SEC Filing | AutoZone, Inc

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended August 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-10714 AUTOZONE, INC. (Exact name of registrant as specified in its charter) NEVADA 62-1482048 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 123 SOUTH FRONT STREET, MEMPHIS, TENNESSEE 38103 (Address of principal executive offices) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (901) 495-6500 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered ------------------- --------------------- COMMON STOCK ($.01 PAR VALUE) NEW YORK STOCK EXCHANGE Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (

229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the 117,609,895 shares of voting stock of the registrant held by non-affiliates of the registrant (excluding, for this purpose, shares held by officers, directors, or 10% stockholders) was $3,770,867,258 based on the last sales price of the Common Stock on October 10, 1997, as reported on the New York Stock Exchange. The number of shares of Common Stock outstanding as of October 10, 1997, was 151,446,220. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Annual Report to Stockholders for the year ended August 30, 1997 are incorporated by reference into Parts I and II. Portions of the Proxy Statement for the annual stockholders' meeting to be held December 18, 1997 are incorporated by reference into Part III. FORWARD-LOOKING STATEMENTS Certain statements contained in this Annual Report on Form 10-K are forward- looking statements. These statements discuss, among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. The forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to competitive pressures, demand for the Company's products, the market for auto parts, the economy in general, inflation, consumer debt levels and the weather. Actual results may materially differ from anticipated results described in these forward-looking statements. PART I ITEM 1 BUSINESS INTRODUCTION - ------------ AutoZone is the nation's leading specialty retailer of automotive parts and accessories, primarily focusing on "Do-It-Yourself" ("D-I-Y") customers. The Company began operations in 1979 and at August 30, 1997, operated 1,728 stores in 32 states, principally located in the Sunbelt and Midwest regions of the United States. Each AutoZone store carries an extensive product line, including new and re-manufactured automotive hard parts, such as alternators, starters, water pumps, brake shoes and pads, carburetors, clutches and engines; maintenance items, such as oil, antifreeze, transmission, brake and power steering fluids, engine additives, protectants and waxes; and accessories, such as car stereos and floor mats. The Company carries parts for domestic and foreign cars, vans and light trucks. The Company also has a commercial sales program which provides commercial credit and prompt delivery of parts and other products to local repair garages, dealers and service stations. This program was offered in 1,265 of the Company's stores at August 30, 1997. AutoZone does not perform automotive repairs or installations. AutoZone is dedicated to a marketing and merchandising strategy to provide customers with superior service, value and parts selection at conveniently located, well-designed stores. The Company has implemented this strategy primarily with knowledgeable and motivated store personnel trained to emphasize prompt and courteous customer service, through an everyday low price policy and by maintaining an extensive product line with an emphasis on automotive hard parts. AutoZone's stores are generally situated in high-visibility locations and provide a distinctive merchandise presentation in an attractive store environment. At August 30, 1997, AutoZone had stores in the following 32 states: Alabama 77 Louisiana 70 South Carolina 49 Arizona 64 Maryland 1 Tennessee 106 Arkansas 39 Michigan 27 Texas 264 California 8 Mississippi 61 Utah 19 Colorado 32 Missouri 72 Virginia 34 Florida 82 Nevada 1 West Virginia 13 Georgia 96 New Mexico 23 Wisconsin 5 Illinois 56 New York 11 Wyoming 3 Indiana 85 North Carolina 87 ----- Iowa 10 Ohio 166 Kansas 31 Oklahoma 60 Kentucky 48 Pennsylvania 28 Total 1,728 ===== MARKETING AND MERCHANDISING STRATEGY - ------------------------------------ AutoZone's marketing and merchandising strategy is to provide customers with superior service, value and parts selection at conveniently located, well-designed stores. Key elements of this strategy are as follows: CUSTOMER SERVICE The Company believes that D-I-Y customers place a significant value on customer service. As a result, the Company emphasizes customer service as the most important element in its marketing and merchandising strategy. The Company attempts to promote a corporate culture which "always puts customers first" and emphasizes knowledgeable and courteous service. To do so, the Company employs parts personnel with technical expertise to advise customers regarding the correct part type and application, utilizes a wide range of training methods to educate and motivate its store personnel, and provides store personnel with significant opportunities for promotion and incentive compensation. Customer service is enhanced by proprietary electronic parts catalogs which assist in the selection of parts; free testing of starters, alternators, batteries, and sensors and actuators; and liberal return and warranty policies. AutoZone also has a satellite system for all its stores which, among other things, enables the Company to speed credit card and check approval processes and locate parts at neighboring AutoZone stores. AutoZone stores generally open at 8 a.m. and close between 8 and 10 p.m. (with some open to midnight) Monday through Saturday and typically open at 9 a.m. and close between 6 and 7 p.m. on Sunday. During fiscal year 1997, the Company discontinued the operations of the Memphis and Houston call centers and offered to transfer all call center employees to stores in the Memphis and Houston area. The Company anticipates that the discontinuation of the call center operations will result in ongoing savings to the Company. Alldata Corporation, a wholly-owned subsidiary of AutoZone, has developed a database system that provides comprehensive and up-to-date automotive diagnostic, service and repair information which it markets to professional repair shops. PRODUCT SELECTION The Company offers a wide selection of automotive parts and other products designed to cover a broad range of specific vehicle applications. AutoZone's stores generally carry between 17,000 and 20,000 stock keeping units ("SKUs"). Each AutoZone store carries the same basic product line with some regional differences based on climate, demographics and age and type of vehicle registration. The Company's "flexogram" program enables the Company to tailor its hard parts inventory to the makes and models of the automobiles in each store's trade area. In addition to brand name products, the Company sells a number of products, including batteries and engines, under the "AutoZone" and "Duralast" names and a selection of automotive hard parts, including starters, alternators, water pumps, brakes, and filters, under its private label names. In addition to products stocked in stores, the Company offers a range of products, consisting principally of automotive hard parts, through its Express Parts program. The Express Parts program provides air-freight delivery of lower turnover products to AutoZone's stores. PRICING The Company employs an everyday low price strategy and attempts to be the price leader in hard parts categories. Management believes that its prices overall compare favorably to those of its competitors. COMMERCIAL SALES PROGRAM The Company's commercial sales program provides credit and prompt delivery of parts and other products to local repair garages, dealers and service stations. At August 30, 1997,this program was offered in 1,265 of the Company's stores. Commercial customers generally pay the same everyday low prices for parts and other products as paid by the Company's D-I-Y customers. STORE DESIGN AND VISUAL MERCHANDISING AutoZone seeks to design and build stores with a high visual impact. AutoZone stores are designed to have an industrial "high tech" appearance by utilizing colorful exterior signage, exposed beams and ductwork, and brightly lighted interiors. Merchandise in stores is attractively displayed, typically utilizing diagonally placed gondolas for maintenance and accessory products as well as specialized shelving for batteries and, in many stores, oil products. The Company employs a uniform ("planogrammed") store layout system to promote consistent merchandise presentation in all of its stores. In-store signage and special displays are used extensively to aid customers in locating merchandise and promoting products. STORE DEVELOPMENT AND EXPANSION STRATEGY - ---------------------------------------- The following table sets forth the Company's store development activities during the past five fiscal years: FISCAL YEAR ------------------------------------------------------ 1993 1994 1995 1996 1997 Beginning Stores 678 783 933 1,143 1,423 New Stores 107 151 210 280 308 Replaced Stores (1) 20 20 29 31 17 Closed Stores (1) (22) (21) (29) (31) (20) ----- ----- ----- ----- ----- Ending Stores 783 933 1,143 1,423 1,728 ===== ===== ===== ===== ===== (1) Replaced stores are either relocations or conversions of existing smaller stores to larger formats. Closed stores include replaced stores. The Company opened 305 net new stores in fiscal 1997, representing an increase in total square footage from fiscal 1996 of approximately 23%, and had 52 stores under construction at the end of fiscal 1997. The Company plans to open approximately 350 stores in fiscal 1998, representing an increase in total store square footage of approximately 22%, as compared with the end of fiscal 1997. The Company believes that expansion opportunities exist both in markets which it does not currently serve and in markets where it can achieve a larger presence. The Company attempts to obtain high visibility sites in high traffic locations and undertakes substantial research prior to entering new markets. Key factors in selecting new site and market locations include population, demographics, vehicle profile and number and strength of competitors' stores. The Company generally seeks to open new stores within or contiguous to existing market areas and attempts to cluster development in new urban markets in a relatively short period of time in order to achieve economies of scale in advertising and distribution costs. The Company may also expand its operations through acquisitions of existing stores from third parties. The Company regularly evaluates potential acquisition candidates, in new as well as existing market areas. AutoZone's net sales have grown significantly in the past several years, increasing from $1,217 million in fiscal 1993 to $2,691 million in fiscal 1997. The continued growth and financial performance of the Company will be dependent, in large part, upon management's ability to open new stores on a profitable basis in existing and new markets and also upon its ability to continue to increase sales in existing stores. There can be no assurance the Company will continue to be able to open and operate new stores on a timely and profitable basis or will continue to attain increases in comparable store sales. STORE OPERATIONS - ---------------- STORE FORMATS Substantially all of AutoZone's stores are based on standard store formats resulting in generally consistent appearance, merchandising and product mix. Although the smaller store formats were generally used by the Company for its earlier stores, the Company has increasingly used larger format stores starting with its 8,100 square foot store introduced in 1987, its 6,600 square foot store introduced in 1991 and its 7,700 square foot store introduced in 1993. In fiscal 1998, the 6,600 square foot and larger store formats are expected to account for more than 85% of new and replacement stores. Total store space as of August 30, 1997 was as follows: Total Store STORE FORMAT NUMBER OF STORES SQUARE FOOTAGE(1) ------------ ------------------ ----------------- 8,100 sq. ft 230 1,863,000 7,700 sq. ft. 415 3,195,500 6,600 sq. ft. 610 4,026,000 5,400 sq. ft. 453 2,446,200 4,000 sq. ft. 20 80,000 ----- ---------- Total 1,728 11,610,700 ===== ========== (1) Total store square footage is based on the Company's standard store formats, including normal selling, office, stockroom and receiving space, but excluding excess space not utilized in a store's operations. Approximately 85% to 90% of each store's square footage is selling space, of which approximately 30% to 40% is dedicated to automotive parts inventory The parts inventory area is fronted by a counter staffed by knowledgeable parts personnel and equipped with proprietary electronic parts catalogs. The remaining selling space contains gondolas for accessories, maintenance items, including oil and air filters, additives and waxes, and other parts together with specifically designed shelving for batteries and, in many stores, oil products. Approximately three quarters of the Company's stores are freestanding, with the balance principally located within strip shopping centers. Freestanding large format stores typically have parking for approximately 45 to 50 cars on a lot of approximately 3/4 to one acre. The Company's 5,400 and 4,000 square foot stores typically have parking for approximately 25 to 40 cars and are usually located on a lot of approximately 1/2 to 3/4 acre. STORE PERSONNEL AND TRAINING While subject to fluctuation based on seasonal volumes and actual store sales, the 4,000, 5,400 and 6,600 square foot stores typically employ 8 to 20 persons, including a manager and an assistant manager, and the larger stores typically employ 9 to 21 persons. The Company generally hires personnel with prior automotive experience. Although the Company relies primarily on on-the- job training, it also provides formal training programs, which include regular store meetings on specific sales and product issues, standardized training manuals and a specialist program under which store personnel can obtain Company certification in several areas of technical expertise. The Company supplements training with frequent store visits by management. The Company provides financial incentives to store managers through an incentive compensation program and through participation in the Company's stock option plan. In addition, AutoZone's growth has provided opportunities for the promotion of qualified employees. Management believes these opportunities are an important factor in AutoZone's ability to attract, motivate and retain quality personnel. The Company supervises store operations primarily through approximately 286 area advisors who report to one of 33 district managers, who, in turn, report to one of seven regional managers, as of August 30, 1997. Purchasing, merchandising, advertising, accounting, cash management, store development, systems technology and support, and other store support functions are centralized in the Company's store support center in Memphis, Tennessee. The Company believes that such centralization enhances consistent execution of the Company's merchandising and marketing strategy at the store level. STORE AUTOMATION In order to assist store personnel in providing a high level of customer service, all stores have proprietary electronic parts catalogs that provide parts information based on the make, model and year of an automobile. The catalog display screens are placed on the hard parts inventory counter so that both employees and customers can view the screen. In addition, the Company's satellite system enables the stores to speed up credit card and check approval processes and locate parts at neighboring AutoZone stores. All stores utilize the Company's computerized Store Management System, which includes optical character recognition scanning and point-of-sale data collection terminals. The Store Management System provides productivity benefits, including lower administrative requirements and improved personnel scheduling at the store level, as well as enhanced merchandising information and improved inventory control. The Company believes the Store Management System also enhances customer service through faster processing of transactions and simplified warranty and product return procedures. PURCHASING AND DISTRIBUTION - --------------------------- Merchandise is selected and purchased for all stores at the Company's store support center in Memphis. No one class of product accounts for as much as 10% of the Company's total sales. In fiscal 1997, the Company purchased products from approximately 300 suppliers and no single supplier accounted for more than 7% of the Company's total purchases. During fiscal year 1997, the Company's ten largest suppliers accounted for approximately 33% of the Company's purchases. The Company generally has few long-term contracts for the purchase of merchandise. Management believes that AutoZone's relationships with suppliers are excellent. Management also believes that alternative sources of supply exist, at similar cost, for substantially all types of product sold. Substantially all of the Company's merchandise is shipped by vendors to the Company's distribution centers. Orders are typically placed by stores on a weekly basis with orders shipped from the warehouse in trucks operated by the Company on the following day. COMPETITION - ----------- The Company competes principally in the D-I-Y and, more recently, the commercial automotive aftermarket. Although the number of competitors and the level of competition experienced by AutoZone's stores varies by market area, the automotive aftermarket is highly fragmented and generally very competitive. The Company believes that the largest share of the automotive aftermarket is held by independently owned jobber stores which, while principally selling to wholesale accounts, have significant D-I-Y sales. The Company also competes with other automotive specialty retailing chains and, in certain product categories, such as oil and filters, with discount and general merchandise stores. The principal competitive factors which affect the Company's business are store location, customer service, product selection and quality and price. While AutoZone believes that it competes effectively in its various geographic areas, certain of its competitors have substantial resources or have been operating longer in particular geographic areas. TRADEMARKS - ---------- The Company has registered several service marks and trademarks in the United States Patent and Trademark office, including its service mark "AutoZone" and its trademarks "AutoZone," "Duralast," "Valucraft," "Ultra Spark," "Deutsch," "Albany" and "Alldata". The Company believes that the "AutoZone" service mark and trademarks have become an important component in its merchandising and marketing strategy. EMPLOYEES - --------- As of August 30, 1997, the Company employed approximately 28,700 persons, approximately 20,000 of whom were employed full-time. Approximately 86% of the Company's employees were employed in stores or in direct field supervision, approximately 7% in distribution centers and approximately 7% in store support functions. The Company's employees currently are not members of any unions. The Company has never experienced any material labor disruption. Management believes that its labor relations are generally good. EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------ The following table lists AutoZone's executive officers. The title of each executive officer includes the words "Customer Satisfaction" which reflects the Company's commitment to customer service as part of its marketing and merchandising strategy. Officers are elected by and serve at the discretion of the Board of Directors. JOHNSTON C. ADAMS, JR., 49--CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND DIRECTOR Johnston C. Adams, Jr., has been a director since 1996. Mr. Adams was elected Chairman and Chief Executive Officer in March 1997, had been President and Chief Executive Officer since December 1996, and had been Vice Chairman and Chief Operating Officer since March 1996. Previously, he was Executive Vice President-Distribution since 1995. From 1990 to 1994, Mr. Adams was a co-owner of Nicotiana Enterprises, Inc., a company primarily engaged in food distribution. From 1983 to 1990, Mr. Adams was President of the Miami Division of Malone & Hyde., Inc. ("Malone & Hyde") the former parent company of AutoZone. TIMOTHY D. VARGO, 46--PRESIDENT, CHIEF OPERATING OFFICER, AND DIRECTOR Timothy D. Vargo has been a director since 1996 and was elected President and Chief Operating Officer in March 1997. Previously, Mr. Vargo had been Vice Chairman and Chief Operating Officer since 1996, Executive Vice President-Merchandising and Systems Technology since 1995 and had been Senior Vice President-Merchandising in 1995. Mr. Vargo was Senior Vice President-Merchandising from 1986 to 1992 and was Director of Stores for AutoZone from 1984 to 1986. LAWRENCE E. EVANS, 53--EXECUTIVE VICE PRESIDENT-STORE DEVELOPMENT AND ASSISTANT SECRETARY Lawrence E. Evans has been Executive Vice President-Store Development since 1995. Previously he was Senior Vice President-Development from 1993 to 1995 and Vice President-Real Estate since 1992. Mr. Evans was Director of Real Estate from 1991, and had been an attorney for either Malone & Hyde or AutoZone since 1986. Mr. Evans was first employed by Malone & Hyde from 1969 until 1976 and returned to Malone & Hyde in 1986. ROBERT J. HUNT, 48--EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND DIRECTOR Robert J. Hunt was elected a director in September 1997 and has been Executive Vice President and Chief Financial Officer since 1994. Prior to that time, Mr. Hunt was Executive Vice President, Chief Financial Officer, and a Director of the Price Company from 1991 to 1993. Previously, Mr. Hunt had been employed by Malone & Hyde since 1984, where he was Executive Vice President and Chief Financial Officer from 1988 to 1991. SHAWN P. MCGHEE, 34--EXECUTIVE VICE PRESIDENT-MERCHANDISING Shawn P. McGhee was elected Executive Vice President-Merchandising in 1996. Previously, he was Senior Vice President-Merchandising since 1994, Vice President-Merchandising since 1993, and a Senior Product Manager since 1991. Mr. McGhee commenced his employment with the Company in 1988. GERALD E. COLLEY, 45--SENIOR VICE PRESIDENT-STORES Gerald E. Colley was elected Senior Vice President-Stores in October 1997. He had been Vice President-Stores since April 1997, and had been a Regional Manager for the Company since February 1997. Previously, Mr. Colley had been an Executive Vice President for Tire Kingdom, Inc., in 1996, and had been President of Rose Auto Stores Florida, Inc., in 1995. Prior to that time Mr. Colley had been employed by AutoZone since 1987, and had been a Vice President of the Company from 1988 until 1995. HARRY L. GOLDSMITH, 46--SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL Harry L. Goldsmith was elected Senior Vice President, Secretary and General Counsel in 1996. Previously he was Vice President, General Counsel, and Secretary from 1993 to 1996. Prior to that time, he was an attorney at Federal Express Corporation since 1989. ANTHONY DEAN ROSE, JR., 37--SENIOR VICE PRESIDENT-ADVERTISING Anthony Dean Rose, Jr. has been Senior Vice President-Advertising since 1995. Prior to that time, he had been Vice President-Advertising since 1989 and a Director of Advertising since 1987. Mr. Rose has been employed by AutoZone or Malone & Hyde since 1982. STEPHEN W. VALENTINE, 35--SENIOR VICE PRESIDENT-SYSTEMS TECHNOLOGY AND SUPPORT AND CHIEF INFORMATION OFFICER Stephen W. Valentine has been Senior Vice President-Systems Technology and Support since 1995. Prior to that time, he had been Vice President-Systems Technology and Support since 1994, and a Director of Store Management Systems since 1990. Mr. Valentine commenced his employment with the Company in 1989. DAVID J. WILHITE, 35--SENIOR VICE PRESIDENT-MERCHANDISING David J. Wilhite was elected a Senior Vice President-Merchandising in September 1997. Previously Mr. Wilhite was a Vice President-Merchandising since 1996. He has been an employee of AutoZone or Malone & Hyde since 1984. MICHAEL E. BUTTERICK, 46--VICE PRESIDENT-CONTROLLER Michael E. Butterick has been Vice President-Controller since 1995. Prior to that time, Mr. Butterick was Chief Financial Officer of United Medical Incorporated from 1993 to 1995. From 1990 to 1993 Mr. Butterick was Vice President-Finance of the Mid South General Merchandise Division, a division of Fleming Companies. Previously, Mr. Butterick had been employed by Malone & Hyde or AutoZone since 1983, where he was Controller of AutoZone from 1986 to 1990. ANDREW M. CLARKSON, 60--DIRECTOR AND CHAIRMAN OF THE FINANCE COMMITTEE Andrew M. Clarkson has been a director of the Company since 1986 and is employed by the Company as the Chairman of the Finance Committee. Mr. Clarkson had been Vice President and Treasurer of the Company in 1986, Senior Vice President and Treasurer of the Company from 1986 to 1988, was Secretary from 1988 to 1993 and was Treasurer from 1990 to 1995. Previously, Mr. Clarkson was Chief Financial Officer of Malone & Hyde from 1983 to 1988. ITEM 2 PROPERTIES The following table sets forth certain information concerning AutoZone's principal properties: SQUARE NATURE OF LOCATION PRIMARY USE FOOTAGE OCCUPANCY -------- ----------- ------- --------- Memphis, TN Store Support Center 360,000 Owned Lavonia, GA Distribution Center 421,700 Owned Lexington, TN Distribution Center 341,000 Owned Danville, IL Distribution Center 304,500 Owned Memphis, TN Express Parts and Fixture Warehouse 233,100 Leased Lafayette, LA Distribution Center 464,000 Owned San Antonio, TX Distribution Center 217,000 Owned Phoenix, AZ Distribution Center 212,000 Owned Zanesville, OH Distribution Center 550,000 Owned The lease of the Express Parts and Fixture warehouse in Memphis expires in March 2000. The Company also rents additional warehouse space, various district offices and training and other office facilities which are not material in the aggregate. At August 30, 1997, the Company leased 595 and owned 1,133 of its 1,728 store properties. Original lease terms generally range from five to 20 years with renewal options. Leases on 361 stores that are currently operating expire prior to the end of fiscal 2002; however, leases on 334 of such stores contain renewal options. ITEM 3 LEGAL PROCEEDINGS The Company was a defendant in a purported class action entitled "Jack Elliot and Greg Dobson, on behalf of themselves and all others similarly situated, vs. AutoZone, Inc. and AutoZone Stores, Inc." filed on or about May 9, 1997, in the Circuit Court for Roane County, Tennessee. AutoZone Stores, Inc., is a wholly-owned subsidiary of the Company. In their complaint, which was similar to class action complaints filed against several other retailers of aftermarket automotive batteries, the plaintiffs alleged that the Company sold "old," "used," or "out of warranty" automotive batteries to customers as if the batteries were new, and purported to state causes of action for unfair or deceptive acts or practices, breaches of contract, breaches of the duty of good faith and fair dealing, intentional misrepresenta- tion, fraudulent concealment, civil conspiracy, and unjust enrichment. The plaintiffs were seeking an accounting of all moneys wrongfully received by the Company, compensatory and punitive damages, as well as plaintiffs' costs. On September 4, 1997, on the plaintiffs' motion, the court dismissed the case without prejudice. The Company is a defendant in a purported class action entitled "Joe C. Proffitt, Jr., on behalf of himself and all others similarly situated, vs. AutoZone, Inc., and AutoZone Stores, Inc.," filed in the Circuit Court for Jefferson County, Tennessee, on or about October 17, 1997. Along with the complaint, the Plaintiff filed a motion to conditionally certify a multistate class. In the complaint, which is similar to the class action complaint in the action "Elliott v. AutoZone, Inc." described above (and with substantially the same lawyers representing the plaintiff), and is similar to other class action complaints filed against several other retailers of aftermarket automotive batteries, the plaintiff alleges that the Company sold "old," "used," or "out of warranty" automotive batteries to customers as if the batteries were new, and purports to state causes of action for unfair or deceptive acts or practices, breach of contract, breach of the duty of good faith and fair deal- ing, intentional misrepresentation, fraudulent concealment, civil conspiracy, and unjust enrichment. The plaintiffs are seeking an accounting of all moneys wrongfully received by the Company, compensatory and punitive damages, as well as plaintiffs' costs. The Company believes the claims are without merit and intends to vigorously defend this action. The Company is also a party to various claims and lawsuits arising in the ordinary course of business. The Company does not believe that such claims and lawsuits, individually or in the aggregate, will have a material adverse effect on its results of operations or financial condition. PART II ITEM 5 MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS Common Stock Market Prices for the Company's stock as traded on the New York Stock Exchange on page 16 of the annual stockholders report for the year ended August 30, 1997 are incorporated herein by reference. At October 10, 1997, there were 3,331 stockholders of record, excluding the number of beneficial owners whose shares were represented by security position listings. ITEM 6 SELECTED FINANCIAL DATA Selected Financial Data on pages 14 and 15 of the annual stockholders report for the year ended August 30, 1997, is incorporated herein by reference. ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management's Discussion and Analysis of Financial Condition and Results of Operations on pages 17 through 18 of the annual stockholders report for the year ended August 30, 1997, are incorporated herein by reference. ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements included on pages 19 through 27 and the quarterly summary on page 16 of the annual stockholders report for the year ended August 30, 1997, are incorporated herein by reference. ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10 DIRECTORS AND OFFICERS OF THE REGISTRANT The information required by this item is incorporated by reference to Part I of this document and to the Company's definitive Proxy Statement filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the Company's annual meeting of stockholders. ITEM 11 EXECUTIVE COMPENSATION The information required by this item is incorporated by reference to the Company's definitive Proxy Statement filed pursuant to Regulation 14A under the Securities Act of 1934 in connection with the Company's annual meeting of stockholders. ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this item is incorporated by reference to the Company's definitive Proxy Statement filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the Company's annual meeting of stockholders. ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated by reference to the Company's definitive Proxy Statement filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 in connection with the Company's annual meeting of stockholders. PART IV ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K (a) 1. Financial Statements The following financial statements included on pages 19 through 27 in the annual report to stockholders for the year ended August 30, 1997, are incorporated by reference in Item 8: Report of Independent Auditors Statements of Income for the fiscal years ended August 30, 1997, August 31, 1996, and August 26, 1995 Balance Sheets as of August 30, 1997 and August 31, 1996 Statements of Stockholders' Equity for the fiscal years ended August 30, 1997, August 31, 1996 and August 26, 1995 Statements of Cash Flows for the fiscal years ended August 30, 1997, August 31, 1996 and August 26, 1995 Notes to Financial Statements 2. Financial Statement Schedule II - Valuation and Qualifying Accounts All other schedules are omitted because the information is not required or because the information required is included in the financial statements or notes thereto. 3. Exhibits The following exhibits are filed as part of this annual report: 3.1 Articles of Incorporation of AutoZone, Inc. Incorporated by reference to Exhibit 3.1 to the Form 10-K dated November 22, 1994. 3.2 Amendment to Articles of Incorporation of AutoZone, Inc. dated December 16, 1993, to increase its authorized shares of common stock to 200,000,000. Incorporated by reference to Exhibit 3.2 to the Form 10-K dated November 22, 1994. 3.3 By-laws of AutoZone, Inc. Incorporated by reference to Exhibit 3.2 to the February 1992 Form S-1. 4.1 Form of Common Stock Certificate. Incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No. 2 to the February 1992 Form S-1. 4.2 Registration Rights Agreement, dated as of February 18, 1987, by and among Auto Shack, Inc. and certain stockholders. Incorporated by reference to Exhibit 4.9 to the Form S-1 Registration Statement filed by the Company under the Securities Act (No. 33-39197) (the "April 1991 Form S-1"). 4.3 Amendment to Registration Rights Agreement dated as of August 1, 1993. Incorporated by reference to Exhibit 4.1 to the Form S-3 Registration Statement filed by the Company under the Securities Act (No. 33-67550). 10.1 Amended and Restated Stock Option Plan of AutoZone, Inc., as amended on February 26, 1991. Incorporated by reference to Exhibit 10.4 to the April 1991 Form S-1. 10.2 Amendment No. 1 dated December 18, 1992, to the Amended and Restated Stock Option Plan. Incorporated by reference to Exhibit 10.5 to the Form 10-K for the fiscal year ended August 28, 1993. 10.3 1996 Stock Option Plan. Incorporated by reference to Exhibit A of the 1996 Proxy Statement dated November 8, 1996. 10.4* Employment and Non-Compete Agreement between John C. Adams, Jr. and AutoZone, Inc. dated June 11, 1997. 10.5* Employment and Non-Compete Agreement between Timothy D. Vargo and AutoZone, Inc. dated June 11, 1997. 10.6* Employment and Non-Compete Agreement between Robert J. Hunt and AutoZone, Inc. dated June 11, 1997. 10.7* Employment and Non-Compete Agreement between Shawn P. McGhee and AutoZone, Inc. dated June 17, 1997. 10.8* Employment and Non-Compete Agreement between Harry L. Goldsmith and AutoZone, Inc. dated June 11, 1997. 10.9* Employment and Non-Compete Agreement between Stephen W. Valentine and AutoZone, Inc. dated July 7, 1997. 11.1 Computation of Earnings Per Common Share Equivalents. 13.1 Annual Report to Stockholders for the fiscal year ended August 30, 1997. 21.1 Subsidiaries of the Registrant. 23.1 Consent of Ernst & Young LLP. 27.1 Financial Data Schedule. (SEC use only) (b) The Company did not file a Form 8-K during the last quarter of the fiscal year ended August 30, 1997. * Management contract or compensatory plan or arrangement. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AUTOZONE, INC. By: /s/ J. C. ADAMS, JR. November 6, 1997 ------------------------- J. C. Adams, Jr. Chairman, Chief Executive Officer and Director Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated: SIGNATURE TITLE DATE --------- ----- ---- /s/ J. C. ADAMS, JR. Chairman, November 6, 1997 ------------------------- Chief Executive Officer ( J. C. Adams, Jr.) and Director (Principal Executive Officer) /s/ TIMOTHY D. VARGO ------------------------- President, Chief Operating November 6, 1997 (Timothy D. Vargo) Officer and Director /s/ ROBERT J. HUNT Executive Vice President, November 6, 1997 ------------------------- Chief Financial Officer (Robert J. Hunt) and Director (Principal Financial Officer) /s/ MICHAEL E. BUTTERICK Vice President and November 6, 1997 --------------------------- Controller (Michael E. Butterick) (Principal Accounting Officer) /s/ ANDREW M. CLARKSON Director November 6, 1997 -------------------------- (Andrew M. Clarkson) /s/ N. GERRY HOUSE Director November 6, 1997 --------------------------- (N. Gerry House) /s/ J.R. HYDE, III Director November 6, 1997 --------------------------- (J. R. Hyde, III) Director --------------------------- (James F. Keegan) /s/ MICHAEL W. MICHELSON Director November 6, 1997 --------------------------- (Michael W. Michelson) /s/ JOHN E. MOLL Director November 6, 1997 --------------------------- (John E. Moll) /s/ GEORGE R. ROBERTS Director November 6, 1997 --------------------------- (George R. Roberts) /s/ RONALD A. TERRY Director November 6, 1997 -------------------------- (Ronald A. Terry) SCHEDULE II AUTOZONE, INC. VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)

EXHIBIT 10.4 EMPLOYMENT AND NON-COMPETE AGREEMENT THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its various subsidiaries (collectively "AutoZone"), and John C. Adams, Jr., an individual ("Employee") dated as of June 11, 1997 ("Effective Date"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties are agreed as follows: 1. EMPLOYMENT. AutoZone agrees to employ Employee and Employee agrees to remain in the employment of AutoZone, or a subsidiary or affiliate, until the expiration or earlier termination of this Agreement. 2. TERM. This agreement shall be effective as of the Effective Date and shall expire five years thereafter, unless earlier terminated as provided in Paragraphs 8 or 9. 3. SALARY. Employee shall receive a salary from AutoZone as follows: During the term of this Agreement, Employee shall receive annual compensation of five hundred thousand dollars ($500,000), subject to increases as determined by the Compensation Committee of the Board of Directors ("Base Salary"). The Base Salary amount shall be paid on a pro-rated basis for all partial years based on a 364 day year. AutoZone reserves the right to increase the Base Salary above the amounts stated above in its sole discretion. All salary shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 4. BONUS. During the term of this Agreement, Employee shall receive a bonus up to 75% of his Base Salary in accordance with policies and procedures established by AutoZone's Compensation Committee and Board of Directors which shall be based upon the financial and operational goals and objectives for the Employee and AutoZone established by the Compensation Committee for each of AutoZone's fiscal years ("Target") in accordance with AutoZone's Executive Incentive Compensation Plan. The Target is established at the sole discretion of the Compensation Committee and Board of Directors and is subject to review and revision at any time upon notification to the Employee. All bonuses shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 5. DUTIES. Employee shall serve as AutoZone's Chairman and CEO performing such duties as AutoZone's Board of Directors may direct from time to time and as are normally associated with such a position. AutoZone may, in its sole discretion, alter, expand or curtail the services to be performed by Employee or position held by Employee from time to time, without adjustment in compensation. Employee shall devote his entire time and attention to AutoZone's business. During the term of this Agreement, Employee shall not engage in any other business activity that conflicts with his duties with AutoZone, regardless of whether it is pursued for gain or profit. Employee may, however, invest his assets in or serve on the Board of Directors of other companies so long as they do not require Employee's services in the day to day operation of their affairs and do not violate AutoZone's conflict of interest policy. Notwithstanding, Employee may from time to time invest deminimus amounts in the publicly traded stock of Competitors upon written approval of AutoZone's General Counsel. 6. OTHER BENEFITS. Other benefits to be received by Employee from AutoZone shall be the ordinary benefits received by AutoZone's other executive officers, which may be changed by AutoZone in its sole discretion from time to time. 7. TAXES. Employee understands that all salary, bonus and other benefits will be subject to reduction for amounts required to be withheld by law as taxes and otherwise. 8. TERMINATION BY AUTOZONE. (a) WITHOUT CAUSE. AutoZone may terminate this Agreement without Cause at any time upon notice to Employee. In such event, Employee shall continue to be paid his then current Base Salary (on a pro-rated basis in the same manner as Employee is then receiving his base salary) until three years after the termination date ("Continuation Period"). During the Continuation Period, Employee shall not receive any bonus payments. During the Continuation Period, Employee shall continue to be an employee of AutoZone or a subsidiary (on leave of absence), and Employee's stock options shall continue to vest and be exercised in the manner set forth in the respective stock option agreements until the end of the Continuation Period, at which time Employee's employment with AutoZone shall be terminated and further stock option exercise and vesting shall be governed by the terms of the stock option agreement. During the Continuation Period, Employee shall receive such other benefits as other employees of AutoZone, including, but not limited to, health and life insurance, on the same terms and conditions. AutoZone shall have no other obligations other than those stated herein upon the termination of this Agreement and Employee hereby releases AutoZone from any and all obligations and claims except those as are specifically set forth herein. (b) WITH CAUSE. AutoZone shall have the right to terminate this Agreement and Employee's employment with AutoZone for Cause at any time. Upon such termination for Cause, Employee shall have no right to receive any compensation, salary, or bonus and shall immediately cease to receive any benefits (other than those as may be required pursuant to the AutoZone Pension Plan or by law) and any stock options shall be governed by the respective stock option agreements in effect between the Employee and AutoZone at that time. "Cause" shall mean the willful engagement by the Employee in conduct which is demonstrably or materially injurious to AutoZone, monetarily or otherwise. For this purpose, no act or failure to act by the Employee shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of AutoZone. 9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at anytime upon written notice to AutoZone. Upon such termination, Employee's employment shall terminate and Employee shall cease to receive any further salary, benefits, or bonus, and all stock options granted shall be governed by the respective stock option agreement(s) between the Employee and AutoZone. 10. TERMINATION BY EMPLOYEE UPON A CHANGE OF CONTROL. Employee may terminate this Agreement upon a Change of Control of AutoZone by giving written notice to AutoZone within sixty days of the occurrence of a Change of Control. Upon giving such notice to AutoZone, Employees employment shall terminate and Employee shall cease to receive any payments or benefits pursuant this Agreement and all stock options held by Employee shall be govern by the respective stock option agreement(s). Any of the following events shall constitute a "Change of Control": (a) the acquisition after the date hereof, in one or more transactions, of beneficial ownership (as defined in Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), by any person or entity or any group of persons or entities who constitute a group (as defined in Section 13(d)(3) under the Exchange Act) of any securities such that as a result of such acquisition such person, entity or group beneficially owns AutoZone, Inc.'s then outstanding voting securities representing 51% or more of the total combined voting power entitled to vote on a regular basis for a majority of the board of Directors of AutoZone, Inc. or (b) the sale of all or substantially all of the assets of AutoZone (including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction where AutoZone or the beneficial owners (as defined in Rule 13d-3(a)(1) under the Exchange Act) of capital stock of AutoZone do not receive (i) voting securities representing a majority of the total combined voting power entitled to vote on a regular basis for the board of directors of the acquiring entity or of an affiliate which controls the acquiring entity or (ii) securities representing a majority of the total combined equity interest in the acquiring entity, if other than a corporation; provided however, that the foregoing provisions of this Paragraph 10 shall not apply to any transfer, sale or disposition of shares of capital stock of AutoZone to any person or persons who are affiliates of AutoZone on the date hereof. 11. EFFECT OF TERMINATION. Any termination of Employee's service as an officer of AutoZone shall be deemed a termination of Employee's service on all boards and as an officer of all subsidiaries of AutoZone. 12. NON-COMPETE. Employee agrees that he will not, for the period commencing on the termination date of this Agreement pursuant to Paragraph 8 or 9 (whichever is applicable) of this Agreement and ending on (i) the date three years after said termination date of this Agreement if either Employee voluntarily terminates this Agreement or this Agreement is terminated by AutoZone for Cause or (ii) the end of the Continuation Period if this Agreement is terminated by AutoZone without Cause, be engaged in or concerned with, directly or indirectly, any business related to or involved in the retail sale of auto parts to "DIY" customers, or the wholesale or retail sale of auto parts to commercial installers in any state, province, territory or foreign country in which AutoZone operates now or shall operate during the term set forth in this non-compete paragraph (herein called "Competitor"), as an employee, director, consultant, beneficial or record owner, partner, joint venturer, officer or agent of the Competitor. The parties acknowledge and agree that the time, scope, geographic area and other provisions of this Non-Compete section have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope, geographic area and other provisions are reasonable under the circumstances and are in exchange for the obligations undertaken by AutoZone pursuant to this Agreement. Further, Employee agrees not to hire, for himself or any other entity, encourage anyone or entity to hire, or entice away from AutoZone any employee of AutoZone during the term of this non-compete obligation. If at any time a court of competent jurisdiction holds that any portion of this Non-Compete section is unenforceable for any reason, then Employee shall forfeit his right to any further salary, bonus, stock option exercises, or benefits from AutoZone during any Continuation Period. This Paragraph 12 shall not apply to a termination by Employee pursuant to Paragraph 10. 13. CONFIDENTIALITY. Unless otherwise required by law, Employee shall hold in confidence any proprietary or confidential information obtained by him during his employment with AutoZone, which shall include, but not be limited to, information regarding AutoZone's present and future business plans, vendors, systems, operations and personnel. Confidential information shall not include information: (a) publicly disclosed by AutoZone; (b) rightfully received by Employee from a third party without restrictions on disclosure (c) approved for release or disclosure by AutoZone; or (d) produced or disclosed pursuant to applicable laws, regulation or court order. Employee acknowledges that all such confidential or proprietary information is and shall remain the sole property of AutoZone and all embodiments of such information shall remain with AutoZone. 14. BREACH BY EMPLOYEE. The parties further agree that if, at any time, despite the express agreement of the parties hereto, Employee violates the provisions of this Agreement by violating the Non-Compete or Confidentiality sections, or by failing to perform his obligations under this Agreement, Employee shall forfeit any unexercised stock options, vested or not vested, and AutoZone may cease paying any further salary or bonus. In the event of breach by Employee of any provision of this Agreement, Employee acknowledges that such breach will cause irreparable damage to AutoZone, the exact amount of which will be difficult or impossible to ascertain, and that remedies at law for any such breach will be inadequate. Accordingly, AutoZone shall be entitled, in addition to any other rights or remedies existing in its favor, to obtain, without the necessity for any bond or other security, specific performance and/or injunctive relief in order to enforce, or prevent breach of any such provision. 15. DEATH OF EMPLOYEE OR DISABILITY. If Employee should die or become disabled (such that he is no longer capable of performing his duties) during the term of this Agreement, then all salary and bonus shall cease as of the date of his death or disability, all stock options shall be governed by the terms of the respective stock option agreements, and Employee shall receive disability or death benefits as may be provided under AutoZone's then existing policies and procedures related to disability or death of AutoZone employees. 16. WAIVER. Any waiver of any breach of this Agreement by AutoZone shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of AutoZone. 17. ASSIGNMENT. Employee acknowledges that his services are unique and personal. Accordingly, Employee shall not assign his rights or delegate his duties or obligations under this Agreement. Employee's rights and obligations under this Agreement shall inure to the benefit of and be binding upon AutoZone successors and assigns. AutoZone may assign this Agreement to any wholly-owned subsidiary operating for the use and benefit of AutoZone. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties related to the matters discussed herein. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. 19. JURISDICTION. This Agreement shall be governed and construed by the laws of the State of Tennessee, without regard to its choice of law rules. The parties agree that the only proper venue for any dispute under this Agreement shall be in the state or federal courts located in Shelby County, Tennessee. 20. SURVIVAL. Sections 8, 12, 13, 14 and 19 of this Agreement shall survive any termination of this Agreement or Employee's employment with AutoZone (including, without limitation termination pursuant to Paragraphs 8, 9, or 10). IN WITNESS WHEREOF, the respective parties execute this Agreement. AUTOZONE, INC. By: /S/ TIMOTHY D. VARGO /S/ JOHN C. ADAMS, JR. -------------------- ---------------------- Title: President and COO Employee 6/11/97 -------- By: /S/ HARRY L. GOLDSMITH Date ---------------------- Title: Senior Vice President

EXHIBIT 10.5 EMPLOYMENT AND NON-COMPETE AGREEMENT THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its various subsidiaries (collectively "AutoZone"), and Timothy D. Vargo, an individual ("Employee") dated as of June 11, 1997 ("Effective Date"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties are agreed as follows: 1. EMPLOYMENT. AutoZone agrees to employ Employee and Employee agrees to remain in the employment of AutoZone, or a subsidiary or affiliate, until the expiration or earlier termination of this Agreement. 2. TERM. This agreement shall be effective as of the Effective Date and shall expire five years thereafter, unless earlier terminated as provided in Paragraphs 8 or 9. 3. SALARY. Employee shall receive a salary from AutoZone as follows: During the term of this Agreement, Employee shall receive annual compensation of four hundred thousand dollars ($400,000), subject to increases as determined by the Compensation Committee of the Board of Directors ("Base Salary"). The Base Salary amount shall be paid on a pro-rated basis for all partial years based on a 364 day year. AutoZone reserves the right to increase the Base Salary above the amounts stated above in its sole discretion. All salary shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 4. BONUS. During the term of this Agreement, Employee shall receive a bonus up to 75% of his Base Salary in accordance with policies and procedures established by AutoZone's Compensation Committee and Board of Directors which shall be based upon the financial and operational goals and objectives for the Employee and AutoZone established by the Compensation Committee for each of AutoZone's fiscal years ("Target") in accordance with AutoZone's Executive Incentive Compensation Plan. The Target is established at the sole discretion of the Compensation Committee and Board of Directors and is subject to review and revision at any time upon notification to the Employee. All bonuses shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 5. DUTIES. Employee shall serve as AutoZone's President and COO performing such duties as AutoZone's Board of Directors may direct from time to time and as are normally associated with such a position. AutoZone may, in its sole discretion, alter, expand or curtail the services to be performed by Employee or position held by Employee from time to time, without adjustment in compensation. Employee shall devote his entire time and attention to AutoZone's business. During the term of this Agreement, Employee shall not engage in any other business activity that conflicts with his duties with AutoZone, regardless of whether it is pursued for gain or profit. Employee may, however, invest his assets in or serve on the Board of Directors of other companies so long as they do not require Employee's services in the day to day operation of their affairs and do not violate AutoZone's conflict of interest policy. Notwithstanding, Employee may from time to time invest deminimus amounts in the publicly traded stock of Competitors upon written approval of AutoZone's General Counsel. 6. OTHER BENEFITS. Other benefits to be received by Employee from AutoZone shall be the ordinary benefits received by AutoZone's other executive officers, which may be changed by AutoZone in its sole discretion from time to time. 7. TAXES. Employee understands that all salary, bonus and other benefits will be subject to reduction for amounts required to be withheld by law as taxes and otherwise. 8. TERMINATION BY AUTOZONE. (a) WITHOUT CAUSE. AutoZone may terminate this Agreement without Cause at any time upon notice to Employee. In such event, Employee shall continue to be paid his then current Base Salary (on a pro-rated basis in the same manner as Employee is then receiving his base salary) until three years after the termination date ("Continuation Period"). During the Continuation Period, Employee shall not receive any bonus payments. During the Continuation Period, Employee shall continue to be an employee of AutoZone or a subsidiary (on leave of absence), and Employee's stock options shall continue to vest and be exercised in the manner set forth in the respective stock option agreements until the end of the Continuation Period, at which time Employee's employment with AutoZone shall be terminated and further stock option exercise and vesting shall be governed by the terms of the stock option agreement. During the Continuation Period, Employee shall receive such other benefits as other employees of AutoZone, including, but not limited to, health and life insurance, on the same terms and conditions. AutoZone shall have no other obligations other than those stated herein upon the termination of this Agreement and Employee hereby releases AutoZone from any and all obligations and claims except those as are specifically set forth herein. (b) WITH CAUSE. AutoZone shall have the right to terminate this Agreement and Employee's employment with AutoZone for Cause at any time. Upon such termination for Cause, Employee shall have no right to receive any compensation, salary, or bonus and shall immediately cease to receive any benefits (other than those as may be required pursuant to the AutoZone Pension Plan or by law) and any stock options shall be governed by the respective stock option agreements in effect between the Employee and AutoZone at that time. "Cause" shall mean the willful engagement by the Employee in conduct which is demonstrably or materially injurious to AutoZone, monetarily or otherwise. For this purpose, no act or failure to act by the Employee shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of AutoZone. 9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at anytime upon written notice to AutoZone. Upon such termination, Employee's employment shall terminate and Employee shall cease to receive any further salary, benefits, or bonus, and all stock options granted shall be governed by the respective stock option agreement(s) between the Employee and AutoZone. 10. TERMINATION BY EMPLOYEE UPON A CHANGE OF CONTROL. Employee may terminate this Agreement upon a Change of Control of AutoZone by giving written notice to AutoZone within sixty days of the occurrence of a Change of Control. Upon giving such notice to AutoZone, Employees employment shall terminate and Employee shall cease to receive any payments or benefits pursuant this Agreement and all stock options held by Employee shall be govern by the respective stock option agreement(s). Any of the following events shall constitute a "Change of Control": (a) the acquisition after the date hereof, in one or more transactions, of beneficial ownership (as defined in Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), by any person or entity or any group of persons or entities who constitute a group (as defined in Section 13(d)(3) under the Exchange Act) of any securities such that as a result of such acquisition such person, entity or group beneficially owns AutoZone, Inc.'s then outstanding voting securities representing 51% or more of the total combined voting power entitled to vote on a regular basis for a majority of the board of Directors of AutoZone, Inc. or (b) the sale of all or substantially all of the assets of AutoZone (including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction where AutoZone or the beneficial owners (as defined in Rule 13d-3(a)(1) under the Exchange Act) of capital stock of AutoZone do not receive (i) voting securities representing a majority of the total combined voting power entitled to vote on a regular basis for the board of directors of the acquiring entity or of an affiliate which controls the acquiring entity or (ii) securities representing a majority of the total combined equity interest in the acquiring entity, if other than a corporation; provided however, that the foregoing provisions of this Paragraph 10 shall not apply to any transfer, sale or disposition of shares of capital stock of AutoZone to any person or persons who are affiliates of AutoZone on the date hereof. 11. EFFECT OF TERMINATION. Any termination of Employee's service as an officer of AutoZone shall be deemed a termination of Employee's service on all boards and as an officer of all subsidiaries of AutoZone. 12. NON-COMPETE. Employee agrees that he will not, for the period commencing on the termination date of this Agreement pursuant to Paragraph 8 or 9 (whichever is applicable) of this Agreement and ending on (i) the date three years after said termination date of this Agreement if either Employee voluntarily terminates this Agreement or this Agreement is terminated by AutoZone for Cause or (ii) the end of the Continuation Period if this Agreement is terminated by AutoZone without Cause, be engaged in or concerned with, directly or indirectly, any business related to or involved in the retail sale of auto parts to "DIY" customers, or the wholesale or retail sale of auto parts to commercial installers in any state, province, territory or foreign country in which AutoZone operates now or shall operate during the term set forth in this non-compete paragraph (herein called "Competitor"), as an employee, director, consultant, beneficial or record owner, partner, joint venturer, officer or agent of the Competitor. The parties acknowledge and agree that the time, scope, geographic area and other provisions of this Non-Compete section have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope, geographic area and other provisions are reasonable under the circumstances and are in exchange for the obligations undertaken by AutoZone pursuant to this Agreement. Further, Employee agrees not to hire, for himself or any other entity, encourage anyone or entity to hire, or entice away from AutoZone any employee of AutoZone during the term of this non-compete obligation. If at any time a court of competent jurisdiction holds that any portion of this Non-Compete section is unenforceable for any reason, then Employee shall forfeit his right to any further salary, bonus, stock option exercises, or benefits from AutoZone during any Continuation Period. This Paragraph 12 shall not apply to a termination by Employee pursuant to Paragraph 10. 13. CONFIDENTIALITY. Unless otherwise required by law, Employee shall hold in confidence any proprietary or confidential information obtained by him during his employment with AutoZone, which shall include, but not be limited to, information regarding AutoZone's present and future business plans, vendors, systems, operations and personnel. Confidential information shall not include information: (a) publicly disclosed by AutoZone; (b) rightfully received by Employee from a third party without restrictions on disclosure (c) approved for release or disclosure by AutoZone; or (d) produced or disclosed pursuant to applicable laws, regulation or court order. Employee acknowledges that all such confidential or proprietary information is and shall remain the sole property of AutoZone and all embodiments of such information shall remain with AutoZone. 14. BREACH BY EMPLOYEE. The parties further agree that if, at any time, despite the express agreement of the parties hereto, Employee violates the provisions of this Agreement by violating the Non-Compete or Confidentiality sections, or by failing to perform his obligations under this Agreement, Employee shall forfeit any unexercised stock options, vested or not vested, and AutoZone may cease paying any further salary or bonus. In the event of breach by Employee of any provision of this Agreement, Employee acknowledges that such breach will cause irreparable damage to AutoZone, the exact amount of which will be difficult or impossible to ascertain, and that remedies at law for any such breach will be inadequate. Accordingly, AutoZone shall be entitled, in addition to any other rights or remedies existing in its favor, to obtain, without the necessity for any bond or other security, specific performance and/or injunctive relief in order to enforce, or prevent breach of any such provision. 15. DEATH OF EMPLOYEE OR DISABILITY. If Employee should die or become disabled (such that he is no longer capable of performing his duties) during the term of this Agreement, then all salary and bonus shall cease as of the date of his death or disability, all stock options shall be governed by the terms of the respective stock option agreements, and Employee shall receive disability or death benefits as may be provided under AutoZone's then existing policies and procedures related to disability or death of AutoZone employees. 16. WAIVER. Any waiver of any breach of this Agreement by AutoZone shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of AutoZone. 17. ASSIGNMENT. Employee acknowledges that his services are unique and personal. Accordingly, Employee shall not assign his rights or delegate his duties or obligations under this Agreement. Employee's rights and obligations under this Agreement shall inure to the benefit of and be binding upon AutoZone successors and assigns. AutoZone may assign this Agreement to any wholly-owned subsidiary operating for the use and benefit of AutoZone. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties related to the matters discussed herein. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. 19. JURISDICTION. This Agreement shall be governed and construed by the laws of the State of Tennessee, without regard to its choice of law rules. The parties agree that the only proper venue for any dispute under this Agreement shall be in the state or federal courts located in Shelby County, Tennessee. 20. SURVIVAL. Sections 8, 12, 13, 14 and 19 of this Agreement shall survive any termination of this Agreement or Employee's employment with AutoZone (including, without limitation termination pursuant to Paragraphs 8, 9, or 10). IN WITNESS WHEREOF, the respective parties execute this Agreement. AUTOZONE, INC. By: /s/ J.C. Adams /s/ Timothy D. Vargo ---------------- ---------------------- Title: Chairman & CEO Employee 6/13/97 By: Harry L. Goldsmith --------------------- -------------------- Date Title: Senior Vice President

EXHIBIT 10.6 EMPLOYMENT AND NON-COMPETE AGREEMENT THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its various subsidiaries (collectively "AutoZone"), and Robert J. Hunt, an individual ("Employee") dated as of June 11, 1997 ("Effective Date"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties are agreed as follows: 1. EMPLOYMENT. AutoZone agrees to employ Employee and Employee agrees to remain in the employment of AutoZone, or a subsidiary or affiliate, until the expiration or earlier termination of this Agreement. 2. TERM. This agreement shall be effective as of the Effective Date and shall expire five years thereafter, unless earlier terminated as provided in Paragraphs 8 or 9. 3. SALARY. Employee shall receive a salary from AutoZone as follows: During the term of this Agreement, Employee shall receive annual compensation of two hundred eighty-five thousand dollars ($285,000), subject to increases as determined by the Compensation Committee of the Board of Directors ("Base Salary"). The Base Salary amount shall be paid on a pro-rated basis for all partial years based on a 364 day year. AutoZone reserves the right to increase the Base Salary above the amounts stated above in its sole discretion. All salary shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 4. BONUS. During the term of this Agreement, Employee shall receive a bonus up to 60% of his Base Salary in accordance with policies and procedures established by AutoZone's Compensation Committee and Board of Directors which shall be based upon the financial and operational goals and objectives for the Employee and AutoZone established by the Compensation Committee for each of AutoZone's fiscal years ("Target") in accordance with AutoZone's Executive Incentive Compensation Plan. The Target is established at the sole discretion of the Compensation Committee and Board of Directors and is subject to review and revision at any time upon notification to the Employee. All bonuses shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 5. DUTIES. Employee shall serve as AutoZone's Executive Vice President and Chief Financial Officer performing such duties as AutoZone's Board of Directors may direct from time to time and as are normally associated with such a position. AutoZone may, in its sole discretion, alter, expand or curtail the services to be performed by Employee or position held by Employee from time to time, without adjustment in compensation. Employee shall devote his entire time and attention to AutoZone's business. During the term of this Agreement, Employee shall not engage in any other business activity that conflicts with his duties with AutoZone, regardless of whether it is pursued for gain or profit. Employee may, however, invest his assets in or serve on the Board of Directors of other companies so long as they do not require Employee's services in the day to day operation of their affairs and do not violate AutoZone's conflict of interest policy. Notwithstanding, Employee may from time to time invest deminimus amounts in the publicly traded stock of Competitors upon written approval of AutoZone's General Counsel. 6. OTHER BENEFITS. Other benefits to be received by Employee from AutoZone shall be the ordinary benefits received by AutoZone's other executive officers, which may be changed by AutoZone in its sole discretion from time to time. 7. TAXES. Employee understands that all salary, bonus and other benefits will be subject to reduction for amounts required to be withheld by law as taxes and otherwise. 8. TERMINATION BY AUTOZONE. (a) WITHOUT CAUSE. AutoZone may terminate this Agreement without Cause at any time upon notice to Employee. In such event, Employee shall continue to be paid his then current Base Salary (on a pro-rated basis in the same manner as Employee is then receiving his base salary) until three years after the termination date ("Continuation Period"). During the Continuation Period, Employee shall not receive any bonus payments. During the Continuation Period, Employee shall continue to be an employee of AutoZone or a subsidiary (on leave of absence), and Employee's stock options shall continue to vest and be exercised in the manner set forth in the respective stock option agreements until the end of the Continuation Period, at which time Employee's employment with AutoZone shall be terminated and further stock option exercise and vesting shall be governed by the terms of the stock option agreement. During the Continuation Period, Employee shall receive such other benefits as other employees of AutoZone, including, but not limited to, health and life insurance, on the same terms and conditions. AutoZone shall have no other obligations other than those stated herein upon the termination of this Agreement and Employee hereby releases AutoZone from any and all obligations and claims except those as are specifically set forth herein. (b) WITH CAUSE. AutoZone shall have the right to terminate this Agreement and Employee's employment with AutoZone for Cause at any time. Upon such termination for Cause, Employee shall have no right to receive any compensation, salary, or bonus and shall immediately cease to receive any benefits (other than those as may be required pursuant to the AutoZone Pension Plan or by law) and any stock options shall be governed by the respective stock option agreements in effect between the Employee and AutoZone at that time. "Cause" shall mean the willful engagement by the Employee in conduct which is demonstrably or materially injurious to AutoZone, monetarily or otherwise. For this purpose, no act or failure to act by the Employee shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of AutoZone. 9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at anytime upon written notice to AutoZone. Upon such termination, Employee's employment shall terminate and Employee shall cease to receive any further salary, benefits, or bonus, and all stock options granted shall be governed by the respective stock option agreement(s) between the Employee and AutoZone. 10. TERMINATION BY EMPLOYEE UPON A CHANGE OF CONTROL. Employee may terminate this Agreement upon a Change of Control of AutoZone by giving written notice to AutoZone within sixty days of the occurrence of a Change of Control. Upon giving such notice to AutoZone, Employees employment shall terminate and Employee shall cease to receive any payments or benefits pursuant this Agreement and all stock options held by Employee shall be govern by the respective stock option agreement(s). Any of the following events shall constitute a "Change of Control": (a) the acquisition after the date hereof, in one or more transactions, of beneficial ownership (as defined in Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), by any person or entity or any group of persons or entities who constitute a group (as defined in Section 13(d)(3) under the Exchange Act) of any securities such that as a result of such acquisition such person, entity or group beneficially owns AutoZone, Inc.'s then outstanding voting securities representing 51% or more of the total combined voting power entitled to vote on a regular basis for a majority of the board of Directors of AutoZone, Inc. or (b) the sale of all or substantially all of the assets of AutoZone (including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction where AutoZone or the beneficial owners (as defined in Rule 13d-3(a)(1) under the Exchange Act) of capital stock of AutoZone do not receive (i) voting securities representing a majority of the total combined voting power entitled to vote on a regular basis for the board of directors of the acquiring entity or of an affiliate which controls the acquiring entity or (ii) securities representing a majority of the total combined equity interest in the acquiring entity, if other than a corporation; provided however, that the foregoing provisions of this Paragraph 10 shall not apply to any transfer, sale or disposition of shares of capital stock of AutoZone to any person or persons who are affiliates of AutoZone on the date hereof. 11. EFFECT OF TERMINATION. Any termination of Employee's service as an officer of AutoZone shall be deemed a termination of Employee's service on all boards and as an officer of all subsidiaries of AutoZone. 12. NON-COMPETE. Employee agrees that he will not, for the period commencing on the termination date of this Agreement pursuant to Paragraph 8 or 9 (whichever is applicable) of this Agreement and ending on (i) the date three years after said termination date of this Agreement if either Employee voluntarily terminates this Agreement or this Agreement is terminated by AutoZone for Cause or (ii) the end of the Continuation Period if this Agreement is terminated by AutoZone without Cause, be engaged in or concerned with, directly or indirectly, any business related to or involved in the retail sale of auto parts to "DIY" customers, or the wholesale or retail sale of auto parts to commercial installers in any state, province, territory or foreign country in which AutoZone operates now or shall operate during the term set forth in this non-compete paragraph (herein called "Competitor"), as an employee, director, consultant, beneficial or record owner, partner, joint venturer, officer or agent of the Competitor. The parties acknowledge and agree that the time, scope, geographic area and other provisions of this Non-Compete section have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope, geographic area and other provisions are reasonable under the circumstances and are in exchange for the obligations undertaken by AutoZone pursuant to this Agreement. Further, Employee agrees not to hire, for himself or any other entity, encourage anyone or entity to hire, or entice away from AutoZone any employee of AutoZone during the term of this non-compete obligation. If at any time a court of competent jurisdiction holds that any portion of this Non-Compete section is unenforceable for any reason, then Employee shall forfeit his right to any further salary, bonus, stock option exercises, or benefits from AutoZone during any Continuation Period. This Paragraph 12 shall not apply to a termination by Employee pursuant to Paragraph 10. 13. CONFIDENTIALITY. Unless otherwise required by law, Employee shall hold in confidence any proprietary or confidential information obtained by him during his employment with AutoZone, which shall include, but not be limited to, information regarding AutoZone's present and future business plans, vendors, systems, operations and personnel. Confidential information shall not include information: (a) publicly disclosed by AutoZone; (b) rightfully received by Employee from a third party without restrictions on disclosure (c) approved for release or disclosure by AutoZone; or (d) produced or disclosed pursuant to applicable laws, regulation or court order. Employee acknowledges that all such confidential or proprietary information is and shall remain the sole property of AutoZone and all embodiments of such information shall remain with AutoZone. 14. BREACH BY EMPLOYEE. The parties further agree that if, at any time, despite the express agreement of the parties hereto, Employee violates the provisions of this Agreement by violating the Non-Compete or Confidentiality sections, or by failing to perform his obligations under this Agreement, Employee shall forfeit any unexercised stock options, vested or not vested, and AutoZone may cease paying any further salary or bonus. In the event of breach by Employee of any provision of this Agreement, Employee acknowledges that such breach will cause irreparable damage to AutoZone, the exact amount of which will be difficult or impossible to ascertain, and that remedies at law for any such breach will be inadequate. Accordingly, AutoZone shall be entitled, in addition to any other rights or remedies existing in its favor, to obtain, without the necessity for any bond or other security, specific performance and/or injunctive relief in order to enforce, or prevent breach of any such provision. 15. DEATH OF EMPLOYEE OR DISABILITY. If Employee should die or become disabled (such that he is no longer capable of performing his duties) during the term of this Agreement, then all salary and bonus shall cease as of the date of his death or disability, all stock options shall be governed by the terms of the respective stock option agreements, and Employee shall receive disability or death benefits as may be provided under AutoZone's then existing policies and procedures related to disability or death of AutoZone employees. 16. WAIVER. Any waiver of any breach of this Agreement by AutoZone shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of AutoZone. 17. ASSIGNMENT. Employee acknowledges that his services are unique and personal. Accordingly, Employee shall not assign his rights or delegate his duties or obligations under this Agreement. Employee's rights and obligations under this Agreement shall inure to the benefit of and be binding upon AutoZone successors and assigns. AutoZone may assign this Agreement to any wholly-owned subsidiary operating for the use and benefit of AutoZone. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties related to the matters discussed herein. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. 19. JURISDICTION. This Agreement shall be governed and construed by the laws of the State of Tennessee, without regard to its choice of law rules. The parties agree that the only proper venue for any dispute under this Agreement shall be in the state or federal courts located in Shelby County, Tennessee. 20. SURVIVAL. Sections 8, 12, 13, 14 and 19 of this Agreement shall survive any termination of this Agreement or Employee's employment with AutoZone (including, without limitation termination pursuant to Paragraphs 8, 9, or 10). IN WITNESS WHEREOF, the respective parties execute this Agreement. AUTOZONE, INC. By: /s/ J.C. Adams, Jr. /s/ ROBERT J. HUNT ------------------------------- ------------------------------- Title: Chairman and CEO Employee 9/27/97 --------------------------------- By: /s/ Timothy D. Vargo Date ------------------------------ Title: President and COO

EXHIBIT 10.7 EMPLOYMENT AND NON-COMPETE AGREEMENT THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its various subsidiaries (collectively "AutoZone"), and Shawn P. McGhee, an individual ("Employee") dated as of June 17, 1997 ("Effective Date"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties are agreed as follows: 1. EMPLOYMENT. AutoZone agrees to employ Employee and Employee agrees to remain in the employment of AutoZone, or a subsidiary or affiliate, until the expiration or earlier termination of this Agreement. 2. TERM. This agreement shall be effective as of the Effective Date and shall expire five years thereafter, unless earlier terminated as provided in Paragraphs 8 or 9. 3. SALARY. Employee shall receive a salary from AutoZone as follows: During the term of this Agreement, Employee shall receive annual compensation of three hundred thousand dollars ($300,000), subject to increases as determined by the Compensation Committee of the Board of Directors ("Base Salary"). The Base Salary amount shall be paid on a pro-rated basis for all partial years based on a 364 day year. AutoZone reserves the right to increase the Base Salary above the amounts stated above in its sole discretion. All salary shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 4. BONUS. During the term of this Agreement, Employee shall receive a bonus up to 60% of his Base Salary in accordance with policies and procedures established by AutoZone's Compensation Committee and Board of Directors which shall be based upon the financial and operational goals and objectives for the Employee and AutoZone established by the Compensation Committee for each of AutoZone's fiscal years ("Target") in accordance with AutoZone's Executive Incentive Compensation Plan. The Target is established at the sole discretion of the Compensation Committee and Board of Directors and is subject to review and revision at any time upon notification to the Employee. All bonuses shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 5. DUTIES. Employee shall serve as AutoZone's Executive Vice President, performing such duties as AutoZone's Board of Directors may direct from time to time and as are normally associated with such a position. AutoZone may, in its sole discretion, alter, expand or curtail the services to be performed by Employee or position held by Employee from time to time, without adjustment in compensation. Employee shall devote his entire time and attention to AutoZone's business. During the term of this Agreement, Employee shall not engage in any other business activity that conflicts with his duties with AutoZone, regardless of whether it is pursued for gain or profit. Employee may, however, invest his assets in or serve on the Board of Directors of other companies so long as they do not require Employee's services in the day to day operation of their affairs and do not violate AutoZone's conflict of interest policy. Notwithstanding, Employee may from time to time invest deminimus amounts in the publicly traded stock of Competitors upon written approval of AutoZone's General Counsel. 6. OTHER BENEFITS. Other benefits to be received by Employee from AutoZone shall be the ordinary benefits received by AutoZone's other executive officers, which may be changed by AutoZone in its sole discretion from time to time. 7. TAXES. Employee understands that all salary, bonus and other benefits will be subject to reduction for amounts required to be withheld by law as taxes and otherwise. 8. TERMINATION BY AUTOZONE. (a) WITHOUT CAUSE. AutoZone may terminate this Agreement without Cause at any time upon notice to Employee. In such event, Employee shall continue to be paid his then current Base Salary (on a pro-rated basis in the same manner as Employee is then receiving his base salary) until three years after the termination date ("Continuation Period"). During the Continuation Period, Employee shall not receive any bonus payments. During the Continuation Period, Employee shall continue to be an employee of AutoZone or a subsidiary (on leave of absence), and Employee's stock options shall continue to vest and be exercised in the manner set forth in the respective stock option agreements until the end of the Continuation Period, at which time Employee's employment with AutoZone shall be terminated and further stock option exercise and vesting shall be governed by the terms of the stock option agreement. During the Continuation Period, Employee shall receive such other benefits as other employees of AutoZone, including, but not limited to, health and life insurance, on the same terms and conditions. AutoZone shall have no other obligations other than those stated herein upon the termination of this Agreement and Employee hereby releases AutoZone from any and all obligations and claims except those as are specifically set forth herein. (b) WITH CAUSE. AutoZone shall have the right to terminate this Agreement and Employee's employment with AutoZone for Cause at any time. Upon such termination for Cause, Employee shall have no right to receive any compensation, salary, or bonus and shall immediately cease to receive any benefits (other than those as may be required pursuant to the AutoZone Pension Plan or by law) and any stock options shall be governed by the respective stock option agreements in effect between the Employee and AutoZone at that time. "Cause" shall mean the willful engagement by the Employee in conduct which is demonstrably or materially injurious to AutoZone, monetarily or otherwise. For this purpose, no act or failure to act by the Employee shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of AutoZone. 9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at anytime upon written notice to AutoZone. Upon such termination, Employee's employment shall terminate and Employee shall cease to receive any further salary, benefits, or bonus, and all stock options granted shall be governed by the respective stock option agreement(s) between the Employee and AutoZone. 10. TERMINATION BY EMPLOYEE UPON A CHANGE OF CONTROL OR CHANGE IN MANAGEMENT. Employee may terminate this Agreement upon a Change of Control or Change in Management of AutoZone by giving written notice to AutoZone within sixty days of the occurrence of a Change of Control or Change of Management. Upon giving such notice to AutoZone, Employees employment shall terminate and Employee shall cease to receive any payments or benefits pursuant this Agreement and all stock options held by Employee shall be govern by the respective stock option agreement(s). Any of the following events shall constitute a "Change of Control": (a) the acquisition after the date hereof, in one or more transactions, of beneficial ownership (as defined in Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), by any person or entity or any group of persons or entities who constitute a group (as defined in Section 13(d)(3) under the Exchange Act) of any securities such that as a result of such acquisition such person, entity or group beneficially owns AutoZone, Inc.'s then outstanding voting securities representing 51% or more of the total combined voting power entitled to vote on a regular basis for a majority of the board of Directors of AutoZone, Inc. or (b) the sale of all or substantially all of the assets of AutoZone (including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction where AutoZone or the beneficial owners (as defined in Rule 13d-3(a)(1) under the Exchange Act) of capital stock of AutoZone do not receive (i) voting securities representing a majority of the total combined voting power entitled to vote on a regular basis for the board of directors of the acquiring entity or of an affiliate which controls the acquiring entity or (ii) securities representing a majority of the total combined equity interest in the acquiring entity, if other than a corporation; provided however, that the foregoing provisions of this Paragraph 10 shall not apply to any transfer, sale or disposition of shares of capital stock of AutoZone to any person or persons who are affiliates of AutoZone on the date hereof. A "Change in Management" shall be deemed to occur only upon the current Chief Executive Officer or Chief Operating Officer of AutoZone changing. 11. EFFECT OF TERMINATION. Any termination of Employee's service as an officer of AutoZone shall be deemed a termination of Employee's service on all boards and as an officer of all subsidiaries of AutoZone. 12. NON-COMPETE. Employee agrees that he will not, for the period commencing on the termination date of this Agreement pursuant to Paragraph 8 or 9 (whichever is applicable) of this Agreement and ending on (i) the date three years after said termination date of this Agreement if either Employee voluntarily terminates this Agreement or this Agreement is terminated by AutoZone for Cause or (ii) the end of the Continuation Period if this Agreement is terminated by AutoZone without Cause, be engaged in or concerned with, directly or indirectly, any business related to or involved in the retail sale of auto parts to "DIY" customers, or the wholesale or retail sale of auto parts to commercial installers in any state, province, territory or foreign country in which AutoZone operates now or shall operate during the term set forth in this non-compete paragraph (herein called "Competitor"), as an employee, director, consultant, beneficial or record owner, partner, joint venturer, officer or agent of the Competitor. The parties acknowledge and agree that the time, scope, geographic area and other provisions of this Non-Compete section have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope, geographic area and other provisions are reasonable under the circumstances and are in exchange for the obligations undertaken by AutoZone pursuant to this Agreement. Further, Employee agrees not to hire, for himself or any other entity, encourage anyone or entity to hire, or entice away from AutoZone any employee of AutoZone during the term of this non-compete obligation. If at any time a court of competent jurisdiction holds that any portion of this Non-Compete section is unenforceable for any reason, then Employee shall forfeit his right to any further salary, bonus, stock option exercises, or benefits from AutoZone during any Continuation Period. This Paragraph 12 shall not apply to a termination by Employee pursuant to Paragraph 10. 13. CONFIDENTIALITY. Unless otherwise required by law, Employee shall hold in confidence any proprietary or confidential information obtained by him during his employment with AutoZone, which shall include, but not be limited to, information regarding AutoZone's present and future business plans, vendors, systems, operations and personnel. Confidential information shall not include information: (a) publicly disclosed by AutoZone; (b) rightfully received by Employee from a third party without restrictions on disclosure (c) approved for release or disclosure by AutoZone; or (d) produced or disclosed pursuant to applicable laws, regulation or court order. Employee acknowledges that all such confidential or proprietary information is and shall remain the sole property of AutoZone and all embodiments of such information shall remain with AutoZone. 14. BREACH BY EMPLOYEE. The parties further agree that if, at any time, despite the express agreement of the parties hereto, Employee violates the provisions of this Agreement by violating the Non-Compete or Confidentiality sections, or by failing to perform his obligations under this Agreement, Employee shall forfeit any unexercised stock options, vested or not vested, and AutoZone may cease paying any further salary or bonus. In the event of breach by Employee of any provision of this Agreement, Employee acknowledges that such breach will cause irreparable damage to AutoZone, the exact amount of which will be difficult or impossible to ascertain, and that remedies at law for any such breach will be inadequate. Accordingly, AutoZone shall be entitled, in addition to any other rights or remedies existing in its favor, to obtain, without the necessity for any bond or other security, specific performance and/or injunctive relief in order to enforce, or prevent breach of any such provision. 15. DEATH OF EMPLOYEE OR DISABILITY. If Employee should die or become disabled (such that he is no longer capable of performing his duties) during the term of this Agreement, then all salary and bonus shall cease as of the date of his death or disability, all stock options shall be governed by the terms of the respective stock option agreements, and Employee shall receive disability or death benefits as may be provided under AutoZone's then existing policies and procedures related to disability or death of AutoZone employees. 16. WAIVER. Any waiver of any breach of this Agreement by AutoZone shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of AutoZone. 17. ASSIGNMENT. Employee acknowledges that his services are unique and personal. Accordingly, Employee shall not assign his rights or delegate his duties or obligations under this Agreement. Employee's rights and obligations under this Agreement shall inure to the benefit of and be binding upon AutoZone successors and assigns. AutoZone may assign this Agreement to any wholly-owned subsidiary operating for the use and benefit of AutoZone. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties related to the matters discussed herein. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. 19. JURISDICTION. This Agreement shall be governed and construed by the laws of the State of Tennessee, without regard to its choice of law rules. The parties agree that the only proper venue for any dispute under this Agreement shall be in the state or federal courts located in Shelby County, Tennessee. 20. SURVIVAL. Sections 8, 12, 13, 14 and 19 of this Agreement shall survive any termination of this Agreement or Employee's employment with AutoZone (including, without limitation termination pursuant to Para- graphs 8, 9, or 10). IN WITNESS WHEREOF, the respective parties execute this Agreement. AUTOZONE, INC. By: /s/ Tim Vargo /s/Shawn P. McGhee ------------- -------------------- Title: President Employee 7/27/97 By: /s/ J.C. Adams, Jr. -------------------- ------------------- Date Title: Chairman and CEO

EXHIBIT 10.8 EMPLOYMENT AND NON-COMPETE AGREEMENT THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its various subsidiaries (collectively "AutoZone"), and Harry L. Goldsmith, an individual ("Employee") dated as of June 11, 1997 ("Effective Date"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties are agreed as follows: 1. EMPLOYMENT. AutoZone agrees to employ Employee and Employee agrees to remain in the employment of AutoZone, or a subsidiary or affiliate, until the expiration or earlier termination of this Agreement. 2. TERM. This agreement shall be effective as of the Effective Date and shall expire five years thereafter, unless earlier terminated as provided in Paragraphs 8 or 9. 3. SALARY. Employee shall receive a salary from AutoZone as follows: During the term of this Agreement, Employee shall receive annual compensation of one hundred seventy-five thousand dollars ($175,000), subject to increases as determined by the Compensation Committee of the Board of Directors ("Base Salary"). The Base Salary amount shall be paid on a pro-rated basis for all partial years based on a 364 day year. AutoZone reserves the right to increase the Base Salary above the amounts stated above in its sole discretion. All salary shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 4. BONUS. During the term of this Agreement, Employee shall receive a bonus up to 50% of his Base Salary in accordance with policies and procedures established by AutoZone's Compensation Committee and Board of Directors which shall be based upon the financial and operational goals and objectives for the Employee and AutoZone established by the Compensation Committee for each of AutoZone's fiscal years ("Target") in accordance with AutoZone's Executive Incentive Compensation Plan. The Target is established at the sole discretion of the Compensation Committee and Board of Directors and is subject to review and revision at any time upon notification to the Employee. All bonuses shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 5. DUTIES. Employee shall serve as AutoZone's Senior Vice President and General Counsel performing such duties as AutoZone's Board of Directors may direct from time to time and as are normally associated with such a position. AutoZone may, in its sole discretion, alter, expand or curtail the services to be performed by Employee or position held by Employee from time to time, without adjustment in compensation. Employee shall devote his entire time and attention to AutoZone's business. During the term of this Agreement, Employee shall not engage in any other business activity that conflicts with his duties with AutoZone, regardless of whether it is pursued for gain or profit. Employee may, however, invest his assets in or serve on the Board of Directors of other companies so long as they do not require Employee's services in the day to day operation of their affairs and do not violate AutoZone's conflict of interest policy. Notwithstanding, Employee may from time to time invest deminimus amounts in the publicly traded stock of Competitors upon written approval of AutoZone's General Counsel. 6. OTHER BENEFITS. Other benefits to be received by Employee from AutoZone shall be the ordinary benefits received by AutoZone's other executive officers, which may be changed by AutoZone in its sole discretion from time to time. 7. TAXES. Employee understands that all salary, bonus and other benefits will be subject to reduction for amounts required to be withheld by law as taxes and otherwise. 8. TERMINATION BY AUTOZONE. (a) WITHOUT CAUSE. AutoZone may terminate this Agreement without Cause at any time upon notice to Employee. In such event, Employee shall continue to be paid his then current Base Salary (on a pro-rated basis in the same manner as Employee is then receiving his base salary) until three years after the termination date ("Continuation Period"). During the Continuation Period, Employee shall not receive any bonus payments. During the Continuation Period, Employee shall continue to be an employee of AutoZone or a subsidiary (on leave of absence), and Employee's stock options shall continue to vest and be exercised in the manner set forth in the respective stock option agreements until the end of the Continuation Period, at which time Employee's employment with AutoZone shall be terminated and further stock option exercise and vesting shall be governed by the terms of the stock option agreement. During the Continuation Period, Employee shall receive such other benefits as other employees of AutoZone, including, but not limited to, health and life insurance, on the same terms and conditions. AutoZone shall have no other obligations other than those stated herein upon the termination of this Agreement and Employee hereby releases AutoZone from any and all obligations and claims except those as are specifically set forth herein. (b) WITH CAUSE. AutoZone shall have the right to terminate this Agreement and Employee's employment with AutoZone for Cause at any time. Upon such termination for Cause, Employee shall have no right to receive any compensation, salary, or bonus and shall immediately cease to receive any benefits (other than those as may be required pursuant to the AutoZone Pension Plan or by law) and any stock options shall be governed by the respective stock option agreements in effect between the Employee and AutoZone at that time. "Cause" shall mean the willful engagement by the Employee in conduct which is demonstrably or materially injurious to AutoZone, monetarily or otherwise. For this purpose, no act or failure to act by the Employee shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of AutoZone. 9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at anytime upon written notice to AutoZone. Upon such termination, Employee's employment shall terminate and Employee shall cease to receive any further salary, benefits, or bonus, and all stock options granted shall be governed by the respective stock option agreement(s) between the Employee and AutoZone. 10. TERMINATION BY EMPLOYEE UPON A CHANGE OF CONTROL. Employee may terminate this Agreement upon a Change of Control of AutoZone by giving written notice to AutoZone within sixty days of the occurrence of a Change of Control. Upon giving such notice to AutoZone, Employees employment shall terminate and Employee shall cease to receive any payments or benefits pursuant this Agreement and all stock options held by Employee shall be govern by the respective stock option agreement(s). Any of the following events shall constitute a "Change of Control": (a) the acquisition after the date hereof, in one or more transactions, of beneficial ownership (as defined in Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), by any person or entity or any group of persons or entities who constitute a group (as defined in Section 13(d)(3) under the Exchange Act) of any securities such that as a result of such acquisition such person, entity or group beneficially owns AutoZone, Inc.'s then outstanding voting securities representing 51% or more of the total combined voting power entitled to vote on a regular basis for a majority of the Board of Directors of AutoZone, Inc. or (b) the sale of all or substantially all of the assets of AutoZone (including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction where AutoZone or the beneficial owners (as defined in Rule 13d-3(a)(1) under the Exchange Act) of capital stock of AutoZone do not receive (i) voting securities representing a majority of the total combined voting power entitled to vote on a regular basis for the board of directors of the acquiring entity or of an affiliate which controls the acquiring entity or (ii) securities representing a majority of the total combined equity interest in the acquiring entity, if other than a corporation; provided however, that the foregoing provisions of this Paragraph 10 shall not apply to any transfer, sale or disposition of shares of capital stock of AutoZone to any person or persons who are affiliates of AutoZone on the date hereof. A "Change in Management" shall be deemed to occur only upon the current Chief Executive Officer or Chief Operating Officer of AutoZone changing. 11. EFFECT OF TERMINATION. Any termination of Employee's service as an officer of AutoZone shall be deemed a termination of Employee's service on all boards and as an officer of all subsidiaries of AutoZone. 12. NON-COMPETE. Employee agrees that he will not, for the period commencing on the termination date of this Agreement pursuant to Paragraph 8 or 9 (whichever is applicable) of this Agreement and ending on (i) the date three years after said termination date of this Agreement if either Employee voluntarily terminates this Agreement or this Agreement is terminated by AutoZone for Cause or (ii) the end of the Continuation Period if this Agreement is terminated by AutoZone without Cause, be engaged in or concerned with, directly or indirectly, any business related to or involved in the retail sale of auto parts to "DIY" customers, or the wholesale or retail sale of auto parts to commercial installers in any state, province, territory or foreign country in which AutoZone operates now or shall operate during the term set forth in this non-compete paragraph (herein called "Competitor"), as an employee, director, consultant, beneficial or record owner, partner, joint venturer, officer or agent of the Competitor. The parties acknowledge and agree that the time, scope, geographic area and other provisions of this Non-Compete section have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope, geographic area and other provisions are reasonable under the circumstances and are in exchange for the obligations undertaken by AutoZone pursuant to this Agreement. Further, Employee agrees not to hire, for himself or any other entity, encourage anyone or entity to hire, or entice away from AutoZone any employee of AutoZone during the term of this non-compete obligation. If at any time a court of competent jurisdiction holds that any portion of this Non-Compete section is unenforceable for any reason, then Employee shall forfeit his right to any further salary, bonus, stock option exercises, or benefits from AutoZone during any Continuation Period. This Paragraph 12 shall not apply to a termination by Employee pursuant to Paragraph 10. 13. CONFIDENTIALITY. Unless otherwise required by law, Employee shall hold in confidence any proprietary or confidential information obtained by him during his employment with AutoZone, which shall include, but not be limited to, information regarding AutoZone's present and future business plans, vendors, systems, operations and personnel. Confidential information shall not include information: (a) publicly disclosed by AutoZone; (b) rightfully received by Employee from a third party without restrictions on disclosure (c) approved for release or disclosure by AutoZone; or (d) produced or disclosed pursuant to applicable laws, regulation or court order. Employee acknowledges that all such confidential or proprietary information is and shall remain the sole property of AutoZone and all embodiments of such information shall remain with AutoZone. 14. BREACH BY EMPLOYEE. The parties further agree that if, at any time, despite the express agreement of the parties hereto, Employee violates the provisions of this Agreement by violating the Non-Compete or Confidentiality sections, or by failing to perform his obligations under this Agreement, Employee shall forfeit any unexercised stock options, vested or not vested, and AutoZone may cease paying any further salary or bonus. In the event of breach by Employee of any provision of this Agreement, Employee acknowledges that such breach will cause irreparable damage to AutoZone, the exact amount of which will be difficult or impossible to ascertain, and that remedies at law for any such breach will be inadequate. Accordingly, AutoZone shall be entitled, in addition to any other rights or remedies existing in its favor, to obtain, without the necessity for any bond or other security, specific performance and/or injunctive relief in order to enforce, or prevent breach of any such provision. 15. DEATH OF EMPLOYEE OR DISABILITY. If Employee should die or become disabled (such that he is no longer capable of performing his duties) during the term of this Agreement, then all salary and bonus shall cease as of the date of his death or disability, all stock options shall be governed by the terms of the respective stock option agreements, and Employee shall receive disability or death benefits as may be provided under AutoZone's then existing policies and procedures related to disability or death of AutoZone employees. 16. WAIVER. Any waiver of any breach of this Agreement by AutoZone shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of AutoZone. 17. ASSIGNMENT. Employee acknowledges that his services are unique and personal. Accordingly, Employee shall not assign his rights or delegate his duties or obligations under this Agreement. Employee's rights and obligations under this Agreement shall inure to the benefit of and be binding upon AutoZone successors and assigns. AutoZone may assign this Agreement to any wholly-owned subsidiary operating for the use and benefit of AutoZone. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties related to the matters discussed herein. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. 19. JURISDICTION. This Agreement shall be governed and construed by the laws of the State of Tennessee, without regard to its choice of law rules. The parties agree that the only proper venue for any dispute under this Agreement shall be in the state or federal courts located in Shelby County, Tennessee. 20. SURVIVAL. Sections 8, 12, 13, 14 and 19 of this Agreement shall survive any termination of this Agreement or Employee's employment with AutoZone (including, without limitation termination pursuant to Paragraphs 8, 9, or 10). IN WITNESS WHEREOF, the respective parties execute this Agreement. AUTOZONE, INC. By: /s/ J.C. Adams, Jr. /s/ Harry L. Goldsmith ------------------- ---------------------- Title: Chairman & CEO Employee 6/11/97 By: /s/ Timothy D. Vargo ---------------------- -------------------- Date Title: President

EXHIBIT 10.9 EMPLOYMENT AND NON-COMPETE AGREEMENT THIS AGREEMENT is between AutoZone, Inc., a Nevada corporation and its various subsidiaries (collectively "AutoZone"), and Stephen W. Valentine, an individual ("Employee") dated as of July 7, 1997 ("Effective Date"). For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties are agreed as follows: 1. EMPLOYMENT. AutoZone agrees to employ Employee and Employee agrees to remain in the employment of AutoZone, or a subsidiary or affiliate, until the expiration or earlier termination of this Agreement. 2. TERM. This agreement shall be effective as of the Effective Date and shall expire five years thereafter, unless earlier terminated as provided in Paragraphs 8 or 9. 3. SALARY. Employee shall receive a salary from AutoZone as follows: During the term of this Agreement, Employee shall receive annual compensation of two hundred thousand dollars ($200,000), subject to increases as determined by the Compensation Committee of the Board of Directors ("Base Salary"). The Base Salary amount shall be paid on a pro-rated basis for all partial years based on a 364 day year. AutoZone reserves the right to increase the Base Salary above the amounts stated above in its sole discretion. All salary shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 4. BONUS. During the term of this Agreement, Employee shall receive a bonus up to 50% of his Base Salary in accordance with policies and procedures established by AutoZone's Compensation Committee and Board of Directors which shall be based upon the financial and operational goals and objectives for the Employee and AutoZone established by the Compensation Committee for each of AutoZone's fiscal years ("Target") in accordance with AutoZone's Executive Incentive Compensation Plan. The Target is established at the sole discretion of the Compensation Committee and Board of Directors and is subject to review and revision at any time upon notification to the Employee. All bonuses shall be paid at the same time and in the same manner that AutoZone's other officers are paid. 5. DUTIES. Employee shall serve as AutoZone's Senior Vice President performing such duties as AutoZone's Board of Directors may direct from time to time and as are normally associated with such a position. AutoZone may, in its sole discretion, alter, expand or curtail the services to be performed by Employee or position held by Employee from time to time, without adjustment in compensation. Employee shall devote his entire time and attention to AutoZone's business. During the term of this Agreement, Employee shall not engage in any other business activity that conflicts with his duties with AutoZone, regardless of whether it is pursued for gain or profit. Employee may, however, invest his assets in or serve on the Board of Directors of other companies so long as they do not require Employee's services in the day to day operation of their affairs and do not violate AutoZone's conflict of interest policy. Notwithstanding, Employee may from time to time invest deminimus amounts in the publicly traded stock of Competitors upon written approval of AutoZone's General Counsel. 6. OTHER BENEFITS. Other benefits to be received by Employee from AutoZone shall be the ordinary benefits received by AutoZone's other executive officers, which may be changed by AutoZone in its sole discretion from time to time. 7. TAXES. Employee understands that all salary, bonus and other benefits will be subject to reduction for amounts required to be withheld by law as taxes and otherwise. 8. TERMINATION BY AUTOZONE. (a) WITHOUT CAUSE. AutoZone may terminate this Agreement without Cause at any time upon notice to Employee. In such event, Employee shall continue to be paid his then current Base Salary (on a pro-rated basis in the same manner as Employee is then receiving his base salary) until three years after the termination date ("Continuation Period"). During the Continuation Period, Employee shall not receive any bonus payments. During the Continuation Period, Employee shall continue to be an employee of AutoZone or a subsidiary (on leave of absence), and Employee's stock options shall continue to vest and be exercised in the manner set forth in the respective stock option agreements until the end of the Continuation Period, at which time Employee's employment with AutoZone shall be terminated and further stock option exercise and vesting shall be governed by the terms of the stock option agreement. During the Continuation Period, Employee shall receive such other benefits as other employees of AutoZone, including, but not limited to, health and life insurance, on the same terms and conditions. AutoZone shall have no other obligations other than those stated herein upon the termination of this Agreement and Employee hereby releases AutoZone from any and all obligations and claims except those as are specifically set forth herein. (b) WITH CAUSE. AutoZone shall have the right to terminate this Agreement and Employee's employment with AutoZone for Cause at any time. Upon such termination for Cause, Employee shall have no right to receive any compensation, salary, or bonus and shall immediately cease to receive any benefits (other than those as may be required pursuant to the AutoZone Pension Plan or by law) and any stock options shall be governed by the respective stock option agreements in effect between the Employee and AutoZone at that time. "Cause" shall mean the willful engagement by the Employee in conduct which is demonstrably or materially injurious to AutoZone, monetarily or otherwise. For this purpose, no act or failure to act by the Employee shall be considered "willful" unless done, or omitted to be done, by the Employee not in good faith and without reasonable belief that his action or omission was in the best interest of AutoZone. 9. TERMINATION BY EMPLOYEE. Employee may terminate this Agreement at anytime upon written notice to AutoZone. Upon such termination, Employee's employment shall terminate and Employee shall cease to receive any further salary, benefits, or bonus, and all stock options granted shall be governed by the respective stock option agreement(s) between the Employee and AutoZone. 10. TERMINATION BY EMPLOYEE UPON A CHANGE OF CONTROL. Employee may terminate this Agreement upon a Change of Control of AutoZone, Inc. by giving written notice to AutoZone within sixty days of the occurrence of a Change of Control. Upon giving such notice to AutoZone, Employee's employment shall terminate and Employee shall cease to receive any payments or benefits pursuant this Agreement and all stock options held by Employee shall be governed by the respective stock option agreement(s). Any of the following events shall constitute a "Change of Control": (a) the acquisition after the date hereof, in one or more transactions, of beneficial ownership (as defined in Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended ("Exchange Act")), by any person or entity or any group of persons or entities who constitute a group (as defined in Section 13(d)(3) under the Exchange Act) of any securities such that as a result of such acquisition such person, entity or group beneficially owns AutoZone, Inc.'s then outstanding voting securities representing 51% or more of the total combined voting power entitled to vote on a regular basis for a majority of the board of Directors of AutoZone, Inc. or (b) the sale of all or substantially all of the assets of AutoZone (including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction where AutoZone. or the beneficial owners (as defined in Rule 13d-3(a)(1) under the Exchange Act) of capital stock of AutoZone do not receive (i) voting securities representing a majority of the total combined voting power entitled to vote on a regular basis for the board of directors of the acquiring entity or of an affiliate which controls the acquiring entity or (ii) securities representing a majority of the total combined equity interest in the acquiring entity, if other than a corporation; provided however, that the foregoing provisions of this Paragraph 10 shall not apply to any transfer, sale or disposition of shares of capital stock of AutoZone to any person or persons who are affiliates of AutoZone on the date hereof. 11. EFFECT OF TERMINATION. Any termination of Employee's service as an officer of AutoZone shall be deemed a termination of Employee's service on all boards and as an officer of all subsidiaries of AutoZone. 12. NON-COMPETE. Employee agrees that he will not, for the period commencing on the termination date of this Agreement pursuant to Paragraph 8 or 9 (whichever is applicable) of this Agreement and ending on (i) the date three years after said termination date of this Agreement if either Employee voluntarily terminates this Agreement or this Agreement is terminated by AutoZone for Cause or (ii) the end of the Continuation Period if this Agreement is terminated by AutoZone without Cause, be engaged in or concerned with, directly or indirectly, any business related to or involved in the retail sale of auto parts to "DIY" customers, or the wholesale or retail sale of auto parts to commercial installers in any state, province, territory or foreign country in which AutoZone operates now or shall operate during the term set forth in this non-compete paragraph (herein called "Competitor"), as an employee, director, consultant, beneficial or record owner, partner, joint venturer, officer or agent of the Competitor. The parties acknowledge and agree that the time, scope, geographic area and other provisions of this Non-Compete section have been specifically negotiated by sophisticated commercial parties and specifically hereby agree that such time, scope, geographic area and other provisions are reasonable under the circumstances and are in exchange for the obligations undertaken by AutoZone pursuant to this Agreement. Further, Employee agrees not to hire, for himself or any other entity, encourage anyone or entity to hire, or entice away from AutoZone any employee of AutoZone during the term of this non-compete obligation. If at any time a court of competent jurisdiction holds that any portion of this Non-Compete section is unenforceable for any reason, then Employee shall forfeit his right to any further salary, bonus, stock option exercises, or benefits from AutoZone during any Continuation Period. This Paragraph 12 shall not apply to a termination by Employee pursuant to Paragraph 10. 13. CONFIDENTIALITY. Unless otherwise required by law, Employee shall hold in confidence any proprietary or confidential information obtained by him during his employment with AutoZone, which shall include, but not be limited to, information regarding AutoZone's present and future business plans, vendors, systems, operations and personnel. Confidential information shall not include information: (a) publicly disclosed by AutoZone; (b) rightfully received by Employee from a third party without restrictions on disclosure (c) approved for release or disclosure by AutoZone; or (d) produced or disclosed pursuant to applicable laws, regulation or court order. Employee acknowledges that all such confidential or proprietary information is and shall remain the sole property of AutoZone and all embodiments of such information shall remain with AutoZone. 14. BREACH BY EMPLOYEE. The parties further agree that if, at any time, despite the express agreement of the parties hereto, Employee violates the provisions of this Agreement by violating the Non-Compete or Confidentiality sections, or by failing to perform his obligations under this Agreement, Employee shall forfeit any unexercised stock options, vested or not vested, and AutoZone may cease paying any further salary or bonus. In the event of breach by Employee of any provision of this Agreement, Employee acknowledges that such breach will cause irreparable damage to AutoZone, the exact amount of which will be difficult or impossible to ascertain, and that remedies at law for any such breach will be inadequate. Accordingly, AutoZone shall be entitled, in addition to any other rights or remedies existing in its favor, to obtain, without the necessity for any bond or other security, specific performance and/or injunctive relief in order to enforce, or prevent breach of any such provision. 15. DEATH OF EMPLOYEE OR DISABILITY. If Employee should die or become disabled (such that he is no longer capable of performing his duties) during the term of this Agreement, then all salary and bonus shall cease as of the date of his death or disability, all stock options shall be governed by the terms of the respective stock option agreements, and Employee shall receive disability or death benefits as may be provided under AutoZone's then existing policies and procedures related to disability or death of AutoZone employees. 16. WAIVER. Any waiver of any breach of this Agreement by AutoZone shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of AutoZone. 17. ASSIGNMENT. Employee acknowledges that his services are unique and personal. Accordingly, Employee shall not assign his rights or delegate his duties or obligations under this Agreement. Employee's rights and obligations under this Agreement shall inure to the benefit of and be binding upon AutoZone successors and assigns. AutoZone may assign this Agreement to any wholly-owned subsidiary operating for the use and benefit of AutoZone. 18. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the parties related to the matters discussed herein. It may not be changed orally but only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension, or discharge is sought. 19. JURISDICTION. This Agreement shall be governed and construed by the laws of the State of Tennessee, without regard to its choice of law rules. The parties agree that the only proper venue for any dispute under this Agreement shall be in the state or federal courts located in Shelby County, Tennessee. 20. SURVIVAL. Sections 8, 12, 13, 14 and 19 of this Agreement shall survive any termination of this Agreement or Employee's employment with AutoZone (including, without limitation termination pursuant to Paragraphs 8, 9, or 10). IN WITNESS WHEREOF, the respective parties execute this Agreement. AUTOZONE, INC. By: /s/ Tim Vargo /s/ Stephen W. Valentine ---------------- --------------------------- Title: President Employee By: J.C. Adams, Jr. 07/07/97 ----------------- --------------------------- Title: CEO Date

EXHIBIT 13.1 [PHOTOGRAPH OF AN AUTOZONE STORE IN BACKGROUND APPEARS HERE] 1 9 9 7 A N N U A L R E P O R T [PHOTOGRAPH OF A MAN AND 2 YOUTHS LOOKING AT A VEHICLE FRONT WITH HOOD UP APPEARS HERE] Company Description AutoZone is the nation's leading auto parts chain. We sell a broad line of replacement parts, accessories, chemicals and motor oil. With 1,728 stores in 32 states, we operate more stores than any auto parts retailer in America. On average, we open the doors on a new AutoZone store nearly every day. Our primary customers are do-it-yourselfers who repair their own cars to save money. We also sell and deliver parts to professional repair shops whose technicians install parts for a living. The first AutoZone store opened in Forrest City, Arkansas, on July 4, 1979. Eighteen years later, we still attribute much of our success to our fanatical commitment to customer satisfaction. There's a pledge you'll hear recited throughout AutoZoneland that helps us keep our focus: AutoZoners always put customers first. We know our parts and products. Our stores look great. And we've got the best merchandise at the right price. [MAP OF THE UNITED STATES APPEARS HERE] Financial Highlights

*includes a 53rd week [MID TO EASTERN UNITED STATES MAP APPEARS HERE] . Store Support Center Memphis, TN . Distribution Centers Danville, IL Lafayette, LA Lavonia, GA Lexington, TN Phoenix, AZ San Antonio, TX Zanesville, OH AutoZone Stores By State . Alabama.................. 77 . Arizona.................. 64 . Arkansas................. 39 * California............... 8 . Colorado................. 32 . Florida.................. 82 . Georgia.................. 96 . Illinois................. 56 . Indiana.................. 85 * Iowa..................... 10 . Kansas................... 31 . Kentucky................. 48 . Louisiana................ 70 * Maryland................. 1 . Michigan................. 27 . Mississippi.............. 61 . Missouri................. 72 * Nevada................... 1 . New Mexico............... 23 * New York................. 11 . North Carolina........... 87 . Ohio.....................166 . Oklahoma................. 60 . Pennsylvania............. 28 . South Carolina........... 49 . Tennessee................106 . Texas....................264 . Utah..................... 19 . Virginia................. 34 . West Virginia............ 13 . Wisconsin................ 5 . Wyoming.................. 3 * Indicates a new state for F97 SALES ($ millions) [BAR GRAPH APPEARS HERE] 93 94 95 96 97 -- -- -- -- -- 1,217 1,508 1,808 2,243 2,691 NET Income ($ millions) [BAR GRAPH APPEARS HERE] 93 94 95 96 97 -- -- -- -- -- 87 116 139 167 195 OPERATING Profit ($ millions) [BAR GRAPH APPEARS HERE] 93 94 95 96 97 -- -- -- -- -- 141 191 228 269 321 EARNINGS Per Share ($) [BAR GRAPH APPEARS HERE] 93 94 95 96 97 -- -- -- -- -- .59 .78 .93 1.11 1.28 To our Customers, AutoZoners and Stockholders: Fiscal 1997 -- the year we finally answered the frequently asked question, "When will AutoZone be in California?" That answer came on July 4 -- our 18th birthday - -- when we opened our doors in the town of El Centro. While we're excited about saying we now serve customers from coast to coast, we've continued to focus on being our customers' neighborhood auto parts store everywhere we do business. El Centro was just one of 305 net new stores we opened in fiscal 1997. And one of many we opened in markets where we didn't have a presence 12 months ago. That means our customer base both the do-it-yourself (DIY) market and the professional mechanic sector we call commercial -- continues to expand, along with the number of AutoZone neighborhoods. We also: . Entered five new states California, Iowa, Maryland, Nevada and New York. . Turned a profit in our commercial sales program. . Surpassed the $1 billion mark in stockholders' equity. Fiscal 1997 was another record year financially: . Sales rose 20% to $2.69 billion. . Comparable store sales increased by 8%. . Net income increased 17% to $195 million. . Earnings per share rose 15% to $1.28. We're particularly pleased with our financial gains, given the fact that we're measuring ourselves against a 53-week year in fiscal 1996. We're gaining leverage on expenses through a revival of our culture of thrift -- more commonly known outside AutoZone as tight expense control. Less than two years ago we were kicking off the commercial program in our first store. Today that business accounts for more than 10% of our total sales. And although DIY sales were soft industrywide for the first half of the year, we've felt a real momentum shift since the third quarter. Looking ahead, we will maintain our focus on our core DIY business and expect the commercial business to continue to have a favorable impact on same store sales and earnings as it grows. Once again, our new store openings are among the best in retailing. With the addition of 305 net new stores, we ended the year with 1,728 stores in 32 states. We're confident there's still lots of room for expansion, and we project 350 2 AFTER TAX RETURN On Capital [BAR GRAPH APPEARS HERE] 93 94 95 96 97 -- -- -- -- -- 18% 19% 19% 18% 16% [PHOTOGRAPH OF TIM VARGO AND JOHN ADAMS APPEARS HERE] President Tim Vargo and Chairman John Adams new stores in the coming year. Professional technicians across the nation are reaping the benefits of the research and development investment we've made this year in ALLDATA. In the coming year, we believe ALLDATA's software will rise to a new level - clearly establishing itself as the unassailable leader in automotive diagnostic and repair information. We'd like to take this opportunity to thank Pitt Hyde and Tom Hanemann for their leadership and service to AutoZone. Tom retired after 23 years, dating back to his days with Malone & Hyde, our former parent company. He was vital in developing AutoZone's culture and his influence will be felt for years to come. Pitt retired 18 years after founding AutoZone and 30 years after joining Malone & Hyde. His vision of taking customer service to a new level in the auto parts industry is what made AutoZone the best in the business. Pitt continues to offer his expertise as a member of our board. If you've followed AutoZone closely as we've grown, you won't find our strategy for the coming year all that unusual. We'll continue to profitably expand our store count faster than anyone else in our industry. We'll continue to seek out competitive advantages in areas like technology, store design and product quality. And we will always look for new opportunities to create more value for our customers. Wall Street may see AutoZone as a rapidly growing chain of more than 1,700 stores spread across 32 states. But we know that to our millions of loyal customers, AutoZone is the man or woman in the red shirt behind the counter of the neighborhood auto parts store just a few minutes from home. As we focus on growing our business and gaining new customers, we'll never lose sight of our obligation to invest in the more than 28,000 AutoZoners who continue to find new ways to deliver extraordinary customer service every day. /s/ John Adams /s/ Tim Vargo John Adams Tim Vargo Chairman & CEO President & COO Customer Satisfaction Customer Satisfaction 3 Your neighborhood auto parts store -- all across America. 4 From Sumter, South Carolina to El Centro, California. From Indianapolis, Indiana to Brownsville, Texas. From Detroit, Michigan to Andalusia, Alabama. It's something that's as common in small town America as it is in our bustling big cities. The neighborhood AutoZone store. It was born in Forrest City, Arkansas, in 1979. Needless to say, we've come a long way since then. We've grown from a small time operation in the South to the nation's leading auto parts chain with stores from coast to coast. We've introduced and helped develop new products. We're constantly fine-tuning the way our stores are designed and operated. We're even into the development of automotive diagnostic and repair software. Fact of the matter is, we've enhanced our business in more ways than we have room to mention here. But for all the enhancements, there's a part of our business we don't want to change a bit. And that's the way we relate to our customers. We can create whizbang systems `til the cows come home, but if we don't treat our customers like friends and give them the service they deserve, we can kiss it all goodbye. Because when it's all said and done, AutoZone is still the place where somebody's dad, somebody's mom, somebody's uncle, friend or neighbor goes to buy parts. The place where we know the regulars and they know us. Where we can tell newcomers the best way to fix a leaky radiator or just the best place to get a bite to eat. Because while we're in a lot more neighborhoods than ever before, we're still your neighborhood auto parts store. [PHOTOGRAPH OF A YOUTH STANDING IN FRONT OF AN ANTIQUE CADILLAC APPEARS HERE] 5 [PHOTO OF MOUNTAIN APPEARS HERE] Yucaipa California Nestled in the foothills of the San Bernardino mountains is the community of Yucaipa. The Serrano Indians first viewed this land from the backs of horses and gave the town its name, which means "green valley." The current natives still rely on horsepower, but their horses tend to reside under the hoods of their cars and trucks. [PHOTO OF TWO PEOPLE APPEARS HERE] More than 500 Yucaipa residents are members of the town's four car clubs -- a tribute to Southern California's hot rod heritage. One local car enthusiast is AutoZone customer Jeff Ranney. And his pride and joy is a `68 Chevy pickup. [PHOTO OF TRUCK APPEARS HERE] Jeff is co-owner of a local repair shop and was one of our very first customers when we opened our doors in July. "When you buy as many parts as I do, you've got to trade with people who are serious about quality," he says. "The price has to be right on, because I have to watch my bottom line, too. And of course, there`s also my reputation. I can't risk it on poor quality parts. I trust the people at AutoZone. They always take the time to help you out and let you know your business is appreciated." [PHOTO OF CARS APPEARS HERE] [PHOTO OF TRUCK APPEARS HERE] That's a testimonial we're pretty proud of from somebody who's eager to be one of our first commercial customers in the state of California. At press time, Yucaipa`s commercial program wasn`t in place. That`s because in new stores, we get our core do-it-yourself business up and running before we roll out commercial. But rest assured, Jeff is at the top of our list. And we know he`ll be in good company with our thousands of other commercial customers all across the country. [PHOTO OF SIGN STATING "WELCOME TO YUCAIPA" APPEARS HERE] 6 [PHOTO OF AUTOZONE STORE WITH ANTIQUE CARS PARKED IN FRONT APPEARS HERE] 7 [PHOTO OF CITY SKYLINE APPEARS HERE] Cedar Rapids Iowa If rolling cornfields and dusty farm roads are the only images you associate with Iowa, you probably haven't been there lately. In Cedar Rapids, towering grain silos and windmills share the skyline with office buildings, manufacturing facilities and neighborhood stores, like AutoZone. [PHOTO OF TWO PEOPLE APPEARS HERE] Mark Petersen manages the AutoZone store on Blairs Ferry Road -- one of three that opened in Cedar Rapids this year and one of 305 that opened up all across America. If you had driven down Blairs Ferry Road five years ago, you would've seen nothing but corn. Today it's one of the busiest shopping areas in town. [PHOTO OF SIGN STATING "WELCOME TO CEDAR RAPIDS" APPEARS HERE] Mark grew up in the area, and he's excited to work for a company that's part of the city`s growth. "When I returned home after four years in the Air Force, I almost didn't recognize some parts of town," Mark said. "But what's great is that we still look out for each other, no matter how big Cedar Rapids has gotten. When new people move here, they aren't strangers very long." [PHOTO OF TRACTOR APPEARS HERE] Although his store isn't a year old yet, Mark already has a list of regular customers a mile long. "We knew many of our customers before AutoZone ever came to town. And when new people come through the doors, we make it a point to get to know them, too." Mark says this is one of the things that sets AutoZone apart. "If we know what our customers drive and the kinds of problems they've been having, we'll be able to solve their problems better the next time they come in." Customers in Cedar Rapids -- whether they're lifelong residents or new to the area -- can count on us for everything from alternators for their 1979 Oldsmobile Cutlasses to control modules for their 1995 Chevy Luminas. And just in case, we even carry batteries for 1994 John Deere model 8960 tractors. [PHOTO OF AUTOZONE STORE APPEARS HERE] 8 [PHOTO OF AUTOZONE TRUCK APPEARS HERE] 9 [PHOTO OF TRAFFIC APPEARS HERE] HOUSTON TEXAS People in Texas are proud of their reputation for doing things in big ways. From the vast plains of the West Texas cattle ranches to the sprawling oil refineries of Beaumont, that same pride is found in our 264 stores throughout the Lone Star State. Perhaps none more so than at a store in Houston fondly referred to as "Sergeant Garcia." [PHOTO OF TWO PEOPLE APPEARS HERE] Located in the heart of a Hispanic neighborhood, this store sits next to a quiet side street named after WWII hero Sergeant Juan Garcia. The store has been a part of the community so long that a few of the AutoZoners have become almost as legendary as the Sergeant himself. Joe Calvillo is a great example. Having worked in other parts stores for many years, Joe came to AutoZone about nine years ago. When he did, many of his customers came with him. [PHOTO OF THREE PEOPLE APPEARS HERE] They like the way he goes the extra mile to get the job done right. It's because of people like Joe that the Sergeant Garcia store is one of the company's highest volume stores. It was one of the first stores to receive multiple deliveries of merchandise a week to serve its customers better. And like the folks in their neighborhood, each and every AutoZoner at Sergeant Garcia speaks fluent Spanish. [PHOTO OF TRUCK APPEARS HERE] So how has the store remained so successful despite other parts stores moving into the neighborhood? Joe probably summed it up best, "Tratamos a nuestros clientes como queremos ser tratados." That's "We treat our customers the way we'd want to be treated." -- for the Spanish impaired. Joe speaks other languages his customers appreciate, as well. Ford and Chevy, just to name a couple. [PHOTO OF TWO PEOPLE WORKING ON CAR APPEARS HERE] 10 [PHOTO OF AUTOZONE STORE APPEARS HERE] 11 [PHOTO OF TOWN APPEARS HERE] Johnstown Pennsylvania The state of Pennsylvania is well known as the home of "the City of Brotherly Love." But due west of Philadelphia, at the junction of the Conemaugh and Stonycreek rivers is a town you may not have heard quite as much about, Johnstown -- "the Friendly City." [PHOTO OF TWO PEOPLE APPEARS HERE] With our focus on pleasing customers, we knew we'd be right at home in a town with this motto, but our customer service has impressed even the friendliest of residents. Take Ken Bilger, the service manager at the Horner Street Service Station, for example. Ken's been coming by a couple of times a day ever since we opened our doors. "There's just something different about the way they treat you here," Ken says. "They don't just sell parts -- they really listen to your problem and help you try to solve it." [PHOTO OF AUTOZONE STORE APPEARS HERE] Those are the kind of comments Lynn Shumate likes to hear. After all, she's the manager of our Johnstown store. Lynn and her husband, Ron, moved to Johnstown from Memphis. His job? He's the manager of the AutoZone in nearby Somerset, Pennsylvania. "We kept hearing about how the company needed experienced AutoZoners in this market," Lynn said. "We're glad we got this opportunity. We feel a little bit like pioneers, spreading the AutoZone culture in a new district." [PHOTO OF PERSON WORKING ON VEHICLE APPEARS HERE] Since our Johnstown store was the first we opened in the area, Lynn and Ron trained six new crews for stores in neighboring towns. "The thing that sets AutoZone apart is our culture -- and that boils down to our people. It was neat to teach new AutoZoners how we treat our customers," Lynn said. "We were responsible for seeing that the same service we've been delivering down South was happening up here." These two transplanted Southerners have found their new home to be just what it claims to be -- "the Friendly City." What they haven't found is a place that serves grits. [PHOTO OF SIGN STATING "JOHNSTOWN WELCOMES YOU" APPEARS HERE] 12 [PHOTO OF TOWN APPEARS HERE] 13 Ten-Year Review (in thousands, except per share data and selected operating data)

* 53 weeks. Comparable store sales, average net sales per store and average net sales per store square foot for fiscal year 1996 and 1991 have been adjusted to exclude net sales for the 53rd week. 14

15 QUARTERLY SUMMARY (Unaudited)

16 FINANCIAL REVIEW Results of Operations The following table sets forth income statement data of AutoZone expressed as a percentage of net sales for the periods indicated:

FISCAL 1997 COMPARED TO FISCAL 1996 Net sales for fiscal 1997 increased by $448.8 million or 20.0% over net sales for fiscal 1996. This increase was due to a comparable store net sales increase of 8% (which was primarily due to sales growth in the Company's newer stores and the added sales of the Company's commercial program) and an increase in net sales of $313.1 million for stores opened since the beginning of fiscal 1996, offset by net sales for the 53rd week of fiscal 1996. At August 30, 1997, the Company had 1,728 stores in operation, a net increase of 305 stores, or approximately 23% in new store square footage for the year. Gross profit for fiscal 1997 was $1,132.1 million, or 42.0% of net sales, compared with $935.0 million, or 41.7% of net sales, for fiscal 1996. The increase in gross profit percentage was due primarily to improved leveraging of warehouse and delivery expenses. Operating, selling, general and administrative expenses for fiscal 1997 increased by $144.7 million over such expenses for fiscal 1996 and increased as a percentage of net sales from 29.7% to 30.1%. The increase in the expense ratio was primarily due to operating costs of ALLDATA and to costs of the Company's commercial program. Net interest expense for fiscal 1997 was $8.8 million compared with $2.0 million for fiscal 1996. The increase in interest expense was primarily due to higher levels of borrowings. AutoZone's effective income tax rate was 37.6% of pre-tax income for fiscal 1997 and 37.4% for fiscal 1996. FISCAL 1996 COMPARED TO FISCAL 1995 Net sales for fiscal 1996 increased by $434.5 million or 24.0% over net sales for fiscal 1995. This increase was due to a comparable store net sales increase of 6% (which was primarily due to sales growth in the Company's newer stores and added sales of the Company's commercial program), an increase in net sales of $275.1 million for stores opened since the beginning of fiscal 1995 and net sales for the fifty-third week of fiscal 1996. At August 31, 1996, the Company had 1,423 stores in operation, a net increase of 280 stores, or approximately 26% in new store square footage for the year. Gross profit for fiscal 1996 was $935.0 million, or 41.7% of net sales, compared with $751.1 million, or 41.5% of net sales, for fiscal 1995. The increase in gross profit percentage was due primarily to improved leveraging of warehouse and delivery expenses, favorable results of store and distribution center inventories and the added sales of higher margin ALLDATA products. Operating, selling, general and administrative expenses for fiscal 1996 increased by $142.6 million over such expenses for fiscal 1995 and increased as a percentage of net sales from 28.9% to 29.7%. The increase in the expense ratio was primarily due to acquisition and operating costs of ALLDATA and to costs of the Company's commercial program. Net interest expense for fiscal 1996 was $2.0 million compared with interest income of $0.6 million for fiscal 1995. The increase in interest expense was primarily due to higher levels of borrowings. AutoZone's effective income tax rate was 37.4% of pre-tax income for fiscal 1996 and 39.2% for fiscal 1995. The decrease in the tax rate was primarily due to a reduction in state income taxes. 17 Liquidity and Capital Resources The Company's primary capital requirements have been the funding of its continued new store expansion program, the increase in distribution centers and inventory requirements. The Company has opened 1,050 net new stores and constructed four new distribution centers from the beginning of fiscal 1993 to August 30, 1997. The Company has financed this growth through a combination of internally generated funds and, to a lesser degree, borrowings. Net cash provided by operating activities was $177.5 million in fiscal 1997, $174.2 million in fiscal 1996 and $180.1 million in fiscal 1995. Capital expenditures were $297.5 million in fiscal 1997, $288.2 million in fiscal 1996, and $258.1 million in fiscal 1995. The Company opened 305 net new stores in fiscal 1997. Construction commitments totaled approximately $52 million at August 30, 1997. The Company's new store development program requires significant working capital, principally for inventories. Historically, the Company has negotiated extended payment terms from suppliers, minimizing the working capital required by its expansion. The Company believes that it will be able to continue financing much of its inventory growth by favorable payment terms from suppliers, but there can be no assurance that the Company will be successful in obtaining such terms. The Company anticipates that it will rely primarily on internally generated funds to support a majority of its capital expenditures and working capital requirements; the balance of such requirements will be funded through borrowings. The Company has an unsecured revolving credit agreement with several banks providing for borrowings up to $275 million. At August 30, 1997, the Company had available borrowings under these agreements of $76.6 million. At August 30, 1997, the Company had outstanding stock options to purchase 10,599,254 shares of Common Stock. Assuming all such options become vested and are exercised, such options would result in proceeds of $210.3 million to the Company. Such proceeds constitute an additional source for liquidity and capital resources for the Company. For fiscal 1997, proceeds from sales of stock under stock option and employee stock purchase plans were $14.6 million, including related tax benefits. Inflation The Company does not believe its operations have been materially affected by inflation. The Company has been successful, in many cases, in mitigating the effects of merchandise cost increases principally due to economies of scale resulting from increased volumes of purchases, selective forward buying and the use of alternative suppliers. Seasonality and Quarterly Periods The Company's business is somewhat seasonal in nature, with the highest sales occurring in the summer months of June through August, in which average weekly per store sales historically have run about 20% to 30% higher than in the slowest months of December through February. The Company's business is also affected by weather conditions. Extremely hot or extremely cold weather tends to enhance sales by causing parts to fail and spurring sales of seasonal products. Mild or rainy weather tends to soften sales as parts' failure rates are lower in mild weather and elective maintenance is deferred during periods of rainy weather. Each of the first three quarters of AutoZone's fiscal year consists of twelve weeks and the fourth quarter consists of sixteen weeks (seventeen weeks in fiscal 1996). Because the fourth quarter contains the seasonally high sales volume and consists of sixteen weeks (seventeen weeks in fiscal 1996) compared to twelve weeks for each of the first three quarters, the Company's fourth quarter represents a disproportionate share of the annual net sales and net income. For fiscal 1997 and 1996, the fourth quarter represented 35.2% and 37.0%, respectively, of annual net sales and 41.8% and 40.3%, respectively, of net income. Forward-Looking Statements Certain statements contained in the Financial Review and elsewhere in this annual report are forward-looking statements. These statements discuss, among other things, expected growth, future revenues and future performance. The forward-looking statements are subject to risks, uncertainties and assumptions including, but not limited to competitive pressures, demand for our products, the market for auto parts, the economy in general, inflation, consumer debt levels and the weather. Actual results may materially differ from anticipated results described in these forward-looking statements. 18 Consolidated Statements of Income

See Notes to Consolidated Financial Statements. 19

See Notes to Consolidated Financial Statements. 20 Consolidated Statements of Cash Flows

See Notes to Consolidated Financial Statements. 21 Consolidated Statements of Stockholders' Equity

See Notes to Consolidated Financial Statements. 22 Notes To Consolidated Financial Statements Note A -- Significant Accounting Policies Business: The Company is a specialty retailer of automotive parts and accessories. At the end of fiscal 1997, the Company operated 1,728 stores in 32 states. Fiscal Year: The Company's fiscal year consists of 52 or 53 weeks ending on the last Saturday in August. Basis of Presentation: The consolidated financial statements include the accounts of AutoZone, Inc. and its wholly owned subsidiaries (the Company). All significant intercompany transactions and balances have been eliminated in consolidation. Merchandise Inventories: Inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method. Property and Equipment: Property and equipment is stated at cost. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets. Leasehold interests and improvements are amortized over the terms of the leases. Amortization: The cost in excess of net assets acquired is amortized by the straight-line method over 40 years. Preopening Expenses: Preopening expenses, which consist primarily of payroll and occupancy costs, are expensed as incurred. Advertising Costs: The Company expenses advertising costs as incurred. Advertising expense, net of vendor rebates, was approximately $24,622,000, $23,129,000 and $18,531,000 in fiscal 1997, 1996 and 1995, respectively. Warranty Costs: The Company provides the retail consumer with a warranty on certain products. Estimated warranty obligations are provided at the time of sale of the product. Financial Instruments: The Company has certain financial instruments which include cash, accounts receivable, accounts payable and debt. The carrying amounts of these financial instruments approximate fair value because of their short maturities or variable interest rates. Income Taxes: The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Cash Equivalents: Cash equivalents consist of investments with maturities of 90 days or less at the date of purchase. Use of Estimates: Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. Net Income Per Share: Net income per share of common stock is computed using the weighted average number of shares of common stock outstanding during each period, including common stock equivalents, consisting of stock options calculated using the treasury stock method, when dilutive. In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No. 128 requires dual presentation of basic earnings per share (EPS) and diluted EPS on the face of all statements of earnings issued after December 15, 1997. Basic EPS is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock-based compensation including stock options. Assuming the Company had adopted the provisions of SFAS No. 128, EPS as reported and pro forma for the last three fiscal years would be as follows 1997 -- as reported: $1.28, basic: $1.29, 1996 -- as reported: $1.11, basic: $1.13; 1995 -- as reported: $0.93, basic: $0.95. The Company's reported EPS calculations are the same as pro forma diluted EPS. Impairment of Long-Lived Assets: In fiscal 1997 the Company adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement requires that long-lived assets and certain identifiable intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Also, in general, long-lived assets and certain identifiable intangibles to be disposed of should be reported at the lower of carrying amount or fair value less cost to sell. This pronouncement did not have a material effect on the Company's financial position or results of operations. Note B -- Accrued Expenses Accrued expenses consist of the following: August 30, August 31, 1997 1996 ---------------------- (in thousands) Medical and casualty insurance claims $ 35,121 $ 33,800 Accrued compensation and related payroll taxes 26,481 18,490 Property and sales taxes 27,161 21,485 Other 33,817 31,134 ---------------------- $122,580 $104,909 ---------------------- 23 Note C -- Income Taxes At August 30, 1997, the Company has net operating loss carryforwards (NOLs) of approximately $13.3 million that expire in years 2000 through 2009. These carryforwards resulted from the Company's acquisition of ALLDATA Corporation (ALLDATA) during fiscal 1996. The use of the NOLs is limited to future taxable earnings of ALLDATA and is subject to annual limitations. A valuation allowance of $5,247,000 and $5,573,000 in fiscal 1997 and 1996, respectively, has been recognized to offset the deferred tax assets related to those carryforwards. If realized, the tax benefit for those NOLs will reduce income tax expense. The provision for income taxes consists of the following:

Significant components of the Company's deferred tax assets and liabilities are as follows:

A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate of 35% to income before income taxes is as follows:

Note D -- Financing Arrangements During December 1996, the Company executed an agreement with a group of banks for a $275 million five-year unsecured revolving credit facility to replace the existing revolving credit agreements. The rate of interest payable under the agreement is a function of the London Interbank Offered Rate (LIBOR), or the lending bank's base rate (as defined in the agreement), or a competitive bid rate, at the option of the Company. At August 30, 1997, the Company's borrowings under this agreement were $198.4 million and the weighted average interest rate was 5.79%. At August 31, 1996, revolving credit borrowings were $94.4 million and the weighted average interest rate was 5.67%. The unsecured revolving credit agreement contains a covenant limiting the amount of debt the Company may incur relative to its total capitalization. Based on the term of the Company's new five-year credit facility, amounts outstanding under the revolving credit facility have been classified as long-term. On March 27, 1997, the Company executed a negotiated rate unsecured revolving credit agreement totaling $25 million which extends until March 26, 1998. There were no amounts outstanding under this agreement as of August 30, 1997. Interest costs of $2,119,000 in fiscal 1997, $2,416,000 in fiscal 1996, and $981,000 in fiscal 1995 were capitalized. 24 Note E -- Equity The Company has granted options to purchase common stock to certain employees under various plans at prices equal to the market value of the stock on the dates the options were granted. Options are generally exercisable over a three to seven year period, and generally expire in 10 years. A summary of outstanding stock options is as follows:

The following table summarizes information about stock options outstanding at August 30, 1997:

Options to purchase 2,619,363 shares at August 30, 1997, and 2,901,140 shares at August 31, 1996, were exercisable. Shares reserved for future grants were 4,199,055 shares at August 30, 1997, and 725,363 at August 31, 1996. The Company adopted the disclosure requirement of SFAS No. 123, "Accounting for Stock-Based Compensation," issued in October 1995. In accordance with the provisions of SFAS No. 123, the Company applies APB Opinion 25 and related interpretations in accounting for its stock option plans and, accordingly no compensation expense for stock options has been recognized. If the Company had elected to recognize compensation cost based on the fair value of the options granted at the grant date prescribed in SFAS No. 123, the Company's net income and earnings per share would have been reduced to the pro forma amounts indicated below. The effects of applying SFAS No. 123 and the results obtained through the use of the Black-Scholes option pricing model in this pro forma disclosure are not indicative of future amounts. SFAS No. 123 does not apply to awards prior to fiscal 1996. Additional awards in future years are anticipated. Net Income 1997 1996 ----------------------- ($000) As reported $195,008 $167,165 Pro forma $191,118 $165,992 Earnings per share As reported $1.28 $1.11 Pro forma $1.26 $1.10 The weighted-average fair value of the stock options granted during fiscal 1997 and 1996 was $9.26 and $12.25, respectively. The fair value of each option is estimated on the date of the grant using the Black-Scholes option pricing model with the following weighted-average assumptions for grants in 1997 and 1996: expected price volatility of .34; risk-free interest rates ranging from 5.7 to 5.98 percent; and expected lives between 3.75 and 7.75 years. The Company also has an employee stock purchase plan under which all eligible employees may purchase Common Stock at no less than 85% of fair market value (determined quarterly) through regular payroll deductions. Annual purchases are limited to $4,000 per employee. Under the plan, 308,141 shares were sold in fiscal 1997 and 226,541 shares were sold in fiscal 1996, including 168,362 and 173,572 shares, respectively, purchased by the Company for sale under the plan. No shares of Common Stock are reserved for future issuance under this plan. 25 Note F -- Pension Plan Substantially all full-time employees are covered by a defined benefit pension plan. The benefits are based on years of service and the employee's highest consecutive five-year average compensation. The Company's funding policy is to make annual contributions in amounts at least equal to the minimum funding requirements of the Employee Retirement Income Security Act of 1974. The following table sets forth the plan's funded status and amounts recognized in the Company's financial statements (in thousands):

The actuarial present value of the projected benefit obligation was determined using weighted-average discount rates of 7.94% and 7.93% at August 30, 1997 and August 31, 1996, respectively, and assumed increases in future compensation levels of 6%. The expected long-term rate of return on plan assets was 9.5%, 7% and 7% at August 30, 1997, August 31, 1996 and August 26, 1995, respectively. Prior service cost is amortized over the estimated average remaining service lives of the plan participants, and the unrecognized net experience gain or loss is amortized over five years. Note G -- Leases A portion of the Company's retail stores and certain equipment are leased. Most of these leases include renewal options and some include options to purchase and provisions for percentage rent based on sales. Rental expense was $39,078,000 for fiscal 1997, $30,626,000 for fiscal 1996 and $26,460,000 for fiscal 1995. Percentage rentals were insignificant. Minimum annual rental commitments under non-cancelable operating leases are as follows (in thousands): Year Amount ------------------------ 1998 $35,096 1999 31,760 2000 29,164 2001 24,861 2002 15,097 Thereafter 66,716 ------------------------ $202,694 ======================== Note H -- Related Party Transactions Management fees of $272,000 for fiscal 1996 and $371,000 for fiscal 1995 were paid to KKR Associates (KKR), which directly and through several limited partnerships, of which it is a general partner, owned approximately 13% of the Company's outstanding Common Stock at August 30, 1997 and August 31, 1996. There were no management fees paid to KKR during fiscal 1997. Note I -- Commitments and Contingencies Construction commitments, primarily for new stores, totaled approximately $52 million at August 30, 1997. The Company is a party to various claims and lawsuits arising in the normal course of business which, in the opinion of management, are not, singularly or in aggregate, material to the Company's financial position or results of operations. The Company is self-insured for workers` compensation, automobile, general and product liability losses. The Company is also self-insured for health care claims for eligible active employees. The Company maintains certain levels of stop loss coverage for each self-insured plan. Self-insurance costs are accrued based upon the aggregate of the liability for reported claims and an estimated liability for claims incurred but not reported. Note J -- Business Combination On March 29, 1996, ALLDATA became a wholly owned subsidiary of AutoZone in a stock-for-stock merger, accounted for as a pooling of interests. Under the terms of the merger agreement, AutoZone issued approximately 1.7 million shares of Common Stock and stock options covering approximately 200,000 shares of Common Stock. Financial information of ALLDATA has been included in the results of operations from the date of acquisition. Financial statements for periods prior to the date of combination have not been restated as the effect is not material to the Company's financial condition and results of operations. The assets and liabilities of ALLDATA were approximately $17.4 million and $21.4 million, respectively, at the date of combination. 26 Management's Report AutoZone's management takes responsibility for the integrity and objectivity of the financial statements in this annual report. These financial statements were prepared from accounting records which management believes fairly and accurately reflect the operations and financial position of AutoZone. The financial statements in this report were prepared in conformity with generally accepted accounting principles. In certain instances, management used its best estimates and judgments based upon currently available information and management's view of current conditions and circumstances. Management maintains a system of internal controls designed to provide reasonable assurance that assets are protected from improper use and accounted for in accordance with its policies and that transactions are recorded accurately in the Company's records. The concept of reasonable assurance is based upon a recognition that the cost of the controls should not exceed the benefit derived. The financial statements of AutoZone have been audited by Ernst & Young LLP, independent auditors. Their accompanying report is based on an audit conducted in accordance with generally accepted auditing standards, including a review of internal accounting controls and financial reporting matters. /s/ Robert J. Hunt Robert J. Hunt Executive Vice President - Finance Chief Financial Officer Customer Satisfaction Corporate Information Transfer Agent and Registrar Auditors First Chicago Trust Company of New York Ernst & Young LLP P.O. Box 2500 Memphis, Tennessee Jersey City, New Jersey 07303-2500 (800) 756-8200 Store Support Center (201) 324-0498 123 South Front Street Memphis, Tennessee 38103-3607 Stock Exchange Listing (901) 495-6500 New York Stock Exchange Ticker Symbol: AZO AutoZone Web Site http://www.autozone.com Report of Independent Auditors Stockholders AutoZone, Inc. We have audited the accompanying consolidated balance sheets of AutoZone, Inc. as of August 30, 1997 and August 31, 1996, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended August 30, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of AutoZone, Inc. at August 30, 1997 and August 31, 1996, and the consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended August 30, 1997 in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Memphis, Tennessee September 19, 1997 Annual Meeting The Annual Meeting of Stockholders of AutoZone will be held at 10:00 a.m. on December 18, 1997, at AutoZone's store support center, 123 South Front Street, Memphis, Tennessee. SEC Form 10-K/Quarterly Reports AutoZone does not produce quarterly reports because the information is not timely and is costly to distribute. Stockholders may obtain free of charge a copy of the Company's annual report on Form 10-K as filed with the Securities and Exchange Commission or our quarterly press releases by writing to Stockholder Relations, P.O. Box 2198, Memphis, Tennessee 38101. Copies of all documents filed by the company with the Securities and Exchange Commission, including Form 10-K and Form 10-Q, are also available at the SEC's EDGAR server at http://www.sec.gov. Stockholders of Record As of September 30, 1997, there were 3,330 stockholders of record, excluding the number of beneficial owners whose shares were represented by security position listings. 27 OFFICERS SENIOR VICE PRESIDENTS CUSTOMER SATISFACTION Johnston C. Adams Jr. Chairman and CEO Gerald E. Colley Customer Satisfaction Stores Timothy D. Vargo Harry L. Goldsmith President and COO General Counsel Customer Satisfaction and Secretary Anthony D. Rose Jr. Advertising Stephen W. Valentine Chief Information Officer Systems Technology & Support David J. Wilhite Merchandising EXECUTIVE VICE PRESIDENTS CUSTOMER SATISFACTION Lawrence E. Evans Store Development Robert J. Hunt Chief Financial Officer Shawn P. McGhee Merchandising VICE PRESIDENTS CUSTOMER SATISFACTION Richard F. Adams Jr. Mark D. Hamm Merchandising Analysis Systems Technology & Support & Support Michael B. Baird Phillip J. Jackson Stores Distribution David W. Barczak Michael E. Longo Real Estate Distribution Jon A. Bascom William R. McCawley Jr. Systems Technology Stores & Support Steven R. McClanahan B. Craig Blackwell Stores Stores Grantland E. McGee Jr. Francis C. Brown III Stores Human Resources John Minervini Michael E. Butterick Business Development Controller David W. Nichols William L. Cone Stores Loss Prevention Robert F. Osswald Brett D. Easley AutoZoner Development Merchandising Systems & Training Tara C. Elliot William C. Rhodes Treasurer Operations Analysis & Support William D. Gilmore Store Design & Construction Richard C. Smith Stores Frank B. Goodman Business Planning Dennis P. Tolivar Sr. & Analysis Stores Clifford E. Green Merchandising OTHER CORPORATE OFFICERS CUSTOMER SATISFACTION Emma Jo Kauffman Assistant Treasurer Donald R. Rawlins Assistant Secretary BOARD OF DIRECTORS Johnston C. Adams Jr. John E. Moll(1) Chairman and CEO Retired President Customer Satisfaction The Fleming Companies, Inc. Timothy D. Vargo George R. Roberts President and COO Member Customer Satisfaction Kohlberg Kravis Roberts & Co. LLC James F. Keegan(1*, 2) Chairman Andrew M. Clarkson (3*) Staff Line, Inc. Chairman Finance Committee Michael W. Michelson(3) Customer Satisfaction Member Kohlberg Kravis Roberts Dr. N. Gerry House(2) & Co. LLC Superintendent Memphis City Schools Robert J. Hunt Executive Vice President Ronald A. Terry(1, 2*) and CFO Retired Chairman Customer Satisfaction First Tennessee National Corporation Joseph R. Hyde III Former Chairman and CEO Customer Satisfaction (1) Audit Committee (2) Compensation Committee (3) Finance Committee (*) Committee Chairman 28 [PHOTO OF PITT HYDE APPEARS HERE] Pitt Hyde was convinced that the lessons of value and customer service he'd learned in the grocery business could be applied to the automotive aftermarket with great results. Eighteen years later, there's little question he was right. As chairman and CEO of AutoZone, Pitt guided the company he founded to be the leading auto parts chain in the country. He started by establishing a strong culture that revolved around the people on both sides of the parts counter. For our customers, his vision was to make AutoZone the best customer service provider in the business. For AutoZoners, Pitt wanted them to know what it was like to be part of a winning team and to understand how their efforts contributed to AutoZone's growth. Creating this culture wasn't easy, but seeing the impact it's had on AutoZone's success is. Today, there are more than 28,000 AutoZoners carrying the culture forward -- a testament to Pitt's ability to spread his ideas throughout the organization. [PHOTO OF PLAQUE STATING: J.R. HYDE III STORE SUPPORT CENTER DEDICATED TO PITT HYDE, THE FOUNDER OF AUTOZONE, WHOSE PASSION FOR CUSTOMER SATISFACTION IS AN INSPIRATION TO AUTOZONERS EVERYWHERE. MAY 8, 1997 APPEARS HERE] The relentless pursuit of the ultimate customer service experience is a passion that lives on at AutoZone. He's taught us well. Pitt retired as chairman in March. In his honor at a companywide meeting of store managers in May, we renamed our headquarters building -- the J. R. Hyde III Store Support Center. Yet, the biggest tribute we can pay him is to continue to find new ways to amaze our customers. [PHOTO OF MAN CHECKING TRUCK ENGINE APPEARS HERE] [AUTOZONE(R) LOGO APPEARS HERE]

EXHIBIT 21.1 SUBSIDIARIES OF THE REGISTRANT STATE OR COUNTRY OF ORGANIZATION SUBSIDIARY OR INCORPORATION - ---------- -------------------------------- Alldata Corporation Delaware AutoZone Development Corporation Nevada AutoZone Marketing Company Nevada AutoZone Properties, Inc. Nevada AutoZoners, Inc. Nevada AutoZone Stores, Inc. Nevada AutoZone Texas, L.P. Delaware AutoZone Management, L.P. Delaware AutoZone Leadership, Inc. Nevada AutoZone de Mexico, S. de R.L. de C.V. Mexico

EXHIBIT 23.1 Consent of Independent Auditors We consent to the incorporation by reference in this Annual Report (Form 10-K) of AutoZone, Inc. of our report dated September 19, 1997, included in the 1997 Annual Report to Stockholders of AutoZone, Inc. Our audits also included the financial statement schedule of AutoZone, Inc. listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-41308) pertaining to the AutoZone, Inc. Employee Stock Purchase Plan, the Registration State- ment (Form S-8 and Form S-3 No. 33-41618) pertaining to the Amended and Restated Stock Option Plan of AutoZone, Inc. and the Registration Statement (Form S-8 No. 333-19561) pertaining to the AutoZone,Inc., 1996 Stock Option Plan of our report dated September 19, 1997, with respect to the consolidated financial statements and schedule of AutoZone, Inc. included or incorporated by reference in the Annual Report (Form 10-K) for the year ended August 30, 1997. /s/ ERNST & YOUNG LLP Memphis, Tennessee November 4, 1997

5 This schedule contains summary financial information extracted from financial statements for fiscal year ended August 30, 1997, and is qualified in its entirety by reference to such financial statements. 1000 YEAR AUG-30-1997 AUG-30-1997 4668 0 18713 0 709446 778802 1336911 255783 1884017 592452 0 0 0 1513 1073695 1884017 2691440 2691440 1559296 1559296 810793 0 8843 312508 117500 195008 0 0 0 195008 1.28 1.28