Good morning, and welcome to the AutoZone conference call. [Operator Instructions] Please be advised, today's call is being recorded. If you have any objections, please disconnect at this time. 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 a.m. Central Time, 11 a.m. Eastern time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements.

Certain 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, positioned, 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: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; availability of consumer transportation; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of our annual report on Form 10-K for the year ended August 25, 2012, and these risk factors should be read carefully.

Mr. Rhodes, you may now begin.

Good morning, and thank you for joining us today for AutoZone's 2013 Fourth Quarter Conference Call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer, IT and ALLDATA; and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax. Regarding the fourth quarter, I hope you had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, are available on our website, www.autozoneinc.com. Please click on Quarterly Earnings Conference Calls to see them. To begin this morning, I want to thank all AutoZoners across the globe for another very solid quarter and year. 2013 was a very busy and productive year for us. We reached 2 amazing milestones in our company's history. First, we surpassed $9 billion in sales, finishing at $9.1 billion. Second, we crossed $2 billion in EBITDA, another amazing milestone, placing us an elite company across retail. AutoZoners past and present built this business through hard work, passion for customer service and dedication, and we owe them a great deal of gratitude. We've been growing our business on a variety of fronts. Our U.S. Retail business expanded again in 2013 with the opening of another 153 new stores. Our Commercial business continues to gain traction, growing sales 12.6% for the year, with 368 net new programs opened. We now have the commercial program in 71% of our domestic stores, having opened 762 new programs in just the past 2 years. We continue to expand our presence in Mexico, and we've opened stores in Brazil with 3 stores now in operation. We are expanding our online offerings in both our traditional autozone.com and autozonepro.com websites, and we acquired AutoAnything in fiscal 2013. Along with these strategic investments, we spend a…

Thanks, Bill, and good morning, everyone. To start this morning, let me take a few moments to talk more specifically about our Retail, Commercial and international results for the quarter. For the quarter, total auto parts sales, which includes our domestic Retail and Commercial businesses, our Mexico stores and our 3 stores in Brazil, increased 10.3% on a 17-week basis. During the quarter, nationally, unleaded gas prices started out at $3.54 a gallon and ended the quarter at $3.61 a gallon, a $0.07 increase. Now last year, gas prices decreased $0.01 per gallon during the fourth quarter, starting at $3.79 a gallon and ending at $3.78. We continue to believe gas prices have a real impact on our customer's ability to maintain their vehicles and we will continue to monitor prices closely in the future. We also recognize that the impact of miles driven on cars over 10 years old, the current average, is much different than on newer cars in terms of wear and tear. Miles driven were basically flat for the quarter through the last month recorded, which is June. The other statistic we highlight is the number of 7-year-old and older vehicles on the road, which continues to trend in our industry's favor. Another key macro issue facing our customers today is the reinstitution of payroll taxes back to historic norms. This reduction in our customers' take-home pay began at the beginning of the new calendar year and at this point, it has been difficult to objectively quantify the ramifications of this change. However, we believe this is and will continue throughout the year to be a headwind to our consumers' spending habits. For the trailing 4 quarters, total sales for auto parts stores was $1.7 million. This statistic continues to set the pace for the rest…

Thank you, Bill. We're pleased to report our 28th consecutive quarter of double-digit EPS growth and, for the year, to report an EPS growth rate of 18.3%, or 15.6% on a comparable 52-week basis. Our company has continued to be successful over the long run. That success is attributable to our approach of leveraging our unique and powerful culture and focusing on the needs of our customers. We focus on executing at a high level consistently, which we believe can be a competitive advantage. To execute at a high level, we have to consistently adhere to living the pledge. We cannot and will not take our eye off of execution. While we study the external environment and react where appropriate, we must stay committed to executing day in and day out on our game plan. Success will be achieved with an attention to detail and exceptional execution. Before I conclude, I want to take this opportunity to reflect on fiscal 2013. We were able to build on past accomplishments and deliver some impressive results. In recognition of the dedication, passion and commitment of our AutoZoners, we grew both our Retail and Commercial businesses this past year. With this growth, we were able to achieve and surpass the $9 billion annual sales milestone. We opened our first stores in Brazil. While in early stages of development, we couldn't be more excited about our opportunities in this highly populated country with lots of our kind of vehicles. Third, we acquired AutoAnything in December of last year, providing us access to a second arguably best-in-class dot-com brand. Culturally, the 2 companies couldn't be a better fit. We look forward to learning from and growing our businesses together. Both our inventory assortment testing and hub store remodels continue at an accelerated rate, and their…

[Operator Instructions] The first question today is from Dan Wewer with Raymond James. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: Bill, looks like your Commercial sales per program, adjusting for the extra week, declined slightly in the year just ended. In the past, you've noted that AutoZone may be suffering from some diminishing returns in the new programs. It sounds like now there is an epiphany that perhaps the problem was more inventory coverage. Do you think the issue is that hubs are not as competitive as full line distribution centers operated by your competitors? Or are you indicating the problem is just the breadth of assortment in the hubs is the challenge?

Let me just start by talking a little bit about -- Dan, I would say that we're happy with the productivity of the commercial programs, particularly the new programs. I think -- also, keep in mind that, as we mentioned, we've got -- probably almost 30% of our programs are 3 years old or less and we've opened close to 800 programs in just the last 2 years. So just given an overall maturation curve, you're going to see a little bit of depression on the productivity of the commercial programs taken as a whole. So I would say that we continue to be pretty pleased with the progress of the commercial programs overall. And I think from a hub perspective, we view that more as an evolution. When we added more inventory into those hubs, we recognized that, that was an opportunity and so this continues to evolve. We think there are real opportunities for us to add more inventory into the marketplace, continue to expand our coverage. As we've talked about in the past, we learned that as we added inventory for -- to help support the Commercial business by adding later model coverage, we found that, that actually helped the DIY business as well. And so we think there's better and more opportunity for us to leverage the existing infrastructure that we have out there at a higher rate than we have up to this point. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: And you'd noted that the inventory per store is up a little more than 4% year-over-year, but that's about the same rate of growth in the prior quarter. Once you lay in these new inventory initiatives, how do you see that inventory per store rate increasing? And does that come at the expense of the amount of the share buybacks as you invest that cash in inventory instead of buybacks?

Yes. And always keep in mind, our first priority is to be -- to driving EBIT and to drive return on invested capital. And so we will do what is financially viable. But to cut to your real -- answer to your real question is, yes, we anticipate that inventory on a per-store basis is going to increase likely over the next year or 2 as we continue to test more opportunities for us to increase inventory coverage in the marketplace. But again, as you know, our DNA is more of a test and then roll out where it's financially viable. So our expectation is that, yes, inventory on a per-store basis will continue to increase slightly over the next year or so and we'll just continue to manage that. Obviously, we hope that, that's going to continue to drive EBIT dollars or we wouldn't be doing it.

The next question is from Alan Rifkin with Barclays.

A question for Bill. Bill, with the increased emphasis on adding inventory and hard parts in particular, how should we be thinking about the long-term effects on gross margin, given the fact that this category is, typically, above the corporate average?

Yes, Alan. I'm not sure which Bill. Bill Rhodes will take this one at the start. If you want to hear from Giles, just ask for it. I think, generally, the gross margin differences between hard parts and sales for our categories, generally, are not that significantly different. So I think you won't see any material change in our gross margin rate as a result of being more aggressive in hard parts coverage.

Okay. A question for Bill Giles. What was the effect of deflation on comps, if any?

We haven't really quantified that overall, so I'd be guessing a little bit. But it was certainly probably over 1 point or so over the last couple of quarters. We really saw a fair amount of inflation through fiscal year '12, probably '11 and '12, which kind of helps quite a bit from a comp store sales comparison, if you will. But for fiscal year '13, we've begun to anniversary some pretty good increases in inflation and we're just not seeing that right now. And frankly, we're not seeing that on the horizon either. So we will be up against easier compares, but we will not necessarily have a tailwind on that. So I'd be guessing, Alan, but I'd give it probably that rough estimate.

And one more, if I may. In an effort to just try to quantify what the effect has been on your revenues of expanding the hubs, really looking at the 92 expanding hubs versus the 60-some-odd that are not, are the comps for the expense supported by the stores -- excuse me, are the comps for the stores supported by the expanded hubs significantly greater than the comps for the stores for the hubs that you have not yet expanded?

Yes. I would say they are definitely greater. Definition of significant, I'm not sure I would go there. But as you know, we would forecast what our expectations are for each one of those, both what the hub store, itself, is going to do, plus all the satellites that are attached to that hub store. And as we rolled all through those 92 stores, it has been remarkably close to what our expectation was. So we're quite pleased with them. And yes, they're performing better. And as we get the rest of them up, we anticipate that they'll perform better as well.

The next question is from Simeon Gutman with Credit Suisse. Simeon Gutman - Crédit Suisse AG, Research Division: Can we elaborate a little bit or dig in on some of the initiatives that we talked about? I know hard parts is one of them. Then the test that was mentioned, is that separate and exclusive from the greater assortment? And is that test Commercial-focused or DIY-focused? I think you also mentioned Z-net enhancements. And any other current initiatives that are on plan for next year?

Yes, Simeon. We went into some discussions about what we're doing on the inventory assortment front. We did some pretty significant strategic assessments back last winter and end of this spring. And as a result of that, we found some opportunities where we could -- where we believe we could significantly enhance our productivity. So starting in about May, we launched a variety of tests. Some of them are competing tests, but one of them is the mega hub or expanding our hubs even greater than we are today. One of them is what I talked about, a test where we took a large group of stores and used our latest and greatest thinking on the data and leveraging the data for inventory store-level assortments at every individual store. That test proved to work very well and so we are beginning to roll that one even as we speak. It will take about a year for -- because we're going to roll it off with category reviews. It will take about a year for it to get out there. But the vast majority of it should happen between now and February. So we're just trying a lot of different things. We're very excited. Some of them are going to work; some of them aren't going to work. As I mentioned, some of them are competing against each other. So we'll see what happens. It's a little too early to tell yet, but we're confident we found some opportunities to further enhance. The other part that you asked about was Z-net. As we mentioned, about a year ago, we added leveraging information technology as one of our key priorities. And our information technology team has gone to work really collaboratively, particularly with our store operations team, and we're very excited about what we're doing. We're just now, this week, introducing this new version of Z-net to our leaders at the national sales meeting and they are very excited about what they see. So we're excited about what we have in front of us. Simeon Gutman - Crédit Suisse AG, Research Division: And just to follow up to something that Alan asked a second ago and I think this is implied in your comments but just wanted to make sure. The inventory that's been added to some of the hubs, or the expand that's been happening over the last year, that's what's increasing the productivity, meaning those SKUs are the ones that are increasing the productivity of those stores where you've added it?

I would say the vast majority -- well, I would say the majority of the benefit is coming from those SKUs, but there's also a market basket effect. So if we have the radiator, we also get some of the ancillary parts that were already there that go with that radiator, if that makes sense. Simeon Gutman - Crédit Suisse AG, Research Division: Yes, it does. And then one more bigger picture. If you look at the Commercial opportunity, we see and we hear the trade data of how fragmented the industry looks. But looking closer to your markets and I guess AutoZone is in almost every market, but looking at it on a more detailed level, can you give us a sense of the competition there? Are there these wholesale distributors that are still part of that fragmentation? Or are you budding up against the bigger, the larger players, the publics as well as the NAPAs and the CARQUEST?

Now we are absolutely competing against a wide variety of competitors, from WDs to local jobbers to individual-owned stores to the people that are public that we always talk about.

Yes. Keep in mind also, Simeon, we've got about a 3% market share. So we're in control of our own destiny.

The next question is from Matthew Fassler with Goldman Sachs.

Three quick ones, I think. First of all, if you could go into a little more detail as to the enhancements to Z-net, are they graphics? Is it reference information? Is it sort of next steps for associates to take with consumers? Because Z-net, obviously, when hit, will certainly -- gave you guys a different form factor and such. And I know some of your competitors have also enhanced their POS and their direct assistance. So can you tell us what you're doing here that you think will move the needle?

I would say that on that, it's probably more reference, just to use your own terminology. I think that we're providing better information for the AutoZoners to provide better service on completing a job, maybe to your point on what the next steps are, et cetera. But for us, it's all about making sure that the customer gets exactly what they need to do the job right. And we believe that we're adding some enhancements, particularly for individual jobs, that will allow the AutoZoners to make sure that happens.

Any sense from your early tests of the kind of impact that, that can have where you introduced it?

I would say it's really early. We tested it very lightly because it's more of a technology. It wasn't a significant investment. And then we're going to roll it out relatively quickly. So we'll see. It can only be a plus.

Got it. Second quick question. You talked about, in addition to inventory, talked about a couple of operating initiatives. How should we think about the costs of those initiatives? Are they incremental? Will they show up in any way? Or have they basically been absorbed already?

I wouldn't say they've been absorbed because we haven't rolled out everything overall. So there's going to be some elements of it that are going to be relatively low cost, where we're going to be able to leverage our existing infrastructure at a pretty high level. There may be some increased operational costs as we move some inventory. That would probably show up maybe in SG&A. But I don't think that right now, today, we're indicating that we're going to see material cost increases. And we know we certainly would be well out in front of that with you guys if we saw that. But today, we don't see that.

Got it. And then finally, I know you said that the addition of dot-com to your same-store sales calculation was not a big deal. Any sense as to the rough order of magnitude of the contribution?

I'd say it's, like, around 10 basis points maybe? So it's not...

So truly material?

Yes.

The next question is from Bret Jordan with BB&T Capital Markets. Bret David Jordan - BB&T Capital Markets, Research Division: Just a follow-up on some of the inventory questions and talk about expanding the coverage. Are you looking at branded coverage to meet the Commercial hard parts demand, as well, or are we looking at keeping the percentage weighting in Duralast fairly constant?

Yes. I would say we're planning to keep the percentage weighting in Duralast very constant. This is about expanding our ability to say, yes, not adding choice. Bret David Jordan - BB&T Capital Markets, Research Division: Okay. And I guess as 71% of the stores now have commercial and you look at the store base, maybe some of them don't really apply to commercial. What do you think the potential maximum percentage is if the footprint were to stay the way it is today?

I think if you had 5 of us in a room, we'd all have 5 different points of view. We don't know the answer to that yet. We believe it's not 100%. We believe it's significantly above where it is today. Whether that's 80%, 85% or 90%, I don't think we know the answer. And frankly, as we continue to improve our offering, we think it will be higher and higher. Bret David Jordan - BB&T Capital Markets, Research Division: Okay. And I guess one last question. I mean, just from a housekeeping standpoint, what percentage of the mix would be done in the Duralast brand basket now?

That's probably around 50%.

The next question is from Michael Lasser with UBS.

I believe Bill Rhodes made a comment that you want to say, "yes," more frequently in an economically prudent manner. It seemed like that's going to be more relevant on -- or a little more relevant on the Commercial side. And perhaps to be very relevant in that market, you would have to accept lower turns, may require a greater distribution capacity, a deeper inventory investment. So how do you balance the desire to want to be more relevant in that market with your current return profile that's, obviously, very nice?

Yes, I think it's a great question, Michael. And I would start with, yes, we have 32.7% return on invested capital. We do not hold incremental investments to that 32.7%. If we have something that will exceed our 15% internal rate of return, we're going to go for it. So that's why we're going with all these tests. We also don't want to go out there and launch something big until we understand the ramifications of it. So that's why we've put these myriad of tests out there and we have great testing methodologies where we can look at tests versus control; look at the cost; look at any capital, if there is any; and then determine: is this the right investment for us over the long term or is it not? So I think our approach works really well. And it's the same approach we use to develop the current Commercial model and the same approach we use to develop the hub store model.

So if you are seeing evidence from your tests that you may need to push further on your distribution capacity, that's something that you would not rule out?

I wouldn't rule out anything. If we can find something that's economically viable and have a high degree of confidence that it's going to work over the long term, we would look at this -- all kinds of different strategies. I want to be very careful, that does not mean that's what we're going to go do. We have a myriad of tests that are out there, where we're looking at how do we improve but also make sure that it's prudent from a financial point of view.

That makes sense. My last question is on the DIY side. Can you talk about how you thought your share, your market share trended during the most recent quarter? And what were some of the puts and takes on your ability to either gain or perhaps the circumstances which you lost a little share?

Yes. I would say we probably had a minimal loss on market share overall, probably over the past year or so. And I think that, that's regained a fair amount of energy and focus in the organization. We're really excited about the things that we've put together as we kind of head forward into next year. So I don't know what the puts and calls are necessarily. There's a lot of things that we know that we can do better on internally and we think the things we articulated today are what we're going to focus on to regain market share.

The next question is from Greg Melich with ISI.

I only have 2 questions. One is, so I think you mentioned a strong traffic trend or an improving traffic trend while still negative. Could you give us a little more on that? Was that talking through the quarter or sequentially versus last quarter?

I would say through the quarter versus last year overall. And I would say that what we saw was that traffic had a little bit of an improvement from a trends perspective. And so, actually, tickets been a little bit more of a challenge and we talked about that a little bit earlier relative to the inflation factor.

So it'd be fair to say if your costs improved 110 basis points, sequentially, the traffic improved more than that?

Yes. That's a good way to look at it.

Okay. And then second is the AP inventory getting all the way to 116%. Is that a function of the new SKUs you're adding and how they turn in their terms? Or is that just sort of a timing of when the year ended? Or can we actually use that kind of rate going forward?

I would look at it from the standpoint, I think it's a lot of great work from the merchandising organization in order to balance out terms in some of the inventory that they're adding. Relative to going forward, I think we'll continue to see a little bit of pressure on that number as we add inventory over time. So we're thrilled we're at 116%. We think that's a real -- certainly an industry-leading number for us. We're proud of that number. But we're not trying to chase that number at the risk of not having the appropriate inventory coverage.

So put another way, as we add the inventory for the hubs, we shouldn't assume that the payable terms is going to cover all that investment?

I would say that's probably right over time. But in the short term, it definitely will.

The next question is from Brian Nagel with Oppenheimer. Brian W. Nagel - Oppenheimer & Co. Inc., Research Division: Just one question, I guess really for Bill Giles. Looking at the gross margins and you made some -- made comments about -- in your prepared comments about the gross margin, but just maybe so I can understand better. If you look at the trajectory through the course of the year, and it seemed like your gross margin gains moderated pretty meaningfully towards the end of the year, recognizing you don't manage towards the rate, just help me understand the kind of puts and takes with that, what basically caused that moderation?

I think that the moderation, I would attribute it more to the prior year activity than the current year activity. I think we've had pretty good improvement on lower acquisition costs, et cetera. I suspect that we had a slightly higher rate of lower acquisition costs, coupled with probably some increase in inflation and, ultimately, will always help margin a little bit. And those things didn't anniversary themselves this year. So I think, overall, when I looked at it, we're flat for last year. x AutoAnything, we're probably up maybe 40 basis points or so. So we still have a very strong margin and a growing margin.

The other element of that, we mentioned many times, is as we continue to grow the Commercial business, it is a natural headwind for us. And we're growing at an accelerated rate versus our DIY business. That is a pretty significant headwind in gross margin.

The next question is from Christopher Horvers with JPMC. Christopher Horvers - JP Morgan Chase & Co, Research Division: Wanted to follow up on the gross margin question. So as you think about inflation going forward, with a lack of inflation going forward and presumably some deflation, is it in categories where the pricing is sticky, where, perhaps, you could see some tailwind related to that, particularly as it interacts with the LIFO calculation? Or does the, I guess, modest deflation put pressure going forward on the gross margin?

I would say that at the moment, we're not believing that we'll have significant inflation or deflation, per se. I don't think that we're going to necessarily have significant deflation. So and when you think about it, a lot of this inflation occurred in fiscal year '11 and '12. '13 didn't really have a lot. If there really isn't a lot of inflation or deflation in fiscal year '14, then it should be -- not have a significant comparable impact. Christopher Horvers - JP Morgan Chase & Co, Research Division: Okay. So then I guess once you get past the anniversary AutoAnything, December 19 or so, so really, some of the pressure on gross margin goes away. So we could see some modest gross margin expansion once you fully lap AutoAnything?

I think that's a fair way to look at it. That's exactly right. That would be one aspect, a pressure point that would become anniversary-ed when we lap it. And like Bill said, as we continue to grow Commercial, that creates a little bit of headwind. And then we always have opportunities to improve sourcing, so that can be a tailwind. Christopher Horvers - JP Morgan Chase & Co, Research Division: Yes. And then the last question on sales. You mentioned the Northeast was a stronger performer relative to other regions. Was that region hit particularly around the cooling weather to suggest that, that region also decelerated into August? And then is there a lingering impact overall in the business as you get past the AC season? Doesn't the mix suggest that maybe things got a little bit better here in September? Or is there a lingering impact on batteries? How do you think about that overall?

Yes. I think the reason we wanted to call out the Northeast and the Midwest in particular was that they had been performing so significantly different than the rest of the country for the last 15 months or so. Basically, what we're saying is, we said all along that we thought that was related to the winter of 2011, 2012. That seems to have been right. Now the Northeast performed pretty well this quarter. The Midwest continued to be challenged but not nearly at the rate that it was before. So I wouldn't read too much into that. As far as the batteries and air-conditioning sales, yes, those were a little bit more challenged, particularly in the Eastern United States during the summer months. They'll become less and less important as we move into October. But then we'll get into December where batteries and other failure-related categories will be very important. Christopher Horvers - JP Morgan Chase & Co, Research Division: So would you assess the August being a little slower than the start of the quarter, mainly around the weather in those categories?

It was modestly slower and it was certainly mild. So I think that's a good conclusion. Okay. Before we conclude the call, I'd like to take a moment to reiterate that our business model continues to be solid. We are excited about our growth prospects for the year. We will not take anything for granted as we understand our customers have alternatives. Our culture remains our key point of differentiation from our competition and we must not lose sight of the importance of basic store execution in order to remain very successful. We have a solid plan to succeed this fiscal year, but I want to stress that this is a marathon and not a sprint. As we continue to focus on the basics and focus on optimizing long-term shareholder value, we are confident AutoZone will continue to be incredibly successful. We thank you for participating in today's call.

Thank you. This does conclude today's conference. Thank you very much for joining. You may disconnect at this time.