Note N – Segment Reporting

The Company’s four 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 in its Annual Report on Form 10-K for the year ended August 26, 2017.

The Auto Parts Locations segment is a retailer and distributor of automotive parts and accessories through the Company’s 6,088 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. Segment results for the periods presented were as follows:


	Twelve Weeks Ended								Twenty-Four Weeks Ended
(in thousands)	February 10, 2018				February 11, 2017				February 10, 2018				February 11, 2017

Net Sales
Auto Parts Locations		$	2,331,572			$	2,205,562			$	4,841,700			$	4,595,123
Other			81,454				83,657				160,456				161,942

Total		$	2,413,026			$	2,289,219			$	5,002,156			$	4,757,065


Segment Profit
Auto Parts Locations		$	1,233,008			$	1,160,923			$	2,555,452			$	2,418,689
Other			44,038				44,613				87,441				88,388

Gross profit			1,277,046				1,205,536				2,642,893				2,507,077
Operating, selling, general and administrative expenses⁽¹⁾			(1,071,948	)			(821,567	)			(1,969,041	)			(1,664,206	)
Interest expense, net			(39,340	)			(34,198	)			(78,229	)			(67,504	)

Income before income taxes		$	165,758			$	349,771			$	595,623			$	775,367

(1)

Includes impairment charges of $193.2 million. See “Note L – Asset Impairments” for further discussion.