Key questions and answers from the fourth quarter fiscal 2007 earnings call conducted by AutoZone Inc. on September 18, 2007.

John Lawrence (Morgan Keegan): On the commercial side, would you elaborate a little bit about some of the tests, the transitioning with more profitability and how is that coming about? Could you provide some examples of how the hard parts coverage is helping your business?

Bill Rhodes: We rolled out our test programs about a year ago, and we continue to roll them out, although at a very prudent place. We are functioning in a pay as we go model. We're going to make sure the investments we're making are proving themselves. That's one of one of the beauties of having 4,000 locations and almost 2,200 commercial programs. We don't having to full steam ahead at any point in time so we can prove the activities we're doing are paying off.

We've been very encouraged, particularly on the commercial side, with the product assortment improvements we've made over the last nine months, and we're now beginning to build a world-class sales culture, and that's something that's new to us. Historically we've been a retailer, and retailers don't have direct sales operations. We're continuing to learn in that area.

John Lawrence (Morgan Keegan): On the SG&A line going forward, will some of those other initiatives as far as training and advertising continue to add to the expense line?

Bill Giles: Overall we wouldn't expect that level of deleverage on an ongoing basis. We're very much committed to making sure we continue to invest in the initiatives to help drive and improve customer service on an ongoing basis, and we have our expenses appropriately managed.

Robert Higginbotham (Goldman Sachs): Can you comment on how sales progressed through the quarter and also give us some extra color on what the regional disparities were, particularly Florida and California?

Bill Giles: Historically we do not break out sales trends throughout the quarter or even regionally. I can't say that we've necessarily seen anything that we would say that one particular region is carrying us or killing us. What we're doing is focused on a lot of things across the organization. We have done a good job throughout the year of improving and expanding our product assortment particularly on the hard parts side of the business. We've done a good job of continuing to improve our customer service levels. We get good feedback from our customers that our overall service levels and satisfaction levels have improved on a year-over-year basis. It is a lot of things throughout the quarter that helped us improve the momentum we have gained.

Robert Higginbotham (Goldman Sachs): Could you comment on why you think that the DIY environment is still as tough as it is and when do you think that starts to turn around?

Bill Rhodes: We haven't seen a radical material change in our DIY performance over the last 24 months, and certainly miles driven have flattened to slight declines over the last 18 months, but what we're focusing on is what can we do to make our business more productive? We have so many opportunities to continue to become more and more relevant to our customers. We're very pleased with the progress we're making on our initiatives, but the bottom line is it hasn't generated the sales growth we want, need or expect. We're not significantly off from that, but we're not meeting our aspirations, and that's our commitment regardless of what's going on in the macro environment, we need to go meet our expectations.

Dan Wewer (Raymond James): If we see a sales breakout in 2008, it sounds like it will more than likely originate on the commercial side of the business where you had the greatest opportunities. Is that accurate?

Bill Rhodes: We have the greatest opportunity on commercial. We have 13% market share on DIY, 1.3% on commercial. We have a tremendous long-term opportunity in commercial and a tremendous long-term opportunity in DIY, but we have a more mature model in DIY than we do in commercial.

Adam Timler (Deutsche Bank): Did you comment in your prepared remarks you will essentially able to offset the lost revenue from Midas with other initiatives in the quarter on the commercial side?

Bill Rhodes: That's correct. Overall our sales performance was up 0.5%, which was the first time in three quarters or so it went positive, and that was despite the termination of the Midas agreement which formally terminated on July the 1st. But there was a transition that began around April 1st.

Adam Timler (Deutsche Bank): Have you seen any impact per se from the fact that perhaps cars are changing their oil a little less frequently due to improvements in the quality of the oil and how the cars run from a traffic standpoint at all?

Bill Rhodes: Over an extended period of time, the oil drain has been extended. Many of the car manufacturers today will tell you that you can change your oil every 7,500 miles or 10,000 miles, versus 3,000 miles, which is the historical trend. However, you will read further in the owner's manual it says you can only do that if you're not considered a severe driver and severe driving is like driving around in Memphis, or driving in dust. The parameters on it are light. We've seen some lengthening in that, and certainly that's been part of our traffic challenges. But you also have things like synthetic oils which also, although they don't change them at frequently, they cost much more. There is a natural lift in several categories where the average price of the parts is going up, but the change interval is decreasing.

Irene for Danielle Fox (Merrill Lynch): Do you have an idea when inventory increases will be slower than sales increases? Is it fair to say by end of 2008?

Bill Giles: Our inventory overall is flat with last year and slightly lower, so we feel good about some of the improvements that we've made on inventory management perspective. We don't necessarily project out guidance on a go-forward basis. We've done a good job as an organization in adding some additional parts coverage, particularly in the hard parts side of the business, and at the same time rationalizing SKUs for slower-turning businesses and maintaining our inventory levels. For us, we're very much focused on making sure that we've got the right parts in order to be able to say yes on a more frequent basis to our customers, and that's been the primary emphasis. We've kept inventory relatively in check and on a net inventory basis we made progress there. If you're thinking about it from a capital perspective, we've utilized less capital in order to do that.

There may be a little bit of confusion on the way we talk about inventory per store, which on a year-over-year basis. Our inventory per store was $500,000 this year, $501,000 last year. However, we have reduced pay on scan inventory over time, so we've taken on the inventory ownership and gotten increased terms from our vendors. On the top line if you just look at owned inventory, that number is increasing, but overall deployed inventory is not.

Irene for Danielle Fox (Merrill Lynch): Can you talk a little bit more about why occupancy costs were up this quarter and if you expect that to continue going forward?