[PHOTO: Light shining under the hood of a car] [AUTOZONE LOGO] 2000 Annual Report Our Culture AutoZone is the sum of people whose drive to provide unrivaled customer service is surpassed only by their drive to innovate. We ’re 21 years old, but we still feel like an ambitious start-up, constantly pursuing new ideas, plans and dreams. Truly, we never left the garage. We sell car parts, sure, but we provide solutions. Anybody stranded by a bad alternator knows this value first hand. And we never stop coming up with new ways to bring our solutions to customers. For this reason, we have an elite group called the Starters Club. A handful of AutoZoners are chosen each year to join this prestigious club, and they all have something in common. Each has played a key role in initiating a program or project that has a lasting impact on our company. A company more capable of serving customers than it was the year prior. This year’s inductees to the Starters Club, pictured to the left, were responsible for shedding new light on an age-old inventory opportunity. They developed and implemented a program called pull replenishment, and the details of their breakthrough are covered on page 7. We don’t know who next year’s Starters will be, but you can be sure they ’re hard at work right now, changing the way we do business. [PHOTO: AutoZone Employees holding flashlights] Company Description AutoZone is the undisputed leader in automotive aftermarket parts sales and information. We sell auto parts, accessories, chemicals and motor oil to DIY customers and professional technicians through 2,915 AutoZone stores in 42 of our United States and 13 stores in Mexico. We also sell heavy duty truck parts through 49 TruckPro stores in 15 states. Through ALLDATA, we provide electronic diagnostic and repair information. We offer the professional technician a complete software package, and the DIYer can purchase vehicle-specific information on CD-ROM or through www.alldatadiy.com. We also help DIYers on the web at www.autozone.com. [PHOTO: Front of AutoZone store] Financial Highlights 2000 1999 % Change Sales $4,482,696,000 $4,116,392,000 +9% Operating Profit $ 512,020,000 $ 433,095,000 +18% Net Income $ 267,590,000 $ 244,783,000 +9% Earnings Per Share $ 2.00 $ 1.63 +23% Cash from Operations $ 512,960,000 $ 311,668,000 +65% Domestic Auto Parts Stores 2,915 2,711 +8% [CHART: Sales] [CHART: Operating Profit] [CHART: Net Income] [CHART: Earnings Per Share] [CHART: Cash Flow From Operations] [CHART: After-Tax Return On Capital] [CHART: After-Tax Return On Average Equity] 1 To our stockholders, customers and AutoZoners, [PHOTO: John Adams] [PHOTO: Tim Vargo] John Adams Tim Vargo In a year that marked the most celebrated New Year’s rollover in our nation’s history, AutoZone closed out FY00 with a little less fanfare but plenty of things to celebrate. Most notable were our record sales of $4.48 billion. Also, EPS climbed to $2.00, up 23% from FY99. We entered FY00 with high expectations for reaping the benefits from our recent acquisitions. And we’re proud to announce we were able to realize those plans. Our assimilated Chief stores led the way with a 31% same store sales increase for the year. The Express locations from Pep Boys achieved 30% same store sales increases, and Auto Palace stores were up 15%. Acquired stores weren’t the only areas of the company that showed strong sales growth. Our stores in Mexico, which grew from 6 locations to 13 in FY00, are attracting DIYers in record numbers. In fact, sales at the average store in Mexico are much higher than for stores of similar maturity in the United States. We’re planning to continue our expansion pace in Mexico in FY01, and our first store in Mexico’s interior is already in the pipeline. Relentless focus on improving returns in FY00 also paid off in big ways. After-tax return on capital reached its inflection point as we came in at 13.3%, up from 12.8% in FY99. This marked the end of the downward trend which began as we first rolled out our commercial program and ended as we completed the conversions of our acquired stores. Our goal is to reach a 14% after-tax return on capital in FY01 and 15% in FY02. Return on equity increased from 19% to 23% in FY00. These are significant indicators that we’ve got things headed in the right direction. We’re very pleased with the $513 million of cash generated by operations, an increase of over $200 million from last year. This represents cash we can invest in other things. In this case it was used to help us buy back $608 million in stock, bringing cumulative totals in the share repurchase program to $1.15 billion, including forward purchase contracts. We plan to continue the repurchase of our stock in FY01. We forged ahead in store expansion, opening 204 net new stores in the United States, bringing our total to 2,915 at the end of FY00. We’ve raised the bar when it comes to finding the most profitable real estate possible, and we’re confident this approach, though more time consuming, will pay off in the long run. Next year we’re targeting 175 new stores in the United States with continued focus on more highly profitable sites. One particular new site that opened during FY00 has created a lot of excitement – and it didn’t officially open until late in the fiscal year. The address is www.autozone.com, and it sold its first part August 11, 2000. AutoZone has had a web site for years, but in FY00 it was converted into a fully functional e-commerce site capable of serving customers across the country – even in markets lacking an AutoZone presence. If you haven’t visited our site lately, we invite you to look us up. We continued rolling out our commercial program during FY00. We ended the year with 1,486 stores delivering parts to professional technicians. Our $397 million in commercial sales was enough to place AutoZone at number three in that business. At ALLDATA, the news is very encouraging. Sales topped $50 million for the first time, and our customer 2 base grew to more than 32,000 subscribers – a number unrivaled in the automotive diagnostic and repair software business. Fanatical customer service and unmatched content have been the foundation for this success, and the subscription renewal rate of more than 90% is a clear indication that the efforts are paying off. ALLDATA has clearly established itself among automotive professionals as the premier name in computer-based diagnostic and repair information. TruckPro also made progress during FY00. Sales growth and EBIT margins remained in the low single digits, but considering the extremely challenging conditions the industry faced during the year, these positive results are good indicators that we’re figuring out the heavy duty business. We’ll focus on gaining efficiencies in the coming year as we continue to profitably build market share for this future growth contributor. We like the positive trends we saw in FY00, but liking them isn’t enough. Our e-commerce push is barely off the ground, and it will continue to evolve and grow. Our international development strategy has just begun to take shape. And DIY and commercial will continue to be fertile ground for growth and innovation. It’s all part of a bigger plan we have to prevail in an industry where others are simply trying to figure out how to survive. We chose the theme “shedding light” for this year’s report because it sums up what we have to do to make our plan successful. For our AutoZoners, that means helping you see all of the career choices our success has made possible. For our customers, that means helping you take the mystery out of car care. And for our stockholders, that means helping you understand our industry a little better. Best regards, /s/ JOHN ADAMS /s/ TIM VARGO John Adams Tim Vargo Chairman & CEO President & COO Customer Satisfaction Customer Satisfaction A personal note from John: Since the theme of this annual report is “shedding light,” I thought it would be a perfect opportunity to take the pen for a moment and shed a little light on my recent decision to step aside as CEO while remaining as chairman. I’m extremely proud of all AutoZone has accomplished during my tenure as CEO. We expanded the commercial business, started selling truck parts, broke new ground in technology, led the way in industry consolidation and took AutoZone south of the border. I feel terrific about where we’re positioned as a company, and it’s that confidence that allows me to begin focusing more on a personal goal of spending more time with my wife and three daughters. I want to thank all of the AutoZoners for their extraordinary performances which have allowed us to put a greater distance between us and our competition. As chairman, I will work closely with our board and with our next CEO in taking AutoZone to the next level. I look forward to celebrating many future successes with all of you. /s/ JOHNNY 3 [PHOTO: People working on their car] 4 We helped customers with over 250 million DIY jobs last year. That’s right. We opened our cash registers more than 250 million times in FY00. That’s over a quarter of a billion DIY jobs in America.