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Segment Reporting

12 Months Ended

Aug. 29, 2020

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 6,549 locations in the U.S., 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 and 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
	August 29,		August 31,		August 25,
(in thousands)	2020		2019		2018

Net Sales
Auto Parts Locations	$	12,405,929	$	11,645,235	$	10,951,498
Other		226,038		218,508		269,579
Total	$	12,631,967	$	11,863,743	$	11,221,077

Segment Profit
Auto Parts Locations	$	6,617,508	$	6,209,229	$	5,805,561
Other		153,245		155,772		168,185
Gross profit		6,770,753		6,365,001		5,973,746
Operating, selling, general and administrative expenses⁽¹⁾		(4,353,074)		(4,148,864)		(4,162,890)
Interest expense, net		(201,165)		(184,804)		(174,527)
Income before income taxes	$	2,216,514	$	2,031,333	$	1,636,329

Segment Assets:
Auto Parts Locations	$	14,303,427	$	9,781,926	$	9,231,021
Other		120,445		113,987		115,959
Total	$	14,423,872	$	9,895,913	$	9,346,980

Capital Expenditures:
Auto Parts Locations	$	432,067	$	479,120	$	499,762
Other		25,669		16,930		22,026
Total	$	457,736	$	496,050	$	521,788

Auto Parts Locations Sales by Product Grouping:
Failure	$	6,088,859	$	5,728,294	$	5,338,890
Maintenance items		4,284,913		4,140,987		3,914,546
Discretionary		2,032,157		1,775,954		1,698,062
Auto Parts Locations net sales	$	12,405,929	$	11,645,235	$	10,951,498

(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.