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UNITED STATES




SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549




FORM



10-Q



















































































































Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
















For the quarterly period ended

February 13, 2021

, or




































Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
















For the transition period from _______ to ________.


































Commission file number

1-10714









Graphic





AUTOZONE, INC



.



(Exact name of registrant as specified in its charter)










































































Nevada







62-1482048





(State or other jurisdiction of




(I.R.S. Employer Identification No.)




incorporation or organization)














































































123 South Front Street



,



Memphis



,



Tennessee







38103





(Address of principal executive offices)




(Zip Code)










(



901



)



495-6500




(Registrant’s telephone number, including area code)




Not applicable



(Former name, former address and former fiscal year, if changed since last report)



Securities registered pursuant to Section 12(b) of the Act:


































































Title of Each Class







Trading Symbol(s)







Name of Each Exchange on which Registered






Common Stock



($0.01 par value)







AZO








New York Stock Exchange













Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes










No







Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).



Yes










No






Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
























































Large accelerated filer










Accelerated filer






Non-accelerated filer







Smaller reporting company












Emerging growth company






















If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.










Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes











No






Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Common Stock, $.01 Par Value –

22,036,780

shares outstanding as of March 12, 2021.






























TABLE OF CONTENTS
















































































































































































































PART I.













FINANCIAL INFORMATION





3












Item 1.













Financial Statements





3
























CONDENSED CONSOLIDATED BALANCE SHEETS





3
























CONDENSED CONSOLIDATED STATEMENTS OF INCOME





4
























CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME





4
























CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS





5
























CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT





6
























NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





7
























REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





18












Item 2.













Management’s Discussion and Analysis of Financial Condition and Results of Operations





19












Item 3.













Quantitative and Qualitative Disclosures About Market Risk





28












Item 4.













Controls and Procedures





29






PART II.













OTHER INFORMATION





29












Item 1.













Legal Proceedings





29












Item 1A.













Risk Factors





29












Item 2.













Unregistered Sales of Equity Securities and Use of Proceeds





29












Item 3.













Defaults Upon Senior Securities





29












Item 4.













Mine Safety Disclosures





30












Item 5.













Other Information





30












Item 6.













Exhibits





30






SIGNATURES

















32























2












PART I. FINANCIAL INFORMATION







Item 1.


Financial Statements.



AUTOZONE, INC.





CONDENSED CONSOLIDATED BALANCE SHEETS



(Unaudited)
























































































































































































































































































































































































































































































































































































































February 13,











August 29,





(in thousands)











2021











2020















































Assets


































Current assets:


































Cash and cash equivalents










$





1,026,164










$





1,750,815




Accounts receivable














352,517














364,774




Merchandise inventories














4,736,826














4,473,282




Other current assets














211,338














223,001




Total current assets














6,326,845














6,811,872














































Property and equipment:








































Property and equipment














8,410,097














8,136,542




Less: Accumulated depreciation and amortization













(

3,782,104

)













(

3,627,321

)




















4,627,993














4,509,221














































Operating lease right-of-use assets

















2,660,667

















2,581,677




Goodwill














302,645














302,645




Deferred income taxes














30,240














27,843




Other long-term assets














211,603














190,614




















3,205,155














3,102,779
















$





14,159,993










$





14,423,872















































Liabilities and Stockholders’ Deficit








































Current liabilities:








































Accounts payable










$





5,351,096










$





5,156,324




Current portion of operating lease liabilities

















252,523

















223,846




Current portion of debt

















250,000






















Accrued expenses and other














866,297














827,668




Income taxes payable














84,355














75,253




Total current liabilities














6,804,271














6,283,091














































Debt, less current portion














5,266,396














5,513,371




Operating lease liabilities, less current portion

















2,566,974

















2,501,560




Deferred income taxes














358,161














354,186




Other long-term liabilities














687,764














649,641














































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;

22,796

shares issued and

22,183

shares outstanding as of February 13, 2021;

23,697

shares issued and

23,376

shares outstanding as of August 29, 2020














228














237




Additional paid-in capital














1,314,424














1,283,495




Retained deficit













(

1,801,764

)













(

1,450,970

)




Accumulated other comprehensive loss













(

300,839

)













(

354,252

)




Treasury stock, at cost













(

735,622

)













(

356,487

)




Total stockholders’ deficit













(

1,523,573

)













(

877,977

)
















$





14,159,993










$





14,423,872









See Notes to Condensed Consolidated Financial Statements.







3










AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF INCOME



(Unaudited)



















































































































































































































































































































































































































































































































































Twelve Weeks Ended











Twenty-Four Weeks Ended

















February 13,











February 15,











February 13,











February 15,





(in thousands, except per share data)











2021











2020











2021











2020


















































































Net sales







$





2,910,818







$





2,513,663







$





6,065,078







$





5,306,700




Cost of sales, including warehouse and delivery expenses

















1,351,435

















1,147,600

















2,830,078

















2,439,569




Gross profit

















1,559,383














1,366,063

















3,235,000














2,867,131




Operating, selling, general and administrative expenses

















1,077,616

















958,125

















2,138,008

















1,959,170




Operating profit

















481,767

















407,938

















1,096,992

















907,961




Interest expense, net

















46,012

















44,335

















92,191

















88,078




Income before income taxes

















435,755














363,603

















1,004,801














819,883




Income tax expense

















89,809

















64,321

















216,422

















170,263




Net income










$





345,946










$





299,282










$





788,379










$





649,620


















































































Weighted average shares for basic earnings per share














22,648














23,570














22,935














23,722




Effect of dilutive stock equivalents

















520

















590

















538

















604




Weighted average shares for diluted earnings per share














23,168














24,160














23,473














24,326


















































































Basic earnings per share










$





15.27










$





12.70










$





34.37










$





27.38




Diluted earnings per share










$





14.93










$





12.39










$





33.59










$





26.70









See Notes to Condensed Consolidated Financial Statements.





AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



(Unaudited)











































































































































































































































































































































































































































































Twelve Weeks Ended











Twenty-Four Weeks Ended
















February 13,










February 15,










February 13,










February 15,





(in thousands)











2021











2020











2021











2020


















































































Net income










$





345,946










$





299,282










$





788,379










$





649,620




Other comprehensive income:




















































Foreign currency translation adjustments














5,601














21,178














52,596














40,218




Unrealized (losses) gains on marketable debt securities, net of taxes













(

192

)














178













(

501

)













(

10

)




Net derivative activities, net of taxes














659














388














1,318














777




Total other comprehensive income














6,068














21,744














53,413














40,985




Comprehensive income










$





352,014










$





321,026










$





841,792










$





690,605









See Notes to Condensed Consolidated Financial Statements.












4










AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)












































































































































































































































































































































































































































































































Twenty-Four Weeks Ended
















February 13,











February 15,





(in thousands)











2021











2020














































Cash flows from operating activities:




























Net income










$





788,379










$





649,620




Adjustments to reconcile net income to net cash provided by operating activities:




























Depreciation and amortization of property and equipment and intangibles














184,027














180,420




Amortization of debt origination fees














6,369














4,216




Deferred income taxes













(

1,772

)














11,154




Share-based compensation expense














24,178














22,107




Changes in operating assets and liabilities:




























Accounts receivable














15,991













(

28,897

)




Merchandise inventories













(

229,542

)













(

262,234

)




Accounts payable and accrued expenses














216,540














6,571




Income taxes payable














11,180














11,124




Other, net














24,497














57,563




Net cash provided by operating activities














1,039,847














651,644














































Cash flows from investing activities:




























Capital expenditures













(

238,644

)













(

190,563

)




Purchase of marketable debt securities













(

48,384

)













(

56,347

)




Proceeds from sale of marketable debt securities














60,575














70,812




(Payments) proceeds from disposal of capital assets and other, net













(

1,951

)














1,185




Net cash used in investing activities













(

228,404

)













(

174,913

)














































Cash flows from financing activities:




























Net proceeds from commercial paper



























242,700




Net proceeds from sale of common stock














66,510














48,705




Purchase of treasury stock
















(

1,578,323

)
















(

764,846

)




Repayment of principal portion of finance lease liabilities













(

29,076

)
















(

29,324

)




Net cash used in financing activities













(

1,540,889

)













(

502,765

)














































Effect of exchange rate changes on cash














4,795














2,704














































Net decrease in cash and cash equivalents













(

724,651

)













(

23,330

)




Cash and cash equivalents at beginning of period














1,750,815














176,300




Cash and cash equivalents at end of period










$





1,026,164










$





152,970









See Notes to Condensed Consolidated Financial Statements.












5










AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT



(Unaudited)


















































































































































































































































































































































































































































































































































































































Twelve Weeks Ended February 13, 2021



















































































Accumulated





















































Common





























Additional





























Other


















































Shares










Common










Paid-in










Retained










Comprehensive










Treasury






















(in thousands)











Issued











Stock











Capital











Deficit











Loss











Stock











Total


































































































































Balance at November 21, 2020








23,761










$





238










$





1,323,037










$




(

1,008,537

)










$




(

306,907

)










$




(

1,034,811

)










$




(

1,026,980

)




Net income















































345,946








































345,946




Total other comprehensive income




























































6,068



























6,068




Retirement of treasury shares










(

1,044

)
















(

10

)
















(

60,005

)
















(

1,139,173

)

































1,199,188




















Purchase of

752

shares of treasury stock








































































(

899,999

)













(

899,999

)




Issuance of common stock under stock options and stock purchase plans








79



























37,844






























































37,844




Share-based compensation expense


































13,548





















































13,548




Balance at February 13, 2021








22,796










$





228










$





1,314,424










$




(

1,801,764

)










$




(

300,839

)










$




(

735,622

)










$




(

1,523,573

)

















































































































































































































































































































































































































































































































































































































Twelve Weeks Ended February 15, 2020



















































































Accumulated





















































Common





























Additional





























Other


















































Shares










Common










Paid-in










Retained










Comprehensive










Treasury






















(in thousands)











Issued











Stock











Capital











Deficit











Loss











Stock











Total


































































































































Balance at November 23, 2019








25,465










$





254










$





1,282,629










$




(

955,009

)










$




(

250,081

)










$




(

1,853,883

)










$




(

1,776,090

)




Net income















































299,282








































299,282




Total other comprehensive income




























































21,744



























21,744




Retirement of treasury shares







(

1,912

)













(

19

)













(

99,686

)













(

1,878,595

)



























1,978,300

















Purchase of

267

shares of treasury stock








































































(

314,847

)













(

314,847

)




Issuance of common stock under stock options and stock purchase plans








100














2














46,477






























































46,479




Share-based compensation expense


































12,313





















































12,313




Balance at February 15, 2020








23,653










$





237










$





1,241,733










$




(

2,534,322

)










$




(

228,337

)










$




(

190,430

)










$




(

1,711,119

)


























































































































































































































































































































































































































































































































































































Twenty-Four Weeks Ended February 13, 2021



















































































Accumulated





















































Common





























Additional





























Other


















































Shares










Common










Paid-in










Retained










Comprehensive










Treasury






















(in thousands)











Issued











Stock











Capital











Deficit











Loss











Stock











Total




Balance at August 29, 2020








23,697










$





237










$





1,283,495










$




(

1,450,970

)










$




(

354,252

)










$




(

356,487

)










$




(

877,977

)




Net income















































788,379








































788,379




Total other comprehensive income




























































53,413



























53,413




Retirement of treasury shares







(

1,044

)













(

10

)













(

60,005

)













(

1,139,173

)



























1,199,188

















Purchase of

1,336

shares of treasury stock








































































(

1,578,323

)













(

1,578,323

)




Issuance of common stock under stock options and stock purchase plans








143














1














66,509






























































66,510




Share-based compensation expense


































24,425





















































24,425




Balance at February 13, 2021








22,796










$





228










$





1,314,424










$




(

1,801,764

)










$




(

300,839

)










$




(

735,622

)










$




(

1,523,573

)

















































































































































































































































































































































































































































































































































































































Twenty-Four Weeks Ended February 15, 2020



















































































Accumulated





















































Common





























Additional





























Other


















































Shares










Common










Paid-in










Retained










Comprehensive










Treasury






















(in thousands)











Issued











Stock











Capital











Deficit











Loss











Stock











Total


































































































































Balance at August 31, 2019








25,445










$





254










$





1,264,448










$




(

1,305,347

)










$




(

269,322

)










$




(

1,403,884

)










$




(

1,713,851

)




Net income















































649,620








































649,620




Total other comprehensive income




























































40,985



























40,985




Retirement of treasury shares







(

1,912

)













(

19

)













(

99,686

)













(

1,878,595

)



























1,978,300

















Purchase of

670

shares of treasury stock








































































(

764,846

)













(

764,846

)




Issuance of common stock under stock options and stock purchase plans








120














2














55,299






























































55,301




Share-based compensation expense


































21,672





















































21,672




Balance at February 15, 2020








23,653










$





237










$





1,241,733










$




(

2,534,322

)










$




(

228,337

)










$




(

190,430

)










$




(

1,711,119

)









See Notes to Condensed Consolidated Financial Statements

.







6

















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 29, 2020.




Operating results for the twelve and twenty-four weeks ended February 13, 2021 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 28, 2021. 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 quarters of fiscal 2021 and 2020 each have 16 weeks.





Recent Accounting Pronouncements:



In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15,

Intangibles – Goodwill and Other Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted the new guidance on a prospective basis in the first quarter of fiscal 2021. The adoption of this guidance did not have a material impact on the Company’s Condensed Consolidated Financial Statements and related disclosures.



In June 2016, the FASB issued ASU 2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments

which was subsequently amended in November 2018 through ASU 2018-19,

Codification Improvements to Topic 326, Financial Instruments Credit Losses

. ASU 2016-13 requires entities to estimate all expected credit losses for financial assets measured at amortized cost basis, including trade receivables, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The Company adopted this guidance using the modified retrospective adoption method beginning with its first quarter ended November 21, 2020. The adoption of this new guidance did not have a material impact on the Company's Condensed Consolidated Financial Statements and related disclosures. The balance for allowance for uncollectable accounts was $

11.2

million at February 13, 2021 and $

10.0


million at August 29, 2020.











Note B – 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.






7