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Notice of Annual Meeting of Stockholders and Proxy Statement
Creating Customers for Life
Thanks and Giving
®
2013 Annual Report

Table of contents

  • Page 1
    Creating Customers for Life 2013 Annual Report Thanks and Giving ® Notice of Annual Meeting of Stockholders and Proxy Statement

  • Page 2
    ..., and non-automotive products. Many 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. AutoZone also sells the ALLDATA brand...

  • Page 3
    ... growing online retailers of specialized automotive products. We knew AutoAnything was a perfect fit for AutoZone when we learned its guiding business philosophy mirrored ours - "always do what is in the best interest of the customer". Since our inception in 1979, the key operating principles...

  • Page 4
    ... 2012. Excluding the 53rd week, sales were up 4.3% and earnings per share of $27.15 increased 15.6%. We also: •฀Expanded฀our฀domestic฀store฀base฀by฀a฀net฀151฀stores,฀ending฀with฀4,836฀stores •฀Opened฀368฀new฀commercial฀programs฀ending฀the฀year฀with...

  • Page 5
    ...the last several years and, as a result of those investments and a tremendous amount of hard work by our team, our sales have more than doubled since 2010. In just the past three years alone, we have added 997 new commercial programs and we now have the program in 71% of our domestic stores. We have...

  • Page 6
    ... throughout our company's history, 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

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

  • Page 8

  • Page 9
    ...III Store Support Center 123 South Front Street Memphis, Tennessee Stockholders will vote regarding: • Election of eleven directors • Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the 2014 fiscal year • Advisory vote on executive...

  • Page 10
    ... 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...

  • Page 11
    ... "the Company" mean AutoZone, Inc. • "Annual Meeting" or "Meeting" means the Annual Meeting of Stockholders to be held on December 18, 2013, 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...

  • Page 12
    ... 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 proposal on executive compensation, and in the proxies' discretion on any other matter that may...

  • Page 13
    ... as currently in effect; • 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 as a director; • has not had any of the relationships described above with any affiliate of AutoZone...

  • Page 14
    ...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. During fiscal 2013, First Horizon National Corporation did business with AutoZone in arm...

  • Page 15
    ...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...

  • Page 16
    ... & Corporate Governance Committees; a Code of Business Conduct & Ethics 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...

  • Page 17
    ...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 31, 2013, with...

  • Page 18
    ... 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...

  • Page 19
    ... biographical and business experience information regarding the nominee and other information required by said Article III, Section 1. Copies of the Bylaws will be provided upon written request to AutoZone's Secretary and are also available on AutoZone's corporate website at www.autozoneinc.com. 9

  • Page 20
    ... and business experience information regarding the nominee and the other information required by Article III, Section 1 of the Bylaws, will receive the same consideration as the Nominating and Corporate Governance Committee's other potential nominees. Procedure for Communication with the Board of...

  • Page 21
    ...our 2013 Annual Report for a discussion of our accounting for sharebased 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...

  • 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
    ...in AutoZone stock. Shares, Stock Units and Restricted Stock Units issued under the AutoZone, Inc. Second Amended and Restated Director Compensation Plan, the 2003 Director Compensation Plan and the 2011 Equity Plan count toward this requirement. OTHER INFORMATION Security Ownership of Management and...

  • Page 24
    ...calculated based on the number of shares of AutoZone common stock outstanding as of October 21, 2013. (2) The source of this information is the Form 13F filed by T. Rowe Price Associates, Inc. on August 15, 2013 for the quarter ending June 30, 2013. (3) The source of this information is the Form 13F...

  • Page 25
    ... of international operations, his experience as a chief executive officer of a public company, his experience managing a company with a strong focus on customer service, and his owner orientation, as well as his integrity, energy, and willingness to spend time on and interest in AutoZone. Linda...

  • Page 26
    ... 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 and finance roles, her knowledge of accounting, financial reporting, and financial systems...

  • Page 27
    ... banking and financial services industry, his experience serving as the chief executive officer and the chief financial officer of public companies, his strong knowledge of corporate finance and management, and his owner orientation, as well as his integrity, energy, and willingness to spend time on...

  • Page 28
    ...Board believes Mr. Rhodes, AutoZone's Chairman and Chief Executive Officer, is qualified to serve as a director of the Company based on his 18 years' experience with the Company, which have included responsibility for corporate strategy, executive management, operations, supply chain and information...

  • Page 29
    ... the Company's goals of rewarding financial and operating performance and the creation of stockholder value. Our Board of Directors and Compensation Committee believe that there should be a strong relationship between pay and corporate performance, and our executive compensation program reflects...

  • Page 30
    ... 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 31
    ... vice president (a total of 11 executives at the end of fiscal 2013). 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...

  • Page 32
    ... 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...

  • Page 33
    ... in the positions. Points are assigned to positions using 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...

  • Page 34
    ..., President & CEO Executive Vice Presidents All Other NEOs 62.5% 37.5% 30% 125% 75% 60% Annual cash incentives for executive officers are paid pursuant to the AutoZone, Inc. 2010 Executive Incentive Compensation Plan ("EICP"), our performance-based short-term incentive plan. Pursuant to the plan...

  • Page 35
    ... 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...

  • Page 36
    ... 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 December 15, 2010, AutoZone...

  • Page 37
    ... Chief Executive Officer: Performance Retention • The target financial measures, diluted earnings per share and stock price, relate directly to stockholder success. • Achieving a payout under the award terms requires continued and sustained high performance. • The potential realizable value...

  • Page 38
    ... vested shares which have restrictions on sale. Key features of the stock ownership requirement are summarized in the table below: Ownership Requirement • Chief Executive Officer • Executive Vice President • Senior Vice President 5 times base salary 3 times base salary 2 times base salary 28

  • Page 39
    ...the Chief Executive Officer are held outside his presence. Does AutoZone use compensation consultants? Neither AutoZone management nor the Compensation Committee hired executive compensation consultants during fiscal 2013. Although historically we have hired consultants to provide services from time...

  • Page 40
    ... 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. Plans or payment types...

  • Page 41
    ...'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 42
    ...per-share price of AutoZone's stock); • Vesting and stock ownership requirements for executive officers which encourage long-term perspectives among participants; and Proxy • A preference for performance measures which result in payments only upon achievement of ultimate financial results. 32

  • Page 43
    ... Plan. See "Compensation Discussion and Analysis-Stock Compensation" on page 25 for more information about this grant. See Note B, Share-Based Payments, to our consolidated financial statements in our 2013 Annual Report for a description of the 2011 Equity Plan and the Executive Stock Purchase Plan...

  • Page 44
    ... 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. (8) Mr. Griffin was hired effective June 10, 2012...

  • Page 45
    ... forth information regarding plan-based awards granted to the Company's Named Executive Officers during the 2013 fiscal year. All other Stock All other Awards: Option Exercise Number Awards: or Estimated Future Payments of Number of base Under Nonequity Incentive shares of securities price of Plans...

  • Page 46
    ... 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...

  • Page 47
    ... 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 to AutoZone, will again be available for awards granted pursuant to the 2011 Equity Plan. The payment of dividend equivalents in cash...

  • Page 48
    ... 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 31, 2013: Option Awards Stock Awards Market Number value of shares of shares of stock of stock Option that that have Expiration...

  • Page 49
    ...'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 30, 2013 ($419.94 per share). (4) Represents a grant of performance-restricted stock units pursuant to the 2011 Equity Plan. 39

  • Page 50
    ... about this plan. (3) 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 31, 2013: Number of Years of Credited Service Present Value of...

  • Page 51
    ... 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...

  • Page 52
    ... 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 31, 2013, there were 42 such officers of the Company. The EDCP is a nonqualified plan...

  • Page 53
    ... 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...

  • Page 54
    ...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 55
    ...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 56
    ... that the Named Executive Officers would have received if their employment had been terminated under specified circumstances on August 31, 2013. This table does not include amounts related to the Named Executive Officers' vested benefits under our deferred compensation and pension plans or pursuant...

  • Page 57
    ... are share options 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...

  • Page 58
    ...adopted a Code of Business 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...

  • Page 59
    ..., 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. STOCKHOLDER PROPOSALS FOR 2014 ANNUAL MEETING Stockholder...

  • Page 60
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 61
    Form 10-K

  • Page 62

  • Page 63
    .... 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 64
    ...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 $13,781,127,110. The number of shares of Common Stock outstanding as of October 21, 2013, was 34,031,760. Documents...

  • Page 65
    ...CONTENTS PART I ...5 Item 1. Business ...5 Introduction ...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...

  • Page 66
    ... contained in Item 1A under Part 1 of this Annual Report on Form 10-K for the year ended August 31, 2013, 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 67
    ... 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 31, 2013, in 3,421 of our domestic stores we also have a commercial sales program that provides commercial...

  • Page 68
    ...-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, and product availability. Our stores generally open at...

  • Page 69
    ... Engines Fuel Pumps Fuses Ignition Lighting Mufflers Radiators Thermostats Starters & Alternators Water Pumps Maintenance Antifreeze & Windshield Washer Fluid Brake Drums, Rotors, Shoes & Pads Chemicals, including Brake & Power Steering Fluid, Oil & Fuel Additives Oil & Transmission Fluid Oil, Air...

  • Page 70
    ...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 stores utilize our computerized proprietary Store Management System, which includes bar code scanning and point-of-sale data...

  • Page 71
    ...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 72
    ... Rhodes is a member of the Board of Directors for Dollar General Corporation. William T. Giles, 54-Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA, Customer Satisfaction William T. Giles was named Chief Financial Officer and Executive Vice President...

  • Page 73
    ...President - Commercial during fiscal 2007. Mr. Roesel came to AutoZone with more than thirty years of experience with OfficeMax, Inc. and its predecessor, where he served in operations, sales and general management. Michael A. Womack, 46-Senior Vice President - Human Resources, Customer Satisfaction...

  • Page 74
    ... owned parts stores, online parts stores, 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 online retailers that sell aftermarket vehicle parts and supplies...

  • Page 75
    ... availability, price, product warranty, distribution locations, and the strength of our AutoZone brand name, trademarks and service marks, some automotive aftermarket jobbers have been in business for substantially longer periods of time than we have, have developed long-term customer relationships...

  • Page 76
    ...our financial condition and operations. 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 71,000 AutoZoners employed in our stores, distribution centers, store support centers, ALLDATA and AutoAnything. We...

  • Page 77
    ... 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 stores resulting in...

  • Page 78
    ... 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 in Memphis...

  • Page 79
    ...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: Fiscal Year Ended August 31, 2013...

  • Page 80
    ... 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 3,454 shares in fiscal 2013, 3,937 shares in fiscal 2012, and 1,719 shares in fiscal 2011. At August 31, 2013, 248,953 shares of common stock...

  • Page 81
    ... leases ...Stockholders' (deficit) ...Selected Operating Data Number of stores at beginning of year ...New stores...Closed stores ...Net new stores ...Relocated stores ...Number of stores at end of year ...Domestic commercial programs ...Total store square footage (in thousands) ...Average square...

  • Page 82
    ... 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 31, 2013, in 3,421 of our domestic stores, we also have a commercial sales program that provides commercial...

  • Page 83
    ... 31, 2013, we reported net sales of $9.148 billion compared with $8.604 billion for the year ended August 25, 2012, a 6.3% increase from fiscal 2012. This growth was driven primarily by sales from new stores of $222.3 million, the 53rd week sales of $177.7 million, and sales from AutoAnything for...

  • Page 84
    ... incentive compensation (19 basis points), partially offset by lower sales growth rates. Interest expense, net for fiscal 2013 was $185.4 million compared with $175.9 million during fiscal 2012. This increase was primarily due to higher average borrowing levels over the comparable prior year period...

  • Page 85
    ... through the sale of automotive parts and products. Net cash provided by operating activities was $1.415 billion in fiscal 2013, $1.224 billion in fiscal 2012, and $1.292 billion in fiscal 2011. Cash flows from operations are favorable to last year due to the change in inventories net of payables...

  • Page 86
    ... 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 a high accounts payable to inventory ratio. We plan...

  • Page 87
    ... for working capital, capital expenditures, new store openings, stock repurchases and acquisitions. Proceeds from the debt issuance on April 29, 2013, were used to repay a portion of the outstanding commercial paper borrowings and for general corporate purposes. We used commercial paper borrowings...

  • Page 88
    ...grade credit ratings. We believe this is important information for the management of our debt levels. 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...

  • Page 89
    ... by a change in interest rates or a change in the actual or expected return on plan assets. As of August 31, 2013, our defined benefit obligation associated with our pension plans is $256.8 million and our pension assets are valued at $208.1 million, resulting in a net pension obligation of $48...

  • Page 90
    ... (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 2012 2011 2010 (in thousands) 2013 2009 10-K Net increase (decrease) in cash and cash equivalents ...$ 39,098 $ 5,487...

  • Page 91
    ... by average 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": 2013(1) Fiscal Year Ended August 2012 2011 2010 738...

  • Page 92
    ... in "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations": 2013(1) 1,016,480 185,415 571,203 1,773,098 227,251 246,340 37,307 2,283,996 4,187,000 106,171 1,478,040 5,771,211 2.5 $ Fiscal Year Ended August 2012 2011 2010 930,373 175...

  • Page 93
    ... 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. Over the last three years, there has been less than a 50 basis point fluctuation in our shrinkage rate...

  • Page 94
    ...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 million for fiscal 2013. Our liability for health benefits is...

  • Page 95
    ... 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 96
    ... one percentage point increase in interest rates would reduce the fair value of our fixed rate debt by approximately $128.4 million at August 31, 2013. 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 97
    ... 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 $378.7 million at August 31, 2013 and $315.7 million at August 25, 2012. The year-end exchange rates with...

  • Page 98
    ...Supplementary Data Index Management's Report on Internal Control Over Financial Reporting...37 Certifications ...37 Reports of Independent Registered Public Accounting Firm ...38 Consolidated Statements of Income ...40 Consolidated Statements of Comprehensive Income ...40 Consolidated Balance Sheets...

  • Page 99
    ...report on the Company's internal control over financial reporting as of August 31, 2013 is included in this Annual Report on Form 10-K. 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...

  • Page 100
    ...financial reporting as of August 31, 2013, 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 31, 2013 and August 25, 2012, and the related...

  • Page 101
    ... years in the period ended August 31, 2013, in conformity with U.S. generally accepted accounting principles. 10-K 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...

  • Page 102
    ... Ended August 25, 2012 (52 weeks) $ 8,603,863 4,171,827 4,432,036 2,803,145 1,628,891 175,905 1,452,986 522,613 $ 930,373 38,696 929 39,625 $ $ 24.04 23.48 $ $ (in thousands, except per share data) Net sales ...Cost of sales, including warehouse and delivery expenses ...Gross profit ...Operating...

  • Page 103
    Consolidated Balance Sheets August 31, 2013 August 25, 2012 (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 ...

  • Page 104
    ... 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 ...Purchase of marketable securities ...Proceeds from sale of marketable...

  • Page 105
    ... 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 stock options ...Other ...Balance at August 27, 2011 ...Net income...

  • Page 106
    ... At the end of fiscal 2013, the Company operated 4,836 stores in the United States ("U.S."), including Puerto Rico; 362 stores in Mexico; and three stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured...

  • Page 107
    ... 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 108
    ... 25, 2012. 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...

  • Page 109
    ... used part is returned or expected to be returned from the customer. 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...

  • Page 110
    ... 2013, one class of similar products accounted for 10 percent of the Company's total revenues, and no vendor supplied more than 10 percent of the Company's total purchases. Recently Adopted Accounting Pronouncements: In August 2011, the Financial Accounting Standards Board ("FASB") issued Accounting...

  • Page 111
    ... and the 2003 Director Stock Option Plan (the "2003 Option Plan"). 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...

  • Page 112
    ...granted and the related share-based compensation expense: Year Ended August 25, 2012 28% 0.7% 5.4 10% 0% August 31, 2013 Expected price volatility ...Risk-free interest rates ...Weighted average expected lives (in years) ...Forfeiture rate...Dividend yield ...29% 0.5% 5.2 10% 0% August 27, 2011 31...

  • Page 113
    ... The Company recognized $1.5 million in expense related to the discount on the selling of shares to employees and executives under various share purchase plans in fiscal 2013, $1.5 million in fiscal 2012 and $1.4 million in fiscal 2011. The Sixth Amended and Restated AutoZone, Inc. Employee Stock...

  • Page 114
    ... million for workers' compensation and property, $0.5 million for employee health, and $1.0 million for general, products liability, and vehicle. Note D - Income Taxes The components of income from continuing operations before income taxes are as follows: Year Ended August 25, 2012 $ 1,373,142 79...

  • Page 115
    ...: August 31, 2013 $ 41,785 16,237 67,350 18,004 45,597 188,973 (11,593) 177,380 August 25, 2012 $ 36,605 18,185 63,320 43,904 41,658 203,672 (9,532) 194,140 (in thousands) Deferred tax assets: Net operating loss and credit carryforwards ...Insurance reserves ...Accrued benefits ...Pension ...Other...

  • Page 116
    ... with unrecognized tax benefits at August 31, 2013 and August 25, 2012, respectively. The Company files U.S. federal, U.S. state and local, and international income tax returns. The U.S. Internal Revenue Service has completed exams on U.S. federal income tax returns for years 2009 and prior. With...

  • Page 117
    ... Derivative Financial Instruments," while the fair value of the Company's pension plan assets are disclosed in "Note L - Pension and Savings Plans." Effective December 19, 2012, the Company acquired certain assets and liabilities of AutoAnything, an online retailer of specialized automotive products...

  • Page 118
    ...24,419 76,214 $ $ $ $ The debt securities held at August 31, 2013, 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 2013, fiscal 2012, or fiscal 2011. 56

  • Page 119
    ... reflected in periodic pension cost primarily driven by a higher discount rate at August 31, 2013. 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...

  • Page 120
    ... September 2011, the Company amended and restated its $800 million revolving credit facility, which was scheduled to expire in July 2012. The capacity under the revolving credit facility was increased to $1.0 billion. This credit facility is available to primarily support commercial paper borrowings...

  • Page 121
    ... and for working capital, capital expenditures, new store openings, stock repurchases and acquisitions. Proceeds from the debt issuance on April 29, 2013, were used to repay a portion of the outstanding commercial paper borrowings and for general corporate purposes. The Company used commercial paper...

  • Page 122
    ...billion as of August 31, 2013, and $4.055 billion as of August 25, 2012, 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 $72.2 million...

  • Page 123
    ...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...

  • Page 124
    ... 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 years ending August 25, 2012, and August 31, 2013. The change in fair value of Level 3 assets that use significant unobservable...

  • Page 125
    ... 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 126
    ...25, 2012 3.90% 7.50% August 31, 2013 Weighted average discount rate ...Expected long-term rate of return on plan assets ...5.19% 7.50% August 27, 2011 5.13% 8.00% As the plan benefits are frozen, increases in future compensation levels no longer impact the calculation and there is no service cost...

  • Page 127
    ...acquisition, the Company expects to bolster its online presence in the automotive accessory and performance markets. The results of operations from AutoAnything have been included in the Company's Other business activities since the date of acquisition. Pro forma results of operations related to the...

  • Page 128
    ...on sales. Rental expense was $246.3 million in fiscal 2013, $229.4 million in fiscal 2012, and $213.8 million in fiscal 2011. 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 129
    ... financial condition, results of operations or cash flow. The Company is involved in various other legal proceedings incidental to the conduct of its business, including several lawsuits containing class-action allegations in which the plaintiffs are current and former hourly and salaried employees...

  • Page 130
    ...The Auto Parts Stores segment is a retailer and distributor of automotive parts and accessories through the Company's 5,201 stores in the United States, Puerto Rico, Mexico and Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new...

  • Page 131
    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: Year Ended August 25, 2012 (in thousands) Net Sales: Auto Parts Stores...Other ...Total ...

  • Page 132
    Note S - Quarterly Summary (1) (Unaudited) Twelve Weeks Ended November 17, February 9, 2012 2013 Seventeen Weeks Ended August 31, 2013(2) (in thousands, except per share data) May 4, 2013 Net sales ...Gross profit ...Operating profit ...Income before income taxes...Net income ...Basic earnings ...

  • Page 133
    ... 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 contained in AutoZone, Inc.'s Proxy Statement dated October 28, 2013, in the section entitled "Executive Compensation," is...

  • Page 134
    ...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...

  • Page 135
    ..., the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AUTOZONE, INC. By: /s/ WILLIAM C. RHODES, III William C. Rhodes, III Chairman, President and Chief Executive Officer (Principal Executive Officer) Dated: October 28, 2013 10-K 73

  • Page 136
    ... Chief Executive Officer (Principal Executive Officer) Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA (Principal Financial Officer) Senior Vice President and Controller (Principal Accounting Officer) Director DATE October 28, 2013 October 28, 2013...

  • Page 137
    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 138
    ... by 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. Incorporated by reference to Exhibit 10.11 to the Annual Report on Form 10-K dated October 22, 2012. 76 10-K

  • Page 139
    ... to Amended and Restated Employment Agreement between AutoZone, Inc. and Robert D. Olsen dated September 29, 2009. Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated September 30, 2009. *10.22 AutoZone, Inc. 2010 Executive Incentive Compensation Plan, incorporated by...

  • Page 140
    ...to the Annual Report on Form 10-K for the fiscal year ended August 27, 2011. *10.36 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. *10.37 Offer letter dated May 23, 2012, to Mike...

  • Page 141
    ...Report on Form 10-Q dated June 12, 2013. 12.1 Computation of Ratio of Earnings to Fixed Charges. 14.1 Code of Ethical Conduct. Incorporated by reference to Exhibit 14.1 of the Annual Report on Form 10-K for the fiscal year ended... * Management contract or compensatory plan or arrangement. 10-K 79

  • Page 142
    Exhibit 12.1 Computation of Ratio of Earnings to Fixed Charges (Unaudited) Fiscal Year Ended August 2012 2011 2010 (52 weeks) (52 weeks) (52 weeks) (in thousands, except ratios) 2013 (53 weeks) 2009 (52 weeks) Earnings: Income before income taxes...$ 1,587,683 $ 1,452,986 $ 1,324,246 $ 1,160,505...

  • Page 143
    ...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, Inc. AutoZone Parts, Inc. AutoZone Puerto Rico, Inc. AutoAnything, Inc. In addition, 24 subsidiaries operating in the United...

  • Page 144
    ...the effectiveness of internal control over financial reporting of AutoZone, Inc., included in this Annual Report (Form 10-K) for the year ended August 31, 2013: Registration Statement (Form S-8 No. 333-19561) pertaining to the AutoZone, Inc. 1996 Stock Option Plan Registration Statement (Form S-8 No...

  • Page 145
    ..., that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. 10-K October 28, 2013 /s/ WILLIAM C. RHODES, III William C. Rhodes, III Chairman, President and Chief Executive Officer (Principal Executive Officer) 83

  • Page 146
    ... employees who have a significant role in the registrant's internal control over financial reporting. 3. 4. 10-K October 28, 2013 /s/ WILLIAM T. GILES William T. Giles Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA (Principal Financial Officer...

  • Page 147
    ... contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. (ii) October 28, 2013 /s/ WILLIAM C. RHODES, III William C. Rhodes, III Chairman, President and Chief Executive Officer (Principal Executive Officer) 10-K 85

  • Page 148
    ... Report fairly presents, in all material respects, the financial condition and results of operations of the Company. (ii) October 28, 2013 /s/ WILLIAM T. GILES William T. Giles Chief Financial Officer and Executive Vice President - Finance, Information Technology and ALLDATA (Principal Financial...

  • Page 149
    Corporate information

  • Page 150
    ...win as a team. Through their support and guidance, but most importantly through the commitment and passion of our 71,000+ AutoZoners, the Company is well positioned for future growth and prosperity. Officers Customer Satisfaction William C. Rhodes, III†Chairman, President and Chief Executive Of...

  • Page 151
    ...Company Websites www.autozone.com www.autozonepro.com www.alldata.com www.autoanything.com Annual Meeting The Annual Meeting of Stockholders of AutoZone will be held at 8:00 a.m. CST, on December 18, 2013, at the J.R. Hyde III Store Support Center, 123 South Front Street, Memphis, Tennessee. Stock...

  • Page 152
    Creating Customers for Life 123฀S.฀Front฀Street Memphis,฀TN฀38103-3607 (901)฀495-6500 www.autozone.com