AUTOZONE INC [AZO] Filings

May 4,

August 26,

(in thousands)

3.125% Senior Notes due April 2024, effective interest rate 3.32%

3.250% Senior Notes due April 2025, effective interest rate 3.36%

10-Q 1 azo-20240504x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended May 4, 2024 or

☐		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from _______ to ________.

		Commission file number 1-10714

AUTOZONE, INC.

(Exact name of registrant as specified in its charter)


Nevada	62-1482048
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)


123 South Front Street, Memphis, Tennessee	38103
(Address of principal executive offices)	(Zip Code)

(901) 495-6500

(Registrant’s telephone number, including area code)

Not applicable

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

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

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on which Registered
Common Stock ($0.01 par value)		AZO		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

Common Stock, $.01 Par Value – 17,082,810 shares outstanding as of May 31, 2024.

Table of Contents

TABLE OF CONTENTS


PART I.		FINANCIAL INFORMATION	3
	Item 1.	Financial Statements	3
		CONDENSED CONSOLIDATED BALANCE SHEETS	3
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME	4
		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT	6
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
		REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	17
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
	Item 4.	Controls and Procedures	27
PART II.		OTHER INFORMATION	27
	Item 1.	Legal Proceedings	27
	Item 1A.	Risk Factors	28
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
	Item 3.	Defaults Upon Senior Securities	28
	Item 4.	Mine Safety Disclosures	28
	Item 5.	Other Information	28
	Item 6.	Exhibits	28
SIGNATURES			30

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements.

AUTOZONE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	May 4,		August 26,
(in thousands)	2024		2023

Assets
Current assets:
Cash and cash equivalents	$	275,358	$	277,054
Accounts receivable		586,775		520,385
Merchandise inventories		6,155,300		5,764,143
Other current assets		272,019		217,844
Total current assets		7,289,452		6,779,426

Property and equipment:
Property and equipment		11,075,765		10,337,890
Less: Accumulated depreciation and amortization		(5,026,706)		(4,741,342)
		6,049,059		5,596,548

Operating lease right-of-use assets		3,097,047		2,998,097
Goodwill		302,645		302,645
Deferred income taxes		85,267		86,002
Other long-term assets		284,962		223,160
Total long-term assets		3,769,921		3,609,904
Total assets	$	17,108,432	$	15,985,878

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	7,369,673	$	7,201,281
Current portion of operating lease liabilities		303,179		257,256
Current portion of debt		500,000		—
Accrued expenses and other		989,472		1,000,841
Income taxes payable		30,263		52,478
Total current liabilities		9,192,587		8,511,856

Long-term debt		8,496,288		7,668,549
Operating lease liabilities, less current portion		2,963,026		2,917,046
Deferred income taxes		543,046		536,278
Other long-term liabilities		751,722		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; 17,425 shares issued and 17,144 shares outstanding as of May 4, 2024; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023		174		189
Additional paid-in capital		1,565,860		1,484,992
Retained deficit		(5,327,190)		(2,959,278)
Accumulated other comprehensive loss		(202,899)		(190,836)
Treasury stock, at cost		(874,182)		(2,684,961)
Total stockholders’ deficit		(4,838,237)		(4,349,894)
Total liabilities and stockholders' deficit	$	17,108,432	$	15,985,878

See Notes to Condensed Consolidated Financial Statements.

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AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Twelve Weeks Ended				Thirty-Six Weeks Ended
	May 4,		May 6,		May 4,		May 6,
(in thousands, except per share data)	2024		2023		2024		2023

Net sales	$	4,235,485	$	4,090,541	$	12,284,888	$	11,766,591
Cost of sales, including warehouse and delivery expenses		1,969,963		1,944,415		5,725,698		5,695,840
Gross profit		2,265,522		2,146,126		6,559,190		6,070,751
Operating, selling, general and administrative expenses		1,365,341		1,287,645		4,067,163		3,819,261
Operating profit		900,181		858,481		2,492,027		2,251,490
Interest expense, net		104,422		74,313		298,426		197,645
Income before income taxes		795,759		784,168		2,193,601		2,053,845
Income tax expense		144,033		136,445		433,382		390,260
Net income	$	651,726	$	647,723	$	1,760,219	$	1,663,585

Weighted average shares for basic earnings per share		17,273		18,389		17,434		18,700
Effect of dilutive stock equivalents		488		594		507		622
Weighted average shares for diluted earnings per share		17,761		18,983		17,941		19,322

Basic earnings per share	$	37.73	$	35.22	$	100.96	$	88.96
Diluted earnings per share	$	36.69	$	34.12	$	98.11	$	86.10

See Notes to Condensed Consolidated Financial Statements.

AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Twelve Weeks Ended				Thirty-Six Weeks Ended
	May 4,		May 6,		May 4,		May 6,
(in thousands)	2024		2023		2024		2023

Net income	$	651,726	$	647,723	$	1,760,219	$	1,663,585
Other comprehensive income (loss):
Foreign currency translation adjustments		1,630		41,657		(14,252)		67,052
Unrealized (losses) gains on marketable debt securities, net of taxes		(34)		923		978		800
Net derivative activities, net of taxes		404		(743)		1,211		5,209
Total other comprehensive income (loss)		2,000		41,837		(12,063)		73,061
Comprehensive income	$	653,726	$	689,560	$	1,748,156	$	1,736,646

See Notes to Condensed Consolidated Financial Statements.

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AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Thirty-Six Weeks Ended
	May 4,		May 6,
(in thousands)	2024		2023

Cash flows from operating activities:
Net income	$	1,760,219	$	1,663,585
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		374,416		339,087
Other non-cash (income) charges		(40,000)		74,000
Amortization of debt origination fees		8,155		6,065
Deferred income taxes		9,016		(3,424)
Share-based compensation expense		71,314		62,389
Changes in operating assets and liabilities:
Accounts receivable		(66,550)		38,317
Merchandise inventories		(353,813)		(93,163)
Accounts payable and accrued expenses		126,488		(239,900)
Income taxes		69,746		64,041
Other, net		(25,125)		(38,221)
Net cash provided by operating activities		1,933,866		1,872,776

Cash flows from investing activities:
Capital expenditures		(725,910)		(430,441)
Purchase of marketable debt securities		(17,551)		(48,445)
Proceeds from sale of marketable debt securities		21,245		37,544
Investment in tax credit equity investments		(193,327)		(50,685)
Other, net		(715)		13,051
Net cash used in investing activities		(916,258)		(478,976)

Cash flows from financing activities:
Net proceeds from commercial paper		631,300		524,000
Proceeds from issuance of debt		1,000,000		1,000,000
Repayment of debt		(300,000)		(300,000)
Net proceeds from sale of common stock		154,367		154,863
Purchase of treasury stock		(2,437,176)		(2,699,996)
Repayment of principal portion of finance lease liabilities		(62,455)		(60,927)
Other, net		(5,001)		(6,247)
Net cash used in financing activities		(1,018,965)		(1,388,307)

Effect of exchange rate changes on cash		(339)		5,043

Net (decrease) increase in cash and cash equivalents		(1,696)		10,536
Cash and cash equivalents at beginning of period		277,054		264,380
Cash and cash equivalents at end of period	$	275,358	$	274,916

See Notes to Condensed Consolidated Financial Statements.

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AUTOZONE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)


	Twelve Weeks Ended May 4, 2024
								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-in		Retained		Comprehensive		Treasury
(in thousands)	Issued	Stock		Capital		Deficit		Loss		Stock		Total

Balance at February 10, 2024	17,351	$	174	$	1,485,789	$	(5,978,916)	$	(204,899)	$	(139,469)	$	(4,837,321)
Net income	—		—		—		651,726		—		—		651,726
Total other comprehensive income	—		—		—		—		2,000		—		2,000
Purchase of 242 shares of treasury stock	—		—		—		—		—		(734,713)		(734,713)
Issuance of common stock under stock options and stock purchase plans	74		—		56,028		—		—		—		56,028
Share-based compensation expense	—		—		24,043		—		—		—		24,043
Balance at May 4, 2024	17,425	$	174	$	1,565,860	$	(5,327,190)	$	(202,899)	$	(874,182)	$	(4,838,237)


	Twelve Weeks Ended May 6, 2023
								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-in		Retained		Comprehensive		Treasury
(in thousands)	Issued	Stock		Capital		Deficit		Loss		Stock		Total

Balance at February 11, 2023	18,786	$	188	$	1,324,258	$	(4,471,842)	$	(269,312)	$	(767,462)	$	(4,184,170)
Net income	—		—		—		647,723		—		—		647,723
Total other comprehensive income	—		—		—		—		41,837		—		41,837
Purchase of 356 shares of treasury stock	—		—		—		—		—		(908,225)		(908,225)
Issuance of common stock under stock options and stock purchase plans	114		1		82,104		—		—		—		82,105
Share-based compensation expense	—		—		19,153		—		—		—		19,153
Balance at May 6, 2023	18,900	$	189	$	1,425,515	$	(3,824,119)	$	(227,475)	$	(1,675,687)	$	(4,301,577)


	Thirty-Six Weeks Ended May 4, 2024
								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-in		Retained		Comprehensive		Treasury
(in thousands)	Issued	Stock		Capital		Deficit		Loss		Stock		Total

Balance at August 26, 2023	18,936	$	189	$	1,484,992	$	(2,959,278)	$	(190,836)	$	(2,684,961)	$	(4,349,894)
Net income	—		—		—		1,760,219		—		—		1,760,219
Total other comprehensive loss	—		—		—		—		(12,063)		—		(12,063)
Retirement of treasury shares	(1,703)		(17)		(142,391)		(4,128,131)		—		4,270,539		—
Purchase of 905 shares of treasury stock	—		—		—		—		—		(2,459,760)		(2,459,760)
Issuance of common stock under stock options and stock purchase plans	192		2		154,365		—		—		—		154,367
Share-based compensation expense	—		—		68,894		—		—		—		68,894
Balance at May 4, 2024	17,425	$	174	$	1,565,860	$	(5,327,190)	$	(202,899)	$	(874,182)	$	(4,838,237)


	Thirty-Six Weeks Ended May 6, 2023
								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-in		Retained		Comprehensive		Treasury
(in thousands)	Issued	Stock		Capital		Deficit		Loss		Stock		Total

Balance at August 27, 2022	20,732	$	207	$	1,354,252	$	(1,330,067)	$	(300,536)	$	(3,262,769)	$	(3,538,913)
Net income	—		—		—		1,663,585		—		—		1,663,585
Total other comprehensive income	—		—		—		—		73,061		—		73,061
Retirement of treasury shares	(2,051)		(20)		(143,440)		(4,157,637)		—		4,301,097		—
Purchase of 1,120 shares of treasury stock	—		—		—		—		—		(2,714,015)		(2,714,015)
Issuance of common stock under stock options and stock purchase plans	219		2		154,861		—		—		—		154,863
Share-based compensation expense	—		—		59,842		—		—		—		59,842
Balance at May 6, 2023	18,900	$	189	$	1,425,515	$	(3,824,119)	$	(227,475)	$	(1,675,687)	$	(4,301,577)

See Notes to Condensed Consolidated Financial Statements.

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AUTOZONE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note A – General

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission’s (the “SEC”) rules and regulations. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and related notes included in the AutoZone, Inc. (“AutoZone” or the “Company”) Annual Report on Form 10-K for the year ended August 26, 2023.

Operating results for the twelve and thirty-six weeks ended May 4, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 31, 2024. Each of the first three quarters of AutoZone’s fiscal year consists of 12 weeks, and the fourth quarter consists of 16 or 17 weeks. The fourth quarter of fiscal 2024 has 17 weeks, and the fourth quarter of fiscal 2023 had 16 weeks.

Recently Adopted Accounting Pronouncements

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 Condensed Consolidated Financial Statements. 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.

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Note B – Merchandise Inventories

Merchandise inventories include related purchasing, storage and handling costs. Inventory cost has been determined using the last-in, first-out (“LIFO”) method stated at the lower of cost or net realizable value for domestic inventories and the weighted average cost method stated at the lower of cost or net realizable value for Mexico and Brazil inventories. The Company’s LIFO credit reserve balance decreased to $19.0 million at May 4, 2024 from $59.0 million at August 26, 2023 as a result of net deflation, primarily driven by reduced freight costs. Until the credit reserve balance is exhausted, decreases are recorded as a non-cash benefit to cost of sales and increases are recorded as a non-cash charge to cost of sales. Debit LIFO reserve balances are not recorded as the Company’s policy is not to write up inventory in excess of replacement cost.

Note C – Variable Interest Entities

The Company invests in certain tax credit funds that promote renewable energy and generate a return primarily through the realization of federal tax credits. The Company considers its investments in these tax credit funds as investments in variable interest entities (“VIEs”). The Company evaluates the investment in any VIE to determine whether it is the primary beneficiary. The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. As of May 4, 2024, the Company held tax credit equity investments that were deemed to be VIEs and determined that it was not the primary beneficiary of the entities, as it did not have the power to direct the activities that most significantly impacted the entities and accounted for these investments using the equity method. The Company’s maximum exposure to losses is generally limited to its net investment, which was $110.9 million as of May 4, 2024 and $29.6 million as of August 26, 2023, and was included in Other long-term assets on the accompanying Condensed Consolidated Balance Sheets.

Note D – 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. 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.

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Marketable Debt Securities Measured at Fair Value on a Recurring Basis

The Company’s marketable debt securities measured at fair value on a recurring basis were as follows:


	May 4, 2024
(in thousands)	Level 1		Level 2		Level 3		Fair Value

Other current assets	$	52,352	$	8,289	$	—	$	60,641
Other long-term assets		26,235		32,184		—		58,419
	$	78,587	$	40,473	$	—	$	119,060


	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 May 4, 2024 and August 26, 2023, the fair value measurement amounts for assets and liabilities recorded in the accompanying Condensed Consolidated Balance Sheets consisted of short-term marketable debt securities, which are included within Other current assets, and long-term marketable debt securities, which are included in 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 securities, including benchmark yields and reported trades. The fair values of the marketable debt securities, by asset class, are described in “Note E – Marketable Debt Securities.”

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 H – Financing.”

Note E – Marketable Debt Securities

Marketable debt securities are carried at fair value, with unrealized gains and losses, net of income taxes, recorded in Accumulated other comprehensive loss until realized, and any credit risk related losses are recognized in net income in the period incurred. The Company’s basis for determining the cost of a security sold is the Specific Identification Model.

The Company’s available-for-sale marketable debt securities consisted of the following:


	May 4, 2024
	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
(in thousands)	Basis		Gains		Losses		Value

Corporate debt securities	$	28,377	$	13	$	(270)	$	28,120
Government bonds		56,502		376		(1,048)		55,830
Mortgage-backed securities		2,771		—		(118)		2,653
Asset-backed securities and other		32,540		—		(83)		32,457
	$	120,190	$	389	$	(1,519)	$	119,060

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	August 26, 2023
	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
(in thousands)	Basis		Gains		Losses		Value

Corporate debt securities	$	31,683	$	17	$	(504)	$	31,196
Government bonds		63,747		—		(1,440)		62,307
Mortgage-backed securities		3,215		—		(213)		3,002
Asset-backed securities and other		25,242		—		(234)		25,008
	$	123,887	$	17	$	(2,391)	$	121,513

The marketable debt securities held at May 4, 2024 had effective maturities ranging from less than one year to approximately eleven years. 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 the thirty-six week period ended May 4, 2024 and the comparable prior year period.

Included above in total available-for-sale marketable debt securities are $108.7 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 May 4, 2024 and August 26, 2023, respectively.

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 May 4, 2024 and August 26, 2023, the Company had supplier obligations outstanding that had been confirmed under these arrangements of $4.8 billion for each period, which are included in Accounts payable and $226.0 million and $224.8 million, respectively, which are included in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

Note G – 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.

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Note H – Financing

The Company’s debt consisted of the following: