AutoZone 2010 Annual Report Download - page 152

In an order dated September 7, 2010 and issued on September 16, 2010, the court granted motions to dismiss all
claims against AutoZone and its co-defendant competitors and suppliers. Based on the record in the prior
litigation, the court dismissed with prejudice all overlapping claims – that is, those covering the same time periods
covered by the prior litigation and brought by the judgment plaintiffs in the prior litigation. The court also
dismissed with prejudice the plaintiffs’ attempt to revisit discovery disputes from the prior litigation. Further,
with respect to the other claims under the Act, the Court found that the factual statements contained in the
complaint fall short of what would be necessary to support a plausible inference of unlawful price
discrimination. Finally, the court held that the AutoZone pay-on-scan program is a difference in non-price terms
that are not governed by the Act. The court ordered the case closed, but also stated that “in an abundance of
caution the Court [was] defer[ring] decision on whether to grant leave to amend to allow plaintiff an opportunity
to propose curative amendments.” Without moving for leave to amend their complaint for a third time, four
plaintiffs filed a Third Amended and Supplemental Complaint (the “Third Amended Complaint”) on October 18,
2010. The Third Amended Complaint repeats and expands certain allegations from previous complaints, asserting
two claims under the Act, but states that all other plaintiffs have withdrawn their claims, and that, inter alia, Chief
Auto Parts, Inc. has been dismissed as a defendant. The court set no specific procedure for further response or
motion by the defendants. The Company anticipates that the defendants, including AutoZone, will request that
the court reject the Third Amended Complaint and/or will seek to have it dismissed.
The Company believes this suit to be without merit and is vigorously defending against it. The Company is
unable to estimate a loss or possible range of loss.
The Company currently, and from time to time, is involved in various other legal proceedings incidental to the
conduct of its business. Although the amount of liability that may result from these other proceedings cannot be
ascertained, the Company does not currently believe that, in the aggregate, these matters will result in liabilities
material to the Company’s financial condition, results of operations or cash flows.
Note P – Segment Reporting
The Company’s two operating segments (Domestic Auto Parts and Mexico) have been aggregated as one
reportable segment: Auto Parts Stores. The criteria the Company used to identify the reportable segment are
primarily the nature of the products the Company sells and the operating results that are regularly reviewed by the
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 Stores segment is a retailer and distributor of automotive parts and accessories through the
Company’s 4,627 stores in the United States, including Puerto Rico, and Mexico. Each store carries an extensive
product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive
hard parts, maintenance items, accessories and non-automotive products.
The “Other” category reflects business activities that are not separately reportable, including ALLDATA which
produces, sells and maintains diagnostic and repair information software used in the automotive repair industry,
and e-Commerce, which includes direct sales to customers through www.autozone.com.
The Company evaluates its reportable segment primarily on the basis of net sales and segment profit, which is
defined as gross profit. During fiscal 2009, the Company reassessed and revised its reportable segment to exclude
ALLDATA and e-Commerce from the newly designated Auto Parts Stores reporting segment. Previously, these
immaterial business activities had been combined with Auto Parts Stores.
62
10-K