Document and Company Informatio
Document and Company Information (USD $) | |||
3 Months Ended
Nov. 21, 2009 | Dec. 14, 2009
| Feb. 14, 2009
| |
Document and Company Information [Abstract] | |||
Entity Registrant Name | AUTOZONE INC | ||
Entity Central Index Key | 0000866787 | ||
Document Type | 10-Q | ||
Document Period End Date | 2009-11-21 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --08-28 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $7,449,415,374 | ||
Entity Common Stock, Shares Outstanding | 49,496,251 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | ||
In Thousands | Nov. 21, 2009
| Aug. 29, 2009
|
Current assets: | ||
Cash and cash equivalents | $79,603 | $92,706 |
Accounts receivable | 142,721 | 126,514 |
Merchandise inventories | 2,262,823 | 2,207,497 |
Other current assets | 132,794 | 135,013 |
Total current assets | 2,617,941 | 2,561,730 |
Property and equipment: | ||
Property and equipment | 3,863,498 | 3,809,414 |
Less: Accumulated depreciation and amortization | 1,494,652 | 1,455,057 |
Property and equipment, net | 2,368,846 | 2,354,357 |
Other assets: | ||
Goodwill, net of accumulated amortization | 302,645 | 302,645 |
Deferred income taxes | 55,154 | 59,067 |
Other long-term assets | 41,237 | 40,606 |
Other noncurrent assets total | 399,036 | 402,318 |
Total assets | 5,385,823 | 5,318,405 |
Current liabilities: | ||
Accounts payable | 2,187,347 | 2,118,746 |
Accrued expenses and other | 357,778 | 381,271 |
Income taxes payable | 84,755 | 35,145 |
Deferred income taxes | 174,500 | 171,590 |
Total current liabilities | 2,804,380 | 2,706,752 |
Debt | 2,739,500 | 2,726,900 |
Other liabilities | 325,908 | 317,827 |
Stockholders' equity (deficit) | (483,965) | (433,074) |
Liabilities and stockholders' equity | $5,385,823 | $5,318,405 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
Nov. 21, 2009 | 3 Months Ended
Nov. 22, 2008 |
Net sales | $1,589,244 | $1,478,292 |
Cost of sales, including warehouse and delivery expenses | 789,320 | 737,101 |
Gross profit | 799,924 | 741,191 |
Operating, selling, general and administrative expenses | 539,496 | 502,652 |
Operating profit | 260,428 | 238,539 |
Interest expense, net | 36,340 | 31,166 |
Income before income taxes | 224,088 | 207,373 |
Income taxes | 80,788 | 76,002 |
Net income | $143,300 | $131,371 |
Weighted average shares for basic earnings per share | 50,114 | 58,325 |
Effect of dilutive stock equivalents | 710 | 590 |
Adjusted weighted average shares for diluted earnings per share | 50,824 | 58,915 |
Basic earnings per share | 2.86 | 2.25 |
Diluted earnings per share | 2.82 | 2.23 |
1_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | ||
In Thousands | 3 Months Ended
Nov. 21, 2009 | 3 Months Ended
Nov. 22, 2008 |
Cash flows from operating activities: | ||
Net income | $143,300 | $131,371 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 42,566 | 40,153 |
Amortization of debt origination fees | 1,489 | 620 |
Income tax benefit from exercise of stock options | (585) | (1,520) |
Deferred income taxes | 4,699 | 1,502 |
Share-based compensation expense | 4,251 | 4,456 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (16,144) | 3,054 |
Merchandise inventories | (54,418) | (53,828) |
Accounts payable and accrued expenses | 41,564 | (47,291) |
Income taxes payable | 52,048 | 58,080 |
Other, net | 12,111 | 4,187 |
Net cash provided by operating activities | 230,881 | 140,784 |
Cash flows from investing activities: | ||
Capital expenditures | (53,439) | (51,099) |
Purchase of marketable securities | (2,203) | (5,281) |
Proceeds from sale of marketable securities | 1,325 | 5,270 |
Disposal of capital assets and other, net | 1,619 | 4,498 |
Net cash used in investing activities | (52,698) | (46,612) |
Cash flows from financing activities: | ||
Net proceeds from commercial paper | 12,600 | 18,900 |
Repayment of debt | 0 | (700) |
Net proceeds from sale of common stock | 3,821 | 8,062 |
Purchase of treasury stock | (204,379) | (272,123) |
Income tax benefit from exercise of stock options | 585 | 1,520 |
Payments of capital lease obligations | (4,492) | (3,979) |
Net cash used in financing activities | (191,865) | (248,320) |
Effect of exchange rate changes on cash | 579 | (2,557) |
Net decrease in cash and cash equivalents | (13,103) | (156,705) |
Cash and cash equivalents at beginning of period | 92,706 | 242,461 |
Cash and cash equivalents at end of period | $79,603 | $85,756 |
General
General | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
General [Abstract] | |
General | Note A General The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article10 of RegulationS-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and footnotes included in the 2009 Annual Report to Stockholders for AutoZone, Inc. (AutoZone or the Company) for the year ended August29, 2009 (the 2009 Annual Report to Stockholders). Operating results for the twelve weeks ended November21, 2009, are not necessarily indicative of the results that may be expected for the fiscal year ending August28, 2010. Each of the first three quarters of AutoZones fiscal year consists of 12weeks, and the fourth quarter consists of 16 or 17weeks. The fourth quarter for fiscal 2009 had 16weeks and for fiscal 2010 will also have 16weeks. Additionally, the Companys business is somewhat seasonal in nature, with the highest sales generally occurring in the spring and summer months of March through September and the lowest sales generally occurring in the winter months of December through February. Recent Accounting Pronouncements: In June2009, the Financial Accounting Standards Board (FASB) voted to approve the FASB Accounting Standards Codification (ASC) as the single source of authoritative nongovernmental U.S. generally accepted accounting principles. The ASC became effective for the Company commencing with the Companys fiscal quarter beginning August30, 2009. The ASC does not change U.S. generally accepted accounting principles, but combines all authoritative standards such as those issued by the FASB, the American Institute of Certified Public Accountants and the Emerging Issues Task Force into a comprehensive, topically organized online database. On August31, 2008, the Company adopted ASC 820 (formerly FASB Statement No.157, Fair Value Measurements). This standard defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. On August30, 2009, the Company implemented the previously deferred provisions of ASC 820 for nonfinancial assets and liabilities recorded at fair value, as required. The adoption of this statement did not have a material impact on the consolidated financial statements. In December2007, the FASB issued ASC 805 (formerly FASB Statement 141R, Business Combinations). This standard significantly changes the accounting for and reporting of business combinations in consolidated financial statements. Among other things, ASC 805 requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed at the acquisition date and requires the expensing of most transacti |
Share Based Payments
Share Based Payments | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Share-Based Payments [Abstract] | |
Share-Based Payments | Note B Share-Based Payments AutoZone recognizes compensation expense for share-based payments based on the fair value of the awards at the grant date. Share-based payments include stock option grants and the discount on shares sold to employees under share purchase plans. Additionally, directors may defer a portion of their fees in units with value equivalent to the value of shares of common stock as of the grant date. Total share-based compensation expense (a component of operating, selling, general and administrative expenses) was $4.3million for the twelve week period ended November21, 2009, and was $4.5million for the comparable prior year period. During the twelve week period ended November21, 2009, the Company made stock option grants of 474,087 shares. The Company granted options to purchase 567,942 shares during the comparable prior year period. The weighted average fair value of the stock option awards granted during the twelve week periods ended November21, 2009, and November22, 2008, using the Black-Scholes-Merton multiple-option pricing valuation model, was $40.08 and $33.64 per share, respectively, using the following weighted average key assumptions: Twelve Weeks Ended November 21, November 22, 2009 2008 Expected price volatility 31 % 27 % Risk-free interest rate 1.7 % 2.5 % Weighted average expected lives in years 4.3 4.1 Forfeiture rate 10.0 % 10.0 % Dividend yield 0.0 % 0.0 % See AutoZones 2009 Annual Report to Stockholders for a discussion of the methodologies employed in developing AutoZones assumptions used in determining the fair value of the option awards. |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note C Fair Value Measurements The Company defines fair value as the price received to transfer an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a hierarchy of valuation inputs to measure fair value. The hierarchy prioritizes the inputs into three broad levels: Level 1 inputsunadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. An active market for the asset or liability is one in which transactions for the asset or liability occur with sufficient frequency and volume to provide ongoing pricing information. Level 2 inputsinputs other than quoted market prices included in Level 1 that are observable, either directly or indirectly, for the asset or liability. Level 2 inputs include, but are not limited to, quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted market prices that are observable for the asset or liability, such as interest rate curves and yield curves observable at commonly quoted intervals, volatilities, credit risk and default rates. Level 3 inputsunobservable inputs for the asset or liability. The Company invests a portion of its assets held by the Companys wholly owned insurance captive in marketable debt securities and classifies them as available-for-sale. The Company includes these securities within the other current assets caption and records the amounts at fair value, which is typically valued at the closing quoted price in the principal active market as of the last business day of the quarter (Level 1). Unrealized gains and losses on these marketable securities are recorded in accumulated other comprehensive income, net of tax. The Companys basis for determining the cost of a security sold is the Specific Identification Model. The Companys available-for-sale marketable securities consisted of the following: Gross Gross Amortized Cost Unrealized Unrealized (in thousands) Basis Gains Losses Fair Value November21, 2009 $ 69,042 $ 1,763 $ (321 ) $ 70,484 August29, 2009 $ 68,862 $ 1,510 $ (334 ) $ 70,038 The debt securities held at November21, 2009, had maturities ranging from less than one year to approximately 16years and consisted primarily of high grade corporate and government fixed income securities. The Company did not realize any material gains or losses on its marketable securities during the twelve week period ended November21, 2009. As of November21, 2009, the Company holds four securities that are in an unrealized loss position. The Company has the intent and ability to hold these investments until recovery of fair value or maturity, and does not deem the investments to be impaired on an other than temporary basis. In evaluating whether the securities are deemed to be impaired on an other than temporary basis, the Company considers |
Inventories
Inventories | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Inventories [Abstract] | |
Inventories | Note D Inventories Inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method for domestic inventories and the first-in, first-out (FIFO)method for Mexico inventories. Included in inventory are related purchasing, storage and handling costs. Due to price deflation on the Companys merchandise purchases, the Companys domestic inventory balances are effectively maintained under the FIFO method. The Companys policy is not to write up inventory in excess of replacement cost. The cumulative balance of this unrecorded adjustment, which will be reduced upon experiencing price inflation on the Companys merchandise purchases, was $232.4million at November 21, 2009, and $223.0million at August29, 2009. |
Pension Plans
Pension Plans | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Pension Plans [Abstract] | |
Pension Plans | Note E Pension Plans The components of net periodic benefit (income)expense related to the Companys pension plans for all periods presented are as follows: Twelve Weeks Ended November 21, November 22, (in thousands) 2009 2008 Interest cost $ 2,611 $ 2,457 Expected return on plan assets (2,087 ) (2,927 ) Amortization of prior service cost 14 Amortization of net loss 1,877 17 Net periodic benefit (income)expense $ 2,401 $ (439 ) The Company makes contributions in amounts at least equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006. During the twelve week period ended November21, 2009, the Company did not make any contributions to its funded plan and does not expect to make any additional cash contributions during the remainder of fiscal 2010. |
Debt
Debt | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Debt [Abstract] | |
Debt | Note F Debt The Companys debt consisted of the following: November 21, August 29, (in thousands) 2009 2009 4.75% Senior Notes due November2010, effective interest rate of 4.17% $ 199,300 $ 199,300 5.875% Senior Notes due October2012, effective interest rate of 6.33% 300,000 300,000 4.375% Senior Notes due June2013, effective interest rate of 5.65% 200,000 200,000 6.5% Senior Notes due January2014, effective interest rate of 6.63% 500,000 500,000 5.75% Senior Notes due January2015, effective interest rate of 5.89% 500,000 500,000 5.5% Senior Notes due November2015, effective interest rate of 4.86% 300,000 300,000 6.95% Senior Notes due June2016, effective interest rate of 7.09% 200,000 200,000 7.125% Senior Notes due August2018, effective interest rate of 7.28% 250,000 250,000 Commercial paper, weighted average interest rate of 0.31% and 0.49% at November21, 2009 and August29, 2009, respectively 290,200 277,600 $ 2,739,500 $ 2,726,900 As of November21, 2009, the 4.75% Senior Notes due November2010 and the commercial paper borrowings mature in the next twelve months but are classified as long-term in the accompanying Condensed Consolidated Balance Sheet, as the Company has the ability and intent to refinance them on a long-term basis. The fair value of the Companys debt was estimated at $2.935billion as of November21, 2009, and $2.853billion as of August29, 2009, based on the quoted market prices for the same or similar issues or on the current rates available to the Company for debt of the same remaining maturities. Such fair value is greater than the carrying value of debt by $195.4million at November21, 2009, and $126.5million at August29, 2009. |
Stock Repurchase Program
Stock Repurchase Program | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Stock Repurchase Program [Abstract] | |
Stock Repurchase Program | Note G Stock Repurchase Program From January1, 1998 to November21, 2009, the Company has repurchased a total of 116.8million shares at an aggregate cost of $7.8billion, including 1,417,584 shares of its common stock at an aggregate cost of $204.4million during the twelve week period ended November21, 2009. Considering cumulative repurchases as of November21, 2009, the Company had $104.7million remaining under the Boards authorization to repurchase its common stock. On December16, 2009, this authorization was increased by $500million to raise the cumulative share repurchase authorization from $7.9billion to $8.4billion. |
Comprehensive Income
Comprehensive Income | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Comprehensive Income [Abstract] | |
Comprehensive Income | Note H Comprehensive Income Comprehensive income includes foreign currency translation adjustments; the impact from certain derivative financial instruments designated and effective as cash flow hedges, including changes in fair value, as applicable; the reclassification of gains and/or losses from accumulated other comprehensive loss to net income to offset the earnings impact of the underlying items being hedged; and changes in the fair value of certain investments classified as available for sale. During the twelve week period ended November21, 2009, the Mexican Peso slightly strengthened against the US Dollar. The foreign currency translation adjustment of $41.6million in the twelve week period ended November22, 2008, was attributable to the weakening of the Mexican Peso against the US Dollar, which as of November22, 2008, had decreased by approximately 30% when compared to the fiscal year ended August30, 2008. Comprehensive income for all periods presented is as follows: Twelve Weeks Ended November 21, November 22, (in thousands) 2009 2008 Net income, as reported $ 143,300 $ 131,371 Foreign currency translation adjustment 1,488 (41,600 ) Net impact from derivative instruments (141 ) (1,257 ) Unrealized gains (losses)from marketable securities 183 (432 ) Comprehensive income $ 144,830 $ 88,082 |
Segment Reporting
Segment Reporting | |
3 Months Ended
Nov. 21, 2009 USD / shares | |
Segment Reporting [Abstract] | |
Segment Reporting | Note I Segment Reporting The Companys two operating segments (Domestic Auto Parts and Mexico) are aggregated as one reportable segment: Auto Parts Stores. The criteria the Company used to identify the reportable segment are primarily the nature of the products the Company sells and the operating results that are regularly reviewed by the Companys chief operating decision maker to make decisions about the resources to be allocated to the business units and to assess performance. The accounting policies of the Companys reportable segment are the same as those described in Note A in its 2009 Annual Report to Stockholders. The Auto Parts Stores segment is a retailer and distributor of automotive parts and accessories through the Companys 4,458 stores in the United States, including Puerto Rico, and Mexico. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. The Other category reflects business activities that are not separately reportable, including ALLDATA, which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry, and E-commerce, which includes direct sales to customers through www.autozone.com. The Company evaluates its reportable segment primarily on the basis of net sales and segment profit, which is defined as gross profit. Segment results for the periods presented are as follows: Twelve Weeks Ended November 21, November 22, (in thousands) 2009 2008 Net Sales Auto Parts Stores $ 1,556,261 $ 1,445,601 Other 32,983 32,691 Total $ 1,589,244 $ 1,478,292 Segment Profit Auto Parts Stores $ 772,998 $ 714,020 Other 26,926 27,171 Gross profit 799,924 741,191 Operating, selling, general and administrative expenses 539,496 502,652 Interest expense, net 36,340 31,166 Income before income taxes $ 224,088 $ 207,373 |