[X]    Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  [X]    No  [ ]
 

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  [X]    No  [ ]
 

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

Common Stock, $.01 Par Value - 89,483,123 shares as of June 7, 2003.

PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements
 
 

See Notes to Condensed Consolidated Financial Statements

    See Notes to Condensed Consolidated Financial Statements

    See Notes to Condensed Consolidated Financial Statements

Note A-Basis of Presentation

        The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the thirty-six weeks ended May 10, 2003, are not necessarily indicative of the results that may be expected for the fiscal year ending August 30, 2003. For further information, refer to the consolidated financial statements and footnotes included in the Company's annual report on Form 10-K for the year ended August 31, 2002.
 

Note B-Adoption of New Accounting Standards

        On September 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS 144).  SFAS 144 supersedes Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," but retains many of its fundamental provisions.  Additionally, SFAS 144 expands the scope of discontinued operations to include more disposal transactions.  The adoption of SFAS 144 did not have a significant impact on the Company's Consolidated Financial Statements.

        In November 2002 the Financial Accounting Standards Board issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45).  FIN 45 elaborates on the disclosures that must be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees and indemnities.  It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee.  The disclosure requirements of FIN 45 are effective for financial statements of interim or annual periods ending after December 15, 2002, and its recognition requirements are applicable for guarantees issued or modified after December 31, 2002.  FIN 45 applies to product warranties offered by the Company.  The Company does not expect the adoption of FIN 45 to have significant impact on its Consolidated Financial Statements.  Refer to Note K for the Company's interim disclosures.

        On December 31, 2002, the Company adopted Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146).  SFAS 146 nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)" and requires that a liability for the cost associated with an exit or disposal activity be recognized when the liability is incurred, as opposed to the date of an entity's commitment to an exit plan.  The adoption of SFAS 146 did not have a significant impact on the Company's Consolidated Financial Statements.

        On December 31, 2002, the Financial Accounting Standards Board issued Statement No. 148, "Accounting for Stock-Based Compensation -- Transition and Disclosure" (SFAS 148).  SFAS 148 amends Statement No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition to the Statement's fair value method of accounting for stock-based employee compensation.  SFAS 148 also amends the disclosure provisions of SFAS 123 and APB Opinion No. 28, "Interim Financial Reporting," to require disclosure in the summary of significant accounting policies of the effects of an entity's accounting policy with respect to stock-based employee compensation on reported net income and earnings per share in annual and interim financial statements.  Refer to Note C for the Company's interim disclosures.

        In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46).  FIN 46 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 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date.  FIN 46 applies to the Company's existing $30 million synthetic lease facility, and will be effective for the Company's first quarter in fiscal 2004.  The Company is currently evaluating the impact of FIN 46 and does not expect its adoption to have a significant impact on its Consolidated Financial Statements.

        In March 2003, the Emerging Issues Task Force (EITF) reached final consensus on EITF Issue No. 02-16, "Accounting by a Customer (including a Reseller) for Cash Consideration Received from a Vendor" (EITF 02-16).  Under EITF 02-16, cash consideration received from a vendor is presumed to be a reduction of the purchase cost of merchandise and should be reflected as a reduction of cost of sales or revenue as prescribed in the consensus.  The new guidance should be applied to new arrangements, including modifications of existing arrangements, entered into after December 31, 2002, to the extent vendor funds will be applied as a reduction of the purchase cost of inventories.  During the quarter, the Company reflected the new guidance for new and modified vendor agreements.  As a result, cost of sales was $13.0 million less and operating, selling, general and administrative expenses were $15.6 million higher as a result of the new guidance, resulting in a pretax charge of $2.6 million ($0.02 per share).  The Company will continue to reflect the new guidance for all new and modified arrangements.

        In April 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (SFAS 149).  SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities."  SFAS 149 is generally effective for contracts entered into or modified after June 30, 2003, and should be applied prospectively.  The Company does not expect the adoption of SFAS 149 to have a significant impact on its Consolidated Financial Statements.

        In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150).  SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.  It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances).  Many of these instruments were previously classified as equity.  SFAS 150 applies to the Company's use of equity forward agreements to repurchase common stock and would require the Company to record any forward purchase obligations as a liability on the balance sheet.  The guidance in SFAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  Subsequent to the end of the quarter, the Company settled all outstanding forward purchase contracts and, therefore, does not expect the adoption of SFAS 150 to have a significant impact on its Consolidated Financial Statements.
 

Note C-Stock-Based Compensation

       The Company has granted options to purchase common stock to some of its employees and directors under various plans, as described more fully in the Company's annual report on Form 10-K for the fiscal year ended August 31, 2002.  The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 125, "Accounting for Stock Issued to Employees," and related interpretations.  No stock-based employee compensation cost is reflected in net income, as options are typically granted under those plans at an exercise price equal to the market value of the underlying common stock on the date of grant.  The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation.
 
 
 

		Twelve	Weeks	Ended		Thirty-six	Weeks	Ended
(in thousands, except per share amounts)		May 10, 2003		May 4, 2002		May 10, 2003		May 4, 2002
Net income, as reported		$ 125,977		$ 102,314		$ 310,163		$ 250,162
Deduct:  Total stock-based employee     compensation expense determined     under fair value based method for all     awards, net of related tax effects		(3,950	)	(1,983	)	(11,801	)	(5,836	)
Pro forma net income		$ 122,027		$ 100,331		$ 298,362		$ 244,326
Earnings per share
Basic -- as reported		$       1.33		$       0.98		$       3.19		$       2.35
Basic -- pro forma		$       1.29		$       0.97		$       3.07		$       2.30
Diluted -- as reported		$       1.30		$       0.96		$       3.12		$       2.29
Diluted -- pro forma		$       1.26		$       0.94		$       3.00		$       2.24

Note D-Inventories

        Inventories are stated at the lower of cost or market using the last-in, first-out (LIFO) method.  An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations must necessarily be based on management's estimates of expected year end inventory levels and costs.  The balance of the LIFO reserve was zero for all periods presented.
 

Note E-Financing Arrangements

        The Company's long term debt as of May 10, 2003, and August 31, 2002, consisted of the following:
 
 
 

        The Company maintains $950 million of revolving credit facilities with a group of banks.  Of the $950 million, $300 million was scheduled to expire in May 2003 but, subsequent to the end of the quarter, was renewed for one year to May 18, 2004.  The remaining $650 million expires in May 2005.  The 364-day facility expiring in May 2004 includes a renewal feature, as well as an option to extend the maturity date of the then-outstanding debt by one year.  The credit facilities exist largely to support commercial paper borrowings and other short term unsecured bank loans.  Outstanding commercial paper at May 10, 2003, of $265.0 million and the 6% Notes due November 2003 are classified as long term as the Company has the ability and intention to refinance them on a long term basis.  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 agreement) or a competitive bid rate at the option of the Company.  The Company has agreed to observe certain covenants under the terms of its credit agreements, including limitations on total indebtedness, restrictions on liens and minimum fixed charge coverage.  As of May 10, 2003, the Company was in compliance with all covenants.

        On October 1, 2002, the Company filed a shelf registration with the Securities and Exchange Commission that allows the Company to sell up to $500 million in debt securities.  On October 16, 2002, the Company issued $300 million of 5.875% Senior Notes under the registration statement.  The Senior Notes mature in October 2012, and interest is payable semi-annually on April 15 and October 15.  A portion of the proceeds from the Senior Notes was used to prepay a $115 million unsecured bank term loan due December 2003 and to repay a portion of the Company's outstanding commercial paper borrowings.

        On June 3, 2003, the Company issued $200 million of 4.375% Senior Notes remaining under the shelf registration filed in October 2002.  The 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.
 

Note F-Stockholders' Equity

        As of May 10, 2003, the Company's Board of Directors had authorized the Company to repurchase up to $2.8 billion of common stock in the open market.  Since fiscal 1998, the Company has repurchased a total of 66.2 million shares at an aggregate cost of $2.4 billion.  In addition to these purchases, at times, the Company has utilized equity forward contracts to facilitate its repurchase of common stock.  At May 10, 2003, the Company held equity forward contracts that relate to the purchase of approximately 4.0 million shares of common stock at an average cost of $73.69 per share, all of which were scheduled to mature in fiscal 2003.  During fiscal 2003, the Company has repurchased $589.9 million of common stock, including shares under forward purchase contracts.  The Company, at its option, may settle the forward contracts in cash or common stock.  The Company has historically settled all similar contracts in cash.  In accordance with the provisions of Emerging Issues Task Force Issue 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock," these contracts qualify as equity instruments and are not reflected in the Company's Consolidated Balance Sheets.  Due to fluctuations in the Company's stock price, when the Company settles these forward contracts, the settlement price may be above or below the market price of the underlying common stock.  Subsequent to the end of the quarter, the Company purchased 4.0 million shares in settlement of all remaining forward contracts outstanding at May 10, 2003, and as of June 7, 2003, the Company had purchased 0.7 million shares in the open market at an average cost of $85 per share.
 

Note G-Comprehensive Income

        Comprehensive income includes foreign currency translation adjustments and changes in the fair value of certain derivative financial instruments that qualify for cash flow hedge accounting.  Comprehensive income for all periods presented is as follows:
 
 

		Twelve	Weeks	Ended			Thirty-six	Weeks	Ended
(in thousands)		May 10, 2003		May 4, 2002			May 10, 2003		May 4, 2002
Reported net earnings		$  125,977		$  102,314			$  310,163		$250,162
Foreign currency translation           adjustment		2,403		(816	)		(4,088	)	(292	)
Unrealized gain (loss) on          derivative contracts, net of          deferred taxes		(3,731	)	1,403			(6,203	)	(1,422	)
Comprehensive income		$  124,649		$  102,901			$  299,872		$  248,448

Note H-Restructuring and Impairment Charges

        In fiscal 2001, AutoZone recorded restructuring and impairment charges of $156.8 million.  Total remaining accrued obligations for restructuring charges were $15.0 million at May 10, 2003, and consisted primarily of accrued lease obligations.  The following table presents a summary of the activity in accrued lease obligations:
 
 

Stockholders

Memphis, Tennessee

Critical Accounting Policies

        Net interest expense for the twelve weeks ended May 10, 2003, was $19.4 million compared with $17.4 million during the comparable period of 2002.  The increase in net interest expense was due to an increase in average borrowings and average interest rates.  Weighted average borrowings for the twelve weeks ended May 10, 2003, were $1.51 billion, compared with $1.35 billion for the same period of fiscal 2002.  Weighted average borrowing rates were 4.3% in the twelve weeks ended May 10, 2003, compared with 4.2% in the same period of the prior year.  The increase in average interest rates reflects the issuance of long term debt during the first quarter, which was partially offset by lower short term interest rates.

        AutoZone's effective income tax rate was 37.8% of pretax income for the twelve weeks ended May 10, 2003, and 38.0% for the twelve weeks ended May 4, 2002.

Thirty-six Weeks Ended May 10, 2003, Compared with

        AutoZone's effective income tax rate was 37.9% of pretax income for the thirty-six weeks ended May 10, 2003, compared with 38.1% for the thirty-six weeks ended May 4, 2002.
 

Liquidity and Capital Resources

        For the thirty-six weeks ended May 10, 2003, net cash of $277.9 million was provided by AutoZone's operating activities compared with $388.9 million of cash provided for the comparable prior year period.  The decrease in cash flow from operating activities is due primarily to working capital requirements, partially offset by an increase in net income.  Our working capital requirements reflected an increase in other receivables and an intentional increase in inventory through the first fiscal quarter in order to improve in-stock inventory levels, add brand coverage and late model parts for AZ Commercial and to expand our good/better/best product ranges.  This increase in inventory has been largely financed by our vendors, as evidenced by our 72.8% ratio of accounts payable to inventory.  We have been successful at extending payment terms with our vendors, in some cases by working with our vendors to factor (discount) their AutoZone receivables with their banks at attractive rates due to our credit rating.

        Additionally, $86.8 million was used in investing activities by AutoZone compared with $44.5 million in the comparable period of fiscal year 2002. The increase in cash used in investing activities as compared to the same period of the prior year is due primarily to increased store development activities in the current year and proceeds from the sale of the TruckPro business in the prior year.  Capital expenditures for the thirty-six weeks ended May 10, 2003, were $98.8 million compared to $81.8 million for the comparable period of fiscal 2002. Year-to-date, we opened 92 new domestic stores, replaced four existing stores, opened four new stores in Mexico and closed eight domestic stores.  In the comparable period of the prior fiscal year, we opened 72 new domestic stores, replaced 12 existing stores and closed 39 stores.  We expect to open approximately 160 new domestic stores and close nine domestic stores during the fiscal year.

        Financing activities for the thirty-six weeks ended May 10, 2003, resulted in a use of $191.0 million compared with $344.4 million in the comparable period of the prior year.  The current period reflects net proceeds from debt of $225.5 million offset by $444.6 million in stock repurchases, compared with $25.7 million in debt proceeds and $412.4 million in stock repurchases in the same period of the prior year.  For the thirty-six weeks ended May 4, 2003, exercises of stock options provided $56.1 million, including $25.0 million in related tax benefits that are reflected in cash flows from operations.  In the same period of the prior year, exercises of stock options provided $70.4 million, including $28.2 million in related tax benefits.  Options to purchase 2.0 million shares were exercisable at May 10, 2003, at a weighted average exercise price of $28 per share.

        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 to support a majority of our capital expenditures, working capital requirements and stock repurchases.  The balance will be funded through borrowings.  We anticipate that we will be able to obtain such financing in view of our credit rating and favorable experiences in the debt market in the past.

        At May 10, 2003, 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. Moody's had AutoZone listed as having a "stable" outlook and Standard & Poor's had AutoZone listed as having a "positive" outlook.  Subsequent to the end of the quarter, Standard and Poor's changed its outlook for AutoZone to "stable." 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.

        We maintain $950 million of revolving credit facilities with a group of banks.  Of the $950 million, $300 million was scheduled to expire in May 2003 but, subsequent to the end of the quarter, was renewed for one year to May 18, 2004.  The remaining $650 million expires in May 2005.  The 364-day facility expiring in May 2004 includes a renewal feature, as well as an option to extend the maturity date of the then-outstanding debt by one year.  The credit facilities exist largely to support commercial paper borrowings and other short-term unsecured bank loans.  Outstanding commercial paper at May 10, 2003, of $265.0 million and the 6% Notes due November 2003 are classified as long term as we have the ability and intention to refinance them on a long term basis.  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 agreement) or a competitive bid rate at our option.  We have agreed to observe certain covenants under the terms of our credit agreements, including limitations on total indebtedness, restrictions on liens and minimum fixed charge coverage.  As of May 10, 2003, we were in compliance with all covenants.

        On October 1, 2002, we filed a shelf registration with the Securities and Exchange Commission that allows us to sell up to $500 million in debt securities.  On October 16, 2002, we issued $300 million of 5.875% Senior Notes under the registration statement.  The Senior Notes mature in October 2012, and interest is payable semi-annually on April 15 and October 15.  A portion of the proceeds from the Senior Notes was used to prepay a $115 million unsecured bank term loan due December 2003 and to repay a portion of our outstanding commercial paper borrowings.

        On June 3, 2003, we issued $200 million of 4.375% Senior Notes remaining under the shelf registration filed in October 2002.  The 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.

        All of the repayment obligations under our bank lines of credit may be accelerated and come due prior to the scheduled payment date if AutoZone experiences a change in control (as defined in the agreements) of AutoZone or its Board of Directors or if covenants are breached related to total indebtedness and minimum fixed charge coverage.  We expect to remain in compliance with these covenants.

        As of May 10, 2003, our Board of Directors had authorized the repurchase of up to $2.8 billion of common stock in the open market.  Since fiscal 1998, we have repurchased 66.2 million shares at an aggregate cost of $2.4 billion.  In addition to these purchases, at times, we have utilized equity forward contracts to facilitate the repurchase of common stock.  At May 10, 2003, we held equity forward contracts relating to the purchase of approximately 4.0 million shares of common stock at an average cost of $73.69 per share.  During fiscal 2003, the Company has repurchased $589.9 million of common stock, including shares under forward purchase contracts.  The Company, at its option, may settle the forward contracts in cash or common stock.  The Company has historically settled all similar contracts in cash.  In accordance with the provisions of Emerging Issues Task Force Issue 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock," these contracts qualify as equity instruments and are not reflected in the Company's Consolidated Balance Sheets.  Due to fluctuations in the Company's stock price, when the Company settles these forward contracts, the settlement price may be above or below the market price of the underlying common stock.  Subsequent to the end of the quarter, we purchased 4.0 million shares in settlement of all forward contracts outstanding at May 10, 2003, and as of June 7, 2003, we had purchased 0.7 million shares in the open market at an average cost of $85 per share.

        There were no material changes to the financial commitment schedules disclosed in our annual report on Form 10-K for the fiscal year ended August 31, 2002, except for share repurchases and the issuance of debt as discussed previously.  Additionally, as discussed in the Form 10-Q for the quarter ended February 15, 2003, since fiscal year end, we issued additional stand-by letters of credit (which are primarily renewed on an annual basis) to cover premium and deductible payments to our workers' compensation carrier and cancelled some surety bonds.  Our total standby letters of credit commitment at May 10, 2003, was $52.8 million compared with $31.7 million at August 31, 2002, and our total surety bonds commitment at May 10, 2003, was $12.1 million compared with $23.7 million at August 31, 2002.
 

Off-Balance Sheet Arrangements

        At times, we have utilized equity forward contracts to facilitate our repurchase of common stock and to lock in current market prices for later purchase.  Our obligations under the equity forward agreements are not reflected on our balance sheet.  AutoZone, at its option, may settle the forward purchase agreements in cash or in common stock.

        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 established a reserve for this recourse.  At May 10, 2003, the receivables facility had an outstanding balance of $29.6 million and the balance of the recourse reserve was $2.0 million.

        AutoZone has a synthetic lease facility of $30.0 million.  The facility expires in fiscal 2006.  At May 10, 2003, $29.9 million in synthetic lease obligations were outstanding relating to a small number of our domestic stores. The synthetic leases qualify as operating leases for accounting purposes and are not reflected as an asset or a liability on our balance sheet.  The lease payments on the stores are reflected in the income statement in operating expenses and we depreciate the underlying assets for tax purposes.  FIN 46 applies to this synthetic lease facility, and will be effective for AutoZone's first quarter in fiscal 2004.

Forward-Looking Statements

        Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking statements.  These statements discuss, among other things, business strategies and future performance.  The forward-looking statements are subject to risks, uncertainties and assumptions including, without limitation, competition, product demand, the economy, inflation, gasoline prices, consumer debt levels, war and the prospect of war, including terrorist activity, and availability of commercial transportation.  Actual results may materially differ from anticipated results.  Please refer to the Risk Factors section in our annual report on Form 10-K for fiscal year ended August 31, 2002, for more details.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

        AutoZone is exposed to market risk from changes in foreign exchange and interest rates.  Additionally, we are exposed to market risk from changes in fuel prices related to our transportation fleet of trucks.  We may periodically use various financial instruments to reduce such risks.  To date, foreign exchange exposure has not been material.  All hedging transactions are authorized by our Board of Directors.  Further, we do not buy or sell financial instruments for trading purposes.

Derivatives and Hedging

        Financial market risk relating to AutoZone's operations results primarily from changes in interest rates.  We comply with Statement of Financial Accounting Standards Nos. 133, 137 and 138 (collectively "SFAS 133") pertaining to the accounting for derivatives and hedging activities. SFAS 133 requires us to recognize all derivative instruments on the balance sheet at fair value. AutoZone reduces its exposure to increases in interest rates by entering into interest rate swap contracts and treasury lock agreements. All of our interest rate swaps and treasury locks are designated as cash flow hedges.

        AutoZone has utilized interest rate swaps to convert variable rate debt to fixed rate debt.  At May 10, 2003, we held interest rate swap contracts related to $25 million of variable rate debt.  These swaps expire in September 2003, and are used to hedge the variable rate debt associated with commercial paper borrowings.  Additionally, during the second fiscal quarter, we entered into a forward starting interest rate swap with notional amounts totaling $200 million associated with the anticipated issuance of an additional $200 million of debt available under our shelf registration. This swap expires in August 2003.

        During the third quarter, we entered into fuel swaps to hedge a portion of our diesel fuel exposure between April and August 2003.  As of May 10, 2003, we held fuel swap contracts related to $1.9 million of diesel fuel.

        Subsequent to the end of the quarter, we issued $200 million of 4.375% Senior Notes due June 2013.  The forward starting swap was settled upon the issuance of the Senior Notes.  The loss realized under the forward starting swap agreement is being amortized as interest expense over the life of the underlying Senior Notes, resulting in an effective interest rate of 5.65%.

        At August 31, 2002, we held a total of $75 million of interest rate swaps related to commercial paper borrowings and also held $115 million of swaps that were used to hedge the variable rate debt associated with a $115 million term loan.  Additionally, at August 31, 2002, we held treasury lock agreements with notional amounts of $300 million that expired in October 2002 and were used to hedge the exposure to variability in future cash flows related to AutoZone's issuance of $300 million 5.875% Senior Notes.  The treasury lock agreements were settled upon the issuance of the Senior Notes.  The loss realized under the treasury lock agreements is being amortized as interest expense over the life of the underlying Senior Notes, resulting in an effective interest rate of 6.33%.  A portion of the proceeds generated from the issuance of the Senior Notes was used to prepay a $115 million term loan.  Accordingly, the related swap agreements were settled and the realized loss is being amortized as interest expense over the life of the swap agreement.

        In accordance with SFAS 133, AutoZone reflects the current fair value of all derivatives on our balance sheet. The related gains or losses on these transactions are deferred in stockholders' equity as a component of comprehensive income. These deferred gains and losses are recognized in income in the period in which the related items being hedged are recognized in expense. However, to the extent that the change in value of a derivative contract does not perfectly offset the change in the value of the items being hedged, that ineffective portion is immediately recognized in income.  Excluding the fuel hedge, for the thirty-six weeks ended May 10, 2003, and May 4, 2002, all of our derivative contracts were determined to be highly effective, and no ineffective portion was recognized in income.

        The fair value of AutoZone's debt was estimated at $1.49 billion as of May 10, 2003, and $1.22 billion as of August 31, 2002, based on the market values of the debt at those dates.  Such fair value is greater than the carrying value of debt at May 10, 2003, by $70.1 million, and at August 31, 2002, by $27.2 million.  We had $625.2 million of variable rate debt outstanding at May 10, 2003, and $699.8 million outstanding at August 31, 2002.  At these borrowing levels, a one percentage point increase in interest rates would have an unfavorable annual impact on AutoZone's pretax earnings and cash flows of $6.0 million in fiscal 2003 and $5.1 million in fiscal 2002, which includes the effects of interest rate swaps.  The primary interest rate exposure on variable rate debt is based on LIBOR.

Item 4.  Controls and Procedures

        As of May 10, 2003, an evaluation was performed under the supervision and with the participation of AutoZone's management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on that evaluation, AutoZone's management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of May 10, 2003.  No significant changes in AutoZone's internal controls or in other factors have occurred that could significantly affect controls subsequent to May 10, 2003.

PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K
 

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 

                                                                                AUTOZONE, INC.

                                                                                By:  /s/ MICHAEL ARCHBOLD

                                                                                By:  /s/ CHARLIE PLEAS III

I, Steve Odland, certify that:
 

The following exhibits are filed as part of this report: