Good morning and welcome to the AutoZone conference call. (Operator Instructions) This conference call will discuss AutoZone's fourth quarter financial results. Bill Rhodes, the company’s Chairman, President, and CEO, will be making a short presentation on the highlights of the quarter. The conference call will end promptly at 10:00 a.m. Central Time, 11:00 a.m. Eastern Time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements.

Statements contained in this presentation are forward-looking statements. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, position, strategy, and similar expressions. These are based on assumptions and assessments made by our management in light of experience and [perception] of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation competition, product demand, the economy, credit markets, the ability to hire and retain qualified employees, consumer debt levels, inflation, weather, raw material costs from our suppliers, engine prices, war and the prospects of war, [inaudible] transportation, construction delays, access to available and feasible financing, and changes in laws and regulations. Forward-looking statements are not guarantees of future performance and actual results, developments, and businesses may differ from those contemplated by such forward-looking statements, and such events could materially adversely affect our business. Forward-looking statements speak only as of the date made except as required by applicable law. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results may materially differ from anticipated results. Please refer to the risk factors section on AutoZone's Form 10-K for the fiscal year ended August 25, 2007, for more information related to these risks. In addition to the financial statements presented [inaudible] generally accepted accounting principles, AutoZone has [inaudible]. For a reconciliation of these metrics, please see AutoZone's press release in the investor relations section at www.autozoneinc.com.

Mr. Rhodes, you may now begin.

Good morning and thank you for joining us today for AutoZone's fiscal 2008 fourth quarter conference call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer, Store Development, and IT; and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax. Regarding the fourth quarter, I hope you’ve had an opportunity to read our press release and learn about the quarter’s results. If not, the press release, along with the slides complementing our comments today, is available on our website, www.autozoneinc.com. Please click on quarterly earnings conference calls to see them. To begin, I would like to thank our entire organization for the solid performance delivered this past quarter and for the year. We were pleased to deliver our eighth consecutive quarter of double-digit EPS growth, particularly in light of a challenging macro environment. We understand that in an environment where consumers are pressured, it is critically important to offer them a compelling value proposition. Our AutoZoners continue to deliver a great value proposition to our customers through our terrific product offerings presented in a customer friendly shopping environment, complemented with the most important element, trustworthy advice. I must say, I am very proud of our AutoZoners across the organization. This quarter was again about executing on our major initiatives outlined at the beginning of our fiscal year. These initiatives have focused on improving our in-store customer shopping experience, increasing our AutoZoners’ level of knowledge and accelerating commercial growth. We haven’t significantly changed our operating priorities or major initiatives in a few years because we are intensely focused on the basics, the basics that our customers tell us are the most important. As we close out fiscal 2008 and begin a new fiscal year, I would like to take a moment and highlight our full-year accomplishments before…

Thanks, Bill. Regarding the fourth quarter, for the 17-weeks ended August 30th we reported sales of $2.211 billion, an increase of 10.4% from last year’s fourth quarter. Excluding the sales generated from the 17th week, our total sales grew 4.1%. Same-store sales, or sales for stores opened more than one year, were up 0.6% for the quarter. While our retail sales showed a modest acceleration versus the previous quarter, our customer satisfaction surveys continue to confirm that we are improving the customer’s experience. Regarding our commercial business, we continue to be encouraged by the progress we are making. This marks our fifth consecutive quarter of positive sales growth. It was just last quarter that we rolled out a new field organization dedicated to managing our future commercial efforts and a portion of the fourth quarter was spent transitioning these organizational changes into our company. In the fourth quarter, gross profit as a percentage of sales was up 15 basis points versus last year’s quarter, while operating expenses as a percentage of sales increased by 18 basis points. This resulted in an operating margin of 18.9%, down three basis points from last year’s quarter. Operating profit increased 10.2% versus the prior year. Net income for the quarter was $244 million, an increase of 12.2% and diluted earnings per share increased 20.1% to $3.88 from $3.23 in the year-ago quarter. Excluding this year’s 17th week, operating margins were 18.7%, down approximately 20 basis points from last year’s quarter. Operating profit increased 3% versus the prior year. Net income for the quarter was $228 million, an increase of 5%, and diluted earnings per share increased 12.4% to $3.63 over the previous year’s quarter. Our continued disciplined capital management approach resulted in return on invested capital for the trailing four quarters of 24%. This…

Thank you, Bill. In summary, we are pleased to have delivered another very solid year performance. We have a very dedicated team of AutoZoners who are committed to our success and are committed to delivering on our promise to put our customers first. I would like to again thank our entire team across North America for their passion to our customers, each other, our communities and of course, our success. Together, we were again able to deliver another quarter of double-digit earnings per share growth and for the full year, we were able to deliver 15% earnings per share growth adjusting for the additional week in 2008. However, we cannot be satisfied with these successes. We continue to have tremendous opportunities for improvement. As I started the call mentioning, 2009 will be about improving our brand of differentiated customer service. We have to make 2009 about great people providing great service. Four major objectives for 2009 will be: one, a relentless focus on hiring, retaining, and training our AutoZoners to make sure we are delivering trustworthy advice; two, continual refinement of our product assortment, especially for late-model products; three, deploying inventory more effectively across our network with specific emphasis on utilizing our hub network even more extensively in 2009; and four, commercial sales growth, appropriately paced profitable growth across both our up-and-down the street business and national account business. This will be accomplished through a combination of continual development of our sales team and refinement of our product assortment and service offering. We enjoy industry-leading metrics today but we have to continue to innovate and improve every facet of our business. Regarding our commercial performance, we have to earn our customers’ business. We must do this through continual refinement and enhancement of our service offering and parts assortment while providing…

(Operator Instructions) Our first question comes from Rachel [Cha], Morgan Keegan.

Good morning. This is John Lawrence, actually. Congratulations, Bill. Can you talk up a little bit -- you’ve talked about expanding the inventories a little bit, a lighter model. Are you still seeing that same trend that the expansion in the commercial side is helping the retail stores as well?

Yes, no question about it. As we continued to add products that are particularly earlier in the lifecycle, we continue to be impressed and encouraged by how many of those sales actually go to the retail business now with approximately 85% of our sales in retail, that’s one of the reasons that it’s so deeply penetrated there but they are certainly helping on both sides of our business.

And secondly, you mentioned a lot about -- on the commercial business, systems will continue to play a part. Is what’s happening at ALLDATA with collision all a part of that, and talk a little bit about ALLDATA and what they are doing?

Sure. First of all, we don’t spend a lot of time talking about ALLDATA but Jeff Lagges and his team continue to do an incredible job with that business. We still struggle to find a tremendous link between being the shop-owner’s advisor and linking that to driving higher part sales. However, as they enter the collision market, that gives us more information on the collision customers and it gives us the opportunity to try to penetrate them more on the commercial side as well.

Great. Thanks a lot.

You have a question from Colin McGranahn, Bernstein.

Thank you. Good morning. Two quick questions for you; first on the SG&A, if I’m doing my math correctly and backing out the extra week, it looks like the dollar growth of SG&A accelerated a bit to maybe the low [5%] range and I know you talked about self-insurance and I think fuel. Was there anything in the quarter that was more related to the reorganization of the commercial sales force, anything in there that would have been one-time that might have led to that acceleration in dollar growth?

I wouldn’t say really, Colin, that there was anything in there that related to a one-time growth. I mean, we continue to invest in the commercial business to make sure that we are supporting the customer experience that we want to there. Clearly as you pointed out before, we certainly had some higher fuel costs and some higher insurance costs as well that kind of jumped it up a little bit this quarter but we are going to continue to manage expenses and we believe that we can control those going forward.

Okay. And then secondly on the commercial business, you talked about the performance, I think it’s now about 1,400 stores that have the enhanced tools and processes. Can you talk about the performance of that subset?

Colin, we don’t -- as I mentioned in the prepared remarks, we don’t break out those performance specifically but we continue to be pleased with the performance of those stores as we add the additional resources and that’s why we continue to add more and more stores to that list of programs.

Okay, and then secondly, commodity inflation, how much is that impacting your comps at this point?

You know, it’s very difficult to break that out. I mean, clearly there’s inflation in a lot of commodity-based products between oil and steel but there’s also a lot of technology enhancements in the products and as Bill mentioned in the earlier comments, we’ve added about $180 million worth of new products, many are technology and some are coverage. So it’s hard for me to quantify specifically what the inflation is but there is some small benefit to inflation.

Okay. Thanks.

Our next question comes from Dan Wewer, Raymond James.

Thank you. Bill, you noted you are reducing the return on capital hurdle rate for new stores from 15% I believe you said down to 14%. Should we interpret that as a signal that you are looking to maybe accelerate the unit growth rate in the future or rather does it reflect diminishing returns in the industry?

I think it really reflects -- I wouldn’t say either of those necessarily. I wouldn’t say it’s an acceleration of new store unit growth. I think it’s an opportunity for us to be more aggressive about getting into selected markets that previously may have been a little higher in cost and so I think we want to look at the portfolio on a more blended basis and be able to balance it out. We’re still going to open a lot of stores at 15% or better and strategically we may take a few markets and maybe have a rate that’s slightly below 15.

Well, it looks like I guess like the two regions where you’re perhaps under-stored is Florida and the Pacific Northwest. Are those the higher cost markets you are alluding to or --

Those would be two examples of higher markets. There are a couple of others as well but yeah, you can kind of figure it out yourself but that’s right.

And the other question I have, O’Reilly’s given us a lot more information regarding their plan for CSK. Based on what you have heard, what are the potential implications for AutoZone in your western states?

I think the implications haven’t changed for us. I think we control our own destiny. CSK was a good operator, O’Reilly’s is a very good operator. They certainly focus more on the commercial business but if you go back and look at the market share that we have in commercial today, it is so small that having a different competitor out there shouldn’t be the determinant of our success. I think our execution is going to determine our success, so we are certainly mindful of what they are doing. We are going to watch it during the transitional period but we are sticking to our game plan.

They have made reference to changing their pricing strategy and moving away from the use of coupons unto more competitive everyday pricing. Will that impact AutoZone's pricing strategy in those states?

Dan, we’ve competed against O’Reilly’s and Advanced and Pep Boys and CSK for many years. We understand how they operate with their pricing philosophies. We believe we are going to use our pricing philosophies and the methodologies as we go forward.

Okay, great. Thank you.

Our next question comes from Alan Rifkin, Merrill Lynch.

Thank you very much. Just a follow-up to Dan’s question with respect to the lower hurdle rate for new stores -- is that a function of anticipated lower revenues at new stores or do you believe it’s a function more of escalating costs?

I would say it’s probably more the latter. I don’t think it’s a function of lower volume, so it’s a -- in fact, possibly just the opposite in certain of those markets so I think it’s really a function of the cost. And again, I don’t want to over-play this -- I mean, we’ve dropped our hurdle rate from 15 to 14 so we are still a way ahead of our cost of capital.

Okay but if all your new stores are meeting that 15%, why the decision now to even lower the threshold?

Because I think it allows us to be a little bit more aggressive in certain strategic markets that as Dan mentioned before, that we still have a lot of opportunity for us to continue to expand our footprint.

I mean, there’s simply some markets that we’ve been shut out of for all intents and purposes because of the cost of real estate and when we look at that and say okay, we can get zero return out of that market or we can go in there and get a slightly smaller return than it still significantly exceeds our cost of capital, we made the decision let’s go in there.

Okay, and one follow-up, if I may; Bill Rhodes, you mentioned that in an effort to support the commercial program going forward, in 2009 you will be enhancing the technology platform. What associated costs should we anticipate as a result of that initiative?

You won’t notice any stair-step changes in our cost platform because of that.

Okay. Thank you very much.

Our next question comes from Matt Fassler, Goldman Sachs.

Thanks a lot. Good morning. A couple of follow-ups on the hurdle rate -- one would be does this at all relate to your effort to drive more business towards commercial, where the margins might be somewhat lower? And then I’m also trying to reconcile what looks like obviously a modest lowering of the bar but a lowering nonetheless for investment, reinvestment into the operating business at a moment when you are trying to orient more of your cash flow to taking on more leverage. It seems like at this moment if anything you might want to conserve a bit more capital on the operating side until you achieve that goal?

I would break it down two ways -- one is I think it’s more a function of the cost of, as Bill mentioned before, the cost of the real estate per se and the cost of operating in certain of those markets that we haven’t really been able to penetrate up to this point, so I wouldn’t look at it as a function of the operating model relative to commercial. From an investment standpoint, again you’re right -- the credit markets continue to be tight and credit continues to be tight but at the same time, have a high degree of confidence in our cash flow model and so when we look at long-term, over the long-term, again we generated a fair amount of cash this past year, this past quarter, and so we obviously don’t give any guidance out into the future but we certainly remain very confident in our ability to continue to maintain cash flow and we are going to continue to invest where we think it’s appropriate and maintain adequate liquidity to execute our long-term financial plan.

I want to reinforce that our capital allocation strategy has always been first to take care of the infrastructure and existing stores that we have today; secondly to open new stores; and then third to use that excess cash flow for share repurchases. So this continues to be in line with that strategy.

A second question -- it looks like there was a bit, a different kind of impact from the extra week on DIY sales versus DIFM. It’s probably nit-picking a bit but I’m curious whether I’m misreading that or whether one benefited more than the other.

Matt, I’d be very careful to try to, as you said, nit-pick the 17th week. The reason there’s a 17th week is because there’s a calendar shift and if you get into those weeks, particularly you get closer to Labor Day or farther away from Labor Day, there can be material changes and material changes between retail and commercial, so I would be very careful to try to draw any conclusions from that week of sales.

Understood, and then finally, how should we think about the way the redesigned commercial sales force impacts the business trajectory for the commercial business in Europe coming -- fiscal year but from a cost perspective and from a revenue perspective?

Well, the costs are all embedded in our model today. Now, we will continue to grow the penetration of those stores but for the ones that are in the program today, all that cost has been in for some period of time. As far as the sales performance, I think we were pretty clear in our prepared remarks that we are certainly happy to have positive sales growth for the first time, or five straight quarters for the first time in a long time and had 5.7% for the quarter but we are not satisfied with that and we believe we’ve got a lot of great AutoZoners in those new commercial sales positions. We are training them extensively and we’ve got to continue to go out and execute our plan and we certainly hope to gain benefits from that.

Now that the installed cost base is there presumably as the people have been hired, is it more of a pay-for-performance model from here, so could that take some pressure off SG&A as we look into next year?

Well, I hope it will add pressure to SG&A for the performance but yes, it is more of a pay-for-performance model. It is not a full commission model by any stretch of the imagination.

Thank you so much.

Our next question comes from Peter Benedict, Wachovia.

Thanks. Hi, guys. I was wondering, can you discuss maybe how the current credit environment is or could impact your ability to execute the buy-back plan, or any other part of your business, the vendor financing purchases, that type of a thing?

At the moment, we haven’t seen an impact on any of those things. I mean, clearly we’ll continue to monitor credit availability, which is really what you are asking and as you well know, the commercial paper market has been a little bit tighter. We’re not in the commercial paper market currently, obviously with the cash balance but again, we believe we’ve got adequate access to capital. We have a $1 billion revolving credit facility and we continue to have available credit in our supplier [inaudible] receivable program as well, so we haven’t seen any disruptions or changes up to this point and we are not anticipating any.

Okay, great and just on to the CapEx, Bill, a little bit higher than we had though at least in this quarter -- was that related to the DC or what can you -- can you give us a sense of maybe what the capital spending may be for next year?

Yeah, there’s probably a little bit of the DC there and there’s probably some IT projects as well but overall, our CapEx dollars spent was pretty much in line with where we expected it to be so it might have been a little bit of timing but I don’t see anything unusual there.

Okay, thanks and then lastly, just on the shrink being up in the quarter, can you talk maybe about why you think that happened? Could that have been related to the fact that the DC opened up in the quarter?

No, I don’t think it was really a function of the DC, necessarily. I mean, we saw a little bit of an increase in shrink and we’ve got several tactics and a lot of people working very hard at reducing shrink so that’s not something that we would look at on a permanent basis but it did pop a little bit in the quarter and we just thought it was worth mentioning.

Fair enough. Thanks.

Our next question comes from Tony Cristello, BB&T. Tony Cristello - BB&T Capital Markets: I’m wondering if you can maybe give us a little idea of how your commercial stores or commercial presence in your stores will look -- number of employees working the parts desk, number of regional sales people that you will have versus what you have now because it certainly sounds like you definitely are having a reorganization there and I’m just trying to compare and contrast where we are today versus where we might be a year from now.

You know, the in-store allocation and sales force has not changed. We do have the commercial specialist in these programs on an incentive compensation program but from there on, volume drives the structure in the store. Above the store, we have what we call territory managers and we have approximately one for every 10 stores that are on this program. We have increased over the last several months our territory manager plans from 100 to 140, so you can see that line is up with the 1,400. And then we also changed the leadership or management structure above the territory managers and that was a material part of the shift. We got to more normalized levels of management ratios at those levels. Tony Cristello - BB&T Capital Markets: Is that one for each 10 or is there a way that I can sort of quantify that?

Well to quantify, we have approximately 20 today and we also have an infrastructure in place that can support more territory managers without necessarily having to change that structure. It’s more of a geographically based structure today. Tony Cristello - BB&T Capital Markets: Okay, and is that -- are they more responsible now for driving some of that incremental sales on the commercial side or is it still going to be a sales presence at the local level and you sort of will feed it from there?

No, their responsibility is to drive sales. They are a sales force and a sales management force. That is their sole responsibility and they too are on an incentive compensation program that has higher incentives than our base programs. Tony Cristello - BB&T Capital Markets: Okay. And when you look at the parts availability, you’ve talked about the parts availability having a definite impact -- where, if you look at I think 21,000 SKUs per store or so, how has that number fluctuated in terms of more hard parts or can you even sort of give us one way in terms of a direction that we might be seeing filter into the stores that are giving them access [to consumer parts]?

You know, I don’t really have those numbers at my fingertips during this discussion but I don’t believe it has changed materially. The refinements continue to be on a per-store basis. Finding what categories, what value propositions we need to have in those specific stores and I am very pleased with the progress that our merchandising team has made on better refining our inventory assortment on a per store basis. Tony Cristello - BB&T Capital Markets: Okay, and when you noted some of the more discretionary categories where you saw some, experienced some sales shift to lower price points, would those continue to be the break categories and those type of things or were there some others more specifically you could point to?

You know, I’d be careful -- we didn’t say in those categories that they shifted down to their purchasing habits. We said that in those categories, we saw softer trends. So it doesn’t necessarily mean that they are trading down. And in fact, in a lot of cases, we’re seeing the opposite of that but some of the more discretionary, and particularly I’d call them sales floor type categories. It’s not all the sales floor categories but some of the sales floor categories are seeing some additional pressure. Tony Cristello - BB&T Capital Markets: Okay, and one last point I wanted to just clarify on the rebate check comment, did you say that that cost you a point in comp?

No, we said it added -- it is our estimate that it added 1% to comps in the quarter. But I want to be careful with this because it is incredibly hard -- we’ve tried very hard to estimate that number but because of the random nature of the distribution of the checks, it is very difficult to say what it meant and there were a lot of other changes as soon as those checks stopped that happened. Mainly it was very cool in August across the country. Tony Cristello - BB&T Capital Markets: So it’s not a difference of positive 0.6 to negative 0.6 simply explained by rebate checks?

I wouldn’t say entirely but basically what we are trying to convey to you is that we think it was about a point benefit in the quarter. As Bill said, it’s difficult to empirically quantify that but that’s kind of our best guess based on what we’ve seen. Tony Cristello - BB&T Capital Markets: Okay, great. Thanks, guys.

Our next question comes from Stephen Chick, Friedman, Billings, Ramsey.

Just a follow-up clarification question I think on the comps and the stimulus benefit, and I understand it’s tough to quantify but I guess maybe the better way to ask it, or maybe a better answer more that would help us I guess what I’m inferring is that the comp run-rate that you are trending at right now would probably be a level 100 basis points lower than what you reported for the quarter. Am I understanding that correctly -- so you are probably at a run-rate just south of flat right now, like say negative four-tenths of a percent comp?

I wouldn’t articulate it as a run-rate but if you said what did we experience in that quarter, yes, if we took our estimate as fact, then we would run a negative 0.4. But there’s a lot of other factors that go into any individual one quarter and I would just caution you not to try to draw too much from that one conclusion. Just look back over the last three years and our comps have been trending in a pretty tight band over that period of time, which says with all the pluses and minuses we haven’t seen any material change.

Okay, and you are not too far into the current period but is it -- is the trend pretty consistent?

We have a very consistent methodology of not commenting on the period quarter to date because it’s such a short period of time and there’s a lot of things that can happen in a short period of time that can send signals that may or may not turn out to be true.

Okay, that’s fair. And the second thing, if I could, maybe even for Bill Giles, but this is the second consecutive quarter where your total operating margins have slowed in terms of expansion, whereas last quarter I think they were up a couple of basis points and this quarter, ex the extra week, March’s were down a little bit. And given the numbers that you highlight what you need to leverage and then your comments that you may see gross profit margin expansion slow a little going forward, is it -- should we think about maybe operating profit margins possibly contracting a little bit from where they are now, as we look out over the next 12 to say 24 months?

I mean, obviously you’ve hit on all the buttons. I mean, you’ve got to come to a conclusion as to where you think same-store sales are going to trend, et cetera. We do believe there’s opportunity for us to continue to move and improve gross margin. We put a lot of energy and effort behind that through category management efforts, increased imports, lowering cost, product acquisition cost, et cetera. SG&A, as you mentioned, was impacted this quarter by higher self-insurance cost, higher fuel costs, et cetera. There are actions that we can take to try to control those costs going forward but we do expect there will probably be a little bit of deleverage from SG&A and again, you are just going to have to do your model up and see where it shakes out.

Okay, and last, if I could, what percentage of the new stores might be in this kind of 14% hurdle rate range versus the 15? I mean, it sounds like we are talking about a small amount but can you give us a sense if you open another 160 next year, what number will be in the more than 14% hurdle rate range?

It would be hard for me to quantify exactly. Obviously we have our own internal targets, et cetera, but it’s going to be a function of what’s available and how we approach it. But you know, more importantly we are going to manage with 14%. We’re going to give ourselves the latitude to enter some of these strategic markets that previously we’ve not gotten into and so -- but again, we’ll continue to manage the portfolio with a 14% number.

Okay, thanks, Bill.

We have a question from David Cumberland, Robert Baird.

Good morning. Thanks. My question is on the new process to accept electronic payment at the parts counter -- is that fully implemented across the stores?

Yeah, it’s not at this point in time. I believe it was in something like 1,600 stores at the end of the quarter but is on a very fast track to be in all the stores. And this is something we are really excited about. I mean, one of the things that our customers have said to us is they do not like having to go through two different processes but it’s a very complex issue to go out and make that many cash doors -- you know, we’re very focused on controls and having cash in a lot of different places that is not something that is very enticing to us. So the fact that we’ve actually moved all the electronic payments so that they can be accepted at the parts counter not only eliminates that, it eliminates them having to go through two processes and it improves our controls, so we’re pretty excited about this. This is one quite frankly we’ve been working on for about 10 years to figure out how to do it and it’s now become a reality.

Bill, when might that be in place across the stores?

I think it will be finished by the end of the first quarter or so.

Yeah, I think it will be -- we’ll have it pretty much in all of the stores by the end of the first quarter and so far, it’s been received very well.

Sounds great. Thank you.

Okay. Thank you all. Before we conclude the call, I would like to take a moment to reiterate that we are excited about our growth prospects for the upcoming year. We cannot take anything for granted as we understand we have to earn our customers’ business each and every day. We have a solid plan and a culture that is second to none but I want to stress that this is a marathon and not a sprint. Our focus is on our critical success factors as we continue to focus on the basics and never take our eye off of optimizing long-term shareholder value. We are confident we will continue to be incredibly successful. Thank you very much for participating in today’s call.

That does conclude today’s conference. Thank you for participating. You may disconnect at this time.