AUTOZONE INC - 10-K Annual Report

229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]

The aggregate market value of the 117,609,895 shares of voting stock of the
registrant held by non-affiliates of the registrant (excluding, for this
purpose, shares held by officers, directors, or 10% stockholders) was
$3,770,867,258 based on the last sales price of the Common Stock on October 10,
1997, as reported on the New York Stock Exchange.

The number of shares of Common Stock outstanding as of October 10, 1997, was
151,446,220.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Annual Report to Stockholders for the year ended August 30,
1997 are incorporated by reference into Parts I and II.

Portions of the Proxy Statement for the annual stockholders' meeting to be held
December 18, 1997 are incorporated by reference into Part III.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Annual Report on Form 10-K are forward-
looking statements. These statements discuss, among other things, expected
growth, store development and expansion strategy, business strategies, future
revenues and future performance. The forward-looking statements are subject to
risks, uncertainties and assumptions including, but not limited to competitive
pressures, demand for the Company's products, the market for auto parts, the
economy in general, inflation, consumer debt levels and the weather. Actual
results may materially differ from anticipated results described in these
forward-looking statements.

PART I

ITEM 1 BUSINESS

INTRODUCTION
- ------------

AutoZone is the nation's leading specialty retailer of automotive parts and
accessories, primarily focusing on "Do-It-Yourself" ("D-I-Y") customers. The
Company began operations in 1979 and at August 30, 1997, operated 1,728 stores
in 32 states, principally located in the Sunbelt and Midwest regions of the
United States. Each AutoZone store carries an extensive product line,
including new and re-manufactured automotive hard parts, such as alternators,
starters, water pumps, brake shoes and pads, carburetors, clutches and engines;
maintenance items, such as oil, antifreeze, transmission, brake and power
steering fluids, engine additives, protectants and waxes; and accessories,
such as car stereos and floor mats. The Company carries parts for domestic and
foreign cars, vans and light trucks. The Company also has a commercial sales
program which provides commercial credit and prompt delivery of parts and
other products to local repair garages, dealers and service stations. This
program was offered in 1,265 of the Company's stores at August 30, 1997.
AutoZone does not perform automotive repairs or installations.

AutoZone is dedicated to a marketing and merchandising strategy to provide
customers with superior service, value and parts selection at conveniently
located, well-designed stores. The Company has implemented this strategy
primarily with knowledgeable and motivated store personnel trained to emphasize
prompt and courteous customer service, through an everyday low price policy and
by maintaining an extensive product line with an emphasis on automotive hard
parts. AutoZone's stores are generally situated in high-visibility locations
and provide a distinctive merchandise presentation in an attractive store
environment.

At August 30, 1997, AutoZone had stores in the following 32 states:

Alabama 77 Louisiana 70 South Carolina 49
Arizona 64 Maryland 1 Tennessee 106
Arkansas 39 Michigan 27 Texas 264
California 8 Mississippi 61 Utah 19
Colorado 32 Missouri 72 Virginia 34
Florida 82 Nevada 1 West Virginia 13
Georgia 96 New Mexico 23 Wisconsin 5
Illinois 56 New York 11 Wyoming 3
Indiana 85 North Carolina 87 -----
Iowa 10 Ohio 166
Kansas 31 Oklahoma 60
Kentucky 48 Pennsylvania 28 Total 1,728
=====

MARKETING AND MERCHANDISING STRATEGY
- ------------------------------------

AutoZone's marketing and merchandising strategy is to provide customers with
superior service, value and parts selection at conveniently located,
well-designed stores. Key elements of this strategy are as follows:

CUSTOMER SERVICE

The Company believes that D-I-Y customers place a significant value on
customer service. As a result, the Company emphasizes customer service as the
most important element in its marketing and merchandising strategy. The
Company attempts to promote a corporate culture which "always puts customers
first" and emphasizes knowledgeable and courteous service. To do so, the
Company employs parts personnel with technical expertise to advise customers
regarding the correct part type and application, utilizes a wide range of
training methods to educate and motivate its store personnel, and provides
store personnel with significant opportunities for promotion and incentive

compensation. Customer service is enhanced by proprietary electronic parts
catalogs which assist in the selection of parts; free testing of starters,
alternators, batteries, and sensors and actuators; and liberal return and
warranty policies. AutoZone also has a satellite system for all its stores
which, among other things, enables the Company to speed credit card and check
approval processes and locate parts at neighboring AutoZone stores. AutoZone
stores generally open at 8 a.m. and close between 8 and 10 p.m. (with some open
to midnight) Monday through Saturday and typically open at 9 a.m. and close
between 6 and 7 p.m. on Sunday.

During fiscal year 1997, the Company discontinued the operations of the
Memphis and Houston call centers and offered to transfer all call center
employees to stores in the Memphis and Houston area. The Company anticipates
that the discontinuation of the call center operations will result in ongoing
savings to the Company.

Alldata Corporation, a wholly-owned subsidiary of AutoZone, has developed a
database system that provides comprehensive and up-to-date automotive
diagnostic, service and repair information which it markets to professional
repair shops.

PRODUCT SELECTION

The Company offers a wide selection of automotive parts and other products
designed to cover a broad range of specific vehicle applications. AutoZone's
stores generally carry between 17,000 and 20,000 stock keeping units ("SKUs").
Each AutoZone store carries the same basic product line with some regional
differences based on climate, demographics and age and type of vehicle
registration. The Company's "flexogram" program enables the Company to tailor
its hard parts inventory to the makes and models of the automobiles in each
store's trade area. In addition to brand name products, the Company sells a
number of products, including batteries and engines, under the "AutoZone" and
"Duralast" names and a selection of automotive hard parts, including starters,
alternators, water pumps, brakes, and filters, under its private label names.
In addition to products stocked in stores, the Company offers a range of
products, consisting principally of automotive hard parts, through its
Express Parts program. The Express Parts program provides air-freight delivery
of lower turnover products to AutoZone's stores.

PRICING

The Company employs an everyday low price strategy and attempts to be the
price leader in hard parts categories. Management believes that its prices
overall compare favorably to those of its competitors.

COMMERCIAL SALES PROGRAM

The Company's commercial sales program provides credit and prompt delivery
of parts and other products to local repair garages, dealers and service
stations. At August 30, 1997,this program was offered in 1,265 of the Company's
stores. Commercial customers generally pay the same everyday low prices for
parts and other products as paid by the Company's D-I-Y customers.

STORE DESIGN AND VISUAL MERCHANDISING

AutoZone seeks to design and build stores with a high visual impact.
AutoZone stores are designed to have an industrial "high tech" appearance by
utilizing colorful exterior signage, exposed beams and ductwork, and brightly
lighted interiors. Merchandise in stores is attractively displayed, typically
utilizing diagonally placed gondolas for maintenance and accessory products as
well as specialized shelving for batteries and, in many stores, oil products.
The Company employs a uniform ("planogrammed") store layout system to promote
consistent merchandise presentation in all of its stores. In-store signage and
special displays are used extensively to aid customers in locating merchandise
and promoting products.

STORE DEVELOPMENT AND EXPANSION STRATEGY
- ----------------------------------------

The following table sets forth the Company's store development activities
during the past five fiscal years:

FISCAL YEAR
------------------------------------------------------
1993 1994 1995 1996 1997

Beginning Stores 678 783 933 1,143 1,423
New Stores 107 151 210 280 308
Replaced Stores (1) 20 20 29 31 17
Closed Stores (1) (22) (21) (29) (31) (20)
----- ----- ----- ----- -----
Ending Stores 783 933 1,143 1,423 1,728
===== ===== ===== ===== =====

(1) Replaced stores are either relocations or conversions of existing
smaller stores to larger formats. Closed stores include replaced stores.

The Company opened 305 net new stores in fiscal 1997, representing an
increase in total square footage from fiscal 1996 of approximately 23%, and had
52 stores under construction at the end of fiscal 1997. The Company plans to
open approximately 350 stores in fiscal 1998, representing an increase in total
store square footage of approximately 22%, as compared with the end of fiscal
1997.

The Company believes that expansion opportunities exist both in markets
which it does not currently serve and in markets where it can achieve a larger
presence. The Company attempts to obtain high visibility sites in high traffic
locations and undertakes substantial research prior to entering new markets.
Key factors in selecting new site and market locations include population,
demographics, vehicle profile and number and strength of competitors' stores.
The Company generally seeks to open new stores within or contiguous to existing
market areas and attempts to cluster development in new urban markets in a
relatively short period of time in order to achieve economies of scale in
advertising and distribution costs. The Company may also expand its operations
through acquisitions of existing stores from third parties. The Company
regularly evaluates potential acquisition candidates, in new as well as
existing market areas.

AutoZone's net sales have grown significantly in the past several years,
increasing from $1,217 million in fiscal 1993 to $2,691 million in fiscal 1997.
The continued growth and financial performance of the Company will be
dependent, in large part, upon management's ability to open new stores on a
profitable basis in existing and new markets and also upon its ability to
continue to increase sales in existing stores. There can be no assurance the
Company will continue to be able to open and operate new stores on a timely and
profitable basis or will continue to attain increases in comparable store
sales.

STORE OPERATIONS
- ----------------

STORE FORMATS

Substantially all of AutoZone's stores are based on standard store formats
resulting in generally consistent appearance, merchandising and product mix.
Although the smaller store formats were generally used by the Company for its
earlier stores, the Company has increasingly used larger format stores starting
with its 8,100 square foot store introduced in 1987, its 6,600 square foot
store introduced in 1991 and its 7,700 square foot store introduced in 1993.
In fiscal 1998, the 6,600 square foot and larger store formats are expected to
account for more than 85% of new and replacement stores. Total store space
as of August 30, 1997 was as follows:

Total Store
STORE FORMAT NUMBER OF STORES SQUARE FOOTAGE(1)
------------ ------------------ -----------------
8,100 sq. ft 230 1,863,000
7,700 sq. ft. 415 3,195,500
6,600 sq. ft. 610 4,026,000
5,400 sq. ft. 453 2,446,200
4,000 sq. ft. 20 80,000
----- ----------
Total 1,728 11,610,700
===== ==========

(1) Total store square footage is based on the Company's standard store
formats, including normal selling, office, stockroom and receiving space, but
excluding excess space not utilized in a store's operations.

Approximately 85% to 90% of each store's square footage is selling space,
of which approximately 30% to 40% is dedicated to automotive parts inventory
The parts inventory area is fronted by a counter staffed by knowledgeable
parts personnel and equipped with proprietary electronic parts catalogs.
The remaining selling space contains gondolas for accessories, maintenance
items, including oil and air filters, additives and waxes, and other parts
together with specifically designed shelving for batteries and, in many stores,
oil products.

Approximately three quarters of the Company's stores are freestanding, with
the balance principally located within strip shopping centers. Freestanding
large format stores typically have parking for approximately 45 to 50 cars on a
lot of approximately 3/4 to one acre. The Company's 5,400 and 4,000 square
foot stores typically have parking for approximately 25 to 40 cars and are
usually located on a lot of approximately 1/2 to 3/4 acre.

STORE PERSONNEL AND TRAINING

While subject to fluctuation based on seasonal volumes and actual store
sales, the 4,000, 5,400 and 6,600 square foot stores typically employ 8 to 20
persons, including a manager and an assistant manager, and the larger stores
typically employ 9 to 21 persons. The Company generally hires personnel with
prior automotive experience. Although the Company relies primarily on on-the-
job training, it also provides formal training programs, which include regular
store meetings on specific sales and product issues, standardized training
manuals and a specialist program under which store personnel can obtain Company
certification in several areas of technical expertise. The Company supplements
training with frequent store visits by management.

The Company provides financial incentives to store managers through an
incentive compensation program and through participation in the Company's stock
option plan. In addition, AutoZone's growth has provided opportunities for the
promotion of qualified employees. Management believes these opportunities are
an important factor in AutoZone's ability to attract, motivate and retain
quality personnel.

The Company supervises store operations primarily through approximately 286
area advisors who report to one of 33 district managers, who, in turn, report
to one of seven regional managers, as of August 30, 1997. Purchasing,
merchandising, advertising, accounting, cash management, store development,
systems technology and support, and other store support functions are
centralized in the Company's store support center in Memphis, Tennessee. The
Company believes that such centralization enhances consistent execution of the
Company's merchandising and marketing strategy at the store level.

STORE AUTOMATION

In order to assist store personnel in providing a high level of customer
service, all stores have proprietary electronic parts catalogs that provide
parts information based on the make, model and year of an automobile. The
catalog display screens are placed on the hard parts inventory counter so that
both employees and customers can view the screen. In addition, the Company's
satellite system enables the stores to speed up credit card and check approval
processes and locate parts at neighboring AutoZone stores.

All stores utilize the Company's computerized Store Management System, which
includes optical character recognition scanning and point-of-sale data
collection terminals. The Store Management System provides productivity
benefits, including lower administrative requirements and improved personnel
scheduling at the store level, as well as enhanced merchandising information
and improved inventory control. The Company believes the Store Management
System also enhances customer service through faster processing of transactions
and simplified warranty and product return procedures.

PURCHASING AND DISTRIBUTION
- ---------------------------

Merchandise is selected and purchased for all stores at the Company's
store support center in Memphis. No one class of product accounts for as much
as 10% of the Company's total sales. In fiscal 1997, the Company purchased
products from approximately 300 suppliers and no single supplier accounted
for more than 7% of the Company's total purchases. During fiscal year 1997,
the Company's ten largest suppliers accounted for approximately 33% of
the Company's purchases. The Company generally has few long-term contracts for
the purchase of merchandise. Management believes that AutoZone's relationships
with suppliers are excellent. Management also believes that alternative
sources of supply exist, at similar cost, for substantially all types of
product sold.

Substantially all of the Company's merchandise is shipped by vendors to the
Company's distribution centers. Orders are typically placed by stores on a
weekly basis with orders shipped from the warehouse in trucks operated by the
Company on the following day.

COMPETITION
- -----------

The Company competes principally in the D-I-Y and, more recently, the
commercial automotive aftermarket. Although the number of competitors and the
level of competition experienced by AutoZone's stores varies by market area,
the automotive aftermarket is highly fragmented and generally very competitive.
The Company believes that the largest share of the automotive aftermarket is
held by independently owned jobber stores which, while principally selling to
wholesale accounts, have significant D-I-Y sales. The Company also competes
with other automotive specialty retailing chains and, in certain product
categories, such as oil and filters, with discount and general merchandise
stores. The principal competitive factors which affect the Company's business
are store location, customer service, product selection and quality and price.
While AutoZone believes that it competes effectively in its various geographic
areas, certain of its competitors have substantial resources or have been
operating longer in particular geographic areas.

TRADEMARKS
- ----------

The Company has registered several service marks and trademarks in the
United States Patent and Trademark office, including its service mark
"AutoZone" and its trademarks "AutoZone," "Duralast," "Valucraft," "Ultra
Spark," "Deutsch," "Albany" and "Alldata". The Company believes that the
"AutoZone" service mark and trademarks have become an important component in
its merchandising and marketing strategy.

EMPLOYEES
- ---------

As of August 30, 1997, the Company employed approximately 28,700 persons,
approximately 20,000 of whom were employed full-time. Approximately 86% of
the Company's employees were employed in stores or in direct field supervision,
approximately 7% in distribution centers and approximately 7% in store support
functions.

The Company's employees currently are not members of any unions. The
Company has never experienced any material labor disruption. Management
believes that its labor relations are generally good.

EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------

The following table lists AutoZone's executive officers. The title of each
executive officer includes the words "Customer Satisfaction" which reflects the
Company's commitment to customer service as part of its marketing and
merchandising strategy. Officers are elected by and serve at the discretion of
the Board of Directors.

JOHNSTON C. ADAMS, JR., 49--CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND DIRECTOR
Johnston C. Adams, Jr., has been a director since 1996. Mr. Adams was
elected Chairman and Chief Executive Officer in March 1997, had been President
and Chief Executive Officer since December 1996, and had been Vice Chairman and
Chief Operating Officer since March 1996. Previously, he was Executive Vice
President-Distribution since 1995. From 1990 to 1994, Mr. Adams was a co-owner
of Nicotiana Enterprises, Inc., a company primarily engaged in food
distribution. From 1983 to 1990, Mr. Adams was President of the Miami Division
of Malone & Hyde., Inc. ("Malone & Hyde") the former parent company of
AutoZone.

TIMOTHY D. VARGO, 46--PRESIDENT, CHIEF OPERATING OFFICER, AND DIRECTOR
Timothy D. Vargo has been a director since 1996 and was elected
President and Chief Operating Officer in March 1997. Previously, Mr. Vargo had
been Vice Chairman and Chief Operating Officer since 1996, Executive
Vice President-Merchandising and Systems Technology since 1995 and had been
Senior Vice President-Merchandising in 1995. Mr. Vargo was Senior Vice
President-Merchandising from 1986 to 1992 and was Director of Stores for
AutoZone from 1984 to 1986.

LAWRENCE E. EVANS, 53--EXECUTIVE VICE PRESIDENT-STORE DEVELOPMENT AND ASSISTANT
SECRETARY
Lawrence E. Evans has been Executive Vice President-Store Development since
1995. Previously he was Senior Vice President-Development from 1993 to 1995
and Vice President-Real Estate since 1992. Mr. Evans was Director of Real
Estate from 1991, and had been an attorney for either Malone & Hyde or AutoZone
since 1986. Mr. Evans was first employed by Malone & Hyde from 1969 until 1976
and returned to Malone & Hyde in 1986.

ROBERT J. HUNT, 48--EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND DIRECTOR
Robert J. Hunt was elected a director in September 1997 and has
been Executive Vice President and Chief Financial Officer since 1994. Prior to
that time, Mr. Hunt was Executive Vice President, Chief Financial Officer, and
a Director of the Price Company from 1991 to 1993. Previously, Mr. Hunt had
been employed by Malone & Hyde since 1984, where he was Executive Vice
President and Chief Financial Officer from 1988 to 1991.

SHAWN P. MCGHEE, 34--EXECUTIVE VICE PRESIDENT-MERCHANDISING
Shawn P. McGhee was elected Executive Vice President-Merchandising in 1996.
Previously, he was Senior Vice President-Merchandising since 1994, Vice
President-Merchandising since 1993, and a Senior Product Manager since 1991.
Mr. McGhee commenced his employment with the Company in 1988.

GERALD E. COLLEY, 45--SENIOR VICE PRESIDENT-STORES
Gerald E. Colley was elected Senior Vice President-Stores in October 1997.
He had been Vice President-Stores since April 1997, and had been a Regional
Manager for the Company since February 1997. Previously, Mr. Colley had been
an Executive Vice President for Tire Kingdom, Inc., in 1996, and had been
President of Rose Auto Stores Florida, Inc., in 1995. Prior to that time Mr.
Colley had been employed by AutoZone since 1987, and had been a Vice President
of the Company from 1988 until 1995.

HARRY L. GOLDSMITH, 46--SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Harry L. Goldsmith was elected Senior Vice President, Secretary and General
Counsel in 1996. Previously he was Vice President, General Counsel, and
Secretary from 1993 to 1996. Prior to that time, he was an attorney at Federal
Express Corporation since 1989.

ANTHONY DEAN ROSE, JR., 37--SENIOR VICE PRESIDENT-ADVERTISING
Anthony Dean Rose, Jr. has been Senior Vice President-Advertising since
1995. Prior to that time, he had been Vice President-Advertising since 1989
and a Director of Advertising since 1987. Mr. Rose has been employed by
AutoZone or Malone & Hyde since 1982.

STEPHEN W. VALENTINE, 35--SENIOR VICE PRESIDENT-SYSTEMS TECHNOLOGY AND SUPPORT
AND CHIEF INFORMATION OFFICER
Stephen W. Valentine has been Senior Vice President-Systems Technology and
Support since 1995. Prior to that time, he had been Vice President-Systems
Technology and Support since 1994, and a Director of Store Management Systems
since 1990. Mr. Valentine commenced his employment with the Company in 1989.

DAVID J. WILHITE, 35--SENIOR VICE PRESIDENT-MERCHANDISING
David J. Wilhite was elected a Senior Vice President-Merchandising in
September 1997. Previously Mr. Wilhite was a Vice President-Merchandising
since 1996. He has been an employee of AutoZone or Malone & Hyde since 1984.

MICHAEL E. BUTTERICK, 46--VICE PRESIDENT-CONTROLLER
Michael E. Butterick has been Vice President-Controller since 1995. Prior
to that time, Mr. Butterick was Chief Financial Officer of United Medical
Incorporated from 1993 to 1995. From 1990 to 1993 Mr. Butterick was Vice
President-Finance of the Mid South General Merchandise Division, a division of
Fleming Companies. Previously, Mr. Butterick had been employed by Malone &
Hyde or AutoZone since 1983, where he was Controller of AutoZone from 1986 to
1990.

ANDREW M. CLARKSON, 60--DIRECTOR AND CHAIRMAN OF THE FINANCE COMMITTEE
Andrew M. Clarkson has been a director of the Company since 1986 and is
employed by the Company as the Chairman of the Finance Committee. Mr. Clarkson
had been Vice President and Treasurer of the Company in 1986, Senior Vice
President and Treasurer of the Company from 1986 to 1988, was Secretary from
1988 to 1993 and was Treasurer from 1990 to 1995. Previously, Mr. Clarkson was
Chief Financial Officer of Malone & Hyde from 1983 to 1988.

ITEM 2 PROPERTIES

The following table sets forth certain information concerning AutoZone's
principal properties:
SQUARE NATURE OF
LOCATION PRIMARY USE FOOTAGE OCCUPANCY
-------- ----------- ------- ---------

Memphis, TN Store Support Center 360,000 Owned
Lavonia, GA Distribution Center 421,700 Owned
Lexington, TN Distribution Center 341,000 Owned
Danville, IL Distribution Center 304,500 Owned
Memphis, TN Express Parts and
Fixture Warehouse 233,100 Leased
Lafayette, LA Distribution Center 464,000 Owned
San Antonio, TX Distribution Center 217,000 Owned
Phoenix, AZ Distribution Center 212,000 Owned
Zanesville, OH Distribution Center 550,000 Owned

The lease of the Express Parts and Fixture warehouse in Memphis expires in
March 2000. The Company also rents additional warehouse space, various
district offices and training and other office facilities which are not
material in the aggregate.

At August 30, 1997, the Company leased 595 and owned 1,133 of its 1,728
store properties. Original lease terms generally range from five to 20 years
with renewal options. Leases on 361 stores that are currently operating expire
prior to the end of fiscal 2002; however, leases on 334 of such stores contain
renewal options.

ITEM 3 LEGAL PROCEEDINGS

The Company was a defendant in a purported class action entitled "Jack
Elliot and Greg Dobson, on behalf of themselves and all others similarly
situated, vs. AutoZone, Inc. and AutoZone Stores, Inc." filed on or about
May 9, 1997, in the Circuit Court for Roane County, Tennessee. AutoZone
Stores, Inc., is a wholly-owned subsidiary of the Company. In their
complaint, which was similar to class action complaints filed against several
other retailers of aftermarket automotive batteries, the plaintiffs alleged
that the Company sold "old," "used," or "out of warranty" automotive batteries
to customers as if the batteries were new, and purported to state causes of
action for unfair or deceptive acts or practices, breaches of contract,
breaches of the duty of good faith and fair dealing, intentional misrepresenta-
tion, fraudulent concealment, civil conspiracy, and unjust enrichment. The
plaintiffs were seeking an accounting of all moneys wrongfully received by the
Company, compensatory and punitive damages, as well as plaintiffs' costs. On
September 4, 1997, on the plaintiffs' motion, the court dismissed the case
without prejudice.

The Company is a defendant in a purported class action entitled "Joe C.
Proffitt, Jr., on behalf of himself and all others similarly situated, vs.
AutoZone, Inc., and AutoZone Stores, Inc.," filed in the Circuit Court for
Jefferson County, Tennessee, on or about October 17, 1997. Along with the
complaint, the Plaintiff filed a motion to conditionally certify a multistate
class. In the complaint, which is similar to the class action complaint in the
action "Elliott v. AutoZone, Inc." described above (and with substantially the
same lawyers representing the plaintiff), and is similar to other class action
complaints filed against several other retailers of aftermarket automotive
batteries, the plaintiff alleges that the Company sold "old," "used," or "out
of warranty" automotive batteries to customers as if the batteries were new,
and purports to state causes of action for unfair or deceptive acts or
practices, breach of contract, breach of the duty of good faith and fair deal-
ing, intentional misrepresentation, fraudulent concealment, civil conspiracy,
and unjust enrichment. The plaintiffs are seeking an accounting of all moneys
wrongfully received by the Company, compensatory and punitive damages, as well
as plaintiffs' costs. The Company believes the claims are without merit and
intends to vigorously defend this action.

The Company is also a party to various claims and lawsuits arising in the
ordinary course of business. The Company does not believe that such claims
and lawsuits, individually or in the aggregate, will have a material adverse
effect on its results of operations or financial condition.

PART II

ITEM 5 MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Common Stock Market Prices for the Company's stock as traded on the New York
Stock Exchange on page 16 of the annual stockholders report for the year ended
August 30, 1997 are incorporated herein by reference.

At October 10, 1997, there were 3,331 stockholders of record, excluding the
number of beneficial owners whose shares were represented by security position
listings.

ITEM 6 SELECTED FINANCIAL DATA

Selected Financial Data on pages 14 and 15 of the annual stockholders report
for the year ended August 30, 1997, is incorporated herein by reference.

ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 17 through 18 of the annual stockholders report for the
year ended August 30, 1997, are incorporated herein by reference.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements included on pages 19 through 27 and the quarterly
summary on page 16 of the annual stockholders report for the year ended August
30, 1997, are incorporated herein by reference.

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

None.

PART III

ITEM 10 DIRECTORS AND OFFICERS OF THE REGISTRANT

The information required by this item is incorporated by reference to Part I
of this document and to the Company's definitive Proxy Statement filed pursuant
to Regulation 14A under the Securities Exchange Act of 1934 in connection with
the Company's annual meeting of stockholders.

ITEM 11 EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement filed pursuant to Regulation 14A under the
Securities Act of 1934 in connection with the Company's annual meeting of
stockholders.

ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934 in connection with the Company's annual meeting
of stockholders.

ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated by reference to the
Company's definitive Proxy Statement filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934 in connection with the Company's annual meeting
of stockholders.

PART IV

ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K

(a) 1. Financial Statements
The following financial statements included on pages 19 through 27
in the annual report to stockholders for the year ended
August 30, 1997, are incorporated by reference in Item 8:

Report of Independent Auditors
Statements of Income for the fiscal years ended August 30, 1997,
August 31, 1996, and August 26, 1995
Balance Sheets as of August 30, 1997 and August 31, 1996
Statements of Stockholders' Equity for the fiscal years ended
August 30, 1997, August 31, 1996 and August 26, 1995
Statements of Cash Flows for the fiscal years ended August 30, 1997,
August 31, 1996 and August 26, 1995
Notes to Financial Statements

2. Financial Statement Schedule II - Valuation and Qualifying Accounts

All other schedules are omitted because the information is not
required or because the information required is included in
the financial statements or notes thereto.

3. Exhibits
The following exhibits are filed as part of this annual report:

3.1 Articles of Incorporation of AutoZone, Inc. Incorporated by
reference to Exhibit 3.1 to the Form 10-K dated November 22, 1994.

3.2 Amendment to Articles of Incorporation of AutoZone, Inc. dated
December 16, 1993, to increase its authorized shares of common stock
to 200,000,000. Incorporated by reference to Exhibit 3.2 to the
Form 10-K dated November 22, 1994.

3.3 By-laws of AutoZone, Inc. Incorporated by reference to Exhibit 3.2
to the February 1992 Form S-1.

4.1 Form of Common Stock Certificate. Incorporated by reference to
Exhibit 4.1 to Pre-Effective Amendment No. 2 to the February 1992
Form S-1.

4.2 Registration Rights Agreement, dated as of February 18, 1987, by and
among Auto Shack, Inc. and certain stockholders. Incorporated by
reference to Exhibit 4.9 to the Form S-1 Registration Statement filed
by the Company under the Securities Act (No. 33-39197)
(the "April 1991 Form S-1").

4.3 Amendment to Registration Rights Agreement dated as of August 1,
1993. Incorporated by reference to Exhibit 4.1 to the Form S-3
Registration Statement filed by the Company under the Securities Act
(No. 33-67550).

10.1 Amended and Restated Stock Option Plan of AutoZone, Inc., as amended
on February 26, 1991. Incorporated by reference to Exhibit 10.4 to
the April 1991 Form S-1.

10.2 Amendment No. 1 dated December 18, 1992, to the Amended and Restated
Stock Option Plan. Incorporated by reference to Exhibit 10.5 to
the Form 10-K for the fiscal year ended August 28, 1993.

10.3 1996 Stock Option Plan. Incorporated by reference to Exhibit A of
the 1996 Proxy Statement dated November 8, 1996.

10.4* Employment and Non-Compete Agreement between John C. Adams, Jr.
and AutoZone, Inc. dated June 11, 1997.

10.5* Employment and Non-Compete Agreement between Timothy D. Vargo and
AutoZone, Inc. dated June 11, 1997.

10.6* Employment and Non-Compete Agreement between Robert J. Hunt and
AutoZone, Inc. dated June 11, 1997.

10.7* Employment and Non-Compete Agreement between Shawn P. McGhee and
AutoZone, Inc. dated June 17, 1997.

10.8* Employment and Non-Compete Agreement between Harry L. Goldsmith and
AutoZone, Inc. dated June 11, 1997.

10.9* Employment and Non-Compete Agreement between Stephen W. Valentine
and AutoZone, Inc. dated July 7, 1997.

11.1 Computation of Earnings Per Common Share Equivalents.

13.1 Annual Report to Stockholders for the fiscal year ended
August 30, 1997.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Ernst & Young LLP.

27.1 Financial Data Schedule. (SEC use only)

(b) The Company did not file a Form 8-K during the last quarter of the
fiscal year ended August 30, 1997.

* Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

AUTOZONE, INC.

By: /s/ J. C. ADAMS, JR. November 6, 1997
-------------------------
J. C. Adams, Jr.
Chairman, Chief Executive Officer
and Director

Pursuant to the requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

/s/ J. C. ADAMS, JR. Chairman, November 6, 1997
------------------------- Chief Executive Officer
( J. C. Adams, Jr.) and Director (Principal
Executive Officer)

/s/ TIMOTHY D. VARGO
------------------------- President, Chief Operating November 6, 1997
(Timothy D. Vargo) Officer and Director

/s/ ROBERT J. HUNT Executive Vice President, November 6, 1997
------------------------- Chief Financial Officer
(Robert J. Hunt) and Director
(Principal Financial Officer)

/s/ MICHAEL E. BUTTERICK Vice President and November 6, 1997
--------------------------- Controller
(Michael E. Butterick) (Principal Accounting Officer)

/s/ ANDREW M. CLARKSON Director November 6, 1997
--------------------------
(Andrew M. Clarkson)

/s/ N. GERRY HOUSE Director November 6, 1997
---------------------------
(N. Gerry House)

/s/ J.R. HYDE, III Director November 6, 1997
---------------------------
(J. R. Hyde, III)

Director
---------------------------
(James F. Keegan)

/s/ MICHAEL W. MICHELSON Director November 6, 1997
---------------------------
(Michael W. Michelson)

/s/ JOHN E. MOLL Director November 6, 1997
---------------------------
(John E. Moll)

/s/ GEORGE R. ROBERTS Director November 6, 1997
---------------------------
(George R. Roberts)

/s/ RONALD A. TERRY Director November 6, 1997
--------------------------
(Ronald A. Terry)

SCHEDULE II
AUTOZONE, INC.
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

COL A COL B COL C COL D COL E

ADDITIONS
Balance Deductions- Balance at
CLASSIFICATION Beginning of Describe End of Period
Period (1) (2)
Charged to Charged to Other
Costs and Expenses Accounts-Describe

Year Ended August 26, 1995:
Reserve for warranty claims $ 9,061 $23,124 $19,572 (1) $12,613
Other reserves 5,840 9,229

Year Ended August 31, 1996:
Reserve for warranty claims $12,613 $26,982 $25,443 (1) $14,152
Other reserves 9,299 9,015

Year Ended August 30, 1997:
Reserve for warranty claims $14,152 $40,303 $35,333 (1) $19,122
Other reserves 9,015 11,227

(1) Cost of product for warranty replacements, net of salvage and amounts
collected from customers.