Note R – Segment Reporting

Four of the Company’s operating segments (Domestic Auto Parts, Mexico, Brazil, and IMC) are aggregated as one reportable segment: Auto Parts Locations. The criteria the Company used to identify the reportable segment are primarily the nature of the products the Company sells and the operating results that are regularly reviewed by the Company’s chief operating decision maker to make decisions about the resources to be allocated to the business units and to assess performance. The accounting policies of the Company’s reportable segment are the same as those described in Note A.

The Auto Parts Locations segment is a retailer and distributor of automotive parts and accessories through the Company’s 6,029 locations in the United States, Puerto Rico, Mexico and Brazil. Each location carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products.

The Other category reflects business activities of three operating segments that are not separately reportable due to the materiality of these operating segments. The operating segments include ALLDATA, which produces, sells and maintains diagnostic and repair information software used in the automotive repair industry; E-commerce, which includes direct sales to customers through www.autozone.com; and AutoAnything, which includes direct sales to customers through www.autoanything.com.

The Company evaluates its reportable segment primarily on the basis of net sales and segment profit, which is defined as gross profit. The following table shows segment results for the following fiscal years:


	Year Ended
(in thousands)	August 26, 2017			August 27, 2016			August 29, 2015
Net Sales:
Auto Parts Locations	$	10,523,272		$	10,261,112		$	9,824,876
Other		365,404			374,564			362,464

Total	$	10,888,676		$	10,635,676		$	10,187,340

Segment Profit:
Auto Parts Locations	$	5,544,494		$	5,410,477		$	5,132,624
Other		195,126			198,259			194,407

Gross profit		5,739,620			5,608,736			5,327,031
Operating, selling, general and administrative expenses		(3,659,551	)		(3,548,341	)		(3,373,980	)
Interest expense, net		(154,580	)		(147,681	)		(150,439	)

Income before income taxes	$	1,925,489		$	1,912,714		$	1,802,612

Segment Assets:
Auto Parts Locations	$	8,964,371		$	8,351,883		$	7,883,720
Other		295,410			247,904			218,629

Total	$	9,259,781		$	8,599,787		$	8,102,349

Capital Expenditures:
Auto Parts Locations	$	533,304		$	470,631		$	464,246
Other		20,528			18,160			16,333

Total	$	553,832		$	488,791		$	480,579

Auto Parts Locations Sales by Product Grouping:
Failure	$	5,100,702		$	4,913,423		$	4,650,271
Maintenance items		3,774,386			3,721,240			3,618,779
Discretionary		1,648,184			1,626,449			1,555,826

Auto Parts Locations net sales	$	10,523,272		$	10,261,112		$	9,824,876