AutoZone 2012 Annual Report Download

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1TEAM
Delivering
WOW!
Notice of
Annual Meeting
of Stockholders
and Proxy Statement

Table of contents

  • Page 1
    Auto Zo ne rs put custo s y a me w l rs a 1TEAM Delivering WOW! know our We pa r ts a nd s t! fir c e. p ri product s. O ur sto res look gre a t! at erchandis e the righ t Notice of Annual Meeting of Stockholders and Proxy Statement We've go t t he be m st

  • Page 2
    ... Commercial programs • 9 Distribution centers (8 in the United States and 1 in México) • More than 70,000 AutoZoners Corporate Profile AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. The company operates stores...

  • Page 3
    ... we announced we would begin doing business on two new continents with the declaration that we would soon be opening stores in Brazil and our ALLDATA Repair product would soon be available for sale in Europe. AutoZone was built on a culture of customer service. More than 25 years ago, our Pledge was...

  • Page 4
    ... 2010's 5.4% • Continued to grow our domestic Retail and Commercial businesses while continuing to gain market share in both sectors* • Opened our 5,000th store in Alaska, allowing us to enter our 49th U.S. state • Opened our 3,000th Commercial program and opened 394 net new programs in 2012...

  • Page 5
    ...program count and existing program volumes. From industry data, we are currently a top ten Commercial seller in the U.S., and climbing. Our focus remains on developing and delivering a differentiated value proposition to our customers. Our late model parts coverage additions and Hub Store expansions...

  • Page 6
    ...customer service. While we have performed very well throughout our company's history, I continue to believe our best days lie ahead. Thank you for staying "in the Zone" with us for these years, and we'll diligently work to continually improve. We look forward to updating you on our continued success...

  • Page 7
    notice of annual meeting of stockholders and proxy statement

  • Page 8

  • Page 9
    ... Standard Time J. R. Hyde III Store Support Center 123 South Front Street Memphis, Tennessee Stockholders will vote regarding: • Election of eight directors • Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2013 fiscal year...

  • Page 10
    ...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...

  • Page 11
    ..."us," and "the Company" mean AutoZone, Inc. • "Annual Meeting" or "Meeting" means the Annual Meeting of Stockholders to be held on December 12, 2012, at 8:30 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...

  • Page 12
    ... Plan? If you have shares in an account under the AutoZone Employee Stock Purchase Plan, you have the right to vote the shares in your account. To do this you must grant your proxy by telephone or over the Internet by following the instructions on the proxy card or you must sign and timely return...

  • Page 13
    ... 25% of AutoZone common stock on November 4, 2011. Corporate Governance Matters Independence How many independent directors does AutoZone have? Our Board of Directors has determined that eight of our current ten directors are independent: William C. Crowley, Sue E. Gove, Earl G. Graves, Jr., Robert...

  • Page 14
    ... disclosure under Rule 404(a) or (b) of Regulation S-K of the Securities and Exchange Commission as currently in effect; Proxy • receives no compensation from AutoZone other than compensation as a director; • is not employed by a public company at which an executive officer of AutoZone serves...

  • Page 15
    ... 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...

  • Page 16
    ... 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...

  • Page 17
    ... Committee Report The Audit Committee of AutoZone, Inc. has reviewed and discussed AutoZone's audited financial statements for the year ended August 25, 2012, with AutoZone's management. In addition, we have discussed with Ernst & Young LLP, AutoZone's independent registered public accounting firm...

  • Page 18
    ...of Mr. Graves (Chair), Mr. Grusky, 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...

  • Page 19
    ... 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 2012 fiscal year, the Nominating and Corporate Governance Committee...

  • Page 20
    ...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. All such communications will be forwarded unopened to the addressee. Communications addressed to the Board of...

  • Page 21
    ... 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 32. Theodore W. Ullyot did not stand for re-election to the Board at the 2011 Annual Meeting...

  • Page 22
    ... a non-employee director ceases to be a director of the Company (the "Payment Date"). Restricted Stock Units are paid in shares of AutoZone common stock as soon as practicable after the Payment Date, to be no later than the fifteenth day of the third month following the end of the tax year in which...

  • Page 23
    ... Director Compensation Plan and the 2011 Equity Plan count toward this requirement. OTHER INFORMATION Security Ownership of Management and Board of Directors This table shows the beneficial ownership of common stock by each director, the Principal Executive Officer, the Principal Financial Officer...

  • Page 24
    ... 8.0% (1) The source of this information is the Form 13F filed by FMR LLC on August 14, 2012 for the quarter ending June 30, 2012. The ownership percentage is calculated based on the number of shares of AutoZone common stock outstanding as of October 15, 2012. THE PROPOSALS PROPOSAL 1 - Election...

  • Page 25
    ... Financial Officer of Zale Corporation from 1998 to 2002 and remained in the position of Chief Financial Officer until 2003. Experience, Skills and Qualifications: The Board believes Ms. Gove is qualified to serve as a director of the Company based on her experience in executive retail operations...

  • Page 26
    ... 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. Proxy Experience, Skills and Qualifications: The Board believes Mr. Hyde, the founder and a former...

  • Page 27
    ...: The Board believes Mr. Rhodes, AutoZone's Chairman and Chief Executive Officer, is qualified to serve as a director of the Company based on his 17 years' experience with the Company, which have included responsibility for corporate strategy, executive management, operations and supply chain; his...

  • Page 28
    ... 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. AutoZone sets challenging financial and operating goals...

  • Page 29
    ... 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...

  • Page 30
    ... 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...

  • Page 31
    ... 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...

  • Page 32
    ... a job evaluation system developed by Hay Group, a global management and human resources consulting firm, and AutoZone maintains salary ranges based on the job evaluations originally constructed with Hay Group's help. These salary ranges are usually updated annually based on broad-based survey data...

  • Page 33
    ... 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...

  • Page 34
    ...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. In order to support and facilitate stock ownership by our executive officers, a portion of their annual...

  • Page 35
    ...of ISOs beginning in fiscal 2013. 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...

  • Page 36
    ... 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...

  • Page 37
    ... Table on page 35. Employee Stock Purchase Plan Executive Stock Purchase Plan Contributions After tax, limited to lower of 10% of eligible compensation or $15,000 15% discount based on lowest price at beginning or end of the quarter None (one-year holding period only) After tax, limited to 25% of...

  • Page 38
    ... usually relate to base salary increases 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...

  • Page 39
    ... $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 29

  • Page 40
    ...'s management conducts an annual assessment of the compensation plans and programs that apply throughout the Company, including those plans and programs in which our executives participate. The assessment is performed by key members of AutoZone's human resources, finance, operations, and legal teams...

  • Page 41
    ... of the management incentive plan and all stock-based compensation by the Compensation Committee of the Board of Directors; Proxy • Senior management oversight of key plans and programs, including approving target level payouts, setting financial and operating goals, and approving payouts...

  • Page 42
    ... Plan. See "Compensation Discussion and Analysis-Stock Compensation" on page 24 for more information about this grant. See Note B, Share-Based Payments, to our consolidated financial statements in our 2012 Annual Report for a description of the 2011 Equity Plan and the Executive Stock Purchase Plan...

  • Page 43
    ... AutoZone, Inc. Executive Deferred Compensation Plan. (D) Represents transition payments to Mr. Goldsmith which the Company pays to certain individuals due to their age and service as of the date the AutoZone, Inc. Associates Pension Plan was frozen. (7) Mr. Griffin was hired effective June 10, 2012...

  • Page 44
    ...-BASED AWARDS The following table sets forth information regarding plan-based awards granted to the Company's Named Executive Officers during the 2012 fiscal year. Proxy Name Equity Plans Grant Date All other Stock All other Awards: Option Exercise Number Awards: or Estimated Future Payments of...

  • Page 45
    ... 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 Proxy The EICP provides that the goal may be...

  • Page 46
    ...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 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...

  • Page 47
    ... AutoZone, Inc. 1996 Stock Option Plan ("1996 Stock Option Plan"), other outstanding equity awards under the 2011 Equity Plan, and unvested shares under the Executive Stock Purchase Plan for the Company's Named Executive Officers as of August 25, 2012: Option Awards Stock Awards Market Number value...

  • Page 48
    ...'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 24, 2012 ($365.08 per share). (4) Represents a grant of performance-restricted stock units pursuant to the 2011 Equity Plan. 38

  • Page 49
    ...about this plan. (2) Based on the closing price of AutoZone common stock on the vesting date. PENSION BENEFITS The following table sets forth information regarding pension benefits for the Company's Named Executive Officers as of August 25, 2012: Number of Years of Credited Service Present Value of...

  • Page 50
    ... 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...

  • Page 51
    ... in the United States are eligible to participate in the EDCP after their first year of employment with the Company. As of August 25, 2012, there were 42 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...

  • Page 52
    ... 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...

  • Page 53
    ...become vested. Life Insurance AutoZone provides all salaried employees in active full-time employment in the United States a companypaid life insurance benefit in the amount of two times annual earnings. "Annual earnings" exclude stock compensation and gains realized from stock option exercises, but...

  • Page 54
    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...

  • Page 55
    ... that the Named Executive Officers would have received if their employment had been terminated under specified circumstances on August 25, 2012. This table does not include amounts related to the Named Executive Officers' vested benefits under our deferred compensation and pension plans or pursuant...

  • Page 56
    ...under the Executive Stock Purchase Plan, which vest upon involuntary termination not for cause, disability, death or normal retirement. Disability Benefits are benefits under Company-paid individual long-term disability insurance policy. Life Insurance Benefits are benefits under a Company-paid life...

  • Page 57
    ... 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...

  • Page 58
    ... in office. These stock option grants were made at the fair market value as of the grant date. Summary Table Proxy The following table sets forth certain information as of August 25, 2012, with respect to compensation plans under which shares of AutoZone common stock may be issued. Number of...

  • Page 59
    form 10-K

  • Page 60

  • Page 61
    .... Commission file number 1-10714 AUTOZONE, INC. (Exact name of registrant as specified in its charter) Nevada (State or other jurisdiction of incorporation or organization) 123 South Front Street, Memphis, Tennessee (Address of principal executive offices) 62-1482048 (I.R.S. Employer Identification...

  • Page 62
    ... filer Â... Smaller reporting company Â... Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes Â... No 7 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...

  • Page 63
    ... ...5 Marketing and Merchandising Strategy...6 Commercial ...7 Store Operations ...8 Store Development ...9 Purchasing and Supply Chain...9 Competition ...9 Trademarks and Patents ...10 Employees ...10 AutoZone Websites ...10 Executive Officers of the Registrant...10 Item 1A. Risk Factors...

  • Page 64
    ... contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 25, 2012, 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...

  • Page 65
    ... and accessories in the United States. We began operations in 1979 and at August 25, 2012, operated 4,685 stores in the United States, including Puerto Rico, and 321 in Mexico. Each of our stores carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new...

  • Page 66
    ... 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, batteries...

  • Page 67
    ...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...

  • Page 68
    ... 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...

  • Page 69
    ...distribution centers multiple times per week. 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...

  • Page 70
    ... Customer Satisfaction William T. Giles was named Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA during October 2012. Prior to that, he was Chief Financial Officer and Executive Vice President - Finance, Information Technology and Store Development...

  • Page 71
    ... 59-Corporate Development Officer, Customer Satisfaction Robert D. Olsen was elected Corporate Development Officer during fiscal 2009, with primary responsibility for Mexico, ALLDATA, and other strategic initiatives. Previously, he was Executive Vice President - Store Operations, Commercial, ALLDATA...

  • Page 72
    ..., customer service, store location and price. Competitors are opening locations near our existing stores. AutoZone competes as a provider in both the DIY and DIFM auto parts and accessories markets. Competitors include national, regional and local auto parts chains, independently owned parts stores...

  • Page 73
    ... to open stores at historical rates or continue to achieve increases in same-store sales. 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, to...

  • Page 74
    ... existing supply chain and hub network. Our continued growth and success will depend in part on our ability to open and operate new stores and expand and remodel existing stores to meet customers' needs on a timely and profitable basis. Accomplishing our new and existing store expansion goals will...

  • Page 75
    ... 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 stores resulting in lost sales and/or a potential loss of customer loyalty. Transportation issues...

  • Page 76
    ...distribution centers servicing our stores, of which approximately 1.3 million square feet is leased and the remainder is owned. Our distribution centers are located in Arizona, California, Georgia, Illinois, Ohio, Pennsylvania, Tennessee, Texas and Mexico. Our primary store support center is located...

  • Page 77
    ... 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...

  • Page 78
    ...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 3,937 shares in fiscal 2012, 1,719 shares in fiscal 2011...

  • Page 79
    ... (3)...Accounts payable to inventory ratio ...After-tax return on invested capital (4)...Adjusted debt to EBITDAR (5) ...Net cash provided by operating activities (in thousands)...$ Cash flow before share repurchases and changes in debt (in thousands) (6)...$ Fiscal Year Ended August 2010 2009...

  • Page 80
    ... and accessories in the United States. We began operations in 1979 and at August 25, 2012, operated 4,685 stores in the United States, including Puerto Rico, and 321 in Mexico. Each of our stores carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new...

  • Page 81
    ... and 321 stores in Mexico, compared with 4,534 domestic stores and 279 stores in Mexico at August 27, 2011. We reported a total auto parts (domestic and Mexico operations) sales increase of 6.5% for fiscal 2012. Gross profit for fiscal 2012 was $4.432 billion, or 51.5% of net sales, compared with...

  • Page 82
    ... and 279 stores in Mexico, compared with 4,389 domestic stores and 238 stores in Mexico at August 28, 2010. We reported a total auto parts (domestic and Mexico operations) sales increase of 9.6% for fiscal 2011. Gross profit for fiscal 2011 was $4.119 billion, or 51.0% of net sales, compared with...

  • Page 83
    ... our new-store program 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 2012...

  • Page 84
    ... fiscal year ending August 31, 2013. In addition to the building and land costs, our new-store development program requires working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in...

  • Page 85
    ... debt and for working capital, capital expenditures, new store openings, stock repurchases and acquisitions. Proceeds from the debt issuance on April 24, 2012, were used to repay a portion of the commercial paper borrowings and for general corporate purposes. On November 15, 2010, we issued $500...

  • Page 86
    ... or a change in the actual or expected return on plan assets. As of August 25, 2012, our defined benefit obligation associated with our pension plans is $305.2 million and our pension assets are valued at $181.4 million, resulting in a net pension obligation of $123.8 million. Amounts recorded in...

  • Page 87
    ... 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": Fiscal Year Ended August 2011 2010 2009 (in thousands) 2012 2008 155,807 314,382 849,196...

  • Page 88
    ... 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": Fiscal Year Ended August (in thousands, except ratios) 2012 2011 2010 2009 2008 (1) Net...

  • Page 89
    ... 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 using the...

  • Page 90
    ..., 2012, and $159.3 million at August 27, 2011. 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 and changes in our discount rate. 10...

  • Page 91
    ... 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. 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...

  • Page 92
    ... A one percentage point increase in interest rates would reduce the fair value of our fixed rate debt by approximately $130 million at August 25, 2012. 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...

  • Page 93
    ...in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $315.7 million at August 25, 2012 and $292.2 million at August 27, 2011. The potential loss in value of our net assets in the Mexican subsidiaries resulting from a hypothetical 10 percent adverse change in...

  • Page 94
    ...Statements and Supplementary Data Index Management's Report on Internal Control Over Financial Reporting...35 Certifications ...35 Reports of Independent Registered Public Accounting Firm ...36 Consolidated Statements of Income ...38 Consolidated Statements of Comprehensive Income ...38 Consolidated...

  • Page 95
    ... 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 25, 2012, the certifications of its...

  • Page 96
    ... financial reporting as of August 25, 2012, 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 25, 2012 and August 27, 2011 and the related...

  • Page 97
    ... its operations and its cash flows for each of the three years in the period ended August 25, 2012, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), AutoZone, Inc...

  • Page 98
    ... Ended August 27, 2011 (52 weeks) $ 8,072,973 3,953,510 4,119,463 2,624,660 1,494,803 170,557 1,324,246 475,272 $ 848,974 42,632 971 43,603 $ $ 19.91 19.47 $ $ (in thousands, except per share data) Net sales ...Cost of sales, including warehouse and delivery expenses ...Gross profit ...Operating...

  • Page 99
    ... August 25, 2012 August 27, 2011 (in thousands) Assets Current assets: Cash and cash equivalents ...Accounts receivable ...Merchandise inventories ...Other current assets ...Deferred income taxes ...Total current assets ...Property and equipment: Land ...Buildings and improvements ...Equipment...

  • Page 100
    ... cash equivalents at end of year ...Supplemental cash flow information: Interest paid, net of interest cost capitalized ...Income taxes paid ...Assets acquired through capital lease ...See Notes to Consolidated Financial Statements. August 25, 2012 (52 weeks) August 28, 2010 (52 weeks) $ 930,373...

  • Page 101
    ......Balance at August 28, 2010 ...Net income ...Total other comprehensive loss ...Purchase of 5,598 shares of treasury stock ...Retirement of treasury shares ...Sale of common stock under stock options and stock purchase plans ...Share-based compensation expense ...Income tax benefit from exercise of...

  • Page 102
    ... of automotive parts and accessories. At the end of fiscal 2012, the Company operated 4,685 stores in the United States ("U.S."), including Puerto Rico, and 321 stores in Mexico. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and...

  • Page 103
    ... 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...

  • Page 104
    ...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...

  • Page 105
    ...merchandise inventories from the Company's vendors to the distribution centers and to the retail stores; o Vendor allowances that are not reimbursements for specific, incremental and identifiable costs; x Costs associated with operating the Company's supply chain, including payroll and benefit costs...

  • Page 106
    ... the fair value of the awards. See "Note B - Share-Based Payments" for further discussion. Risk and Uncertainties: In fiscal 2012, one class of similar products accounted for 10 percent of the Company's total revenues, and one vendor supplied more than 10 percent of the Company's total purchases. No...

  • Page 107
    ...the 2011 Director Compensation Program (the "2011 Program"), which states that non-employee directors will 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...

  • Page 108
    ...granted and the related share-based compensation expense: Year Ended August 27, 2011 31% 1.0% 4.3 10% 0% August 25, 2012 Expected price volatility ...Risk-free interest rates ...Weighted average expected lives (in years) ...Forfeiture rate...Dividend yield ...28% 0.7% 5.4 10% 0% August 28, 2010 31...

  • Page 109
    ... 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 3,937 shares in fiscal 2012, 1,719 shares in fiscal 2011, and 1,483...

  • Page 110
    ...: August 25, 2012 $ 36,605 18,185 63,320 43,904 41,658 203,672 (9,532) 194,140 August 27, 2011 $ 31,772 17,542 61,436 30,967 39,878 181,595 (7,973) 173,622 (in thousands) Deferred tax assets: Net operating loss and credit carryforwards ...Insurance reserves ...Accrued benefits ...Pension ...Other...

  • Page 111
    ... associated with unrecognized tax benefits at August 25, 2012 and August 27, 2011, respectively. The major jurisdictions where the Company files income tax returns are the United States and Mexico. With few exceptions, tax returns filed for tax years 2008 through 2011 remain open and subject to...

  • Page 112
    ...and other. 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...

  • Page 113
    ... held at August 25, 2012, had effective maturities ranging from less than one year to approximately 3 years. The Company did not realize any material gains or losses on its sale of marketable securities during fiscal 2012, fiscal 2011, or fiscal 2010. The Company holds six securities that are...

  • Page 114
    ...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...

  • Page 115
    ... during the fourth quarter of fiscal 2010 and one was entered into during the first quarter of fiscal 2011. These agreements were designated as cash flow hedges and were used to hedge the exposure to variability in future cash flows resulting from changes in variable interest rates related to the...

  • Page 116
    ... debt and for working capital, capital expenditures, new store openings, stock repurchases and acquisitions. The Company used the proceeds from the issuance of debt to repay a portion of the commercial paper borrowings and for general corporate purposes. On November 15, 2010, the Company issued $500...

  • Page 117
    ...activity consisted of the following: Year Ended August 27, 2011 $ 1,466,802 5,598 (in thousands) Amount ...Shares ... August 25, 2012 $ 1,362,869 3,795 August 28, 2010 $ 1,123,655 6,376 During the fiscal year 2012, the Company retired 4.9 million shares of treasury stock which had previously been...

  • Page 118
    ... 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...

  • Page 119
    ... 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 8.0% in fiscal 2011 to 7.5% for the year ending August 25, 2012. The August 27, 2011 actual asset allocation in the chart above...

  • Page 120
    ... 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 liabilities ...Net...

  • Page 121
    ...by the Board. The Company made matching contributions to employee accounts in connection with the 401(k) plan of $14.4 million in fiscal 2012, $13.3 million in fiscal 2011 and $11.7 million in fiscal 2010. Note M - Leases The Company leases some of its retail stores, distribution centers, facilities...

  • Page 122
    ...on sales. Rental expense was $229.4 million in fiscal 2012, $213.8 million in fiscal 2011, and $195.6 million in fiscal 2010. Percentage rentals were insignificant. The Company has a fleet of vehicles used for delivery to its commercial customers and stores and travel for members of field management...

  • Page 123
    ...A. The Auto Parts Stores segment is a retailer and distributor of automotive parts and accessories through the Company's 5,006 stores in the United States, Puerto Rico, and Mexico. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and...

  • Page 124
    ...: Year Ended August 27, 2011 (in thousands) Net Sales: Auto Parts Stores...Other ...Total ...Segment Profit: Auto Parts Stores...Other ...Gross profit ...Operating, selling, general and administrative expenses...Interest expense, net ...Income before income taxes...Segment Assets: Auto Parts Stores...

  • Page 125
    ... - Quarterly Summary (1) (Unaudited) Twelve Weeks Ended November 19, February 11, 2011 2012 Sixteen Weeks Ended August 25, 2012(2) (in thousands, except per share data) May 5, 2012 Net sales ...Gross profit ...Operating profit ...Income before income taxes...Net income ...Basic earnings per share...

  • Page 126
    ... similar functions. The Company has filed a copy of this Code of Ethical Conduct as Exhibit 14.1 to this Form 10-K. The Company has also made the Code of Ethical Conduct available on its investor relations website at http://www.autozoneinc.com. Item 11. Executive Compensation The information...

  • Page 127
    ... 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 25, 2012, August 27, 2011, and August 28, 2010...

  • Page 128
    ..., President and Chief Executive Officer (Principal Executive Officer) Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA October 22, 2012 10-K /s/ WILLIAM T. GILES William T. Giles October 22, 2012 (Principal Financial Officer) /s/ CHARLIE PLEAS...

  • Page 129
    EXHIBIT INDEX The following exhibits are filed as part of this Annual Report on Form 10-K: 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 Fifth Amended and Restated By...

  • Page 130
    ... reference to Exhibit 10.26 to the Annual Report on Form 10-K for the fiscal year ended August 25, 2007. *10.11 AutoZone, Inc. Fifth Amended and Restated Executive Stock Purchase Plan. *10.12 Amended and Restated AutoZone, Inc. 2003 Director Compensation Plan. Incorporated by reference to Exhibit 99...

  • Page 131
    ... proxy statement dated October 25, 2010, for the Annual Meeting of Stockholders held December 15, 2010. *10.24 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 of Form 10-Q dated December...

  • Page 132
    ... 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. 10.37 Second Amended AutoZone, Inc. Executive Deferred Compensation Plan. Incorporated by reference to Exhibit 10.1 on Form 8-K filed 12-14-11. *10.38 Offer...

  • Page 133
    ... Presentation Document **101.DEF XBRL Taxonomy Extension Definition Document * Management contract or compensatory plan or arrangement. 10-K ** In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Annual Report on Form 10-K shall be deemed "furnished" and not...

  • Page 134
    ... Computation of Ratio of Earnings to Fixed Charges (Unaudited) Fiscal Year Ended August 2011 2010 2009 (52 weeks) (52 weeks) (52 weeks) (in thousands, except ratios) 2012 (52 weeks) 2008 (53 weeks) Earnings: Income before income taxes...$ 1,452,986 $ 1,324,246 $ 1,160,505 $ 1,033,746 $ 1,007,389...

  • Page 135
    ... New Jersey Nevada Delaware Delaware Virginia Nevada Puerto Rico NAME ALLDATA LLC AutoZone de México, S. de R.L. de C.V. AutoZone Development Corporation AutoZone Northeast, Inc. fka ADAP, Inc AutoZone Stores, Inc. AutoZone Texas, L.P. AutoZone West, Inc. fka Chief Auto Parts Inc. AutoZone.com...

  • Page 136
    ... financial statements and the effectiveness of internal control over financial reporting of AutoZone, Inc., included in this Annual Report (Form 10-K) for the year ended August 25, 2012: Registration Statement (Form S-8 No. 333-19561) pertaining to the AutoZone, Inc. 1996 Stock Option Plan...

  • Page 137
    ... 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 22, 2012 /s/ WILLIAM C. RHODES, III William C. Rhodes, III Chairman, President and Chief...

  • Page 138
    ... involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. 10-K October 22, 2012 /s/ WILLIAM T. GILES William T. Giles Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA...

  • Page 139
    ... the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. (ii) October 22, 2012 /s/ WILLIAM C. RHODES, III William C. Rhodes, III Chairman, President and Chief Executive Officer (Principal Executive Officer...

  • Page 140
    ..., in all material respects, the financial condition and results of operations of the Company. (ii) October 22, 2012 /s/ WILLIAM T. GILES William T. Giles Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA (Principal Financial Officer) 10-K 80

  • Page 141
    corporate information

  • Page 142
    ... William W. Graves†Supply Chain and International Ronald B. Griffin†Chief Information Officer, IT Lisa R. Kranc†Marketing Thomas B. Newbern†Store Operations and Store Development Charlie Pleas, III†Controller Larry M. Roesel Commercial †Vice Presidents Customer Satisfaction...

  • Page 143
    ... III Store Support Center, 123 South Front Street, Memphis, Tennessee. AutoZone Websites Investor Relations: www.autozoneinc.com Company Website www.autozone.com Stock Exchange Listing New York Stock Exchange Ticker Symbol: AZO Auditors Ernst & Young, LLP Memphis, Tennessee Code of Ethical Conduct...

  • Page 144
    123 S. Front Street Memphis, Tennessee 38103-3607 (901) 495-6500 www.autozone.com