Segment Reporting

12 Months Ended

Aug. 31, 2019

Note S – Segment Reporting

The Company’s operating segments (Domestic Auto Parts, Mexico and Brazil; and IMC results through April 4, 2018) 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 – Significant Accounting Policies.”

The Auto Parts Locations segment is a retailer and distributor of automotive parts and accessories through the Company’s 6,411 locations in the United States, Puerto Rico, Saint Thomas, 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 for sales that are not fulfilled by local stores; and AutoAnything, which includes direct sales to customers through www.autoanything.com, prior to the Company’s sale of substantially all of its assets on February 26, 2018.

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 31, 2019			August 25, 2018			August 26, 2017
Net Sales:
Auto Parts Locations	$	11,645,235		$	10,951,498		$	10,523,272
Other		218,508			269,579			365,404

Total	$	11,863,743		$	11,221,077		$	10,888,676

Segment Profit:
Auto Parts Locations	$	6,209,229		$	5,805,561		$	5,544,494
Other		155,772			168,185			195,126

Gross profit		6,365,001			5,973,746			5,739,620
Operating, selling, general and administrative expenses (1)		(4,148,864	)		(4,162,890	)		(3,659,551	)
Interest expense, net		(184,804	)		(174,527	)		(154,580	)

Income before income taxes	$	2,031,333		$	1,636,329		$	1,925,489

Segment Assets:
Auto Parts Locations	$	9,781,926		$	9,231,021		$	8,964,371
Other		113,987			115,959			295,410

Total	$	9,895,913		$	9,346,980		$	9,259,781

Capital Expenditures:
Auto Parts Locations	$	479,120		$	499,762		$	533,304
Other		16,930			22,026			20,528

Total	$	496,050		$	521,788		$	553,832

Auto Parts Locations Sales by Product Grouping:
Failure	$	5,728,294		$	5,338,890		$	5,100,702
Maintenance items		4,140,987			3,914,546			3,774,386
Discretionary		1,775,954			1,698,062			1,648,184

Auto Parts Locations net sales	$	11,645,235		$	10,951,498		$	10,523,272

(1)	Operating, selling, general and administrative expenses for fiscal 2018 include $130.3 million related to pension termination charges and $193.2 million related to impairment charges.