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Mail Stop 3561
February 9, 2006
Mr. Charlie Pleas, III
Vice President and Controller
AutoZone, Inc.
123 South Front Street
Memphis, Tennessee 38103
RE: AutoZone, Inc.
Form 10-K for Fiscal Year Ended August 27, 2005
Filed October 26, 2005
Form 10-Q for Quarterly Period Ended November 19,
2005
File No. 001-10714
Dear Mr Pleas:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
disclosures in future filings in response to these comments. If
you
disagree, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation. In some of our comments, we may
ask
you to provide us with information so we may better understand
your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for Fiscal Year Ended August 27, 2005
Exhibit 13.1, Fiscal 2005 Annual Report
Selected Financial Data, page 2
1. Reference is made to your presentation of "Inventory turnover"
and
"Net inventory turnover." Because the numerator in each of the
ratios includes cost of sales related to pay-on-scan arrangements,
but the denominator excludes the inventory associated with pay-on-
scan arrangements, we are concerned that the ratios are not
reflective of your true inventory turnover. Please tell us why
you
believe that these measures, as currently presented, provide valid
and useful information to investors, or otherwise tell us how you
would propose to revise your disclosures in future filings. Also
revise your disclosure to highlight the lack of comparability
between
periods as a result of the pay-on-scan arrangements not having
begun
until fiscal 2004.
Item 9A. Controls and Procedures, page 16
2. In future filings, please revise your disclosure regarding
changes
to internal controls over financial reporting to identify "any
changes," not just "significant changes," that occurred in the
most
recent quarter "which have materially affected or are reasonably
likely to materially affect, your internal controls over financial
reporting." See Item 308(c) of Regulation S-K. Also confirm to
us
that there were no changes in your internal controls over
financial
reporting during the fourth quarter that materially affected, or
are
reasonably likely to materially affect, your internal controls
over
financial reporting.
Consolidated Financial Statements, page 18
Notes to Consolidated Financial Statements, page 22
Note A. Significant Accounting Policies, page 22
3. In future filings, please disclose your policy for classifying
cash flows associated with derivative instruments designated as
qualifying hedges, as there are two alternative classifications
permitted under GAAP. Refer to paragraph 14 and footnote 4 to
SFAS
95. Please show us how the disclosure will read.
Note C. Accrued Expenses, page 27
4. Reference is made to your disclosure of the changes in your
accrued sales and warranty returns for the last three years. In
future filings, please revise to show separately the activity in
accrued sales returns and accrued warranty reserves. Refer to
Rules
5-04 and 12-09 of Regulation S-X.
Form 8-K filed December 6, 2005
5. In future filings please, revise to clearly and prominently
identify each non-GAAP measure as a non-GAAP measure. For
example,
you should identify "adjusted operating expenses," "adjusted
operating profit," "adjusted diluted earnings per share,"
"adjusted
debt/EITDAR," "cash flows before share repurchases and changes in
debt," "[adjusted] return on equity (ROE)," and "[adjusted] return
on
invested capital (ROIC)" as non-GAAP measures. We also believe
you
should revise the titles of the ROE and ROIC measures to call them
"Adjusted" ROE and "Adjusted" ROIC. Additionally, please revise
to
disclose for each non-GAAP measure presented the substantive
reasons
why management believes that presentation of the non-GAAP
financial
measure provides useful information to investors regarding your
financial condition and results of operations. Refer to the
Instructions to Item 2.02 of Form 8-K and Item 10(e)(1)(i) of
Regulation S-K. Finally, please ensure each non-GAAP measure
presented is reconciled to the most comparable GAAP measure. In
this
regard, we note that you currently have not provided a
reconciliation
of ROE or ROIC, as adjusted, to ROE or ROIC, as computed using
GAAP
measures.
Please respond to these comments within 10 business days or
tell
us when you will provide us with a response. Please furnish a
letter
that keys your responses to our comments and provides any
requested
information. Please understand that we may have additional
comments
after reviewing your responses to our comments. Please file your
response letter on EDGAR as a correspondence file.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filings
or
in response to our comments on your filings.
If you have any questions regarding these comments, please
direct them to Adam Phippen, Staff Accountant, at (202) 551-3336.
In
his absence, direct your questions to Robyn Manuel at (202) 551-
3823.
Any other questions may be directed to me at (202) 551-3843.
Sincerely,
George F. Ohsiek, Jr.
Branch Chief
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Mr. Charlie Pleas, III
AutoZone, Inc.
February 9, 2006
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