--- ticker: AZO company: AZO filing_type: 10-K year_current: 2024 year_prior: 2023 risks_added: 17 risks_removed: 20 risks_modified: 37 risks_unchanged: 36 source: SEC EDGAR url: https://riskdiff.com/azo/2024-vs-2023/ markdown_url: https://riskdiff.com/azo/2024-vs-2023/index.md generated: 2026-06-01 --- # AZO: 10-K Risk Factor Changes 2024 vs 2023 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-06-01 > All data extracted directly from official filings. No hallucinated content. ## Summary | Status | Count | |--------|-------| | New risks added | 17 | | Risks removed | 20 | | Risks modified | 37 | | Unchanged | 36 | --- ## New in Current Filing: If we cannot profitably increase our market share in the commercial auto parts business, our sales growth may be limited. ​ Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase our commercial market share. Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, delivery times, product warranty, distribution locations and the strength of our AutoZone brand, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships, an experienced sales organization, considerable market presence and have large available inventories. If we are unable to profitably grow our sales with existing commercial customers, our sales growth may be limited. ​ --- ## New in Current Filing: Inability to acquire and provide quality merchandise at competitive prices could materially adversely affect our sales and results of operations. ​ We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​ All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​ Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​ If any of our significant vendors experience financial difficulties or business disruptions or are otherwise unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales. ​ --- ## New in Current Filing: We are subject to a complex and evolving body of laws and regulations regarding data privacy and may face increased costs as a result of changes in, enforcement of, or the adoption of new laws and regulations. These costs may have a material adverse impact on our business and results of operations. ​ The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws. The potential effects of the various laws regulating the collection, transfer, use and other types of processing of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage. ​ Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel. There can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body. ​ --- ## New in Current Filing: Our business, results of operations, financial condition and cash flows may be adversely affected by the adoption of new laws, changes to existing laws, increased enforcement activity or other governmental actions. ​ We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ substantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our AutoZoners and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in the enforcement or interpretation of existing laws and regulations or the enactment of any new laws and regulations, including tax legislation, could have a material adverse impact on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry. ​ --- ## New in Current Filing: Risk Management and Strategy Program ​We recognize the importance of assessing, identifying, and managing material risks from cybersecurity threats and have implemented various processes and safeguards to aid in such efforts. Our program encompasses people, processes, and technologies to safeguard our systems, data, and business from cybersecurity threats. Our program 22 22 Table of Contentsprioritizes threat mitigation and risk management, while focusing on maintaining the integrity and resilience of our systems. ​Our program is informed by industry standards, including the National Institute of Standards and Technology (NIST) Cyber Security Framework (CSF), the American National Standards Institute encryption standards and the Payment Card Industry Data Security Standard. As part of our cybersecurity strategy, we regularly engage independent, outside expertise to assess and benchmark our overall program against these industry standards. ​AutoZone, with the assistance of our managed security service provider, continuously monitors our threat intelligence and events within our digital environments. We employ a variety of methods designed to test and improve our controls, including vulnerability scanning, penetration testing, and attack simulation testing. We have an incident response plan which sets forth procedures to investigate, respond to, contain, and remediate incidents with the support of a cross-functional team. The incident response plan also outlines a process for escalating and communicating incidents to members of management.​During the contract review and vendor engagement process, we assess vendors' adherence to appropriate security practices, requirements, and expectations, including compliance with industry standards and applicable laws and regulations. We also engage a third-party to monitor certain service providers so that we may be alerted of important events that would impact such party's risk profile. We have an Information Security Awareness program which seeks to educate our employees on security risks and best practices through training, internal communications, and security awareness campaigns. We maintain cybersecurity insurance coverage that may protect us from losses in connection with certain cybersecurity incidents.​Cybersecurity Risks​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data. Any future incident could significantly disrupt our operations and key business processes, result in the impairment, loss, unauthorized access of critical or sensitive data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. See "Information Technology, Cybersecurity and Data Privacy Risks" in Item 1.A., Risk Factors for additional information related to cybersecurity risks. ​GovernanceThe cybersecurity risk management program is integrated into our broader enterprise risk management framework, which allows our senior management team, with oversight of our Board, to develop a more holistic view of our risk exposure and prioritize and manage such risks accordingly.AutoZone's Chief Information Security Officer (CISO) reports directly to our Chief Information Officer and Senior Vice President of Information Technology. Our CISO has over 25 years' experience in IT, with almost 20 years in dedicated Information Security leadership roles. He has experience across a broad range of industries and holds credentials including the Certified Information Systems Security Professional and the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors.​The Audit Committee is responsible for overseeing the company's enterprise risk management program, including cybersecurity risks. At its quarterly committee meetings, the Audit Committee reviews and discusses cybersecurity matters directly with our CISO, including relevant cybersecurity risks, changes to AutoZone's threat landscape, risk mitigation strategies, cybersecurity program assessments and results, and cybersecurity roadmap and progress.23 Table of Contents Table of Contents Table of Contents prioritizes threat mitigation and risk management, while focusing on maintaining the integrity and resilience of our systems. ​Our program is informed by industry standards, including the National Institute of Standards and Technology (NIST) Cyber Security Framework (CSF), the American National Standards Institute encryption standards and the Payment Card Industry Data Security Standard. As part of our cybersecurity strategy, we regularly engage independent, outside expertise to assess and benchmark our overall program against these industry standards. ​AutoZone, with the assistance of our managed security service provider, continuously monitors our threat intelligence and events within our digital environments. We employ a variety of methods designed to test and improve our controls, including vulnerability scanning, penetration testing, and attack simulation testing. We have an incident response plan which sets forth procedures to investigate, respond to, contain, and remediate incidents with the support of a cross-functional team. The incident response plan also outlines a process for escalating and communicating incidents to members of management.​During the contract review and vendor engagement process, we assess vendors' adherence to appropriate security practices, requirements, and expectations, including compliance with industry standards and applicable laws and regulations. We also engage a third-party to monitor certain service providers so that we may be alerted of important events that would impact such party's risk profile. We have an Information Security Awareness program which seeks to educate our employees on security risks and best practices through training, internal communications, and security awareness campaigns. We maintain cybersecurity insurance coverage that may protect us from losses in connection with certain cybersecurity incidents.​Cybersecurity Risks​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data. Any future incident could significantly disrupt our operations and key business processes, result in the impairment, loss, unauthorized access of critical or sensitive data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. See "Information Technology, Cybersecurity and Data Privacy Risks" in Item 1.A., Risk Factors for additional information related to cybersecurity risks. ​GovernanceThe cybersecurity risk management program is integrated into our broader enterprise risk management framework, which allows our senior management team, with oversight of our Board, to develop a more holistic view of our risk exposure and prioritize and manage such risks accordingly.AutoZone's Chief Information Security Officer (CISO) reports directly to our Chief Information Officer and Senior Vice President of Information Technology. Our CISO has over 25 years' experience in IT, with almost 20 years in dedicated Information Security leadership roles. He has experience across a broad range of industries and holds credentials including the Certified Information Systems Security Professional and the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors.​The Audit Committee is responsible for overseeing the company's enterprise risk management program, including cybersecurity risks. At its quarterly committee meetings, the Audit Committee reviews and discusses cybersecurity matters directly with our CISO, including relevant cybersecurity risks, changes to AutoZone's threat landscape, risk mitigation strategies, cybersecurity program assessments and results, and cybersecurity roadmap and progress. prioritizes threat mitigation and risk management, while focusing on maintaining the integrity and resilience of our systems. ​Our program is informed by industry standards, including the National Institute of Standards and Technology (NIST) Cyber Security Framework (CSF), the American National Standards Institute encryption standards and the Payment Card Industry Data Security Standard. As part of our cybersecurity strategy, we regularly engage independent, outside expertise to assess and benchmark our overall program against these industry standards. ​AutoZone, with the assistance of our managed security service provider, continuously monitors our threat intelligence and events within our digital environments. We employ a variety of methods designed to test and improve our controls, including vulnerability scanning, penetration testing, and attack simulation testing. We have an incident response plan which sets forth procedures to investigate, respond to, contain, and remediate incidents with the support of a cross-functional team. The incident response plan also outlines a process for escalating and communicating incidents to members of management.​During the contract review and vendor engagement process, we assess vendors' adherence to appropriate security practices, requirements, and expectations, including compliance with industry standards and applicable laws and regulations. We also engage a third-party to monitor certain service providers so that we may be alerted of important events that would impact such party's risk profile. We have an Information Security Awareness program which seeks to educate our employees on security risks and best practices through training, internal communications, and security awareness campaigns. We maintain cybersecurity insurance coverage that may protect us from losses in connection with certain cybersecurity incidents.​Cybersecurity Risks​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data. Any future incident could significantly disrupt our operations and key business processes, result in the impairment, loss, unauthorized access of critical or sensitive data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. See "Information Technology, Cybersecurity and Data Privacy Risks" in Item 1.A., Risk Factors for additional information related to cybersecurity risks. ​GovernanceThe cybersecurity risk management program is integrated into our broader enterprise risk management framework, which allows our senior management team, with oversight of our Board, to develop a more holistic view of our risk exposure and prioritize and manage such risks accordingly.AutoZone's Chief Information Security Officer (CISO) reports directly to our Chief Information Officer and Senior Vice President of Information Technology. Our CISO has over 25 years' experience in IT, with almost 20 years in dedicated Information Security leadership roles. He has experience across a broad range of industries and holds credentials including the Certified Information Systems Security Professional and the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors.​The Audit Committee is responsible for overseeing the company's enterprise risk management program, including cybersecurity risks. At its quarterly committee meetings, the Audit Committee reviews and discusses cybersecurity matters directly with our CISO, including relevant cybersecurity risks, changes to AutoZone's threat landscape, risk mitigation strategies, cybersecurity program assessments and results, and cybersecurity roadmap and progress. prioritizes threat mitigation and risk management, while focusing on maintaining the integrity and resilience of our systems. ​ Our program is informed by industry standards, including the National Institute of Standards and Technology (NIST) Cyber Security Framework (CSF), the American National Standards Institute encryption standards and the Payment Card Industry Data Security Standard. As part of our cybersecurity strategy, we regularly engage independent, outside expertise to assess and benchmark our overall program against these industry standards. ​ AutoZone, with the assistance of our managed security service provider, continuously monitors our threat intelligence and events within our digital environments. We employ a variety of methods designed to test and improve our controls, including vulnerability scanning, penetration testing, and attack simulation testing. We have an incident response plan which sets forth procedures to investigate, respond to, contain, and remediate incidents with the support of a cross-functional team. The incident response plan also outlines a process for escalating and communicating incidents to members of management. ​ During the contract review and vendor engagement process, we assess vendors' adherence to appropriate security practices, requirements, and expectations, including compliance with industry standards and applicable laws and regulations. We also engage a third-party to monitor certain service providers so that we may be alerted of important events that would impact such party's risk profile. We have an Information Security Awareness program which seeks to educate our employees on security risks and best practices through training, internal communications, and security awareness campaigns. We maintain cybersecurity insurance coverage that may protect us from losses in connection with certain cybersecurity incidents. ​ Cybersecurity Risks ​ While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data. Any future incident could significantly disrupt our operations and key business processes, result in the impairment, loss, unauthorized access of critical or sensitive data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. See "Information Technology, Cybersecurity and Data Privacy Risks" in Item 1.A., Risk Factors for additional information related to cybersecurity risks. ​ Governance The cybersecurity risk management program is integrated into our broader enterprise risk management framework, which allows our senior management team, with oversight of our Board, to develop a more holistic view of our risk exposure and prioritize and manage such risks accordingly. AutoZone's Chief Information Security Officer (CISO) reports directly to our Chief Information Officer and Senior Vice President of Information Technology. Our CISO has over 25 years' experience in IT, with almost 20 years in dedicated Information Security leadership roles. He has experience across a broad range of industries and holds credentials including the Certified Information Systems Security Professional and the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors. ​ The Audit Committee is responsible for overseeing the company's enterprise risk management program, including cybersecurity risks. At its quarterly committee meetings, the Audit Committee reviews and discusses cybersecurity matters directly with our CISO, including relevant cybersecurity risks, changes to AutoZone's threat landscape, risk mitigation strategies, cybersecurity program assessments and results, and cybersecurity roadmap and progress. 23 23 Table of ContentsItem 2. PropertiesThe following table reflects the number of leased and owned properties and square footage of selling space for our stores as of August 31, 2024:​​​​​​ No. of Store Square​​Stores​ Footage(1)Leased 4,081 27,226,410Owned 3,272 22,190,827Total 7,353 49,417,237​(1)Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.We have approximately 7.1 million square feet in distribution centers servicing our stores, of which approximately 2.1 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have four additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico; Sao Paulo, Brazil; and Gurugram, India. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate.Item 3. Legal Proceedings We are involved in various legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows.Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million.Item 4. Mine Safety DisclosuresNot applicable.24 Table of Contents Table of Contents Table of Contents Item 2. PropertiesThe following table reflects the number of leased and owned properties and square footage of selling space for our stores as of August 31, 2024:​​​​​​ No. of Store Square​​Stores​ Footage(1)Leased 4,081 27,226,410Owned 3,272 22,190,827Total 7,353 49,417,237​(1)Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.We have approximately 7.1 million square feet in distribution centers servicing our stores, of which approximately 2.1 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have four additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico; Sao Paulo, Brazil; and Gurugram, India. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate.Item 3. Legal Proceedings We are involved in various legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows.Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million.Item 4. Mine Safety DisclosuresNot applicable. Item 2. PropertiesThe following table reflects the number of leased and owned properties and square footage of selling space for our stores as of August 31, 2024:​​​​​​ No. of Store Square​​Stores​ Footage(1)Leased 4,081 27,226,410Owned 3,272 22,190,827Total 7,353 49,417,237​(1)Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.We have approximately 7.1 million square feet in distribution centers servicing our stores, of which approximately 2.1 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have four additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico; Sao Paulo, Brazil; and Gurugram, India. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate.Item 3. Legal Proceedings We are involved in various legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows.Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million.Item 4. Mine Safety DisclosuresNot applicable. Item 2. Properties The following table reflects the number of leased and owned properties and square footage of selling space for our stores as of August 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ No. of --- ## New in Current Filing: For fiscal 2024, net sales increased to $18.5 billion, a 5.9% increase over the prior year. Our retail sales and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives aimed at improving parts availability and providing WOW! Customer Service. Operating profit increased 9.1% to $3.8 billion, net income increased 5.3% to $2.7 billion and diluted earnings per share increased 13.0% to $149.55 for the year. During fiscal 2024, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 86% of total sales. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a decrease in mix of sales of the discretionary category and a slight increase in the maintenance and failure categories compared to last year. --- ## New in Current Filing: Quarterly Periods Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 17 weeks in 2024 and 16 weeks in 2023 and 2022. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2024 represented 33.6% of annual sales and 33.9% of net income; the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; and the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% of net income. --- ## New in Current Filing: Fiscal 2024 Results of Operations Excluding 53rd Week ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 18,490,268 ​ $ (365,879) ​ $ 18,124,389 Cost of sales ​ ​ 8,673,216 ​ ​ (176,855) ​ ​ 8,496,361 Gross profit ​ ​ 9,817,052 ​ ​ (189,024) ​ ​ 9,628,028 Operating, selling, general and administrative expenses ​ ​ 6,028,344 ​ ​ (102,278) ​ ​ 5,926,066 EBIT ​ ​ 3,788,708 ​ ​ (86,746) ​ ​ 3,701,962 Interest expense, net ​ ​ 451,578 ​ ​ (9,009) ​ ​ 442,569 Income before taxes ​ ​ 3,337,130 ​ ​ (77,737) ​ ​ 3,259,393 Income tax expense ​ ​ 674,703 ​ ​ (17,024) ​ ​ 657,679 Net income ​ $ 2,662,427 ​ $ (60,713) ​ $ 2,601,714 Diluted earnings per share ​ $ 149.55 ​ $ (3.41) ​ $ 146.14 --- ## New in Current Filing: 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. --- ## New in Current Filing: August 31, 2024 (in thousands) Level 1 Level 2 Level 3 Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other current assets ​ $ 26,697 ​ $ 11,734 ​ $ - ​ $ 38,431 Other long-term assets ​ 27,031 ​ ​ 56,696 ​ - ​ 83,727 ​ ​ $ 53,728 ​ $ 68,430 ​ $ - ​ $ 122,158 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## New in Current Filing: August 31, 2024 (in thousands) Level 1 Level 2 Level 3 Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other current assets ​ $ 26,697 ​ $ 11,734 ​ $ - ​ $ 38,431 Other long-term assets ​ 27,031 ​ ​ 56,696 ​ - ​ 83,727 ​ ​ $ 53,728 ​ $ 68,430 ​ $ - ​ $ 122,158 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## New in Current Filing: 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 August 31, 2024, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $38.4 million, which are included within Other current assets and long-term marketable debt securities of $83.7 million, which are included within 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 debt securities, including benchmark yields and reported trades. A discussion on how the Company's cash flow hedges are valued is included in "Note L - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note C - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment. These non-financial assets and liabilities could include assets and liabilities acquired in an acquisition as well as goodwill, intangible assets and property, plant and equipment that are determined to be impaired. At August 31, 2024, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition. 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 I - Financing." 57 57 Table of Contents​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively.58 Table of Contents Table of Contents Table of Contents ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively. ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 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 August 31, 2024 and August 26, 2023, respectively. ​ --- ## New in Current Filing: Note D - Leases Lease-related assets and liabilities recorded on the Consolidated Balance Sheets are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) --- ## New in Current Filing: 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 August 31, 2024, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $38.4 million, which are included within Other current assets and long-term marketable debt securities of $83.7 million, which are included within 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 debt securities, including benchmark yields and reported trades. A discussion on how the Company's cash flow hedges are valued is included in "Note L - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note C - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment. These non-financial assets and liabilities could include assets and liabilities acquired in an acquisition as well as goodwill, intangible assets and property, plant and equipment that are determined to be impaired. At August 31, 2024, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition. 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 I - Financing." 57 57 Table of Contents​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively.58 Table of Contents Table of Contents Table of Contents ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively. ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 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 August 31, 2024 and August 26, 2023, respectively. ​ --- ## New in Current Filing: 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 August 31, 2024, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $38.4 million, which are included within Other current assets and long-term marketable debt securities of $83.7 million, which are included within 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 debt securities, including benchmark yields and reported trades. A discussion on how the Company's cash flow hedges are valued is included in "Note L - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note C - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment. These non-financial assets and liabilities could include assets and liabilities acquired in an acquisition as well as goodwill, intangible assets and property, plant and equipment that are determined to be impaired. At August 31, 2024, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition. 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 I - Financing." 57 57 Table of Contents​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively.58 Table of Contents Table of Contents Table of Contents ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively. ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 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 August 31, 2024 and August 26, 2023, respectively. ​ --- ## New in Current Filing: August 31, 2024 (in thousands) Level 1 Level 2 Level 3 Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other current assets ​ $ 26,697 ​ $ 11,734 ​ $ - ​ $ 38,431 Other long-term assets ​ 27,031 ​ ​ 56,696 ​ - ​ 83,727 ​ ​ $ 53,728 ​ $ 68,430 ​ $ - ​ $ 122,158 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## New in Current Filing: 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 August 31, 2024 and August 26, 2023, the Company had supplier obligations outstanding that had been confirmed under these arrangements of $4.9 billion and $4.8 billion, respectively, which are included in Accounts payable and $226.7 million and $224.8 million, respectively, which are included in Other long-term liabilities in the Condensed Consolidated Balance Sheets. 63 63 Table of ContentsNote G - Accrued Expenses and OtherAccrued expenses and other consisted of the following:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Accrued compensation, related payroll taxes and benefits​$ 291,728​$ 343,379Property, sales and other taxes​ 190,317​ 165,731Finance lease liabilities​ 115,559​ 86,916Medical and casualty insurance claims (current portion)​ 107,877​ 127,624Accrued interest​ 88,590​ 54,493Accrued gift cards​ 58,529​ 59,254Accrued sales and warranty returns​ 46,794​ 43,355Other​ 161,352​ 120,089​​$ 1,060,746​$ 1,000,841​​​​​​​​The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability.Note H - Litigation The Company is involved in various legal proceedings incidental to the conduct of its business, including, but not limited to, claims and allegations related to wage and hour violations, unlawful termination, employment practices, product liability, privacy and cybersecurity, environmental matters, intellectual property rights or regulatory compliance. The Company does not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to the Company's financial condition, results of operations or cash flows.​​​64 Table of Contents Table of Contents Table of Contents Note G - Accrued Expenses and OtherAccrued expenses and other consisted of the following:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Accrued compensation, related payroll taxes and benefits​$ 291,728​$ 343,379Property, sales and other taxes​ 190,317​ 165,731Finance lease liabilities​ 115,559​ 86,916Medical and casualty insurance claims (current portion)​ 107,877​ 127,624Accrued interest​ 88,590​ 54,493Accrued gift cards​ 58,529​ 59,254Accrued sales and warranty returns​ 46,794​ 43,355Other​ 161,352​ 120,089​​$ 1,060,746​$ 1,000,841​​​​​​​​The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability.Note H - Litigation The Company is involved in various legal proceedings incidental to the conduct of its business, including, but not limited to, claims and allegations related to wage and hour violations, unlawful termination, employment practices, product liability, privacy and cybersecurity, environmental matters, intellectual property rights or regulatory compliance. The Company does not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to the Company's financial condition, results of operations or cash flows.​​​ Note G - Accrued Expenses and OtherAccrued expenses and other consisted of the following:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Accrued compensation, related payroll taxes and benefits​$ 291,728​$ 343,379Property, sales and other taxes​ 190,317​ 165,731Finance lease liabilities​ 115,559​ 86,916Medical and casualty insurance claims (current portion)​ 107,877​ 127,624Accrued interest​ 88,590​ 54,493Accrued gift cards​ 58,529​ 59,254Accrued sales and warranty returns​ 46,794​ 43,355Other​ 161,352​ 120,089​​$ 1,060,746​$ 1,000,841​​​​​​​​The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability.Note H - 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.​​​ --- ## No Match in Current: We may not be able to sustain our historic rate of sales growth. *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ We have increased our store count in the past five fiscal years, growing from 6,202 stores at August 25, 2018, to 7,140 stores at August 26, 2023, a compounded annual growth rate of three percent. Additionally, we have increased annual revenues in the past five fiscal years from $11.2 billion in fiscal 2018 to $17.5 billion in fiscal 2023, with a compounded annual growth rate of nine percent. Annual revenue growth is driven by increases in same store sales, the opening of new stores and the development of new commercial programs. See "Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion of same store sales. ​ We open new stores only after evaluating customer buying trends and market demand/needs, all of which could be adversely affected by persistent unemployment, wage cuts, small business failures, microeconomic conditions unique to the automotive industry and our ability to expand into international markets. Same store sales are impacted both by customer demand levels and by the prices we are able to charge for our products, which can also be negatively impacted by economic pressures. ​ --- ## No Match in Current: Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel. *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ We believe much of our brand value lies in the quality of the approximately 119,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​ We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages. ​ In the U.S., there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our employees are currently covered by collective bargaining agreements, there can be no assurance that our employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party between our current terrific relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have adverse effects on our business and financial results. ​ If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer due to a declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows. ​ Our future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could adversely affect our operations. ​ --- ## No Match in Current: We are subject to risks associated with products sourced outside the U.S. *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ We directly imported approximately 16% of our purchases in fiscal 2023, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, port labor agreements, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. These and other factors affecting our suppliers and our access to products could adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase. ​ --- ## No Match in Current: Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition. *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​ While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving, increasing in frequency and sophistication, and can be difficult to anticipate or detect for long periods of time. The security measures we or our third-party service providers and vendors have in place today in an effort to keep up with growing and evolving risks do not always prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​ While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security. ​ The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial liability due to claims arising from customers, financial institutions, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation. ​ --- ## No Match in Current: A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities. *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings. Moreover, significant deterioration in the financial condition of large financial institutions during the Great Recession resulted in a severe loss of liquidity and availability of credit in global credit markets and in more stringent borrowing terms. We can provide no assurance that such similar events that occurred during the Great Recession will not occur again in the foreseeable future. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt. ​ --- ## No Match in Current: Constant Currency (1) *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ 2023 ​ 2023 ​ 2022 ​ 2022 ​ Domestic ​ 3.4 % ​ 3.4 % ​ 8.4 % ​ 8.4 % International 29.3 % 17.5 % 19.1 % 19.2 % Total Company 5.6 % 4.6 % 9.2 % 9.2 % ​ ​ At August 26, 2023, we operated 6,300 domestic stores, 740 in Mexico and 100 in Brazil, compared with 6,168 domestic stores, 703 in Mexico and 72 in Brazil at August 27, 2022. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 7.4% for fiscal 2023. ​ Gross profit for fiscal 2023 was $9.1 billion, or 52.0% of net sales, a 17 basis point decrease compared with $8.5 billion, or 52.1% of net sales for fiscal 2022. The deleverage in gross margin was impacted by a non-cash LIFO charge of $44.0 million in fiscal 2023 versus a $15.0 million charge in fiscal 2022. Operating, selling, general and administrative expenses for fiscal 2023 increased to $5.6 billion, or 32.1% of net sales, from $5.2 billion, or 32.0% of net sales for fiscal 2022. Interest expense, net for fiscal 2023 was $306.4 million compared with $191.6 million during fiscal 2022. Average borrowings for fiscal 2023 were $7.0 billion, compared with $5.8 billion for fiscal 2022. Weighted average borrowing rates were 3.78% and 3.29% for fiscal 2023 and 2022, respectively. Our effective income tax rate was 20.2% and 21.1% of pre-tax income for fiscal 2023 and fiscal 2022, respectively. The benefit from stock options exercised in fiscal 2023 was $92.2 million compared to $63.2 million in fiscal 2022 (see "Note D - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2023 increased by 4.1% to $2.5 billion, and diluted earnings per share increased 12.9% to $132.36 from $117.19 in fiscal 2022. The impact on the fiscal 2023 diluted earnings per share from stock repurchases was an increase of $1.15. Fiscal 2022 Compared with Fiscal 2021 A discussion of changes in our results of operations from fiscal 2022 to fiscal 2021 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 24, 2022, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page. --- ## No Match in Current: Recently Adopted Accounting Pronouncements *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* In November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance, which requires annual disclosures for entities receiving governmental assistance to provide more transparency. This ASU is effective for fiscal years beginning after December 15, 2021. The Company adopted this ASU with its first quarter ended November 19, 2022 on a prospective basis. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. --- ## No Match in Current: Overview of Share-Based Payment Plans *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* The Company has several active and inactive equity incentive plans under which the Company has been authorized to grant share-based awards to key employees and non-employee directors. Awards under these plans have been in the form of restricted stock, restricted stock units, stock options, stock appreciation rights and other awards as defined by the plans. The Company also has an Employee Stock Purchase Plan that allows employees to purchase Company shares at a discount subject to certain limitations. The Company also has an Executive Stock Purchase Plan which permits all eligible executives to purchase AutoZone's common stock using up to twenty-five percent of his or her annual salary and bonus. Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan On December 15, 2010, the Company's stockholders approved the 2011 Equity Incentive Award Plan (the "2011 Plan"), allowing the Company to provide equity-based compensation to non-employee directors and employees for their service to AutoZone or its subsidiaries or affiliates. Prior to the Company's adoption of the 2011 Plan, equity-based compensation was provided to employees under the 2006 Stock Option Plan and to non-employee directors under the 2003 Director Compensation Plan (the "2003 Comp Plan"). 58 58 Table of ContentsDuring fiscal 2016, the Company's stockholders approved the Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan (the "Amended 2011 Equity Plan"). The Amended 2011 Equity Plan imposes a maximum limit on the compensation, measured as the sum of any cash compensation and the aggregate grant date fair value of awards granted under the Amended 2011 Equity Plan, which may be paid to non-employee directors for such service during any calendar year. The Amended 2011 Equity Plan also applies a ten-year term on the Amended 2011 Equity Plan through December 16, 2025 and extends the Company's ability to grant incentive stock options under the Amended 2011 Equity Plan through October 7, 2025.AutoZone, Inc. 2020 Omnibus Incentive Award PlanOn December 16, 2020, the Company's stockholders approved the AutoZone, Inc. 2020 Omnibus Incentive Award Plan (the "2020 Omnibus Plan"), which serves as the successor to the Amended 2011 Equity Plan. The 2020 Omnibus Plan provides equity-based compensation to our non-employee directors and employees for their service to AutoZone or our subsidiaries or affiliates. Under the 2020 Omnibus Plan, participants may receive equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, deferred stock, stock payments, performance based awards, cash based awards and other incentive awards structured by the Compensation Committee and the Board within parameters set forth in the 2020 Omnibus Plan.​AutoZone, Inc. Director Compensation ProgramUnder the Company's Director Compensation Program (the "Program"), non-employee directors will receive their compensation in awards of restricted stock units under the 2020 Omnibus Plan, with an option for a certain portion of a director's compensation to be paid in cash at the non-employee director's election. Under the Program, restricted stock units are granted on January 1 of each year (the "Grant Date"). The number of restricted stock units is determined by dividing the amount of the annual retainer by the fair market value of the shares of common stock as of the Grant Date. The restricted stock units are fully vested on the date of grant and are paid in shares of the Company's common stock on the first or the fifth anniversary of the Grant Date (at the Director's election) or if sooner, the date the non-employee director ceases to be a member of the Board ("Separation from Service"). The cash portion of the award, if elected, is paid ratably over each calendar quarter.Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) was $93.1 million, $70.6 million and $56.1 million for fiscal 2023, 2022 and 2021, respectively. General terms and methods of valuation for the Company's share-based awards are as follows:Stock OptionsThe Company grants options to purchase common stock to certain of its employees under the 2020 Omnibus Plan at prices equal to the market value of the stock on the date of grant. Options have a term of ten years from grant date. Employee options generally vest in equal annual installments on the first, second, third and fourth anniversaries of the grant date and generally have 90 days after the service relationship ends, or one year after death, to exercise all vested options, unless retirement provisions are met. The fair value of each option grant is separately estimated for each vesting date. 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 Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The following table presents the weighted average 59 Table of Contents Table of Contents Table of Contents During fiscal 2016, the Company's stockholders approved the Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan (the "Amended 2011 Equity Plan"). The Amended 2011 Equity Plan imposes a maximum limit on the compensation, measured as the sum of any cash compensation and the aggregate grant date fair value of awards granted under the Amended 2011 Equity Plan, which may be paid to non-employee directors for such service during any calendar year. The Amended 2011 Equity Plan also applies a ten-year term on the Amended 2011 Equity Plan through December 16, 2025 and extends the Company's ability to grant incentive stock options under the Amended 2011 Equity Plan through October 7, 2025.AutoZone, Inc. 2020 Omnibus Incentive Award PlanOn December 16, 2020, the Company's stockholders approved the AutoZone, Inc. 2020 Omnibus Incentive Award Plan (the "2020 Omnibus Plan"), which serves as the successor to the Amended 2011 Equity Plan. The 2020 Omnibus Plan provides equity-based compensation to our non-employee directors and employees for their service to AutoZone or our subsidiaries or affiliates. Under the 2020 Omnibus Plan, participants may receive equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, deferred stock, stock payments, performance based awards, cash based awards and other incentive awards structured by the Compensation Committee and the Board within parameters set forth in the 2020 Omnibus Plan.​AutoZone, Inc. Director Compensation ProgramUnder the Company's Director Compensation Program (the "Program"), non-employee directors will receive their compensation in awards of restricted stock units under the 2020 Omnibus Plan, with an option for a certain portion of a director's compensation to be paid in cash at the non-employee director's election. Under the Program, restricted stock units are granted on January 1 of each year (the "Grant Date"). The number of restricted stock units is determined by dividing the amount of the annual retainer by the fair market value of the shares of common stock as of the Grant Date. The restricted stock units are fully vested on the date of grant and are paid in shares of the Company's common stock on the first or the fifth anniversary of the Grant Date (at the Director's election) or if sooner, the date the non-employee director ceases to be a member of the Board ("Separation from Service"). The cash portion of the award, if elected, is paid ratably over each calendar quarter.Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) was $93.1 million, $70.6 million and $56.1 million for fiscal 2023, 2022 and 2021, respectively. General terms and methods of valuation for the Company's share-based awards are as follows:Stock OptionsThe Company grants options to purchase common stock to certain of its employees under the 2020 Omnibus Plan at prices equal to the market value of the stock on the date of grant. Options have a term of ten years from grant date. Employee options generally vest in equal annual installments on the first, second, third and fourth anniversaries of the grant date and generally have 90 days after the service relationship ends, or one year after death, to exercise all vested options, unless retirement provisions are met. The fair value of each option grant is separately estimated for each vesting date. 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 Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The following table presents the weighted average During fiscal 2016, the Company's stockholders approved the Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan (the "Amended 2011 Equity Plan"). The Amended 2011 Equity Plan imposes a maximum limit on the compensation, measured as the sum of any cash compensation and the aggregate grant date fair value of awards granted under the Amended 2011 Equity Plan, which may be paid to non-employee directors for such service during any calendar year. The Amended 2011 Equity Plan also applies a ten-year term on the Amended 2011 Equity Plan through December 16, 2025 and extends the Company's ability to grant incentive stock options under the Amended 2011 Equity Plan through October 7, 2025. AutoZone, Inc. 2020 Omnibus Incentive Award Plan On December 16, 2020, the Company's stockholders approved the AutoZone, Inc. 2020 Omnibus Incentive Award Plan (the "2020 Omnibus Plan"), which serves as the successor to the Amended 2011 Equity Plan. The 2020 Omnibus Plan provides equity-based compensation to our non-employee directors and employees for their service to AutoZone or our subsidiaries or affiliates. Under the 2020 Omnibus Plan, participants may receive equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, deferred stock, stock payments, performance based awards, cash based awards and other incentive awards structured by the Compensation Committee and the Board within parameters set forth in the 2020 Omnibus Plan. ​ AutoZone, Inc. Director Compensation Program Under the Company's Director Compensation Program (the "Program"), non-employee directors will receive their compensation in awards of restricted stock units under the 2020 Omnibus Plan, with an option for a certain portion of a director's compensation to be paid in cash at the non-employee director's election. Under the Program, restricted stock units are granted on January 1 of each year (the "Grant Date"). The number of restricted stock units is determined by dividing the amount of the annual retainer by the fair market value of the shares of common stock as of the Grant Date. The restricted stock units are fully vested on the date of grant and are paid in shares of the Company's common stock on the first or the fifth anniversary of the Grant Date (at the Director's election) or if sooner, the date the non-employee director ceases to be a member of the Board ("Separation from Service"). The cash portion of the award, if elected, is paid ratably over each calendar quarter. Total share-based compensation expense (a component of Operating, selling, general and administrative expenses) was $93.1 million, $70.6 million and $56.1 million for fiscal 2023, 2022 and 2021, respectively. General terms and methods of valuation for the Company's share-based awards are as follows: --- ## No Match in Current: Stock Options *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* The Company grants options to purchase common stock to certain of its employees under the 2020 Omnibus Plan at prices equal to the market value of the stock on the date of grant. Options have a term of ten years from grant date. Employee options generally vest in equal annual installments on the first, second, third and fourth anniversaries of the grant date and generally have 90 days after the service relationship ends, or one year after death, to exercise all vested options, unless retirement provisions are met. The fair value of each option grant is separately estimated for each vesting date. 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 Company has estimated the fair value of all stock option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The following table presents the weighted average 59 59 Table of Contentsfor key assumptions used in determining the fair value of options granted and the related share-based compensation expense:​​​​​​​​​​​​​Year Ended ​ ​August 26,​August 27,​August 28, ​ ​2023​2022​2021​​​​​​​​​​Expected price volatility ​29%28% 28%Risk-free interest rate ​3.8%1.1% 0.4%Weighted average expected lives (in years) ​5.5​5.6​ 5.6​Forfeiture rate ​10%10% 10%Dividend yield ​0%0% 0%​The following methodologies were applied in developing the assumptions used in determining the fair value of options granted:Expected price volatility - This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of its stock to calculate the volatility assumption as it is management's belief that this is the best indicator of future volatility. The Company calculates daily market value changes from the date of grant over a past period representative of the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense.Risk-free interest rate - This is the U.S. Treasury rate for the week of the grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.Expected lives - This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. Options granted have a maximum term of ten years. An increase in the expected life will increase compensation expense.Forfeiture rate - This is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. This estimate is based on historical experience at the time of valuation and reduces expense ratably over the vesting period. An increase in the forfeiture rate will decrease compensation expense. This estimate is evaluated periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.Dividend yield - The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future. An increase in the dividend yield will decrease compensation expense.The weighted average grant date fair value per share of options granted was $764.68, $463.45 and $304.31 during fiscal 2023, 2022 and 2021, respectively. The intrinsic value of options exercised was $424.6 million, $282.7 million and $280.1 million in fiscal 2023, 2022 and 2021, respectively. The total fair value of options vested was $47.9 million, $39.3 million and $44.7 million in fiscal 2023, 2022 and 2021, respectively.60 Table of Contents Table of Contents Table of Contents for key assumptions used in determining the fair value of options granted and the related share-based compensation expense:​​​​​​​​​​​​​Year Ended ​ ​August 26,​August 27,​August 28, ​ ​2023​2022​2021​​​​​​​​​​Expected price volatility ​29%28% 28%Risk-free interest rate ​3.8%1.1% 0.4%Weighted average expected lives (in years) ​5.5​5.6​ 5.6​Forfeiture rate ​10%10% 10%Dividend yield ​0%0% 0%​The following methodologies were applied in developing the assumptions used in determining the fair value of options granted:Expected price volatility - This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of its stock to calculate the volatility assumption as it is management's belief that this is the best indicator of future volatility. The Company calculates daily market value changes from the date of grant over a past period representative of the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense.Risk-free interest rate - This is the U.S. Treasury rate for the week of the grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.Expected lives - This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. Options granted have a maximum term of ten years. An increase in the expected life will increase compensation expense.Forfeiture rate - This is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. This estimate is based on historical experience at the time of valuation and reduces expense ratably over the vesting period. An increase in the forfeiture rate will decrease compensation expense. This estimate is evaluated periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate.Dividend yield - The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future. An increase in the dividend yield will decrease compensation expense.The weighted average grant date fair value per share of options granted was $764.68, $463.45 and $304.31 during fiscal 2023, 2022 and 2021, respectively. The intrinsic value of options exercised was $424.6 million, $282.7 million and $280.1 million in fiscal 2023, 2022 and 2021, respectively. The total fair value of options vested was $47.9 million, $39.3 million and $44.7 million in fiscal 2023, 2022 and 2021, respectively. for key assumptions used in determining the fair value of options granted and the related share-based compensation expense: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 26, ​ August 27, ​ August 28, ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Expected price volatility ​ 29 % 28 % 28 % Risk-free interest rate ​ 3.8 % 1.1 % 0.4 % Weighted average expected lives (in years) ​ 5.5 ​ 5.6 ​ 5.6 ​ Forfeiture rate ​ 10 % 10 % 10 % Dividend yield ​ 0 % 0 % 0 % ​ The following methodologies were applied in developing the assumptions used in determining the fair value of options granted: Expected price volatility - This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The Company uses actual historical changes in the market value of its stock to calculate the volatility assumption as it is management's belief that this is the best indicator of future volatility. The Company calculates daily market value changes from the date of grant over a past period representative of the expected life of the options to determine volatility. An increase in the expected volatility will increase compensation expense. Risk-free interest rate - This is the U.S. Treasury rate for the week of the grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense. Expected lives - This is the period of time over which the options granted are expected to remain outstanding and is based on historical experience. Separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. Options granted have a maximum term of ten years. An increase in the expected life will increase compensation expense. Forfeiture rate - This is the estimated percentage of options granted that are expected to be forfeited or canceled before becoming fully vested. This estimate is based on historical experience at the time of valuation and reduces expense ratably over the vesting period. An increase in the forfeiture rate will decrease compensation expense. This estimate is evaluated periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the previous estimate. Dividend yield - The Company has not made any dividend payments nor does it have plans to pay dividends in the foreseeable future. An increase in the dividend yield will decrease compensation expense. The weighted average grant date fair value per share of options granted was $764.68, $463.45 and $304.31 during fiscal 2023, 2022 and 2021, respectively. The intrinsic value of options exercised was $424.6 million, $282.7 million and $280.1 million in fiscal 2023, 2022 and 2021, respectively. The total fair value of options vested was $47.9 million, $39.3 million and $44.7 million in fiscal 2023, 2022 and 2021, respectively. 60 60 Table of ContentsThe Company generally issues new shares when options are exercised. The following table summarizes information about stock option activity for the year ended August 26, 2023:​​​​​​​​​​​​ ​ ​​ Weighted ​​​​​​​​​Average​​​​​​​​​​Remaining​Aggregate​​​​Weighted​Contractual​Intrinsic​​Number​Average​Term​Value​​of Shares​Exercise Price​(in years)​(in thousands)​​​​​​​​​​​Outstanding - August 27, 2022 1,139,100​$ 941.28 ​​​​Granted 161,510​​ 2,218.35 ​ Exercised (242,920)​​ 708.46 ​ Forfeited/Cancelled (30,102)​​ 1,504.17 ​ Outstanding - August 26, 2023 1,027,588​ 1,180.39 5.97​$ 1,308,493​​​​​​​​​​​Exercisable 651,032​​ 862.98​ 4.71​​ 1,035,417Expected to vest 359,109​​ 1,719.64​ 8.13​​ 263,838Available for future grants 862,178​​​​​​​​​As of August 26, 2023, total unrecognized share-based compensation expense related to stock options, net of estimated forfeitures, was approximately $90.1 million, before income taxes, and will be recognized over an estimated weighted average period of 2.9 years.Restricted Stock UnitsRestricted stock unit awards are valued at the market price of a share of the Company's stock on the date of grant and 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.As of August 26, 2023, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $8.2 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.4 years.Transactions related to restricted stock units for the fiscal year ended August 26, 2023 are as follows:​​​​​​​​​​Weighted-​ Number Average Grant​​of Shares​Date Fair Value​​​​​​Nonvested at August 27, 2022 12,731​$ 1,223.61Granted 3,584​​ 2,267.41Vested (6,643)​​ 1,276.36Forfeited (1,539)​​ 1,581.25Nonvested at August 26, 2023 8,133​$ 1,572.87​Stock Appreciation RightsAt August 26, 2023 and August 27, 2022, the Company had $11.8 million and $10.4 million, respectively of accrued compensation expense. There were 4,822 outstanding units issued under the 2003 Comp Plan and prior plans. As directors retire, this balance will be reduced. No additional shares of stock or units will be issued in future years under the 2003 Comp Plan or prior plans.61 Table of Contents Table of Contents Table of Contents The Company generally issues new shares when options are exercised. The following table summarizes information about stock option activity for the year ended August 26, 2023:​​​​​​​​​​​​ ​ ​​ Weighted ​​​​​​​​​Average​​​​​​​​​​Remaining​Aggregate​​​​Weighted​Contractual​Intrinsic​​Number​Average​Term​Value​​of Shares​Exercise Price​(in years)​(in thousands)​​​​​​​​​​​Outstanding - August 27, 2022 1,139,100​$ 941.28 ​​​​Granted 161,510​​ 2,218.35 ​ Exercised (242,920)​​ 708.46 ​ Forfeited/Cancelled (30,102)​​ 1,504.17 ​ Outstanding - August 26, 2023 1,027,588​ 1,180.39 5.97​$ 1,308,493​​​​​​​​​​​Exercisable 651,032​​ 862.98​ 4.71​​ 1,035,417Expected to vest 359,109​​ 1,719.64​ 8.13​​ 263,838Available for future grants 862,178​​​​​​​​​As of August 26, 2023, total unrecognized share-based compensation expense related to stock options, net of estimated forfeitures, was approximately $90.1 million, before income taxes, and will be recognized over an estimated weighted average period of 2.9 years.Restricted Stock UnitsRestricted stock unit awards are valued at the market price of a share of the Company's stock on the date of grant and 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.As of August 26, 2023, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $8.2 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.4 years.Transactions related to restricted stock units for the fiscal year ended August 26, 2023 are as follows:​​​​​​​​​​Weighted-​ Number Average Grant​​of Shares​Date Fair Value​​​​​​Nonvested at August 27, 2022 12,731​$ 1,223.61Granted 3,584​​ 2,267.41Vested (6,643)​​ 1,276.36Forfeited (1,539)​​ 1,581.25Nonvested at August 26, 2023 8,133​$ 1,572.87​Stock Appreciation RightsAt August 26, 2023 and August 27, 2022, the Company had $11.8 million and $10.4 million, respectively of accrued compensation expense. There were 4,822 outstanding units issued under the 2003 Comp Plan and prior plans. As directors retire, this balance will be reduced. No additional shares of stock or units will be issued in future years under the 2003 Comp Plan or prior plans. The Company generally issues new shares when options are exercised. The following table summarizes information about stock option activity for the year ended August 26, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Remaining ​ Aggregate ​ ​ ​ ​ Weighted ​ --- ## No Match in Current: Contractual *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ Less than ​ Between ​ Between ​ Over (in thousands) ​ --- ## No Match in Current: Exercise Price *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ (in years) ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding - August 27, 2022 1,139,100 ​ $ 941.28 ​ ​ ​ ​ Granted 161,510 ​ ​ 2,218.35 ​ Exercised (242,920) ​ ​ 708.46 ​ Forfeited/Cancelled (30,102) ​ ​ 1,504.17 ​ Outstanding - August 26, 2023 1,027,588 ​ 1,180.39 5.97 ​ $ 1,308,493 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable 651,032 ​ ​ 862.98 ​ 4.71 ​ ​ 1,035,417 Expected to vest 359,109 ​ ​ 1,719.64 ​ 8.13 ​ ​ 263,838 Available for future grants 862,178 ​ ​ ​ ​ ​ ​ ​ ​ ​ As of August 26, 2023, total unrecognized share-based compensation expense related to stock options, net of estimated forfeitures, was approximately $90.1 million, before income taxes, and will be recognized over an estimated weighted average period of 2.9 years. --- ## No Match in Current: Restricted Stock Units *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* Restricted stock unit awards are valued at the market price of a share of the Company's stock on the date of grant and 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. As of August 26, 2023, total unrecognized stock-based compensation expense related to nonvested restricted stock unit awards, net of estimated forfeitures, was approximately $8.2 million, before income taxes, which we expect to recognize over an estimated weighted average period of 2.4 years. Transactions related to restricted stock units for the fiscal year ended August 26, 2023 are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ Number --- ## No Match in Current: Date Fair Value *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ ​ ​ ​ ​ ​ Nonvested at August 27, 2022 12,731 ​ $ 1,223.61 Granted 3,584 ​ ​ 2,267.41 Vested (6,643) ​ ​ 1,276.36 Forfeited (1,539) ​ ​ 1,581.25 Nonvested at August 26, 2023 8,133 ​ $ 1,572.87 ​ --- ## No Match in Current: Stock Appreciation Rights *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* At August 26, 2023 and August 27, 2022, the Company had $11.8 million and $10.4 million, respectively of accrued compensation expense. There were 4,822 outstanding units issued under the 2003 Comp Plan and prior plans. As directors retire, this balance will be reduced. No additional shares of stock or units will be issued in future years under the 2003 Comp Plan or prior plans. 61 61 Table of ContentsEmployee Stock Purchase Plan and Executive Stock Purchase PlanThe Company recognized $2.5 million in compensation expense related to the discount on the selling of shares to employees and executives under the various share purchase plans in fiscal 2023, $3.2 million in fiscal 2022 and $2.5 million in fiscal 2021. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. The Company repurchased 4,886 and 7,611 shares in fiscal 2022 and 2021, respectively, all at market value from employees electing to sell their stock. Purchases under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively. Issuances of shares under the Employee Plan are netted against repurchases and such repurchases are not included in share repurchases disclosed in "Note K - Stock Repurchase Program." At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan, and 232,966 shares of common stock were reserved for future issuance under the Executive Plan.Note C - Accrued Expenses and OtherAccrued expenses and other consisted of the following:​​​​​​​​ August 26, August 27,(in thousands)​2023​2022​​​​​​​Accrued compensation, related payroll taxes and benefits​$ 343,379​$ 414,892Property, sales and other taxes​ 165,731​ 153,305Medical and casualty insurance claims (current portion)​ 127,624​ 115,201Finance lease liabilities​ 86,916​ 92,877Accrued gift cards​ 59,254​ 52,237Accrued interest​ 54,493​ 50,696Accrued sales and warranty returns​ 43,355​ 35,696Other​ 120,089​ 93,797​​$ 1,000,841​$ 1,008,701​​​​​​​​The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability.​Note D - Income Taxes The components of income from continuing operations before income taxes are as follows:​​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands)​2023​2022​2021​​​​​​​​​​Domestic​$ 2,621,714​$ 2,429,262​$ 2,436,548International​ 545,900​ 649,829​ 312,642​​$ 3,167,614​$ 3,079,091 $ 2,749,190​62 Table of Contents Table of Contents Table of Contents Employee Stock Purchase Plan and Executive Stock Purchase PlanThe Company recognized $2.5 million in compensation expense related to the discount on the selling of shares to employees and executives under the various share purchase plans in fiscal 2023, $3.2 million in fiscal 2022 and $2.5 million in fiscal 2021. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. The Company repurchased 4,886 and 7,611 shares in fiscal 2022 and 2021, respectively, all at market value from employees electing to sell their stock. Purchases under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively. Issuances of shares under the Employee Plan are netted against repurchases and such repurchases are not included in share repurchases disclosed in "Note K - Stock Repurchase Program." At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan, and 232,966 shares of common stock were reserved for future issuance under the Executive Plan.Note C - Accrued Expenses and OtherAccrued expenses and other consisted of the following:​​​​​​​​ August 26, August 27,(in thousands)​2023​2022​​​​​​​Accrued compensation, related payroll taxes and benefits​$ 343,379​$ 414,892Property, sales and other taxes​ 165,731​ 153,305Medical and casualty insurance claims (current portion)​ 127,624​ 115,201Finance lease liabilities​ 86,916​ 92,877Accrued gift cards​ 59,254​ 52,237Accrued interest​ 54,493​ 50,696Accrued sales and warranty returns​ 43,355​ 35,696Other​ 120,089​ 93,797​​$ 1,000,841​$ 1,008,701​​​​​​​​The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability.​Note D - Income Taxes The components of income from continuing operations before income taxes are as follows:​​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands)​2023​2022​2021​​​​​​​​​​Domestic​$ 2,621,714​$ 2,429,262​$ 2,436,548International​ 545,900​ 649,829​ 312,642​​$ 3,167,614​$ 3,079,091 $ 2,749,190​ --- ## No Match in Current: Employee Stock Purchase Plan and Executive Stock Purchase Plan *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* The Company recognized $2.5 million in compensation expense related to the discount on the selling of shares to employees and executives under the various share purchase plans in fiscal 2023, $3.2 million in fiscal 2022 and $2.5 million in fiscal 2021. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. The Company repurchased 4,886 and 7,611 shares in fiscal 2022 and 2021, respectively, all at market value from employees electing to sell their stock. Purchases under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively. Issuances of shares under the Employee Plan are netted against repurchases and such repurchases are not included in share repurchases disclosed in "Note K - Stock Repurchase Program." At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan, and 232,966 shares of common stock were reserved for future issuance under the Executive Plan. --- ## No Match in Current: August 26, 2023 *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* (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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## No Match in Current: August 26, 2023 *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* (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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## No Match in Current: August 27, 2022 *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* (in thousands) Level 1 Level 2 Level 3 Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other current assets ​ $ 49,659 ​ $ 109 ​ $ - ​ $ 49,768 Other long-term assets ​ 57,301 ​ 5,476 ​ - ​ 62,777 ​ ​ $ 106,960 ​ $ 5,585 ​ $ - ​ $ 112,545 ​ At August 26, 2023, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $39.6 million, which are included within Other current assets and long-term marketable debt securities of $81.9 million, which are included within 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 debt securities, including benchmark yields and reported trades. A discussion on how the Company's cash flow hedges are valued is included in "Note H - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note F - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment. These non-financial assets and liabilities could include assets and liabilities acquired in an acquisition as well as goodwill, intangible assets and property, plant and equipment that are determined to be impaired. At August 26, 2023, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition. 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 I - Financing." ​ ​ 66 66 Table of ContentsNote F - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​​​​​​​​​​​​​​​​August 27, 2022​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 15,293​$ 1​$ (298)​$ 14,996Government bonds​ 88,903​ - ​ (1,963)​ 86,940Mortgage-backed securities​ 4,600​ - ​ (243)​ 4,357Asset-backed securities and other​ 6,531​ - ​ (279)​ 6,252​​$ 115,327​$ 1​$ (2,783)​$ 112,545​The marketable debt securities held at August 26, 2023, had effective maturities ranging from less than one year to approximately three years. At August 26, 2023, the Company held 75 securities that are in an unrealized loss position of approximately $2.4 million. 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 fiscal 2023, 2022 or 2021.Included above in total marketable debt securities are $105.0 million and $91.1 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 26, 2023 and August 27, 2022, respectively.​​67 Table of Contents Table of Contents Table of Contents Note F - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​​​​​​​​​​​​​​​​August 27, 2022​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 15,293​$ 1​$ (298)​$ 14,996Government bonds​ 88,903​ - ​ (1,963)​ 86,940Mortgage-backed securities​ 4,600​ - ​ (243)​ 4,357Asset-backed securities and other​ 6,531​ - ​ (279)​ 6,252​​$ 115,327​$ 1​$ (2,783)​$ 112,545​The marketable debt securities held at August 26, 2023, had effective maturities ranging from less than one year to approximately three years. At August 26, 2023, the Company held 75 securities that are in an unrealized loss position of approximately $2.4 million. 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 fiscal 2023, 2022 or 2021.Included above in total marketable debt securities are $105.0 million and $91.1 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 August 26, 2023 and August 27, 2022, respectively.​​ --- ## No Match in Current: Note G - Accumulated Other Comprehensive Loss *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* Accumulated Other Comprehensive Loss includes certain adjustments to foreign currency translation adjustments, certain activity for interest rate swaps and treasury rate locks that qualify as cash flow hedges and unrealized gains (losses) on available-for-sale marketable debt securities. Changes in Accumulated Other Comprehensive Loss consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ --- ## No Match in Current: Derivatives *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at August 28, 2021 ​ $ (287,638) ​ $ 589 ​ $ (20,937) ​ $ (307,986) Other Comprehensive Income (Loss) before reclassifications ​ 7,448 ​ (2,760) ​ - ​ 4,688 Amounts reclassified from Accumulated Other Comprehensive Loss(2) ​ - ​ - ​ 2,762 ​ 2,762 Balance at August 27, 2022 ​ ​ (280,190) ​ ​ (2,171) ​ ​ (18,175) ​ ​ (300,536) Other Comprehensive Income before reclassifications ​ 103,633 ​ ​ 472 ​ ​ 3,635 ​ 107,740 Amounts reclassified from Accumulated Other Comprehensive Loss(2) ​ - ​ ​ (152) ​ ​ 2,112 ​ 1,960 Balance at August 26, 2023 ​ $ (176,557) ​ $ (1,851) ​ $ (12,428) ​ $ (190,836) ​ ​ --- ## Modified: If we are unable to compete successfully against other businesses that sell the products that we sell, we could lose customers and our sales and profits may decline. **Key changes:** - Reworded sentence: "​ The sale of automotive parts, accessories and maintenance items is highly competitive." - Reworded sentence: "​ Although we believe we compete effectively, our competitors may have greater financial resources allowing them to invest more in their business, greater sourcing capabilities allowing them to sell merchandise at lower prices, larger stores with more merchandise, longer operating histories with deeper customer relationships, more frequent customer visits, more effective advertising and more successful utilization of data analytics, artificial intelligence and other new and emerging technologies." - Reworded sentence: "​ With the increasing use of digital tools, our customers often begin their shopping experience online and are quickly able to compare prices, product assortment, product availability and feedback from other customers before purchasing products." **Prior (2023):** The sale of automotive parts, accessories and maintenance items is highly competitive. See "Item 1. Business" above for additional information regarding our competitive environment. ​ Although we believe we compete effectively, our competitors may have greater financial and marketing resources allowing them to sell merchandise at lower prices, larger stores with more merchandise, longer operating histories with deeper customer relationships, more frequent customer visits and more effective advertising. Online and multi-channel retailers often have lower operating costs and focus on delivery services, thereby offering customers faster, guaranteed delivery times and low-price or free shipping. In addition, because our business strategy is based on offering superior levels of customer service to complement the products we offer, our cost structure is higher than some of our competitors, which also puts pressure on our margins. ​ Consumers are embracing shopping online, including through mobile applications. With the increasing use of digital tools and social media, and our competitors' increased focus on optimizing customers' online experience, our customers are quickly able to compare prices, product assortment, product availability and feedback from other customers before purchasing products. ​ If we are unable to continue to manage in-stock inventory and costs, provide competitive delivery options, develop successful competitive strategies, including the maintenance of effective promotions, advertising and loyalty programs, develop and execute effective digital and omni-channel strategies or otherwise compete effectively, or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline. ​ **Current (2024):** ​ The sale of automotive parts, accessories and maintenance items is highly competitive. See "Item 1. Business" above for additional information regarding our competitive environment. ​ Although we believe we compete effectively, our competitors may have greater financial resources allowing them to invest more in their business, greater sourcing capabilities allowing them to sell merchandise at lower prices, larger stores with more merchandise, longer operating histories with deeper customer relationships, more frequent customer visits, more effective advertising and more successful utilization of data analytics, artificial intelligence and other new and emerging technologies. Online and multi-channel retailers often have lower operating costs and focus on delivery services, thereby offering customers faster, guaranteed delivery times and low-price or free shipping. In addition, because our business strategy is based on offering superior levels of customer service to complement the products we offer, our cost structure is higher than some of our competitors, which also puts pressure on our margins. ​ With the increasing use of digital tools, our customers often begin their shopping experience online and are quickly able to compare prices, product assortment, product availability and feedback from other customers before purchasing products. We may be unable to differentiate ourselves or unable to anticipate and adapt to new or enhanced digital experiences offered by other retailers. ​ If we are unable to continue to manage in-stock inventory and costs, provide competitive delivery options, develop successful competitive strategies, including the maintenance of effective promotions, advertising and loyalty programs, develop and execute effective digital and omni-channel strategies or otherwise compete effectively, or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline. ​ --- ## Modified: Liquidity and Capital Resources **Key changes:** - Removed sentence: "Continued progress on our initiatives improved our operating performance for the fiscal year." - Reworded sentence: "As of August 31, 2024, we held $298.2 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings." - Reworded sentence: "Net cash provided by operating activities was $3.0 billion in 2024, $2.9 billion in 2023 and $3.2 billion in 2022." - Reworded sentence: "We purchased marketable debt securities of $38.8 million, $66.9 million and $56.0 million in fiscal 2024, 2023 and 2022, respectively." - Reworded sentence: "The Company had net repayments of commercial paper and short-term borrowing of $629.6 million during fiscal 2024, and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million and $603.4 million during fiscal 2023 and 2022, respectively." **Prior (2023):** The primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. Continued progress on our initiatives improved our operating performance for the fiscal year. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 26, 2023, we held $277.1 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $2.9 billion in 2023, $3.2 billion in 2022 and $3.5 billion in 2021. Cash flows from operations are below last year primarily due to unfavorable changes in accounts payable and accrued expenses. Our net cash flows used in investing activities were $876.2 million, $648.1 million and $601.8 million in fiscal 2023, 2022 and 2021, respectively. The increase in net cash used in investing activities in fiscal 2023 was primarily due to an increase in capital expenditures. We invested $796.7 million, $672.4 million and $621.8 million in capital assets in fiscal 2023, 2022 and 2021, respectively. The increase in capital expenditures from fiscal 2022 to fiscal 2023 was primarily driven by our growth initiatives, including new stores, hub and mega hub expansion initiatives and supply chain projects. We had net new store openings of 197, 176 and 218 for fiscal 2023, 2022 and 2021, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $66.9 million, $56.0 million and $63.7 million in fiscal 2023, 2022 and 2021, respectively. We had proceeds from the sale of marketable debt securities of $58.4 million, $53.9 million and $95.4 million in fiscal 2023, 2022 and 2021, respectively. Net cash used in financing activities was $2.1 billion in fiscal 2023 and $3.5 billion in fiscal 2022 and fiscal 2021. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.7 billion, $4.4 billion and $3.4 billion for fiscal 2023, 2022 and 2021, respectively. The treasury stock purchases in fiscal 2023, 2022 and 2021 were primarily funded by cash flows from operations. During the year ended August 26, 2023, we repaid our $300 million 2.875% Senior Notes due January 2023 and our $500 million 3.125% Senior Notes due July 2023 and issued $1.8 billion of new debt compared to $750 million in 2022 and none in 2021. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes. The Company had net proceeds from the issuance of commercial paper and short term borrowing of $606.2 million and $603.4 million during fiscal 2023 and fiscal 2022, respectively. We did not have any commercial paper or short-term borrowing activity during fiscal 2021. During fiscal 2024, we expect to increase the investment in our business as compared to fiscal 2023. Our investments are expected to be directed primarily to our supply chain initiatives, which includes expanded hub and mega hubs, as well as distribution center expansions and new stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas. During fiscal 2023, 2022 and 2021 our capital expenditures increased by approximately 18%, 8% and 36%, respectively. Fiscal 2021 capital expenditures increased due to delays in capital spending for the third and fourth quarter of fiscal 2020 related to the COVID-19 pandemic. 32 32 Table of Contents​In addition to building and land costs, our new stores require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our vendors' capacity to factor their receivables from us. Certain vendors participate in arrangements with financial institutions whereby they factor their AutoZone receivables, allowing them to receive early payment from the financial institution on our invoices at a discounted rate. The terms of these agreements are between the vendor and the financial institution. Upon request from the vendor, we confirm to the vendor's financial institution the balances owed to the vendor, the due date and agree to waive any right of offset to the confirmed balances. A downgrade in our credit or changes in the financial markets may limit the financial institutions' willingness to participate in these arrangements, which may result in the vendor wanting to renegotiate payment terms. A reduction in payment terms would increase the working capital required to fund future inventory investments. Extended payment terms from our vendors have allowed us to continue our high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 124.9% at August 26, 2023 and 129.5% at August 27, 2022. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past.Our cash balances are held in various locations around the world. As of August 26, 2023, and August 27, 2022, cash and cash equivalents of $108.5 million and $86.8 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.For the fiscal year ended August 26, 2023, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 55.4% as compared to 52.9% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Debt FacilitiesOn November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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 our 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 August 26, 2023, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. 33 Table of Contents Table of Contents Table of Contents ​In addition to building and land costs, our new stores require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our vendors' capacity to factor their receivables from us. Certain vendors participate in arrangements with financial institutions whereby they factor their AutoZone receivables, allowing them to receive early payment from the financial institution on our invoices at a discounted rate. The terms of these agreements are between the vendor and the financial institution. Upon request from the vendor, we confirm to the vendor's financial institution the balances owed to the vendor, the due date and agree to waive any right of offset to the confirmed balances. A downgrade in our credit or changes in the financial markets may limit the financial institutions' willingness to participate in these arrangements, which may result in the vendor wanting to renegotiate payment terms. A reduction in payment terms would increase the working capital required to fund future inventory investments. Extended payment terms from our vendors have allowed us to continue our high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 124.9% at August 26, 2023 and 129.5% at August 27, 2022. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past.Our cash balances are held in various locations around the world. As of August 26, 2023, and August 27, 2022, cash and cash equivalents of $108.5 million and $86.8 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.For the fiscal year ended August 26, 2023, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 55.4% as compared to 52.9% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Debt FacilitiesOn November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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 our 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 August 26, 2023, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. ​ In addition to building and land costs, our new stores require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our vendors' capacity to factor their receivables from us. Certain vendors participate in arrangements with financial institutions whereby they factor their AutoZone receivables, allowing them to receive early payment from the financial institution on our invoices at a discounted rate. The terms of these agreements are between the vendor and the financial institution. Upon request from the vendor, we confirm to the vendor's financial institution the balances owed to the vendor, the due date and agree to waive any right of offset to the confirmed balances. A downgrade in our credit or changes in the financial markets may limit the financial institutions' willingness to participate in these arrangements, which may result in the vendor wanting to renegotiate payment terms. A reduction in payment terms would increase the working capital required to fund future inventory investments. Extended payment terms from our vendors have allowed us to continue our high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 124.9% at August 26, 2023 and 129.5% at August 27, 2022. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past. Our cash balances are held in various locations around the world. As of August 26, 2023, and August 27, 2022, cash and cash equivalents of $108.5 million and $86.8 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations. For the fiscal year ended August 26, 2023, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 55.4% as compared to 52.9% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation. Debt Facilities On November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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 our 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 August 26, 2023, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. 33 33 Table of ContentsThe Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 26, 2023 was 6.3:1.We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 26, 2023, we had $25 million in letters of credit outstanding under the letter of credit facility.In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $107.2 million in letters of credit outstanding as of August 26, 2023. These letters of credit have various maturity dates and were issued on an uncommitted basis.As of August 26, 2023, the $1.2 billion of commercial paper borrowings and the $300 million 3.125% Senior Notes due April 2024 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 26, 2023, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023.On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023.On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.​On March 15, 2021, we repaid the $250 million 2.500% Senior Notes due April 2021, which were callable at par in March 2021.On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used for general corporate purposes.On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used to repay a portion of the Company's outstanding commercial paper borrowings and for other general corporate purposes.On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.​The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. 34 Table of Contents Table of Contents Table of Contents The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 26, 2023 was 6.3:1.We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 26, 2023, we had $25 million in letters of credit outstanding under the letter of credit facility.In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $107.2 million in letters of credit outstanding as of August 26, 2023. These letters of credit have various maturity dates and were issued on an uncommitted basis.As of August 26, 2023, the $1.2 billion of commercial paper borrowings and the $300 million 3.125% Senior Notes due April 2024 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 26, 2023, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023.On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023.On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.​On March 15, 2021, we repaid the $250 million 2.500% Senior Notes due April 2021, which were callable at par in March 2021.On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used for general corporate purposes.On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used to repay a portion of the Company's outstanding commercial paper borrowings and for other general corporate purposes.On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.​The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 26, 2023 was 6.3:1. We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 26, 2023, we had $25 million in letters of credit outstanding under the letter of credit facility. In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $107.2 million in letters of credit outstanding as of August 26, 2023. These letters of credit have various maturity dates and were issued on an uncommitted basis. As of August 26, 2023, the $1.2 billion of commercial paper borrowings and the $300 million 3.125% Senior Notes due April 2024 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 26, 2023, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023. On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023. On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022. ​ On March 15, 2021, we repaid the $250 million 2.500% Senior Notes due April 2021, which were callable at par in March 2021. On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used for general corporate purposes. On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used to repay a portion of the Company's outstanding commercial paper borrowings and for other general corporate purposes. On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. ​ The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. 34 34 Table of ContentsAs of August 26, 2023, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.For the fiscal year ended August 26, 2023, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.3:1 as compared to 2.1:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels.Management expects the ratio of adjusted debt to EBITDAR to return to pre-pandemic levels in the future, increasing debt levels. Once the target ratio is achieved, to the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Stock RepurchasesDuring 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $1.5 billion on October 5, 2021, $1.5 billion on December 15, 2021, $2.0 billion on March 22, 2022, $2.5 billion on October 4, 2022 and $2.0 billion on June 14, 2023, bringing the total authorization to $35.7 billion. From January 1998 to August 26, 2023, we have repurchased a total of 154.0 million shares at an aggregate cost of $33.8 billion. We repurchased 1.5 million, 2.2 million and 2.6 million shares of common stock at an aggregate cost of $3.7 billion (inclusive of excise tax of $23.7 million), $4.4 billion and $3.4 billion during fiscal 2023, 2022 and 2021, respectively. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022. Considering cumulative repurchases as of August 26, 2023 we had $1.8 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate.Cash flow before share repurchases and changes in debt was $2.2 billion, $2.6 billion and $3.0 billion for the fiscal year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Subsequent to August 26, 2023 and through October 16, 2023, we have repurchased 200,303 shares of common stock at an aggregate cost of $512.4 million. Considering the cumulative repurchases through October 16, 2023, we have $1.3 billion remaining under the Board's authorization to repurchase its common stock.​35 Table of Contents Table of Contents Table of Contents As of August 26, 2023, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.For the fiscal year ended August 26, 2023, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.3:1 as compared to 2.1:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels.Management expects the ratio of adjusted debt to EBITDAR to return to pre-pandemic levels in the future, increasing debt levels. Once the target ratio is achieved, to the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Stock RepurchasesDuring 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $1.5 billion on October 5, 2021, $1.5 billion on December 15, 2021, $2.0 billion on March 22, 2022, $2.5 billion on October 4, 2022 and $2.0 billion on June 14, 2023, bringing the total authorization to $35.7 billion. From January 1998 to August 26, 2023, we have repurchased a total of 154.0 million shares at an aggregate cost of $33.8 billion. We repurchased 1.5 million, 2.2 million and 2.6 million shares of common stock at an aggregate cost of $3.7 billion (inclusive of excise tax of $23.7 million), $4.4 billion and $3.4 billion during fiscal 2023, 2022 and 2021, respectively. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022. Considering cumulative repurchases as of August 26, 2023 we had $1.8 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate.Cash flow before share repurchases and changes in debt was $2.2 billion, $2.6 billion and $3.0 billion for the fiscal year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Subsequent to August 26, 2023 and through October 16, 2023, we have repurchased 200,303 shares of common stock at an aggregate cost of $512.4 million. Considering the cumulative repurchases through October 16, 2023, we have $1.3 billion remaining under the Board's authorization to repurchase its common stock.​ As of August 26, 2023, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements. For the fiscal year ended August 26, 2023, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.3:1 as compared to 2.1:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels. Management expects the ratio of adjusted debt to EBITDAR to return to pre-pandemic levels in the future, increasing debt levels. Once the target ratio is achieved, to the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation. Stock Repurchases During 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $1.5 billion on October 5, 2021, $1.5 billion on December 15, 2021, $2.0 billion on March 22, 2022, $2.5 billion on October 4, 2022 and $2.0 billion on June 14, 2023, bringing the total authorization to $35.7 billion. From January 1998 to August 26, 2023, we have repurchased a total of 154.0 million shares at an aggregate cost of $33.8 billion. We repurchased 1.5 million, 2.2 million and 2.6 million shares of common stock at an aggregate cost of $3.7 billion (inclusive of excise tax of $23.7 million), $4.4 billion and $3.4 billion during fiscal 2023, 2022 and 2021, respectively. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022. Considering cumulative repurchases as of August 26, 2023 we had $1.8 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate. Cash flow before share repurchases and changes in debt was $2.2 billion, $2.6 billion and $3.0 billion for the fiscal year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation. Subsequent to August 26, 2023 and through October 16, 2023, we have repurchased 200,303 shares of common stock at an aggregate cost of $512.4 million. Considering the cumulative repurchases through October 16, 2023, we have $1.3 billion remaining under the Board's authorization to repurchase its common stock. ​ 35 35 Table of ContentsFinancial CommitmentsThe following table shows our significant contractual obligations as of August 26, 2023:​​​​​​​​​​​​​​​​​​Total​Payment Due by Period​​Contractual​Less than​Between​Between​Over(in thousands)​Obligations 1 year 1‑3 years 3‑5 years 5 years​​​​​​​​​​​​​​​​Debt(1) $ 7,709,600​$ 1,509,600​$ 1,750,000​$ 1,050,000​$ 3,400,000Interest payments(2)​ 1,468,738​​ 252,600​​ 455,325​​ 321,125​​ 439,688Operating leases(3)​ 4,097,510​​ 372,849​​ 781,663​​ 682,165​​ 2,260,833Finance leases(3)​ 319,186​​ 88,284​​ 143,106​​ 44,568​​ 43,228Self-insurance reserves(4)​ 279,407​​ 96,795​​ 95,288​​ 38,757​​ 48,567Construction commitments​ 198,926​ 198,926​​ - ​​ - ​​ - Other(5)​​ 9,326​​ 9,326​​ - ​​ - ​​ - ​​$ 14,082,693​$ 2,528,380​$ 3,225,382​$ 2,136,615​$ 6,192,316​(1)Debt balances represent principal maturities, excluding interest, discounts, and debt issuance costs.(2)Represents obligations for interest payments on long-term debt.(3)Operating and finance lease obligations include related interest in accordance with ASU 2016-02, Leases (Topic 842).(4)Self-insurance reserves reflect estimates based on actuarial calculations and are presented net of insurance receivables. Although these obligations do not have scheduled maturities, the timing of future payments are predictable based upon historical patterns. Accordingly, we reflect the net present value of these obligations in our Consolidated Balance Sheets.(5)Represents commitments to make additional capital contributions to certain tax credit equity investments upon achievement of project milestones.Our tax liability for uncertain tax positions, including interest and penalties, was $51.0 million at August 26, 2023. Approximately $11.2 million is classified as current liabilities and $39.8 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​Off-Balance Sheet ArrangementsThe following table reflects outstanding letters of credit and surety bonds as of August 26, 2023:​​​​​ Total ​​Other (in thousands)​Commitments​​​​Standby letters of credit​$ 133,953Surety bonds​​ 43,076​​$ 177,029​A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers' compensation carriers.There are no additional contingent liabilities associated with these instruments as the underlying liabilities are already reflected in our Consolidated Balance Sheets. The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses.36 Table of Contents Table of Contents Table of Contents Financial CommitmentsThe following table shows our significant contractual obligations as of August 26, 2023:​​​​​​​​​​​​​​​​​​Total​Payment Due by Period​​Contractual​Less than​Between​Between​Over(in thousands)​Obligations 1 year 1‑3 years 3‑5 years 5 years​​​​​​​​​​​​​​​​Debt(1) $ 7,709,600​$ 1,509,600​$ 1,750,000​$ 1,050,000​$ 3,400,000Interest payments(2)​ 1,468,738​​ 252,600​​ 455,325​​ 321,125​​ 439,688Operating leases(3)​ 4,097,510​​ 372,849​​ 781,663​​ 682,165​​ 2,260,833Finance leases(3)​ 319,186​​ 88,284​​ 143,106​​ 44,568​​ 43,228Self-insurance reserves(4)​ 279,407​​ 96,795​​ 95,288​​ 38,757​​ 48,567Construction commitments​ 198,926​ 198,926​​ - ​​ - ​​ - Other(5)​​ 9,326​​ 9,326​​ - ​​ - ​​ - ​​$ 14,082,693​$ 2,528,380​$ 3,225,382​$ 2,136,615​$ 6,192,316​(1)Debt balances represent principal maturities, excluding interest, discounts, and debt issuance costs.(2)Represents obligations for interest payments on long-term debt.(3)Operating and finance lease obligations include related interest in accordance with ASU 2016-02, Leases (Topic 842).(4)Self-insurance reserves reflect estimates based on actuarial calculations and are presented net of insurance receivables. Although these obligations do not have scheduled maturities, the timing of future payments are predictable based upon historical patterns. Accordingly, we reflect the net present value of these obligations in our Consolidated Balance Sheets.(5)Represents commitments to make additional capital contributions to certain tax credit equity investments upon achievement of project milestones.Our tax liability for uncertain tax positions, including interest and penalties, was $51.0 million at August 26, 2023. Approximately $11.2 million is classified as current liabilities and $39.8 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​Off-Balance Sheet ArrangementsThe following table reflects outstanding letters of credit and surety bonds as of August 26, 2023:​​​​​ Total ​​Other (in thousands)​Commitments​​​​Standby letters of credit​$ 133,953Surety bonds​​ 43,076​​$ 177,029​A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers' compensation carriers.There are no additional contingent liabilities associated with these instruments as the underlying liabilities are already reflected in our Consolidated Balance Sheets. The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses. Financial Commitments The following table shows our significant contractual obligations as of August 26, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ **Current (2024):** The primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 31, 2024, we held $298.2 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $3.0 billion in 2024, $2.9 billion in 2023 and $3.2 billion in 2022. Cash flows from operations are favorable compared to last year primarily due to higher net income partially due to the additional week of sales in the current year. Our net cash flows used in investing activities were $1.3 billion, $876.2 million and $648.1 million in fiscal 2024, 2023 and 2022, respectively. The increase in net cash used in investing activities in fiscal 2024 was primarily due to an increase in capital expenditures. We invested $1.1 billion, $796.7 million and $672.4 million in capital assets in fiscal 2024, 2023 and 2022, respectively. The increase in capital expenditures from fiscal 2023 to fiscal 2024 was primarily driven by our growth initiatives, including investments in new distribution centers and stores to be opened in subsequent periods as well as stores opened in the current year. We had net new store openings of 213, 197 and 176 for fiscal 2024, 2023 and 2022, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $38.8 million, $66.9 million and $56.0 million in fiscal 2024, 2023 and 2022, respectively. We had proceeds from the sale of marketable debt securities of $40.8 million, $58.4 million and $53.9 million in fiscal 2024, 2023 and 2022, respectively. Our investment in tax credit equity investments was $227.5 million, $98.0 million and $31.5 million in fiscal 2024, 2023 and 2022, respectively. Net cash used in financing activities was $1.7 billion, $2.1 billion and $3.5 billion in fiscal 2024, 2023 and 2022, respectively. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.1 billion, $3.7 billion and $4.4 billion for fiscal 2024, 2023 and 2022, respectively. The treasury stock purchases in fiscal 2024, 2023 and 2022 were primarily funded by cash flows from operations and increased borrowings. During the year ended August 31, 2024, we repaid our $300 million 3.125% Senior Notes due April 2024 and issued $2.3 billion of new debt compared to $1.8 billion in 2023 and $750 million in 2022. In fiscal year 2024 the proceeds from the issuance of debt were used to repay a portion of our commercial paper borrowings and for general corporate purposes. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes. The Company had net repayments of commercial paper and short-term borrowing of $629.6 million during fiscal 2024, and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million and $603.4 million during fiscal 2023 and 2022, respectively. 31 31 Table of ContentsDuring fiscal 2025, we expect to increase the investment in our business as compared to fiscal 2024. Our investments are expected to be directed primarily to our supply chain initiatives, which include new distribution centers and new stores, including expanded hub stores and mega hub stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.In addition to building and land costs, our new stores and distribution centers require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our suppliers' ability to factor their receivables from us. 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 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. A downgrade in our credit ratings or changes in the financial markets could limit the financial institutions' and our suppliers' willingness to participate in these arrangements. We plan to continue negotiating extended terms with our suppliers, benefitting our working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 119.5% at August 31, 2024 and 124.9% at August 26, 2023. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past.Our cash balances are held in various locations around the world. As of August 31, 2024, and August 26, 2023, cash and cash equivalents of $99.8 million and $108.5 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.For the fiscal year ended August 31, 2024, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 49.7% as compared to 55.4% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Debt FacilitiesOn November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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.32 Table of Contents Table of Contents Table of Contents During fiscal 2025, we expect to increase the investment in our business as compared to fiscal 2024. Our investments are expected to be directed primarily to our supply chain initiatives, which include new distribution centers and new stores, including expanded hub stores and mega hub stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.In addition to building and land costs, our new stores and distribution centers require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our suppliers' ability to factor their receivables from us. 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 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. A downgrade in our credit ratings or changes in the financial markets could limit the financial institutions' and our suppliers' willingness to participate in these arrangements. We plan to continue negotiating extended terms with our suppliers, benefitting our working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 119.5% at August 31, 2024 and 124.9% at August 26, 2023. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past.Our cash balances are held in various locations around the world. As of August 31, 2024, and August 26, 2023, cash and cash equivalents of $99.8 million and $108.5 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.For the fiscal year ended August 31, 2024, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 49.7% as compared to 55.4% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Debt FacilitiesOn November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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. During fiscal 2025, we expect to increase the investment in our business as compared to fiscal 2024. Our investments are expected to be directed primarily to our supply chain initiatives, which include new distribution centers and new stores, including expanded hub stores and mega hub stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.In addition to building and land costs, our new stores and distribution centers require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our suppliers' ability to factor their receivables from us. 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 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. A downgrade in our credit ratings or changes in the financial markets could limit the financial institutions' and our suppliers' willingness to participate in these arrangements. We plan to continue negotiating extended terms with our suppliers, benefitting our working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 119.5% at August 31, 2024 and 124.9% at August 26, 2023. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past.Our cash balances are held in various locations around the world. As of August 31, 2024, and August 26, 2023, cash and cash equivalents of $99.8 million and $108.5 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations.For the fiscal year ended August 31, 2024, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 49.7% as compared to 55.4% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Debt FacilitiesOn November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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. During fiscal 2025, we expect to increase the investment in our business as compared to fiscal 2024. Our investments are expected to be directed primarily to our supply chain initiatives, which include new distribution centers and new stores, including expanded hub stores and mega hub stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas. In addition to building and land costs, our new stores and distribution centers require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our suppliers' ability to factor their receivables from us. 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 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. A downgrade in our credit ratings or changes in the financial markets could limit the financial institutions' and our suppliers' willingness to participate in these arrangements. We plan to continue negotiating extended terms with our suppliers, benefitting our working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 119.5% at August 31, 2024 and 124.9% at August 26, 2023. Depending on the timing and magnitude of our future investments (either in the form of leased or purchased properties or acquisitions), we anticipate that we will rely primarily on internally generated funds and available borrowing capacity to support a majority of our capital expenditures, working capital requirements and stock repurchases. The balance may be funded through new borrowings. We anticipate we will be able to obtain such financing in view of our credit ratings and favorable experiences in the debt markets in the past. Our cash balances are held in various locations around the world. As of August 31, 2024, and August 26, 2023, cash and cash equivalents of $99.8 million and $108.5 million, respectively, were held outside of the U.S. and were generally utilized to support the liquidity needs in our foreign operations. For the fiscal year ended August 31, 2024, our adjusted after-tax return on invested capital ("ROIC"), which is a non-GAAP measure, was 49.7% as compared to 55.4% for the prior year. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation. Debt Facilities On November 15, 2021, we amended and restated our existing revolving credit facility (as amended from time to time, the "Revolving Credit Agreement") pursuant to which our borrowing capacity under the Revolving Credit Agreement was increased from $2.0 billion to $2.25 billion, and the maximum borrowing under the Revolving Credit Agreement may, at our option, subject to lenders approval, be increased from $2.25 billion to $3.25 billion. On November 15, 2022, we 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 we 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 our 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. 32 32 Table of ContentsUnder our 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 August 31, 2024, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 31, 2024 was 5.4:1.We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 31, 2024, we had no letters of credit outstanding under the letter of credit facility.In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $141.6 million in letters of credit outstanding as of August 31, 2024. These letters of credit have various maturity dates and were issued on an uncommitted basis.As of August 31, 2024, the $580 million of commercial paper borrowings, the $400 million 3.250% Senior Notes due April 2025 and the $500 million 3.625% Senior Notes due April 2025 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 31, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On April 18, 2024, we repaid the $300 million 3.125% Senior Notes due April 2024.On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023.On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023.On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.On June 28, 2024, we issued $600 million in 5.100% Senior Notes due July 2029 and $700 million 5.400% Senior Notes due July 2034 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used to repay a portion of our outstanding commercial paper borrowings and for other general corporate purposes.On October 25, 2023, we issued $500 million in 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.33 Table of Contents Table of Contents Table of Contents Under our 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 August 31, 2024, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 31, 2024 was 5.4:1.We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 31, 2024, we had no letters of credit outstanding under the letter of credit facility.In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $141.6 million in letters of credit outstanding as of August 31, 2024. These letters of credit have various maturity dates and were issued on an uncommitted basis.As of August 31, 2024, the $580 million of commercial paper borrowings, the $400 million 3.250% Senior Notes due April 2025 and the $500 million 3.625% Senior Notes due April 2025 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 31, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On April 18, 2024, we repaid the $300 million 3.125% Senior Notes due April 2024.On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023.On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023.On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.On June 28, 2024, we issued $600 million in 5.100% Senior Notes due July 2029 and $700 million 5.400% Senior Notes due July 2034 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used to repay a portion of our outstanding commercial paper borrowings and for other general corporate purposes.On October 25, 2023, we issued $500 million in 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. Under our 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 August 31, 2024, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 31, 2024 was 5.4:1.We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 31, 2024, we had no letters of credit outstanding under the letter of credit facility.In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $141.6 million in letters of credit outstanding as of August 31, 2024. These letters of credit have various maturity dates and were issued on an uncommitted basis.As of August 31, 2024, the $580 million of commercial paper borrowings, the $400 million 3.250% Senior Notes due April 2025 and the $500 million 3.625% Senior Notes due April 2025 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 31, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On April 18, 2024, we repaid the $300 million 3.125% Senior Notes due April 2024.On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023.On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023.On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022.On June 28, 2024, we issued $600 million in 5.100% Senior Notes due July 2029 and $700 million 5.400% Senior Notes due July 2034 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used to repay a portion of our outstanding commercial paper borrowings and for other general corporate purposes.On October 25, 2023, we issued $500 million in 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. Under our 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 August 31, 2024, we had no outstanding borrowings and $1.8 million of outstanding letters of credit under the Revolving Credit Agreement. The Revolving Credit Agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.5:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 31, 2024 was 5.4:1. We also maintain a letter of credit facility that allows us to request the participating bank to issue letters of credit on our 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 and had an expiration in June 2022. On May 16, 2022, we amended and restated the letter of credit facility to, among other things, extend the facility through June 2025. As of August 31, 2024, we had no letters of credit outstanding under the letter of credit facility. In addition to the outstanding letters of credit issued under the committed facility discussed above, we had $141.6 million in letters of credit outstanding as of August 31, 2024. These letters of credit have various maturity dates and were issued on an uncommitted basis. As of August 31, 2024, the $580 million of commercial paper borrowings, the $400 million 3.250% Senior Notes due April 2025 and the $500 million 3.625% Senior Notes due April 2025 were classified as long-term in the Consolidated Balance Sheets as we have the current ability and intent to refinance them on a long-term basis through available capacity in our revolving credit facility. As of August 31, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility. On April 18, 2024, we repaid the $300 million 3.125% Senior Notes due April 2024. On July 17, 2023, we repaid the $500 million 3.125% Senior Notes due July 2023. On January 17, 2023, we repaid the $300 million 2.875% Senior Notes due January 2023. On January 18, 2022, we repaid the $500 million 3.700% Senior Notes due April 2022, which were callable at par in January 2022. On June 28, 2024, we issued $600 million in 5.100% Senior Notes due July 2029 and $700 million 5.400% Senior Notes due July 2034 under our automatic shelf registration statement on Form S-3, filed with the SEC on July 19, 2022 (File No. 333-266209) (the "2022 Shelf Registration Statement"). The 2022 Shelf Registration Statement allows us to sell an indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store or distribution center openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used to repay a portion of our outstanding commercial paper borrowings and for other general corporate purposes. On October 25, 2023, we issued $500 million in 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. On July 21, 2023, we issued $450 million in 5.050% Senior Notes due July 2026 and $300 million in 5.200% Senior Notes due August 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. 33 33 Table of ContentsOn January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. As of August 31, 2024, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.For the fiscal year ended August 31, 2024, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.5:1 as compared to 2.3:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels. To the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Stock RepurchasesDuring 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total authorization to $39.2 billion. Previously, the Board voted to increase the authorization by $4.5 billion in fiscal 2023 and $5.0 billion in fiscal 2022. From January 1998 to August 31, 2024, we have repurchased a total of 155.2 million shares at an aggregate cost of $37.0 billion. We repurchased 1.1 million, 1.5 million and 2.2 million shares of common stock at an aggregate cost of $3.2 billion, $3.7 billion and $4.4 billion during fiscal 2024, 2023 and 2022, respectively. Considering cumulative repurchases as of August 31, 2024 we had $2.2 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate.Cash flow before share repurchases and changes in debt was $1.8 billion, $2.2 billion and $2.6 billion for the fiscal year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Subsequent to August 31, 2024 and through October 21, 2024, we have repurchased 67,677 shares of common stock at an aggregate cost of $212.0 million. Considering the cumulative repurchases through October 21, 2024, we have $2.0 billion remaining under the Board's authorization to repurchase our common stock.34 Table of Contents Table of Contents Table of Contents On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. As of August 31, 2024, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.For the fiscal year ended August 31, 2024, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.5:1 as compared to 2.3:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels. To the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Stock RepurchasesDuring 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total authorization to $39.2 billion. Previously, the Board voted to increase the authorization by $4.5 billion in fiscal 2023 and $5.0 billion in fiscal 2022. From January 1998 to August 31, 2024, we have repurchased a total of 155.2 million shares at an aggregate cost of $37.0 billion. We repurchased 1.1 million, 1.5 million and 2.2 million shares of common stock at an aggregate cost of $3.2 billion, $3.7 billion and $4.4 billion during fiscal 2024, 2023 and 2022, respectively. Considering cumulative repurchases as of August 31, 2024 we had $2.2 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate.Cash flow before share repurchases and changes in debt was $1.8 billion, $2.2 billion and $2.6 billion for the fiscal year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Subsequent to August 31, 2024 and through October 21, 2024, we have repurchased 67,677 shares of common stock at an aggregate cost of $212.0 million. Considering the cumulative repurchases through October 21, 2024, we have $2.0 billion remaining under the Board's authorization to repurchase our common stock. On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes.The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. As of August 31, 2024, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements.For the fiscal year ended August 31, 2024, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.5:1 as compared to 2.3:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels. To the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Stock RepurchasesDuring 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total authorization to $39.2 billion. Previously, the Board voted to increase the authorization by $4.5 billion in fiscal 2023 and $5.0 billion in fiscal 2022. From January 1998 to August 31, 2024, we have repurchased a total of 155.2 million shares at an aggregate cost of $37.0 billion. We repurchased 1.1 million, 1.5 million and 2.2 million shares of common stock at an aggregate cost of $3.2 billion, $3.7 billion and $4.4 billion during fiscal 2024, 2023 and 2022, respectively. Considering cumulative repurchases as of August 31, 2024 we had $2.2 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate.Cash flow before share repurchases and changes in debt was $1.8 billion, $2.2 billion and $2.6 billion for the fiscal year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation.Subsequent to August 31, 2024 and through October 21, 2024, we have repurchased 67,677 shares of common stock at an aggregate cost of $212.0 million. Considering the cumulative repurchases through October 21, 2024, we have $2.0 billion remaining under the Board's authorization to repurchase our common stock. On January 27, 2023 we issued $450 million in 4.500% Senior Notes due February 2028 and $550 million in 4.750% Senior Notes due February 2033 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. On August 1, 2022, we issued $750 million in 4.750% Senior Notes due August 2032 under the 2022 Shelf Registration Statement. Proceeds from the debt issuance were used for general corporate purposes. The Senior Notes contain a provision that repayment may be accelerated if we experience a change in control (as defined in the agreements). Our borrowings under our Senior Notes contain minimal covenants, primarily restrictions on liens, sale and leaseback transactions and consolidations, mergers and the sale of assets. All of the repayment obligations under our borrowing arrangements may be accelerated and come due prior to the applicable scheduled payment date if covenants are breached or an event of default occurs. Interest is paid on a semi-annual basis. As of August 31, 2024, we were in compliance with all covenants and expect to remain in compliance with all covenants under our borrowing arrangements. For the fiscal year ended August 31, 2024, our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense ("EBITDAR") ratio was 2.5:1 as compared to 2.3:1 as of the comparable prior year end. We calculate adjusted debt as the sum of total debt, finance lease liabilities and rent times six; and we calculate adjusted EBITDAR by adding interest, taxes, depreciation, amortization, rent and share-based compensation expense to net income. We target our debt levels to a specified ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings and believe this is important information for the management of our debt levels. To the extent adjusted EBITDAR increases, we expect our debt levels to increase; conversely, if adjusted EBITDAR decreases, we would expect our debt levels to decrease. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation. Stock Repurchases During 1998, we announced a program permitting us to repurchase a portion of our outstanding shares not to exceed a dollar maximum established by our Board of Directors (the "Board"). The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total authorization to $39.2 billion. Previously, the Board voted to increase the authorization by $4.5 billion in fiscal 2023 and $5.0 billion in fiscal 2022. From January 1998 to August 31, 2024, we have repurchased a total of 155.2 million shares at an aggregate cost of $37.0 billion. We repurchased 1.1 million, 1.5 million and 2.2 million shares of common stock at an aggregate cost of $3.2 billion, $3.7 billion and $4.4 billion during fiscal 2024, 2023 and 2022, respectively. Considering cumulative repurchases as of August 31, 2024 we had $2.2 billion remaining under the Board's authorization to repurchase our common stock. We will continue to evaluate current and expected business conditions and adjust the level of share repurchases under our share repurchase program in a manner that is consistent with our capital allocation strategy or as we otherwise deem appropriate. Cash flow before share repurchases and changes in debt was $1.8 billion, $2.2 billion and $2.6 billion for the fiscal year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively. Cash flow before share repurchases and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less net increases or decreases in debt (excluding deferred financing costs) plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows remaining and available. We believe this is important information regarding our allocation of available capital where we prioritize investments in the business and utilize the remaining funds to repurchase shares, while maintaining debt levels that support our investment grade credit ratings. Refer to the "Reconciliation of Non-GAAP Financial Measures" section for further details of our calculation. Subsequent to August 31, 2024 and through October 21, 2024, we have repurchased 67,677 shares of common stock at an aggregate cost of $212.0 million. Considering the cumulative repurchases through October 21, 2024, we have $2.0 billion remaining under the Board's authorization to repurchase our common stock. 34 34 Table of ContentsFinancial CommitmentsThe following table shows our significant contractual obligations as of August 31, 2024:​​​​​​​​​​​​​​​​​​Total​Payment Due by Period​​Contractual​Less than​Between​Between​Over(in thousands)​Obligations 1 year 1‑3 years 3‑5 years 5 years​​​​​​​​​​​​​​​​Debt(1) $ 9,080,000​$ 1,480,000​$ 1,450,000​$ 2,000,000​$ 4,150,000Interest payments(2)​ 2,198,888​​ 375,625​​ 653,775​​ 527,550​​ 641,938Operating leases(3)​ 4,157,877​​ 391,901​​ 828,934​​ 719,996​​ 2,217,046Finance leases(3)​ 461,654​​ 116,999​​ 209,841​​ 92,389​​ 42,425Self-insurance reserves(4)​ 267,779​​ 82,976​​ 97,736​​ 42,585​​ 44,482Construction commitments​ 103,780​ 103,780​​ - ​​ - ​​ - Other(5)​​ 49,259​​ 49,259​​ - ​​ - ​​ - ​​$ 16,319,237​$ 2,600,540​$ 3,240,286​$ 3,382,520​$ 7,095,891​(1)Debt balances represent principal maturities, excluding interest, discounts, and debt issuance costs.(2)Represents obligations for interest payments on long-term debt.(3)Operating and finance lease obligations include related interest in accordance with ASU 2016-02, Leases (Topic 842).(4)Self-insurance reserves reflect estimates based on actuarial calculations and are presented net of insurance receivables. Although these obligations do not have scheduled maturities, the timing of future payments are predictable based upon historical patterns. Accordingly, we reflect the net present value of these obligations in our Consolidated Balance Sheets.(5)Represents commitments to make additional capital contributions to certain tax credit instruments upon achievement of project milestones.Our tax liability for uncertain tax positions, including interest and penalties, was $45.4 million at August 31, 2024. Approximately $23.1 million is classified as current liabilities and $22.3 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​Off-Balance Sheet ArrangementsThe following table reflects outstanding letters of credit and surety bonds as of August 31, 2024:​​​​​ Total ​​Other (in thousands)​Commitments​​​​Standby letters of credit​$ 143,393Surety bonds​​ 48,868​​$ 192,261​A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers' compensation carriers.There are no additional contingent liabilities associated with these instruments as the underlying liabilities are already reflected in our Consolidated Balance Sheets. The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses.35 Table of Contents Table of Contents Table of Contents Financial CommitmentsThe following table shows our significant contractual obligations as of August 31, 2024:​​​​​​​​​​​​​​​​​​Total​Payment Due by Period​​Contractual​Less than​Between​Between​Over(in thousands)​Obligations 1 year 1‑3 years 3‑5 years 5 years​​​​​​​​​​​​​​​​Debt(1) $ 9,080,000​$ 1,480,000​$ 1,450,000​$ 2,000,000​$ 4,150,000Interest payments(2)​ 2,198,888​​ 375,625​​ 653,775​​ 527,550​​ 641,938Operating leases(3)​ 4,157,877​​ 391,901​​ 828,934​​ 719,996​​ 2,217,046Finance leases(3)​ 461,654​​ 116,999​​ 209,841​​ 92,389​​ 42,425Self-insurance reserves(4)​ 267,779​​ 82,976​​ 97,736​​ 42,585​​ 44,482Construction commitments​ 103,780​ 103,780​​ - ​​ - ​​ - Other(5)​​ 49,259​​ 49,259​​ - ​​ - ​​ - ​​$ 16,319,237​$ 2,600,540​$ 3,240,286​$ 3,382,520​$ 7,095,891​(1)Debt balances represent principal maturities, excluding interest, discounts, and debt issuance costs.(2)Represents obligations for interest payments on long-term debt.(3)Operating and finance lease obligations include related interest in accordance with ASU 2016-02, Leases (Topic 842).(4)Self-insurance reserves reflect estimates based on actuarial calculations and are presented net of insurance receivables. Although these obligations do not have scheduled maturities, the timing of future payments are predictable based upon historical patterns. Accordingly, we reflect the net present value of these obligations in our Consolidated Balance Sheets.(5)Represents commitments to make additional capital contributions to certain tax credit instruments upon achievement of project milestones.Our tax liability for uncertain tax positions, including interest and penalties, was $45.4 million at August 31, 2024. Approximately $23.1 million is classified as current liabilities and $22.3 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​Off-Balance Sheet ArrangementsThe following table reflects outstanding letters of credit and surety bonds as of August 31, 2024:​​​​​ Total ​​Other (in thousands)​Commitments​​​​Standby letters of credit​$ 143,393Surety bonds​​ 48,868​​$ 192,261​A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers' compensation carriers.There are no additional contingent liabilities associated with these instruments as the underlying liabilities are already reflected in our Consolidated Balance Sheets. The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses. Financial CommitmentsThe following table shows our significant contractual obligations as of August 31, 2024:​​​​​​​​​​​​​​​​​​Total​Payment Due by Period​​Contractual​Less than​Between​Between​Over(in thousands)​Obligations 1 year 1‑3 years 3‑5 years 5 years​​​​​​​​​​​​​​​​Debt(1) $ 9,080,000​$ 1,480,000​$ 1,450,000​$ 2,000,000​$ 4,150,000Interest payments(2)​ 2,198,888​​ 375,625​​ 653,775​​ 527,550​​ 641,938Operating leases(3)​ 4,157,877​​ 391,901​​ 828,934​​ 719,996​​ 2,217,046Finance leases(3)​ 461,654​​ 116,999​​ 209,841​​ 92,389​​ 42,425Self-insurance reserves(4)​ 267,779​​ 82,976​​ 97,736​​ 42,585​​ 44,482Construction commitments​ 103,780​ 103,780​​ - ​​ - ​​ - Other(5)​​ 49,259​​ 49,259​​ - ​​ - ​​ - ​​$ 16,319,237​$ 2,600,540​$ 3,240,286​$ 3,382,520​$ 7,095,891​(1)Debt balances represent principal maturities, excluding interest, discounts, and debt issuance costs.(2)Represents obligations for interest payments on long-term debt.(3)Operating and finance lease obligations include related interest in accordance with ASU 2016-02, Leases (Topic 842).(4)Self-insurance reserves reflect estimates based on actuarial calculations and are presented net of insurance receivables. Although these obligations do not have scheduled maturities, the timing of future payments are predictable based upon historical patterns. Accordingly, we reflect the net present value of these obligations in our Consolidated Balance Sheets.(5)Represents commitments to make additional capital contributions to certain tax credit instruments upon achievement of project milestones.Our tax liability for uncertain tax positions, including interest and penalties, was $45.4 million at August 31, 2024. Approximately $23.1 million is classified as current liabilities and $22.3 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​Off-Balance Sheet ArrangementsThe following table reflects outstanding letters of credit and surety bonds as of August 31, 2024:​​​​​ Total ​​Other (in thousands)​Commitments​​​​Standby letters of credit​$ 143,393Surety bonds​​ 48,868​​$ 192,261​A substantial portion of the outstanding standby letters of credit (which are primarily renewed on an annual basis) and surety bonds are used to cover reimbursement obligations to our workers' compensation carriers.There are no additional contingent liabilities associated with these instruments as the underlying liabilities are already reflected in our Consolidated Balance Sheets. The standby letters of credit and surety bond arrangements expire within one year but have automatic renewal clauses. Financial Commitments The following table shows our significant contractual obligations as of August 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ --- ## Modified: Opinion on the Financial Statements **Key changes:** - Reworded sentence: "(the Company) as of August 31, 2024, and August 26, 2023, the related consolidated statements of income, comprehensive income, stockholders' deficit and cash flows for each of the three years in the period ended August 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements")." - Reworded sentence: "​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated October 28, 2024 expressed an unqualified opinion thereon." **Prior (2023):** We have audited the accompanying consolidated balance sheets of AutoZone, Inc. (the Company) as of August 26, 2023 and August 27, 2022, the related consolidated statements of income, comprehensive income, stockholders' deficit, and cash flows for each of the three years in the period ended August 26, 2023, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at August 26, 2023 and August 27, 2022, and the results of its operations and its cash flows for each of the three years in the period ended August 26, 2023, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 26, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated October 24, 2023, expressed an unqualified opinion thereon. ​ **Current (2024):** We have audited the accompanying consolidated balance sheets of AutoZone, Inc. (the Company) as of August 31, 2024, and August 26, 2023, the related consolidated statements of income, comprehensive income, stockholders' deficit and cash flows for each of the three years in the period ended August 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at August 31, 2024 and August 26, 2023, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2024, in conformity with U.S. generally accepted accounting principles. ​ We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of August 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated October 28, 2024 expressed an unqualified opinion thereon. ​ --- ## Modified: Information Technology, Cybersecurity and Data Privacy Risks **Key changes:** - Reworded sentence: "Any damage to, failure of, or interruption in these systems or our inability to realize the anticipated benefits associated with investments in new or upgraded systems could have a material adverse effect on our business and operating results." - Reworded sentence: "Although we seek to 18 18 Table of Contentseffectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful." - Reworded sentence: "While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results.​In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively acquiring and implementing new systems with new functionality." - Reworded sentence: "​While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving and increasing in frequency and sophistication, including through the use of evolving artificial intelligence tools to identify and exploit vulnerabilities." - Reworded sentence: "To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial 19 Table of Contents Table of Contents Table of Contents effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful." **Prior (2023):** ​ ‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems could have a material adverse impact on our business and operating results. ​ We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. ​ In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively 19 19 Table of Contentsacquiring new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations.​Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition.​Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving, increasing in frequency and sophistication, and can be difficult to anticipate or detect for long periods of time. The security measures we or our third-party service providers and vendors have in place today in an effort to keep up with growing and evolving risks do not always prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security.​The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial liability due to claims arising from customers, financial institutions, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation.​We are subject to a complex and evolving body of laws and regulations regarding data privacy and may face increased costs as a result of changes in, enforcement of, or the adoption of new laws and regulations. These costs may have a material adverse impact on our business and results of operations. ​The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws designed to provide new rights to consumers and, in some cases, employees. The potential effects of the various laws regulating the collection, processing, transfer and use of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing 20 Table of Contents Table of Contents Table of Contents acquiring new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations.​Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition.​Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving, increasing in frequency and sophistication, and can be difficult to anticipate or detect for long periods of time. The security measures we or our third-party service providers and vendors have in place today in an effort to keep up with growing and evolving risks do not always prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security.​The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial liability due to claims arising from customers, financial institutions, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation.​We are subject to a complex and evolving body of laws and regulations regarding data privacy and may face increased costs as a result of changes in, enforcement of, or the adoption of new laws and regulations. These costs may have a material adverse impact on our business and results of operations. ​The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws designed to provide new rights to consumers and, in some cases, employees. The potential effects of the various laws regulating the collection, processing, transfer and use of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing acquiring new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations. ​ **Current (2024):** ​ ‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems or our inability to realize the anticipated benefits associated with investments in new or upgraded systems could have a material adverse effect on our business and operating results. ​ We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to 18 18 Table of Contentseffectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results.​In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively acquiring and implementing new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations.​Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition.​Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving and increasing in frequency and sophistication, including through the use of evolving artificial intelligence tools to identify and exploit vulnerabilities. Attempts to gain unauthorized access can be difficult to anticipate or promptly detect. We cannot assure you that the security measures we or our third-party service providers and vendors have in place today will be successful in their efforts to prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security.​The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial 19 Table of Contents Table of Contents Table of Contents effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results.​In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively acquiring and implementing new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations.​Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition.​Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving and increasing in frequency and sophistication, including through the use of evolving artificial intelligence tools to identify and exploit vulnerabilities. Attempts to gain unauthorized access can be difficult to anticipate or promptly detect. We cannot assure you that the security measures we or our third-party service providers and vendors have in place today will be successful in their efforts to prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security.​The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results.​In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively acquiring and implementing new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations.​Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition.​Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving and increasing in frequency and sophistication, including through the use of evolving artificial intelligence tools to identify and exploit vulnerabilities. Attempts to gain unauthorized access can be difficult to anticipate or promptly detect. We cannot assure you that the security measures we or our third-party service providers and vendors have in place today will be successful in their efforts to prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security.​The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results. ​ In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively acquiring and implementing new systems with new functionality. These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, cost overruns, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs that could adversely affect our business operations and results of operations. ​ --- ## Modified: Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business. **Key changes:** - Reworded sentence: "Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader logistics or supply chain industry at large." - Reworded sentence: "and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which were further exacerbated by the COVID-19 pandemic and other factors beyond our control." - Added sentence: "​ In addition, we have made, and plan to continue to make, significant investments in our supply chain, such as the construction of multiple new distribution centers and the execution of various technology initiatives." - Added sentence: "These investments seek to improve product availability and assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals." - Added sentence: "If we fail to effectively implement these changes, or if our investments in our supply chain initiatives do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins." **Prior (2023):** ​ A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which have been further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors. ​ **Current (2024):** ​ A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader logistics or supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which were further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors. ​ In addition, we have made, and plan to continue to make, significant investments in our supply chain, such as the construction of multiple new distribution centers and the execution of various technology initiatives. These investments seek to improve product availability and assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively implement these changes, or if our investments in our supply chain initiatives do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins. ​ --- ## Modified: Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material adverse effect on our sales and our business. **Key changes:** - Reworded sentence: "17 17 Table of Contents​In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty." - Removed sentence: "18 18 Table of ContentsOur failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, employees, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability.​We believe our continued strong sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, employees, suppliers, vendors and other stakeholders." - Removed sentence: "The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW!" - Removed sentence: "Customer service, trustworthy advice, integrity and business ethics." - Removed sentence: "Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers' confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors." **Prior (2023):** ​ Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms. ​ In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​ It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations. 18 18 Table of ContentsOur failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, employees, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability.​We believe our continued strong sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, employees, suppliers, vendors and other stakeholders. The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics. Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers' confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors. Further, our actual or perceived response or lack of response to social, political, environmental or other sensitive issues, whether or not based in fact, could damage our reputation and may result in reduced demand for our merchandise. Customers are also increasingly using social media to provide feedback and information about our Company, our products and services in a manner that is rapidly and broadly disseminated. Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared and distributed in such a manner.​Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional resources to rebuild our reputation.​Information Technology, Cybersecurity and Data Privacy Risks​‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems could have a material adverse impact on our business and operating results.​We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results.​In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively 19 Table of Contents Table of Contents Table of Contents Our failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, employees, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability.​We believe our continued strong sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, employees, suppliers, vendors and other stakeholders. The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics. Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers' confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors. Further, our actual or perceived response or lack of response to social, political, environmental or other sensitive issues, whether or not based in fact, could damage our reputation and may result in reduced demand for our merchandise. Customers are also increasingly using social media to provide feedback and information about our Company, our products and services in a manner that is rapidly and broadly disseminated. Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared and distributed in such a manner.​Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional resources to rebuild our reputation.​Information Technology, Cybersecurity and Data Privacy Risks​‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems could have a material adverse impact on our business and operating results.​We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to effectively maintain and safeguard our systems and our data and we seek to ensure our third-party service providers effectively maintain and safeguard their systems and our data, such efforts are not always successful. As a result, we or our service providers have experienced and are likely to again experience one or more errors, interruptions, delays or cessations of service impacting the integrity or availability of our information technology infrastructure. While such incidents have not been material to date, any future incident could significantly disrupt our operations and key business processes, result in the impairment or loss of critical data, be costly and resource-intensive to remedy; harm our reputation and relationship with customers, AutoZoners, vendors and other stakeholders; and have a material adverse impact on our business and operating results.​In addition, our information technology systems, infrastructure and personnel require substantial investments, such as replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; or designing or cost-effectively **Current (2024):** ​ Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms. 17 17 Table of Contents​In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations.Our failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, AutoZoners, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability.​We believe our continued sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, AutoZoners, suppliers, vendors and other stakeholders. The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics. Negative incidents can erode trust and confidence quickly, and adverse publicity about us, whether or not based in fact, could damage our brand and reputation, undermine our customers' confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors. Further, our actual or perceived strategies, initiatives, responses or lack of response relating to social, political, environmental or other issues, whether or not based in fact, could damage our reputation, negatively impact our stock price or result in reduced demand for our merchandise. Customers are also increasingly using social media to provide feedback, criticism and other information about our Company, our products and our services in a manner that is rapidly and broadly disseminated. Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared and distributed in such a manner.​Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional resources to rebuild our reputation.​Information Technology, Cybersecurity and Data Privacy Risks​‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems or our inability to realize the anticipated benefits associated with investments in new or upgraded systems could have a material adverse effect on our business and operating results.​We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to 18 Table of Contents Table of Contents Table of Contents ​In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations.Our failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, AutoZoners, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability.​We believe our continued sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, AutoZoners, suppliers, vendors and other stakeholders. The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics. Negative incidents can erode trust and confidence quickly, and adverse publicity about us, whether or not based in fact, could damage our brand and reputation, undermine our customers' confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors. Further, our actual or perceived strategies, initiatives, responses or lack of response relating to social, political, environmental or other issues, whether or not based in fact, could damage our reputation, negatively impact our stock price or result in reduced demand for our merchandise. Customers are also increasingly using social media to provide feedback, criticism and other information about our Company, our products and our services in a manner that is rapidly and broadly disseminated. Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared and distributed in such a manner.​Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional resources to rebuild our reputation.​Information Technology, Cybersecurity and Data Privacy Risks​‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems or our inability to realize the anticipated benefits associated with investments in new or upgraded systems could have a material adverse effect on our business and operating results.​We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to ​In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations.Our failure to protect our brand and reputation could have an adverse effect on our relationships with our customers, AutoZoners, suppliers, vendors and other stakeholders, thereby negatively impacting sales and profitability.​We believe our continued sales growth is driven in significant part by our AutoZone and private label brand names and our positive reputation with customers, AutoZoners, suppliers, vendors and other stakeholders. The value in our brand names and reputation, and their continued effectiveness in driving our sales growth is dependent to a significant degree on our ability to maintain our reputation for safety, high product quality, friendliness, WOW! Customer service, trustworthy advice, integrity and business ethics. Negative incidents can erode trust and confidence quickly, and adverse publicity about us, whether or not based in fact, could damage our brand and reputation, undermine our customers' confidence in us, reduce demand for our products and services, affect our ability to recruit and retain employees, attract regulatory scrutiny, and impact our relationships with suppliers and vendors. Further, our actual or perceived strategies, initiatives, responses or lack of response relating to social, political, environmental or other issues, whether or not based in fact, could damage our reputation, negatively impact our stock price or result in reduced demand for our merchandise. Customers are also increasingly using social media to provide feedback, criticism and other information about our Company, our products and our services in a manner that is rapidly and broadly disseminated. Our brand and reputation could be negatively impacted if negative sentiment about the Company, whether or not based on fact, is shared and distributed in such a manner.​Failure to comply with ethical, social, product, labor, environmental and anti-corruption standards could also jeopardize our reputation and potentially lead to various adverse actions by consumer or environmental groups, employees or regulatory bodies. Damage to our reputation or loss of consumer confidence for any of these or other reasons could have a material adverse effect on our results of operations and financial condition, as well as require additional resources to rebuild our reputation.​Information Technology, Cybersecurity and Data Privacy Risks​‌We rely heavily on information technology systems for our key business processes. Any damage to, failure of, or interruption in these systems or our inability to realize the anticipated benefits associated with investments in new or upgraded systems could have a material adverse effect on our business and operating results.​We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit and protect key business processes, transactions and data, such as sales data, customer data, employee data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment and more. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could adversely impact their effectiveness or could expose us to security and other risks. Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons such as: power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, malicious cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks and ransomware, natural disasters and catastrophic events, inadequate or ineffective redundancy measures; and design or usage errors by AutoZoners, contractors or third-party service providers. Although we seek to ​ In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​ It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations. --- ## Modified: August 26, 2023 **Key changes:** - Reworded sentence: "(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 August 31, 2024, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $38.4 million, which are included within Other current assets and long-term marketable debt securities of $83.7 million, which are included within Other long-term assets." - Reworded sentence: "A discussion on how the Company's cash flow hedges are valued is included in "Note L - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note C - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment." - Reworded sentence: "At August 31, 2024, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition." - Reworded sentence: "A discussion of the carrying values and fair values of the Company's debt is included in "Note I - Financing." 57 57 Table of Contents​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss." - Reworded sentence: "The Company did not realize any material gains or losses on its marketable debt securities during fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 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 August 31, 2024 and August 26, 2023, respectively.58 Table of Contents Table of Contents Table of Contents ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss." **Prior (2023):** (in thousands) Level 1 Level 2 Level 3 Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other current assets ​ $ 49,659 ​ $ 109 ​ $ - ​ $ 49,768 Other long-term assets ​ 57,301 ​ 5,476 ​ - ​ 62,777 ​ ​ $ 106,960 ​ $ 5,585 ​ $ - ​ $ 112,545 ​ At August 26, 2023, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $39.6 million, which are included within Other current assets and long-term marketable debt securities of $81.9 million, which are included within 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 debt securities, including benchmark yields and reported trades. A discussion on how the Company's cash flow hedges are valued is included in "Note H - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note F - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment. These non-financial assets and liabilities could include assets and liabilities acquired in an acquisition as well as goodwill, intangible assets and property, plant and equipment that are determined to be impaired. At August 26, 2023, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition. 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 I - Financing." ​ ​ 66 66 Table of ContentsNote F - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​​​​​​​​​​​​​​​​August 27, 2022​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 15,293​$ 1​$ (298)​$ 14,996Government bonds​ 88,903​ - ​ (1,963)​ 86,940Mortgage-backed securities​ 4,600​ - ​ (243)​ 4,357Asset-backed securities and other​ 6,531​ - ​ (279)​ 6,252​​$ 115,327​$ 1​$ (2,783)​$ 112,545​The marketable debt securities held at August 26, 2023, had effective maturities ranging from less than one year to approximately three years. At August 26, 2023, the Company held 75 securities that are in an unrealized loss position of approximately $2.4 million. 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 fiscal 2023, 2022 or 2021.Included above in total marketable debt securities are $105.0 million and $91.1 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 26, 2023 and August 27, 2022, respectively.​​67 Table of Contents Table of Contents Table of Contents Note F - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​​​​​​​​​​​​​​​​August 27, 2022​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 15,293​$ 1​$ (298)​$ 14,996Government bonds​ 88,903​ - ​ (1,963)​ 86,940Mortgage-backed securities​ 4,600​ - ​ (243)​ 4,357Asset-backed securities and other​ 6,531​ - ​ (279)​ 6,252​​$ 115,327​$ 1​$ (2,783)​$ 112,545​The marketable debt securities held at August 26, 2023, had effective maturities ranging from less than one year to approximately three years. At August 26, 2023, the Company held 75 securities that are in an unrealized loss position of approximately $2.4 million. 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 fiscal 2023, 2022 or 2021.Included above in total marketable debt securities are $105.0 million and $91.1 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 August 26, 2023 and August 27, 2022, respectively.​​ **Current (2024):** (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 August 31, 2024, the fair value measurement amounts for assets and liabilities recorded in the accompanying Consolidated Balance Sheet consisted of short-term marketable debt securities of $38.4 million, which are included within Other current assets and long-term marketable debt securities of $83.7 million, which are included within 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 debt securities, including benchmark yields and reported trades. A discussion on how the Company's cash flow hedges are valued is included in "Note L - Derivative Financial Instruments," while the fair values of the marketable debt securities by asset class are described in "Note C - Marketable Debt Securities." Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis Certain non-financial assets and liabilities are required to be measured at fair value on a non-recurring basis in certain circumstances, including the event of impairment. These non-financial assets and liabilities could include assets and liabilities acquired in an acquisition as well as goodwill, intangible assets and property, plant and equipment that are determined to be impaired. At August 31, 2024, the Company did not have any other significant non-financial assets or liabilities that had been measured at fair value on a non-recurring basis subsequent to initial recognition. 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 I - Financing." 57 57 Table of Contents​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively.58 Table of Contents Table of Contents Table of Contents ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 million and $105.0 million of marketable debt securities transferred by the Company's insurance captive to a trust account to secure its obligations to an insurance company related to future workers' compensation and casualty losses as of August 31, 2024 and August 26, 2023, respectively. ​Note C - Marketable Debt SecuritiesThe Company's basis for determining the cost of a security sold is the "Specific Identification Model." Unrealized gains (losses) on marketable debt securities are recorded in Accumulated Other Comprehensive Loss. The Company's available-for-sale marketable debt securities consisted of the following:​​​​​​​​​​​​​​​August 31, 2024​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 32,355​$ 183​$ (78)​$ 32,460Government bonds​ 50,251​ 483​ (493)​ 50,241Mortgage-backed securities​ 22,859​ 326​ (95)​ 23,090Asset-backed securities and other​ 16,327​ 66​ (26)​ 16,367​​$ 121,792​$ 1,058​$ (692)​$ 122,158​​​​​​​​​​​​​​​​August 26, 2023​ Amortized Gross Gross ​​​Cost​Unrealized​Unrealized​Fair(in thousands)​Basis​Gains​Losses​Value​​​​​​​​​​​​​Corporate debt securities​$ 31,683​$ 17​$ (504)​$ 31,196Government bonds​ 63,747​ - ​ (1,440)​ 62,307Mortgage-backed securities​ 3,215​ - ​ (213)​ 3,002Asset-backed securities and other​ 25,242​ - ​ (234)​ 25,008​​$ 123,887​$ 17​$ (2,391)​$ 121,513​The marketable debt securities held at August 31, 2024, had effective maturities ranging from less than one year to approximately twenty-nine years. At August 31, 2024, the Company held 45 securities that are in an unrealized loss position of approximately $0.7 million. 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 fiscal 2024, 2023 or 2022.Included above in total marketable debt securities are $111.5 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 August 31, 2024 and August 26, 2023, respectively. ​ --- ## Modified: Critical Accounting Policies and Estimates **Key changes:** - Reworded sentence: "Our senior management has identified self-insurance reserves as a critical accounting estimate that is materially impacted by assumptions and has discussed this policy with the Audit Committee of our Board." - Reworded sentence: "In recent history, our methods for determining our exposure have remained consistent, and our historical trends have been appropriately factored into our reserve estimates." - Reworded sentence: "A 10% change in our self-insurance liability would have affected net income by approximately $18.8 million for fiscal 2024." - Reworded sentence: "If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.2 million for fiscal 2024." - Reworded sentence: "To date, no derivative instruments have been utilized to reduce foreign exchange rate risk." **Prior (2023):** Preparation of our Consolidated Financial Statements requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements, reported amounts of revenues and expenses during the reporting period and related disclosures of contingent liabilities. In the Notes to our Consolidated Financial Statements, we describe our significant accounting policies used in preparing the Consolidated Financial Statements. Our policies are evaluated on an ongoing basis and are drawn from historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results could differ under different assumptions or conditions. Our senior management has identified self-insurance reserves as a critical accounting estimate that is materially impacted by assumptions while income taxes and valuation allowances have been identified as critical accounting policies. These policies have been discussed with the Audit Committee of our Board. The following items in our Consolidated Financial Statements represent our critical accounting policies and estimates by management: Self-Insurance Reserves We retain a significant portion of the risks associated with workers' compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks. Our self-insurance reserve estimates totaled $268.8 million at August 26, 2023, and $264.3 million at August 27, 2022. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable. The assumptions made by management in estimating our self-insurance reserves include consideration of historical cost experience, judgments about the present and expected levels of cost per claim and retention levels. We utilize various methods, including analyses of historical trends and use of a specialist, to estimate the cost to settle reported claims and claims incurred but not yet reported. The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. In recent history, our methods for determining our exposure have remained 39 39 Table of Contentsconsistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $19.3 million for fiscal 2023. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date.If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.1 million for fiscal 2023. Income TaxesOur income tax returns are audited by state, federal and foreign tax authorities, and we are typically engaged in various tax examinations at any given time. Tax contingencies often arise due to uncertainty or differing interpretations of the application of tax rules throughout the various jurisdictions in which we operate. The contingencies are influenced by items such as tax audits, changes in tax laws, litigation, appeals and prior experience with similar tax positions.We regularly review our tax reserves for these items and assess the adequacy of the amount we have recorded. As of August 26, 2023, we had approximately $51.0 million reserved for uncertain tax positions.We evaluate exposures associated with our various tax filings by estimating a liability for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.We believe our estimates to be reasonable and have not experienced material adjustments to our reserves in the previous three years; however, actual results could differ from our estimates, and we may be exposed to gains or losses. Specifically, management has used judgment and made assumptions to estimate the likely outcome of uncertain tax positions. Additionally, to the extent we prevail in matters for which a liability has been established, or must pay in excess of recognized reserves, our effective tax rate in any particular period could be affected.Vendor AllowancesWe receive various payments and allowances from our vendors through a variety of programs and arrangements, including allowances for warranties, advertising and general promotion of vendor products. Vendor allowances are treated as a reduction of the cost of inventory, unless they are provided as a reimbursement of specific, incremental, identifiable costs incurred by the Company in selling the vendor's products. Approximately 88% of the vendor funds received during fiscal 2023 were recorded as a reduction of the cost of inventories and recognized as a reduction to cost of sales as these inventories are sold.Based on our vendor agreements, a significant portion of vendor funding we receive is earned as we purchase inventory. Therefore, we record receivables for funding earned but not yet received as we purchase inventory. During the year, we regularly review the receivables from vendors to ensure vendors are able to meet their 40 Table of Contents Table of Contents Table of Contents consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $19.3 million for fiscal 2023. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date.If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.1 million for fiscal 2023. Income TaxesOur income tax returns are audited by state, federal and foreign tax authorities, and we are typically engaged in various tax examinations at any given time. Tax contingencies often arise due to uncertainty or differing interpretations of the application of tax rules throughout the various jurisdictions in which we operate. The contingencies are influenced by items such as tax audits, changes in tax laws, litigation, appeals and prior experience with similar tax positions.We regularly review our tax reserves for these items and assess the adequacy of the amount we have recorded. As of August 26, 2023, we had approximately $51.0 million reserved for uncertain tax positions.We evaluate exposures associated with our various tax filings by estimating a liability for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.We believe our estimates to be reasonable and have not experienced material adjustments to our reserves in the previous three years; however, actual results could differ from our estimates, and we may be exposed to gains or losses. Specifically, management has used judgment and made assumptions to estimate the likely outcome of uncertain tax positions. Additionally, to the extent we prevail in matters for which a liability has been established, or must pay in excess of recognized reserves, our effective tax rate in any particular period could be affected.Vendor AllowancesWe receive various payments and allowances from our vendors through a variety of programs and arrangements, including allowances for warranties, advertising and general promotion of vendor products. Vendor allowances are treated as a reduction of the cost of inventory, unless they are provided as a reimbursement of specific, incremental, identifiable costs incurred by the Company in selling the vendor's products. Approximately 88% of the vendor funds received during fiscal 2023 were recorded as a reduction of the cost of inventories and recognized as a reduction to cost of sales as these inventories are sold.Based on our vendor agreements, a significant portion of vendor funding we receive is earned as we purchase inventory. Therefore, we record receivables for funding earned but not yet received as we purchase inventory. During the year, we regularly review the receivables from vendors to ensure vendors are able to meet their consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly. Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $19.3 million for fiscal 2023. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date. If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.1 million for fiscal 2023. Income Taxes Our income tax returns are audited by state, federal and foreign tax authorities, and we are typically engaged in various tax examinations at any given time. Tax contingencies often arise due to uncertainty or differing interpretations of the application of tax rules throughout the various jurisdictions in which we operate. The contingencies are influenced by items such as tax audits, changes in tax laws, litigation, appeals and prior experience with similar tax positions. We regularly review our tax reserves for these items and assess the adequacy of the amount we have recorded. As of August 26, 2023, we had approximately $51.0 million reserved for uncertain tax positions. We evaluate exposures associated with our various tax filings by estimating a liability for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. We believe our estimates to be reasonable and have not experienced material adjustments to our reserves in the previous three years; however, actual results could differ from our estimates, and we may be exposed to gains or losses. Specifically, management has used judgment and made assumptions to estimate the likely outcome of uncertain tax positions. Additionally, to the extent we prevail in matters for which a liability has been established, or must pay in excess of recognized reserves, our effective tax rate in any particular period could be affected. Vendor Allowances We receive various payments and allowances from our vendors through a variety of programs and arrangements, including allowances for warranties, advertising and general promotion of vendor products. Vendor allowances are treated as a reduction of the cost of inventory, unless they are provided as a reimbursement of specific, incremental, identifiable costs incurred by the Company in selling the vendor's products. Approximately 88% of the vendor funds received during fiscal 2023 were recorded as a reduction of the cost of inventories and recognized as a reduction to cost of sales as these inventories are sold. Based on our vendor agreements, a significant portion of vendor funding we receive is earned as we purchase inventory. Therefore, we record receivables for funding earned but not yet received as we purchase inventory. During the year, we regularly review the receivables from vendors to ensure vendors are able to meet their 40 40 Table of Contentsobligations. We generally have not recorded a reserve against these receivables as we have not experienced significant losses and typically have a legal right of offset with our vendors for payments owed them. We have had write-offs less than $1 million in each of the last three years.Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, based upon our current level of foreign operations, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes.Interest Rate RiskOur financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps.We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 26, 2023 and August 27, 2022, no such interest rate swaps were outstanding. Unrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings.The fair value of our debt was estimated at $7.3 billion as of August 26, 2023, and $5.9 billion as of August 27, 2022, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is less than the carrying value of debt by $406.6 million and $182.8 million at August 26, 2023 and August 27, 2022, respectively, which reflects its face amount, adjusted for any unamortized debt issuance costs and discounts. We had $1.2 billion in variable rate debt outstanding at August 26, 2023 and $603.4 million in August 27, 2022. We had outstanding fixed rate debt of $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023, and $5.5 billion, net of unamortized debt issuance costs of $31.3 million, at August 27, 2022. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $264.7 million at August 26, 2023.Foreign Currency RiskForeign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material.We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $409.8 million at August 26, 2023 and $270.2 million at August 27, 2022. The year-end exchange rates with respect to the Mexican peso increased by 15.7% with respect to the U.S. dollar during fiscal 2023 and decreased by less than 1.0% with respect to the U.S. dollar during fiscal 2022. The potential loss in value 41 Table of Contents Table of Contents Table of Contents obligations. We generally have not recorded a reserve against these receivables as we have not experienced significant losses and typically have a legal right of offset with our vendors for payments owed them. We have had write-offs less than $1 million in each of the last three years.Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, based upon our current level of foreign operations, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes.Interest Rate RiskOur financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps.We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 26, 2023 and August 27, 2022, no such interest rate swaps were outstanding. Unrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings.The fair value of our debt was estimated at $7.3 billion as of August 26, 2023, and $5.9 billion as of August 27, 2022, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is less than the carrying value of debt by $406.6 million and $182.8 million at August 26, 2023 and August 27, 2022, respectively, which reflects its face amount, adjusted for any unamortized debt issuance costs and discounts. We had $1.2 billion in variable rate debt outstanding at August 26, 2023 and $603.4 million in August 27, 2022. We had outstanding fixed rate debt of $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023, and $5.5 billion, net of unamortized debt issuance costs of $31.3 million, at August 27, 2022. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $264.7 million at August 26, 2023.Foreign Currency RiskForeign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material.We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $409.8 million at August 26, 2023 and $270.2 million at August 27, 2022. The year-end exchange rates with respect to the Mexican peso increased by 15.7% with respect to the U.S. dollar during fiscal 2023 and decreased by less than 1.0% with respect to the U.S. dollar during fiscal 2022. The potential loss in value obligations. We generally have not recorded a reserve against these receivables as we have not experienced significant losses and typically have a legal right of offset with our vendors for payments owed them. We have had write-offs less than $1 million in each of the last three years. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, based upon our current level of foreign operations, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes. Interest Rate Risk Our financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps. We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 26, 2023 and August 27, 2022, no such interest rate swaps were outstanding. Unrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings. The fair value of our debt was estimated at $7.3 billion as of August 26, 2023, and $5.9 billion as of August 27, 2022, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is less than the carrying value of debt by $406.6 million and $182.8 million at August 26, 2023 and August 27, 2022, respectively, which reflects its face amount, adjusted for any unamortized debt issuance costs and discounts. We had $1.2 billion in variable rate debt outstanding at August 26, 2023 and $603.4 million in August 27, 2022. We had outstanding fixed rate debt of $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023, and $5.5 billion, net of unamortized debt issuance costs of $31.3 million, at August 27, 2022. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $264.7 million at August 26, 2023. Foreign Currency Risk Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material. We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $409.8 million at August 26, 2023 and $270.2 million at August 27, 2022. The year-end exchange rates with respect to the Mexican peso increased by 15.7% with respect to the U.S. dollar during fiscal 2023 and decreased by less than 1.0% with respect to the U.S. dollar during fiscal 2022. The potential loss in value 41 41 Table of Contentsof our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 26, 2023 and August 27, 2022, would have been approximately $37.3 million and approximately $24.6 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations.​42 Table of Contents Table of Contents Table of Contents of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 26, 2023 and August 27, 2022, would have been approximately $37.3 million and approximately $24.6 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations.​ of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 26, 2023 and August 27, 2022, would have been approximately $37.3 million and approximately $24.6 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations. ​ 42 42 Table of ContentsItem 8. Financial Statements and Supplementary DataIndexManagement's Report on Internal Control Over Financial Reporting44Reports of Independent Registered Public Accounting Firm45Consolidated Statements of Income48Consolidated Statements of Comprehensive Income48Consolidated Balance Sheets49Consolidated Statements of Cash Flows50Consolidated Statements of Stockholders' Deficit51Notes to Consolidated Financial Statements52​​​43 Table of Contents Table of Contents Table of Contents Item 8. Financial Statements and Supplementary DataIndexManagement's Report on Internal Control Over Financial Reporting44Reports of Independent Registered Public Accounting Firm45Consolidated Statements of Income48Consolidated Statements of Comprehensive Income48Consolidated Balance Sheets49Consolidated Statements of Cash Flows50Consolidated Statements of Stockholders' Deficit51Notes to Consolidated Financial Statements52​​​ Item 8. Financial Statements and Supplementary Data Index Management's Report on Internal Control Over Financial Reporting Management's Report on Internal Control Over Financial Reporting 44 Reports of Independent Registered Public Accounting Firm Reports of Independent Registered Public Accounting Firm 45 Consolidated Statements of Income Consolidated Statements of Income 48 Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income 48 Consolidated Balance Sheets Consolidated Balance Sheets 49 Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows 50 Consolidated Statements of Stockholders' Deficit Consolidated Statements of Stockholders' Deficit 51 Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements 52 ​ ​ ​ 43 43 Table of Contents​Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and properly trained staff. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting, including regular testing performed by the Company's internal audit team. Actions are taken to correct deficiencies as they are identified. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and a staff of highly qualified financial and legal professionals.Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of August 26, 2023, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework.Based on this assessment, management has concluded that our internal control over financial reporting was effective as of August 26, 2023.Our independent registered public accounting firm, Ernst & Young LLP (PCAOB ID: 42), audited the effectiveness of our internal control over financial reporting. Ernst & Young LLP's attestation report on the Company's internal control over financial reporting as of August 26, 2023 is included in this Annual Report on Form 10-K.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​44 Table of Contents Table of Contents Table of Contents ​Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and properly trained staff. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting, including regular testing performed by the Company's internal audit team. Actions are taken to correct deficiencies as they are identified. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and a staff of highly qualified financial and legal professionals.Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of August 26, 2023, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework.Based on this assessment, management has concluded that our internal control over financial reporting was effective as of August 26, 2023.Our independent registered public accounting firm, Ernst & Young LLP (PCAOB ID: 42), audited the effectiveness of our internal control over financial reporting. Ernst & Young LLP's attestation report on the Company's internal control over financial reporting as of August 26, 2023 is included in this Annual Report on Form 10-K.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​ **Current (2024):** Preparation of our Consolidated Financial Statements requires us to make estimates and assumptions affecting the reported amounts of assets and liabilities at the date of the financial statements, reported amounts of revenues and expenses during the reporting period and related disclosures of contingent liabilities. In the Notes to our Consolidated Financial Statements, we describe our significant accounting policies used in preparing the Consolidated Financial Statements. Our policies are evaluated on an ongoing basis and are drawn from historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results could differ under different assumptions or conditions. Our senior management has identified self-insurance reserves as a critical accounting estimate that is materially impacted by assumptions and has discussed this policy with the Audit Committee of our Board. 38 38 Table of ContentsSelf-Insurance ReservesWe retain a significant portion of the risks associated with workers' compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks. Our self-insurance reserve estimates totaled $257.7 million at August 31, 2024, and $268.8 million at August 26, 2023. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable.The assumptions made by management in estimating our self-insurance reserves include consideration of historical cost experience, judgments about the present and expected levels of cost per claim and retention levels. We utilize various methods, including analyses of historical trends and use of a specialist, to estimate the cost to settle reported claims and claims incurred but not yet reported. The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. In recent history, our methods for determining our exposure have remained consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $18.8 million for fiscal 2024. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date.If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.2 million for fiscal 2024. Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes.Interest Rate RiskOur financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps.We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 31, 2024 and August 26, 2023, no such interest rate swaps were outstanding. 39 Table of Contents Table of Contents Table of Contents Self-Insurance ReservesWe retain a significant portion of the risks associated with workers' compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks. Our self-insurance reserve estimates totaled $257.7 million at August 31, 2024, and $268.8 million at August 26, 2023. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable.The assumptions made by management in estimating our self-insurance reserves include consideration of historical cost experience, judgments about the present and expected levels of cost per claim and retention levels. We utilize various methods, including analyses of historical trends and use of a specialist, to estimate the cost to settle reported claims and claims incurred but not yet reported. The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. In recent history, our methods for determining our exposure have remained consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $18.8 million for fiscal 2024. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date.If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.2 million for fiscal 2024. Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes.Interest Rate RiskOur financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps.We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 31, 2024 and August 26, 2023, no such interest rate swaps were outstanding. Self-Insurance ReservesWe retain a significant portion of the risks associated with workers' compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks. Our self-insurance reserve estimates totaled $257.7 million at August 31, 2024, and $268.8 million at August 26, 2023. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable.The assumptions made by management in estimating our self-insurance reserves include consideration of historical cost experience, judgments about the present and expected levels of cost per claim and retention levels. We utilize various methods, including analyses of historical trends and use of a specialist, to estimate the cost to settle reported claims and claims incurred but not yet reported. The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. In recent history, our methods for determining our exposure have remained consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly.Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $18.8 million for fiscal 2024. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date.If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.2 million for fiscal 2024. Item 7A. Quantitative and Qualitative Disclosures about Market RiskWe are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes.Interest Rate RiskOur financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps.We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 31, 2024 and August 26, 2023, no such interest rate swaps were outstanding. Self-Insurance Reserves We retain a significant portion of the risks associated with workers' compensation, general, product liability, property and vehicle liability; and we obtain third party insurance to limit the exposure related to certain of these risks. Our self-insurance reserve estimates totaled $257.7 million at August 31, 2024, and $268.8 million at August 26, 2023. Where estimates are possible, losses covered by insurance are recognized on a gross basis with a corresponding insurance receivable. The assumptions made by management in estimating our self-insurance reserves include consideration of historical cost experience, judgments about the present and expected levels of cost per claim and retention levels. We utilize various methods, including analyses of historical trends and use of a specialist, to estimate the cost to settle reported claims and claims incurred but not yet reported. The actuarial methods develop estimates of the future ultimate claim costs based on the claims incurred as of the balance sheet date. When estimating these liabilities, we consider factors, such as the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. In recent history, our methods for determining our exposure have remained consistent, and our historical trends have been appropriately factored into our reserve estimates. As we obtain additional information and refine our methods regarding the assumptions and estimates we use to recognize liabilities incurred, we will adjust our reserves accordingly. Management believes that the various assumptions developed and actuarial methods used to determine our self- insurance reserves are reasonable and provide meaningful data and information that management uses to make its best estimate of our exposure to these risks. Arriving at these estimates, however, requires a significant amount of subjective judgment by management, and as a result these estimates are uncertain and our actual exposure may be different from our estimates. For example, changes in our assumptions about healthcare costs, the severity of accidents and the incidence of illness, the average size of claims and other factors could cause actual claim costs to vary from our assumptions and estimates, causing our reserves to be overstated or understated. A 10% change in our self-insurance liability would have affected net income by approximately $18.8 million for fiscal 2024. Our liabilities for workers' compensation, general and product liability, property and vehicle claims do not have scheduled maturities; however, the timing of future payments is predictable based on historical patterns and is relied upon in determining the current portion of these liabilities. Accordingly, we reflect the net present value of the obligations we determine to be long-term using the risk-free interest rate as of the balance sheet date. If the discount rate used to calculate the present value of these reserves changed by 25 basis points, net income would have been affected by approximately $1.2 million for fiscal 2024. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risk from, among other things, changes in interest rates, foreign exchange rates and fuel prices. From time to time, we use various derivative instruments to reduce interest rate and fuel price risks. To date, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of our hedging activities are governed by guidelines that are authorized by the Board. Further, we do not buy or sell derivative instruments for trading purposes. Interest Rate Risk Our financial market risk results primarily from changes in interest rates. At times, we reduce our exposure to changes in interest rates by entering into various interest rate hedge instruments such as interest rate swap contracts, treasury lock agreements and forward-starting interest rate swaps. We have historically utilized interest rate swaps to convert variable rate debt to fixed rate debt and to lock in fixed rates on future debt issuances. We reflect the current fair value of all interest rate hedge instruments as a component of either other current assets or accrued expenses and other. Our interest rate hedge instruments are designated as cash flow hedges. As of August 31, 2024 and August 26, 2023, no such interest rate swaps were outstanding. 39 39 Table of ContentsUnrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings.The fair value of our debt was estimated at $9.0 billion as of August 31, 2024, and $7.3 billion as of August 26, 2023, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is greater than the carrying value of debt by $3.5 million and less than the carrying value of debt by $406.6 million at August 31, 2024 and August 26, 2023, respectively. This amount reflects face amount, adjusted for any unamortized debt issuance costs and discounts.We had $580.0 million in variable rate debt outstanding at August 31, 2024 and $1.2 billion in August 26, 2023. We had outstanding fixed rate debt of $8.4 billion, net of unamortized debt issuance costs of $55.6 million, at August 31, 2024, and $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $365.1 million at August 31, 2024.Foreign Currency RiskForeign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material.We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $478.4 million at August 31, 2024 and $409.8 million at August 26, 2023. The year-end exchange rates with respect to the Mexican peso decreased by 17.9% with respect to the U.S. dollar during fiscal 2024 and increased by 15.7% with respect to the U.S. dollar during fiscal 2023. The potential loss in value of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 31, 2024 and August 26, 2023, would have been approximately $43.5 million and approximately $37.3 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations.​40 Table of Contents Table of Contents Table of Contents Unrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings.The fair value of our debt was estimated at $9.0 billion as of August 31, 2024, and $7.3 billion as of August 26, 2023, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is greater than the carrying value of debt by $3.5 million and less than the carrying value of debt by $406.6 million at August 31, 2024 and August 26, 2023, respectively. This amount reflects face amount, adjusted for any unamortized debt issuance costs and discounts.We had $580.0 million in variable rate debt outstanding at August 31, 2024 and $1.2 billion in August 26, 2023. We had outstanding fixed rate debt of $8.4 billion, net of unamortized debt issuance costs of $55.6 million, at August 31, 2024, and $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $365.1 million at August 31, 2024.Foreign Currency RiskForeign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material.We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $478.4 million at August 31, 2024 and $409.8 million at August 26, 2023. The year-end exchange rates with respect to the Mexican peso decreased by 17.9% with respect to the U.S. dollar during fiscal 2024 and increased by 15.7% with respect to the U.S. dollar during fiscal 2023. The potential loss in value of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 31, 2024 and August 26, 2023, would have been approximately $43.5 million and approximately $37.3 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations.​ Unrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings.The fair value of our debt was estimated at $9.0 billion as of August 31, 2024, and $7.3 billion as of August 26, 2023, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is greater than the carrying value of debt by $3.5 million and less than the carrying value of debt by $406.6 million at August 31, 2024 and August 26, 2023, respectively. This amount reflects face amount, adjusted for any unamortized debt issuance costs and discounts.We had $580.0 million in variable rate debt outstanding at August 31, 2024 and $1.2 billion in August 26, 2023. We had outstanding fixed rate debt of $8.4 billion, net of unamortized debt issuance costs of $55.6 million, at August 31, 2024, and $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $365.1 million at August 31, 2024.Foreign Currency RiskForeign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material.We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $478.4 million at August 31, 2024 and $409.8 million at August 26, 2023. The year-end exchange rates with respect to the Mexican peso decreased by 17.9% with respect to the U.S. dollar during fiscal 2024 and increased by 15.7% with respect to the U.S. dollar during fiscal 2023. The potential loss in value of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 31, 2024 and August 26, 2023, would have been approximately $43.5 million and approximately $37.3 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations.​ Unrealized gains and losses on interest rate hedges are deferred in stockholders' deficit as a component of Accumulated Other Comprehensive Loss. These deferred gains and losses are recognized in income as a decrease or increase to interest expense in the period in which the related cash flows being hedged are recognized in expense. However, to the extent that the change in value of an interest rate hedge instrument does not perfectly offset the change in the value of the cash flow being hedged, that ineffective portion is immediately recognized in earnings. The fair value of our debt was estimated at $9.0 billion as of August 31, 2024, and $7.3 billion as of August 26, 2023, based on the quoted market prices for the same or similar debt issues or on the current rates available to us for debt having the same remaining maturities. Such fair value is greater than the carrying value of debt by $3.5 million and less than the carrying value of debt by $406.6 million at August 31, 2024 and August 26, 2023, respectively. This amount reflects face amount, adjusted for any unamortized debt issuance costs and discounts. We had $580.0 million in variable rate debt outstanding at August 31, 2024 and $1.2 billion in August 26, 2023. We had outstanding fixed rate debt of $8.4 billion, net of unamortized debt issuance costs of $55.6 million, at August 31, 2024, and $6.5 billion, net of unamortized debt issuance costs of $41.1 million, at August 26, 2023. A one percentage point increase in interest rates would have reduced the fair value of our fixed rate debt by approximately $365.1 million at August 31, 2024. Foreign Currency Risk Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities' functional currencies. To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. We are exposed to Brazilian reals, Canadian dollars, euros, Chinese yuan renminbi and British pounds, but our primary foreign currency exposure arises from Mexican peso-denominated revenues and profits and their translation into U.S. dollars. Foreign currency exposures arising from transactions denominated in currencies other than the functional currency are not material. We view our investments in Mexican subsidiaries as long-term. As a result, we generally do not hedge these net investments. The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $478.4 million at August 31, 2024 and $409.8 million at August 26, 2023. The year-end exchange rates with respect to the Mexican peso decreased by 17.9% with respect to the U.S. dollar during fiscal 2024 and increased by 15.7% with respect to the U.S. dollar during fiscal 2023. The potential loss in value of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in quoted foreign currency exchange rates at August 31, 2024 and August 26, 2023, would have been approximately $43.5 million and approximately $37.3 million, respectively. Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the foreign currency translation component of Accumulated Other Comprehensive Loss, unless the Mexican subsidiaries are sold or otherwise disposed. A hypothetical 10 percent adverse change in average exchange rates would not have a material impact on our results of operations. ​ 40 40 Table of ContentsItem 8. Financial Statements and Supplementary DataIndexManagement's Report on Internal Control Over Financial Reporting42Reports of Independent Registered Public Accounting Firm43Consolidated Statements of Income46Consolidated Statements of Comprehensive Income46Consolidated Balance Sheets47Consolidated Statements of Cash Flows48Consolidated Statements of Stockholders' Deficit49Notes to Consolidated Financial Statements50​​​41 Table of Contents Table of Contents Table of Contents Item 8. Financial Statements and Supplementary DataIndexManagement's Report on Internal Control Over Financial Reporting42Reports of Independent Registered Public Accounting Firm43Consolidated Statements of Income46Consolidated Statements of Comprehensive Income46Consolidated Balance Sheets47Consolidated Statements of Cash Flows48Consolidated Statements of Stockholders' Deficit49Notes to Consolidated Financial Statements50​​​ Item 8. Financial Statements and Supplementary DataIndexManagement's Report on Internal Control Over Financial Reporting42Reports of Independent Registered Public Accounting Firm43Consolidated Statements of Income46Consolidated Statements of Comprehensive Income46Consolidated Balance Sheets47Consolidated Statements of Cash Flows48Consolidated Statements of Stockholders' Deficit49Notes to Consolidated Financial Statements50​​​ Item 8. Financial Statements and Supplementary Data Index Management's Report on Internal Control Over Financial Reporting Management's Report on Internal Control Over Financial Reporting 42 Reports of Independent Registered Public Accounting Firm Reports of Independent Registered Public Accounting Firm 43 Consolidated Statements of Income Consolidated Statements of Income 46 Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income 46 Consolidated Balance Sheets Consolidated Balance Sheets 47 Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows 48 Consolidated Statements of Stockholders' Deficit Consolidated Statements of Stockholders' Deficit 49 Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements 50 ​ ​ ​ 41 41 Table of Contents​Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and properly trained staff. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting, including regular testing performed by the Company's internal audit team. Actions are taken to correct deficiencies as they are identified. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and a staff of highly qualified financial and legal professionals.Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of August 31, 2024, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework.Based on this assessment, management has concluded that our internal control over financial reporting was effective as of August 31, 2024.Our independent registered public accounting firm, Ernst & Young LLP (PCAOB ID: 42), audited the effectiveness of our internal control over financial reporting. Ernst & Young LLP's attestation report on the Company's internal control over financial reporting as of August 31, 2024 is included in this Annual Report on Form 10-K.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​42 Table of Contents Table of Contents Table of Contents ​Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and properly trained staff. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting, including regular testing performed by the Company's internal audit team. Actions are taken to correct deficiencies as they are identified. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and a staff of highly qualified financial and legal professionals.Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of August 31, 2024, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework.Based on this assessment, management has concluded that our internal control over financial reporting was effective as of August 31, 2024.Our independent registered public accounting firm, Ernst & Young LLP (PCAOB ID: 42), audited the effectiveness of our internal control over financial reporting. Ernst & Young LLP's attestation report on the Company's internal control over financial reporting as of August 31, 2024 is included in this Annual Report on Form 10-K.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended). Our internal control over financial reporting includes, among other things, defined policies and procedures for conducting and governing our business, sophisticated information systems for processing transactions and properly trained staff. Mechanisms are in place to monitor the effectiveness of our internal control over financial reporting, including regular testing performed by the Company's internal audit team. Actions are taken to correct deficiencies as they are identified. Our procedures for financial reporting include the active involvement of senior management, our Audit Committee and a staff of highly qualified financial and legal professionals.Management, with the participation of our principal executive and financial officers, assessed our internal control over financial reporting as of August 31, 2024, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework.Based on this assessment, management has concluded that our internal control over financial reporting was effective as of August 31, 2024.Our independent registered public accounting firm, Ernst & Young LLP (PCAOB ID: 42), audited the effectiveness of our internal control over financial reporting. Ernst & Young LLP's attestation report on the Company's internal control over financial reporting as of August 31, 2024 is included in this Annual Report on Form 10-K.​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​ --- ## Modified: Selected Operating Data **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ Number of stores at beginning of year ​ 7,140 ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ New stores ​ 217 ​ 198 ​ 177 ​ 219 ​ 138 ​ Closed stores ​ 4 ​ 1 ​ 1 ​ 1 ​ - ​ Net new stores ​ 213 ​ 197 ​ 176 ​ 218 ​ 138 ​ Relocated stores ​ 6 ​ 12 ​ 13 ​ 12 ​ 5 ​ Number of stores at end of year ​ 7,353 ​ 7,140 ​ 6,943 ​ 6,767 ​ 6,549 ​ AutoZone domestic commercial programs ​ 5,898 ​ 5,682 ​ 5,342 ​ 5,179 ​ 5,007 ​ Total Company Store Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory per store (in thousands) ​ $ 837 ​ $ 807 ​ $ 812 ​ $ 686 ​ $ 683 ​ Total AutoZone store square footage (in thousands) ​ 49,417 ​ 47,899 ​ 46,435 ​ 45,057 ​ 43,502 ​ Average square footage per AutoZone store ​ 6,721 ​ 6,709 ​ 6,688 ​ 6,658 ​ 6,643 ​ Increase in AutoZone store square footage ​ 3.2 % 3.2 % 3.1 % 3.6 % 2.3 % Average net sales per AutoZone store (in thousands) ​ $ 2,505 ​ $ 2,435 ​ $ 2,329 ​ $ 2,160 ​ $ 1,914 ​ Net sales per AutoZone store average square foot ​ $ 373 ​ $ 363 ​ $ 349 ​ $ 325 ​ $ 288 ​ Total employees at end of year (in thousands) ​ 126 ​ 119 ​ 112 ​ 105 ​ 100 ​ Inventory turnover(6) ​ 1.5x ​ 1.5x ​ 1.5x ​ 1.5x ​ 1.3x ​ Accounts payable to inventory ratio ​ 119.5 % 124.9 % 129.5 % 129.6 % 115.3 % After-tax return on invested capital(7) ​ 49.7 % 55.4 % 52.9 % 41.0 % 35.7 % Adjusted debt to EBITDAR(8) ​ 2.5 ​ 2.3 ​ 2.1 ​ 2.0 ​ 2.4 ​ Net cash provided by operating activities (in thousands)(3) ​ $ 3,004,116 ​ $ 2,940,788 ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ Cash flow before share repurchases and changes in debt (in thousands)(9) ​ $ 1,791,635 ​ $ 2,156,026 ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ Share repurchases (in thousands)(5)(10) ​ $ 3,170,320 ​ $ 3,723,289 ​ $ 4,359,991 ​ $ 3,378,321 ​ $ 930,903 ​ Number of shares repurchased (in thousands)(5) ​ 1,149 ​ 1,524 ​ 2,220 ​ 2,592 ​ 826 ​ 28 28 Table of Contents(1) The fiscal year ended August 31, 2024 consisted of 53 weeks.(2) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.(3) Fiscal 2024, 2023, 2022, 2021 and 2020 include excess tax benefits from stock option exercises of $81.4 million, $92.2 million, $63.2 million, $56.4 million, and $20.9 million, respectively.(4) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year." - Reworded sentence: "(5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases)." - Reworded sentence: "(5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases)." - Reworded sentence: "(5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases)." **Prior (2023):** ​ ​ ​ ​ ​ ​ Number of stores at beginning of year ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ 6,202 ​ New stores ​ 198 ​ 177 ​ 219 ​ 138 ​ 209 ​ Closed stores ​ 1 ​ 1 ​ 1 ​ - ​ - ​ Net new stores ​ 197 ​ 176 ​ 218 ​ 138 ​ 209 ​ Relocated stores ​ 12 ​ 13 ​ 12 ​ 5 ​ 2 ​ Number of stores at end of year ​ 7,140 ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ AutoZone domestic commercial programs ​ 5,682 ​ 5,342 ​ 5,179 ​ 5,007 ​ 4,893 ​ Total Company Store Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory per store (in thousands) ​ $ 807 ​ $ 812 ​ $ 686 ​ $ 683 ​ $ 674 ​ Total AutoZone store square footage (in thousands) ​ 47,899 ​ 46,435 ​ 45,057 ​ 43,502 ​ 42,526 ​ Average square footage per AutoZone store ​ 6,709 ​ 6,688 ​ 6,658 ​ 6,643 ​ 6,633 ​ Increase in AutoZone store square footage ​ 3.2 % 3.1 % 3.6 % 2.3 % 3.6 % Average net sales per AutoZone store (in thousands) ​ $ 2,435 ​ $ 2,329 ​ $ 2,160 ​ $ 1,914 ​ $ 1,847 ​ Net sales per AutoZone store average square foot ​ $ 363 ​ $ 349 ​ $ 325 ​ $ 288 ​ $ 279 ​ Total employees at end of year (in thousands) ​ 119 ​ 112 ​ 105 ​ 100 ​ 96 ​ Inventory turnover(8) ​ 1.5x ​ 1.5x ​ 1.5x ​ 1.3x ​ 1.3x ​ Accounts payable to inventory ratio ​ 124.9 % 129.5 % 129.6 % 115.3 % 112.6 % After-tax return on invested capital(9) ​ 55.4 % 52.9 % 41.0 % 35.7 % 35.7 % Adjusted debt to EBITDAR(10) ​ 2.3 ​ 2.1 ​ 2.0 ​ 2.4 ​ 2.5 ​ Net cash provided by operating activities (in thousands)(4) ​ $ 2,940,788 ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ $ 2,128,513 ​ Cash flow before share repurchases and changes in debt (in thousands)(11) ​ $ 2,156,026 ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ $ 1,758,672 ​ Share repurchases (in thousands)(7) ​ $ 3,723,289 ​ $ 4,359,991 ​ $ 3,378,321 ​ $ 930,903 ​ $ 2,004,896 ​ Number of shares repurchased (in thousands)(7) ​ 1,524 ​ 2,220 ​ 2,592 ​ 826 ​ 2,182 ​ 29 29 Table of Contents(1) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.(2) The fiscal year ended August 31, 2019 consisted of 53 weeks.(3) Fiscal 2019 includes a benefit to net income related to the Tax Cuts and Jobs Act of $6.3 million, net of repatriation tax. (4) Fiscal 2023, 2022, 2021, 2020 and 2019 include excess tax benefits from stock option exercises of $92.2 million, $63.2 million, $56.4 million, $20.9 million, and $46.0 million, respectively.(5) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (6) The Company adopted ASU 2016-02, Leases (Topic 842), beginning with its first quarter ended November 23, 2019 which resulted in the Company recognizing a right-of-use asset ("ROU asset") and a corresponding lease liability on the balance sheet.(7)Inclusive of excise tax of $23.7 million for the year ended August 26, 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022. During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(8)Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(9)After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases). For fiscal 2019, after-tax operating profit was adjusted for the impact of the average revaluation of deferred tax liabilities, net of repatriation tax. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.(10)Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations (11)Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.​30 Table of Contents Table of Contents Table of Contents (1) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.(2) The fiscal year ended August 31, 2019 consisted of 53 weeks.(3) Fiscal 2019 includes a benefit to net income related to the Tax Cuts and Jobs Act of $6.3 million, net of repatriation tax. (4) Fiscal 2023, 2022, 2021, 2020 and 2019 include excess tax benefits from stock option exercises of $92.2 million, $63.2 million, $56.4 million, $20.9 million, and $46.0 million, respectively.(5) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (6) The Company adopted ASU 2016-02, Leases (Topic 842), beginning with its first quarter ended November 23, 2019 which resulted in the Company recognizing a right-of-use asset ("ROU asset") and a corresponding lease liability on the balance sheet.(7)Inclusive of excise tax of $23.7 million for the year ended August 26, 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022. During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(8)Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(9)After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases). For fiscal 2019, after-tax operating profit was adjusted for the impact of the average revaluation of deferred tax liabilities, net of repatriation tax. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.(10)Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations (11)Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.​ (1) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively. (2) The fiscal year ended August 31, 2019 consisted of 53 weeks. (3) Fiscal 2019 includes a benefit to net income related to the Tax Cuts and Jobs Act of $6.3 million, net of repatriation tax. (4) Fiscal 2023, 2022, 2021, 2020 and 2019 include excess tax benefits from stock option exercises of $92.2 million, $63.2 million, $56.4 million, $20.9 million, and $46.0 million, respectively. (5) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (6) The Company adopted ASU 2016-02, Leases (Topic 842), beginning with its first quarter ended November 23, 2019 which resulted in the Company recognizing a right-of-use asset ("ROU asset") and a corresponding lease liability on the balance sheet. ​ 30 30 Table of ContentsFiscal 2023 Compared with Fiscal 2022For the fiscal year ended August 26, 2023, we reported net sales of $17.5 billion compared with $16.3 billion for the year ended August 27, 2022, a 7.4% increase from fiscal 2022. This growth was driven primarily by a domestic same store sales increase of 3.4% and net sales of $327.8 million from new domestic and international stores. Domestic commercial sales increased $368.0 million, or 8.7%, over domestic commercial sales for fiscal 2022. Same store sales, or sales for our domestic and international stores open at least one year, are as follows:​​​​​​​​​​​​​​Fiscal Year Ended August​​​​​​​​​​​​​​​​ Constant Currency (1) ​​ Constant Currency (1) ​2023​2023​2022​2022​Domestic​ 3.4% ​ 3.4% ​ 8.4% ​ 8.4% International 29.3% 17.5% 19.1% 19.2% Total Company 5.6% 4.6% 9.2% 9.2% ​(1)Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.​At August 26, 2023, we operated 6,300 domestic stores, 740 in Mexico and 100 in Brazil, compared with 6,168 domestic stores, 703 in Mexico and 72 in Brazil at August 27, 2022. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 7.4% for fiscal 2023. ​Gross profit for fiscal 2023 was $9.1 billion, or 52.0% of net sales, a 17 basis point decrease compared with $8.5 billion, or 52.1% of net sales for fiscal 2022. The deleverage in gross margin was impacted by a non-cash LIFO charge of $44.0 million in fiscal 2023 versus a $15.0 million charge in fiscal 2022.Operating, selling, general and administrative expenses for fiscal 2023 increased to $5.6 billion, or 32.1% of net sales, from $5.2 billion, or 32.0% of net sales for fiscal 2022.Interest expense, net for fiscal 2023 was $306.4 million compared with $191.6 million during fiscal 2022. Average borrowings for fiscal 2023 were $7.0 billion, compared with $5.8 billion for fiscal 2022. Weighted average borrowing rates were 3.78% and 3.29% for fiscal 2023 and 2022, respectively.Our effective income tax rate was 20.2% and 21.1% of pre-tax income for fiscal 2023 and fiscal 2022, respectively. The benefit from stock options exercised in fiscal 2023 was $92.2 million compared to $63.2 million in fiscal 2022 (see "Note D - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2023 increased by 4.1% to $2.5 billion, and diluted earnings per share increased 12.9% to $132.36 from $117.19 in fiscal 2022. The impact on the fiscal 2023 diluted earnings per share from stock repurchases was an increase of $1.15.Fiscal 2022 Compared with Fiscal 2021A discussion of changes in our results of operations from fiscal 2022 to fiscal 2021 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 24, 2022, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page.Quarterly PeriodsEach of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16 weeks in 2023, 2022 and 2021. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% 31 Table of Contents Table of Contents Table of Contents Fiscal 2023 Compared with Fiscal 2022For the fiscal year ended August 26, 2023, we reported net sales of $17.5 billion compared with $16.3 billion for the year ended August 27, 2022, a 7.4% increase from fiscal 2022. This growth was driven primarily by a domestic same store sales increase of 3.4% and net sales of $327.8 million from new domestic and international stores. Domestic commercial sales increased $368.0 million, or 8.7%, over domestic commercial sales for fiscal 2022. Same store sales, or sales for our domestic and international stores open at least one year, are as follows:​​​​​​​​​​​​​​Fiscal Year Ended August​​​​​​​​​​​​​​​​ Constant Currency (1) ​​ Constant Currency (1) ​2023​2023​2022​2022​Domestic​ 3.4% ​ 3.4% ​ 8.4% ​ 8.4% International 29.3% 17.5% 19.1% 19.2% Total Company 5.6% 4.6% 9.2% 9.2% ​(1)Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.​At August 26, 2023, we operated 6,300 domestic stores, 740 in Mexico and 100 in Brazil, compared with 6,168 domestic stores, 703 in Mexico and 72 in Brazil at August 27, 2022. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 7.4% for fiscal 2023. ​Gross profit for fiscal 2023 was $9.1 billion, or 52.0% of net sales, a 17 basis point decrease compared with $8.5 billion, or 52.1% of net sales for fiscal 2022. The deleverage in gross margin was impacted by a non-cash LIFO charge of $44.0 million in fiscal 2023 versus a $15.0 million charge in fiscal 2022.Operating, selling, general and administrative expenses for fiscal 2023 increased to $5.6 billion, or 32.1% of net sales, from $5.2 billion, or 32.0% of net sales for fiscal 2022.Interest expense, net for fiscal 2023 was $306.4 million compared with $191.6 million during fiscal 2022. Average borrowings for fiscal 2023 were $7.0 billion, compared with $5.8 billion for fiscal 2022. Weighted average borrowing rates were 3.78% and 3.29% for fiscal 2023 and 2022, respectively.Our effective income tax rate was 20.2% and 21.1% of pre-tax income for fiscal 2023 and fiscal 2022, respectively. The benefit from stock options exercised in fiscal 2023 was $92.2 million compared to $63.2 million in fiscal 2022 (see "Note D - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2023 increased by 4.1% to $2.5 billion, and diluted earnings per share increased 12.9% to $132.36 from $117.19 in fiscal 2022. The impact on the fiscal 2023 diluted earnings per share from stock repurchases was an increase of $1.15.Fiscal 2022 Compared with Fiscal 2021A discussion of changes in our results of operations from fiscal 2022 to fiscal 2021 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 27, 2022, filed with the SEC on October 24, 2022, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page.Quarterly PeriodsEach of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16 weeks in 2023, 2022 and 2021. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% Fiscal 2023 Compared with Fiscal 2022 For the fiscal year ended August 26, 2023, we reported net sales of $17.5 billion compared with $16.3 billion for the year ended August 27, 2022, a 7.4% increase from fiscal 2022. This growth was driven primarily by a domestic same store sales increase of 3.4% and net sales of $327.8 million from new domestic and international stores. Domestic commercial sales increased $368.0 million, or 8.7%, over domestic commercial sales for fiscal 2022. Same store sales, or sales for our domestic and international stores open at least one year, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ **Current (2024):** ​ ​ ​ ​ ​ ​ Number of stores at beginning of year ​ 7,140 ​ 6,943 ​ 6,767 ​ 6,549 ​ 6,411 ​ New stores ​ 217 ​ 198 ​ 177 ​ 219 ​ 138 ​ Closed stores ​ 4 ​ 1 ​ 1 ​ 1 ​ - ​ Net new stores ​ 213 ​ 197 ​ 176 ​ 218 ​ 138 ​ Relocated stores ​ 6 ​ 12 ​ 13 ​ 12 ​ 5 ​ Number of stores at end of year ​ 7,353 ​ 7,140 ​ 6,943 ​ 6,767 ​ 6,549 ​ AutoZone domestic commercial programs ​ 5,898 ​ 5,682 ​ 5,342 ​ 5,179 ​ 5,007 ​ Total Company Store Data ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Inventory per store (in thousands) ​ $ 837 ​ $ 807 ​ $ 812 ​ $ 686 ​ $ 683 ​ Total AutoZone store square footage (in thousands) ​ 49,417 ​ 47,899 ​ 46,435 ​ 45,057 ​ 43,502 ​ Average square footage per AutoZone store ​ 6,721 ​ 6,709 ​ 6,688 ​ 6,658 ​ 6,643 ​ Increase in AutoZone store square footage ​ 3.2 % 3.2 % 3.1 % 3.6 % 2.3 % Average net sales per AutoZone store (in thousands) ​ $ 2,505 ​ $ 2,435 ​ $ 2,329 ​ $ 2,160 ​ $ 1,914 ​ Net sales per AutoZone store average square foot ​ $ 373 ​ $ 363 ​ $ 349 ​ $ 325 ​ $ 288 ​ Total employees at end of year (in thousands) ​ 126 ​ 119 ​ 112 ​ 105 ​ 100 ​ Inventory turnover(6) ​ 1.5x ​ 1.5x ​ 1.5x ​ 1.5x ​ 1.3x ​ Accounts payable to inventory ratio ​ 119.5 % 124.9 % 129.5 % 129.6 % 115.3 % After-tax return on invested capital(7) ​ 49.7 % 55.4 % 52.9 % 41.0 % 35.7 % Adjusted debt to EBITDAR(8) ​ 2.5 ​ 2.3 ​ 2.1 ​ 2.0 ​ 2.4 ​ Net cash provided by operating activities (in thousands)(3) ​ $ 3,004,116 ​ $ 2,940,788 ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ Cash flow before share repurchases and changes in debt (in thousands)(9) ​ $ 1,791,635 ​ $ 2,156,026 ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ Share repurchases (in thousands)(5)(10) ​ $ 3,170,320 ​ $ 3,723,289 ​ $ 4,359,991 ​ $ 3,378,321 ​ $ 930,903 ​ Number of shares repurchased (in thousands)(5) ​ 1,149 ​ 1,524 ​ 2,220 ​ 2,592 ​ 826 ​ 28 28 Table of Contents(1) The fiscal year ended August 31, 2024 consisted of 53 weeks.(2) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.(3) Fiscal 2024, 2023, 2022, 2021 and 2020 include excess tax benefits from stock option exercises of $81.4 million, $92.2 million, $63.2 million, $56.4 million, and $20.9 million, respectively.(4) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases). (8) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations. (9) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.(10) Share repurchases are inclusive of excise tax in fiscal 2024 and 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.​29 Table of Contents Table of Contents Table of Contents (1) The fiscal year ended August 31, 2024 consisted of 53 weeks.(2) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.(3) Fiscal 2024, 2023, 2022, 2021 and 2020 include excess tax benefits from stock option exercises of $81.4 million, $92.2 million, $63.2 million, $56.4 million, and $20.9 million, respectively.(4) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases). (8) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations. (9) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.(10) Share repurchases are inclusive of excise tax in fiscal 2024 and 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.​ (1) The fiscal year ended August 31, 2024 consisted of 53 weeks.(2) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively.(3) Fiscal 2024, 2023, 2022, 2021 and 2020 include excess tax benefits from stock option exercises of $81.4 million, $92.2 million, $63.2 million, $56.4 million, and $20.9 million, respectively.(4) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021.(6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters.(7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases). (8) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations. (9) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations.(10) Share repurchases are inclusive of excise tax in fiscal 2024 and 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.​ (1) The fiscal year ended August 31, 2024 consisted of 53 weeks. (2) The 52 weeks ended August 28, 2021 and August 29, 2020 were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0 million (pre-tax) and $83.9 million (pre-tax), respectively. (3) Fiscal 2024, 2023, 2022, 2021 and 2020 include excess tax benefits from stock option exercises of $81.4 million, $92.2 million, $63.2 million, $56.4 million, and $20.9 million, respectively. (4) The domestic and international comparable sales increases are based on sales for all AutoZone stores open at least one year. Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate. Same store sales are computed on a 52-week basis. Relocated stores are included in the same store sales computation based on the year the original store was opened. Closed store sales are included in the same store sales computation up to the week it closes, and excluded from the computation for all periods subsequent to closing. All sales through our www.autozone.com website, including consumer direct ship-to-home sales, are also included in the computation. (5) During the third quarter of fiscal 2020, the Company temporarily suspended share repurchases under the share repurchase program in response to the COVID-19 pandemic which was restarted beginning in the first quarter of fiscal 2021. (6) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over the trailing 5 quarters. (7) After-tax return on invested capital is defined as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize leases). (8) Adjusted debt to EBITDAR is defined as the sum of total debt, finance lease obligations and annual rents times six; divided by net income plus interest, taxes, depreciation, amortization, rent and share-based compensation expense. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations. (9) Cash flow before share repurchases and changes in debt is defined as the change in cash and cash equivalents less the change in debt plus treasury stock purchases. See Reconciliation of Non-GAAP Financial Measures in Management's Discussion and Analysis of Financial Condition and Results of Operations. (10) Share repurchases are inclusive of excise tax in fiscal 2024 and 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022. ​ 29 29 Table of ContentsFiscal 2024 Compared with Fiscal 2023For the fiscal year ended August 31, 2024, we had net sales of $18.5 billion compared with $17.5 billion for the year ended August 26, 2023, an increase of 5.9%. This growth was driven primarily by the additional 53rd week sales of $365.9 million, net sales of $292.4 million from new domestic and international stores and an increase in total company same store sales of 1.4% on a constant currency basis. Domestic commercial sales increased $284.3 million, or 6.2%, over domestic commercial sales for fiscal 2023, driven in part by the additional 53rd week sales of $95.7 million. Same store sales, or sales for our domestic and international stores open at least one year, are computed on a 52-week basis and are as follows:​​​​​​​​​​​​​​​Fiscal Year Ended August​​​ ​ ​Constant Currency (1) ​​2024​2023​2024​2023Domestic​ 0.4% ​ 3.4% ​ 0.4% ​ 3.4% International 16.1% 29.3% 10.2% 17.5% Total Company 2.1% 5.6% 1.4% 4.6% ​(1)Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.​At August 31, 2024, we operated 6,432 domestic stores, 794 in Mexico and 127 in Brazil, compared with 6,300 domestic stores, 740 in Mexico and 100 in Brazil at August 26, 2023. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 5.9% for fiscal 2024. ​Gross profit for fiscal 2024 was $9.8 billion, or 53.1% of net sales, a 114 basis point increase compared with $9.1 billion, or 52.0% of net sales for fiscal 2023. The increase in gross margin was driven by higher merchandise margins and 47 basis points ($84.0 million net) from non-cash LIFO favorability.Operating, selling, general and administrative expenses for fiscal 2024 increased to $6.0 billion, or 32.6% of net sales, from $5.6 billion, or 32.1% of net sales for fiscal 2023. The increase in operating expenses as a percentage of sales was primarily driven by domestic store payroll.Interest expense, net for fiscal 2024 was $451.6 million compared with $306.4 million during fiscal 2023. Average borrowings for fiscal 2024 were $8.7 billion, compared with $7.0 billion for fiscal 2023. Weighted average borrowing rates were 4.39% and 3.78% for fiscal 2024 and 2023, respectively.Our effective income tax rate was 20.2% of pre-tax income for both fiscal 2024 and fiscal 2023. The benefit from stock options exercised in fiscal 2024 was $81.4 million compared to $92.2 million in fiscal 2023 (see "Note E - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2024 increased by 5.3% to $2.7 billion, and diluted earnings per share increased 13.0% to $149.55 from $132.36 in fiscal 2023. The impact on the fiscal 2024 diluted earnings per share from stock repurchases was an increase of $0.96.Fiscal 2023 Compared with Fiscal 2022A discussion of changes in our results of operations from fiscal 2023 to fiscal 2022 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page.30 Table of Contents Table of Contents Table of Contents Fiscal 2024 Compared with Fiscal 2023For the fiscal year ended August 31, 2024, we had net sales of $18.5 billion compared with $17.5 billion for the year ended August 26, 2023, an increase of 5.9%. This growth was driven primarily by the additional 53rd week sales of $365.9 million, net sales of $292.4 million from new domestic and international stores and an increase in total company same store sales of 1.4% on a constant currency basis. Domestic commercial sales increased $284.3 million, or 6.2%, over domestic commercial sales for fiscal 2023, driven in part by the additional 53rd week sales of $95.7 million. Same store sales, or sales for our domestic and international stores open at least one year, are computed on a 52-week basis and are as follows:​​​​​​​​​​​​​​​Fiscal Year Ended August​​​ ​ ​Constant Currency (1) ​​2024​2023​2024​2023Domestic​ 0.4% ​ 3.4% ​ 0.4% ​ 3.4% International 16.1% 29.3% 10.2% 17.5% Total Company 2.1% 5.6% 1.4% 4.6% ​(1)Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.​At August 31, 2024, we operated 6,432 domestic stores, 794 in Mexico and 127 in Brazil, compared with 6,300 domestic stores, 740 in Mexico and 100 in Brazil at August 26, 2023. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 5.9% for fiscal 2024. ​Gross profit for fiscal 2024 was $9.8 billion, or 53.1% of net sales, a 114 basis point increase compared with $9.1 billion, or 52.0% of net sales for fiscal 2023. The increase in gross margin was driven by higher merchandise margins and 47 basis points ($84.0 million net) from non-cash LIFO favorability.Operating, selling, general and administrative expenses for fiscal 2024 increased to $6.0 billion, or 32.6% of net sales, from $5.6 billion, or 32.1% of net sales for fiscal 2023. The increase in operating expenses as a percentage of sales was primarily driven by domestic store payroll.Interest expense, net for fiscal 2024 was $451.6 million compared with $306.4 million during fiscal 2023. Average borrowings for fiscal 2024 were $8.7 billion, compared with $7.0 billion for fiscal 2023. Weighted average borrowing rates were 4.39% and 3.78% for fiscal 2024 and 2023, respectively.Our effective income tax rate was 20.2% of pre-tax income for both fiscal 2024 and fiscal 2023. The benefit from stock options exercised in fiscal 2024 was $81.4 million compared to $92.2 million in fiscal 2023 (see "Note E - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2024 increased by 5.3% to $2.7 billion, and diluted earnings per share increased 13.0% to $149.55 from $132.36 in fiscal 2023. The impact on the fiscal 2024 diluted earnings per share from stock repurchases was an increase of $0.96.Fiscal 2023 Compared with Fiscal 2022A discussion of changes in our results of operations from fiscal 2023 to fiscal 2022 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page. Fiscal 2024 Compared with Fiscal 2023For the fiscal year ended August 31, 2024, we had net sales of $18.5 billion compared with $17.5 billion for the year ended August 26, 2023, an increase of 5.9%. This growth was driven primarily by the additional 53rd week sales of $365.9 million, net sales of $292.4 million from new domestic and international stores and an increase in total company same store sales of 1.4% on a constant currency basis. Domestic commercial sales increased $284.3 million, or 6.2%, over domestic commercial sales for fiscal 2023, driven in part by the additional 53rd week sales of $95.7 million. Same store sales, or sales for our domestic and international stores open at least one year, are computed on a 52-week basis and are as follows:​​​​​​​​​​​​​​​Fiscal Year Ended August​​​ ​ ​Constant Currency (1) ​​2024​2023​2024​2023Domestic​ 0.4% ​ 3.4% ​ 0.4% ​ 3.4% International 16.1% 29.3% 10.2% 17.5% Total Company 2.1% 5.6% 1.4% 4.6% ​(1)Constant currency same store sales exclude impacts from fluctuations of foreign exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.​At August 31, 2024, we operated 6,432 domestic stores, 794 in Mexico and 127 in Brazil, compared with 6,300 domestic stores, 740 in Mexico and 100 in Brazil at August 26, 2023. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 5.9% for fiscal 2024. ​Gross profit for fiscal 2024 was $9.8 billion, or 53.1% of net sales, a 114 basis point increase compared with $9.1 billion, or 52.0% of net sales for fiscal 2023. The increase in gross margin was driven by higher merchandise margins and 47 basis points ($84.0 million net) from non-cash LIFO favorability.Operating, selling, general and administrative expenses for fiscal 2024 increased to $6.0 billion, or 32.6% of net sales, from $5.6 billion, or 32.1% of net sales for fiscal 2023. The increase in operating expenses as a percentage of sales was primarily driven by domestic store payroll.Interest expense, net for fiscal 2024 was $451.6 million compared with $306.4 million during fiscal 2023. Average borrowings for fiscal 2024 were $8.7 billion, compared with $7.0 billion for fiscal 2023. Weighted average borrowing rates were 4.39% and 3.78% for fiscal 2024 and 2023, respectively.Our effective income tax rate was 20.2% of pre-tax income for both fiscal 2024 and fiscal 2023. The benefit from stock options exercised in fiscal 2024 was $81.4 million compared to $92.2 million in fiscal 2023 (see "Note E - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2024 increased by 5.3% to $2.7 billion, and diluted earnings per share increased 13.0% to $149.55 from $132.36 in fiscal 2023. The impact on the fiscal 2024 diluted earnings per share from stock repurchases was an increase of $0.96.Fiscal 2023 Compared with Fiscal 2022A discussion of changes in our results of operations from fiscal 2023 to fiscal 2022 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page. Fiscal 2024 Compared with Fiscal 2023 For the fiscal year ended August 31, 2024, we had net sales of $18.5 billion compared with $17.5 billion for the year ended August 26, 2023, an increase of 5.9%. This growth was driven primarily by the additional 53rd week sales of $365.9 million, net sales of $292.4 million from new domestic and international stores and an increase in total company same store sales of 1.4% on a constant currency basis. Domestic commercial sales increased $284.3 million, or 6.2%, over domestic commercial sales for fiscal 2023, driven in part by the additional 53rd week sales of $95.7 million. Same store sales, or sales for our domestic and international stores open at least one year, are computed on a 52-week basis and are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## Modified: A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities. **Key changes:** - Reworded sentence: "​ Our short-term and long-term debt is rated investment grade by the major rating agencies." - Reworded sentence: "These laws may change over time and may differ substantially across the areas where we operate." - Reworded sentence: "Any changes in the enforcement or interpretation of existing laws and regulations or the enactment of any new laws and regulations, including tax legislation, could have a material adverse impact on our financial condition and results of operations." - Reworded sentence: "to consider the enactment of legislative and regulatory proposals that would impose extensive mandatory reporting requirements as well as requirements for reductions of greenhouse gas ("GHG") emissions." - Reworded sentence: "For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs or other regulations that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell." **Prior (2023):** ​ We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ 21 21 Table of Contentssubstantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our employees and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation, including tax legislation, could have an adverse impact, directly or indirectly, on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry.​We may be adversely affected by legal, regulatory or market responses to global climate change.​Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. For example, we have significant operations in California, where serious drought has made water less available and more costly and has increased the risk of wildfires. Changes in climate patterns leading to extreme heat waves or unusual cold weather at some of our locations can lead to increased energy usage and costs, or otherwise adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose mandatory requirements for reductions of greenhouse gas (GHG) emissions. Such laws, if enacted, are likely to impact our business in a number of ways. For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell. We may not be able to accurately predict, prepare for and respond to new kinds of technological innovations with respect to electric vehicles and other technologies that minimize emissions. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers. Our inability to appropriately respond to such changes could adversely impact our business, financial condition, results of operations or cash flows​We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of greenhouse gas (GHG) emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.​Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.​We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time. Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose shareholder support. Certain challenges we face in the achievement of our ESG 22 Table of Contents Table of Contents Table of Contents substantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our employees and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation, including tax legislation, could have an adverse impact, directly or indirectly, on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry.​We may be adversely affected by legal, regulatory or market responses to global climate change.​Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. For example, we have significant operations in California, where serious drought has made water less available and more costly and has increased the risk of wildfires. Changes in climate patterns leading to extreme heat waves or unusual cold weather at some of our locations can lead to increased energy usage and costs, or otherwise adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose mandatory requirements for reductions of greenhouse gas (GHG) emissions. Such laws, if enacted, are likely to impact our business in a number of ways. For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell. We may not be able to accurately predict, prepare for and respond to new kinds of technological innovations with respect to electric vehicles and other technologies that minimize emissions. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers. Our inability to appropriately respond to such changes could adversely impact our business, financial condition, results of operations or cash flows​We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of greenhouse gas (GHG) emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.​Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.​We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time. Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose shareholder support. Certain challenges we face in the achievement of our ESG substantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our employees and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in regulations, the imposition of additional regulations, or the enactment of any new legislation, including tax legislation, could have an adverse impact, directly or indirectly, on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry. ​ **Current (2024):** ​ Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings. Additionally, a downgrade in our credit or changes in the financial markets may limit financial institutions' willingness to participate in our supplier financing arrangements, which may result in vendors seeking to renegotiate their payment terms. Moreover, significant deterioration in the financial condition of large financial institutions could result in a severe loss of liquidity and availability of credit in global credit markets and in more stringent 20 20 Table of Contentsborrowing terms. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt.​Legal and Regulatory Risks​Our business, results of operations, financial condition and cash flows may be adversely affected by the adoption of new laws, changes to existing laws, increased enforcement activity or other governmental actions.​We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ substantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our AutoZoners and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in the enforcement or interpretation of existing laws and regulations or the enactment of any new laws and regulations, including tax legislation, could have a material adverse impact on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry.​We may be adversely affected by legal, regulatory or market responses to global climate change.​Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. For example, we have significant operations in California, where serious drought has made water less available and more costly and has increased the risk of wildfires. Changes in climate patterns leading to extreme heat waves or unusual cold weather at some of our locations can lead to increased energy usage and costs, or otherwise adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose extensive mandatory reporting requirements as well as requirements for reductions of greenhouse gas ("GHG") emissions. Such laws, if enacted, are likely to impact our business in a number of ways. For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs or other regulations that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell. We may not be able to accurately predict, prepare for and effectively respond to new kinds of technological innovations with respect to electric vehicles and other technologies that minimize emissions. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers. Our inability to appropriately respond to such changes could materially adversely impact our business, financial condition, results of operations or cash flows.​We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of GHG emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.​Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting of GHG emissions and other sustainability metrics, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A 21 Table of Contents Table of Contents Table of Contents borrowing terms. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt.​Legal and Regulatory Risks​Our business, results of operations, financial condition and cash flows may be adversely affected by the adoption of new laws, changes to existing laws, increased enforcement activity or other governmental actions.​We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ substantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our AutoZoners and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in the enforcement or interpretation of existing laws and regulations or the enactment of any new laws and regulations, including tax legislation, could have a material adverse impact on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry.​We may be adversely affected by legal, regulatory or market responses to global climate change.​Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. For example, we have significant operations in California, where serious drought has made water less available and more costly and has increased the risk of wildfires. Changes in climate patterns leading to extreme heat waves or unusual cold weather at some of our locations can lead to increased energy usage and costs, or otherwise adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose extensive mandatory reporting requirements as well as requirements for reductions of greenhouse gas ("GHG") emissions. Such laws, if enacted, are likely to impact our business in a number of ways. For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs or other regulations that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell. We may not be able to accurately predict, prepare for and effectively respond to new kinds of technological innovations with respect to electric vehicles and other technologies that minimize emissions. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers. Our inability to appropriately respond to such changes could materially adversely impact our business, financial condition, results of operations or cash flows.​We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of GHG emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.​Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting of GHG emissions and other sustainability metrics, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A borrowing terms. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt.​Legal and Regulatory Risks​Our business, results of operations, financial condition and cash flows may be adversely affected by the adoption of new laws, changes to existing laws, increased enforcement activity or other governmental actions.​We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ substantially across the areas where we operate. Although we have implemented policies and procedures to help ensure compliance with these laws, there can be no certainty that our AutoZoners and third parties with whom we do business will not take actions in violation of our policies or applicable laws. If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be subject to governmental enforcement action or private litigation resulting in restrictions on our business, monetary penalties, reputational harm and increased costs of regulatory compliance. Any changes in the enforcement or interpretation of existing laws and regulations or the enactment of any new laws and regulations, including tax legislation, could have a material adverse impact on our financial condition and results of operations. We may also be subject to investigations or audits by governmental authorities and regulatory agencies as a result of enforcing existing laws and regulations or changes in enforcement priorities, which can occur in the ordinary course of business or may result from increased scrutiny from a particular agency or toward a particular industry.​We may be adversely affected by legal, regulatory or market responses to global climate change.​Climate change resulting from increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere could present risks to our operations. For example, we have significant operations in California, where serious drought has made water less available and more costly and has increased the risk of wildfires. Changes in climate patterns leading to extreme heat waves or unusual cold weather at some of our locations can lead to increased energy usage and costs, or otherwise adversely impact our facilities and operations and disrupt our supply chains and distribution systems. Growing concern over climate change has led policy makers in the U.S. to consider the enactment of legislative and regulatory proposals that would impose extensive mandatory reporting requirements as well as requirements for reductions of greenhouse gas ("GHG") emissions. Such laws, if enacted, are likely to impact our business in a number of ways. For example, significant increases in fuel economy requirements, new federal or state restrictions on emissions of carbon dioxide or new federal or state incentive programs or other regulations that may be imposed on vehicles and automobile fuels could adversely affect demand for vehicles, annual miles driven or the products we sell. We may not be able to accurately predict, prepare for and effectively respond to new kinds of technological innovations with respect to electric vehicles and other technologies that minimize emissions. Compliance with any new or more stringent laws or regulations, or stricter interpretations of existing laws, could require additional expenditures by us or our suppliers. Our inability to appropriately respond to such changes could materially adversely impact our business, financial condition, results of operations or cash flows.​We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of GHG emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters.​Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting of GHG emissions and other sustainability metrics, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A borrowing terms. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt. ​ --- ## Modified: We may not be able to sustain our historic rate of sales growth. **Key changes:** - Reworded sentence: "​ We have increased annual revenues in the past five fiscal years from $11.9 billion in fiscal 2019 to $18.5 billion in fiscal 2024, with a compounded annual growth rate of approximately nine percent." - Reworded sentence: "Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements, and these laws are subject to change over time." - Reworded sentence: "We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.​In the U.S., over the last few years there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry." - Reworded sentence: "Although none of our domestic employees are covered by collective bargaining agreements, there can be no assurance that our domestic employees will not elect to be represented by labor unions in the future." - Reworded sentence: "Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have material adverse effects on our business and financial results." **Prior (2023):** ​ Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase our commercial market share. Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, delivery times, product warranty, distribution locations and the strength of our AutoZone brand name, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships and have large available inventories. If we are unable to profitably develop new commercial customers, our sales growth may be limited. ​ 15 15 Table of ContentsOur business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel.​We believe much of our brand value lies in the quality of the approximately 119,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.​In the U.S., there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our employees are currently covered by collective bargaining agreements, there can be no assurance that our employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party between our current terrific relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have adverse effects on our business and financial results. ​If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer due to a declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows.​Our future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could adversely affect our operations.​Inability to acquire and provide quality merchandise at competitive prices could adversely affect our sales and results of operations.​We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in 16 Table of Contents Table of Contents Table of Contents Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel.​We believe much of our brand value lies in the quality of the approximately 119,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.​In the U.S., there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our employees are currently covered by collective bargaining agreements, there can be no assurance that our employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party between our current terrific relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have adverse effects on our business and financial results. ​If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer due to a declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows.​Our future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could adversely affect our operations.​Inability to acquire and provide quality merchandise at competitive prices could adversely affect our sales and results of operations.​We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in **Current (2024):** ​ We have increased annual revenues in the past five fiscal years from $11.9 billion in fiscal 2019 to $18.5 billion in fiscal 2024, with a compounded annual growth rate of approximately nine percent. Annual revenue growth is driven by increases in same store sales, the opening of new stores and the development of new commercial programs. Same store sales are impacted both by customer demand levels and by the prices we are able to charge for our products, which can also be negatively impacted by economic pressures. See "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for further discussion of same store sales. ​ Our ability to grow depends in part on new store openings, existing store remodels and expansions and effective utilization of our existing supply chain and hub network. ​ We have increased our store count in the past five fiscal years, growing from 6,411 stores at August 31, 2019 to 7,353 stores at August 31, 2024, a compounded annual growth rate of approximately three percent. ​ Achieving our store development and expansion goals will depend upon our ability to identify and obtain suitable sites for new and expanded stores in a timely manner and at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations, among other factors. Furthermore, we open new stores only after evaluating customer buying trends and market demand/needs, all of which could be adversely affected by persistent unemployment, wage cuts, small business failures, microeconomic conditions unique to the automotive industry and our ability to expand into international markets. There can be no assurance we will be able 14 14 Table of Contentsto achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. ​If we cannot profitably increase our market share in the commercial auto parts business, our sales growth may be limited.​Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase our commercial market share. Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, delivery times, product warranty, distribution locations and the strength of our AutoZone brand, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships, an experienced sales organization, considerable market presence and have large available inventories. If we are unable to profitably grow our sales with existing commercial customers, our sales growth may be limited.​Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel.​We believe much of our brand value lies in the quality of the approximately 126,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements, and these laws are subject to change over time. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.​In the U.S., over the last few years there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our domestic employees are covered by collective bargaining agreements, there can be no assurance that our domestic employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party into our current relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have material adverse effects on our business and financial results. ​If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer from any resultant declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates and resultant labor costs. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows.​15 Table of Contents Table of Contents Table of Contents to achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. ​If we cannot profitably increase our market share in the commercial auto parts business, our sales growth may be limited.​Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase our commercial market share. Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, delivery times, product warranty, distribution locations and the strength of our AutoZone brand, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships, an experienced sales organization, considerable market presence and have large available inventories. If we are unable to profitably grow our sales with existing commercial customers, our sales growth may be limited.​Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel.​We believe much of our brand value lies in the quality of the approximately 126,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements, and these laws are subject to change over time. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.​In the U.S., over the last few years there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our domestic employees are covered by collective bargaining agreements, there can be no assurance that our domestic employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party into our current relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have material adverse effects on our business and financial results. ​If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer from any resultant declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates and resultant labor costs. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows.​ to achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. ​If we cannot profitably increase our market share in the commercial auto parts business, our sales growth may be limited.​Although we are a leading distributor of automotive parts and other products in the commercial market, we must effectively compete against national, regional and local auto parts chains, independently owned parts stores, wholesalers, jobbers, repair shops, auto dealers, online retailers and others in order to increase our commercial market share. Although we believe we compete effectively in the commercial market on the basis of customer service, merchandise quality, selection and availability, price, delivery times, product warranty, distribution locations and the strength of our AutoZone brand, trademarks and service marks, some automotive aftermarket participants have been in business for substantially longer periods of time than we have, and as a result have developed long-term customer relationships, an experienced sales organization, considerable market presence and have large available inventories. If we are unable to profitably grow our sales with existing commercial customers, our sales growth may be limited.​Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel.​We believe much of our brand value lies in the quality of the approximately 126,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements, and these laws are subject to change over time. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages.​In the U.S., over the last few years there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our domestic employees are covered by collective bargaining agreements, there can be no assurance that our domestic employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party into our current relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have material adverse effects on our business and financial results. ​If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer from any resultant declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates and resultant labor costs. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows.​ to achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. ​ --- ## Modified: Failure to maintain the security of sensitive personal information or other confidential information in our possession could subject us to litigation or regulatory enforcement action, cause reputational harm and cause us to incur substantial costs or have a material adverse impact on our business and financial condition. **Key changes:** - Reworded sentence: "​ Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business." - Reworded sentence: "have passed, and continue to pass, data protection laws." - Reworded sentence: "A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings." - Reworded sentence: "A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings." **Prior (2023):** ​ The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws designed to provide new rights to consumers and, in some cases, employees. The potential effects of the various laws regulating the collection, processing, transfer and use of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing 20 20 Table of Contentspractices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage.​Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel and rulemaking is not finalized. Given the short amount of time between finalized rulemaking and the dates these laws become effective and enforceable, there can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body.​Indebtedness, Financial and Market RisksWe are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us.​We are self-insured up to certain limits for workers' compensation, employee group medical, general liability, product liability, property and automobile. The types and amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements. Our reserves are established using historical trends and, where appropriate, using a third-party actuary to estimate costs to settle reported claims and claims incurred but not yet reported. Estimated costs are subject to a variety of assumptions and other factors including the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. Material increases in the number of insurance claims, changes to healthcare costs, accident frequency and severity, legal expenses and other factors could result in unfavorable difference between actual self-insurance costs and our reserve estimates. As a result, our self-insurance costs could increase which may adversely affect our business, results of operations, financial condition and cash flows.​A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities.​Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings.Moreover, significant deterioration in the financial condition of large financial institutions during the Great Recession resulted in a severe loss of liquidity and availability of credit in global credit markets and in more stringent borrowing terms. We can provide no assurance that such similar events that occurred during the Great Recession will not occur again in the foreseeable future. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt.​Legal and Regulatory Risks​Our business, results of operations, financial condition and cash flows may be adversely affected by the adoption of new laws, changes to existing laws, increased enforcement activity or other governmental actions.​We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ 21 Table of Contents Table of Contents Table of Contents practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage.​Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel and rulemaking is not finalized. Given the short amount of time between finalized rulemaking and the dates these laws become effective and enforceable, there can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body.​Indebtedness, Financial and Market RisksWe are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us.​We are self-insured up to certain limits for workers' compensation, employee group medical, general liability, product liability, property and automobile. The types and amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements. Our reserves are established using historical trends and, where appropriate, using a third-party actuary to estimate costs to settle reported claims and claims incurred but not yet reported. Estimated costs are subject to a variety of assumptions and other factors including the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. Material increases in the number of insurance claims, changes to healthcare costs, accident frequency and severity, legal expenses and other factors could result in unfavorable difference between actual self-insurance costs and our reserve estimates. As a result, our self-insurance costs could increase which may adversely affect our business, results of operations, financial condition and cash flows.​A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities.​Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings.Moreover, significant deterioration in the financial condition of large financial institutions during the Great Recession resulted in a severe loss of liquidity and availability of credit in global credit markets and in more stringent borrowing terms. We can provide no assurance that such similar events that occurred during the Great Recession will not occur again in the foreseeable future. Conditions and events in the global credit markets could have a material adverse effect on our access to short-term and long-term debt and the terms and cost of that debt.​Legal and Regulatory Risks​Our business, results of operations, financial condition and cash flows may be adversely affected by the adoption of new laws, changes to existing laws, increased enforcement activity or other governmental actions.​We are subject to numerous federal, state and local laws and regulations, many of which are complex, frequently revised and subject to varying interpretations. These include laws governing employment and labor, wage and hour, environmental matters, proper handling and disposal of hazardous materials and waste, employee benefits, data privacy, cybersecurity, safety, the pricing and sale of goods, import and export compliance, transportation and logistics, consumer protection and advertising, among others. These laws may change over time and may differ practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage. ​ Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel and rulemaking is not finalized. Given the short amount of time between finalized rulemaking and the dates these laws become effective and enforceable, there can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body. ​ **Current (2024):** ​ Our business, like that of most retailers, involves the collection, processing, storage and transmission of large amounts of personal information relating to our customers, suppliers and AutoZoners and confidential business information relating to AutoZone or other parties with which we do business. This information is handled by us as well as third-party service providers and vendors that provide us with various technology, systems, services and other resources that we use in connection with the handling of this information and in furtherance of our business objectives. Furthermore, we accept payments using a variety of methods, including credit, debit, electronic payments and gift cards, which present information security risks, and we may offer new payment options in the future presenting new risks of which we are currently unaware. ​ While addressing vulnerabilities is a priority for us, the methods used to obtain unauthorized access are constantly evolving and increasing in frequency and sophistication, including through the use of evolving artificial intelligence tools to identify and exploit vulnerabilities. Attempts to gain unauthorized access can be difficult to anticipate or promptly detect. We cannot assure you that the security measures we or our third-party service providers and vendors have in place today will be successful in their efforts to prevent or mitigate the impact of a cyber incident or provide us with sufficient visibility to determine if a cyber incident has occurred, and there can be no assurance that such measures we introduce in the future will be sufficiently effective either. Failure to maintain the security of the personal and other confidential information to which we have access could lead to private litigation, regulatory enforcement actions and reputational harm, all of which would require extensive time and financial resources to resolve and could have a material adverse impact on our business and financial condition. ​ While we have not experienced a material breach of our information systems or data to date, unauthorized parties have in the past gained access and exfiltrated data, and will continue to attempt to do so as the result of a cyber-attack, employee misconduct, employee error, system vulnerabilities or compromises, fraud, hacking, phishing attempts, malware, ransomware, other malicious codes or other intentional or unintentional acts. Furthermore, hardware, software or other IT applications that we or a third party develop for our use have contained and may contain exploitable vulnerabilities, bugs or design defects or may involve other problems that could unexpectedly compromise information security. ​ The cost to remediate and respond to a cyber incident involving unauthorized use, access, damage or loss of systems, data or other information could be significant. To the extent any cyber incident involving our or one of our third-party service provider's information systems results in the unauthorized access, loss, damage or misappropriation of information, we may be required by law to notify impacted individuals and face substantial 19 19 Table of Contentsliability due to claims arising from customers, financial institutions, AutoZoners, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation.​We are subject to a complex and evolving body of laws and regulations regarding data privacy and may face increased costs as a result of changes in, enforcement of, or the adoption of new laws and regulations. These costs may have a material adverse impact on our business and results of operations. ​The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws. The potential effects of the various laws regulating the collection, transfer, use and other types of processing of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage.​Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel. There can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body.​Indebtedness, Financial and Market RisksWe are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us.​We are self-insured up to certain limits for workers' compensation, employee group medical, general liability, product liability, property and automobile. The types and amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements. Our reserves are established using historical trends and, where appropriate, using a third-party actuary to estimate costs to settle reported claims and claims incurred but not yet reported. Estimated costs are subject to a variety of assumptions and other factors including the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. Material increases in the number of insurance claims, changes to healthcare costs, accident frequency and severity, legal expenses and other factors could result in unfavorable difference between actual self-insurance costs and our reserve estimates. As a result, our self-insurance costs could increase which may adversely affect our business, results of operations, financial condition and cash flows.​A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities.​Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings. Additionally, a downgrade in our credit or changes in the financial markets may limit financial institutions' willingness to participate in our supplier financing arrangements, which may result in vendors seeking to renegotiate their payment terms. Moreover, significant deterioration in the financial condition of large financial institutions could result in a severe loss of liquidity and availability of credit in global credit markets and in more stringent 20 Table of Contents Table of Contents Table of Contents liability due to claims arising from customers, financial institutions, AutoZoners, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation.​We are subject to a complex and evolving body of laws and regulations regarding data privacy and may face increased costs as a result of changes in, enforcement of, or the adoption of new laws and regulations. These costs may have a material adverse impact on our business and results of operations. ​The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws. The potential effects of the various laws regulating the collection, transfer, use and other types of processing of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage.​Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel. There can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body.​Indebtedness, Financial and Market RisksWe are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us.​We are self-insured up to certain limits for workers' compensation, employee group medical, general liability, product liability, property and automobile. The types and amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements. Our reserves are established using historical trends and, where appropriate, using a third-party actuary to estimate costs to settle reported claims and claims incurred but not yet reported. Estimated costs are subject to a variety of assumptions and other factors including the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. Material increases in the number of insurance claims, changes to healthcare costs, accident frequency and severity, legal expenses and other factors could result in unfavorable difference between actual self-insurance costs and our reserve estimates. As a result, our self-insurance costs could increase which may adversely affect our business, results of operations, financial condition and cash flows.​A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities.​Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings. Additionally, a downgrade in our credit or changes in the financial markets may limit financial institutions' willingness to participate in our supplier financing arrangements, which may result in vendors seeking to renegotiate their payment terms. Moreover, significant deterioration in the financial condition of large financial institutions could result in a severe loss of liquidity and availability of credit in global credit markets and in more stringent liability due to claims arising from customers, financial institutions, AutoZoners, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation.​We are subject to a complex and evolving body of laws and regulations regarding data privacy and may face increased costs as a result of changes in, enforcement of, or the adoption of new laws and regulations. These costs may have a material adverse impact on our business and results of operations. ​The regulatory environment related to information security, data collection, processing and use, and data privacy is becoming increasingly rigorous and complex. Multiple states in the U.S. have passed, and continue to pass, data protection laws. The potential effects of the various laws regulating the collection, transfer, use and other types of processing of personal or protected information are far-reaching and may require significant time, resources and costs to comply, may require changes to our existing practices and processes that are not advantageous to our business, and otherwise limit our ability to use data to provide a more personalized customer experience or as otherwise desired. In addition, failure to comply with applicable requirements by us or our business partners or third-party service providers or vendors could subject us to fines, sanctions, governmental investigations, lawsuits or reputational damage.​Additionally, while we seek to comply with these various laws as they take effect, many of the concepts are novel. There can be no assurance that compliance efforts taken by us in good faith will be sufficient, and we may be the subject of an investigation or enforcement action instituted by a state agency or other regulatory body.​Indebtedness, Financial and Market RisksWe are self-insured for certain costs associated with our operations and an increase in our insurance claims and expenses may have a material negative impact on us.​We are self-insured up to certain limits for workers' compensation, employee group medical, general liability, product liability, property and automobile. The types and amounts of insurance may vary from time to time based on our decisions with respect to risk retention and regulatory requirements. Our reserves are established using historical trends and, where appropriate, using a third-party actuary to estimate costs to settle reported claims and claims incurred but not yet reported. Estimated costs are subject to a variety of assumptions and other factors including the severity, duration and frequency of claims, legal costs associated with claims, healthcare trends and projected inflation of related factors. Material increases in the number of insurance claims, changes to healthcare costs, accident frequency and severity, legal expenses and other factors could result in unfavorable difference between actual self-insurance costs and our reserve estimates. As a result, our self-insurance costs could increase which may adversely affect our business, results of operations, financial condition and cash flows.​A downgrade in our credit ratings or a general disruption in the credit markets could make it more difficult for us to access funds, refinance our debt, obtain new funding or issue debt securities.​Our short-term and long-term debt is rated investment grade by the major rating agencies. These investment-grade credit ratings have historically allowed us to take advantage of lower interest rates and other favorable terms on our short-term credit lines, in our senior debt offerings and in the commercial paper markets. To maintain our investment-grade ratings, we are required to meet certain financial performance ratios. A change by the rating agencies in these ratios, an increase in our debt, and/or a decline in our earnings could result in downgrades in our credit ratings. A downgrade in our credit ratings could limit our access to public debt markets, limit the institutions willing to provide credit facilities to us, result in more restrictive financial and other covenants in our public and private debt and would likely significantly increase our overall borrowing costs and adversely affect our earnings. Additionally, a downgrade in our credit or changes in the financial markets may limit financial institutions' willingness to participate in our supplier financing arrangements, which may result in vendors seeking to renegotiate their payment terms. Moreover, significant deterioration in the financial condition of large financial institutions could result in a severe loss of liquidity and availability of credit in global credit markets and in more stringent liability due to claims arising from customers, financial institutions, AutoZoners, regulatory authorities, payment card issuers and others. We maintain insurance coverage that may protect us from losses or claims in connection with certain incidents; however, our insurance coverage may not be sufficient to cover significant losses in any particular situation. ​ --- ## Modified: Note E - Income Taxes **Key changes:** - Reworded sentence: "The components of operating income before income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, (in thousands) ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 2,663,148 ​ $ 2,621,714 ​ $ 2,429,262 International ​ 673,982 ​ 545,900 ​ 649,829 ​ ​ $ 3,337,130 ​ $ 3,167,614 $ 3,079,091 ​ 60 60 Table of ContentsThe provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,(in thousands) 2024​2023​2022​​​​​​​​​​Current tax provision (benefit): ​ ​ ​ Federal​$ 846,176​$ 491,338​$ 341,462State​ 54,837​ 86,687​ 48,490International​ 193,794​ 154,907​ 122,381Purchased tax credits​​ (368,870)​​ (68,037)​​ (48,440)​​ 725,937​ 664,895​ 463,893Deferred tax provision (benefit):​ ​ ​ Federal​ (163,775)​ 26,858​ 157,807State​ 12,264​ (21,847)​ 34,564International​ (10,616)​ (24,126)​ (9,719)Purchased tax credits​​ 110,893​​ (6,592)​​ 2,942​​ (51,234)​ (25,707)​ 185,594Income tax expense​$ 674,703​$ 639,188​$ 649,487​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 31,​August 26,​August 27,​(in thousands)​2024​2023​2022​​​​​​​​ Federal tax at statutory U.S." - Reworded sentence: "The provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,(in thousands) 2024​2023​2022​​​​​​​​​​Current tax provision (benefit): ​ ​ ​ Federal​$ 846,176​$ 491,338​$ 341,462State​ 54,837​ 86,687​ 48,490International​ 193,794​ 154,907​ 122,381Purchased tax credits​​ (368,870)​​ (68,037)​​ (48,440)​​ 725,937​ 664,895​ 463,893Deferred tax provision (benefit):​ ​ ​ Federal​ (163,775)​ 26,858​ 157,807State​ 12,264​ (21,847)​ 34,564International​ (10,616)​ (24,126)​ (9,719)Purchased tax credits​​ 110,893​​ (6,592)​​ 2,942​​ (51,234)​ (25,707)​ 185,594Income tax expense​$ 674,703​$ 639,188​$ 649,487​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 31,​August 26,​August 27,​(in thousands)​2024​2023​2022​​​​​​​​ Federal tax at statutory U.S." - Reworded sentence: "61 61 Table of Contents​Significant components of the Company's deferred tax assets and liabilities were as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Deferred tax assets: ​ ​ Net operating loss and credit carryforwards​$ 47,030​$ 45,081Accrued benefits​ 86,119​ 82,318Operating lease liabilities​​ 722,156​​ 698,728Federal credit carryforwards​​ 131,895​​ - Other​ 102,820​ 90,897Total deferred tax assets​ 1,090,020​ 917,024Valuation allowances​ (26,922)​ (24,940)Net deferred tax assets​ 1,063,098​ 892,084​​​​​​​Deferred tax liabilities:​ ​ Property and equipment​ (228,184)​ (194,686)Inventory​ (499,022)​ (451,360)Operating lease assets​​ (660,949)​​ (652,652)Other​ (38,320)​ (43,662)Deferred tax liabilities​ (1,426,475)​ (1,342,360)​​​​​​​Net deferred tax liabilities​$ (363,377)​$ (450,276)​​​​​​​​For the year ended August 31, 2024, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries." - Reworded sentence: "Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes.​As of August 31, 2024, we have not recorded incremental income taxes for outside basis differences of $386.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations." - Reworded sentence: "​The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective for our tax periods ending August 30, 2025 and forward." **Prior (2023):** The components of income from continuing operations before income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 26, ​ August 27, ​ August 28, (in thousands) ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 2,621,714 ​ $ 2,429,262 ​ $ 2,436,548 International ​ 545,900 ​ 649,829 ​ 312,642 ​ ​ $ 3,167,614 ​ $ 3,079,091 $ 2,749,190 ​ 62 62 Table of ContentsThe provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands) 2023​2022​2021​​​​​​​​​​Current: ​ ​ ​ Federal​$ 423,301​$ 293,022​$ 438,686State​ 86,687​ 48,490​ 79,271International​ 154,907​ 122,381​ 95,351​​ 664,895​ 463,893​ 613,308Deferred:​ ​ ​ Federal​ 20,266​ 160,749​ (21,366)State​ (21,847)​ 34,564​ (1,707)International​ (24,126)​ (9,719)​ (11,359)​​ (25,707)​ 185,594​ (34,432)Income tax expense​$ 639,188​$ 649,487​$ 578,876​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 26,​August 27,​August 28,​(in thousands)​2023​2022​2021​​​​​​​​ Federal tax at statutory U.S. income tax rate 21.0% 21.0% 21.0%State income taxes, net 1.6% 2.1% 2.2%Share-based compensation (2.3)% (1.6)% (1.7)% US Tax on Non-U.S. Income (GILTI and Subpart F)​ 3.3% 3.1% 2.8% Non-U.S. Permanent Differences​ (1.4)% (1.5)% (0.4)% Foreign Tax Credits​ (2.3)% (1.9)% (1.7)% Other 0.3% (0.1)% (1.1)% Effective tax rate 20.2% 21.1% 21.1%​For the year ended August 26, 2023, August 27, 2022, and August 28, 2021, the Company recognized excess tax benefits from stock option exercises of $92.2 million, $63.2 million, and $56.4 million, respectively.The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax.63 Table of Contents Table of Contents Table of Contents The provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands) 2023​2022​2021​​​​​​​​​​Current: ​ ​ ​ Federal​$ 423,301​$ 293,022​$ 438,686State​ 86,687​ 48,490​ 79,271International​ 154,907​ 122,381​ 95,351​​ 664,895​ 463,893​ 613,308Deferred:​ ​ ​ Federal​ 20,266​ 160,749​ (21,366)State​ (21,847)​ 34,564​ (1,707)International​ (24,126)​ (9,719)​ (11,359)​​ (25,707)​ 185,594​ (34,432)Income tax expense​$ 639,188​$ 649,487​$ 578,876​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 26,​August 27,​August 28,​(in thousands)​2023​2022​2021​​​​​​​​ Federal tax at statutory U.S. income tax rate 21.0% 21.0% 21.0%State income taxes, net 1.6% 2.1% 2.2%Share-based compensation (2.3)% (1.6)% (1.7)% US Tax on Non-U.S. Income (GILTI and Subpart F)​ 3.3% 3.1% 2.8% Non-U.S. Permanent Differences​ (1.4)% (1.5)% (0.4)% Foreign Tax Credits​ (2.3)% (1.9)% (1.7)% Other 0.3% (0.1)% (1.1)% Effective tax rate 20.2% 21.1% 21.1%​For the year ended August 26, 2023, August 27, 2022, and August 28, 2021, the Company recognized excess tax benefits from stock option exercises of $92.2 million, $63.2 million, and $56.4 million, respectively.The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax. The provision for income tax expense consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 26, ​ August 27, ​ August 28, (in thousands) 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current: ​ ​ ​ Federal ​ $ 423,301 ​ $ 293,022 ​ $ 438,686 State ​ 86,687 ​ 48,490 ​ 79,271 International ​ 154,907 ​ 122,381 ​ 95,351 ​ ​ 664,895 ​ 463,893 ​ 613,308 Deferred: ​ ​ ​ Federal ​ 20,266 ​ 160,749 ​ (21,366) State ​ (21,847) ​ 34,564 ​ (1,707) International ​ (24,126) ​ (9,719) ​ (11,359) ​ ​ (25,707) ​ 185,594 ​ (34,432) Income tax expense ​ $ 639,188 ​ $ 649,487 ​ $ 578,876 ​ A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ August 26, ​ August 27, ​ August 28, ​ (in thousands) ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ Federal tax at statutory U.S. income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net 1.6 % 2.1 % 2.2 % Share-based compensation (2.3) % (1.6) % (1.7) % US Tax on Non-U.S. Income (GILTI and Subpart F) ​ 3.3 % 3.1 % 2.8 % Non-U.S. Permanent Differences ​ (1.4) % (1.5) % (0.4) % Foreign Tax Credits ​ (2.3) % (1.9) % (1.7) % Other 0.3 % (0.1) % (1.1) % Effective tax rate 20.2 % 21.1 % 21.1 % ​ For the year ended August 26, 2023, August 27, 2022, and August 28, 2021, the Company recognized excess tax benefits from stock option exercises of $92.2 million, $63.2 million, and $56.4 million, respectively. The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax. 63 63 Table of Contents​Significant components of the Company's deferred tax assets and liabilities were as follows:​​​​​​​​​ August 26, August 27,(in thousands)​2023​2022​​​​​​​Deferred tax assets: ​ ​ Net operating loss and credit carryforwards​$ 45,081​$ 33,924Accrued benefits​ 82,318​ 60,561Operating lease liabilities​​ 698,728​​ 692,730Other​ 90,897​ 79,850Total deferred tax assets​ 917,024​ 867,065Valuation allowances​ (24,940)​ (27,790)Net deferred tax assets​ 892,084​ 839,275​​​​​​​Deferred tax liabilities:​ ​ Property and equipment​ (194,686)​ (197,482)Inventory​ (451,360)​ (448,273)Operating lease assets​​ (652,652)​​ (650,145)Other​ (43,662)​ (25,211)Deferred tax liabilities​ (1,342,360)​ (1,321,111)​​​​​​​Net deferred tax liabilities​$ (450,276)​$ (481,836)​​​​​​​​For the year ended August 26, 2023, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes.​As of August 26, 2023, we have not recorded incremental income taxes for outside basis differences of $383.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​At August 26, 2023 and August 27, 2022, the Company had net operating loss ("NOL") carryforwards totaling approximately $314.6 million ($37.2 million tax effected) and $241.2 million ($28.9 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2024 through 2043. At August 26, 2023 and August 27, 2022, the Company had deferred tax assets for income tax credit carryforwards of $7.9 million and $5.0 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2024 through 2033.​At August 26, 2023 and August 27, 2022, the Company had a valuation allowance of $24.9 million and $27.8 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized.​64 Table of Contents Table of Contents Table of Contents ​Significant components of the Company's deferred tax assets and liabilities were as follows:​​​​​​​​​ August 26, August 27,(in thousands)​2023​2022​​​​​​​Deferred tax assets: ​ ​ Net operating loss and credit carryforwards​$ 45,081​$ 33,924Accrued benefits​ 82,318​ 60,561Operating lease liabilities​​ 698,728​​ 692,730Other​ 90,897​ 79,850Total deferred tax assets​ 917,024​ 867,065Valuation allowances​ (24,940)​ (27,790)Net deferred tax assets​ 892,084​ 839,275​​​​​​​Deferred tax liabilities:​ ​ Property and equipment​ (194,686)​ (197,482)Inventory​ (451,360)​ (448,273)Operating lease assets​​ (652,652)​​ (650,145)Other​ (43,662)​ (25,211)Deferred tax liabilities​ (1,342,360)​ (1,321,111)​​​​​​​Net deferred tax liabilities​$ (450,276)​$ (481,836)​​​​​​​​For the year ended August 26, 2023, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes.​As of August 26, 2023, we have not recorded incremental income taxes for outside basis differences of $383.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​At August 26, 2023 and August 27, 2022, the Company had net operating loss ("NOL") carryforwards totaling approximately $314.6 million ($37.2 million tax effected) and $241.2 million ($28.9 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2024 through 2043. At August 26, 2023 and August 27, 2022, the Company had deferred tax assets for income tax credit carryforwards of $7.9 million and $5.0 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2024 through 2033.​At August 26, 2023 and August 27, 2022, the Company had a valuation allowance of $24.9 million and $27.8 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized.​ ​ Significant components of the Company's deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ August 26, August 27, (in thousands) ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets: ​ ​ Net operating loss and credit carryforwards ​ $ 45,081 ​ $ 33,924 Accrued benefits ​ 82,318 ​ 60,561 Operating lease liabilities ​ ​ 698,728 ​ ​ 692,730 Other ​ 90,897 ​ 79,850 Total deferred tax assets ​ 917,024 ​ 867,065 Valuation allowances ​ (24,940) ​ (27,790) Net deferred tax assets ​ 892,084 ​ 839,275 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ Property and equipment ​ (194,686) ​ (197,482) Inventory ​ (451,360) ​ (448,273) Operating lease assets ​ ​ (652,652) ​ ​ (650,145) Other ​ (43,662) ​ (25,211) Deferred tax liabilities ​ (1,342,360) ​ (1,321,111) ​ ​ ​ ​ ​ ​ ​ Net deferred tax liabilities ​ $ (450,276) ​ $ (481,836) ​ ​ ​ ​ ​ ​ ​ ​ For the year ended August 26, 2023, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes. ​ As of August 26, 2023, we have not recorded incremental income taxes for outside basis differences of $383.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​ At August 26, 2023 and August 27, 2022, the Company had net operating loss ("NOL") carryforwards totaling approximately $314.6 million ($37.2 million tax effected) and $241.2 million ($28.9 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2024 through 2043. At August 26, 2023 and August 27, 2022, the Company had deferred tax assets for income tax credit carryforwards of $7.9 million and $5.0 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2024 through 2033. ​ At August 26, 2023 and August 27, 2022, the Company had a valuation allowance of $24.9 million and $27.8 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized. ​ 64 64 Table of ContentsA reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:​​​​​​​​ August 26, August 27,(in thousands)​2023​2022​​​​​​​Beginning balance​$ 49,316​$ 39,797Additions based on tax positions related to the current year​ 9,416​ 17,488Additions for tax positions of prior years​ 8,012​ 3,008Reductions for tax positions of prior years​ (5,336)​ (6,806)Reductions due to settlements​ (6,800)​ (1,539)Reductions due to statute of limitations​ (5,121)​ (2,632)Ending balance​$ 49,487​$ 49,316​Included in the August 26, 2023 and the August 27, 2022 balances are $37.0 million and $32.4 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $8.6 million and $11.5 million for August 26, 2023 and August 27, 2022, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability.​The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $10.1 million and $5.7 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 26, 2023 and August 27, 2022, respectively.​The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2019 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 26, 2023, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $6.2 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates.​Note E - Fair Value MeasurementsThe Company defines fair value as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In accordance with ASC 820, Fair Value Measurements and Disclosures, the Company uses the fair value hierarchy, which prioritizes the inputs used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are set forth below:Level 1 inputs - unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.Level 2 inputs - inputs other than quoted market prices included within Level 1 that are observable, either directly or indirectly, for the asset or liability.Level 3 inputs - unobservable inputs for the asset or liability, which are based on the Company's own assumptions as there is little, if any, observable activity in identical assets or liabilities.65 Table of Contents Table of Contents Table of Contents A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:​​​​​​​​ August 26, August 27,(in thousands)​2023​2022​​​​​​​Beginning balance​$ 49,316​$ 39,797Additions based on tax positions related to the current year​ 9,416​ 17,488Additions for tax positions of prior years​ 8,012​ 3,008Reductions for tax positions of prior years​ (5,336)​ (6,806)Reductions due to settlements​ (6,800)​ (1,539)Reductions due to statute of limitations​ (5,121)​ (2,632)Ending balance​$ 49,487​$ 49,316​Included in the August 26, 2023 and the August 27, 2022 balances are $37.0 million and $32.4 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $8.6 million and $11.5 million for August 26, 2023 and August 27, 2022, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability.​The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $10.1 million and $5.7 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 26, 2023 and August 27, 2022, respectively.​The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2019 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 26, 2023, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $6.2 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates.​Note E - Fair Value MeasurementsThe 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. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 26, August 27, (in thousands) ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 49,316 ​ $ 39,797 Additions based on tax positions related to the current year ​ 9,416 ​ 17,488 Additions for tax positions of prior years ​ 8,012 ​ 3,008 Reductions for tax positions of prior years ​ (5,336) ​ (6,806) Reductions due to settlements ​ (6,800) ​ (1,539) Reductions due to statute of limitations ​ (5,121) ​ (2,632) Ending balance ​ $ 49,487 ​ $ 49,316 ​ Included in the August 26, 2023 and the August 27, 2022 balances are $37.0 million and $32.4 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $8.6 million and $11.5 million for August 26, 2023 and August 27, 2022, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability. ​ The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $10.1 million and $5.7 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 26, 2023 and August 27, 2022, respectively. ​ The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2019 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 26, 2023, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $6.2 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates. ​ **Current (2024):** The components of operating income before income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, (in thousands) ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Domestic ​ $ 2,663,148 ​ $ 2,621,714 ​ $ 2,429,262 International ​ 673,982 ​ 545,900 ​ 649,829 ​ ​ $ 3,337,130 ​ $ 3,167,614 $ 3,079,091 ​ 60 60 Table of ContentsThe provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,(in thousands) 2024​2023​2022​​​​​​​​​​Current tax provision (benefit): ​ ​ ​ Federal​$ 846,176​$ 491,338​$ 341,462State​ 54,837​ 86,687​ 48,490International​ 193,794​ 154,907​ 122,381Purchased tax credits​​ (368,870)​​ (68,037)​​ (48,440)​​ 725,937​ 664,895​ 463,893Deferred tax provision (benefit):​ ​ ​ Federal​ (163,775)​ 26,858​ 157,807State​ 12,264​ (21,847)​ 34,564International​ (10,616)​ (24,126)​ (9,719)Purchased tax credits​​ 110,893​​ (6,592)​​ 2,942​​ (51,234)​ (25,707)​ 185,594Income tax expense​$ 674,703​$ 639,188​$ 649,487​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 31,​August 26,​August 27,​(in thousands)​2024​2023​2022​​​​​​​​ Federal tax at statutory U.S. income tax rate 21.0% 21.0% 21.0%State income taxes, net 1.6% 1.6% 2.1%Share-based compensation (1.9)% (2.3)% (1.6)% US Tax on Non-U.S. Income (Subpart F)​ 2.9% 2.5% 2.3% US Tax on Non-U.S. Income (GILTI)​ 1.2% 0.8% 0.8% Non-U.S. Permanent Differences​ (1.3)% (1.4)% (1.5)% Non-US Rate Differences​ 1.1% 0.4% 1.0% Foreign Tax Credits​ (2.9)% (2.3)% (1.9)% Other (1.5)% (0.1)% (1.1)% Effective tax rate 20.2% 20.2% 21.1%​For the year ended August 31, 2024, August 26, 2023, and August 27, 2022, the Company recognized excess tax benefits from stock option exercises of $81.4 million, $92.2 million, and $63.2 million, respectively.The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax.61 Table of Contents Table of Contents Table of Contents The provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,(in thousands) 2024​2023​2022​​​​​​​​​​Current tax provision (benefit): ​ ​ ​ Federal​$ 846,176​$ 491,338​$ 341,462State​ 54,837​ 86,687​ 48,490International​ 193,794​ 154,907​ 122,381Purchased tax credits​​ (368,870)​​ (68,037)​​ (48,440)​​ 725,937​ 664,895​ 463,893Deferred tax provision (benefit):​ ​ ​ Federal​ (163,775)​ 26,858​ 157,807State​ 12,264​ (21,847)​ 34,564International​ (10,616)​ (24,126)​ (9,719)Purchased tax credits​​ 110,893​​ (6,592)​​ 2,942​​ (51,234)​ (25,707)​ 185,594Income tax expense​$ 674,703​$ 639,188​$ 649,487​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 31,​August 26,​August 27,​(in thousands)​2024​2023​2022​​​​​​​​ Federal tax at statutory U.S. income tax rate 21.0% 21.0% 21.0%State income taxes, net 1.6% 1.6% 2.1%Share-based compensation (1.9)% (2.3)% (1.6)% US Tax on Non-U.S. Income (Subpart F)​ 2.9% 2.5% 2.3% US Tax on Non-U.S. Income (GILTI)​ 1.2% 0.8% 0.8% Non-U.S. Permanent Differences​ (1.3)% (1.4)% (1.5)% Non-US Rate Differences​ 1.1% 0.4% 1.0% Foreign Tax Credits​ (2.9)% (2.3)% (1.9)% Other (1.5)% (0.1)% (1.1)% Effective tax rate 20.2% 20.2% 21.1%​For the year ended August 31, 2024, August 26, 2023, and August 27, 2022, the Company recognized excess tax benefits from stock option exercises of $81.4 million, $92.2 million, and $63.2 million, respectively.The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax. The provision for income tax expense consisted of the following:​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,(in thousands) 2024​2023​2022​​​​​​​​​​Current tax provision (benefit): ​ ​ ​ Federal​$ 846,176​$ 491,338​$ 341,462State​ 54,837​ 86,687​ 48,490International​ 193,794​ 154,907​ 122,381Purchased tax credits​​ (368,870)​​ (68,037)​​ (48,440)​​ 725,937​ 664,895​ 463,893Deferred tax provision (benefit):​ ​ ​ Federal​ (163,775)​ 26,858​ 157,807State​ 12,264​ (21,847)​ 34,564International​ (10,616)​ (24,126)​ (9,719)Purchased tax credits​​ 110,893​​ (6,592)​​ 2,942​​ (51,234)​ (25,707)​ 185,594Income tax expense​$ 674,703​$ 639,188​$ 649,487​A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:​​​​​​​​​​Year Ended​ August 31,​August 26,​August 27,​(in thousands)​2024​2023​2022​​​​​​​​ Federal tax at statutory U.S. income tax rate 21.0% 21.0% 21.0%State income taxes, net 1.6% 1.6% 2.1%Share-based compensation (1.9)% (2.3)% (1.6)% US Tax on Non-U.S. Income (Subpart F)​ 2.9% 2.5% 2.3% US Tax on Non-U.S. Income (GILTI)​ 1.2% 0.8% 0.8% Non-U.S. Permanent Differences​ (1.3)% (1.4)% (1.5)% Non-US Rate Differences​ 1.1% 0.4% 1.0% Foreign Tax Credits​ (2.9)% (2.3)% (1.9)% Other (1.5)% (0.1)% (1.1)% Effective tax rate 20.2% 20.2% 21.1%​For the year ended August 31, 2024, August 26, 2023, and August 27, 2022, the Company recognized excess tax benefits from stock option exercises of $81.4 million, $92.2 million, and $63.2 million, respectively.The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax. The provision for income tax expense consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, (in thousands) 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current tax provision (benefit): ​ ​ ​ Federal ​ $ 846,176 ​ $ 491,338 ​ $ 341,462 State ​ 54,837 ​ 86,687 ​ 48,490 International ​ 193,794 ​ 154,907 ​ 122,381 Purchased tax credits ​ ​ (368,870) ​ ​ (68,037) ​ ​ (48,440) ​ ​ 725,937 ​ 664,895 ​ 463,893 Deferred tax provision (benefit): ​ ​ ​ Federal ​ (163,775) ​ 26,858 ​ 157,807 State ​ 12,264 ​ (21,847) ​ 34,564 International ​ (10,616) ​ (24,126) ​ (9,719) Purchased tax credits ​ ​ 110,893 ​ ​ (6,592) ​ ​ 2,942 ​ ​ (51,234) ​ (25,707) ​ 185,594 Income tax expense ​ $ 674,703 ​ $ 639,188 ​ $ 649,487 ​ A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ August 31, ​ August 26, ​ August 27, ​ (in thousands) ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ Federal tax at statutory U.S. income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net 1.6 % 1.6 % 2.1 % Share-based compensation (1.9) % (2.3) % (1.6) % US Tax on Non-U.S. Income (Subpart F) ​ 2.9 % 2.5 % 2.3 % US Tax on Non-U.S. Income (GILTI) ​ 1.2 % 0.8 % 0.8 % Non-U.S. Permanent Differences ​ (1.3) % (1.4) % (1.5) % Non-US Rate Differences ​ 1.1 % 0.4 % 1.0 % Foreign Tax Credits ​ (2.9) % (2.3) % (1.9) % Other (1.5) % (0.1) % (1.1) % Effective tax rate 20.2 % 20.2 % 21.1 % ​ For the year ended August 31, 2024, August 26, 2023, and August 27, 2022, the Company recognized excess tax benefits from stock option exercises of $81.4 million, $92.2 million, and $63.2 million, respectively. The Company is subject to a tax on global intangible low-taxed income ("GILTI") which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for this tax. 61 61 Table of Contents​Significant components of the Company's deferred tax assets and liabilities were as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Deferred tax assets: ​ ​ Net operating loss and credit carryforwards​$ 47,030​$ 45,081Accrued benefits​ 86,119​ 82,318Operating lease liabilities​​ 722,156​​ 698,728Federal credit carryforwards​​ 131,895​​ - Other​ 102,820​ 90,897Total deferred tax assets​ 1,090,020​ 917,024Valuation allowances​ (26,922)​ (24,940)Net deferred tax assets​ 1,063,098​ 892,084​​​​​​​Deferred tax liabilities:​ ​ Property and equipment​ (228,184)​ (194,686)Inventory​ (499,022)​ (451,360)Operating lease assets​​ (660,949)​​ (652,652)Other​ (38,320)​ (43,662)Deferred tax liabilities​ (1,426,475)​ (1,342,360)​​​​​​​Net deferred tax liabilities​$ (363,377)​$ (450,276)​​​​​​​​For the year ended August 31, 2024, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes.​As of August 31, 2024, we have not recorded incremental income taxes for outside basis differences of $386.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective for our tax periods ending August 30, 2025 and forward. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting similar legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our effective tax rate.​At August 31, 2024 and August 26, 2023, the Company had net operating loss ("NOL") carryforwards totaling approximately $309.8 million ($37.2 million tax effected) and $314.6 million ($37.2 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2025 through 2043. At August 31, 2024 and August 26, 2023, the Company had deferred tax assets for income tax credit carryforwards of $141.7 million and $7.9 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2025 through 2051.​Pursuant to provisions under the Inflation Reduction Act, enacted in August of 2022, the Company purchased transferable federal tax credits during fiscal year 2024 from various counterparties. Such federal tax credits were purchased at negotiated discounts, resulting in an income tax benefit recorded during the year ended August 31, 62 Table of Contents Table of Contents Table of Contents ​Significant components of the Company's deferred tax assets and liabilities were as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Deferred tax assets: ​ ​ Net operating loss and credit carryforwards​$ 47,030​$ 45,081Accrued benefits​ 86,119​ 82,318Operating lease liabilities​​ 722,156​​ 698,728Federal credit carryforwards​​ 131,895​​ - Other​ 102,820​ 90,897Total deferred tax assets​ 1,090,020​ 917,024Valuation allowances​ (26,922)​ (24,940)Net deferred tax assets​ 1,063,098​ 892,084​​​​​​​Deferred tax liabilities:​ ​ Property and equipment​ (228,184)​ (194,686)Inventory​ (499,022)​ (451,360)Operating lease assets​​ (660,949)​​ (652,652)Other​ (38,320)​ (43,662)Deferred tax liabilities​ (1,426,475)​ (1,342,360)​​​​​​​Net deferred tax liabilities​$ (363,377)​$ (450,276)​​​​​​​​For the year ended August 31, 2024, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes.​As of August 31, 2024, we have not recorded incremental income taxes for outside basis differences of $386.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective for our tax periods ending August 30, 2025 and forward. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting similar legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our effective tax rate.​At August 31, 2024 and August 26, 2023, the Company had net operating loss ("NOL") carryforwards totaling approximately $309.8 million ($37.2 million tax effected) and $314.6 million ($37.2 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2025 through 2043. At August 31, 2024 and August 26, 2023, the Company had deferred tax assets for income tax credit carryforwards of $141.7 million and $7.9 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2025 through 2051.​Pursuant to provisions under the Inflation Reduction Act, enacted in August of 2022, the Company purchased transferable federal tax credits during fiscal year 2024 from various counterparties. Such federal tax credits were purchased at negotiated discounts, resulting in an income tax benefit recorded during the year ended August 31, ​Significant components of the Company's deferred tax assets and liabilities were as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Deferred tax assets: ​ ​ Net operating loss and credit carryforwards​$ 47,030​$ 45,081Accrued benefits​ 86,119​ 82,318Operating lease liabilities​​ 722,156​​ 698,728Federal credit carryforwards​​ 131,895​​ - Other​ 102,820​ 90,897Total deferred tax assets​ 1,090,020​ 917,024Valuation allowances​ (26,922)​ (24,940)Net deferred tax assets​ 1,063,098​ 892,084​​​​​​​Deferred tax liabilities:​ ​ Property and equipment​ (228,184)​ (194,686)Inventory​ (499,022)​ (451,360)Operating lease assets​​ (660,949)​​ (652,652)Other​ (38,320)​ (43,662)Deferred tax liabilities​ (1,426,475)​ (1,342,360)​​​​​​​Net deferred tax liabilities​$ (363,377)​$ (450,276)​​​​​​​​For the year ended August 31, 2024, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes.​As of August 31, 2024, we have not recorded incremental income taxes for outside basis differences of $386.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective for our tax periods ending August 30, 2025 and forward. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting similar legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our effective tax rate.​At August 31, 2024 and August 26, 2023, the Company had net operating loss ("NOL") carryforwards totaling approximately $309.8 million ($37.2 million tax effected) and $314.6 million ($37.2 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2025 through 2043. At August 31, 2024 and August 26, 2023, the Company had deferred tax assets for income tax credit carryforwards of $141.7 million and $7.9 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2025 through 2051.​Pursuant to provisions under the Inflation Reduction Act, enacted in August of 2022, the Company purchased transferable federal tax credits during fiscal year 2024 from various counterparties. Such federal tax credits were purchased at negotiated discounts, resulting in an income tax benefit recorded during the year ended August 31, ​ Significant components of the Company's deferred tax assets and liabilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, August 26, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Deferred tax assets: ​ ​ Net operating loss and credit carryforwards ​ $ 47,030 ​ $ 45,081 Accrued benefits ​ 86,119 ​ 82,318 Operating lease liabilities ​ ​ 722,156 ​ ​ 698,728 Federal credit carryforwards ​ ​ 131,895 ​ ​ - Other ​ 102,820 ​ 90,897 Total deferred tax assets ​ 1,090,020 ​ 917,024 Valuation allowances ​ (26,922) ​ (24,940) Net deferred tax assets ​ 1,063,098 ​ 892,084 ​ ​ ​ ​ ​ ​ ​ Deferred tax liabilities: ​ ​ Property and equipment ​ (228,184) ​ (194,686) Inventory ​ (499,022) ​ (451,360) Operating lease assets ​ ​ (660,949) ​ ​ (652,652) Other ​ (38,320) ​ (43,662) Deferred tax liabilities ​ (1,426,475) ​ (1,342,360) ​ ​ ​ ​ ​ ​ ​ Net deferred tax liabilities ​ $ (363,377) ​ $ (450,276) ​ ​ ​ ​ ​ ​ ​ ​ For the year ended August 31, 2024, the Company asserts indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. The Company does not assert permanent reinvestment of fiscal 2021 through current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of fiscal 2021 through current year earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company's provision for income taxes. ​ As of August 31, 2024, we have not recorded incremental income taxes for outside basis differences of $386.7 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​ The Organization for Economic Co-operation and Development has issued Pillar Two model rules introducing a new global minimum tax of 15% intended to be effective for our tax periods ending August 30, 2025 and forward. While the U.S. has not yet adopted the Pillar Two rules, various other governments around the world are enacting similar legislation. As currently designed, Pillar Two will ultimately apply to our worldwide operations. There remains uncertainty as to the final Pillar Two model rules. We are continuing to evaluate the Pillar Two rules and their potential impact on future periods, but we do not expect the rules to have a material impact on our effective tax rate. ​ At August 31, 2024 and August 26, 2023, the Company had net operating loss ("NOL") carryforwards totaling approximately $309.8 million ($37.2 million tax effected) and $314.6 million ($37.2 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2025 through 2043. At August 31, 2024 and August 26, 2023, the Company had deferred tax assets for income tax credit carryforwards of $141.7 million and $7.9 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2025 through 2051. ​ Pursuant to provisions under the Inflation Reduction Act, enacted in August of 2022, the Company purchased transferable federal tax credits during fiscal year 2024 from various counterparties. Such federal tax credits were purchased at negotiated discounts, resulting in an income tax benefit recorded during the year ended August 31, 62 62 Table of Contents2024. Receivables associated with transferable federal tax credits are recorded (netted) within taxes payable and deferred tax liabilities​At August 31, 2024 and August 26, 2023, the Company had a valuation allowance of $26.9 million and $24.9 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized given the extended carryforward periods referenced.​A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Beginning balance​$ 49,487​$ 49,316Additions based on tax positions related to the current year​ 5,386​ 9,416Additions for tax positions of prior years​ 5,373​ 8,012Reductions for tax positions of prior years​ (8,595)​ (5,336)Reductions due to settlements​ (8,600)​ (6,800)Reductions due to statute of limitations​ (5,065)​ (5,121)Ending balance​$ 37,986​$ 49,487​Included in the August 31, 2024 and the August 26, 2023 balances are $32.1 million and $37.0 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $3.8 million and $8.6 million for August 31, 2024 and August 26, 2023, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability.​The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $11.2 million and $10.1 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 31, 2024 and August 26, 2023, respectively.​The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2020 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 31, 2024, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $13.1 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates.Note F - Supplier Financing ProgramsThe 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 August 31, 2024 and August 26, 2023, the Company had supplier obligations outstanding that had been confirmed under these arrangements of $4.9 billion and $4.8 billion, respectively, which are included in Accounts payable and $226.7 million and $224.8 million, respectively, which are included in Other long-term liabilities in the Condensed Consolidated Balance Sheets.63 Table of Contents Table of Contents Table of Contents 2024. Receivables associated with transferable federal tax credits are recorded (netted) within taxes payable and deferred tax liabilities​At August 31, 2024 and August 26, 2023, the Company had a valuation allowance of $26.9 million and $24.9 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized given the extended carryforward periods referenced.​A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Beginning balance​$ 49,487​$ 49,316Additions based on tax positions related to the current year​ 5,386​ 9,416Additions for tax positions of prior years​ 5,373​ 8,012Reductions for tax positions of prior years​ (8,595)​ (5,336)Reductions due to settlements​ (8,600)​ (6,800)Reductions due to statute of limitations​ (5,065)​ (5,121)Ending balance​$ 37,986​$ 49,487​Included in the August 31, 2024 and the August 26, 2023 balances are $32.1 million and $37.0 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $3.8 million and $8.6 million for August 31, 2024 and August 26, 2023, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability.​The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $11.2 million and $10.1 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 31, 2024 and August 26, 2023, respectively.​The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2020 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 31, 2024, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $13.1 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates.Note F - Supplier Financing ProgramsThe 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 August 31, 2024 and August 26, 2023, the Company had supplier obligations outstanding that had been confirmed under these arrangements of $4.9 billion and $4.8 billion, respectively, which are included in Accounts payable and $226.7 million and $224.8 million, respectively, which are included in Other long-term liabilities in the Condensed Consolidated Balance Sheets. 2024. Receivables associated with transferable federal tax credits are recorded (netted) within taxes payable and deferred tax liabilities​At August 31, 2024 and August 26, 2023, the Company had a valuation allowance of $26.9 million and $24.9 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized given the extended carryforward periods referenced.​A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:​​​​​​​​ August 31, August 26,(in thousands)​2024​2023​​​​​​​Beginning balance​$ 49,487​$ 49,316Additions based on tax positions related to the current year​ 5,386​ 9,416Additions for tax positions of prior years​ 5,373​ 8,012Reductions for tax positions of prior years​ (8,595)​ (5,336)Reductions due to settlements​ (8,600)​ (6,800)Reductions due to statute of limitations​ (5,065)​ (5,121)Ending balance​$ 37,986​$ 49,487​Included in the August 31, 2024 and the August 26, 2023 balances are $32.1 million and $37.0 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $3.8 million and $8.6 million for August 31, 2024 and August 26, 2023, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability.​The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $11.2 million and $10.1 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 31, 2024 and August 26, 2023, respectively.​The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2020 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 31, 2024, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $13.1 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates.Note F - Supplier Financing ProgramsThe 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 August 31, 2024 and August 26, 2023, the Company had supplier obligations outstanding that had been confirmed under these arrangements of $4.9 billion and $4.8 billion, respectively, which are included in Accounts payable and $226.7 million and $224.8 million, respectively, which are included in Other long-term liabilities in the Condensed Consolidated Balance Sheets. 2024. Receivables associated with transferable federal tax credits are recorded (netted) within taxes payable and deferred tax liabilities ​ At August 31, 2024 and August 26, 2023, the Company had a valuation allowance of $26.9 million and $24.9 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized given the extended carryforward periods referenced. ​ A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, August 26, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 49,487 ​ $ 49,316 Additions based on tax positions related to the current year ​ 5,386 ​ 9,416 Additions for tax positions of prior years ​ 5,373 ​ 8,012 Reductions for tax positions of prior years ​ (8,595) ​ (5,336) Reductions due to settlements ​ (8,600) ​ (6,800) Reductions due to statute of limitations ​ (5,065) ​ (5,121) Ending balance ​ $ 37,986 ​ $ 49,487 ​ Included in the August 31, 2024 and the August 26, 2023 balances are $32.1 million and $37.0 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company's effective tax rate. The balances above also include amounts of $3.8 million and $8.6 million for August 31, 2024 and August 26, 2023, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability. ​ The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $11.2 million and $10.1 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 31, 2024 and August 26, 2023, respectively. ​ The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2020 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 31, 2024, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $13.1 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates. --- ## Modified: Our business depends upon hiring, training and retaining qualified employees, including members of management and other key personnel. **Key changes:** - Reworded sentence: "​ We believe much of our brand value lies in the quality of the approximately 126,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA." - Reworded sentence: "​All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards." - Reworded sentence: "​If any of our significant vendors experience financial difficulties or business disruptions or are otherwise unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products." - Reworded sentence: "​If any of our significant vendors experience financial difficulties or business disruptions or are otherwise unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products." - Reworded sentence: "​Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices." **Prior (2023):** ​ We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​ All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in 16 16 Table of Contentscostly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​If any of our significant vendors experience financial difficulties, business disruptions or are unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business.​A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which have been further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 16% of our purchases in fiscal 2023, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, port labor agreements, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. These and other factors affecting our suppliers and our access to products could adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase.​Our ability to grow depends in part on new store openings, existing store remodels and expansions and effective utilization of our existing supply chain and hub network.​Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores to meet customers' needs on a timely and profitable basis. Accomplishing store development and expansion goals will depend upon a number of factors, including the ability to identify and obtain suitable sites for new and expanded stores in a timely manner and at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations. There can be no assurance we will be able to 17 Table of Contents Table of Contents Table of Contents costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​If any of our significant vendors experience financial difficulties, business disruptions or are unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business.​A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which have been further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 16% of our purchases in fiscal 2023, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, port labor agreements, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. These and other factors affecting our suppliers and our access to products could adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase.​Our ability to grow depends in part on new store openings, existing store remodels and expansions and effective utilization of our existing supply chain and hub network.​Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores to meet customers' needs on a timely and profitable basis. Accomplishing store development and expansion goals will depend upon a number of factors, including the ability to identify and obtain suitable sites for new and expanded stores in a timely manner and at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations. There can be no assurance we will be able to costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​ Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​ If any of our significant vendors experience financial difficulties, business disruptions or are unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales. ​ **Current (2024):** ​ We believe much of our brand value lies in the quality of the approximately 126,000 AutoZoners employed in our stores, distribution centers, store support centers and ALLDATA. Our workforce costs represent our largest operating expense, and our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates and unemployment levels. Our business is also subject to employment laws and regulations, including those related to minimum wage, benefits and scheduling requirements, and these laws are subject to change over time. In addition, the implementation of potential regulatory changes relating to overtime exemptions and benefits for certain employees under federal and state laws could result in increased labor costs to our business and negatively impact our operating results. ​ We compete with other retail businesses for many of our associates in hourly positions, and these positions have historically had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We cannot be assured that we can continue to hire, train and retain qualified employees at current wage rates since we operate in a competitive labor market, and there are currently significant inflationary and other pressures on wages. ​ In the U.S., over the last few years there has been an increase in workers exercising their right to form or join a union, both generally and in the retail industry. Further, the National Labor Relations Board (NLRB) has issued decisions making it easier for employees to organize. Although none of our domestic employees are covered by collective bargaining agreements, there can be no assurance that our domestic employees will not elect to be represented by labor unions in the future. If a significant portion of our work force were to become unionized, our culture and operating model could be challenged by inserting a third party into our current relationships between our leaders and hourly AutoZoners. Further, our labor costs could increase, and our business could be negatively affected by other requirements and expectations that could change our company culture, decrease our flexibility and disrupt our business. Further, our responses to any union organizing efforts could negatively impact how our brand is perceived by customers and AutoZoners and have material adverse effects on our business and financial results. ​ If we are unable to hire, properly train and retain qualified AutoZoners, we could experience higher employment costs, reduced sales, losses of customers and diminution of our brand or company culture, which could adversely affect our earnings. If we do not maintain competitive wages or benefit packages, our customer service could suffer from any resultant declining quality of our workforce, or, alternatively, our earnings could decrease if we increase our wage rates and resultant labor costs. A violation or change in employment and labor laws (including changes in existing employment benefit programs such as health insurance) could have a material adverse effect on our results of operations, financial condition and cash flows. ​ 15 15 Table of ContentsOur future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could materially adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could materially adversely affect our operations.​Inability to acquire and provide quality merchandise at competitive prices could materially adversely affect our sales and results of operations.​We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​If any of our significant vendors experience financial difficulties or business disruptions or are otherwise unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes and other issues, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. Furthermore, these risks may be amplified if we are unable to diversify our supply chain or rely too heavily on a single country to source our or our vendors' products. These and other factors affecting our suppliers and our access to products could materially adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase.​16 Table of Contents Table of Contents Table of Contents Our future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could materially adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could materially adversely affect our operations.​Inability to acquire and provide quality merchandise at competitive prices could materially adversely affect our sales and results of operations.​We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​If any of our significant vendors experience financial difficulties or business disruptions or are otherwise unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes and other issues, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. Furthermore, these risks may be amplified if we are unable to diversify our supply chain or rely too heavily on a single country to source our or our vendors' products. These and other factors affecting our suppliers and our access to products could materially adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase.​ Our future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could materially adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could materially adversely affect our operations.​Inability to acquire and provide quality merchandise at competitive prices could materially adversely affect our sales and results of operations.​We are dependent upon our domestic and international vendors continuing to supply us with quality merchandise at competitive prices and payment terms. If our merchandise offerings do not meet our customers' expectations, or our customers have a negative perception of our merchandise regarding quality, innovation and safety, we could experience lost sales, increased costs and exposure to legal and reputational risk. In those circumstances, it may be difficult and costly for us to rebuild our reputation and regain the confidence of our customers. ​All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety and quality standards. Events that give rise to actual, potential or perceived product safety concerns could expose us to government enforcement action or private litigation, result in costly product recalls and other liabilities and lead to reputational harm and loss of customer confidence. To the extent our suppliers are subject to added government regulation of their product design and/or manufacturing processes, the cost of the merchandise we purchase may rise. ​Furthermore, our vendors are impacted by global economic conditions which in turn impact our ability to source merchandise at competitive prices. For example, inflation, rising interest rates and disruption to the global supply chain have negatively impacted costs and inventory availability and may continue to have a negative impact on future results and profitability. Credit market and other macroeconomic conditions could also have a material adverse effect on the ability of our global and domestic suppliers to finance and operate their businesses. ​If any of our significant vendors experience financial difficulties or business disruptions or are otherwise unable to deliver merchandise to us on a timely basis, or at all, we could have product shortages in our stores that could adversely affect customers' perceptions of us and cause us to lose customers and sales.​We are subject to risks associated with products sourced outside the U.S.​We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes and other issues, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. Furthermore, these risks may be amplified if we are unable to diversify our supply chain or rely too heavily on a single country to source our or our vendors' products. These and other factors affecting our suppliers and our access to products could materially adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase.​ Our future success depends on the skills and experience of our management and other key personnel. The unexpected loss of the services of any such persons could materially adversely affect our operations. There can be no assurance that our succession planning, retention or hiring efforts will be successful. Failure to attract and retain qualified personnel in key roles could materially adversely affect our operations. ​ --- ## Modified: AutoZone, Inc. Consolidated Statements of Cash Flows **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ August 31, ​ August 26, ​ August 27, ​ ​ ​ 2024 ​ 2023 ​ 2022 (in thousands) ​ ​ (53 weeks) ​ (52 weeks) ​ (52 weeks) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization of property and equipment ​ ​ 549,755 ​ ​ 497,577 ​ 442,223 Other non-cash (income) charges ​ ​ (40,000) ​ ​ 44,000 ​ 15,000 Amortization of debt origination fees ​ ​ 11,988 ​ ​ 9,264 ​ 11,276 Deferred income taxes ​ ​ (254,393) ​ ​ (25,707) ​ 185,594 Share-based compensation expense ​ ​ 106,246 ​ ​ 93,087 ​ 70,612 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ (38,282) ​ ​ (6,674) ​ (125,732) Merchandise inventories ​ ​ (453,101) ​ ​ (89,180) ​ (1,005,686) Accounts payable and accrued expenses ​ ​ 244,134 ​ ​ (183,679) ​ 1,224,692 Income taxes ​ ​ 296,398 ​ ​ 92,832 ​ (10,517) Other, net ​ ​ (81,056) ​ ​ (19,158) ​ (25,931) Net cash provided by operating activities ​ ​ 3,004,116 ​ ​ 2,940,788 ​ 3,211,135 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures ​ ​ (1,072,696) ​ ​ (796,657) ​ (672,391) Purchase of marketable debt securities ​ ​ (38,757) ​ ​ (66,917) ​ (56,040) Proceeds from sale of marketable debt securities ​ ​ 40,849 ​ ​ 58,357 ​ 53,882 Investment in tax credit equity investments ​ ​ (227,494) ​ ​ (98,003) ​ ​ (31,537) Other, net ​ ​ 11,592 ​ ​ 27,042 ​ 57,987 Net cash used in investing activities ​ ​ (1,286,506) ​ ​ (876,178) ​ (648,099) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ Net (payments of)/proceeds from commercial paper ​ ​ (629,600) ​ ​ 606,200 ​ 603,400 Proceeds from issuance of debt ​ ​ 2,300,000 ​ ​ 1,750,000 ​ 750,000 Repayment of debt ​ ​ (300,000) ​ ​ (800,000) ​ ​ (500,000) Net proceeds from sale of common stock ​ ​ 176,236 ​ ​ 182,494 ​ 113,934 Purchase of treasury stock ​ ​ (3,140,917) ​ ​ (3,699,552) ​ (4,359,991) Repayment of principal portion of finance lease liabilities ​ ​ (85,258) ​ ​ (81,055) ​ (67,182) Other, net ​ ​ (4,197) ​ ​ (18,169) ​ (10,658) Net cash used in financing activities ​ ​ (1,683,736) ​ ​ (2,060,082) ​ (3,470,497) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash ​ ​ (12,756) ​ ​ 8,146 ​ 506 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ ​ 21,118 ​ ​ 12,674 ​ (906,955) Cash and cash equivalents at beginning of period ​ ​ 277,054 ​ ​ 264,380 ​ 1,171,335 Cash and cash equivalents at end of period ​ $ 298,172 ​ $ 277,054 ​ $ 264,380 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ ​ ​ ​ ​ ​ Interest paid, net of interest cost capitalized ​ $ 353,819 ​ $ 260,866 ​ $ 178,561 Income taxes paid ​ $ 437,552 ​ $ 570,250 ​ $ 461,232 Leased assets obtained in exchange for new finance lease liabilities ​ $ 196,112 ​ $ 58,316 ​ $ 100,711 Leased assets obtained in exchange for new operating lease liabilities ​ $ 415,212 ​ $ 428,150 ​ $ 527,966 ​ See Notes to Consolidated Financial Statements." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 26, ​ August 27, ​ August 28, (in thousands) ​ ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ Net income ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization of property and equipment ​ ​ 497,577 ​ ​ 442,223 ​ 407,683 Other non-cash charges ​ ​ 44,000 ​ ​ 15,000 ​ - Amortization of debt origination fees ​ ​ 9,264 ​ ​ 11,276 ​ 12,858 Deferred income taxes ​ ​ (25,707) ​ ​ 185,594 ​ (34,432) Share-based compensation expense ​ ​ 93,087 ​ ​ 70,612 ​ 56,112 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ (6,674) ​ ​ (125,732) ​ (11,039) Merchandise inventories ​ ​ (89,180) ​ ​ (1,005,686) ​ (138,517) Accounts payable and accrued expenses ​ ​ (183,679) ​ ​ 1,224,692 ​ 1,029,912 Income taxes ​ ​ 92,832 ​ ​ (10,517) ​ 29,467 Other, net ​ ​ (19,158) ​ ​ (25,931) ​ (3,815) Net cash provided by operating activities ​ ​ 2,940,788 ​ ​ 3,211,135 ​ 3,518,543 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures ​ ​ (796,657) ​ ​ (672,391) ​ (621,767) Purchase of marketable debt securities ​ ​ (66,917) ​ ​ (56,040) ​ (63,676) Proceeds from sale of marketable debt securities ​ ​ 58,357 ​ ​ 53,882 ​ 95,393 Investment in tax credit equity investments ​ ​ (98,003) ​ ​ (31,537) ​ ​ (41,712) Proceeds from disposal of capital assets and other, net ​ ​ 27,042 ​ ​ 57,987 ​ 29,984 Net cash used in investing activities ​ ​ (876,178) ​ ​ (648,099) ​ (601,778) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ Net proceeds from commercial paper ​ ​ 606,200 ​ ​ 603,400 ​ - Proceeds from issuance of debt ​ ​ 1,750,000 ​ ​ 750,000 ​ - Repayment of debt ​ ​ (800,000) ​ ​ (500,000) ​ ​ (250,000) Net proceeds from sale of common stock ​ ​ 182,494 ​ ​ 113,934 ​ 187,757 Purchase of treasury stock ​ ​ (3,699,552) ​ ​ (4,359,991) ​ (3,378,321) Repayment of principal portion of finance lease liabilities ​ ​ (81,055) ​ ​ (67,182) ​ (59,853) Other, net ​ ​ (18,169) ​ ​ (10,658) ​ - Net cash used in financing activities ​ ​ (2,060,082) ​ ​ (3,470,497) ​ (3,500,417) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash ​ ​ 8,146 ​ ​ 506 ​ 4,172 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase/(decrease) in cash and cash equivalents ​ ​ 12,674 ​ ​ (906,955) ​ (579,480) Cash and cash equivalents at beginning of period ​ ​ 264,380 ​ ​ 1,171,335 ​ 1,750,815 Cash and cash equivalents at end of period ​ $ 277,054 ​ $ 264,380 ​ $ 1,171,335 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ ​ ​ ​ ​ ​ Interest paid, net of interest cost capitalized ​ $ 260,866 ​ $ 178,561 ​ $ 187,948 Income taxes paid ​ $ 570,250 ​ $ 461,232 ​ $ 574,854 Leased assets obtained in exchange for new finance lease liabilities ​ $ 58,316 ​ $ 100,711 ​ $ 112,095 Leased assets obtained in exchange for new operating lease liabilities ​ $ 428,150 ​ $ 527,966 ​ $ 444,626 ​ See Notes to Consolidated Financial Statements. 50 50 Table of ContentsAutoZone, Inc. Consolidated Statements of Stockholders' Deficit​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​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 - ​ - ​ - ​ 2,170,314​ - ​ - ​ 2,170,314Total other comprehensive income - ​ - ​ - ​ - ​ 46,266​​ - ​ 46,266Purchase of 2,592 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (3,378,321)​ (3,378,321)Retirement of treasury shares (1,044)​ (10)​ (60,005)​ (1,139,173)​ - ​ 1,199,188​ - Issuance of common stock under stock options and stock purchase plans 354​ 3​ 187,754​​ - ​​ - ​​ - ​ 187,757Share-based compensation expense - ​ - ​ 54,425​ - ​ - ​ - ​ 54,425Balance at August 28, 2021 23,007​ 230​ 1,465,669​ (419,829)​ (307,986)​ (2,535,620)​ (1,797,536)Net income - ​ - ​ - ​ 2,429,604​ - ​ - ​ 2,429,604Total other comprehensive income - ​ - ​ - ​ - ​ 7,450​ - ​ 7,450Purchase of 2,220 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (4,359,991)​ (4,359,991)Retirement of treasury shares (2,484)​ (25)​ (292,975)​ (3,339,842)​ - ​ 3,632,842​ - Issuance of common stock under stock options and stock purchase plans 209​ 2​ 113,932​​ - ​​ - ​​ - ​ 113,934Share-based compensation expense - ​ - ​ 67,626​ - ​ - ​ - ​ 67,626Balance at August 27, 2022 20,732​ 207​ 1,354,252​ (1,330,067)​ (300,536)​ (3,262,769)​ (3,538,913)Net income - ​ - ​ - ​ 2,528,426​ - ​ - ​ 2,528,426Total other comprehensive income - ​ - ​ - ​ - ​ 109,700​ - ​ 109,700Purchase of 1,524 shares of treasury stock(1) - ​​ - ​​ - ​​ - ​​ - ​​ (3,723,289)​ (3,723,289)Retirement of treasury shares (2,051)​ (20)​ (143,440)​ (4,157,637)​ - ​ 4,301,097​ - Issuance of common stock under stock options and stock purchase plans 255​ 2​ 182,492​​ - ​​ - ​​ - ​ 182,494Share-based compensation expense - ​ - ​ 91,688​ - ​ - ​ - ​ 91,688Balance at August 26, 2023 18,936​$ 189​$ 1,484,992​$ (2,959,278)​$ (190,836)​$ (2,684,961)​$ (4,349,894)​(1)Inclusive of excise tax of $23.7 million for the year ended August 26, 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.​See Notes to Consolidated Financial Statements.​51 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Statements of Stockholders' Deficit​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​Common​​​​Additional​​​​Other​​​​​​​ Shares Common Paid-in Retained Comprehensive Treasury ​​(in thousands)​Issued​Stock​Capital​Deficit​Loss​Stock​Total​​​​​​​​​​​​​​​​​​​​​Balance at August 29, 2020 23,697​$ 237​$ 1,283,495​$ (1,450,970)​$ (354,252)​$ (356,487)​$ (877,977)Net income - ​ - ​ - ​ 2,170,314​ - ​ - ​ 2,170,314Total other comprehensive income - ​ - ​ - ​ - ​ 46,266​​ - ​ 46,266Purchase of 2,592 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (3,378,321)​ (3,378,321)Retirement of treasury shares (1,044)​ (10)​ (60,005)​ (1,139,173)​ - ​ 1,199,188​ - Issuance of common stock under stock options and stock purchase plans 354​ 3​ 187,754​​ - ​​ - ​​ - ​ 187,757Share-based compensation expense - ​ - ​ 54,425​ - ​ - ​ - ​ 54,425Balance at August 28, 2021 23,007​ 230​ 1,465,669​ (419,829)​ (307,986)​ (2,535,620)​ (1,797,536)Net income - ​ - ​ - ​ 2,429,604​ - ​ - ​ 2,429,604Total other comprehensive income - ​ - ​ - ​ - ​ 7,450​ - ​ 7,450Purchase of 2,220 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (4,359,991)​ (4,359,991)Retirement of treasury shares (2,484)​ (25)​ (292,975)​ (3,339,842)​ - ​ 3,632,842​ - Issuance of common stock under stock options and stock purchase plans 209​ 2​ 113,932​​ - ​​ - ​​ - ​ 113,934Share-based compensation expense - ​ - ​ 67,626​ - ​ - ​ - ​ 67,626Balance at August 27, 2022 20,732​ 207​ 1,354,252​ (1,330,067)​ (300,536)​ (3,262,769)​ (3,538,913)Net income - ​ - ​ - ​ 2,528,426​ - ​ - ​ 2,528,426Total other comprehensive income - ​ - ​ - ​ - ​ 109,700​ - ​ 109,700Purchase of 1,524 shares of treasury stock(1) - ​​ - ​​ - ​​ - ​​ - ​​ (3,723,289)​ (3,723,289)Retirement of treasury shares (2,051)​ (20)​ (143,440)​ (4,157,637)​ - ​ 4,301,097​ - Issuance of common stock under stock options and stock purchase plans 255​ 2​ 182,492​​ - ​​ - ​​ - ​ 182,494Share-based compensation expense - ​ - ​ 91,688​ - ​ - ​ - ​ 91,688Balance at August 26, 2023 18,936​$ 189​$ 1,484,992​$ (2,959,278)​$ (190,836)​$ (2,684,961)​$ (4,349,894)​(1)Inclusive of excise tax of $23.7 million for the year ended August 26, 2023. The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.​See Notes to Consolidated Financial Statements.​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ August 31, ​ August 26, ​ August 27, ​ ​ ​ 2024 ​ 2023 ​ 2022 (in thousands) ​ ​ (53 weeks) ​ (52 weeks) ​ (52 weeks) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization of property and equipment ​ ​ 549,755 ​ ​ 497,577 ​ 442,223 Other non-cash (income) charges ​ ​ (40,000) ​ ​ 44,000 ​ 15,000 Amortization of debt origination fees ​ ​ 11,988 ​ ​ 9,264 ​ 11,276 Deferred income taxes ​ ​ (254,393) ​ ​ (25,707) ​ 185,594 Share-based compensation expense ​ ​ 106,246 ​ ​ 93,087 ​ 70,612 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ​ (38,282) ​ ​ (6,674) ​ (125,732) Merchandise inventories ​ ​ (453,101) ​ ​ (89,180) ​ (1,005,686) Accounts payable and accrued expenses ​ ​ 244,134 ​ ​ (183,679) ​ 1,224,692 Income taxes ​ ​ 296,398 ​ ​ 92,832 ​ (10,517) Other, net ​ ​ (81,056) ​ ​ (19,158) ​ (25,931) Net cash provided by operating activities ​ ​ 3,004,116 ​ ​ 2,940,788 ​ 3,211,135 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ Capital expenditures ​ ​ (1,072,696) ​ ​ (796,657) ​ (672,391) Purchase of marketable debt securities ​ ​ (38,757) ​ ​ (66,917) ​ (56,040) Proceeds from sale of marketable debt securities ​ ​ 40,849 ​ ​ 58,357 ​ 53,882 Investment in tax credit equity investments ​ ​ (227,494) ​ ​ (98,003) ​ ​ (31,537) Other, net ​ ​ 11,592 ​ ​ 27,042 ​ 57,987 Net cash used in investing activities ​ ​ (1,286,506) ​ ​ (876,178) ​ (648,099) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ Net (payments of)/proceeds from commercial paper ​ ​ (629,600) ​ ​ 606,200 ​ 603,400 Proceeds from issuance of debt ​ ​ 2,300,000 ​ ​ 1,750,000 ​ 750,000 Repayment of debt ​ ​ (300,000) ​ ​ (800,000) ​ ​ (500,000) Net proceeds from sale of common stock ​ ​ 176,236 ​ ​ 182,494 ​ 113,934 Purchase of treasury stock ​ ​ (3,140,917) ​ ​ (3,699,552) ​ (4,359,991) Repayment of principal portion of finance lease liabilities ​ ​ (85,258) ​ ​ (81,055) ​ (67,182) Other, net ​ ​ (4,197) ​ ​ (18,169) ​ (10,658) Net cash used in financing activities ​ ​ (1,683,736) ​ ​ (2,060,082) ​ (3,470,497) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash ​ ​ (12,756) ​ ​ 8,146 ​ 506 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net increase (decrease) in cash and cash equivalents ​ ​ 21,118 ​ ​ 12,674 ​ (906,955) Cash and cash equivalents at beginning of period ​ ​ 277,054 ​ ​ 264,380 ​ 1,171,335 Cash and cash equivalents at end of period ​ $ 298,172 ​ $ 277,054 ​ $ 264,380 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ ​ ​ ​ ​ ​ Interest paid, net of interest cost capitalized ​ $ 353,819 ​ $ 260,866 ​ $ 178,561 Income taxes paid ​ $ 437,552 ​ $ 570,250 ​ $ 461,232 Leased assets obtained in exchange for new finance lease liabilities ​ $ 196,112 ​ $ 58,316 ​ $ 100,711 Leased assets obtained in exchange for new operating lease liabilities ​ $ 415,212 ​ $ 428,150 ​ $ 527,966 ​ See Notes to Consolidated Financial Statements. 48 48 Table of ContentsAutoZone, Inc. Consolidated Statements of Stockholders' Deficit​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​Common​​​​Additional​​​​Other​​​​​​​ Shares Common Paid-in Retained Comprehensive Treasury ​​(in thousands)​Issued​Stock​Capital​Deficit​Loss​Stock​Total​​​​​​​​​​​​​​​​​​​​​Balance at August 28, 2021 23,007​$ 230​$ 1,465,669​$ (419,829)​$ (307,986)​$ (2,535,620)​$ (1,797,536)Net income - ​ - ​ - ​ 2,429,604​ - ​ - ​ 2,429,604Total other comprehensive income - ​ - ​ - ​ - ​ 7,450​​ - ​ 7,450Purchase of 2,220 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (4,359,991)​ (4,359,991)Retirement of treasury shares (2,484)​ (25)​ (292,975)​ (3,339,842)​ - ​ 3,632,842​ - Issuance of common stock under stock options and stock purchase plans 209​ 2​ 113,932​​ - ​​ - ​​ - ​ 113,934Share-based compensation expense - ​ - ​ 67,626​ - ​ - ​ - ​ 67,626Balance at August 27, 2022 20,732​ 207​ 1,354,252​ (1,330,067)​ (300,536)​ (3,262,769)​ (3,538,913)Net income - ​ - ​ - ​ 2,528,426​ - ​ - ​ 2,528,426Total other comprehensive income - ​ - ​ - ​ - ​ 109,700​ - ​ 109,700Purchase of 1,524 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (3,723,289)​ (3,723,289)Retirement of treasury shares (2,051)​ (20)​ (143,440)​ (4,157,637)​ - ​ 4,301,097​ - Issuance of common stock under stock options and stock purchase plans 255​ 2​ 182,492​​ - ​​ - ​​ - ​ 182,494Share-based compensation expense - ​ - ​ 91,688​ - ​ - ​ - ​ 91,688Balance at August 26, 2023 18,936​ 189​ 1,484,992​ (2,959,278)​ (190,836)​ (2,684,961)​ (4,349,894)Net income - ​ - ​ - ​ 2,662,427​ - ​ - ​ 2,662,427Total other comprehensive loss - ​ - ​ - ​ - ​ (170,782)​ - ​ (170,782)Purchase of 1,149 shares of treasury stock - ​​ - ​​ - ​​ - ​​ - ​​ (3,170,320)​ (3,170,320)Retirement of treasury shares (1,703)​ (17)​ (142,391)​ (4,128,131)​ - ​ 4,270,539​ - Issuance of common stock under stock options and stock purchase plans 218​ 3​ 176,233​​ - ​​ - ​​ - ​ 176,236Share-based compensation expense - ​ - ​ 102,719​ - ​ - ​ - ​ 102,719Balance at August 31, 2024 17,451​$ 175​$ 1,621,553​$ (4,424,982)​$ (361,618)​$ (1,584,742)​$ (4,749,614)​See Notes to Consolidated Financial Statements.​49 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Statements of Stockholders' Deficit​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​Common​​​​Additional​​​​Other​​​​​​​ Shares Common Paid-in Retained Comprehensive Treasury ​​(in thousands)​Issued​Stock​Capital​Deficit​Loss​Stock​Total​​​​​​​​​​​​​​​​​​​​​Balance at August 28, 2021 23,007​$ 230​$ 1,465,669​$ (419,829)​$ (307,986)​$ (2,535,620)​$ (1,797,536)Net income - ​ - ​ - ​ 2,429,604​ - ​ - ​ 2,429,604Total other comprehensive income - ​ - ​ - ​ - ​ 7,450​​ - ​ 7,450Purchase of 2,220 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (4,359,991)​ (4,359,991)Retirement of treasury shares (2,484)​ (25)​ (292,975)​ (3,339,842)​ - ​ 3,632,842​ - Issuance of common stock under stock options and stock purchase plans 209​ 2​ 113,932​​ - ​​ - ​​ - ​ 113,934Share-based compensation expense - ​ - ​ 67,626​ - ​ - ​ - ​ 67,626Balance at August 27, 2022 20,732​ 207​ 1,354,252​ (1,330,067)​ (300,536)​ (3,262,769)​ (3,538,913)Net income - ​ - ​ - ​ 2,528,426​ - ​ - ​ 2,528,426Total other comprehensive income - ​ - ​ - ​ - ​ 109,700​ - ​ 109,700Purchase of 1,524 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (3,723,289)​ (3,723,289)Retirement of treasury shares (2,051)​ (20)​ (143,440)​ (4,157,637)​ - ​ 4,301,097​ - Issuance of common stock under stock options and stock purchase plans 255​ 2​ 182,492​​ - ​​ - ​​ - ​ 182,494Share-based compensation expense - ​ - ​ 91,688​ - ​ - ​ - ​ 91,688Balance at August 26, 2023 18,936​ 189​ 1,484,992​ (2,959,278)​ (190,836)​ (2,684,961)​ (4,349,894)Net income - ​ - ​ - ​ 2,662,427​ - ​ - ​ 2,662,427Total other comprehensive loss - ​ - ​ - ​ - ​ (170,782)​ - ​ (170,782)Purchase of 1,149 shares of treasury stock - ​​ - ​​ - ​​ - ​​ - ​​ (3,170,320)​ (3,170,320)Retirement of treasury shares (1,703)​ (17)​ (142,391)​ (4,128,131)​ - ​ 4,270,539​ - Issuance of common stock under stock options and stock purchase plans 218​ 3​ 176,233​​ - ​​ - ​​ - ​ 176,236Share-based compensation expense - ​ - ​ 102,719​ - ​ - ​ - ​ 102,719Balance at August 31, 2024 17,451​$ 175​$ 1,621,553​$ (4,424,982)​$ (361,618)​$ (1,584,742)​$ (4,749,614)​See Notes to Consolidated Financial Statements.​ AutoZone, Inc. Consolidated Statements of Stockholders' Deficit​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​Common​​​​Additional​​​​Other​​​​​​​ Shares Common Paid-in Retained Comprehensive Treasury ​​(in thousands)​Issued​Stock​Capital​Deficit​Loss​Stock​Total​​​​​​​​​​​​​​​​​​​​​Balance at August 28, 2021 23,007​$ 230​$ 1,465,669​$ (419,829)​$ (307,986)​$ (2,535,620)​$ (1,797,536)Net income - ​ - ​ - ​ 2,429,604​ - ​ - ​ 2,429,604Total other comprehensive income - ​ - ​ - ​ - ​ 7,450​​ - ​ 7,450Purchase of 2,220 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (4,359,991)​ (4,359,991)Retirement of treasury shares (2,484)​ (25)​ (292,975)​ (3,339,842)​ - ​ 3,632,842​ - Issuance of common stock under stock options and stock purchase plans 209​ 2​ 113,932​​ - ​​ - ​​ - ​ 113,934Share-based compensation expense - ​ - ​ 67,626​ - ​ - ​ - ​ 67,626Balance at August 27, 2022 20,732​ 207​ 1,354,252​ (1,330,067)​ (300,536)​ (3,262,769)​ (3,538,913)Net income - ​ - ​ - ​ 2,528,426​ - ​ - ​ 2,528,426Total other comprehensive income - ​ - ​ - ​ - ​ 109,700​ - ​ 109,700Purchase of 1,524 shares of treasury stock - ​ - ​ - ​ - ​ - ​ (3,723,289)​ (3,723,289)Retirement of treasury shares (2,051)​ (20)​ (143,440)​ (4,157,637)​ - ​ 4,301,097​ - Issuance of common stock under stock options and stock purchase plans 255​ 2​ 182,492​​ - ​​ - ​​ - ​ 182,494Share-based compensation expense - ​ - ​ 91,688​ - ​ - ​ - ​ 91,688Balance at August 26, 2023 18,936​ 189​ 1,484,992​ (2,959,278)​ (190,836)​ (2,684,961)​ (4,349,894)Net income - ​ - ​ - ​ 2,662,427​ - ​ - ​ 2,662,427Total other comprehensive loss - ​ - ​ - ​ - ​ (170,782)​ - ​ (170,782)Purchase of 1,149 shares of treasury stock - ​​ - ​​ - ​​ - ​​ - ​​ (3,170,320)​ (3,170,320)Retirement of treasury shares (1,703)​ (17)​ (142,391)​ (4,128,131)​ - ​ 4,270,539​ - Issuance of common stock under stock options and stock purchase plans 218​ 3​ 176,233​​ - ​​ - ​​ - ​ 176,236Share-based compensation expense - ​ - ​ 102,719​ - ​ - ​ - ​ 102,719Balance at August 31, 2024 17,451​$ 175​$ 1,621,553​$ (4,424,982)​$ (361,618)​$ (1,584,742)​$ (4,749,614)​See Notes to Consolidated Financial Statements.​ --- ## Modified: Note G - Accrued Expenses and Other **Key changes:** - Reworded sentence: "Accrued expenses and other consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, August 26, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Accrued compensation, related payroll taxes and benefits ​ $ 291,728 ​ $ 343,379 Property, sales and other taxes ​ 190,317 ​ 165,731 Finance lease liabilities Finance lease liabilities ​ 115,559 ​ 86,916 Medical and casualty insurance claims (current portion) ​ 107,877 ​ 127,624 Accrued interest ​ 88,590 ​ 54,493 Accrued gift cards ​ 58,529 ​ 59,254 Accrued sales and warranty returns ​ 46,794 ​ 43,355 Other ​ 161,352 ​ 120,089 ​ ​ $ 1,060,746 ​ $ 1,000,841 ​ ​ ​ ​ ​ ​ ​ ​ The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance." **Prior (2023):** Accrued expenses and other consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 26, August 27, (in thousands) ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Accrued compensation, related payroll taxes and benefits ​ $ 343,379 ​ $ 414,892 Property, sales and other taxes ​ 165,731 ​ 153,305 Medical and casualty insurance claims (current portion) ​ 127,624 ​ 115,201 Finance lease liabilities Finance lease liabilities ​ 86,916 ​ 92,877 Accrued gift cards ​ 59,254 ​ 52,237 Accrued interest ​ 54,493 ​ 50,696 Accrued sales and warranty returns ​ 43,355 ​ 35,696 Other ​ 120,089 ​ 93,797 ​ ​ $ 1,000,841 ​ $ 1,008,701 ​ ​ ​ ​ ​ ​ ​ ​ The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability. ​ **Current (2024):** Accrued expenses and other consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, August 26, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Accrued compensation, related payroll taxes and benefits ​ $ 291,728 ​ $ 343,379 Property, sales and other taxes ​ 190,317 ​ 165,731 Finance lease liabilities Finance lease liabilities ​ 115,559 ​ 86,916 Medical and casualty insurance claims (current portion) ​ 107,877 ​ 127,624 Accrued interest ​ 88,590 ​ 54,493 Accrued gift cards ​ 58,529 ​ 59,254 Accrued sales and warranty returns ​ 46,794 ​ 43,355 Other ​ 161,352 ​ 120,089 ​ ​ $ 1,060,746 ​ $ 1,000,841 ​ ​ ​ ​ ​ ​ ​ ​ The Company retains a significant portion of the insurance risks associated with workers' compensation, general, product liability, property and vehicle insurance. A portion of these self-insured losses is managed through a wholly owned insurance captive. The Company maintains certain levels for stop-loss coverage for each self-insured plan in order to limit its liability for large claims. The retained limits per claim type are $2.0 million for workers' compensation, $7.5 million for auto liability, $21.5 million for property and $2.0 million for general and product liability. --- ## Modified: Fiscal Year Ended August **Key changes:** - Reworded sentence: "​ (in thousands, except percentage) ​ 2024(1) 2023 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 2,662,427 $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972 ​ Adjustments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense ​ 451,578 ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ Rent expense(2) ​ 447,693 ​ 406,398 ​ 373,278 ​ 345,380 ​ 329,783 ​ Tax effect(3) ​ (181,653) ​ (143,980) ​ (119,197) ​ (114,091) ​ (115,747) ​ Adjusted after-tax return ​ $ 3,380,045 ​ $ 3,097,216 ​ $ 2,875,323 ​ $ 2,596,940 ​ $ 2,148,173 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average debt(4) ​ $ 8,580,659 ​ $ 6,900,354 ​ $ 5,712,301 ​ $ 5,416,471 ​ $ 5,375,356 ​ Average stockholders' deficit(4) ​ (4,797,747) ​ (4,042,495) ​ (2,797,181) ​ (1,397,892) ​ (1,542,355) ​ Add: Rent x 6(2)(5) ​ 2,686,158 ​ 2,438,388 ​ 2,239,668 ​ 2,072,280 ​ 1,978,696 ​ Average finance lease liabilities(4) ​ 329,225 ​ 296,599 ​ 284,453 ​ 237,267 ​ 203,998 ​ Invested capital ​ $ 6,798,295 ​ $ 5,592,846 ​ $ 5,439,241 ​ $ 6,328,126 ​ $ 6,015,695 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted after-tax ROIC ​ 49.7 % 55.4 % 52.9 % 41.0 % 35.7 % ​ ​ Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to EBITDAR The following table calculates the ratio of adjusted debt to EBITDAR." **Prior (2023):** (in thousands, except per share data, same store sales and selected operating data) 2023 2022 2021(1) 2020(1) 2019(2)(3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ **Current (2024):** (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## Modified: Fiscal Year Ended August **Key changes:** - Reworded sentence: "(in thousands) ​ 2024 2023 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by/(used in): ​ ​ ​ ​ ​ ​ Operating activities ​ $ 3,004,116 ​ $ 2,940,788 ​ $ 3,211,135 ​ $ 3,518,543 ​ $ 2,720,108 ​ Investing activities ​ (1,286,506) ​ (876,178) ​ (648,099) ​ (601,778) ​ (497,875) ​ Financing activities ​ (1,683,736) ​ (2,060,082) ​ (3,470,497) ​ (3,500,417) ​ (643,636) ​ Effect of exchange rate changes on cash ​ ​ (12,756) ​ 8,146 ​ 506 ​ 4,172 ​ (4,082) ​ Net increase/(decrease) in cash and cash equivalents ​ ​ 21,118 ​ 12,674 ​ (906,955) ​ (579,480) ​ 1,574,515 ​ Less: increase/(decrease) in debt, excluding deferred financing costs ​ ​ 1,370,400 ​ 1,556,200 ​ 853,400 ​ (250,000) ​ 320,000 ​ Plus: Share repurchases ​ 3,140,917 ​ 3,699,552 ​ 4,359,991 ​ 3,378,321 ​ 930,903 (1)​ Cash flow before share repurchases and changes in debt ​ $ 1,791,635 ​ $ 2,156,026 ​ $ 2,599,636 ​ $ 3,048,841 ​ $ 2,185,418 ​ ​ ​ ​ ​ ​ ​ ​ 36 36 Table of ContentsReconciliation of Non-GAAP Financial Measure: Adjusted After-tax ROICThe following table calculates the percentage of ROIC." - Reworded sentence: "The ROIC percentages are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations": ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​​​​​​​​​​​​​​ ​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August​(in thousands, except percentage)​2024(1) 2023 2022 2021 2020 ​​​​​​​​​​​​​​​​​Net income $ 2,662,427 $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972​Adjustments:​ ​​ ​​ ​​ ​ ​Interest expense​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Rent expense(2)​ 447,693​ 406,398​ 373,278​ 345,380​ 329,783​Tax effect(3)​ (181,653)​ (143,980)​ (119,197)​ (114,091)​ (115,747)​Adjusted after-tax return​$ 3,380,045​$ 3,097,216​$ 2,875,323​$ 2,596,940​$ 2,148,173​​​​​​​​​​​​​​​​​​Average debt(4)​$ 8,580,659​$ 6,900,354​$ 5,712,301​$ 5,416,471​$ 5,375,356​Average stockholders' deficit(4)​ (4,797,747)​ (4,042,495)​ (2,797,181)​ (1,397,892)​ (1,542,355)​Add: Rent x 6(2)(5)​ 2,686,158​ 2,438,388​ 2,239,668​ 2,072,280​ 1,978,696​Average finance lease liabilities(4)​ 329,225​ 296,599​ 284,453​ 237,267​ 203,998​Invested capital​$ 6,798,295​$ 5,592,846​$ 5,439,241​$ 6,328,126​$ 6,015,695​​​​​​​​​​​​​​​​​​Adjusted after-tax ROIC​ 49.7% 55.4% 52.9% 41.0% 35.7%​​Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to EBITDARThe following table calculates the ratio of adjusted debt to EBITDAR." - Reworded sentence: "The adjusted debt to EBITDAR ratios are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations":​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August(in thousands, except ratio)​2024(1) 2023 2022 2021 2020​​​​​​​​​​​​​​​​Net income $ 2,662,427 $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972Add: Interest expense​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165Income tax expense​​ 674,703​​ 639,188​​ 649,487​​ 578,876​​ 483,542EBIT​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679Add: Depreciation and amortization expense​ 549,755​ 497,577​ 442,223​ 407,683​ 397,466Rent expense(2)​ 447,693​ 406,398​ 373,278​ 345,380​ 329,783Share-based expense​ 106,246​ 93,087​ 70,612​ 56,112​ 44,835EBITDAR​$ 4,892,402​$ 4,471,048​$ 4,156,842​$ 3,753,702​$ 3,189,763​​​​​​​​​​​​​​​​Debt​$ 9,024,381​$ 7,668,549​$ 6,122,092​$ 5,269,820​$ 5,513,371Financing lease liabilities​ 399,441​ 287,618​ 310,305​ 276,054​ 223,353Add: Rent x 6(2)(5)​ 2,686,158​ 2,438,388​ 2,239,668​ 2,072,280​ 1,978,696Adjusted debt​$ 12,109,980​$ 10,394,555​$ 8,672,065​$ 7,618,154​$ 7,715,420​​​​​​​​​​​​​​​​Adjusted debt to EBITDAR​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​​37 Table of Contents Table of Contents Table of Contents Reconciliation of Non-GAAP Financial Measure: Adjusted After-tax ROICThe following table calculates the percentage of ROIC." - Reworded sentence: "The ROIC percentages are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations": ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​​​​​​​​​​​​​​ ​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August​(in thousands, except percentage)​2024(1) 2023 2022 2021 2020 ​​​​​​​​​​​​​​​​​Net income $ 2,662,427 $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972​Adjustments:​ ​​ ​​ ​​ ​ ​Interest expense​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Rent expense(2)​ 447,693​ 406,398​ 373,278​ 345,380​ 329,783​Tax effect(3)​ (181,653)​ (143,980)​ (119,197)​ (114,091)​ (115,747)​Adjusted after-tax return​$ 3,380,045​$ 3,097,216​$ 2,875,323​$ 2,596,940​$ 2,148,173​​​​​​​​​​​​​​​​​​Average debt(4)​$ 8,580,659​$ 6,900,354​$ 5,712,301​$ 5,416,471​$ 5,375,356​Average stockholders' deficit(4)​ (4,797,747)​ (4,042,495)​ (2,797,181)​ (1,397,892)​ (1,542,355)​Add: Rent x 6(2)(5)​ 2,686,158​ 2,438,388​ 2,239,668​ 2,072,280​ 1,978,696​Average finance lease liabilities(4)​ 329,225​ 296,599​ 284,453​ 237,267​ 203,998​Invested capital​$ 6,798,295​$ 5,592,846​$ 5,439,241​$ 6,328,126​$ 6,015,695​​​​​​​​​​​​​​​​​​Adjusted after-tax ROIC​ 49.7% 55.4% 52.9% 41.0% 35.7%​​Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to EBITDARThe following table calculates the ratio of adjusted debt to EBITDAR." - Reworded sentence: "The adjusted debt to EBITDAR ratios are presented in "Management's Discussion and Analysis of Financial Condition and Results of Operations":​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​ ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August(in thousands, except ratio)​2024(1) 2023 2022 2021 2020​​​​​​​​​​​​​​​​Net income $ 2,662,427 $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972Add: Interest expense​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165Income tax expense​​ 674,703​​ 639,188​​ 649,487​​ 578,876​​ 483,542EBIT​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679Add: Depreciation and amortization expense​ 549,755​ 497,577​ 442,223​ 407,683​ 397,466Rent expense(2)​ 447,693​ 406,398​ 373,278​ 345,380​ 329,783Share-based expense​ 106,246​ 93,087​ 70,612​ 56,112​ 44,835EBITDAR​$ 4,892,402​$ 4,471,048​$ 4,156,842​$ 3,753,702​$ 3,189,763​​​​​​​​​​​​​​​​Debt​$ 9,024,381​$ 7,668,549​$ 6,122,092​$ 5,269,820​$ 5,513,371Financing lease liabilities​ 399,441​ 287,618​ 310,305​ 276,054​ 223,353Add: Rent x 6(2)(5)​ 2,686,158​ 2,438,388​ 2,239,668​ 2,072,280​ 1,978,696Adjusted debt​$ 12,109,980​$ 10,394,555​$ 8,672,065​$ 7,618,154​$ 7,715,420​​​​​​​​​​​​​​​​Adjusted debt to EBITDAR​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​​ Reconciliation of Non-GAAP Financial Measure: Adjusted After-tax ROICThe following table calculates the percentage of ROIC." **Prior (2023):** (in thousands, except per share data, same store sales and selected operating data) 2023 2022 2021(1) 2020(1) 2019(2)(3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ **Current (2024):** (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## Modified: Balance Sheet Data **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ Current assets ​ $ 7,306,759 ​ $ 6,779,426 ​ $ 6,627,984 ​ $ 6,415,303 ​ $ 6,811,872 ​ Operating lease right-of-use assets ​ ​ 3,057,780 ​ ​ 2,998,097 ​ ​ 2,918,817 ​ ​ 2,718,712 ​ ​ 2,581,677 ​ Working capital (deficit)(5) ​ (1,407,484) ​ (1,732,430) ​ (1,960,409) ​ (954,451) ​ 528,781 ​ Total assets ​ 17,176,538 ​ 15,985,878 ​ 15,275,043 ​ 14,516,199 ​ 14,423,872 ​ Current liabilities ​ 8,714,243 ​ 8,511,856 ​ 8,588,393 ​ 7,369,754 ​ 6,283,091 ​ Debt ​ 9,024,381 ​ 7,668,549 ​ 6,122,092 ​ 5,269,820 ​ 5,513,371 ​ Finance lease liabilities, less current portion ​ 283,882 ​ 200,702 ​ 217,428 ​ 186,122 ​ 155,855 ​ Operating lease liabilities, less current portion ​ ​ 2,960,174 ​ ​ 2,917,046 ​ ​ 2,837,973 ​ ​ 2,632,842 ​ ​ 2,501,560 ​ Stockholders' deficit ​ (4,749,614) ​ (4,349,894) ​ (3,538,913) ​ (1,797,536) ​ (877,977) ​" **Prior (2023):** ​ ​ ​ ​ ​ ​ Current assets ​ $ 6,779,426 ​ $ 6,627,984 ​ $ 6,415,303 ​ $ 6,811,872 ​ $ 5,028,685 ​ Operating lease right-of-use assets(6) ​ ​ 2,998,097 ​ ​ 2,918,817 ​ ​ 2,718,712 ​ ​ 2,581,677 ​ ​ - ​ Working capital (deficit)(7) ​ (1,732,430) ​ (1,960,409) ​ (954,451) ​ 528,781 ​ (483,456) ​ Total assets ​ 15,985,878 ​ 15,275,043 ​ 14,516,199 ​ 14,423,872 ​ 9,895,913 ​ Current liabilities ​ 8,511,856 ​ 8,588,393 ​ 7,369,754 ​ 6,283,091 ​ 5,512,141 ​ Debt ​ 7,668,549 ​ 6,122,092 ​ 5,269,820 ​ 5,513,371 ​ 5,206,344 ​ Finance lease liabilities, less current portion(6) ​ 200,702 ​ 217,428 ​ 186,122 ​ 155,855 ​ 123,659 ​ Operating lease liabilities, less current portion(6) ​ ​ 2,917,046 ​ ​ 2,837,973 ​ ​ 2,632,842 ​ ​ 2,501,560 ​ ​ - ​ Stockholders' deficit ​ (4,349,894) ​ (3,538,913) ​ (1,797,536) ​ (877,977) ​ (1,713,851) ​ **Current (2024):** ​ ​ ​ ​ ​ ​ Current assets ​ $ 7,306,759 ​ $ 6,779,426 ​ $ 6,627,984 ​ $ 6,415,303 ​ $ 6,811,872 ​ Operating lease right-of-use assets ​ ​ 3,057,780 ​ ​ 2,998,097 ​ ​ 2,918,817 ​ ​ 2,718,712 ​ ​ 2,581,677 ​ Working capital (deficit)(5) ​ (1,407,484) ​ (1,732,430) ​ (1,960,409) ​ (954,451) ​ 528,781 ​ Total assets ​ 17,176,538 ​ 15,985,878 ​ 15,275,043 ​ 14,516,199 ​ 14,423,872 ​ Current liabilities ​ 8,714,243 ​ 8,511,856 ​ 8,588,393 ​ 7,369,754 ​ 6,283,091 ​ Debt ​ 9,024,381 ​ 7,668,549 ​ 6,122,092 ​ 5,269,820 ​ 5,513,371 ​ Finance lease liabilities, less current portion ​ 283,882 ​ 200,702 ​ 217,428 ​ 186,122 ​ 155,855 ​ Operating lease liabilities, less current portion ​ ​ 2,960,174 ​ ​ 2,917,046 ​ ​ 2,837,973 ​ ​ 2,632,842 ​ ​ 2,501,560 ​ Stockholders' deficit ​ (4,749,614) ​ (4,349,894) ​ (3,538,913) ​ (1,797,536) ​ (877,977) ​ --- ## Modified: We are subject to risks associated with products sourced outside the U.S. **Key changes:** - Reworded sentence: "​ We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products." - Reworded sentence: "As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material adverse effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S." - Reworded sentence: "As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material adverse effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S." **Prior (2023):** ​ Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores to meet customers' needs on a timely and profitable basis. Accomplishing store development and expansion goals will depend upon a number of factors, including the ability to identify and obtain suitable sites for new and expanded stores in a timely manner and at acceptable costs, the hiring and training of qualified personnel and the integration of new stores into existing operations. There can be no assurance we will be able to 17 17 Table of Contentsachieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably.​In addition, we extensively utilize our hub network, our supply chain and our logistics management techniques to efficiently stock our stores. We have made, and plan to continue to make, significant investments in our supply chain to improve product availability and product assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively utilize our existing hubs and/or supply chains, or if our investments in our supply chain initiatives, including directly sourcing some products from outside the U.S., do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins.​Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets.​The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations. Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions as well as our general ability to compete effectively and provide superior customer service regardless of distance, language and cultural differences.​Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in obtaining and enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy.​In addition, our operations in international markets are conducted primarily in the local currency of those countries. Since our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period. As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material negative effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms.​In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations.18 Table of Contents Table of Contents Table of Contents achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably.​In addition, we extensively utilize our hub network, our supply chain and our logistics management techniques to efficiently stock our stores. We have made, and plan to continue to make, significant investments in our supply chain to improve product availability and product assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively utilize our existing hubs and/or supply chains, or if our investments in our supply chain initiatives, including directly sourcing some products from outside the U.S., do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins.​Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets.​The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations. Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions as well as our general ability to compete effectively and provide superior customer service regardless of distance, language and cultural differences.​Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in obtaining and enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy.​In addition, our operations in international markets are conducted primarily in the local currency of those countries. Since our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period. As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material negative effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms.​In the event commercial transportation is curtailed or substantially delayed, we may have difficulty transporting merchandise to our distribution centers and stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues could also cause us to cancel purchase orders if we are unable to receive merchandise in our distribution centers. ​It is not possible to predict all events or circumstances which may negatively disrupt our business in a significant manner, and the near-term and long-term impacts of such disruptions on our business, demand for our products and our growth initiatives will vary significantly based on the facts and circumstances of each such disruption. Furthermore, such business interruptions could cause additional negative impacts of which we are not currently aware or magnify other risks associated with our business and operations. achieve our store expansion goals, manage our growth effectively, successfully integrate the planned new stores into our operations or operate our new, remodeled and expanded stores profitably. ​ In addition, we extensively utilize our hub network, our supply chain and our logistics management techniques to efficiently stock our stores. We have made, and plan to continue to make, significant investments in our supply chain to improve product availability and product assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively utilize our existing hubs and/or supply chains, or if our investments in our supply chain initiatives, including directly sourcing some products from outside the U.S., do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins. ​ **Current (2024):** ​ We directly imported approximately 13% of our purchases in fiscal 2024, but many of our domestic vendors directly import their products or components of their products. Changes to the price or flow of these goods for any reason, such as civil unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes and other issues, economic conditions and instability in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our standards, issues with labor practices of our suppliers or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials to suppliers, increased import duties or tariffs, merchandise quality or safety issues, shipping and transport availability and cost, increases in wage rates and taxes, transport security, foreign trade policies, trade sanctions, import limitations on certain types of goods or of goods containing certain materials from other countries, inflation and other factors relating to the suppliers and the countries in which they are located or from which they import, often are beyond our control and could adversely affect our operations and profitability. Furthermore, these risks may be amplified if we are unable to diversify our supply chain or rely too heavily on a single country to source our or our vendors' products. These and other factors affecting our suppliers and our access to products could materially adversely affect our business and financial performance. As we or our domestic vendors increase the importation of merchandise or components from foreign vendors, these risks are likely to increase. ​ 16 16 Table of ContentsDisruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business.​A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader logistics or supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which were further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors.​In addition, we have made, and plan to continue to make, significant investments in our supply chain, such as the construction of multiple new distribution centers and the execution of various technology initiatives. These investments seek to improve product availability and assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively implement these changes, or if our investments in our supply chain initiatives do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins.​Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets.​The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations. Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions as well as our general ability to compete effectively and provide superior customer service regardless of distance, language and cultural differences.​Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in obtaining and enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy.​In addition, our operations in international markets are conducted primarily in the local currency of those countries. Since our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period. As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material adverse effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms.17 Table of Contents Table of Contents Table of Contents Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business.​A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader logistics or supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which were further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors.​In addition, we have made, and plan to continue to make, significant investments in our supply chain, such as the construction of multiple new distribution centers and the execution of various technology initiatives. These investments seek to improve product availability and assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively implement these changes, or if our investments in our supply chain initiatives do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins.​Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets.​The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations. Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions as well as our general ability to compete effectively and provide superior customer service regardless of distance, language and cultural differences.​Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in obtaining and enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy.​In addition, our operations in international markets are conducted primarily in the local currency of those countries. Since our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period. As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material adverse effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms. Disruptions in our supply chain and other factors affecting the distribution of our merchandise could adversely impact our business.​A disruption to our supply chain or distribution network could adversely affect our ability to receive and distribute inventory in a timely manner, which could result in low inventory availability, lost sales, increased supply chain costs and loss of customer loyalty, among other things. Such disruptions may result from damage or destruction of our distribution centers, our ability to attract and retain qualified drivers, costs associated with maintaining or operating our fleet or macroeconomic conditions impacting the broader logistics or supply chain industry at large. For example, in recent years, ports, rails and domestic long-hauls in the U.S. and elsewhere have been negatively impacted by capacity constraints, congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which were further exacerbated by the COVID-19 pandemic and other factors beyond our control. Our business and competitive position may be negatively impacted if we are unable to successfully mitigate the impacts of such disruption to our supply chain or if we are unable to manage such disruptions more effectively than our competitors.​In addition, we have made, and plan to continue to make, significant investments in our supply chain, such as the construction of multiple new distribution centers and the execution of various technology initiatives. These investments seek to improve product availability and assortment, fulfill evolving consumer product demands and keep up with our long-term store expansion goals. If we fail to effectively implement these changes, or if our investments in our supply chain initiatives do not provide the anticipated benefits, we could experience sub-optimal inventory levels in our stores or increases in our operating costs, which could adversely affect our sales volume and/or our margins.​Our success in international operations is dependent on our ability to manage the unique challenges presented by international markets.​The various risks we face in our U.S. operations generally also exist when conducting operations in and sourcing products and materials from outside of the U.S., in addition to the unique costs, risks and difficulties of managing international operations. Our expansion into international markets may be adversely affected by local laws and customs, U.S. laws applicable to foreign operations, and political and socio-economic conditions as well as our general ability to compete effectively and provide superior customer service regardless of distance, language and cultural differences.​Risks inherent in international operations also include potential adverse tax consequences, potential changes to trade policies and trade agreements, compliance with the Foreign Corrupt Practices Act and local anti-bribery and anti-corruption laws, greater difficulty in obtaining and enforcing intellectual property rights, challenges to identify and gain access to local suppliers, and possibly misjudging the response of consumers in foreign countries to our product assortment and marketing strategy.​In addition, our operations in international markets are conducted primarily in the local currency of those countries. Since our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period. As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.​Business interruptions may negatively impact our operating hours, operability of our computer and other systems, availability of merchandise and otherwise have a material adverse effect on our sales and our business.​Business interruptions including war or acts of terrorism, political or civil unrest, unusual or severe weather conditions such as hurricanes, tornadoes, windstorms, fires, earthquakes and floods, public health crises and other disasters or the threat of any of them, may negatively impact the hours and operations of our stores, distribution centers, store support centers or sourcing offices; may negatively impact our supply chain and distribution network; and may impede our ability to source quality merchandise domestically and outside of the U.S. on favorable terms. --- ## Modified: Stock Performance Graph **Key changes:** - Reworded sentence: "The graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 31, 2019, and ending August 31, 2024." - Reworded sentence: "We began operations in 1979 and at August 31, 2024, operated 6,432 stores in the U.S., 794 stores in Mexico and 127 stores in Brazil." - Reworded sentence: "At August 31, 2024, in 5,898 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts." - Reworded sentence: "We do not derive revenue from automotive repair or installation services.Executive SummaryFor fiscal 2024, net sales increased to $18.5 billion, a 5.9% increase over the prior year." - Reworded sentence: "We began operations in 1979 and at August 31, 2024, operated 6,432 stores in the U.S., 794 stores in Mexico and 127 stores in Brazil." **Prior (2023):** The graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 25, 2018 and ending August 26, 2023. ​ Item 6. Reserved Not required. ​ 26 26 Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsWe are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 26, 2023, operated 6,300 stores in the U.S., 740 stores in Mexico and 100 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 26, 2023, in 5,682 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services.Executive SummaryFor fiscal 2023, we achieved record net income of $2.5 billion, a 4.1% increase over the prior year, and sales growth of $1.2 billion, a 7.4% increase over the prior year. Our retail sales and commercial sales in our domestic and international markets grew this past year as we made progress on our initiatives aimed at improving our ability to say "Yes" to our customers more frequently.​Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, fuel costs, wage rates, supply chain disruptions, hiring and other economic conditions. Given the nature of these macroeconomic factors, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future.​One macroeconomic factor affecting our customers and our industry is gas prices. We believe fluctuations in gas prices impact our customers' level of disposable income. With approximately 11 billion gallons of unleaded gas consumption each month across the U.S., each $1 increase at the pump reduces approximately $11 billion of additional spending capacity to consumers each month. Given the unpredictability of gas prices, we cannot predict whether gas prices will increase or decrease, nor can we predict how any future changes in gas prices will impact our sales in future periods.​We have also experienced continued pressure on average hourly wages in the U.S. during fiscal 2023. Some of this is attributed to regulatory changes in certain states and municipalities, while the larger portion is being driven by general market pressures and some specific actions taken recently by other retailers. The regulatory changes are expected to continue, as evidenced by the areas that have passed legislation to increase employees' wages substantially over the next few years.During fiscal 2023, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 85% of total sales categories continuing to comprise our largest set of categories. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a slight decrease in mix of sales of the discretionary category and a slight increase in the maintenance category compared to last year.The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road.Miles DrivenWe believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. While over the long-term we have seen a close correlation between our net sales and the number of miles driven, we have also seen certain time frames of minimal correlation in sales performance and miles driven. During the periods of minimal 27 Table of Contents Table of Contents Table of Contents Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsWe are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 26, 2023, operated 6,300 stores in the U.S., 740 stores in Mexico and 100 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 26, 2023, in 5,682 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services.Executive SummaryFor fiscal 2023, we achieved record net income of $2.5 billion, a 4.1% increase over the prior year, and sales growth of $1.2 billion, a 7.4% increase over the prior year. Our retail sales and commercial sales in our domestic and international markets grew this past year as we made progress on our initiatives aimed at improving our ability to say "Yes" to our customers more frequently.​Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, fuel costs, wage rates, supply chain disruptions, hiring and other economic conditions. Given the nature of these macroeconomic factors, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future.​One macroeconomic factor affecting our customers and our industry is gas prices. We believe fluctuations in gas prices impact our customers' level of disposable income. With approximately 11 billion gallons of unleaded gas consumption each month across the U.S., each $1 increase at the pump reduces approximately $11 billion of additional spending capacity to consumers each month. Given the unpredictability of gas prices, we cannot predict whether gas prices will increase or decrease, nor can we predict how any future changes in gas prices will impact our sales in future periods.​We have also experienced continued pressure on average hourly wages in the U.S. during fiscal 2023. Some of this is attributed to regulatory changes in certain states and municipalities, while the larger portion is being driven by general market pressures and some specific actions taken recently by other retailers. The regulatory changes are expected to continue, as evidenced by the areas that have passed legislation to increase employees' wages substantially over the next few years.During fiscal 2023, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 85% of total sales categories continuing to comprise our largest set of categories. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a slight decrease in mix of sales of the discretionary category and a slight increase in the maintenance category compared to last year.The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road.Miles DrivenWe believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. While over the long-term we have seen a close correlation between our net sales and the number of miles driven, we have also seen certain time frames of minimal correlation in sales performance and miles driven. During the periods of minimal Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations We are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 26, 2023, operated 6,300 stores in the U.S., 740 stores in Mexico and 100 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 26, 2023, in 5,682 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services. **Current (2024):** The graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 31, 2019, and ending August 31, 2024. Item 6. Reserved Not required. ​ 26 26 Table of ContentsItem 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsWe are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 31, 2024, operated 6,432 stores in the U.S., 794 stores in Mexico and 127 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 31, 2024, in 5,898 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services.Executive SummaryFor fiscal 2024, net sales increased to $18.5 billion, a 5.9% increase over the prior year. Our retail sales and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives aimed at improving parts availability and providing WOW! Customer Service. Operating profit increased 9.1% to $3.8 billion, net income increased 5.3% to $2.7 billion and diluted earnings per share increased 13.0% to $149.55 for the year.During fiscal 2024, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 86% of total sales. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a decrease in mix of sales of the discretionary category and a slight increase in the maintenance and failure categories compared to last year.Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, interest rates, levels of consumer debt, fuel and energy costs, prevailing wage rates, foreign exchange rate fluctuations, supply chain disruptions, hiring and other economic conditions. Given the nature of these macroeconomic factors, which are generally outside of our control, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future.​The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven-year-old or older vehicles on the road.Miles DrivenWe believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. Since the beginning of the fiscal year and through July 2024 miles driven in the U.S. increased 1.2% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation.Seven Year Old or Older VehiclesAs the number of seven-year-old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer. According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road was 12.6 years and these vehicles account for approximately 38% of U.S. vehicles.According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 11,000 miles each year. In seven years, the average miles driven equates to approximately 77,000 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating.27 Table of Contents Table of Contents Table of Contents Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsWe are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 31, 2024, operated 6,432 stores in the U.S., 794 stores in Mexico and 127 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 31, 2024, in 5,898 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services.Executive SummaryFor fiscal 2024, net sales increased to $18.5 billion, a 5.9% increase over the prior year. Our retail sales and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives aimed at improving parts availability and providing WOW! Customer Service. Operating profit increased 9.1% to $3.8 billion, net income increased 5.3% to $2.7 billion and diluted earnings per share increased 13.0% to $149.55 for the year.During fiscal 2024, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 86% of total sales. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a decrease in mix of sales of the discretionary category and a slight increase in the maintenance and failure categories compared to last year.Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, interest rates, levels of consumer debt, fuel and energy costs, prevailing wage rates, foreign exchange rate fluctuations, supply chain disruptions, hiring and other economic conditions. Given the nature of these macroeconomic factors, which are generally outside of our control, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future.​The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven-year-old or older vehicles on the road.Miles DrivenWe believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. Since the beginning of the fiscal year and through July 2024 miles driven in the U.S. increased 1.2% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation.Seven Year Old or Older VehiclesAs the number of seven-year-old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer. According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road was 12.6 years and these vehicles account for approximately 38% of U.S. vehicles.According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 11,000 miles each year. In seven years, the average miles driven equates to approximately 77,000 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating. Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsWe are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 31, 2024, operated 6,432 stores in the U.S., 794 stores in Mexico and 127 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 31, 2024, in 5,898 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services.Executive SummaryFor fiscal 2024, net sales increased to $18.5 billion, a 5.9% increase over the prior year. Our retail sales and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives aimed at improving parts availability and providing WOW! Customer Service. Operating profit increased 9.1% to $3.8 billion, net income increased 5.3% to $2.7 billion and diluted earnings per share increased 13.0% to $149.55 for the year.During fiscal 2024, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 86% of total sales. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a decrease in mix of sales of the discretionary category and a slight increase in the maintenance and failure categories compared to last year.Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, interest rates, levels of consumer debt, fuel and energy costs, prevailing wage rates, foreign exchange rate fluctuations, supply chain disruptions, hiring and other economic conditions. Given the nature of these macroeconomic factors, which are generally outside of our control, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future.​The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven-year-old or older vehicles on the road.Miles DrivenWe believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. Since the beginning of the fiscal year and through July 2024 miles driven in the U.S. increased 1.2% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation.Seven Year Old or Older VehiclesAs the number of seven-year-old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer. According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road was 12.6 years and these vehicles account for approximately 38% of U.S. vehicles.According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 11,000 miles each year. In seven years, the average miles driven equates to approximately 77,000 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations We are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at August 31, 2024, operated 6,432 stores in the U.S., 794 stores in Mexico and 127 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At August 31, 2024, in 5,898 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provided prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services. --- ## Modified: August 29, 2020 **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost, per ASC 842 ​ $ 588,835 ​ $ 524,283 ​ $ 470,563 ​ $ 427,443 ​ $ 415,505 Less: Finance lease interest and amortization ​ (103,670) ​ ​ (86,521) ​ ​ (69,564) ​ ​ (56,334) ​ ​ (60,275) Less: Variable operating lease components, related to insurance and common area maintenance ​ (37,472) ​ ​ (31,364) ​ ​ (27,721) ​ ​ (25,729) ​ ​ (25,447) Rent expense ​ $ 447,693 ​ $ 406,398 ​ $ 373,278 ​ $ 345,380 ​ $ 329,783 ​ ​ Reconciliation of Non-GAAP Financial Measure: Fiscal 2024 Results Excluding Impact of 53rd Week: The following table summarizes the impact of the additional week to the 53 week fiscal year ended August 31, 2024." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost, per ASC 842 ​ $ 524,283 ​ $ 470,563 ​ $ 427,443 ​ $ 415,505 Less: Finance lease interest and amortization ​ (86,521) ​ ​ (69,564) ​ ​ (56,334) ​ ​ (60,275) Less: Variable operating lease components, related to insurance and common area maintenance ​ (31,364) ​ ​ (27,721) ​ ​ (25,729) ​ ​ (25,447) Rent expense ​ $ 406,398 ​ $ 373,278 ​ $ 345,380 ​ $ 329,783 ​ ​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost, per ASC 842 ​ $ 588,835 ​ $ 524,283 ​ $ 470,563 ​ $ 427,443 ​ $ 415,505 Less: Finance lease interest and amortization ​ (103,670) ​ ​ (86,521) ​ ​ (69,564) ​ ​ (56,334) ​ ​ (60,275) Less: Variable operating lease components, related to insurance and common area maintenance ​ (37,472) ​ ​ (31,364) ​ ​ (27,721) ​ ​ (25,729) ​ ​ (25,447) Rent expense ​ $ 447,693 ​ $ 406,398 ​ $ 373,278 ​ $ 345,380 ​ $ 329,783 ​ ​ Reconciliation of Non-GAAP Financial Measure: Fiscal 2024 Results Excluding Impact of 53rd Week: The following table summarizes the impact of the additional week to the 53 week fiscal year ended August 31, 2024. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands, except per share) ​ --- ## Modified: Constant Currency (1) **Key changes:** - Reworded sentence: "​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 Domestic ​ 0.4 % ​ 3.4 % ​ 0.4 % ​ 3.4 % International 16.1 % 29.3 % 10.2 % 17.5 % Total Company 2.1 % 5.6 % 1.4 % 4.6 % ​ ​ At August 31, 2024, we operated 6,432 domestic stores, 794 in Mexico and 127 in Brazil, compared with 6,300 domestic stores, 740 in Mexico and 100 in Brazil at August 26, 2023." - Reworded sentence: "The fourth quarter of fiscal year 2024 represented 33.6% of annual sales and 33.9% of net income; the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; and the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% of net income.Liquidity and Capital ResourcesThe primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories." - Reworded sentence: "As of August 31, 2024, we held $298.2 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings." - Reworded sentence: "Net cash provided by operating activities was $3.0 billion in 2024, $2.9 billion in 2023 and $3.2 billion in 2022." - Reworded sentence: "We purchased marketable debt securities of $38.8 million, $66.9 million and $56.0 million in fiscal 2024, 2023 and 2022, respectively." **Prior (2023):** Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16 weeks in 2023, 2022 and 2021. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% 31 31 Table of Contentsof net income; and the fourth quarter of fiscal year 2021 represented 33.6% of annual sales and 36.2% of net income.Liquidity and Capital ResourcesThe primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. Continued progress on our initiatives improved our operating performance for the fiscal year. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 26, 2023, we held $277.1 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $2.9 billion in 2023, $3.2 billion in 2022 and $3.5 billion in 2021. Cash flows from operations are below last year primarily due to unfavorable changes in accounts payable and accrued expenses.Our net cash flows used in investing activities were $876.2 million, $648.1 million and $601.8 million in fiscal 2023, 2022 and 2021, respectively. The increase in net cash used in investing activities in fiscal 2023 was primarily due to an increase in capital expenditures. We invested $796.7 million, $672.4 million and $621.8 million in capital assets in fiscal 2023, 2022 and 2021, respectively. The increase in capital expenditures from fiscal 2022 to fiscal 2023 was primarily driven by our growth initiatives, including new stores, hub and mega hub expansion initiatives and supply chain projects. We had net new store openings of 197, 176 and 218 for fiscal 2023, 2022 and 2021, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $66.9 million, $56.0 million and $63.7 million in fiscal 2023, 2022 and 2021, respectively. We had proceeds from the sale of marketable debt securities of $58.4 million, $53.9 million and $95.4 million in fiscal 2023, 2022 and 2021, respectively.Net cash used in financing activities was $2.1 billion in fiscal 2023 and $3.5 billion in fiscal 2022 and fiscal 2021. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.7 billion, $4.4 billion and $3.4 billion for fiscal 2023, 2022 and 2021, respectively. The treasury stock purchases in fiscal 2023, 2022 and 2021 were primarily funded by cash flows from operations. During the year ended August 26, 2023, we repaid our $300 million 2.875% Senior Notes due January 2023 and our $500 million 3.125% Senior Notes due July 2023 and issued $1.8 billion of new debt compared to $750 million in 2022 and none in 2021. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes.The Company had net proceeds from the issuance of commercial paper and short term borrowing of $606.2 million and $603.4 million during fiscal 2023 and fiscal 2022, respectively. We did not have any commercial paper or short-term borrowing activity during fiscal 2021.During fiscal 2024, we expect to increase the investment in our business as compared to fiscal 2023. Our investments are expected to be directed primarily to our supply chain initiatives, which includes expanded hub and mega hubs, as well as distribution center expansions and new stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.During fiscal 2023, 2022 and 2021 our capital expenditures increased by approximately 18%, 8% and 36%, respectively. Fiscal 2021 capital expenditures increased due to delays in capital spending for the third and fourth quarter of fiscal 2020 related to the COVID-19 pandemic.32 Table of Contents Table of Contents Table of Contents of net income; and the fourth quarter of fiscal year 2021 represented 33.6% of annual sales and 36.2% of net income.Liquidity and Capital ResourcesThe primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. Continued progress on our initiatives improved our operating performance for the fiscal year. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 26, 2023, we held $277.1 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $2.9 billion in 2023, $3.2 billion in 2022 and $3.5 billion in 2021. Cash flows from operations are below last year primarily due to unfavorable changes in accounts payable and accrued expenses.Our net cash flows used in investing activities were $876.2 million, $648.1 million and $601.8 million in fiscal 2023, 2022 and 2021, respectively. The increase in net cash used in investing activities in fiscal 2023 was primarily due to an increase in capital expenditures. We invested $796.7 million, $672.4 million and $621.8 million in capital assets in fiscal 2023, 2022 and 2021, respectively. The increase in capital expenditures from fiscal 2022 to fiscal 2023 was primarily driven by our growth initiatives, including new stores, hub and mega hub expansion initiatives and supply chain projects. We had net new store openings of 197, 176 and 218 for fiscal 2023, 2022 and 2021, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $66.9 million, $56.0 million and $63.7 million in fiscal 2023, 2022 and 2021, respectively. We had proceeds from the sale of marketable debt securities of $58.4 million, $53.9 million and $95.4 million in fiscal 2023, 2022 and 2021, respectively.Net cash used in financing activities was $2.1 billion in fiscal 2023 and $3.5 billion in fiscal 2022 and fiscal 2021. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.7 billion, $4.4 billion and $3.4 billion for fiscal 2023, 2022 and 2021, respectively. The treasury stock purchases in fiscal 2023, 2022 and 2021 were primarily funded by cash flows from operations. During the year ended August 26, 2023, we repaid our $300 million 2.875% Senior Notes due January 2023 and our $500 million 3.125% Senior Notes due July 2023 and issued $1.8 billion of new debt compared to $750 million in 2022 and none in 2021. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes.The Company had net proceeds from the issuance of commercial paper and short term borrowing of $606.2 million and $603.4 million during fiscal 2023 and fiscal 2022, respectively. We did not have any commercial paper or short-term borrowing activity during fiscal 2021.During fiscal 2024, we expect to increase the investment in our business as compared to fiscal 2023. Our investments are expected to be directed primarily to our supply chain initiatives, which includes expanded hub and mega hubs, as well as distribution center expansions and new stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.During fiscal 2023, 2022 and 2021 our capital expenditures increased by approximately 18%, 8% and 36%, respectively. Fiscal 2021 capital expenditures increased due to delays in capital spending for the third and fourth quarter of fiscal 2020 related to the COVID-19 pandemic. of net income; and the fourth quarter of fiscal year 2021 represented 33.6% of annual sales and 36.2% of net income. **Current (2024):** ​ ​ 2024 ​ 2023 ​ 2024 ​ 2023 Domestic ​ 0.4 % ​ 3.4 % ​ 0.4 % ​ 3.4 % International 16.1 % 29.3 % 10.2 % 17.5 % Total Company 2.1 % 5.6 % 1.4 % 4.6 % ​ ​ At August 31, 2024, we operated 6,432 domestic stores, 794 in Mexico and 127 in Brazil, compared with 6,300 domestic stores, 740 in Mexico and 100 in Brazil at August 26, 2023. We reported a total auto parts segment (domestic, Mexico and Brazil) sales increase of 5.9% for fiscal 2024. ​ Gross profit for fiscal 2024 was $9.8 billion, or 53.1% of net sales, a 114 basis point increase compared with $9.1 billion, or 52.0% of net sales for fiscal 2023. The increase in gross margin was driven by higher merchandise margins and 47 basis points ($84.0 million net) from non-cash LIFO favorability. Operating, selling, general and administrative expenses for fiscal 2024 increased to $6.0 billion, or 32.6% of net sales, from $5.6 billion, or 32.1% of net sales for fiscal 2023. The increase in operating expenses as a percentage of sales was primarily driven by domestic store payroll. Interest expense, net for fiscal 2024 was $451.6 million compared with $306.4 million during fiscal 2023. Average borrowings for fiscal 2024 were $8.7 billion, compared with $7.0 billion for fiscal 2023. Weighted average borrowing rates were 4.39% and 3.78% for fiscal 2024 and 2023, respectively. Our effective income tax rate was 20.2% of pre-tax income for both fiscal 2024 and fiscal 2023. The benefit from stock options exercised in fiscal 2024 was $81.4 million compared to $92.2 million in fiscal 2023 (see "Note E - Income Taxes" in the Notes to Consolidated Financial Statements). Net income for fiscal 2024 increased by 5.3% to $2.7 billion, and diluted earnings per share increased 13.0% to $149.55 from $132.36 in fiscal 2023. The impact on the fiscal 2024 diluted earnings per share from stock repurchases was an increase of $0.96. Fiscal 2023 Compared with Fiscal 2022 A discussion of changes in our results of operations from fiscal 2023 to fiscal 2022 has been omitted from this Annual Report on Form 10-K, but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended August 26, 2023, filed with the SEC on October 24, 2023, which is available free of charge on the SECs website at www.sec.gov and at www.autozone.com, by clicking "Investor Relations" located at the bottom of the page. 30 30 Table of ContentsQuarterly PeriodsEach of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 17 weeks in 2024 and 16 weeks in 2023 and 2022. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2024 represented 33.6% of annual sales and 33.9% of net income; the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; and the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% of net income.Liquidity and Capital ResourcesThe primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 31, 2024, we held $298.2 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $3.0 billion in 2024, $2.9 billion in 2023 and $3.2 billion in 2022. Cash flows from operations are favorable compared to last year primarily due to higher net income partially due to the additional week of sales in the current year.Our net cash flows used in investing activities were $1.3 billion, $876.2 million and $648.1 million in fiscal 2024, 2023 and 2022, respectively. The increase in net cash used in investing activities in fiscal 2024 was primarily due to an increase in capital expenditures. We invested $1.1 billion, $796.7 million and $672.4 million in capital assets in fiscal 2024, 2023 and 2022, respectively. The increase in capital expenditures from fiscal 2023 to fiscal 2024 was primarily driven by our growth initiatives, including investments in new distribution centers and stores to be opened in subsequent periods as well as stores opened in the current year. We had net new store openings of 213, 197 and 176 for fiscal 2024, 2023 and 2022, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $38.8 million, $66.9 million and $56.0 million in fiscal 2024, 2023 and 2022, respectively. We had proceeds from the sale of marketable debt securities of $40.8 million, $58.4 million and $53.9 million in fiscal 2024, 2023 and 2022, respectively. Our investment in tax credit equity investments was $227.5 million, $98.0 million and $31.5 million in fiscal 2024, 2023 and 2022, respectively.Net cash used in financing activities was $1.7 billion, $2.1 billion and $3.5 billion in fiscal 2024, 2023 and 2022, respectively. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.1 billion, $3.7 billion and $4.4 billion for fiscal 2024, 2023 and 2022, respectively. The treasury stock purchases in fiscal 2024, 2023 and 2022 were primarily funded by cash flows from operations and increased borrowings. During the year ended August 31, 2024, we repaid our $300 million 3.125% Senior Notes due April 2024 and issued $2.3 billion of new debt compared to $1.8 billion in 2023 and $750 million in 2022. In fiscal year 2024 the proceeds from the issuance of debt were used to repay a portion of our commercial paper borrowings and for general corporate purposes. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes.The Company had net repayments of commercial paper and short-term borrowing of $629.6 million during fiscal 2024, and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million and $603.4 million during fiscal 2023 and 2022, respectively. 31 Table of Contents Table of Contents Table of Contents Quarterly PeriodsEach of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 17 weeks in 2024 and 16 weeks in 2023 and 2022. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2024 represented 33.6% of annual sales and 33.9% of net income; the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; and the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% of net income.Liquidity and Capital ResourcesThe primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 31, 2024, we held $298.2 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $3.0 billion in 2024, $2.9 billion in 2023 and $3.2 billion in 2022. Cash flows from operations are favorable compared to last year primarily due to higher net income partially due to the additional week of sales in the current year.Our net cash flows used in investing activities were $1.3 billion, $876.2 million and $648.1 million in fiscal 2024, 2023 and 2022, respectively. The increase in net cash used in investing activities in fiscal 2024 was primarily due to an increase in capital expenditures. We invested $1.1 billion, $796.7 million and $672.4 million in capital assets in fiscal 2024, 2023 and 2022, respectively. The increase in capital expenditures from fiscal 2023 to fiscal 2024 was primarily driven by our growth initiatives, including investments in new distribution centers and stores to be opened in subsequent periods as well as stores opened in the current year. We had net new store openings of 213, 197 and 176 for fiscal 2024, 2023 and 2022, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $38.8 million, $66.9 million and $56.0 million in fiscal 2024, 2023 and 2022, respectively. We had proceeds from the sale of marketable debt securities of $40.8 million, $58.4 million and $53.9 million in fiscal 2024, 2023 and 2022, respectively. Our investment in tax credit equity investments was $227.5 million, $98.0 million and $31.5 million in fiscal 2024, 2023 and 2022, respectively.Net cash used in financing activities was $1.7 billion, $2.1 billion and $3.5 billion in fiscal 2024, 2023 and 2022, respectively. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.1 billion, $3.7 billion and $4.4 billion for fiscal 2024, 2023 and 2022, respectively. The treasury stock purchases in fiscal 2024, 2023 and 2022 were primarily funded by cash flows from operations and increased borrowings. During the year ended August 31, 2024, we repaid our $300 million 3.125% Senior Notes due April 2024 and issued $2.3 billion of new debt compared to $1.8 billion in 2023 and $750 million in 2022. In fiscal year 2024 the proceeds from the issuance of debt were used to repay a portion of our commercial paper borrowings and for general corporate purposes. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes.The Company had net repayments of commercial paper and short-term borrowing of $629.6 million during fiscal 2024, and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million and $603.4 million during fiscal 2023 and 2022, respectively. Quarterly PeriodsEach of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 17 weeks in 2024 and 16 weeks in 2023 and 2022. Because the fourth quarter contains seasonally high sales volume and consists of 16 or 17 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a disproportionate share of our annual net sales and net income. The fourth quarter of fiscal year 2024 represented 33.6% of annual sales and 33.9% of net income; the fourth quarter of fiscal year 2023 represented 32.6% of annual sales and 34.2% of net income; and the fourth quarter of fiscal year 2022 represented 32.9% of annual sales and 33.3% of net income.Liquidity and Capital ResourcesThe primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. We believe that our cash generated from operating activities, available cash reserves and available credit, supplemented with our long-term borrowings will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of August 31, 2024, we held $298.2 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our revolving credit facility, without giving effect to commercial paper borrowings. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. Net cash provided by operating activities was $3.0 billion in 2024, $2.9 billion in 2023 and $3.2 billion in 2022. Cash flows from operations are favorable compared to last year primarily due to higher net income partially due to the additional week of sales in the current year.Our net cash flows used in investing activities were $1.3 billion, $876.2 million and $648.1 million in fiscal 2024, 2023 and 2022, respectively. The increase in net cash used in investing activities in fiscal 2024 was primarily due to an increase in capital expenditures. We invested $1.1 billion, $796.7 million and $672.4 million in capital assets in fiscal 2024, 2023 and 2022, respectively. The increase in capital expenditures from fiscal 2023 to fiscal 2024 was primarily driven by our growth initiatives, including investments in new distribution centers and stores to be opened in subsequent periods as well as stores opened in the current year. We had net new store openings of 213, 197 and 176 for fiscal 2024, 2023 and 2022, respectively. We invest a portion of our assets held by our wholly owned insurance captive in marketable debt securities. We purchased marketable debt securities of $38.8 million, $66.9 million and $56.0 million in fiscal 2024, 2023 and 2022, respectively. We had proceeds from the sale of marketable debt securities of $40.8 million, $58.4 million and $53.9 million in fiscal 2024, 2023 and 2022, respectively. Our investment in tax credit equity investments was $227.5 million, $98.0 million and $31.5 million in fiscal 2024, 2023 and 2022, respectively.Net cash used in financing activities was $1.7 billion, $2.1 billion and $3.5 billion in fiscal 2024, 2023 and 2022, respectively. The net cash used in financing activities reflected purchases of treasury stock, which totaled $3.1 billion, $3.7 billion and $4.4 billion for fiscal 2024, 2023 and 2022, respectively. The treasury stock purchases in fiscal 2024, 2023 and 2022 were primarily funded by cash flows from operations and increased borrowings. During the year ended August 31, 2024, we repaid our $300 million 3.125% Senior Notes due April 2024 and issued $2.3 billion of new debt compared to $1.8 billion in 2023 and $750 million in 2022. In fiscal year 2024 the proceeds from the issuance of debt were used to repay a portion of our commercial paper borrowings and for general corporate purposes. In fiscal years 2023 and 2022 the proceeds from the issuance of debt were used for general corporate purposes.The Company had net repayments of commercial paper and short-term borrowing of $629.6 million during fiscal 2024, and net proceeds from the issuance of commercial paper and short-term borrowings of $606.2 million and $603.4 million during fiscal 2023 and 2022, respectively. --- ## Modified: Income Statement Data **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ Net sales ​ $ 18,490,268 ​ $ 17,457,209 ​ $ 16,252,230 ​ $ 14,629,585 ​ $ 12,631,967 ​ Cost of sales, including warehouse and delivery expenses ​ 8,673,216 ​ 8,386,787 ​ 7,779,580 ​ 6,911,800 ​ 5,861,214 ​ Gross profit ​ 9,817,052 ​ 9,070,422 ​ 8,472,650 ​ 7,717,785 ​ 6,770,753 ​ Operating, selling, general and administrative expenses ​ 6,028,344 ​ 5,596,436 ​ 5,201,921 ​ 4,773,258 ​ 4,353,074 ​ Operating profit ​ 3,788,708 ​ 3,473,986 ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ Interest expense, net ​ 451,578 ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ Income before income taxes ​ 3,337,130 ​ 3,167,614 ​ 3,079,091 ​ 2,749,190 ​ 2,216,514 ​ Income tax expense(3) ​ 674,703 ​ 639,188 ​ 649,487 ​ 578,876 ​ 483,542 ​ Net income(3) ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 ​ $ 1,732,972 ​ Diluted earnings per share(3) ​ $ 149.55 ​ $ 132.36 ​ $ 117.19 ​ $ 95.19 ​ $ 71.93 ​ Weighted average shares for diluted earnings per share(3) ​ 17,803 ​ 19,103 ​ 20,733 ​ 22,799 ​ 24,093 ​" **Prior (2023):** ​ ​ ​ ​ ​ Net sales ​ $ 17,457,209 ​ $ 16,252,230 ​ $ 14,629,585 ​ $ 12,631,967 ​ $ 11,863,743 ​ Cost of sales, including warehouse and delivery expenses ​ 8,386,787 ​ 7,779,580 ​ 6,911,800 ​ 5,861,214 ​ 5,498,742 ​ Gross profit ​ 9,070,422 ​ 8,472,650 ​ 7,717,785 ​ 6,770,753 ​ 6,365,001 ​ Operating, selling, general and administrative expenses ​ 5,596,436 ​ 5,201,921 ​ 4,773,258 ​ 4,353,074 ​ 4,148,864 ​ Operating profit ​ 3,473,986 ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ 2,216,137 ​ Interest expense, net ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ 184,804 ​ Income before income taxes ​ 3,167,614 ​ 3,079,091 ​ 2,749,190 ​ 2,216,514 ​ 2,031,333 ​ Income tax expense(4) ​ 639,188 ​ 649,487 ​ 578,876 ​ 483,542 ​ 414,112 ​ Net income(4) ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 ​ $ 1,732,972 ​ $ 1,617,221 ​ Diluted earnings per share(4) ​ $ 132.36 ​ $ 117.19 ​ $ 95.19 ​ $ 71.93 ​ $ 63.43 ​ Weighted average shares for diluted earnings per share(4) ​ 19,103 ​ 20,733 ​ 22,799 ​ 24,093 ​ 25,498 ​ **Current (2024):** ​ ​ ​ ​ ​ Net sales ​ $ 18,490,268 ​ $ 17,457,209 ​ $ 16,252,230 ​ $ 14,629,585 ​ $ 12,631,967 ​ Cost of sales, including warehouse and delivery expenses ​ 8,673,216 ​ 8,386,787 ​ 7,779,580 ​ 6,911,800 ​ 5,861,214 ​ Gross profit ​ 9,817,052 ​ 9,070,422 ​ 8,472,650 ​ 7,717,785 ​ 6,770,753 ​ Operating, selling, general and administrative expenses ​ 6,028,344 ​ 5,596,436 ​ 5,201,921 ​ 4,773,258 ​ 4,353,074 ​ Operating profit ​ 3,788,708 ​ 3,473,986 ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 ​ Interest expense, net ​ 451,578 ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 ​ Income before income taxes ​ 3,337,130 ​ 3,167,614 ​ 3,079,091 ​ 2,749,190 ​ 2,216,514 ​ Income tax expense(3) ​ 674,703 ​ 639,188 ​ 649,487 ​ 578,876 ​ 483,542 ​ Net income(3) ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 ​ $ 1,732,972 ​ Diluted earnings per share(3) ​ $ 149.55 ​ $ 132.36 ​ $ 117.19 ​ $ 95.19 ​ $ 71.93 ​ Weighted average shares for diluted earnings per share(3) ​ 17,803 ​ 19,103 ​ 20,733 ​ 22,799 ​ 24,093 ​ --- ## Modified: We may be unable to achieve the goals and aspirations set forth in our environmental, social and governance (ESG) report, particularly with respect to the reduction of GHG emissions, or otherwise meet the expectations of our stakeholders with respect to ESG matters. **Key changes:** - Reworded sentence: "​ Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting of GHG emissions and other sustainability metrics, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report." - Reworded sentence: "A 21 21 Table of Contentsfailure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.​We have announced certain aspirations and goals related to ESG matters, such as our intention to reduce certain GHG emissions over time." - Reworded sentence: "In addition, some jurisdictions have adopted laws and other regulations that may subject companies operating in those jurisdictions to legal liability for failing to meet published goals." - Reworded sentence: "The damages sought against us in these proceedings may be material and may adversely affect our business, results of operations, financial condition and cash flows.​General Risks​Significant changes in macroeconomic and geo-political factors could materially adversely affect our financial condition and results of operations.​Macroeconomic conditions impact both our customers and our suppliers." - Reworded sentence: "These could materially adversely affect our financial condition and operations.​Item 1B." **Prior (2023):** ​ Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support. ​ We have announced certain aspirations and goals related to ESG matters, such as plans to reduce certain GHG emissions over time. Achievement of these aspirations, targets, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, or we may lose shareholder support. Certain challenges we face in the achievement of our ESG 22 22 Table of Contentsobjectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report.​Our business, financial condition, results of operations and cash flows may be affected by litigation.​We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business. Such matters involve significant expense and divert management's attention and resources from other matters. The damages sought against us in these proceedings may be material and may adversely affect our business, results of operations, financial condition and cash flows.​General Risks​Significant changes in macroeconomic and geo-political factors could adversely affect our financial condition and results of operations.​Macroeconomic conditions impact both our customers and our suppliers. Moreover, the U.S. government continues to operate under historically large deficits and debt burden. Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as the COVID-19 pandemic), constraints on the global supply chain and other factors continue to affect the global economy. Moreover, rising energy prices could impact our merchandise distribution, commercial delivery, utility and product costs. It is unclear how such factors could impact our business in the short term. Over a longer period of time, these macroeconomic and geo-political conditions could adversely affect our sales growth, margins and overhead. These could adversely affect our financial condition and operations.​Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesThe following table reflects the square footage and number of leased and owned properties for our stores as of August 26, 2023:​​​​​​ No. of Store Square​​Stores​ Footage(1)Leased 3,931 26,158,259Owned 3,209 21,741,090Total 7,140 47,899,349​(1)Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.We have approximately 6.9 million square feet in distribution centers servicing our stores, of which approximately 2.0 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have three additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate.23 Table of Contents Table of Contents Table of Contents objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report.​Our business, financial condition, results of operations and cash flows may be affected by litigation.​We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business. Such matters involve significant expense and divert management's attention and resources from other matters. The damages sought against us in these proceedings may be material and may adversely affect our business, results of operations, financial condition and cash flows.​General Risks​Significant changes in macroeconomic and geo-political factors could adversely affect our financial condition and results of operations.​Macroeconomic conditions impact both our customers and our suppliers. Moreover, the U.S. government continues to operate under historically large deficits and debt burden. Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as the COVID-19 pandemic), constraints on the global supply chain and other factors continue to affect the global economy. Moreover, rising energy prices could impact our merchandise distribution, commercial delivery, utility and product costs. It is unclear how such factors could impact our business in the short term. Over a longer period of time, these macroeconomic and geo-political conditions could adversely affect our sales growth, margins and overhead. These could adversely affect our financial condition and operations.​Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesThe following table reflects the square footage and number of leased and owned properties for our stores as of August 26, 2023:​​​​​​ No. of Store Square​​Stores​ Footage(1)Leased 3,931 26,158,259Owned 3,209 21,741,090Total 7,140 47,899,349​(1)Square footage excludes store support centers, regional offices, distribution centers and the areas that hold the local mega hub and hub expanded assortment.We have approximately 6.9 million square feet in distribution centers servicing our stores, of which approximately 2.0 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have three additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate. objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report. ​ **Current (2024):** ​ Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting of GHG emissions and other sustainability metrics, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report. We strive to deliver shared value through our business and our diverse stakeholders expect us to make progress in certain ESG priority issue areas. A 21 21 Table of Contentsfailure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.​We have announced certain aspirations and goals related to ESG matters, such as our intention to reduce certain GHG emissions over time. Achievement of these aspirations, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. In addition, some jurisdictions have adopted laws and other regulations that may subject companies operating in those jurisdictions to legal liability for failing to meet published goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, cause us to lose shareholder support, and subject us to legal claims and liabilities with respect to such matters. Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report.​Our business, financial condition, results of operations and cash flows may be affected by litigation.​We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business. Such matters involve significant expense and divert management's attention and resources from other matters. The damages sought against us in these proceedings may be material and may adversely affect our business, results of operations, financial condition and cash flows.​General Risks​Significant changes in macroeconomic and geo-political factors could materially adversely affect our financial condition and results of operations.​Macroeconomic conditions impact both our customers and our suppliers. Moreover, the U.S. government continues to operate under historically large deficits and debt burden. Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as the COVID-19 pandemic), constraints on the global supply chain and other factors continue to affect the global economy. Moreover, rising energy prices could impact our merchandise distribution, commercial delivery, utility and product costs. It is unclear how such factors could impact our business in the short term. Over a longer period of time, these macroeconomic and geo-political conditions could adversely affect our sales growth, margins and overhead. These could materially adversely affect our financial condition and operations.​Item 1B. Unresolved Staff CommentsNone.Item 1C. CybersecurityRisk Management and StrategyProgram ​We recognize the importance of assessing, identifying, and managing material risks from cybersecurity threats and have implemented various processes and safeguards to aid in such efforts. Our program encompasses people, processes, and technologies to safeguard our systems, data, and business from cybersecurity threats. Our program 22 Table of Contents Table of Contents Table of Contents failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.​We have announced certain aspirations and goals related to ESG matters, such as our intention to reduce certain GHG emissions over time. Achievement of these aspirations, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. In addition, some jurisdictions have adopted laws and other regulations that may subject companies operating in those jurisdictions to legal liability for failing to meet published goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, cause us to lose shareholder support, and subject us to legal claims and liabilities with respect to such matters. Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report.​Our business, financial condition, results of operations and cash flows may be affected by litigation.​We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business. Such matters involve significant expense and divert management's attention and resources from other matters. The damages sought against us in these proceedings may be material and may adversely affect our business, results of operations, financial condition and cash flows.​General Risks​Significant changes in macroeconomic and geo-political factors could materially adversely affect our financial condition and results of operations.​Macroeconomic conditions impact both our customers and our suppliers. Moreover, the U.S. government continues to operate under historically large deficits and debt burden. Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as the COVID-19 pandemic), constraints on the global supply chain and other factors continue to affect the global economy. Moreover, rising energy prices could impact our merchandise distribution, commercial delivery, utility and product costs. It is unclear how such factors could impact our business in the short term. Over a longer period of time, these macroeconomic and geo-political conditions could adversely affect our sales growth, margins and overhead. These could materially adversely affect our financial condition and operations.​Item 1B. Unresolved Staff CommentsNone.Item 1C. CybersecurityRisk Management and StrategyProgram ​We recognize the importance of assessing, identifying, and managing material risks from cybersecurity threats and have implemented various processes and safeguards to aid in such efforts. Our program encompasses people, processes, and technologies to safeguard our systems, data, and business from cybersecurity threats. Our program failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support.​We have announced certain aspirations and goals related to ESG matters, such as our intention to reduce certain GHG emissions over time. Achievement of these aspirations, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. In addition, some jurisdictions have adopted laws and other regulations that may subject companies operating in those jurisdictions to legal liability for failing to meet published goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, cause us to lose shareholder support, and subject us to legal claims and liabilities with respect to such matters. Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report.​Our business, financial condition, results of operations and cash flows may be affected by litigation.​We are involved in lawsuits, regulatory investigations, governmental and other legal proceedings arising out of the ordinary course of business. Such matters involve significant expense and divert management's attention and resources from other matters. The damages sought against us in these proceedings may be material and may adversely affect our business, results of operations, financial condition and cash flows.​General Risks​Significant changes in macroeconomic and geo-political factors could materially adversely affect our financial condition and results of operations.​Macroeconomic conditions impact both our customers and our suppliers. Moreover, the U.S. government continues to operate under historically large deficits and debt burden. Continued distress in global credit markets, business failures, civil unrest, inflation, rising interest rates, foreign exchange rate fluctuations, significant geo-political conflicts, proposed or additional tariffs, continued volatility in energy prices, the impact of a public health crisis or pandemic (such as the COVID-19 pandemic), constraints on the global supply chain and other factors continue to affect the global economy. Moreover, rising energy prices could impact our merchandise distribution, commercial delivery, utility and product costs. It is unclear how such factors could impact our business in the short term. Over a longer period of time, these macroeconomic and geo-political conditions could adversely affect our sales growth, margins and overhead. These could materially adversely affect our financial condition and operations.​Item 1B. Unresolved Staff CommentsNone.Item 1C. CybersecurityRisk Management and StrategyProgram ​We recognize the importance of assessing, identifying, and managing material risks from cybersecurity threats and have implemented various processes and safeguards to aid in such efforts. Our program encompasses people, processes, and technologies to safeguard our systems, data, and business from cybersecurity threats. Our program failure or perceived failure to meet these expectations could adversely affect public perception of our business, employee morale or customer or shareholder support. ​ We have announced certain aspirations and goals related to ESG matters, such as our intention to reduce certain GHG emissions over time. Achievement of these aspirations, plans and goals is subject to numerous risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to: our ability to successfully identify and implement relevant strategies on a timely and cost-effective basis; our ability to achieve the anticipated benefits and cost savings of such strategies and actions; and the availability and cost of existing and future technologies, such as alternative fuel vehicles, off-site renewable energy, and other materials and components. It is possible that we may be unsuccessful in the achievement of our ESG goals, on a timely basis or at all, or that the costs to achieve those goals become prohibitively expensive. Furthermore, our stakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations and goals. In addition, some jurisdictions have adopted laws and other regulations that may subject companies operating in those jurisdictions to legal liability for failing to meet published goals. A delay, failure or perceived failure or delay to meet our goals and aspirations could adversely affect public perception of our business, cause us to lose shareholder support, and subject us to legal claims and liabilities with respect to such matters. Certain challenges we face in the achievement of our ESG objectives are also captured within our ESG reporting, which is not incorporated by reference into and does not form any part of this report. ​ --- ## Modified: Recently Adopted Accounting Pronouncements **Key changes:** - Reworded sentence: "In September 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50)." - Reworded sentence: "The Company adopted this standard on a retrospective basis beginning with its first quarter ended November 18, 2023." **Prior (2023):** In September 2022, the FASB issued 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. Early adoption is permitted. The Company expects to adopt this standard beginning with its first quarter ending November 18, 2023. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact. **Current (2024):** 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 consolidated financial statements and related disclosures. Refer to "Note F - Supplier Financing Programs." --- ## Modified: Our business is impacted by various factors within the economy that affect both our consumer and our industry, including but not limited to inflation, interest rates, levels of consumer debt, fuel and energy costs, prevailing wage rates, foreign exchange rate fluctuations, supply chain disruptions, hiring and other economic conditions. Given the nature of these macroeconomic factors, which are generally outside of our control, we cannot predict whether or for how long certain trends will continue, nor can we predict to what degree these trends will impact us in the future. **Key changes:** - Reworded sentence: "​ The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven-year-old or older vehicles on the road." - Reworded sentence: "Since the beginning of the fiscal year and through July 2024 miles driven in the U.S." - Reworded sentence: "Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 11,000 miles each year." - Reworded sentence: "27 27 Table of ContentsResults of OperationsThe following table highlights selected financial information over the past five years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 18,490,268​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​Cost of sales, including warehouse and delivery expenses​ 8,673,216​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​Gross profit​ 9,817,052​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​Operating, selling, general and administrative expenses​ 6,028,344​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​Operating profit​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​Interest expense, net​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Income before income taxes​ 3,337,130​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​Income tax expense(3)​ 674,703​ 639,188​ 649,487​ 578,876​ 483,542​Net income(3)​$ 2,662,427​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​Diluted earnings per share(3)​$ 149.55​$ 132.36​$ 117.19​$ 95.19​$ 71.93​Weighted average shares for diluted earnings per share(3)​ 17,803​ 19,103​ 20,733​ 22,799​ 24,093​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(4)​ 0.4% 3.4% 8.4% ​ 13.6% ​ 7.4% Increase (decrease) in international comparable store net sales(4)​​ 16.1% ​ 29.3% ​ 19.1% ​ 22.5%​ (2.8)% Increase in international comparable store net sales (constant currency)(4)​​ 10.2% ​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% Increase in total company comparable store net sales(4)​​ 2.1% ​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% Increase in total company comparable store net sales (constant currency)(4)​​ 1.4% ​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 7,306,759​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​Working capital (deficit)(5)​ (1,407,484)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​Total assets​ 17,176,538​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​Current liabilities​ 8,714,243​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​Debt​ 9,024,381​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​Finance lease liabilities, less current portion​ 283,882​ 200,702​ 217,428​ 186,122​ 155,855​Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​Stockholders' deficit​ (4,749,614)​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​New stores​ 217​ 198​ 177​ 219​ 138​Closed stores​ 4​ 1​ 1​ 1​ - ​Net new stores​ 213​ 197​ 176​ 218​ 138​Relocated stores​ 6​ 12​ 13​ 12​ 5​Number of stores at end of year​ 7,353​ 7,140​ 6,943​ 6,767​ 6,549​AutoZone domestic commercial programs​ 5,898​ 5,682​ 5,342​ 5,179​ 5,007​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 837​$ 807​$ 812​$ 686​$ 683​Total AutoZone store square footage (in thousands)​ 49,417​ 47,899​ 46,435​ 45,057​ 43,502​Average square footage per AutoZone store​ 6,721​ 6,709​ 6,688​ 6,658​ 6,643​Increase in AutoZone store square footage​ 3.2% 3.2% 3.1% 3.6% 2.3% Average net sales per AutoZone store (in thousands)​$ 2,505​$ 2,435​$ 2,329​$ 2,160​$ 1,914​Net sales per AutoZone store average square foot​$ 373​$ 363​$ 349​$ 325​$ 288​Total employees at end of year (in thousands)​ 126​ 119​ 112​ 105​ 100​Inventory turnover(6)​ 1.5x​ 1.5x​ 1.5x​ 1.5x​ 1.3x​Accounts payable to inventory ratio​ 119.5% 124.9% 129.5% 129.6% 115.3% After-tax return on invested capital(7)​ 49.7% 55.4% 52.9% 41.0% 35.7% Adjusted debt to EBITDAR(8)​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​Net cash provided by operating activities (in thousands)(3)​$ 3,004,116​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​Cash flow before share repurchases and changes in debt (in thousands)(9)​$ 1,791,635​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​Share repurchases (in thousands)(5)(10)​$ 3,170,320​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​Number of shares repurchased (in thousands)(5)​ 1,149​ 1,524​ 2,220​ 2,592​ 826​28 Table of Contents Table of Contents Table of Contents Results of OperationsThe following table highlights selected financial information over the past five years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 18,490,268​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​Cost of sales, including warehouse and delivery expenses​ 8,673,216​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​Gross profit​ 9,817,052​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​Operating, selling, general and administrative expenses​ 6,028,344​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​Operating profit​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​Interest expense, net​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Income before income taxes​ 3,337,130​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​Income tax expense(3)​ 674,703​ 639,188​ 649,487​ 578,876​ 483,542​Net income(3)​$ 2,662,427​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​Diluted earnings per share(3)​$ 149.55​$ 132.36​$ 117.19​$ 95.19​$ 71.93​Weighted average shares for diluted earnings per share(3)​ 17,803​ 19,103​ 20,733​ 22,799​ 24,093​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(4)​ 0.4% 3.4% 8.4% ​ 13.6% ​ 7.4% Increase (decrease) in international comparable store net sales(4)​​ 16.1% ​ 29.3% ​ 19.1% ​ 22.5%​ (2.8)% Increase in international comparable store net sales (constant currency)(4)​​ 10.2% ​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% Increase in total company comparable store net sales(4)​​ 2.1% ​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% Increase in total company comparable store net sales (constant currency)(4)​​ 1.4% ​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 7,306,759​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​Working capital (deficit)(5)​ (1,407,484)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​Total assets​ 17,176,538​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​Current liabilities​ 8,714,243​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​Debt​ 9,024,381​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​Finance lease liabilities, less current portion​ 283,882​ 200,702​ 217,428​ 186,122​ 155,855​Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​Stockholders' deficit​ (4,749,614)​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​New stores​ 217​ 198​ 177​ 219​ 138​Closed stores​ 4​ 1​ 1​ 1​ - ​Net new stores​ 213​ 197​ 176​ 218​ 138​Relocated stores​ 6​ 12​ 13​ 12​ 5​Number of stores at end of year​ 7,353​ 7,140​ 6,943​ 6,767​ 6,549​AutoZone domestic commercial programs​ 5,898​ 5,682​ 5,342​ 5,179​ 5,007​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 837​$ 807​$ 812​$ 686​$ 683​Total AutoZone store square footage (in thousands)​ 49,417​ 47,899​ 46,435​ 45,057​ 43,502​Average square footage per AutoZone store​ 6,721​ 6,709​ 6,688​ 6,658​ 6,643​Increase in AutoZone store square footage​ 3.2% 3.2% 3.1% 3.6% 2.3% Average net sales per AutoZone store (in thousands)​$ 2,505​$ 2,435​$ 2,329​$ 2,160​$ 1,914​Net sales per AutoZone store average square foot​$ 373​$ 363​$ 349​$ 325​$ 288​Total employees at end of year (in thousands)​ 126​ 119​ 112​ 105​ 100​Inventory turnover(6)​ 1.5x​ 1.5x​ 1.5x​ 1.5x​ 1.3x​Accounts payable to inventory ratio​ 119.5% 124.9% 129.5% 129.6% 115.3% After-tax return on invested capital(7)​ 49.7% 55.4% 52.9% 41.0% 35.7% Adjusted debt to EBITDAR(8)​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​Net cash provided by operating activities (in thousands)(3)​$ 3,004,116​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​Cash flow before share repurchases and changes in debt (in thousands)(9)​$ 1,791,635​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​Share repurchases (in thousands)(5)(10)​$ 3,170,320​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​Number of shares repurchased (in thousands)(5)​ 1,149​ 1,524​ 2,220​ 2,592​ 826​ Results of OperationsThe following table highlights selected financial information over the past five years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 18,490,268​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​Cost of sales, including warehouse and delivery expenses​ 8,673,216​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​Gross profit​ 9,817,052​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​Operating, selling, general and administrative expenses​ 6,028,344​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​Operating profit​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​Interest expense, net​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Income before income taxes​ 3,337,130​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​Income tax expense(3)​ 674,703​ 639,188​ 649,487​ 578,876​ 483,542​Net income(3)​$ 2,662,427​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​Diluted earnings per share(3)​$ 149.55​$ 132.36​$ 117.19​$ 95.19​$ 71.93​Weighted average shares for diluted earnings per share(3)​ 17,803​ 19,103​ 20,733​ 22,799​ 24,093​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(4)​ 0.4% 3.4% 8.4% ​ 13.6% ​ 7.4% Increase (decrease) in international comparable store net sales(4)​​ 16.1% ​ 29.3% ​ 19.1% ​ 22.5%​ (2.8)% Increase in international comparable store net sales (constant currency)(4)​​ 10.2% ​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% Increase in total company comparable store net sales(4)​​ 2.1% ​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% Increase in total company comparable store net sales (constant currency)(4)​​ 1.4% ​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 7,306,759​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​Working capital (deficit)(5)​ (1,407,484)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​Total assets​ 17,176,538​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​Current liabilities​ 8,714,243​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​Debt​ 9,024,381​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​Finance lease liabilities, less current portion​ 283,882​ 200,702​ 217,428​ 186,122​ 155,855​Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​Stockholders' deficit​ (4,749,614)​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​New stores​ 217​ 198​ 177​ 219​ 138​Closed stores​ 4​ 1​ 1​ 1​ - ​Net new stores​ 213​ 197​ 176​ 218​ 138​Relocated stores​ 6​ 12​ 13​ 12​ 5​Number of stores at end of year​ 7,353​ 7,140​ 6,943​ 6,767​ 6,549​AutoZone domestic commercial programs​ 5,898​ 5,682​ 5,342​ 5,179​ 5,007​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 837​$ 807​$ 812​$ 686​$ 683​Total AutoZone store square footage (in thousands)​ 49,417​ 47,899​ 46,435​ 45,057​ 43,502​Average square footage per AutoZone store​ 6,721​ 6,709​ 6,688​ 6,658​ 6,643​Increase in AutoZone store square footage​ 3.2% 3.2% 3.1% 3.6% 2.3% Average net sales per AutoZone store (in thousands)​$ 2,505​$ 2,435​$ 2,329​$ 2,160​$ 1,914​Net sales per AutoZone store average square foot​$ 373​$ 363​$ 349​$ 325​$ 288​Total employees at end of year (in thousands)​ 126​ 119​ 112​ 105​ 100​Inventory turnover(6)​ 1.5x​ 1.5x​ 1.5x​ 1.5x​ 1.3x​Accounts payable to inventory ratio​ 119.5% 124.9% 129.5% 129.6% 115.3% After-tax return on invested capital(7)​ 49.7% 55.4% 52.9% 41.0% 35.7% Adjusted debt to EBITDAR(8)​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​Net cash provided by operating activities (in thousands)(3)​$ 3,004,116​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​Cash flow before share repurchases and changes in debt (in thousands)(9)​$ 1,791,635​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​Share repurchases (in thousands)(5)(10)​$ 3,170,320​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​Number of shares repurchased (in thousands)(5)​ 1,149​ 1,524​ 2,220​ 2,592​ 826​" **Prior (2023):** ​ One macroeconomic factor affecting our customers and our industry is gas prices. We believe fluctuations in gas prices impact our customers' level of disposable income. With approximately 11 billion gallons of unleaded gas consumption each month across the U.S., each $1 increase at the pump reduces approximately $11 billion of additional spending capacity to consumers each month. Given the unpredictability of gas prices, we cannot predict whether gas prices will increase or decrease, nor can we predict how any future changes in gas prices will impact our sales in future periods. ​ We have also experienced continued pressure on average hourly wages in the U.S. during fiscal 2023. Some of this is attributed to regulatory changes in certain states and municipalities, while the larger portion is being driven by general market pressures and some specific actions taken recently by other retailers. The regulatory changes are expected to continue, as evidenced by the areas that have passed legislation to increase employees' wages substantially over the next few years. During fiscal 2023, failure and maintenance related categories represented the largest portion of our sales mix, at approximately 85% of total sales categories continuing to comprise our largest set of categories. While we have not experienced any fundamental shifts in our category sales mix as compared to previous years, in our domestic stores we see a slight decrease in mix of sales of the discretionary category and a slight increase in the maintenance category compared to last year. The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road. Miles Driven We believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. While over the long-term we have seen a close correlation between our net sales and the number of miles driven, we have also seen certain time frames of minimal correlation in sales performance and miles driven. During the periods of minimal 27 27 Table of Contentscorrelation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road. Since the beginning of the fiscal year and through July 2023 miles driven in the U.S. increased by 1.3% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation.Seven Year Old or Older VehiclesAs the number of seven year old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer in an effort to save money. According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 13,500 miles each year. In seven years, the average miles driven equates to approximately 94,500 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating.According to the latest data provided by the Auto Care Association, as of January 1, 2023, the average age of light vehicles on the road was 12.5 years and these vehicles account for more than 40% of U.S. vehicles. The average age of light vehicles has exceeded 12 years since 2012.​28 Table of Contents Table of Contents Table of Contents correlation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road. Since the beginning of the fiscal year and through July 2023 miles driven in the U.S. increased by 1.3% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation.Seven Year Old or Older VehiclesAs the number of seven year old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer in an effort to save money. According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 13,500 miles each year. In seven years, the average miles driven equates to approximately 94,500 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating.According to the latest data provided by the Auto Care Association, as of January 1, 2023, the average age of light vehicles on the road was 12.5 years and these vehicles account for more than 40% of U.S. vehicles. The average age of light vehicles has exceeded 12 years since 2012.​ correlation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road. Since the beginning of the fiscal year and through July 2023 miles driven in the U.S. increased by 1.3% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation. Seven Year Old or Older Vehicles As the number of seven year old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer in an effort to save money. According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 13,500 miles each year. In seven years, the average miles driven equates to approximately 94,500 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating. According to the latest data provided by the Auto Care Association, as of January 1, 2023, the average age of light vehicles on the road was 12.5 years and these vehicles account for more than 40% of U.S. vehicles. The average age of light vehicles has exceeded 12 years since 2012. ​ 28 28 Table of ContentsResults of OperationsThe following table highlights selected financial information over the past 5 years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2023 2022 2021(1) 2020(1) 2019(2)(3) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​$ 11,863,743​Cost of sales, including warehouse and delivery expenses​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​ 5,498,742​Gross profit​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​ 6,365,001​Operating, selling, general and administrative expenses​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​ 4,148,864​Operating profit​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​ 2,216,137​Interest expense, net​ 306,372​ 191,638​ 195,337​ 201,165​ 184,804​Income before income taxes​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​ 2,031,333​Income tax expense(4)​ 639,188​ 649,487​ 578,876​ 483,542​ 414,112​Net income(4)​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​$ 1,617,221​Diluted earnings per share(4)​$ 132.36​$ 117.19​$ 95.19​$ 71.93​$ 63.43​Weighted average shares for diluted earnings per share(4)​ 19,103​ 20,733​ 22,799​ 24,093​ 25,498​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(5)​ 3.4% 8.4% 13.6% ​ 7.4% ​ 3.0% Increase in international comparable store net sales(5)​​ 29.3% ​ 19.1% ​ 22.5% ​(2.8)%​ 4.6% Increase in international comparable store net sales (constant currency)(5)​​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% ​ 7.2% Increase in total company comparable store net sales(5)​​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% ​ 3.2% Increase in total company comparable store net sales (constant currency)(5)​​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% ​ 3.4% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​$ 5,028,685​Operating lease right-of-use assets(6)​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​​ - ​Working capital (deficit)(7)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​ (483,456)​Total assets​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​ 9,895,913​Current liabilities​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​ 5,512,141​Debt​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​ 5,206,344​Finance lease liabilities, less current portion(6)​ 200,702​ 217,428​ 186,122​ 155,855​ 123,659​Operating lease liabilities, less current portion(6)​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​​ - ​Stockholders' deficit​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​ (1,713,851)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 6,943​ 6,767​ 6,549​ 6,411​ 6,202​New stores​ 198​ 177​ 219​ 138​ 209​Closed stores​ 1​ 1​ 1​ - ​ - ​Net new stores​ 197​ 176​ 218​ 138​ 209​Relocated stores​ 12​ 13​ 12​ 5​ 2​Number of stores at end of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​AutoZone domestic commercial programs​ 5,682​ 5,342​ 5,179​ 5,007​ 4,893​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 807​$ 812​$ 686​$ 683​$ 674​Total AutoZone store square footage (in thousands)​ 47,899​ 46,435​ 45,057​ 43,502​ 42,526​Average square footage per AutoZone store​ 6,709​ 6,688​ 6,658​ 6,643​ 6,633​Increase in AutoZone store square footage​ 3.2% 3.1% 3.6% 2.3% 3.6% Average net sales per AutoZone store (in thousands)​$ 2,435​$ 2,329​$ 2,160​$ 1,914​$ 1,847​Net sales per AutoZone store average square foot​$ 363​$ 349​$ 325​$ 288​$ 279​Total employees at end of year (in thousands)​ 119​ 112​ 105​ 100​ 96​Inventory turnover(8)​ 1.5x​ 1.5x​ 1.5x​ 1.3x​ 1.3x​Accounts payable to inventory ratio​ 124.9% 129.5% 129.6% 115.3% 112.6% After-tax return on invested capital(9)​ 55.4% 52.9% 41.0% 35.7% 35.7% Adjusted debt to EBITDAR(10)​ 2.3​ 2.1​ 2.0​ 2.4​ 2.5​Net cash provided by operating activities (in thousands)(4)​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​$ 2,128,513​Cash flow before share repurchases and changes in debt (in thousands)(11)​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​$ 1,758,672​Share repurchases (in thousands)(7)​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​$ 2,004,896​Number of shares repurchased (in thousands)(7)​ 1,524​ 2,220​ 2,592​ 826​ 2,182​29 Table of Contents Table of Contents Table of Contents Results of OperationsThe following table highlights selected financial information over the past 5 years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2023 2022 2021(1) 2020(1) 2019(2)(3) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​$ 11,863,743​Cost of sales, including warehouse and delivery expenses​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​ 5,498,742​Gross profit​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​ 6,365,001​Operating, selling, general and administrative expenses​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​ 4,148,864​Operating profit​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​ 2,216,137​Interest expense, net​ 306,372​ 191,638​ 195,337​ 201,165​ 184,804​Income before income taxes​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​ 2,031,333​Income tax expense(4)​ 639,188​ 649,487​ 578,876​ 483,542​ 414,112​Net income(4)​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​$ 1,617,221​Diluted earnings per share(4)​$ 132.36​$ 117.19​$ 95.19​$ 71.93​$ 63.43​Weighted average shares for diluted earnings per share(4)​ 19,103​ 20,733​ 22,799​ 24,093​ 25,498​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(5)​ 3.4% 8.4% 13.6% ​ 7.4% ​ 3.0% Increase in international comparable store net sales(5)​​ 29.3% ​ 19.1% ​ 22.5% ​(2.8)%​ 4.6% Increase in international comparable store net sales (constant currency)(5)​​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% ​ 7.2% Increase in total company comparable store net sales(5)​​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% ​ 3.2% Increase in total company comparable store net sales (constant currency)(5)​​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% ​ 3.4% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​$ 5,028,685​Operating lease right-of-use assets(6)​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​​ - ​Working capital (deficit)(7)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​ (483,456)​Total assets​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​ 9,895,913​Current liabilities​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​ 5,512,141​Debt​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​ 5,206,344​Finance lease liabilities, less current portion(6)​ 200,702​ 217,428​ 186,122​ 155,855​ 123,659​Operating lease liabilities, less current portion(6)​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​​ - ​Stockholders' deficit​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​ (1,713,851)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 6,943​ 6,767​ 6,549​ 6,411​ 6,202​New stores​ 198​ 177​ 219​ 138​ 209​Closed stores​ 1​ 1​ 1​ - ​ - ​Net new stores​ 197​ 176​ 218​ 138​ 209​Relocated stores​ 12​ 13​ 12​ 5​ 2​Number of stores at end of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​AutoZone domestic commercial programs​ 5,682​ 5,342​ 5,179​ 5,007​ 4,893​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 807​$ 812​$ 686​$ 683​$ 674​Total AutoZone store square footage (in thousands)​ 47,899​ 46,435​ 45,057​ 43,502​ 42,526​Average square footage per AutoZone store​ 6,709​ 6,688​ 6,658​ 6,643​ 6,633​Increase in AutoZone store square footage​ 3.2% 3.1% 3.6% 2.3% 3.6% Average net sales per AutoZone store (in thousands)​$ 2,435​$ 2,329​$ 2,160​$ 1,914​$ 1,847​Net sales per AutoZone store average square foot​$ 363​$ 349​$ 325​$ 288​$ 279​Total employees at end of year (in thousands)​ 119​ 112​ 105​ 100​ 96​Inventory turnover(8)​ 1.5x​ 1.5x​ 1.5x​ 1.3x​ 1.3x​Accounts payable to inventory ratio​ 124.9% 129.5% 129.6% 115.3% 112.6% After-tax return on invested capital(9)​ 55.4% 52.9% 41.0% 35.7% 35.7% Adjusted debt to EBITDAR(10)​ 2.3​ 2.1​ 2.0​ 2.4​ 2.5​Net cash provided by operating activities (in thousands)(4)​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​$ 2,128,513​Cash flow before share repurchases and changes in debt (in thousands)(11)​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​$ 1,758,672​Share repurchases (in thousands)(7)​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​$ 2,004,896​Number of shares repurchased (in thousands)(7)​ 1,524​ 2,220​ 2,592​ 826​ 2,182​ **Current (2024):** ​ The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven-year-old or older vehicles on the road. Miles Driven We believe as the number of miles driven increases, consumers' vehicles are more likely to need service and maintenance, resulting in an increase in the need for automotive hard parts and maintenance items. Since the beginning of the fiscal year and through July 2024 miles driven in the U.S. increased 1.2% compared to the same period in the prior year based on the latest information available from the U.S. Department of Transportation. Seven Year Old or Older Vehicles As the number of seven-year-old or older vehicles on the road increases, we expect an increase in demand for the products we sell. We expect the aging vehicle population to continue to increase as consumers keep their cars longer. According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road was 12.6 years and these vehicles account for approximately 38% of U.S. vehicles. According to the U.S. Department of Transportation - Federal Highway Administration, vehicles are driven an average of approximately 11,000 miles each year. In seven years, the average miles driven equates to approximately 77,000 miles. Our experience is that at this point in a vehicle's life, most vehicles are not covered by warranties and increased maintenance and repairs are needed to keep the vehicle operating. 27 27 Table of ContentsResults of OperationsThe following table highlights selected financial information over the past five years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 18,490,268​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​Cost of sales, including warehouse and delivery expenses​ 8,673,216​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​Gross profit​ 9,817,052​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​Operating, selling, general and administrative expenses​ 6,028,344​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​Operating profit​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​Interest expense, net​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Income before income taxes​ 3,337,130​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​Income tax expense(3)​ 674,703​ 639,188​ 649,487​ 578,876​ 483,542​Net income(3)​$ 2,662,427​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​Diluted earnings per share(3)​$ 149.55​$ 132.36​$ 117.19​$ 95.19​$ 71.93​Weighted average shares for diluted earnings per share(3)​ 17,803​ 19,103​ 20,733​ 22,799​ 24,093​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(4)​ 0.4% 3.4% 8.4% ​ 13.6% ​ 7.4% Increase (decrease) in international comparable store net sales(4)​​ 16.1% ​ 29.3% ​ 19.1% ​ 22.5%​ (2.8)% Increase in international comparable store net sales (constant currency)(4)​​ 10.2% ​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% Increase in total company comparable store net sales(4)​​ 2.1% ​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% Increase in total company comparable store net sales (constant currency)(4)​​ 1.4% ​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 7,306,759​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​Working capital (deficit)(5)​ (1,407,484)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​Total assets​ 17,176,538​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​Current liabilities​ 8,714,243​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​Debt​ 9,024,381​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​Finance lease liabilities, less current portion​ 283,882​ 200,702​ 217,428​ 186,122​ 155,855​Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​Stockholders' deficit​ (4,749,614)​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​New stores​ 217​ 198​ 177​ 219​ 138​Closed stores​ 4​ 1​ 1​ 1​ - ​Net new stores​ 213​ 197​ 176​ 218​ 138​Relocated stores​ 6​ 12​ 13​ 12​ 5​Number of stores at end of year​ 7,353​ 7,140​ 6,943​ 6,767​ 6,549​AutoZone domestic commercial programs​ 5,898​ 5,682​ 5,342​ 5,179​ 5,007​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 837​$ 807​$ 812​$ 686​$ 683​Total AutoZone store square footage (in thousands)​ 49,417​ 47,899​ 46,435​ 45,057​ 43,502​Average square footage per AutoZone store​ 6,721​ 6,709​ 6,688​ 6,658​ 6,643​Increase in AutoZone store square footage​ 3.2% 3.2% 3.1% 3.6% 2.3% Average net sales per AutoZone store (in thousands)​$ 2,505​$ 2,435​$ 2,329​$ 2,160​$ 1,914​Net sales per AutoZone store average square foot​$ 373​$ 363​$ 349​$ 325​$ 288​Total employees at end of year (in thousands)​ 126​ 119​ 112​ 105​ 100​Inventory turnover(6)​ 1.5x​ 1.5x​ 1.5x​ 1.5x​ 1.3x​Accounts payable to inventory ratio​ 119.5% 124.9% 129.5% 129.6% 115.3% After-tax return on invested capital(7)​ 49.7% 55.4% 52.9% 41.0% 35.7% Adjusted debt to EBITDAR(8)​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​Net cash provided by operating activities (in thousands)(3)​$ 3,004,116​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​Cash flow before share repurchases and changes in debt (in thousands)(9)​$ 1,791,635​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​Share repurchases (in thousands)(5)(10)​$ 3,170,320​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​Number of shares repurchased (in thousands)(5)​ 1,149​ 1,524​ 2,220​ 2,592​ 826​28 Table of Contents Table of Contents Table of Contents Results of OperationsThe following table highlights selected financial information over the past five years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 18,490,268​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​Cost of sales, including warehouse and delivery expenses​ 8,673,216​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​Gross profit​ 9,817,052​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​Operating, selling, general and administrative expenses​ 6,028,344​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​Operating profit​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​Interest expense, net​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Income before income taxes​ 3,337,130​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​Income tax expense(3)​ 674,703​ 639,188​ 649,487​ 578,876​ 483,542​Net income(3)​$ 2,662,427​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​Diluted earnings per share(3)​$ 149.55​$ 132.36​$ 117.19​$ 95.19​$ 71.93​Weighted average shares for diluted earnings per share(3)​ 17,803​ 19,103​ 20,733​ 22,799​ 24,093​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(4)​ 0.4% 3.4% 8.4% ​ 13.6% ​ 7.4% Increase (decrease) in international comparable store net sales(4)​​ 16.1% ​ 29.3% ​ 19.1% ​ 22.5%​ (2.8)% Increase in international comparable store net sales (constant currency)(4)​​ 10.2% ​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% Increase in total company comparable store net sales(4)​​ 2.1% ​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% Increase in total company comparable store net sales (constant currency)(4)​​ 1.4% ​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 7,306,759​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​Working capital (deficit)(5)​ (1,407,484)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​Total assets​ 17,176,538​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​Current liabilities​ 8,714,243​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​Debt​ 9,024,381​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​Finance lease liabilities, less current portion​ 283,882​ 200,702​ 217,428​ 186,122​ 155,855​Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​Stockholders' deficit​ (4,749,614)​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​New stores​ 217​ 198​ 177​ 219​ 138​Closed stores​ 4​ 1​ 1​ 1​ - ​Net new stores​ 213​ 197​ 176​ 218​ 138​Relocated stores​ 6​ 12​ 13​ 12​ 5​Number of stores at end of year​ 7,353​ 7,140​ 6,943​ 6,767​ 6,549​AutoZone domestic commercial programs​ 5,898​ 5,682​ 5,342​ 5,179​ 5,007​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 837​$ 807​$ 812​$ 686​$ 683​Total AutoZone store square footage (in thousands)​ 49,417​ 47,899​ 46,435​ 45,057​ 43,502​Average square footage per AutoZone store​ 6,721​ 6,709​ 6,688​ 6,658​ 6,643​Increase in AutoZone store square footage​ 3.2% 3.2% 3.1% 3.6% 2.3% Average net sales per AutoZone store (in thousands)​$ 2,505​$ 2,435​$ 2,329​$ 2,160​$ 1,914​Net sales per AutoZone store average square foot​$ 373​$ 363​$ 349​$ 325​$ 288​Total employees at end of year (in thousands)​ 126​ 119​ 112​ 105​ 100​Inventory turnover(6)​ 1.5x​ 1.5x​ 1.5x​ 1.5x​ 1.3x​Accounts payable to inventory ratio​ 119.5% 124.9% 129.5% 129.6% 115.3% After-tax return on invested capital(7)​ 49.7% 55.4% 52.9% 41.0% 35.7% Adjusted debt to EBITDAR(8)​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​Net cash provided by operating activities (in thousands)(3)​$ 3,004,116​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​Cash flow before share repurchases and changes in debt (in thousands)(9)​$ 1,791,635​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​Share repurchases (in thousands)(5)(10)​$ 3,170,320​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​Number of shares repurchased (in thousands)(5)​ 1,149​ 1,524​ 2,220​ 2,592​ 826​ Results of OperationsThe following table highlights selected financial information over the past five years:​​​​​​​​​​​​​​​​​​​Fiscal Year Ended August (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​​​​​​​​​​​​​​​​​Income Statement Data ​ ​ ​ ​ ​ Net sales​$ 18,490,268​$ 17,457,209​$ 16,252,230​$ 14,629,585​$ 12,631,967​Cost of sales, including warehouse and delivery expenses​ 8,673,216​ 8,386,787​ 7,779,580​ 6,911,800​ 5,861,214​Gross profit​ 9,817,052​ 9,070,422​ 8,472,650​ 7,717,785​ 6,770,753​Operating, selling, general and administrative expenses​ 6,028,344​ 5,596,436​ 5,201,921​ 4,773,258​ 4,353,074​Operating profit​ 3,788,708​ 3,473,986​ 3,270,729​ 2,944,527​ 2,417,679​Interest expense, net​ 451,578​ 306,372​ 191,638​ 195,337​ 201,165​Income before income taxes​ 3,337,130​ 3,167,614​ 3,079,091​ 2,749,190​ 2,216,514​Income tax expense(3)​ 674,703​ 639,188​ 649,487​ 578,876​ 483,542​Net income(3)​$ 2,662,427​$ 2,528,426​$ 2,429,604​$ 2,170,314​$ 1,732,972​Diluted earnings per share(3)​$ 149.55​$ 132.36​$ 117.19​$ 95.19​$ 71.93​Weighted average shares for diluted earnings per share(3)​ 17,803​ 19,103​ 20,733​ 22,799​ 24,093​Same Store Sales​ ​ ​​ ​ ​ ​Increase in domestic comparable store net sales(4)​ 0.4% 3.4% 8.4% ​ 13.6% ​ 7.4% Increase (decrease) in international comparable store net sales(4)​​ 16.1% ​ 29.3% ​ 19.1% ​ 22.5%​ (2.8)% Increase in international comparable store net sales (constant currency)(4)​​ 10.2% ​ 17.5% ​ 19.2% ​ 20.7% ​ 4.7% Increase in total company comparable store net sales(4)​​ 2.1% ​ 5.6% ​ 9.2% ​ 14.3% ​ 6.6% Increase in total company comparable store net sales (constant currency)(4)​​ 1.4% ​ 4.6% ​ 9.2% ​ 14.1% ​ 7.2% Balance Sheet Data​ ​ ​ ​ ​ ​Current assets​$ 7,306,759​$ 6,779,426​$ 6,627,984​$ 6,415,303​$ 6,811,872​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097​​ 2,918,817​​ 2,718,712​​ 2,581,677​Working capital (deficit)(5)​ (1,407,484)​ (1,732,430)​ (1,960,409)​ (954,451)​ 528,781​Total assets​ 17,176,538​ 15,985,878​ 15,275,043​ 14,516,199​ 14,423,872​Current liabilities​ 8,714,243​ 8,511,856​ 8,588,393​ 7,369,754​ 6,283,091​Debt​ 9,024,381​ 7,668,549​ 6,122,092​ 5,269,820​ 5,513,371​Finance lease liabilities, less current portion​ 283,882​ 200,702​ 217,428​ 186,122​ 155,855​Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046​​ 2,837,973​​ 2,632,842​​ 2,501,560​Stockholders' deficit​ (4,749,614)​ (4,349,894)​ (3,538,913)​ (1,797,536)​ (877,977)​Selected Operating Data​ ​ ​ ​ ​ ​Number of stores at beginning of year​ 7,140​ 6,943​ 6,767​ 6,549​ 6,411​New stores​ 217​ 198​ 177​ 219​ 138​Closed stores​ 4​ 1​ 1​ 1​ - ​Net new stores​ 213​ 197​ 176​ 218​ 138​Relocated stores​ 6​ 12​ 13​ 12​ 5​Number of stores at end of year​ 7,353​ 7,140​ 6,943​ 6,767​ 6,549​AutoZone domestic commercial programs​ 5,898​ 5,682​ 5,342​ 5,179​ 5,007​Total Company Store Data​​​​​​​​​​​​​​​​Inventory per store (in thousands)​$ 837​$ 807​$ 812​$ 686​$ 683​Total AutoZone store square footage (in thousands)​ 49,417​ 47,899​ 46,435​ 45,057​ 43,502​Average square footage per AutoZone store​ 6,721​ 6,709​ 6,688​ 6,658​ 6,643​Increase in AutoZone store square footage​ 3.2% 3.2% 3.1% 3.6% 2.3% Average net sales per AutoZone store (in thousands)​$ 2,505​$ 2,435​$ 2,329​$ 2,160​$ 1,914​Net sales per AutoZone store average square foot​$ 373​$ 363​$ 349​$ 325​$ 288​Total employees at end of year (in thousands)​ 126​ 119​ 112​ 105​ 100​Inventory turnover(6)​ 1.5x​ 1.5x​ 1.5x​ 1.5x​ 1.3x​Accounts payable to inventory ratio​ 119.5% 124.9% 129.5% 129.6% 115.3% After-tax return on invested capital(7)​ 49.7% 55.4% 52.9% 41.0% 35.7% Adjusted debt to EBITDAR(8)​ 2.5​ 2.3​ 2.1​ 2.0​ 2.4​Net cash provided by operating activities (in thousands)(3)​$ 3,004,116​$ 2,940,788​$ 3,211,135​$ 3,518,543​$ 2,720,108​Cash flow before share repurchases and changes in debt (in thousands)(9)​$ 1,791,635​$ 2,156,026​$ 2,599,636​$ 3,048,841​$ 2,185,418​Share repurchases (in thousands)(5)(10)​$ 3,170,320​$ 3,723,289​$ 4,359,991​$ 3,378,321​$ 930,903​Number of shares repurchased (in thousands)(5)​ 1,149​ 1,524​ 2,220​ 2,592​ 826​ --- ## Modified: Liabilities and Stockholders' Deficit **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 7,355,701 ​ $ 7,201,281 Current portion of operating lease liabilities ​ ​ 266,855 ​ ​ 257,256 Accrued expenses and other ​ 1,060,746 ​ 1,000,841 Income taxes payable ​ 30,941 ​ 52,478 Total current liabilities ​ 8,714,243 ​ 8,511,856 ​ ​ ​ ​ ​ ​ ​ Long-term debt ​ 9,024,381 ​ 7,668,549 Operating lease liabilities, less current portion ​ ​ 2,960,174 ​ ​ 2,917,046 Deferred income taxes ​ 447,067 ​ 536,278 Other long-term liabilities ​ 780,287 ​ 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; 17,451 shares issued and 16,926 shares outstanding as of August 31, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023 ​ 175 ​ 189 Additional paid-in capital ​ 1,621,553 ​ 1,484,992 Retained deficit ​ (4,424,982) ​ (2,959,278) Accumulated other comprehensive loss ​ (361,618) ​ (190,836) Treasury stock, at cost ​ (1,584,742) ​ (2,684,961) Total stockholders' deficit ​ (4,749,614) ​ (4,349,894) Total liabilities and stockholders' deficit ​ $ 17,176,538 ​ $ 15,985,878 ​ See Notes to Consolidated Financial Statements." **Prior (2023):** ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 7,201,281 ​ $ 7,301,347 Current portion of operating lease liabilities ​ ​ 257,256 ​ ​ 243,407 Accrued expenses and other ​ 1,000,841 ​ 1,008,701 Income taxes payable ​ 52,478 ​ 34,938 Total current liabilities ​ 8,511,856 ​ 8,588,393 ​ ​ ​ ​ ​ ​ ​ Long-term debt ​ 7,668,549 ​ 6,122,092 Operating lease liabilities, less current portion ​ ​ 2,917,046 ​ ​ 2,837,973 Deferred income taxes ​ 536,278 ​ 533,884 Other long-term liabilities ​ 702,043 ​ 731,614 ​ ​ ​ ​ ​ ​ ​ 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; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023; 20,732 shares issued and 19,126 shares outstanding as of August 27, 2022 ​ 189 ​ 207 Additional paid-in capital ​ 1,484,992 ​ 1,354,252 Retained deficit ​ (2,959,278) ​ (1,330,067) Accumulated other comprehensive loss ​ (190,836) ​ (300,536) Treasury stock, at cost ​ (2,684,961) ​ (3,262,769) Total stockholders' deficit ​ (4,349,894) ​ (3,538,913) Total liabilities and stockholders' deficit ​ $ 15,985,878 ​ $ 15,275,043 ​ See Notes to Consolidated Financial Statements. 49 49 Table of ContentsAutoZone, Inc. Consolidated Statements of Cash Flows​​​​​​​​​​​​Year Ended​ ​August 26,​August 27,​August 28,(in thousands)​​2023​2022​2021​​​​​​​​​​Cash flows from operating activities: ​​​​ ​​ Net income​$2,528,426 ​$2,429,604​$ 2,170,314Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​ ​Depreciation and amortization of property and equipment​​497,577 ​​442,223 ​ 407,683 Other non-cash charges​​44,000 ​​15,000 ​ - Amortization of debt origination fees​​9,264 ​​11,276 ​ 12,858 Deferred income taxes​​(25,707)​​185,594 ​ (34,432)Share-based compensation expense​​93,087 ​​70,612 ​ 56,112 Changes in operating assets and liabilities:​​​​​​​ ​Accounts receivable​​(6,674)​​(125,732)​ (11,039)Merchandise inventories​​(89,180)​​(1,005,686)​ (138,517)Accounts payable and accrued expenses​​(183,679)​​1,224,692 ​ 1,029,912 Income taxes​​92,832 ​​(10,517)​ 29,467 Other, net​​(19,158)​​(25,931)​ (3,815)Net cash provided by operating activities​​ 2,940,788​​ 3,211,135​ 3,518,543​​​​​​​​​​Cash flows from investing activities:​​​​​​​ ​Capital expenditures​​(796,657)​​(672,391)​ (621,767)Purchase of marketable debt securities​​(66,917)​​(56,040)​ (63,676)Proceeds from sale of marketable debt securities​​58,357 ​​53,882 ​ 95,393Investment in tax credit equity investments​​(98,003)​​(31,537)​​ (41,712)Proceeds from disposal of capital assets and other, net​​27,042 ​​57,987 ​ 29,984Net cash used in investing activities​​ (876,178)​​ (648,099)​ (601,778)​​​​​​​​​​Cash flows from financing activities:​​​​​​​ ​Net proceeds from commercial paper​​ 606,200​​ 603,400​ - Proceeds from issuance of debt​​ 1,750,000​​ 750,000​ - Repayment of debt​​ (800,000)​​ (500,000)​​ (250,000)Net proceeds from sale of common stock​​ 182,494​​ 113,934​ 187,757Purchase of treasury stock​​ (3,699,552)​​ (4,359,991)​ (3,378,321)Repayment of principal portion of finance lease liabilities​​ (81,055)​​ (67,182)​ (59,853)Other, net​​ (18,169)​​ (10,658)​ - Net cash used in financing activities​​ (2,060,082)​​ (3,470,497)​ (3,500,417)​​​​​​​​​​Effect of exchange rate changes on cash​​ 8,146​​ 506​ 4,172​​​​​​​​​​Net increase/(decrease) in cash and cash equivalents​​ 12,674​​ (906,955)​ (579,480)Cash and cash equivalents at beginning of period​​ 264,380​​ 1,171,335​ 1,750,815Cash and cash equivalents at end of period​$ 277,054​$ 264,380​$ 1,171,335​​​​​​​​​​Supplemental cash flow information:​​​​​​​ Interest paid, net of interest cost capitalized​$ 260,866​$ 178,561​$ 187,948Income taxes paid​$ 570,250​$ 461,232​$ 574,854Leased assets obtained in exchange for new finance lease liabilities​$ 58,316​$ 100,711​$ 112,095Leased assets obtained in exchange for new operating lease liabilities​$ 428,150​$ 527,966​$ 444,626​See Notes to Consolidated Financial Statements.50 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Statements of Cash Flows​​​​​​​​​​​​Year Ended​ ​August 26,​August 27,​August 28,(in thousands)​​2023​2022​2021​​​​​​​​​​Cash flows from operating activities: ​​​​ ​​ Net income​$2,528,426 ​$2,429,604​$ 2,170,314Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​ ​Depreciation and amortization of property and equipment​​497,577 ​​442,223 ​ 407,683 Other non-cash charges​​44,000 ​​15,000 ​ - Amortization of debt origination fees​​9,264 ​​11,276 ​ 12,858 Deferred income taxes​​(25,707)​​185,594 ​ (34,432)Share-based compensation expense​​93,087 ​​70,612 ​ 56,112 Changes in operating assets and liabilities:​​​​​​​ ​Accounts receivable​​(6,674)​​(125,732)​ (11,039)Merchandise inventories​​(89,180)​​(1,005,686)​ (138,517)Accounts payable and accrued expenses​​(183,679)​​1,224,692 ​ 1,029,912 Income taxes​​92,832 ​​(10,517)​ 29,467 Other, net​​(19,158)​​(25,931)​ (3,815)Net cash provided by operating activities​​ 2,940,788​​ 3,211,135​ 3,518,543​​​​​​​​​​Cash flows from investing activities:​​​​​​​ ​Capital expenditures​​(796,657)​​(672,391)​ (621,767)Purchase of marketable debt securities​​(66,917)​​(56,040)​ (63,676)Proceeds from sale of marketable debt securities​​58,357 ​​53,882 ​ 95,393Investment in tax credit equity investments​​(98,003)​​(31,537)​​ (41,712)Proceeds from disposal of capital assets and other, net​​27,042 ​​57,987 ​ 29,984Net cash used in investing activities​​ (876,178)​​ (648,099)​ (601,778)​​​​​​​​​​Cash flows from financing activities:​​​​​​​ ​Net proceeds from commercial paper​​ 606,200​​ 603,400​ - Proceeds from issuance of debt​​ 1,750,000​​ 750,000​ - Repayment of debt​​ (800,000)​​ (500,000)​​ (250,000)Net proceeds from sale of common stock​​ 182,494​​ 113,934​ 187,757Purchase of treasury stock​​ (3,699,552)​​ (4,359,991)​ (3,378,321)Repayment of principal portion of finance lease liabilities​​ (81,055)​​ (67,182)​ (59,853)Other, net​​ (18,169)​​ (10,658)​ - Net cash used in financing activities​​ (2,060,082)​​ (3,470,497)​ (3,500,417)​​​​​​​​​​Effect of exchange rate changes on cash​​ 8,146​​ 506​ 4,172​​​​​​​​​​Net increase/(decrease) in cash and cash equivalents​​ 12,674​​ (906,955)​ (579,480)Cash and cash equivalents at beginning of period​​ 264,380​​ 1,171,335​ 1,750,815Cash and cash equivalents at end of period​$ 277,054​$ 264,380​$ 1,171,335​​​​​​​​​​Supplemental cash flow information:​​​​​​​ Interest paid, net of interest cost capitalized​$ 260,866​$ 178,561​$ 187,948Income taxes paid​$ 570,250​$ 461,232​$ 574,854Leased assets obtained in exchange for new finance lease liabilities​$ 58,316​$ 100,711​$ 112,095Leased assets obtained in exchange for new operating lease liabilities​$ 428,150​$ 527,966​$ 444,626​See Notes to Consolidated Financial Statements. **Current (2024):** ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 7,355,701 ​ $ 7,201,281 Current portion of operating lease liabilities ​ ​ 266,855 ​ ​ 257,256 Accrued expenses and other ​ 1,060,746 ​ 1,000,841 Income taxes payable ​ 30,941 ​ 52,478 Total current liabilities ​ 8,714,243 ​ 8,511,856 ​ ​ ​ ​ ​ ​ ​ Long-term debt ​ 9,024,381 ​ 7,668,549 Operating lease liabilities, less current portion ​ ​ 2,960,174 ​ ​ 2,917,046 Deferred income taxes ​ 447,067 ​ 536,278 Other long-term liabilities ​ 780,287 ​ 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; 17,451 shares issued and 16,926 shares outstanding as of August 31, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023 ​ 175 ​ 189 Additional paid-in capital ​ 1,621,553 ​ 1,484,992 Retained deficit ​ (4,424,982) ​ (2,959,278) Accumulated other comprehensive loss ​ (361,618) ​ (190,836) Treasury stock, at cost ​ (1,584,742) ​ (2,684,961) Total stockholders' deficit ​ (4,749,614) ​ (4,349,894) Total liabilities and stockholders' deficit ​ $ 17,176,538 ​ $ 15,985,878 ​ See Notes to Consolidated Financial Statements. 47 47 Table of ContentsAutoZone, Inc. Consolidated Statements of Cash Flows​​​​​​​​​​​​Year Ended​​​August 31,​August 26,​August 27,​​​2024​2023​2022(in thousands)​​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Cash flows from operating activities:​​​​​ ​​ Net income​$2,662,427 ​$2,528,426​$ 2,429,604Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​ ​Depreciation and amortization of property and equipment​​549,755 ​​497,577 ​ 442,223 Other non-cash (income) charges​​(40,000)​​44,000 ​ 15,000Amortization of debt origination fees​​11,988 ​​9,264 ​ 11,276 Deferred income taxes​​(254,393)​​(25,707)​ 185,594 Share-based compensation expense​​106,246 ​​93,087 ​ 70,612 Changes in operating assets and liabilities:​​​​​​​ ​Accounts receivable​​(38,282)​​(6,674)​ (125,732)Merchandise inventories​​(453,101)​​(89,180)​ (1,005,686)Accounts payable and accrued expenses​​244,134 ​​(183,679)​ 1,224,692 Income taxes​​296,398 ​​92,832 ​ (10,517)Other, net​​(81,056)​​(19,158)​ (25,931)Net cash provided by operating activities​​ 3,004,116​​ 2,940,788​ 3,211,135​​​​​​​​​​Cash flows from investing activities:​​​​​​​ ​Capital expenditures​​(1,072,696)​​(796,657)​ (672,391)Purchase of marketable debt securities​​(38,757)​​(66,917)​ (56,040)Proceeds from sale of marketable debt securities​​40,849 ​​58,357 ​ 53,882Investment in tax credit equity investments​​(227,494)​​(98,003)​​ (31,537)Other, net​​11,592 ​​27,042 ​ 57,987Net cash used in investing activities​​ (1,286,506)​​ (876,178)​ (648,099)​​​​​​​​​​Cash flows from financing activities:​​​​​​​ ​Net (payments of)/proceeds from commercial paper​​ (629,600)​​ 606,200​ 603,400Proceeds from issuance of debt​​ 2,300,000​​ 1,750,000​ 750,000Repayment of debt​​ (300,000)​​ (800,000)​​ (500,000)Net proceeds from sale of common stock​​ 176,236​​ 182,494​ 113,934Purchase of treasury stock​​ (3,140,917)​​ (3,699,552)​ (4,359,991)Repayment of principal portion of finance lease liabilities​​ (85,258)​​ (81,055)​ (67,182)Other, net​​ (4,197)​​ (18,169)​ (10,658)Net cash used in financing activities​​ (1,683,736)​​ (2,060,082)​ (3,470,497)​​​​​​​​​​Effect of exchange rate changes on cash​​ (12,756)​​ 8,146​ 506​​​​​​​​​​Net increase (decrease) in cash and cash equivalents​​ 21,118​​ 12,674​ (906,955)Cash and cash equivalents at beginning of period​​ 277,054​​ 264,380​ 1,171,335Cash and cash equivalents at end of period​$ 298,172​$ 277,054​$ 264,380​​​​​​​​​​Supplemental cash flow information:​​​​​​​ Interest paid, net of interest cost capitalized​$ 353,819​$ 260,866​$ 178,561Income taxes paid​$ 437,552​$ 570,250​$ 461,232Leased assets obtained in exchange for new finance lease liabilities​$ 196,112​$ 58,316​$ 100,711Leased assets obtained in exchange for new operating lease liabilities​$ 415,212​$ 428,150​$ 527,966​See Notes to Consolidated Financial Statements.48 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Statements of Cash Flows​​​​​​​​​​​​Year Ended​​​August 31,​August 26,​August 27,​​​2024​2023​2022(in thousands)​​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Cash flows from operating activities:​​​​​ ​​ Net income​$2,662,427 ​$2,528,426​$ 2,429,604Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​ ​Depreciation and amortization of property and equipment​​549,755 ​​497,577 ​ 442,223 Other non-cash (income) charges​​(40,000)​​44,000 ​ 15,000Amortization of debt origination fees​​11,988 ​​9,264 ​ 11,276 Deferred income taxes​​(254,393)​​(25,707)​ 185,594 Share-based compensation expense​​106,246 ​​93,087 ​ 70,612 Changes in operating assets and liabilities:​​​​​​​ ​Accounts receivable​​(38,282)​​(6,674)​ (125,732)Merchandise inventories​​(453,101)​​(89,180)​ (1,005,686)Accounts payable and accrued expenses​​244,134 ​​(183,679)​ 1,224,692 Income taxes​​296,398 ​​92,832 ​ (10,517)Other, net​​(81,056)​​(19,158)​ (25,931)Net cash provided by operating activities​​ 3,004,116​​ 2,940,788​ 3,211,135​​​​​​​​​​Cash flows from investing activities:​​​​​​​ ​Capital expenditures​​(1,072,696)​​(796,657)​ (672,391)Purchase of marketable debt securities​​(38,757)​​(66,917)​ (56,040)Proceeds from sale of marketable debt securities​​40,849 ​​58,357 ​ 53,882Investment in tax credit equity investments​​(227,494)​​(98,003)​​ (31,537)Other, net​​11,592 ​​27,042 ​ 57,987Net cash used in investing activities​​ (1,286,506)​​ (876,178)​ (648,099)​​​​​​​​​​Cash flows from financing activities:​​​​​​​ ​Net (payments of)/proceeds from commercial paper​​ (629,600)​​ 606,200​ 603,400Proceeds from issuance of debt​​ 2,300,000​​ 1,750,000​ 750,000Repayment of debt​​ (300,000)​​ (800,000)​​ (500,000)Net proceeds from sale of common stock​​ 176,236​​ 182,494​ 113,934Purchase of treasury stock​​ (3,140,917)​​ (3,699,552)​ (4,359,991)Repayment of principal portion of finance lease liabilities​​ (85,258)​​ (81,055)​ (67,182)Other, net​​ (4,197)​​ (18,169)​ (10,658)Net cash used in financing activities​​ (1,683,736)​​ (2,060,082)​ (3,470,497)​​​​​​​​​​Effect of exchange rate changes on cash​​ (12,756)​​ 8,146​ 506​​​​​​​​​​Net increase (decrease) in cash and cash equivalents​​ 21,118​​ 12,674​ (906,955)Cash and cash equivalents at beginning of period​​ 277,054​​ 264,380​ 1,171,335Cash and cash equivalents at end of period​$ 298,172​$ 277,054​$ 264,380​​​​​​​​​​Supplemental cash flow information:​​​​​​​ Interest paid, net of interest cost capitalized​$ 353,819​$ 260,866​$ 178,561Income taxes paid​$ 437,552​$ 570,250​$ 461,232Leased assets obtained in exchange for new finance lease liabilities​$ 196,112​$ 58,316​$ 100,711Leased assets obtained in exchange for new operating lease liabilities​$ 415,212​$ 428,150​$ 527,966​See Notes to Consolidated Financial Statements. AutoZone, Inc. Consolidated Statements of Cash Flows​​​​​​​​​​​​Year Ended​​​August 31,​August 26,​August 27,​​​2024​2023​2022(in thousands)​​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Cash flows from operating activities:​​​​​ ​​ Net income​$2,662,427 ​$2,528,426​$ 2,429,604Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​ ​Depreciation and amortization of property and equipment​​549,755 ​​497,577 ​ 442,223 Other non-cash (income) charges​​(40,000)​​44,000 ​ 15,000Amortization of debt origination fees​​11,988 ​​9,264 ​ 11,276 Deferred income taxes​​(254,393)​​(25,707)​ 185,594 Share-based compensation expense​​106,246 ​​93,087 ​ 70,612 Changes in operating assets and liabilities:​​​​​​​ ​Accounts receivable​​(38,282)​​(6,674)​ (125,732)Merchandise inventories​​(453,101)​​(89,180)​ (1,005,686)Accounts payable and accrued expenses​​244,134 ​​(183,679)​ 1,224,692 Income taxes​​296,398 ​​92,832 ​ (10,517)Other, net​​(81,056)​​(19,158)​ (25,931)Net cash provided by operating activities​​ 3,004,116​​ 2,940,788​ 3,211,135​​​​​​​​​​Cash flows from investing activities:​​​​​​​ ​Capital expenditures​​(1,072,696)​​(796,657)​ (672,391)Purchase of marketable debt securities​​(38,757)​​(66,917)​ (56,040)Proceeds from sale of marketable debt securities​​40,849 ​​58,357 ​ 53,882Investment in tax credit equity investments​​(227,494)​​(98,003)​​ (31,537)Other, net​​11,592 ​​27,042 ​ 57,987Net cash used in investing activities​​ (1,286,506)​​ (876,178)​ (648,099)​​​​​​​​​​Cash flows from financing activities:​​​​​​​ ​Net (payments of)/proceeds from commercial paper​​ (629,600)​​ 606,200​ 603,400Proceeds from issuance of debt​​ 2,300,000​​ 1,750,000​ 750,000Repayment of debt​​ (300,000)​​ (800,000)​​ (500,000)Net proceeds from sale of common stock​​ 176,236​​ 182,494​ 113,934Purchase of treasury stock​​ (3,140,917)​​ (3,699,552)​ (4,359,991)Repayment of principal portion of finance lease liabilities​​ (85,258)​​ (81,055)​ (67,182)Other, net​​ (4,197)​​ (18,169)​ (10,658)Net cash used in financing activities​​ (1,683,736)​​ (2,060,082)​ (3,470,497)​​​​​​​​​​Effect of exchange rate changes on cash​​ (12,756)​​ 8,146​ 506​​​​​​​​​​Net increase (decrease) in cash and cash equivalents​​ 21,118​​ 12,674​ (906,955)Cash and cash equivalents at beginning of period​​ 277,054​​ 264,380​ 1,171,335Cash and cash equivalents at end of period​$ 298,172​$ 277,054​$ 264,380​​​​​​​​​​Supplemental cash flow information:​​​​​​​ Interest paid, net of interest cost capitalized​$ 353,819​$ 260,866​$ 178,561Income taxes paid​$ 437,552​$ 570,250​$ 461,232Leased assets obtained in exchange for new finance lease liabilities​$ 196,112​$ 58,316​$ 100,711Leased assets obtained in exchange for new operating lease liabilities​$ 415,212​$ 428,150​$ 527,966​See Notes to Consolidated Financial Statements. --- ## Modified: Maximum Dollar Value that May Yet Be Purchased Under the Plans or Programs **Key changes:** - Reworded sentence: "May 5, 2024 to June 1, 2024 65,636 ​ $ 2,891.87 ​ 65,636 ​ $ 1,184,718,249 June 2, 2024 to June 29, 2024 81,197 ​ 2,881.79 ​ 81,197 ​ ​ 2,450,725,318 June 30, 2024 to July 27, 2024 84,860 ​ 2,936.78 ​ 84,860 ​ ​ 2,201,510,545 July 28, 2024 to August 31, 2024 12,096 ​ ​ 3,103.60 ​ 12,096 ​ ​ 2,163,969,364 Total 243,789 ​ $ 2,914.65 ​ 243,789 ​ $ 2,163,969,364 ​ The Company also repurchased, at market value, an additional 4,886 shares in fiscal year 2022 from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions." - Reworded sentence: "Under the Employee Plan, 5,000, 5,183 and 6,238 shares were sold to employees in fiscal 2024, 2023 and 2022, respectively." - Reworded sentence: "Purchases by executives under the Executive Plan were 540, 689 and 709 shares in fiscal 2024, 2023 and 2022, respectively." **Prior (2023):** May 7, 2023 to June 3, 2023 86,678 ​ $ 2,560.49 ​ 86,678 ​ $ 621,625,545 June 4, 2023 to July 1, 2023 94,541 ​ 2,416.71 ​ 94,541 ​ ​ 2,393,147,061 July 2, 2023 to July 29, 2023 107,560 ​ 2,532.00 ​ 107,560 ​ ​ 2,120,805,558 July 30, 2023 to August 26, 2023 114,620 ​ ​ 2,499.71 ​ 114,620 ​ ​ 1,834,288,894 Total 403,399 ​ $ 2,501.93 ​ 403,399 ​ $ 1,834,288,894 ​ ​ 24 24 Table of ContentsThe Company also repurchased, at market value, an additional 4,886 and 7,611 shares in fiscal years 2022 and 2021, respectively, from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan.Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 232,966 shares of common stock were reserved for future issuance under the Executive Plan.​25 Table of Contents Table of Contents Table of Contents The Company also repurchased, at market value, an additional 4,886 and 7,611 shares in fiscal years 2022 and 2021, respectively, from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan.Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 232,966 shares of common stock were reserved for future issuance under the Executive Plan.​ The Company also repurchased, at market value, an additional 4,886 and 7,611 shares in fiscal years 2022 and 2021, respectively, from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,183, 6,238 and 8,479 shares were sold to employees in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 122,341 shares of common stock were reserved for future issuance under the Employee Plan. Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 689, 709 and 997 shares in fiscal 2023, 2022 and 2021, respectively. At August 26, 2023, 232,966 shares of common stock were reserved for future issuance under the Executive Plan. ​ 25 25 Table of ContentsStock Performance GraphThe graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 25, 2018 and ending August 26, 2023. ​Item 6. ReservedNot required.​26 Table of Contents Table of Contents Table of Contents Stock Performance GraphThe graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 25, 2018 and ending August 26, 2023. ​Item 6. ReservedNot required.​ **Current (2024):** May 5, 2024 to June 1, 2024 65,636 ​ $ 2,891.87 ​ 65,636 ​ $ 1,184,718,249 June 2, 2024 to June 29, 2024 81,197 ​ 2,881.79 ​ 81,197 ​ ​ 2,450,725,318 June 30, 2024 to July 27, 2024 84,860 ​ 2,936.78 ​ 84,860 ​ ​ 2,201,510,545 July 28, 2024 to August 31, 2024 12,096 ​ ​ 3,103.60 ​ 12,096 ​ ​ 2,163,969,364 Total 243,789 ​ $ 2,914.65 ​ 243,789 ​ $ 2,163,969,364 ​ The Company also repurchased, at market value, an additional 4,886 shares in fiscal year 2022 from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,000, 5,183 and 6,238 shares were sold to employees in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 117,341 shares of common stock were reserved for future issuance under the Employee Plan. Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 540, 689 and 709 shares in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 232,426 shares of common stock were reserved for future issuance under the Executive Plan. 25 25 Table of ContentsStock Performance GraphThe graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 31, 2019, and ending August 31, 2024.Item 6. ReservedNot required.​26 Table of Contents Table of Contents Table of Contents Stock Performance GraphThe graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 31, 2019, and ending August 31, 2024.Item 6. ReservedNot required.​ Stock Performance GraphThe graph below presents changes in the value of AutoZone's stock as compared to Standard & Poor's 500 Composite Index ("S&P 500") and to Standard & Poor's Retail Index ("S&P Retail Index") for the five-year period beginning August 31, 2019, and ending August 31, 2024.Item 6. ReservedNot required.​ --- ## Modified: Earnings per Share: Basic earnings per share is based on the weighted average outstanding common shares. Diluted earnings per share is based on the weighted average outstanding common shares adjusted for the effect of common stock equivalents, which are primarily stock options. There were 118,771, 140,071 and 142,887 stock **Key changes:** - Reworded sentence: "55 55 Table of Contentsoptions excluded for the year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively, because they would have been anti-dilutive.Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans." - Reworded sentence: "(Refer to "Note O - Share-Based Payments" for further discussion.)Risk and Uncertainties: In fiscal 2024, one class of similar products accounted for approximately 15 percent of the Company's total revenues and one individual vendor provided 12 percent of our total purchases." - Added sentence: "The Company adopted this standard on a retrospective basis beginning with its first quarter ended November 18, 2023." - Added sentence: "The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures." - Added sentence: "Refer to "Note F - Supplier Financing Programs." Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280)." **Prior (2023):** 57 57 Table of Contentscommon stock equivalents, which are primarily stock options. There were 140,071, 142,887 and 171,652 stock options excluded for the year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively, because they would have been anti-dilutive.Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note B - Share-Based Payments" for further discussion.)Risk and Uncertainties: In fiscal 2023, one class of similar products accounted for approximately 14 percent of the Company's total revenues. No other class of similar products accounted for 10 percent or more of total revenues, and no individual vendor provided more than 10 percent of total purchases.Recently Adopted Accounting PronouncementsIn November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance, which requires annual disclosures for entities receiving governmental assistance to provide more transparency. This ASU is effective for fiscal years beginning after December 15, 2021. The Company adopted this ASU with its first quarter ended November 19, 2022 on a prospective basis. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements: In September 2022, the FASB issued 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. Early adoption is permitted. The Company expects to adopt this standard beginning with its first quarter ending November 18, 2023. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact. Note B - Share-Based PaymentsOverview of Share-Based Payment PlansThe Company has several active and inactive equity incentive plans under which the Company has been authorized to grant share-based awards to key employees and non-employee directors. Awards under these plans have been in the form of restricted stock, restricted stock units, stock options, stock appreciation rights and other awards as defined by the plans. The Company also has an Employee Stock Purchase Plan that allows employees to purchase Company shares at a discount subject to certain limitations. The Company also has an Executive Stock Purchase Plan which permits all eligible executives to purchase AutoZone's common stock using up to twenty-five percent of his or her annual salary and bonus.Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award PlanOn December 15, 2010, the Company's stockholders approved the 2011 Equity Incentive Award Plan (the "2011 Plan"), allowing the Company to provide equity-based compensation to non-employee directors and employees for their service to AutoZone or its subsidiaries or affiliates. Prior to the Company's adoption of the 2011 Plan, equity-based compensation was provided to employees under the 2006 Stock Option Plan and to non-employee directors under the 2003 Director Compensation Plan (the "2003 Comp Plan").58 Table of Contents Table of Contents Table of Contents common stock equivalents, which are primarily stock options. There were 140,071, 142,887 and 171,652 stock options excluded for the year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively, because they would have been anti-dilutive.Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note B - Share-Based Payments" for further discussion.)Risk and Uncertainties: In fiscal 2023, one class of similar products accounted for approximately 14 percent of the Company's total revenues. No other class of similar products accounted for 10 percent or more of total revenues, and no individual vendor provided more than 10 percent of total purchases.Recently Adopted Accounting PronouncementsIn November 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-10, Government Assistance (Topic 832) - Disclosures by Business Entities about Government Assistance, which requires annual disclosures for entities receiving governmental assistance to provide more transparency. This ASU is effective for fiscal years beginning after December 15, 2021. The Company adopted this ASU with its first quarter ended November 19, 2022 on a prospective basis. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements and related disclosures. Recently Issued Accounting Pronouncements: In September 2022, the FASB issued 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. Early adoption is permitted. The Company expects to adopt this standard beginning with its first quarter ending November 18, 2023. The Company is currently evaluating these new disclosure requirements and does not expect the adoption to have a material impact. Note B - Share-Based PaymentsOverview of Share-Based Payment PlansThe Company has several active and inactive equity incentive plans under which the Company has been authorized to grant share-based awards to key employees and non-employee directors. Awards under these plans have been in the form of restricted stock, restricted stock units, stock options, stock appreciation rights and other awards as defined by the plans. The Company also has an Employee Stock Purchase Plan that allows employees to purchase Company shares at a discount subject to certain limitations. The Company also has an Executive Stock Purchase Plan which permits all eligible executives to purchase AutoZone's common stock using up to twenty-five percent of his or her annual salary and bonus.Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award PlanOn December 15, 2010, the Company's stockholders approved the 2011 Equity Incentive Award Plan (the "2011 Plan"), allowing the Company to provide equity-based compensation to non-employee directors and employees for their service to AutoZone or its subsidiaries or affiliates. Prior to the Company's adoption of the 2011 Plan, equity-based compensation was provided to employees under the 2006 Stock Option Plan and to non-employee directors under the 2003 Director Compensation Plan (the "2003 Comp Plan"). common stock equivalents, which are primarily stock options. There were 140,071, 142,887 and 171,652 stock options excluded for the year ended August 26, 2023, August 27, 2022 and August 28, 2021, respectively, because they would have been anti-dilutive. Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note B - Share-Based Payments" for further discussion.) **Current (2024):** 55 55 Table of Contentsoptions excluded for the year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively, because they would have been anti-dilutive.Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note O - Share-Based Payments" for further discussion.)Risk and Uncertainties: In fiscal 2024, one class of similar products accounted for approximately 15 percent of the Company's total revenues and one individual vendor provided 12 percent of our total purchases. No other class of similar products accounted for 10 percent or more of total revenues, and no other individual vendor provided more than 10 percent of total purchases.Recently Adopted Accounting PronouncementsIn 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 consolidated financial statements and related disclosures. 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 - Fair Value MeasurementsThe 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 56 Table of Contents Table of Contents Table of Contents options excluded for the year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively, because they would have been anti-dilutive.Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note O - Share-Based Payments" for further discussion.)Risk and Uncertainties: In fiscal 2024, one class of similar products accounted for approximately 15 percent of the Company's total revenues and one individual vendor provided 12 percent of our total purchases. No other class of similar products accounted for 10 percent or more of total revenues, and no other individual vendor provided more than 10 percent of total purchases.Recently Adopted Accounting PronouncementsIn 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 consolidated financial statements and related disclosures. 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 - Fair Value MeasurementsThe 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 options excluded for the year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively, because they would have been anti-dilutive.Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note O - Share-Based Payments" for further discussion.)Risk and Uncertainties: In fiscal 2024, one class of similar products accounted for approximately 15 percent of the Company's total revenues and one individual vendor provided 12 percent of our total purchases. No other class of similar products accounted for 10 percent or more of total revenues, and no other individual vendor provided more than 10 percent of total purchases.Recently Adopted Accounting PronouncementsIn 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 consolidated financial statements and related disclosures. 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 - Fair Value MeasurementsThe 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 options excluded for the year ended August 31, 2024, August 26, 2023 and August 27, 2022, respectively, because they would have been anti-dilutive. Share-Based Payments: Share-based payments include stock option grants, restricted stock, restricted stock units, stock appreciation rights and other transactions under the Company's equity incentive plans. The Company recognizes compensation expense for its share-based payments over the requisite service period based on the fair value of the awards. The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options. The value of restricted stock is based on the stock price of the award on the grant date. (Refer to "Note O - Share-Based Payments" for further discussion.) --- ## Modified: AutoZone, Inc. Consolidated Statements of Income **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, ​ ​ 2024 ​ 2023 ​ 2022 (in thousands, except per share data) ​ (53 weeks) ​ (52 weeks) ​ (52 weeks) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales $ 18,490,268 $ 17,457,209 $ 16,252,230 Cost of sales, including warehouse and delivery expenses ​ ​ 8,673,216 ​ ​ 8,386,787 ​ ​ 7,779,580 Gross profit ​ ​ 9,817,052 ​ 9,070,422 ​ 8,472,650 Operating, selling, general and administrative expenses ​ ​ 6,028,344 ​ ​ 5,596,436 ​ ​ 5,201,921 Operating profit ​ ​ 3,788,708 ​ ​ 3,473,986 ​ ​ 3,270,729 Interest expense, net ​ ​ 451,578 ​ ​ 306,372 ​ ​ 191,638 Income before income taxes ​ ​ 3,337,130 ​ 3,167,614 ​ 3,079,091 Income tax expense ​ ​ 674,703 ​ ​ 639,188 ​ ​ 649,487 Net income ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares for basic earnings per share ​ 17,309 ​ 18,510 ​ 20,107 Effect of dilutive stock equivalents ​ ​ 494 ​ ​ 593 ​ ​ 626 Weighted average shares for diluted earnings per share ​ 17,803 ​ 19,103 ​ 20,733 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 153.82 ​ $ 136.60 ​ $ 120.83 Diluted earnings per share ​ $ 149.55 ​ $ 132.36 ​ $ 117.19 ​ See Notes to Consolidated Financial Statements." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 26, ​ August 27, ​ August 28, (in thousands, except per share data) ​ 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales $ 17,457,209 $ 16,252,230 $ 14,629,585 Cost of sales, including warehouse and delivery expenses ​ ​ 8,386,787 ​ ​ 7,779,580 ​ ​ 6,911,800 Gross profit ​ ​ 9,070,422 ​ 8,472,650 ​ 7,717,785 Operating, selling, general and administrative expenses ​ ​ 5,596,436 ​ ​ 5,201,921 ​ ​ 4,773,258 Operating profit ​ ​ 3,473,986 ​ ​ 3,270,729 ​ ​ 2,944,527 Interest expense, net ​ ​ 306,372 ​ ​ 191,638 ​ ​ 195,337 Income before income taxes ​ ​ 3,167,614 ​ 3,079,091 ​ 2,749,190 Income tax expense ​ ​ 639,188 ​ ​ 649,487 ​ ​ 578,876 Net income ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares for basic earnings per share ​ 18,510 ​ 20,107 ​ 22,237 Effect of dilutive stock equivalents ​ ​ 593 ​ ​ 626 ​ ​ 562 Weighted average shares for diluted earnings per share ​ 19,103 ​ 20,733 ​ 22,799 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 136.60 ​ $ 120.83 ​ $ 97.60 Diluted earnings per share ​ $ 132.36 ​ $ 117.19 ​ $ 95.19 ​ See Notes to Consolidated Financial Statements. **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, ​ ​ 2024 ​ 2023 ​ 2022 (in thousands, except per share data) ​ (53 weeks) ​ (52 weeks) ​ (52 weeks) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales $ 18,490,268 $ 17,457,209 $ 16,252,230 Cost of sales, including warehouse and delivery expenses ​ ​ 8,673,216 ​ ​ 8,386,787 ​ ​ 7,779,580 Gross profit ​ ​ 9,817,052 ​ 9,070,422 ​ 8,472,650 Operating, selling, general and administrative expenses ​ ​ 6,028,344 ​ ​ 5,596,436 ​ ​ 5,201,921 Operating profit ​ ​ 3,788,708 ​ ​ 3,473,986 ​ ​ 3,270,729 Interest expense, net ​ ​ 451,578 ​ ​ 306,372 ​ ​ 191,638 Income before income taxes ​ ​ 3,337,130 ​ 3,167,614 ​ 3,079,091 Income tax expense ​ ​ 674,703 ​ ​ 639,188 ​ ​ 649,487 Net income ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares for basic earnings per share ​ 17,309 ​ 18,510 ​ 20,107 Effect of dilutive stock equivalents ​ ​ 494 ​ ​ 593 ​ ​ 626 Weighted average shares for diluted earnings per share ​ 17,803 ​ 19,103 ​ 20,733 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share ​ $ 153.82 ​ $ 136.60 ​ $ 120.83 Diluted earnings per share ​ $ 149.55 ​ $ 132.36 ​ $ 117.19 ​ See Notes to Consolidated Financial Statements. --- ## Modified: Fiscal Year Ended August **Key changes:** - Reworded sentence: "(in thousands, except ratio) ​ 2024(1) 2023 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 2,662,427 $ 2,528,426 $ 2,429,604 $ 2,170,314 $ 1,732,972 Add: Interest expense ​ 451,578 ​ 306,372 ​ 191,638 ​ 195,337 ​ 201,165 Income tax expense ​ ​ 674,703 ​ ​ 639,188 ​ ​ 649,487 ​ ​ 578,876 ​ ​ 483,542 EBIT ​ 3,788,708 ​ 3,473,986 ​ 3,270,729 ​ 2,944,527 ​ 2,417,679 Add: Depreciation and amortization expense ​ 549,755 ​ 497,577 ​ 442,223 ​ 407,683 ​ 397,466 Rent expense(2) ​ 447,693 ​ 406,398 ​ 373,278 ​ 345,380 ​ 329,783 Share-based expense ​ 106,246 ​ 93,087 ​ 70,612 ​ 56,112 ​ 44,835 EBITDAR ​ $ 4,892,402 ​ $ 4,471,048 ​ $ 4,156,842 ​ $ 3,753,702 ​ $ 3,189,763 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt ​ $ 9,024,381 ​ $ 7,668,549 ​ $ 6,122,092 ​ $ 5,269,820 ​ $ 5,513,371 Financing lease liabilities ​ 399,441 ​ 287,618 ​ 310,305 ​ 276,054 ​ 223,353 Add: Rent x 6(2)(5) ​ 2,686,158 ​ 2,438,388 ​ 2,239,668 ​ 2,072,280 ​ 1,978,696 Adjusted debt ​ $ 12,109,980 ​ $ 10,394,555 ​ $ 8,672,065 ​ $ 7,618,154 ​ $ 7,715,420 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted debt to EBITDAR ​ 2.5 ​ 2.3 ​ 2.1 ​ 2.0 ​ 2.4 ​ ​ 37 37 Table of Contents(1)The fiscal year ended August 31, 2024, consisted of 53 weeks.(2)The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the 53 weeks ended, August 31, 2024, and the 52 weeks ended August 26, 2023, August 27,2022, August 28, 2021 and August 29, 2020." - Reworded sentence: "Our senior management has identified self-insurance reserves as a critical accounting estimate that is materially impacted by assumptions and has discussed this policy with the Audit Committee of our Board." - Reworded sentence: "Our senior management has identified self-insurance reserves as a critical accounting estimate that is materially impacted by assumptions and has discussed this policy with the Audit Committee of our Board." **Prior (2023):** (in thousands, except per share data, same store sales and selected operating data) 2023 2022 2021(1) 2020(1) 2019(2)(3) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ **Current (2024):** (in thousands, except per share data, same store sales and selected operating data) 2024(1) 2023 2022 2021(2) 2020(2) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## Modified: Valuation of Self-insurance Reserves **Key changes:** - Reworded sentence: "Description of the Matter At August 31, 2024, the Company's self-insurance reserve estimate was $257.7 million." - Reworded sentence: "​ Memphis, Tennessee October 28, 2024 ​ 45 45 Table of ContentsAutoZone, Inc." **Prior (2023):** Description of the Matter At August 26, 2023, the Company's self-insurance reserve estimate was $268.8 million. As more fully described in Note A of the consolidated financial statements, the Company retains a significant portion of the risks associated with workers' compensation, general liability, product liability, property and vehicle insurance. Accordingly, the Company utilizes various methods, including analyses of historical trends and actuarial methods, to estimate the costs of these risks. Auditing the self-insurance reserve is complex and required the involvement of specialists due to the judgmental nature of estimating the costs to settle reported claims and claims incurred but not yet reported. There are a number of factors and/or assumptions (e.g., severity, duration and frequency of claims, projected inflation of related factors, and the risk-free rate) used in the measurement process which have a significant effect on the estimated self-insurance reserve. How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of the Company's controls over the self-insurance reserve process. For example, we tested controls over management's review of the self-insurance reserve calculations, the significant actuarial assumptions and the data inputs provided to the actuary. To evaluate the self-insurance reserve, our audit procedures included, among others, assessing the methodologies used, evaluating the significant actuarial assumptions discussed above and testing the completeness and the accuracy of the underlying claims data used by the Company. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the self-insurance reserve from the prior year due to changes in these assumptions. In addition, we involved our actuarial specialists to assist in assessing the valuation methodologies and significant assumptions used in the valuation analysis, we evaluated management's methodology for determining the risk-free interest rate utilized in measuring the net present value of the long-term portion of the self-insurance reserve, we compared the significant assumptions used by management to industry accepted actuarial assumptions and we compared the Company's reserve to a range developed by our actuarial specialists based on assumptions developed by the specialists. ​ ​ /s/ Ernst & Young LLP We have served as the Company's auditor since 1988. ​ Memphis, Tennessee October 24, 2023 ​ 47 47 Table of ContentsAutoZone, Inc. Consolidated Statements of Income​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands, except per share data)​2023​2022​2021​​​​​​​​​​Net sales $ 17,457,209 $ 16,252,230 $ 14,629,585Cost of sales, including warehouse and delivery expenses​​ 8,386,787​​ 7,779,580​​ 6,911,800Gross profit​​ 9,070,422​ 8,472,650​ 7,717,785Operating, selling, general and administrative expenses​​ 5,596,436​​ 5,201,921​​ 4,773,258Operating profit​​ 3,473,986​​ 3,270,729​​ 2,944,527Interest expense, net​​ 306,372​​ 191,638​​ 195,337Income before income taxes​​ 3,167,614​ 3,079,091​ 2,749,190Income tax expense​​ 639,188​​ 649,487​​ 578,876Net income​$ 2,528,426​$ 2,429,604​$ 2,170,314​​​​​​​​​​Weighted average shares for basic earnings per share​ 18,510​ 20,107​ 22,237Effect of dilutive stock equivalents​​ 593​​ 626​​ 562Weighted average shares for diluted earnings per share​ 19,103​ 20,733​ 22,799​​​​​​​​​​Basic earnings per share​$ 136.60​$ 120.83​$ 97.60Diluted earnings per share​$ 132.36​$ 117.19​$ 95.19​See Notes to Consolidated Financial Statements.AutoZone, Inc. Consolidated Statements of Comprehensive Income​​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands) 2023​2022​2021​​​​​​​​​​Net income​$ 2,528,426​$ 2,429,604​$ 2,170,314Other comprehensive income:​ ​ ​ Foreign currency translation adjustments​ 103,633​ 7,448​ 44,683Unrealized gains (losses) on marketable debt securities, net of taxes​ 320​ (2,760)​ (1,256)Net derivative activities, net of taxes​ 5,747​ 2,762​ 2,839Total other comprehensive income​ 109,700​ 7,450​ 46,266Comprehensive income​$ 2,638,126​$ 2,437,054​$ 2,216,580​(1)See Notes to Consolidated Financial Statements.​​48 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Statements of Income​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands, except per share data)​2023​2022​2021​​​​​​​​​​Net sales $ 17,457,209 $ 16,252,230 $ 14,629,585Cost of sales, including warehouse and delivery expenses​​ 8,386,787​​ 7,779,580​​ 6,911,800Gross profit​​ 9,070,422​ 8,472,650​ 7,717,785Operating, selling, general and administrative expenses​​ 5,596,436​​ 5,201,921​​ 4,773,258Operating profit​​ 3,473,986​​ 3,270,729​​ 2,944,527Interest expense, net​​ 306,372​​ 191,638​​ 195,337Income before income taxes​​ 3,167,614​ 3,079,091​ 2,749,190Income tax expense​​ 639,188​​ 649,487​​ 578,876Net income​$ 2,528,426​$ 2,429,604​$ 2,170,314​​​​​​​​​​Weighted average shares for basic earnings per share​ 18,510​ 20,107​ 22,237Effect of dilutive stock equivalents​​ 593​​ 626​​ 562Weighted average shares for diluted earnings per share​ 19,103​ 20,733​ 22,799​​​​​​​​​​Basic earnings per share​$ 136.60​$ 120.83​$ 97.60Diluted earnings per share​$ 132.36​$ 117.19​$ 95.19​See Notes to Consolidated Financial Statements.AutoZone, Inc. Consolidated Statements of Comprehensive Income​​​​​​​​​​​​​Year Ended​​August 26,​August 27,​August 28,(in thousands) 2023​2022​2021​​​​​​​​​​Net income​$ 2,528,426​$ 2,429,604​$ 2,170,314Other comprehensive income:​ ​ ​ Foreign currency translation adjustments​ 103,633​ 7,448​ 44,683Unrealized gains (losses) on marketable debt securities, net of taxes​ 320​ (2,760)​ (1,256)Net derivative activities, net of taxes​ 5,747​ 2,762​ 2,839Total other comprehensive income​ 109,700​ 7,450​ 46,266Comprehensive income​$ 2,638,126​$ 2,437,054​$ 2,216,580​(1)See Notes to Consolidated Financial Statements.​​ **Current (2024):** Description of the Matter At August 31, 2024, the Company's self-insurance reserve estimate was $257.7 million. As more fully described in Note A of the consolidated financial statements, the Company retains a significant portion of the risks associated with workers' compensation, general liability, product liability, property and vehicle insurance. Accordingly, the Company utilizes various methods, including analyses of historical trends and actuarial methods, to estimate the costs of these risks. Auditing the self-insurance reserve is complex and required the involvement of specialists due to the judgmental nature of estimating the costs to settle reported claims and claims incurred but not yet reported. There are a number of factors and/or assumptions (e.g., severity, duration and frequency of claims, projected inflation of related factors, and the risk-free rate) used in the measurement process which have a significant effect on the estimated self-insurance reserve. How We Addressed the Matter in Our Audit We evaluated the design and tested the operating effectiveness of the Company's controls over the self-insurance reserve process. For example, we tested controls over management's review of the self-insurance reserve calculations, the significant actuarial assumptions and the data inputs provided to the actuary. To evaluate the self-insurance reserve, our audit procedures included, among others, assessing the methodologies used, evaluating the significant actuarial assumptions discussed above and testing the completeness and the accuracy of the underlying claims data used by the Company. We compared the actuarial assumptions used by management to historical trends and evaluated the change in the self-insurance reserve from the prior year due to changes in these assumptions. In addition, we involved our actuarial specialists to assist in assessing the valuation methodologies and significant assumptions used in the valuation analysis, we evaluated management's methodology for determining the risk-free interest rate utilized in measuring the net present value of the long-term portion of the self-insurance reserve, we compared the significant assumptions used by management to industry accepted actuarial assumptions and we compared the Company's reserve to a range developed by our actuarial specialists based on assumptions developed by the specialists. ​ ​ /s/ Ernst & Young LLP We have served as the Company's auditor since 1988. ​ Memphis, Tennessee October 28, 2024 ​ 45 45 Table of ContentsAutoZone, Inc. Consolidated Statements of Income​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,​​2024​2023​2022(in thousands, except per share data)​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Net sales $ 18,490,268 $ 17,457,209 $ 16,252,230Cost of sales, including warehouse and delivery expenses​​ 8,673,216​​ 8,386,787​​ 7,779,580Gross profit​​ 9,817,052​ 9,070,422​ 8,472,650Operating, selling, general and administrative expenses​​ 6,028,344​​ 5,596,436​​ 5,201,921Operating profit​​ 3,788,708​​ 3,473,986​​ 3,270,729Interest expense, net​​ 451,578​​ 306,372​​ 191,638Income before income taxes​​ 3,337,130​ 3,167,614​ 3,079,091Income tax expense​​ 674,703​​ 639,188​​ 649,487Net income​$ 2,662,427​$ 2,528,426​$ 2,429,604​​​​​​​​​​Weighted average shares for basic earnings per share​ 17,309​ 18,510​ 20,107Effect of dilutive stock equivalents​​ 494​​ 593​​ 626Weighted average shares for diluted earnings per share​ 17,803​ 19,103​ 20,733​​​​​​​​​​Basic earnings per share​$ 153.82​$ 136.60​$ 120.83Diluted earnings per share​$ 149.55​$ 132.36​$ 117.19​See Notes to Consolidated Financial Statements.AutoZone, Inc. Consolidated Statements of Comprehensive Income​​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,​ 2024​2023​2022(in thousands)​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Net income​$ 2,662,427​$ 2,528,426​$ 2,429,604Other comprehensive (loss) income:​ ​ ​ Foreign currency translation adjustments​ (174,715)​ 103,633​ 7,448Unrealized gains (losses) on marketable debt securities, net of taxes​ 2,151​ 320​ (2,760)Net derivative activities, net of taxes​ 1,782​ 5,747​ 2,762Total other comprehensive (loss) income​ (170,782)​ 109,700​ 7,450Comprehensive income​$ 2,491,645​$ 2,638,126​$ 2,437,054​(1)See Notes to Consolidated Financial Statements.​​46 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Statements of Income​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,​​2024​2023​2022(in thousands, except per share data)​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Net sales $ 18,490,268 $ 17,457,209 $ 16,252,230Cost of sales, including warehouse and delivery expenses​​ 8,673,216​​ 8,386,787​​ 7,779,580Gross profit​​ 9,817,052​ 9,070,422​ 8,472,650Operating, selling, general and administrative expenses​​ 6,028,344​​ 5,596,436​​ 5,201,921Operating profit​​ 3,788,708​​ 3,473,986​​ 3,270,729Interest expense, net​​ 451,578​​ 306,372​​ 191,638Income before income taxes​​ 3,337,130​ 3,167,614​ 3,079,091Income tax expense​​ 674,703​​ 639,188​​ 649,487Net income​$ 2,662,427​$ 2,528,426​$ 2,429,604​​​​​​​​​​Weighted average shares for basic earnings per share​ 17,309​ 18,510​ 20,107Effect of dilutive stock equivalents​​ 494​​ 593​​ 626Weighted average shares for diluted earnings per share​ 17,803​ 19,103​ 20,733​​​​​​​​​​Basic earnings per share​$ 153.82​$ 136.60​$ 120.83Diluted earnings per share​$ 149.55​$ 132.36​$ 117.19​See Notes to Consolidated Financial Statements.AutoZone, Inc. Consolidated Statements of Comprehensive Income​​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,​ 2024​2023​2022(in thousands)​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Net income​$ 2,662,427​$ 2,528,426​$ 2,429,604Other comprehensive (loss) income:​ ​ ​ Foreign currency translation adjustments​ (174,715)​ 103,633​ 7,448Unrealized gains (losses) on marketable debt securities, net of taxes​ 2,151​ 320​ (2,760)Net derivative activities, net of taxes​ 1,782​ 5,747​ 2,762Total other comprehensive (loss) income​ (170,782)​ 109,700​ 7,450Comprehensive income​$ 2,491,645​$ 2,638,126​$ 2,437,054​(1)See Notes to Consolidated Financial Statements.​​ AutoZone, Inc. Consolidated Statements of Income​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,​​2024​2023​2022(in thousands, except per share data)​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Net sales $ 18,490,268 $ 17,457,209 $ 16,252,230Cost of sales, including warehouse and delivery expenses​​ 8,673,216​​ 8,386,787​​ 7,779,580Gross profit​​ 9,817,052​ 9,070,422​ 8,472,650Operating, selling, general and administrative expenses​​ 6,028,344​​ 5,596,436​​ 5,201,921Operating profit​​ 3,788,708​​ 3,473,986​​ 3,270,729Interest expense, net​​ 451,578​​ 306,372​​ 191,638Income before income taxes​​ 3,337,130​ 3,167,614​ 3,079,091Income tax expense​​ 674,703​​ 639,188​​ 649,487Net income​$ 2,662,427​$ 2,528,426​$ 2,429,604​​​​​​​​​​Weighted average shares for basic earnings per share​ 17,309​ 18,510​ 20,107Effect of dilutive stock equivalents​​ 494​​ 593​​ 626Weighted average shares for diluted earnings per share​ 17,803​ 19,103​ 20,733​​​​​​​​​​Basic earnings per share​$ 153.82​$ 136.60​$ 120.83Diluted earnings per share​$ 149.55​$ 132.36​$ 117.19​See Notes to Consolidated Financial Statements.AutoZone, Inc. Consolidated Statements of Comprehensive Income​​​​​​​​​​​​​Year Ended​​August 31,​August 26,​August 27,​ 2024​2023​2022(in thousands)​(53 weeks)​(52 weeks)​(52 weeks)​​​​​​​​​​Net income​$ 2,662,427​$ 2,528,426​$ 2,429,604Other comprehensive (loss) income:​ ​ ​ Foreign currency translation adjustments​ (174,715)​ 103,633​ 7,448Unrealized gains (losses) on marketable debt securities, net of taxes​ 2,151​ 320​ (2,760)Net derivative activities, net of taxes​ 1,782​ 5,747​ 2,762Total other comprehensive (loss) income​ (170,782)​ 109,700​ 7,450Comprehensive income​$ 2,491,645​$ 2,638,126​$ 2,437,054​(1)See Notes to Consolidated Financial Statements.​​ --- ## Modified: Store Square **Key changes:** - Reworded sentence: "​ ​ Stores ​ Footage(1) Leased 4,081 27,226,410 Owned 3,272 22,190,827 Total 7,353 49,417,237 ​ We have approximately 7.1 million square feet in distribution centers servicing our stores, of which approximately 2.1 million square feet is leased and the remainder is owned." - Reworded sentence: "We also have four additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico; Sao Paulo, Brazil; and Gurugram, India." - Reworded sentence: "Legal Proceedings We are involved in various legal proceedings incidental to the conduct of our 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." - Reworded sentence: "24 24 Table of ContentsPART IIItem 5." - Reworded sentence: "The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total value of authorized share repurchases to $39.2 billion." **Prior (2023):** ​ ​ Stores ​ Footage(1) Leased 3,931 26,158,259 Owned 3,209 21,741,090 Total 7,140 47,899,349 ​ We have approximately 6.9 million square feet in distribution centers servicing our stores, of which approximately 2.0 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have three additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate. 23 23 Table of ContentsItem 3. Legal Proceedings We are involved in various other legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows.Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million.Item 4. Mine Safety DisclosuresNot applicable.PART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesThe principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 16, 2023, there were 1,703 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow.During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. On June 14, 2023, the Board of Directors authorized the repurchase of an additional $2.0 billion of the Company's common stock, bringing the total value of authorized share repurchases to $35.7 billion.Shares of common stock repurchased by the Company during the quarter ended August 26, 2023 were as follows:​​​​​​​​​​​PeriodTotal Number of Shares Purchased​​Average Price Paid per Share (1)​Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs​​Maximum Dollar Value that May Yet Be Purchased Under the Plans or ProgramsMay 7, 2023 to June 3, 2023 86,678​$ 2,560.49​ 86,678​$621,625,545June 4, 2023 to July 1, 2023 94,541​ 2,416.71​ 94,541​​2,393,147,061July 2, 2023 to July 29, 2023 107,560​ 2,532.00​ 107,560​​2,120,805,558July 30, 2023 to August 26, 2023 114,620​​ 2,499.71​ 114,620​​1,834,288,894Total 403,399​$ 2,501.93​ 403,399​$ 1,834,288,894​(1)Average price per share includes excise tax assessed at one percent of the fair market value of net stock repurchases.​24 Table of Contents Table of Contents Table of Contents Item 3. Legal Proceedings We are involved in various other legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows.Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million.Item 4. Mine Safety DisclosuresNot applicable.PART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesThe principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 16, 2023, there were 1,703 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow.During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. On June 14, 2023, the Board of Directors authorized the repurchase of an additional $2.0 billion of the Company's common stock, bringing the total value of authorized share repurchases to $35.7 billion.Shares of common stock repurchased by the Company during the quarter ended August 26, 2023 were as follows:​​​​​​​​​​​PeriodTotal Number of Shares Purchased​​Average Price Paid per Share (1)​Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs​​Maximum Dollar Value that May Yet Be Purchased Under the Plans or ProgramsMay 7, 2023 to June 3, 2023 86,678​$ 2,560.49​ 86,678​$621,625,545June 4, 2023 to July 1, 2023 94,541​ 2,416.71​ 94,541​​2,393,147,061July 2, 2023 to July 29, 2023 107,560​ 2,532.00​ 107,560​​2,120,805,558July 30, 2023 to August 26, 2023 114,620​​ 2,499.71​ 114,620​​1,834,288,894Total 403,399​$ 2,501.93​ 403,399​$ 1,834,288,894​(1)Average price per share includes excise tax assessed at one percent of the fair market value of net stock repurchases.​ Item 3. Legal Proceedings We are involved in various other legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows. Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million. Item 4. Mine Safety Disclosures Not applicable. PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 16, 2023, there were 1,703 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings. We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow. During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. On June 14, 2023, the Board of Directors authorized the repurchase of an additional $2.0 billion of the Company's common stock, bringing the total value of authorized share repurchases to $35.7 billion. Shares of common stock repurchased by the Company during the quarter ended August 26, 2023 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period **Current (2024):** ​ ​ Stores ​ Footage(1) Leased 4,081 27,226,410 Owned 3,272 22,190,827 Total 7,353 49,417,237 ​ We have approximately 7.1 million square feet in distribution centers servicing our stores, of which approximately 2.1 million square feet is leased and the remainder is owned. We have 11 distribution centers located throughout the U.S., two in Mexico, and one in Brazil. Our primary store support center is located in Memphis, Tennessee, and consists of approximately 325,000 square feet. We also have four additional store support centers located in Monterrey, Mexico; Chihuahua, Mexico; Sao Paulo, Brazil; and Gurugram, India. Our primary International Sourcing Office is located in Shanghai, China. The ALLDATA headquarters in Elk Grove, California is leased, and we also own or lease other properties which are not material individually or in the aggregate. Item 3. Legal Proceedings We are involved in various legal proceedings incidental to the conduct of our 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. We do not currently believe that, either individually or in the aggregate, these matters will result in liabilities material to our financial condition, results of operations or cash flows. Additionally, we are not involved in any environmental proceeding in which a governmental authority is a party, and such proceeding involves potential monetary sanctions that we reasonably believe will exceed an applied threshold of $1 million. Item 4. Mine Safety Disclosures Not applicable. 24 24 Table of ContentsPART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesThe principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 21, 2024, there were 1,603 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow.During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total value of authorized share repurchases to $39.2 billion.Shares of common stock repurchased by the Company during the quarter ended August 31, 2024 were as follows:​​​​​​​​​​​PeriodTotal Number of Shares Purchased​​Average Price Paid per Share ​Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs​​Maximum Dollar Value that May Yet Be Purchased Under the Plans or ProgramsMay 5, 2024 to June 1, 2024 65,636​$ 2,891.87​ 65,636​$1,184,718,249June 2, 2024 to June 29, 2024 81,197​ 2,881.79​ 81,197​​2,450,725,318June 30, 2024 to July 27, 2024 84,860​ 2,936.78​ 84,860​​2,201,510,545July 28, 2024 to August 31, 2024 12,096​​ 3,103.60​ 12,096​​2,163,969,364Total 243,789​$ 2,914.65​ 243,789​$ 2,163,969,364​The Company also repurchased, at market value, an additional 4,886 shares in fiscal year 2022 from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,000, 5,183 and 6,238 shares were sold to employees in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 117,341 shares of common stock were reserved for future issuance under the Employee Plan.Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 540, 689 and 709 shares in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 232,426 shares of common stock were reserved for future issuance under the Executive Plan.25 Table of Contents Table of Contents Table of Contents PART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesThe principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 21, 2024, there were 1,603 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow.During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total value of authorized share repurchases to $39.2 billion.Shares of common stock repurchased by the Company during the quarter ended August 31, 2024 were as follows:​​​​​​​​​​​PeriodTotal Number of Shares Purchased​​Average Price Paid per Share ​Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs​​Maximum Dollar Value that May Yet Be Purchased Under the Plans or ProgramsMay 5, 2024 to June 1, 2024 65,636​$ 2,891.87​ 65,636​$1,184,718,249June 2, 2024 to June 29, 2024 81,197​ 2,881.79​ 81,197​​2,450,725,318June 30, 2024 to July 27, 2024 84,860​ 2,936.78​ 84,860​​2,201,510,545July 28, 2024 to August 31, 2024 12,096​​ 3,103.60​ 12,096​​2,163,969,364Total 243,789​$ 2,914.65​ 243,789​$ 2,163,969,364​The Company also repurchased, at market value, an additional 4,886 shares in fiscal year 2022 from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,000, 5,183 and 6,238 shares were sold to employees in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 117,341 shares of common stock were reserved for future issuance under the Employee Plan.Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 540, 689 and 709 shares in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 232,426 shares of common stock were reserved for future issuance under the Executive Plan. PART IIItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesThe principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 21, 2024, there were 1,603 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings.We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow.During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total value of authorized share repurchases to $39.2 billion.Shares of common stock repurchased by the Company during the quarter ended August 31, 2024 were as follows:​​​​​​​​​​​PeriodTotal Number of Shares Purchased​​Average Price Paid per Share ​Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs​​Maximum Dollar Value that May Yet Be Purchased Under the Plans or ProgramsMay 5, 2024 to June 1, 2024 65,636​$ 2,891.87​ 65,636​$1,184,718,249June 2, 2024 to June 29, 2024 81,197​ 2,881.79​ 81,197​​2,450,725,318June 30, 2024 to July 27, 2024 84,860​ 2,936.78​ 84,860​​2,201,510,545July 28, 2024 to August 31, 2024 12,096​​ 3,103.60​ 12,096​​2,163,969,364Total 243,789​$ 2,914.65​ 243,789​$ 2,163,969,364​The Company also repurchased, at market value, an additional 4,886 shares in fiscal year 2022 from employees electing to sell their stock under the Company's Eighth Amended and Restated Employee Stock Purchase Plan (as amended from time to time, the "Employee Plan"), qualified under Section 423 of the Internal Revenue Code, under which all eligible employees may purchase AutoZone's common stock at 85% of the lower of the market price of the common stock on the first day or last day of each calendar quarter through payroll deductions. Maximum permitted annual purchases are $15,000 per employee or 10 percent of compensation, whichever is less. Under the Employee Plan, 5,000, 5,183 and 6,238 shares were sold to employees in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 117,341 shares of common stock were reserved for future issuance under the Employee Plan.Once executives have reached the maximum purchases under the Employee Plan, the Sixth Amended and Restated Executive Stock Purchase Plan (the "Executive Plan") permits all eligible executives to purchase AutoZone's common stock up to 25 percent of his or her annual salary and bonus. Purchases by executives under the Executive Plan were 540, 689 and 709 shares in fiscal 2024, 2023 and 2022, respectively. At August 31, 2024, 232,426 shares of common stock were reserved for future issuance under the Executive Plan. PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The principal market on which our common stock is traded is the New York Stock Exchange under the symbol "AZO." On October 21, 2024, there were 1,603 stockholders of record, which does not include the number of beneficial owners whose shares were represented by security position listings. We currently do not pay a dividend on our common stock. Any future payment of dividends would be dependent upon our financial condition, capital requirements, earnings and cash flow. During 1998, the Company announced a program permitting the Company to repurchase a portion of its outstanding shares not to exceed a dollar maximum established by the Company's Board of Directors. The Board voted to increase the repurchase authorization by $2.0 billion on December 20, 2023 and $1.5 billion on June 19, 2024, bringing the total value of authorized share repurchases to $39.2 billion. Shares of common stock repurchased by the Company during the quarter ended August 31, 2024 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period --- ## Modified: AutoZone, Inc. Consolidated Balance Sheets **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, ​ August 26, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 298,172 ​ $ 277,054 Accounts receivable ​ 545,575 ​ 520,385 Merchandise inventories ​ 6,155,218 ​ 5,764,143 Other current assets ​ 307,794 ​ 217,844 Total current assets ​ 7,306,759 ​ 6,779,426 ​ ​ ​ ​ ​ ​ ​ Property and equipment: ​ ​ ​ ​ ​ ​ Land ​ 1,390,713 ​ 1,367,391 Buildings and improvements ​ 5,124,448 ​ 4,860,216 Equipment ​ 3,308,967 ​ 2,972,879 Leasehold improvements ​ 922,466 ​ 831,508 Construction in progress ​ 558,531 ​ 305,896 Property and equipment ​ 11,305,125 ​ 10,337,890 Less: Accumulated depreciation and amortization ​ (5,121,586) ​ (4,741,342) ​ ​ 6,183,539 ​ 5,596,548 ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ ​ 3,057,780 ​ ​ 2,998,097 Goodwill ​ 302,645 ​ 302,645 Deferred income taxes ​ 83,689 ​ 86,002 Other long-term assets ​ 242,126 ​ 223,160 Total long-term assets ​ 3,686,240 ​ 3,609,904 Total assets ​ $ 17,176,538 ​ $ 15,985,878 ​ ​ ​ ​ ​ ​ ​" **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 26, ​ August 27, (in thousands) ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 277,054 ​ $ 264,380 Accounts receivable ​ 520,385 ​ 504,886 Merchandise inventories ​ 5,764,143 ​ 5,638,004 Other current assets ​ 217,844 ​ 220,714 Total current assets ​ 6,779,426 ​ 6,627,984 ​ ​ ​ ​ ​ ​ ​ Property and equipment: ​ ​ ​ ​ ​ ​ Land ​ 1,367,391 ​ 1,299,981 Buildings and improvements ​ 4,860,216 ​ 4,486,676 Equipment ​ 2,972,879 ​ 2,650,831 Leasehold improvements ​ 831,508 ​ 724,095 Construction in progress ​ 305,896 ​ 291,588 Property and equipment ​ 10,337,890 ​ 9,453,171 Less: Accumulated depreciation and amortization ​ (4,741,342) ​ (4,282,752) ​ ​ 5,596,548 ​ 5,170,419 ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ ​ 2,998,097 ​ ​ 2,918,817 Goodwill ​ 302,645 ​ 302,645 Deferred income taxes ​ 86,002 ​ 52,047 Other long-term assets ​ 223,160 ​ 203,131 Total long-term assets ​ 3,609,904 ​ 3,476,640 Total assets ​ $ 15,985,878 ​ $ 15,275,043 ​ ​ ​ ​ ​ ​ ​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ August 31, ​ August 26, (in thousands) ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ Current assets: ​ ​ ​ ​ Cash and cash equivalents ​ $ 298,172 ​ $ 277,054 Accounts receivable ​ 545,575 ​ 520,385 Merchandise inventories ​ 6,155,218 ​ 5,764,143 Other current assets ​ 307,794 ​ 217,844 Total current assets ​ 7,306,759 ​ 6,779,426 ​ ​ ​ ​ ​ ​ ​ Property and equipment: ​ ​ ​ ​ ​ ​ Land ​ 1,390,713 ​ 1,367,391 Buildings and improvements ​ 5,124,448 ​ 4,860,216 Equipment ​ 3,308,967 ​ 2,972,879 Leasehold improvements ​ 922,466 ​ 831,508 Construction in progress ​ 558,531 ​ 305,896 Property and equipment ​ 11,305,125 ​ 10,337,890 Less: Accumulated depreciation and amortization ​ (5,121,586) ​ (4,741,342) ​ ​ 6,183,539 ​ 5,596,548 ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ ​ 3,057,780 ​ ​ 2,998,097 Goodwill ​ 302,645 ​ 302,645 Deferred income taxes ​ 83,689 ​ 86,002 Other long-term assets ​ 242,126 ​ 223,160 Total long-term assets ​ 3,686,240 ​ 3,609,904 Total assets ​ $ 17,176,538 ​ $ 15,985,878 ​ ​ ​ ​ ​ ​ ​ --- ## Modified: AutoZone, Inc. Consolidated Statements of Comprehensive Income **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, ​ 2024 ​ 2023 ​ 2022 (in thousands) ​ (53 weeks) ​ (52 weeks) ​ (52 weeks) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 Other comprehensive (loss) income: ​ ​ ​ Foreign currency translation adjustments ​ (174,715) ​ 103,633 ​ 7,448 Unrealized gains (losses) on marketable debt securities, net of taxes ​ 2,151 ​ 320 ​ (2,760) Net derivative activities, net of taxes ​ 1,782 ​ 5,747 ​ 2,762 Total other comprehensive (loss) income ​ (170,782) ​ 109,700 ​ 7,450 Comprehensive income ​ $ 2,491,645 ​ $ 2,638,126 ​ $ 2,437,054 ​ See Notes to Consolidated Financial Statements." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 26, ​ August 27, ​ August 28, (in thousands) 2023 ​ 2022 ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,528,426 ​ $ 2,429,604 ​ $ 2,170,314 Other comprehensive income: ​ ​ ​ Foreign currency translation adjustments ​ 103,633 ​ 7,448 ​ 44,683 Unrealized gains (losses) on marketable debt securities, net of taxes ​ 320 ​ (2,760) ​ (1,256) Net derivative activities, net of taxes ​ 5,747 ​ 2,762 ​ 2,839 Total other comprehensive income ​ 109,700 ​ 7,450 ​ 46,266 Comprehensive income ​ $ 2,638,126 ​ $ 2,437,054 ​ $ 2,216,580 ​ See Notes to Consolidated Financial Statements. ​ ​ 48 48 Table of ContentsAutoZone, Inc. Consolidated Balance Sheets​​​​​​​​​August 26,​August 27,(in thousands)​2023​2022​​​​​​​Assets​​​ ​ Current assets:​​​ ​ Cash and cash equivalents​$ 277,054​$ 264,380Accounts receivable​ 520,385​ 504,886Merchandise inventories​ 5,764,143​ 5,638,004Other current assets​ 217,844​ 220,714Total current assets​ 6,779,426​ 6,627,984​​​​​​​Property and equipment:​​​​​​Land​ 1,367,391​ 1,299,981Buildings and improvements​ 4,860,216​ 4,486,676Equipment​ 2,972,879​ 2,650,831Leasehold improvements​ 831,508​ 724,095Construction in progress​ 305,896​ 291,588Property and equipment​ 10,337,890​ 9,453,171Less: Accumulated depreciation and amortization​ (4,741,342)​ (4,282,752)​​ 5,596,548​ 5,170,419​​​​​​​Operating lease right-of-use assets​​ 2,998,097​​ 2,918,817Goodwill​ 302,645​ 302,645Deferred income taxes​ 86,002​ 52,047Other long-term assets​ 223,160​ 203,131Total long-term assets​ 3,609,904​ 3,476,640Total assets​$ 15,985,878​$ 15,275,043​​​​​​​Liabilities and Stockholders' Deficit​​​​​​Current liabilities:​​​​​​Accounts payable​$ 7,201,281​$ 7,301,347Current portion of operating lease liabilities​​ 257,256​​ 243,407Accrued expenses and other​ 1,000,841​ 1,008,701Income taxes payable​ 52,478​ 34,938Total current liabilities​ 8,511,856​ 8,588,393​​​​​​​Long-term debt​ 7,668,549​ 6,122,092Operating lease liabilities, less current portion​​ 2,917,046​​ 2,837,973Deferred income taxes​ 536,278​ 533,884Other long-term liabilities​ 702,043​ 731,614​​​​​​​Commitments and contingencies​​​​​​​​​​​​​Stockholders' deficit:​​​​​​Preferred stock, authorized 1,000 shares; no shares issued​ - ​ - Common stock, par value $.01 per share, authorized 200,000 shares; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023; 20,732 shares issued and 19,126 shares outstanding as of August 27, 2022​ 189​ 207Additional paid-in capital​ 1,484,992​ 1,354,252Retained deficit​ (2,959,278)​ (1,330,067)Accumulated other comprehensive loss​ (190,836)​ (300,536)Treasury stock, at cost​ (2,684,961)​ (3,262,769)Total stockholders' deficit​ (4,349,894)​ (3,538,913)Total liabilities and stockholders' deficit​$ 15,985,878​$ 15,275,043​See Notes to Consolidated Financial Statements.49 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Balance Sheets​​​​​​​​​August 26,​August 27,(in thousands)​2023​2022​​​​​​​Assets​​​ ​ Current assets:​​​ ​ Cash and cash equivalents​$ 277,054​$ 264,380Accounts receivable​ 520,385​ 504,886Merchandise inventories​ 5,764,143​ 5,638,004Other current assets​ 217,844​ 220,714Total current assets​ 6,779,426​ 6,627,984​​​​​​​Property and equipment:​​​​​​Land​ 1,367,391​ 1,299,981Buildings and improvements​ 4,860,216​ 4,486,676Equipment​ 2,972,879​ 2,650,831Leasehold improvements​ 831,508​ 724,095Construction in progress​ 305,896​ 291,588Property and equipment​ 10,337,890​ 9,453,171Less: Accumulated depreciation and amortization​ (4,741,342)​ (4,282,752)​​ 5,596,548​ 5,170,419​​​​​​​Operating lease right-of-use assets​​ 2,998,097​​ 2,918,817Goodwill​ 302,645​ 302,645Deferred income taxes​ 86,002​ 52,047Other long-term assets​ 223,160​ 203,131Total long-term assets​ 3,609,904​ 3,476,640Total assets​$ 15,985,878​$ 15,275,043​​​​​​​Liabilities and Stockholders' Deficit​​​​​​Current liabilities:​​​​​​Accounts payable​$ 7,201,281​$ 7,301,347Current portion of operating lease liabilities​​ 257,256​​ 243,407Accrued expenses and other​ 1,000,841​ 1,008,701Income taxes payable​ 52,478​ 34,938Total current liabilities​ 8,511,856​ 8,588,393​​​​​​​Long-term debt​ 7,668,549​ 6,122,092Operating lease liabilities, less current portion​​ 2,917,046​​ 2,837,973Deferred income taxes​ 536,278​ 533,884Other long-term liabilities​ 702,043​ 731,614​​​​​​​Commitments and contingencies​​​​​​​​​​​​​Stockholders' deficit:​​​​​​Preferred stock, authorized 1,000 shares; no shares issued​ - ​ - Common stock, par value $.01 per share, authorized 200,000 shares; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023; 20,732 shares issued and 19,126 shares outstanding as of August 27, 2022​ 189​ 207Additional paid-in capital​ 1,484,992​ 1,354,252Retained deficit​ (2,959,278)​ (1,330,067)Accumulated other comprehensive loss​ (190,836)​ (300,536)Treasury stock, at cost​ (2,684,961)​ (3,262,769)Total stockholders' deficit​ (4,349,894)​ (3,538,913)Total liabilities and stockholders' deficit​$ 15,985,878​$ 15,275,043​See Notes to Consolidated Financial Statements. **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ August 31, ​ August 26, ​ August 27, ​ 2024 ​ 2023 ​ 2022 (in thousands) ​ (53 weeks) ​ (52 weeks) ​ (52 weeks) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 2,662,427 ​ $ 2,528,426 ​ $ 2,429,604 Other comprehensive (loss) income: ​ ​ ​ Foreign currency translation adjustments ​ (174,715) ​ 103,633 ​ 7,448 Unrealized gains (losses) on marketable debt securities, net of taxes ​ 2,151 ​ 320 ​ (2,760) Net derivative activities, net of taxes ​ 1,782 ​ 5,747 ​ 2,762 Total other comprehensive (loss) income ​ (170,782) ​ 109,700 ​ 7,450 Comprehensive income ​ $ 2,491,645 ​ $ 2,638,126 ​ $ 2,437,054 ​ See Notes to Consolidated Financial Statements. ​ ​ 46 46 Table of ContentsAutoZone, Inc. Consolidated Balance Sheets​​​​​​​​​August 31,​August 26,(in thousands)​2024​2023​​​​​​​Assets​​​ ​ Current assets:​​​ ​ Cash and cash equivalents​$ 298,172​$ 277,054Accounts receivable​ 545,575​ 520,385Merchandise inventories​ 6,155,218​ 5,764,143Other current assets​ 307,794​ 217,844Total current assets​ 7,306,759​ 6,779,426​​​​​​​Property and equipment:​​​​​​Land​ 1,390,713​ 1,367,391Buildings and improvements​ 5,124,448​ 4,860,216Equipment​ 3,308,967​ 2,972,879Leasehold improvements​ 922,466​ 831,508Construction in progress​ 558,531​ 305,896Property and equipment​ 11,305,125​ 10,337,890Less: Accumulated depreciation and amortization​ (5,121,586)​ (4,741,342)​​ 6,183,539​ 5,596,548​​​​​​​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097Goodwill​ 302,645​ 302,645Deferred income taxes​ 83,689​ 86,002Other long-term assets​ 242,126​ 223,160Total long-term assets​ 3,686,240​ 3,609,904Total assets​$ 17,176,538​$ 15,985,878​​​​​​​Liabilities and Stockholders' Deficit​​​​​​Current liabilities:​​​​​​Accounts payable​$ 7,355,701​$ 7,201,281Current portion of operating lease liabilities​​ 266,855​​ 257,256Accrued expenses and other​ 1,060,746​ 1,000,841Income taxes payable​ 30,941​ 52,478Total current liabilities​ 8,714,243​ 8,511,856​​​​​​​Long-term debt​ 9,024,381​ 7,668,549Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046Deferred income taxes​ 447,067​ 536,278Other long-term liabilities​ 780,287​ 702,043​​​​​​​Commitments and contingencies​​​​​​​​​​​​​Stockholders' deficit:​​​​​​Preferred stock, authorized 1,000 shares; no shares issued​ - ​ - Common stock, par value $.01 per share, authorized 200,000 shares; 17,451 shares issued and 16,926 shares outstanding as of August 31, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023​ 175​ 189Additional paid-in capital​ 1,621,553​ 1,484,992Retained deficit​ (4,424,982)​ (2,959,278)Accumulated other comprehensive loss​ (361,618)​ (190,836)Treasury stock, at cost​ (1,584,742)​ (2,684,961)Total stockholders' deficit​ (4,749,614)​ (4,349,894)Total liabilities and stockholders' deficit​$ 17,176,538​$ 15,985,878​See Notes to Consolidated Financial Statements.47 Table of Contents Table of Contents Table of Contents AutoZone, Inc. Consolidated Balance Sheets​​​​​​​​​August 31,​August 26,(in thousands)​2024​2023​​​​​​​Assets​​​ ​ Current assets:​​​ ​ Cash and cash equivalents​$ 298,172​$ 277,054Accounts receivable​ 545,575​ 520,385Merchandise inventories​ 6,155,218​ 5,764,143Other current assets​ 307,794​ 217,844Total current assets​ 7,306,759​ 6,779,426​​​​​​​Property and equipment:​​​​​​Land​ 1,390,713​ 1,367,391Buildings and improvements​ 5,124,448​ 4,860,216Equipment​ 3,308,967​ 2,972,879Leasehold improvements​ 922,466​ 831,508Construction in progress​ 558,531​ 305,896Property and equipment​ 11,305,125​ 10,337,890Less: Accumulated depreciation and amortization​ (5,121,586)​ (4,741,342)​​ 6,183,539​ 5,596,548​​​​​​​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097Goodwill​ 302,645​ 302,645Deferred income taxes​ 83,689​ 86,002Other long-term assets​ 242,126​ 223,160Total long-term assets​ 3,686,240​ 3,609,904Total assets​$ 17,176,538​$ 15,985,878​​​​​​​Liabilities and Stockholders' Deficit​​​​​​Current liabilities:​​​​​​Accounts payable​$ 7,355,701​$ 7,201,281Current portion of operating lease liabilities​​ 266,855​​ 257,256Accrued expenses and other​ 1,060,746​ 1,000,841Income taxes payable​ 30,941​ 52,478Total current liabilities​ 8,714,243​ 8,511,856​​​​​​​Long-term debt​ 9,024,381​ 7,668,549Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046Deferred income taxes​ 447,067​ 536,278Other long-term liabilities​ 780,287​ 702,043​​​​​​​Commitments and contingencies​​​​​​​​​​​​​Stockholders' deficit:​​​​​​Preferred stock, authorized 1,000 shares; no shares issued​ - ​ - Common stock, par value $.01 per share, authorized 200,000 shares; 17,451 shares issued and 16,926 shares outstanding as of August 31, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023​ 175​ 189Additional paid-in capital​ 1,621,553​ 1,484,992Retained deficit​ (4,424,982)​ (2,959,278)Accumulated other comprehensive loss​ (361,618)​ (190,836)Treasury stock, at cost​ (1,584,742)​ (2,684,961)Total stockholders' deficit​ (4,749,614)​ (4,349,894)Total liabilities and stockholders' deficit​$ 17,176,538​$ 15,985,878​See Notes to Consolidated Financial Statements. AutoZone, Inc. Consolidated Balance Sheets​​​​​​​​​August 31,​August 26,(in thousands)​2024​2023​​​​​​​Assets​​​ ​ Current assets:​​​ ​ Cash and cash equivalents​$ 298,172​$ 277,054Accounts receivable​ 545,575​ 520,385Merchandise inventories​ 6,155,218​ 5,764,143Other current assets​ 307,794​ 217,844Total current assets​ 7,306,759​ 6,779,426​​​​​​​Property and equipment:​​​​​​Land​ 1,390,713​ 1,367,391Buildings and improvements​ 5,124,448​ 4,860,216Equipment​ 3,308,967​ 2,972,879Leasehold improvements​ 922,466​ 831,508Construction in progress​ 558,531​ 305,896Property and equipment​ 11,305,125​ 10,337,890Less: Accumulated depreciation and amortization​ (5,121,586)​ (4,741,342)​​ 6,183,539​ 5,596,548​​​​​​​Operating lease right-of-use assets​​ 3,057,780​​ 2,998,097Goodwill​ 302,645​ 302,645Deferred income taxes​ 83,689​ 86,002Other long-term assets​ 242,126​ 223,160Total long-term assets​ 3,686,240​ 3,609,904Total assets​$ 17,176,538​$ 15,985,878​​​​​​​Liabilities and Stockholders' Deficit​​​​​​Current liabilities:​​​​​​Accounts payable​$ 7,355,701​$ 7,201,281Current portion of operating lease liabilities​​ 266,855​​ 257,256Accrued expenses and other​ 1,060,746​ 1,000,841Income taxes payable​ 30,941​ 52,478Total current liabilities​ 8,714,243​ 8,511,856​​​​​​​Long-term debt​ 9,024,381​ 7,668,549Operating lease liabilities, less current portion​​ 2,960,174​​ 2,917,046Deferred income taxes​ 447,067​ 536,278Other long-term liabilities​ 780,287​ 702,043​​​​​​​Commitments and contingencies​​​​​​​​​​​​​Stockholders' deficit:​​​​​​Preferred stock, authorized 1,000 shares; no shares issued​ - ​ - Common stock, par value $.01 per share, authorized 200,000 shares; 17,451 shares issued and 16,926 shares outstanding as of August 31, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023​ 175​ 189Additional paid-in capital​ 1,621,553​ 1,484,992Retained deficit​ (4,424,982)​ (2,959,278)Accumulated other comprehensive loss​ (361,618)​ (190,836)Treasury stock, at cost​ (1,584,742)​ (2,684,961)Total stockholders' deficit​ (4,749,614)​ (4,349,894)Total liabilities and stockholders' deficit​$ 17,176,538​$ 15,985,878​See Notes to Consolidated Financial Statements. --- ## Modified: Obligations **Key changes:** - Reworded sentence: "1 year 1‑3 years 3‑5 years 5 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt(1) $ 9,080,000 ​ $ 1,480,000 ​ $ 1,450,000 ​ $ 2,000,000 ​ $ 4,150,000 Interest payments(2) ​ 2,198,888 ​ ​ 375,625 ​ ​ 653,775 ​ ​ 527,550 ​ ​ 641,938 Operating leases(3) ​ 4,157,877 ​ ​ 391,901 ​ ​ 828,934 ​ ​ 719,996 ​ ​ 2,217,046 Finance leases(3) ​ 461,654 ​ ​ 116,999 ​ ​ 209,841 ​ ​ 92,389 ​ ​ 42,425 Self-insurance reserves(4) ​ 267,779 ​ ​ 82,976 ​ ​ 97,736 ​ ​ 42,585 ​ ​ 44,482 Construction commitments ​ 103,780 ​ 103,780 ​ ​ - ​ ​ - ​ ​ - Other(5) ​ ​ 49,259 ​ ​ 49,259 ​ ​ - ​ ​ - ​ ​ - ​ ​ $ 16,319,237 ​ $ 2,600,540 ​ $ 3,240,286 ​ $ 3,382,520 ​ $ 7,095,891 ​ Our tax liability for uncertain tax positions, including interest and penalties, was $45.4 million at August 31, 2024." - Reworded sentence: "​ Off-Balance Sheet Arrangements The following table reflects outstanding letters of credit and surety bonds as of August 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Other (in thousands) ​" **Prior (2023):** 1 year 1‑3 years 3‑5 years 5 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt(1) $ 7,709,600 ​ $ 1,509,600 ​ $ 1,750,000 ​ $ 1,050,000 ​ $ 3,400,000 Interest payments(2) ​ 1,468,738 ​ ​ 252,600 ​ ​ 455,325 ​ ​ 321,125 ​ ​ 439,688 Operating leases(3) ​ 4,097,510 ​ ​ 372,849 ​ ​ 781,663 ​ ​ 682,165 ​ ​ 2,260,833 Finance leases(3) ​ 319,186 ​ ​ 88,284 ​ ​ 143,106 ​ ​ 44,568 ​ ​ 43,228 Self-insurance reserves(4) ​ 279,407 ​ ​ 96,795 ​ ​ 95,288 ​ ​ 38,757 ​ ​ 48,567 Construction commitments ​ 198,926 ​ 198,926 ​ ​ - ​ ​ - ​ ​ - Other(5) ​ ​ 9,326 ​ ​ 9,326 ​ ​ - ​ ​ - ​ ​ - ​ ​ $ 14,082,693 ​ $ 2,528,380 ​ $ 3,225,382 ​ $ 2,136,615 ​ $ 6,192,316 ​ Our tax liability for uncertain tax positions, including interest and penalties, was $51.0 million at August 26, 2023. Approximately $11.2 million is classified as current liabilities and $39.8 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​ Off-Balance Sheet Arrangements The following table reflects outstanding letters of credit and surety bonds as of August 26, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Other (in thousands) ​ **Current (2024):** 1 year 1‑3 years 3‑5 years 5 years ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Debt(1) $ 9,080,000 ​ $ 1,480,000 ​ $ 1,450,000 ​ $ 2,000,000 ​ $ 4,150,000 Interest payments(2) ​ 2,198,888 ​ ​ 375,625 ​ ​ 653,775 ​ ​ 527,550 ​ ​ 641,938 Operating leases(3) ​ 4,157,877 ​ ​ 391,901 ​ ​ 828,934 ​ ​ 719,996 ​ ​ 2,217,046 Finance leases(3) ​ 461,654 ​ ​ 116,999 ​ ​ 209,841 ​ ​ 92,389 ​ ​ 42,425 Self-insurance reserves(4) ​ 267,779 ​ ​ 82,976 ​ ​ 97,736 ​ ​ 42,585 ​ ​ 44,482 Construction commitments ​ 103,780 ​ 103,780 ​ ​ - ​ ​ - ​ ​ - Other(5) ​ ​ 49,259 ​ ​ 49,259 ​ ​ - ​ ​ - ​ ​ - ​ ​ $ 16,319,237 ​ $ 2,600,540 ​ $ 3,240,286 ​ $ 3,382,520 ​ $ 7,095,891 ​ Our tax liability for uncertain tax positions, including interest and penalties, was $45.4 million at August 31, 2024. Approximately $23.1 million is classified as current liabilities and $22.3 million is classified as long-term liabilities. We did not reflect these obligations in the table above as we are unable to make an estimate of the timing of payments of the long-term liabilities due to uncertainties in the timing and amounts of the settlement of these tax positions. ​ Off-Balance Sheet Arrangements The following table reflects outstanding letters of credit and surety bonds as of August 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ Other (in thousands) ​ --- *Data sourced from SEC EDGAR. Last updated 2026-06-01.*