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Table of Contents
 
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 November 23, 2019, 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
 
 
AUTOZONE, INC.
(Exact name of registrant as specified in its charter)
     
Nevada
 
62-1482048
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
 
Identification No.)
     
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
    Emerging growth company
 
Smaller reporting 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 –
23,592,711
shares outstanding as of December 13, 2019.
 

Table of Contents
TABLE OF CONTENTS
             
PART I.
 
 
 
3
 
Item 1.
 
 
 
3
 
 
 
 
3
 
 
 
 
4
 
 
 
 
4
 
 
 
 
5
 
 
 
 
6
 
 
 
 
7
 
 
 
 
17
 
Item 2.
 
 
 
18
 
Item 3.
 
 
 
24
 
Item 4.
 
 
 
24
 
PART II.
 
 
 
25
 
Item 1.
 
 
 
25
 
Item 1A.
 
 
 
25
 
Item 2.
 
 
 
25
 
Item 3.
 
 
 
26
 
Item 4.
 
 
 
26
 
Item 5.
 
 
 
26
 
Item 6.
 
 
 
27
 
 
 
 
28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2
 

 
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AUTOZONE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
 
 
 
                         
  (in thousands)
 
November 23
,
2019
 
 
 
August 31
,
2019
 
 
 
 
     
 
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
     
 
 
 
             
Current assets:
 
     
 
 
 
           
Cash and cash equivalents
 
 
$
158,089
 
 
 
 
 
 
 
 
 
 
 
 
 
$
176,300
 
 
 
 
 
 
 
Accounts receivable
 
 
 
333,246
 
 
 
 
 
308,995
 
 
Merchandise inventories
 
 
 
4,463,124
 
 
 
 
 
4,319,113
 
 
Other current assets
 
 
 
202,516
 
 
 
 
 
224,277
 
 
Total current assets
 
 
 
5,156,975
 
 
 
 
 
5,028,685
 
 
 
 
 
 
 
 
 
 
 
Property and equipment:
 
 
 
 
 
 
 
 
Property and equipment
 
 
 
7,844,304
 
 
 
 
 
7,713,196
 
 
Less: Accumulated depreciation and amortization
 
 
 
(3,393,648
)
 
 
 
 
 
(3,314,445
)
 
 
 
 
 
4,450,656
 
 
 
 
 
4,398,751
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating lease
right-of-use
assets
 
 
 
2,585,105
 
 
 
 
 
 
 
Goodwill
 
 
 
302,645
 
 
 
 
 
302,645
 
 
Deferred income taxes
 
 
 
27,365
 
 
 
 
 
26,861
 
 
Other long-term assets
 
 
 
177,710
 
 
 
 
 
138,971
 
 
 
 
 
3,092,825
 
 
 
 
 
468,477
 
 
 
 
$
12,700,456
 
 
 
 
$
9,895,913
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Stockholders’ Deficit
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable
 
 
$
 4,922,148
 
 
 
 
$
4,864,912
 
 
Current portion of operating lease liabilities
 
 
 
232,549
 
 
 
 
 
 
 
Accrued expenses and other
 
 
 
618,654
 
 
 
 
 
621,932
 
 
Income taxes payable
 
 
 
94,885
 
 
 
 
 
25,297
 
 
Total current liabilities
 
 
 
5,868,236
 
 
 
 
 
5,512,141
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
 
 
5,287,324
 
 
 
 
 
5,206,344
 
 
Operating lease liabilities, less current portion
 
 
 
2,506,829
 
 
 
 
 
 
 
Deferred income taxes
 
 
 
315,602
 
 
 
 
 
311,980
 
 
Other long-term liabilities
 
 
 
498,555
 
 
 
 
 
579,299
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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; 25,465 shares issued and 23,655 shares outstanding as of November 23, 2019; 25,445 shares issued and 24,038 shares outstanding as of August 31, 2019
 
 
 
254
 
 
 
 
 
254
 
 
Additional
paid-in
capital
 
 
 
1,282,629
 
 
 
 
 
1,264,448
 
 
Retained deficit
 
 
 
(955,009
)
 
 
 
 
 
(1,305,347
)
 
 
Accumulated other comprehensive loss
 
 
 
(250,081
)
 
 
 
 
 
(269,322
)
 
 
Treasury stock, at cost
 
 
 
(1,853,883
)
 
 
 
 
 
(1,403,884
)
 
 
Total stockholders’ deficit
 
 
 
(1,776,090
)
 
 
 
 
 
(1,713,851
)
 
 
 
 
$
 
 
 
 
 
12,700,456
 
 
 
 
$
9,895,913
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
3

Table of Contents
AUTOZONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
 
Twelve Weeks Ended
 
 
  (in thousands, except per share data)
 
 
November 23,
2019
 
 
 
 
November 17,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Net sales
 
 
$
 2,793,038
 
 
 
 
$
2,641,733
 
 
  
Cost of sales, including warehouse and delivery expenses
 
 
 
1,291,970
 
 
 
 
 
1,224,259
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Gross profit
 
 
 
1,501,068
 
 
 
 
 
1,417,474
   
  
Operating, selling, general and administrative expenses
 
 
 
1,001,045
 
 
 
 
 
929,656
   
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Operating profit
 
 
 
500,023
 
 
 
 
 
487,818
 
 
  
Interest expense, net
 
 
 
43,743
 
 
 
 
 
39,006
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Income before income taxes
 
 
 
456,280
 
 
 
 
 
448,812
 
 
  
Income tax expense
 
 
 
105,942
 
 
 
 
 
97,406
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Net income
 
 
$
 350,338
 
 
 
 
$
351,406
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Weighted average shares for basic earnings per share
 
 
 
23,875
 
 
 
 
 
25,629
 
 
  
Effect of dilutive stock equivalents
 
 
 
618
 
 
 
 
 
468
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Weighted average shares for diluted earnings per share
 
 
 
24,493
 
 
 
 
 
26,097
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Basic earnings per share
 
 
$
14.67
 
 
 
 
$
13.71
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Diluted earnings per share
 
 
$
 14.30
 
 
 
 
$
13.47
 
 
See Notes to Condensed Consolidated Financial Statements.
 
 
AUTOZONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
 
Twelve Weeks Ended
 
 
 
 
(in thousands)
 
 
November 23,
2019
 
 
 
 
November 17,
2018
 
 
  
Net income
 
 
$
 350,338
 
 
 
 
 
 
 
 
 
$
351,406
 
 
 
 
  
Other comprehensive
income (
loss
)
:
 
 
 
 
 
 
 
 
 
 
  
Foreign currency translation adjustments
 
 
 
19,040
 
 
 
 
 
(40,573
)
 
  
Unrealized (losses) on marketable debt securities, net of taxes
(1)
 
 
 
(188
)
 
 
 
 
(77
)
 
  
Net derivative activities, net of taxes
(2)
 
 
 
389
 
 
 
 
 
389
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Total other comprehensive
income (
loss
)
 
 
 
19,241
 
 
 
 
 
(40,261
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Comprehensive income
 
 
$
 369,579
 
 
 
 
$
311,145
 
 
   
 
     
 
 
 
     
 
(1)
Unrealized (losses) on marketable debt securities are presented net of tax
 benefit
of $50 in fiscal 2020 and $20 in fiscal 2019.
(2)
Net derivative activities are presented net of taxes of $120​​​​​​​ in
both 
fiscal 2020 and fiscal 2019.
See Notes to Condensed Consolidated Financial Statements.
 
4
 

Table of Contents
AUTOZONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                         
 
Twelve Weeks Ended
 
  (in thousands)
 
November 23,
2019
 
 
November 17,
2018
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
 
Net income
 
 
$
350,338
 
 
 
 
$
 
 
351,406
 
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization of property and equipment and intangibles
 
 
 
89,750
 
 
 
 
 
82,452
 
 
Amortization of debt origination fees
 
 
 
2,195
 
 
 
 
 
1,864
 
 
Deferred income taxes
 
 
 
1,940
 
 
 
 
 
7,420
 
 
Share-based compensation expense
 
 
 
9,996
 
 
 
 
 
10,527
 
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts receivable
 
 
 
(23,246
)
 
 
 
 
(16,338
)
 
Merchandise inventories
 
 
 
(133,206
)
 
 
 
 
(167,454
)
 
Accounts payable and accrued expenses
 
 
 
48,270
 
 
 
 
 
67,762
 
 
Income taxes payable
 
 
 
69,390
 
 
 
 
 
63,774
 
 
Other, net
 
 
 
31,675
 
 
 
 
 
47,769
 
 
Net cash provided by operating activities
 
 
 
447,102
 
 
 
 
 
449,182
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
 
 
(101,407
)
 
 
 
 
(98,168
)
 
Purchase of marketable debt securities
 
 
 
(35,448
)
 
 
 
 
(7,480
)
 
Proceeds from sale of marketable debt securities
 
 
 
45,765
 
 
 
 
 
13,116
 
 
Proceeds from disposal of capital assets and other, net
 
 
 
379
 
 
 
 
 
633
 
 
Net cash used in investing activities
 
 
 
(90,711
)
 
 
 
 
(91,899
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
 
Net proceeds from commercial paper
 
 
 
79,700
 
 
 
 
 
149,378
 
 
Net proceeds from sale of common stock
 
 
 
8,822
 
 
 
 
 
44,671
 
 
Purchase of treasury stock
 
 
 
(449,999
)
 
 
 
 
(497,060
)
 
Re
p
ayment of
principal porti
on 
of financ
e
 
lease
liabilities
 
 
 
(14,331
)
 
 
 
 
(12,597
)
 
Net cash used in financing activities
 
 
 
(375,808
)
 
 
 
 
(315,608
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash
 
 
 
1,206
 
 
 
 
 
(7,413
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (decrease)
increase
 
in cash and cash equivalents
 
 
 
(18,211
)
 
 
 
 
34,262
 
 
Cash and cash equivalents at beginning of period
 
 
 
176,300
 
 
 
 
 
217,824
 
 
Cash and cash equivalents at end of period
 
 
$
158,089
 
 
 
 
$
252,086
 
 
   
 
     
 
 
 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.
 
5
 
 
 

Table of Contents
AUTOZONE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
 
 
Twelve Weeks Ended
November 23, 2019
 
 (in thousa
nds)
 
Common
Shares
Issued
 
 
Common
Stock
 
 
Additional
Paid-in
Capital
 
 
Retained
Deficit
 
 
Accumulated
Other
Comprehensive
Loss
 
 
Treasury
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
 
 
 
 
 
 
 
 
 
 
 
350,338
 
 
 
 
 
 
 
 
 
350,338
 
 
 
 
Total other comprehensive
gain
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,241
 
 
 
 
 
 
19,241
 
 
 
 
Purchase of 403 shares of treasury stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(449,999
)
 
 
(449,999
)
 
 
 
Issuance of common stock under stock options and stock purchase plans
 
 
20
 
 
 
 
 
 
8,822
 
 
 
 
 
 
 
 
 
 
 
 
8,822
 
 
 
 
Share-based compensation expense
 
 
 
 
 
 
 
 
9,359
 
 
 
 
 
 
 
 
 
 
 
 
9,359
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at November 23, 2019
 
 
25,465
 
 
$
254
 
 
$
 
 
 
 
1,282,629
 
 
$
(955,009
)
 
$
 
(250,081
)
 
$
 
 
 
 
(1,853,883
)
 
$
 
 
 
 
(1,776,090
)
 
       
 
 
Twelve Weeks Ended

November
 
17
, 201
8
 
 
 
(in thousands)
 
Common
Shares
Issued
 
 
Common
Stock
 
 
Additional
Paid-in
Capital
 
 
Retained
Deficit
 
 
Accumulated
Other
Comprehensive
Loss
 
 
Treasury
Stock
 
 
Total
   
 
 
 
 
Balance at August 25, 2018
 
 
27,530
 
 
$
275
 
 
$
1,155,426
 
 
$
(1,208,824
)
 
$
(235,805
)
 
$
(1,231,427
)
 
$
(1,520,355
)
 
 
 
Cumulative effect of adoption of ASU
2014-09
 
 
 
 
 
 
 
 
 
 
 
(6,773
)
 
 
 
 
 
 
 
 
(6,773
)
 
 
 
Balance at August 25, 2018, as adjusted
 
 
27,530
 
 
 
275
 
 
 
1,155,426
 
 
 
(1,215,597
)
 
 
(235,805
)
 
 
(1,231,427
)
 
 
(1,527,128
)
 
 
 
Net income
 
 
 
 
 
 
 
 
 
 
 
351,406
 
 
 
 
 
 
 
 
 
351,406