AutoZone Annual Report 2017

FY2017 Annual Report · AutoZone

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2017 ANNUAL REPORT
Notice of Annual Meeting of Stockholders and Proxy Statement

Corporate Proﬁle
AutoZone, Inc. is the nation’s leading retailer and a leading
distributor of automotive replacement parts and accessories
in the United States. We began operations in 1979 and at
August 26, 2017, operated 5,465 AutoZone stores in the
United States and Puerto Rico; 524 in Mexico; 14 in Brazil;
and 26 Interamerican Motor Corporation (“IMC”) branches.
Each AutoZone 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. Many of
our AutoZone stores also have a commercial sales program
that provides commercial credit and prompt delivery of parts
and other products to local, regional and national repair
garages, dealers, service stations and public sector accounts.
IMC branches carry an extensive line of original equipment
quality import replacement parts. We also sell the ALLDATA
brand automotive diagnostic and repair software through

www.alldata.com and www.alldatadiy.com. Additionally,
we sell automotive hard parts, maintenance items, accessories
and non-automotive products through www.autozone.com,
www.autozonepro.com and accessories, performance and
replacement parts through www.autoanything.com, and
our commercial customers can make purchases through
www.autozonepro.com and www.imcparts.net. We do not
derive revenue from automotive repair or installation services.

• 6,029 locations (5,465 stores in 50 states, the

District of Columbia and Puerto Rico in the U.S.,
524 in Mexico,14 in Brazil and 26 IMC branches)

• 4,592 domestic Commercial programs

• 11 Distribution centers

(9 in the United States and 2 in Mexico)

• More than 87,000 AutoZoners

Selected Financial Highlights

(Dollars in millions, except per share data)

2013*

Net Sales

Operating Proﬁt

Diluted Earnings per Share

After-Tax Return on Invested Capital

Domestic Same Store Sales Growth

Operating Margin

Cash Flow from Operations

$9,148

$1,773

$27.79

32.9 %

0.0 %

19.4 %

$1,482

2014

$9,475

$1,830

$31.57

32.1%

2.8 %

19.3 %

$1,365

2015

$10,187

$1,953

$36.03

31.2%

3.8 %

19.2 %

$1,573

2016

$10,636

$2,060

$40.70

31.3%

2.4%

19.4%

$1,641

2017

$10,888

$2,080

$44.07

29.9%

0.5%

19.1%

$1,571

*2013 includes a 53rd week

AutoZone’s Pledge, est. 1986

AutoZoners always put customers ﬁrst!
We know our parts and products.
Our stores look great!
We’ve got the best merchandise at the right price.

Dear Customers, AutoZoners and Stockholders,

On behalf of more than 87,000 AutoZoners, I am excited to update you on our progress during ﬁscal 2017 and to review our plans for 2018
and beyond. For 2018, AutoZone is continuing the 2017 operating theme: “YES! We’ve Got It”. Being able to say “YES” to customers has
always been at the core of what we do. We are focused on continued enhancements to our capabilities in 2018 to effectively deploy our
inventory assortment to AutoZone stores across the U.S., Mexico, and Brazil even better than ever, allowing more AutoZoners to say “YES”
to more customers

This past year marked AutoZone’s 38th anniversary and I am as excited about our future today as when I had the privilege of becoming
AutoZone’s Chief Executive back in 2005. We continue to set the standard for great service in clean, well-lit, well-merchandised stores in
convenient locations. Our vision has always been centered on the customer: getting them what they need to do the job right so they can
get back on their way. With AutoZone stores in 50 U.S. States, the District of Columbia, Puerto Rico, Mexico and Brazil, and our ALLDATA,
AutoAnything and IMC businesses, we will continue to expand and enhance our offerings to both retail and commercial customers.

We have more than 87,000 of the very best people in our industry, our AutoZoners. It continues to be our responsibility to create terriﬁc
career opportunities for all AutoZoners. We embrace diversity as one of our Values, to make sure we provide tremendous opportunities for
growth and advancement to both current and future AutoZoners. I am proud of what we have accomplished to help AutoZoners achieve their
goals and we will continue to improve. By focusing on developing our AutoZoners’ skills and talents, and always saying “Yes! We’ve Got It” to
our customers, we are constantly strengthening our founder’s great vision and we are positioned well for continued future success.

Providing the right inventory availability and assortment to meet our customers’ changing demands has been an ongoing theme for AutoZone
since the Company’s inception back in 1979. With such a large and diverse car and truck population across North and South America,
we need to carry even more products to meet our customers’ needs. We are opening more distribution centers, more mega hubs, more
hubs, and working to determine the optimal frequency of delivery from our distribution centers (DCs). In 2017 alone, we opened two new
distribution centers: one in the U.S. and one in Mexico. We also have another DC in the U.S. under construction plus one other in the process
of being expanded. Additionally, we opened four more hub stores, ﬁnishing ﬁscal year 2017 with 186, and added ﬁve more mega hub stores,
ﬁnishing the year with 16 in operation. Along with our increase in availability, we’ve continued to expand the frequency of deliveries our U.S
stores receive in an effort to improve our “in-stock”. Across our approximately 6,000 U.S. and Mexico stores, we are increasing availability
using our DCs, mega hub and hub locations to both reduce out-of-stocks and add coverage. This expanded parts coverage is allowing us to
say, “Yes! We’ve Got it,” more than ever. We are committed to having the availability of parts to meet or exceed our customers’ expectations.

Fiscal 2017 was a more challenging year for AutoZone than we had expected. While we never take our business for granted, the additional
challenge was primarily due to two occurrences. First, the delay in timing for income tax refunds issued by the U.S. government negatively
impacted sales. While 2016’s refund season began at the end of January, this year it did not begin until the end of February. Although we
assumed we’d “earn back” lost sales from the tax refund delay during the spring selling season, it did not happen. Secondly, the mild winter
experienced across much of the Northeastern and Midwestern markets continued for a second straight year. Our business performs well
when temperatures become extreme, because extreme cold or heat causes parts to fail. Mild temperatures simply don’t have the same
impact. For a second straight year, mild temperatures caused sales to underperform during the winter and spring seasons in traditional
parts categories that typically do well in winter months. While facing these headwinds, we continued with our phased inventory availability
implementation, distribution center initiatives, new store openings, and investments in our internet businesses. Throughout the year, the data
available to us shows we continue to gain share, and we believe we are better positioned to grow our business in 2018 because of what we
accomplished in 2017.

What’s Different

While our story continues to be one of evolution, not revolution, we are on solid footing heading into ﬁscal 2018. Assortment and availability are core to future
sales growth. We have substantially expanded our breadth of parts coverage. With the best brand of products in the automotive aftermarket, Duralast, AutoZone
has driven further into lines of coverage like never before. I can say today that our coverage and assortment have never been better. But, we know we must
continue to improve further. That is why we opened two new distribution centers in ﬁscal 2017 with still a third under construction. Additional hub stores and
mega hub locations make incremental choice available. We expect to take our expanded delivery network to even more locations this upcoming year. While our
very successful 186 hub stores carry a more extensive line of hard parts inventory than their surrounding stores—usually twice the number of products—the
mega hubs carry an even more extensive assortment, roughly twice what a hub store carries. Additional deliveries from distribution centers are focused on
providing higher in-stock levels on products we stock in our stores, and the mega hubs are focused on increasing local market availability. We will expand or
build up to 40 mega hubs to provide substantially broader inventory assortments to the vast majority of our domestic stores.

With regard to our domestic operations, we continue to study our Commercial business in order to ﬁnd opportunistic ways to accelerate sales growth beyond
the current, industry leading rate of 5.7%: the rate of growth we had during ﬁscal 2017. In addition, we continued to focus on growing sales at our IMC
branches. Acquired in 2015, IMC and its 26 locations represent the second largest distributor of original equipment (“OE”) quality import replacement parts in
the United States. With its extensive line of OE brands for most European and Asian cars, we believe IMC has strong prospects.

In ﬁscal 2017, we continued with our international store growth, opening 47 stores outside the U.S., and ﬁnishing with 524 stores in Mexico and 14 in
Brazil. Our commitment to growing internationally is stronger today than ever, as we see our product and service offerings being well received by customers
in these geographies.

We are also expanding our growing Internet offerings. Utilizing our consumer sites autozone.com and autoanything.com, we believe we are well positioned to
serve our customers however they elect to interact with us. In 2018, we will continue to focus on both increasing our online product offerings and improving the
shopping experience, including enhancing our business-to-business sites like autozonepro.com. While our Internet business is a key focus for future growth, it
remains relatively small in sales volume. However, over time, as mobile shopping intensiﬁes, it will expand. We have to stay out front in this sector of our industry.
Our customers are demanding an ever-improving online shopping experience. And we intend to deliver.

We are proud of what we’ve accomplished this past year and we believe ﬁscal 2017 laid a strong foundation for an even better year in 2018. While ﬁscal 2017
was clearly a more challenging year for AutoZone, the initiatives begun are expected to drive sales for years to come. Lastly, we will continue investing capital in
our information systems infrastructure at increasing levels, as these investments will be at the core of our customer interfacing efforts. Looking forward, 2018
will be a busy year for us as we have many growth opportunities ahead.

Summary of 2017 Results
During 2017, we had many successes. We
recorded a record $10.9 billion in sales, up
2.4% over ﬁscal year 2016, and we delivered a
record $44.07 in earnings per share, up 8.3%
over 2016. We also:

• Opened our 6,000th store and had the honor to
do so in our hometown of Memphis, Tennessee

• Expanded our domestic store base by 168
stores across 50 states and Puerto Rico

• Opened 202 net new Commercial programs,
ending the year with commercial programs in
84% of our domestic store base

• Increased our presence in Mexico, celebrating
our 500th store opening during the year and
ending with 524 stores

• Opened six additional stores in Brazil, for a

total of 14 stores

• Signiﬁcantly grew our online offerings at
autozone.com, autozonepro.com and
autoanything.com

• Opened four additional hub stores, ﬁnishing
the ﬁscal year with 186 hubs (including 16
mega hubs)

• Continued our relentless focus on Return on
Invested Capital (ROIC), reporting 29.9% for
ﬁscal 2017

• Generated $1.6 billion of Operating Cash Flow
• Repurchased more than $1 billion of our shares

for the ninth consecutive year

Our success is directly attributable to our 87,000+
great AutoZoners and their commitment to living
our Pledge and Values and leveraging our unique
and powerful culture to say, “YES! We’ve Got It.”

We are looking forward to 2018!

U.S. Retail
We are the country’s largest retailer of automotive aftermarket products with nearly 5,500 stores across the United States. Our initiatives for
2017 were: (1) Great People Providing Great Service; (2) Proﬁtable Commercial Growth; (3) Leveraging the Internet; (4) Yes! We’ve Got It.; and,
(5) Leveraging Information Technology.

The most signiﬁcant initiative impacting U.S. Retail in 2017 was the further implementation of our inventory availability initiatives highlighted
earlier, which we call “Yes! We’ve Got It.” Many of our retail initiatives generally don’t change signiﬁcantly from year to year. Our Great People
Providing Great Service initiative has been, and will continue to be, a constant because it is central to our culture. This initiative is focused on
hiring, retaining, training and developing the best people in the industry. We also continued with our aggressive investments in technology this
past year. We have committed to a multi-year approach to enhancing our systems, both hardware and software, to ensure our AutoZoners have
the best, most reliable tools available. As a result, we signiﬁcantly increased our investments in IT over the last ﬁve years. We expect an increased
level of investment next year as well, as technology improvements will be part of our key priorities for years to come.

U.S. Commercial
In ﬁscal 2017, our Commercial sales grew 5.7% over last year. This customer base remains highly fragmented, and we see tremendous
opportunities to increase market share. We opened 202 net new programs this past year and have opened 750 net new programs over the last
three years. We now have commercial programs in 84% of our domestic store base with opportunities to continue to open additional programs and
grow sales in our existing programs. In 2017, we intensiﬁed our focus on growing our “mature programs” and speciﬁcally our “mature customers.”
Despite challenges to our industry in 2017, we saw, as in previous years, our growth rates continue to outpace the overall industry. We believe
we are well positioned for growth in Commercial for 2018 and beyond.

International
With 524 stores across Mexico and 14 in Brazil, we expanded our international store base in 2017. While our business model performed well
last year, we were challenged by exchange rate ﬂuctuations that hurt translation of local currency proﬁts into their U.S. dollar equivalents. With
the bulk of our international business in Mexico, the peso’s weakness relative to the U.S. dollar caused a signiﬁcant headwind to bottom line
comparisons with ﬁscal 2016. While exchange rates remained a challenge for us in 2017, we continued with our ongoing store expansion
strategy. Our deliberate store opening schedule is driven by our efforts to improve our information systems within our international operations. We
believe having all our stores across the world on the same systems platform will allow improved execution. This is a challenging task since there
are different requirements for doing business in Brazil versus Mexico, for example. While we have been doing business in Mexico for nearly two
decades, we expect to continue expanding our presence there for many more years. In Brazil, we have a much smaller presence and added six
new stores in 2017. As we continue to develop a model that works well for our Brazilian customers and for us ﬁnancially, we expect to expand.
We intend to open up to 10 new stores in Brazil in 2018. We are excited about our ongoing International opportunities.

Digital Integration
Our digital integration effort strives to leverage all our “digital assets” to both communicate with and sell more effectively to our customers. We
have a wealth of data, content and customer relationships from AutoZone Retail and Commercial, ALLDATA, autozone.com, autozonepro.com,
AutoAnything and IMC. By combining these customer views and mining our data further, we’ll be able to learn more and improve upon having the
right merchandise in the right locations for whenever and wherever our customers demand it. We must make sure our customers are “one click”
from experiencing WOW! Customer Service in any way they wish to engage with us. As we strengthen this focus, we understand our challenges
and see our opportunities. This will continue to be an important part of our thinking on customer relationships for years to come and will remain
a key focus in 2018.

Our Future

Our 2018 operating theme “Yes! We’ve Got It” means we are focused on having the right inventory available at the right location
every day. Having the parts customers demand, closer to where they need them, will continue to be the key to our success in
the future. We have always understood there are choices our customers can make on where they shop, and we don’t take that
for granted. Every customer interaction is an opportunity for us to surprise and delight, leading our customers to say “WOW!”
or conversely, an opportunity for us to disappoint a customer – an unacceptable outcome. While 2017 was a challenging sales
year due to the delayed income tax refund season and milder weather impacting failure related parts sales, we did not stop
investing in merchandise availability, training and, most importantly, our AutoZoners. We are challenging ourselves in 2018 to
improve on our customer service efforts. And, we are determined to say “YES” to our customers even more in 2018.

We have a solid business model that is built on delivering consistent ﬁnancial results. As we think about the future, we intend
to continue to grow new store square footage at an annual rate of three to four percent, and we expect to continue to grow
our commercial sales at a rate faster than our retail sales. While we did not continue our streak of 41 consecutive quarters
of double-digit EPS growth this past year, we are positioned for steady future growth. We will also continue to leverage our
historically strong cash ﬂows to repurchase shares to grow our earnings per share. Primarily, we will continue to invest in
initiatives that provide us with an appropriate return. As our ROIC, at 29.9%, is one of the best in all of hardlines retailing,
we are committed to being good stewards of capital as we understand the capital we deploy is your capital.

As I write this letter, I would be remiss to not comment on the horrible storms and natural disasters that occurred in recent
months. I want to recognize the extraordinary efforts our AutoZoners made to help each other and our customers recover
in Houston, Florida, Puerto Rico, Mexico and California. The efforts of our folks went above and beyond imaginable, and I’m
proud to be a part of such a wonderful team that truly cares about people.

I want to thank all AutoZoners for their dedication and hard work in 2017. Over the years, our Company’s success is entirely
due to their consistent commitments to going the extra mile to help our customers. They embrace our culture and provide
our customers with an exceptional experience. I would also like to thank our vendors for their ongoing commitment to our
collective success. Additionally, I would like to thank you, our stockholders, for the conﬁdence you have placed in us by your
decision to invest in our Company. We remain committed to managing your capital wisely, achieving an appropriate return on
incremental projects and returning excess cash through an orderly share repurchase program.

I would also like to take a moment to thank Sue Gove, one of our board members, for her service over the last 12 years. She
has decided not to stand for re-election at our upcoming stockholders’ meeting. She has been an invaluable contributor to
the development of our strategies and has been a material contributor to our overall success. We wish her all the best in her
future endeavors.

We have a wonderful culture that has been ﬁrmly built over the past 38 years. We remain passionate about our Pledge,
Values, and culture to earn our customers’ business every day. I continue to believe our best days are ahead. Thank you for
staying in the Zone with us for all these years!

We look forward to updating you on our continued success well into the future.
Sincerely,

Bill Rhodes
Chairman, President and CEO
Customer Satisfaction

Notice of annual meeting of stockholders
and proxy statement

AUTOZONE, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 20, 2017

P
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What:

When:

Where:

Stockholders
will vote regarding:

Record Date:

Memphis, Tennessee
October 27, 2017

Annual Meeting of Stockholders

December 20, 2017, 8:00 a.m. Central Standard Time

J. R. Hyde III Store Support Center
123 South Front Street
Memphis, Tennessee

• Election of eleven directors

• Ratification of the appointment of Ernst & Young LLP
as our independent registered public accounting firm
for the 2018 fiscal year

• Advisory vote on executive compensation

• Advisory vote on the frequency of future advisory

votes on executive compensation

• The transaction of other business that may be properly

brought before the meeting

Stockholders of record as of October 23, 2017, may vote
at the meeting.

By order of the Board of Directors,

Kristen C. Wright
Secretary

We encourage you to vote by telephone or Internet, both of which are convenient,
cost-effective and reliable alternatives to returning your proxy card by mail.

P
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TABLE OF CONTENTS

The Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
About this Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information about Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate Governance Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Meetings and Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Committees of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nominating and Corporate Governance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Nomination Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Procedure for Communication with the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Management and Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Certain Beneficial Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 1 – Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nominees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 2 – Ratification of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . .
PROPOSAL 3 – Advisory Vote on Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPOSAL 4 – Advisory Vote on the Frequency of Future Advisory Votes on Executive

Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation Program Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grants of Plan-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding Equity Awards at Fiscal Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Exercises and Stock Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nonqualified Deferred Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments upon Termination or Change in Control
Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Proposals for 2018 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annual Report

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AutoZone, Inc.
123 South Front Street
Memphis, Tennessee 38103

Proxy Statement
for
Annual Meeting of Stockholders
December 20, 2017

The Meeting

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The Annual Meeting of Stockholders of AutoZone, Inc. will be held at AutoZone’s offices, the J. R. Hyde

III Store Support Center, 123 South Front Street, Memphis, Tennessee, at 8:00 a.m. CST on December 20, 2017.

About this Proxy Statement

Our Board of Directors has sent you this Proxy Statement to solicit your vote at the Annual Meeting. This
Proxy Statement contains important information for you to consider when deciding how to vote on the matters
brought before the Meeting. Please read it carefully.

In this Proxy Statement:

• “AutoZone,” “we,” “us,” and “the Company” mean AutoZone, Inc.

• “Annual Meeting” or “Meeting” means the Annual Meeting of Stockholders to be held on December 20,
2017, at 8:00 a.m. CST at the J. R. Hyde III Store Support Center, 123 South Front Street, Memphis,
Tennessee.

• “Board” means the Board of Directors of AutoZone, Inc.

AutoZone will pay all expenses incurred in this proxy solicitation. We also may make additional

solicitations in person, by telephone, facsimile, e-mail, or other forms of communication. Brokers, banks, and
others who hold our stock for beneficial owners will be reimbursed by us for their expenses related to
forwarding our proxy materials to the beneficial owners.

This Proxy Statement is first being sent or given to security holders on or about October 27, 2017.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON DECEMBER 20, 2017. This Proxy Statement and
the annual report to security holders are available at www.autozoneinc.com.

Information about Voting

What matters will be voted on at the Annual Meeting?

At the Annual Meeting, stockholders will be asked to vote on the following proposals:

1. to elect ten directors;

2. to ratify the appointment of Ernst & Young LLP as our independent registered public accounting

firm for the 2018 fiscal year;

3. to approve an advisory vote on executive compensation; and

4. to approve an advisory vote on the frequency of future advisory votes on executive compensation

Stockholders also will transact any other business that may be properly brought before the Meeting.

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Who is entitled to vote at the Annual Meeting?

The record date for the Annual Meeting is October 23, 2017. Only stockholders of record at the close of
business on that date are entitled to attend and vote at the Annual Meeting. The only class of stock that can be
voted at the Meeting is our common stock. Each share of common stock is entitled to one vote on all matters
that come before the Meeting. At the close of business on the record date, October 23, 2017, we had 27,492,520
shares of common stock outstanding.

How do I vote my shares?

You may vote your shares in person or by proxy:

By Proxy: You can vote by telephone, on the Internet or by mail. We encourage you to vote by
telephone or Internet, both of which are convenient, cost-effective, and reliable alternatives to returning
your proxy card by mail.

1. By Telephone: You may submit your voting instructions by telephone by following the

instructions printed on the enclosed proxy card. If you submit your voting instructions by telephone, you do
not have to mail in your proxy card.

2. On the Internet: You may vote on the Internet by following the instructions printed on the

enclosed proxy card. If you vote on the Internet, you do not have to mail in your proxy card.

3. By Mail:

If you properly complete and sign the enclosed proxy card and return it in the enclosed

envelope, it will be voted in accordance with your instructions. The enclosed envelope requires no
additional postage if mailed in the United States.

In Person: You may attend the Annual Meeting and vote in person. If you are a registered holder of

your shares (if you hold your stock in your own name), you need only to attend the Meeting. However, if
your shares are held in an account by a broker, you will need to present a written consent from your broker
permitting you to vote the shares in person at the Annual Meeting.

How will my vote be counted?

Your vote for your shares will be cast as you indicate on your proxy card. If you sign your card without
indicating how you wish to vote, your shares will be voted FOR our nominees for director, FOR Ernst & Young
LLP as independent registered public accounting firm, FOR the advisory vote on executive compensation, FOR
approval of an annual frequency for future executive compensation votes, and in the proxies’ discretion on any
other matter that may properly be brought before the Meeting or any adjournment of the Meeting.

The votes will be tabulated and certified by our transfer agent, Computershare. A representative of

Computershare will serve as the inspector of election.

Can I change my vote after I submit my proxy?

Yes, you may revoke your proxy at any time before it is voted at the Meeting by:

• giving written notice to our Secretary that you have revoked the proxy, or

• providing a later-dated proxy.

Any written notice should be sent to the Secretary at 123 South Front Street, Dept. 8074, Memphis,

Tennessee 38103.

How many shares must be present to constitute a quorum for the Meeting?

Holders of a majority of the shares of the voting power of the Company’s stock must be present in person
or by proxy in order for a quorum to be present. If a quorum is not present at the scheduled time of the Annual
Meeting, we may adjourn the Meeting, without notice other than announcement at the Meeting, until a quorum
is present or represented. Any business which could have been transacted at the Meeting as originally scheduled
can be conducted at the adjourned meeting.

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Corporate Governance Matters

Independence

How many independent directors does AutoZone have?

Our Board has determined that ten of our current eleven directors are independent: Douglas H. Brooks,

Linda A. Goodspeed, Sue E. Gove, Earl G. Graves, Jr., Enderson Guimaraes, J. R. Hyde, III, D. Bryan Jordan,
W. Andrew McKenna, George R. Mrkonic, Jr., and Luis P. Nieto, Jr. All of these directors meet the
independence standards of our Corporate Governance Principles and the New York Stock Exchange listing
standards.

How does AutoZone determine whether a director is independent?

In accordance with AutoZone’s Corporate Governance Principles, a director is considered independent if

the director meets the independence requirements of the applicable New York Stock Exchange listing standards,
and, with respect to the Audit Committee, the applicable Securities & Exchange Commission rules.

In determining the independence of our directors, the Board considers relationships involving directors and
their immediate family members that are relevant under applicable laws and regulations, the listing standards of
the New York Stock Exchange, and the standards contained in our Corporate Governance Principles. The Board
relies on information from Company records and questionnaires completed annually by each director.

As part of its most recent independence determinations, the Board noted that AutoZone does not have, and
did not have during fiscal 2017, significant commercial relationships with companies at which Board members
served as officers or directors, or in which Board members or their immediate family members held an
aggregate of 10% or more direct or indirect interest.

The Board considered the fact that Mr. Jordan is the Chairman of the Board, President and Chief Executive

Officer and a member of the board of directors of First Horizon National Corporation, parent company of First
Tennessee Bank, which

• participates in one of AutoZone’s supplier confirmed receivables programs (under which some AutoZone

vendors are borrowers, but AutoZone is not);

• has established a Daylight Overdraft line which allows AutoZone to make large payments early in the

morning creating a “daylight” overdraft which is rectified at the end of the day;

• acts as Trustee for AutoZone’s pension plan;

• offers brokerage services to AutoZone employees exercising stock options, and

• holds various AutoZone deposit accounts.

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During fiscal 2017, First Horizon National Corporation did business with AutoZone in arm’s length

transactions which were not, individually or cumulatively, material to either AutoZone or First Horizon National
Corporation and which did not materially benefit Mr. Jordan, either directly or indirectly.

The Board also considered the fact that Mr. Brooks is a member of the board of directors of Southwest

Airlines. During fiscal 2017, AutoZone purchased airline tickets from Southwest Airlines which were not,
individually or cumulatively, material to either AutoZone or Southwest Airlines and which did not materially
benefit Mr. Brooks, either directly or indirectly.

The Board also reviewed donations made by the Company to not-for-profit organizations with which Board

members or their immediate family members were affiliated by membership or service or as directors or
trustees.

Based on its review of the above matters, the Board determined that none of Messrs. Brooks, Graves,
Guimaraes, Hyde, Jordan, McKenna, Mrkonic, or Nieto or Ms. Goodspeed or Gove has a material relationship
with the Company and that all of them are independent within the meaning of the AutoZone Corporate
Governance Principles and applicable law and listing standards. The Board also determined that Mr. Rhodes is
not independent since he is an employee of the Company.

Board Leadership Structure

Our Board believes that having a combined Chairman/CEO, independent members and chairs for each of
our Board committees and an independent Lead Director currently provides the best board leadership structure
for AutoZone. This structure, together with our other corporate governance practices, provides strong
independent oversight of management while ensuring clear strategic alignment throughout the Company. Our
Lead Director is a non-employee director who is elected by the Board. Earl G. Graves, Jr., a director since 2002,
currently serves as our Lead Director.

Our Lead Director:

• Chairs Board meetings when the Chairman is not present, including presiding at all executive sessions of

the Board (without management present) at every regularly scheduled Board meeting;

• Works with management to determine the information and materials provided to Board members;

• Approves Board meeting agendas, schedules and other information provided to the Board;

• Consults with the Chairman on such other matters as are pertinent to the Board and the Company;

• Has the authority to call meetings of the independent directors;

• Is available for direct communication and consultation with major shareholders upon request; and

• Serves as liaison between the Chairman and the independent directors.

Board Risk Oversight

Oversight of risk management is a responsibility of the Board and is an integral part of the Board’s
oversight of AutoZone’s business. AutoZone’s management takes a variety of calculated risks in order to

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enhance Company performance and shareholder value. The primary responsibility for the identification,
assessment and management of the various risks resides with AutoZone’s management. The Board is primarily
responsible for ensuring that management has established and adequately resourced processes for identifying
and preparing the Company to manage risks effectively. Additionally, the Board reviews the Company’s
principal strategic and operating risks as part of its regular discussion and consideration of AutoZone’s strategy
and operating results. The Board also reviews periodically with the General Counsel legal matters that may have
a material adverse impact on the Company’s financial statements, the Company’s compliance with laws, and
any material reports received from regulatory agencies.

The Audit Committee is involved in the Board’s oversight of risk management. At each of its regular
meetings, the Audit Committee reviews the Company’s major financial exposures and the steps management has
taken to identify, assess, monitor, control, remediate and report such exposures. The Audit Committee, along
with management, also evaluates the effectiveness of the risk avoidance and mitigation processes in place. Such
risk-related information is then summarized, reported and discussed at each quarterly Board meeting.

To assist with risk management and oversight, AutoZone has adopted the concept of enterprise risk
management (“ERM”) using the framework issued in 2004 by the Committee of Sponsoring Organizations of
the Treadway Commission. The Company’s Vice President of Internal Audit, who reports directly to the Audit
Committee, has been charged with leading the Company’s ERM processes with the assistance of Company
management. The Vice President of Internal Audit presents to the Audit Committee a comprehensive review of
the Company’s ERM processes annually. This presentation includes an overview of all significant risks that
have been identified and assessed and the strategies developed by management for managing such risks. The
Vice President of Internal Audit leads open discussions with the Audit Committee members to analyze the
significance of the risks identified and to verify that the list is all-inclusive. Company management is also
involved in these discussions to ensure that the Board gains a full understanding of the risks and the strategies
that management has implemented to manage the risks.

Other Board committees also consider significant risks within their areas of responsibility. The

Compensation Committee considers risk in connection with the design of AutoZone’s compensation programs.
The Nominating and Corporate Governance Committee oversees risks related to the Company’s governance
policies and practices.

Corporate Governance Documents

Our Board has adopted Corporate Governance Principles; charters for its Audit, Compensation, and
Nominating & Corporate Governance Committees; a Code of Conduct for directors, officers and employees of
AutoZone; and a Code of Ethical Conduct for Financial Executives. Each of these documents is available on our
corporate website at www.autozoneinc.com and is also available, free of charge, in print to any stockholder who
requests it.

Meetings and Attendance

How many times did AutoZone’s Board meet during the last fiscal year?

During the 2017 fiscal year, the Board held four meetings.

Did any of AutoZone’s directors attend fewer than 75% of the meetings of the Board and their assigned
committees?

All of our directors attended at least 75% of the meetings of the Board and their assigned committees

during the fiscal year.

What is AutoZone’s policy with respect to directors’ attendance at the Annual Meeting?

As a general matter, all directors are expected to attend our Annual Meetings. At our 2016 Annual Meeting,

all directors were present.

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Do AutoZone’s non-management directors meet regularly in executive session?

The non-management members of our Board regularly meet in executive sessions in conjunction with each

regularly scheduled Board meeting. Our Lead Director, Mr. Graves, presides at these sessions.

Committees of the Board

What are the standing committees of AutoZone’s Board?

AutoZone’s Board has three standing committees: Audit Committee, Compensation Committee, and

Nominating and Corporate Governance Committee, each consisting only of independent directors.

Audit Committee

What is the function of the Audit Committee?

The Audit Committee is responsible for:

• the integrity of the Company’s financial statements,

• the independent auditor’s qualification, independence and performance,

• the performance of the Company’s internal audit function, and

• the Company’s compliance with legal and regulatory requirements.

The Audit Committee performs its duties by:

• evaluating, appointing or dismissing, determining compensation for, and overseeing the work of the

independent public accounting firm employed to conduct the annual audit, which reports to the Audit
Committee;

• pre-approving all audit and permitted non-audit services performed by the independent auditor,

considering issues of auditor independence;

• conducting periodic reviews with Company officers, management, independent auditors, and the internal

audit function;

• reviewing and discussing with management and the independent auditor the Company’s annual audited

financial statements, quarterly financial statements, internal controls report and the independent auditor’s
attestation thereof, and other matters related to the Company’s financial statements and disclosures;

• overseeing the Company’s internal audit function;

• reporting periodically to the Board and making appropriate recommendations; and

• preparing the report of the Audit Committee required to be included in the annual proxy statement.

Who are the members of the Audit Committee?

The Audit Committee consists of Ms. Goodspeed, Ms. Gove, Mr. Jordan, Mr. McKenna (Chair),

Mr. Mrkonic, and Mr. Nieto.

Are all of the members of the Audit Committee independent?

Yes, the Audit Committee consists entirely of independent directors under the standards of AutoZone’s

Corporate Governance Principles and the listing standards of the New York Stock Exchange.

Does the Audit Committee have an Audit Committee Financial Expert?

The Board has determined that Ms. Goodspeed, Ms. Gove, Mr. Jordan, Mr. McKenna, Mr. Mrkonic and
Mr. Nieto each meet the qualifications of an audit committee financial expert as defined by the Securities and
Exchange Commission. All members of the Audit Committee meet the New York Stock Exchange definition of
financial literacy.

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How many times did the Audit Committee meet during the last fiscal year?

During the 2017 fiscal year, the Audit Committee held eight meetings.

Where can I find the charter of the Audit Committee?

The Audit Committee’s charter is available on our corporate website at www.autozoneinc.com and is also

available, free of charge, in print to any stockholder who requests it.

Audit Committee Report

The Audit Committee of AutoZone, Inc. has reviewed and discussed AutoZone’s audited financial
statements for the year ended August 26, 2017, with AutoZone’s management. In addition, we have discussed
with Ernst & Young LLP, AutoZone’s independent registered public accounting firm, the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees, as amended and
as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T, the Sarbanes-Oxley
Act of 2002, and the charter of the Committee.

The Committee also has received the written disclosures and the letter from Ernst & Young LLP required
by the applicable requirements of the PCAOB regarding the firm’s communications with the Audit Committee
concerning independence, and we have discussed with Ernst & Young LLP their independence from the
Company and its management. The Committee has discussed with AutoZone’s management and the auditing
firm such other matters and received such assurances from them as we deemed appropriate.

As a result of our review and discussions, we have recommended to the Board of Directors the inclusion of

AutoZone’s audited financial statements in the annual report for the fiscal year ended August 26, 2017, on
Form 10-K for filing with the Securities and Exchange Commission.

While the Audit Committee has the responsibilities and powers set forth in its charter, the Audit Committee

does not have the duty to plan or conduct audits or to determine that AutoZone’s financial statements are
complete, accurate, or in accordance with generally accepted accounting principles; AutoZone’s management
and the independent auditor have this responsibility. Nor does the Audit Committee have the duty to assure
compliance with laws and regulations and the policies of the Board of Directors.

W. Andrew McKenna (Chair)
Linda A. Goodspeed
Sue E. Gove
D. Bryan Jordan
George R. Mrkonic, Jr.
Luis P. Nieto

The above Audit Committee Report does not constitute soliciting material and should not be deemed filed
or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically incorporates this Report by reference
therein.

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Compensation Committee

What is the function of the Compensation Committee?

The Compensation Committee has the authority, based on its charter and the AutoZone Corporate

Governance Principles, to:

• review and approve AutoZone’s compensation objectives;

• review and approve the compensation programs, plans, policies and awards for executive officers,

including recommending equity-based plans for stockholder approval;

• lead the independent directors in the evaluation of the performance of the Chief Executive Officer
(“CEO”) in meeting established goals and objectives relevant to the compensation of the CEO;

• act as administrator as may be required by AutoZone’s short- and long-term incentive plans and stock or

stock-based plans; and

• review the compensation of AutoZone’s non-employee directors from time to time and recommend to the

full Board any changes that the Compensation Committee deems necessary.

The Compensation Committee may appoint subcommittees from time to time with such responsibilities as

it may deem appropriate; however, the committee may not delegate its authority to any other persons.

AutoZone’s processes and procedures for the consideration and determination of executive compensation,

including the role of the Compensation Committee and compensation consultants, are described in the
“Compensation Discussion and Analysis” on page 21.

Who are the members of the Compensation Committee?

The Compensation Committee consists of Mr. Brooks, Ms. Goodspeed, Mr. Graves (Chair), Mr. McKenna,

and Mr. Mrkonic, all of whom are independent directors under the standards of AutoZone’s Corporate
Governance Principles and the listing standards of the New York Stock Exchange.

How many times did the Compensation Committee meet during the last fiscal year?

During the 2017 fiscal year, the Compensation Committee held three meetings.

Where can I find the charter of the Compensation Committee?

The Compensation Committee’s charter is available on our corporate website at www.autozoneinc.com and

is also available, free of charge, in print to any stockholder who requests it.

Nominating and Corporate Governance Committee

What is the function of the Nominating and Corporate Governance Committee?

The Nominating and Corporate Governance Committee ensures that:

• qualified candidates are presented to the Board for election as directors;

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• the Board has adopted appropriate corporate governance principles that best serve the practices and

objectives of the Board; and

• AutoZone’s Articles of Incorporation and By-Laws are structured to best serve the interests of the

stockholders.

Who are the members of the Nominating and Corporate Governance Committee?

The Nominating and Corporate Governance Committee consists of Ms. Gove (Chair), Mr. Guimaraes,
Mr. Jordan and Mr. Nieto, all of whom are independent directors under the standards of AutoZone’s Corporate
Governance Principles and the listing standards of the New York Stock Exchange.

How many times did the Nominating and Corporate Governance Committee meet during the last fiscal
year?

During the 2017 fiscal year, the Nominating and Corporate Governance Committee held three meetings.

Where can I find the charter of the Nominating and Corporate Governance Committee?

The Nominating and Corporate Governance Committee’s charter is available on our corporate website at

www.autozoneinc.com and is also available, free of charge, in print to any stockholder who requests it.

Director Nomination Process

What is the Nominating and Corporate Governance Committee’s policy regarding consideration of director
candidates recommended by stockholders? How do stockholders submit such recommendations?

The Nominating and Corporate Governance Committee’s policy is to consider director candidate

recommendations from stockholders if they are submitted in writing to AutoZone’s Secretary in accordance with
the procedure set forth in Article III, Section 1 of AutoZone’s Sixth Amended and Restated By-Laws
(“By-Laws”), including biographical and business experience, information regarding the nominee and other
information required by said Article III, Section 1. Copies of the By-Laws will be provided upon written request
to AutoZone’s Secretary and are also available on AutoZone’s corporate website at www.autozoneinc.com.

What qualifications must a nominee have in order to be recommended by the Nominating and Corporate
Governance Committee for a position on the Board?

The Board believes each individual director should possess certain personal characteristics, and that the

Board as a whole should possess certain core competencies. Such personal characteristics are integrity and
accountability, informed judgment, financial literacy, mature confidence, high performance standards, and
passion. They should also have demonstrated the confidence to be truly independent, as well as be business
savvy, have an owner orientation and have a genuine interest in AutoZone. Core competencies of the Board as a
whole are accounting and finance, business judgment, management expertise, crisis response, industry
knowledge, international markets, strategy and vision. These characteristics and competencies are set forth in
more detail in AutoZone’s Corporate Governance Principles, which are available on AutoZone’s corporate
website at www.autozoneinc.com.

How does the Nominating and Corporate Governance Committee identify and evaluate nominees for
director?

Prior to each annual meeting of stockholders at which directors are to be elected, the Nominating and
Corporate Governance Committee considers incumbent directors and other qualified individuals, if necessary, as

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potential director nominees. In evaluating a potential nominee, the Nominating and Corporate Governance
Committee considers the personal characteristics described above, and also reviews the composition of the full
Board to determine the areas of expertise and core competencies needed to enhance the function of the Board.
The Nominating and Corporate Governance Committee may also consider other factors such as the size of the
Board, whether a candidate is independent, how many other public company directorships a candidate holds, and
the listing standards requirements of the New York Stock Exchange.

The Nominating and Corporate Governance Committee recognizes the importance of selecting directors

from various backgrounds and professions in order to ensure that the Board as a whole has a variety of
experiences and perspectives which contribute to a more effective decision-making process. The Board does not
have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and
professional experiences in evaluating candidates for Board membership.

The Nominating and Corporate Governance Committee uses a variety of methods for identifying potential

nominees for director. Candidates may come to the attention of the Nominating and Corporate Governance
Committee through current Board members, stockholders or other persons. The Nominating and Corporate
Governance Committee may retain a search firm or other consulting firm from time to time to identify potential
nominees. Nominees recommended by stockholders in accordance with the procedure described above, i.e.,
submitted in writing to AutoZone’s Secretary, accompanied by the biographical and business experience
information regarding the nominee and the other information required by Article III, Section 1 of the By-Laws,
will receive the same consideration as the Nominating and Corporate Governance Committee’s other potential
nominees.

Procedure for Communication with the Board of Directors

How can stockholders and other interested parties communicate with the Board?

Stockholders and other interested parties may communicate with the Board by writing to the Board, to any

individual director or to the non-management directors as a group c/o Secretary, AutoZone, Inc., 123 South
Front Street, Dept. 8074, Memphis, Tennessee 38103. The Company’s General Counsel and Secretary will
review all such correspondence and will forward correspondence that, in her opinion, deals with the function of
the Board or that she otherwise determines requires the attention of any member, group or committee of the
Board. Communications addressed to the Board or to the non-management directors as a group will be
forwarded to the Chair of the Nominating and Corporate Governance Committee, and communications
addressed to a committee of the Board will be forwarded to the chair of that committee.

Compensation of Directors

Director Compensation Table

This table shows the compensation paid to our non-employee directors during the 2017 fiscal year. No
amounts were paid to our non-employee directors during the 2017 fiscal year that would be classified as “Option
Awards,” “Non-Equity Incentive Plan Compensation,” “Changes in Pension Value and Nonqualified Deferred
Compensation Earnings” or “All Other Compensation,” so these columns have been omitted from the table.

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Name (1)

Douglas H. Brooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Linda A. Goodspeed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sue E. Gove . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earl G. Graves, Jr.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enderson Guimaraes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J.R. Hyde, III
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Bryan Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
W. Andrew McKenna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
George R. Mrkonic, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Luis Nieto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fees
Paid in Cash
($)
(2)

80,000
—
75,000
—
—
—
—
—
—
90,000

Stock
Awards
($)
(3)

124,992
214,997
124,992
239,993
204,998
204,998
214,997
224,995
214,997
124,992

Total
($)

204,992
214,997
199,992
239,993
204,998
204,998
214,997
224,995
214,997
214,992

(1) William C. Rhodes, III, our Chairman, President and Chief Executive Officer, serves on the Board but does

not receive any compensation for his service as a director. His compensation as an employee of the
Company is shown in the Summary Compensation Table on page 33.

(2) Under the Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan (the “Amended 2011
Equity Plan”), AutoZone’s non-employee directors receive their director compensation in the form of
Restricted Stock Units, which are contractual rights to receive in the future a share of AutoZone stock. Upon
timely election, non-employee directors may elect to receive $80,000 of the annual retainer fee, plus any
additional fees, in the form of cash, paid in quarterly installments in advance (on January 1, April 1, July 1
and October 1 of each calendar year). This column represents the portion of the Director Compensation that
was paid in cash and earned in fiscal year 2017.

(3) The “Stock Awards” column represents the aggregate grant date fair value computed in accordance with
FASB ASC Topic 718 for awards of Restricted Stock Units under the Amended 2011 Equity Plan during
fiscal 2017. See Note B, Share-Based Payments, to our consolidated financial statements in our 2017 Annual
Report for a discussion of our accounting for share-based awards and the assumptions used. The aggregate
number of outstanding awards of common stock under the AutoZone, Inc. 2003 Director Compensation Plan
(“Stock Units”) and Restricted Stock Units held by each director at the end of fiscal 2017 are shown in the
following footnote 4. See “Security Ownership of Management and Board of Directors” on page 13 for more
information about our directors’ stock ownership.

(4) As of August 26, 2017, each current non-employee director had the following aggregate number of

outstanding Stock Units, Restricted Stock Units and stock options:

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Name

Douglas H. Brooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Linda A. Goodspeed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sue E. Gove . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earl G. Graves, Jr.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Enderson Guimaraes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J.R. Hyde, III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D. Bryan Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
W. Andrew McKenna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
George R. Mrkonic, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Luis Nieto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Stock
Units
(#)

—
—
280
3,417
—
7,505
—
4,247
1,405
1,136

Restricted
Stock
Units
(#)

Stock
Options
(#)

949
1,465
3,078
3,431
1,891
3,028
1,481
3,131
3,117
2,585

—
—
—
1,000
—
9,000
—
9,000
—
—

Narrative Accompanying Director Compensation Table

AutoZone’s current director compensation program became effective January 1, 2017.

Annual Retainer Fees. Non-employee directors receive an annual retainer fee of $205,000 (the “Annual
Retainer”). The lead director and the chair of the Audit Committee each receive an additional fee (“Additional
Fee”) of $20,000 annually, the chair of the Compensation Committee receives an Additional Fee of $15,000 per
year, the chair of the Nominating and Corporate Governance Committee receives an Additional Fee of $10,000
per year, and the non-chair members of the Audit Committee each receive an Additional Fee of $10,000 per year
(such Additional Fees, together with the Annual Retainer, the “Director Compensation”). There are no meeting
fees.

Under the Amended 2011 Equity Plan, which replaced the AutoZone, Inc. 2011 Equity Incentive Award
Plan (the “2011 Equity Plan”), non-employee directors receive Director Compensation in the form of Restricted
Stock Units, which are contractual rights to receive in the future a share of AutoZone common stock. Upon
timely delivery of an election form, a non-employee director may elect to receive $80,000 of the Annual
Retainer plus any Additional Fees in the form of cash, paid in quarterly installments, with the remainder of the
Annual Retainer paid in the form of Restricted Stock Units. All Restricted Stock Units are granted on January 1
of the applicable calendar year.

If a non-employee director is elected to the Board, or assumes a different position, after the beginning of a

calendar quarter, he or she will receive the Annual Retainer and/or Additional Fees, prorated based on the
number of days remaining in the calendar year, for Restricted Stock Units or quarter, for cash, as appropriate.

Restricted Stock Units become payable on the earlier to occur of (1) the fifth anniversary of the grant date,

or (2) the date on which the non-employee director ceases to be a director (the “Payment Date”). Upon timely
delivery of an election form, a non-employee director may elect to receive payment on the date on which he or
she ceases to be a director. Restricted Stock Units are payable in shares of AutoZone common stock no later
than the fifteenth day of the third month following the end of the tax year in which such Payment Date occurs.

Other Predecessor Plans

The AutoZone, Inc. Second Amended and Restated Director Compensation Plan and the AutoZone, Inc.
Fourth Amended and Restated 1998 Director Stock Option Plan were terminated in December 2002 and were
replaced by the AutoZone, Inc. First Amended and Restated 2003 Director Compensation Plan (the “2003
Director Compensation Plan”) and the AutoZone, Inc. First Amended and Restated 2003 Director Stock Option

Plan (the “2003 Director Stock Option Plan”). The 2003 Director Compensation Plan and the 2003 Director
Stock Option Plan were terminated in December 2010 and replaced by the 2011 Equity Plan. The 2011 Equity
Plan was terminated in December 2015 and replaced with the Amended 2011 Equity Plan. However, grants
made under those plans continue in effect under the terms of the grant made and are included in the aggregate
awards outstanding shown above.

Stock Ownership Requirement

The Board has established a stock ownership requirement for non-employee directors. Each director is
required to own AutoZone common stock and/or restricted stock units having a cumulative fair market value in
an amount equal to three times the value of the base annual retainer payable pursuant to the Director
Compensation Program within five years of joining the Board, and to maintain such ownership level thereafter.
Exceptions to this requirement may only be made by the Board under compelling mitigating circumstances.
Shares, Stock Units and Restricted Stock Units issued under the AutoZone, Inc. Second Amended and Restated
Director Compensation Plan, the 2003 Director Compensation Plan, the 2011 Equity Plan and the Amended
2011 Equity Plan count toward this requirement. The in-the-money value of vested stock options does not count
toward this requirement.

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Security Ownership of Management and Board of Directors

OTHER INFORMATION

This table shows the beneficial ownership of common stock by each director, the Principal Executive
Officer, the Principal Financial Officer and the other three most highly compensated executive officers, and all
current directors and executive officers as a group. Unless stated otherwise in the notes to the table, each person
named below has sole authority to vote and invest the shares shown.

Name of Beneficial Owner

Douglas H. Brooks . . . . . . . .
Linda A. Goodspeed . . . . . . .
Sue E. Gove . . . . . . . . . . . . .
Earl G. Graves, Jr.
. . . . . . . .
Enderson Guimaraes . . . . . .
J. R. Hyde, III(4)
. . . . . . . . .
D. Bryan Jordan . . . . . . . . . .
W. Andrew McKenna . . . . .
George R. Mrkonic, Jr. . . . . .
Luis P. Nieto . . . . . . . . . . . . .
. .
William C. Rhodes, III(5)
William T. Giles . . . . . . . . . .
William W. Graves(6) . . . . .
Mark A. Finestone(7) . . . . . .
Thomas B. Newbern . . . . . . .
All current directors and
executive officers as a
group (24 persons) . . . . . .

Deferred
Stock
Units(1)

0
0
280
3,417
0
7,505
0
4,247
1,405
1,136
0
0
0
0
0

610
0
0
0
0
65,600
240
4,000
0
0
48,113
8,666
5,619
4,238
12,641

Options(2)

0
0
0
1,000
0
9,000
0
6,000
0
0
132,961
90,555
51,860
56,760
18,085

Restricted
Stock
Units(3)

949
1,465
3,078
3,431
1,891
3,028
1,481
3,131
3,117
2,585
0
0
0
0
0

Total

1,559
1,465
3,358
7,848
1,891
85,133
1,721
17,378
4,522
3,721
181,074
99,221
57,479
60,998
30,726

Ownership
Percentage

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

159,303

17,990

569,609

24,156

771,058

2.8%

* Less than 1%.

(1) Includes shares that may be acquired immediately upon termination as a director by conversion of Stock

Units.

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(2) Includes shares that may be acquired upon exercise of stock options either immediately or within 60 days of

October 23, 2017.

(3) Includes Restricted Stock Units that may be acquired within sixty (60) days of termination of service as a

director.

(4) Does not include 2,000 shares owned by Mr. Hyde’s wife.

(5) Includes 1,694 shares held as custodian for Mr. Rhodes’ children, 162 shares held as trustee of trusts for
Mr. Rhodes’ children, 777 shares held as trustee of trusts for Mr. Rhodes’ nieces and nephews, 14,732
shares owned by a trust for Mr. Rhodes’ wife and 16,376 shares owned by two (2) grantor retained annuity
trusts. Also includes 2,987 shares held by a charitable foundation for which Mr. Rhodes is president and a
director and for which he shares investment and voting power.

(6) Includes 3,600 shares owned by a grantor retained annuity trust.

(7) Includes 102 shares held in trusts for Mr. Finestone’s children and 2,345 shares owned by a grantor retained

annuity trust.

Security Ownership of Certain Beneficial Owners

The following entities are known by us to own more than five percent of our outstanding common stock:

Name and Address
of Beneficial Owner

Ownership
Percentage(1)

T. Rowe Price Associates, Inc.(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,324,827

12.1%

1000 East Pratt Street
Baltimore, MD 21202

Blackrock, Inc.(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,058,773

7.5%

55 East 52nd Street
New York, NY 10055

The Vanguard Group, Inc.(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,899,758

6.9%

PO Box 2600, V26
Valley Forge, PA 19482

FMR LLC(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,864,473

6.8%

245 Summer Street
Boston, MA 02210

State Street Corp.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,363,261

5.0%

One Lincoln Street
Boston, MA 02111

(1) The ownership percentages are calculated based on the number of shares of AutoZone common stock

outstanding as of October 23, 2017.

(2) The source of this information is the Form 13F filed by T. Rowe Price Associates, Inc. on August 14, 2017

for the quarter ending June 30, 2017.

(3) The source of this information is the Form 13F filed by Blackrock, Inc. on August 10, 2017 for the quarter

ending June 30, 2017. The shares are beneficially owned by a group consisting of BlackRock Asset
Management Schweiz AG (148 shares); BlackRock Asset Management North Asia Ltd (182 shares);
BlackRock (Singapore) Limited (951 shares); BlackRock International Limited (1,039 shares); BlackRock
(Netherlands) B.V. (6,099 shares); BlackRock Investment Management (Australia) Limited (8,564 shares);
BlackRock Capital Management, Inc. (14,549 shares); BlackRock Advisors (UK) Limited (15,309 shares);
BlackRock (Luxembourg) S.A. (19,460 shares); BlackRock Asset Management Canada Limited (22,029
shares); BlackRock Advisors LLC (27,354 shares); BlackRock Japan Co. Ltd (33,930 shares); BlackRock
Life Limited (35,839 shares); BlackRock Financial Management, Inc. (42,458 shares); BlackRock
Investment Management, LLC (62,050 shares); BlackRock Asset Management Ireland Limited (87,118
shares); BlackRock Investment Management (UK) Limited (95,214 shares); BlackRock Fund Managers

Limited (177,177 shares); BlackRock Fund Advisors (630,690 shares); and BlackRock Institutional Trust
Company, N.A. (778,613 shares).

(4) The source of this information is the Form 13F filed by The Vanguard Group, Inc. on August 24, 2017 for
the quarter ending June 30, 2017. The shares are beneficially owned by a group consisting of Vanguard
Group Inc. (1,849,297 shares); Vanguard Fiduciary Trust Co. (34,390 shares); and Vanguard Investments
Australia, Ltd. (16,071 shares).

(5) The source of this information is the Form 13F filed by FMR LLC on August 29, 2017 for the quarter

ending June 30, 2017. The shares are beneficially owned by a group consisting of Fidelity Management &
Research Co. and FMR CO LLC (1,732,258 shares); FIAM LLC (51,300 shares); Fidelity (Canada) Asset
Management ULC (48,500 shares); Strategic Advisers Inc. (14,890 shares); Fidelity Institutional Asset
Management Trust Co., (8,920 shares); Fidelity Management Trust Co. (8,005 shares); and Fidelity
Management & Research Co. (600 shares).

(6) The source of this information is the Form 13F filed by State Street Corp. on August 14, 2017 for the quarter

ending June 30, 2017.

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PROPOSAL 1 — Election of Directors

THE PROPOSALS

Ten directors will be elected at the Annual Meeting to serve until the next annual meeting of stockholders

in 2018. Pursuant to AutoZone’s Sixth Amended and Restated By-Laws, in an uncontested election of directors,
a nominee for director is elected to the Board if the number of votes cast for such nominee’s election exceed the
number of votes cast against such nominee’s election. (If the number of nominees were to exceed the number of
directors to be elected, i.e., a contested election, directors would be elected by a plurality of the votes cast at the
Annual Meeting.) Pursuant to AutoZone’s Corporate Governance Principles, incumbent directors must agree to
tender their resignation if they fail to receive the required number of votes for re-election, and in such event the
Board will act within 90 days following certification of the shareholder vote to determine whether to accept the
director’s resignation. These procedures are described in more detail in our Corporate Governance Principles,
which are available on our corporate website at www.autozoneinc.com. The Board may consider any factors it
deems relevant in deciding whether to accept a director’s resignation. If a director’s resignation offer is not
accepted by the Board, that director will continue to serve until AutoZone’s next annual meeting of stockholders
or until his or her successor is duly elected and qualified, or until the director’s earlier death, resignation, or
removal.

Any director nominee who is not an incumbent director and who does not receive a majority vote in an
uncontested election will not be elected as a director, and a vacancy will be left on the Board. The Board, in its
sole discretion, may either fill a vacancy resulting from a director nominee not receiving a majority vote
pursuant to the By-Laws or decrease the size of the Board to eliminate the vacancy.

Broker non-votes occur when shares held by a brokerage firm are not voted with respect to a proposal
because the firm has not received voting instructions from the beneficial owner of the shares and the firm does
not have the authority to vote the shares in its discretion. Shares abstaining from voting and shares as to which a
broker non-vote occurs are considered present for purposes of determining whether a quorum exists, but are not
considered votes cast or shares entitled to vote with respect to such matter. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of Proposal 1.

The Board recommends that the stockholders vote FOR each of these nominees. These nominees have

consented to serve if elected. Should any nominee be unavailable to serve, your proxy will be voted for the
substitute nominee recommended by the Board, or the Board may reduce the number of directors on the Board.

Each of the nominees named below was elected a director at the 2016 annual meeting. Sue E. Gove is not

standing for re-election to the Board.

Nominees

The nominees are:

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Douglas H. Brooks, 65, has been a director since 2013. He is retired. Until his retirement in 2013, he

had held various positions with Brinker International, including serving as Non-Executive Chairman of the
Board of Brinker International from January 2013 until December 2013; Chairman, President and Chief
Executive Officer of Brinker from 2004 until January 2013, and President and Chief Operating Officer
from 1999 to 2004. He served on the Brinker board of directors from 1999 through 2013 and on the Club
Corp. board of directors from 2013 through 2017. Mr. Brooks is also a director of Southwest Airlines.

Experience, Skills and Qualifications: The Board believes Mr. Brooks is qualified to serve as a
director of the Company based on his strategic and operational business background, his knowledge of
international operations, his experience as a chief executive officer of a public company, his experience
managing a company with a focus on customer service, his owner orientation, and his board experience as
well as his integrity, energy, and willingness to spend time on and interest in AutoZone.

Linda A. Goodspeed, 55, had been a director since 2013. She retired in 2017 as the Chief Operating
Officer and a Managing Partner at WealthStrategies Financial Advisors, positions she had held since 2007.
She had served as Senior Vice President and Chief Information Officer of ServiceMaster from 2011 to
2014. From 2008 to September 2011, Ms. Goodspeed served as Vice President, Information Systems and
Chief Information Officer for Nissan North America, Inc., a subsidiary of Nissan Motor Company, a global
manufacturer of vehicles. From 2001 to 2008, Ms. Goodspeed served as Executive Vice President at
Lennox International, Inc., a global manufacturer of air conditioning, heating and commercial refrigeration
equipment. She is also a director of American Electric Power Co., Inc., Darling Ingredients Inc., and Global
Power Equipment Group.

Experience, Skills and Qualifications: The Board believes Ms. Goodspeed is qualified to serve as a
director of the Company based on her experience in key strategic and operational roles with several large
global companies, her expertise in information technology and previous position as the chief information
officer of a service company, her owner orientation, her board experience and her executive management
skills, as well as her integrity, energy, and willingness to spend time on and interest in AutoZone.

Earl G. Graves, Jr., 55, has been a director since 2002 and was elected Lead Director in January 2009.

He has been the President and Chief Executive Officer of Black Enterprise, publisher of Black Enterprise
Magazine, since January 2006, and was President and Chief Operating Officer from 1998 to 2006.
Mr. Graves has been employed by the same company in various capacities since 1988.

Experience, Skills and Qualifications: The Board believes Mr. Graves is qualified to serve as a

director of the Company based on his business, management and strategic planning experience, his
knowledge of advertising and marketing, his owner orientation, and his board experience, as well as his
integrity, energy, and willingness to spend time on and interest in AutoZone.

Enderson Guimaraes, 58, has been a director since 2012. He retired as the President and Chief
Operating Officer for Laureate Education, Inc., positions he had held since 2015. He was Executive Vice
President, Global Categories and Operations of PepsiCo, Inc. from January 2015 through July 2015. He
served as Chief Executive Officer of PepsiCo Europe and Sub-Sahara Africa from September 2012 through
January 2015. He was also President of PepsiCo Global Operations from October 2011 to September 2012.
Mr. Guimaraes previously had served as Executive Vice President of Electrolux and Chief Executive
Officer of its major appliances business in Europe, Africa and the Middle East from 2008 to 2011. Prior to
this, Mr. Guimaraes spent 10 years at Philips Electronics, first as a regional marketing executive in Brazil
and ultimately as Senior Vice President and head of Global Marketing Management and general manager
of the WidiWall LED display business. He also served as CEO of Philips’ Lifestyle Incubator group, an
innovation engine which created new businesses and developed them over several years. Earlier,
Mr. Guimaraes worked in various marketing positions at Danone and Johnson & Johnson.

Experience, Skills and Qualifications: The Board believes Mr. Guimaraes is qualified to serve as a

director of the Company based on his business, management and strategic planning experience, his
knowledge of advertising, marketing and international operations, and his owner orientation as well as his
integrity, energy, and willingness to spend time on and interest in AutoZone.

J. R. Hyde, III, 74, has been a director since 1986 and was non-executive Chairman of the Board from

2005 until June 2007. He has been the President of Pittco Holdings, Inc., an investment company, since
1988. Mr. Hyde has been a director of GTx, Inc., a biopharmaceutical company, since 2000 and has been
the Lead Director since 2015. Mr. Hyde served as Chairman of the Board of GTx, Inc. from 2000 to
2015. Mr. Hyde, AutoZone’s founder, was AutoZone’s Chairman from 1986 to 1997 and its Chief
Executive Officer from 1986 to 1996. He was Chairman and Chief Executive Officer of Malone & Hyde,
AutoZone’s former parent company, until 1988. Mr. Hyde was a director of FedEx Corporation from 1977
to September 2011.

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Experience, Skills and Qualifications: The Board believes Mr. Hyde, the founder and a former

Chairman and Chief Executive Officer of AutoZone, is qualified to serve as a director of the Company
based on his extensive knowledge of AutoZone’s business and the automotive aftermarket industry, his
expertise in strategic business development and executive management, his owner orientation, and his
board experience as well as his integrity, energy, and willingness to spend time on and interest in
AutoZone.

D. Bryan Jordan, 55, has been a director since 2013. He has served as Chairman of the Board,
President and Chief Executive Officer of First Horizon National Corporation since January 1, 2012, and has
held the positions of President and Chief Executive Officer and director since 2008. From May 2007 until
September 2008 Mr. Jordan was Executive Vice President and Chief Financial Officer of First Horizon and
First Tennessee Bank National Association, and prior to that he served in various positions at Regions
Financial Corporation and its subsidiary Regions Bank, including (beginning in 2002) as Chief Financial
Officer.

Experience, Skills and Qualifications: The Board believes Mr. Jordan is qualified to serve as a
director of the Company based on his extensive experience in the banking and financial services industry,
his experience serving as the chief executive officer and the chief financial officer of public companies, his
knowledge of corporate finance and management, and his owner orientation, as well as his integrity,
energy, and willingness to spend time on and interest in AutoZone.

W. Andrew McKenna, 71, has been a director since 2000 and served as Lead Director from June 2007

through January 2009. He is retired. Until his retirement in 1999, he had held various positions with The
Home Depot, Inc., including Senior Vice President–Strategic Business Development from 1997 to 1999;
President, Midwest Division from 1994 to 1997; and Senior Vice President–Corporate Information Systems
from 1990 to 1994. Prior to joining Home Depot he was a Partner, Management Consulting, with
Deloitte & Touche for 10 years. He was also President of SciQuest.com, Inc. in 2000. Mr. McKenna was a
director of Danka Business Systems PLC from 2002 to 2008, serving as Chairman of the Board from
March 2005 to March 2006. Mr. McKenna was a director of Bally Technologies from 2011 to 2014, when
the company was sold.

Experience, Skills and Qualifications: The Board believes Mr. McKenna is qualified to serve as a
director of the Company based on his executive experience in the retail industry and other industries, his
expertise in strategic business development, his background in finance, audit and information technology,
his owner orientation, and his board experience, as well as his integrity, energy, and willingness to spend
time on and interest in AutoZone.

George R. Mrkonic, Jr., 65, has been a director since 2006. He is the non-Executive Chairman of Maru

Group, a London, UK based research, insight and advisory services firm. Previously, he was the
Non-Executive Chairman of Paperchase Products Limited, London, UK, a retailer of cards, stationery,

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wraps and gifts in the UK, Europe and the Middle East, since 2005, and has been a director since 1999.
Prior to that, he was President of Borders Group, Inc. from 1994 to 1997 and Vice Chairman of Borders
Group, Inc. from 1994 to 2002. He is also a director of Brinker International, Inc., and Ulta Salon,
Cosmetics & Fragrance, Inc. Mr. Mrkonic was a director of Pacific Sunwear of California, Inc. from 2007
to 2015 and Syntel, Inc. from 2009 to May 2016.

Experience, Skills and Qualifications: The Board believes Mr. Mrkonic is qualified to serve as a
director of the Company based on his experience as a senior executive in retail companies, his knowledge
of corporate strategy, finance, and management, his owner orientation, and his board experience, as well as
his integrity, energy, and willingness to spend time on and interest in AutoZone.

Luis P. Nieto, 62, has been a director since 2008. He is president of Nieto Advisory LLC which
provides advisory services to small consumer food companies. He was president of the Consumer Foods
Group of ConAgra Foods Inc., one of the largest packaged foods companies in North America, from 2008
until his retirement in June 2009. Previously, he was president of ConAgra Refrigerated Foods from 2006
to 2008 and ConAgra Meats from 2005 to 2006. Prior to joining ConAgra, Mr. Nieto was President and
Chief Executive Officer of the Federated Group, a leading private label supplier to the retail grocery and
foodservice industries from 2002 to 2005. From 2000 to 2002, he served as President of the National
Refrigerated Products Group of Dean Foods Company. He held other positions at Dean Foods Group from
1998 to 2000. Prior to joining Dean Foods, Mr. Nieto held positions in brand management and strategic
planning with Mission Foods, Kraft Foods and the Quaker Oats Company. Mr. Nieto is also a director of
Ryder Systems, Inc.

Experience, Skills and Qualifications: The Board believes Mr. Nieto is qualified to serve as a
director of the Company based on his expertise in brand management and marketing, including experience
managing a diverse portfolio of brands and products, as well as his knowledge of finance and operations,
his executive management experience, his owner orientation and his board experience, as well as his
integrity, energy, and willingness to spend time on and interest in AutoZone.

William C. Rhodes, III, 52, was elected Chairman in June 2007. He has been President, Chief
Executive Officer, and a director since 2005. Prior to his appointment as President and Chief Executive
Officer, Mr. Rhodes was Executive Vice President–Store Operations and Commercial. Prior to fiscal 2005,
he had been Senior Vice President–Supply Chain and Information Technology since fiscal 2002, and prior
thereto had been Senior Vice President–Supply Chain since 2001. Prior to that time, he served in various
capacities within the Company since 1994. Prior to 1994, Mr. Rhodes was a manager with Ernst & Young
LLP. Mr. Rhodes is also a director of Dollar General Corporation.

Experience, Skills and Qualifications: The Board believes Mr. Rhodes, AutoZone’s Chairman,
President and Chief Executive Officer, is qualified to serve as a director of the Company based on his 20
plus years’ experience with the Company, which have included responsibility for corporate strategy,
executive management, operations, finance, supply chain and information technology; his knowledge and
understanding of the automotive aftermarket and retail industries; his financial background and his owner
orientation, as well as his integrity and energy.

PROPOSAL 2 — Ratification of Independent Registered Public Accounting Firm

Ernst & Young LLP, our independent auditor for the past thirty fiscal years, has been selected by the Audit

Committee to be AutoZone’s independent registered public accounting firm for the 2018 fiscal year.
Representatives of Ernst & Young LLP will be present at the Annual Meeting to make a statement if they so
desire and to answer any appropriate questions.

The Audit Committee recommends that you vote FOR ratification of Ernst & Young LLP as

AutoZone’s independent registered public accounting firm.

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Under Nevada law and the Company’s By-Laws, if a quorum is present, Ernst & Young LLP will be
ratified as AutoZone’s independent registered public accounting firm if the number of votes cast in favor of the
matter exceeds the number of votes cast in opposition to the matter. Broker non-votes occur when shares held by
a brokerage firm are not voted with respect to a proposal because the firm has not received voting instructions
from the beneficial owner of the shares and the firm does not have the authority to vote the shares in its
discretion. Shares abstaining from voting and shares as to which a broker non-vote occurs are considered present
for purposes of determining whether a quorum exists, but are not considered votes cast or shares entitled to vote
with respect to such matter. Accordingly, abstentions and broker non-votes will have no effect on the outcome
of Proposal 2. The Audit Committee is not bound by a vote either for or against the firm. The Audit Committee
will consider a vote against the firm by the stockholders in selecting our independent registered public
accounting firm in the future.

During the past two fiscal years, the aggregate fees for professional services rendered by Ernst & Young

LLP were as follows:

2017

2016

Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax and other Non-Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,077,192

5,935(1)
78,326(2)

$2,255,034
—

400,545(3)

(1) Audit-Related Fees for 2017 were for services rendered for AutoZone de Mexico related to Banco Nacional

de Mexico, S.A.’s Foreign Exchange Correspondents certification process.

(2) Tax and other Non-Audit-Related Fees for 2017 were for state, local and international tax services.

(3) Tax and other Non-Audit-Related Fees for 2016 were for state, local and international tax services.

The Audit Committee pre-approves all services performed by the independent registered public accounting
firm under the terms contained in the Audit Committee charter, a copy of which can be obtained at our website
at www.autozoneinc.com. The Audit Committee pre-approved 100% of the services provided by Ernst & Young
LLP during the 2017 and 2016 fiscal years. The Audit Committee considers the services listed above to be
compatible with maintaining Ernst & Young LLP’s independence.

PROPOSAL 3 — Advisory Vote on Executive Compensation — “Say-on-Pay”

In accordance with Section 14A of the Securities Exchange Act, we are asking stockholders to approve the

following advisory resolution on the compensation of our Principal Executive Officer, the Principal Financial
Officer and our other three most highly paid executive officers (collectively, the “Named Executive Officers”) at
the Annual Meeting:

“RESOLVED, that the compensation paid to AutoZone’s Named Executive Officers, as disclosed in this

Proxy Statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission,
including the Compensation Discussion and Analysis, the accompanying compensation tables and the related
narrative discussion, is hereby APPROVED.”

This advisory vote, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to

endorse or not endorse our executive pay program. The Board recommends a vote “FOR” this resolution
because it believes that AutoZone’s executive compensation program, described in the Compensation
Discussion and Analysis, is effective in achieving the Company’s goals of rewarding financial and operating
performance and the creation of stockholder value.

Our Board and Compensation Committee believe that there should be a strong relationship between pay
and corporate performance, and our executive compensation program reflects this belief. While the overall level
and balance of compensation elements in our compensation program are designed to ensure that AutoZone can
retain key executives and, when necessary, attract qualified new executives to the organization, the emphasis of
AutoZone’s compensation program is linking executive compensation to business results and intrinsic value
creation, which is ultimately reflected in increases in stockholder value.

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AutoZone sets challenging financial and operating goals, and a significant amount of an executive’s annual

cash compensation is tied to these objectives and therefore “at risk”—payment is earned only if performance
warrants it.

AutoZone’s compensation program is intended to support long-term focus on stockholder value, so it
emphasizes long-term rewards. At target levels, the majority of an executive officer’s total compensation
package each year is the potential value of his or her stock options, which yield value to the executive only if the
stock price appreciates.

Our management stock ownership requirement effectively promotes meaningful and significant stock

ownership by our Named Executive Officers and further aligns their interests with those of our stockholders.

We urge you to read the Compensation Discussion and Analysis, as well as the Summary Compensation

Table and related compensation tables and narrative, appearing on pages 33 through 46, which provide detailed
information on our compensation philosophy, policies and practices and the compensation of our Named
Executive Officers.

Because the vote on this proposal is advisory in nature, it is not binding on AutoZone, the Board or the
Compensation Committee. The vote on this proposal will, therefore, not affect any compensation already paid or
awarded to any Named Executive Officer and will not overrule any decisions made by the Board or the
Compensation Committee. Because we highly value the opinions of our stockholders, however, the Board and
the Compensation Committee will consider the results of this advisory vote when making future executive
compensation decisions.

Under Nevada law and the Company’s By-Laws, if a quorum is present, this matter will be approved if the
number of votes cast in favor of the matter exceeds the number of votes cast in opposition to the matter. Broker
non-votes occur when shares held by a brokerage firm are not voted with respect to a proposal because the firm
has not received voting instructions from the beneficial owner of the shares and the firm does not have the
authority to vote the shares in its discretion. Shares abstaining from voting and shares as to which a broker
non-vote occurs are considered present for purposes of determining whether a quorum exists, but are not
considered votes cast or shares entitled to vote with respect to such matter. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of Proposal 3.

The Board recommends that the stockholders vote FOR this proposal.

PROPOSAL 4 — Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

In addition to the advisory vote on executive compensation or “say-on-pay” vote, we are also asking

stockholders to cast an advisory vote on the frequency of that vote. Stockholders are being asked to vote on
whether the advisory vote on executive compensation should be held every year, every two years or every three
years.

The Board recommends holding the advisory vote on executive compensation every year. An annual vote

provides the Board with timely feedback from stockholders on executive compensation matters. An annual
advisory vote is also consistent with our Compensation Committee’s practice of monitoring both short- and
long-term compensation program elements each year.

The proxy card gives you four choices for voting on this proposal. You can choose whether the

“say-on-pay” vote should be held every year, every two years or every three years. You may also abstain from
voting. You are not voting to approve or disapprove the Board’s recommendation on this proposal.

The vote on this proposal is non-binding, and the final decision with respect to the frequency of future
advisory votes on executive compensation remains with the Board. However, the Board values the opinions of
our stockholders and will take into account the outcome of the vote in considering the frequency of future
advisory votes on executive compensation.

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In accordance with Securities and Exchange Commission rules, stockholders will have the opportunity at

least every six years to recommend the frequency of future “say-on-pay” advisory votes on executive
compensation.

The Board recommends that the stockholders vote to conduct future advisory votes on executive

compensation EVERY YEAR.

Other Matters

We do not know of any matters to be presented at the Annual Meeting other than those discussed in this

Proxy Statement. If, however, other matters are properly brought before the Annual Meeting, your proxies will
be able to vote those matters in their discretion.

Compensation Discussion and Analysis

EXECUTIVE COMPENSATION

This Compensation Discussion and Analysis provides a principles-based overview of AutoZone’s

executive compensation program. It discusses our rationale for the types and amounts of compensation that our
executive officers receive and how compensation decisions affecting these officers are made. It also discusses
AutoZone’s total rewards philosophy, the key principles governing our compensation program, and the
objectives we seek to achieve with each element of our compensation program.

What are the Company’s key compensation principles?

Pay for performance. The primary emphasis of AutoZone’s compensation program is linking executive

compensation to business results and intrinsic value creation, which is ultimately reflected in increases in
stockholder value. Base salary levels are intended to be competitive in the U.S. marketplace for executives, but
the more potentially valuable components of executive compensation are annual cash incentives, which depend
on the achievement of pre-determined business goals, and to a greater extent, long-term compensation, which is
based on the value of our stock.

Attract and retain talented AutoZoners. The overall level and balance of compensation elements in our
compensation program are designed to ensure that AutoZone can retain key executives and, when necessary,
attract qualified new executives to the organization. We believe that a company which provides quality products
and services to its customers, and delivers solid financial results, will generate long-term stockholder returns,
and that this is the most important component of attracting and retaining executive talent.

What are the Company’s overall executive compensation objectives?

Drive high performance. AutoZone sets challenging financial and operating goals, and a significant
amount of an executive’s annual cash compensation is tied to these objectives and therefore “at risk”—payment
is earned only if performance warrants it.

Drive long-term stockholder value. AutoZone’s compensation program is intended to support long-term
focus on stockholder value, so it emphasizes long-term rewards. At target levels, the majority of an executive
officer’s total compensation package each year is the potential value of his or her stock options.

The table below illustrates how AutoZone’s compensation program weights the “at-risk” components of its

Named Executive Officers’ 2017 total compensation. See the Summary Compensation Table on page 33 for
additional details about fiscal 2017 compensation for all of the Named Executive Officers (“NEOs”).

Executive

Base Salary Annual Incentive Long-Term Incentive Total At-Risk

William C. Rhodes III*

All Other NEOs

24%

15%

58%

60%

82%

75%

18%

25%

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* Mr. Rhodes’ long-term incentive consists of fiscal 2017 stock and option grants, plus one-fifth of the total

annualized value of his one-time grant of 50,000 stock options in fiscal 2016. The one-time award vests 50%
on each of the fourth and fifth anniversaries of the grant date.

Who participates in AutoZone’s executive compensation programs?

The Chief Executive Officer and the other Named Executive Officers, as well as the other senior executives

comprising AutoZone’s Executive Committee, participate in the compensation program outlined in this
Compensation Discussion and Analysis. The Executive Committee consists of the Chief Executive Officer and
officers with the title of senior vice president or executive vice president (a total of 14 executives at the end of
fiscal 2017). However, many elements of the compensation program also apply to other levels of AutoZone
management. The intent is to ensure that management is motivated to pursue, and is rewarded for achieving, the
same financial, operating and stockholder objectives.

What are the key elements of the Company’s overall executive compensation program?

The table below summarizes the key elements of AutoZone’s executive compensation program and the
objectives they are designed to achieve. More details on these elements follow throughout the Compensation
Discussion and Analysis and this Proxy Statement, as appropriate.

Description

Objectives

Base salary

• Annual fixed cash compensation.

• Attract and retain talented executives.

• Recognize differences in relative size,
scope and complexity of positions as
well as individual performance over
the long term.

• Communicate key financial and

operating objectives.

• Drive high levels of performance by
ensuring that executives’ total cash
compensation is linked to
achievement of financial and
operating objectives.

• Support and reward consistent,
balanced growth and returns
performance (add value every year)
with demonstrable links to
stockholder returns.

• Drive cross-functional collaboration
and a total-company perspective.

• Align long-term compensation with

stockholder results. Opportunities for
significant wealth accumulation by
executives are tightly linked to
stockholder returns.

Annual cash incentive

• Annual variable pay tied to the
achievement of economic profit
objectives, as operationalized by our
primary measures:

• Earnings before interest and taxes,

and

• Return on invested capital.

• Actual payout depends on the results
achieved. Individual potential payout
is capped at $4 million; however,
payout is zero if threshold targets are
not achieved.

• The Compensation Committee may

reduce payouts in its discretion when
indicated by individual performance
or other reasons, but does not have
discretion to increase payouts.

Stock options and other
equity compensation

• Senior executives receive

non-qualified stock options
(NQSOs).

• All stock options are granted at fair

market value on the grant date
(discounted options are prohibited).

Description

Objectives

• AutoZone’s equity compensation
plan prohibits re-pricing of stock
options and does not include a
“reload” program.

• AutoZone may occasionally grant
awards of performance-restricted
stock units, as well as awards of
restricted stock with time-based
vesting.

• Provide retention incentives to ensure
business continuity, and facilitate
succession planning and executive
knowledge transfer.

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Stock purchase plans

• AutoZone maintains a broad-based

employee stock purchase plan
(ESPP) which is qualified under
Section 423 of the Internal Revenue
Code. The Employee Stock Purchase
Plan allows AutoZoners to make
quarterly purchases of AutoZone
shares at 85% of the fair market
value on the first or last day of the
calendar quarter, whichever is lower.
The annual contribution limit under
the ESPP is $15,000.

• The Company has implemented an
Executive Stock Purchase Plan so
that executives may continue to
purchase AutoZone shares beyond
the limit the IRS and the company set
for the Employee Stock Purchase
Plan. An executive may make
purchases using up to 25% of their
prior fiscal year’s eligible
compensation.

• Executive officers must meet
specified minimum levels of
ownership, using a multiple of base
salary approach.

The Company maintains three
retirement plans:
• 401(k) defined contribution plan,
• Frozen defined benefit pension plan,

and

• Non-qualified deferred compensation

plan (including a frozen defined
benefit restoration feature)

Management stock
ownership requirement

Retirement plans

• Allow all AutoZoners to participate
in the growth of AutoZone’s stock.
• Encourage ownership, and therefore

alignment of executive and
stockholder interests.

• Encourage ownership by requiring
executive officers to meet specified
levels of ownership.

• Alignment of executive and

stockholder interests.

• Provide competitive executive

retirement benefits.

• The non-qualified plan enables
executives to defer 25% of base
salary and 75% of annual cash
incentives, independent of the IRS
limitations set for the qualified
401(k) plan.

• The restoration component of the

non-qualified plan, which was frozen
at the end of 2002, allowed
executives to accrue benefits that
were not capped by IRS earnings
limits.

Description

Objectives

Health and other
benefits

Executives are eligible for a variety of
benefits, including:

• Medical, dental and vision plans;

• Life and disability insurance plans;

• Provide competitive benefits.

• Minimize perquisites while ensuring

a competitive overall rewards
package.

and

• Charitable contribution match

program.

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Annual cash compensation. Annual cash compensation consists of base salary and annual cash incentives.

Base Salary. Salaries are determined within the context of a targeted total cash compensation level for

each position. Base salary is a fixed portion of the targeted annual cash compensation, with the specific portion
varying based on differences in the size, scope or complexity of the jobs as well as the tenure and individual
performance level of incumbents in the positions. Points are assigned to positions using a job evaluation system
developed by Korn Ferry Hay Group (“Hay Group”), a global management and human resources consulting
firm, and AutoZone maintains salary ranges based on these job evaluations. These salary ranges are usually
updated annually based on broad-based survey data; in addition to Hay Group survey data, AutoZone also
subscribes to survey information from a variety of providers for this purpose, as discussed below.

The survey data used to periodically adjust salary ranges is broad-based, including data submitted by

hundreds of companies. Examples of the types of information contained in salary surveys include summary
statistics (e.g., mean, median, 25th percentile, etc.) related to:

• base salaries

• variable compensation

• total annual cash compensation

• long-term incentive compensation

• total direct compensation

The salary surveys cover both the retail industry and compensation data on a broader, more general public

company universe. Multiple salary surveys are used, so that ultimately the data represent hundreds of companies
and positions and thousands of incumbents, or people holding those positions. The surveys generally list the
participating companies, and for each position “matched”, the number of companies and incumbents associated
with the position. Subscribers cannot determine which information comes from which company.

The salary ranges which apply to the Named Executive Officers, including the Principal Executive Officer,

are part of the structure applicable to thousands of AutoZone’s employees. AutoZone positions are each
assigned to a salary grade. This is generally accomplished at the creation of a position, using the Hay Group job
evaluation method, and jobs tend to remain in the same grade as long as there are no significant job content
changes. Each grade in the current salary structure has a salary range associated with it. This range has a
midpoint, to which we compare summary market salary data (generally median pay level) of the types discussed
above.

Over time, as the median pay levels in the competitive market change, as evidenced by the salary survey
data, AutoZone will make appropriate adjustments to salary range midpoints so that on average, these midpoints
are positioned at roughly 95% of the market median value as revealed by the surveys. This positioning relative
to the market allows for competitive base salary levels, while generally leaving actual average base pay slightly
below the survey market level. This fits our stated philosophy of delivering competitive total rewards at or
above the market median through performance-based variable compensation.

In making decisions related to compensation of the Named Executive Officers, the Compensation
Committee uses the survey data and salary ranges as context in reviewing compensation levels and approving
pay actions. Other elements that the Compensation Committee considers are individual performance, Company
performance, individual tenure, internal equity, position tenure, and succession planning.

Annual Cash Incentive. Executive officers and certain other employees are eligible to receive annual cash

incentives each fiscal year based on the Company’s attainment of certain Company performance objectives set
by the Compensation Committee at the beginning of the fiscal year. The annual cash incentive target for each
position, expressed as a percentage of base salary, is based on both salary range and level within the
organization, and therefore does not change annually. As a general rule, as an executive’s level of management
responsibility increases, the portion of his or her total compensation dependent on Company performance
increases.

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The threshold and target percentage amounts for the Named Executive Officers for fiscal 2017 are shown in

the table below.

Principal Position

Chairman, President & CEO
Executive Vice President

Threshold Target

62.5% 125%
75%
37.5%

Annual cash incentives for executive officers are paid pursuant to the AutoZone, Inc. 2015 Executive
Incentive Compensation Plan (“EICP”), our performance-based short-term incentive plan. Pursuant to the plan,
the Compensation Committee establishes incentive objectives at the beginning of each fiscal year. For more
information about the EICP, see Discussion of Plan-Based Awards Table on page 36.

The actual incentive amount paid depends on Company performance relative to the target objectives. A
minimum pre-established goal must be met in order for any incentive award to be paid, and the incentive award
as a percentage of annual salary will increase as the Company achieves higher levels of performance.

The Compensation Committee may in its sole discretion reduce the incentive awards paid to Named

Executive Officers. Under the EICP, the Compensation Committee may not exercise discretion in granting
awards in cases where no awards are indicated, nor may the Compensation Committee increase any calculated
awards. Any such “positive” discretionary changes, were they to occur, would be paid outside of the EICP and
reported under the appropriate Bonus column in the Summary Compensation Table on page 33; however, the
Compensation Committee has not historically exercised this discretion.

The Compensation Committee, as described in the EICP, may (but is not required to) disregard the effect of

one-time charges and extraordinary events such as asset write-downs, litigation judgments or settlements,
changes in tax laws, accounting principles or other laws or provisions affecting reported results, accruals for
reorganization or restructuring, and any other extraordinary non-recurring items, acquisitions or divestitures and
any foreign exchange gains or losses on the calculation of performance.

The incentive objectives for fiscal 2017 were set during a September 2016 Compensation Committee
meeting, and were based on the achievement of specified levels of earnings before interest and taxes (“EBIT”)
and return on invested capital (“ROIC”), as are the incentive objectives for fiscal 2018, which were set during a
Compensation Committee meeting held in September 2017. The total incentive award is determined based on
the impact of EBIT and ROIC on AutoZone’s economic profit for the year, rather than by a simple allocation of
a portion of the award to achievement of the EBIT target and a portion to achievement of the ROIC target. EBIT
and ROIC are key inputs to the calculation of economic profit (sometimes referred to as “economic value
added”), and have been determined by our Compensation Committee to be important factors in enhancing
stockholder value. If both the EBIT and ROIC targets are achieved, the result will be a 100%, or target, payout.
However, the payout cannot exceed 100% unless the EBIT target is exceeded (i.e., unless there is “excess EBIT”
to fund the additional incentive payout). Additionally, when the aggregate incentive amount is calculated, if the
resulting payout amount in excess of target exceeds a specified percentage of excess EBIT (currently 20%), then

the incentive payout will be reduced until the total amount of the incentive payment in excess of target is within
that specified limit.

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The specific targets are tied to achievement of the Company’s operating plan for the fiscal year. In 2017,
the target objectives were EBIT of $2,166.7 million and ROIC of 31.1%. The 2017 incentive awards for each
named executive officer were based on the following performance:

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EICP Target
Actual (as adjusted)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,166.7
2,083.8
(82.9)

31.1%
30.0%

-114 bps

EBIT ($MMs)

ROIC

Effect of Performance on Total Annual Cash Compensation. Because AutoZone emphasizes pay for

performance, it is only when the Company exceeds its target objectives that an executive’s total annual cash
compensation begins to climb relative to the median market level. Similarly, Company performance below
target will cause an executive’s total annual cash compensation to drop below market median. As discussed
below, AutoZone does not engage in strict benchmarking of compensation levels, i.e., we do not use specific
data to support precise targeting of compensation, such as setting an executive’s base pay at the 50th percentile
of an identified group of companies.

Incentive Compensation Recovery Policy. During fiscal 2017, AutoZone implemented an incentive
compensation recovery, or “clawback”, policy. The purpose of the policy is to enable AutoZone’s Board, at its
discretion, to recover excess incentive compensation in the event that the Company is required to prepare an
accounting restatement to correct an error that is material to the previously issued financial statements. “Excess”
compensation is generally the amount of performance-based compensation paid above what would have been
received had the statements in question been accurate. The Company will revise and administer this policy in
compliance with the Dodd-Frank Act provisions, once the rules implementing those provisions become
effective.

Stock compensation. To emphasize achievement of long-term stockholder value, AutoZone’s executives

receive a significant portion of their targeted total compensation in the form of non-qualified stock options.
Although stock options have potential worth at the time they are granted, they only confer actual value if
AutoZone’s stock price appreciates between the grant date and the exercise date. For this reason, we believe
stock options are a highly effective long-term compensation vehicle to reward executives for creating
stockholder value. We want our executives to realize total compensation levels well above the market norm,
because when they do, such success is the result of achievement of Company financial and operating objectives
that leads to growth in the per-share value of AutoZone common stock.

AutoZone grants stock options annually. Currently, the annual grants are reviewed and approved by the
Compensation Committee in the meeting (typically in late September or early October) at which it reviews prior
year results, determines incentive payouts, and takes other compensation actions affecting its executive officers.
The Compensation Committee has not delegated its authority to grant stock options; all grants are directly
approved by the Compensation Committee. Option grant amounts for the Chief Executive Officer’s direct
reports and other senior executives are recommended to the Compensation Committee by the Chief Executive
Officer, based on individual performance and the size and scope of the position held. AutoZone’s practice is to
limit the total option shares granted to its employees during the annual grant process to approximately one
percent of common shares outstanding. The annual grant is typically made near the beginning of the fiscal year
and does not include a limited number of promotional or new hire grants that may be made during the fiscal
year. The Committee reserves the right to deviate from this policy as it deems appropriate.

Newly promoted or hired officers may receive an option grant shortly after their hire or promotion. New

hire or promotional stock options are individually approved at a regularly scheduled meeting of the
Compensation Committee, or by unanimous written consent of the Compensation Committee. The grants are
recommended to the Compensation Committee by the Chief Executive Officer based on individual

circumstances (e.g., what may be required in order to attract a new executive). Internal promotional grants are
prorated based on the time elapsed since the officer received a regular annual grant of stock options.

On October 7, 2015, the Committee authorized a one-time award of 50,000 nonqualified stock options to
Mr. Rhodes. The options, which have an expiration date of October 8, 2025, vest in one-half increments on the
fourth and fifth anniversaries of the grant. The purpose of this one-time award is to solidify Mr. Rhodes’
commitment to AutoZone as well as to motivate continued high performance in a way that is aligned with both
stockholder results as well as AutoZone’s leadership team incentives. In association with this one-time grant, the
Committee intends to continue authorizing annual stock option grants to Mr. Rhodes at a reduced level
compared to prior years.

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Stock purchase plans. AutoZone maintains the Sixth Amended and Restated AutoZone, Inc. Employee

Stock Purchase Plan (“Employee Stock Purchase Plan”) which enables all employees to purchase AutoZone
common stock at a discount, subject to IRS-determined limitations. Based on IRS rules, we limit the annual
purchases in the Employee Stock Purchase Plan to no more than $15,000, and no more than 10% of eligible
compensation. To support and encourage stock ownership by our executives, AutoZone also established a
non-qualified stock purchase plan. The AutoZone, Inc. Sixth Amended and Restated Executive Stock Purchase
Plan (“Executive Stock Purchase Plan”) permits participants to acquire AutoZone common stock in excess of
the purchase limits contained in AutoZone’s Employee Stock Purchase Plan. Because the Executive Stock
Purchase Plan is not required to comply with the requirements of Section 423 of the Internal Revenue Code, it
has a higher limit on the percentage of a participant’s compensation that may be used to purchase shares (25%)
and places no dollar limit on the amount of a participant’s compensation that may be used to purchase shares
under the plan.

The Executive Stock Purchase Plan operates in a similar manner to the tax-qualified Employee Stock
Purchase Plan, in that it allows executives to contribute after-tax compensation for use in making quarterly
purchases of AutoZone common stock. Options are granted under the Executive Stock Purchase Plan each
calendar quarter and consist of two parts: a restricted share option and an unvested share option. Shares are
purchased under the restricted share option at 100% of the closing price of AutoZone stock at the end of the
calendar quarter (i.e., not at a discount), and a number of shares are issued under the unvested share option at no
cost to the executive, so that the total number of shares acquired upon exercise of both options is equivalent to
the number of shares that could have been purchased with the contributions at a price equal to 85% of the stock
price at the end of the quarter. The unvested shares are subject to forfeiture if the executive does not remain with
the company for one year after the grant date. After one year, the shares vest, and the executive owes taxes
based on the share price on the vesting date (unless a so-called 83(b) election was made on the date of grant).

The table below can be used to compare and contrast the stock purchase plans. For more information about

our stock-based plans, including the Executive Stock Purchase Plan, see Discussion of Plan-Based Awards
Table on page 36.

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Contributions

Discount

Vesting

Taxes — Individual

Employee Stock Purchase Plan

Executive Stock Purchase Plan

After tax, limited to lower of 10%
of eligible compensation or
$15,000

After tax, limited to 25% of
eligible compensation

15% discount based on lowest
price at beginning or end of the
quarter

None (one-year holding period
only)

Ordinary income in amount of
spread; capital gains for
appreciation; taxed when shares
sold

15% discount based on
quarter-end price

Shares granted to represent 15%
discount vest after one year;
one-year holding period for
shares purchased at fair market
value

Ordinary income when
restrictions lapse (83(b) election
optional)

Taxes — Company

No deduction unless
“disqualifying disposition”

Deduction when included in
employee’s income

How does the Compensation Committee consider and determine executive and director compensation?

Chief Executive Officer. The Compensation Committee establishes the compensation level for the Chief

Executive Officer, including base salary, annual cash incentive compensation, and stock-based awards. The
Chief Executive Officer’s compensation is reviewed annually by the Compensation Committee in conjunction
with a review of his individual performance by the non-management directors, taking into account all forms of
compensation, including base salary, annual cash incentive, stock options and other stock-based awards, and the
value of other benefits received.

Other Executive Officers. The Compensation Committee reviews and establishes base salaries for
AutoZone’s executive officers (other than the Chief Executive Officer) based on each executive officer’s
individual performance during the past fiscal year and on the recommendations of the Chief Executive Officer.
The Compensation Committee approves the annual cash incentive amounts for the executive officers, which are
determined by objectives established by the Compensation Committee at the beginning of each fiscal year as
discussed above. The actual incentive amount paid depends on performance relative to the target objectives.

The Compensation Committee approves awards of stock options to many levels of management, including
executive officers. Stock options are granted to executive officers upon initial hire or promotion, and thereafter
are typically granted annually in accordance with guidelines established by the Compensation Committee as
discussed above. The actual grant is determined by the Compensation Committee based on the guidelines and
the performance of the individual in the position. The Compensation Committee considers the recommendations
of the Chief Executive Officer. Other than grants of stock made pursuant to the stock purchase plans discussed
above, from time to time the Compensation Committee has sole authority to approve any other individual
awards of stock-based compensation.

Management Stock Ownership Requirement. To further reinforce AutoZone’s objective of driving long-

term stockholder results, AutoZone maintains a stock ownership requirement for all Executive Committee
members (a total of 14 individuals at the end of fiscal 2017). Covered executives must attain a specified
minimum level of stock ownership, based on a multiple of their base salary, within 5 years of the executive’s
placement into a covered position. Executives who are promoted into a position with a higher multiple will have

an additional 3 years to attain the increased required ownership level. In order to calculate whether each
executive meets the ownership requirement, we total the value of each executive’s holdings of whole shares of
stock and the intrinsic (or “in-the-money”) value of vested stock options, based on the fiscal year-end closing
price of AutoZone stock, and compare that value to the appropriate multiple of fiscal year-end base salary.

To encourage full participation in our equity plans, all AutoZone stock acquired under those plans is
included in the executive’s holdings for purposes of calculating his or her ownership. This includes vested stock
options and vested shares which have restrictions on sale.

Key features of the stock ownership requirement are summarized in the table below:

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Ownership Requirement

Holding Requirements

• Chief Executive Officer
• Executive Vice President
• Senior Vice President

5 times base salary
3 times base salary
2 times base salary

• Individuals who have not achieved the ownership requirement within
the specified period will be required to hold 50% of net after-tax
shares upon exercise of any stock option, and may not sell any shares
of AZO.

• Guidelines will no longer apply after an executive reaches age 62, in

order to facilitate appropriate financial planning as retirement
approaches. The Compensation Committee may waive the guidelines
for any other executive at its discretion.

Ownership Definition

• Shares of stock directly owned;

• Unvested Shares acquired via the Executive Stock Purchase Plan; and

• Vested stock options acquired via the AutoZone Stock Option Plan

(based on the “in-the-money” value).

Under AutoZone’s insider trading policy, all transactions involving put or call options on the stock of
AutoZone are prohibited at all times. Officers and directors and their respective family members may not
directly or indirectly participate in transactions involving trading activities which by their aggressive or
speculative nature may give rise to an appearance of impropriety.

What roles do the Chief Executive Officer and other executive officers play in the determination of
executive compensation?

The Chief Executive Officer attends most meetings of the Compensation Committee and participates in the

process by answering Compensation Committee questions about pay philosophy and by ensuring that the
Compensation Committee’s requests for information are fulfilled. He also assists the Compensation Committee
in determining the compensation of the executive officers by providing recommendations and input about such
matters as individual performance, tenure, and size, scope and complexity of their positions. The Chief
Executive Officer makes specific recommendations to the Compensation Committee concerning the
compensation of his direct reports and other senior executives, including the executive officers. These
recommendations usually relate to base salary increases, changes to annual incentive targets and stock option
grants. The Chief Executive Officer also recommends pay packages for newly hired executives. Management
provides the Compensation Committee with data, analyses and perspectives on market trends and annually
prepares information to assist the Compensation Committee in its consideration of such recommendations.
Annual incentive awards are based on achievement of business objectives set by the Compensation Committee,
but the Compensation Committee may exercise negative discretion, and if it does so, it is typically in reliance on
the Chief Executive Officer’s assessment of an individual’s performance.

The Chief Executive Officer does not make recommendations to the Compensation Committee regarding

his own compensation. The Senior Vice President, Human Resources has direct discussions with the

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Compensation Committee Chair regarding the Compensation Committee’s recommendations on the Chief
Executive Officer’s compensation; however, Compensation Committee discussions of specific pay actions
related to the Chief Executive Officer are held outside his presence.

Does AutoZone use compensation consultants?

The Compensation Committee has authority, pursuant to its charter, to hire consultants of its selection to

advise it with respect to AutoZone’s compensation programs, and it may also limit the use of the Compensation
Committee’s compensation consultants by AutoZone’s management as it deems appropriate. Although
historically AutoZone has hired consultants to provide services from time to time, it is not AutoZone’s usual
practice, and, neither the Compensation Committee nor AutoZone’s management regularly engages consultants
as part of the annual review and determination of executive compensation.

What are AutoZone’s peer group and compensation benchmarking practices?

AutoZone reviews publicly-available data from a peer group of companies to help us ensure that our overall

compensation remains competitive. The peer group data we use is from proxy filings and other published
sources – it is not prepared or compiled especially for AutoZone.

We periodically review the appropriateness of this peer group. It typically has changed when such events as

acquisitions and spin-offs have occurred, and in the event a member company experiences significant
performance challenges.

During fiscal 2017, management recommended the addition of two companies to our peer group (italicized

in the list below) and the removal of Barnes & Noble. The criteria used to select the peer group companies
include:

• Direct competitors;

• Companies with which we compete for talent, customers and capital; and

• Companies with key financial measures within a reasonable range compared to those same measures for

AutoZone (e.g., revenues between 50% and 200% of AutoZone’s).

Advance Auto Parts
Bed Bath & Beyond
Darden Restaurants
Dick’s Sporting Goods
Dollar General
Dollar Tree
Foot Locker

AutoZone Peer Group

Gamestop
Gap Stores
Genuine Parts
L Brands
LKQ Corporation
O’Reilly Automotive

Ross Stores
Sherwin Williams
Starbucks
Tractor Supply Company
W.W. Grainger
Yum! Brands

We do not use information from the peer group or other published sources to set precise compensation
targets or make individual compensation decisions. AutoZone does not engage in “benchmarking,” such as
targeting base salary at peer group median for a given position. Rather we use such data as context in reviewing
AutoZone’s overall compensation levels and approving recommended compensation actions. Broad survey data
and peer group information are just two elements that we find useful in maintaining a reasonable and
competitive compensation program. Other elements that we consider are individual performance, Company
performance, individual tenure, position tenure, and succession planning.

What is AutoZone’s policy concerning the taxation of compensation?

The Compensation Committee considers the provisions of Section 162(m) of the Internal Revenue Code
which allows the Company to take an income tax deduction for compensation up to $1 million and for certain

compensation exceeding $1 million paid in any taxable year to a “covered employee” as that term is defined in
the Code. There is an exception for qualified performance-based compensation, and AutoZone’s compensation
program is designed to maximize the tax deductibility of compensation paid to executive officers, where
possible. However, the Compensation Committee may authorize payments which are not deductible where it is
in the best interests of AutoZone and its stockholders.

Payments made pursuant to AutoZone’s Executive Incentive Compensation Plan, as well as the stock
options granted under the Amended 2011 Equity Plan, qualify as performance-based compensation. Base
salaries (less deferred compensation), restricted stock awards, Executive Stock Purchase Plan vested shares, and
certain benefits and perquisites do not qualify as performance-based under 162(m). For fiscal 2017, the sum of
this compensation for each of AutoZone’s “covered employees” did not exceed $1 million; therefore, the
compensation of the Chief Executive Officer and the other “covered employees” was fully deductible.

Section 409A of the Internal Revenue Code was created with the passage of the American Jobs Creation

Act of 2004. These tax regulations create strict rules related to non-qualified deferred compensation earned and
vested on or after January 1, 2005. The Internal Revenue Service periodically releases Notices and other
guidance related to Section 409A, and AutoZone continues to take actions necessary to comply with the
Section’s requirements by the deadlines established by the Internal Revenue Service.

Compensation Committee Report

The Compensation Committee of the Board of Directors (the “Committee”) has reviewed and discussed
with management the Compensation Discussion and Analysis (“CD&A”). Based on the review and discussions,
the Committee recommended to the Board of Directors that the CD&A be included in this proxy statement.

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Members of the Compensation Committee:

Earl G. Graves, Jr., Chair
Douglas H. Brooks
Linda A. Goodspeed
W. Andrew McKenna
George R. Mrkonic, Jr.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee is composed solely of independent, non-employee directors. The members

of the Compensation Committee of the Board during the 2017 fiscal year are listed above.

Compensation Program Risk Assessment

AutoZone’s management conducts periodic assessments of the compensation plans and programs that apply

throughout the Company, including those plans and programs in which our executives participate. The
assessments are performed by key members of AutoZone’s human resources, finance, operations, and legal
teams, and entails thorough discussions of each plan’s or program’s design and operation. Significant findings
are reviewed by senior management prior to being reviewed and discussed with the Compensation Committee.

Plan elements which are reviewed include participants, performance measures, performance and payout
curves or formulas, how target level performance is determined (including whether any thresholds and caps
exist), how frequently payouts occur, and the mix of fixed and variable compensation which the plan delivers.
The plans and programs are also reviewed from the standpoint of reasonableness (e.g., how target and above-
target pay levels compare to similar plans for similar populations at other companies, and how payout amounts
relate to the results which generate the payment), how well the plans and programs are aligned with AutoZone’s
goals and objectives, and from an overall standpoint, whether these plans and programs represent an appropriate
mix of short- and long-term compensation.

The purpose of these reviews is to determine whether the risks related to the design and operation of these

plans and programs, if present, are reasonably likely to have a material adverse effect on the Company. We

believe that our compensation plans, policies and practices do not encourage excessive risk-taking and are not
reasonably likely to have a material adverse effect on the Company. The various mitigating factors which
support this conclusion include:

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• Oversight of the management incentive plan and all stock-based compensation by the Compensation

Committee of the Board;

• Senior management oversight of key plans and programs, including approving target level payouts,

setting financial and operating goals, and approving payouts;

• Administration and oversight of plans and programs by multiple functions within the Company (e.g.,

finance, operations, legal and human resources);

• Implementation during fiscal 2017 of an incentive compensation recovery (“clawback”) policy;

• Interrelationship between measures (e.g., correlation between economic profit performance and

appreciation in the per-share price of AutoZone’s stock);

• Vesting and stock ownership requirements for executive officers which encourage long-term perspectives

among participants; and

• A preference for performance measures which result in payments only upon achievement of ultimate

financial results.

SUMMARY COMPENSATION TABLE

This table shows the compensation paid to the Named Executive Officers during the 2017 fiscal year.

Name and Principal Position

Year

Salary
($)

Bonus
($)(1)

Stock
Awards
($)(2)(3)

Option
Awards
($)(3)

Non-Equity
Incentive Plan
Compensation
($)(4)

Change In
Pension Value
& Non-qualified
Deferred
Compensation
Earnings
($)(5)

All Other
Compensation
($)(6)

Total
($)

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William C. Rhodes III . . . . . . . . 2017 1,000,000 — 89,920

1,054,789
2016 1,000,000 — 90,300 12,490,176
2,563,220
2015 1,000,000 — 90,628

Chairman, President &
Chief Executive Officer

William T. Giles . . . . . . . . . . . . . 2017
CFO/Executive Vice President, 2016
2015
Finance & Information
Technology

William W. Graves . . . . . . . . . . . 2017
2016
2015

Executive Vice President,
Mexico, Brazil, IMC & Store
Development

Mark A. Finestone . . . . . . . . . . . 2017
2016
2015

Executive Vice President,
Merchandising, Supply
Chain & Marketing

Thomas B. Newbern . . . . . . . . . . 2017
2016
2015

Executive Vice President,
Store Operations,
Commercial, Loss
Prevention & ALLDATA

622,387 — 27,507
601,090 — 27,452
560,539 — 27,530

1,425,138
1,737,659
1,561,502

512,692 — 17,550
492,154 — 18,637
430,154 — 17,275

1,209,492
1,475,371
1,163,761

512,692 — 18,997
492,154 — 26,373
430,154 — 13,274

1,209,492
1,803,231
1,163,761

512,692 —
492,154 —
430,154 —

— 1,209,492
— 1,803,231
— 1,163,761

1,018,750
1,543,750
1,507,500

380,435
556,761
507,008

313,383
446,624
311,260

—
39,196
9,089

—
—
—

1,179
28,313
7,685

—
—
—

1,425
66,149
16,344

171,779
186,549
181,256

104,553
104,348
107,845

96,955
97,232
89,883

92,991
94,412
87,423

67,425
57,519
43,611

3,335,238
15,349,971
5,351,693

2,560,020
3,027,310
2,764,424

2,151,251
2,558,331
2,020,018

2,147,555
2,862,794
2,005,872

2,104,417
2,865,677
1,965,130

(1) Annual incentive awards were paid pursuant to the EICP and therefore appear in the “non-equity incentive

plan compensation” column of the table.

(2) Represents shares acquired pursuant to the Executive Stock Purchase Plan. See “Compensation Discussion
and Analysis” on page 21 for more information about the Executive Stock Purchase Plan. See Note B,
Share-Based Payments, to our consolidated financial statements in our 2017 Annual Report for a description
of the Executive Stock Purchase Plan and the accounting and assumptions used in calculating expenses in
accordance with FASB ASC Topic 718.

(3) The value of stock awards and option awards was determined as required by FASB ASC Topic 718. There is
no assurance that these values will be realized. See Note B, Share-Based Payments, to our consolidated
financial statements in our 2017 Annual Report for details on assumptions used in the valuation.

(4) Incentive amounts were earned for the 2017 fiscal year pursuant to the EICP and were paid in October 2017.

See “Compensation Discussion and Analysis” on page 21 for more information about this plan.

(5) Our defined benefit pension plans were frozen as of December 31, 2002, and accordingly, benefits do not
increase or decrease, and there is no service cost. Annual changes in actuarial assumptions result in year-
over-year changes in the present values of the benefits provided. Therefore, the values shown in the column
represent the change in value from one year to the next, with negative changes reflected as zero change. See
the Pension Benefits table on page 40 for more information. We did not provide above-market or
preferential earnings on deferred compensation in 2015, 2016 or 2017.

(6) All Other Compensation includes the following:

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Name

William C. Rhodes III

. . . . . . . . . . . . .

William T. Giles . . . . . . . . . . . . . . . . . .

William W. Graves . . . . . . . . . . . . . . . .

Mark A. Finestone . . . . . . . . . . . . . . . .

Thomas B. Newbern . . . . . . . . . . . . . . .

Perquisites
and Personal
Benefits
($)(A)

61,516(B)
64,728(B)
63,016(B)
55,127(B)
45,943(B)
54,565(B)
57,733(B)
59,833(B)
56,107(B)
53,806(B)
58,319(B)
54,941(B)
25,549
18,216
9,561

Tax
Gross-
ups
($)(C)

3,113
5,641
3,010
—
2,431
—
131
2,431
—
—
2,431
—
3,014
5,641
1,568

2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015
2017
2016
2015

Company
Contributions to
Defined
Contribution
Plans
($)(D)

Life
Insurance
Premiums
($)

101,750
100,300
99,350
46,969
42,973
41,660
38,011
30,235
29,043
37,782
30,245
29,065
37,782
30,245
29,065

5,400
15,880
15,880
2,457
13,001
11,620
1,080
4,733
4,733
1,403
3,417
3,417
1,080
3,417
3,417

(A) Perquisites and personal benefits for all Named Executive Officers include Company-provided home
security system and/or monitoring services, airline club memberships and status upgrades, Company-
paid spouse business-related travel, Company-paid long-term disability insurance premiums, and
matching charitable contributions under the AutoZone Matching Gift Program.

(B) The perquisites or personal benefits which exceeded the greater of $25,000 or 10% of the total amount
of perquisites and personal benefits for an executive officer, which consisted of matching charitable
contributions made under the AutoZone Matching Gift program, under which executives may
contribute to qualified charitable organizations and AutoZone provides a matching contribution to the
charities in an equal amount, up to $50,000 in the aggregate for each executive officer annually, are as
follows:

Name

William C. Rhodes III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
William T. Giles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
William W. Graves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark A. Finestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2017
($)

50,000
50,000
50,000
48,024

2016
($)

50,000
38,000
50,000
50,000

2015
($)

50,000
50,000
50,000
50,000

(D) Represents employer contributions to the AutoZone, Inc. 401(k) Plan and the AutoZone, Inc.

Executive Deferred Compensation Plan.

GRANTS OF PLAN-BASED AWARDS

The following table sets forth information regarding plan-based awards granted to the Company’s Named

Executive Officers during the 2017 fiscal year.

Estimated Future Payments
Under Nonequity Incentive
Plans(1)

Threshold
($)

Target
($)

Maximum
($)

Equity
Plans
Grant Date

All other
Stock
Awards:
Number
of
shares of
Stock or
Units (#)
(2)

All other
Option
Awards:
Number of
securities
underlying
options (#)
(3)

Exercise
or
base
price of
option
awards
($)

Grant
date fair
value of
stock
and
option
awards
($)

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Name

William C. Rhodes III . . . . . .

625,000 1,250,000 N/A

9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

William T. Giles . . . . . . . . . .

234,375

468,750 N/A

9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

William W. Graves . . . . . . . .

193,125

386,250 N/A

9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

Mark A. Finestone . . . . . . . .

193,125

386,250 N/A

9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

Thomas B. Newbern . . . . . . .

193,125

386,250 N/A

9/23/2016

16
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17
19

10
8
10
11

2
17
2
2

5
11
5
5

6,750

9,120

7,740

744.85 1,054,789
12,293
54,496
12,292
10,839

1,144,709

744.85 1,425,138
7,683
6,318
7,231
6,275

1,452,645

744.85 1,209,492
1,537
13,426
1,446
1,141

1,227,042

744.85 1,209,492
3,842
8,688
3,615
2,852

1,228,489

7,740

744.85 1,209,492

1,209,492

(1) Represents potential threshold, target and maximum incentive compensation for the 2017 fiscal year under

the EICP based on each officer’s salary on the date the 2017 fiscal year targets were approved. The amounts
actually paid for the 2017 fiscal year are described in the “Non-Equity Incentive Plan Compensation”
column in the Summary Compensation Table. The “threshold” is the minimum payment level under the
EICP which is 50% of the target amount. There is no overall percentage maximum; however, awards paid to
any individual pursuant to the EICP may not exceed $4 million. See “Compensation Discussion and
Analysis” at page 21 and the discussion following this table for more information on the EICP.

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(2) Represents shares awarded pursuant to the Executive Stock Purchase Plan. See “Compensation Discussion
and Analysis” at page 21 and the discussion following this table for more information on the Executive
Stock Purchase Plan.

(3) Represents options awarded pursuant to the Amended 2011 Equity Plan. See “Compensation Discussion and

Analysis” at page 21 and the discussion following this table for more information on equity plans.

Discussion of Plan-Based Awards Table

Executive Incentive Compensation Plan. The EICP is intended to be a performance-based compensation
plan under Section 162(m) of the Internal Revenue Code. The Company’s executive officers, as determined by
the Compensation Committee of the Board, are eligible to participate in the EICP. At the beginning of each
fiscal year, the Compensation Committee establishes a goal, which may be a range from a minimum to a
maximum attainable bonus, based on one or more of the following measures:

• Earnings
• Earnings per share
• Sales
• Market share
• Operating or net cash flows
• Pre-tax profits
• Earnings before interest and taxes (EBIT)

• Return on invested capital
• Economic value added
• Return on inventory
• EBIT margin
• Sales per square foot
• Comparable store sales

The EICP provides that the goal may be different for different executives. The goals can change annually to
support our business objectives. After the end of each fiscal year, the Compensation Committee must certify the
attainment of goals under the EICP and direct the amount to be paid to each participant in cash. See
“Compensation Discussion and Analysis” on page 21 for more information about the EICP.

Executive Stock Purchase Plan. The Executive Stock Purchase Plan permits participants to acquire
AutoZone common stock in excess of the purchase limits contained in AutoZone’s Employee Stock Purchase
Plan. Because the Executive Stock Purchase Plan is not required to comply with the requirements of Section 423
of the Internal Revenue Code, it has a higher limit on the percentage of a participant’s compensation that may be
used to purchase shares (25%) and places no dollar limit on the amount of a participant’s compensation that may
be used to purchase shares under the plan. For more information about the Executive Stock Purchase Plan, see
“Compensation Discussion and Analysis” on page 21.

Stock Options. Stock options are awarded to many levels of management, including executive officers, to
align the long-term interests of AutoZone’s management and our stockholders. During the 2017 fiscal year, 778
AutoZone employees received stock options. The stock options shown in the table were granted pursuant to the
Amended 2011 Equity Plan.

Both incentive stock options and non-qualified stock options, or a combination of both, can be granted

under the Amended 2011 Equity Plan. Incentive stock options have a maximum term of ten years, and
non-qualified stock options have a maximum term of ten years and one day. The stock options subject to
Mr. Rhodes’ one-time grant in 2015 vest in equal increments on the fourth and fifth anniversaries of the grant
date. All options granted during the 2017 fiscal year vest in one-fourth increments over a four-year period. All
options granted under the Amended 2011 Equity Plan have an exercise price equal to the fair market value of
AutoZone common stock on the date of grant, which is defined as the closing price on the grant date. Option
repricing is expressly prohibited by the terms of the Amended 2011 Equity Plan.

Each grant of stock options is governed by the terms of a Stock Option Agreement entered into between the

Company and the executive officer at the time of the grant. The Stock Option Agreements provide vesting
schedules and other terms of the grants in accordance with the Amended 2011 Equity Plan.

Under the Amended 2011 Equity Plan, participants may receive equity-based compensation in the form of

stock appreciation rights, restricted shares, restricted share units, dividend equivalents, deferred stock, stock

payments, performance share awards and other incentive awards structured by the Compensation Committee and
the Board within parameters set forth in the Amended 2011 Equity Plan.

The aggregate number of shares of AutoZone common stock available for equity grants pursuant to the

Amended 2011 Equity Plan will be reduced by two shares for every share delivered in settlement of an award
other than (i) a stock option, (ii) a stock appreciation right or (iii) any other award for which the holder pays the
intrinsic value existing as of the date of grant (such awards, “Full Value Awards”). To the extent that any award
other than a Full Value Award is forfeited, expires or is settled in cash without the delivery of shares to the
holder, then any shares subject to the award will again be available for the grant of an award pursuant to the
Amended 2011 Equity Plan; if such forfeited, expired or cash-settled award is a Full Value Award, then the
number of shares available under the Amended 2011 Equity Plan will be increased by two shares for each share
subject to the award that is forfeited, expired or cash-settled. However, shares tendered or withheld in payment
of the exercise price of an option or in satisfaction of any tax withholding obligations with respect to an award,
shares subject to a stock appreciation right that are not issued in connection with the stock settlement of the
stock appreciation right on exercise thereof, and shares purchased on the open market with the cash proceeds
from the exercise of options, will not again be available for the grant of an award pursuant to the Amended 2011
Equity Plan. Any shares of restricted stock repurchased by AutoZone at the same price paid by the participant,
so that such shares are returned to AutoZone, will again be available for awards granted pursuant to the
Amended 2011 Equity Plan. The payment of dividend equivalents in cash in conjunction with any outstanding
awards will not be counted against the shares available for issuance under the Amended 2011 Equity Plan.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth information regarding outstanding stock option awards under the Amended
2011 Equity Plan, the 2011 Equity Plan, the AutoZone, Inc. 2006 Stock Option Plan the (“2006 Stock Option
Plan”), other outstanding equity awards under the Amended 2011 Equity Plan and the 2011 Equity Plan, and
unvested shares under the Executive Stock Purchase Plan for the Company’s Named Executive Officers as of
August 26, 2017:

Name
William C. Rhodes III . . . . . . . . .

Totals . . . . . . . . . . . . . . . . .
William T. Giles . . . . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . .
William W. Graves . . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . .

Grant Date
9/29/2009
9/29/2009
9/29/2010
9/29/2010
9/27/2011
9/27/2011
9/27/2012
10/1/2013
9/23/2014
10/6/2015
10/7/2015
9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

9/22/2008
9/29/2009
9/28/2010
9/27/2011
9/27/2011
9/27/2012
10/1/2013
9/23/2014
10/6/2015
9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

9/28/2010
9/28/2010
9/27/2011
9/27/2011
9/27/2012
10/1/2013
9/23/2014
10/6/2015
9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

Option Awards

Stock Awards

Number of securities
underlying unexercised
options(1)

Exercisable Unexercisable

Option
Exercise
Price

Option
Expiration
Date

Number
of shares of
stock that
have
not vested(2)

Market
value
of shares
of stock
that have
not
vested(3)

26,500
500
23,700
700
400
20,800
22,500
14,400
8,700
1,962

— $142.77 9/30/2019
— $142.77 9/29/2019
— $228.20 9/30/2020
— $228.20 9/29/2020
— $326.00 9/27/2021
— $326.00 9/28/2021
— $371.47 9/28/2022
$425.11 10/2/2023
$507.79 9/24/2024
$744.62 10/7/2025
— 50,000(4) $736.00 10/8/2025
$744.85 9/24/2026
—

4,800
8,700
5,888

6,750

16
69
17
19
121

$ 8,463
$36,498
$ 8,992
$10,050
$64,003

10
8
10
11
39

2
17
2
2
23

$ 5,290
$ 4,232
$ 5,290
$ 5,818
$20,630

$ 1,058
$ 8,992
$ 1,058
$ 1,058
$12,166

120,162
8,400
15,800
13,500
125
12,000
13,600
8,700
5,300
2,650
—

80,075
10,500
900
500
9,500
9,400
6,525
3,950
2,250
—

76,138

— $130.79 9/23/2018
— $142.77 9/30/2019
— $225.74 9/29/2020
— $326.00 9/27/2021
— $326.00 9/28/2021
— $371.47 9/28/2022
$425.11 10/2/2023
$507.79 9/24/2024
$744.62 10/7/2025
$744.85 9/24/2026

2,900
5,300
7,950
9,120

25,270

— $225.74 9/29/2020
— $225.74 9/28/2020
— $326.00 9/27/2021
— $326.00 9/28/2021
— $371.47 9/28/2022
$425.11 10/2/2023
$507.79 9/24/2024
$744.62 10/7/2025
$744.85 9/24/2026

2,175
3,950
6,750
7,740

43,525

20,615

Option Awards

Stock Awards

Number of securities
underlying unexercised
options(1)

Exercisable Unexercisable

Option
Exercise
Price

Option
Expiration
Date

Number
of shares of
stock that
have
not vested(2)

Market
value
of shares
of stock
that have
not
vested(3)

13,500
11,800
9,400
6,525
3,950
2,750
—

47,925
2,350
2,175
1,975
2,750
—
9,250

— $225.74 9/29/2020
— $326.00 9/28/2021
— $371.47 9/28/2022
$425.11 10/2/2023
$507.79 9/24/2024
$744.62 10/7/2025
$744.85 9/24/2026

2,175
3,950
8,250
7,740

22,115

— $371.47 9/28/2022
$425.11 10/2/2023
$507.79 9/24/2024
$744.62 10/7/2025
$744.85 9/24/2026

2,175
3,950
8,250
7,740
22,115

5
11
5
5
26

$ 2,645
$ 5,818
$ 2,645
$ 2,645
$13,753

Grant Date
9/28/2010
9/27/2011
9/27/2012
10/1/2013
9/23/2014
10/6/2015
9/23/2016
9/30/2016
12/31/2016
3/31/2017
6/30/2017

9/27/2012
10/1/2013
9/23/2014
10/6/2015
9/23/2016

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Name
Mark Finestone . . . . . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . .
Thomas B. Newbern . . . . . . . . . .

Totals . . . . . . . . . . . . . . . . .

(1) Unless indicated otherwise, stock options vest annually in one-fourth increments over a four-year period.

Both incentive stock options and non-qualified stock options have been awarded.

(2) Represents shares acquired pursuant to unvested shares granted under the Executive Stock Purchase Plan.
Such shares vest on the first anniversary of the date the option was exercised under the plan, and will vest
immediately upon a participant’s termination of employment without cause or the participant’s death,
disability or retirement.

(3) Based on the closing price of AutoZone common stock on August 26, 2017 ($528.95 per share).

(4) Represents a one-time grant of non-qualified stock options pursuant to the 2011 Equity Plan. Fifty percent

(50%) of the shares vest on the fourth anniversary of the grant, and the other fifty percent (50%) vest on the
fifth anniversary of the grant.

OPTION EXERCISES AND STOCK VESTED

The following table sets forth information regarding stock option exercises and vested stock awards for the

Company’s Named Executive Officers during the fiscal year ended August 26, 2017:

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Name

William C. Rhodes III . . . . . . . . . . . . . . . . . . . . . .
William T. Giles . . . . . . . . . . . . . . . . . . . . . . . . . .
William W. Graves . . . . . . . . . . . . . . . . . . . . . . . .
Mark A. Finestone . . . . . . . . . . . . . . . . . . . . . . . . .
Thomas B. Newbern . . . . . . . . . . . . . . . . . . . . . . .

Option Awards

Stock Awards

Number
of shares
acquired
on exercise
(#)

32,000
10,000
12,000
—
—

Value
realized
on exercise
($)(1)

21,192,013
4,503,087
7,128,142
—
—

Number
of shares
acquired
on vesting
(#)(2)

120
36
25
35
—

Value
realized
on vesting
($)(3)

90,076
25,732
19,437
26,193
—

(1) If the shares were sold immediately upon exercise, the value realized on exercise of the option is the

difference between the actual sales price and the exercise price of the option. Otherwise, the value realized is
the difference between the closing price of AutoZone common stock on the New York Stock Exchange on
the date of exercise and the exercise price of the option.

(2) Represents shares acquired pursuant to the Executive Stock Purchase Plan. See “Compensation Discussion

and Analysis” on page 21 for more information about this plan.

(3) Based on the closing price of AutoZone common stock on the vesting date.

The following table sets forth information regarding pension benefits for the Company’s Named Executive

Officers as of August 26, 2017:

PENSION BENEFITS

Name

William C. Rhodes III

Plan Name

. . . . . . . . . . . AutoZone, Inc. Associates
Pension Plan
AutoZone, Inc. Executive
Deferred Compensation Plan

William T. Giles . . . . . . . . . . . . . . . . N/A

William W. Graves . . . . . . . . . . . . . . AutoZone, Inc. Associates

Pension Plan
AutoZone, Inc. Executive
Deferred Compensation Plan

Number of
Years of
Credited
Service

Present
Value of
Accumulated
Benefit
($)(1)

116,775

72,890

142,299

22,562

Mark A. Finestone

N/A

Thomas B. Newbern . . . . . . . . . . . . . AutoZone, Inc. Associates

289,664

Pension Plan
AutoZone, Inc. Executive
Deferred Compensation Plan

66,049

Payments
During Last
Fiscal Year
($)

—

(1) As the plan benefits were frozen as of December 31, 2002, there is no service cost and increases in future

compensation levels no longer impact the calculations. The benefit of each participant is accrued based on a
funding formula computed by our independent actuaries, Mercer. See Note L, Pension and Savings Plans, to
our consolidated financial statements in our 2017 Annual Report for a discussion of our assumptions used in
determining the present value of the accumulated pension benefits.

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Prior to January 1, 2003, substantially all full-time AutoZone employees were covered by a defined benefit
pension plan, the AutoZone, Inc. Associates Pension Plan (the “Pension Plan”). The Pension Plan is a traditional
defined benefit pension plan which covered full-time AutoZone employees who were at least 21 years old and
had completed one year of service with the Company. The benefits under the Pension Plan were based on years
of service and the employee’s highest consecutive five-year average compensation. Compensation included total
annual earnings shown on Form W-2 plus any amounts directed on a tax-deferred basis into Company-
sponsored benefit plans, but did not include reimbursements or other expense allowances, cash or non-cash
fringe benefits, moving expenses, non-cash compensation (regardless of whether it resulted in imputed income),
long-term cash incentive payments, gain on exercise of stock options, payments under any insurance plan,
payments under any weekly-paid indemnity plan, payments under any long term disability plan, nonqualified
deferred compensation, or welfare benefits.

AutoZone also maintained a supplemental defined benefit pension plan for certain highly compensated

employees to supplement the benefits under the Pension Plan as part of our Executive Deferred Compensation
Plan (the “Supplemental Pension Plan”). The purpose of the Supplemental Pension Plan was to provide any
benefit that could not be provided under the qualified plan due to IRS limitations on the amount of salary that
could be recognized in the qualified plan. The benefit under the Supplemental Pension Plan is the difference
between (a) the amount of benefit determined under the Pension Plan formula but using the participant’s total
compensation without regard to any IRS limitations on salary that can be recognized under the qualified plan,
less (b) the amount of benefit determined under the Pension Plan formula reflecting the IRS limitations on
compensation that can be reflected under a qualified plan.

In December 2002, both the Pension Plan and the Supplemental Pension Plan were frozen. Accordingly, all
benefits to all participants in the Pension Plan were fixed and could not increase, and no new participants could
join the plans.

Annual benefits to the Named Executive Officers are payable upon retirement at age 65. Sixty monthly
payments are guaranteed after retirement. The benefits will not be reduced by Social Security or other amounts
received by a participant. The basic monthly retirement benefit is calculated as 1% of average monthly
compensation multiplied by a participant’s years of credited service. Benefits under the Pension Plan may be
taken in one of several different annuity forms. The actual amount a participant would receive depends upon the
payment method chosen.

A participant in the Pension Plan is eligible for early retirement under the plan if he or she is at least 55
years old AND was either (a) a participant in the original plan as of June 19, 1976; or (b) has completed at least
ten (10) years of service for vesting (i.e. years in which the participant worked at least 1,000 hours after
becoming a Pension Plan participant). The early retirement date will be the first of any month after the
participant meets these requirements and chooses to retire. Benefits may begin immediately, or the participant
may elect to begin receiving them on the first of any month between the date he or she actually retires and the
normal retirement date. If a participant elects to begin receiving an early retirement benefit before the normal
retirement date, the amount of the accrued benefit will be reduced according to the number of years by which the
start of benefits precedes the normal retirement date.

Messrs. Rhodes, Graves and Newbern are participants in the Pension Plan and the Supplemental Pension

Plan. No Named Executive Officers received payment of a retirement benefit in fiscal 2017.

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NONQUALIFIED DEFERRED COMPENSATION

The following table sets forth information regarding nonqualified deferred compensation for the

Company’s Named Executive Officers as of and for the year ended August 26, 2017.

Name

Plan

William C. Rhodes III . . . Executive Deferred
Compensation Plan

William T. Giles . . . . . . . Executive Deferred
Compensation Plan

William W. Graves . . . . . Executive Deferred
Compensation Plan

Mark A. Finestone . . . . . . Executive Deferred
Compensation Plan

Thomas B. Newbern . . . . Executive Deferred
Compensation Plan

Executive
Contributions
in Last FY
($)(1)

Registrant
Contributions
in Last FY
($)(2)

Aggregate
Earnings in
Last FY
($)(3)

Aggregate
withdrawals /
distributions
($)

Aggregate
Balance at
Last FYE
($)

613,125

91,150

1,668,059

— 12,045,041

101,146

36,096

125,917

— 1,127,433

259,160

27,357

111,458

— 1,567,571

95,874

27,357

125,205

(16,519) 1,019,244

191,748

27,357

31,859 (541,496) 1,318,172

(1) Represents contributions by the Named Executive Officers under the AutoZone, Inc. Executive Deferred
Compensation Plan (the “EDCP”). Such contributions are included under the appropriate “Salary” and
“Non-Equity Incentive Plan Compensation” columns for the Named Executive Officers in the Summary
Compensation Table.

(2) Represents matching contributions by the Company under the EDCP. Such contributions are included under
the “All Other Compensation” column for the Named Executive Officers in the Summary Compensation
Table.

(3) Represents the difference between the aggregate balance at end of fiscal 2017 and the end of fiscal 2016,

excluding (i) contributions made by the executive officer and the Company during fiscal 2017 and (ii) any
withdrawals or distributions during fiscal 2017. None of the earnings in this column were included in the
Summary Compensation Table because they were not preferential or above market.

Officers of the Company with the title of vice president or higher based in the United States are eligible to

participate in the EDCP after their first year of employment with the Company. As of August 26, 2017, there
were 49 such officers of the Company. The EDCP is a nonqualified plan that allows officers to make a pretax
deferral of base salary and bonus compensation. Officers may defer up to 25% of base salary and up to 75% of
bonus compensation. The Company match is calculated based on 100% of the first 3% of deferred compensation
and 50% of the next 2% deferred, less the maximum value of the Company match available generally to
participants in AutoZone’s 401(k) Plan. Participants may select among various mutual funds in which to invest
their deferral accounts. Participants may elect to receive distribution of their deferral accounts at retirement or
starting in a specific future year of choice before or after anticipated retirement (but not later than the year in
which the participant reaches age 75). If a participant’s employment with AutoZone terminates other than by
retirement or death, the account balance will be paid in a lump sum payment six months after termination of
employment. There are provisions in the EDCP for withdrawal of all or part of the deferral account balance in
the event of an extreme and unforeseen financial hardship.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Our Named Executive Officers may receive certain benefits if their employment terminates under specified

circumstances. These benefits derive from Company policies, plans, agreements and arrangements described
below.

Agreement with Mr. Rhodes

In 2008, Mr. Rhodes and AutoZone entered into an agreement (the “Agreement”) providing that if
Mr. Rhodes’ employment is terminated by the Company without cause, he will receive severance benefits
consisting of an amount equal to 2.99 times his then-current base salary, a lump sum prorated share of any
unpaid annual bonus incentive for periods during which he was employed, and AutoZone will pay the cost of
COBRA premiums to continue his medical, dental and vision insurance benefits for up to 18 months to the
extent such premiums exceed the amount Mr. Rhodes had been paying for such coverage during his
employment. The Agreement further provides that Mr. Rhodes will not compete with AutoZone or solicit its
employees for a three-year period after his employment with AutoZone terminates.

Executive Officer Agreements (Messrs. Giles, Finestone, Graves and Newbern)

AutoZone’s executive officers who do not have written employment agreements, including Messrs. Giles,

Finestone, Graves and Newbern, have entered into agreements (“Severance and Non-Compete Agreements”)
with the Company providing that if their employment is involuntarily terminated without cause, and if they sign
an agreement waiving certain legal rights, they will receive severance benefits in the form of salary continuation
for a period of time ranging from 12 months to 24 months, depending on their length of service at the time of
termination. Mr. Giles presently has 11 years of service, Mr. Finestone has 15 years of service, Mr. Graves has
24 years of service and Mr. Newbern has 32 years of service.

Years of Service

Severance
Period

Less than 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12months

2 – less than 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18months

5 or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24months

The executives will also receive a lump sum prorated share of their annual bonus incentive when such
incentives are paid to similarly-situated executives. Medical, dental and vision insurance benefits generally
continue through the severance period up to a maximum of 18 months, with the Company paying the cost of
COBRA premiums to the extent such premiums exceed the amount the executive had been paying for such
coverage. An appropriate level of outplacement services may be provided based on individual circumstances.

The Severance and Non-Compete Agreement further provides that the executive will not compete with
AutoZone or solicit its employees for a two-year period after his or her employment with AutoZone terminates.

Equity Plans

All outstanding, unvested stock options, including those held by the Named Executive Officers, will vest

immediately upon the option holder’s death pursuant to the terms of the stock option agreements.

Unvested shares under our Executive Stock Purchase Plan, which normally are subject to forfeiture if a

participant’s employment terminates prior to the first anniversary of their acquisition, will vest immediately if
the termination is by reason of the participant’s death, disability, termination by the Company without cause, or
retirement on or after the participant’s normal retirement date. The plan defines “disability,” “cause,” and
“normal retirement date.”

Life Insurance

AutoZone provides all salaried employees in active full-time employment in the United States a company-

paid life insurance benefit in the amount of two times annual earnings. “Annual earnings” exclude stock
compensation and gains realized from stock option exercises, but include salary and incentive compensation
received. Additionally, salaried employees are eligible to purchase additional life insurance subject to
insurability above certain amounts. The maximum benefit of the company-paid and the additional coverage
combined is $5,000,000. All of the Named Executive Officers are eligible for this benefit.

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Disability Insurance

All full-time officers at the level of vice president and above are eligible to participate in two executive
long-term disability plans. Accordingly, AutoZone purchases individual disability policies for its executive
officers that pay 70% of the first $7,143 of insurable monthly earnings in the event of disability. Additionally,
the executive officers are eligible to receive an executive long-term disability plan benefit in the amount of 70%
of the next $35,714 of insurable monthly earnings to a maximum benefit of $25,000 per month. AutoZone
purchases insurance to cover this plan benefit. These two benefits combined provide a maximum benefit of
$30,000 per month. The benefit payment for these plans may be reduced by deductible sources of income and
disability earnings.

The following table shows the amounts that the Named Executive Officers would have received if their
employment had been terminated under specified circumstances on August 26, 2017. This table does not include
amounts related to the Named Executive Officers’ vested benefits under our deferred compensation and pension
plans or pursuant to stock option awards, all of which are described in the tables above.

Name

William C. Rhodes, III(1)

Severance Pay . . . . . . . . . . . . . . . . . . . .
Annual Incentive . . . . . . . . . . . . . . . . . .
Benefits Continuation . . . . . . . . . . . . . .
Unvested Stock Options . . . . . . . . . . . .
Unvested Stock Awards . . . . . . . . . . . .
Disability Benefits . . . . . . . . . . . . . . . .
Life Insurance Benefits . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

William T. Giles(2)

William W. Graves(2)

Mark A. Finestone(2)

Thomas B. Newbern(2)

Severance Pay . . . . . . . . . . . . . . . . . . . .
Annual Incentive . . . . . . . . . . . . . . . . . .
Benefits Continuation . . . . . . . . . . . . . .
Unvested Stock Options . . . . . . . . . . . .
Disability Benefits . . . . . . . . . . . . . . . .
Life Insurance Benefits . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .

Voluntary or
For Cause
Termination
($)

Involuntary
Termination
Not For Cause
($)

Change in
Control
($)

Disability
($)

Death
($)

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—

2,990,000
1,018,750
22,905
—
64,003
—
—
4,095,658

1,250,000
380,435
25,728
—
20,630
—
—
1,676,793

1,030,000
313,383
22,500
—
12,166
—
—
1,378,049

1,030,000
313,383
22,500
—
13,753
—
—
1,379,636

1,030,000
313,383
25,728
—
—
—
1,369,111

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—

—
—
1,018,750
1,018,750
—
2,995
— 682,524
64,003
—
— 5,000,000
6,768,272

64,003
4,560,000

5,642,753

—
—
380,435
380,435
—
2,816
— 413,284
20,630
—
— 2,154,000
2,971,165

20,630
2,520,000

2,921,065

—
—
313,383
313,383
—
2,816
— 309,434
12,166
—
— 1,000,000
1,637,799

12,166
2,520,000

2,845,549

—
—
313,383
313,383
—
2,816
— 309,434
13,753
—
— 1,898,000
2,537,386

13,753
2,670,000

2,997,136

—
—
313,383
313,383
—
2,816
— 309,434
—
— 1,000,000
1,625,633

3,553,383

3,240,000

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Normal
Retirement
($)

—
1,018,750
—
—
—
—
—
1,018,750

—
380,435
—
—
—
—
—
380,435

—
313,383
—
—
—
—
—
313,383

—
313,383
—
—
—
—
313,383

(1) Severance Pay, Bonus and Benefits Continuation amounts shown under the “Involuntary Termination Not

for Cause” column reflect the terms of Mr. Rhodes’ Agreement described above. Unvested stock options are

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those outstanding, unvested stock options which will vest immediately upon the option holder’s death.
Unvested stock awards are shares under the Executive Stock Purchase Plan, which vest upon involuntary
termination not for cause, disability, or death. Annual Incentive is shown at actual annual incentive amount
for the 2017 fiscal year; it would be prorated if the triggering event occurred other than on the last day of the
fiscal year. Disability Benefits are benefits under Company-paid individual long-term disability insurance
policy. Life Insurance Benefits are benefits under a Company-paid life insurance policy.

(2) Severance Pay, Bonus and Benefits Continuation amounts shown under the “Involuntary Termination Not
for Cause” column reflect payments to Mr. Giles, Mr. Finestone, Mr. Graves, and Mr. Newbern under the
Severance and Non-Compete Agreements described above. Annual Incentive is shown at actual annual
incentive amount for the 2017 fiscal year; it would be prorated if the triggering event occurred other than on
the last day of the fiscal year. Benefits Continuation refers to medical, dental and vision benefits. Unvested
stock options are those outstanding, unvested stock options which will vest immediately upon the option
holder’s death. Unvested stock awards are share options under the Executive Stock Purchase Plan, which
vest upon involuntary termination not for cause, disability, or death. Disability Benefits are benefits under
Company-paid individual long-term disability insurance policy. Life Insurance Benefits are benefits under a
Company-paid life insurance policy.

Related Party Transactions

Our Board has adopted a Related Person Transaction Policy (the “Policy”) which requires the Audit
Committee of the Board to review and approve or ratify all Related Person Transactions. The Audit Committee
is to consider all of the available relevant facts and circumstances of each transaction, including but not limited
to the benefits to the Company; the impact on a director’s independence in the event the Related Person is a
director, an immediate family member of a director or an entity in which a director is a partner, shareholder or
executive officer; the availability of other sources for comparable products or services; the terms of the
transaction; and the terms available to unrelated third parties generally. Related Person Transactions must also
comply with the policies and procedures specified in our Code of Conduct and Corporate Governance
Principles, as described below.

The Policy also requires disclosure of all Related Person Transactions that are required to be disclosed in
AutoZone’s filings with the Securities and Exchange Commission, in accordance with all applicable legal and
regulatory requirements.

A “Related Person Transaction” is defined in the Policy as a transaction, arrangement or relationship (or

any series of similar transactions, arrangements or relationships) that occurred since the beginning of the
Company’s most recent fiscal year in which the Company (including any of its subsidiaries) was, is or will be a
participant and the amount involved exceeds $120,000 and in which any Related Person had, has or will have a
direct or indirect material interest. “Related Persons” include a director or executive officer of the Company, a
nominee to become a director of the Company, any person known to be the beneficial owner of more than 5% of
any class of the Company’s voting securities, any immediate family member of any of the foregoing persons,
and any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or
principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest.

Our Board has adopted a Code of Conduct (the “Code of Conduct”) that applies to the Company’s

directors, officers and employees. The Code of Conduct prohibits directors and executive officers from engaging
in activities that create conflicts of interest, taking corporate opportunities for personal use or competing with
the Company, among other things. Our Board has also adopted a Code of Ethical Conduct for Financial
Executives (the “Financial Code of Conduct”) that applies to the Company’s officers and employees who hold
the position of principal executive officer, principal financial officer, principal accounting officer or controller
as well as to the Company’s officers and employees who perform similar functions (“Financial Executives”).
The Financial Code of Conduct requires the Financial Executives to, among other things, report any actual or
apparent conflicts of interest between personal or professional relationships involving the Company’s
management or any other Company employee with a role in financial reporting disclosures or internal controls.

Additionally, our Corporate Governance Principles require each director who is faced with an issue that
presents, or may give the appearance of presenting, a conflict of interest to disclose that fact to the Chairman of
the Board and the Secretary, and to refrain from participating in discussions or votes on such issue unless a
majority of the Board determines, after consultation with counsel, that no conflict of interest exists as to such
matter.

We have concluded there are no material Related Party Transactions or agreements that were entered into
during the fiscal year ended August 26, 2017, and through the date of this proxy statement requiring disclosure
under these policies.

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Equity Compensation Plans

Equity Compensation Plans Approved by Stockholders

Our stockholders have approved the Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award
Plan, the AutoZone, Inc. 2011 Equity Incentive Award Plan, the 2006 Stock Option Plan, the Employee Stock
Purchase Plan, the Executive Stock Purchase Plan, the 2003 Director Compensation Plan and the 2003 Director
Stock Option Plan.

Equity Compensation Plans Not Approved by Stockholders

The AutoZone, Inc. Second Amended and Restated Director Compensation Plan was approved by the
Board, but was not submitted for approval by the stockholders as then permitted under the rules of the New
York Stock Exchange. This plan was terminated in December 2002 and was replaced by the 2003 Director
Compensation Plan, after the stockholders approved it. No further grants can be made under the terminated plan.
However, any grants made under this plan will continue under the terms of the grant made. Only treasury shares
are issued under the terminated plans.

Under the Second Amended and Restated Director Compensation Plan, a non-employee director could
receive no more than one-half of the annual retainer and meeting fees immediately in cash, and the remainder of
the fees were taken in common stock or deferred in stock appreciation rights.

The following table sets forth certain information as of August 26, 2017, with respect to compensation

plans under which shares of AutoZone common stock may be issued.

Summary Table

Number of securities to
be issued upon exercise
of outstanding
options, warrants
and rights

Weighted-average
exercise price of
outstanding options
warrants and rights

Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in the
first column)

Plan Category

Equity compensation plans

approved by security holders . .

1,835,899

Equity compensation plans not

approved by security holders . .
. . . . . . . . . . . . . . . . . . . . . . .

Total

7,284
1,843,183

$490.72

38.18
$488.93

1,316,693

—
1,316,693

Section 16(a) Beneficial Ownership Reporting Compliance

Securities laws require our executive officers, directors, and beneficial owners of more than ten percent of

our common stock to file insider trading reports (Forms 3, 4, and 5) with the Securities and Exchange
Commission and the New York Stock Exchange relating to the number of shares of common stock that they

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own, and any changes in their ownership. To our knowledge, all persons related to AutoZone that are required to
file these insider trading reports have filed them in a timely manner. Copies of the insider trading reports can be
found on the AutoZone corporate website at www.autozoneinc.com.

On September 29, 2017, the Company became aware of a transaction by a director of the Company in
violation of Section 16(b) of the Securities Act of 1934. On October 16, 2017, the director voluntarily disgorged
$23,993 to the Company representing full disgorgement of the short-swing profit realized on the transaction.

STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING

Stockholder proposals for inclusion in the Proxy Statement for the Annual Meeting in 2018 must be
received by June 29, 2018. In accordance with our By-Laws, stockholder proposals received after August 22,
2018, but by September 21, 2018, may be presented at the Annual Meeting, but will not be included in the Proxy
Statement. Any stockholder proposal received after September 21, 2018, will not be eligible to be presented for
a vote to the stockholders in accordance with our By-Laws. Any proposals must be mailed to AutoZone, Inc.,
Attention: Secretary, Post Office Box 2198, Dept. 8074, Memphis, Tennessee 38101-2198.

A copy of our Annual Report is being mailed with this Proxy Statement to all stockholders of record.

ANNUAL REPORT

By order of the Board of Directors,

Kristen C. Wright
Secretary

Memphis, Tennessee
October 27, 2017

Form 10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________

FORM 10-K

(cid:55) Annual Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended August 26, 2017, or

(cid:133)

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

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0
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AUTOZONE, INC.

(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of
incorporation or organization)

62-1482048
(I.R.S. Employer Identification No.)

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

38103
(Zip Code)

(901) 495-6500
(Registrant’s telephone number, including area code)

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

Title of each class
Common Stock
($.01 par value)

Name of each exchange
on which registered
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:55) No (cid:133)

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act. Yes (cid:133) No (cid:55)

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 period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes (cid:55) No (cid:133)

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site,
if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes (cid:55) No (cid:133)

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of
this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (cid:55)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, 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 (cid:55)
Non-accelerated filer (cid:133)(cid:3)(Do not check if a smaller reporting company)(cid:3)
Emerging growth company (cid:133)

Accelerated filer (cid:133)
Smaller reporting company (cid:133)

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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.(cid:3)(cid:133)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:133)
No (cid:55)

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was
$20,972,678,680.

The number of shares of Common Stock outstanding as of October 23, 2017, was 27,492,520.

Documents Incorporated By Reference

Portions of the definitive Proxy Statement to be filed within 120 days of August 26, 2017, pursuant to Regulation
14A under the Securities Exchange Act of 1934 for the Annual Meeting of Stockholders to be held December 20,
2017, are incorporated by reference into Part III.

TABLE OF CONTENTS

Item 1.

PART I .......................................................................................................................................................................................
Business .................................................................................................................................................................
Introduction ........................................................................................................................................................
Marketing and Merchandising Strategy .............................................................................................................
Commercial ........................................................................................................................................................
Store Operations .................................................................................................................................................
Store Development .............................................................................................................................................
Purchasing and Supply Chain.............................................................................................................................
Competition........................................................................................................................................................
Trademarks and Patents......................................................................................................................................
Employees ..........................................................................................................................................................
AutoZone Websites ............................................................................................................................................
Executive Officers of the Registrant ..................................................................................................................
Item 1A. Risk Factors ...........................................................................................................................................................
Item 1B. Unresolved Staff Comments ..................................................................................................................................
Properties ...............................................................................................................................................................
Item 2.
Legal Proceedings..................................................................................................................................................
Item 3.
Mine Safety Disclosures ........................................................................................................................................
Item 4.

PART II......................................................................................................................................................................................

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities ................................................................................................................................................................
Selected Financial Data ..........................................................................................................................................
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations .................................
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ...............................................................................
Financial Statements and Supplementary Data ......................................................................................................
Item 8.
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.................................
Item 9.
Item 9A. Controls and Procedures.........................................................................................................................................
Item 9B. Other Information...................................................................................................................................................

PART III ....................................................................................................................................................................................
Item 10. Directors, Executive Officers and Corporate Governance .....................................................................................
Executive Compensation .......................................................................................................................................
Item 11.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ..............
Item 13. Certain Relationships and Related Transactions, and Director Independence .......................................................
Principal Accounting Fees and Services ................................................................................................................
Item 14.

PART IV.....................................................................................................................................................................................
Exhibits and Financial Statement Schedules ..........................................................................................................

Item 15.

5
5
5
6
8
8
9
9
10
10
10
10
11
13
19
19
19
20

21
23
24
39
41
75
76
76

77
77
77
77
77
77

78
78

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Forward-Looking Statements

Certain statements contained in this annual report are forward-looking statements. Forward-looking statements
typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,”
“project,” “positioned,” “strategy” and similar expressions. These are based on assumptions and assessments
made by our management in light of experience and perception of historical trends, current conditions, expected
future developments and other factors that we believe to be appropriate. These forward-looking statements are
subject to a number of risks and uncertainties, including without limitation: product demand; energy prices;
weather; competition; credit market conditions; access to available and feasible financing; the impact of
recessionary conditions; consumer debt levels; changes in laws or regulations; war and the prospect of war,
including terrorist activity; inflation; the ability to hire and retain qualified employees; construction delays; the
compromising of confidentiality, availability or integrity of information, including cyber attacks; and raw material
costs of suppliers. Certain of these risks are discussed in more detail in the “Risk Factors” section contained in
Item 1A under Part 1 of this Annual Report on Form 10-K for the year ended August 26, 2017, and these Risk
Factors should be read carefully. Forward-looking statements are not guarantees of future performance and actual
results; developments and business decisions may differ from those contemplated by such forward-looking
statements, and events described above and in the “Risk Factors” could materially and adversely affect our
business. Forward-looking statements speak only as of the date made. Except as required by applicable law, we
undertake no obligation to update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. Actual results may materially differ from anticipated results.

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Item 1. Business

Introduction

PART I

AutoZone, Inc. (“AutoZone,” the “Company,” “we,” “our” or “us”) is the nation’s leading retailer, and a leading
distributor, of automotive replacement parts and accessories in the United States. We began operations in 1979
and at August 26, 2017, operated 5,465 AutoZone stores in the United States, including Puerto Rico; 524 stores in
Mexico; 14 stores in Brazil; and 26 Interamerican Motor Corporation (“IMC”) branches. Each AutoZone 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. At August
26, 2017, in 4,592 of our domestic AutoZone stores, we also had a commercial sales program that provides
commercial credit and prompt delivery of parts and other products to local, regional and national repair garages,
dealers, service stations and public sector accounts. We also have commercial programs in AutoZone stores in
Mexico and Brazil. IMC branches carry an extensive line of original equipment quality import replacement parts.
We also sell the ALLDATA brand automotive diagnostic and repair software through www.alldata.com and
www.alldatadiy.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-
automotive products through www.autozone.com, and accessories, performance and replacement parts through
www.autoanything.com, and our commercial customers can make purchases through www.autozonepro.com and
www.imcparts.net. We do not derive revenue from automotive repair or installation services.

At August 26, 2017, our AutoZone stores and IMC branches were in the following locations:

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Location
Count

Alabama ..........................................................................................................................................
Alaska..............................................................................................................................................
Arizona............................................................................................................................................
Arkansas..........................................................................................................................................
California ........................................................................................................................................
Colorado..........................................................................................................................................
Connecticut .....................................................................................................................................
Delaware .........................................................................................................................................
Florida .............................................................................................................................................
Georgia............................................................................................................................................
Hawaii .............................................................................................................................................
Idaho................................................................................................................................................
Illinois .............................................................................................................................................
Indiana.............................................................................................................................................
Iowa.................................................................................................................................................
Kansas .............................................................................................................................................
Kentucky .........................................................................................................................................
Louisiana .........................................................................................................................................
Maine ..............................................................................................................................................
Maryland .........................................................................................................................................
Massachusetts..................................................................................................................................
Michigan .........................................................................................................................................
Minnesota........................................................................................................................................
Mississippi ......................................................................................................................................
Missouri ..........................................................................................................................................
Montana ..........................................................................................................................................
Nebraska..........................................................................................................................................
Nevada ............................................................................................................................................
New Hampshire...............................................................................................................................
New Jersey ......................................................................................................................................

110
8
136
64
585
87
47
16
318
200
4
28
238
155
29
50
95
123
13
75
81
188
54
94
112
13
20
64
23
96

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New Mexico ....................................................................................................................................
New York ........................................................................................................................................
North Carolina.................................................................................................................................
North Dakota...................................................................................................................................
Ohio.................................................................................................................................................
Oklahoma ........................................................................................................................................
Oregon.............................................................................................................................................
Pennsylvania ...................................................................................................................................
Puerto Rico......................................................................................................................................
Rhode Island....................................................................................................................................
South Carolina.................................................................................................................................
South Dakota...................................................................................................................................
Tennessee ........................................................................................................................................
Texas ...............................................................................................................................................
Utah.................................................................................................................................................
Vermont ..........................................................................................................................................
Virginia ...........................................................................................................................................
Washington .....................................................................................................................................
Washington, DC ..............................................................................................................................
West Virginia ..................................................................................................................................
Wisconsin........................................................................................................................................
Wyoming.........................................................................................................................................
Total Domestic AutoZone stores.....................................................................................................
Mexico ............................................................................................................................................
Brazil...............................................................................................................................................
Total AutoZone stores.....................................................................................................................
IMC branches ..................................................................................................................................
Total locations.................................................................................................................................

62
189
219
3
259
74
43
177
43
17
88
7
165
597
58
2
123
88
5
44
67
9
5,465
524
14
6,003
26
6,029

Marketing and Merchandising Strategy

We are dedicated to providing customers with superior service and trustworthy advice as well as quality
automotive parts and products at a great value in conveniently located, well-designed stores. Key elements of this
strategy are:

Customer Service
Customer service is the most important element in our marketing and merchandising strategy, which is based
upon consumer marketing research. We emphasize that our AutoZoners (employees) should always put customers
first by providing prompt, courteous service and trustworthy advice. Our electronic parts catalog assists in the
selection of parts as well as identifying any associated warranties that are offered by us or our vendors. We sell
automotive hard parts, maintenance items, accessories and non-automotive parts through www.autozone.com for
pick-up in store or to be shipped directly to a customer’s home or business. Additionally, we offer smartphone
apps that provide customers with store locations, driving directions, operating hours, ability to purchase products
and product availability.

Our stores generally open at 7:30 or 8 a.m. and close between 8 and 10 p.m. Monday through Saturday and
typically open at 9 a.m. and close between 6 and 9 p.m. on Sunday. However, some stores are open 24 hours, and
some have extended hours of 6 or 7 a.m. until midnight seven days a week.

We also provide specialty tools through our Loan-A-Tool program. Customers can borrow a specialty tool, such
as a steering wheel puller, for which a do-it-yourself (“DIY”) customer or a repair shop would have little or no use
other than for a single job. AutoZoners also provide other free services, including check engine light readings
where allowed by law, battery charging, the collection of used oil for recycling, and the testing of starters,
alternators and batteries.

Merchandising
The following tables show some of the types of products that we sell by major category of items:

Maintenance

Antifreeze & Windshield Washer Fluid
Brake Drums, Rotors, Shoes & Pads
Chemicals, including Brake & Power
Steering Fluid, Oil & Fuel Additives

Oil & Transmission Fluid
Oil, Air, Fuel & Transmission Filters
Oxygen Sensors
Paint & Accessories
Refrigerant & Accessories
Shock Absorbers & Struts
Spark Plugs & Wires
Windshield Wipers

Discretionary

Air Fresheners
Cell Phone Accessories
Drinks & Snacks
Floor Mats & Seat Covers
Interior & Exterior Accessories
Mirrors
Performance Products
Protectants & Cleaners
Sealants & Adhesives
Steering Wheel Covers
Stereos & Radios
Tools
Wash & Wax

Failure
A/C Compressors
Batteries & Accessories
Bearings
Belts & Hoses
Calipers
Carburetors
Chassis
Clutches
CV Axles
Engines
Fuel Pumps
Fuses
Ignition
Lighting
Mufflers
Radiators
Tire Repair
Thermostats
Starters & Alternators
Water Pumps

We believe that the satisfaction of our customers is often impacted by our ability to provide specific automotive
products as requested. Each store carries the same basic products, but we tailor our hard parts inventory to the
makes and models of the vehicles in each store’s trade area, and our sales floor products are tailored to the local
store’s demographics. Our hub stores (including mega hubs, which carry an even broader assortment) carry a
larger assortment of products that are delivered to local satellite stores. We are constantly updating the products
we offer to ensure that our inventory matches the products our customers need or desire.

Pricing
We want to be the value leader in our industry, by consistently providing quality merchandise at the right price,
backed by a satisfactory warranty and outstanding customer service. For many of our products, we offer multiple
value choices in a good/better/best assortment, with appropriate price and quality differences from the “good”
products to the “better” and “best” products. A key differentiating component versus our competitors is our
exclusive line of in-house brands, which includes the Valucraft, AutoZone, SureBilt, ProElite, Duralast, Duralast
Max, Duralast Gold, Duralast Platinum, Duralast ProPower and Duralast GT brands. We believe that our overall
value compares favorably to that of our competitors.

Brand Marketing: Advertising and Promotions
We believe that targeted advertising and promotions play important roles in succeeding in today’s environment.
We are constantly working to understand our customers’ wants and needs so that we can build long-lasting, loyal
relationships. We utilize promotions, advertising and loyalty programs primarily to highlight our great value and
the availability of high quality parts. Broadcast and internet media are our primary advertising methods of driving
retail traffic to our stores, while we leverage a dedicated sales force and our ProVantage loyalty program to drive
commercial sales. In the stores, we utilize in-store signage, in-store circulars, and creative product placement and
promotions to help educate customers about products that they need.

Store Design and Visual Merchandising
We design and build stores for high visual impact. The typical AutoZone store utilizes colorful exterior and
interior signage, exposed beams and ductwork and brightly lit interiors. Maintenance products, accessories and
non-automotive items are attractively displayed for easy browsing by customers. In-store signage and special
displays promote products on floor displays, end caps and shelves.

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Commercial

Our commercial sales program operates in a highly fragmented market, and we are one of the leading distributors
of automotive parts and other products to local, regional and national repair garages, dealers, service stations and
public sector accounts in the United States, Puerto Rico and Mexico. As a part of the domestic store program, we
offer credit and delivery to our customers, as well as online ordering through www.autozonepro.com and
www.imcparts.net. Through our hub stores, we offer a greater range of parts and products desired by professional
technicians. We have dedicated sales teams focused on independent repair shops as well as national, regional and
public sector commercial accounts.

Store Operations

Store Formats
Substantially all AutoZone stores are based on standard store formats, resulting in generally consistent
appearance, merchandising and product mix. Approximately 85% to 90% of each store’s square footage is selling
space. In our satellite stores, approximately 40% to 45% of our space is dedicated to hard parts inventory, while
our hub stores and mega hubs have 75% to 85% of their space utilized for hard parts. The hard parts inventory
area is generally fronted by counters or pods that run the depth or length of the store, dividing the hard parts area
from the remainder of the store. The remaining selling space contains displays of maintenance, accessories and
non-automotive items.

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We believe that our stores are “destination stores,” generating their own traffic rather than relying on traffic
created by adjacent stores. Therefore, we situate most stores on major thoroughfares with easy access and good
parking.

Store Personnel and Training
We provide on-the-job training as well as formal training programs, including an annual national sales meeting,
store meetings on specific sales and product topics, standardized training manuals and computer based modules
and a specialist program that provides training to AutoZoners in several areas of technical expertise from the
Company, our vendors and independent certification agencies. All domestic AutoZoners are encouraged to
complete tests resulting in certifications by the National Institute for Automotive Service Excellence (“ASE”),
which is broadly recognized for training certification in the automotive industry. Training is supplemented with
frequent store visits by management.

Store managers, sales representatives, commercial sales managers, and managers at various levels across the
organization receive financial incentives through performance-based bonuses. In addition, our growth has
provided opportunities for the promotion of qualified AutoZoners. We believe these opportunities are important to
attract, motivate and retain high quality AutoZoners.

All store and branch support functions are centralized in our store support centers located in Memphis, Tennessee;
Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil, and our branch support center located in Canoga
Park, California. We believe that this centralization enhances consistent execution of our merchandising and
marketing strategies at the store level, while reducing expenses and cost of sales.

Store Automation
All of our AutoZone stores have Z-net, our proprietary electronic catalog that enables our AutoZoners to
efficiently look up the parts that our customers need and to provide complete job solutions, advice and
information for customer vehicles. Z-net provides parts information based on the year, make, model and engine
type of a vehicle and also tracks inventory availability at the store, at other nearby stores and through special
order. The Z-net display screens are placed on the hard parts counter or pods, where both the AutoZoner and
customer can view the screen.

Our AutoZone stores utilize our computerized proprietary Store Management System, which includes bar code
scanning and point-of-sale data collection terminals. The Store Management System provides administrative
assistance and improved personnel scheduling at the store level, as well as enhanced merchandising information
and improved inventory control. We believe the Store Management System also enhances customer service
through faster processing of transactions and simplified warranty and product return procedures.

Store Development

The following table reflects our location development during the past five fiscal years:

Locations:
Beginning ...........................................
Acquired(1)..........................................
New ....................................................
Closed.................................................
Net new ..............................................
Relocated............................................
Ending ................................................

2017

2016

Fiscal Year
2015

2014

2013

5,814
–
215
–
215
5
6,029

5,609
–
205
–
205
6
5,814

5,391
17
202
1
201
5
5,609

5,201
–
190
–
190
8
5,391

5,006
–
197
2
195
11
5,201

(1) 17 IMC branches acquired on September 27, 2014.

We believe that expansion opportunities exist in markets that we do not currently serve, as well as in markets
where we can achieve a larger presence. We undertake substantial research prior to entering new markets. The
most important criteria for opening a new AutoZone store or IMC branch are the projected future profitability and
the ability to achieve our required investment hurdle rate. Key factors in selecting new site and market locations
for AutoZone stores and IMC branches include population, demographics, vehicle profile, customer buying
trends, commercial businesses, number and strength of competitors’ stores and the cost of real estate. In reviewing
the vehicle profile, we also consider the number of vehicles that are seven years old and older, or “our kind of
vehicles”; these vehicles are generally no longer under the original manufacturers’ warranties and require more
maintenance and repair than newer vehicles. We seek to open new AutoZone stores in high visibility sites in high
traffic locations within or contiguous to existing market areas and attempt to cluster development in markets in a
relatively short period of time. When selecting future sites and market locations for our IMC branches, we look
for locations close to major highways to support IMC’s delivery schedule and also consider the population of
AutoZone stores in the market. In addition to continuing to lease or develop our own locations, we evaluate and
may make strategic acquisitions.

Purchasing and Supply Chain

Merchandise is selected and purchased for all AutoZone stores through our store support centers located in
Memphis, Tennessee; Monterrey, Mexico and Sao Paulo, Brazil. Additionally, we have an office in Shanghai,
China to support our sourcing efforts in Asia. Merchandise is selected and purchased for all IMC branches
through our branch support center located in Canoga Park, California. In fiscal 2017, one class of similar products
accounted for approximately 11 percent of our total sales, and one vendor supplied approximately 11 percent of
our purchases. No other class of similar products accounted for 10 percent or more of our total sales, and no other
individual vendor provided more than 10 percent of our total purchases. We believe that alternative sources of
supply exist, at similar costs, for most types of product sold. Most of our merchandise flows through our
distribution centers to our stores by our fleet of tractors and trailers or by third-party trucking firms.

We ended fiscal 2017 with 186 domestic hub stores, which have a larger assortment of products as well as regular
replenishment items that can be delivered to a store in its network within 24 hours. Hub stores are generally
replenished from distribution centers multiple times per week. Hub stores have increased our ability to distribute
products on a timely basis to many of our stores and to expand our product assortment.

During fiscal 2014 and 2015, we tested two new concepts of our domestic supply chain strategy, increased
delivery frequency to our stores utilizing our distribution centers and significantly expanded parts assortments in
select stores we call mega hubs. Our tests were concluded during fiscal 2015, and both initiatives were expanded
to additional locations in fiscal 2016 and 2017.

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Increased delivery frequency focuses on improving our in-stock position of our core store-stocked product by
providing deliveries to certain stores multiple times per week. We are continuing to test our new frequency of
delivery for certain volume stores to ensure the model is producing sufficient benefit to justify the costs. We had
roughly 2,300 stores receiving more deliveries multiple times per week at the end of the third quarter of fiscal
2017. As the results have not been conclusive to date, we are continuing to test different scenarios to determine
the optimal approach.

A mega hub store carries inventory of 80,000 to 100,000 unique SKUs, approximately twice what a hub store
carries. Mega hubs provide coverage to both surrounding stores and other hub stores multiple times a day or on an
overnight basis. Currently, we have over 4,000 stores with access to mega hub inventory. A majority of these
4,000 stores receive their service on an overnight basis today, but as we expand our mega hubs, more of them will
receive this service same day and many will receive it multiple times per day. We ended fiscal 2017 with 16 mega
hubs, an increase of five since fiscal 2016.

Competition

The sale of automotive parts, accessories and maintenance items is highly competitive in many areas, including
name recognition, product availability, customer service, store location and price. AutoZone competes in the
aftermarket auto parts industry, which includes both the retail DIY and commercial do-it-for-me (“DIFM”) auto
parts and products markets.

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Competitors include national, regional and local auto parts chains, independently owned parts stores, online parts
stores, wholesale distributors, jobbers, repair shops, car washes and auto dealers, in addition to discount and mass
merchandise stores, department stores, hardware stores, supermarkets, drugstores, convenience stores, home
stores, and other online retailers that sell aftermarket vehicle parts and supplies, chemicals, accessories, tools and
maintenance parts. AutoZone competes on the basis of customer service, including the trustworthy advice of our
AutoZoners; merchandise quality, selection and availability; price; product warranty; store layouts, location and
convenience; and the strength of our AutoZone brand name, trademarks and service marks.

Trademarks and Patents

We have registered several service marks and trademarks in the United States Patent and Trademark office as well
as in certain other countries, including our service marks, “AutoZone” and “Get in the Zone,” and trademarks,
“AutoZone,” “Duralast,” “Duralast Gold,” “Duralast Platinum,” “Duralast ProPower,” “Duralast ProPower Plus,”
“Duralast ProPower Ultra,” “Duralast ProPower AGM,” “Valucraft,” “ProElite,” “SureBilt,” “ALLDATA,”
“AutoAnything,” “IMC,” “Loan-A-Tool” and “Z-net.” We believe that these service marks and trademarks are
important components of our marketing and merchandising strategies.

Employees

As of August 26, 2017, we employed over 87,000 persons, approximately 61 percent of whom were employed
full-time. About 90 percent of our AutoZoners were employed in stores or in direct field supervision,
approximately 6 percent in distribution centers and approximately 4 percent in store support and other functions.
Included in the above numbers are approximately 8,200 persons employed in our Mexico and Brazil operations.

We have never experienced any material labor disruption and believe that relations with our AutoZoners are good.

AutoZone Websites

AutoZone’s primary website is at http://www.autozone.com. We make available, free of charge, at our investor
relations website, http://www.autozoneinc.com, our Annual Reports on Form 10-K,Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, proxy statements, registration statements and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as
amended, as soon as reasonably feasible after we electronically file such material with, or furnish it to, the
Securities and Exchange Commission. Our website and the information contained therein or linked thereto are not
intended to be incorporated into this Annual Report or Form 10-K.

Executive Officers of the Registrant

The following list describes our executive officers. The title of each executive officer includes the words
“Customer Satisfaction” which reflects our commitment to customer service. Officers are elected by and serve at
the discretion of the Board of Directors.

William C. Rhodes, III, 52—Chairman, President and Chief Executive Officer, Customer Satisfaction
William C. Rhodes, III, was named Chairman of AutoZone during fiscal 2007 and has been President, Chief
Executive Officer and a director since March 2005. Prior to his appointment as President and Chief Executive
Officer, Mr. Rhodes was Executive Vice President – Store Operations and Commercial. Previously, he held
several key management positions with the Company. Prior to 1994, Mr. Rhodes was a manager with Ernst &
Young LLP. Mr. Rhodes is a member of the Board of Directors for Dollar General Corporation.

William T. Giles, 58—Chief Financial Officer and Executive Vice President – Finance and Information
Technology, Customer Satisfaction
William T. Giles was named Chief Financial Officer during May 2006. He has also held other responsibilities at
various times including Executive Vice President of Finance, Information Technology, ALLDATA and Store
Development. From 1991 to May 2006, he held several positions with Linens N’ Things, Inc., most recently as the
Executive Vice President and Chief Financial Officer. Prior to 1991, he was with Melville, Inc. and
PricewaterhouseCoopers. Mr. Giles is a member of the Board of Directors for Brinker International.

Mark A. Finestone, 56—Executive Vice President – Merchandising, Supply Chain and Marketing, Customer
Satisfaction
Mark A. Finestone was named Executive Vice President – Merchandising, Supply Chain and Marketing during
October 2015. Previously, he was Senior Vice President – Merchandising and Store Development since 2014,
Senior Vice President – Merchandising from 2008 to 2014, and Vice President – Merchandising from 2002 to
2008. Prior to joining AutoZone in 2002, Mr. Finestone worked for May Department Stores for 19 years where he
held a variety of leadership roles which included Divisional Vice President, Merchandising.

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William W. Graves, 57—Executive Vice President – Mexico, Brazil, IMC and Store Development, Customer
Satisfaction
William W. Graves was named Executive Vice President – Mexico, Brazil, IMC and Store Development during
October 2015. Previously, he was Senior Vice President – Supply Chain and International since 2012. Prior
thereto, he was Senior Vice President – Supply Chain from 2006 to 2012 and Vice President – Supply Chain from
2000 to 2006. From 1992 to 2000, Mr. Graves served in various capacities within the Company.

Thomas B. Newbern, 55—Executive Vice President – Store Operations, Commercial, Loss Prevention and
ALLDATA, Customer Satisfaction
Thomas B. Newbern was named Executive Vice President – Store Operations, Commercial, Loss Prevention and
ALLDATA during February 2017. Prior to that, he was Executive Vice President – Store Operations, Commercial
and Loss Prevention since October 2015. Previously, he held the titles Senior Vice President – Store Operations
and Loss Prevention from 2014 to 2015, Senior Vice President – Store Operations and Store Development from
2012 to 2014, Senior Vice President – Store Operations from 2007 to 2012 and Vice President – Store Operations
from 1998 to 2007. Prior thereto, he served in various capacities within the Company.

Philip B. Daniele, 48—Senior Vice President – Commercial, Customer Satisfaction
Philip B. Daniele was elected Senior Vice President – Commercial during November 2015. Prior to that, he was
Vice President – Commercial since 2013 and Vice President – Merchandising from 2008 to 2013. Previously, he
was Vice President – Store Operations from 2005 to 2008. From 1993 until 2008, Mr. Daniele served in various
capacities within the Company.

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Ronald B. Griffin, 63—Senior Vice President and Chief Information Officer, Customer Satisfaction
Ronald B. Griffin was elected Senior Vice President and Chief Information Officer during June 2012. Prior to
that, he was Senior Vice President, Global Information Technology at Hewlett-Packard Company. During his
tenure at Hewlett-Packard Company, he also served as the Chief Information Officer for the Enterprise Business
Division. Prior to that, Mr. Griffin was Executive Vice President and Chief Information Officer for Fleming
Companies, Inc. He also spent over 12 years with The Home Depot, Inc., with the last eight years in the role of
Chief Information Officer. Mr. Griffin also served at Deloitte & Touche LLP and Delta Air Lines, Inc.

James C. Griffith, 52—Senior Vice President – Store Operations, Customer Satisfaction
James C. Griffith was named Senior Vice President – Store Operations in November 2015. Prior to that, he was
Vice President – Store Development since October 2010 and Vice President – Store Operations since 2007. Prior
thereto, he held several management positions within the Company.

William R. Hackney, 52—Senior Vice President – Merchandising, Customer Satisfaction
William R. Hackney was named Senior Vice President, Merchandising in October 2015. His career with
AutoZone began in 1983, and he has held several key management roles within the Company, including Vice
President – Store Operations Support and Vice President – Merchandising.

Rodney C. Halsell, 49—Senior Vice President – Supply Chain, Customer Satisfaction
Rodney C. Halsell was named Senior Vice President – Supply Chain during October 2015. Prior to that, he was
Vice President – Distribution since 2005. From 1985 to 2005, he held several management positions and served in
various capacities within the Company.

Charlie Pleas, III, 52—Senior Vice President and Controller, Customer Satisfaction
Charlie Pleas, III, was elected Senior Vice President and Controller during 2007. Prior to that, he was Vice
President and Controller since 2003. Previously, he was Vice President – Accounting since 2000, and Director of
General Accounting since 1996. Prior to joining AutoZone, Mr. Pleas was a Division Controller with Fleming
Companies, Inc. where he served in various capacities since 1988. Mr. Pleas is a member of the Board of
Directors for Kirkland’s Inc.

Albert Saltiel, 53—Senior Vice President – Marketing and E-Commerce, Customer Satisfaction
Albert Saltiel was named Senior Vice President – Marketing and E-Commerce during October 2014. Previously,
he was elected Senior Vice President – Marketing since 2013. Prior to that, he was Chief Marketing Officer and a
key member of the leadership team at Navistar International Corporation. Mr. Saltiel has also been with Sony
Electronics as General Manager, Marketing, and Ford Motor Company where he held multiple marketing roles.

Richard C. Smith, 53—Senior Vice President – Human Resources, Customer Satisfaction
Richard C. Smith was elected Senior Vice President – Human Resources in December 2015. He has been an
AutoZoner since 1985, previously holding the position of Vice President of Stores since 1997. Prior thereto, he
served in various capacities within the Company.

Kristen C. Wright, 41—Senior Vice President – General Counsel & Secretary, Customer Satisfaction
Kristen C. Wright was named Senior Vice President – General Counsel & Secretary effective January 2014. She
previously held the title of Vice President – Assistant General Counsel & Assistant Secretary since January 2012.
Before joining AutoZone, she was a partner with the law firm of Bass, Berry & Sims PLC.

Item 1A. Risk Factors

Our business is subject to a variety of risks. Set forth below are certain of the important risks that we face, the
occurrence of which could have a material adverse effect on our business. These risks are not the only ones we
face. Our business could also be affected by additional factors that are presently unknown to us or that we
currently believe to be immaterial to our business.

If demand for our products slows, then our business may be materially adversely affected.

Demand for the products we sell may be affected by a number of factors we cannot control, including:

•

the number of older vehicles in service. Vehicles seven years old or older are generally no longer under
the original vehicle manufacturers’ warranties and tend to need more maintenance and repair than newer
vehicles.

rising energy prices. Increases in energy prices may cause our customers to defer purchases of certain of
our products as they use a higher percentage of their income to pay for gasoline and other energy costs
and may drive their vehicles less, resulting in less wear and tear and lower demand for repairs and
maintenance.

the economy. In periods of declining economic conditions, consumers may defer vehicle maintenance or
repair and discretionary spending. Additionally, such conditions may affect our customers’ ability to
obtain credit. During periods of expansionary economic conditions, more of our DIY customers may pay
others to repair and maintain their vehicles instead of working on their own vehicles, or they may
purchase new vehicles.

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the weather. Mild weather conditions may lower the failure rates of automotive parts, while wet
conditions may cause our customers to defer maintenance and repair on their vehicles. Extremely hot or
cold conditions may enhance demand for our products due to increased failure rates of our customers’
automotive parts.

technological advances. Advances in automotive technology and parts design can result in cars needing
maintenance less frequently and parts lasting longer.

For the long term, demand for our products may be affected by:

•

the number of miles vehicles are driven annually. Higher vehicle mileage increases the need for
maintenance and repair. Mileage levels may be affected by gas prices and other factors.

the quality of the vehicles manufactured by the original vehicle manufacturers and the length of the
warranties or maintenance offered on new vehicles.

restrictions on access to telematics and diagnostic tools and repair information imposed by the original
vehicle manufacturers or by governmental regulation, which may cause vehicle owners to rely on dealers
to perform maintenance and repairs.

All of these factors could result in immediate and longer term declines in the demand for our products, which
could adversely affect our sales, cash flows and overall financial condition.

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.

The sale of automotive parts, accessories and maintenance items is highly competitive, and sales volumes are
dependent on many factors, including name recognition, product availability, customer service, store location and
price. Competitors are opening locations near our existing locations. AutoZone competes as a provider in both the
DIY and DIFM auto parts and accessories markets.

Our competitors include national, regional and local auto parts chains, independently owned parts stores, online
automotive parts stores or marketplaces, wholesale distributors, jobbers, repair shops, car washes and auto dealers,
in addition to discount and mass merchandise stores, hardware stores, supermarkets, drugstores, convenience
stores, home stores, and other retailers that sell aftermarket vehicle parts and supplies, chemicals, accessories,
tools and maintenance parts. Although we believe we compete effectively on the basis of customer service,
including the knowledge and expertise of our AutoZoners; merchandise quality, selection and availability; product
warranty; store layout, location and convenience; price; and the strength of our AutoZone brand name, trademarks
and service marks, some of our competitors may gain competitive advantages, such as greater financial and
marketing resources allowing them to sell automotive products at lower prices, larger stores with more
merchandise, longer operating histories, more frequent customer visits and more effective advertising. Online and
multi-channel retailers often focus on delivery services, offering customers faster, guaranteed delivery times and
low-price or free shipping. Some online businesses have lower operating costs than we do and may not be
required to collect and remit sales taxes in all U.S. states, which may negatively impact our ability to be price-
competitive on a tax-included basis. 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 and through mobile commerce 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, and feedback from other customers before
purchasing our products either online, in the physical stores, or through a combination of both offerings. We
believe that we compete effectively on the basis of merchandise availability as a result of investments in inventory
available for immediate sale, the development of a robust hub and mega hub distribution network providing
efficient access to obtain products required on-demand, options to order products online or by telephone and pick
them up in stores and options for special orders directly from our vendors. We also offer hassle-free returns to our
customers. In addition, we believe that customers value the personal interaction with a salesperson that is
qualified to offer trustworthy advice and provide other free services such as parts testing.

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We also utilize promotions, advertising and our loyalty programs to drive customer traffic and compete more
effectively, and we must regularly assess and adjust our efforts to address changes in the competitive marketplace.
If we are unable to continue to manage readily-available inventory demand and competitive delivery options as
well as develop successful competitive strategies, including the maintenance of effective promotions, advertising
and loyalty card programs, or if our competitors develop more effective strategies, we could lose customers and
our sales and profits may decline.

We may not be able to sustain our historic rate of sales growth.

We have increased our location count in the past five fiscal years, growing from 5,006 locations at August 25,
2012, to 6,029 locations at August 26, 2017, an average location increase per year of 4%. Additionally, we have
increased annual revenues in the past five fiscal years from $8.604 billion in fiscal 2012 to $10.889 billion in
fiscal 2017, an average increase per year of 5%. Annual revenue growth is driven by the opening of new
locations, the development of new commercial programs and increases in same store sales. We open new
locations 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 and microeconomic conditions unique to
the automotive industry. 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 the economic pressures mentioned
above. We cannot provide any assurance that we will continue to open locations at historical rates or continue to
achieve increases in same store sales.

Consolidation among our competitors may negatively impact our business.

Historically some of our competitors have merged. Consolidation among our competitors could enhance their
market share and financial position, provide them with the ability to achieve better purchasing terms and provide
more competitive prices to customers for whom we compete, and allow them to utilize merger synergies and cost
savings to increase advertising and marketing budgets to more effectively compete for customers. Consolidation
by our competitors could also increase their access to local market parts assortment.

These consolidated competitors could take sales volume away from us in certain markets, could achieve greater
market penetration, could cause us to change our pricing with a negative impact on our margins or could cause us
to spend more money to maintain customers or seek new customers, all of which could negatively impact our
business.

If we cannot profitably increase our market share in the commercial auto parts business, our sales growth
may be limited.

Although we are one of the largest sellers of auto parts in the commercial market, we must effectively compete
against national and regional auto parts chains, independently owned parts stores, wholesalers and jobbers 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, 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.

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 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.

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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. During brief time intervals, there was limited liquidity in the commercial paper
markets, resulting in an absence of commercial paper buyers and extraordinarily high interest rates. 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.

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. Job growth in the U.S. was stagnated
and unemployment was at historically high levels during the Great Recession; however, in recent years, the
unemployment rate has improved to pre-recession levels. Moreover, the United States government continues to
operate under historically large deficits and debt burden. Continued distress in global credit markets, business
failures, inflation, foreign exchange rate fluctuations, significant geo-political conflicts, continued volatility in
energy prices and other factors continue to affect the global economy. Moreover, rising energy prices could
impact our merchandise distribution, commercial delivery, utility and product costs. Over the short term, such
factors could positively impact our business. Over a longer period of time, all of these macroeconomic and geo-
political conditions could adversely affect our sales growth, margins and overhead, which could adversely affect
our financial condition and operations.

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Our business depends upon hiring and retaining qualified employees.

We believe that much of our brand value lies in the quality of the more than 87,000 AutoZoners employed in our
stores, distribution centers, store support centers, ALLDATA, AutoAnything and IMC. Our workforce costs
represent our largest operating expense, and our business is subject to employment laws and regulations, including
requirements related to minimum wage and benefits. 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 cannot be assured
that we can continue to hire and retain qualified employees at current wage rates since we operate in a competitive
labor market and there is a risk of market increases in compensation.

If we are unable to hire, properly train and/or retain qualified employees, we could experience higher employment
costs, reduced sales, losses of customers and diminution of our brand, which could adversely affect our earnings.
If we do not maintain competitive wages, 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 laws and/or regulations could have a material adverse effect on our results of operations, financial
condition and cash flows.

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 favorable prices and payment terms. If our merchandise offerings do not meet our customers’ expectations
regarding quality and safety, we could experience lost sales, increased costs and exposure to legal and reputational
risk. 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 and
result in costly product recalls and other liabilities. 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. In addition, negative customer perceptions regarding the safety or quality of the products we sell could cause
our customers to seek alternative sources for their needs, resulting in lost sales. In those circumstances, it may be
difficult and costly for us to rebuild our reputation and regain the confidence of our customers. Moreover, our
vendors are impacted by global economic conditions. Credit market and other macroeconomic conditions could
have a material adverse effect on the ability of our suppliers to finance and operate their businesses, resulting in
increased product costs and difficulties in meeting our inventory demands. If any of our significant vendors
experience financial difficulties or otherwise 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.

We directly imported approximately 10% of our purchases in fiscal 2017, but many of our domestic vendors
directly import their products or components of their products. Disruptions in the price or flow of these goods for
any reason, such as political unrest or acts of war, currency fluctuations, disruptions in maritime lanes, port labor
disputes and 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, merchandise quality or safety issues, transport availability and cost, increases in wage
rates and taxes, transport security, inflation and other factors relating to the suppliers and the countries in which
they are located or from which they import, are beyond our control and could adversely affect our operations and
profitability. In addition, the United States' foreign trade policies, tariffs and other impositions on imported goods,
trade sanctions imposed on certain countries, the limitation on the importation of certain types of goods or of
goods containing certain materials from other countries and other factors relating to foreign trade and port labor
agreements are beyond our control. These and other factors affecting our suppliers and our access to products
could adversely affect our business and financial performance. As we increase our imports of merchandise from
foreign vendors, the risks associated with these imports will also increase.

Our ability to grow depends in part on new location openings, existing location 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 locations and
expand and remodel existing locations to meet customers’ needs on a timely and profitable basis. Accomplishing
our new and existing location expansion goals will depend upon a number of factors, including the ability to
partner with developers and landlords to obtain suitable sites for new and expanded locations at acceptable costs,
the hiring and training of qualified personnel and the integration of new locations into existing operations. There
can be no assurance we will be able to achieve our location expansion goals, manage our growth effectively,
successfully integrate the planned new locations into our operations or operate our new, remodeled and expanded
locations profitably.

In addition, we extensively utilize our hub network, our supply chain and logistics management techniques to
efficiently stock our locations. We have made, and plan to continue to make, significant investments in our supply
chain to improve our ability to provide the best parts at the right price and to meet consumer product needs. 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 United States, do not provide the
anticipated benefits, we could experience sub-optimal inventory levels in our locations or increases in our
operating costs, which could adversely affect our sales volume and/or our margins.

Our failure to protect our reputation could have a material adverse effect on our brand name and
profitability.

We believe our continued strong sales growth is driven in significant part by our brand name. The value in our
brand name and its continued effectiveness in driving our sales growth are dependent to a significant degree on
our ability to maintain our reputation for safety, high product quality, friendliness, service, trustworthy advice,
integrity and business ethics. Any negative publicity about these areas could damage our reputation and may
result in reduced demand for our merchandise. The increasing use of technology also poses a risk as customers are
able to quickly compare products and prices and use social media to provide feedback in a manner that is rapidly
and broadly dispersed. Our reputation could be impacted if customers have a bad experience and share it over
social media.

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. Failure to comply with applicable laws and regulations, to maintain an effective
system of internal controls or to provide accurate and timely financial statement information could also hurt our
reputation. If we fail to comply with existing or future laws or regulations, we may be subject to governmental or
judicial fines or sanctions, while incurring substantial legal fees and costs. In addition, our capital and operating
expenses could increase due to implementation of and compliance with existing and future laws and regulations or
remediation measures that may be required if we are found to be noncompliant with any existing or future laws or
regulations. The inability to pass through any increased expenses through higher prices would have an adverse
effect on our results of operations.

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.

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.

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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 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.

Failure to protect or effectively respond to a breach of the privacy and security of customers’, suppliers’,
AutoZoners’ or Company information could damage our reputation, subject us to litigation, and cause us
to incur substantial costs.

Our business, like that of most retailers and distributors, involves the receipt, storage and transmission of personal
information about our customers, suppliers and AutoZoners, some of which is entrusted to third-party service
providers and vendors. Failure to protect the security of our customers’, suppliers’, employees’ and company
information could subject us to costly regulatory enforcement actions, expose us to litigation and impair our
reputation, which may have a negative impact on our sales. While we and our third-party service providers and
vendors take significant steps to protect customer, supplier, employee and other confidential information,
including maintaining compliance with payment card industry standards, these security measures may be
breached in the future due to cyber-attack, employee error, system compromises, fraud, trickery, hacking or other
intentional or unintentional acts, and unauthorized parties may obtain access to this data. Failure to effectively
respond to system compromises may undermine our security measures. The methods used to obtain unauthorized
access are constantly evolving, and may be difficult to anticipate or detect for long periods of time. As the
regulatory environment related to information security, data collection and use, and privacy becomes increasingly
rigorous, compliance with these requirements could also result in significant additional costs.

We accept payments using a variety of methods, including cash, checks, credit, debit and gift cards, and we may
offer new payment options over time, which may have information security risk implications. As a retailer
accepting debit and credit cards for payment, we are subject to various industry data protection standards and
protocols, such as the American National Standards Institute encryption standards and payment network security
operating guidelines and Payment Card Industry Data Security Standard. Even though we comply with these
standards and protocols and other information security measures, we cannot be certain that the security measures
we maintain to protect all of our information technology systems are able to prevent, contain or detect any cyber-
attacks, cyber terrorism, or security breaches from known cyber-attacks or malware that may be developed in the
future. To the extent that any cyber-attack or incursion in our or one of our third-party service provider’s
information systems results in the loss, damage or misappropriation of information, we may be materially
adversely affected by claims from customers, financial institutions, regulatory authorities, payment card networks
and others. In certain circumstances, payment card association rules and obligations to which we are subject under
our contracts with payment card processors make us liable to payment card issuers if information in connection
with payment cards and payment card transactions that we hold is compromised, which liabilities could be
substantial. In addition, the cost of complying with stricter and more complex data privacy, data collection and
information security laws and standards could be significant to us.

We rely heavily on our information technology systems for our key business processes. Any failure or
interruption in these systems could have a material adverse impact on our business.

We rely extensively on our information technology systems, some of which are managed or provided by third-
party service providers, to manage inventory, communicate with customers, process transactions and summarize
results. Our systems and the third-party systems we rely on are subject to damage or interruption from power
outages, telecommunications failures, computer viruses, security breaches, malicious cyber-attacks, catastrophic
events, and design or usage errors by our AutoZoners, contractors or third-party service providers. Although we
and our third-party service providers work diligently to maintain our respective systems, we may not be successful
in doing so.

If our systems are damaged or fail to function properly, we may incur substantial costs to repair or replace them,
and may experience loss of critical data and interruptions or delays in our ability to manage inventories or process
transactions, which could result in lost sales, inability to process purchase orders and/or a potential loss of
customer loyalty, which could adversely affect our results of operations.

Business interruptions may negatively impact our location hours, operability of our computer and other
systems, availability of merchandise and otherwise have a material negative effect on our sales and our
business.

War or acts of terrorism, political unrest, unusual weather conditions, hurricanes, tornadoes, windstorms, fires,
earthquakes, floods and other natural or other disasters or the threat of any of them, may result in certain of our
locations being closed for a period of time or permanently or have a negative impact on our ability to obtain
merchandise available for sale in our locations. Some of our merchandise is imported from other countries. If
imported goods become difficult or impossible to bring into the United States, and if we cannot obtain such
merchandise from other sources at similar costs, our sales and profit margins may be negatively affected.

In the event that commercial transportation is curtailed or substantially delayed, our business may be adversely
impacted, as we may have difficulty shipping merchandise to our distribution centers and locations 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.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

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The following table reflects the square footage and number of leased and owned properties for our AutoZone
stores as of August 26, 2017:

Leased .......................................................................................................
Owned .......................................................................................................
Total ..........................................................................................................

No. of AZ
Stores

3,115
2,888
6,003

AZ Store
Square Footage
20,177,795
19,506,505
39,684,300

We have approximately 5.3 million square feet in distribution centers servicing our AutoZone stores, of which
approximately 1.8 million square feet is leased and the remainder is owned. Our 11 AutoZone distribution centers
are located in Arizona, California, Georgia, Illinois, Ohio, Pennsylvania, Tennessee, Texas, Washington and two
in Mexico. We currently have one additional domestic distribution center under development. Of our 26 IMC
branches, 25 branches, consisting of 854,804 square feet, are leased, and one branch, consisting of approximately
23 thousand square feet, is owned. Our primary store support center is located in Memphis, Tennessee, and
consists of approximately 260,000 square feet. We also have three additional AutoZone store support centers
located in Monterrey, Mexico; Chihuahua, Mexico and Sao Paulo, Brazil, and an IMC branch support center
located in Canoga Park, California. The ALLDATA headquarters in Elk Grove, California and the AutoAnything
headquarters space in San Diego, California are leased, and we also own or lease other properties that are not
material in the aggregate.

Item 3. Legal Proceedings

In 2004, we acquired a store site in Mount Ephraim, New Jersey that had previously been the site of a gasoline
service station and contained evidence of groundwater contamination. Upon acquisition, we voluntarily reported
the groundwater contamination issue to the New Jersey Department of Environmental Protection (“NJDEP”) and
entered into a Voluntary Remediation Agreement providing for the remediation of the contamination associated
with the property. We have conducted and paid for (at an immaterial cost to us) remediation of contamination on
the property.

We have also voluntarily investigated and addressed potential vapor intrusion impacts in downgradient residences
and businesses. The NJDEP has asserted, in a Directive and Notice to Insurers dated February 19, 2013 and again
in an Amended Directive and Notice to Insurers dated January 13, 2014 (collectively the “Directives”), that we
are liable for the downgradient impacts under a joint and severable liability theory. By letter dated April 23, 2015,
NJDEP has demanded payment from us, and other parties, in the amount of approximately $296 thousand for
costs incurred by NJDEP in connection with contamination downgradient of the property. By letter dated January
29, 2016, we were informed that NJDEP has filed a lien against the property in connection with approximately
$355 thousand in costs incurred by NJDEP in connection with contamination downgradient of the property. We
have contested, and will continue to contest, any such assertions due to the existence of other entities/sources of
contamination, some of which are named in the Directives and the April 23, 2015 demand, in the area of the
property. Pursuant to the Voluntary Remediation Agreement, upon completion of all remediation required by the
agreement, we believe we should be eligible to be reimbursed up to 75 percent of qualified remediation costs by
the State of New Jersey. We have asked the state for clarification that the agreement applies to off-site work, and
the state is considering the request. Although the aggregate amount of additional costs that we may incur pursuant
to the remediation cannot currently be ascertained, we do not currently believe that fulfillment of our obligations
under the agreement or otherwise will result in costs that are material to our financial condition, results of
operations or cash flow.

In July 2014, we received a subpoena from the District Attorney of the County of Alameda, along with other
environmental prosecutorial offices in the state of California, seeking documents and information related to the
handling, storage and disposal of hazardous waste. We received notice that the District Attorney will seek
injunctive and monetary relief. We are cooperating fully with the request and cannot predict the ultimate outcome
of these efforts, although we have accrued all amounts we believe to be probable and reasonably estimable. We do
not believe the ultimate resolution of this matter will have a material adverse effect on our consolidated financial
position, results of operations or cash flows.

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In April 2016, we received a letter from the California Air Resources Board seeking payment for alleged
violations of the California Health and Safety Code related to the sale of certain aftermarket emission parts in the
State of California. We do not believe that any resolution of the matter will have a material adverse effect on our
consolidated financial position, results of operations or cash flows.

We are involved in various other legal proceedings incidental to the conduct of our business, including several
lawsuits containing class-action allegations in which the plaintiffs are current and former hourly and salaried
employees who allege various wage and hour violations and unlawful termination practices. 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.

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

Our common stock is listed on the New York Stock Exchange under the symbol “AZO.” On October 23, 2017,
there were 2,347 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. Our ability to pay dividends is subject to limitations
imposed by Nevada law. Any future payment of dividends would be dependent upon our financial condition,
capital requirements, earnings and cash flow.

The following table sets forth the high and low sales prices per share of common stock, as reported by the New
York Stock Exchange, for the periods indicated:

Price Range of Common Stock

Fiscal Year ended August 26, 2017:

Fourth quarter.............................................................................................
Third quarter...............................................................................................
Second quarter............................................................................................
First quarter ................................................................................................

Fiscal Year Ended August 27, 2016:

High
$ 709.98
$ 741.05
$ 809.87
$ 779.61

$ 815.98
$ 805.40
$ 796.09
$ 797.29

Low
$ 493.15
$ 682.99
$ 714.99
$ 722.44

$ 742.08
$ 748.51
$ 695.46
$ 714.37

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
program was most recently amended on March 21, 2017, to increase the repurchase authorization by $750 million
bringing total value of authorized share repurchases to $18.65 billion.

Shares of common stock repurchased by the Company during the quarter ended August 26, 2017, were as follows:

Period
May 7, 2017, to June 3, 2017 ..........
June 4, 2017, to July 1, 2017...........
July 2, 2017, to July 29, 2017 .........
July 30, 2017, to August 26, 2017 ..
Total ................................................

Total
Number of
Shares
Purchased
131,400
187,136
-
47,118
365,654

Average
Price Paid
per Share
689.21
$
597.99
-
530.57
622.08

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

131,400
187,136
-
47,118
365,654

Maximum Dollar
Value that May
Yet Be Purchased
Under the Plans
or Programs

960,606,233
848,701,210
848,701,210
823,701,893
823,701,893

The Company also repurchased, at market value, an additional 12,455 shares in fiscal 2017, 12,460 shares in
fiscal 2016, and 15,594 shares in fiscal 2015 from employees electing to sell their stock under the Company’s
Sixth Amended and Restated Employee Stock Purchase Plan (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, 14,205 shares were sold to employees in fiscal 2017,
12,662 shares in fiscal 2016, and 14,222 shares were sold to employees in fiscal 2015. At August 26, 2017,
178,300 shares of common stock were reserved for future issuance under the Employee Plan.

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Once executives have reached the maximum purchases under the Employee Plan, the Fifth 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 1,865 shares in fiscal 2017, 1,943 shares in fiscal 2016, and 2,229 shares in fiscal 2015. At
August 26, 2017, 239,888 shares of common stock were reserved for future issuance under the Executive Plan.

Stock Performance Graph
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, 2012 and ending August 26, 2017.

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140%

120%

100%

80%

60%

40%

20%

Aug-12

Aug-13

Aug-14

Aug-15

Aug-16

Aug-17

AutoZone

S&P 500

S&P Retail
Index

Item 6. Selected Financial Data

(in thousands, except per share data, same store sales and selected
operating data)
Income Statement Data

Net sales .............................................................................................
Cost of sales, including warehouse and delivery expenses .................
Gross profit.........................................................................................
Operating, selling, general and administrative expenses.....................
Operating profit ..................................................................................
Interest expense, net ...........................................................................
Income before income taxes ...............................................................
Income tax expense(2) .........................................................................
Net income(2) ......................................................................................

Diluted earnings per share(2) ...............................................................

Weighted average shares for diluted earnings per share(2) ..................

Adjusted diluted earnings per share(2) ...............................................

Same Store Sales

Increase in domestic comparable store net sales(3) .............................

Balance Sheet Data

Current assets .....................................................................................
Working capital (deficit) ....................................................................
Total assets .........................................................................................
Current liabilities................................................................................
Debt....................................................................................................
Long-term capital leases .....................................................................
Stockholders’ (deficit) ........................................................................

Selected Operating Data

Number of locations at beginning of year...........................................
Acquired locations(4).........................................................................
New locations...................................................................................
Closed locations ...............................................................................
Net new locations .............................................................................
Relocated locations ..........................................................................
Number of locations at end of year ....................................................

AutoZone domestic commercial programs .........................................
Inventory per location (in thousands) .................................................
Total AutoZone store square footage (in thousands) ..........................
Average square footage per AutoZone store.......................................
Increase in AutoZone store square footage.........................................
Average net sales per AutoZone store (in thousands) .........................
Net sales per AutoZone store square foot ...........................................
Total employees at end of year (in thousands)....................................
Inventory turnover(5) ...........................................................................
Accounts payable to inventory ratio ...................................................
After-tax return on invested capital(6)..................................................
Adjusted debt to EBITDAR(7) ............................................................

Net cash provided by operating activities (in thousands)(2).................
Cash flow before share repurchases and changes in debt
(in thousands)(8) ..................................................................................
Share repurchases (in thousands) .......................................................
Number of shares repurchased (in thousands) ....................................

Fiscal Year Ended August
2015

2014

2016

2017

$ 10,888,676
5,149,056
5,739,620
3,659,551
2,080,069
154,580
1,925,489
644,620
1,280,869

$ 10,635,676
5,026,940
5,608,736
3,548,341
2,060,395
147,681
1,912,714
671,707
1,241,007

$ 10,187,340
4,860,309
5,327,031
3,373,980
1,953,051
150,439
1,802,612
642,371
1,160,241

$
$

44.07

29,065

43.26

0.5%

4,611,255
(155,046)
9,259,781
4,766,301
5,081,238
102,322
(1,428,377)

5,814
–
215
–
215
5
6,029

4,592
644
39,684
6,611
3.9%
1,756
266
87
1.4x
107.4%
29.9%
2.6

1,570,612

1,017,585
1,071,649
1,495

$
$

40.70

30,488

40.70

2.4%

4,239,573
(450,747)
8,599,787
4,690,320
4,924,119
102,451
(1,787,538)

5,609
–
205
–
205
6
5,814

4,390
625
38,198
6,600
3.8%
1,773
269
84
1.4x
112.8%
31.3%
2.5

1,641,060

1,166,987
1,452,462
1,903

$
$

36.03

32,206

36.03

3.8%

3,970,294
(742,579)
8,102,349
4,712,873
4,624,876
87,639
(1,701,390)

5,391
17
202
1
201
5
5,609

4,141
610
36,815
6,587
3.9%
1,761
268
81
1.4x
112.9%
31.2%
2.5

1,573,018

1,018,440
1,271,416
2,010

$
$

9,475,313
4,540,406
4,934,907
3,104,684
1,830,223
167,509
1,662,714
592,970
1,069,744

31.57

33,882

31.57

2.8%

3,580,612
(960,482)
7,497,163
4,541,094
4,323,106
83,098
(1,621,857)

5,201
–
190
–
190
8
5,391

3,845
582
35,424
6,571
4.0%
1,724
263
76
1.5x
114.9%
32.1%
2.5

1,365,005

924,706
1,099,212
2,232

$
$

2013(1)

9,147,530
4,406,595
4,740,935
2,967,837
1,773,098
185,415
1,587,683
571,203
1,016,480

27.79

36,581

27.79

0.0%

3,278,013
(891,137)
6,869,167
4,169,150
4,164,078
73,925
(1,687,319)

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5,006
–
197
2
195
11
5,201

3,421
550
34,076
6,552
4.2%
1,736
265
71
1.6x
115.6%
32.9%
2.5

1,481,763

1,007,761
1,387,315
3,511

(1) The fiscal year ended August 31, 2013 consisted of 53 weeks.
(2) As described in the consolidated financial statements and notes, thereto, we have adopted the provisions of
ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvement to Employee Share-based
Payment Accounting, as of August 28, 2016. The ASU simplifies several aspects of accounting for share-
based payments transactions, including income tax consequences, classification of awards as either equity or
liabilities and classification on the statement of cash flows. We have applied the amendment requiring
recognition of excess tax deficiencies and tax benefits in the income statement, prospectively. Prior period
income tax expense, net income and diluted earnings per share amounts were not restated. The adoption of

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the new standard increased diluted earnings per share for fiscal 2017 by $0.81, driven by a lower effective tax
rate of 162 basis points, partially offset by a change to the dilutive outstanding shares calculation. Excluding
the impact of excess tax benefits from option exercises, adjusted diluted earnings per share was $43.26. See
Reconciliation of Non-GAAP Financial Measures in Management’s Discussion and Analysis of Financial
Condition and Results of Operations. We have applied the amendment relating to the presentation of the
excess tax benefits on the Consolidated Statements of Cash Flows retrospectively. Prior period amounts for
net cash provided by operating activities for all years presented above were restated to conform to the current
period presentation.

(3) The domestic comparable sales increases are based on sales for all AutoZone domestic stores open at least
one year. 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.

(4) 17 IMC branches acquired on September 27, 2014.
(5) Inventory turnover is calculated as cost of sales divided by the average merchandise inventory balance over

the trailing 5 quarters.

(6) 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 operating leases). See Reconciliation of Non-GAAP
Financial Measures in Management’s Discussion and Analysis of Financial Condition and Results of
Operations.

(7) Adjusted debt to EBITDAR is defined as the sum of total debt, capital 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.

(8) 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.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are the nation’s leading retailer, and a leading distributor, of automotive replacement parts and accessories in
the United States. We began operations in 1979 and at August 26, 2017, operated 5,465 AutoZone stores in the
United States, including Puerto Rico; 524 stores in Mexico; 14 stores in Brazil; and 26 IMC branches. Each
AutoZone 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. At
August 26, 2017, in 4,592 of our domestic AutoZone stores, we also had a commercial sales program that
provides commercial credit and prompt delivery of parts and other products to local, regional and national repair
garages, dealers, service stations and public sector accounts. We also have commercial programs in AutoZone
stores in Mexico and Brazil. IMC branches carry an extensive line of original equipment quality import
replacement parts. We also sell the ALLDATA brand automotive diagnostic and repair software through
www.alldata.com and www.alldatadiy.com. Additionally, we sell automotive hard parts, maintenance items,
accessories and non-automotive products through www.autozone.com, and accessories, performance and
replacement parts through www.autoanything.com, and our commercial customers can make purchases through
www.autozonepro.com and www.imcparts.net. We do not derive revenue from automotive repair or installation
services.

Executive Summary

For fiscal 2017, we achieved record net income of $1.281 billion, a 3.2% increase over the prior year, and sales
growth of $253.0 million, a 2.4% increase over the prior year. Both our retail sales and commercial sales grew this
past year, as we continue to make progress on our initiatives that are aimed at improving our ability to say yes to
our customers more frequently, drive traffic to our stores and accelerate our commercial growth.

Our business is impacted by various factors within the economy that affect both our consumer and our industry,
including but not limited to fuel costs, wage rates, 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 during fiscal 2017 was gas prices. During
fiscal 2017, the average price per gallon of unleaded gasoline in the United States was $2.31 per gallon, compared
to $2.14 per gallon during fiscal 2016. We believe fluctuations in gas prices impact our customers’ level of
disposable income. With approximately 12 billion gallons of unleaded gas consumption each month across the
U.S., each $1 increase at the pump reduces approximately $12 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 accelerated pressure on wages in the United States during fiscal 2017. Some of this is
attributed to regulatory changes in certain states and municipalities, while the larger portion is being driven by
general market pressures with lower unemployment rates and some specific actions taken in recent years by other
retailers. The regulatory changes are going to continue, as evidenced by the areas that have passed legislation to
increase their wages substantially over the next few years, but we are still assessing to what degree these changes
will impact our earnings growth in future periods.

During fiscal 2017, failure and maintenance related categories represented the largest portion of our sales mix, at
approximately 84% of total sales, with failure related categories continuing to be 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 did experience a slight increase in mix of sales of the failure category as compared to
last year. We believe the improvement in this sales category was driven by differences in regional weather
patterns and improved merchandise assortments due to the products we have added over the last year. Our sales
mix can be impacted by severe or unusual weather over a short term period. Over the long term, we believe the
impact of the weather on our sales mix is not significant.

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Our primary response to fluctuations in the demand for the products we sell is to adjust our advertising message,
store staffing, and product assortment. In recent years, we initiated a variety of strategic tests focused on increasing
inventory availability in our domestic stores. As part of those tests, we closely studied our hub distribution model,
store inventory levels and product assortment, which led to strategic tests on increased frequency of delivery to our
domestic stores and significantly expanding parts and assortment in select domestic stores we call mega hubs.
During fiscal 2015, we concluded our tests on these specific new concepts. During fiscal 2016 and most of fiscal
2017, we continued the implementation of more frequent deliveries from our distribution centers to additional
domestic stores and the execution of our mega hub strategy. In the fourth quarter of fiscal 2017, however, we made
substantial changes to test different scenarios to determine the optimal approach around increased delivery
frequency. We expect to conclude this test in fiscal 2018.

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 that 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 correlation between net sales and miles driven, we believe net sales have been positively impacted by
other factors, including the number of seven year old or older vehicles on the road. Since the beginning of the
fiscal year and through June 2017 (latest publicly available information), miles driven in the U.S. increased by
1.2% compared to the same period in the prior year.

Seven Year Old or Older Vehicles
Between 2008 and 2012, new vehicle sales were significantly lower than historical levels, which we believe
contributed to an increasing number of seven year old or older vehicles on the road. We estimate vehicles are
driven an average of approximately 12,500 miles each year. In seven years, the average miles driven equates to

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approximately 87,500 miles. Our experience is that at this point in a vehicle’s life, most vehicles are not covered
by warranties and increased maintenance is needed to keep the vehicle operating.

According to the latest data provided by the Auto Care Association, as of January 1, 2017, the average age of
vehicles on the road is 11.7 years as compared to 11.6 years as of January 1, 2016. Although the average age of
vehicles continues to increase, it is increasing at a decelerated rate primarily driven by the improvement in new
car sales in recent years. However, in the near term, we expect the aging vehicle population to continue to
increase as consumers keep their cars longer in an effort to save money. 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.

Results of Operations

Fiscal 2017 Compared with Fiscal 2016
For the fiscal year ended August 26, 2017, we reported net sales of $10.889 billion compared with $10.636 billion
for the year ended August 27, 2016, a 2.4% increase from fiscal 2016. This growth was driven primarily by net
sales of $172.5 million from new domestic AutoZone stores and domestic same store sales increase of 0.5%.
Domestic commercial sales increased $110.9 million, or 5.7%, over domestic commercial sales for fiscal 2016.

At August 26, 2017, we operated 5,465 domestic AutoZone stores, 524 in Mexico, 14 in Brazil, and 26 IMC
branches compared with 5,297 domestic AutoZone stores, 483 in Mexico, eight in Brazil, and 26 IMC branches at
August 27, 2016. We reported a total auto parts (domestic, Mexico, Brazil, and IMC) sales increase of 2.6% for
fiscal 2017.

Gross profit for fiscal 2017 was $5.740 billion, or 52.7% of net sales, a 2 basis point decrease compared with
$5.609 billion, or 52.7% of net sales for fiscal 2016. The slight decline in gross margin was attributable to higher
supply chain costs (-20 basis points) associated with current year inventory initiatives, partially offset by higher
merchandise margins.

Operating, selling, general and administrative expenses for fiscal 2017 increased to $3.660 billion, or 33.6% of net
sales, from $3.548 billion, or 33.4% of net sales for fiscal 2016. The increase in operating expenses, as a
percentage of sales, was primarily due to deleverage on occupancy costs (-23 basis points) and domestic store
payroll driven by higher wage pressure.

Interest expense, net for fiscal 2017 was $154.6 million compared with $147.7 million during fiscal 2016. This
increase was primarily due to higher borrowing levels and borrowing rates. Average borrowings for fiscal 2017
were $5.070 billion, compared with $4.860 billion for fiscal 2016, and weighted average borrowing rates were
2.8% for fiscal 2017, compared to 2.7% for fiscal 2016.

Our effective income tax rate was 33.5% of pre-tax income for fiscal 2017 compared to 35.1% for fiscal 2016.
The decrease in the tax rate was primarily due to the Company’s adoption of the new accounting guidance for
share-based payments, which lowered the effective tax rate by 162 basis points.

Net income for fiscal 2017 increased by 3.2% to $1.281 billion, and diluted earnings per share increased 8.3% to
$44.07 from $40.70 in fiscal 2016. The Company’s adoption of the new accounting guidance for share-based
payments increased earnings per share by $0.81, driven by a lower effective tax rate of 162 basis points, (a $1.08
benefit to earnings per share), partially offset by a change to the dilutive outstanding shares calculations (a $0.27
reduction to earnings per share). Excluding the $0.81 net benefit for the year from the adoption of this new
standard, adjusted diluted earnings per share increased 6.3% to $43.26. We believe that adjusted diluted earnings
per share provides us with an understanding of the results from the primary operations of our business by
excluding the tax effects of option exercise activity. We use adjusted diluted earnings per share to evaluate period-
over-period operating performance because we believe it provides a more comparable measure of our continuing
business by adjusting for items that are not reflective of the normal earnings of our business. This measure may be
useful to an investor in evaluating the underlying operating performance of our business. Refer to the
“Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.

The impact of the fiscal 2017 stock repurchases on diluted earnings per share in fiscal 2017 was an increase of
approximately $1.03.

Fiscal 2016 Compared with Fiscal 2015
For the fiscal year ended August 27, 2016, we reported net sales of $10.636 billion compared with $10.187 billion
for the year ended August 29, 2015, a 4.4% increase from fiscal 2015. This growth was driven primarily by
domestic same store sales increase of 2.4% and net sales of $177.0 million from new domestic AutoZone stores.
Domestic commercial sales for fiscal 2016 increased $129.8 million, or 7.1%, over domestic commercial sales for
fiscal 2015.

At August 27, 2016, we operated 5,297 domestic AutoZone stores, 483 in Mexico, eight in Brazil and 26 IMC
branches compared with 5,141 domestic AutoZone stores, 441 in Mexico, seven in Brazil and 20 IMC branches at
August 29, 2015. We reported a total auto parts (domestic, Mexico, Brazil and IMC) sales increase of 4.4% for
fiscal 2016.

Gross profit for fiscal 2016 was $5.609 billion, or 52.7% of net sales, compared with $5.327 billion, or 52.3% of
net sales for fiscal 2015. The improvement in gross margin was attributable to lower acquisition costs, partially
offset by higher supply chain costs associated with current year inventory initiatives (–18 basis points).

Operating, selling, general and administrative expenses for fiscal 2016 increased to $3.548 billion, or 33.4% of net
sales, from $3.374 billion, or 33.1% of net sales for fiscal 2015. The increase in operating expenses, as a
percentage of sales, was primarily due to higher store payroll.

Interest expense, net for fiscal 2016 was $147.7 million compared with $150.4 million during fiscal 2015. This
decrease was primarily due to a decline in borrowing rates, partially offset by higher borrowing levels over the
comparable year period. Average borrowings for fiscal 2016 were $4.860 billion, compared with $4.520 billion
for fiscal 2015 and weighted average borrowing rates were 2.7% for fiscal 2016, compared to 3.0% for fiscal
2015.

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Our effective income tax rate was 35.1% of pre-tax income for fiscal 2016 compared to 35.6% for fiscal 2015.
The decrease in the effective income tax rate was driven by a discrete tax item during fiscal 2016.

Net income for fiscal 2016 increased by 7.0% to $1.241 billion, and diluted earnings per share increased 13.0% to
$40.70 from $36.03 in fiscal 2015. The impact of the fiscal 2016 stock repurchases on diluted earnings per share
in fiscal 2016 was an increase of approximately $1.17.

Seasonality and Quarterly Periods

Our business is somewhat seasonal in nature, with the highest sales typically occurring in the spring and summer
months of February through September, in which average weekly per-store sales historically have been about 15%
to 20% higher than in the slower months of December and January. During short periods of time, a store’s sales
can be affected by weather conditions. Extremely hot or extremely cold weather may enhance sales by causing
parts to fail; thereby increasing sales of seasonal products. Mild or rainy weather tends to soften sales, as parts
failure rates are lower in mild weather and elective maintenance is deferred during periods of rainy weather. Over
the longer term, the effects of weather balance out, as we have locations throughout the United States, Puerto
Rico, Mexico and Brazil.

Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consisted of 16
weeks in 2017, 2016 and 2015. Because the fourth quarter contains seasonally high sales volume and consists of
16 weeks, compared with 12 weeks for each of the first three quarters, our fourth quarter represents a
disproportionate share of the annual net sales and net income. The fourth quarter of fiscal year 2017 represented
32.3% of annual sales and 33.9% of net income; the fourth quarter of fiscal year 2016 represented 32.0% of
annual sales and 34.4% of net income; and the fourth quarter of fiscal 2015 represented 32.3% of annual sales and
34.6% of net income.

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Liquidity and Capital Resources

The primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and
accessories. Net cash provided by operating activities was $1.571 billion in 2017, $1.641 billion in 2016, and
$1.573 billion in fiscal 2015. Cash flows from operations are unfavorable compared to last year primarily due to
timing of payment of accounts payable and accrued expenses, partially offset by growth in net income and a
decrease in pension contributions.

Our primary capital requirement has been the funding of our continued new-location development program and
the building of new distribution centers. From the beginning of fiscal 2015 to August 26, 2017, we have opened
622 new locations. We opened two distribution centers in fiscal 2017 and currently have one additional
distribution center under development. Net cash flows used in investing activities were $553.6 million in fiscal
2017, compared to $505.8 million in fiscal 2016 and $567.9 million in fiscal 2015. We invested $553.8 million in
capital assets in fiscal 2017, compared to $488.8 million in fiscal 2016 and $480.6 million in fiscal 2015. The
increase in capital expenditures during this time was primarily attributable to the building of the new distribution
centers and increased investment in our existing locations. We had new location openings of 215 for fiscal 2017,
205 for fiscal 2016, and 202 for fiscal 2015. Cash flows used in the acquisition of IMC were $75.7 million in
fiscal 2015. Cash flows were also used in the purchase of other intangibles for $10 million in each of fiscal 2016
and fiscal 2015. We invest a portion of our assets held by our wholly owned insurance captive in marketable
securities. We purchased $85.7 million in marketable securities in fiscal 2017, $130.2 million in fiscal 2016 and
$49.7 million in fiscal 2015. We had proceeds from the sale of marketable securities of $83.0 million in fiscal
2017, $120.5 million in fiscal 2016 and $46.4 million in fiscal 2015.

Net cash used in financing activities was $914.3 million in 2017, $1.117 billion in 2016 and $944.6 million in
fiscal 2015. The net cash used in financing activities reflected purchases of treasury stock which totaled $1.072
billion for fiscal 2017, $1.452 billion for fiscal 2016 and $1.271 billion for fiscal 2015. The treasury stock
purchases in fiscal 2017, 2016 and 2015 were primarily funded by cash flows from operations and by increases in
debt levels. Proceeds from issuance of debt were $600 million for fiscal 2017 and $650 million for each of fiscal
2016 and 2015. In fiscal 2017, the proceeds from the issuance of debt were used for the repayment of a portion of
our outstanding commercial paper borrowings, which were used to repay the $400 million Senior Notes due in
January 2017. In fiscal 2016, the proceeds from the issuance of debt were used for general corporate purposes,
including for working capital requirements, capital expenditures, store openings and stock repurchases. In fiscal
2015, the proceeds from the issuance of debt were used for the repayment of a portion of our outstanding
commercial paper borrowings, which were used to repay the $500 million 5.750% Senior Notes due January 2015
and for the acquisition of IMC. We used commercial paper borrowings to repay the $300 million Senior Notes
due in November 2015 and the $200 million Senior Notes due in June 2016. In 2017, we made net repayments of
commercial paper and short-term borrowings in the amount of $42.4 million. Net proceeds from the issuance of
commercial paper and short-term borrowings for fiscal 2016 and 2015 were $149.9 million and $153.8 million,
respectively.

During fiscal 2018, we expect to invest in our business at a decreased rate as compared to fiscal 2017, as fiscal
2017 included significant investment for the building of new distribution centers. Our investments are expected to
be directed primarily to new locations, supply chain infrastructure, enhancements to existing locations and
investments in technology. The amount of our investments in our new locations is impacted by different factors,
including such factors as whether the building and land are purchased (requiring higher investment) or leased
(generally lower investment), located in the United States, Mexico or Brazil, or located in urban or rural areas.
During fiscal 2017, 2016 and 2015, our capital expenditures have increased by approximately 13%, 2%, and 10%,
respectively, as compared to the prior year.

In addition to the building and land costs, our new locations 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 financing arrangements with financial institutions whereby
they factor their receivables from us, allowing them to receive payment on our invoices at a discounted rate. In
recent years, we initiated a variety of strategic tests focused on increasing inventory availability, which increased
our inventory per location. Many of our vendors have supported our initiative to update our product assortments

by providing extended payment terms. These extended payment terms have allowed us to continue our high
accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 107.4% at August 26, 2017,
112.8% at August 27, 2016, and 112.9% at August 29, 2015. The decrease from fiscal 2016 to fiscal 2017 was
due to inventory growth and slowing inventory turns.

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 that 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, 2017, and August 27, 2016,
cash and cash equivalents of $148.4 million and $78.1 million, respectively, were held outside of the U.S. and
were generally utilized to support liquidity needs in our foreign operations. We intend to continue to permanently
reinvest the cash held outside of the U.S. in our foreign operations.

For the fiscal year ended August 26, 2017, our after-tax return on invested capital (“ROIC”) was 29.9% as
compared to 31.3% for the comparable prior year period. ROIC is calculated as after-tax operating profit
(excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). The
decrease in ROIC is primarily due to the increase in average debt, along with the impact of recent investments in
the business. Currently, these investments are diluting our return metrics. We use 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 18, 2016, we amended and restated our existing Multi-Year revolving credit facility (the “New
Multi-Year Revolving Credit Agreement”) by increasing the committed credit amount from $1.25 billion to $1.6
billion, extending the expiration date by two years and renegotiating other terms and conditions. This credit
facility is available to primarily support commercial paper borrowings, letters of credit and other short-term
unsecured bank loans. The capacity of the credit facility may be increased to $2.1 billion prior to the maturity date
at our election and subject to bank credit capacity and approval, and may include up to $200 million in letters of
credit. Under the revolving credit facility, we may borrow funds consisting of Eurodollar loans, base rate loans or
a combination of both. Interest accrues on Eurodollar loans at a defined Eurodollar rate, defined as LIBOR plus
the applicable percentage, as defined in the revolving credit facility, depending upon our senior, unsecured, (non-
credit enhanced) long-term debt rating. Interest accrues on base rate loans as defined in the credit facility. We also
have the option to borrow funds under the terms of a swingline loan subfacility. The revolving credit facility
expires on November 18, 2021, but we may, by notice to the administrative agent, make up to two requests to
extend the termination date for an additional period of one year. The first such request must be made no earlier
than 60 days, and no later than 45 days, prior to November 18, 2017, while the second request must be made no
earlier than 60 days, and no later than 45 days, prior to November 18, 2018.

On November 18, 2016, we amended and restated our existing 364-Day revolving credit facility (the “New 364-
Day Credit Agreement”) by decreasing the committed credit amount from $500 million to $400 million,
extending the expiration date by one year and renegotiating other terms and conditions. The credit facility is
available to primarily support commercial paper borrowings and other short-term unsecured bank loans. Under the
credit facility, we may borrow funds consisting of Eurodollar loans, base rate loans or a combination of both.
Interest accrues on Eurodollar loans at a defined Eurodollar rate, defined as LIBOR plus the applicable margin, as
defined in the revolving credit facility, depending upon our senior, unsecured, (non-credit enhanced) long-term
debt rating. Interest accrues on base rate loans as defined in the credit facility. The New 364-Day Credit
Agreement expires on November 17, 2017, but we may request an extension of the term date for 364 days no later
than 45 days prior to November 17, 2017, subject to bank approval. In addition, at least 15 days prior to
November 17, 2017, we have the right to convert the credit facility to a term loan for up to one year from the
termination date, subject to a 1% penalty.

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As of August 26, 2017, we had no outstanding borrowings under either of the revolving credit facilities and $3.3
million of outstanding letters of credit under the New Multi-Year Revolving Credit Agreement.

The revolving credit facility agreements require 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, 2017 was 6.0:1.

As of August 26, 2017, $1.155 billion of commercial paper borrowings and the $250 million 7.125% Senior Notes
due August 2018 were classified as long-term in the Consolidated Balance Sheets as we have the ability and intent
to refinance on a long-term basis through available capacity in our revolving credit facilities. As of August 26,
2017, we had $1.997 billion of availability under our $2.0 billion revolving credit facilities, which would allow us
to replace these short-term obligations with long-term financing facilities.

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 $75 million. The letter of credit facility is in addition to the letters of
credit that may be issued under the New Multi-Year Revolving Credit Agreement. As of August 26, 2017 we had
$74.9 million in letters of credit outstanding under the letter of credit facility, which expires June 2019.

In addition to the outstanding letters of credit issued under the committed facilities discussed above, we had $10.4
million in letters of credit outstanding as of August 26, 2017. These letters of credit have various maturity dates
and were issued on an uncommitted basis.

On April 18, 2017, we issued $600 million in 3.750% Senior Notes due June 2027 under our shelf registration
statement filed with the SEC on April 15, 2015 (the “2015 Shelf Registration”). The 2015 Shelf Registration
allows us to sell an indeterminate amount of debt securities to fund general corporate purposes, including
repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new location
openings, stock repurchases and acquisitions. Proceeds from the debt issuance were used for general corporate
purposes.

On April 21, 2016, we issued $400 million in 3.125% Senior Notes due April 2026 and $250 million in 1.625%
Senior Notes due April 2019 under the 2015 Shelf Registration. Proceeds from the debt issuances were used for
general corporate purposes.

On April 29, 2015, we issued $400 million in 3.250% Senior Notes due April 2025 and $250 million in 2.500%
Senior Notes due April 2021 under the 2015 Shelf Registration. Proceeds from the debt issuances were used to
repay a portion of the outstanding commercial paper borrowings, which were used to repay the $500 million in
5.750% Senior Notes due in January 2015, and for general corporate purposes.

All senior notes are subject to an interest rate adjustment if the debt ratings assigned to the senior notes are
downgraded (as defined in the agreements). Further, the senior notes contain a provision that repayment of the
senior notes 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. Under our revolving
credit facilities, 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. All of the repayment obligations under our borrowing arrangements may
be accelerated and come due prior to the scheduled payment date if covenants are breached or an event of default
occurs.

As of August 26, 2017, we were in compliance with all covenants related to our borrowing arrangements and
expect to remain in compliance with those covenants in the future.

For the fiscal year ended August 26, 2017, our adjusted debt to earnings before interest, taxes, depreciation,
amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.6:1 as compared to 2.5:1 as
of the comparable prior year end. We calculate adjusted debt as the sum of total debt, capital lease obligations and
rent times six; and we calculate 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
30

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 EBITDAR continues to grow in future years, we expect our debt
levels to increase; conversely, if EBITDAR declines, 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”). On March 21, 2017, the Board
voted to increase the authorization by $750 million to raise the cumulative share repurchase authorization from
$17.9 billion to $18.65 billion. From January 1998 to August 26, 2017, we have repurchased a total of 142.3
million shares at an aggregate cost of $17.826 billion. We repurchased 1.5 million shares of common stock at an
aggregate cost of $1.072 billion during fiscal 2017, 1.9 million shares of common stock at an aggregate cost of
$1.452 billion during fiscal 2016, and 2.0 million shares of common stock at an aggregate cost of $1.271 billion
during fiscal 2015. Considering cumulative repurchases as of August 26, 2017, we had $823.7 million remaining
under the Board’s authorization to repurchase our common stock.

For the fiscal year ended August 26, 2017, cash flow before share repurchases and changes in debt was $1.018
billion as compared to $1.167 billion during the comparable prior year period. Cash flow before share repurchases
and changes in debt is calculated as the net increase or decrease in cash and cash equivalents less increases in debt
plus share repurchases. We use cash flow before share repurchases and changes in debt to calculate the cash flows
remaining and available in an effort to increase shareholder value in the form of share repurchases. 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. If we allowed these funds to accumulate on our balance sheet instead of
repurchasing our shares, we believe our earnings per share and stock price would be negatively impacted. Refer to
the “Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.

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Subsequent to August 26, 2017, we have repurchased 383,165 shares of common stock at an aggregate cost of
$225.8 million. Considering the cumulative repurchases subsequent to August 26, 2017, we have $597.9 million
remaining under the Board’s authorization to repurchase our common stock.

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Financial Commitments
The following table shows our significant contractual obligations as of August 26, 2017:

(in thousands)

Total
Contractual
Obligations

Less than
1 year

Payment Due by Period
Between
3-5 years

Between
1-3 years

Over
5 years

Debt(1)................................................
Interest payments(2) ...........................
Operating leases(3) .............................
Capital leases(4) .................................
Self-insurance reserves(5) ..................
Construction commitments ...............

$ 5,105,100
796,125
2,153,180
159,076
231,079
69,914
$ 8,514,474

$1,405,100
138,875
293,826
48,134
84,756
69,914
$ 2,040,605

$ 250,000
238,063
547,305
86,418
75,195
–
$1,196,981

$ 1,250,000
197,750
450,640
24,524
31,320
–
$ 1,954,234

$ 2,200,000
221,437
861,409
–
39,808
–
$ 3,322,654

(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 lease obligations are inclusive of amounts accrued within deferred rent and closed store

obligations reflected in our consolidated balance sheets.

(4) Capital lease obligations include related interest.
(5) Self-insurance reserves reflect estimates based on actuarial calculations. 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.

We have pension obligations reflected in our consolidated balance sheets that are not reflected in the table above
due to the absence of scheduled maturities and the nature of the account. During fiscal 2017, we made
contributions of $17.8 million to the pension plan. We expect to make contributions of approximately $20.3
million during fiscal 2018; however a change to the expected cash funding may be impacted by a change in
interest rates or a change in the actual or expected return on plan assets.

As of August 26, 2017, our defined benefit obligation associated with our pension plans is $314.7 million and our
pension assets are valued at $316.3 million, resulting in a net pension asset position of $1.5 million. Amounts
recorded in Accumulated other comprehensive loss are $118.9 million at August 26, 2017. The balance in
Accumulated other comprehensive loss will be amortized into pension expense in the future, unless the losses are
recovered in future periods through actuarial gains.

Additionally, our tax liability for uncertain tax positions, including interest and penalties, was $15.4 million at
August 26, 2017. Approximately $2.6 million is classified as current liabilities and $12.8 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, 2017:

(in thousands)

Standby letters of credit.................................................................................................
Surety bonds..................................................................................................................

Total
Other
Commitments

88,633
28,759
117,392

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.

Reconciliation of Non-GAAP Financial Measures

“Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” include certain financial measures not derived in accordance with generally accepted accounting
principles (“GAAP”). These non-GAAP financial measures provide additional information for determining our
optimum capital structure and are used to assist management in evaluating performance and in making appropriate
business decisions to maximize stockholders’ value.

Non-GAAP financial measures should not be used as a substitute for GAAP financial measures, or considered in
isolation, for the purpose of analyzing our operating performance, financial position or cash flows. However, we
have presented the non-GAAP financial measures, as we believe they provide additional information that is useful
to investors as it indicates more clearly our comparative year-to-year operating results. Furthermore, our
management and Compensation Committee of the Board use the above-mentioned non-GAAP financial measures
to analyze and compare our underlying operating results and use select measurements to determine payments of
performance-based compensation. We have included a reconciliation of this information to the most comparable
GAAP measures in the following reconciliation tables.

Reconciliation of Non-GAAP Financial Measure: Cash Flow Before Share Repurchases and Changes in Debt
The following table reconciles net increase (decrease) in cash and cash equivalents to cash flow before share
repurchases and changes in debt, which is presented in “Selected Financial Data” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operations”:

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(in thousands)

2017

Net cash provided by/(used in):
Operating activities(2)..................... $ 1,570,612
(553,599)
Investing activities .........................
Financing activities(2).....................
(914,329)
Effect of exchange rate changes
on cash ........................................
Net increase/(decrease) in cash and

852

Fiscal Year Ended August
2015

2016

2014

2013(1)

$ 1,641,060
(505,835)
(1,116,528)

$ 1,573,018
(567,911)
(944,597)

$ 1,365,005
(447,968)
(935,328)

$ 1,481,763
(527,295)
(913,774)

(4,272)

(9,686)

585

(1,596)

cash equivalents ............................. $

103,536

14,425

50,824

(17,706)

39,098

Less: Increase in debt, excluding

deferred financing costs .................
Plus: Share repurchases ....................
Cash flow before share repurchases

157,600
1,071,649

299,900
1,452,462

303,800
1,271,416

156,800
1,099,212

418,652
1,387,315

and changes in debt ........................ $ 1,017,585

$ 1,166,987

$ 1,018,440

924,706

$ 1,007,761

(1) The fiscal year ended August 31, 2013 consisted of 53 weeks.
(2) As described in the consolidated financial statements and notes, thereto, we have adopted the provisions
of ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvement to Employee Share-
based Payment Accounting, as of August 28, 2016. The ASU simplifies several aspects of accounting for
share-based payments transactions, including income tax consequences, classification of awards as
either equity or liabilities and classification on the statement of cash flows. We have applied the
amendment relating to the presentation of the excess tax benefits on the Consolidated Statements of Cash
Flows retrospectively. Prior period amounts for net cash provided by operating and financing activities
for all years presented above were restated to conform to the current period presentation.

Reconciliation of Non-GAAP Financial Measure: After-tax Return on Invested Capital (“ROIC”)
The following table calculates the percentage of ROIC. ROIC is calculated as after-tax operating profit (excluding
rent) divided by invested capital (which includes a factor to capitalize operating leases). The ROIC percentages
are presented in “Selected Financial Data” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations”:

(in thousands, except percentages)

2017

Fiscal Year Ended August
2015

2016

2014

2013(1)

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Net income ....................................... $ 1,280,869 $ 1,241,007 $ 1,160,241 $ 1,069,744 $ 1,016,480
Adjustments:

Interest expense ..........................
Rent expense ..............................
Tax effect(2).................................

185,415
246,340
(155,432)
After-tax return................................. $ 1,585,112 $ 1,518,890 $ 1,430,655 $ 1,340,654 $ 1,292,803

147,681
280,490
(150,288)

150,439
269,458
(149,483)

154,580
302,928
(153,265)

167,509
253,813
(150,412)

Average debt(3) ................................. $ 5,061,502 $ 4,820,402 $ 4,458,114 $ 4,258,796 $ 3,930,975
Average (deficit)(4) ...........................
(1,581,832)
Rent x 6(5) .........................................
1,478,040
Average capital lease obligations(6)
102,729
Invested capital................................. $ 5,298,577 $ 4,860,021 $ 4,581,362 $ 4,180,371 $ 3,929,912
32.9%
ROIC ................................................

(1,730,559)
1,817,568
150,066

(1,709,778)
1,522,878
108,475

(1,774,329)
1,682,940
131,008

(1,619,596)
1,616,748
126,096

31.3%

29.9%

32.1%

31.2%

(1) The fiscal year ended August 31, 2013 consisted of 53 weeks.
(2) The effective tax rate during fiscal 2017, 2016, 2015, 2014 and 2013 was 33.5%, 35.1%, 35.6%, 35.7% and

36.0%, respectively.

(3) Average debt is equal to the average of our debt measured as of the previous five quarters.
(4) Average equity is equal to the average of our stockholders’ (deficit) measured as of the previous five

quarters.

(5) Rent is multiplied by a factor of six to capitalize operating leases in the determination of pre-tax invested

capital.

(6) Average capital lease obligations is computed as the average of our capital lease obligations over the

previous five quarters.

Reconciliation of Non-GAAP Financial Measure: Adjusted Debt to Earnings before Interest, Taxes, Depreciation,
Rent and Share-Based Expense “EBITDAR”
The following table calculates the ratio of adjusted debt to EBITDAR. Adjusted debt to EBITDAR is calculated
as the sum of total debt, capital lease obligations and annual rents times six; divided by net income plus interest,
taxes, depreciation, amortization, rent and share-based compensation expense. The adjusted debt to EBITDAR
ratios are presented in “Selected Financial Data” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations”:

(in thousands, except ratios)

2017

Fiscal Year Ended August
2015

2014

2016

2013(1)

Net income ..................................... $ 1,280,869 $ 1,241,007
147,681
Add: Interest expense .....................
671,707
Income tax expense ...............
2,060,395
EBIT...............................................
Add: Depreciation and

154,580
644,620
2,080,069

$ 1,160,241 $ 1,069,744
167,509
592,970
1,830,223

150,439
642,371
1,953,051

$ 1,016,480
185,415
571,203
1,773,098

323,051
302,928
38,244

amortization expense.............
Rent expense .........................
Share-based expense .............

297,397
251,267
280,490
253,813
39,825
39,390
EBITDAR ...................................... $ 2,744,292 $ 2,678,107
$ 2,533,423 $ 2,374,693
Debt ................................................ $ 5,081,238 $ 4,924,119 $ 4,624,876 $ 4,323,106
119,603
150,456
147,285
Capital lease obligations.................
1,522,878
1,682,940
1,817,568
Rent x 6 ..........................................
Adjusted debt.................................. $ 7,049,262 $ 6,754,344
$ 6,369,791 $ 5,965,587
2.5
Adjusted debt to EBITDAR ...........

269,919
269,458
40,995

128,167
1,616,748

2.5

2.6

2.5

227,251
246,340
37,307
$ 2,283,996

$ 4,164,078
106,171
1,478,040
$ 5,748,289

2.5

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(1) The fiscal year ended August 31, 2013 consisted of 53 weeks.

Reconciliation of Non-GAAP Financial Measure: Adjusted Diluted Earnings Per Share
The following table calculates the adjusted diluted earnings per share. Adjusted diluted earnings per share is
calculated to exclude the impact of excess tax benefits from option exercises under the new accounting guidance
for share-based payments. The adjusted diluted earnings per share amounts are presented in “Selected Financial
Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”:

2017

Fiscal Year Ended August
2015

2016

2014

2013(1)

Diluted earnings per share .................
Impact of excess tax benefits

from option exercises......................
Adjusted diluted earnings per share ...

$ 44.07 $ 40.70 $ 36.03 $ 31.57 $

27.79

(0.81)
$ 43.26

–

$ 40.70 $

–
36.03

–
–
31.57 $ 27.79

(1) The fiscal year ended August 31, 2013 consisted of 53 weeks.

Recent Accounting Pronouncements

See Note A of the Notes to Consolidated Financial Statements for a discussion on recent accounting
pronouncements.

Critical Accounting Policies and Estimates

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

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differ under different assumptions or conditions. Our senior management has identified the critical accounting
policies for the areas that are materially impacted by estimates and assumptions and have discussed such policies
with the Audit Committee of our Board. The following items in our consolidated financial statements represent
our critical accounting policies that require significant estimation or judgment by management:

Inventory Reserves and Cost of Sales
LIFO
We state our inventories at the lower of cost or market. Inventory cost has been determined using the last-in, first-
out (“LIFO”) method for domestic inventories and the weighted average cost method for Mexico and Brazil
inventories. Due to price deflation on our merchandise purchases, we have exhausted our LIFO reserve balance.
Our policy is to not write up inventory in excess of replacement cost, which is based on average cost. The
difference between LIFO cost and replacement cost, which will be reduced upon experiencing price inflation on
our merchandise purchases, was $414.9 million at August 26, 2017.

Inventory Obsolescence and Shrinkage
Our inventory, primarily hard parts, maintenance items, accessories and non-automotive products, is used on
vehicles that have rather long lives; and therefore, the risk of obsolescence is minimal and the majority of excess
inventory has historically been returned to our vendors for credit. In the isolated instances where less than full
credit will be received for such returns and where we anticipate that items will be sold at retail prices that are less
than recorded costs, we record a charge (less than $3 million in each of the last three years) through cost of sales
for the difference. These charges are based on management’s judgment, including estimates and assumptions
regarding marketability of products and the market value of inventory to be sold in future periods.

Historically, we have not encountered material exposure to inventory obsolescence or excess inventory, nor have
we experienced material changes to our estimates. However, we may be exposed to material losses should our
vendors alter their policy with regard to accepting excess inventory returns.

Additionally, we reduce inventory for projected losses related to shrinkage, which is estimated based on historical
losses and current inventory loss trends resulting from previous physical inventories. Shrinkage may occur due to
theft, loss or inaccurate records for the receipt of goods, among other things. Throughout the year, we take
physical inventory counts of our stores and distribution centers to verify these estimates. We make assumptions
regarding upcoming physical inventory counts that may differ from actual results.

Each quarter, we evaluate the accrued shrinkage in light of the actual shrink results from physical inventory
counts. To the extent our actual physical inventory count results differ from our estimates, we may experience
material adjustments to our financial statements. Historically, we have not experienced material adjustments to
our shrinkage estimates and do not believe there is a reasonable likelihood that there will be a material change in
the future estimates or assumptions we use. Over the last three years, there has been less than a 50 basis point
fluctuation in our shrinkage rate (shrink loss as a percent of sales).

A 10% difference in our inventory reserves as of August 26, 2017, would have affected net income by
approximately $6.7 million in fiscal 2017.

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 inventory, unless they are provided as a reimbursement of specific, incremental,
identifiable costs incurred by the Company in selling the vendor’s products. Approximately 81% of the vendor
funds received are 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
obligations. We generally have not recorded a reserve against these receivables as we have not experienced
significant losses and typically have legal right of offset with our vendors for payments owed them. Historically,
we have had write-offs less than $1 million in each of the last three years.

Goodwill and Intangibles
We evaluate goodwill and indefinite-lived intangibles for impairment annually in the fourth quarter of each fiscal
year or whenever events or changes in circumstances indicate the carrying values exceed the current fair values.
We evaluate the likelihood of impairment by considering qualitative factors, such as macroeconomic, industry,
market, or any other factors that could impact the reporting unit’s fair value. If these factors indicate impairment,
we perform a quantitative assessment to determine if the carrying value exceeds the fair value. Goodwill is
evaluated at the reporting unit level and involves valuation methods including forecasting future financial
performance, estimates of discount rates and other factors. If the carrying value of the reporting unit’s goodwill
exceeds the fair value, we recognize an impairment loss.

Indefinite-lived intangibles are evaluated by comparing the carrying amount of the asset to the future discounted
cash flows that the asset is expected to generate. If the carrying value of the indefinite-lived intangible asset
exceeds the fair value based on the future discounted cash flows, we recognize an impairment loss. These
impairment analyses require a significant amount of subjective judgment by management, and as a result these
estimates are uncertain and our actual results may be different from our estimates.

The carrying value of goodwill and indefinite-lived intangibles at August 26, 2017 and August 27, 2016 was
$418.8 million with $302.6 million related to our Domestic Auto Parts reporting unit, $89.8 million relating to our
AutoAnything reporting unit and $26.4 million relating to our Interamerican Motor Corporation reporting unit. No
impairment charges were recognized in fiscal 2017, 2016 and 2015 as the fair value of our reporting units
exceeded our carrying values. If profitability trends do not improve as projected during fiscal 2018 for our
AutoAnything and Interamerican Motor Corporation reporting units, it is possible that an interim test, or our
annual impairment test, may result in an impairment of these assets.

Self-Insurance Reserves
We retain a significant portion of the risks associated with workers’ compensation, employee health, general and
products 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 $220.5 million at August 26, 2017, and
$214.4 million at August 27, 2016. This change is primarily reflective of our growing operations, including
inflation, increases in health care costs, the number of vehicles and the number of hours worked, as well as our
historical claims experience.

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 actuarial methods, 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 health care 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 materially from our assumptions and estimates, causing our reserves to be overstated or understated. For
instance, a 10% change in our self-insurance liability would have affected net income by approximately $14.7
million for fiscal 2017.

Our liabilities for workers’ compensation, certain 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

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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 50 basis points, net income
would have been affected by approximately $2.1 million for fiscal 2017. Our liability for health benefits is
classified as current, as the historical average duration of claims is approximately six weeks.

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, 2017, we had approximately $15.4 million reserved
for uncertain tax positions.

We evaluate potential 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.

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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 that could be material. 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 materially affected.

Pension Obligation
Prior to January 1, 2003, substantially all full-time employees were covered by a qualified defined benefit pension
plan. The benefits under the plan were based on years of service and the employee’s highest consecutive five-year
average compensation. On January 1, 2003, the plan was frozen. Accordingly, pension plan participants will earn
no new benefits under the plan formula and no new participants will join the pension plan. On January 1, 2003,
our supplemental, unqualified defined benefit pension plan for certain highly compensated employees was also
frozen. Accordingly, plan participants will earn no new benefits under the plan formula and no new participants
will join the pension plan. As the plan benefits are frozen, the annual pension expense and recorded liabilities are
not impacted by increases in future compensation levels or additional years of service, but are impacted by the use
of two key assumptions in the calculation of these balances:

Expected long-term rate of return on plan assets: For the fiscal year ended August 26, 2017, we have
assumed a 7.0% long-term rate of return on our plan assets. This estimate is a judgmental matter in which
management considers the composition of our asset portfolio, our historical long-term investment
performance and current market conditions. We review the expected long-term rate of return on an annual
basis, and revise it accordingly. Additionally, we monitor the mix of investments in our portfolio to ensure
alignment with our long-term strategy to manage pension cost and reduce volatility in our assets. In January
2017, our Investment Committee approved a revised asset allocation target for the investments held by the
pension plan. Based on the revised asset allocation target, the expected long-term rate of return on plan assets
changed from 7.0% for the year ended August 26, 2017, to 6.0% for the year ending August 25, 2018. At
August 26, 2017, our plan assets totaled $316.3 million in our qualified plan. Our assets are generally valued
using the net asset values, which are determined by valuing investments at the closing price or last trade
reported on such date on the major market on which the individual securities are traded. We have no assets in
our nonqualified plan. A 50 basis point change in our expected long term rate of return would impact annual
pension expense by approximately $1.6 million for the qualified plan.

Discount rate used to determine benefit obligations: This rate is highly sensitive and is adjusted annually
based on the interest rate for long-term, high-quality, corporate bonds as of the measurement date using yields

for maturities that are in line with the duration of our pension liabilities. For fiscal 2017, we assumed a
discount rate of 3.9%. A decrease in the discount rate increases our projected benefit obligation and pension
expense. A 50 basis point change in the discount rate at August 26, 2017 would impact annual pension
expense/income by approximately $1.7 million for the qualified plan and $30 thousand for the nonqualified
plan.

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.

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.

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The fair value of our debt was estimated at $5.171 billion as of August 26, 2017, and $5.117 billion as of
August 27, 2016, 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 $90.3 million and $192.7 million at August 26, 2017 and August 27, 2016, respectively. We had $1.155
billion of variable rate debt outstanding at August 26, 2017, and $1.198 billion of variable rate debt outstanding at
August 27, 2016. In fiscal 2017, at this borrowing level for variable rate debt, a one percentage point increase in
interest rates would have had an unfavorable impact on our pre-tax earnings and cash flows of approximately
$11.6 million. The primary interest rate exposure on variable rate debt is based on LIBOR. We had outstanding
fixed rate debt of $3.926 billion, net of unamortized debt issuance costs of $23.9 million, at August 26, 2017, and
$3.727 billion, net of unamortized debt issuance costs of $23.4 million, at August 27, 2016. A one percentage
point increase in interest rates would reduce the fair value of our fixed rate debt by approximately $191.3 million
at August 26, 2017.

Fuel Price Risk
From time to time, we utilize fuel swap contracts in order to lower fuel cost volatility in our operating results.
Historically, the instruments were executed to economically hedge a portion of our diesel and unleaded fuel
exposure. However, we have not designated the fuel swap contracts as hedging instruments; and therefore, the
contracts have not qualified for hedge accounting treatment. In fiscal 2015, we entered into a fuel swap to
economically hedge the commodity cost associated with our unleaded fuel usage. The notional amount of the
contract was 2.9 million gallons and terminated March 31, 2015. The swap had no significant impact on the
results of operations. We did not enter into any fuel swap contracts during fiscal 2017 or 2016.

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 $519.3 million at August 26, 2017 and $398.0. million at August 27, 2016. The year-end
exchange rates with respect to the Mexican peso increased by approximately 4% with respect to the U.S. dollar
during fiscal 2017 and decreased by approximately 9% during fiscal 2016. 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 26, 2017 and August 27, 2016, would be approximately $47.2 million and
approximately $36.2 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.

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Item 8. Financial Statements and Supplementary Data

Index

Management’s Report on Internal Control Over Financial Reporting ................................................................... 42
Certifications .......................................................................................................................................................... 42
Reports of Independent Registered Public Accounting Firm ................................................................................. 43
Consolidated Statements of Income ....................................................................................................................... 45
Consolidated Statements of Comprehensive Income ............................................................................................. 45
Consolidated Balance Sheets.................................................................................................................................. 46
Consolidated Statements of Cash Flows ................................................................................................................ 47
Consolidated Statements of Stockholders’ Deficit................................................................................................. 48
Notes to Consolidated Financial Statements .......................................................................................................... 49

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Management’s Report on Internal Control Over Financial Reporting

Our 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, 2017, 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, 2017.

Our independent registered public accounting firm, Ernst & Young LLP, 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, 2017 is included in this Annual Report on Form 10-K.

/s/ WILLIAM C. RHODES, III
William C. Rhodes, III
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)

/s/ WILLIAM T. GILES
William T. Giles
Chief Financial Officer and Executive
Vice President – Finance and Information
Technology
(Principal Financial Officer)

Certifications

Compliance with NYSE Corporate Governance Listing Standards
On January 4, 2017, the Company submitted to the New York Stock Exchange the Annual CEO Certification
required pursuant to Section 303A.12(a) of the New York Stock Exchange Listed Company Manual.

Rule 13a-14(a) Certifications of Principal Executive Officer and Principal Financial Officer
The Company has filed, as exhibits to its Annual Report on Form 10-K for the fiscal year ended August 26, 2017,
the certifications of its Principal Executive Officer and Principal Financial Officer required pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of AutoZone, Inc.

We have audited AutoZone, Inc.’s internal control over financial reporting as of August 26, 2017, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission 2013 framework (the “COSO criteria”). AutoZone, Inc.’s
management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
AutoZone, Inc.’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

In our opinion, AutoZone, Inc. maintained, in all material respects, effective internal control over financial
reporting as of August 26, 2017, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of AutoZone, Inc. as of August 26, 2017 and August 27, 2016,
and 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, 2017 of AutoZone, Inc. and our report dated October
25, 2017 expressed an unqualified opinion thereon.

Memphis, Tennessee
October 25, 2017

/s/ Ernst & Young LLP

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of AutoZone, Inc.

We have audited the accompanying consolidated balance sheets of AutoZone, Inc. as of August 26, 2017 and
August 27, 2016, and 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, 2017. These financial statements are the
responsibility of AutoZone, Inc.’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of AutoZone, Inc. as of August 26, 2017 and August 27, 2016 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended August 26, 2017, in conformity with
U.S. generally accepted accounting principles.

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), AutoZone, Inc.’s internal control over financial reporting as of August 26, 2017, 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 25, 2017 expressed an unqualified
opinion thereon.

Memphis, Tennessee
October 25, 2017

/s/ Ernst & Young LLP

Consolidated Statements of Income

(in thousands, except per share data)

Net sales ...................................................................................
Cost of sales, including warehouse and delivery expenses.......
Gross profit...............................................................................
Operating, selling, general and administrative expenses ..........
Operating profit ........................................................................
Interest expense, net .................................................................
Income before income taxes .....................................................
Income tax expense ..................................................................
Net income ...............................................................................

Weighted average shares for basic earnings per share..............
Effect of dilutive stock equivalents ..........................................
Weighted average shares for diluted earnings per share...........

August 26,
2017
(52 weeks)

$10,888,676
5,149,056
5,739,620
3,659,551
2,080,069
154,580
1,925,489
644,620
$ 1,280,869

28,430
635
29,065

Year Ended

August 27,
2016
(52 weeks)

$10,635,676
5,026,940
5,608,736
3,548,341
2,060,395
147,681
1,912,714

671,707
$ 1,241,007

29,889
599
30,488

Basic earnings per share ...........................................................
Diluted earnings per share ........................................................

$
$

45.05
44.07

$
$

41.52
40.70

$
$

August 29,
2015
(52 weeks)

$10,187,340
4,860,309
5,327,031
3,373,980
1,953,051
150,439
1,802,612
642,371
$ 1,160,241

31,560
646
32,206

36.76
36.03

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See Notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

(in thousands)

August 26,
2017
(52 weeks)

Year Ended
August 27,
2016
(52 weeks)

August 29,
2015
(52 weeks)

Net income ..........................................................................................

$1,280,869

$1,241,007

$1,160,241

Other comprehensive income (loss):

Pension liability adjustments, net of taxes(1) ....................................
Foreign currency translation adjustments.........................................
Unrealized (losses) gains on marketable securities, net of taxes(2) ...
Net derivative activity, net of taxes(3)...............................................
Total other comprehensive income (loss)............................................

16,514
35,198
(131)
1,391
52,972

(18,095)
(39,524)
146
(538)
(58,011)

(6,975)
(113,652)
(102)
114
(120,615)

Comprehensive income .......................................................................

$1,333,841

$1,182,996

$1,039,626

(1) Pension liability adjustments are presented net of taxes of $10,542 in 2017, $11,394 in 2016 and $4,638 in 2015
(2) Unrealized (losses) gains on marketable securities are presented net of taxes of $69 in 2017, $79 in 2016 and $55 in

2015

(3) Net derivative activities are presented net of taxes of $814 in 2017, $315 in 2016 and $68 in 2015

See Notes to Consolidated Financial Statements.

Consolidated Balance Sheets

(in thousands)

August 26,
2017

August 27,
2016

Assets
Current assets:
Cash and cash equivalents....................................................................................
Accounts receivable .............................................................................................
Merchandise inventories ......................................................................................
Other current assets..............................................................................................
Total current assets.........................................................................................

Property and equipment:
Land .....................................................................................................................
Buildings and improvements................................................................................
Equipment ............................................................................................................
Leasehold improvements .....................................................................................
Construction in progress ......................................................................................

Less: Accumulated depreciation and amortization ..............................................

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Goodwill................................................................................................................
Deferred income taxes ...........................................................................................
Other long-term assets ...........................................................................................

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable .................................................................................................
Accrued expenses and other.................................................................................
Income taxes payable ...........................................................................................
Total current liabilities....................................................................................

Long-term debt ......................................................................................................
Deferred income taxes ...........................................................................................
Other long-term liabilities .....................................................................................

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; 28,735
shares issued and 27,833 shares outstanding in 2017 and 30,329 shares issued
and 29,118 shares outstanding in 2016...............................................................
Additional paid-in capital...................................................................................
Retained deficit ..................................................................................................
Accumulated other comprehensive loss .............................................................
Treasury stock, at cost........................................................................................
Total stockholders’ deficit ..............................................................................

See Notes to Consolidated Financial Statements.

$ 293,270
280,733
3,882,086
155,166
4,611,255

1,056,187
3,423,056
1,704,653
470,998
218,299
6,873,193
2,842,175
4,031,018

391,887
35,308
190,313
617,508
$ 9,259,781

$ 4,168,940
563,350
34,011
4,766,301

5,081,238
371,111
469,508

–

287
1,086,671
(1,642,387)
(254,557)
(618,391)
(1,428,377)
$ 9,259,781

$ 189,734

287,680
3,631,916
130,243
4,239,573

998,460
3,169,575
1,550,792
434,615
176,673
6,330,115
2,596,861
3,733,254

391,887
36,855
198,218
626,960
$ 8,599,787

$4,095,854
551,625
42,841
4,690,320

4,924,119
284,500
488,386

–

303
1,054,647
(1,602,186)
(307,529)
(932,773)
(1,787,538)
$ 8,599,787

Consolidated Statements of Cash Flows

(in thousands)

Cash flows from operating activities:
Net income..................................................................................
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of property and equipment

and intangibles.....................................................................
Amortization of debt origination fees .....................................
Deferred income taxes ............................................................
Share-based compensation expense ........................................
Pension plan contributions ......................................................
Changes in operating assets and liabilities:

Accounts receivable.............................................................
Merchandise inventories......................................................
Accounts payable and accrued expenses .............................
Income taxes payable ..........................................................
Other, net .............................................................................
Net cash provided by operating activities ........................

Cash flows from investing activities:

Capital expenditures................................................................
Acquisition of business, net of cash ........................................
Purchase of intangibles ...........................................................
Purchase of marketable securities ...........................................
Proceeds from sale of marketable securities ...........................
Proceeds from disposal of capital assets and other, net...........
Net cash used in investing activities ................................

Cash flows from financing activities:

Net (payments) proceeds of commercial paper.......................
Proceeds from issuance of debt...............................................
Repayment of debt ..................................................................
Net proceeds from sale of common stock ...............................
Purchase of treasury stock.......................................................
Payments of capital lease obligations......................................
Other, net.................................................................................
Net cash used in financing activities................................

August 26,
2017
(52 weeks)

Year Ended
August 27,
2016
(52 weeks)

August 29,
2015
(52 weeks)

$ 1,280,869

$ 1,241,007

$ 1,160,241

323,051
8,369
74,902
38,244
(17,761)

7,795
(236,807)
82,614
(3,659)
12,995
1,570,612

(553,832)
–
–
(85,711)
82,993
2,951
(553,599)

(42,400)
600,000
(400,000)
54,686
(1,071,649)
(47,604)
(7,362)
(914,329)

297,397
7,980
45,019
39,825
(52,721)

(41,447)
(227,518)
271,198
50,122
10,198
1,641,060

(488,791)

–

(10,000)
(130,170)
120,472
2,654
(505,835)

149,900
650,000
(500,000)
80,289
(1,452,462)
(36,320)
(7,935)
(1,116,528)

269,919
6,230
35,971
40,995
–

(36,466)
(266,776)
291,520
74,487
(3,103)
1,573,018

(480,579)
(75,744)
(10,000)
(49,740)
46,411
1,741
(567,911)

153,800
650,000
(500,000)
66,717
(1,271,416)
(34,986)
(8,712)
(944,597)

Effect of exchange rate changes on cash ....................................

852

(4,272)

(9,686)

Net increase in cash and cash equivalents ..................................
Cash and cash equivalents at beginning of year .........................
Cash and cash equivalents at end of year ...................................

103,536
189,734
$ 293,270

14,425
175,309
$ 189,734

Supplemental cash flow information:

Interest paid, net of interest cost capitalized ...........................
Income taxes paid....................................................................
Assets acquired through capital lease......................................

$ 135,331
$ 579,925
84,011
$

$ 136,731
$ 582,384
94,052
$

50,824
124,485
175,309

137,630
539,152
71,047

$
$
$

See Notes to Consolidated Financial Statements.

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Consolidated Statements of Stockholders’ Deficit

Common
Shares
Issued

Common
Stock

Additional
Paid-in
Capital

Retained
Deficit

Accumulated
Other
Comprehensive
Loss

Treasury
Stock

Total

(in thousands)

Balance at August 30, 2014 . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive loss . . . . . . . . . . . . . . . . .
Purchase of 2,010 shares of treasury stock . . . . . . . .
Retirement of treasury shares . . . . . . . . . . . . . . . . . .
Issuance of common stock under stock options and

stock purchase plans . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . .
Income tax benefit from exercise of stock

options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at August 29, 2015 . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive loss . . . . . . . . . . . . . . . . .
Purchase of 1,903 shares of treasury stock . . . . . . . .
Retirement of treasury shares . . . . . . . . . . . . . . . . . .
Issuance of common stock under stock options and

stock purchase plans . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . .
Income tax benefit from exercise of stock

options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at August 27, 2016 . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive income . . . . . . . . . . . . . .
Purchase of 1,495 shares of treasury stock . . . . . . . .
Retirement of treasury shares . . . . . . . . . . . . . . . . . .
Issuance of common stock under stock options and

stock purchase plans . . . . . . . . . . . . . . . . . . . . . . .
Share-based compensation expense . . . . . . . . . . . . .

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33,858

339

843,504

$ (1,529,123)
1,160,241

(2,125)

(21)

(57,403)

(1,049,856)

365

32,098

321

66,714
37,645

47,895

938,355

(1,418,738)
1,241,007

(2,132)

(21)

(67,023)

(1,424,455)

363

80,286
39,298

63,731

30,329

303

1,054,647

(1,602,186)
1,280,869

(1,804)

(18)

(64,943)

(1,321,070)

210

54,684
42,283

(128,903) $ (807,674) $ (1,621,857)
1,160,241
(120,615)
(1,271,416)

(120,615)

(1,271,416)
1,107,280

(249,518)

(971,810)

(58,011)

(1,452,462)
1,491,499

(307,529)

(932,773)

52,972

(1,071,649)
1,386,031

–

66,717
37,645

47,895

(1,701,390)
1,241,007
(58,011)
(1,452,462)

–

80,289
39,298

63,731

(1,787,538)
1,280,869
52,972
(1,071,649)

–

54,686
42,283

Balance at August 26, 2017 . . . . . . . . . . . . . . . . . . .

28,735

287

$ 1,086,671

$ (1,642,387) $

(254,557) $ (618,391) $ (1,428,377)

See Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

Note A – Significant Accounting Policies

Business: AutoZone, Inc. and its wholly owned subsidiaries (“AutoZone” or the “Company”) are principally a
retailer and distributor of automotive replacement parts and accessories. At the end of fiscal 2017, the Company
operated 5,465 AutoZone stores in the United States, including Puerto Rico; 524 stores in Mexico; 14 stores in
Brazil; and 26 Interamerican Motor Corporation (“IMC”) branches. Each AutoZone 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. At the end of fiscal 2017, 4,592 of the
domestic AutoZone stores had a commercial sales program that provides commercial credit and prompt delivery
of parts and other products to local, regional and national repair garages, dealers, service stations and public sector
accounts. The company also had commercial programs in AutoZone stores in Mexico and Brazil. IMC branches
carry an extensive line of original equipment quality import replacement parts. The Company also sells the
ALLDATA brand automotive diagnostic and repair software through www.alldata.com and www.alldatadiy.com.
Additionally, the Company sells automotive hard parts, maintenance items, accessories, and non-automotive
products through www.autozone.com, and accessories, performance and replacement parts through
www.autoanything.com, and its commercial customers can make purchases through www.autozonepro.com and
www.imcparts.net. The Company does not derive revenue from automotive repair or installation services.

Fiscal Year: The Company’s fiscal year consists of 52 or 53 weeks ending on the last Saturday in August. Fiscal
2017, fiscal 2016 and fiscal 2015 represented 52 weeks.

Basis of Presentation: The consolidated financial statements include the accounts of AutoZone, Inc. and its
wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in
consolidation. Certain reclassifications have been made to the prior years’ Consolidated Statements of Cash Flows
to conform to the current year’s presentation due to the adoption of the new accounting guidance for share-based
payments.

Use of Estimates: Management of the Company has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent liabilities to prepare these financial statements.
Actual results could differ from those estimates.

Cash and Cash Equivalents: Cash equivalents consist of investments with original maturities of 90 days or less
at the date of purchase. Cash equivalents include proceeds due from credit and debit card transactions with
settlement terms of less than five days. Credit and debit card receivables included within cash and cash
equivalents were $48.3 million at August 26, 2017 and $46.8 million at August 27, 2016.

Cash balances are held in various locations around the world. Cash and cash equivalents of $148.4 million and
$78.1 million were held outside of the U.S. as of August 26, 2017, and August 27, 2016, respectively, and were
generally utilized to support liquidity needs in foreign operations. The Company intends to continue to
permanently reinvest the cash held outside of the U.S. in its foreign operations.

Accounts Receivable: Accounts receivable consists of receivables from commercial customers and vendors, and
are presented net of an allowance for uncollectible accounts. AutoZone routinely grants credit to certain of its
commercial customers. The risk of credit loss in its trade receivables is substantially mitigated by the Company’s
credit evaluation process, short collection terms and sales to a large number of customers, as well as the low dollar
value per transaction for most of its sales. Allowances for potential credit losses are determined based on
historical experience and current evaluation of the composition of accounts receivable. Historically, credit losses
have been within management’s expectations and the balance of the allowance for uncollectible accounts was
$5.9 million at August 26, 2017, and $7.4 million at August 27, 2016.

Merchandise Inventories: Inventories are stated at the lower of cost or market. Merchandise inventories include
related purchasing, storage and handling costs. Inventory cost has been determined using the last-in, first-out
(“LIFO”) method for domestic inventories and the weighted average cost method for Mexico and Brazil
inventories. Due to price deflation on the Company’s merchandise purchases, the Company has exhausted its
LIFO reserve balance. The Company’s policy is to not write up inventory in excess of replacement cost.

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The difference between LIFO cost and replacement cost, which will be reduced upon experiencing price inflation
on the Company’s merchandise purchases, was $414.9 million at August 26, 2017, and $364.1 million at August
27, 2016.

Marketable Securities: The Company invests a portion of its assets held by the Company’s 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 and Other long-term assets captions in the accompanying
Consolidated Balance Sheets and records the amounts at fair market value, which is determined using quoted
market prices at the end of the reporting period. A discussion of marketable securities is included in “Note E –
Fair Value Measurements” and “Note F – Marketable Securities.”

Property and Equipment: Property and equipment is stated at cost. Depreciation and amortization are computed
principally using the straight-line method over the following estimated useful lives: buildings, 40 to 50 years;
building improvements, 5 to 15 years; equipment, 3 to 10 years; and leasehold improvements, over the shorter of
the asset’s estimated useful life or the remaining lease term, which includes any reasonably assured renewal
periods. Depreciation and amortization include amortization of assets under capital lease.

Impairment of Long-Lived Assets: The Company evaluates the recoverability of its long-lived assets whenever
events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When such
an event occurs, the Company compares the sum of the undiscounted expected future cash flows of the asset
(asset group) with the carrying amounts of the asset. If the undiscounted expected future cash flows are less than
the carrying value of the assets, the Company measures the amount of impairment loss as the amount by which
the carrying amount of the assets exceeds the fair value of the assets. There were no material impairment losses
recorded in the three years ended August 26, 2017.

Goodwill: The cost in excess of fair value of identifiable net assets of businesses acquired is recorded as
goodwill. Goodwill has not been amortized since fiscal 2001, but an analysis is performed at least annually to
compare the fair value of the reporting unit to the carrying amount to determine if any impairment exists. The
Company performs its annual impairment assessment in the fourth quarter of each fiscal year, unless
circumstances dictate more frequent assessments. Refer to “Note N – Goodwill and Intangibles” for additional
disclosures regarding the Company’s goodwill and impairment assessment.

Intangible Assets: Intangible assets consist of assets from the acquisitions of IMC and AutoAnything and assets
purchased relating to ALLDATA operations, and include technology, non-compete agreements, customer
relationships and trade names. Amortizing intangible assets are amortized over periods ranging from 3 to 10
years. Trade names are non-amortizing intangibles as their lives are indefinite. These non-amortizing assets are
reviewed at least annually for impairment by comparing the carrying amount to fair value. The Company
performs its annual impairment assessment in the fourth quarter of each fiscal year, unless circumstances dictate
more frequent assessments. Refer to “Note N – Goodwill and Intangibles” for additional disclosures regarding the
Company’s intangible assets and impairment assessment.

Derivative Instruments and Hedging Activities: AutoZone is exposed to market risk from, among other things,
changes in interest rates, foreign exchange rates and fuel prices. From time to time, the Company uses various
derivative instruments to reduce such risks. To date, based upon the Company’s current level of foreign
operations, no derivative instruments have been utilized to reduce foreign exchange rate risk. All of the
Company’s hedging activities are governed by guidelines that are authorized by AutoZone’s Board of Directors
(the “Board”). Further, the Company does not buy or sell derivative instruments for trading purposes.

AutoZone’s financial market risk results primarily from changes in interest rates. At times, AutoZone reduces its
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. All of the Company’s interest
rate hedge instruments are designated as cash flow hedges. Refer to “Note H – Derivative Financial Instruments”
for additional disclosures regarding the Company’s derivative instruments and hedging activities. Cash flows
related to these instruments designated as qualifying hedges are reflected in the accompanying Consolidated
Statements of Cash Flows in the same categories as the cash flows from the items being hedged. Accordingly,
cash flows relating to the settlement of interest rate derivatives hedging the forecasted issuance of debt have been
reflected upon settlement as a component of financing cash flows. The resulting gain or loss from such settlement

is deferred to Accumulated other comprehensive loss and reclassified to interest expense over the term of the
underlying debt. This reclassification of the deferred gains and losses impacts the interest expense recognized on
the underlying debt that was hedged and is therefore reflected as a component of operating cash flows in periods
subsequent to settlement.

Foreign Currency: The Company accounts for its Mexican, Brazilian, Canadian, European, Chinese and British
operations using the Mexican peso, Brazilian real, Canadian dollar, euro, Chinese yuan renminbi and British
pound as the functional currencies, respectively, and converts its financial statements from these currencies to
U.S. dollars. The cumulative loss on currency translation is recorded as a component of Accumulated other
comprehensive loss (see “Note G – Accumulated Other Comprehensive Loss”).

Self-Insurance Reserves: The Company retains a significant portion of the risks associated with workers’
compensation, employee health, general, products liability, property and vehicle insurance. Through various
methods, which include analyses of historical trends and utilization of actuaries, the Company estimates the costs
of these risks. The costs are accrued based upon the aggregate of the liability for reported claims and an estimated
liability for claims incurred but not reported. Estimates are based on calculations that consider historical lag and
claim development factors. The long-term portions of these liabilities are recorded at the Company’s estimate of
their net present value.

Deferred Rent: The Company recognizes rent expense on a straight-line basis over the course of the lease term,
which includes any reasonably assured renewal periods, beginning on the date the Company takes physical
possession of the property (see “Note O – Leases”). Differences between this calculated expense and cash
payments are recorded as a liability within the Accrued expenses and other and Other long-term liabilities
captions in the accompanying Consolidated Balance Sheets, based on the terms of the lease. Deferred rent
approximated $130.2 million as of August 26, 2017, and $121.7 million as of August 27, 2016.

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Financial Instruments: 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,” marketable securities is included in “Note F – Marketable
Securities,” and derivatives is included in “Note H – Derivative Financial Instruments.”

Income Taxes: The Company accounts for income taxes under the liability method. Deferred tax assets and
liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to
reverse. Our effective tax rate is based on income by tax jurisdiction, statutory rates, and tax saving initiatives
available to the Company in the various jurisdictions in which we operate.

The Company recognizes liabilities for uncertain income 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 the Company to estimate and measure the tax benefit as the
largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and
subjective to estimate such amounts, as the Company must determine the probability of various possible
outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis or when new information
becomes available to management. These reevaluations are based on factors including, but not limited to, changes
in facts or circumstances, changes in tax law, successfully settled issues under audit, expirations due to statutes
and new audit activity. Such a change in recognition or measurement could result in the recognition of a tax
benefit or an increase to the tax accrual.

The Company classifies interest related to income tax liabilities, and if applicable, penalties, as a component of
Income tax expense. The income tax liabilities and accrued interest and penalties that are expected to be payable
within one year of the balance sheet date are presented within the Accrued expenses and other caption in the
accompanying Consolidated Balance Sheets. The remaining portion of the income tax liabilities and accrued
interest and penalties are presented within the Other long-term liabilities caption in the accompanying
Consolidated Balance Sheets because payment of cash is not anticipated within one year of the balance sheet date.
Refer to “Note D – Income Taxes” for additional disclosures regarding the Company’s income taxes.

Sales and Use Taxes: Governmental authorities assess sales and use taxes on the sale of goods and services. The
Company excludes taxes collected from customers in its reported sales results; such amounts are included within
the Accrued expenses and other caption until remitted to the taxing authorities.

Dividends: The Company currently does not pay a dividend on its common stock. The ability to pay dividends is
subject to limitations imposed by Nevada law. Under Nevada law, any future payment of dividends would be
dependent upon the Company’s financial condition, capital requirements, earnings and cash flow.

Revenue Recognition: The Company recognizes sales at the time the sale is made and the product is delivered to
the customer. Revenue from sales are presented net of allowances for estimated sales returns, which are based on
historical return rates.

A portion of the Company's transactions include the sale of auto parts that contain a core component. The core
component represents the recyclable portion of the auto part. Customers are not charged for the core component
of the new part if a used core is returned at the point of sale of the new part; otherwise the Company charges
customers a specified amount for the core component. The Company refunds that same amount upon the customer
returning a used core to the store at a later date. The Company does not recognize sales or cost of sales for the
core component of these transactions when a used part is returned or expected to be returned from the customer.

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Vendor Allowances and Advertising Costs: The Company receives various payments and allowances from its
vendors through a variety of programs and arrangements. Monies received from vendors include rebates,
allowances and promotional funds. The amounts to be received are subject to the terms of the vendor agreements,
which generally do not state an expiration date, but are subject to ongoing negotiations that may be impacted in
the future based on changes in market conditions, vendor marketing strategies and changes in the profitability or
sell-through of the related merchandise.

Rebates and other miscellaneous incentives are earned based on purchases or product sales and are accrued
ratably over the purchase or sale of the related product. These monies are generally recorded as a reduction of
merchandise inventories and are recognized as a reduction to cost of sales as the related inventories are sold.

For arrangements that provide for reimbursement of specific, incremental, identifiable costs incurred by the
Company in selling the vendors’ products, the vendor funds are recorded as a reduction to Operating, selling,
general and administrative expenses in the period in which the specific costs were incurred.

The Company expenses advertising costs as incurred. Advertising expense, net of vendor promotional funds, was
$93.1 million in fiscal 2017, $98.3 million in fiscal 2016, and $98.0 million in fiscal 2015. Vendor promotional
funds, which reduced advertising expense, amounted to $28.3 million in fiscal 2017, $21.4 million in fiscal 2016,
and $22.0 million in fiscal 2015.

Cost of Sales and Operating, Selling, General and Administrative Expenses: The following illustrates the
primary costs classified in each major expense category:

Cost of Sales

(cid:120)

Total cost of merchandise sold, including:

Freight expenses associated with moving merchandise inventories from the Company’s vendors
to the distribution centers;

o Vendor allowances that are not reimbursements for specific, incremental and identifiable costs

Costs associated with operating the Company’s supply chain, including payroll and benefit costs,
warehouse occupancy costs, transportation costs and depreciation; and
Inventory shrinkage

Operating, Selling, General and Administrative Expenses

Payroll and benefit costs for store, field leadership and store support employees;

(cid:120)
(cid:120) Occupancy costs of store and store support facilities;
(cid:120) Depreciation and amortization related to store and store support assets;
(cid:120)
(cid:120) Advertising;
(cid:120)
(cid:120) Other administrative costs, such as credit card transaction fees, legal costs, supplies, and travel and

Transportation costs associated with field leadership, commercial sales force and hub deliveries;

Self insurance costs; and

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lodging

Warranty Costs: The Company or the vendors supplying its products provides the Company’s customers limited
warranties on certain products that range from 30 days to lifetime. In most cases, the Company’s vendors are
primarily responsible for warranty claims. Warranty costs relating to merchandise sold under warranty not
covered by vendors are estimated and recorded as warranty obligations at the time of sale based on each product’s
historical return rate. These obligations, which are often funded by vendor allowances, are recorded within the
Accrued expenses and other caption in the Consolidated Balance Sheets. For vendor allowances that are in excess
of the related estimated warranty expense for the vendor’s products, the excess is recorded in inventory and
recognized as a reduction to cost of sales as the related inventory is sold.

Shipping and Handling Costs: The Company does not generally charge customers separately for shipping and
handling. Substantially all the costs the Company incurs to ship products to our stores are included in cost of
sales.

Pre-opening Expenses: Pre-opening expenses, which consist primarily of payroll and occupancy costs, are
expensed as incurred.

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 620,915 stock options excluded from
the diluted earnings per share calculation because they would have been anti-dilutive as of August 26, 2017. There
were 329,900 stock options excluded for the year ended August 27, 2016, and 778 stock options excluded for the
year ended August 29, 2015, because they would have been anti-dilutive.

Share-Based Payments: Share-based payments include stock option grants and certain other transactions under
the Company’s stock plans. The Company recognizes compensation expense for its share-based payments over
the requisite service period based on the fair value of the awards. See “Note B – Share-Based Payments” for
further discussion.

Risk and Uncertainties: In fiscal 2017, one class of similar products accounted for approximately 11 percent of
the Company’s total revenues, and one vendor supplied approximately 11 percent of the Company’s 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.

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Recently Adopted Accounting Pronouncements:
In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update
(“ASU”) 2016-09, Compensation – Stock Compensation (Topic 718): Improvement to Employee Share-based
Payment Accounting. ASU 2016-09 simplifies several aspects of accounting for share-based payments
transactions, including income tax consequences, classification of awards as either equity or liabilities and
classification on the statement of cash flows. The Company adopted this standard on August 28, 2016. The
Company has applied the amendment requiring recognition of excess tax deficiencies and tax benefits in the
income statement prospectively. The adoption of the new standard increased earnings per share for the year ended
August 26, 2017 by $0.81, driven by a lower effective tax rate of 162 basis points (a $1.08 benefit to earnings per
share), partially offset by a change to the dilutive outstanding shares calculation (a $0.27 reduction to earnings per
share). The Company has applied the amendment relating to the presentation of the excess tax benefits on the
Consolidated Statements of Cash Flows retrospectively, resulting in the reclassification of $63.7 million and $47.9
million of excess tax benefits from cash flows from financing activities to cash flows from operating activities for
the years ended August 27, 2016 and August 29, 2015, respectively. The Company will continue to estimate
forfeitures of share-based awards.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test
for Goodwill Impairment. ASU 2017-04 eliminates Step 2 from the goodwill impairment test and instead requires an
entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with
its carrying amount. The entity should recognize an impairment charge for the amount by which the carrying amount
exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The
updated guidance requires a prospective adoption. Early adoption is permitted. The Company early adopted ASU
2017-04 in the fourth quarter of fiscal 2017, and it had no material impact on the consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic
2015-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15
requires management to perform two steps. Management must first evaluate whether there are conditions and events
that raise substantial doubt about the entity’s ability to continue as a going concern (Step 1). If management
concludes that substantial doubt is raised, management also is required to consider whether its plans alleviate that
doubt (Step 2). Management must perform a going concern evaluation to assess whether it is probable that both
management’s plans will be effectively implemented and those plans will mitigate the relevant conditions and events
within one year after the financial statements are issued (or available to be issued, when applicable). The Company
adopted ASU 2014-15 in fiscal 2017, concluding no significant conditions or events are present to raise substantial
doubt about the Company’s ability to continue as a going concern.

Recently Issued Accounting Pronouncements:
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. Under ASU 2014-09, an
entity will recognize revenue to depict the transfer of promised goods or services to customers at an amount that
reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable
users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows
arising from contracts with customers. This update will be effective for the Company at the beginning of its fiscal
2019 year. The Company established a cross-functional implementation team to evaluate and identify the impact
of ASU 2014-09 on the Company’s financial position, results of operations and cash flows. The Company is
currently in the process of identifying changes to its business processes, systems and controls to support adoption
of the new standard. The Company is considering the possible implications of the new standard on the Company’s
revenue streams at each of the business units, the application of the Company’s loyalty programs and all
applicable financial statement disclosures required by the new guidance. At this time, the team has not completed
its full analysis or means of adoption for the new guidance; however, the Company does not expect the adoption
of the new standard to have a material impact on its consolidated financial condition, results of operations or cash
flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires an entity to
recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition,
measurement and presentation of expenses will depend on classification as a finance or operating lease. The
amendments also require certain quantitative and qualitative disclosures about leasing arrangements. Early
adoption is permitted. The updated guidance requires a modified retrospective adoption. This update will be
effective for the Company beginning with its fiscal 2020 first quarter. The Company established a cross-

functional implementation team to evaluate and identify the impact of ASU 2016-02 on the Company’s financial
position, results of operations and cash flows. The Company is currently in the process of identifying changes to
its business processes, systems and controls to support adoption of the new standard. The Company is considering
the possible implications of the new standard on determining the valuation of new and existing leases, procedural
and operational changes that may be necessary to comply with the provisions of the accounting update and all
applicable financial statement disclosures required by the new guidance. At this time, the team has not completed
its full analysis and is unable to quantify the impact; however, the Company believes the adoption of the new
guidance will have a material impact on the total assets and total liabilities reported on the Company’s
consolidated balance sheets.

In May 2016, the FASB issued ASU 2016-11, Revenue Recognition (Topic 605) and Derivatives Hedging (Topic
815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to
Staff Announcements at the March 3, 2016 EITF Meeting (SEC Update). ASU 2016-11 rescinds certain SEC Staff
Observer comments under Topic 605, Revenue Recognition and Topic 932, Extractive Activities-Oil and Gas.
This guidance clarifies that the registrants should not rely on the rescinded SEC Staff Observer comments upon
adoption of ASU 2014-09. The Company does not expect ASU 2016-11 to have a material impact on its
consolidated financial statements. This update will be effective for the Company at the beginning of its fiscal
2019 year.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets
Other than Inventory. ASU 2016-16 requires that an entity recognize the income tax consequences of an intra-
entity transfer of assets other than inventory when the transfer occurs. The guidance must be applied using the
modified retrospective basis. The Company does not expect the provisions of ASU 2016-16 to have a material
impact on its financial statements. This update will be effective for the Company at the beginning of fiscal 2019.

In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606,
Revenue from Contracts with Customers. ASU 2016-20 provides correction or improvement to the guidance
previously issued in ASU 2014-09, Revenue from Contracts with Customers. Under ASU 2014-09, an entity will
recognize revenue to depict the transfer of promised goods or services to customers at an amount that reflects
what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of
financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising
from contracts with customers. The Company is in the process of evaluating the impact of the provisions of the
ASUs on its consolidated financial statements. This update will be effective for the Company at the beginning of
its fiscal 2019 year.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of
a Business. ASU 2017-01 provides guidance to assist entities in evaluating whether transactions should be
accounted for as acquisitions (or disposals) of assets or businesses. The updated guidance requires a prospective
adoption. Early adoption is permitted. The Company does not expect the provisions of ASU 2017-01 to have a
material impact on its consolidated financial statements. This update will be effective for the Company beginning
with its fiscal 2019 first quarter.

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the
Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires
an employer to separate the service cost component from other components of net benefit cost. It also provides
specific guidance on the presentation of the service cost component and other components of net benefit in the
income statement; only the service cost component of net benefit cost is eligible for capitalization. The Company
is in the process of evaluating the effects of the provisions of ASU 2017-07 on its consolidated financial
statements. This update will be effective for the Company beginning with its fiscal 2019 first quarter.

Note B – Share-Based Payments

Total share-based compensation expense (a component of Operating, selling, general and administrative
expenses) was $38.2 million for fiscal 2017, $39.8 million for fiscal 2016, and $41.0 million for fiscal 2015. As of
August 26, 2017, share-based compensation expense for unvested awards not yet recognized in earnings is $37.9
million and will be recognized over a weighted average period of 1.98 years. As a result of the adoption of the
new accounting guidance for share-based payments, cash flows related to tax deductions in excess of recognized

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compensation cost are classified as operating cash flows for each period presented. Retrospective application of
the cash flow presentation resulted in increases to both net cash provided by operations and net cash required for
financing activities of $63.7 million and $47.9 million for fiscal 2016 and 2015, respectively.

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”) and the 2003 Director Stock
Option Plan (the “2003 Option Plan”).

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
through October 7, 2025.

The Company grants options to purchase common stock to certain of its employees under its plan at prices equal
to the market value of the stock on the date of grant. Options have a term of 10 years or 10 years and one day
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 30 or 90 days after the service relationship ends, or one year
after death, to exercise all vested options. 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.

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In addition to the 2011 Plan, on December 15, 2010, the Company adopted the 2011 Director Compensation
Program (the “2011 Program”), which stated that non-employee directors would receive their compensation in
awards of restricted stock units under the 2011 Plan. Under the 2011 Program, restricted stock units are granted
the first day of each calendar quarter. The number of restricted stock units granted each quarter is determined by
dividing one-fourth of 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 they are issued and are paid in shares of the
Company’s common stock subsequent to the non-employee director ceasing to be a member of the Board.

The 2011 Program replaced the 2003 Comp Plan and the 2003 Option Plan. Under the 2003 Comp Plan, non-
employee directors could receive no more than one-half of their director fees immediately in cash, and the
remainder of the fees was required to be taken in common stock or stock appreciation rights. The director had the
option to elect to receive up to 100% of the fees in stock or defer all or part of the fees in units with value
equivalent to the value of shares of common stock as of the grant date. At August 26, 2017, the Company had
$9.5 million accrued related to 17,990 outstanding units issued under the 2003 Comp Plan and prior plans, and
there was $13.6 million accrued related to 17,990 outstanding units issued as of August 27, 2016. No additional
shares of stock or units will be issued in future years under the 2003 Comp Plan.

Under the 2003 Option Plan, each non-employee director received an option grant on January 1 of each year, and
each new non-employee director received an option to purchase 3,000 shares upon election to the Board, plus a
portion of the annual directors’ option grant prorated for the portion of the year actually served. These stock
option grants were made at the fair market value as of the grant date and generally vested three years from the
grant date. There were 19,000 and 24,000 outstanding options under the 2003 Option Plan as of August 26, 2017
and August 27, 2016, respectively. No additional shares of stock will be issued in future years under the 2003
Option Plan.

During the second quarter of fiscal 2014, the Company adopted the 2014 Director Compensation Program (the
“Program”), which states that non-employee directors will receive their compensation in awards of restricted
stock units under the 2011 Equity Incentive Award 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. The Program replaces the 2011 Director
Compensation Program. Under the Program, restricted stock units are granted 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 January 1 of each year and are paid in shares of the Company’s common stock on the earlier to occur of the
fifth anniversary of the Grant Date or the date the non-employee director ceases to be a member of the Board
(“Separation from Service”). Non-employee directors may elect to defer receipt of the restricted stock units until
their Separation from Service. The cash portion of the award, if elected, is paid ratably over the remaining
calendar quarters.

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 application of this valuation model involves
assumptions that are judgmental and highly sensitive in the determination of compensation expense. The
following table presents the weighted average for key assumptions used in determining the fair value of options
granted and the related share-based compensation expense:

August 26,
2017

Year Ended
August 27,
2016

August 29,
2015

Expected price volatility ................................................
Risk-free interest rates ...................................................
Weighted average expected lives (in years)...................
Forfeiture rate ................................................................
Dividend yield................................................................

18%
1.2%
5.1
10%
0%

18%
1.5%
5.1
10%
0%

20%
1.4%
5.1
9%
0%

The following methodologies were applied in developing the assumptions used in determining the fair value of
options granted:

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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 or ten years and one day. 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 $139.80 during fiscal 2017, $156.20
during fiscal 2016, and $106.27 during fiscal 2015. The intrinsic value of options exercised was $93.9 million in
fiscal 2017, $178.0 million in fiscal 2016, and $154.8 million in fiscal 2015. The total fair value of options vested
was $34.7 million in fiscal 2017, $32.2 million in fiscal 2016, and $30.6 million in fiscal 2015.

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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, 2017:

Weighted
Average
Exercise
Price

428.72
744.80
263.02
657.78
493.18

362.38
673.42

Number
of Shares

1,759,408
290,805
(207,069)
(45,089)
1,798,055

1,041,933
680,510
898,992

Weighted-
Average
Remaining
Contractual
Term
(in years)

Aggregate
Intrinsic
Value
(in thousands)

6.17

4.76
8.10

199,752

189,790
8,966

Outstanding – August 27, 2016...
Granted .......................................
Exercised.....................................
Cancelled ....................................
Outstanding – August 26, 2017...

Exercisable..................................
Expected to vest ..........................
Available for future grants ..........

The Company recognized $1.8 million in expense related to the discount on the selling of shares to employees and
executives under various share purchase plans in fiscal 2017, $2.0 million in fiscal 2016 and $2.1 million in fiscal
2015. The Sixth Amended and Restated AutoZone, Inc. Employee Stock Purchase Plan (the “Employee Plan”),
which is qualified under Section 423 of the Internal Revenue Code, permits all eligible employees to 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, 14,205 shares were sold to
employees in fiscal 2017, 12,662 shares were sold to employees in fiscal 2016, and 14,222 shares were sold to
employees in fiscal 2015. The Company repurchased 12,455 shares at market value in fiscal 2017, 12,460 shares
in fiscal 2016 and 15,594 shares in fiscal 2015 from employees electing to sell their stock. 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, 2017, 178,300 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 Fifth 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 under the Executive Plan were
1,865 shares in fiscal 2017, 1,943 shares in fiscal 2016 and 2,229 shares in fiscal 2015. At August 26, 2017,
239,888 shares of common stock were reserved for future issuance under the Executive Plan.

Note C – Accrued Expenses and Other

Accrued expenses and other consisted of the following:

(in thousands)

Accrued compensation, related payroll taxes and benefits ........................
Property, sales, and other taxes..................................................................
Medical and casualty insurance claims (current portion)...........................
Capital lease obligations ............................................................................
Accrued interest .........................................................................................
Accrued gift cards ......................................................................................
Accrued sales and warranty returns ...........................................................
Other ..........................................................................................................

August 26,
2017

August 27,
2016

181,591
98,829
84,756
48,134
41,047
24,192
19,520
65,281
563,350

180,012
95,293
78,458
44,834
34,179
24,129
19,527
75,193
551,625

The Company retains a significant portion of the insurance risks associated with workers’ compensation,
employee health, general, products 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 limits are per claim and are
$1.5 million for workers’ compensation, $2.0 million for vehicles, $21.5 million for property, $0.7 million for
employee health, and $1.0 million for general and products liability.

Note D – Income Taxes

The components of income from continuing operations before income taxes are as follows:

(in thousands)

Domestic ..........................................................................
International .....................................................................

The provision for income tax expense consisted of the following:

August 26,
2017

$ 1,737,401
188,088
$ 1,925,489

Year Ended
August 27,
2016

$ 1,737,727
174,987
$ 1,912,714

August 29,
2015

$ 1,676,640
125,972
$ 1,802,612

(in thousands)

Current:

August 26,
2017

Year Ended
August 27,
2016

August 29,
2015

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Federal .........................................................................
State .............................................................................
International.................................................................

$ 487,492
31,733
50,493
569,718

$ 534,621
39,223
52,844
626,688

$ 522,073
41,921
42,406
606,400

Deferred:

Income tax expense.........................................................

72,208
7,769
(5,075)
74,902
$ 644,620

48,509
9,453
(12,943)
45,019
$ 671,707

38,299
941
(3,269)
35,971
$ 642,371

A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax
rate of 35% to income before income taxes is as follows:

(in thousands)

August 26,
2017

Year Ended
August 27,
2016

August 29,
2015

Federal tax at statutory U.S. income tax rate ..................
State income taxes, net....................................................
Other ...............................................................................
Effective tax rate .............................................................

35.0%
1.3%
(2.8%)
33.5%

35.0%
1.6%
(1.5%)
35.1%

35.0%
1.5%
(0.9%)
35.6%

Significant components of the Company's deferred tax assets and liabilities were as follows:

(in thousands)

Deferred tax assets:

Net operating loss and credit carryforwards ...........................................
Accrued benefits .....................................................................................
Other .......................................................................................................
Total deferred tax assets......................................................................
Less: Valuation allowances........................................................................
Net deferred tax asset ..................................................................................
Deferred tax liabilities:

Property and equipment ..........................................................................
Inventory.................................................................................................
Prepaid Expenses ....................................................................................
Other .......................................................................................................
Total deferred tax liabilities ................................................................
Net deferred tax liability..............................................................................

August 26,
2017

August 27,
2016

48,062
96,664
56,052
200,778
(13,501)
187,277

(117,580)
(333,422)
(60,920)
(11,158)
(523,080)
$ (335,803)

50,859
93,212
68,600
212,671
(13,338)
199,333

(93,943)
(315,563)
(27,395)
(10,077)
(446,978)
$ (247,645)

Deferred taxes are not provided for temporary differences of approximately $712.6 million at August 26, 2017,
and $572.0 million at August 27, 2016, representing earnings of non-U.S. subsidiaries that are intended to be
permanently reinvested. If a deferred tax liability associated with these undistributed earnings had been recorded
it would have been approximately $37.5 million and $35.0 million at August 26, 2017 and August 27, 2016,
respectively.

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At August 26, 2017 and August 27, 2016, the Company had deferred tax assets of $30.8 million and $25.2
million, respectively, from net operating loss (“NOL”) carryforwards available to reduce future taxable income
totaling approximately $198.2 million and $122.0 million, respectively. Certain NOLs have no expiration date and
others will expire, if not utilized, in various years from fiscal 2018 through 2037. At August 26, 2017 and August
27, 2016, the Company had deferred tax assets for income tax credit carryforwards of $17.2 million and $25.7
million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2023
through 2027.

At August 26, 2017 and August 27, 2016, the Company had a valuation allowance of $13.5 million and $13.3
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.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in thousands)

Beginning balance......................................................................................
Additions based on tax positions related to the current year ..................
Additions for tax positions of prior years ...............................................
Reductions for tax positions of prior years .............................................
Reductions due to settlements.................................................................
Reductions due to statute of limitations..................................................
Ending balance...........................................................................................

August 26,
2017

August 27,
2016

27,726
7,089
278
(6,954)
(1,964)
(3,974)
22,201

28,434
7,172
95
(2,405)
(858)
(4,712)
27,726

Included in the August 26, 2017 and the August 27, 2016 balances are $9.9 million and $15.5 million,
respectively, of unrecognized tax benefits that, if recognized, would reduce the Company’s effective tax rate.

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 $1.2 million and $2.8
60

million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 26,
2017 and August 27, 2016, 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 state and local or Non-U.S. examinations by tax authorities for fiscal year
2013 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 jurisidictions. As of August 26, 2017, the Company estimates that the
amount of unrecognized tax benefits could be reduced by approximately $2.3 million over the next twelve months
as a result of tax audit settlements. While the Company believes that it has 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 Measurements

The Company has adopted ASC Topic 820, Fair Value Measurement, which defines fair value, establishes a
framework for measuring fair value in GAAP and expands disclosure requirements about fair value
measurements. This standard 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. ASC Topic 820
establishes a framework for measuring fair value by creating a hierarchy of valuation inputs used to measure fair
value, and although it does not require additional fair value measurements, it applies to other accounting
pronouncements that require or permit fair value measurements.

The hierarchy prioritizes the inputs into three broad levels:

Level 1 inputs — unadjusted 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 inputs — inputs 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 inputs — unobservable inputs for the asset or liability.

Financial Assets & Liabilities Measured at Fair Value on a Recurring Basis
The Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

(in thousands)

Level 1

Level 2

Level 3

August 26, 2017

Other current assets.................................
Other long-term assets ............................

(in thousands)

Other current assets.................................
Other long-term assets ............................

18,453
53,319
71,772

Level 1

7,326
65,350
72,676

120
28,981
29,101

August 27, 2016

Level 2

Level 3

–
25,675
25,675

Fair
Value

18,573
82,300
$ 100,873

Fair
Value

7,326
91,025
98,351

–
–
–

At August 26, 2017, the fair value measurement amounts for assets and liabilities recorded in the accompanying
Consolidated Balance Sheet consisted of short-term marketable securities of $18.6 million, which are included
61

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within Other current assets and long-term marketable securities of $82.3 million, which are included in Other
long-term assets. The Company’s marketable 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.

A discussion on how the Company’s cash flow hedges are valued is included in “Note H – Derivative Financial
Instruments,” while the fair value of the Company’s pension plan assets are disclosed in “Note L – Pension and
Savings Plans.”

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis
Non-financial assets are required to be measured at fair value on a non-recurring basis in certain circumstances,
including the event of impairment. The assets could include assets acquired in an acquisition as well as property,
plant and equipment that are determined to be impaired. During fiscal 2017 and fiscal 2016, the Company did not
have any significant non-financial assets measured at fair value on a non-recurring basis in periods 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. The fair value of the Company’s debt is disclosed in “Note I – Financing.”

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Note F – Marketable Securities

The Company’s basis for determining the cost of a security sold is the “Specific Identification Model.” Unrealized
gains (losses) on marketable securities are recorded in Accumulated other comprehensive loss. The Company’s
available-for-sale marketable securities consisted of the following:

(in thousands)

Corporate securities ..................................
Government bonds ....................................
Mortgage-backed securities ......................
Asset-backed securities and other .............

(in thousands)

Corporate securities .................................
Government bonds ...................................
Mortgage-backed securities .....................
Asset-backed securities and other ............

August 26, 2017

Amortized
Cost
Basis

Gross
Unrealized
Gains

Gross
Unrealized
Losses

39,917
31,076
4,850
25,042
$ 100,885

Amortized
Cost
Basis

37,789
33,497
6,865
20,015
98,166

73
49
2
28
152

(13)
(74)
(42)
(35)
(164)

August 27, 2016

Gross
Unrealized
Gains

Gross
Unrealized
Losses

198
24
18
26
266

(6)
(35)
(29)
(11)
(81)

Fair
Value

39,977
31,051
4,810
25,035
$ 100,873

Fair
Value

37,981
33,486
6,854
20,030
98,351

The debt securities held at August 26, 2017, had effective maturities ranging from less than one year to
approximately three years. The Company did not realize any material gains or losses on its marketable securities
during fiscal 2017, 2016 or 2015.

The Company holds 51 securities that are in an unrealized loss position of approximately $164 thousand at August
26, 2017. 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
62

whether the securities are deemed to be impaired on an other than temporary basis, the Company considers factors
such as the duration and severity of the loss position, the credit worthiness of the investee, the term to maturity
and its intent and ability to hold the investments until maturity or until recovery of fair value.

Included above in total marketable securities are $85.4 million and $61.8 million of marketable 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, 2017 and August 27, 2016,
respectively.

Note G – Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss includes certain adjustments to pension liabilities, 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 securities. Changes in Accumulated other
comprehensive loss consisted of the following:

(in thousands)

Pension
Liability

Foreign
Currency(3)

Net
Unrealized
Gain (Loss)
on Securities

Derivatives

Total

Balance at August 29, 2015…………
Other comprehensive (loss) income

$ (70,795)

$ (171,488)

(26)

$ (7,209)

$ (249,518)

before reclassifications…………..

(24,542)

(39,524)

206

(2,687)

(66,547)

Amounts reclassified from

Accumulated other comprehensive
loss(1) ………………………….
Balance at August 27, 2016…………
Other comprehensive (loss) income

before reclassifications…………..

Amounts reclassified from

Accumulated other comprehensive
loss(1) ………………………….
Balance at August 26, 2017…………

6,447(2)
(88,890)

–
(211,012)

8,046

35,198

(60)(4)
120

(60)

2,149(5)
(7,747)

8,536
(307,529)

–

43,184

8,468(2)
$ (72,376)

–
$ (175,814)

(71)(4)
(11)

1,391(5)
$ (6,356)

9,788

$ (254,557)

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(1) Amounts in parentheses indicate debits to Accumulated other comprehensive loss.
(2) Represents amortization of pension liability adjustments, net of taxes of $5,406 in fiscal 2017 and $4,059 in fiscal 2016,
which is recorded in Operating, selling, general and administrative expenses on the Consolidated Statements of Income.
See “Note L – Pension and Savings Plans” for further discussion.

(3) Foreign currency is not shown net of additional U.S. tax as earnings of non-U.S. subsidiaries are intended to be

permanently reinvested.

(4) Represents realized losses on marketable securities, net of taxes of $38 in fiscal 2017 and $33 in fiscal 2016, which is

recorded in Operating, selling, general, and administrative expenses on the Consolidated Statements of Income. See “Note
F – Marketable Securities” for further discussion.

(5) Represents gains and losses on derivatives, net of taxes of $814 in fiscal 2017 and $315 in fiscal 2016, which is recorded in
Interest expense, net, on the Consolidated Statements of Income. See “Note H – Derivative Financial Instruments” for
further discussion.

The 2017 pension actuarial gain of $8.0 million and the 2016 pension actuarial loss of $24.5 million include
amounts not yet reflected in periodic pension costs primarily driven by changes in the discount rate.

Note H – Derivative Financial Instruments

The Company periodically uses derivatives to hedge exposures to interest rates. The Company does not hold or
issue financial instruments for trading purposes. For transactions that meet the hedge accounting criteria, the
Company formally designates and documents the instrument as a hedge at inception and quarterly thereafter
assesses the hedges to ensure they are effective in offsetting changes in the cash flows of the underlying
exposures. Derivatives are recorded in the Company’s Consolidated Balance Sheet at fair value, determined using
available market information or other appropriate valuation methodologies. In accordance with ASC Topic 815,
Derivatives and Hedging, the effective portion of a financial instrument’s change in fair value is recorded in
Accumulated other comprehensive loss for derivatives that qualify as cash flow hedges and any ineffective
portion of an instrument’s change in fair value is recognized in earnings.

At August 26, 2017, the Company had $10.1 million recorded in Accumulated other comprehensive loss related to
net realized losses associated with terminated interest rate swap and treasury rate lock derivatives which were
designated as hedging instruments. Net losses are amortized into Interest expense over the remaining life of the
associated debt. During the fiscal year ended August 26, 2017, the Company reclassified $2.2 million of net losses
from Accumulated other comprehensive loss to Interest expense. In the fiscal year ended August 27, 2016, the
Company reclassified $1.8 million of net losses from Accumulated other comprehensive loss to Interest expense.
The Company expects to reclassify $2.2 million of net losses from Accumulated other comprehensive loss to
Interest expense over the next 12 months.

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Note I – Financing

The Company’s debt consisted of the following:

(in thousands)

1.300% Senior Notes due January 2017, effective interest rate of 1.43%..........
7.125% Senior Notes due August 2018, effective interest rate of 7.28% ..........
1.625% Senior Notes due April 2019, effective interest rate of 1.77% .............
4.000% Senior Notes due November 2020, effective interest rate of 4.43% .....
2.500% Senior Notes due April 2021, effective interest rate of 2.62% .............
3.700% Senior Notes due April 2022, effective interest rate of 3.85% .............
2.875% Senior Notes due January 2023, effective interest rate of 3.21% .........
3.125% Senior Notes due July 2023, effective interest rate of 3.26% ...............
3.250% Senior Notes due April 2025, effective interest rate 3.36%..................
3.125% Senior Notes due April 2026, effective interest rate of 3.28% .............
3.750% Senior Notes due June 2027, effective interest rate of 3.83% ..............
Commercial paper, weighted average interest rate of 1.44% and 0.72% at

August 26, 2017 and August 27, 2016, respectively...................................
Total debt before discounts and debt issuance costs ..........................................
Less: Discounts and debt issuance costs ......................................................
Long-term debt ..................................................................................................

August 26,
2017

August 27,
2016

–
250,000
250,000
500,000
250,000
500,000
300,000
500,000
400,000
400,000
600,000

400,000
250,000
250,000
500,000
250,000
500,000
300,000
500,000
400,000
400,000
–

1,155,100
5,105,100
23,862
$ 5,081,238

1,197,500
4,947,500
23,381
$ 4,924,119

As of August 26, 2017, the commercial paper borrowings and the $250 million 7.125% Senior Notes due August
2018 are classified as long-term in the accompanying Consolidated Balance Sheets as the Company has the ability
and intent to refinance on a long-term basis through available capacity in its revolving credit facilities. As of
August 26, 2017, the Company had $1.997 billion of availability under its $2.0 billion revolving credit facilities,
which would allow it to replace these short-term obligations with long-term financing facilities.

On November 18, 2016, the Company amended and restated its existing Multi-Year revolving credit facility (the
“New Multi-Year Revolving Credit Agreement”) by increasing the committed credit amount from $1.25 billion to
$1.6 billion, extending the expiration date by two years and renegotiating other terms and conditions. This credit
facility is available to primarily support commercial paper borrowings, letters of credit and other short-term
unsecured bank loans. The capacity of the credit facility may be increased to $2.1 billion prior to the maturity date
at the Company’s election and subject to bank credit capacity and approval, and may include up to $200 million in
letters of credit. Under the revolving credit facility, the Company may borrow funds consisting of Eurodollar
64

loans, base rate loans or a combination of both. Interest accrues on Eurodollar loans at a defined Eurodollar rate,
defined as LIBOR plus the applicable percentage, as defined in the revolving credit facility, depending upon the
Company’s senior, unsecured, (non-credit enhanced) long-term debt rating. Interest accrues on base rate loans as
defined in the credit facility. The Company also has the option to borrow funds under the terms of a swingline
loan subfacility. The revolving credit facility expires on November 18, 2021, but the Company may, by notice to
the administrative agent, make up to two requests to extend the termination date for an additional period of one
year. The first such request must be made no earlier than 60 days, and no later than 45 days, prior to November
18, 2017, while the second request must be made no earlier than 60 days, and no later than 45 days, prior to
November 18, 2018.

On November 18, 2016, the Company amended and restated its existing 364-Day revolving credit facility (the
“New 364-Day Credit Agreement”) by decreasing the committed credit amount from $500 million to $400
million, extending the expiration date by one year and renegotiating other terms and conditions. The credit facility
is available to primarily support commercial paper borrowings and other short-term unsecured bank loans. Under
the credit facility, the Company may borrow funds consisting of Eurodollar loans, base rate loans or a
combination of both. Interest accrues on Eurodollar loans at a defined Eurodollar rate, defined as LIBOR plus the
applicable margin, as defined in the revolving credit facility, depending upon the Company’s senior, unsecured,
(non-credit enhanced) long-term debt rating. Interest accrues on base rate loans as defined in the credit facility.
The New 364-Day Credit Agreement expires on November 17, 2017, but the Company may request an extension
of the termination date for 364 days no later than 45 days prior to November 17, 2017, subject to bank approval.
In addition, at least 15 days prior to November 17, 2017, the Company has the right to convert the credit facility
to a term loan for up to one year from the termination date, subject to a 1% penalty.

The revolving credit facility agreements require that the Company’s 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. The Company’s
consolidated interest coverage ratio as of August 26, 2017 was 6.0:1.

As of August 26, 2017, the Company had no outstanding borrowings under each of the revolving credit facilities,
and $3.3 million of outstanding letters of credit under the New Multi-Year Revolving Credit Agreement.

The Company also maintains a letter of credit facility that allows it to request the participating bank to issue
letters of credit on its behalf up to an aggregate amount of $75 million. The letter of credit facility is in addition to
the letters of credit that may be issued under the New Multi-Year Revolving Credit Agreement. As of August 26,
2017, the Company had $74.9 million in letters of credit outstanding under the letter of credit facility.

In addition to the outstanding letters of credit issued under the committed facilities discussed above, the Company
had $10.4 million in letters of credit outstanding as of August 26, 2017. These letters of credit have various
maturity dates and were issued on an uncommitted basis.

On April 18, 2017, the Company issued $600 million in 3.750% Senior Notes due June 2027 under its shelf
registration statement filed with the SEC on April 15, 2015 (the “2015 Shelf Registration”). The 2015 Shelf
Registration allows the Company 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 location openings, stock repurchases and acquisitions. Proceeds from the debt issuance were
used for general corporate purposes.

On April 21, 2016, the Company issued $400 million in 3.125% Senior Notes due April 2026 and $250 million in
1.625% Senior Notes due April 2019 under its 2015 Shelf Registration. Proceeds from the debt issuances were
used for general corporate purposes.

On April 29, 2015, we issued $400 million in 3.250% Senior Notes due April 2025 and $250 million in 2.500%
Notes due April 2021 under the 2015 Shelf Registration. Proceeds from the debt issuances were used to repay a
portion of the outstanding commercial paper borrowings, which were used to repay the $500 million in 5.750%
Senior Notes due in January 2015, and for general corporate purposes.

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All senior notes are subject to an interest rate adjustment if the debt ratings assigned to the senior notes are
downgraded (as defined in the agreements). Further, the senior notes contain a provision that repayment of the
senior notes may be accelerated if the Company experiences a change in control (as defined in the agreements).
The Company’s borrowings under its senior notes contain minimal covenants, primarily restrictions on liens.
Under its revolving credit facilities, 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. All of the repayment obligations under its borrowing
arrangements may be accelerated and come due prior to the scheduled payment date if covenants are breached or
an event of default occurs.

As of August 26, 2017, the Company was in compliance with all covenants related to its borrowing arrangements.
All of the Company’s debt is unsecured. Scheduled maturities of debt are as follows:

(in thousands)

2018 ...............................................................................................................................
2019 ...............................................................................................................................
2020 ...............................................................................................................................
2021 ...............................................................................................................................
2022 ...............................................................................................................................
Thereafter.......................................................................................................................
Subtotal ..................................................................................................................
Discount and debt issuance costs ...................................................................................

Total Debt

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Scheduled
Maturities

$ 1,405,100
250,000
-
750,000
500,000
2,200,000
5,105,100
23,862
$ 5,081,238

The fair value of the Company’s debt was estimated at $5.171 billion as of August 26, 2017, and $5.117 billion as
of August 27, 2016, 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 terms (Level 2). Such fair value is greater than the carrying value
of debt by $90.3 million at August 26, 2017 and $192.7 million at August 27, 2016, which reflect their face
amount, adjusted for any unamortized debt issuance costs and discounts.

Note J – Interest Expense

Net interest expense consisted of the following:

(in thousands)

Interest expense.............................................................
Interest income..............................................................
Capitalized interest .......................................................

August 26,
2017

$ 159,329
(3,502)
(1,247)
$ 154,580

Year Ended
August 27,
2016

150,961
(2,371)
(909)
147,681

August 29,
2015

$ 153,007
(1,605)
(963)
$ 150,439

Note K – Stock Repurchase Program

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 Board. The program was last amended on
March 21, 2017 to increase the repurchase authorization to $18.65 billion from $17.9 billion. From January 1998
to August 26, 2017, the Company has repurchased a total of 142.3 million shares at an aggregate cost of $17.826
billion.

The Company’s share repurchase activity consisted of the following:

(in thousands)

August 26,
2017

Year Ended
August 27,
2016

August 29,
2015

Amount ..........................................................................
Shares.............................................................................

$ 1,071,649
1,495

$ 1,452,462
1,903

$ 1,271,416
2,010

During fiscal year 2017, the Company retired 1.8 million shares of treasury stock which had previously been
repurchased under the Company’s share repurchase program. The retirement increased Retained deficit by $1.321
billion and decreased Additional paid-in capital by $64.9 million. During the comparable prior year period, the
Company retired 2.1 million shares of treasury stock, which increased Retained deficit by $1.424 billion and
decreased Additional paid-in capital by $67.0 million.

Note L – Pension and Savings Plans

Prior to January 1, 2003, substantially all full-time employees were covered by a defined benefit pension plan.
The benefits under the plan were based on years of service and the employee’s highest consecutive five-year
average compensation. On January 1, 2003, the plan was frozen. Accordingly, pension plan participants will earn
no new benefits under the plan formula and no new participants will join the pension plan.

On January 1, 2003, the Company’s supplemental defined benefit pension plan for certain highly compensated
employees was also frozen. Accordingly, plan participants will earn no new benefits under the plan formula and
no new participants will join the pension plan.

The Company has recognized the unfunded status of the defined pension plans in its Consolidated Balance Sheets,
which represents the difference between the fair value of pension plan assets and the projected benefit obligations
of its defined benefit pension plans. The net unrecognized actuarial losses and unrecognized prior service costs are
recorded in Accumulated other comprehensive loss. These amounts will be subsequently recognized as net
periodic benefit cost pursuant to the Company’s historical accounting policy for amortizing such amounts.
Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic benefit
cost in the same periods will be recognized as a component of other comprehensive income. Those amounts will
be subsequently recognized as a component of net periodic benefit cost on the same basis as the amounts
previously recognized in Accumulated other comprehensive loss.

The Company’s investment strategy for pension plan assets is to utilize a diversified mix of domestic and
international equity and fixed income portfolios to earn a long-term investment return that meets the Company’s
pension plan obligations. The pension plan assets are invested primarily in listed securities, and the pension plans
may hold only a minimal investment in AutoZone common stock that is entirely at the discretion of third-party
pension fund investment managers. The Company’s largest holding classes, fixed income bonds and U.S. equities,
are invested with a fund manager that holds diversified portfolios. Accordingly, the Company does not have any
significant concentrations of risk in particular securities, issuers, sectors, industries or geographic regions.
Alternative investment strategies were fully liquidated during fiscal 2016. The Company’s investment managers
are prohibited from using derivatives for speculative purposes and are not permitted to use derivatives to leverage
a portfolio.

The following is a description of the valuation methodologies used for the Company’s investments measured at
fair value:

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K

U.S., international, emerging, and high yield equities – These investments are commingled funds and are
valued using the net asset values, which are determined by valuing investments at the closing price or last
trade reported on the major market on which the individual securities are traded. These investments are
subject to annual audits.

Alternative investments – This category represents a hedge fund of funds made up of various investments in
limited partnerships, limited liability companies and corporations. The fair value of the hedge fund of funds is
determined using valuations provided by third party administrators for each of the underlying funds.

Fixed income securities – The fair values of corporate, U.S. government securities and other fixed income
securities are estimated by using bid evaluation pricing models or quoted prices of securities with similar
characteristics.

Cash and cash equivalents – These investments include cash equivalents valued using exchange rates
provided by an industry pricing vendor and commingled funds valued using the net asset value. These
investments also include cash.

The fair values of investments by level and asset category and the weighted-average asset allocations of the
Company’s pension plans at the measurement date are presented in the following table:

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(in thousands)

August 26, 2017

Fair
Value

Asset Allocation

Actual

Target

Fair Value Hierarchy
Level 2

Level 3

Level 1

U.S. equities.........................
International equities............
Emerging equities ................
High yield securities ............
Alternative investments .......
Fixed income securities........
Cash and cash equivalents ...

$ 50,125
33,696
19,027
17,063
–
178,650
17,706
$316,267

15.8%
10.7
6.0
5.4
–
56.5
5.6
100.0%

17.0%
11.0
6.0
6.0
–
60.0
–

100.0%

–
–
–
–
–
–
–
–

$ 50,125
33,696
19,027
17,063
–
178,650
17,706
$316,267

–
–
–
–
–
–
–
–

(in thousands)

August 27, 2016

Fair
Value

Asset Allocation

Actual

Target

Fair Value Hierarchy
Level 2

Level 3

Level 1

$ 66,008
42,023
22,848
21,445
–
99,336
37,726
$ 289,386

22.9%
14.5
7.9
7.4
–
34.3
13.0
100.0%

26.0%
17.0
8.5
8.5
–
40.0
–

100.0%

–
–
–
–
–
–
–
–

$ 66,008
42,023
22,848
21,445
–
99,336
37,726
$289,386

–
–
–
–
–
–
–
–

The asset allocations in the charts above include $17.5 million and $48.0 million in cash contributions made in the
last month prior to the balance sheet date of August 26, 2017, and August 27, 2016, respectively. Subsequent to
August 26, 2017, and August 27, 2016, these cash contributions were allocated to the pension plan investments in
accordance with the targeted asset allocation.

In January 2017, the Company’s Investment Committee approved a revised asset allocation target for the
investments held by the pension plan. Based on the revised asset allocation target, the expected long-term rate of
return on plan assets changed from 7.0% for the year ended August 26, 2017 to 6.0% for the year ending August
25, 2018.

The following table sets forth the plans’ funded status and amounts recognized in the Company’s Consolidated
Balance Sheets:

(in thousands)

August 26,
2017

August 27,
2016

Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year ......................................
Interest cost ................................................................................................
Actuarial (gains) losses ..............................................................................
Benefits paid .............................................................................................
Benefit obligations at end of year .............................................................

328,511
10,335
(8,746)
(15,376)
314,724

$ 296,123
11,272
39,842
(18,726)
$ 328,511

Change in Plan Assets:
Fair value of plan assets at beginning of year ...........................................
Actual return on plan assets ......................................................................
Employer contributions.............................................................................
Benefits paid ............................................................................................
Fair value of plan assets at end of year .....................................................

Amount Recognized in the Statement of Financial Position:
Current liabilities ......................................................................................
Long-term assets .......................................................................................
Long-term liabilities..................................................................................
Net amount recognized .............................................................................

Amount Recognized in Accumulated Other Comprehensive Loss
and not yet reflected in Net Periodic Benefit Cost:
Net actuarial loss.......................................................................................
Accumulated other comprehensive loss....................................................

Amount Recognized in Accumulated Other Comprehensive Loss
and not yet reflected in Net Periodic Benefit Cost and expected to
be amortized in next year’s Net Periodic Benefit Cost:
Net actuarial loss.......................................................................................
Amount recognized...................................................................................

289,386
24,496
17,761
(15,376)
316,267

238,755
16,636
52,721
(18,726)
289,386

(283)
8,686
(6,860)
1,543

$
(276)
–
(38,849)
(39,125)

1
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$ (118,889)
$ (118,889)

$ (145,948)
$ (145,948)

$
$

(10,736)
(10,736)

$
$

(13,874)
(13,874)

Net periodic benefit expense consisted of the following:

(in thousands)

Interest cost ....................................................................
Expected return on plan assets .......................................
Recognized net actuarial losses......................................
Net periodic benefit expense..........................................

August 26,
2017

10,335
(20,056)
13,873
4,152

Year Ended
August 27,
2016

11,272
(16,512)
10,506
5,266

August 29,
2015

12,338
(16,281)
8,941
4,998

The blended actuarial assumptions used in determining the projected benefit obligation include the following:

August 26,
2017

Year Ended
August 27,
2016

August 29,
2015

Discount rate to determine benefit obligation ................
Discount rate to determine net interest cost ...................
Expected long-term rate of return on plan assets ...........

3.86%
3.21%
7.00%

3.72%
3.90%
7.00%

4.50%
4.28%
7.00%

As the plan benefits are frozen, increases in future compensation levels no longer impact the calculation and there
is no service cost.

The discount rate to determine the projected benefit obligation is determined as of the measurement date and is
based on the calculated yield of a portfolio of high-grade corporate bonds with cash flows that generally match the
Company’s expected benefit payments in future years.

During fiscal 2016, the Company changed the method used to estimate the interest cost component of net periodic
benefit cost. Previously, the Company estimated interest cost using a single weighted-average discount rate
derived from the yield curve used to measure the benefit obligation. The Company elected to utilize a spot rate
approach by applying specific spot rates along the yield curve to calculate interest costs instead of a single
weighted-average discount rate. This calculation is believed to be more refined under the applicable accounting
standard. The impact of this change to net periodic benefit cost was a reduction of $1.8 million in fiscal 2016. The
Company accounted for this change as a change in accounting estimate and accounted for it prospectively.

The expected long-term rate of return on plan assets is based on the historical relationships between the
investment classes and the capital markets, updated for current conditions.

The Company makes annual contributions in amounts at least equal to the minimum funding requirements of the
Employee Retirement Income Security Act of 1974. The Company contributed $17.8 million to the plans in fiscal
2017, $52.7 million to the plans in fiscal 2016 and $17.1 million to the plans in fiscal 2015. The Company expects
to contribute approximately $20.3 million to the plans in fiscal 2018; however, a change to the expected cash
funding may be impacted by a change in interest rates or a change in the actual or expected return on plan assets
or through other plans initiated by management.

Based on current assumptions about future events, benefit payments are expected to be paid as follows for each of
the following fiscal years. Actual benefit payments may vary significantly from the following estimates:

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(in thousands)

2018 ...................................................................................................................................
2019 ...................................................................................................................................
2020 ...................................................................................................................................
2021 ...................................................................................................................................
2022 ...................................................................................................................................
2023 – 2027 .......................................................................................................................

Benefit
Payments

13,608
13,139
13,817
14,538
14,917
79,742

The Company has a 401(k) plan that covers all domestic employees who meet the plan’s participation
requirements. The plan features include Company matching contributions, immediate 100% vesting of Company
contributions and a savings option up to 25% of qualified earnings. The Company makes matching contributions,
per pay period, up to a specified percentage of employees’ contributions as approved by the Board. The Company
made matching contributions to employee accounts in connection with the 401(k) plan of $21.0 million in fiscal
2017, $19.7 million in fiscal 2016, and $17.7 million in fiscal 2015.

Note M – Acquisition

Effective September 27, 2014, the Company acquired the outstanding stock of Interamerican Motor Corporation
(“IMC”), the second largest distributor of quality import replacement parts in the United States, for $75.7 million,
net of cash. IMC specializes in parts coverage for European and Asian cars. With this acquisition, the Company
continues to grow its share in the aftermarket import car parts market. The results of operations from IMC have
been included in the Company’s Auto Parts Locations business activities since the date of acquisition.

Note N – Goodwill and Intangibles

The changes in the carrying amount of goodwill are as follows:

(in thousands)

Net balance as of August 29, 2015 ........................
Goodwill added through acquisition .................
Goodwill adjustments .......................................
Net balance as of August 27, 2016 ........................
Goodwill added through acquisition .................
Goodwill adjustments .......................................
Net balance as of August 26, 2017 ........................

Auto Parts
Locations

326,703
–
–
326,703
–
–
326,703

Other

Total

65,184
–
–
65,184
–
–
65,184

391,887
–
–
391,887
–
–
391,887

The Company performs its annual goodwill and intangibles impairment test in the fourth quarter of each fiscal
year. In the fourth quarter of fiscal 2017 and 2016, the Company concluded that its goodwill was not impaired.
Total accumulated goodwill impairment for both August 26, 2017 and August 27, 2016 is $18.3 million.

The carrying amounts of intangible assets are included in Other long-term assets as follows:

(in thousands)

Amortizing intangible assets:

August 26, 2017

Estimated
Useful
Life

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

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Technology..............................................
Noncompete agreements .........................
Customer relationships............................

3-5 years
5 years
3-10 years

10,570
1,300
49,676
61,546

(9,994)
(1,223)
(24,730)
(35,947)

576
77
24,946
25,599

Non-amortizing intangible asset:

Trade names .......................................................................................................................................
Total intangible assets other than goodwill ..........................................................................................

26,900
$ 52,499

(in thousands)

Amortizing intangible assets:

August 27, 2016

Estimated
Useful
Life

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Technology...............................................
Noncompete agreements ..........................
Customer relationships.............................

3-5 years
5 years
3-10 years

10,570
1,300
49,676
61,546

(7,988)
(963)
(18,514)
(27,465)

2,582
337
31,162
34,081

Non-amortizing intangible asset:

Trade names ..............................................................................................................................................
Total intangible assets other than goodwill .................................................................................................

26,900

$ 60,981

During fiscal 2014, the Company purchased $30.2 million of intangible assets relating to the rights to certain
customer relationships and technology assets relating to its ALLDATA operations. Additionally, during fiscal
2016 and 2015, the Company made an installment payment of $10 million in each year related to certain customer
relationships purchased during 2014 relating to its ALLDATA operations.

As part of its annual impairment test, the Company evaluates the AutoAnything and IMC trade names for
impairment in the fourth quarter of each fiscal year. In the fourth quarter of fiscal 2017 and 2016, the Company

concluded that AutoAnything’s and IMC’s trade names were not impaired. Trade names at August 26, 2017 and
August 27, 2016 reflect a total accumulated impairment of $4.1 million.

Amortization expense of intangible assets for the years ended August 26, 2017 and August 27, 2016 was $8.5
million and $8.7 million, respectively.

Total future amortization expense for intangible assets that have finite lives, based on the existing intangible
assets and their current estimated useful lives as of August 26, 2017, is estimated as follows:

(in thousands)

2018........................................................................................................................................
2019.........................................................................................................................................
2020.........................................................................................................................................
2021.........................................................................................................................................
2022.........................................................................................................................................
Thereafter ................................................................................................................................

Total

6,855
6,203
6,203
3,474
2,030
834
25,599

Note O – Leases

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The Company leases some of its retail stores, distribution centers, facilities, land and equipment, including
vehicles. Other than vehicle leases, most of the leases are operating leases, which include renewal options made at
the Company’s election and provisions for percentage rent based on sales. Rental expense was $302.9 million in
fiscal 2017, $280.5 million in fiscal 2016, and $269.5 million in fiscal 2015. Percentage rentals were insignificant.

The Company records rent for all operating leases on a straight-line basis over the lease term, including any
reasonably assured renewal periods and the period of time prior to the lease term that the Company is in
possession of the leased space for the purpose of installing leasehold improvements. Differences between
recorded rent expense and cash payments are recorded as a liability in Accrued expenses and other and Other
long-term liabilities in the accompanying Consolidated Balance Sheets, based on the terms of the lease. The
deferred rent approximated $130.2 million on August 26, 2017, and $121.7 million on August 27, 2016.

The Company has a fleet of vehicles used for delivery to its commercial customers and stores and travel for
members of field management. The majority of these vehicles are held under capital leases. At August 26, 2017,
the Company had capital lease assets of $152.0 million, net of accumulated amortization of $70.2 million, and
capital lease obligations of $150.5 million, of which $48.1 million is classified as Accrued expenses and other as
it represents the current portion of these obligations. At August 27, 2016, the Company had capital lease assets of
$148.5 million, net of accumulated amortization of $59.5 million, and capital lease obligations of $147.3 million,
of which $44.8 million is classified as Accrued expenses and other as it represents the current portion of these
obligations.

Future minimum annual rental commitments under non-cancelable operating leases and capital leases were as
follows at the end of fiscal 2017:

(in thousands)

2018.............................................................................................................
2019.............................................................................................................
2020.............................................................................................................
2021.............................................................................................................
2022.............................................................................................................
Thereafter ....................................................................................................
Total minimum payments required .............................................................
Less: Interest ...............................................................................................
Present value of minimum capital lease payments ......................................

Note P – Commitments and Contingencies

Operating
Leases

Capital
Leases

293,826
284,523
262,782
237,241
213,399
861,409
$ 2,153,180

48,134
49,808
36,610
21,217
3,307
-
159,076
(8,620)
$ 150,456

Construction commitments, primarily for new stores and new distribution centers, totaled approximately $69.9
million at August 26, 2017.

The Company had $88.6 million in outstanding standby letters of credit and $28.8 million in surety bonds as of
August 26, 2017, which all have expiration periods of less than one year. 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 the consolidated balance
sheet. The standby letters of credit and surety bonds arrangements have automatic renewal clauses.

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Note Q – Litigation

In July 2014, the Company received a subpoena from the District Attorney of the County of Alameda, along with
other environmental prosecutorial offices in the state of California, seeking documents and information related to
the handling, storage and disposal of hazardous waste. The Company received notice that the District Attorney
will seek injunctive and monetary relief. The Company is cooperating fully with the request and cannot predict
the ultimate outcome of these efforts, although the Company has accrued all amounts it believes to be probable
and reasonably estimable. The Company does not believe the ultimate resolution of this matter will have a
material adverse effect on its consolidated financial position, results of operations or cash flows.

In April 2016, the Company received a letter from the California Air Resources Board seeking payment for
alleged violations of the California Health and Safety Code related to the sale of certain aftermarket emission
parts in the State of California. The Company does not believe that any resolution of the matter will have a
material adverse effect on its consolidated financial position, results of operations or cash flows.

The Company is involved in various other legal proceedings incidental to the conduct of its business, including,
but not limited to, several lawsuits containing class-action allegations in which the plaintiffs are current and
former hourly and salaried employees who allege various wage and hour violations and unlawful termination
practices. 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 R – Segment Reporting

Four of the Company’s operating segments (Domestic Auto Parts, Mexico, Brazil, and IMC) are aggregated as
one reportable segment: Auto Parts Locations. 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 Company’s 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 Company’s reportable segment are the
same as those described in Note A.

The Auto Parts Locations segment is a retailer and distributor of automotive parts and accessories through the
Company’s 6,029 locations in the United States, Puerto Rico, Mexico and Brazil. Each location 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 of three operating segments that are not separately reportable due
to the materiality of these operating segments. The operating segments include ALLDATA, which produces, sells
and maintains diagnostic and repair information software used in the automotive repair industry; E-commerce,
which includes direct sales to customers through www.autozone.com; and AutoAnything, which includes direct
sales to customers through www.autoanything.com.

The Company evaluates its reportable segment primarily on the basis of net sales and segment profit, which is
defined as gross profit. The following table shows segment results for the following fiscal years:

(in thousands)

Net Sales:
Auto Parts Locations .......................................................
Other................................................................................
Total ................................................................................

Segment Profit:
Auto Parts Locations .......................................................
Other................................................................................
Gross profit......................................................................
Operating, selling, general and administrative expenses.
Interest expense, net ........................................................
Income before income taxes............................................

Segment Assets:
Auto Parts Locations .......................................................
Other................................................................................
Total ................................................................................

Capital Expenditures:
Auto Parts Locations .......................................................
Other................................................................................
Total ................................................................................

Auto Parts Locations Sales by Product Grouping:
Failure .............................................................................
Maintenance items...........................................................
Discretionary ...................................................................
Auto Parts Locations net sales.........................................

August 26,
2017

Year Ended
August 27,
2016

August 29,
2015

$10,523,272
365,404
$10,888,676

$10,261,112
374,564
$10,635,676

$ 9,824,876
362,464
$10,187,340

$ 5,544,494
195,126
5,739,620
(3,659,551)
(154,580)
$ 1,925,489

$ 5,410,477
198,259
5,608,736
(3,548,341)
(147,681)
$ 1,912,714

$ 5,132,624
194,407
5,327,031
(3,373,980)
(150,439)
$ 1,802,612

$ 8,964,371
295,410
$ 9,259,781

$ 8,351,883
247,904
$ 8,599,787

$ 7,883,720
218,629
$ 8,102,349

533,304
20,528
553,832

470,631
18,160
488,791

464,246
16,333
480,579

$ 5,100,702
3,774,386
1,648,184
$10,523,272

$ 4,913,423
3,721,240
1,626,449
$10,261,112

$ 4,650,271
3,618,779
1,555,826
$ 9,824,876

Note S – Quarterly Summary (1)
(Unaudited)

(in thousands, except per share data)

Twelve Weeks Ended

November 19,
2016

February 11,
2017

May 6,
2017

Sixteen
Weeks Ended
August 26,
2017(2)

Net sales .......................................
Gross profit ...................................
Operating profit ............................
Income before income taxes .........
Net income(3) ................................
Basic earnings per share(3) ............
Diluted earnings per share(3) .........

$ 2,467,845
1,301,542
458,902
425,596
278,125
9.61
9.36

$ 2,289,219
1,205,536
383,969
349,771
237,145
8.28
8.08

$ 2,619,007
1,378,418
529,570
493,895
331,700
11.70
11.44

$ 3,512,605
1,854,125
707,628
656,227
433,899
15.52
15.27

(in thousands, except per share data)

Twelve Weeks Ended

November 21,
2015

February 13,
2016

May 7,
2016

Sixteen
Weeks Ended
August 27,
2016(2)

Net sales .......................................
Gross profit ...................................
Operating profit ............................
Income before income taxes .........
Net income ...................................
Basic earnings per share ...............
Diluted earnings per share ............

$ 2,386,043
1,252,934
437,995
402,985
258,112
8.46
8.29

$ 2,257,192
1,190,596
382,660
349,828
228,613
7.58
7.43

$ 2,593,672
1,370,458
536,374
502,323
327,515
10.99
10.77

$ 3,398,769
1,794,748
703,366
657,577
426,768
14.58
14.30

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(1) The sum of quarterly amounts may not equal the annual amounts reported due to rounding. In addition, the
earnings per share amounts are computed independently for each quarter while the full year is based on the
annual weighted average shares outstanding.

(2) The fourth quarter for fiscal 2017 and fiscal 2016 are based on a 16-week period. All other quarters presented

are based on a 12-week period.

(3) As discussed in Note A, the Company adopted the new accounting guidance for shared-based payments on
August 28, 2016. These amounts include the impact of the adoption. For the twelve week period ended
November 19, 2016, this increased net income by $3.1 million, basic earnings per share by $0.11 and diluted
earnings per share by $0.03. For the twelve week period ended February 11, 2017, this increased net income
by $12.5 million, basic earnings per share by $0.43 and diluted earnings per share by $0.37. For the twelve
week period ended May 6, 2017, this increased net income by $11.4 million, basic earnings per share by $0.40
and diluted earnings per share by $0.32. For the sixteen week period ended August 26, 2017, this increased
net income by $4.1 million, basic earnings per share by $0.15 and diluted earnings per share by $0.09. Prior
period net income, basic earnings per share and diluted earnings per share amounts were not restated.

Note T – Subsequent Event
(Unaudited)

Subsequent to August 26, 2017, several storms made landfall and have resulted in extensive damage and flooding
in Texas, Florida, Louisiana and Puerto Rico. The damage to the Company’s stores in Texas, Florida and
Louisiana did not have a material impact on its consolidated financial statements. A full assessment of the extent
of the damage to stores in Puerto Rico is expected to be completed in the weeks ahead. Currently, there is
uncertainty as to the magnitude of the losses associated with this event and whether such losses would have a
material effect on the Company’s consolidated financial statements.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

As of August 26, 2017, an evaluation was performed under the supervision and with the participation of
AutoZone’s management, including the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act, as amended. Based on that evaluation, our management, including the
Chief Executive Officer and the Chief Financial Officer, concluded that our disclosure controls and procedures
were effective. During or subsequent to the quarter ended August 26, 2017, there were no changes in our internal
controls that have materially affected or are reasonably likely to materially affect, internal controls over financial
reporting.

Item 9B. Other Information

Not applicable.

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Item 10. Directors, Executive Officers and Corporate Governance

PART III

The information set forth in Part I of this document in the section entitled “Executive Officers of the Registrant,”
is incorporated herein by reference in response to this item. Additionally, the information contained in AutoZone,
Inc.’s Proxy Statement dated October 21, 2017, in the sections entitled “Proposal 1 – Election of Directors” and
“Section 16(a) Beneficial Ownership Reporting Compliance,” is incorporated herein by reference in response to
this item.

The Company has adopted a Code of Ethical Conduct for Financial Executives that applies to its chief executive
officer, chief financial officer, chief accounting officer and other financial executives. The Company has made the
Code of Ethical Conduct available on its investor relations website at http://www.autozoneinc.com.

Item 11. Executive Compensation

The information contained in AutoZone, Inc.’s Proxy Statement dated October 21, 2017, in the section entitled
“Executive Compensation,” is incorporated herein by reference in response to this item.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

The information contained in AutoZone, Inc.’s Proxy Statement dated October 21, 2017, in the sections entitled
“Security Ownership of Management and Board of Directors” and “Security Ownership of Certain Beneficial
Owners,” is incorporated herein by reference in response to this item.

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Item 13. Certain Relationships and Related Transactions, and Director Independence

Not applicable.

Item 14. Principal Accounting Fees and Services

The information contained in AutoZone, Inc.’s Proxy Statement dated October 21, 2017, in the section entitled
“Proposal 2 – Ratification of Independent Registered Public Accounting Firm,” is incorporated herein by
reference in response to this item.

PART IV

Item 15. Exhibits, Financial Statement Schedules

The following information required under this item is filed as part of this report.

(a) Financial Statements

The following financial statements, related notes and reports of independent registered public accounting firm are
filed with this Annual Report on Form 10-K in Part II, Item 8:

Reports of Independent Registered Public Accounting Firm
Consolidated Statements of Income for the fiscal years ended August 26, 2017, August 27, 2016, and August

29, 2015

Consolidated Statements of Comprehensive Income for the fiscal years ended ended August 26, 2017, August

27, 2016, and August 29, 2015

Consolidated Balance Sheets as of August 26, 2017, and August 27, 2016
Consolidated Statements of Cash Flows for the fiscal years ended ended August 26, 2017, August 27, 2016,

and August 29, 2015

Consolidated Statements of Stockholders’ Deficit for the fiscal years ended ended August 26, 2017, August

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27, 2016, and August 29, 2015

Notes to Consolidated Financial Statements

(b) Exhibits

The following exhibits are being filed herewith:

3.1 Restated Articles of Incorporation of AutoZone, Inc. Incorporated by reference to Exhibit 3.1 to the

Quarterly Report on Form 10-Q for the quarter ended February 13, 1999.

3.2 Sixth Amended and Restated By-laws of AutoZone, Inc. Incorporated by reference to Exhibit 3.1 to

the Current Report on Form 8-K dated October 7, 2015.

4.1 Indenture dated as of August 8, 2003, between AutoZone, Inc. and Bank One Trust Company, N.A.
Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (No. 333-
107828) filed August 11, 2003.

4.2 Officers’ Certificate dated August 4, 2008, pursuant to Section 3.2 of the Indenture dated August 11,
2003, setting forth the terms of the 7.125% Senior Notes due 2018. Incorporated by reference to
Exhibit 4.2 to the Current Report on Form 8-K dated August 4, 2008.

4.3 Form of 7.125% Senior Note due 2018. Incorporated by reference from the Form 8-K dated August

4, 2008.

4.4 Officers’ Certificate dated November 15, 2010, pursuant to Section 3.2 of the Indenture dated

August 8, 2003, setting forth the terms of the 4.000% Notes due 2020. Incorporated by reference to
4.1 to the Current Report on Form 8-K dated November 15, 2010.

4.5 Form of 4.000% Senior Note due 2020. Incorporated by reference from the Form 8-K dated

November 15, 2010.

4.6 Officers’ Certificate dated April 24, 2012, pursuant to section 3.2 of the indenture dated August 8,
2003, setting forth the terms of the 3.700% Senior Notes due 2022. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated April 24, 2012.

4.7 Form of 3.700% Senior Notes due 2022. Incorporated by reference from the Form 8-K dated April

24, 2012

4.8 Officers’ Certificate dated November 13, 2012, pursuant to section 3.2 of the indenture dated August
8, 2003, setting forth the terms of the 2.875% Senior Notes due 2023. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated November 13, 2012.

4.9 Form of 2.875% Senior Notes due 2023. Incorporated by reference from the Form 8-K dated

November 13, 2012.

4.10 Officers’ Certificate dated April 29, 2013, pursuant to section 3.2 of the indenture dated August 8,

2003, setting forth the terms of the 3.125% Senior Notes due 2023. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated April 29, 2013.

4.11 Form of 3.125% Senior Notes due 2023. Incorporated by reference to Exhibit 4.2 to the Form 8-K

dated April 29, 2013.

4.12 Officers’ Certificate dated April 29, 2015, pursuant to Section 3.2 of the Indenture dated August 8,

2003, setting forth the terms of the 2.500% Senior Notes due 2021. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated April 29, 2015.

4.13 Form of 2.500% Note dated 2021. Incorporated by reference to Exhibit 4.3 to the Current Report on

Form 8-K dated April 29, 2015.

4.14 Officers’ Certificate dated April 29, 2015, pursuant to Section 3.2 of the Indenture dated August 8,

2003, setting forth the terms of the 3.250% Senior Notes due 2025. Incorporated by reference to
Exhibit 4.2 to the Current Report on Form 8-K dated April 29, 2015.

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4.15 Form of 3.250% Note due 2025. Incorporated by reference to Exhibit 4.4 to the Current Report on

Form 8-K dated April 29, 2015.

4.16 Officers’ Certificate dated April 21, 2016, pursuant to Section 3.2 of the Indenture dated August 8,

2003, setting forth the terms of the 1.625% Senior Notes due 2019. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated April 21, 2016.

4.17 Form of 1.625% Senior Notes due 2019. Incorporated by reference to Exhibit 4.3 to the Current

Report on Form 8-K dated April 21, 2016.

4.18 Officers’ Certificate dated April 21, 2016, pursuant to Section 3.2 of the Indenture dated August 8,

2003, setting forth the terms of the 3.125% Senior Notes due 2026. Incorporated by reference to
Exhibit 4.2 to the Current Report on Form 8-K dated April 21, 2016.

4.19 Form of 3.125% Senior Notes due 2026. Incorporated by reference to Exhibit 4.4 to the Current

Report on Form 8-K dated April 21, 2016.

4.20 Officers’ Certificate dated April 18, 2017, pursuant to Section 3.2 of the Indenture dated August 8,

2003, setting forth the terms of the 3.750% Senior Notes due 2027. Incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K dated April 18, 2017.

4.21 Form of 3.750% Senior Notes due 2027. Incorporated by reference to Exhibit 4.2 to the Current

Report on Form 8-K dated April 18, 2017.

*10.1 Second Amended and Restated 1998 Director Compensation Plan. Incorporated by reference to
Exhibit 10.2 to the Annual Report on Form 10-K for the fiscal year ended August 26, 2000.

*10.2 AutoZone, Inc. 2003 Director Stock Option Plan. Incorporated by reference to Appendix C to the
definitive proxy statement dated November 1, 2002, for the Annual Meeting of Stockholders held
December 12, 2002.

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*10.3 AutoZone, Inc. 2003 Director Compensation Plan. Incorporated by reference to Appendix D to the
definitive proxy statement dated November 1, 2002, for the Annual Meeting of Stockholders held
December 12, 2002.

*10.4 Third Amendment to the AutoZone, Inc. Executive Deferred Compensation Plan. Incorporated by

reference to Exhibit 10.1 to the Form 8-K dated December 12, 2012.

*10.5 AutoZone, Inc. 2006 Stock Option Plan. Incorporated by reference to Appendix A to the definitive

proxy statement dated October 25, 2006, for the Annual Meeting of Stockholders held December 13,
2006.

*10.6 Form of Stock Option Agreement. Incorporated by reference to Exhibit 10.26 to the Annual Report

on Form 10-K for the fiscal year ended August 25, 2007.

*10.7 Amended and Restated AutoZone, Inc. 2003 Director Compensation Plan. Incorporated by reference

to Exhibit 99.2 to the Current Report on Form 8-K dated January 4, 2008.

*10.8 Amended and Restated AutoZone, Inc. 2003 Director Stock Option Plan. Incorporated by reference

to Exhibit 99.3 to the Current Report on Form 8-K dated January 4, 2008.

*10.9 AutoZone, Inc. Enhanced Severance Pay Plan. Incorporated by reference to Exhibit 99.1 to the

Current Report on Form 8-K dated February 15, 2008.

*10.10 Form of non-compete and non-solicitation agreement for Section 16 executive officers and by

AutoZone, Inc. Incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K dated
February 15, 2008.

*10.11 Form of non-compete and non-solicitation agreement approved by AutoZone’s Compensation

Committee for execution by non-executive officers. Incorporated by reference to Exhibit 99.3 to the
Current Report on Form 8-K dated February 15, 2008.

*10.12 Agreement dated February 14, 2008, between AutoZone, Inc. and William C. Rhodes, III.

Incorporated by reference to Exhibit 99.4 to the Current Report on Form 8-K dated February 15,
2008.

*10.13 Form of non-compete and non-solicitation agreement for Non-Section 16 officers and by AutoZone,
Inc. Incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q for the quarter
ended May 3, 2008.

*10.14 AutoZone, Inc. 2010 Executive Incentive Compensation Plan, incorporated by reference to Exhibit
A to the definitive proxy statement dated October 26, 2009, for the Annual Meeting of Stockholders
held December 16, 2009.

*10.15 AutoZone, Inc. 2011 Equity Incentive Award Plan, incorporated by reference to Exhibit A to the
definitive proxy statement dated October 25, 2010, for the Annual Meeting of Stockholders held
December 15, 2010.

*10.16 Form of Stock Option Agreement under the 2006 Stock Option Plan, effective September 2010.

Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q dated December 16,
2010.

*10.17 Form of Stock Option Agreement under the 2006 Stock Option Plan for certain executive officers,

effective September 2010. Incorporated by reference to Exhibit 10.3 to the Quarterly Report on
Form 10-Q dated December 16, 2010.

*10.18 Form of Letter Agreement dated as of December 14, 2010, amending certain Stock Option

Agreements of executive officers. Incorporated by reference to Exhibit 10.4 to the Quarterly Report
on Form 10-Q dated December 16, 2010.

*10.19 AutoZone, Inc. 2011 Director Compensation Program. Incorporated by reference to Exhibit 10.5 to

the Quarterly Report on Form 10-Q dated December 16, 2010.

*10.20 Form of Stock Option Agreement under the 2011 Equity Incentive Award Plan. Incorporated by
reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q dated March 17, 2011.

*10.21 Form of Stock Option Agreement under the 2011 Equity Incentive Award Plan for officers effective
September 27, 2011. Incorporated by reference to Exhibit 10.37 to the Annual Report on Form 10-K
for the fiscal year ended August 27, 2011.

*10.22 First Amended and Restated AutoZone, Inc. Enhanced Severance Pay Plan. Incorporated by
reference to Exhibit 10.4 to the Quarterly Report on Form 10-Q dated March 17, 2011.

*10.23 Form of Stock Option Agreement under the 2011 Equity Incentive Award Plan for officers effective
September 27, 2011. Incorporated by reference to Exhibit 10.37 to the Annual Report on Form 10-K
for the fiscal year ended August 27, 2011.

*10.24 Form of Stock Option Agreement under the 2011 Equity Incentive Award Plan for certain executive

officers effective September 27, 2011. Incorporated by reference to Exhibit 10.38 to the Annual
Report on Form 10-K for the fiscal year ended August 27, 2011.

*10.25 Sixth Amended and Restated AutoZone, Inc. Employee Stock Purchase Plan. Incorporated by

reference to Exhibit 10.40 to the Annual Report on Form 10-K for the fiscal year ended August 27,
2011.

*10.26 Second Amended AutoZone, Inc. Executive Deferred Compensation Plan. Incorporated by reference

to Exhibit 10.1 to the Current Report on Form 8-K dated December 14, 2011.

*10.27 Offer letter dated April 26, 2012, to Ronald B. Griffin. Incorporated by reference to Exhibit 10.39 of

Annual Report on Form 10-K dated October 22, 2012.

*10.28 Offer letter dated February 7, 2013, to Albert Saltiel. Incorporated by reference to Exhibit 10.2 of

the Quarterly Report on Form 10-Q dated June 12, 2013.

*10.29 Third Amendment to the AutoZone, Inc. Executive Deferred Compensation Plan incorporated by

reference to Exhibit 10.1 to the Form 8-K dated December 12, 2012.

*10.30 Amended and Restated AutoZone, Inc. AutoZone, Inc. Executive Deferred Compensation Plan
dated December 17, 2013. Incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q dated March 25, 2014.

*10.31 AutoZone, Inc. Director Compensation Program effective January 1, 2014. Incorporated by

reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q dated March 25, 2014.

*10.32 Amended and Restated AutoZone, Inc. 2011 Equity Incentive Award Plan dated December 16,

2015. Incorporated by reference to Exhibit A to the definitive proxy statement dated October 26,
2015, for the Annual Meeting of Stockholders held December 16, 2015.

*10.33 Third Amended and Restated Credit Agreement dated as of November 18, 2016, among AutoZone,

Inc., as Borrower, the lenders party thereto and Bank of America, N.A. as Administrative Agent,
incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K dated November 21,
2016.

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*10.34 364-Day Credit Agreement Dated as of November 18, 2016, among AutoZone, Inc. as Borrower, the
lenders party thereto and Wells Fargo Bank National Association as Administrative Agent,
incorporated by reference to Exhibit 10.2 of the Current Report on Form 8-K dated November 21,
2016.

*10.35 AutoZone, Inc. Sixth Amended and Restated Executive Stock Purchase Plan. Incorporated by

reference to Exhibit A to the definitive proxy statement dated October 24, 2016, for the Annual
Meeting of Stockholders held December 14, 2016.

12.1 Computation of Ratio of Earnings to Fixed Charges.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Ernst & Young LLP.

31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the

Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the

Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted Pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Document

101.LAB XBRL Taxonomy Extension Labels Document

101.PRE XBRL Taxonomy Extension Presentation Document

101.DEF XBRL Taxonomy Extension Definition Document

* Management contract or compensatory plan or arrangement.

Schedules are omitted because the information is not required or because the information required is included in
the financial statements or notes thereto.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

AUTOZONE, INC.

By:

/s/ WILLIAM C. RHODES, III
William C. Rhodes, III
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)

Dated: October 25, 2017

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated:

SIGNATURE

TITLE

DATE

/s/ WILLIAM C. RHODES, III
William C. Rhodes, III

Chairman, President and Chief Executive Officer
(Principal Executive Officer)

October 25, 2017

/s/ WILLIAM T. GILES
William T. Giles

Chief Financial Officer and Executive Vice
President – Finance and Information Technology
(Principal Financial Officer)

/s/ CHARLIE PLEAS, III
Charlie Pleas, III

Senior Vice President and Controller
(Principal Accounting Officer)

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/s/ DOUGLAS H. BROOKS
Douglas H. Brooks

/s/ LINDA A. GOODSPEED
Linda A. Goodspeed

/s/ SUE E. GOVE
Sue E. Gove

/s/ EARL G. GRAVES, JR.
Earl G. Graves, Jr.

/s/ ENDERSON GUIMARAES
Enderson Guimaraes

/s/ J.R. HYDE, III
J.R. Hyde, III

/s/ D. BRYAN JORDAN
D. Bryan Jordan

/s/ W. ANDREW MCKENNA
W. Andrew McKenna

/s/ GEORGE R. MRKONIC, JR.
George R. Mrkonic, Jr.

/s/ LUIS P. NIETO
Luis P. Nieto

Director

Computation of Ratio of Earnings to Fixed Charges
(Unaudited)

Exhibit 12.1

(in thousands, except ratios)

Earnings:

2017
(52 weeks)

Fiscal Year Ended August
2015
(52 weeks)

2014
(52 weeks)

2016
(52 weeks)

2013
(53 weeks)

Income before income taxes .................................
Fixed charges........................................................
Less: Capitalized interest......................................
Adjusted earnings .............................................

$ 1,925,489
253,751
(1,247)
$ 2,177,993

$ 1,912,714
238,389
(909)
$ 2,150,194

$ 1,802,612
236,996
(963)
$ 2,038,645

$ 1,662,714
249,513
(1,041)
$ 1,911,186

$ 1,587,683
265,108
(1,303)
$ 1,851,488

Fixed charges:

Gross interest expense ..........................................
Amortization of debt expense...............................
Interest portion of rent expense ............................
Fixed charges ....................................................

150,960
8,369
94,422
253,751

142,981
7,980
87,428
238,389

146,777
6,230
83,989
236,996

163,544
6,856
79,113
249,513

180,085
8,239
76,784
265,108

Ratio of earnings to fixed charges ........................

8.6

9.0

8.6

7.7

7.0

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SUBSIDIARIES OF THE REGISTRANT

Exhibit 21.1

NAME

ALLDATA LLC
AutoAnything, Inc.
AutoZone.com, Inc.
AutoZone de México, S. de R.L. de C.V.
AutoZone Development LLC
AutoZone IP LLC
AutoZone Northeast LLC
AutoZone Parts, Inc.
AutoZone Puerto Rico, Inc.
AutoZone Stores LLC
AutoZone Texas LLC
AutoZone West LLC
Interamerican Motor Corporation
Riverside Captive Insurance Company

STATE OR COUNTRY OF
ORGANIZATION OR INCORPORATION
Nevada
Nevada
Virginia
Mexico
Nevada
Nevada
Nevada
Nevada
Puerto Rico
Nevada
Nevada
Nevada
California
Arizona

In addition, 27 subsidiaries operating in the United States and 25 subsidiaries operating outside of the United
States have been omitted as they would not, considered in the aggregate as a single subsidiary, constitute a
significant subsidiary as defined by Rule 1-02(w) of Regulation S-X.

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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

Exhibit 23.1

Registration Statement (Form S-8 No. 333-42797) pertaining to the AutoZone, Inc. Amended and Restated
Employee Stock Purchase Plan

Registration Statement (Form S-8 No. 333-88241) pertaining to the AutoZone, Inc. Amended and Restated
Director Compensation Plan

Registration Statement (Form S-8 No. 333-75140) pertaining to the AutoZone, Inc. Executive Stock Purchase
Plan

Registration Statement (Form S-3 No. 333-83436) pertaining to a shelf registration to sell 15,000,000 shares
of common stock owned by certain selling stockholders

Registration Statement (Form S-3ASR No. 333-152592) pertaining to a shelf registration to sell debt
securities

Registration Statement (Form S-8 No. 333-171186) pertaining to the AutoZone, Inc. 2011 Equity Incentive
Award Plan

Registration Statement (Form S-3 No. 333-180768) pertaining to a shelf registration to sell debt securities

Registration Statement (Form S-3 No. 333-203439) pertaining to a shelf registration to sell debt securities

of our reports dated October 25, 2017, with respect to the consolidated financial statements of AutoZone, Inc. and the
effectiveness of internal control over financial reporting of AutoZone, Inc., included in this Annual Report (Form 10-K)
of AutoZone, Inc. for the year ended August 26, 2017.

/s/Ernst & Young LLP

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Memphis, Tennessee
October 25, 2017

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Exhibit 31.1

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William C. Rhodes, III, certify that:

I have reviewed this Annual Report on Form 10-K of AutoZone, Inc. (“registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred

during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or
persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize
and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant's internal control over financial reporting.

October 25, 2017

/s/ WILLIAM C. RHODES, III
William C. Rhodes, III
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William T. Giles, certify that:

I have reviewed this Annual Report on Form 10-K of AutoZone, Inc. (“registrant”);

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred

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(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant's internal control over financial reporting.

October 25, 2017

/s/ WILLIAM T. GILES
William T. Giles
Chief Financial Officer and Executive
Vice President – Finance and Information
Technology
(Principal Financial Officer)

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AutoZone, Inc. (the “Company”) on Form 10-K for the fiscal year ended August 26,
2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William C. Rhodes, III,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

Exhibit 32.1

(i)

(ii)

October 25, 2017

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the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.

/s/ WILLIAM C. RHODES, III
William C. Rhodes, III
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AutoZone, Inc. (the “Company”) on Form 10-K for the fiscal year ended August 26,
2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William T. Giles, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.

(i)

(ii)

October 25, 2017

/s/ WILLIAM T. GILES
William T. Giles
Chief Financial Officer and Executive
Vice President – Finance and Information
Technology
(Principal Financial Officer)

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[THIS PAGE INTENTIONALLY LEFT BLANK]

Corporate information

Corporate Information
Corporate Information

AutoZone’s CEO Team
AutoZone’s CEO Team

Our 2017 leadership team is comprised of 49 individuals who work tirelessly to support and continue to enhance the AutoZone that exists today. We lead as
a team and we win as a team. Through their support and guidance, but most importantly through the commitment and passion of our 87,000+ AutoZoners,
the Company is well positioned for future growth and prosperity.

Ofﬁcers
Customer Satisfaction

Executive Vice Presidents
Customer Satisfaction

William C. Rhodes, III†
Chairman, President and
Chief Executive Ofﬁcer

Mark A. Finestone†
Merchandising, Supply
Chain and Marketing

William T. Giles†
Chief Financial Ofﬁcer,
Finance and Information
Technology

William W. Graves†
Mexico, Brazil, IMC and
Store Development

Thomas B. Newbern†
Store Operations,
Commercial, Loss
Prevention and ALLDATA

Senior Vice Presidents
Customer Satisfaction

Philip B. Daniele†
Commercial

James C. Grifﬁth†
Store Operations

Rodney C. Halsell†
Supply Chain

Albert Saltiel†
Marketing and
E-Commerce

Kristen Collier Wright†
General Counsel and
Secretary

Ronald B. Grifﬁn†
Chief Information
Ofﬁcer, IT

William R. Hackney†
Merchandising

Charlie Pleas, III†
Controller

Richard C. Smith†
Human Resources

Vice Presidents
Customer Satisfaction

Jennie E. Anderson
Operations Support

Joseph Espinosa
Stores

Edward Beltran
Stores

Duane Findley
Stores

B. Craig Blackwell
Stores

Preston B. Frazer
Loss Prevention

Brian L. Campbell
Tax, Treasury and
Investor Relations

Catherine M. Culnane
IT

Anthony J. Dudek
IT

Robert A. Durkin
Distribution

William R. Edwards II
Merchandising

Timothy J. Goddard
Store Development

Eric S. Gould
Replenishment

Matt Henson
Field Human Resources

Troy L. Hitchcock
Merchandising

Robert C. Hunter
Merchandising Pricing and
Analysis

Domingo Hurtado
President, AutoZone de
México

Joyce L. Johns
Internal Audit

Thomas A. Kliman
Tax

John L. Lammers
Merchandising

Maria M. Leggett
Assistant General Counsel
and Assistant Secretary

Jamey Maki
E-Commerce

Grant E. McGee
Stores

J. Scott Murphy
Strategic Planning and
Business Development

Raymond A. Pohlman
Government and
Community Relations

Brett L. Shanaman
Marketing

Jamey Traywick
Merchandising Catalog
and Content

Kevin A. Williams
Assistant General Counsel
and Assistant Secretary

Solomon A. Woldeslassie
Transportation

Brandon H. Proctor
President, AutoAnything

Lawrence H. Yeske
Merchandising

Dennis W. LeRiche
Stores

Anthony D. Rose, Jr.
Visual Merchandising

Mitchell C. Major
Commercial Support
and President, ALLDATA

Joe L. Sellers, Jr.
Commercial Sales

† Required to ﬁle under Section 16 of the
Securities and Exchange Act of 1934.

Board of Directors

Douglas H. Brooks (2)
Former Chairman, President and
CEO – Brinker International

Linda A. Goodspeed (1,2)
Former Managing Partner and COO
WealthStrategies Financial Advisors

Sue E. Gove (1,3*)
President
Excelsior Advisors, LLC

Earl G. Graves, Jr. (2*,†)
President and CEO
Black Enterprise

Enderson Guimaraes (3)
Former President and COO
Laureate Education Inc.

J.R. Hyde, III
AutoZone Founder

Lead Director
GTx, Inc.

D. Bryan Jordan (1,3)
Chairman, President and CEO
First Horizon National Corporation

W. Andrew McKenna (1*,2)
Retired

George R. Mrkonic, Jr. (1,2)
Non-Executive Chairman
MARU Group

Luis P. Nieto (1,3)
President
Nieto Advisory LLC

William C. Rhodes, III
Chairman, President and CEO
AutoZone, Inc.

(1) Audit Committee, (2) Compensation Committee, (3) Nomination and Corporate Governance Committee, * Committee Chair, † Lead Director

Transfer Agent and Registrar

Investor Relations Website

Form of 10-K / Quarterly Report

Computershare Investor Services
P.O. Box 43069
Providence, RI 02940-3069
(877) 282-1168
(781) 575-2723
www.computershare.com

Annual Meeting

The Annual Meeting of Stockholders of
AutoZone will be held at 8:00 a.m. CST, on
December 20, 2017, at the J.R. Hyde III
Store Support Center, 123 South Front Street,
Memphis, Tennessee.

www.autozoneinc.com

Company Websites

www.autozone.com
www.autozonepro.com
www.alldata.com
www.autoanything.com
www.imcparts.net

Stock Exchange Listing

New York Stock Exchange
Ticker Symbol: AZO

Auditors

Ernst & Young, LLP
Memphis, Tennessee

Code of Ethical Conduct

AutoZone’s Code of Ethical Conduct is
available on its Investor Relations website at
www.autozoneinc.com.

Stockholders may obtain, free of charge, a
copy of AutoZone’s annual report on Form
10-K, its quarterly reports on Form 10-Q
as ﬁled with the Securities and Exchange
Commission and quarterly press releases
by contacting
• Investor Relations
P.O. Box 2198
Memphis, TN 38101

• Phoning (901) 495-7185 or
• Emailing investor.relations@autozone.com

Copies of all documents ﬁled by AutoZone
with the Securities and Exchange Commission,
including Annual Reports on Form 10-K and
Quarterly Reports on Form 10-Q, are also
available at the SEC’s EDGAR server at
www.sec.gov.

Stockholders of Record

As of August 26, 2017, there were 2,356
stockholders of record, excluding the number
of beneﬁcial owners whose shares were
represented by security position listing.

123 S. Front Street
Memphis, TN 38103-3607
(901) 495-6500
www.autozone.com