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                                                                    EXHIBIT 12.1

                Computation of Ratio of Earnings to Fixed Charges
                          (in thousands, except ratios)



                                                                 Fiscal Year Ended August
                                          ----------------------------------------------------------------
                                              2004          2003         2002         2001*        2000
                                           (52 weeks)    (52 weeks)   (53 weeks)   (52 weeks)   (52 weeks)
                                          -----------    ----------   ----------   ----------   ----------
                                                                                 
Earnings:
  Income before income taxes              $   905,902    $ 833,007    $ 691,148    $ 287,026    $ 435,190
  Fixed charges                               130,278      121,129       98,688      121,141       97,520

  Less:  Capitalized interest                    (813)        (791)        (437)      (1,380)      (2,773)
                                          -----------    ---------    ---------    ---------    ---------
      Adjusted earnings                   $ 1,035,367    $ 953,345    $ 789,399    $ 406,787    $ 529,937
                                          ===========    =========    =========    =========    =========

Fixed charges:
  Gross interest expense                  $    89,600    $  79,301    $  78,183    $ 100,291    $  77,699
  Amortization of debt expense                  4,230        7,334        2,283        2,377        2,209
  Interest portion of rent expense             36,448       34,494       18,222       18,473       17,612
                                          -----------    ---------    ---------    ---------    ---------
     Total fixed charges                  $   130,278    $ 121,129    $  98,688    $ 121,141    $  97,520
                                          ===========    =========    =========    =========    =========
     Ratio of earnings to fixed charges           7.9          7.9          8.0          3.4          5.4
                                          ===========    =========    =========    =========    =========


* Includes the impact of the pre-tax restructuring and impairment charges of
$156.8 million in fiscal 2001.

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                                                                    EXHIBIT 13.1

                                FINANCIAL SECTION
                                TABLE OF CONTENTS

                                                                                             
Selected Financial Data.....................................................................     2
Quarterly Summary (unaudited)...............................................................     3
Management's Discussion and Analysis of Financial Condition and Results of Operations.......     4
Consolidated Statements of Income...........................................................    15
Consolidated Balance Sheets.................................................................    16
Consolidated Statements of Cash Flows.......................................................    17
Consolidated Statements of Stockholders' Equity.............................................    18
Notes to Consolidated Financial Statements..................................................    19
Report of Independent Registered Public Accounting Firm ....................................    34
Management's Report.........................................................................    35


                                       1


SELECTED FINANCIAL DATA:



                                                                                       FISCAL YEAR ENDED AUGUST
                                                               ---------------------------------------------------------------------
  (IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED
                OPERATING DATA)                                   2004(1)        2003(2)        2002(3)       2001(4)       2000
  ---------------------------------------------------             -------        -------        -------       -------       ----
                                                                                                          
INCOME STATEMENT DATA
Net sales ..................................................   $ 5,637,025    $ 5,457,123    $ 5,325,510    $4,818,185   $4,482,696
Cost of sales, including warehouse and delivery
   expenses ................................................     2,880,446      2,942,114      2,950,123     2,804,896    2,602,386
Operating, selling, general and administrative
   expenses ................................................     1,757,873      1,597,212      1,604,379     1,625,598    1,368,290
                                                               -----------    -----------    -----------    ----------   ----------
Operating profit ...........................................       998,706        917,797        771,008       387,691      512,020
Interest expense - net .....................................        92,804         84,790         79,860       100,665       76,830
                                                               -----------    -----------    -----------    ----------   ----------
Income before income taxes .................................       905,902        833,007        691,148       287,026      435,190
Income taxes ...............................................       339,700        315,403        263,000       111,500      167,600
                                                               -----------    -----------    -----------    ----------   ----------
Net income .................................................   $   566,202    $   517,604    $   428,148    $  175,526   $  267,590
                                                               ===========    ===========    ===========    ==========   ==========
Diluted earnings per share .................................   $      6.56    $      5.34    $      4.00    $     1.54   $     2.00
                                                               ===========    ===========    ===========    ==========   ==========
Adjusted weighted average shares for diluted earnings
   per share ...............................................        86,350         96,963        107,111       113,801      133,869
                                                               ===========    ===========    ===========    ==========   ==========

BALANCE SHEET DATA(5)
Current assets .............................................   $ 1,755,757    $ 1,671,354    $ 1,513,936    $1,395,240   $1,245,146
Working capital (deficit) ..................................       (62,358)       (90,572)       (83,443)       61,857      152,236
Total assets ...............................................     3,912,565      3,766,826      3,541,599     3,499,241    3,391,584
Current liabilities ........................................     1,818,115      1,761,926      1,597,379     1,333,383    1,092,910
Debt .......................................................     1,869,250      1,546,845      1,194,517     1,225,402    1,249,937
Stockholders' equity .......................................   $   171,393    $   373,758    $   689,127    $  866,213   $  992,179

SELECTED OPERATING DATA(5)
Number of domestic auto parts stores at beginning of year ..         3,219          3,068          3,019         2,915        2,711
                                                               -----------    -----------    -----------    ----------   ----------
   New stores ..............................................           202            160            102           107          208
   Replacement stores ......................................             4              6             15            16           30
   Closed stores ...........................................             1              9             53             3            4
                                                               -----------    -----------    -----------    ----------   ----------
   Net new stores ..........................................           201            151             49           104          204
                                                               -----------    -----------    -----------    ----------   ----------
Number of domestic auto parts stores at end of year ........         3,420          3,219          3,068         3,019        2,915
Number of Mexico auto parts stores at end of year ..........            63             49             39            21           13
                                                               -----------    -----------    -----------    ----------   ----------
Number of total auto parts stores at end of year ...........         3,483          3,268          3,107         3,040        2,928
                                                               ===========    ===========    ===========    ==========   ==========
Total domestic auto parts store square footage (000s) ......        21,689         20,500         19,683        19,377       18,719
Average square footage per domestic auto parts store .......         6,342          6,368          6,416         6,418        6,422
Increase in domestic auto parts store square footage .......             6%             4%             2%            4%           8%
Increase in domestic auto parts comparable store net sales .             0%             3%             9%            4%           5%
Average net sales per domestic auto parts store (000s) .....   $     1,647    $     1,689    $     1,658    $    1,543   $    1,517
Average net sales per domestic auto parts store square foot    $       259    $       264    $       258    $      240   $      236
Total domestic employees at end of year ....................        48,294         47,727         44,179        44,557       43,164
Inventory turnover(6) ......................................          1.87x          2.04x          2.25x         2.39x        2.32x
Net inventory turnover(7) ..................................         20.34x         16.40x         12.51x        10.11x        8.38x
After-tax return on invested capital (8) ...................          25.1%          23.4%          19.8%         13.4%        12.9%
Net cash provided by operating activities ..................   $   638,379    $   720,807    $   736,170    $  467,300   $  505,610
Cash flow before share repurchases and changes in debt(9) ..   $   509,447    $   561,563    $   726,159    $  399,312   $  272,029
Return on average equity ...................................           208%            97%            55%           19%          23%


(1)   Fiscal 2004 operating results include $42.1 million in pre-tax gains from
      warranty negotiations with certain vendors and the change in
      classification of certain vendor funding to increase operating expenses
      and decrease cost of sales by $138.2 million in accordance with Emerging
      Issues Task Force Issue No. 02-16 ("EITF 02-16") regarding vendor funding,
      which was adopted during fiscal 2003.

(2)   Fiscal 2003 operating results include $8.7 million in pre-tax gains from
      warranty negotiations, a $4.7 million pre-tax gain associated with the
      settlement of certain liabilities and the repayment of a note associated
      with the sale of the TruckPro business in December 2001, and a $4.6
      million pre-tax gain as a result of the disposition of properties
      associated with the 2001 restructuring and impairment charges. Fiscal 2003
      was also impacted by the adoption of EITF 02-16, which decreased pre-tax
      earning by $10.0 million, increased operating expenses by $52.6 million
      and decreased cost of sales by $42.6 million.

(3)   53 weeks. Comparable store sales, average net sales per domestic auto
      parts store and average net sales per store square foot for fiscal 2002
      have been adjusted to exclude net sales for the 53rd week.

                                       2


(4)   Fiscal 2001 operating results include pre-tax restructuring and impairment
      charges of $156.8 million, or $0.84 per diluted share after tax.

(5)   To conform to current year presentation, certain prior year amounts have
      been adjusted to reflect the impact of reclassifications on the
      consolidated statements of cash flows and the consolidated balance sheet.
      Prior presentations had netted certain amounts within accounts payable;
      these amounts have now been reclassified for all periods presented
      impacting reported cash and cash equivalents, accounts payable and accrued
      expenses.

(6)   Inventory turnover is calculated as cost of sales divided by the average
      of the beginning and ending merchandise inventories, which excludes
      merchandise under pay-on-scan arrangements.

(7)   Net inventory turnover is calculated as cost of sales divided by the
      average of the beginning and ending merchandise inventories, which
      excludes merchandise under pay-on-scan arrangements, less the average of
      the beginning and ending accounts payable.

(8)   After-tax return on invested capital is calculated as after-tax operating
      profit (excluding rent and restructuring and impairment charges) divided
      by average invested capital (which includes a factor to capitalize
      operating leases). See Reconciliation of Non-GAAP Financial Measures in
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations.

(9)   Cash flow before share repurchases is calculated as the change in cash and
      cash equivalents less the change in debt plus treasury stock purchases.
      See Reconciliation of Non-GAAP Financial Measures in Management's
      Discussion and Analysis of Financial Condition and Results of Operations.

QUARTERLY SUMMARY (1)
(UNAUDITED)



                                                                                                  SIXTEEN
                                                             TWELVE WEEKS ENDED                 WEEKS ENDED
                                               -------------------------------------------      -----------
                                               NOVEMBER 22,    FEBRUARY 14,       MAY 8,         AUGUST 28,
(IN THOUSANDS, EXCEPT PER SHARE DATA)            2003 (2)          2004          2004 (2)         2004 (2)
- -------------------------------------          ------------    ------------     ----------      -----------
                                                                                    
Net sales..........................             $1,282,040      $1,159,236      $1,360,022      $ 1,835,728
Increase (decrease) in domestic
   comparable store sales..........                      2%              0%              2%              (3)%
Gross profit.......................                613,090         564,311         676,187          902,991
Operating profit...................                215,105         168,526         251,321          363,755
Income before income taxes.........                194,845         146,604         229,411          335,042
Net income.........................             $  121,745      $   91,654      $  143,411      $   209,392
Basic earnings per share...........             $     1.37      $     1.06      $     1.71      $      2.56
Diluted earnings per share.........             $     1.35      $     1.04      $     1.68      $      2.53




                                                 NOVEMBER 23,    FEBRUARY 15,       MAY 10,       AUGUST 30,
 (IN THOUSANDS, EXCEPT PER SHARE DATA)               2002            2003          2003 (3)        2003 (4)
 -------------------------------------           ------------    ------------     ----------      ----------
                                                                                      
Net sales...............................          $1,218,635      $1,120,696      $1,288,445      $1,829,347
Increase in domestic comparable store
   sales................................                   4%              2%              3%              3%
Gross profit............................             549,390         495,999         598,823         870,797
Operating profit........................             188,326         147,498         221,883         360,090
Income before income taxes..............             169,221         127,865         202,530         333,391
Net income..............................          $  104,911      $   79,275      $  125,977      $  207,441
Basic earnings per share................          $     1.06      $     0.81      $     1.33      $     2.32
Diluted earnings per share..............          $     1.04      $     0.79      $     1.30      $     2.27


                                       3


(1)   The sum of quarterly amounts may not equal the annual amounts reported due
      to rounding and due to per share amounts being computed independently for
      each quarter while the full year is based on the annual weighted average
      shares outstanding.

(2)   The first, third and fourth quarters of fiscal 2004 include$16.0 million,
      $10.6 million, and $15.5 million, respectively, in pre-tax gains from
      warranty negotiations with certain vendors.

(3)   The third quarter of fiscal 2003 includes a $4.7 million pre-tax gain
      associated with the settlement of certain liabilities and the repayment of
      a note associated with the sale of the TruckPro business in December 2001.
      The third quarter of fiscal 2003 also includes a $2.6 million pre-tax
      negative impact of the adoption of EITF 02-16 regarding vendor funding
      that resulted in an increase to operating expenses by $15.6 million and an
      increase to gross profit by $13.0 million.

(4)   The fourth quarter of fiscal 2003 includes $8.7 million in pre-tax gains
      from warranty negotiations with certain vendors and a $4.6 million pre-tax
      gain as a result of the disposition of properties associated with the
      fiscal 2001 restructuring and impairment charges. The fourth quarter of
      fiscal 2003 also includes a $7.4 million pre-tax negative impact of the
      adoption of EITF 02-16 regarding vendor funding that resulted in an
      increase to operating expenses by $37.0 million and an increase to gross
      profit by $29.6 million.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

      We are the nation's leading specialty retailer of automotive parts and
accessories, with most of our sales to our DIY customers. We began operations in
1979 and as of August 28, 2004, operated 3,420 auto parts stores in the United
States and 63 in Mexico. Each of our stores carries an extensive product line
for cars, sport utility vehicles, vans and light trucks, including new and
remanufactured automotive hard parts, maintenance items, accessories and
non-automotive products. In many of our domestic stores we also have a
commercial sales program that provides commercial credit and prompt delivery of
parts and other products to local, regional and national repair garages, dealers
and service stations. We also sell the ALLDATA brand automotive diagnostic and
repair software. On the web at www.autozone.com, we sell diagnostic and repair
information, auto and light truck parts, and accessories. We do not derive
revenue from automotive repair or installation.

RESULTS OF OPERATIONS

FISCAL 2004 COMPARED WITH FISCAL 2003

      For the year ended August 28, 2004, AutoZone reported sales of $5.637
billion compared with $5.457 billion for the year ended August 30, 2003, a 3.3%
increase from fiscal 2003. This growth was driven by an increase in open stores
and continued growth in our commercial sales program. At August 28, 2004, we
operated 3,420 domestic auto parts stores and 63 in Mexico, compared with 3,219
domestic auto parts stores and 49 in Mexico at August 30, 2003. Retail DIY sales
increased 1.9% and commercial sales increased 10.5% over prior year. Same store
sales, or sales for domestic stores open at least one year, were flat during the
year. ALLDATA and Mexico sales increased over prior year, contributing 0.4
percentage points of the total increase. Same store sales for domestic stores
increased by 2% for the first three fiscal quarters, but were flat for the year
due to a 3% decline during the fourth quarter. While our average ticket
increased over prior year, the number of transactions with both our DIY and
commercial customers deteriorated during the latter part of the year. This
deterioration correlated with the sudden rise in gas prices. While gas prices
have ebbed and flowed over time, this is the first time that we have seen
statistical significance to reduced transactions at the store level. In addition
to higher gas prices, it has been reported by the Federal Highway Administration
that fewer miles were driven per vehicle, a key macro driver of our industry,
for the latter part of our fiscal year.

      Gross profit for fiscal 2004 was $2.757 billion, or 48.9% of net sales,
compared with $2.515 billion, or 46.1% of net sales, for fiscal 2003. Fiscal
2004 benefited from $42.1 million in gains from warranty negotiations as
compared to $8.7 million in warranty gains during fiscal 2003. Further
benefiting gross profit was the adoption of Emerging Issues Task Force Issue No.
02-16 ("EITF 02-16") during fiscal 2003, which requires vendor funding to be
classified as a reduction to cost of sales. Prior to the adoption of EITF 02-16,
vendor funding was reflected as a

                                       4


reduction to operating, selling, general and administrative expenses. The
adoption of EITF 02-16 increased gross profit by $138.2 million in fiscal 2004
and $42.6 million in fiscal 2003; and increased operating, selling, general and
administrative expenses by $138.2 million in fiscal 2004 and $52.6 million in
fiscal 2003. The remaining improvement in gross profit was driven by strategic
pricing and change in product mix.

      Operating, selling, general and administrative expenses for fiscal 2004
increased to $1.758 billion, or 31.2% of net sales, from $1.597 billion, or
29.3% of net sales for fiscal 2003. Fiscal 2003 benefited from a $4.7 million
pre-tax gain associated with the settlement of certain liabilities and the
repayment of a note associated with the sale of the TruckPro business in
December 2001, and a $4.6 million pre-tax gain as a result of the disposition of
properties associated with the 2001 restructuring and impairment charges.
Drivers of current year expenses included the impact of EITF 02-16, the increase
in the number of store refreshes and an increase in new store openings.

      Interest expense, net for fiscal 2004 was $92.8 million compared with
$84.8 million during fiscal 2003. This increase was primarily due to higher
average borrowing levels over fiscal 2003. Average borrowings for fiscal 2004
were $1.8 billion, compared with $1.5 billion for fiscal 2003. Weighted average
borrowing rates were 4.6% at August 28, 2004, compared to 4.4% at August 30,
2003.

      Our effective income tax rate declined to 37.5% of pre-tax income for
fiscal 2004 as compared to 37.9% for fiscal 2003.

      Net income for fiscal 2004 increased by 9.4% to $566.2 million, and
diluted earnings per share increased by 22.8% to $6.56 from $5.34 in fiscal
2003. The impact of the fiscal 2004 stock repurchases on diluted earnings per
share in fiscal 2004 was an increase of approximately $0.20.

FISCAL 2003 COMPARED WITH FISCAL 2002

      For the year ended August 30, 2003, AutoZone reported sales of $5.457
billion (52 weeks) compared with $5.326 billion (53 weeks) for the year ended
August 31, 2002, a 2.5% increase from fiscal 2002. At August 30, 2003, we
operated 3,219 domestic auto parts stores and 49 in Mexico, compared with 3,068
domestic auto parts stores and 39 in Mexico at August 31, 2002. Excluding sales
from the extra week included in the prior year, sales were up 4.6% (see
Reconciliation of Non-GAAP Financial Measures). Same store sales, or sales for
domestic stores open at least one year, increased approximately 3% during the
year, driven by an increase in commercial sales. The improvement in same store
sales was due more to an increase in average dollars spent per transaction over
the amounts in the same period of the prior year than an increase in transaction
count. The balance of the 4.6% increase was due to new store sales for fiscal
2003 which contributed 1.9 percentage points of the increase; ALLDATA and Mexico
sales which contributed 0.5 percentage points of the increase, while TruckPro
sales in the prior year of $47.6 million reduced the increase by 0.9 percentage
points.

      Gross profit for fiscal 2003 was $2.515 billion, or 46.1% of net sales,
compared with $2.375 billion, or 44.6% of net sales for fiscal 2002. This
improvement was driven by $8.7 million in gains from warranty negotiations and
the adoption of EITF 02-16 that reclassified $42.6 million in vendor funding to
cost of sales. Prior to the adoption of EITF 02-16, vendor funding was reflected
as a reduction to operating, selling, general and administrative expenses.
Fiscal 2002 also benefited from $50.4 million in gross profit generated during
the 53rd week of that year as compared to the 52 week fiscal 2003. The remaining
improvements in gross profit and gross margin reflect the additive impact of new
merchandise, a reduction in our product warranty expense, and the benefit of
more strategic and disciplined pricing derived from our category management
system.

      Operating, selling, general and administrative expenses for fiscal 2003
decreased to $1.597 billion, or 29.3% of net sales, from $1.604 billion, or
30.1% of sales for fiscal 2002. The adoption of EITF 02-16 increased operating
expenses during fiscal 2003 by $52.6 million due to the reclassification of
vendor funding. Fiscal 2003 expenses were further impacted by a $4.6 million
gain as a result of the disposition of properties associated with the fiscal
2001 restructuring and impairment charges and a $4.7 million gain associated
with the settlement of certain liabilities and the repayment of a note
associated with the sale of the TruckPro business in December 2001. The
remaining decreases in operating, selling, general and administrative expenses
reflect our relentless expense discipline, in particular, the leveraging of
salaries and information technology spending during fiscal 2003.

                                       5


      Interest expense, net for fiscal 2003 was $84.8 million compared with
$79.9 million during fiscal 2002. The increase in interest expense for fiscal
2003 was primarily due to higher levels of debt compared with the 2002 fiscal
year. Weighted average borrowings for fiscal 2003 were $1.5 billion, compared
with $1.3 billion for fiscal 2002; and, weighted average borrowing rates,
excluding the impact of debt amortization and facility fees, remained relatively
flat at 4.4% for both fiscal years.

      AutoZone's effective income tax rate declined slightly to 37.9% of pre-tax
income for fiscal 2003 as compared to 38.1% for fiscal 2002.

      Net income for fiscal 2003 increased by 20.9% to $517.6 million, and
diluted earnings per share increased by 33.5% to $5.34 from $4.00 reported for
the year-ago period. The impact of the fiscal 2003 stock repurchases on diluted
earnings per share in fiscal 2003 was an increase of $0.19.

SEASONALITY AND QUARTERLY PERIODS

      AutoZone'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 been about 15% to 25% higher than in the
slower months of December through February. During short periods of time, a
store's sales can be affected by weather conditions. Extremely hot or extremely
cold weather may enhance sales by causing parts to fail 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. Over the longer term, the effects of weather balance
out, as we have stores throughout the United States.

      Each of the first three quarters of AutoZone's fiscal year consists of 12
weeks, and the fourth quarter consists of 16 weeks (17 weeks in fiscal 2002).
Because the fourth quarter contains the seasonally high sales volume and
consists of 16 weeks (17 weeks in fiscal 2002), compared with 12 weeks for each
of the first three quarters, our fourth quarter represents a disproportionate
share of the annual net sales and net income. The fourth quarter of fiscal 2004
represented 32.6% of annual sales and 37.0% of net income; the fourth quarter of
fiscal 2003 represented 33.5% of annual net sales and 40.1% of net income; and
the fourth quarter of fiscal 2002 represented 34.6% of annual net sales and
41.6% of net income. Fiscal 2002 consisted of 53 weeks, with the fiscal fourth
quarter including 17 weeks. Accordingly, the fourth quarter of fiscal 2002
included the benefit of an additional week of net sales of $109.1 million and
net income of $18.3 million.

LIQUIDITY AND CAPITAL RESOURCES

      Net cash provided by operating activities was $638.4 million in fiscal
2004, $720.8 million in fiscal 2003 and $736.2 million in fiscal 2002. The
primary source of our liquidity is our cash flows realized through the sale of
automotive parts and accessories. Our new-store development program requires
working capital, predominantly for inventories. The year-over-year change in
accounts payable and accrued expenses was impacted by a $67.0 million decline in
accrued warranty obligations related to the $42.1 million in gains from warranty
negotiations with certain vendors and the settlement of warranty claims. These
warranty negotiations have resulted in the shifting of the warranty liability to
the vendors. During the past three fiscal years, we have improved our accounts
payable to inventory ratio to 92% at August 28, 2004, from 90% at August 30,
2003, and 85% at August 31, 2002. Contributing to this improvement has been the
year-over-year increase in vendor payables as a result of our ability to extend
payment terms with our vendors. Prior to May 8, 2004, we had entered into
arrangements with certain vendors and banks that, through our issuance of
negotiable instruments to our vendors, the vendors could negotiate the
instruments at attractive discount rates due to our credit rating. At May 8,
2004, we ceased the issuance of negotiable instruments under these arrangements.
At August 28, 2004, and August 30, 2003, approximately $110.7 million and $212.5
million, respectively, were payable by us under these arrangements and are
included in accounts payable in the accompanying consolidated balance sheets.
The increase in merchandise inventories, required to support new-store
development and sales growth, has largely been financed by our vendors, as
evidenced by the higher accounts payable to inventory ratio. Contributing to
this improvement is the use of pay-on-scan ("POS") arrangements with certain
vendors. Under a POS arrangement, AutoZone will not purchase merchandise
supplied by a vendor until that merchandise is ultimately sold to AutoZone's
customers. Upon the sale of the merchandise to

                                       6


AutoZone's customers, AutoZone recognizes the liability for the goods and pays
the vendor in accordance with the agreed-upon terms. Revenues under POS
arrangements are included in net sales in the income statement. Since we do not
own merchandise under POS arrangements until just before it is sold to a
customer, such merchandise is not included in our balance sheet. AutoZone has
financed the repurchase of existing merchandise inventory by certain vendors in
order to convert such vendors to POS arrangements. These receivables have
durations up to 24 months and approximated $58.3 million at August 28, 2004. The
$27.8 million current portion of these receivables is reflected in accounts
receivable and the $30.5 million long-term portion is reflected as a component
of other long-term assets. Merchandise under POS arrangements was $146.6 million
at August 28, 2004, and we continue to actively negotiate with our vendors to
increase the use of POS arrangements.

      AutoZone's primary capital requirement has been the funding of its
continued new store development program. From the beginning of fiscal 2002 to
August 28, 2004, we have opened 443 net new auto parts stores. Net cash flows
used in investing activities were $193.7 million in fiscal 2004, compared to
$167.8 million in fiscal 2003, and $64.5 million in fiscal 2002. We invested
$184.9 million in capital assets in fiscal 2004 compared to $182.2 million in
fiscal 2003, and $117.2 million in fiscal 2002. New store openings in the U.S.
were 202 for fiscal 2004, 160 for fiscal 2003, and 102 for fiscal 2002. During
fiscal 2004, $11.4 million was invested in the acquisition of certain assets
from a regional auto parts retailer. Seven stores related to this transaction
were converted during fiscal 2004 to AutoZone stores, with the remaining five
stores to be converted during fiscal 2005. The converted stores are included in
our domestic store count upon opening as an AutoZone store. During fiscal 2002,
we sold TruckPro, our heavy-duty truck parts subsidiary, which operated 49
stores, for cash proceeds of $25.7 million. Proceeds from capital asset
disposals totaled $2.6 million for fiscal 2004, $14.4 million for fiscal 2003,
and $25.1 million for fiscal 2002.

      Net cash used in financing activities was $460.9 million in fiscal 2004,
$530.2 million in fiscal 2003, and $675.4 million in fiscal 2002. The net cash
used in financing activities is primarily attributable to purchases of treasury
stock which totaled $848.1 million for fiscal 2004, $891.1 million for fiscal
2003, and $699.0 million for fiscal 2002. Net proceeds from the issuance of debt
securities, including repayments on other debt and the net change in commercial
paper borrowings, offset the increased level of treasury stock purchases by
approximately $322.4 million in fiscal 2004 and by $329.8 million in fiscal
2003.

      We expect to invest in our business consistent with historical rates
during fiscal 2005, primarily related to our new store development program and
enhancements to existing stores and systems. We expect to open approximately 200
new stores during fiscal 2005. In addition to the building and land costs, our
new-store development program requires working capital, predominantly for
non-POS inventories. Historically, we have negotiated extended payment terms
from suppliers, reducing the working capital required by expansion. We believe
that we will be able to continue to finance much of our inventory requirements
through favorable payment terms from suppliers.

      Depending on the timing and magnitude of our future investments (either in
the form of leased or purchased properties or acquisitions), we anticipate that
we will rely primarily on internally generated funds and available borrowing
capacity to support a majority of our capital expenditures, working capital
requirements and stock repurchases. The balance may be funded through new
borrowings. We anticipate that we will be able to obtain such financing in view
of our credit rating and favorable experiences in the debt markets in the past.

Credit Ratings

      At August 28, 2004, AutoZone had a senior unsecured debt credit rating
from Standard & Poor's of BBB+ and a commercial paper rating of A-2. Moody's
Investors Service had assigned us a senior unsecured debt credit rating of Baa2
and a commercial paper rating of P-2. As of August 28, 2004, Moody's and
Standard & Poor's had AutoZone listed as having a "negative" and "stable"
outlook, respectively. If our credit ratings drop, our interest expense may
increase; similarly, we anticipate that our interest expense may decrease if our
investment ratings are raised. If our commercial paper ratings drop below
current levels, we may have difficulty continuing to utilize the commercial
paper market and our interest expense will increase, as we will then be required
to access more expensive bank lines of credit. If our senior unsecured debt
ratings drop below investment grade, our access to financing may become more
limited.

                                       7


Debt Facilities

      We maintain $1.0 billion of revolving credit facilities with a group of
banks. During fiscal 2004, these credit facilities replaced the previous $950
million of revolving credit facilities. Of the $1.0 billion, $300 million
expires in May 2005. The remaining $700 million expires in May 2009. The portion
expiring in May 2005 is expected to be renewed, replaced or the option to extend
the maturity date of the then outstanding debt by one year will be exercised.
The credit facilities exist primarily to support commercial paper borrowings,
letters of credit and other short-term unsecured bank loans. As the available
balance is reduced by commercial paper borrowings and certain outstanding
letters of credit, we had $380.7 million in available capacity under these
facilities at August 28, 2004. The rate of interest payable under the credit
facilities is a function of the London Interbank Offered Rate (LIBOR), the
lending bank's base rate (as defined in the facility agreements) or a
competitive bid rate at the option of the Company.

      On October 16, 2002, we issued $300 million of 5.875% Senior Notes that
mature in October 2012, with interest payable semi-annually on April 15 and
October 15. A portion of the proceeds from these Senior Notes was used to prepay
a $115 million unsecured bank term loan due December 2003, to repay a portion of
the Company's outstanding commercial paper borrowings, and to settle interest
rate hedges associated with the issuance and repayment of the related debt
securities. On June 3, 2003, we issued $200 million of 4.375% Senior Notes.
These Senior Notes mature in June 2013, and interest is payable semi-annually on
June 1 and December 1. The proceeds were used to repay a portion of our
outstanding commercial paper borrowings, to prepay $100 million of the $350
million unsecured bank loan due November 2004, and to settle interest rate
hedges associated with the issuance of the debt securities.

      As of August 30, 2003, long-term debt included approximately $30 million
related to synthetic leases, with expiration dates in fiscal 2006, for a small
number of our domestic stores. At August 30, 2003, we recognized the obligations
under the lease facility and increased its property and long-term debt balances
on our balance sheet by approximately $30 million. All obligations related to
the synthetic leases were settled during fiscal 2004.

      During November 2003, we issued $300 million of 5.5% Senior Notes due
November 2015 and $200 million of 4.75% Senior Notes due November 2010. Interest
under both notes is payable in May and November of each year. Proceeds were used
to repay a $250 million bank term loan, $150 million in 6% Senior Notes and to
reduce commercial paper borrowings. During November 2003, we settled all then
outstanding interest rate hedge instruments, including interest rate swap
contracts, treasury lock agreements and forward-starting interest rate swaps.

      On August 17, 2004, we filed a shelf registration with the Securities and
Exchange Commission that allows us to sell up to $300 million in debt securities
to fund general corporate purposes, including repaying, redeeming or
repurchasing outstanding debt, and for working capital, capital expenditures,
new store openings, stock repurchases and acquisitions. All debt under this
registration statement is planned to be issued in the first quarter of fiscal
2005. Based on this planned debt issuance, on March 31, 2004, we entered into a
five-year forward-starting interest rate swap with a notional amount of $300
million with a settlement and an effective date in October 2004. The fair value
of this swap was $4.6 million at August 28, 2004, and is reflected as a
component of other assets.

      We agreed to observe certain covenants under the terms of our borrowing
agreements, including limitations on total indebtedness, restrictions on liens
and minimum fixed charge coverage. All of the repayment obligations under our
borrowing agreements may be accelerated and come due prior to the scheduled
payment date if covenants are breached or an event of default occurs.
Additionally, the repayment obligations may be accelerated if AutoZone
experiences a change in control (as defined in the agreements) of AutoZone or
its Board of Directors. As of August 28, 2004, the Company was in compliance
with all covenants and we expect to remain in compliance with all covenants.

                                       8


Stock Repurchases

      As of August 28, 2004, the Board of Directors had authorized the Company
to repurchase up to $3.9 billion of common stock in the open market. Such
authorization includes the additional $600 million that was approved by the
Board of Directors on March 17, 2004. From January 1998 to August 28, 2004, the
Company has repurchased a total of 82.2 million shares at an aggregate cost of
$3.675 billion. The Company repurchased 10.2 million shares of its common stock
at an aggregate cost of $848.1 million during fiscal 2004, 12.3 million shares
of its common stock at an aggregate cost of $891.1 million during fiscal 2003,
and 12.6 million shares of its common stock at an aggregate cost of $698.9
million during fiscal 2002.

Financial Commitments

      The following table shows AutoZone's obligations and commitments to make
future payments under contractual obligations:



                                                                                   PAYMENT DUE BY PERIOD
                                                            TOTAL     ----------------------------------------------
                                                         CONTRACTUAL   LESS THAN     BETWEEN    BETWEEN     OVER 5
                  (IN THOUSANDS)                         OBLIGATIONS    1 YEAR      1-3 YEARS  4-5 YEARS    YEARS
- ------------------------------------------------------  ------------- ----------   ----------  ---------  -----------
                                                                                           
Long-term debt (1)....................................   $ 1,869,250   $ 525,100    $ 154,150  $ 190,000  $1,000,000
Operating leases (2)..................................       847,883     130,115      221,161    143,241     353,366
Construction obligations..............................        26,385      26,385           --         --          --
                                                         -----------   ---------    ---------  ---------  ----------
                                                         $ 2,743,518   $ 681,600    $ 375,311  $ 333,241  $1,353,366
                                                         ===========   =========    =========  =========  ==========


(1)   Long-term debt balances represent principal maturities, excluding
      interest. At August 28, 2004, debt balances due in less than one year of
      $525.1 million are classified as long-term in our consolidated financial
      statements, as we have the ability and intention to refinance them on a
      long-term basis.

(2)   Operating lease obligations include related interest.

      We have certain contingent liabilities that are not accrued in our balance
sheet in accordance with accounting principles generally accepted in the United
States. These contingent liabilities are not included in the table above.

      We have other liabilities reflected in our balance sheet, including
deferred income taxes, pension and self-insurance accruals. The payment
obligations associated with these liabilities are not reflected in the financial
commitments table due to the absence of scheduled maturities. Therefore, the
timing of these payments cannot be determined, except for amounts estimated to
be payable in 2005 that are included in current liabilities.

      The following table shows AutoZone's other commitments which all have
expiration periods of less than one year:



                                                                      TOTAL
                                                                      OTHER
                              (IN THOUSANDS)                       COMMITMENTS
- ----------------------------------------------------------------   ------------
                                                                
Standby letters of credit........................................  $   97,158
Surety bonds.....................................................      10,799
                                                                   ----------
                                                                   $  107,957
                                                                   ==========


Off-Balance Sheet Arrangements

      The above table reflects the outstanding letters of credit and surety
bonds as of August 28, 2004. A substantial portion of the outstanding standby
letters of credit (which are primarily renewed on an annual basis) and surety
bonds are used to cover reimbursement obligations to our workers' compensation
carriers. There are no additional contingent liabilities associated with them as
the underlying liabilities are already reflected in our balance sheet. The
letters of credit and surety bonds arrangements have automatic renewal clauses.

                                       9


      In conjunction with our commercial sales program, we offer credit to some
of our commercial customers. The receivables related to the credit program are
sold to a third party at a discount for cash with limited recourse. AutoZone has
recorded a reserve for this recourse. At August 28, 2004, the receivables
facility had an outstanding balance of $55.7 million and the balance of the
recourse reserve was $0.8 million.

RESTRUCTURING AND IMPAIRMENT CHARGES

      In fiscal 2001, AutoZone recorded restructuring and impairment charges of
$156.8 million related to the planned closure of 51 domestic auto parts stores
and the disposal of real estate projects in process and excess properties. The
accrued obligations for restructuring charges, representing the remaining lease
payments and other carrying charges of the closed stores under lease, totaled
approximately $2.2 million at August 28, 2004, and $12.5 million at August 30,
2003. The original charges and activity in the restructuring accruals is
described more fully in Note K in the notes to consolidated financial
statements.

VALUE OF PENSION ASSETS

      At August 28, 2004, the fair market value of AutoZone's pension assets was
$102.4 million, and the related accumulated benefit obligation was $128.4
million. On January 1, 2003, our defined benefit pension plans were frozen.
Accordingly, plan participants earn no new benefits under the plan formulas, and
no new participants may join the plans. The material assumptions for fiscal 2004
are an expected long-term rate of return on plan assets of 8.0% and a discount
rate of 6.5%. For additional information regarding AutoZone's qualified and
non-qualified pension plans refer to Note I in the notes to consolidated
financial statements.

RECENT ACCOUNTING PRONOUNCEMENTS

      In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46").
FIN 46, as revised in December 2003, clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 requires the consolidation of certain types
of entities in which a company absorbs a majority of another entity's expected
losses or residual returns, or both, as a result of ownership, contractual or
other financial interests in the other entity. These entities are called
variable interest entities. FIN 46 applies immediately to variable interest
entities created or acquired after January 31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46
must be applied to periods ending after March 15, 2004. Our adoption did not
have a significant impact on our consolidated financial position, operating
results or cash flows.

CRITICAL ACCOUNTING POLICIES

Product Warranties

      Limited warranties on certain products that range from 30 days to lifetime
warranties are provided to our customers by AutoZone or the vendors supplying
our products. Warranty costs relating to merchandise sold under warranty not
covered by vendors are estimated and recorded as warranty obligations at the
time of sale based on each product's historical return rate. These obligations,
which are often funded by vendor allowances, are recorded as a component of
accrued expenses in our consolidated balance sheets. We periodically assess the
adequacy of our recorded warranty liability and adjust the amount as necessary.
During fiscal 2004 and 2003, we successfully negotiated with certain vendors to
transfer warranty obligations to such vendors in order to minimize our warranty
exposure resulting in credits to earnings.

Litigation and Other Contingent Liabilities

      We have received claims related to and been notified that we are a
defendant in a number of legal proceedings resulting from our business, such as
employment matters, product liability claims and general liability claims
related to our store premises. We calculate contingent loss accruals using our
best estimate of our probable and reasonably estimable contingent liabilities,
such as lawsuits and our retained liability for insured claims.

                                       10


Vendor Allowances

      AutoZone receives various payments and allowances from its vendors based
on the volume of purchases or for services that AutoZone provides to the
vendors. Monies received from vendors include rebates, allowances and
promotional funds. Typically these funds are dependent on purchase volumes and
advertising plans. The amounts to be received are subject to changes in market
conditions, vendor marketing strategies and changes in the profitability or
sell-through of the related merchandise.

      Rebates and other miscellaneous incentives are earned based on purchases
or product sales. These monies are treated as a reduction of inventories and are
recognized as a reduction to cost of sales as the inventories are sold.

      Certain vendor allowances are used exclusively for promotions and to
partially or fully offset certain other direct expenses. Such vendor funding
arrangements that were entered into on or before December 31, 2002, were
recognized as a reduction to operating, selling, general and administrative
expenses when earned. However, for such vendor funding arrangements entered into
or modified after December 31, 2002, AutoZone applied the new guidance pursuant
to the Emerging Issues Task Force Issue No. 02-16, "Accounting by a Customer
(including a Reseller) for Cash Consideration Received from a Vendor" ("EITF
02-16"). Accordingly, all vendor funds from arrangements entered into or
modified after December 31, 2002, were recognized as a reduction to cost of
sales as the inventories were sold.

      This accounting pronouncement for vendor funding has not impacted the way
AutoZone runs its business or its relationships with vendors. It does, however,
require the deferral of certain vendor funding which is calculated based upon
vendor inventory turns. Based on the timing of the issuance of the pronouncement
and guidelines during fiscal 2003, we were precluded from adopting EITF 02-16 as
a cumulative effect of a change in accounting principle. Our timing and
accounting treatment of EITF 02-16 was not discretionary.

Impairments

      In accordance with the provisions of Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), we evaluate the recoverability of the carrying amounts of
long-lived assets, such as property and equipment, covered by this standard
whenever events or changes in circumstances dictate that the carrying value may
not be recoverable. As part of the evaluation, we review performance at the
store level to identify any stores with current period operating losses that
should be considered for impairment. We compare the sum of the undiscounted
expected future cash flows with the carrying amounts of the assets.

      Under the provisions of Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142"), we perform an annual
test of goodwill to compare the estimated fair value of goodwill to the carrying
amount to determine if any impairment exists. We perform the annual impairment
assessment in the fourth quarter of each fiscal year, unless circumstances
dictate more frequent assessments.

      If impairments are indicated by either of the above evaluations, the
amount by which the carrying amount of the assets exceeds the fair value of the
assets is recognized as an impairment loss. Such evaluations require management
to make certain assumptions based upon information available at the time the
evaluation is performed, which could differ from actual results.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      AutoZone is exposed to market risk from, among other things, changes in
interest rates, foreign exchange rates and fuel prices. From time to time, we
use various financial instruments to reduce interest rate and fuel price risks.
To date, based upon our current level of foreign operations, hedging costs and
past changes in the associated foreign exchange rates, no instruments have been
utilized to reduce foreign exchange rate risk. All of our hedging activities are
governed by guidelines that are authorized by our Board of Directors. Further,
we do not buy or sell financial instruments for trading purposes.

                                       11


Interest Rate Risk

      AutoZone's financial market risk results primarily from changes in
interest rates. At times, we reduce our exposure to changes in interest rates by
entering into various interest rate hedge instruments such as interest rate swap
contracts, treasury lock agreements and forward-starting interest rate swaps.

      AutoZone has utilized interest rate swaps to convert variable rate debt to
fixed rate debt and to lock in fixed rates on future debt issuances. At August
28, 2004, we held a five-year forward-starting interest rate swap with a
notional amount of $300 million. This swap has an October 2004 settlement and
effective date to coincide with an anticipated debt transaction. It is expected
that upon settlement of the agreement, the realized gain or loss will be
deferred in other comprehensive income and reclassified to interest expense over
the life of the underlying debt.

      At August 30, 2003, we held an interest rate swap contract, which was
settled in September 2003, to hedge $25 million of variable rate debt associated
with commercial paper borrowings. At August 30, 2003, we also held treasury lock
agreements with notional amounts of $300 million and a forward-starting interest
rate swap with a notional amount of $200 million. These agreements hedged the
exposure to variability in future cash flows resulting from changes in interest
rates prior to the November 2003 issuance of $300 million 5.5% Senior Notes due
November 2015 and $200 million 4.75% Senior Notes due November 2010. The related
gains on these transactions are deferred in stockholders' equity as a component
of other comprehensive income or loss. These deferred gains are recognized in
income as a decrease to interest expense in the period in which the related
interest rates being hedged are recognized in expense. However, to the extent
that the change in value of an interest rate hedge instrument does not perfectly
offset the change in the value of the interest rate being hedged, that
ineffective portion is immediately recognized in income. During November 2003,
we recognized $2.7 million in gains related to the ineffective portion of these
agreements. The remaining gains realized upon the November 2003 settlement were
deferred in other comprehensive income and are being reclassified to interest
expense over the life of the underlying Senior Notes, resulting in effective
interest rates of 4.86% on the $300 million issuance and 4.17% on the $200
million issuance.

      During fiscal 2003, we also entered into and settled a forward-starting
interest rate swap with a notional amount of $200 million, used to hedge the
variability in future cash flows resulting from changes in interest rates prior
to the issuance of $200 million 4.375% Senior Notes. The loss realized upon
settlement was deferred in other comprehensive income and is being reclassified
to interest expense over the life of the underlying Senior Notes, resulting in
an effective interest rate of 5.65%. During fiscal 2003, all of our hedge
instruments were determined to be highly effective, and no ineffective portion
was recognized in income.

      AutoZone reflects the current fair value of all interest rate hedge
instruments on our consolidated balance sheets as a component of other assets.
The fair values of the interest rate hedge instruments were $4.6 million at
August 28, 2004 and were $41.6 million at August 30, 2003. Our outstanding hedge
instrument was determined to be highly effective at August 28, 2004.

      The fair value of our debt was estimated at $1.88 billion as of August 28,
2004, and $1.57 billion as of August 30, 2003, based on the quoted market prices
for the same or similar debt issues or on the current rates available to
AutoZone for debt of the same remaining maturities. Such fair value is greater
than the carrying value of debt at August 28, 2004, by $11.1 million, and at
August 30, 2003, by $27.3 million. We had $529.3 million of variable rate debt
outstanding at August 28, 2004, and $556.8 million outstanding at August 30,
2003, both of which exclude the effect of any interest rate swaps designated and
effective as cash flow hedges of such variable rate debt. At these borrowing
levels for variable rate debt, a one percentage point increase in interest rates
would have had an unfavorable impact on our pre-tax earnings and cash flows of
$5.3 million in 2004 and $5.6 million in fiscal 2003, which excludes the effects
of interest rate swaps. The primary interest rate exposure on variable rate debt
is based on LIBOR. We had outstanding fixed rate debt of $1.34 billion at August
28, 2004, and $990.0 million at August 30, 2003. A one percentage point increase
in interest rates would reduce the fair value of our fixed rate debt by $81.1
million at August 28, 2004 and by $47.0 million at August 30, 2003.

Fuel Price Risk

      Fuel swap contracts utilized by us have not previously been designated as
hedging instruments under the provisions of SFAS 133 and do not qualify for
hedge accounting treatment, although the instruments were executed

                                       12


to economically hedge the consumption of diesel fuel used to distribute our
products. Accordingly, mark-to-market gains and losses related to such fuel swap
contracts are recorded in cost of sales as a component of distribution costs. As
of August 28, 2004, the current month's fuel swap contract was outstanding with
a settlement date of August 31, 2004. During fiscal 2004 and 2003, we entered
into fuel swaps to economically hedge a portion of our diesel fuel exposure.
These swaps were settled within a few days of each fiscal year end and had no
significant impact on cost of sales for the 2004 or 2003 fiscal years.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

      "Selected Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" include certain financial
measures not derived in accordance with generally accepted accounting principles
("GAAP"). These non-GAAP financial measures provide additional information for
determining our optimum capital structure and are used to assist management in
evaluating performance and in making appropriate business decisions to maximize
stockholders' value.

      Non-GAAP financial measures should not be used as a substitute for GAAP
financial measures, or considered in isolation, for the purpose of analyzing our
operating performance, financial position or cash flows. However, we have
presented the non-GAAP financial measures, as we believe they provide additional
information to analyze or compare our operations. Furthermore, our management
and Compensation Committee of the Board of Directors use the above mentioned
non-GAAP financial measures to analyze and compare our underlying operating
results and to determine payments of performance-based compensation. We have
included a reconciliation of this information to the most comparable GAAP
measures in the following reconciliation tables.

Reconciliation of Non-GAAP Financial Measure: After-Tax Return on Invested
Capital

      The following table reconciles the percentages of after-tax return on
invested capital, or "ROIC," both including and excluding the fiscal 2001
restructuring and impairment charges, to net income. After-tax return on
invested capital is calculated as after-tax operating profit (excluding rent)
divided by average invested capital (which includes a factor to capitalize
operating leases). The ROIC percentages are presented in the "Selected Financial
Data."

(in thousands, except per share and percentage data)



                                                                            FISCAL YEAR ENDED AUGUST
                                                      ----------------------------------------------------------------------
                                                         2004             2003          2002           2001         2000
                                                      ----------       ---------    -----------     -----------  -----------
                                                                                                  
Net income.......................................     $  566,202       $  517,604   $   428,148     $   175,526  $   267,590
Adjustments:
      After-tax interest.........................         58,003           52,686        49,471          61,560       47,241
      After-tax rent.............................         73,086           68,764        61,348          61,396       58,853
                                                      ----------       ----------   -----------     -----------  -----------
After-tax return.................................        697,291          639,054       538,967         298,482      373,684
After-tax restructuring and
 impairment charges..............................             --               --            --          95,822           --
                                                      ----------       ----------   -----------     -----------  -----------
After-tax return, excluding restructuring  and
 impairment charges..............................     $  697,291       $  639,054   $   538,967     $   394,304  $   373,684
                                                      ==========       ==========   ===========     ===========  ===========

Average debt (1).................................     $1,787,307       $1,484,987   $ 1,329,077     $ 1,445,899  $ 1,182,055
Average equity (2)...............................        292,802          580,176       802,289         879,912    1,149,104
Rent x 6 (3).....................................        701,621          663,990       594,192         602,382      574,290
                                                      ----------       ----------   -----------     -----------  -----------
Pre-tax invested capital.........................      2,781,730        2,729,153     2,725,558       2,928,193    2,905,449
Average equity, excluding
  restructuring and impairment charges (4).......             --               --            --           6,844           --
                                                      ----------       ----------   -----------     -----------  -----------
Pre-tax invested capital, excluding restructuring
 and impairment charges..........................     $2,781,730       $2,729,153   $ 2,725,558     $ 2,935,037  $ 2,905,449
                                                      ==========       ==========   ===========     ===========  ===========

ROIC.............................................           25.1%            23.4%         19.8%           10.1%        12.9%
ROIC, before restructuring and
 impairment charges..............................           25.1%            23.4%         19.8%           13.4%(5)     12.9%


(1)   Average debt is equal to the average of our long-term debt measured at the
      end of the prior fiscal year and each of the 13 fiscal periods in the
      current fiscal year. Long-term debt (in thousands) was $888,340 at August
      28, 1999.

                                       13


(2)   Average equity is equal to the average of our stockholders' equity
      measured at the end of the prior fiscal year and each of the 13 fiscal
      periods of the current fiscal year. Stockholders' equity (in thousands)
      was $1,323,801 at August 28, 1999.

(3)   Rent is multiplied by a factor of six to capitalize operating leases in
      the determination of pre-tax invested capital.

(4)   Average equity at August 25, 2001, increased by $6.8 million as a result
      of excluding restructuring and impairment charges.

(5)   ROIC excluding nonrecurring charges was presented as 14.3% in our Form
      10-K for the fiscal year ended August 31, 2002, but has been revised to
      reflect a rolling 13-period average of debt and equity to conform with our
      current methodology for calculating ROIC.

Reconciliation of Non-GAAP Financial Measure: Cash Flow Before Share Repurchases
and Changes in Debt

      The following table reconciles net increase (decrease) in cash and cash
equivalents to cash flow before share repurchases and changes in debt, which is
presented in the "Selected Financial Data".

(in thousands)



                                                                         FISCAL YEAR ENDED AUGUST
                                                      -----------------------------------------------------------
                                                          2004        2003         2002       2001        2000
                                                      -----------  ----------   ---------- ----------   --------
                                                                                         
Net increase (decrease) in cash and cash equivalents  $  (16,250)  $   22,796   $  (3,709) $    8,680   $   (6,299)
Less: Increase (decrease) in debt..................      322,405      352,328     (30,885)    (24,535)     361,597
Less: Share repurchases............................     (848,102)    (891,095)   (698,983)   (366,097)    (639,925)
                                                      ----------   ----------  ----------  ----------   ----------
Cash flow before share repurchases and
    changes in debt................................   $  509,447   $  561,563   $ 726,159  $  399,312   $  272,029
                                                      ==========   ==========  ==========  ==========   ==========


Reconciliation of Non-GAAP Financial Measure: Fiscal 2002 Results Excluding
Impact of 53rd Week

The following table summarizes the favorable impact of the additional week of
the 53 week fiscal year ended August 31, 2002.

(in thousands, except per share and percentage data)



                                                                       UNAUDITED        FISCAL 2002
                                                                       RESULTS OF       RESULTS OF
                                         FISCAL 2002       PERCENT     OPERATIONS       OPERATIONS        PERCENT
                                         RESULTS OF          OF           FOR            EXCLUDING          OF
                                         OPERATIONS        REVENUE     53RD WEEK        53RD WEEK         REVENUE
                                         ----------        -------    -----------      ------------       --------
                                                                                           
Net sales...........................    $ 5,325,510        100.0%     $  (109,079)     $ 5,216,431         100.0%
Cost of sales.......................      2,950,123         55.4%         (58,688)       2,891,435          55.4%
                                        -----------        -----      -----------      -----------         -----
Gross profit........................      2,375,387         44.6%         (50,391)       2,324,996          44.6%
Operating expenses..................      1,604,379         30.1%         (20,911)       1,583,468          30.4%
                                        -----------        -----      -----------      -----------         -----
Operating profit....................        771,008         14.5%         (29,480)         741,528          14.2%
Interest expense, net...............         79,860          1.5%              --           79,860           1.5%
                                        -----------        -----      -----------      -----------         -----
Income before taxes.................        691,148         13.0%         (29,480)         661,668          12.7%
Income taxes........................        263,000          5.0%         (11,210)         251,790           4.8%
                                        -----------        -----      -----------      -----------         -----
Net income..........................    $   428,148          8.0%     $   (18,270)     $   409,878           7.9%
                                        ===========        =====      ===========      ===========         =====
Diluted earnings per share..........    $      4.00                   $     (0.17)     $      3.83
                                        ===========                   ===========      ===========


                                       14


CONSOLIDATED STATEMENTS OF INCOME



                                                                                           YEAR ENDED
                                                                            -----------------------------------------
                                                                             AUGUST 28,    AUGUST 30,     AUGUST 31,
                                                                                2004          2003          2002
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)                  (52 WEEKS)    (52 WEEKS)    (53 WEEKS)
- -----------------------------------------------------------------------     ------------  ------------  -------------
                                                                                               
Net sales..............................................................     $  5,637,025  $  5,457,123  $  5,325,510
Cost of sales, including warehouse and delivery expenses...............        2,880,446     2,942,114     2,950,123
Operating, selling, general and administrative expenses................        1,757,873     1,597,212     1,604,379
                                                                            ------------  ------------  ------------
Operating profit.......................................................          998,706       917,797       771,008
Interest expense, net..................................................           92,804        84,790        79,860
                                                                            ------------  ------------  ------------
Income before income taxes.............................................          905,902       833,007       691,148
Income taxes...........................................................          339,700       315,403       263,000
                                                                            ------------  ------------  ------------
Net income.............................................................     $    566,202  $    517,604  $    428,148
                                                                            ============  ============  ============

Weighted average shares for basic earnings per share...................           84,993        94,906       104,446
Effect of dilutive stock equivalents...................................            1,357         2,057         2,665
                                                                            ------------  ------------  ------------
Adjusted weighted average shares for diluted earnings per share........           86,350        96,963       107,111
                                                                            ============  ============  ============

Basic earnings per share...............................................     $       6.66  $       5.45  $       4.10
                                                                            ============  ============  ============
Diluted earnings per share.............................................     $       6.56  $       5.34  $       4.00
                                                                            ============  ============  ============


See Notes to Consolidated Financial Statements.

                                       15


CONSOLIDATED BALANCE SHEETS



                                                                                          AUGUST 28,        AUGUST 30,
                           (IN THOUSANDS, EXCEPT PER SHARE DATA)                            2004              2003
- -------------------------------------------------------------------------------------   -------------     -------------
                                                                                                    
ASSETS
Current assets:
   Cash and cash equivalents.........................................................   $      76,852     $      93,102
   Accounts receivable...............................................................          68,372            43,746
   Merchandise inventories...........................................................       1,561,479         1,511,316
   Prepaid expenses and other current assets.........................................          49,054            19,194
   Deferred income taxes.............................................................              --             3,996
                                                                                        -------------     -------------
         Total current assets........................................................       1,755,757         1,671,354
Property and equipment:
   Land..............................................................................         538,920           525,473
   Buildings and improvements........................................................       1,370,079         1,325,759
   Equipment.........................................................................         574,882           551,465
   Leasehold improvements............................................................         137,562           125,592
   Construction in progress..........................................................          87,694            44,871
                                                                                        -------------     -------------
                                                                                            2,709,137         2,573,160
   Less: Accumulated depreciation and amortization...................................         919,048           857,407
                                                                                        -------------     -------------
                                                                                            1,790,089         1,715,753

Goodwill, net of accumulated amortization............................................         301,015           294,348
Deferred income taxes................................................................              --            25,543
Other long-term assets...............................................................          65,704            59,828
                                                                                        -------------     -------------
                                                                                              366,719           379,719
                                                                                        -------------     -------------
                                                                                        $   3,912,565     $   3,766,826
                                                                                        =============     =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable..................................................................   $   1,429,128     $   1,360,482
   Accrued expenses..................................................................         310,880           361,466
   Income taxes payable..............................................................          72,096            39,978
   Deferred income taxes.............................................................           6,011                --
                                                                                        -------------     -------------
     Total current liabilities.......................................................       1,818,115         1,761,926
Long-term debt.......................................................................       1,869,250         1,546,845
Other liabilities....................................................................          48,079            84,297
Deferred income taxes................................................................           5,728                --

Commitments and contingencies

Stockholders' equity:
   Preferred stock, authorized 1,000 shares; no shares issued........................              --                --
   Common stock, par value $.01 per share, authorized 200,000 shares; 89,393
     shares issued and 79,628 shares outstanding in 2004 and 100,670 shares
     issued and 88,708 shares outstanding in 2003....................................             894             1,007
   Additional paid-in capital........................................................         414,231           410,962
   Retained earnings.................................................................         580,147           869,739
   Accumulated other comprehensive loss..............................................         (15,653)          (37,297)
   Treasury stock, at cost...........................................................        (808,226)         (870,653)
                                                                                        -------------     -------------
     Total stockholders' equity......................................................         171,393           373,758
                                                                                        -------------     -------------
                                                                                        $   3,912,565     $   3,766,826
                                                                                        =============     =============


See Notes to Consolidated Financial Statements.

                                       16


CONSOLIDATED STATEMENTS OF CASH FLOWS



                                                                                                    YEAR ENDED
                                                                              -----------------------------------------------------
                                                                                  AUGUST 28,         AUGUST 30,        AUGUST 31,
                                                                                    2004               2003              2002
                               (IN THOUSANDS)                                    (52 WEEKS)         (52 WEEKS)        (53 WEEKS)
- ---------------------------------------------------------------------------   ----------------   ----------------  ----------------
                                                                                                          
Cash flows from operating activities:
   Net income..............................................................   $        566,202   $        517,604  $        428,148
   Adjustments to reconcile net income to net cash provided
     by operating activities:
      Depreciation and amortization of property and equipment..............            106,891            109,748           118,255
      Amortization of debt origination fees................................              4,230              7,334             2,283
      Income tax benefit realized from exercise of options.................             24,339             37,402            42,159
      Gains from warranty negotiations                                                 (42,094)            (8,695)               --
      Changes in operating assets and liabilities:
         Deferred income taxes.............................................             44,498             65,701            28,483
         Accounts receivable and prepaid expenses..........................            (26,101)           (27,468)          (12,879)
         Merchandise inventories...........................................           (119,539)          (135,732)         (168,150)
         Accounts payable and accrued expenses.............................             60,154            176,702           282,408
         Income taxes payable..............................................             32,118             (3,460)           13,743
         Other, net........................................................            (12,319)           (18,329)            1,720
                                                                              ----------------   ----------------  ----------------
      Net cash provided by operating activities............................            638,379            720,807           736,170

Cash flows from investing activities:
   Capital expenditures....................................................           (184,870)          (182,242)         (117,239)
   Acquisition.............................................................            (11,441)                --                --
   Proceeds from sale of business..........................................                 --                 --            25,723
   Proceeds from disposal of capital assets................................              2,590             14,443            25,094
   Notes receivable from officers..........................................                 --                 --             1,911
                                                                              ----------------   ----------------  ----------------
      Net cash used in investing activities................................           (193,721)          (167,799)          (64,511)

Cash flows from financing activities:
   Net change in commercial paper..........................................            254,400             44,800          (162,247)
   Proceeds from issuance of debt..........................................            500,000            500,000           150,000
   Repayment of debt.......................................................           (431,995)          (215,000)          (15,000)
   Net proceeds from sale of common stock..................................             33,552             45,303            55,676
   Purchase of treasury stock..............................................           (848,102)          (891,095)         (698,983)
   Settlement of interest rate hedge instruments...........................             32,166            (28,524)               --
   Other...................................................................               (929)            14,304            (4,814)
                                                                              ----------------   ----------------  ----------------
      Net cash used in financing activities................................           (460,908)          (530,212)         (675,368)
                                                                              ----------------   ----------------  ----------------

Net increase (decrease) in cash and cash equivalents.......................            (16,250)            22,796            (3,709)
Cash and cash equivalents at beginning of year.............................             93,102             70,306            74,015
                                                                              ----------------   ----------------  ----------------
Cash and cash equivalents at end of year...................................   $         76,852   $         93,102  $         70,306
                                                                              ================   ================  ================

Supplemental cash flow information:
   Interest paid, net of interest cost capitalized.........................   $         77,871   $         77,533  $         77,935
                                                                              ================   ================  ================
   Income taxes paid.......................................................   $        237,010   $        215,760  $        178,417
                                                                              ================   ================  ================


See Notes to Consolidated Financial Statements.

                                       17


CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY



                                                                                               ACCUMULATED
                                      COMMON                 ADDITIONAL                           OTHER
                                      SHARES      COMMON      PAID-IN     NOTES      RETAINED  COMPREHENSIVE  TREASURY
              (IN THOUSANDS)          ISSUED       STOCK      CAPITAL   RECEIVABLE   EARNINGS     LOSS          STOCK       TOTAL
- ------------------------------------- -------     ------     --------   ----------   --------   --------      ---------   ---------
                                                                                                  
Balance at August 25, 2001........... 119,518     $1,195     $295,629   $(1,911)     $825,196   $(5,308)      $(248,588)  $ 866,213
Net income...........................                                                 428,148                               428,148
Foreign currency translation
  adjustment.........................                                                             (1,447)                    (1,447)
Unrealized losses on derivatives.....                                                             (4,848)                    (4,848)
                                                                                                                          ---------
  Comprehensive income...............                                                                                       421,853
Repayments of notes receivable
  from officers......................                                     1,911                                               1,911
Purchase of 12,591 shares of
  treasury stock.....................                             298                                          (698,983)   (698,685)
Retirement of treasury stock......... (12,000)      (120)     (23,280)               (279,203)                  302,603          --
Sale of common stock under
  stock option and stock
  purchase plans.....................   2,444         25       55,651                                                        55,676
Tax benefit of exercise of stock
  options............................                          42,159                                                        42,159
                                      -------     ------     --------   -------      --------   --------      ---------   ---------
Balance at August 31, 2002........... 109,962      1,100      370,457        --       974,141    (11,603)      (644,968)    689,127
Net income...........................                                                 517,604                               517,604
Minimum pension liability net
  of taxes of $(18,072)..............                                                            (29,739)                   (29,739)
Foreign currency translation
   adjustment........................                                                             (8,276)                    (8,276)
Net gains on outstanding
  derivatives net of  taxes of
  $15,710............................                                                             25,856                     25,856
Net losses on terminated/
   matured derivatives...............                                                            (20,014)                   (20,014)
Reclassification of net losses on
  derivatives into earnings..........                                                              6,479                      6,479
                                                                                                                          ---------
  Comprehensive income...............                                                                                       491,910
Purchase of 12,266 shares of
  treasury stock.....................                           1,111                                          (891,095)   (889,984)
Retirement of treasury stock......... (11,000)      (110)     (43,120)               (622,006)                  665,236          --
Sale of common stock under
  stock option and stock
  purchase plans.....................   1,708         17       45,112                                               174      45,303
Tax benefit of exercise of stock
  options............................                          37,402                                                        37,402
                                      -------     ------     --------   -------      --------   --------      ---------   ---------
Balance at August 30, 2003........... 100,670      1,007      410,962        --       869,739    (37,297)      (870,653)    373,758
Net income...........................                                                 566,202                               566,202
Minimum pension liability net
  of taxes of $10,750................                                                             17,537                     17,537
Foreign currency translation
   adjustment........................                                                             (3,841)                    (3,841)
Net gains on outstanding
   derivatives net of  taxes of
   $1,740............................                                                              2,900                      2,900
Net gains on terminated/
   matured derivatives net of
   taxes of ($15,710)................                                                              6,226                      6,226
Reclassification of derivative
   ineffectiveness into earnings.....                                                             (2,701)                    (2,701)
Reclassification of net losses on
  derivatives into earnings..........                                                              1,523                      1,523
                                                                                                                          ---------
  Comprehensive income...............                                                                                       587,846
Purchase of 10,194 shares of
  treasury stock.....................                                                                          (848,102)   (848,102)
Retirement of treasury stock......... (12,400)      (124)     (54,611)               (855,794)                  910,529          --
Sale of common stock under
  stock option and stock
  purchase plans.....................   1,123         11       33,541                                                        33,552
Tax benefit of exercise of stock
  options............................                          24,339                                                        24,339
                                      -------     ------     --------   -------      --------   --------      ---------   ---------
Balance at August 28, 2004...........  89,393     $  894     $414,231   $    --      $580,147   $(15,653)     $(808,226)   $171,393
                                      =======     ======     ========   =======      ========   ========      =========   =========


See Notes to Consolidated Financial Statements.

                                       18


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - SIGNIFICANT ACCOUNTING POLICIES

      BUSINESS: AutoZone, Inc. and its wholly owned subsidiaries ("AutoZone" or
the "Company") is principally a retailer of automotive parts and accessories. At
the end of fiscal 2004, the Company operated 3,420 domestic auto parts stores in
48 states and the District of Columbia and 63 auto parts stores in Mexico. Each
store carries an extensive product line for cars, sport utility vehicles, vans
and light trucks, including new and remanufactured automotive hard parts,
maintenance items, accessories and non-automotive products. Many of the domestic
stores have a commercial sales program that provides commercial credit and
prompt delivery of parts and other products to local, regional and national
repair garages, dealers and service stations. The Company also sells the ALLDATA
brand automotive diagnostic and repair software. On the web, the Company sells
automotive diagnostic and repair information and auto and light truck parts
through www.autozone.com.

      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. All significant
intercompany transactions and balances have been eliminated in consolidation.

      USE OF ESTIMATES: Management of the Company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities to prepare these financial statements.
Actual results could differ from those estimates.

      RECLASSIFICATIONS: To conform to current year presentation, certain prior
year amounts have been reclassified within the consolidated statements of cash
flows and the consolidated balance sheet. Prior year presentations had netted or
included certain amounts within accounts payable; these amounts have now been
reclassified for all periods presented impacting cash and cash equivalents,
accounts payable and accrued expenses.

      CASH EQUIVALENTS: Cash equivalents consist of investments with original
maturities of 90 days or less at the date of purchase. Excluded from cash
equivalents are $20.1 million in investments in money market accounts at August
28, 2004, held by the Company's wholly-owned insurance captive that was
established during fiscal 2004. These investments are included within the
prepaid expenses and other current assets caption and are recorded at cost,
which approximates market value, due to the short maturity of the investments.

      ACCOUNTS RECEIVABLE: Accounts receivable consists of receivables from
customers and vendors, including the current portion of long-term receivables
from certain vendors.

      MERCHANDISE INVENTORIES: Inventories are stated at the lower of cost or
market using the last-in, first-out (LIFO) method. Included in inventory are
related purchasing, storage and handling costs. Due to price deflation on the
Company's merchandise purchases, the Company's inventory balances are
effectively maintained under the first-in, first-out method as the Company's
policy is not to write up inventory for favorable LIFO adjustments, resulting in
cost of sales being reflected at the higher amount. The cumulative balance of
this unrecorded adjustment, which will be reduced upon experiencing price
inflation on our merchandise purchases, was $158 million at August 28, 2004, and
$102 million at August 30, 2003.

      AutoZone has entered into pay-on-scan ("POS") arrangements with certain
vendors, whereby AutoZone will not purchase merchandise supplied by a vendor
until that merchandise is ultimately sold to AutoZone's customers. Title and
certain risks of ownership remain with the vendor until the merchandise is sold
to AutoZone's customers. Since the Company does not own merchandise under POS
arrangements until just before it is sold to a customer, such merchandise is not
recorded on the Company's balance sheet. Upon the sale of the merchandise to
AutoZone's customers, AutoZone recognizes the liability for the goods and pays
the vendor in accordance with the agreed-upon terms. Although AutoZone does not
hold title to the goods, AutoZone controls pricing and has credit collection
risk and therefore, revenues under POS arrangements are included in net sales in
the income statement. AutoZone has financed the repurchase of existing
merchandise inventory by certain vendors in order to convert such vendors to POS
arrangements. These receivables have durations up to 24 months and approximated
$58.3 million at August

                                       19


28, 2004. The $27.8 million current portion of these receivables is reflected in
accounts receivable and the $30.5 million long-term portion is reflected as a
component of other long-term assets. Merchandise under POS arrangements was
$146.6 million at August 28, 2004.

      PROPERTY AND EQUIPMENT: Property and equipment is stated at cost.
Depreciation is computed principally using the straight-line method over the
following estimated useful lives: buildings, 40 to 50 years; building
improvements, 5 to 15 years; equipment, 3 to 7 years; and leasehold
improvements, 5 to 15 years, not to exceed the remaining lease term.

      IMPAIRMENT OF LONG-LIVED ASSETS: In accordance with the provisions of
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), the Company evaluates
the recoverability of the carrying amounts of the assets covered by this
standard annually and more frequently if events or changes in circumstances
indicate that the carrying value may not be recoverable. As part of the
evaluation, the Company reviews performance at the store level to identify any
stores with current period operating losses that should be considered for
impairment. The Company compares the sum of the undiscounted expected future
cash flows with the carrying amounts of the assets. If impairments are
indicated, the amount by which the carrying amount of the assets exceeds the
fair value of the assets is recognized as an impairment loss. No significant
impairment losses were recorded in the three years ended August 28, 2004.

      GOODWILL: The cost in excess of fair value of identifiable net assets of
businesses acquired is recorded as goodwill and is reflected net of $32.2
million in accumulated amortization as of August 28, 2004 and August 30, 2003.
In accordance with the provisions of Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"), goodwill has not
been amortized since fiscal 2001, but an analysis is performed at least annually
to compare the fair value of goodwill to the carrying amount to determine if any
impairment exists. The Company performs its annual impairment assessment in the
fourth quarter of each fiscal year, unless circumstances dictate more frequent
assessments. No impairment losses were recorded in the three years ended August
28, 2004.

      DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES: AutoZone is exposed to
market risk from, among other things, changes in interest rates, foreign
exchange rates and fuel prices. From time to time, the Company uses various
financial instruments to reduce such risks. To date, based upon the Company's
current level of foreign operations, hedging costs and past changes in the
associated foreign exchange rates, no instruments have been utilized to reduce
this market risk. All of the Company's hedging activities are governed by
guidelines that are authorized by AutoZone's Board of Directors. Further, the
Company does not buy or sell financial instruments for trading purposes.

      AutoZone's financial market risk results primarily from changes in
interest rates. At times, AutoZone reduces its exposure to changes in interest
rates by entering into various interest rate hedge instruments such as interest
rate swap contracts, treasury lock agreements and forward-starting interest rate
swaps. The Company complies with Statement of Financial Accounting Standards
Nos. 133, 137, 138 and 149 (collectively "SFAS 133") pertaining to the
accounting for these derivatives and hedging activities which require all such
interest rate hedge instruments to be recognized on the balance sheet at fair
value. All of the Company's interest rate hedge instruments are designated as
cash flow hedges. Refer to Note B for additional disclosures regarding the
Company's derivatives instruments and hedging activities.

      FINANCIAL INSTRUMENTS: The Company has financial instruments, including
cash, accounts receivable, other current assets and accounts payable. The
carrying amounts of these financial instruments approximate fair value because
of their short maturities. A discussion of the carrying values and fair values
of the Company's debt is included in Note E, while a discussion of the Company's
fair values of its derivatives is included in Note B.

      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.

      REVENUE RECOGNITION: The Company recognizes sales at the time the sale is
made and the product is delivered to the customer.

                                       20


      VENDOR ALLOWANCES AND ADVERTISING COSTS: The Company receives various
payments and allowances from its vendors based on the volume of purchases or for
services that AutoZone provides to the vendors. Monies received from vendors
include rebates, allowances and promotional funds. Typically, these funds are
dependent on purchase volumes and advertising plans. The amounts to be received
are subject to changes in market conditions, vendor marketing strategies and
changes in the profitability or sell-through of the related merchandise.

      Rebates and other miscellaneous incentives are earned based on purchases
or product sales. These monies are treated as a reduction of inventories and are
recognized as a reduction to cost of sales as the inventories are sold.

      Certain vendor allowances are used exclusively for promotions and to
partially or fully offset certain other direct expenses. Such vendor funding
arrangements, which were entered into on or before December 31, 2002, were
recognized as a reduction to operating, selling, general and administrative
expenses when earned. However, for such vendor funding arrangements entered into
or modified after December 31, 2002, the Company applied the new guidance
pursuant to the Emerging Issues Task Force Issue No. 02-16, "Accounting by a
Customer (Including a Reseller) for Cash Consideration Received from a Vendor"
("EITF 02-16"). Accordingly, all vendor funds from arrangements entered into or
modified after December 31, 2002, were recognized as a reduction to cost of
sales as the inventories were sold. As a result of the adoption of EITF 02-16,
operating, selling, general and administrative expenses were approximately $138
million higher in fiscal 2004 and $53 million higher in fiscal 2003, while gross
profit was approximately $138 million higher in fiscal 2004 and $43 million
higher in fiscal 2003 than such amounts would have been prior to the accounting
change.

      Advertising expense was approximately $98.1 million in fiscal 2004, $32.5
million in fiscal 2003, and $17.5 million in fiscal 2002. Prior to the adoption
of EITF 02-16 during fiscal 2003, vendor allowances for advertising were netted
against advertising expense. The Company expenses advertising costs as incurred.

      WARRANTY COSTS: The Company or the vendors supplying its products provide
its customers with limited warranties on certain products. Estimated warranty
obligations for which the Company is responsible are provided at the time of
sale of the product and are charged to cost of sales.

      SHIPPING AND HANDLING COSTS: The Company does not generally charge
customers separately for shipping and handling. The cost the Company incurs to
ship products to the stores for delivery to the customer is included in cost of
sales.

      PRE-OPENING EXPENSES: Pre-opening expenses, which consist primarily of
payroll and occupancy costs, are expensed as incurred.

      EARNINGS PER SHARE: Basic earnings per share is based on the weighted
average outstanding common shares. Diluted earnings per share is based on the
weighted average outstanding shares adjusted for the effect of common stock
equivalents. At this time, stock options are the Company's only common stock
equivalents. Stock options that were not included in the diluted computation
because they would have been anti-dilutive were 1.1 million shares at August 28,
2004.

      STOCK OPTIONS: At August 28, 2004, the Company has stock option plans that
provide for the purchase of the Company's common stock by some of its employees
and directors, which are described more fully in Note H. The Company accounts
for those plans using the intrinsic-value-based recognition method prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations. Accordingly, no stock-based employee
compensation cost is reflected in net income, as options are granted under those
plans at an exercise price equal to the market value of the underlying common
stock on the date of grant. Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," ("SFAS 123") and Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- - Transition and Disclosure" ("SFAS 148"), established accounting and
disclosure requirements using a fair-value-based method of accounting for
stock-based employee compensation plans. As allowed under SFAS 123, the Company
has elected to continue to apply the intrinsic-value-based method of accounting
and has adopted only the disclosure requirements of SFAS 123. The following
table illustrates the effect on net income and earnings per share had the
Company applied the fair-value recognition provisions of SFAS 123 to stock-based
employee compensation.

                                       21




                                                                                                YEAR ENDED
                                                                                  --------------------------------------
                                                                                  AUGUST 28,    AUGUST 30,    AUGUST 31,
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)                          2004           2003          2002
- ------------------------------------------------------------------------------    ----------    ----------    ----------
                                                                                                     
Reported net income...........................................................    $  566,202    $  517,604    $  428,148
Deduct total incremental stock-based compensation expense determined
   under fair-value-based method for all awards, net of related tax effects...        16,518        14,506         8,969
                                                                                  ----------    ----------    ----------
Pro forma net income..........................................................    $  549,684    $  503,098    $  419,179
                                                                                  ==========    ==========    ==========
Basic earnings per share:
      As reported.............................................................    $     6.66    $     5.45    $     4.10
                                                                                  ==========    ==========    ==========
      Pro forma...............................................................    $     6.46    $     5.30    $     4.01
                                                                                  ==========    ==========    ==========
Diluted earnings per share:
      As reported.............................................................    $     6.56    $     5.34    $     4.00
                                                                                  ==========    ==========    ==========
      Pro forma...............................................................    $     6.36    $     5.20    $     3.91
                                                                                  ==========    ==========    ==========


      The effects of applying SFAS 123 and the results obtained through the use
of the Black-Scholes option-pricing model in this pro forma disclosure are not
necessarily indicative of future amounts. The weighted average fair value of the
stock options granted was $28.07 per share during fiscal 2004, $24.59 per share
during fiscal 2003 and $16.10 per share during fiscal 2002. The fair value of
each option granted is estimated on the date of the grant using the
Black-Scholes option pricing model with the following weighted average
assumptions for grants in 2004, 2003 and 2002:



                                                                         YEAR ENDED
                                                           --------------------------------------
                                                           AUGUST 28,    AUGUST 30,    AUGUST 31,
                                                             2004           2003          2002
                                                           ----------    ----------    ----------
                                                                              
Expected price volatility..........................            37%           38%           39%
Risk-free interest rates...........................           2.4%          3.0%          2.4%
Expected lives in years............................           3.8           4.2           4.3
Dividend yield.....................................             0%            0%            0%


      RECENT ACCOUNTING PRONOUNCEMENTS: In January 2003, the Financial
Accounting Standards Board issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"). FIN 46, as revised in December 2003,
clarifies the application of Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," to certain entities in which equity investors do not have
the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 requires
the consolidation of certain types of entities in which a company absorbs a
majority of another entity's expected losses or residual returns, or both, as a
result of ownership, contractual or other financial interests in the other
entity. These entities are called variable interest entities. FIN 46 applies
immediately to variable interest entities created or acquired after January 31,
2003. For variable interest entities created or acquired prior to February 1,
2003, the provisions of FIN 46 must be applied at the end of periods ending
after March 15, 2004. The Company's adoption of FIN 46 did not have a
significant impact on its consolidated financial position, operating results or
cash flows.

NOTE B - DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

      AutoZone has utilized interest rate swaps to convert variable rate debt to
fixed rate debt and to lock in fixed rates on future debt issuances. At August
28, 2004, the Company held a five-year forward-starting interest rate swap with
a notional amount of $300 million. This swap has an October 2004 effective date
to coincide with an anticipated debt transaction. During fiscal 2004, the
related gains on this derivative are recorded in accumulated other comprehensive
loss, net of income taxes and it is expected that upon settlement of the
agreement, the realized gain or loss will be deferred in accumulated other
comprehensive loss and reclassified to interest expense over the life of the
underlying debt.

      At August 30, 2003, the Company held an interest rate swap contract, which
was settled in September 2003, to hedge $25 million of variable rate debt
associated with commercial paper borrowings. At August 30, 2003, it also held
treasury lock agreements with notional amounts of $300 million and a
forward-starting interest rate swap with a notional amount of $200 million.
These agreements hedged the exposure to variability in future cash flows
resulting from changes in interest rates prior to the November 2003 issuance of
$300 million 5.5% Senior Notes due

                                       22


November 2015 and $200 million 4.75% Senior Notes due November 2010. The related
gains on these transactions are deferred in stockholders' equity as a component
of accumulated other comprehensive loss. These deferred gains are recognized in
income as a decrease to interest expense in the period in which the related
interest rates being hedged are recognized in expense. However, to the extent
that the change in value of an interest rate hedge instrument does not perfectly
offset the change in the value of the interest rate being hedged, SFAS 133
requires that the ineffective portion is to be immediately recognized in income.
During November 2003, the Company recognized $2.7 million in gains related to
the ineffective portion of these agreements. The remaining gains realized upon
the November 2003 settlement were deferred in accumulated other comprehensive
loss and are being reclassified to interest expense over the life of the
underlying Senior Notes, resulting in effective interest rates of 4.86% on the
$300 million issuance and 4.17% on the $200 million issuance.

      During fiscal 2003, the Company also entered into and settled a
forward-starting interest rate swap with a notional amount of $200 million, used
to hedge the variability in future cash flows resulting from changes in interest
rates prior to the issuance of $200 million 4.375% Senior Notes. The loss
realized upon settlement was deferred in accumulated other comprehensive loss
and is being reclassified to interest expense over the life of the underlying
Senior Notes, resulting in an effective interest rate of 5.65%.

      AutoZone reflects the current fair value of all outstanding interest rate
hedge instruments in its consolidated balance sheets as a component of other
assets. The fair values of the interest rate hedge instruments were $4.6 million
at August 28, 2004 and $41.6 million at August 30, 2003. The Company's
outstanding hedge instrument was determined to be highly effective at August 28,
2004.

      The following table summarizes the fiscal 2004 and 2003 activity in
accumulated other comprehensive loss as it relates to interest rate hedge
instruments:



                                                                             BEFORE-TAX    INCOME      AFTER-TAX
                              (IN THOUSANDS)                                   AMOUNT        TAX         AMOUNT
                                                                             ----------   ---------    ---------
                                                                                              
Accumulated net losses as of August 31, 2002...........................      $  (10,445)  $      --    $ (10,445)
   Net gains on outstanding derivatives................................          41,566     (15,710)      25,856
   Net losses on terminated/matured derivatives........................         (20,014)         --      (20,014)
   Reclassification of net losses on derivatives  into earnings........           6,479          --        6,479
                                                                             ----------   ---------    ---------
Accumulated net gains as of August 30, 2003............................          17,586     (15,710)       1,876
   Net gains on outstanding derivatives................................           4,640      (1,740)       2,900
   Net gains on terminated/matured derivatives.........................          (9,484)     15,710        6,226
   Reclassification of derivative ineffectiveness into earnings........          (2,701)         --       (2,701)
   Reclassification of net losses on derivatives into earnings.........           1,523          --        1,523
                                                                             ----------   ---------    ---------
Accumulated net gains as of August 28, 2004............................      $   11,564   $  (1,740)   $   9,824
                                                                             ==========   =========    =========


      The Company primarily executes derivative transactions of relatively short
duration with strong creditworthy counterparties. These counterparties expose
the Company to credit risk in the event of non-performance. The amount of such
exposure is limited to the unpaid portion of amounts due to the Company pursuant
to the terms of the derivative financial instruments, if any. Although there are
no collateral requirements, if a downgrade in the credit rating of these
counterparties occurs, management believes that this exposure is mitigated by
provisions in the derivative agreements which allow for the legal right of
offset of any amounts due to the Company from the counterparties with amounts
payable, if any, to the counterparties by the Company. Management considers the
risk of counterparty default to be minimal.

                                       23


NOTE C - ACCRUED EXPENSES

      Accrued expenses at August 28, 2004, and August 30, 2003, consisted of the
following:



                                                                                          AUGUST 28,   AUGUST 30,
                                    (IN THOUSANDS)                                           2004         2003
- ---------------------------------------------------------------------------------------   ----------   ----------
                                                                                                 
Medical and casualty insurance claims..................................................   $  110,227   $   92,666
Accrued compensation and related payroll taxes.........................................       83,650       87,955
Property and sales taxes...............................................................       46,780       44,371
Accrued interest.......................................................................       23,041       18,651
Accrued sales and warranty returns.....................................................       11,493       78,482
Other..................................................................................       35,689       39,341
                                                                                          ----------   ----------
                                                                                          $  310,880   $  361,466
                                                                                          ==========   ==========


      The Company or the vendors supplying its products provide its customers
limited warranties on certain products that range from 30 days to lifetime
warranties. In most cases, the Company's vendors are primarily responsible for
warranty claims. Warranty costs relating to merchandise sold under warranty not
covered by vendors are estimated and recorded as warranty obligations at the
time of sale based on each product's historical return rate. These obligations,
which are often funded by vendor allowances, are recorded as a component of
accrued expenses. The Company periodically assesses the adequacy of its recorded
warranty liability and adjusts the amount as necessary resulting in income or
expense recognition. The Company has successfully negotiated with certain
vendors to transfer warranty obligations to such vendors in order to minimize
the Company's warranty exposure resulting in credits to earnings of $42.1
million in fiscal 2004 and $8.7 million in fiscal 2003, and ongoing reductions
in allowances received and claim settlements. Changes in the Company's accrued
sales and warranty returns for the last three fiscal years consisted of the
following:



                                                                                          YEAR ENDED
                                                                             ------------------------------------
                                                                             AUGUST 28,   AUGUST 30,   AUGUST 31,
                                (IN THOUSANDS)                                  2004         2003         2002
- ------------------------------------------------------------------------     ----------   ----------   ----------
                                                                                              
Balance, beginning of fiscal year.......................................     $   78,482   $   82,035   $   63,467
   Allowances received from vendors.....................................         37,388      116,808      109,498
   Expense (income).....................................................        (42,094)     (25,522)       2,978
   Claim settlements....................................................        (62,283)     (94,839)     (93,908)
                                                                             ----------   ----------   ----------
Balance, end of fiscal year.............................................     $   11,493   $   78,482   $   82,035
                                                                             ==========   ==========   ==========


NOTE D - INCOME TAXES

      The provision for income tax expense for each of the last three fiscal
years consisted of the following:



                                                                                          YEAR ENDED
                                                                             ------------------------------------
                                                                             AUGUST 28,   AUGUST 30,   AUGUST 31,
                             (IN THOUSANDS)                                     2004         2003         2002
- ------------------------------------------------------------------------     ----------   ----------   ----------
                                                                                              
Current:
   Federal..............................................................     $  268,013   $  219,699   $  210,457
   State................................................................         27,189       30,003       24,060
                                                                             ----------   ----------   ----------
                                                                                295,202      249,702      234,517
Deferred:
   Federal..............................................................         41,532       60,835       26,200
   State................................................................          2,966        4,866        2,283
                                                                             ----------   ----------   ----------
                                                                                 44,498       65,701       28,483
                                                                             ----------   ----------   ----------
                                                                             $  339,700   $  315,403   $  263,000
                                                                             ==========   ==========   ==========


                                       24


      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:



                                                                                         YEAR ENDED
                                                                             -----------------------------------
                                                                             AUGUST 28,  AUGUST 30,   AUGUST 31,
                             (IN THOUSANDS)                                     2004        2003         2002
- -----------------------------------------------------------------------      ----------  -----------  ----------
                                                                                             
Expected tax at statutory rate.........................................      $  317,066  $   291,552  $  241,902
State income taxes, net................................................          19,601       22,665      17,123
Other..................................................................           3,033        1,186       3,975
                                                                             ----------  -----------  ----------
                                                                             $  339,700  $   315,403  $  263,000
                                                                             ==========  ===========  ==========


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



                                                                    AUGUST 28,        AUGUST 30,
                      (IN THOUSANDS)                                   2004              2003
- ------------------------------------------------------------        ---------         ----------
                                                                                
Net deferred tax assets:
   Domestic net operating loss and credit carryforwards ....        $  30,775         $  29,181
   Foreign net operating loss and credit carryforwards .....            8,597             1,763
   Insurance reserves ......................................           23,584            29,319
   Warranty reserves .......................................            2,558            28,786
   Closed store reserves ...................................            4,437            10,321
   Minimum pension liability ...............................            7,322            18,072
                                                                    ---------         ---------
   Total deferred tax assets ...............................           77,273           117,442
   Less: Valuation allowance ...............................          (16,384)          (14,329)
                                                                    ---------         ---------
   Net deferred tax assets .................................           60,889           103,113
                                                                    ---------         ---------
Deferred tax liabilities:
   Property and equipment ..................................           25,000            23,401
   Inventory ...............................................           31,565            27,997
   Derivatives .............................................            1,740            15,710
   Other ...................................................           14,323             6,466
                                                                    ---------         ---------
   Deferred tax liabilities ................................           72,628            73,574
                                                                    ---------         ---------
   Net deferred tax (liabilities) assets ...................        $ (11,739)        $  29,539
                                                                    =========         =========


      For the years ended August 28, 2004 and August 30, 2003, the Company had
deferred tax assets of $9.4 million and $9.6 million from federal tax net
operating loss carryforwards ("NOLs") of $26.9 million and $27.5 million,
deferred tax assets of $11.4 million and $12.1 million from state tax NOLs of
$465.5 million and $492.9 million, and deferred tax assets of $5.7 million and
$1.8 million from foreign tax NOLs of $16.8 million and $5.2 million,
respectively. These NOLs will expire between fiscal 2005 and fiscal 2022. The
federal and state NOLs relate primarily to the acquisitions of ADAP (which had
been doing business as "Auto Palace") and Chief Auto Parts, Inc. in fiscal 1998.
The Company maintains an $8.6 million valuation allowance against certain
federal and state NOLs subject to annual limitations resulting from its
acquisition of ADAP, Inc. This valuation allowance was recorded as part of the
ADAP, Inc. purchase accounting and, if reversed, will be allocated to goodwill.
Additionally, the Company had deferred tax assets of $12.9 million at August 28,
2004, and $7.4 million at August 28, 2003, for federal, state, and Mexican
income tax credit carryforwards. Certain tax credit carryforwards have no
expiration date and others will expire in fiscal 2009 through fiscal 2014.

                                       25



NOTE E - FINANCING

      The Company's long-term debt as of August 28, 2004, and August 30, 2003,
consisted of the following:


                                                                                                  AUGUST 28,        AUGUST 30,
                                      (IN THOUSANDS)                                                 2004              2003
- ------------------------------------------------------------------------------------------        ----------        ----------
                                                                                                              
5.875% Senior Notes due October 2012, effective interest rate of 6.33% ...................        $  300,000        $  300,000
5.5% Senior Notes due November 2015, effective interest rate of 4.86% ....................           300,000                --
4.75% Senior Notes due November 2010, effective interest rate of 4.17% ...................           200,000                --
4.375% Senior Notes due June 2013, effective interest rate of 5.65% ......................           200,000           200,000
6.5% Senior Notes due July 2008 ..........................................................           190,000           190,000
7.99% Senior Notes due April 2006 ........................................................           150,000           150,000
6.0% Senior Notes due November 2003 ......................................................                --           150,000
Bank term loan due November 2004, variable interest rate of 2.26% at August 30, 2003 .....                --           250,000
Commercial paper, weighted average interest rate of 1.6% at August 28, 2004,
  and 1.2% at August 30, 2003 ............................................................           522,400           268,000
Other ....................................................................................             6,850            38,845
                                                                                                  ----------        ----------
                                                                                                  $1,869,250        $1,546,845
                                                                                                  ==========        ==========


      The Company maintains $1.0 billion of revolving credit facilities with a
group of banks. During fiscal 2004, these credit facilities replaced the
previous $950 million of revolving credit facilities. Of the $1.0 billion, $300
million expires in May 2005. The remaining $700 million expires in May 2009. The
portion expiring in May 2005 is expected to be renewed, replaced or the option
to extend the maturity date of the then outstanding debt by one year will be
exercised. The credit facilities exist primarily to support commercial paper
borrowings, letters of credit and other short-term unsecured bank loans. As the
available balance is reduced by commercial paper borrowings and certain
outstanding letters of credit, the Company had $380.7 million in available
capacity under these facilities at August 28, 2004. The rate of interest payable
under the credit facilities is a function of the London Interbank Offered Rate
(LIBOR), the lending bank's base rate (as defined in the facility agreements) or
a competitive bid rate at the option of the Company.

      Commercial paper and other short-term borrowings are classified as
long-term, as the Company has the ability and intent to refinance them on a
long-term basis.

      On October 16, 2002, the Company issued $300 million of 5.875% Senior
Notes that mature in October 2012, with interest payable semi-annually on April
15 and October 15. A portion of the proceeds from these Senior Notes was used to
prepay a $115 million unsecured bank term loan due December 2003, to repay a
portion of the Company's outstanding commercial paper borrowings, and to settle
interest rate hedges associated with the issuance and repayment of the related
debt securities. On June 3, 2003, the Company issued $200 million of 4.375%
Senior Notes. These Senior Notes mature in June 2013, and interest is payable
semi-annually on June 1 and December 1. The proceeds were used to repay a
portion of the Company's outstanding commercial paper borrowings, to prepay $100
million of the $350 million unsecured bank loan due November 2004, and to settle
interest rate hedges associated with the issuance of the debt securities.

      As of August 30, 2003, "Other" long-term debt included approximately $30
million related to the Company's synthetic leases, with expiration dates in
fiscal 2006, for a small number of its domestic stores. At August 30, 2003, the
Company recognized the obligations under the lease facility and increased its
property and long-term debt balances on its balance sheet by approximately $30
million. All obligations related to the synthetic leases were settled during
fiscal 2004.

      During November 2003, the Company issued $300 million of 5.5% Senior Notes
due November 2015 and $200 million of 4.75% Senior Notes due November 2010.
Interest under both notes is payable in May and November of each year. Proceeds
were used to repay a $250 million bank term loan, $150 million in 6% Senior
Notes and to reduce commercial paper borrowings. During November 2003, the
Company settled all then outstanding interest rate hedge instruments, including
interest rate swap contracts, treasury lock agreements and forward-starting
interest rate swaps.

                                       26



      On August 17, 2004, the Company filed a shelf registration with the
Securities and Exchange Commission that allows the Company to sell up to $300
million in debt securities to fund general corporate purposes, including
repaying, redeeming or repurchasing outstanding debt, and for working capital,
capital expenditures, new store openings, stock repurchases and acquisitions.
All debt under this registration statement is planned to be issued in the first
quarter of fiscal 2005. Based on this planned debt issuance, on March 31, 2004,
the Company entered into a five-year forward-starting interest rate swap with a
notional amount of $300 million with a settlement and an effective date in
October 2004. The fair value of this swap was $4.6 million at August 28, 2004,
and is reflected as a component of other assets.

      The Company agreed to observe certain covenants under the terms of its
borrowing agreements, including limitations on total indebtedness, restrictions
on liens and minimum fixed charge coverage. All of the repayment obligations
under the Company's borrowing agreements may be accelerated and come due prior
to the scheduled payment date if covenants are breached or an event of default
occurs. Additionally, the repayment obligations may be accelerated if AutoZone
experiences a change in control (as defined in the agreements) of AutoZone or
its Board of Directors. As of August 28, 2004, the Company was in compliance
with all covenants and expects to remain in compliance with all covenants.

      All of the Company's debt is unsecured, except for $6.9 million, which is
collateralized by property. Scheduled maturities of long-term debt are as
follows:



                                                                                                      AMOUNT
                                               FISCAL YEAR                                        (IN THOUSANDS)
- -----------------------------------------------------------------------------------------------   -------------
                                                                                               
2005...........................................................................................   $   525,100
2006...........................................................................................       152,750
2007...........................................................................................         1,400
2008...........................................................................................       190,000
2009...........................................................................................            --
Thereafter.....................................................................................     1,000,000
                                                                                                  -----------
                                                                                                  $ 1,869,250
                                                                                                  ===========


      The maturities for fiscal 2005 are classified as long-term as the Company
has the ability and intention to refinance them on a long-term basis.

      The fair value of the Company's debt was estimated at $1.88 billion as of
August 28, 2004, and $1.57 billion as of August 30, 2003, based on the quoted
market prices for the same or similar issues or on the current rates available
to the Company for debt of the same remaining maturities. Such fair value is
greater than the carrying value of debt by $11.1 million at August 28, 2004 and
by $27.3 million at August 30, 2003.

NOTE F - INTEREST EXPENSE

      Net interest expense for each of the last three fiscal years consisted of
the following:



                                                          YEAR ENDED
                                          --------------------------------------------
                                          AUGUST 28,       AUGUST 30,       AUGUST 31,
         (IN THOUSANDS)                     2004             2003              2002
- ----------------------------------        ---------        ---------        ----------
                                                                   
Interest expense .................        $ 93,831         $ 86,635         $ 80,466
Interest income ..................            (214)          (1,054)            (169)
Capitalized interest .............            (813)            (791)            (437)
                                          --------         --------         --------
                                          $ 92,804         $ 84,790         $ 79,860
                                          ========         ========         ========


NOTE G - STOCK REPURCHASE PROGRAM

      As of August 28, 2004, the Board of Directors had authorized the Company
to repurchase up to $3.9 billion of common stock in the open market. Such
authorization includes the additional $600 million that was approved by the
Board of Directors on March 17, 2004. From January 1998 to August 28, 2004, the
Company has repurchased a total of 82.2 million shares at an aggregate cost of
$3.675 billion.

                                       27



NOTE H - EMPLOYEE STOCK PLANS

      The Company has granted options to purchase common stock to some of its
employees and directors under various plans at prices equal to the market value
of the stock on the dates the options were granted. Options become exercisable
in a one- to seven-year period, and expire ten years after the grant date. See
Note A for additional information regarding the Company's stock option plans.

      A summary of outstanding stock options is as follows:



                                                                    WEIGHTED
                                                                    AVERAGE
                                                  NUMBER            EXERCISE
                                                OF SHARES            PRICE
                                                ----------         ----------
                                                             
Outstanding August 25, 2001 ............         8,456,177         $    26.33
   Granted .............................         1,134,064              46.88
   Exercised ...........................        (2,621,247)             25.26
   Canceled ............................          (684,435)             29.50
                                                ----------         ----------

Outstanding August 31, 2002 ............         6,284,559              30.09
   Granted .............................         1,475,922              71.55
   Exercised ...........................        (1,763,940)             27.79
   Canceled ............................          (714,840)             32.00
                                                ----------         ----------

Outstanding August 30, 2003 ............         5,281,701              42.14
   Granted .............................         1,161,597              88.99
   Exercised ...........................        (1,118,797)             32.16
   Canceled ............................          (312,795)             53.92
                                                ----------         ----------

Outstanding August 28, 2004 ............         5,011,706         $    54.42
                                                ==========         ==========


      The following table summarizes information about stock options outstanding
at August 28, 2004:



                                        OPTIONS OUTSTANDING                               OPTIONS EXERCISABLE
                          --------------------------------------------------        --------------------------------
                                                                  WEIGHTED
                                                                   AVERAGE
                                              WEIGHTED            REMAINING                              WEIGHTED
                                              AVERAGE            CONTRACTUAL                              AVERAGE
  RANGE OF EXERCISE          NUMBER           EXERCISE               LIFE              NUMBER            EXERCISE
       PRICES             OUTSTANDING          PRICE             (IN YEARS)         EXERCISABLE            PRICE
- ---------------------     -----------       ------------        ------------        ------------        ------------
                                                                                         
$ 4.86 - $26.14 .....      1,239,740        $      24.49                5.12             721,447        $      24.49
$26.38 - $43.90 .....      1,291,955               36.38                5.50             671,285               34.47
$45.53 - $69.71 .....        127,082               62.86                7.36              66,750               61.10
$71.12 - $71.12 .....      1,151,397               71.12                8.03             233,610               71.12
$71.18 - $91.34 .....      1,201,532               87.82                8.97              24,600               77.99
                          ----------        ------------        ------------        ------------        ------------
$ 4.86 - $91.34 .....      5,011,706        $      54.42                6.87           1,717,692        $      36.92
                          ==========        ============        ============        ============        ============


      Options to purchase 1.7 million shares at August 28, 2004, 1.5 million
shares at August 30, 2003, and 2.1 million shares at August 31, 2002, were
exercisable. Shares reserved for future grants were 3.1 million at August 28,
2004.

      The Company also has an employee stock purchase plan, qualified under
Section 423 of the Internal Revenue Code, under which all eligible employees may
purchase AutoZone's common stock at 85% of the lower of the market price of the
common stock on the first day or last day of each calendar quarter through
payroll deductions. Maximum permitted annual purchases are $15,000 per employee
or 10 percent of compensation, whichever is less. Under the plan, 66,572 shares
were sold to employees in fiscal 2004, 84,310 shares were sold in fiscal 2003,
and 112,922 were sold in fiscal 2002. The Company repurchased, at fair value,
102,084 shares in fiscal 2004, 134,972

                                       28


shares in fiscal 2003, and 260,805 shares in fiscal 2002 from employees electing
to sell their stock. At August 28, 2004, 535,682 shares of common stock were
reserved for future issuance under this plan.

      The Amended and Restated Executive Stock Purchase Plan permits senior
Company executives to purchase common stock up to 25 percent of their annual
salary and bonus after the limits under the employee stock purchase plan have
been exceeded. Purchases under this plan were 11,005 shares in fiscal 2004 and
18,524 shares in fiscal 2003. At August 28, 2004, 270,471 shares of common stock
were reserved for future issuance under this plan.

      Under the AutoZone, Inc. 2003 Director Compensation Plan, a non-employee
director may receive no more than one-half of the annual and meeting fees
immediately in cash, and the remainder of the fees must be taken in common stock
or may be deferred in units with value equivalent to the value of shares of
common stock as of the grant date. At August 28, 2004, 94,204 shares of common
stock were reserved for future issuance under this plan.

      Under the AutoZone, Inc. 2003 Director Stock Option Plan, on January 1 of
each year, each non-employee director receives an option to purchase 1,500
shares of common stock, and each non-employee director that owns common stock
worth at least five times the annual fee paid to each non-employee director on
an annual basis will receive an additional option to purchase 1,500 shares of
common stock. In addition, each new director receives an option to purchase
3,000 shares upon election to the Board of Directors, plus a portion of the
annual directors' option grant prorated for the portion of the year actually
served in office. These stock option grants are made at the fair market value as
of the grant date. At August 28, 2004, there were 42,902 outstanding options
with 355,598 shares of common stock reserved for future issuance under this
plan.

NOTE I - PENSION AND SAVINGS PLANS

      Prior to January 1, 2003, substantially all full-time employees were
covered by a defined benefit pension plan. The benefits under the plan were
based on years of service and the employee's highest consecutive five-year
average compensation. On January 1, 2003, the plan was frozen. Accordingly,
pension plan participants will earn no new benefits under the plan formula and
no new participants will join the pension plan.

      On January 1, 2003, the Company's supplemental defined benefit pension
plan for certain highly compensated employees was also frozen. Accordingly, plan
participants will earn no new benefits under the plan formula and no new
participants will join the pension plan.

      The investment strategy for pension plan assets is to utilize a
diversified mix of domestic and international equity portfolios, together with
other investments, to earn a long-term investment return that meets the
Company's pension plan obligations. Active management and alternative investment
strategies are utilized within the plan in an effort to minimize risk, while
realizing investment returns in excess of market indices. The weighted average
asset allocation for our pension plan assets was as follows:



                                                            CURRENT       TARGET
                                                                    
Domestic equities.....................................        51.2%        50.0%
International equities................................        34.6         30.0
Alternative investments...............................        10.9         13.0
Real estate...........................................         3.1          5.0
Cash and cash equivalents.............................         0.2          2.0
                                                             -----        -----
                                                             100.0%       100.0%
                                                             =====        =====


      The Company makes annual contributions in amounts at least equal to the
minimum funding requirements of the Employee Retirement Income Security Act of
1974. The Company made no contributions to the plans in fiscal 2004 and
contributed $6.3 million to the plans in fiscal 2003. No contributions are
expected to be required or made during fiscal 2005. A change in interest rates
or expected return on plan assets may result in a cash funding requirement in
fiscal 2006 or beyond. The measurement date for the Company's defined benefit
pension plan was May 31 of each fiscal year.

                                       29


      The following table sets forth the plans' funded status and amounts
recognized in the Company's financial statements:



                                                                                      AUGUST 28,      AUGUST 30,
                                    (IN THOUSANDS)                                      2004            2003
- --------------------------------------------------------------------------------    --------------  -------------
                                                                                              
Change in benefit obligation:
Benefit obligation at beginning of year.........................................    $     136,077   $     117,005
Service cost....................................................................               --           4,823
Interest cost...................................................................            8,114           6,214
Actuarial (gains) losses........................................................          (13,070)         39,518
Plan amendments.................................................................               --         (29,813)
Benefits paid...................................................................           (2,738)         (1,670)
                                                                                    -------------   -------------
Benefit obligation at end of year...............................................          128,383         136,077

Change in plan assets:
Fair value of plan assets at beginning of year..................................           86,737          83,306
Actual return (loss) on plan assets.............................................           19,157            (603)
Company contributions...........................................................               --           6,293
Benefits paid...................................................................           (2,738)         (1,670)
Administrative expenses.........................................................             (795)           (589)
                                                                                    -------------   -------------
Fair value of plan assets at end of year........................................          102,361          86,737

Reconciliation of funded status:
Underfunded status of the plans.................................................          (26,022)        (49,340)
Unrecognized net actuarial losses...............................................           20,690          49,622
Unamortized prior service cost..................................................           (1,166)         (1,811)
                                                                                    -------------   -------------
Accrued benefit cost............................................................    $      (6,498)  $      (1,529)
                                                                                    =============   =============

Recognized defined benefit pension liability:
Accrued benefit liability.......................................................    $     (26,022)  $     (49,340)
Accumulated other comprehensive income..........................................           19,524          47,811
                                                                                    -------------   -------------
Net liability recognized........................................................    $      (6,498)  $      (1,529)
                                                                                    =============   =============




                                                                                                         YEAR ENDED
                                                                                           -------------------------------------
                                                                                           AUGUST 28,    AUGUST 30,   AUGUST 31,
                                   (IN THOUSANDS)                                            2004          2003         2002
- --------------------------------------------------------------------------------------     ----------    ----------   ----------
                                                                                                             
Components of net periodic benefit cost:
Service cost..........................................................................     $       --    $   4,823    $  13,500
Interest cost.........................................................................          8,114        6,214        6,861
Expected return on plan assets........................................................         (6,871)      (6,609)      (6,255)
Amortization of prior service cost....................................................           (645)        (575)        (568)
Recognized net actuarial losses.......................................................          4,371           --        1,030
Curtailment gain......................................................................             --         (107)          --
                                                                                           ----------    ---------    ---------
Net periodic benefit cost.............................................................     $    4,969    $   3,746    $  14,568
                                                                                           ==========    =========    =========


      The actuarial assumptions were as follows:



                                                              2004        2003         2002
                                                              ----        ----         ----
                                                                              
Weighted average discount rate                                6.50%       6.00%        7.25%
                                                              ====        ====         ====
Expected long-term rate of return on assets                   8.00%       8.00%        8.00%
                                                              ====        ====         ====


      As the plan benefits were frozen as of December 31, 2002, increases in
future compensation levels no longer impact the calculation. In fiscal years
2003 and 2002, the assumed increases in future compensation levels were
generally age weighted rates from 5-10% after the first two years of service
using 15% for year one and 12% for year two. The expected long-term rate of
return on plan assets is based on the historical relationships between the
investment classes and the economical capital market environments, updated for
current conditions. Prior service

                                       30


cost is amortized over the estimated average remaining service lives of the plan
participants and the unrecognized actuarial loss is amortized over the remaining
service period of 7.96 years at August 28, 2004.

      Actual benefit payments may vary significantly from the following
estimates. Based on current assumptions about future events, benefit payments
are expected to be paid as follows for each of the following plan years:



                                                                                                                      AMOUNT
                                               PLAN YEAR ENDING DECEMBER 31                                       (IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------   --------------
                                                                                                               
2004...........................................................................................................     $  2,143
2005...........................................................................................................        2,524
2006...........................................................................................................        2,945
2007...........................................................................................................        3,467
2008...........................................................................................................        4,046
2009 - 2013....................................................................................................       28,294


      On January 1, 2003, the Company introduced an enhanced defined
contribution plan ("401(k) plan") pursuant to Section 401(k) of the Internal
Revenue Code that replaced the previous 401(k) plan. The 401(k) plan covers
substantially all employees that meet the plan's service requirements. The new
plan features include increased Company matching contributions, immediate 100%
vesting of Company contributions and an increased savings option to 25% of
qualified earnings. The Company makes matching contributions, per pay period, up
to a specified percentage of employees' contributions as approved by the Board
of Directors. The Company made matching contributions to employee accounts in
connection with the 401(k) plan of $8.8 million in fiscal 2004, $4.5 million in
fiscal year 2003 and $1.4 million in fiscal year 2002.

NOTE J - LEASES

      Some of the Company's retail stores, distribution centers and equipment
are leased. Most of these leases include renewal options, at the Company's
election, and some include options to purchase and provisions for percentage
rent based on sales.

      Rental expense was $116.9 million in fiscal 2004, $110.7 million in fiscal
2003 and $99.0 million in fiscal 2002. Percentage rentals were insignificant.

      Minimum annual rental commitments under non-cancelable operating leases
were as follows at the end of fiscal 2004 (in thousands):



                                                        FISCAL YEAR                                                        AMOUNT
- ---------------------------------------------------------------------------------------------------------------        -------------
                                                                                                                    
2005...........................................................................................................        $     130,115
2006...........................................................................................................              119,846
2007...........................................................................................................              101,316
2008...........................................................................................................               81,675
2009...........................................................................................................               61,565
Thereafter.....................................................................................................              353,366
                                                                                                                       -------------
Total minimum payments required................................................................................        $     847,883
                                                                                                                       =============


      In connection with the Company's December 2001 sale of the TruckPro
business, the Company subleased some properties to the purchaser for an initial
term of not less than 20 years. The Company's remaining aggregate rental
obligation at August 28, 2004 of $30.1 million is included in the above table,
but the obligation is entirely offset by the sublease rental agreement.

                                       31


NOTE K - RESTRUCTURING AND CLOSED STORE OBLIGATIONS

      In fiscal 2001, the Company recorded restructuring and impairment charges
of $156.8 million related to the planned closure of 51 domestic auto parts
stores and the disposal of real estate projects in process and excess
properties. In fiscal 2002, these stores were closed, and sales of certain
excess properties resulted in gains of approximately $2.6 million. During fiscal
2002, all remaining excess properties were reevaluated. At that time, it was
determined that several properties could be developed. This resulted in the
reversal of accrued lease obligations totaling $6.4 million. It was also
determined that additional write-downs totaling $9.0 million were needed to
state remaining excess properties at fair value. AutoZone recognized gains of
$4.8 million in fiscal 2004 and $4.6 million in fiscal 2003 as a result of the
development, negotiated lease buy-out or disposition of properties associated
with the restructuring and impairment charges in fiscal 2001.

      In December 2001, TruckPro was sold to a group of investors for cash
proceeds of $25.7 million and a promissory note. The Company had deferred a gain
of $3.6 million related to the sale due to uncertainties associated with the
realization of the gain. During fiscal 2003, the note (with a face value of $4.5
million) was repaid to the Company and certain liabilities were settled. As a
result, a total gain of $4.7 million was recognized into income during fiscal
2003.

      From time to time the Company will close under-performing leased stores.
The remaining minimum lease obligations and other carrying costs of these
properties are accrued upon the store closing. The following table presents a
summary of the closed store obligations segmented by those obligations
originating from the 2001 restructuring and all other store closings:



                                          (IN THOUSANDS)                                 RESTRUCTURING   ALL OTHER     TOTAL
- --------------------------------------------------------------------------------------   -------------   ---------    -------
                                                                                                             
Balance at August 31, 2002............................................................      $ 18,140      $34,332     $52,472
Cash outlays/adjustments..............................................................         5,664       19,970      25,634
                                                                                            --------      -------     -------
Balance at August 30, 2003............................................................        12,476       14,362      26,838
Cash outlays/adjustments..............................................................        10,276        5,376      15,652
                                                                                            --------      -------     -------
Balance at August 28, 2004............................................................      $  2,200      $ 8,986     $11,186
                                                                                            ========      =======     =======


NOTE L - COMMITMENTS AND CONTINGENCIES

      Construction commitments, primarily for new stores, totaled approximately
$26.4 million at August 28, 2004.

      The Company currently, and from time to time, is involved in various legal
proceedings incidental to the conduct of its business. Although the amount of
liability that may result from these proceedings cannot be ascertained, the
Company does not currently believe that, in the aggregate, these matters will
result in liabilities material to the Company's financial condition, results of
operations or cash flows.

      The Company is self-insured for workers' compensation, automobile, general
and product liability and property losses. Beginning in fiscal 2004, a portion
of these self-insured losses are managed through a wholly-owned insurance
captive. The captive's assets and liabilities are included, net of intercompany
eliminations, in the consolidated financial statements at August 28, 2004.The
Company is also self-insured for health care claims for eligible active
employees. The Company maintains certain levels for 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.

      The Company had $97.2 million in outstanding letters of credit and $10.8
million in surety bonds as of August 28, 2004, which all have expiration periods
of less than one year. A substantial portion of the outstanding standby letters
of credit (which are primarily renewed on an annual basis) and surety bonds are
used to cover reimbursement obligations to our workers' compensation carriers.
There are no additional contingent liabilities associated with them as the
underlying liabilities are already reflected in our balance sheet. The letters
of credit and surety bonds arrangements have automatic renewal clauses.

                                       32


NOTE M - SEGMENT REPORTING

      The Company manages its business on the basis of one reportable segment.
See Note A for a brief description of the Company's business. As of August 28,
2004, the majority of the Company's operations were located within the United
States. Other operations include ALLDATA and the Mexico locations, each of which
comprises less than 3 percent of consolidated net sales, net income and total
assets. The following data is presented in accordance with Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information."



                                                                                              YEAR ENDED
                                                                          -------------------------------------------------
                                                                             AUGUST 28,       AUGUST 30,       AUGUST 31,
                              (IN THOUSANDS)                                    2004             2003             2002
- ---------------------------------------------------------------------     ----------------  --------------  ---------------
                                                                                                   
Primary business focus:
      U.S. Retail....................................................      $     4,727,402  $    4,638,361  $     4,621,234
      Commercial.....................................................              740,480         670,010          531,776
      Other..........................................................              169,143         148,752          172,500
                                                                           ---------------  --------------  ---------------
   Net sales.........................................................      $     5,637,025  $    5,457,123  $     5,325,510
                                                                           ===============  ==============  ===============


                                       33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

THE BOARD OF DIRECTORS AND STOCKHOLDERS
AUTOZONE, INC.

     We have audited the accompanying consolidated balance sheets of AutoZone,
Inc. as of August 28, 2004 and August 30, 2003, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the three years in the period ended August 28, 2004. 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 the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AutoZone, Inc. as of August 28, 2004 and August 30, 2003, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended August 28, 2004, in conformity with U.S. generally accepted
accounting principles.

     As discussed in Note A, "Vendor Allowances and Advertising Costs", to the
consolidated financial statements, in fiscal 2003, the Company adopted Emerging
Issues Task Force Issue No. 02-16, "Accounting by a Customer (Including a
Reseller) for Certain Consideration Received from a Vendor."


                                            /s/ Ernst & Young LLP


Memphis, Tennessee
September 21, 2004








                                       34




MANAGEMENT'S REPORT

    Management is responsible for the preparation, integrity, and fair
presentation of the accompanying consolidated financial statements of the
Company and its subsidiaries. The financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
and include the best estimates and judgments of management. Management also
prepared the other information included in the annual report and is responsible
for its accuracy and consistency with the financial statements. The report of
the independent registered public accounting firm, Ernst & Young LLP, based upon
their audits of the consolidated financial statements, is contained in this
Annual Report.

    The Audit Committee of our Company's Board of Directors, composed solely of
independent directors, regularly meets with Ernst & Young, management and
internal auditors to discuss auditing and financial reporting matters and the
system of internal control. The Committee also meets regularly with Ernst &
Young and the internal auditors without management present to discuss any
matters that may require attention.

    Management maintains a system of internal control over financial reporting
that provides reasonable assurance, at an appropriate cost-benefit relationship,
about the reliability of financial reporting. The system contains
self-monitoring mechanisms, and is regularly tested by Deloitte & Touche LLP,
the Company's internal auditors. Actions are taken to correct deficiencies as
they are identified. Even an effective internal control system, no matter how
well designed, has inherent limitations - including the possibility of the
circumvention or overriding of controls - and therefore can provide only
reasonable assurance with respect to financial statement preparation. Further,
because of changes in conditions, internal control system effectiveness may vary
over time.

         /s/ Steve Odland                          /s/ Michael G. Archbold
         ---------------------------               -----------------------
         Steve Odland                              Michael G. Archbold
         Chairman, President, and                  Executive Vice President,
         Chief Executive Officer                   Chief Financial Officer
         Customer Satisfaction                     Customer Satisfaction














                                       35

                                                                               .
                                                                               .
                                                                               .

                                                                    EXHIBIT 21.1


                         SUBSIDIARIES OF THE REGISTRANT




                                                     STATE OR COUNTRY
                                                      OF ORGANIZATION
NAME                                                 OR INCORPORATION
                                                  
ALLDATA LLC                                                Nevada
AutoZone de Mexico, S. de R.L. de C.V.                     Mexico
AutoZone Development Corporation                           Nevada
AutoZone Northeast, Inc. fka ADAP, Inc.                  New Jersey
AutoZone Stores, Inc.                                      Nevada
AutoZone Texas, L.P.                                      Delaware
AutoZone West, Inc. fka Chief Auto Parts Inc.             Delaware
AutoZone.com, Inc.                                         Nevada
AutoZone Parts, Inc.                                       Nevada


         In addition, twelve subsidiaries operating in the United States and
three subsidiaries operating outside of the United States have been omitted as
they would not, considered in the aggregate as a single subsidiary, constitute a
significant subsidiary as defined by Rule 1-02(w) of Regulation S-X.

                                                                    Exhibit 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this Annual Report on Form 10-K
of AutoZone, Inc. and in the following Registration Statements and related
Prospectuses of AutoZone, Inc. of our report dated September 21, 2004, with
respect to the consolidated financial statements of AutoZone, Inc. included in
the 2004 Annual Report to Shareholders of AutoZone, Inc.:

Registration Statement (Form S-8 No. 333-42797) pertaining to the AutoZone, Inc.
Amended and Restated Employee Stock Purchase Plan

Registration Statement (Form S-8 and S-3 No. 33-41618) pertaining to the
AutoZone, Inc. Amended and Restated Stock Option Plan

Registration Statement (Form S-8 No. 333-88245) pertaining to the AutoZone, Inc.
Second Amended and Restated 1996 Stock Option Plan

Registration Statement (Form S-8 No. 333-88241) pertaining to the AutoZone, Inc.
Amended and Restated Director Compensation Plan

Registration Statement (Form S-8 No. 333-75142) pertaining to the AutoZone, Inc.
Third Amended and Restated 1998 Director Stock Option Plan

Registration Statement (Form S-8 No. 333-83436) pertaining to a shelf
registration to sell 15,000,000 shares of common stock owned by certain selling
stockholders

Registration Statement (Form S-8 No. 333-75140) pertaining to the AutoZone, Inc.
Executive Stock Purchase Plan

Registration Statement (Form S-3 No. 333-103665) pertaining to the AutoZone,
Inc. 2003 Director Compensation Plan

Registration Statement (Form S-3 No. 333-103666) pertaining to the AutoZone,
Inc. 2003 Director Stock Option Plan

Registration Statement (Form S-3 No. 333-118308) pertaining to the shelf
registration of $300 million in debt securities

                                                   /s/ Ernst & Young LLP

Memphis, Tennessee
October 22, 2004

                                                                    EXHIBIT 31.1

                            CERTIFICATION PURSUANT TO
    RULES 13A-14(a) AND 15D-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I, Steve Odland, Chairman, President and Chief Executive Officer of
AutoZone, Inc. ("registrant"), certify that:

     1.  I have reviewed this annual report on Form 10-K of AutoZone, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this report;

     3.  Based on my knowledge, the financial statements, and other financial
         information included in this report, fairly present in all material
         respects the financial condition, results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The registrant's other certifying officer(s) and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
         registrant and have:

         a)       Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

         b)       Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

         c)       Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter (the registrant's
                  fourth fiscal quarter in the case of an annual report) that
                  has materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

     5.  The registrant's other certifying officer(s) and I have disclosed,
         based on our most recent evaluation of internal control over financial
         reporting, to the registrant's auditors and the audit committee of the
         registrant's board of directors (or persons performing the equivalent
         functions):

         a)       All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         b)       Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls over financial reporting.



October 27, 2004

                                                 /s/ STEVE ODLAND
                                                 -----------------------------
                                                 Steve Odland
                                                 Chairman, President and
                                                 Chief Executive Officer

                                                                    EXHIBIT 31.2

                            CERTIFICATION PURSUANT TO
    RULES 13A-14(a) AND 15D-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
      AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

         I, Michael G. Archbold, Senior Vice President and Chief Financial
Officer of AutoZone, Inc. ("registrant"), certify that:

     1.  I have reviewed this annual report on Form 10-K of AutoZone, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this report;

     3.  Based on my knowledge, the financial statements, and other financial
         information included in this report, fairly present in all material
         respects the financial condition, results of operations and cash flows
         of the registrant as of, and for, the periods presented in this report;

     4.  The registrant's other certifying officer(s) and I are responsible for
         establishing and maintaining disclosure controls and procedures (as
         defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
         registrant and have:

         a)   Designed such disclosure controls and procedures, or caused such
              disclosure controls and procedures to be designed under our
              supervision, to ensure that material information relating to the
              registrant, including its consolidated subsidiaries, is made known
              to us by others within those entities, particularly during the
              period in which this report is being prepared;

         b)   Evaluated the effectiveness of the registrant's disclosure
              controls and procedures and presented in this report our
              conclusions about the effectiveness of the disclosure controls and
              procedures, as of the end of the period covered by this report
              based on such evaluation; and

         c)   Disclosed in this report any change in the registrant's internal
              control over financial reporting that occurred during the
              registrant's most recent fiscal quarter (the registrant's fourth
              fiscal quarter in the case of an annual report) that has
              materially affected, or is reasonably likely to materially affect,
              the registrant's internal control over financial reporting; and

     5.  The registrant's other certifying officer(s) and I have disclosed,
         based on our most recent evaluation of internal control over financial
         reporting, to the registrant's auditors and the audit committee of the
         registrant's board of directors (or persons performing the equivalent
         functions):

         a)       All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

         b)       Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal controls over financial reporting.



October 27, 2004

                               /s/ MICHAEL G. ARCHBOLD
                               -------------------------------------------------
                               Michael G. Archbold
                               Executive Vice President, Chief Financial Officer

                                                                    EXHIBIT 32.1

                            CERTIFICATION PURSUANT TO
                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AutoZone, Inc. (the "Company") on Form
10-K for the fiscal year ended August 28, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Steve Odland,
Chairman, President and Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (i)      the Report fully complies with the requirements of Section
                  13(a) or Section 15(d) of the Securities Exchange Act of 1934;
                  and

         (ii)     the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company.



October 27, 2004

                                            /s/ STEVE ODLAND
                                            ----------------------------------
                                            Steve Odland
                                            Chairman, President and
                                            Chief Executive Officer

                                                                    EXHIBIT 32.2


                            CERTIFICATION PURSUANT TO
                 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of AutoZone, Inc. (the "Company") on Form
10-K for the fiscal year ended August 28, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Michael G. Archbold,
Senior Vice President and Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:

         (i)      the Report fully complies with the requirements of Section
                  13(a) or Section 15(d) of the Securities Exchange Act of 1934;
                  and

         (ii)     the information contained in the Report fairly presents, in
                  all material respects, the financial condition and results of
                  operations of the Company.


October 27, 2004


                                             /s/ MICHAEL G. ARCHBOLD
                                             ---------------------------------
                                             Michael G. Archbold
                                             Executive Vice President,
                                             Chief Financial Officer