We are dedicated to providing customers with superior service value and quality automotive parts and products at a great value in conveniently located, well-designed stores. Key elements of this strategy are:

Customer service is the most important element in our marketing and merchandising strategy, which is based upon consumer marketing research. We emphasize that our AutoZoners (employees) should always put customers first by providing prompt, courteous service and trustworthy advice. Our electronic parts catalog assists in the selection of parts; and lifetime warranties are offered by us or our vendors on many of the parts we sell. Our wide area network in our stores helps us to expedite credit or debit card and check approval processes, to locate parts at neighboring AutoZone stores, and in some cases, to place special orders directly with our vendors.

Our stores generally open at 7:30 or 8 a.m. and close between 8 and 10 p.m. Monday through Saturday and typically open at 9 a.m. and close between 6 and 9 p.m. on Sunday. However, some stores are open 24 hours, and some have extended hours of 6 or 7 a.m. until midnight seven days a week.

The following table showstables show some of the types of products that we sell:

Merchandise is selected and purchased for all stores through our store support centers located in Memphis, Tennessee and Mexico. No oneIn fiscal 2009, no class of product accountssimilar products accounted for as much as 10 percent or more of our total sales. In fiscal 2007, nosales, nor did any single supplier accountedaccount for more than 10 percent of our total purchases. We generally have few long-term contracts for the purchase of merchandise. We believe that we have good relationships with suppliers. We also believe that alternative sources of supply exist, at similar cost, for most types of product sold. Most of our merchandise flows through our distribution centers to our stores by our fleet of tractors and trailers or by third-party trucking firms.

The sale of automotive parts, accessories and maintenance items is highly competitive in many areas, including name recognition, product availability, customer service, store location and price. AutoZone competes in both the retail do-it-yourself (“DIY”) and commercial do-it-for-me (“DIFM”) auto parts and accessories markets.

As of August 25, 2007,29, 2009, we employed approximately 55,00060,000 persons, approximately 5657 percent of whom were employed full-time. About 9392 percent of our AutoZoners were employed in stores or in direct field supervision, approximately 5 percent in distribution centers and approximately 23 percent in store support and other functions. Included in the above numbers are approximately 2,0003,000 persons employed in our Mexico operations.

We have never experienced any material labor disruption and believe that relations with our AutoZoners are generally good.

AutoZone’s primary website is at http://www.autozone.com. We make available, free of charge, at our investor relations website, http://www.autozoneinc.com, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934, as amended, as soon as reasonably feasible after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

The following list describes our executive officers. The title of each executive officer includes the words “Customer Satisfaction” which reflects our commitment to customer service. Officers are elected by and serve at the discretion of the Board of Directors.

William C. Rhodes, III, was named Chairman of AutoZone in Juneduring fiscal 2007 and has been President, Chief Executive Officer and a director since March 2005. Prior to his appointment as President and Chief Executive Officer, Mr. Rhodes was Executive Vice President-StorePresident—Store Operations and Commercial. Prior to fiscal 2005, he had been Senior Vice President-SupplyPresident—Supply Chain and Information Technology since fiscal 2002, and prior thereto had been Senior Vice President-SupplyPresident—Supply Chain since 2001. Prior to that time, he served in various capacities within the Company, including Vice President-StoresPresident—Stores in 2000, Senior Vice President-FinancePresident—Finance and Vice President-FinancePresident—Finance in 1999 and Vice President-OperationsPresident—Operations Analysis and Support from 1997 to 1999. Prior to 1994, Mr. Rhodes was a manager with Ernst & Young LLP.

William T. Giles was elected Executive Vice President -— Finance, Information Technology and Store Development in Marchduring fiscal 2007. Prior to that, he was Executive Vice President, Chief Financial Officer and Treasurer from June 2006 to December 2006 and Executive Vice President, Chief Financial Officer since May 2006. From 1991 to May 2006, he held several positions with Linens N’ Things, Inc., most recently as the Executive Vice President and Chief Financial Officer. Prior to 1991, he was with Melville, Inc. and PricewaterhouseCoopers.

Harry L. Goldsmith was elected Executive Vice-President,Vice President, General Counsel and Secretary during fiscal 2006. Previously, he was Senior Vice President, SecretaryGeneral Counsel and General CounselSecretary since 1996 and was Vice President, General Counsel and Secretary from 1993 to 1996.

Timothy W. Briggs was elected Senior Vice President-HumanPresident—Human Resources in October 2005.during fiscal 2006. Prior to that, he was Vice President - President—Field Human Resources since March 2005. From 2002 to 2005, Mr. Briggs was Vice President - President—Organization Development. From 1996 to 2002, Mr. Briggs served in various management capacities at the Limited Inc., including Vice President, Human Resources.

William W. Graves was elected Senior Vice President-SupplyPresident—Supply Chain in October 2005.during fiscal 2006. Prior thereto, he was Vice President - President—Supply Chain since 2000. From 1992 to 2000, Mr. Graves served in various capacities with the Company.

Charlie Pleas, III, was elected Senior Vice President and Controller in Marchduring fiscal 2007. Prior to that, he was Vice President, Controller since 2003. Previously, he was Vice President-AccountingPresident—Accounting since 2000, and Director of General Accounting since 1996. Prior to joining AutoZone, Mr. Pleas was a Division Controller with Fleming Companies, Inc. where he served in various capacities from 1988.

Our business is subject to a variety of risks. Set forth below are certain of the important risks that we face and that could cause actual results to differ materially from historical results. These risks are not the only ones we face. Our business could also be affected by additional factors that are presently unknown to us or that we currently believe to be immaterial to our business.

We have increased our store count in the past five fiscal years, growing from 3,1073,483 stores at August 31, 2002,28, 2004, to 4,0564,417 stores at August 25, 2007,29, 2009, an average store count increase per year of 5%. Additionally, we have increased annual revenues in the past five fiscal years from $5.326$5.637 billion in fiscal 20022004 to $6.170$6.817 billion in fiscal 2007,2009, an average increase per year of 3%4%. Annual revenue growth is driven by the opening of new stores and increases in same-store sales. We open new stores only after evaluating customer buying trends and market demand/needs, all of which could be adversely affected by continued job losses, wage cuts, small business failures and microeconomic conditions unique to the automotive industry. Some of our new store openings are expected to be in Mexico, where legal and political factors can adversely affect our ability to obtain sites or permits to operate new stores. Same store sales are impacted both by customer demand levels and by the prices we are able to charge for our products, which can also be negatively impacted by continued recessionary pressures. We cannot provide any assurance that we canwill continue to open stores at historical rates or increaseachieve increases in same-store sales.

At the end of fiscal 2007,2009, our consolidated employee count was approximately 55,000.60,000. We cannot assure that we can continue to hire and retain qualified employees at current wage rates. If we do not maintain competitive wages, our customer service could suffer by reason of a declining quality of our workforce or, alternatively, our earnings could decrease if we increase our wage rates.

Demand for products sold by our stores depends on many factors. In the short term, it may depend upon:

For the long term, demand for our products may depend upon:

The sale of automotive parts, accessories and maintenance items is highly competitive and is based on many factors, including name recognition, product availability, customer service, store location and price. Competitors are rapidly opening locations near our existing stores. AutoZone competes as a supplier in both the DIY and DIFM auto parts and accessories markets.

Competitors include national, regional and local auto parts chains, independently owned parts stores, jobbers, repair shops, car washes and auto dealers, in addition to discount and mass merchandise stores, department stores, hardware stores, supermarkets, drugstores, convenience stores and home stores that sell aftermarket vehicle parts and supplies, chemicals, accessories, tools and maintenance parts. Although we believe we compete effectively on the basis of customer service, including the knowledge and expertise of our AutoZoners; merchandise quality, selection and availability; product warranty; store layout, location and convenience; price; and the strength of our AutoZone brand name, trademarks and service marks; some competitors may havegain competitive advantages, such as greater financial and marketing resources, larger stores with more merchandise, longer operating histories, more frequent customer visits and more effective advertising. If we are unable to continue to develop successful competitive strategies, or if our competitors develop more effective strategies, we could lose customers and our sales and profits may decline.

Although we are one of the largest sellers of auto parts in the commercial market, to increase commercial sales we must compete against national and regional auto parts chains, independently owned parts stores, wholesalers and jobbers, repair shops and auto dealers. Although we believe we compete effectively on the basis of customer service, merchandise quality, selection and availability, price, product warranty and distribution locations, and the strength of our AutoZone brand name, trademarks and service marks, some automotive aftermarket jobbers have been in business for substantially longer periods of time than we have, have developed long-term customer relationships and have large available inventories. We can make no assurances thatIf we canare unable to profitably develop new commercial customers, or make available inventories required by commercial customers.our sales growth may be limited.

AutoZone, Inc. is a defendant in a lawsuit entitled "Coalition“Coalition for a Level Playing Field, L.L.C., et al., v. AutoZone, Inc. et al.,"” filed in the U.S. District Court for the Southern District of New York in October 2004. The case was filed by more than 200 plaintiffs, which are principally automotive aftermarket warehouse distributors and jobbers (collectively “Plaintiffs”), against a number of defendants, including automotive aftermarket retailers and aftermarket automotive parts manufacturers. In the amended complaint, the plaintiffs allege, inter alia, that some or all of the automotive aftermarket retailer defendants have knowingly received, in violation of the Robinson-Patman Act (the “Act”), from various of the manufacturer defendants benefits such as volume discounts, rebates, early buy allowances and other allowances, fees, inventory without payment, sham advertising and promotional payments, a share in the manufacturers'manufacturers’ profits, benefits of pay on scan purchases, implementation of radio frequency identification technology, and excessive payments for services purportedly performed for the manufacturers. Additionally, a subset of plaintiffs alleges a claim of fraud against the automotive aftermarket retailer defendants based on discovery issues in a prior litigation involving similar Robinson-Patman Act claims. In the prior litigation, the discovery dispute, as well as the underlying claims, were decided in favor of AutoZone and the other automotive aftermarket retailer defendants who proceeded to trial, pursuant to a unanimous jury verdict which was affirmed by the Second Circuit Court of Appeals. In the current litigation, plaintiffs seek an unspecified amount of damages (including statutory trebling), attorneys'attorneys’ fees, and a permanent injunction prohibiting the aftermarket retailer defendants from inducing and/or knowingly receiving discriminatory prices from any of the aftermarket manufacturer defendants and from opening up any further stores to compete with plaintiffs as long as defendants allegedly continue to violate the Act. The Company believes this suit to be without merit and is vigorously defending against it. The Company is unable to estimate a loss or possible range of loss as of August 29, 2009. Defendants have filed motions to dismiss all claims with prejudice on substantive and procedural grounds. Additionally, the Defendants have sought to enjoin plaintiffs from filing similar lawsuits in the future. If granted in their entirety, these dispositive motions would resolve the litigation in Defendants'Defendants’ favor.

AutoZone is involved in various other legal proceedings incidental to the conduct of our business. Although the amount of liability that may result from these other proceedings cannot be ascertained, we do not currently believe that, in the aggregate, they will result in liabilities material to our financial condition, results of operations, or cash flows.

Not applicable.

AutoZone’s primary capital requirement has been the funding of its continued new store development program. From the beginning of fiscal 20052007 to August 25, 2007,29, 2009, we have opened 573 net551 new stores. Net cash flows used in investing activities were $263.7 million in fiscal 2009, compared to $243.2 million in fiscal 2008, and $228.7 million in fiscal 2007,2007. We invested $272.2 million in capital assets in fiscal 2009, compared to $268.3$243.6 million in fiscal 2006 and $282.8 millioncapital assets in fiscal 2005. We invested2008, and $224.5 million in capital assets in fiscal 2007, compared to $263.6 million2007. The increase in capital assetsexpenditures in fiscal 20062009 was primarily attributable to the types of stores opened and $283.5 millionincreased investment in fiscal 2005.our existing stores. New store openings were 180 for fiscal 2009, 185 for fiscal 2008, and 186 for fiscal 2007, 204 for fiscal 2006, and 193 for fiscal 2005. During fiscal 2006, we began investing2007. We invest a portion of our assets held by the Company’s wholly owned insurance captive in marketable securities. We acquired $94.6$48.4 million of marketable securities in fiscal 2007 and acquired $160.02009, $54.3 million in fiscal 2006.2008, and $94.6 million in fiscal 2007. We had proceeds from matured marketable securities of $46.3 million in fiscal 2009, $50.7 million in fiscal 2008, and $86.9 million in fiscal 2007 and $145.4 million in fiscal 2006.2007. Capital asset disposals provided $10.7 million in fiscal 2009, $4.0 million in fiscal 2008, and $3.5 million in fiscal 2007, $9.8 million in fiscal 2006, and $3.8 million for fiscal 2005.

Net cash used in financing activities was $806.9 million in fiscal 2009, $522.7 million in fiscal 2008, and $621.4 million in fiscal 2007, $537.7 million in fiscal 2006, and $367.4 million in fiscal 2005.2007. The net cash used in financing activities is primarily attributable toreflected purchases of treasury stock which totaled $1.3 billion for fiscal 2009, $849.2 million for fiscal 2008, and $761.9 million for fiscal 2007, $578.1 million for fiscal 2006, and $426.9 million for fiscal 2005.2007. The treasury stock purchases in fiscal 2007, 20062009, 2008 and 20052007 were primarily funded by cash flow from operations, and at times, by increases in debt levels.

We expect to invest in our business consistent with historical rates during fiscal 2008,2010, primarily related to our new store development program and enhancements to existing stores and systems.infrastructure. In addition to the building and land costs, our new store development program requires working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required. We believe that we will be ableplan to continue to finance much ofleveraging our inventory requirements through favorable payment termspurchases; however, our ability to do so may be impacted by a prolonged tightening of the credit markets which may directly limit our vendors’ capacity to factor their receivables from suppliers.

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

At August 25, 2007,29, 2009, AutoZone had a senior unsecured debt credit rating from Standard & Poor’s of BBB+BBB and a commercial paper rating of A-2. Moody’s Investors Service had assigned usthe Company a senior unsecured debt credit rating of Baa2 and a commercial paper rating of P-2. Fitch Ratings assigned the Company a BBB rating for senior unsecured debt and an F-2 rating for commercial paper. As of August 25, 2007,29, 2009, Moody’s, and Standard & Poor’s and Fitch had AutoZone listed as having a “stable” outlook. If our credit ratings drop, our interest expense maywill increase; similarly, we anticipate that our interest expense may decrease if our investment ratings are raised. If our commercial paper ratings drop below current levels, we may have difficulty continuing to utilize the commercial paper market and our interest expense will likely increase, as we will then be required to access more expensive bank lines of credit. If our senior unsecured debt ratings drop below investment grade, our access to financing may become more limited.

During August 2009, we elected to prepay, without penalty, our ratings$300 million bank term loan entered in December 2004, and subsequently amended. The term loan facility provided for a term loan, which consisted of, at August 25, 2007, the applicable percentage onour election, base rate loans, Eurodollar loans is 35 basis points. We may select interest periods of one, two, three or six months for Eurodollar loans, subject to availability. Interest is payable at the enda combination thereof. The entire unpaid principal amount of the selected interest period, but no less frequently than quarterly.term loan was due and payable in full on December 23, 2009, when the facility was scheduled to terminate. We entered into an interest rate swap agreement on December 29, 2004, to effectively fix, based on current debt ratings, the interest rate of the term loan at 4.4%. We haveThe outstanding liability associated with the option to extend loans into subsequent interest period(s) or convert them into loans of another interest rate type. The entire unpaid principal amountswap totaled $3.6 million, and was expensed in operating, selling, general and administrative expenses upon termination of the term loan will be due and payablehedge in full on December 23, 2009, when the facility terminates. We may prepay the term loan in whole or in part at any time without penalty, subject to reimbursement of the lenders’ breakage and redeployment costs in the case of prepayment of Eurodollar borrowings.fiscal 2009.

On August 4, 2008, we issued $200.0$500 million in 6.95%6.50% Senior Notes due 20162014 and $250 million in 7.125% Senior Notes due 2018 under our existing shelf registration statement filed with the Securities and Exchange Commission on August 17, 2004.July 29, 2008 (the “Shelf Registration”). That shelf registration allowed us to sell up to $300 millionan indeterminate amount in debt securities to fund general corporate purposes, including repaying, redeeming or repurchasing outstanding debt and for working capital, capital expenditures, new store openings, stock repurchases and acquisitions.

The remainder6.50% and 7.125% Senior Notes issued during August 2008, and the 5.75% Senior Notes issued in July 2009, are subject to an interest rate adjustment if the debt ratings assigned to the notes are downgraded. They also contain a provision that repayment of the shelf registration was cancellednotes may be accelerated if AutoZone experiences a change in February, 2007.

The $800 million revolving credit agreement requires that our consolidated interest coverage ratio as of the last day of each quarter shall be no less than 2.50:1. This ratio is defined as the ratio of (i) consolidated earnings before interest, taxes and rents to (ii) consolidated interest expense plus consolidated rents. Our consolidated interest coverage ratio as of August 29, 2009 was 4.19:1. As of August 25, 2007,29, 2009, we were in compliance with all covenants and expect to remain in compliance with all covenants.