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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

May 8, 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 –

21,544,752

shares outstanding as of June 4, 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





16












Item 2.













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





17












Item 3.













Quantitative and Qualitative Disclosures About Market Risk





26












Item 4.













Controls and Procedures





27






PART II.













OTHER INFORMATION





27












Item 1.













Legal Proceedings





27












Item 1A.













Risk Factors





27












Item 2.













Unregistered Sales of Equity Securities and Use of Proceeds





27












Item 3.













Defaults Upon Senior Securities





27












Item 4.













Mine Safety Disclosures





28












Item 5.













Other Information





28












Item 6.













Exhibits





28






SIGNATURES

















29























2












PART I. FINANCIAL INFORMATION







Item 1.


Financial Statements.



AUTOZONE, INC.





CONDENSED CONSOLIDATED BALANCE SHEETS



(Unaudited)













































































































































































































































































































































































































































































































































































































May 8,











August 29,





(in thousands)











2021











2020















































Assets


































Current assets:


































Cash and cash equivalents










$





975,646










$





1,750,815




Accounts receivable














359,669














364,774




Merchandise inventories














4,665,477














4,473,282




Other current assets














223,604














223,001




Total current assets














6,224,396














6,811,872














































Property and equipment:








































Property and equipment














8,538,854














8,136,542




Less: Accumulated depreciation and amortization













(

3,855,705

)













(

3,627,321

)




















4,683,149














4,509,221














































Operating lease right-of-use assets

















2,694,846

















2,581,677




Goodwill














302,645














302,645




Deferred income taxes














30,366














27,843




Other long-term assets














202,544














190,614




















3,230,401














3,102,779
















$





14,137,946










$





14,423,872















































Liabilities and Stockholders’ Deficit








































Current liabilities:








































Accounts payable










$





5,778,222










$





5,156,324




Current portion of operating lease liabilities

















256,382

















223,846




Accrued expenses and other














884,377














827,668




Income taxes payable














94,268














75,253




Total current liabilities














7,013,249














6,283,091














































Long-term debt














5,267,896














5,513,371




Operating lease liabilities, less current portion

















2,594,506

















2,501,560




Deferred income taxes














366,497














354,186




Other long-term liabilities














659,190














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;

22,897

shares issued and

21,620

shares outstanding as of May 8, 2021;

23,697

shares issued and

23,376

shares outstanding as of August 29, 2020














229














237




Additional paid-in capital














1,381,982














1,283,495




Retained deficit













(

1,205,600

)













(

1,450,970

)




Accumulated other comprehensive loss













(

304,382

)













(

354,252

)




Treasury stock, at cost













(

1,635,621

)













(

356,487

)




Total stockholders’ deficit













(

1,763,392

)













(

877,977

)
















$





14,137,946










$





14,423,872









See Notes to Condensed Consolidated Financial Statements.







3










AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF INCOME



(Unaudited)



















































































































































































































































































































































































































































































































































Twelve Weeks Ended











Thirty-Six Weeks Ended

















May 8,











May 9,











May 8,











May 9,





(in thousands, except per share data)











2021











2020











2021











2020


















































































Net sales







$





3,651,023







$





2,779,299







$





9,716,101







$





8,085,999




Cost of sales, including warehouse and delivery expenses

















1,736,077

















1,288,651

















4,566,155

















3,728,221




Gross profit

















1,914,946














1,490,648

















5,149,946














4,357,778




Operating, selling, general and administrative expenses

















1,111,441

















998,975

















3,249,449

















2,958,144




Operating profit

















803,505

















491,673

















1,900,497

















1,399,634




Interest expense, net

















45,026

















47,450

















137,217

















135,528




Income before income taxes

















758,479














444,223

















1,763,280














1,264,106




Income tax expense

















162,315

















101,327

















378,737

















271,591




Net income










$





596,164










$





342,896










$





1,384,543










$





992,515


















































































Weighted average shares for basic earnings per share














21,956














23,386














22,609














23,610




Effect of dilutive stock equivalents

















559

















442

















545

















550




Weighted average shares for diluted earnings per share














22,515














23,828














23,154














24,160


















































































Basic earnings per share










$





27.15










$





14.66










$





61.24










$





42.04




Diluted earnings per share










$





26.48










$





14.39










$





59.80










$





41.08









See Notes to Condensed Consolidated Financial Statements.





AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



(Unaudited)











































































































































































































































































































































































































































































Twelve Weeks Ended











Thirty-Six Weeks Ended
















May 8,










May 9,










May 8,










May 9,





(in thousands)











2021











2020











2021











2020


















































































Net income










$





596,164










$





342,896










$





1,384,543










$





992,515




Other comprehensive (loss) income:




















































Foreign currency translation adjustments













(

3,865

)













(

104,920

)














48,731













(

64,702

)




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













(

337

)














1,160













(

838

)














1,150




Net derivative activities, net of taxes














659













(

12,419

)














1,977













(

11,642

)




Total other comprehensive (loss) income













(

3,543

)













(

116,179

)














49,870













(

75,194

)




Comprehensive income










$





592,621










$





226,717










$





1,434,413










$





917,321









See Notes to Condensed Consolidated Financial Statements.












4










AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS



(Unaudited)




























































































































































































































































































































































































































































































































































































Thirty-Six Weeks Ended
















May 8,











May 9,





(in thousands)











2021











2020














































Cash flows from operating activities:




























Net income










$





1,384,543










$





992,515




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




























Depreciation and amortization of property and equipment and intangibles














278,044














272,115




Amortization of debt origination fees














9,326














6,572




Deferred income taxes














6,047














24,281




Share-based compensation expense














38,061














32,251




Changes in operating assets and liabilities:




























Accounts receivable














8,335














36,843




Merchandise inventories













(

162,271

)













(

175,284

)




Accounts payable and accrued expenses














635,058














20,907




Income taxes payable














22,989














12,334




Other, net














10,215














80,574




Net cash provided by operating activities














2,230,347














1,303,108














































Cash flows from investing activities:




























Capital expenditures













(

375,653

)













(

273,888

)




Purchase of marketable debt securities













(

52,553

)













(

82,525

)




Proceeds from sale of marketable debt securities














72,268














106,690




Investment in tax credit equity investments
















(

3,908

)




















Proceeds from disposal of capital assets and other, net














1,183














1,800




Net cash used in investing activities













(

358,663

)













(

247,923

)














































Cash flows from financing activities:




























Net payments of commercial paper


























(

1,030,000

)




Proceeds from issuance of debt



























1,250,000




Repayment of debt













(

250,000

)

















Net proceeds from sale of common stock














121,924














56,306




Purchase of treasury stock
















(

2,478,322

)
















(

930,903

)




Repayment of principal portion of finance lease liabilities













(

44,844

)
















(

43,776

)




Other, net


























(

13,779

)




Net cash used in financing activities













(

2,651,242

)













(

712,152

)














































Effect of exchange rate changes on cash














4,389













(

10,215

)














































Net (decrease) increase in cash and cash equivalents













(

775,169

)














332,818




Cash and cash equivalents at beginning of period














1,750,815














176,300




Cash and cash equivalents at end of period










$





975,646










$





509,118









See Notes to Condensed Consolidated Financial Statements.












5










AUTOZONE, INC.





CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT



(Unaudited)







































































































































































































































































































































































































































































































































































































































































Twelve Weeks Ended May 8, 2021



















































































Accumulated





















































Common





























Additional





























Other


















































Shares










Common










Paid-in










Retained










Comprehensive










Treasury






















(in thousands)











Issued











Stock











Capital











Deficit











Loss











Stock











Total


































































































































Balance at February 13, 2021








22,796










$





228










$





1,314,424










$




(

1,801,764

)










$




(

300,839

)










$




(

735,622

)










$




(

1,523,573

)




Net income















































596,164








































596,164




Total other comprehensive income



























































(

3,543

)


























(

3,543

)




Purchase of

663

shares of treasury stock








































































(

899,999

)













(

899,999

)




Issuance of common stock under stock options and stock purchase plans








101














1














55,413






























































55,414




Share-based compensation expense


































12,145





















































12,145




Balance at May 8, 2021








22,897










$





229










$





1,381,982










$




(

1,205,600

)










$




(

304,382

)










$




(

1,635,621

)










$




(

1,763,392

)










































































































































































































































































































































































































































































































































































































































































Twelve Weeks Ended May 9, 2020



















































































Accumulated





















































Common





























Additional





























Other


















































Shares










Common










Paid-in










Retained










Comprehensive










Treasury






















(in thousands)











Issued











Stock











Capital











Deficit











Loss











Stock











Total


































































































































Balance at February 15, 2020








23,653










$





237










$





1,241,734










$




(

2,534,323

)










$




(

228,337

)










$




(

190,430

)










$




(

1,711,119

)




Net income















































342,896








































342,896




Total other comprehensive income



























































(

116,179

)


























(

116,179

)




Purchase of

156

shares of treasury stock








































































(

166,057

)













(

166,057

)




Issuance of common stock under stock options and stock purchase plans








16



























7,599






























































7,599




Share-based compensation expense


































10,124





















































10,124




Balance at May 9, 2020








23,669










$





237










$





1,259,457










$




(

2,191,427

)










$




(

344,516

)










$




(

356,487

)










$




(

1,632,736

)

















































































































































































































































































































































































































































































































































































































Thirty-Six Weeks Ended May 8, 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















































1,384,543








































1,384,543




Total other comprehensive income




























































49,870



























49,870




Retirement of treasury shares







(

1,044

)













(

10

)













(

60,005

)













(

1,139,173

)



























1,199,188

















Purchase of

1,999

shares of treasury stock








































































(

2,478,322

)













(

2,478,322

)




Issuance of common stock under stock options and stock purchase plans








244














2














121,922






























































121,924




Share-based compensation expense


































36,570





















































36,570




Balance at May 8, 2021








22,897










$





229










$





1,381,982










$




(

1,205,600

)










$




(

304,382

)










$




(

1,635,621

)










$




(

1,763,392

)

















































































































































































































































































































































































































































































































































































































Thirty-Six Weeks Ended May 9, 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















































992,515








































992,515




Total other comprehensive income



























































(

75,194

)


























(

75,194

)




Retirement of treasury shares







(

1,912

)













(

19

)













(

99,686

)













(

1,878,595

)



























1,978,300

















Purchase of

826

shares of treasury stock








































































(

930,903

)













(

930,903

)




Issuance of common stock under stock options and stock purchase plans








136














2














62,899






























































62,901




Share-based compensation expense


































31,796





















































31,796




Balance at May 9, 2020








23,669










$





237










$





1,259,457










$




(

2,191,427

)










$




(

344,516

)










$




(

356,487

)










$




(

1,632,736

)









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 thirty-six weeks ended May 8, 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 $

11.1

million at May 8, 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












































































Stock Options:



The Company made stock option grants of

196,520

shares during the thirty-six week period ended May 8, 2021 and granted options to purchase

188,324

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 the market value of the stock on the date of grant. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date.









The weighted average fair value of the stock option awards granted during the thirty-six week periods ended May 8, 2021 and May 9, 2020, using the Black-Scholes-Merton multiple-option pricing valuation model, was $

299.99

and $

252.39

per share, respectively, using the following weighted average key assumptions:



























































































































Thirty-Six Weeks Ended






















May 8,










May 9,





















2021











2020














































Expected price volatility