AUTOZONE INC, 10-K, 1996-11-27

AUTOZONE INC
10-K, 1996-11-27
AUTO & HOME SUPPLY STORES

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended August 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________

Commission file number 1-10714

AUTOZONE, INC.
(Exact name of registrant as specified in its charter)

NEVADA 62-1482048
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

123 SOUTH FRONT STREET, MEMPHIS, TENNESSEE 38103
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (901) 495-6500

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- ---------------------
<S> <C>
COMMON STOCK
($.01 PAR VALUE) NEW YORK STOCK EXCHANGE
</TABLE>

Securities registered pursuant to Section 12(g) of the Act:
None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 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 115,337,257 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
$2,955,517,210 based on the last sales price of the Common Stock on October 30,
1996 as reported on the New York Stock Exchange.

The number of shares of Common Stock outstanding as of October 30, 1996
was 150,298,667.
<PAGE> 2

PART I

ITEM 1 BUSINESS

INTRODUCTION

AutoZone is a leading specialty retailer of automotive parts and
accessories, primarily focusing on "Do-It-Yourself" ("D-I-Y") consumers. The
Company began operations in 1979 and at August 31, 1996, operated 1,423 stores
in 27 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. During fiscal year 1996, the Company
implemented 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 1,183 of the Company's
stores at August 31, 1996. 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 31, 1996, AutoZone had stores in the following 27 states:

<TABLE>
<S> <C> <C> <C> <C> <C>
Alabama . . . . . . 74 Louisiana . . . . 68 South Carolina . . . 41
Arizona . . . . . . 52 Michigan . . . . . 9 Tennessee . . . . . . 102
Arkansas . . . . . . 37 Mississippi . . . 58 Texas . . . . . . . . 239
Colorado . . . . . . 24 Missouri . . . . . 56 Utah . . . . . . . . 15
Florida . . . . . . 61 New Mexico . . . . 22 Virginia . . . . . . 23
Georgia . . . . . . 87 North Carolina . . 79 West Virginia . . . . 12
Illinois . . . . . . 43 Ohio . . . . . . . 138 Wisconsin . . . . . . 1
Indiana . . . . . . 66 Oklahoma . . . . . 56 Wyoming . . . . . . . 1
Kansas . . . . . . . 7 Pennsylvania . . . 10 -----
Kentucky . . . . . . 42 Total . . . . . . 1,423
=====

</TABLE>

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 consumers 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
<PAGE> 3

liberal return and warranty policies. AutoZone stores generally open at 8 a.m.
and close from 8 to 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.

AutoZone 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. The Company has a call center
in Memphis to support the sales staff at high volume stores. Call center
personnel handle inquiries and orders, enabling store personnel to concentrate
on serving in-store customers without having to field telephone calls. In
November, 1996, the Company consolidated the operations of the Houston call
center into the Memphis call center and offered to transfer all Houston call
center employees to AutoZone stores in the Houston area. The Company
anticipates that the call center consolidation will result in ongoing savings
to the Company.

In March 1996, Alldata Corporation became a wholly-owned subsidiary of
AutoZone in a stock-for-stock merger. Alldata has developed a database system
that provides comprehensive and up-to-date automotive diagnostic, service and
repair information which it will continue to market to professional repair
shops. In addition, the Company plans to integrate certain limited information
from the Alldata database, such as technical service bulletins, recall
information and specifications, into its electronic catalog.

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 16,000 and 19,000 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" name
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

During fiscal year 1996, the Company implemented a commercial sales program
which provides credit and prompt delivery of parts and other products to local
repair garages, dealers and service stations. This program was offered in 1,183
of the Company's stores at August 31, 1996. Commercial customers generally pay
the same everyday low prices for parts and other products as paid by AutoZone's
D-I-Y customers. The program will be tested in nearly all stores, but the
Company anticipates that optimum operating efficiencies will be achieved after
consolidating the commercial business of certain of these stores. Ultimately,
the Company expects that the program will be in 80 to 90 percent of its stores.
Although the commercial sales program is currently unprofitable, the Company
believes that the program should enhance its future financial performance and
will result in an expansion of its customer base at a relatively modest
incremental capital investment. There can be no assurance, however, that the
commercial sales program will enhance the Company's results of operations and
financial condition in future fiscal years.

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
<PAGE> 4

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:
<TABLE>
<CAPTION>
FISCAL YEAR
----------------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Beginning Stores ................................ 598 678 783 933 1,143
New Stores ...................................... 82 107 151 210 280
Replaced Stores(1)............................... 14 20 20 29 31
Closed Stores (1)................................ (16) (22) (21) (29) (31)
--- --- --- ----- -----
Ending Stores ................................... 678 783 933 1,143 1,423
=== === === ===== =====
</TABLE>
- ---------------------
(1) Replaced stores are either relocations or conversions of existing
smaller stores to larger formats. Closed stores include replaced stores.

The Company opened 280 net new stores in fiscal 1996, representing an
increase in total square footage from fiscal 1995 of approximately 26%, and had
70 stores under construction at fiscal year end. The Company plans to open
approximately 335 stores in fiscal 1997, representing an increase in total
store square footage of approximately 26%.

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 $1,002 million in fiscal 1992 to $2,243 million in fiscal 1996.
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
1997, 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 31,
1996 was as follows:

<PAGE> 5

<TABLE>
<CAPTION>
Total Store
Store Format Number of Stores Square Footage(1)
------------ ---------------- -----------------
<S> <C> <C>
8,100 sq. ft.................................... 201 1,628,100
7,700 sq. ft.................................... 303 2,333,100
6,600 sq. ft.................................... 452 2,983,200
5,400 sq. ft.................................... 446 2,408,400
4,000 sq. ft.................................... 21 84,000
----- ---------
Total ..................................... 1,423 9,436,800
===== =========
</TABLE>

- --------------------------
(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 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 12 to 18
persons, including a manager and an assistant manager, and the larger stores
typically employ 14 to 23 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 is testing a multimedia program that will permit store personnel to
train at their own pace. 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 196
area advisors who report to one of 27 district managers, who, in turn, report
to one of six regional managers, as of August 31, 1996. Purchasing,
merchandising, advertising, accounting, cash management, store development and
other store support functions are centralized in the Company's corporate and
administrative headquarters in Memphis, Tennessee. The Company believes that
such centralization enhances consistent execution of the Company's
merchandising and marketing strategy at the store level.
<PAGE> 6

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 Company 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
headquarters in Memphis. No one class of product accounts for as much as 10%
of the Company's total sales. In fiscal 1996, the Company purchased products
from approximately 200 suppliers and no single supplier accounted for more than
6% of the Company's total purchases. During fiscal year 1996, the Company's
ten largest suppliers accounted for approximately 31% of the Company's
purchases. The Company generally has no 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.
<PAGE> 7

EMPLOYEES

As of August 31, 1996, the Company employed approximately 26,800 persons,
approximately 18,700 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 corporate and
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.

ITEM 2 PROPERTIES

The following table sets forth certain information concerning AutoZone's
principal properties:
<TABLE>
<CAPTION>
SQUARE NATURE OF
LOCATION PRIMARY USE FOOTAGE OCCUPANCY
-------- ----------- ------- ----------
<S> <C> <C> <C>
Memphis, TN Corporate and Administrative Office 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 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
</TABLE>

The Company relocated its headquarters in Memphis, Tennessee in October
1995 and completed the sale of its former headquarters in December 1995. The
Company opened a new distribution center in Zanesville, Ohio in February 1996.
The lease of the Express Parts 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 31, 1996, the Company leased 538 and owned 885 of its 1,423 store
properties. Original lease terms generally range from five to 20 years with
renewal options. Leases on 248 stores that are currently operating expire
prior to the end of fiscal 2001; however, leases on 231 of such stores contain
renewal options.

ITEM 3 LEGAL PROCEEDINGS

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

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fiscal
quarter (17 weeks) ended August 31, 1996.
<PAGE> 8

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.

J.R. HYDE, III, 53--CHAIRMAN AND CHIEF EXECUTIVE OFFICER
J. R. Hyde, III, has been Chairman of the Board of Directors and Chief
Executive Officer since 1986. Previously, Mr. Hyde was Chief Executive Officer
of Malone & Hyde (the former parent company of AutoZone). Mr. Hyde has been
employed by AutoZone or Malone & Hyde since 1965.

JOHNSTON C. ADAMS, JR., 48--VICE CHAIRMAN, CHIEF OPERATING OFFICER, AND
DIRECTOR
Johnston C. Adams, Jr. was elected Vice Chairman and Chief Operating
Officer and Director in March 1996. Previously he was Executive Vice
President-Distribution since 1994. 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. The Company anticipates that Mr. Adams will be elected
President and Chief Operating Officer upon Mr. Hanemann's retirement on December
12, 1996.

TIMOTHY D. VARGO, 44--VICE CHAIRMAN AND DIRECTOR
Timothy D. Vargo was elected Vice Chairman and Director in March 1996.
Previously, he was Executive Vice President-Merchandising and Systems
Technology since June 1995 and had been Senior Vice President-Merchandising
since March 1995. Previously, Mr. Vargo was Senior Vice
President-Merchandising for the Company from 1986 to 1992 and was Director of
Stores for AutoZone from 1984 to 1986.

THOMAS S. HANEMANN, 59--PRESIDENT AND DIRECTOR
Thomas S. Hanemann has been a Director and President since 1994. He had
previously been Executive Vice President-Stores and Distribution between 1992
and 1994 and had been Senior Vice President-Stores of AutoZone since 1986.
Previously, Mr. Hanemann was President of Ike's and Super D, drug store
divisions of Malone & Hyde. Mr. Hanemann has been employed by AutoZone or
Malone & Hyde since 1974. Mr. Hanemann has expressed his intention to retire
as President of the Company as of December 12, 1996.

LAWRENCE E. EVANS, 52--EXECUTIVE VICE PRESIDENT-STORE DEVELOPMENT
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, 47--EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Robert J. Hunt 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, 33--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.

ANTHONY DEAN ROSE, JR., 36--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.
<PAGE> 9

STEPHEN W. VALENTINE, 34--SENIOR VICE PRESIDENT-SYSTEMS TECHNOLOGY AND SUPPORT
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.

MICHAEL E. BUTTERICK, 45--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.

HARRY L. GOLDSMITH, 45--VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Harry L. Goldsmith has been Vice President, General Counsel, and Secretary
since 1993. Prior to that time, he was an attorney at Federal Express
Corporation since 1989.

ANDREW M. CLARKSON, 59--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.
<PAGE> 10

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 12 of the annual stockholders report for the year
ended August 31, 1996 are incorporated herein by reference.

At October 30, 1996, there were 2,852 stockholders of record, excluding the
number of beneficial owners whose shares were held in street name.

ITEM 6 SELECTED FINANCIAL DATA

Selected Financial Data on pages 10 and 11 of the annual stockholders
report for the year ended August 31, 1996, 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 13 through 15 of the annual stockholders report for the
year ended August 31, 1996, are incorporated herein by reference.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements included on pages 16 through 23 and the quarterly
summary on page 12 of the annual stockholders report for the year ended August
31, 1996, 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.
<PAGE> 11

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

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 16 through 23
in the annual report to stockholders for the year ended August 31,
1996, are incorporated by reference in Item 8:

Report of Independent Auditors
Statements of Income for the fiscal years ended August 31, 1996,
August 26, 1995, and August 27, 1994
Balance Sheets as of August 31, 1996 and August 26, 1995
Statements of Shareholders' Equity for the fiscal years ended August
31, 1996, August 26, 1995 and August 27, 1994
Statements of Cash Flows for the fiscal years ended August 31, 1996,
August 26, 1995 and August 27, 1994
Notes to Financial Statements

2. Financial Statement Schedule II - Valuation and Qualifying Accounts

SCHEDULE II

AUTOZONE, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
COL A COL B COL C COL D COL E
--------------------------------------------------------------------------------------------------------------------------

Balance
CLASSIFICATION Beginning of ADDITIONS Deductions- Balance at
Period Describe End of Period
(1) (2)
Charged to Costs Charged to Other
and Expenses Accounts-Describe
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year Ended August 27, 1994:
Reserve for warranty claims $ 6,961 $17,409 $15,309(1) $ 9,061
Other reserves 8,014 5,840

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 9,229 9,015

</TABLE>

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

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
<PAGE> 12

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 Agreement. Incorporated by reference to Exhibit 10.5
to the Form 10-K for the fiscal year ended August 28, 1993.

10.3 Form of Non-Qualified Stock Option Agreement between AutoZone and
certain employees of AutoZone. Incorporated by reference to Exhibit
10.5 to the April 1991 Form S-1.

10.4 Form of Non-Qualified Stock Option Agreement dated as of February
11, 1987, between Auto Shack, Inc. and certain of its employees.
Incorporated by reference to Exhibit 10.6 to the April 1991 Form
S-1.

11.1 Computation of Earnings Per Common Share Equivalents.

13.1 Annual Report to stockholders for fiscal year ended August 31, 1996.

21.1 Subsidiaries of the Registrant.

23.1 Consent of Ernst & Young LLP.

27.1 Financial Data Schedule.

(b) The Company did not file a Form 8-K during the last quarter of the
fiscal year ended August 31, 1996.
<PAGE> 13

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.

<TABLE>
<S> <C>
By: /s/ J.R. Hyde, III November 27, 1996
---------------------------------------------------
J.R. Hyde, III
Chairman, Chief Executive Officer and Director
</TABLE>

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:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C>
/s/ J. R. Hyde, III Chairman, Chief Executive Officer November 27, 1996
- ------------------------------------- and Director (Principal Executive Officer)
(J.R. Hyde, III)

/s/ J. C. Adams, Jr. Vice Chairman, Chief Operating November 27, 1996
- ------------------------------------- Officer and Director
(J. C. Adams, Jr.)

/s/ Timothy D. Vargo Vice Chairman and Director November 27, 1996
- -------------------------------------
(Timothy D. Vargo)

/s/ Thomas S. Hanemann President and Director November 27, 1996
- -------------------------------------
(Thomas S. Hanemann)

/s/ Andrew M. Clarkson Director and Chairman of the November 27, 1996
- ------------------------------------- Finance Committee
(Andrew M. Clarkson)

/s/ Robert J. Hunt Executive Vice President and November 27, 1996
- ------------------------------------- Chief Financial Officer
(Robert J. Hunt) (Principal Financial Officer)

/s/ Michael E. Butterick Vice President and Controller November 27, 1996
- ------------------------------------ (Principal Accounting Officer)
(Michael E. Butterick)

/s/ N. Gerry House Director November 27, 1996
- ------------------------------------
(N. Gerry House)

/s/ Ronald A. Terry Director November 27, 1996
- ------------------------------------
(Ronald A. Terry)

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

Director
- ------------------------------------
(Henry R. Kravis)

/s/ Robert I. MacDonnell Director November 27, 1996
- ------------------------------------
(Robert I. MacDonnell)
</TABLE>
<PAGE> 14

<TABLE>
<S> <C> <C>
/s/ Michael W. Michelson Director November 27, 1996
- ------------------------------------
(Michael W. Michelson)

/s/ John E. Moll Director November 27, 1996
- ------------------------------------
(John E. Moll)

/s/ George R. Roberts Director November 27, 1996
- ------------------------------------
(George R. Roberts)
</TABLE>

<PAGE> 1

EXHIBIT 11.1

COMPUTATION OF EARNINGS PER COMMON SHARE EQUIVALENTS

<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------------------------------
August 29, August 28, August 27, August 26, August 31,
1992 1993 1994 1995 1996
----------------------------------------------------------------------------
(in thousands except per share data)
<S> <C> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding 138,794 142,590 144,754 146,189 148,476
Net effect of dilutive stock
options, based on the
treasury stock method,
using average fair market
value 7,146 5,018 3,972 3,113 2,762
------------------------------------------------------------------------
Total shares used in
computation 145,940 147,608 148,726 149,302 151,238
========================================================================
Net income $ 63,288 $ 86,935 $ 116,386 $ 138,781 $ 167,165
========================================================================
Net income per share $ 0.43 $ 0.59 $ 0.78 $ 0.93 $ 1.11
========================================================================

FULLY DILUTED:
Average shares outstanding 138,794 142,590 144,754 146,189 148,476
Net effect of dilutive stock
options, based on the
treasury stock method,
using higher of average or
year-end fair market value 7,146 5,284 3,972 3,155 2,762
------------------------------------------------------------------------
Total shares used in
computation 145,940 147,874 148,726 149,344 151,238
========================================================================
Net income $ 63,288 $ 86,935 $ 116,386 $ 138,781 $ 167,165
========================================================================
Net income per share $ 0.43 $ 0.59 $ 0.78 $ 0.93 $ 1.11
========================================================================
</TABLE>

<PAGE> 1
EXHIBIT 13.1

[COVER]

[photo: Sign stating "AutoZone, Discount Auto Parts"]

1996
Annual Report

<PAGE> 2

COMPANY DESCRIPTION

AutoZone is the nation's leading retail auto parts chain. We sell a broad line
of replacement parts, accessories, chemicals and motor oil.

With 1,423 stores in 27 states, we operate more stores than any auto parts
retailer in America, And on average, we put our mark on a new store nearly every
day.

Our primary customers are do-it-yourselfers who repair their cars out of
economic necessity. We also sell and deliver parts to professional repair shops
who install them on their customers' cars. The first AutoZone opened in Forrest
City, Arkansas, on July 4, 1979. Now more than 17 years later, we still
attribute much of our success to our unwavering commitment to customer
satisfaction. And as a constant reminder of that commitment, we start every
company meeting with the AutoZone pledge:

AutoZoners always put customers first.
We know our parts and products.
Our stores look great.
And we've got the best merchandise at the right price.

<PAGE> 3

FINANCIAL HIGHLIGHTS

1996* 1995 % Change
Sales $2,242,633,000 $1,808,131,000 +24%
Operating Profit $ 268,934,000 $ 227,658,000 +18%
Net Income $ 167,165,000 $ 138,781,000 +20%
Earnings Per Share $ 1.11 $ 0.93 +19%
Shareholders' Equity $ 865,582,000 $ 684,710,000 +26%
Number of Stores 1,423 1,143 +24%

*includes a 53rd week

[photos: painters painting AutoZone sign]

<PAGE> 4

SALES
($ in millions)

[Bar Graph:
92: $1,002
93: $1,217
94: $1,508
95: $1,808
96: $2,243]

OPERATING PROFIT
($ in millions)

[Bar Graph:
92: $104
93: $141
94: $191
95: $228
96: $269]

NET INCOME
($ in millions)

[Bar Graph:
92: $63
93: $87
94: $116
95: $139
96: $167]

EARNINGS PER SHARE

[Bar Graph:
92: $.43
93: $.59
94: $.78
95: $.93
96: $1.11]

TO OUR CUSTOMERS, AUTOZONERS AND SHAREHOLDERS:

In fiscal 1996, AutoZone solidified its position as the leader in the do-it-
yourself retail auto parts market, started delivering parts to professional
repair shops and began exploring opportunities in the international market. For
the year, AutoZone:

- Opened 280 new stores - a 33% increase over last year.
- Increased store square footage by 26%.
- Rolled out a new commercial sales program to almost all of our stores.
We'll complete the rollout in the first quarter of fiscal 1997.
- Acquired ALLDATA, the nation's leading automotive diagnostic and repair
software company.
- Began shipments from our new 550,000-square-foot distribution
center in Zanesville, Ohio.
- Opened our second call center in Houston, Texas.
- Moved into a new corporate headquarters in downtown Memphis.

While making these investments for our future, we completed another record year
financially:
- Sales rose 24% to $2.24 billion - more than double our sales just
four years ago. Fiscal 1996 included a 53rd week.
- Net income increased 20% to $167 million.
- Earnings per share increased 19% to $1.11.
- Comparable store sales, or sales at stores open at the start of the
previous fiscal year, rose 6% for the 52 weeks.

We're pleased with our accomplishments last year, considering that unfavorable
weather contributed to soft comparable store sales to do-it-yourselfers. And
we're optimistic about the coming year. Our commercial sales program should have
a favorable impact on comparable store sales, and we're also continuing to focus
on increasing sales in our base DIY business.

For the past several years, AutoZone's record store openings have outpaced the
competition by a wide margin. And we see no reason why fiscal 1997 should be any
different. We are projecting a record 335 new stores for this coming fiscal
year.

As cars become more complex, it's more important than ever for AutoZone to
retain our position as the leader in providing the most comprehensive automotive
information to our customers. Our March acquisition of ALLDATA, which sells
repair and diagnostic information to professional repair shops on CD-ROM, will
keep us on the cutting edge.

Several promotions further strengthened a management team second to none in the
industry. John Adams, formerly our executive

<PAGE> 5

vice president - distribution, became vice chairman and chief operating officer.
Reporting to John are: Tim Vargo, formerly executive vice president -
merchandising, who became vice chairman and took over the responsibility for
day-to-day operation of our stores; and President Tom Hanemann, who shifted his
focus from domestic store operations to development of AutoZone's prospects in
the international market. While we don't have a firm timetable for international
expansion, Tom will lay the groundwork for expanding the AutoZone concept
outside U.S. borders.

Fiscal 1997 will be a challenging year, but I'm confident AutoZoners will
respond to the challenge with characteristic enthusiasm. To our customers, many
thanks for letting us earn your business and for making us the leading auto
parts retailer in America. To our AutoZoners, you and your ideas built this
company. Thank you for your many contributions. To our shareholders, thank you
for your continued support. With your business, ideas and support, we look
forward to an even more profitable and productive 1997.

Best regards,

/s/ Pitt Hyde
- -------------
J.R. Hyde III

(from left)
PITT HYDE
Chairman & CEO
Customer Satisfaction

JOHN ADAMS
Vice Chairman & COO
Customer Satisfaction

TIM VARGO
Vice Chairman
Customer Satisfaction

TOM HANEMANN
President
Customer Satisfaction

[Photo of Hyde, Adams, Vargo and Hanemann]

<PAGE> 6

AutoZone is the leader in the $32 billion market serving the do-it-yourself
customer. Our fiscal 1996 sales represent less than 7% of this growing industry.
That means AutoZone, the largest auto parts retailer in America, still serves
only about one out of every 15 do-it-yourselfers. Considering that the top 10
retail chains combined control only about a fifth of the $32 billion
do-it-yourself market, we believe there's plenty of room to grow.

Industry trends are favorable for our business. Recent statistics show the
average age of cars on the road is 8.3 years-the oldest it's been since 1948.
The number of cars on the road is steadily rising. People are driving more each
year. And the market we serve - vehicles that are at least 5 years old, out of
warranty and into the repair cycle - now numbers 127 million.

While typical AutoZone customers repair their own cars, millions of others are
having their vehicles repaired by professional technicians. And selling parts to
the professional is a $42 billion market we're just beginning to tap.

There are 127
million vehicles on
the road today that
are at least five
years old, out of
warranty and into
the repair cycle.

<PAGE> 7

RECORD-BREAKING STORE GROWTH
The opening of 280 new stores in fiscal 1996 was no small task. Our record store
openings brought AutoZone's total store count to 1,423 - more than double what
it was just four years ago. And in only six years, our total square footage more
than tripled. Last year's pace of store openings meant we added a new AutoZone
almost every 31 hours. Next year, we expect to increase the new store count to
335, or one every 26 hours.

While we added Pennsylvania as our 27th state, much of our store growth in the
first half of the year was devoted to filling in our existing markets. In some
instances, these new stores take sales away from older stores. In the long run,
however, we believe they help solidify AutoZone's competitive position in the
marketplace.

Perhaps our new store growth is best put in perspective this way: had they stood
alone as a chain, our 280 new stores would rank among the nation's top 10 auto
parts retailers. Needless to say, we're extremely proud of the effort put forth
by the many AutoZoners who helped open so many stores this year.

[Photo of exterior of AutoZone store]

<PAGE> 8

SERVING PROFESSIONAL REPAIR SHOPS
Fiscal 1996 marked the beginning of a new growth opportunity for AutoZone -
selling and delivering parts to professional repair shops. We started an
aggressive rollout of a program to serve these commercial customers in
September, and by fiscal year-end it was up and running in over 80% of our
stores. We'll complete the rollout in the first quarter of fiscal 1997.

By selling and delivering parts to professional repair shops, we're able to
greatly expand the sales potential of our stores with only a small incremental
investment: delivery trucks, dedicated commercial account specialists and
drivers. And by leveraging our existing store base and inventory, we believe the
program has the potential to offer very good returns over time.

The commercial market is a large one - $42 billion. And the customers we're
targeting account for about two-thirds of that market. We already know how to
take care of them. Our approach to serving professional customers is the very
same one we've used for years with DIYers: providing value, quality and - most
importantly - outstanding customer service.

We offer our professional customers the same high quality parts at the

By selling and
delivering parts to
professional repair
shops, we're able to
greatly expand the
sales potential of
each store.

<PAGE> 9

everyday low prices that have turned millions of DIYers into loyal AutoZone
customers. We've found these professionals to be very receptive to trying
AutoZone because our everyday prices are typically lower than even the
discounted prices they get from their current suppliers. They're enthusiastic
about the lifetime warranty we offer on so many parts. And as they gain
firsthand knowledge of the quality of our parts, we're able to win an even
larger share of their business.

It should come as no surprise that we believe our commitment to customer service
is what will ultimately distinguish us in the professional market. By dedicating
AutoZoners to satisfying their needs, serving a select number of accounts and
limiting the distances we drive, we can offer professional shops much quicker
delivery than they're used to - 30 minutes or less, in most cases. And that's
where our densely located 1,423 stores give AutoZone a competitive advantage in
serving these customers.

MORE PARTS, IMPROVED SYSTEMS
We added over 1,000 parts to the typical store's inventory this year, bringing
our average SKU count to 17,500. By using our proprietary flexogram system, we
were able to tailor the inventory based on the vehicles driven by each
individual store's customer base. We now have a wider range of inventory levels
across the chain, from a low of 16,000 SKUs to a high of 19,000.

We added over
1,000 parts to the
typical store's
inventory this year,
bringing our
average SKU count
to 17,500.

[Photo of AutoZone commercial delivery truck]
<PAGE> 10

We continue to expand and refine our electronic parts catalog, already the
superior system in the industry. In the past year alone, we've doubled the
amount of information available. Our electronic catalog now spans 67 years,
dating back to 1930. More diagnostic features were included, and several other
improvements were made that help AutoZoners serve customers better, faster and
more knowledgeably.

HOUSTON CALL CENTER OPENS
Our new Houston call center, which opened in October of 1995, is now serving 160
stores in our bilingual markets. As in our Memphis center, agents in Houston can
access the same information as AutoZoners in the stores through our satellite
system. By diverting calls from our busiest stores to these call centers, we
eliminate the age-old retail conflict of deciding which customer to help first:
the one at the parts counter or the one on the phone.

ALLDATA ACQUISITION
In March, we acquired ALLDATA Corp., the nation's premier automotive diagnostic
and repair software development company. ALLDATA, under the leadership of
Founder and President Rod Georgiu, provides more than 17,000 professional repair
shops across the country with information either on CD-ROM or on-line.

Our electronics parts
catalog now spans
67 years, dating
back to 1930.

Our new Houston
call center now
serves 160 stores in
our bilingual
markets.

<PAGE> 11

ALLDATA turned profitable last year, and we see strong growth opportunities in
its base business. There are over 230,000 garages and service centers in the
U.S., yet only about 30,000 have an electronic diagnostic and repair system in
place. AutoZone's association with ALLDATA will provide the financial resources
to build on its current leadership position in the industry.

We believe joining forces with ALLDATA further strengthens our own position as
the information leader in our industry. As the number of parts continues to
increase and cars become more complex, we believe information will become even
more of a competitive advantage for AutoZone. By adding features like technical
service bulletins, recall information and specifications to our electronic
catalog, we'll be in an even better position to help our customers solve their
problems.

In the meantime, we continue to search for new products, services and
innovations that will distinguish AutoZone in the marketplace. And we remain
confident that more and more customers will continue to reward us with their
business.

The aquisition of
ALLDATA further
strengthens our
position as the
information leader
in our industry.

[Photo of AutoZone employee and customer at parts counter]

<PAGE> 12
TEN YEAR REVIEW
----------------------------------------------------------------
(in thousands, except per share data and selected operating data)
<TABLE>
<CAPTION>
5-Year
Compound ---------------------------
Growth 1996* 1995
INCOME STATEMENT DATA -------- ---------- ----------
<S> <C> <C> <C>
Net sales..................................................... 22% $2,242,633 $1,808,131
Cost of sales, including warehouse and
delivery expenses....................................... 1,307,638 1,057,033
Operating, selling, general and
administrative expenses................................. 666,061 523,440
---------- ----------
Operating profit.............................................. 28% 268,934 227,658
Interest income (expense)..................................... (1,969) 623
---------- ----------
Income before income taxes.................................... 30% 266,965 228,281
Income taxes.................................................. 99,800 89,500
---------- ----------
Net income.................................................... 31% $ 167,165 $ 138,781
========== ==========
Net income per share.......................................... 27% $ 1.11 $ 0.93
========== ==========
Average shares outstanding, including
common stock equivalents................................ 151,238 149,302

BALANCE SHEET DATA
Current assets................................................ $ 613,097 $ 447,822
Working capital............................................... 219 30,273
Total assets.................................................. 1,498,397 1,111,778
Current liabilities........................................... 612,878 417,549
Debt.......................................................... 94,400 13,503
Shareholders' equity.......................................... 865,582 684,710

SELECTED OPERATING DATA
Number of stores at beginning of year......................... 1,143 933
New stores.............................................. 280 210
Replacement stores...................................... 31 29
Closed stores........................................... 0 0
Net new stores.......................................... 280 210
Number of stores at end of year............................... 1,423 1,143
Total store square footage (000's)............................ 9,437 7,480
Increase in square footage - percentage....................... 26% 26%
Increase in comparable store net sales - percentage........... 6% 6%
Average net sales per store (000's)........................... $ 1,702 $ 1,742
Average net sales per store square foot....................... $ 258 $ 269
Total employment.............................................. 26,800 20,200
Gross profit - percentage of sales............................ 41.7% 41.5%
Operating profit - percentage of sales........................ 12.0% 12.6%
Net income - percentage of sales.............................. 7.5% 7.7%
Debt-to-capital - percentage.................................. 9.8% 1.9%
Inventory turnover............................................ 2.7x 2.9x
Return on average equity...................................... 22% 23%
</TABLE>

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

10
<PAGE> 13
<TABLE>
<CAPTION>
Fiscal Year Ended August
------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales............................... $1,508,029 $1,216,793 $1,002,327 $817,962 $671,725 $535,843
Cost of sales, including warehouse
and delivery expenses............. 886,068 731,971 602,956 491,261 416,846 341,130
Operating, selling, general and
administrative expenses........... 431,219 344,060 295,701 247,355 205,609 169,786
---------- ---------- ---------- -------- -------- --------
Operating profit........................ 190,742 140,762 103,670 79,346 49,270 24,927
Interest income (expense)............... 2,244 2,473 818 (7,295) (10,936) (9,799)
---------- ---------- ---------- -------- -------- --------
Income before income taxes.............. 192,986 143,235 104,488 72,051 38,334 15,128
Income taxes............................ 76,600 56,300 41,200 27,900 14,840 6,200
---------- ---------- ---------- -------- -------- --------
Net income.............................. $ 116,386 $ 86,935 $ 63,288 $ 44,151 $ 23,494 $ 8,928
========== ========== ========== ======== ======== ========
Net income per share.................... $ 0.78 $ 0.59 $ 0.43 $ 0.33 $ 0.19 $ 0.07
========== ========== ========== ======== ======== ========
Average shares outstanding,
including common stock
equivalents....................... 148,726 147,608 145,940 134,656 121,212 119,320

BALANCE SHEET DATA
Current assets.......................... $ 424,402 $ 378,467 $ 279,350 $233,439 $191,736 $177,824
Working capital......................... 85,373 92,331 72,270 55,807 26,803 35,831
Total assets............................ 882,102 696,547 501,048 397,776 327,368 296,546
Current liabilities..................... 339,029 286,136 207,080 177,632 164,933 141,993
Debt.................................... 4,252 4,458 7,057 7,246 74,851 93,293
Shareholders' equity.................... 528,377 396,613 278,120 204,628 80,356 54,592

SELECTED OPERATING DATA
Number of stores at beginning
of year........................... 783 678 598 538 504 440
New stores........................ 151 107 82 60 38 70
Replacement stores................ 20 20 14 4 7 7
Closed stores..................... (1) (2) (2) 0 (4) (6)
Net new stores.................... 150 105 80 60 34 64
Number of stores at end of year......... 933 783 678 598 538 504
Total store square footage (000's)...... 5,949 4,839 4,043 3,458 3,031 2,758
Increase in square footage - percentage. 23% 20% 17% 14% 10% 19%
Increase in comparable store net sales -
percentage........................ 9% 9% 15% 12% 13% 10%
Average net sales per store (000's)..... $ 1,758 $ 1,666 $ 1,570 $ 1,408 $ 1,289 $ 1,135
Average net sales per store square foot. $ 280 $ 274 $ 267 $ 246 $ 232 $ 211
Total employment........................ 17,400 15,700 13,200 11,700 9,300 7,900
Gross profit - percentage of sales...... 41.2% 39.8% 39.8% 39.9% 37.9% 36.3%
Operating profit - percentage of sales.. 12.6% 11.5% 10.3% 9.7% 7.3% 4.6%
Net income - percentage of sales........ 7.7% 7.1% 6.3% 5.4% 3.5% 1.7%
Debt-to-capital - percentage............ 0.8% 1.1% 2.5% 3.4% 48.2% 63.1%
Inventory turnover...................... 3.0x 3.2x 3.0x 2.6x 2.4x 2.4x
Return on average equity................ 25% 26% 26% 31% 35% 18%
</TABLE>

<TABLE>
<CAPTION>
Fiscal Year Ended August
--------------------------
1988 1987
----------- -----------
<S> <C> <C>
INCOME STATEMENT DATA
Net sales............................... $437,399 $354,205
Cost of sales, including warehouse
and delivery expenses............. 277,043 224,878
Operating, selling, general and
administrative expenses........... 142,868 113,123
-------- --------
Operating profit........................ 17,488 16,204
Interest income (expense)............... (8,826) (7,107)
-------- --------
Income before income taxes.............. 8,662 9,097
Income taxes............................ 3,770 4,980
-------- --------
Net income.............................. $ 4,892 $ 4,117
======== ========
Net income per share.................... $ 0.04 $ 0.03
======== ========
Average shares outstanding,
including common stock
equivalents....................... 119,936 119,096

BALANCE SHEET DATA
Current assets.......................... $137,098 $124,569
Working capital......................... 35,226 26,760
Total assets............................ 232,977 213,076
Current liabilities..................... 101,872 97,809
Debt.................................... 77,138 65,500
Shareholders' equity.................... 45,608 40,795

SELECTED OPERATING DATA
Number of stores at beginning
of year........................... 396 313
New stores........................ 47 84
Replacement stores................ 1 0
Closed stores..................... (3) (1)
Net new stores.................... 44 83
Number of stores at end of year......... 440 396
Total store square footage (000's)...... 2,318 2,029
Increase in square footage - percentage. 14% 30%
Increase in comparable store net sales -
percentage........................ 6% 10%
Average net sales per store (000's)..... $ 1,046 $ 999
Average net sales per store square foot. $ 201 $ 198
Total employment........................ 7,100 6,300
Gross profit - percentage of sales...... 36.6% 36.5%
Operating profit - percentage of sales.. 4.0% 4.6%
Net income - percentage of sales........ 1.1% 1.2%
Debt-to-capital - percentage............ 62.8% 61.6%
Inventory turnover...................... 2.3x 2.3x
Return on average equity................ 11% 11% .
</TABLE>

11
<PAGE> 14
Quarterly Summary
(unaudited)

<TABLE>
<CAPTION>
Seventeen
Twelve Weeks Ended Weeks Ended
--------------------------------------------- -----------
(in thousands, except per share data)
November 18, February 10, May 4, August 31,
1995 1996 1996 1996
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales..................................... $463,029 $425,838 $524,175 $829,591
Increase in comparable store sales............ 5% 3% 8% 7%
Gross profit.................................. $193,220 $176,033 $215,531 $350,211
Operating profit.............................. 55,397 43,424 60,432 109,681
Income before income taxes.................... 55,397 43,424 59,705 108.439
Net income.................................... 34,797 27,324 37,605 67,439
Net income per share.......................... 0.23 0.18 0.25 0.44
Stock price range:
High..................................... $29.63 $30.13 $37.50 $37.13
Low...................................... $24.75 $24.13 $25.75 $27.00
</TABLE>

<TABLE>
<CAPTION>
Sixteen
Weeks Ended
-----------
November 19, February 11, May 6, August 26,
1994 1995 1995 1995
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales..................................... $389,763 $364,061 $425,483 $628,824
Increase in comparable store sales............ 8% 7% 5% 5%
Gross profit.................................. $158,818 $149,080 $177,091 $266,109
Operating profit.............................. 45,408 39,201 53,114 89,935
Income before income taxes.................... 45,834 39,398 53,114 89,935
Net income.................................... 27,634 23,836 32,414 54,897
Net income per share.......................... 0.19 0.16 0.22 0.37
Stock price range:
High..................................... $27.00 $26.88 $26.50 $27.50
Low...................................... $21.75 $23.38 $23.00 $22.00
</TABLE>

12
<PAGE> 15
FINANCIAL REVIEW

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------
AUGUST 31, AUGUST 26, AUGUST 27,
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales, including warehouse
and delivery expenses 58.3 58.5 58.8
----- ----- -----
Gross profit 41.7 41.5 41.2
Operating, selling, general
and administrative expenses 29.7 28.9 28.6
----- ----- -----
Operating profit 12.0 12.6 12.6
Interest income (expense) - net (0.1) 0.1
Income taxes 4.4 4.9 5.0
----- ----- -----
Net income 7.5% 7.7% 7.7%
===== ===== =====
</TABLE>

FISCAL 1996 COMPARED TO FISCAL 1995

Net sales for fiscal 1996 increased by $434.5 million or 24.0% over net
sales for fiscal 1995. This increase was due to a comparable store net sales
increase of 6% (which was primarily due to sales growth in the Company's newer
stores and added sales of the Company's commercial program), an increase in net
sales of $275.1 million for stores opened since the beginning of fiscal 1995 and
net sales for the 53rd week of fiscal 1996. At August 31, 1996, the Company had
1,423 stores in operation, a net increase of 280 stores, or approximately 26% in
new store square footage for the year.
Gross profit for fiscal 1996 was $935.0 million, or 41.7% of net sales,
compared with $751.1 million, or 41.5% of net sales, for fiscal 1995. The
increase in gross profit percentage was due primarily to improved leveraging of
warehouse and delivery expenses, favorable results of store and distribution
center inventories and the added sales of higher margin ALLDATA products.
Operating, selling, general and administrative expenses for fiscal 1996
increased by $142.6 million over such expenses for fiscal 1995 and increased as
a percentage of net sales from 28.9% to 29.7%. The increase in the expense ratio
was primarily due to acquisition and operating costs of ALLDATA and to costs of
the Company's commercial program.
Net interest expense for fiscal 1996 was $2.0 million compared with
interest income of $0.6 million for fiscal 1995. The increase in interest
expense was primarily due to higher levels of borrowing. At August 31, 1996, the
Company had short-term borrowings, net of short-term investments, of $94.3
million compared with short-term borrowings, net of short term investments, of
$10.8 million at August 26, 1995.
AutoZone's effective income tax rate was 37.4% of pre-tax income for
fiscal 1996 and 39.2% for fiscal 1995. The decrease in the tax rate was
primarily due to a reduction in state income taxes.

FISCAL 1995 COMPARED TO FISCAL 1994

Net sales for fiscal 1995 increased by $300.1 million or 19.9% over net
sales for fiscal 1994. This increase was due to a comparable store net sales
increase of 6%, which was primarily due to sales growth in the Company's newer
stores, and an increase in net sales of $214.1 million for stores opened since
the beginning of fiscal 1994. At August 26, 1995, the Company had 1,143 stores
in operation, a net increase of 210 stores, or approximately 26% in new store
square footage for the year.
Gross profit for fiscal 1995 was $751.1 million, or 41.5% of net sales,
compared with $622.0 million, or 41.2% of net sales, for fiscal 1994. The
increases in gross profit were due primarily to improved leveraging of warehouse
and delivery expenses.

OPERATING PROFIT (% of sales)
[Bar Graph:
92: 10.3%
93: 11.5%
94: 12.6%
95: 12.6%
96: 12.0%]

NET INCOME (% of sales)
[Bar Graph:
92: 6.3%
93: 7.1%
94: 7.7%
95: 7.7%
96: 7.5%]

TOTAL ASSETS ($ in millions)
[Bar Graph:
92: $501
93: $697
94: $882
95: $1,112
96: $1,498]

13
<PAGE> 16
NUMBER OF STORES AT YEAR-END
[Bar Graph:

92:678
93:783
94:933
95:1,143
96:1,423]

NEW STORES
[Bar Graph:
92:80
93:105
94:150
95:210
96:280]

TOTAL STORE SQ. FOOTAGE (% increase)
[Bar Graph:
92:17%
93:20%
94:23%
95:26%
96:26%]

Operating, selling, general and administrative expenses for fiscal 1995
increased by $92.2 million over such expenses for fiscal 1994 and increased as a
percentage of net sales from 28.6% to 28.9%. The increase in the expense ratio
was primarily due to expenses incurred in connection with the introduction of
the call center and flexogram programs and increased net advertising expenses.
Net interest income for fiscal 1995 was $0.6 million compared with $2.2
million for fiscal 1994. The decrease in interest income was primarily due to
lower levels of invested cash. At August 26, 1995, the Company had short-term
borrowings, net of short-term investments, of $10.8 million compared with
short-term investments, net of short-term borrowings, of $53.9 million at August
27, 1994.
AutoZone's effective income tax rate was 39.2% of pre-tax income for
fiscal 1995 and 39.7% for fiscal 1994. The decrease in the tax rate was
primarily due to a change in the effective state tax rate due to expansion in
lower tax rate states.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary capital requirements have been the funding of its
continued new store expansion program, the increase in distribution centers and
inventory requirements. The Company has opened 825 stores and constructed six
new distribution centers from the beginning of fiscal 1992 to August 31, 1996.
The Company has financed this growth through a combination of internally
generated funds and, to a lesser degree, borrowings. Net cash provided by
operating activities was $174.2 million in fiscal 1996, $180.1 million in fiscal
1995 and $128.3 million in fiscal 1994.
Capital expenditures were $288.2 million in fiscal 1996, $258.1 million in
fiscal 1995 and $173.0 million in fiscal 1994. The Company opened 280 stores in
fiscal 1996 and completed construction of a new distribution center in
Zanesville, Ohio, which commenced operations in February 1996. The Company
completed the construction of and relocation to its new Memphis headquarters in
the fall of 1995. Construction commitments totaled approximately $48 million at
August 31, 1996.
The Company's new store development program requires significant working
capital, principally for inventories. Historically, the Company has negotiated
extended payment terms from suppliers, minimizing the working capital required
by its expansion. The Company believes that it will be able to continue
financing much of its inventory growth by favorable payment terms from
suppliers, but there can be no assurance that the Company will be successful in
doing so.
The Company anticipates that it will rely on internally generated funds to
support a majority of its capital expenditures and working capital requirements;
the balance of such requirements will be funded through borrowings. The Company
has revolving credit agreements with several banks providing for lines of credit
in an aggregate amount of $125 million, including an increase of $50 million in
January 1996. At August 31, 1996, the Company had available borrowings under
these agreements of $30.6 million.
At August 31, 1996, the Company had outstanding stock options to purchase
9,759,756 shares of Common Stock. Assuming all such options become vested and
are exercised, such options would result in proceeds of $175.3 million to the
Company. Such proceeds constitute an additional source for liquidity and capital
resources for the Company. For fiscal 1996, proceeds from sales of stock under
stock option and employee stock purchase plans were $17.7 million, including
related tax benefits.

14
<PAGE> 17

RECENT ACCOUNTING PRONOUNCEMENTS

In October 1995, Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (SFAS 123) was issued. SFAS 123
encourages companies to adopt a fair value based method of accounting for
stock-based compensation plans in place of the intrinsic value based method
provided for by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25). Companies which continue to apply the
provisions of APB 25 must make pro forma disclosures in the notes to their
financial statements of net income and earnings per share as if the fair value
based method of accounting defined in SFAS 123 had been applied. The Company
plans to adopt the pro forma disclosure provisions of SFAS 123 in fiscal year
1997.
In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121) was issued. SFAS 121 establishes accounting standards
for the recognition of the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used, or to be
disposed of. The Company does not believe the adoption of SFAS 121 in fiscal
year 1997 will have a significant impact on the Company's financial condition or
results of operations.

INFLATION

The Company does not believe its operations have been materially affected
by inflation. The Company has been successful, in many cases, in mitigating the
effects of merchandise cost increases principally due to economies of scale
resulting from increased volumes of purchases, selective forward buying and the
use of alternative suppliers.

SEASONALITY AND QUARTERLY PERIODS

The Company's business is somewhat seasonal in nature, with the highest
sales occurring in the summer months of June through August, in which average
weekly per store sales historically have run about 20% to 30% higher than in the
slowest months of December through February. The Company's business is also
affected by weather conditions. Extremely hot or extremely cold weather tends to
enhance sales by causing parts to fail and spurring sales of seasonal products.
Mild or rainy weather tends to soften sales as parts' failure rates are lower in
mild weather and elective maintenance is deferred during periods of rainy
weather.
Each of the first three quarters of AutoZone's fiscal year consists of
twelve weeks and the fourth quarter consists of sixteen weeks (seventeen weeks
in fiscal 1996). Because the fourth quarter contains seasonally high sales
volume and consists of sixteen weeks (seventeen weeks in fiscal 1996) compared
to twelve weeks for each of the first three quarters, the Company's fourth
quarter represents a disproportionate share of the annual net sales and net
income. For fiscal 1996 and 1995, the fourth quarter represented 37.0% and
34.8%, respectively, of annual net sales and 40.3% and 39.6%, respectively, of
net income.

AFTER TAX RETURN ON CAPITAL
[Bar Graph:
92: 17%
93: 18%
94: 19%
95: 19%
96: 18%]

SHAREHOLDERS' EQUITY ($ in millions)
[Bar Graph:
92: $278
93: $397
94: $528
95: $685
96: $866]

15
<PAGE> 18

CONSOLIDATED STATEMENTS OF INCOME
----------------------------------------------

<TABLE>
<CAPTION>
Year Ended
----------------------------------------------
August 31, August 26, August 27,
1996 1995 1994
(53 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C>
Net sales........................................................ $2,242,633 $1,808,131 $1,508,029
Cost of sales, including warehouse and delivery expenses......... 1,307,638 1,057,033 886,068
Operating, selling, general and administrative expenses.......... 666,061 523,440 431,219
---------- ---------- ----------
Operating profit................................................. 268,934 227,658 190,742
Interest income (expense) - net.................................. (1,969) 623 2,244
---------- ---------- ----------
Income before income taxes................................. 266,965 228,281 192,986
Income taxes..................................................... 99,800 89,500 76,600
---------- ---------- ----------
Net income................................................. $ 167,165 $ 138,781 $ 116,386
========== ========== ==========

Net income per share............................................. $ 1.11 $ 0.93 $ 0.78
========== ========== ==========

Average shares outstanding, including common
stock equivalents.......................................... 151,238 149,302 148,726
========== ========== ==========
</TABLE>

See Notes to Consolidated Financial Statements.

16
<PAGE> 19

CONSOLIDATED BALANCE SHEETS
----------------------------------------------------

<TABLE>
<CAPTION>
August 31, August 26,
1996 1995
---------- ----------
(in thousands except per share data)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................... $ 3,904 $ 6,411
Accounts receivable.......................................................... 15,466 9,690
Merchandise inventories...................................................... 555,894 395,751
Prepaid expenses............................................................. 19,225 13,329
Deferred income taxes........................................................ 18,608 22,641
---------- ----------
Total current assets................................................... 613,097 447,822
Property and equipment:
Land ........................................................................ 190,660 140,953
Buildings and improvements................................................... 523,240 328,398
Equipment.................................................................... 248,275 188,351
Leasehold improvements and interests......................................... 36,708 29,785
Construction in progress..................................................... 62,283 104,869
---------- ----------
1,061,166 792,356
Less accumulated depreciation and amortization............................... 198,292 148,148
---------- ----------
862,874 644,208
Other assets:
Cost in excess of net assets acquired, net of accumulated amortization
of $7,467 in 1996 and $6,851 in 1995....................................... 17,187 17,803
Deferred income taxes........................................................ 2,938
Other assets................................................................. 2,301 1,945
---------- ----------
22,426 19,748
---------- ----------
$1,498,397 $1,111,778
========== ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................. $ 381,304 $ 300,578
Accrued expenses............................................................. 104,909 91,838
Checks outstanding, net...................................................... 20,005 5,863
Income taxes payable......................................................... 12,260 5,767
Revolving credit agreements.................................................. 94,400 9,500
Current portion of long-term debt............................................ 4,003
---------- ----------
Total current liabilities.............................................. 612,878 417,549
Other liabilities.................................................................. 19,937 8,318
Deferred income taxes.............................................................. 1,201
Commitments and contingencies......................................................
Shareholders' equity:
Preferred Stock, authorized 1,000 shares; no shares issued
and outstanding in 1996 and 1995...........................................
Common Stock, par value $.01 per share, authorized 200,000 shares; issued
and outstanding 150,137 shares in 1996 and
147,052 shares in 1995.................................................... 1,501 1,471
Additional paid-in capital................................................... 235,247 196,625
Retained earnings............................................................ 628,834 486,614
---------- ----------
865,582 684,710
---------- ----------

$1,498,397 $1,111,778
========== ==========
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE> 20

CONSOLIDATED STATEMENTS OF CASH FLOWS
------------------------------------------

<TABLE>
<CAPTION>
Year Ended
----------------------------------------
August 31, August 26, August 27,
1996 1995 1994
(53 Weeks) (52 Weeks) (52 Weeks)
---------- ---------- ----------
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income.................................................... $167,165 $138,781 $116,386
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of property
and equipment....................................... 62,919 47,733 32,429
Amortization of intangible and other assets............ 622 616 637
Deferred income tax expense (benefit).................. 6,082 (7,240) (331)
Net loss (gain) on disposals of property
and equipment....................................... (735) 832 632
Net increase in accounts receivable and
prepaid expenses.................................... (7,564) (6,091) (1,236)
Net increase in merchandise inventories................ (158,673) (61,687) (73,996)
Net increase in accounts payable, accrued expenses
and checks outstanding.............................. 94,916 64,666 57,348
Net increase (decrease) in income taxes payable..................... 6,493 578 (4,477)
Net change in other assets and liabilities............. 2,930 1,880 885
-------- -------- --------
Net cash provided by operating activities........... 174,155 180,068 128,277

Cash flows from investing activities:
Cash outflows for property and equipment...................... (288,182) (258,060) (172,975)
Proceeds from disposals of property and equipment............. 8,680 1,364 1,237
-------- -------- --------
Net cash used in investing activities............... (279,502) (256,696) (171,738)

Cash flows from financing activities:
Repayment of long-term debt................................... (4,003) (249) (206)
Net increase in revolving credit agreements................... 84,900 9,500
Net proceeds from sale of Common Stock, including
related tax benefit........................................ 17,699 17,552 14,078
Principal collections on subscription notes receivable........ 1,300
-------- -------- --------
Net cash provided by financing activities........... 98,596 26,803 15,172
-------- -------- --------

Net decrease in cash and cash equivalents........................... (6,751) (49,825) (28,289)
Cash and cash equivalents at beginning of year...................... 6,411 56,236 84,525
Beginning cash balance of pooled entity............................. 4,244
-------- -------- --------
Cash and cash equivalents at end of year............................ $ 3,904 $ 6,411 $ 56,236
======== ======== ========

Supplemental cash flow information:
Interest paid, net of interest cost capitalized............... $ 1,971 $ 160 $ 85
Income taxes paid............................................. $ 69,791 $ 81,862 $ 70,203
</TABLE>

See Notes to Consolidated Financial Statements.

<PAGE> 21

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
--------------------------------

<TABLE>
<CAPTION>
Additional Subscription
Common Paid-in Retained Notes
Stock Capital Earnings Receivable Total
------ ---------- -------- ------------ --------
(in thousands)

<S> <C> <C> <C> <C> <C>
Balance at August 28, 1993......................... $1,441 $165,025 $231,447 $ (1,300) $396,613
Net income......................................... 116,386 116,386
Principal collections on subscription notes
receivable......................................... 1,300 1,300
Sale of 1,303 shares of Common Stock under
stock option and stock purchase plans......... 13 2,985 2,998
Tax benefit of exercise of stock options........... 11,080 11,080
------ --------- -------- ---------- --------
Balance at August 27, 1994......................... 1,454 179,090 347,833 - 528,377
Net income......................................... 138,781 138,781
Sale of 1,635 shares of Common Stock under
stock option and stock purchase plans......... 17 5,335 5,352
Tax benefit of exercise of stock options........... 12,200 12,200
Balance at August 26, 1995......................... 1,471 196,625 486,614 - 684,710
Net income......................................... 167,165 167,165
Equity of pooled entity issued (1,697 shares)...... 17 20,936 (24,945) (3,992)
Sale of 1,386 shares of Common Stock under
stock option and stock purchase plans......... 13 6,836 6,849
Tax benefit of exercise of stock options........... 10,850 10,850
------ --------- -------- ---------- --------
Balance at August 31, 1996......................... $1,501 $235,247 $628,834 $ - $865,582
====== ========= ======== =========== ========
</TABLE>

See Notes to Consolidated Financial Statements.

19
<PAGE> 22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------

NOTE A - SIGNIFICANT ACCOUNTING POLICIES
BUSINESS: The Company is a specialty retailer of automotive parts and
accessories. At the end of fiscal 1996, the Company operated 1,423 stores in 27
states.
FISCAL YEAR: The Company's fiscal year consists of 52 or 53 weeks ending on
the last Saturday in August.
BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of AutoZone, Inc., and its wholly owned subsidiaries (the Company). All
significant intercompany transactions and balances have been eliminated in
consolidation.
MERCHANDISE INVENTORIES: Inventories are stated at the lower of cost or
market using the last-in, first-out (LIFO) method. The Company believes that the
LIFO method of inventory valuation results in a better matching of current costs
and revenues. A number of retailers use the first-in, first-out (FIFO) method of
inventory valuation. Cost of sales was approximately $100,000, $3,600,000 and
$4,400,000 less in fiscal 1996, 1995 and 1994, respectively than if the FIFO
method had been used.
PROPERTY AND EQUIPMENT: Property and equipment is stated at cost.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets. Leasehold interests and improvements are
amortized over the terms of the leases.
AMORTIZATION: The cost in excess of net assets acquired is amortized by the
straight-line method over 40 years.
PREOPENING EXPENSES: Preopening expenses, which consist primarily of
payroll and occupancy costs, are expensed as incurred.
ADVERTISING COSTS: The Company expenses advertising costs as incurred.
Advertising expense, net of vendor rebates, was approximately $23,129,000,
$18,531,000 and $9,306,000 in fiscal 1996, 1995 and 1994, respectively.
WARRANTY COSTS: The Company provides the retail consumer with a warranty on
certain products. Estimated warranty obligations are provided at the time of
sale of the product.
FINANCIAL INSTRUMENTS: The Company has certain financial instruments which
include cash, accounts receivable, accounts payable, checks outstanding and
revolving credit agreements. The carrying amounts of these financial instruments
approximate fair value because of their short maturities.
INCOME TAXES: The Company accounts for income taxes under the liability
method. Under this 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.
NET INCOME PER SHARE: Net income per share of common stock is computed
using the weighted average number of shares of common stock outstanding during
each period, including common stock equivalents, consisting of stock options
calculated using the treasury stock method, when dilutive.
CASH EQUIVALENTS: Cash equivalents consist of investments with maturities
of 90 days or less at the date of purchase.
USE OF ESTIMATES: Management of the Company has made a number of estimates
and assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from these estimates.
IMPAIRMENT OF LONG-LIVED ASSETS: SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," is
effective for fiscal years beginning after December 15, 1995. This statement
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Also, in general, long-lived assets and certain identifiable
intangibles to be disposed of should be reported at the lower of carrying amount
or fair values less cost to sell. The impact of this new standard is not
expected to have a material effect on the Company's financial position or
results of operations.

NOTE B - ACCRUED EXPENSES
Accrued expenses consist of the following:

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 26,
1996 1995
--------- -------
(in thousands)
<S> <C> <C>
Medical and casualty
insurance claims $ 33,800 $36,835
Accrued compensation
and related payroll taxes 18,490 19,489
Ad valorem and sales taxes 21,485 18,101
Other 31,134 17,413
--------- -------
$ 104,909 $91,838
========= =======
</TABLE>

NOTE C - INCOME TAXES

At August 31, 1996, the Company has net operating loss carryforwards (NOLs)
of approximately $14.5 million that expire in years 2000 through 2009. Those
carryforwards resulted from the Company's acquisition of ALLDATA Corp. (see Note
J - Business Combination). The use of the NOLs is limited to future taxable
earnings of ALLDATA Corp. and is subject to annual limitations. A valuation
allowance of $5,573,000 has been recognized to offset the deferred tax assets
related to those carryforwards. If realized, the tax benefit for those NOLs will
reduce income tax expense.

The provision for income taxes consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED
-------------------------------------
AUGUST 31, AUGUST 26, AUGUST 27,
1996 1995 1994
--------- --------- ----------
(in thousands)
Current:
<S> <C> <C> <C>
Federal $86,469 $81,460 $63,150
State 7,249 15,280 13,781
------- ------- -------
93,718 96,740 76,931

Deferred:
Federal 5,531 (6,160) (250)
State 551 (1,080) (81)
------- ------- -------
6,082 (7,240) (331)
------- ------- -------
$99,800 $89,500 $76,600
======= ======= =======
</TABLE>

20
<PAGE> 23

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

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 26,
1996 1995
--------- ---------
(in thousands)
<S> <C> <C>
Deferred tax assets:
Insurance reserves $11,282 $13,078
Unearned income 6,296
Net operating loss carryforwards 5,573
Other 5,767 11,874
------- -------
28,918 24,952
Less valuation allowance (5,573)
------- -------
23,345 24,952
Deferred tax liabilities:
Property and equipment 1,799 3,512
------- -------
Net deferred tax assets $21,546 $21,440
======= =======
</TABLE>

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:

<TABLE>
<CAPTION>
Year Ended
-----------------------------------
August 31, August 26, August 27,
1996 1995 1994
------- ------- -------
(in thousands)
<S> <C> <C> <C>
Expected tax at
statutory rate $93,438 $79,898 $67,545
State income
taxes, net 5,070 9,230 8,905
Other 1,292 372 150
------- ------- -------
$99,800 $89,500 $76,600
======= ======= =======
</TABLE>

Income tax benefits resulting from the exercise of certain non-qualified
employee stock options were credited to additional paid-in capital because no
expense was charged to income for financial reporting purposes in respect of
such options.

NOTE D - FINANCING ARRANGEMENTS

On January 16, 1996, the Company increased its unsecured revolving credit
agreements (the Revolver) with a group of banks by $50,000,000 for a line of
credit totaling $125,000,000. The rate of interest payable under the Revolver is
a function of the London Interbank Offered Rate (LIBOR) or the lending bank's
base rate (or prime rate as defined by an individual bank), at the option of the
Company. The commitments made under the Revolver expire on February 1, 1998, but
may be extended for additional eighteen month periods with the consent of the
lenders. At August 31, 1996, the Company's borrowings under the Revolver were
$94,400,000 and the average interest rate was 5.67% and 6.06% at fiscal year-end
1996 and 1995, respectively. During the commitment period, the Company is
obligated to pay a fee of .125% per annum for the unused portion of the
$125,000,000 commitment. The Revolver contains a covenant limiting the amount of
debt the Company may incur relative to its net worth.
Interest costs of $2,416,000 in fiscal 1996, $981,000 in fiscal 1995 and
$446,000 in fiscal 1994 were capitalized.

NOTE E - EQUITY

The Company has issued options to purchase Common Stock to certain
shareholders and employees. A summary of outstanding stock options is as
follows:

<TABLE>
<CAPTION>
EXERCISE PRICE NUMBER
PER SHARE OF SHARES
--------------- ---------
<S> <C> <C> <C>
Outstanding August 27, 1994 $ 0.63 - $29.00 9,147,829
Granted 23.38 - 26.38 2,356,855
Exercised 0.63 - 9.17 (1,532,139)
Canceled 1.63 - 29.00 (468,564)
--------------- ---------
Outstanding August 26, 1995 0.67 - 29.00 9,503,981
Assumed 2.24 - 4.86 221,841
Granted 25.13 - 35.13 1,621,395
Exercised 0.67 - 14.31 (1,332,588)
Canceled 4.89 - 28.25 (254,873)
--------------- ---------
Outstanding August 31, 1996 $ 0.79 - $35.13 9,759,756
=============== =========
</TABLE>

Options to purchase 2,901,140 shares at August 31, 1996, and 3,211,405
shares at August 26, 1995, were exercisable. Shares reserved for future grants
were 725,363 shares at August 31, 1996, and 2,091,885 shares at August 26, 1995.
The Company also has an employee stock purchase plan under which all
eligible employees may purchase Common Stock at no less than 85% of fair market
value (determined quarterly) through regular payroll deductions. Annual
purchases are limited to $4,000 per employee. Under the plan, 226,541 shares
were sold in fiscal 1996 and 228,571 shares were sold in fiscal 1995, including
173,572 and 125,219 shares, respectively, purchased by the Company for sale
under the plan. A total of 473,068 shares of Common Stock is reserved for future
issuance under this plan.

NOTE F - PENSION PLAN

Substantially all full-time employees are covered by a defined benefit
pension plan. The benefits are based on years of service and the employee's
highest consecutive five-year average compensation.
The Company's funding policy is to make annual contributions in amounts at
least equal to the minimum funding requirements of the Employee Retirement
Income Security Act of 1974.

21
<PAGE> 24

The following table sets forth the plan's funded status and amounts
recognized in the Company's financial statements (in thousands):

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 26,
1996 1995
-------- --------
<S> <C> <C>
Actuarial present value of
accumulated benefit
obligation, including vested
benefits of $17,225 in 1996
and $12,946 in 1995 $ 20,400 $ 15,444
======== ========
Projected benefit obligation
for service rendered to date $ 31,533 $ 23,348
Less plan assets at fair value,
primarily stocks and
cash equivalents 27,367 18,616
-------- --------
Projected benefit obligation
in excess of plan assets 4,166 4,732
Unrecognized prior service cost (427) (564)
Unrecognized net loss from past
experience different from that
assumed and effects of changes
in assumptions (3,470) (3,799)
Unrecognized net asset 268 418
-------- --------
Accrued pension cost $ 537 $ 787
======== ========
</TABLE>

Net pension cost included the following components (in thousands):

Year Ended
---------------------------------------
August 31, August 26, August 27,
1996 1995 1994
------- ------- -------
Service cost of
benefits earned
during the year $ 4,580 $ 3,536 $ 2,876
Interest cost on
projected benefit
obligation 1,748 1,367 1,097
Actual return on
plan assets (3,677) (1,289) (1,527)
Net amortization
and deferral 2,518 481 1,261
------- ------- -------
Net periodic
pension cost $ 5,169 $ 4,095 $ 3,707
======= ======= =======

The actuarial present value of the projected benefit obligation was
determined using weighted-average discount rates of 7.93% and 7.5% at August 31,
1996, and August 26, 1995, respectively, and assumed increases in future
compensation levels of 6%. The expected long-term rate of return on plan assets
was 7%. Prior service cost is amortized over the estimated average remaining
service lives of the plan participants, and the unrecognized net experience gain
or loss is amortized over five years.

NOTE G - LEASES

A substantial portion of the Company's retail stores and certain equipment
are leased. Most of these leases include renewal options and some include
options to purchase and provisions for percentage rent based on sales.
Rental expense was $30,626,000 for fiscal 1996, $26,460,000 for fiscal 1995
and $28,113,000 for fiscal 1994. Percentage rentals were insignificant.
Minimum annual rental commitments under non-cancelable operating leases are
as follows (in thousands):

<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1997 $ 29,742
1998 26,788
1999 23,130
2000 20,678
2001 16,456
Thereafter 66,520
--------
$183,314
========
</TABLE>

NOTE H - RELATED PARTY TRANSACTIONS

Management fees of $272,000 for fiscal 1996, $371,000 for fiscal 1995 and
$402,000 for fiscal 1994 were paid to KKR Associates, which directly and through
several limited partnerships, of which it is a general partner, owned
approximately 13% and 43% of the Company's outstanding Common Stock at August
31, 1996 and August 26, 1995, respectively.

NOTE I - COMMITMENTS AND CONTINGENCIES

Construction commitments, primarily for new stores, totaled approximately
$48 million at August 31, 1996.
The Company is a party to various claims and lawsuits arising in the normal
course of business which, in the opinion of management, are not, singularly or
in aggregate, material to the Company's financial position or results of
operations.
The Company is self-insured for workers' compensation, automobile, general
and product liability losses. The Company is also self-insured for health care
claims for eligible active employees. The Company maintains certain levels of
stop loss coverage for each self-insured plan. Self-insurance costs are accrued
based upon the aggregate of the liability for reported claims and an estimated
liability for claims incurred but not reported.

NOTE J - BUSINESS COMBINATION

On March 29, 1996, ALLDATA Corp. (ALLDATA) became a wholly owned subsidiary
of AutoZone in a stock-for-stock merger accounted for as a pooling of interests.
ALLDATA 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. Under the terms of the merger agreement,
AutoZone issued approximately 1.7 million shares of Common Stock and stock
options covering approximately 200,000 shares of Common Stock. Financial
information of ALLDATA has been included in the results of operations from the
date of acquisition and is included in the balance sheet as of August 31, 1996.
Financial statements for periods prior to the date of combination have not been
restated as the effect is not material to the Company's financial condition and
results of operations. The assets and liabilities of ALLDATA were approximately
$17.4 million and $21.4 million, respectively, at the date of combination.

22
<PAGE> 25

MANAGEMENT'S REPORT

AutoZone's management takes responsibility for the integrity and
objectivity of the financial statements in this annual report. These financial
statements were prepared from accounting records which management believes
fairly and accurately reflect the operations and financial position of AutoZone.
The financial statements in this report were prepared in conformity with
generally accepted accounting principles. In certain instances, management used
its best estimates and judgments based upon currently available information and
management's view of current conditions and circumstances.
Management maintains a system of internal controls designed to provide
reasonable assurance that assets are protected from improper use and accounted
for in accordance with its policies and that transactions are recorded
accurately in the Company's records. The concept of reasonable assurance is
based upon a recognition that the cost of the controls should not exceed the
benefit derived.
The financial statements of AutoZone have been audited by Ernst & Young
LLP, independent auditors. Their accompanying report is based on an audit
conducted in accordance with generally accepted auditing standards, including a
review of internal accounting controls and financial reporting matters.

/s/ Robert J. Hunt
- ------------------
Robert J. Hunt
Executive Vice President - Finance
Chief Financial Officer
Customer Satisfaction

REPORT OF INDEPENDENT AUDITORS

Shareholders
AutoZone, Inc.,

We have audited the accompanying consolidated balance sheets of AutoZone,
Inc. as of August 31, 1996, and August 26, 1995, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended August 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of AutoZone, Inc.
at August 31, 1996, and August 26, 1995, and the consolidated results of its
operations and its cash flows for each of the three fiscal years in the period
ended August 31, 1996, in conformity with generally accepted accounting
principles.

/s/ ERNST & YOUNG LLP

Memphis, Tennessee
September 23, 1996

CORPORATE INFORMATION

TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, New Jersey 07303-2500
(800) 446-2617
(201) 324-0498

STOCK EXCHANGE LISTING
New York Stock Exchange
Ticker Symbol: AZO

AUDITORS
Ernst & Young LLP
Memphis, Tennessee

CORPORATE OFFICES
123 South Front Street
Memphis, Tennessee 38103-3607
(901) 495-6500

AUTOZONE WEB SITE
http://www.autozone.com

ANNUAL MEETING
The Annual Meeting of Shareholders of AutoZone will
be held at 10:00 a.m. on December 12, 1996, at
AutoZone Corporate Offices, 123 South Front Street,
Memphis, Tennessee.

SEC FORM 10-K/QUARTERLY REPORTS
AutoZone does not produce quarterly reports because
the information is not timely and is costly to distribute.
Shareholders may obtain free of charge a copy of the
Company's annual report on Form 10-K as filed with
the Securities and Exchange Commission or our
quarterly press releases by writing to Shareholder
Relations, P.O. Box 2198, Memphis, Tennessee 38101-
9842.

Copies of all documents filed by the company with
the Securities and Exchange Commission, including
Form 10-K and Form 10-Q, are also available at the
SEC's EDGAR server at http://www.sec.gov.

SHAREHOLDERS OF RECORD
As of August 31, 1996, there were 2,772
shareholders of record.

23
<PAGE> 26

OFFICERS
-----------------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
Executive Vice Presidents Vice Presidents HARRY L. GOLDSMITH
Customer Satisfaction Customer Satisfaction General Counsel
and Secretary
JOSEPH R. HYDE III LAWRENCE E. EVANS RICHARD F. ADAMS JR.
Chairman and CEO Store Development Business Planning Phillip J. Jackson
Customer Satisfaction & Analysis Distribution
ROBERT J. HUNT
JOHNSTON C. ADAMS JR. Chief Financial Officer MICHAEL B. BAIRD MICHAEL E. LONGO
Vice Chairman and COO Stores Distribution
Customer Satisfaction SHAWN P. MCGHEE
Merchandising DAVID W. BARCZAK WILLIAM R. MCCAWLEY JR.
TIMOTHY D. VARGO Real Estate Stores
Vice Chairman
Customer Satisfaction JON A. BASCOM STEVEN R. MCCLANAHAN
Senior Vice Presidents Systems Technology Stores
THOMAS S. HANEMANN Customer Satisfaction & Support
President GRANTLAND E. MCGEE JR.
Customer Satisfaction ANTHONY D. ROSE JR. B. CRAIG BLACKWELL Stores
Advertising Stores
JOHN MINERVINI
STEPHEN W. VALENTINE FRANCIS C. BROWN III Business Development
Other Corporate Officers Systems Technology Human Resources
Customer Satisfaction & Support WILLIAM E. SHULL III
MICHAEL E. BUTTERICK Stores
SHEILA GRACE STUEWE Controller
Treasurer DAVID WILHITE
MARK A. CORDOVA Merchandising
DONALD R. RAWLINS Stores
Assistant Secretary
BRETT D. EASLEY
Merchandising Systems

</TABLE>

BOARD OF DIRECTORS
------------------------------------------------------------

<TABLE>
<S> <C> <C> <C>
JOSEPH R. HYDE III DR. N. GERRY HOUSE ROBERT I. MACDONNELL GEORGE R. ROBERTS
Chairman and CEO Superintendent General Partner General Partner
Customer Satisfaction Memphis City Schools Kohlberg, Kravis, Roberts Kohlberg, Kravis, Roberts

JOHNSTON C. ADAMS JR. JAMES F. KEEGAN MICHAEL W. MICHELSON RONALD A. TERRY
Vice Chairman and COO Managing Director General Partner Retired Chairman
Customer Satisfaction Weibel Huffman Keegan, Inc. Kohlberg, Kravis, Roberts First Tennessee
National Corporation
TIMOTHY D. VARGO HENRY R. KRAVIS JOHN E. MOLL
Vice Chairman General Partner Retired President
Customer Satisfaction Kohlberg, Kravis, Roberts The Fleming Companies, Inc.

THOMAS S. HANEMANN
President
Customer Satisfaction

ANDREW M. CLARKSON
Chairman
Finance Committee
Customer Satisfaction
</TABLE>

24
<PAGE> 27
[Graphic: Map of United States showing number of AutoZone locations per state:]
1,423 STORES
27 STATES

[Alabama 74
Arizona 52
Arkansas 37
Colorado 24
Florida 61
Georgia 87
Illinois 43
Indiana 66
Kansas 7
Kentucky 42
Louisiana 68
Michigan 9
Mississippi 58
Missouri 56
New Mexico 22
North Carolina 79
Ohio 138
Oklahoma 56
Pennsylvania 10
South Carolina 41
Tennessee 102
Texas 239
Utah 15
Virginia 23
West Virginia 12
Wisconsin 1
Wyoming 1]

<TABLE>
<CAPTION>
STORES OPENED FISCAL YEAR 1996

<S> <C> <C> <C> <C>
ALABAMA GEORGIA LOUISIANA (CONT.) OHIO SOUTH CAROLINA
Anniston (R) Atlanta New Orleans Amelia Aiken
Bay Minette Bainbridge Plaquemine Amherst Camden
Birmingham (R) Cornelia Sulphur Boardman Darlington
Clanton Decatur (2) Brunswick Laurens
Florence East Point MISSISSIPPI Bucyrus Lexington
Fort Payne Fayetteville Brandon Calcutta Rock Hill
Gadsden Hephzibah Canton Centerville
Huntsville Kennesaw Greenville (R) Chillicothe TENNESSEE
Leeds Marietta Indianola Conneaut Cordova
Madison Martinez Iuka Delphos Dickson (R)
Monroeville Statesboro Jackson (R) East Liverpool Greeneville (R)
Oneonta Thomasville (R) Lucedale Fostoria Harriman
Prichard Thomson Magee Geneva Jackson
Thomasville Warner Robins Olive Branch Georgetown Jefferson City
Tuscaloosa Winder Philadelphia Hamilton La Follette
Tuscumbia Ripley Harrison Madison (R)
ILLINOIS Senatobia Heath Martin
ARIZONA Belleville Tupelo Ironton Memphis (1, 2R)
Casa Grande (R) Harrisburg Waynesboro Logan Morristown
Coolidge Joliet West Point Lorain Murfreesboro
Glendale Litchfield Marysville Nashville (2, 1R)
Mesa (R) Paris MISSOURI Mason Newport
Phoenix (2, 3R) Salem Aurora Mentor on the Lake Rogersville
Tucson (1,1R) Waterloo Bolivar Milford Selmer
Cape Girardeau (R) Mt. Vernon Sparta
ARKANSAS INDIANA Carthage North Madison
Fort Smith Bloomington Dexter Oxford TEXAS
Harrison Boonville Florissant (R) Painesville Angleton
Pine Bluff Crawfordsville Jackson Parma Arlington
Russellville (R) Evansville Joplin Perrysburg Belton
Siloam Springs Indianapolis (2) Lebanon Sandusky Benbrook
Jeffersonville Macon St. Clairsville Clute (R)
COLORADO Lawrenceburg Mehlville (1, 1R) Symmes Township Corpus Christi
Aurora Martinsville Mexico Warren (2) De Soto
Ft. Morgan Princeton Nevada Washington Court Hse Denison
Wheat Ridge Salem Perryville Wintersville El Campo
Tell City Springfield (2) Woodlawn El Paso (3, 1R)
FLORIDA Troy Wooster Gainesville
Bartow KANSAS Warrensburg Youngstown (4) Garland (2)
Bermuda Chanute Hewitt
Clermont Ft. Scott NEW MEXICO OKLAHOMA Hidalgo
Crystal River Independence Deming Hugo Houston (3, 1R)
Dade City Iola Farmington (R) Mustang Lancaster
Deland Parsons Las Cruces Pryor Laredo
Dunedin Pittsburg Tahlequah Lockhart
Ensley NORTH CAROLINA Tulsa (2) Pearland
Eustis KENTUCKY Asheville Wagoner San Antonio (3, 1R)
Inverness Beaver Dam Belmont Weatherford Santa Fe
Leesburg Cynthiana Charlotte (2, 1R) Woodward Waco
Marianna Florence Dunn (R)
Melbourne Harrodsburg Greensboro (4, 2R) PENNSYLVANIA VIRGINIA
Ocala (2) Leitchfield Lumberton Allison Park Charlottesville
Orange City London Mooresville East Rochester Cheasapeake
Orlando (3) Maysville Morehead City Greenville Newport News
Palm Bay Nicholasville Mount Airy Grove City Norfolk
Pensacola Owensboro (2) Reidsville Hermitage Richmond
Quincy Princeton Rockingham Huntingdon
Sanford Roxboro New Castle WEST VIRGINIA
St. Cloud LOUISIANA Smithfield Sharon Logan
Winter Haven (2) Arabi (R) Tarboro Uniontown Moundsville
Bastrop Washington Waynesburg New Martinsville
Franklinton Wilmington Oak Hill
Marrero Winston-Salem

</TABLE>

(R) - Indicates replacement store.

[AUTOZONE LOGO]

<PAGE> 1

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<S> <C>
Subsidiary State of Organization or Incorporation
- ---------- --------------------------------------
Alldata Corporation Delaware
AutoZone Development Corporation Nevada
AutoZone Marketing Company Nevada
AutoZone Properties, Inc. Nevada
AutoZoners, Inc. Nevada
AutoZone Stores, Inc. Nevada
AutoZone Texas, L.P. Delaware
</TABLE>

<PAGE> 1

EXHIBIT 23.1

Consent of Independent Auditors

Shareholders and Board of Directors
AutoZone, Inc.

We consent to the incorporation by reference in this Annual Report (Form
10-K) of AutoZone, Inc. of our report dated September 23, 1996, included in the
1996 Annual Report to Shareholders of AutoZone, Inc.

Our audits also included the financial statement schedule of AutoZone, Inc.
listed in Item 14(a). This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-41308) pertaining to the AutoZone, Inc. Employee
Stock Purchase Plan and the Registration Statement (Form S-8 and Form S-3 No.
33-41618) pertaining to the Amended and Restated Stock Option Plan of AutoZone,
Inc. of our report dated September 23, 1996, with respect to the financial
statements of AutoZone, Inc. incorporated by reference and the schedule
included in the Annual Report (Form 10-K) for the year ended August 31, 1996.

/s/ ERNST & YOUNG LLP

Memphis, Tennessee
November 26, 1996

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR FISCAL YEAR ENDED AUGUST 31, 1996, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> AUG-27-1995
<PERIOD-END> AUG-31-1996
<CASH> 3,904
<SECURITIES> 0
<RECEIVABLES> 15,466
<ALLOWANCES> 0
<INVENTORY> 555,894
<CURRENT-ASSETS> 613,097
<PP&E> 1,061,166
<DEPRECIATION> 198,292
<TOTAL-ASSETS> 1,498,397
<CURRENT-LIABILITIES> 612,878
<BONDS> 0
0
0
<COMMON> 1,501
<OTHER-SE> 864,081
<TOTAL-LIABILITY-AND-EQUITY> 1,498,397
<SALES> 2,242,633
<TOTAL-REVENUES> 2,242,633
<CGS> 1,307,638
<TOTAL-COSTS> 1,307,638
<OTHER-EXPENSES> 666,061
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,969
<INCOME-PRETAX> 266,965
<INCOME-TAX> 99,800
<INCOME-CONTINUING> 167,165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 167,165
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11

</TABLE>