	​	​	​
Long-term debt	​		8,630,553	​		7,668,549
Operating lease liabilities, less current portion	​	​	2,901,636	​	​	2,917,046
Deferred income taxes	​		539,911	​		536,278
Other long-term liabilities	​		710,266	​		702,043
​	​	​	​	​	​	​
Commitments and contingencies	​	​	​	​	​	​
​	​	​	​	​	​	​
Stockholders’ deficit:	​	​	​	​	​	​
Preferred stock, authorized 1,000 shares; no shares issued	​		—	​		—
Common stock, par value $.01 per share, authorized 200,000 shares; 17,351 shares issued and 17,312 shares outstanding as of February 10, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023	​		174	​		189
Additional paid-in capital	​		1,485,789	​		1,484,992
Retained deficit	​		(5,978,916)	​		(2,959,278)
Accumulated other comprehensive loss	​		(204,899)	​		(190,836)
Treasury stock, at cost	​		(139,469)	​		(2,684,961)
Total stockholders’ deficit	​		(4,837,321)	​		(4,349,894)
Total liabilities and stockholders' deficit	​	$	16,717,654	​	$	15,985,878

See Notes to Condensed Consolidated Financial Statements.

AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twelve Weeks Ended					​	Twenty-Four Weeks Ended
​	​	February 10,		​	February 11,		​	February 10,		​	February 11,
(in thousands, except per share data)	​	2024		​	2023		​	2024		​	2023
​	​	​	​	​	​	​	​	​	​	​	​	​
Net sales		$	3,859,126		$	3,690,982		$	8,049,403		$	7,676,049
Cost of sales, including warehouse and delivery expenses	​	​	1,779,474	​	​	1,760,979	​	​	3,755,735	​	​	3,751,424
Gross profit	​	​	2,079,652	​		1,930,003	​	​	4,293,668	​		3,924,625
Operating, selling, general and administrative expenses	​	​	1,336,410	​	​	1,260,026	​	​	2,701,822	​	​	2,531,615
Operating profit	​	​	743,242	​	​	669,977	​	​	1,591,846	​	​	1,393,010
Interest expense, net	​	​	102,619	​	​	65,609	​	​	194,004	​	​	123,332
Income before income taxes	​	​	640,623	​		604,368	​	​	1,397,842	​		1,269,678
Income tax expense	​	​	125,593	​	​	127,824	​	​	289,349	​	​	253,816
Net income	​	$	515,030	​	$	476,544	​	$	1,108,493	​	$	1,015,862
​	​	​	​	​	​	​	​	​	​	​	​	​
Weighted average shares for basic earnings per share	​		17,319	​		18,705	​		17,514	​		18,856
Effect of dilutive stock equivalents	​	​	509	​	​	632	​	​	517	​	​	635
Weighted average shares for diluted earnings per share	​		17,828	​		19,337	​		18,031	​		19,491
​	​	​	​	​	​	​	​	​	​	​	​	​
Basic earnings per share	​	$	29.74	​	$	25.48	​	$	63.29	​	$	53.87
Diluted earnings per share	​	$	28.89	​	$	24.64	​	$	61.48	​	$	52.12

​

See Notes to Condensed Consolidated Financial Statements.

AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twelve Weeks Ended					​	Twenty-Four Weeks Ended
​	​	February 10,			February 11,			February 10,			February 11,
(in thousands)		2024		​	2023		​	2024		​	2023
​	​	​	​	​	​	​	​	​	​	​	​	​
Net income	​	$	515,030	​	$	476,544	​	$	1,108,493	​	$	1,015,862
Other comprehensive income (loss):	​		​	​			​		​	​
Foreign currency translation adjustments	​		4,339	​		22,060	​		(15,882)	​		25,395
Unrealized gains (losses) on marketable debt securities, net of taxes	​		717	​		548	​		1,012	​		(123)
Net derivative activities, net of taxes	​		404	​		5,345	​		807	​		5,952
Total other comprehensive income (loss)	​		5,460	​		27,953	​		(14,063)	​		31,224
Comprehensive income	​	$	520,490	​	$	504,497	​	$	1,094,430	​	$	1,047,086

​

See Notes to Condensed Consolidated Financial Statements.

​

AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

​	​	​	​	​	​	​
​	​	Twenty-Four Weeks Ended
​		February 10,		​	February 11,
(in thousands)	​	2024		​	2023
​	​	​	​	​	​	​
Cash flows from operating activities:		​	​		​
Net income	​	$	1,108,493	​	$	1,015,862
Adjustments to reconcile net income to net cash provided by operating activities:	​		​	​
Depreciation and amortization of property and equipment	​		245,192	​		222,964
Other non-cash (income) charges	​		(16,000)	​		91,000
Amortization of debt origination fees	​		5,551	​		3,922
Deferred income taxes	​		5,998	​		(4,697)
Share-based compensation expense	​		45,961	​		42,379
Changes in operating assets and liabilities:	​		​	​
Accounts receivable	​		18,364	​		22,273
Merchandise inventories	​		(198,425)	​		(161,546)
Accounts payable and accrued expenses	​		(17,062)	​		(111,311)
Income taxes	​		96,282	​		87,400
Other, net	​		(29,968)	​		(60,185)
Net cash provided by operating activities	​		1,264,386	​		1,148,061
​	​	​	​	​	​	​
Cash flows from investing activities:	​		​	​
Capital expenditures	​		(490,807)	​		(259,234)
Purchase of marketable debt securities	​		(14,038)	​		(14,000)
Proceeds from sale of marketable debt securities	​		12,626	​		3,450
Investment in tax credit equity investments	​	​	(42,522)	​	​	(12,070)
Other, net	​		(9,253)	​		11,846
Net cash used in investing activities	​		(543,994)	​		(270,008)
​	​	​	​	​	​	​
Cash flows from financing activities:	​		​	​
Net (payments of) proceeds from commercial paper	​		(32,228)	​		227,600
Proceeds from issuance of debt	​		1,000,000	​		1,000,000
Repayment of debt	​	​	—	​	​	(300,000)
Net proceeds from sale of common stock	​		98,338	​		72,758
Purchase of treasury stock	​	​	(1,709,034)	​	​	(1,799,997)
Repayment of principal portion of finance lease liabilities	​		(41,459)	​	​	(40,572)
Other, net	​		(8,462)	​		(4,510)
Net cash used in financing activities	​		(692,845)	​		(844,721)
​	​	​	​	​	​	​
Effect of exchange rate changes on cash	​		(505)	​		3,574
​	​	​	​	​	​	​
Net increase in cash and cash equivalents	​		27,042	​		36,906
Cash and cash equivalents at beginning of period	​		277,054	​		264,380
Cash and cash equivalents at end of period	​	$	304,096	​	$	301,286

See Notes to Condensed Consolidated Financial Statements.

​

AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twelve Weeks Ended February 10, 2024
​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​
​	​	Common	​	​	​	​	Additional		​	​		​	Other		​	​	​	​	​	​
​		Shares		Common			Paid-in			Retained			Comprehensive			Treasury			​	​
(in thousands)	​	Issued	​	Stock		​	Capital		​	Deficit		​	Loss		​	Stock		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at November 18, 2023		18,984	​	$	190	​	$	1,548,510	​	$	(2,365,815)	​	$	(210,359)	​	$	(4,186,197)	​	$	(5,213,671)
Net income		—	​		—	​		—	​		515,030	​		—	​		—	​		515,030
Total other comprehensive income		—	​		—	​		—	​		—	​		5,460	​		—	​		5,460
Retirement of treasury shares	​	(1,703)	​		(17)	​		(142,391)	​		(4,128,131)	​		—	​		4,270,539	​		—
Purchase of 84 shares of treasury stock		—	​		—	​		—	​		—	​		—	​		(223,811)	​		(223,811)
Issuance of common stock under stock options and stock purchase plans		70	​		1	​		56,890	​		—	​		—	​		—	​		56,891
Share-based compensation expense		—	​		—	​		22,780	​		—	​		—	​		—	​		22,780
Balance at February 10, 2024		17,351	​	$	174	​	$	1,485,789	​	$	(5,978,916)	​	$	(204,899)	​	$	(139,469)	​	$	(4,837,321)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twelve Weeks Ended February 11, 2023
​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​
​	​	Common	​	​	​	​	Additional		​	​	​	​	Other		​	​	​	​	​	​
​		Shares		Common			Paid-in			Retained			Comprehensive			Treasury			​	​
(in thousands)	​	Issued	​	Stock		​	Capital		​	Deficit		​	Loss		​	Stock		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at November 19, 2022		20,794	​	$	208	​	$	1,412,650	​	$	(790,749)	​	$	(297,265)	​	$	(4,162,767)	​	$	(3,837,923)
Net income		—	​		—	​		—	​		476,544	​		—	​		—	​		476,544
Total other comprehensive income		—	​		—	​		—	​		—	​		27,953	​		—	​		27,953
Retirement of treasury shares		(2,051)	​		(20)	​		(143,440)	​		(4,157,637)	​		—	​		4,301,097	​		—
Purchase of 372 shares of treasury stock		—	​		—	​		—	​		—	​		—	​		(905,792)	​		(905,792)
Issuance of common stock under stock options and stock purchase plans		43	​		—	​		31,929	​	​	—	​	​	—	​	​	—	​		31,929
Share-based compensation expense		—	​		—	​		23,119	​		—	​		—	​		—	​		23,119
Balance at February 11, 2023		18,786	​	$	188	​	$	1,324,258	​	$	(4,471,842)	​	$	(269,312)	​	$	(767,462)	​	$	(4,184,170)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twenty-Four Weeks Ended February 10, 2024
​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​
​	​	Common	​	​	​	​	Additional		​	​	​	​	Other		​	​	​	​	​	​
​		Shares		Common			Paid-in			Retained			Comprehensive			Treasury			​	​
(in thousands)	​	Issued	​	Stock		​	Capital		​	Deficit		​	Loss		​	Stock		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at August 26, 2023		18,936	​	$	189	​	$	1,484,992	​	$	(2,959,278)	​	$	(190,836)	​	$	(2,684,961)	​	$	(4,349,894)
Net income		—	​		—	​		—	​		1,108,493	​		—	​		—	​		1,108,493
Total other comprehensive loss		—	​		—	​		—	​		—	​		(14,063)	​		—	​		(14,063)
Retirement of treasury shares		(1,703)	​		(17)	​		(142,391)	​		(4,128,131)	​		—	​		4,270,539	​		—
Purchase of 663 shares of treasury stock		—	​		—	​		—	​		—	​		—	​		(1,725,047)	​		(1,725,047)
Issuance of common stock under stock options and stock purchase plans		118	​		2	​		98,337	​		—	​		—	​		—	​		98,339
Share-based compensation expense		—	​		—	​		44,851	​		—	​		—	​		—	​		44,851
Balance at February 10, 2024		17,351	​	$	174	​	$	1,485,789	​	$	(5,978,916)	​	$	(204,899)	​	$	(139,469)	​	$	(4,837,321)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twenty-Four Weeks Ended February 11, 2023
​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​
​	​	Common	​	​	​	​	Additional		​	​	​	​	Other		​	​	​	​	​	​
​		Shares		Common			Paid-in			Retained			Comprehensive			Treasury			​	​
(in thousands)	​	Issued	​	Stock		​	Capital		​	Deficit		​	Loss		​	Stock		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at August 27, 2022		20,732	​	$	207	​	$	1,354,252	​	$	(1,330,067)	​	$	(300,536)	​	$	(3,262,769)	​	$	(3,538,913)
Net income		—	​		—	​		—	​		1,015,862	​		—	​		—	​		1,015,862
Total other comprehensive income		—	​		—	​		—	​		—	​		31,224	​		—	​		31,224
Retirement of treasury shares		(2,051)	​		(20)	​		(143,440)	​		(4,157,637)	​		—	​		4,301,097	​		—
Purchase of 764 shares of treasury stock		—	​		—	​		—	​		—	​		—	​		(1,805,790)	​		(1,805,790)
Issuance of common stock under stock options and stock purchase plans		105	​		1	​		72,757	​	​	—	​	​	—	​	​	—	​		72,758
Share-based compensation expense		—	​		—	​		40,689	​		—	​		—	​		—	​		40,689
Balance at February 11, 2023		18,786	​	$	188	​	$	1,324,258	​	$	(4,471,842)	​	$	(269,312)	​	$	(767,462)	​	$	(4,184,170)

See Notes to Condensed Consolidated Financial Statements.

AUTOZONE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A – General

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission’s (the “SEC”) rules and regulations. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and related notes included in the AutoZone, Inc. (“AutoZone” or the “Company”) Annual Report on Form 10-K for the year ended August 26, 2023.

Operating results for the twelve and twenty-four weeks ended February 10, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 31, 2024. 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. The fourth quarter of fiscal 2024 has 17 weeks, and the fourth quarter of fiscal 2023 had 16 weeks.

Recently Adopted Accounting Pronouncements

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50). This ASU requires buyers in a supplier finance program to disclose sufficient qualitative and quantitative information about the program to allow a reader of the financial statements to understand the program’s nature, activity during the period, changes from period to period and the program’s potential magnitude. This ASU is effective for all companies for fiscal years beginning after December 15, 2022, including interim periods within those years, and requires retrospective adoption. The Company adopted this standard on a retrospective basis beginning with its first quarter ended November 18, 2023. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements. Refer to “Note F – Supplier Financing Programs.”

Recently Issued Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this ASU require disclosures, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (CODM), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss. This ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss. Public entities will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single reportable segment are required to provide all the disclosures required by the amendments in the update and existing segment disclosures in Topic 280. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective adoption. Early adoption is permitted. The Company will adopt this standard with our fiscal 2025 annual filing. The Company is currently evaluating these new disclosure requirements and the impact of adoption.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740). The amendments in this ASU are intended to enhance the transparency of income tax information by updating income tax disclosure requirements. The guidance is effective for public entities for annual periods beginning after December 15, 2024, and early adoption is permitted. The amendments in this ASU should be applied on a prospective basis; however, retrospective application is permitted. The Company will adopt this standard with our fiscal 2026 annual filing. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact.

​

Note B – Merchandise Inventories

Merchandise inventories include related purchasing, storage and handling costs. Inventory cost has been determined using the last-in, first-out (“LIFO”) method stated at the lower of cost or net realizable value for domestic inventories and the weighted average cost method stated at the lower of cost or net realizable value for Mexico and Brazil inventories. The Company’s LIFO credit reserve balance decreased to $43.0 million at February 10, 2024 from $59.0 million at August 26, 2023 as a result of net deflation, primarily driven by reduced freight costs. Until the credit reserve balance is exhausted, decreases are recorded as a non-cash benefit to cost of sales and increases are recorded as a non-cash charge to cost of sales. Debit LIFO reserve balances are not recorded as the Company’s policy is not to write up inventory in excess of replacement cost.

Note C – Variable Interest Entities

The Company invests in certain tax credit funds that promote renewable energy and generate a return primarily through the realization of federal tax credits. The Company considers its investment in these tax credit funds as an investment in a variable interest entity (“VIE”). The Company evaluates the investment in any VIE to determine whether it is the primary beneficiary. The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. As of February 10, 2024, the Company held tax credit equity investments that were deemed to be VIE’s and determined that it was not the primary beneficiary of the entities, as it did not have the power to direct the activities that most significantly impacted the entity and accounted for this investment using the equity method. The Company’s maximum exposure to losses is generally limited to its net investment, which was $29.9 million as of February 10, 2024.

Note D – Fair Value Measurements

The Company defines fair value as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, Fair Value Measurements and Disclosures, the Company uses the fair value hierarchy, which prioritizes the inputs used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are set forth below:

Level 1 inputs—unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.

Level 2 inputs—inputs other than quoted market prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability.

Level 3 inputs—unobservable inputs for the asset or liability, which are based on the Company’s own assumptions as there is little, if any, observable activity in identical assets or liabilities.

Marketable Debt Securities Measured at Fair Value on a Recurring Basis

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	February 10, 2024
(in thousands)		Level 1			Level 2			Level 3			Fair Value
​	​	​	​	​	​	​	​	​	​	​	​	​
Other current assets	​	$	47,392	​	$	5,922	​	$	—	​	$	53,314
Other long-term assets	​		33,469	​	​	37,426	​		—	​		70,895
​	​	$	80,861	​	$	43,348	​	$	—	​	$	124,209

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	August 26, 2023
(in thousands)		Level 1			Level 2			Level 3			Fair Value
​	​	​	​	​	​	​	​	​	​	​	​	​
Other current assets	​	$	35,349	​	$	4,290	​	$	—	​	$	39,639
Other long-term assets	​		71,028	​		10,846	​		—	​		81,874
​	​	$	106,377	​	$	15,136	​	$	—	​	$	121,513

​

At February 10, 2024 and August 26, 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. The fair values of the marketable debt securities, by asset class, are described in “Note E – Marketable Debt Securities.”

Financial Instruments not Recognized at Fair Value

The Company has financial instruments, including cash and cash equivalents, accounts receivable, other current assets and accounts payable. The carrying amounts of these financial instruments approximate fair value because of their short maturities. A discussion of the carrying values and fair values of the Company’s debt is included in “Note H – Financing.”

Note E – Marketable Debt Securities

Marketable debt securities are carried at fair value, with unrealized gains and losses, net of income taxes, recorded in Accumulated other comprehensive loss until realized, and any credit risk related losses are recognized in net income in the period incurred. The Company’s basis for determining the cost of a security sold is the Specific Identification Model.

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

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	February 10, 2024
​		Amortized			Gross			Gross			​
​	​	Cost		​	Unrealized		​	Unrealized		​	Fair
(in thousands)	​	Basis		​	Gains		​	Losses		​	Value
​	​	​	​	​	​	​	​	​	​	​	​	​
Corporate debt securities	​	$	29,753	​	$	38	​	$	(240)	​	$	29,551
Government bonds	​		62,189	​		449	​		(1,107)	​		61,531
Mortgage-backed securities	​		3,043	​		—	​		(122)	​		2,921
Asset-backed securities and other	​		30,311	​		4	​		(109)	​		30,206
​	​	$	125,296	​	$	491	​	$	(1,578)	​	$	124,209

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	August 26, 2023
​		Amortized			Gross			Gross			​
​	​	Cost		​	Unrealized		​	Unrealized		​	Fair
(in thousands)	​	Basis		​	Gains		​	Losses		​	Value
​	​	​	​	​	​	​	​	​	​	​	​	​
Corporate debt securities	​	$	31,683	​	$	17	​	$	(504)	​	$	31,196
Government bonds	​		63,747	​		—	​		(1,440)	​		62,307
Mortgage-backed securities	​		3,215	​		—	​		(213)	​		3,002
Asset-backed securities and other	​		25,242	​		—	​		(234)	​		25,008
​	​	$	123,887	​	$	17	​	$	(2,391)	​	$	121,513

​

The marketable debt securities held at February 10, 2024 had effective maturities ranging from less than one year to approximately twelve years. 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. An allowance for credit losses was deemed unnecessary given consideration of the factors above. The Company did not realize any material gains or losses on its marketable debt securities during the twenty-four week period ended February 10, 2024 and the comparable prior year period.

Included above in total available-for-sale marketable debt securities are $107.9 million and $105.0 million of marketable debt securities transferred by the Company’s insurance captive to a trust account to secure its obligations to an insurance company related to future workers’ compensation and casualty losses as of February 10, 2024 and August 26, 2023, respectively.

Note F – Supplier Financing Programs

The Company has arrangements with third-party financial institutions to confirm invoice balances owed by the Company to certain suppliers and pay the financial institutions the confirmed amounts on the invoice due dates. These arrangements allow the Company’s inventory suppliers, at their sole discretion, to enter into agreements directly with these financial institutions to finance the Company’s obligations to the suppliers at terms negotiated between the suppliers and the financial institutions. Supplier participation is optional and our obligations to our suppliers, including the amount and dates due, are not impacted by our suppliers’ decision to enter into an agreement with a third-party financial institution. As of February 10, 2024 and August 26, 2023, the Company had supplier obligations outstanding that had been confirmed under these arrangements of $4.8 billion for each period, which are included in Accounts payable and $197.6 million and $224.8 million, respectively, which are included in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

Note G – Litigation

The Company is involved in various legal proceedings incidental to the conduct of its business, including, but not limited to, claims and allegations related to wage and hour violations, unlawful termination, employment practices, product liability, privacy and cybersecurity, environmental matters, intellectual property rights or regulatory compliance. The Company does not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to the Company’s financial condition, results of operations or cash flows.

Note H – Financing

The Company’s debt consisted of the following:

​	​	​	​	​	​	​
​		February 10,			August 26,
(in thousands)	​	2024		​	2023
​	​	​	​	​	​	​
3.125% Senior Notes due April 2024, effective interest rate 3.32%	​	$	300,000	​	$	300,000
3.250% Senior Notes due April 2025, effective interest rate 3.36%	​		400,000	​		400,000
3.625% Senior Notes due April 2025, effective interest rate 3.78%	​	​	500,000	​	​	500,000
3.125% Senior Notes due April 2026, effective interest rate 3.28%	​		400,000	​		400,000
5.050% Senior Notes due July 2026, effective interest rate 5.09%	​	​	450,000	​	​	450,000
3.750% Senior Notes due June 2027, effective interest rate 3.83%	​		600,000	​		600,000
4.500% Senior Notes due February 2028, effective interest rate 4.43%	​	​	450,000	​	​	450,000
6.250% Senior Notes due November 2028, effective interest rate 6.46%	​	​	500,000	​	​	—
3.750% Senior Notes due April 2029, effective interest rate 3.86%	​		450,000	​		450,000
4.000% Senior Notes due April 2030, effective interest rate 4.09%	​	​	750,000	​	​	750,000
1.650% Senior Notes due January 2031, effective interest rate 2.19%	​	​	600,000	​	​	600,000
4.750% Senior Notes due August 2032, effective interest rate 4.76%	​	​	750,000	​	​	750,000
4.750% Senior Notes due February 2033, effective interest rate 4.70%	​	​	550,000	​	​	550,000
5.200% Senior Notes due August 2033, effective interest rate 5.22%	​	​	300,000	​	​	300,000
6.550% Senior Notes due November 2033, effective interest rate 6.71%	​	​	500,000	​	​	—
Commercial paper, weighted average interest rate 5.43% at February 10, 2024 and August 26, 2023	​		1,177,372	​		1,209,600
Total debt before discounts and debt issuance costs	​		8,677,372	​		7,709,600
Less: Discounts and debt issuance costs	​	​	46,819	​		41,051
Long-term debt	​	$	8,630,553	​	$	7,668,549

​

On November 15, 2021, the Company amended and restated its existing revolving credit facility (as amended from time to time, the “Revolving Credit Agreement”) pursuant to which the Company’s borrowing capacity was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at the Company’s option, subject to lenders’ approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, the Company amended the Revolving Credit Agreement, extending the termination date by one year. As amended, the Revolving Credit Agreement will terminate, and all amounts borrowed will be due and payable on November 15, 2027, but AutoZone may make one additional request to extend the termination date for an additional period of one year. Revolving borrowings under the Revolving Credit Agreement may be base rate loans, Term Secured Overnight Financing Rate (“SOFR”) loans, or a combination of both, at AutoZone’s election. The Revolving Credit Agreement includes (i) a $75 million sublimit for swingline loans, (ii) a $50 million individual issuer letter of credit sublimit and (iii) a $250 million aggregate sublimit for all letters of credit.

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 10, 2024 and August 26, 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 10, 2024 and August 26, 2023, the Company had $16.1 million and $25.0 million, respectively, 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 $128.4 million and $107.2 million in letters of credit outstanding as of February 10, 2024 and August 26, 2023, respectively. These letters of credit have various maturity dates and were issued on an uncommitted basis.

As of February 10, 2024 and August 26, 2023, the $1.2 billion commercial paper borrowings and the $300 million 3.125% Senior Notes due April 2024 were included in Long-term debt 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 under its Revolving Credit Agreement. As of February 10, 2024 and August 26, 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 October 25, 2023, the Company issued $500 million in 6.250% Senior Notes due November 2028 and $500 million in 6.550% Senior Notes due November 2033. Proceeds from the debt issuances were used for general corporate purposes.

​

The Senior Notes contain a provision that repayment may be accelerated if the Company experiences both a change of control and a rating event (both as defined in the agreements). The Company’s borrowings under its Senior Notes contain minimal covenants, primarily restrictions on liens. 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. Interest for the Senior Notes is paid on a semi-annual basis.

​

The fair value of the Company’s debt was estimated at $8.4 billion as of February 10, 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 $189.0 million and $406.6 million at February 10, 2024 and August 26, 2023, respectively, which reflects their face amount, adjusted for any unamortized debt issuance costs and discounts.

As of February 10, 2024, the Company was in compliance with all covenants and expects to remain in compliance with all covenants under its borrowing arrangements.

Note I – Stock Repurchase Program

From January 1, 1998 to February 10, 2024, the Company has repurchased a total of 154.7 million shares of its common stock at an aggregate cost of $35.5 billion, including 663.4 thousand shares of its common stock at an aggregate cost of $1.7 billion during the twenty-four week period ended February 10, 2024.

On December 20, 2023, 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 $37.7 billion. Considering the cumulative repurchases as of February 10, 2024, the Company had $2.1 billion remaining under the Board’s authorization to repurchase its common stock.

During the twenty-four week period ended February 10, 2024, the Company retired 1.7 million shares of treasury stock which had been previously repurchased under the Company’s share repurchase program. The retirement increased Retained deficit by $4.1 billion and decreased Additional paid-in capital by $142.4 million. During the comparable prior year period, the Company retired 2.1 million shares of treasury stock, which increased Retained deficit by $4.2 billion and decreased Additional paid-in capital by $143.4 million.

Subsequent to February 10, 2024 and through March 8, 2024, the Company has repurchased 63.0 thousand shares of its common stock at an aggregate cost of $180.7 million.

Note J – 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 10, 2024 and February 11, 2023 consisted of the following:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Net		​	​	​	​	​	​
​	​	Foreign		​	Unrealized		​	​	​	​	​	​
​	​	Currency		​	Gain (Loss)		​	​	​	​	​	​
(in thousands)		and Other(1)			on Securities		​	Derivatives		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at November 18, 2023	​	$	(196,778)	​	$	(1,556)	​	$	(12,025)	​	$	(210,359)
Other comprehensive income before reclassifications(2)(3)	​		4,339	​	​	717	​		—	​		5,056
Amounts reclassified from Accumulated other comprehensive loss(3)	​		—	​		—	​		404	​		404
Balance at February 10, 2024	​	$	(192,439)	​	$	(839)	​	$	(11,621)	​	$	(204,899)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Net		​	​	​	​	​	​
​	​	Foreign		​	Unrealized		​	​	​	​	​	​
​	​	Currency		​	Gain (Loss)		​	​	​	​	​	​
(in thousands)		and Other(1)			on Securities		​	Derivatives		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at November 19, 2022	​	$	(276,855)	​	$	(2,842)	​	$	(17,568)	​	$	(297,265)
Other comprehensive income before reclassifications(2)(3)	​		22,060	​		548	​		4,781	​		27,389
Amounts reclassified from Accumulated other comprehensive loss(3)	​		—	​		—	​		564	​		564
Balance at February 11, 2023	​	$	(254,795)	​	$	(2,294)	​	$	(12,223)	​	$	(269,312)

​

Changes in Accumulated other comprehensive loss for the twenty-four week periods ended February 10, 2024 and February 11, 2023 consisted of the following:

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Net		​	​	​	​	​	​
​	​	Foreign		​	Unrealized		​	​	​	​	​	​
​	​	Currency		​	Gain (Loss)		​	​	​	​	​	​
(in thousands)		and Other(1)			on Securities		​	Derivatives		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at August 26, 2023	​	$	(176,557)	​	$	(1,851)	​	$	(12,428)	​	$	(190,836)
Other comprehensive (loss) income before reclassifications(2)(3)	​		(15,882)	​	​	1,012	​		—	​		(14,870)
Amounts reclassified from Accumulated other comprehensive loss(3)	​		—	​		—	​		807	​		807
Balance at February 10, 2024	​	$	(192,439)	​	$	(839)	​	$	(11,621)	​	$	(204,899)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Net		​	​	​	​	​	​
​	​	Foreign		​	Unrealized		​	​	​	​	​	​
​	​	Currency		​	Gain (Loss)		​	​	​	​	​	​
(in thousands)		and Other(1)			on Securities		​	Derivatives		​	Total
​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at August 27, 2022	​	$	(280,190)	​	$	(2,171)	​	$	(18,175)	​	$	(300,536)
Other comprehensive income (loss) before reclassifications(2)(3)	​		25,395	​		(123)	​		4,781	​		30,053
Amounts reclassified from Accumulated other comprehensive loss(3)	​		—	​		—	​		1,171	​		1,171
Balance at February 11, 2023	​	$	(254,795)	​	$	(2,294)	​	$	(12,223)	​	$	(269,312)

(1)	Foreign currency is shown net of U.S. tax to account for foreign currency impacts of certain undistributed non-U.S. subsidiaries’ earnings. Other foreign currency is not shown net of additional U.S. tax as other basis differences of non-U.S. subsidiaries are intended to be permanently reinvested.

(2)	Amounts in parentheses indicate debits to Accumulated Other Comprehensive Loss.

(3)	Amounts shown are net of tax_._

Note K – Share-Based Payments

AutoZone maintains several equity incentive plans, which provide equity-based compensation to non-employee directors and eligible employees for their service to AutoZone, its subsidiaries or affiliates. The Company recognizes compensation expense for share-based payments based on the fair value of the awards at the grant date. Share-based payments include stock option grants, restricted stock grants, restricted stock unit grants, stock appreciation rights, discounts on shares sold to employees under share purchase plans and other awards. Additionally, directors’ fees are paid in restricted stock units with value equivalent to the value of shares of common stock as of the grant date. The change in fair value of liability-based stock awards is also recognized in share-based compensation expense.

Stock Options:

The Company made stock option grants for 133,466 shares during the twenty-four week period ended February 10, 2024 and granted options to purchase 157,870 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 or above the market value of the stock on the date of grant. Option-vesting periods range from four to five years, with the vast majority of options vesting ratably over four years. The fair value of each option is amortized into compensation expense on a straight-line basis over the requisite service period, less estimated forfeitures. Beginning with grants made in fiscal 2024, employees who meet the qualified retirement provisions under the AutoZone, Inc. 2020 Omnibus Incentive Award Plan are assumed to have a 0% forfeiture rate. All other employee grants assume a 10% forfeiture rate, which is based on historical experience.

The weighted average fair value of the stock option awards granted during the twenty-four week periods ended February 10, 2024 and February 11, 2023, using the Black-Scholes-Merton multiple-option pricing valuation model, was $913.56 and $760.98 per share, respectively, using the following weighted average key assumptions:

​

​	​	​	​	​	​
​	​	Twenty-Four Weeks Ended			​
​		February 10,		February 11,
​		2024	​	2023	​
​	​	​	​	​	​
Expected price volatility		29	%	29	%
Risk-free interest rate		4.8	%	3.8	%
Weighted average expected lives (in years)		5.4		5.4
Forfeiture rate		7	%	10	%
Dividend yield		0	%	0	%

​

During the twenty-four week period ended February 10, 2024, and the comparable prior year period, 112,394 and 96,080 stock options, respectively, were exercised at a weighted average exercise price of $848.57 and $709.98, respectively.

As of February 10, 2024, total unrecognized share-based expense related to stock options, net of estimated forfeitures, was approximately $152.9 million, before income taxes, which we expect to recognize over an estimated weighted average period of 3.3 years.

Restricted Stock Units:

Restricted stock unit awards are valued at the market price of a share of the Company’s stock on the date of grant. Grants of employee restricted stock units vest ratably on an annual basis over a four-year service period and are payable in shares of common stock on the vesting date. Compensation expense for grants of employee restricted stock units is recognized on a straight-line basis over the four-year service period, less estimated forfeitures, which are consistent with stock option forfeiture assumptions. Grants of non-employee director restricted stock units are made and expensed on January 1 of each year, as they vest immediately.

The Company made grants of 3,173 and 3,584 restricted stock unit awards at weighted average grant date fair values of $2,560.56 and $2,267.40, respectively, during the twenty-four week periods ended February 10, 2024 and February 11, 2023.

During the twenty-four week period ended February 10, 2024, and the comparable prior year period, 4,741 and 6,635 restricted stock unit awards, respectively, were vested at a weighted average grant date fair value of $1,617.00 and $1,276.65, respectively.

As of February 10, 2024, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $9.7 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.8 years.

Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) for the twelve and twenty-four week periods ended February 10, 2024, was $23.0 million and $46.0 million, respectively. For the comparable prior year periods, total share-based compensation expense was $23.4 million and $42.4 million, respectively.

For the twelve and twenty-four week periods ended February 10, 2024, 135,981 and 107,267, 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, 156,925 and 122,072 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 26, 2023 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. 2020 Omnibus Incentive Award Plan and the Director Compensation Program.

Note L – Segment Reporting

The Company’s primary operating segments (Domestic Auto Parts, Mexico and Brazil) are aggregated as one reportable segment: Auto Parts Stores. The criteria the Company used to identify the reportable segment are primarily the nature of the products the Company sells and the operating results that are regularly reviewed by the Company’s chief operating decision maker to make decisions about the resources to be allocated to the business units and to assess performance. The accounting policies of the Company’s reportable segment are the same as those described in “Note A – Significant Accounting Policies” in its Annual Report on Form 10-K for the year ended August 26, 2023.

The Auto Parts Stores segment is a retailer and distributor of automotive parts and accessories through the Company’s 7,191 stores in the U.S., Mexico and Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.

The Other category reflects business activities of two operating segments that are not separately reportable due to the materiality of these operating segments. The operating segments include ALLDATA, which produces, sells and maintains automotive diagnostic, repair and shop management software used in the automotive repair industry and E-commerce, which includes direct sales to customers through www.autozone.com for sales that are not fulfilled by local stores.

The Company evaluates its reportable segment primarily on the basis of net sales and segment profit, which is defined as gross profit. Segment results for the periods presented were as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Twelve Weeks Ended					​	Twenty-Four Weeks Ended
​		February 10,			February 11,			February 10,			February 11,
(in thousands)	​	2024		​	2023		​	2024		​	2023
​	​	​	​	​	​	​	​	​	​	​	​	​
Net Sales		​	​		​			​	​		​
Auto Parts Stores	​	$	3,786,339	​	$	3,623,110	​	$	7,902,033	​	$	7,539,017
Other	​		72,787	​		67,872	​		147,370	​		137,032
Total	​	$	3,859,126	​	$	3,690,982	​	$	8,049,403	​	$	7,676,049
​	​	​	​	​	​	​	​	​	​	​	​	​
Segment Profit	​		​	​			​		​	​
Auto Parts Stores	​	$	2,035,677	​	$	1,888,480	​	$	4,205,701	​	$	3,842,208
Other	​		43,975	​		41,523	​		87,967	​		82,417
Gross profit	​		2,079,652	​		1,930,003	​		4,293,668	​		3,924,625
Operating, selling, general and administrative expenses	​		(1,336,410)	​		(1,260,026)	​		(2,701,822)	​		(2,531,615)
Interest expense, net	​		(102,619)	​		(65,609)	​		(194,004)	​		(123,332)
Income before income taxes	​	$	640,623	​	$	604,368	​	$	1,397,842	​	$	1,269,678

​

​

​

​

​

​

Report of Independent Registered Public Accounting Firm

​

​

To the Stockholders and Board of Directors of

AutoZone, Inc.

​

Results of Review of Interim Financial Statements

We have reviewed the accompanying condensed consolidated balance sheet of AutoZone, Inc. (the Company) as of February 10, 2024, the related condensed consolidated statements of income, comprehensive income and stockholders’ deficit for the twelve and twenty-four week periods ended February 10, 2024 and February 11, 2023, the condensed consolidated statements of cash flows for the twenty-four week periods ended February 10, 2024 and February 11, 2023 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. generally accepted accounting principles.

​

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of August 26, 2023, the related consolidated statements of income, comprehensive income, stockholders’ deficit and cash flows for the year then ended, and the related notes (not presented herein); and in our report dated October 24, 2023, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of August 26, 2023, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

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Basis for Review Results

These financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

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/s/ Ernst & Young LLP

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Memphis, Tennessee

March 15, 2024

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