Bill Rhodes – Chairman, President and CEO Bill Giles – CFO and EVP, Finance, Information Technology and Store Development

Analyst for Gary Balter – Credit Suisse Alan Rifkin – Bank of America John Lawrence – Morgan Keegan Colin McGranahan – Bernstein Tony Cristello – BB&T Capital Matthew Fassler – Goldman Sachs Kate McShane – Citi Investment Research Dan Wewer – Raymond James William Truelove – UBS Chris Horvers – JP Morgan

Welcome to the AutoZone conference call. (Operator Instructions) This conference call will discuss AutoZone's third quarter financial results. Bill Rhodes, the company's Chairman, President and CEO, will be making a short presentation on the highlights of the quarter. The conference call will end promptly at 10:00 AM Central Time or 11:00 AM Eastern Time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements. Certain statements contained in this press release are forward-looking statements. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, positioned, strategy and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties including without limitation credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; availability of consumer transportation; construction delays; access to available and feasible financing and changes in laws or regulations. Certain of these risks are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 29, 2009 and these risk factors should be read carefully. Mr. Rhodes, you may now begin.

Good morning, and thank you for joining us today for AutoZone’s fiscal 2010 third quarter conference call. With me today are Bill Giles, Executive Vice President, Chief Financial Officer, Store Development and IT; and Brian Campbell, Vice President, Treasurer, Investor Relations, and Tax. Regarding the third quarter, I hope you have had an opportunity to read our press release and learn about the quarter’s results. If not, the press release along with slides complimenting our comments today is available on our website, www.autozoneinc.com. Please click on Quarterly Earnings Conference Calls to see them. We are very pleased to announce for the quarter an EPS increase of 31.5% and a domestic same store sales increase of 7.1%. Our same store sales performance accelerated from the second quarter considerably growing from 1% to 7% and it increased on both a 2-year and 3-year stacked comp basis as well. While our average ticket continued to grow year-over-year the improvement primarily was the result of improvement in customer count. We believe our strong same store sales increase was attributable to both the macro economy and market share gains across both our retail and commercial businesses. In reviewing our performance to better understand the causes of our acceleration, our analysis has led us to believe some of the acceleration can be attributed to macro factors. Specifically we believe: One, customers are doing more DIY work due to continued economic pressure. Two, a decrease in new car sales has benefited our industry and this is good for our business in the near-term. Finally, higher tax refunds this year have helped our customers and therefore our business. The first point, customers continue to shop our stores in some cases out of economic necessity or simply to save money. This represents an opportunity for our industry overall. We believe customers have turned to AutoZone to help them save money in these difficult times and our approach is to help them with their needs and to develop ongoing, long-term relationships with them. Whether a customer wants to do it themselves or use one of our high quality commercial customers we believe we can provide them with the trustworthy advice and high quality products at a good value so they can properly maintain their vehicles. The second point is the slowdown in new car sales which has resulted in an older age of U.S. vehicle population which we believe results in an increase in demand. As long as cars continue to get older and need ongoing maintenance our industry will be in a strong position. The next point regarding income taxes is subtle but important. Early IRS statistics up through the week ending April 30th total refunds were up 4.1% over last year and the average household refund was up 8%. From what we can see, households that we would call “our kind of customers” disproportionately benefited from the refunds. While this was not in our opinion the largest contributor to increased customer demand, it did provide additional monetary stimulus for our customers in the quarter. While these three points were important and speak to our overall industry growth let me point out during the quarter we again gained market share in both our DIY and commercial businesses. We believe these gains have come from a continued focus on store execution, better parts assortment, increased availability with the support of our enhanced hub store concept and the ongoing development of our commercial sales force all of which taken together results in us delivering a superior customer experience. We have good competitors in the marketplace and therefore it is imperative we continue to improve every aspect of our business. One particular highlight of the quarter was the acceleration of our commercial business which grew 15.5% for the quarter. I would like to congratulate our entire team for their performance in the commercial business this quarter. This quarter marks the 12th consecutive quarter of sales increases in this business. I have been asked since back in 2005, “Do you think your commercial business can be a material part of your overall sales?” To those folks I have always said, “Yes but be patient. This is a marathon and not a sprint.” Well, this quarter we picked up the pace considerably but kept to our overall strategies. The acceleration from the 8.5% in the second quarter continues to reinforce to us that we are definitely on the right track. During the quarter due to the success of our conversions to the enhanced hub store model and the overall strength in our business we accelerated the rate of conversions to the new model and ended the quarter with 108 of our 143 hubs on the new model, up from 82 at the beginning of the quarter. We have also added some selling payroll to our stores to make sure we satisfy our customers’ needs when they call on us. Again, congratulations on a great quarter AutoZoners but we have a long way to go and significant opportunity to grow our market share in commercial as it is only 1.5% today. Additionally, our ALLDATA and Mexico businesses performed well during the quarter growing both their top lines and operating profit. These businesses are wonderful assets for AutoZone and we expect their performance to continue to be outstanding for years to come. I want to take a moment to congratulate our AutoZoners on delivering our 6th straight quarter of 20% plus EPS growth, exceeding 30% this quarter for the first time since our second quarter of fiscal 2004 and our 15th straight quarter of double-digit EPS growth. This long stretch of success can be attributed to a simple and clear strategy of delivering exceptional customer service and trustworthy advice all while continuing to refine our retail, commercial, Mexico and ALLDATA offerings. These important qualities are embedded in our culture and they are the principles we live by each day. It is worth noting our stretch of 15 straight quarters of double-digit EPS growth has occurred in very different macro economic cycles. Through both boom and bust cycles our organization has performed well and our financial performance has been strong. I attribute this solid financial performance to our business model and our culture, a culture where passionate, highly committed people who understand the objectives and consistently execute at an extremely high level. Our team understands this industry very well and manages our resources very well. We have been very deliberate in how we manage expenses and capital in order to deliver consistent, strong financial performance and position our business for long-term growth. Additionally I would like to congratulate the organization for delivering another strong performance on return on invested capital as we were able to grow this metric to 26.5% on a trailing 4-quarter basis which represents a new, all-time high for our organization. While we have invested over $1 billion in CapEx over the last four years to make sure our stores look great and expand our footprint we have expanded our returns on capital. This gives us great confidence in our planning models to confirm where we have invested your dollars we are getting an adequate return. We will always maintain our diligence regarding capital stewardship. Now to discuss our quarterly performance in a little more detail and try to address questions you may have. Let me begin by discussing category sales. In recent quarters we have provided more detail in the performance of our categories in clusters we have called failure, maintenance and discretionary. In recent quarters our acceleration has come from the maintenance and failure categories, offset by pressures in the discretionary categories. This quarter we are excited to report we experienced growth in our discretionary categories. While discretionary purchases increased to approximately 20% of sales from the mid-teen’s last quarter the 20% was generally in line with last year. The shift is seasonal in nature. Failure related categories sold slightly more than last year at 40% of the mix and helped drive merchandise margin improvement. Finally, maintenance related items were the remaining 40% and were slightly lower than last year. From a regional perspective, we did not experience any material changes in sales trends that differed from the overall chain performance. Based on NPD market share data, we continue to see market share gains in both retail and commercial in virtually every major geographic segment. Our competitors both large and small continued to do a good job executing. Therefore, it is incumbent on us to continue to perform at an extremely high level. As I mentioned earlier we have several initiatives underway at various stages but I would like to highlight the performance of our hub store enhancements. Last year we implemented an enhanced model in 60 of our 143 hubs. Through the third quarter we have completed an additional 48 implementations taking our total to 108. This effort includes enhancing our inventory assortment and increasing the frequency and reach of our daily deliveries to our satellite stores. While this initiative represents a material investment both in terms of operating expenses and some capital we are quite pleased with the sales performance we are experiencing. The incremental parts additions that are now sold throughout the surrounding satellite stores are both exceeding plan and adding to the overall sales performance of the hub store and its market. Our earliest hub store conversions which began back in fiscal 2008 continue to experience sales growth as we refine the assortment and the operating model. Obviously hub conversions is one of many initiatives we are implementing so specifically quantifying the benefits of the hub in isolation is difficult. However, we are confident this is having a positive impact. More importantly it allows our AutoZoners to say “yes” to both our DIY and commercial customers more frequently. At the same time we have been able to reduce slow moving inventory in the satellite stores by consolidating it into the hubs with an overall net inventory reduction. With 35 hubs left to convert, we will manage those rollouts accordingly but our current intentions are to complete the implementations no later than the end of the calendar year. Overall our gross margin rate remained healthy and showed improvement this quarter. I would like to congratulate our merchandising team on their efforts to improve merchandise margins through lower procurement costs, import initiatives and price optimization efforts. We continue to feel margin opportunities exist for us in the near-term. We continue to believe there are opportunities to increase our gross margin rate over the long-term. From an expense standpoint, while we continued to accelerate some of the initiatives that we have been testing and rolling out to the chain, we continued to proactively manage our expenses in order to ensure we are in a position to deliver great customer service and trustworthy advice in both the short and long-term. This organization takes great pride in our disciplined approach to managing our cost structure and leveraging our culture of thrift. This quarter’s performance further solidifies our team is capable of appropriately managing costs. I believe we continue to be well positioned to manage our cost structure appropriately for the foreseeable future. I would also like to congratulate our Mexico team for opening their 212th store this past quarter. While we have been methodical with this business over the years it is exciting for our entire organization to further expand our reach in this important market. With the peso exchange rate volatile right now we are managing our risks accordingly through in-country merchandise procurements based in pesos and methodical expense management. Now I will take a few minutes to talk more specifically about our retail, commercial and Mexico results for the quarter and then Bill Giles will review our gross margin results, operating expense results, balance sheet and cash flows. For the quarter, total auto parts sales increased 10% versus last quarter’s 4.1% and last year’s third quarter of 9.4%. This segment[tation] includes both our domestic, retail and commercial businesses and our Mexico stores. Regarding our domestic business during the third quarter we continued to focus on driving sales and profits through improving the customer experience. This quarter we updated 16 of our 40 plus major merchandise categories and we remain committed to completing at least one line review per major category on an annual basis. We hosted our annual vendor summit this past quarter, inviting all of our vendor community to Memphis to share our future business plans and growth strategies. We reinforced our commitment to improving inventory productivity while stressing the need to work together to make sure AutoZone has the parts coverage necessary to say “yes” more frequently tomorrow than today. I believe our relationships with our suppliers are quite strong and they continue to improve. I will break my comments regarding retail sales up into a couple of major categories. In addition to my previous comments regarding our enhanced hub store model, I would like to address two specific areas. First, we will touch on our [Witager] meeting completed this past quarter. Second, we will address the macro trends we have seen. Training continues to be a key priority to improve customer service and increase sales. This past quarter we educated all of our AutoZoners on the concept “sell it right, keep it sold.” We know our customers want to get in, get what they need and get back on the road. Therefore, we have put together comprehensive training materials to make sure our AutoZoners are doing everything they can to help the customer do the job right the first time. It is very important to note that this effort is not an initiative to “reduce returns.” It is an initiative to help the customer solve their real problem where reduced returns are a likely outcome. Regarding macro trends, during the second quarter unleaded gas prices started out at $2.61 per gallon and climbed throughout the quarter finishing at $2.91 per gallon. We believe that gas prices have not been a material story to our sales results over the last quarter, although we have seen more volatility with oil prices as of late. Last year’s third quarter ended at $2.24 per gallon. However, prices climbed to $2.61 per gallon by the end of the fourth quarter. Regarding miles driven, we saw a continued decline in February on top of the reduction in January. March and April results are not yet available. While recently we have seen minimal correlations in our sales performance with miles driven, historically it has been one of the key statistics which correlates to our sales results over the long-term. The other is the number of 7-year-old and older vehicles on the road, which continues to trend in our industry’s favor. Regarding weather, we believe it had an immaterial impact on our results this quarter. For the trailing 4-quarters total auto parts sales per square foot were $244. This statistic continues to set the pace for the rest of the industry. Now let’s turn to commercial. For the quarter total commercial sales increased 15.5%. We remain encouraged by the consistent progress we have made demonstrated by the continued acceleration in our sales performance over the past several quarters. Our sales growth has come from both existing and new customers. As we continue to increase market share we continue to enhance our selling capability and improve our parts offerings. With improved tools in place combined with constant enhancements we are building a platform for long-term growth. We now have our commercial program in 2,340 stores supported by 143 hub stores. During the quarter we opened 19 additional programs. Our main focus remains on building and developing a world class sales force. Over the last three years we have built our sales force from the ground up. We are targeting sales growth through first, increased penetration of existing customers and second on acquisition of new customers in our existing service radius. The majority of our business is derived from up and down the street customers who are the independently owned repair shops. Additionally we continue to work closely with our national account customers and have developed a strong business relationship with many of them. We remain committed to growing this business profitably and are constantly focused on ensuring our investments are resulting in improved sales and profitability. While we were successful in growing both our operating margins and dollars for our commercial business we did increase our investments in this business. We added to both our sales managers who’s only job it is to develop and cultivate customer relationships and to commercial labor hours to ensure high levels of service to these important customers. We continue to believe more intense personal focus on existing accounts management will continue to drive improved results. We continue to be very excited about our commercial growth opportunities for many years to come. Lastly, we completed our first phase of testing the One Team concept in a few locations. Our goal was for our store AutoZoners to support both sides of the business. Additionally, we have developed a version of Z-net for commercial that better leverages the wealth of content we have available and creates a common operating system platform that is considerably more intuitive to operate across both businesses. We will begin implementing this new system during the fourth quarter. We believe this improves the potential of utilizing our store labor hours more effectively, thereby garnering better coverage and support from both types of customers. The results for the first phase of our One Team initiative were encouraging and therefore we plan to expand the test to a larger store base during the fourth quarter. While we continue to be encouraged by the feedback we have received from our customers an AutoZoners, it remains officially a test. In summary, we remain excited about the growth prospects for the commercial business heading into the fourth fiscal quarter of 2010 and beyond. Regarding Mexico, our Mexico stores continued to perform well although the economic and security challenges in Mexico have been a headwind for our business. We opened 10 new stores during the third quarter and currently have 212 stores in Mexico. We believe we have an appropriate strategy to manage our Mexico business for the long run while minimizing foreign currency risk. Our ongoing commitment remains to prudently and profitably grow the Mexico business. Now I will turn it over Bill Giles to discuss the remainder of the income statement, cash flows and the balance sheet. Bill?

Thanks Bill. Regarding the third quarter for the 12 weeks ended May 8th we reported sales of $1.822 billion, an increase of 9.9% from last year’s third quarter. Same store sales for stores open more than one year were up 7.1% for the quarter. We experienced strong sales growth from both our retail and commercial customers. Net income for the quarter was $203 million, an increase of 16.7% versus last year’s third quarter and diluted earnings per share increased 31.5% to $4.12 from $3.13 in the year-ago quarter. Our continued disciplined capital management approach resulted in return on invested capital for the trailing 4-quarters of 26.5%. We have and will continue to make investments that we believe will generate returns that significantly exceed our cost of capital. Gross margin for the quarter was 50.7% of sales, up 43 basis points compared to last year’s third quarter. The improvement in gross margin benefited from higher merchandise margin and leveraging distribution costs due to higher sales. The merchandise margin improvement of 23 basis points was attributable to both a shift in mix to higher margin products and lower product acquisition costs. Our Duralast, Duralast Gold and Valucraft product lines continued to show sales increases in both our retail and commercial businesses. Our customers continue to recognize the value proposition these high quality brands offer. We continue to spend marketing dollars to promote our brands as we feel they can create real competitive advantages for us on an ongoing basis. Looking forward we believe there continues to be opportunity for gross margin expansion. We do not manage to a targeted gross profit margin percentage, however, as our key focus is on increasing absolute gross profit dollars. SG&A for the quarter was 31.1% of sales, down 59 basis points from last year’s third quarter. The reduction in operating expenses as a percentage of sales reflected leverage due to higher sales partially offset by 17 basis points of expense from the continued investment in our hub store initiative. In addition, as discussed in the last two quarter’s results, this quarter also included an increase in pension expense of approximately $2.8 million or approximately 16 basis points which reflected the decline in value of the underlying assets of the plan. It is our expectation we will incur a similar negative basis point impact in the upcoming fourth quarter of fiscal 2010. We will continue to appropriately manage our expenditures to enhance the customer experience while being fiscally prudent. EBIT for the quarter was $356 million, up 16.6% over last year’s third quarter. Our EBIT margin improved to 19.53% or 112 basis point increase versus the previous year’s third quarter. Interest expense for the quarter was $36.8 million compared with $31.5 million in Q3 a year ago, a 17% increase. Much of this increase was due to 12.2% more debt outstanding versus last year. We would expect this higher interest expense run rate to continue into the fourth quarter. Debt outstanding at the end of the quarter was $2.699 billion or approximately $300 million more than last year’s balance of $2.406 billion. Our adjusted debt levels at 2.4 times to EBITDAR are in line with past quarter’s results. As we have previously stated our objective is to manage our debt levels to maintain our investment grade debt rating at and at a range around 2.5 times adjusted debt to EBITDAR we feel comfortable we are well within an appropriate range to achieve that objective. However, it is our expectation in any given quarter this may increase or decrease. In summary, while we finished below our 2.5 credit metric we remain committed to our capital allocation strategy and share repurchases are an important element of that strategy. For the quarter our tax rate was approximately 36.5%, in line with last year’s third quarter. For the fourth quarter we expect to run a higher rate closer to 37%. Net income for the quarter of $203 million was up 16.7% versus the prior year’s third quarter. Our diluted share count of 49.2 million was down approximately 11% from last year. The combination of these factors drove earnings per share for the quarter to $4.12, up 31.5% over the prior-year’s third quarter. Related to the cash flow statement, in the third quarter we generated $392.1 million of operating cash flow. We continue to see opportunities to increase operating cash flow going forward. We repurchased $266 million of AutoZone stock and at the end of the third quarter we had $251 million remaining under our share buyback authorization. We continue to view our share repurchase program as an attractive capital deployment strategy. Next, I would like to update you on our inventory levels in total and on a per store basis. We reported an inventory balance of $2.3 billion, up 2.1% versus the Q3 ending balance last year. On a per store basis we were down 2% at $506,000. We feel our enhanced hub model will allow us to continue to manage our inventory levels more efficiently. We do, however, expect to offset some of these inventory reductions with new hard parts coverage. Accounts payable as a percent of gross inventory finished the quarter at 97.7% versus 93.7% in last year’s third quarter. [Inaudible] were up 5.4% versus last year. Capital expenditures for the quarter totaled $69 million and reflected the additional expenditures required to open 32 new stores this quarter, maintenance on existing stores and work on development of new stores for upcoming quarters. Specifically related to new store openings, our new stores remain on track and we continue to see opportunities to open domestic stores in a low to single digit growth rate for the foreseeable future. We believe opening stores during these more difficult economic times can be advantageous. We opened 20 net new domestic stores in the quarter for a total of 4,309 stores in 48 states, the District of Columbia and Puerto Rico. Depreciation totaled $42.8 million for the quarter, in line with last year’s third quarter expense of $41.3 million. Our senior unsecured debt rating from Standard & Poor’s is BBB and we have a commercial paper rating of A2. Moody’s investor service has assigned us a senior unsecured debt credit rating of Baa2 and a commercial paper rating of P2. Fitch has assigned us a senior unsecured rating of BBB as well and a commercial paper rating of F2. Now I will turn it back to Bill Rhodes.

Thank you Bill. We managed our business very well this past quarter. I would like to take this opportunity to again commend and congratulate our AutoZoners on a job very well done. We executed our plan and had very few surprises. While we do not and will not manage our business to a 7% comp, we are encouraged by our level of execution and our results and we look forward to our busiest selling season; our fourth quarter. Our stores look great heading into this quarter. The morale across our organization and specifically in our stores is high and our AutoZoners are excited about the investments we have made in their stores and in them personally. We remain focused on our key priorities stated at the beginning of our fiscal year; one, relentlessly hiring, retaining and training our AutoZoners to make sure we are delivering on our stated corporate goal of providing the best in trustworthy advice. Second, continually refining our product assortment in order to meet all of our customer needs. Third, deploying inventory effectively across our network with specific emphasis on utilizing our hub and satellite network of stores. Fourth, commercial sales growth with a pay-as-you-go mentality albeit impatiently, improving our business with up and down the street, national accounts and public sector customers is our objective. We will continue to develop our sales team in order to make this happen. Lastly, we will work to expand the rollout of our blended store concept, our One Team initiative. We believe there can be real power in managing our stores as one cohesive unit. This will only strengthen our service levels to all customers. As we remain on track with all of these initiatives we promise to continue our focus on innovation and improving every aspect of our business. We remain focused on steady, profitable sales and earnings improvement. We had a very good quarter which is again worthy of congratulating our entire organization for their commitment of living the pledge. However, we will not rest on our past performance. Our approach remains consistent. We are focused on going the extra mile in 2010 and we remain very well positioned to do just that. Now we would like to open up the call for questions.

(Operator Instructions) The first question comes from the line of Analyst for Gary Balter – Credit Suisse. Analyst for Gary Balter – Credit Suisse: With the sector going through this top line resurgence we have heard pent up demand. You mentioned tax refunds and some secular factors. We are still trying to gauge how sustainable these sales gains are. Do you see anything your mix even within your buckets that tells you this may be more permanent and I guess broadly in general how sustainable do you think this momentum is?

I mentioned in my closing comments we are not going to manage our business to a 7% comp. It is not our expectation that it will run at that rate. The beauty of this business is we don’t have to be able to forecast what the sales are going to be in the upcoming quarter. We can manage our business week to week certainly and in a lot of cases day to day. We don’t spent a tremendous amount of time trying to see what the future is going to be. What we want to do is optimize the environment we are in. We believe we have had some industry tailwinds now for 18 months or so. We have probably had some industry headwinds for a long period of time. I will just point you back to the 15th consecutive quarter of double-digit EPS growth. I believe we have the right strategy regardless of what happens in the macro environment. We don’t have a crystal ball to see what is going to happen either. Analyst for Gary Balter – Credit Suisse: Within your buckets, failure that presumably gets replaced immediately but I guess maintenance could be a little bit more put off. Are you seeing anything that is changing in there just to say more of this maintenance now is getting fulfilled and right now we see that continuing?

What we have actually experienced is maintenance really accelerated last year. So this quarter we actually talked about it being down slightly but that was really as result of the significant ramp we experienced this time last year. The only thing trend wise we have really seen is a little bit of resurgence in the discretionary categories. I think some of that had to do with coming into spring. There is pent up demand coming out of winter regardless of which year it is as people are cleaning their cars, enhancing and accessorizing their cars a little bit and we saw a little bit of a bump in discretionary this time. Analyst for Gary Balter – Credit Suisse: As we think through the expense line obviously you have done a great job in the quarters where comps have been a little bit lower controlling the expenses. How do we think about what is controllable and what is an underlying growth rate?

That is a great question and I will get Bill Giles to add on to it a little bit. What we are trying to do is make sure we manage our business effectively to whatever business environment we are in. I will point you back to last quarter where we had a 1% comp. We were able again to manage our expenses very well. This quarter we did see significant sales acceleration at the beginning of the quarter and we did some things like accelerating our hub store enhancements.

Just to add on to that, I think we are trying to be relatively clear on those initiatives where we have added some incremental investments and tried to help quantify those for you. We believe those are going to continue to drive our business for the long-term. The one thing I would drive you back to is the organizations incredible ability to respond to the sales environment in which we are operating in and being able to manage the expenses appropriately in order to continue to deliver strong earnings growth.

The next question comes from the line of Alan Rifkin – Bank of America. Alan Rifkin – Bank of America: Concerning the hub strategy, now that you are 75% the way through the program and now you have said you will complete the program by the end of the calendar year whereas I believe in the past it was the end of the fiscal year, obviously this is yielding tremendous results on the commercial side of your business. If we look at the hubs that were reinforced in the latter part of the program, collectively what are the same store sales for the stores supported by the 180 hubs? How are they doing relative to the ones you haven’t completed yet?

I think there is a myriad of factors. We really haven’t looked at it particularly that way. What we have looked at is how are the parts selling that we are adding to those hubs and how are those parts we are replenishing to the satellite stores selling. We have been, as we mentioned previously, very encouraged and the sales are exceeding our plans but we are a little hesitant to quantify it because there is so many other factors going on at the same time. What I will say and reiterate is the hubs we opened in 2008 continue to grow quite nicely. We are continually refining the model and refining the inventory assortment. We are encouraged we are getting a significant bump when we open them but we think there is still a long way to go to optimize them. Alan Rifkin – Bank of America: On the One Team concept you said you will be expanding this test in the fourth quarter. What are the associated expenses with that and are you at liberty to shed a little bit more color as to what exactly you are seeing on the revenue line that is a result of the implementation of this concept in the early stores?

I am hesitant to talk about the sales performance because it has literally been just a handful of stores. So, I am pretty cautious about doing that. There are two things I would like to add. Number one, the whole notion of One Team, we have specific packets we put in these test stores but the whole notion of One Team is beginning to go across the organization whether they have the assets required or not they are really working much more closely together and that has been beneficial. On the expense front we are not sure there will be significant expenses. There might be some CapEx expenses in providing more hardware on the parts counter for commercial sales organization but I don’t think you will ever hear us call that out as an expense drag or a CapEx major hit. We did, as I mentioned in the prepared remarks, we did develop a version of Z-net for commercial which is very exciting because it has been an old green screen platform. Therefore it has been very hard to get people who don’t work with it every day to fill in on vacations or when somebody has to go out and make a sales call or anything like that. So we are very excited about the commercial Z-net and its ability to help facilitate One Team as well. Alan Rifkin – Bank of America: You mentioned as part of the driver for the success in the commercial side was an increase in sales managers. What is your prognosis for the number of incremental sales managers that will be added over the next 12 months?

We really haven’t laid out specifically how we are going to do that. What we are doing, and I mentioned pay-as-you-go. That is our mentality. Put some in. Get them to the point they are productive and providing incremental EBIT and then take that incremental EBIT and invest it in the next group. We are now over 200 and we look to be significantly higher than that and we really frankly don’t even know how high is high at this point in time.

The next question comes from the line of John Lawrence – Morgan Keegan. John Lawrence – Morgan Keegan: Would you comment a little bit on the strength of commercial? When you break down that customer set between up and down the street customers and the chain accounts, can you sort of delve into that a little bit and talk about the strength in both subs?

The way we are really looking at it is we want to do things that benefit all of our customers. When we focus on the things that are important to the up and down the street customer they translate terrific to the national accounts customers as well. We have seen more growth in the up and down the street in recent quarters. Some of that has been because of some of the businesses we are not doing business with but we are having really nice results with a tremendous amount of our national account customers as well.

The next question comes from the line of Colin McGranahan – Bernstein. Colin McGranahan – Bernstein: My first question is on gross margin. Unless something changes dramatically in the fourth quarter it looks like you are on track for at least 10 consecutive years of gross margin expansion. You said and commented and I think you have said this before that you continue to see opportunities for gross margin. I am just wondering as the commercial business does accelerate here and obviously that provides a little bit of negative mix pressure, how much more gross margin opportunity do you think there is? If you can comment at all on the industry overall, your primary competitors have seen nice gross margin trends as well. Does this just continue from here?

I think we certainly have a positive outlook on gross margin as we look forward. We believe there are various attributes of gross margin that continue to have opportunity for us to expand. I think we have done a good job this quarter. We talked a little bit about the shift in mix. That is going to be somewhat timing within a quarter. At the same time we have got lower acquisition costs. I think our merchandising organization has done a very good job of continuing the work and reduce our acquisition costs. Some of that comes from direct sourcing as well and we always continue to have some opportunities on the supply chain. We feel terrific about the improvements and enhancements we have made to improving gross margin and at the same time we have experienced an acceleration in our commercial business. Going forward we continue to see opportunities on each of those fronts. Colin McGranahan – Bernstein: No change or any pressure from pricing that could offset that?

There is always things that can happen in the future but at the moment I think we have done a very good job between price optimization as well as lower acquisition costs as well as expanding our ability to increase our direct sourcing to reduce acquisition costs. Then also our supply chain organization has done a terrific job with managing their infrastructure. Colin McGranahan – Bernstein: A second question coming back to the One Team concept, can you provide any help in understanding how labor hours or labor productivity has changed or improved in the concept or in the test?

Really we haven’t focused on labor hours that much. We have basically focused on, if you take a typical store it may have two people in it at a point in time for DIY and two people working on commercial If you get a rush either in DIY or commercial and you are focused on leveraging those two folks you don’t have the resources you have when you manage the whole business. So we have really seen we haven’t significantly changed labor hours up or down but what we have seen is we have been better able to service customers on both sides of the business and that has benefited us on the sales [department]. Colin McGranahan – Bernstein: So it is really a sales per labor hour productivity enhancement?

It is. Will it give us opportunities in the future to look at leveraging payroll differently? Maybe. It also may give us an opportunity to add payroll and be more productive. So we really don’t know at this point.

The next question comes from the line of Tony Cristello – BB&T Capital. Tony Cristello – BB&T Capital: One of the questions I wanted to ask a little bit about are the hub conversions obviously are working and you are seeing the results. Is it also related to, because it sounded like in some of your commentary you talked about the ability to force product back into the hub and carry fresher product or product that will turn quicker at the local store. How much of that has been reset throughout your network today? If you think about 76% of the hubs have been converted, maybe is it because of the maturation of that is it maybe 50% of your stores are getting that benefit or that lift right now?

You are talking about the benefit of lower inventory because of removing the slow inventory? Tony Cristello – BB&T Capital: Removing the slow moving inventory and then also having probably a better assortment of parts to sell at the store level.

First I would say we are so focused right now on making sure we have the right parts coverage in our stores that we have been pretty cautious on removing that slow moving inventory in the satellite stores. Candidly we will remain pretty cautious on it. We will do it methodically over time because the last thing we want to do is start saying no to customers in the marketplace. As you can tell from our overall inventory results we were down 2% on a per store basis. That is a significant contributor to that decrease and there is probably more upside to that over the long-term but at the same time, as you mentioned, we are going back in and putting in newer, late model coverage to make sure we can fulfill the needs of primarily the commercial business but one thing we keep learning is every time we put inventory in that is newer and fresher the DIY business uses it as well. Tony Cristello – BB&T Capital: One thing I wanted to also ask about is when you look at the spending related to the conversion of the hubs is it fair for us to assume with the success of commercial as a result as well as you pointed out DIY there will remain some embedded level of spend to help drive further commercial growth down the road or could that level of spend even perhaps be accelerated somewhat?

I think it is fair to say there will be some embedded expense in there. Some of the commercial [picks] continue to improve the commercial business overall particularly as we are talking about converting some of the hubs there is an element of some of those expenses that are ongoing in order to operate it. Obviously we believe as we continue to and as Bill talks about all the time on the pay-as-you-go mentality we continue to get the appropriate returns for the investment we are making and on a long-term basis expect to leverage those expenses. Tony Cristello – BB&T Capital: Do you think the level of success you have seen to date is better than you would have anticipated at this point?

I would say I was quite pleased with 15.5% growth in commercial business in Q3. Like I said with the 7% I wouldn’t straight line that. If we come down slightly I am not worried about it. I am very satisfied with the strategies we have put in place and really commend both the operating team on improving the service levels of the stores and also the sales teams which remember is only three years old. While we will continue to add numbers to that sales team the maturation of that sales force is still very early and candidly I am very pleased with how they are progressing.

The next question comes from the line of Matthew Fassler – Goldman Sachs. Matthew Fassler – Goldman Sachs: First of all, you talked about having gained market share this quarter. Given the acceleration in your sales and the similar acceleration we saw across the sector how did your share increases this quarter compare to the share increases you saw in recent quarters?

What we have stated is we continue to have share increases in DIY and commercial. I think they might have been slightly lower this quarter than they have been in the last few quarters. We started annualizing some very significant gains last year. Matthew Fassler – Goldman Sachs: A couple of people have speculated about a perspective change in seasonality to the business to the extent that the fourth quarter has kind of been a [pump] quarter for the last couple of years for whatever reason. Perhaps consumers are focused on other things and they are buying closer to need with the first calendar quarter that is, the spring quarter accelerating to a greater degree than we have previously seen. Do you think there is any relevance or truth to that assertion?

I do. I don’t have empirical evidence to say it. We have looked at a lot of different factors. The one that we called out was we believe there was a benefit from tax refunds. If you think about a very challenged macro environment and particularly some of the customers we deal with who were hit the hardest by it, them getting a refund check is like a monetary stimulus to them and I think that helps bring it in. Also I think there is some factor coming out of winter there is more demand pent up and people are doing that when the weather breaks. Matthew Fassler – Goldman Sachs: Finally, in our store checks and online checks we have noticed a little bit of price creep in some of the commodity driven front-end items, really across the sector. No one more than anyone else and items that would be typically I think be considered inelastic as most of your store really is. Can you talk to us about what you are seeing in pricing and what you think price points in commodities in particular might be contributing to some of the acceleration we are seeing across the space?

I wouldn’t say we have seen a significant change in commodity price points over the last 12 months. Before that there was a very significant change. Just talk about oil for instance. We used to sell it for $1.99 a quart. It is now on the shelf at $4.29 but there is also continuing good promotions certainly by us. We are selling a 5+ quart jug and an oil filter at a very attractive price. All in, I don’t think there has been a significant increase in commodity pricing that is driving any of the sales performance.

The next question comes from the line of Kate McShane – Citi Investment Research. Kate McShane – Citi Investment Research: You had mentioned you were seeing strong execution from your competition and I wonder if anything changed in the competitive environment during the quarter in terms of discounts, promotion or advertising from your competitors that was different from the quarter before?

No. I wouldn’t call out anything material by any stretch of the imagination. Our competitors have always been strong. We have a great deal of respect for them and what they are able to do. Our objective is to do it better. That is what we are going to continue to be focused on. Kate McShane – Citi Investment Research: How much of your growth do you think in [DIFM] is a result of the dealership conversions? Do you have a sense of how many more quarters you are going to possibly benefit from this?

I wouldn’t attribute our performance in the commercial business to many significant external factors. I think the external factors certainly come into play more in the DIY business because we have a more mature business. But in commercial I think our destination is generally solely up to us. We are so new in this business that I really wouldn’t put it to dealerships. If you look at the acceleration from just last quarter we were at 8.5% and we went to 15.5%, clearly dealership closings didn’t happen at that rate during the quarter.

The next question comes from the line of Dan Wewer – Raymond James. Dan Wewer – Raymond James: Last year you noted that you were going to reduce the return on investment hurdle for new stores from 15% down to 14%. I presume that was healthy unit growth in the state of Florida. In hindsight looking at the performance of your new stores, looking at the 200 basis point increase in overall return on capital, have you in fact seen the returns in your newer stores drop as you were speculating a year ago?

It is still fairly early because those stores are still relatively immature. But I believe that strategy was helpful for us and it allowed us to penetrate faster into markets we were under-penetrated in. Overall, our returns continue to perform well. I think some of the strategic decisions that we made on those stores individually have turned out very well and the returns have remained very healthy. Dan Wewer – Raymond James: So when you look at both the capital costs of opening the stores and the initial profit run during the first year have they not changed from what you were seeing in other markets?

They have all opened strong. So they have opened a little bit better. Our new store productivity overall has been a little bit stronger than it has been historically. So I would say we have been very pleased with that. Dan Wewer – Raymond James: You noted on your commercial sales effort the first initiative is to increase share with your existing customers and second add new customers. When you look at the 15% revenue growth in commercial, a bit acceleration from the previous quarter, can you give us a sense as to how those two priorities are playing out? Are you in fact seeing the faster growth with your existing customers?

I would say it is pretty much across the board. I would say both of them, our penetration and the new customers, generally grew at about the same rate proportionately to when they were growing at 8.5. So nothing material there.

The next question comes from the line of William Truelove – UBS. William Truelove – UBS: Getting back to commercial a little bit talking about how you set your own kind of results, could you talk about the inventory or out-of-stock issues with the hub stores that have been converted versus the hub stores that haven’t been converted? How much of the sales gain is just having the parts versus other kind of factors?

I think a big part of it is having the parts. We have expanded the coverage significantly in those new model rollouts and so we are able to say yes quite a bit more frequently than we were before. I also think there is a halo effect. When you continue to say yes to special order needs or special order requests from customers regardless of whether they are commercial or DIY, you build more confidence with them and the next time they have something be it a special item or a regular item they are more likely to call you. We have seen a little bit of a rising tide [on all boats]. William Truelove – UBS: Is there any way to compare that? Or some additional details between where that is now in converted hub stores versus where it was in terms of that? Or could you say a majority of the 15% is from that?

The majority of the 15% of the commercial growth? I wouldn’t say that at all. I would attribute it more to our operating execution and our sales force development and maturation than I would to the hub stores. Don’t forget the hub stores are benefiting significantly on the DIY side. In fact, more of the benefit as a percentage of the total comes from DIY because we have 85% of our business in DIY.

The next question comes from the line of Chris Horvers – JP Morgan. Chris Horvers – JP Morgan: First on the discretionary sales mix. Can you talk a little bit more in detail on the category beneath that? I am curious to see if this is products like car wax that is driving that or is it something where you consider it deferred maintenance items that eventually the consumers put it off and they have to do it? I don’t know, something like car mats. Any detail there would be great.

I would say it is more on the personalization and performance related areas. I would like to call out our merchandising team. I think that group in particular has focused very hard on finding ways to fulfill customer needs and they have changed their product mix as a result of the economic situation that exists today. So things like car mats and radios and all towing and travel, all those kinds of items are where we have seen some of the pickup. Chris Horvers – JP Morgan: So basically the consumer ends up with some more money in their pockets and that confronts better merchandising and that drove the improvement?

Again, I don’t want to over-state that. We said it went up to 20% of the mix but we also said that generally happens this time of the year. I think there is…spring is coming and I want to get my car looking good again. Chris Horvers – JP Morgan: Overall on a monthly basis could you talk about how your sales mix peaks here in the next month or two? Is May the biggest month of the year or June?

Our business comes out strong starting around Valentine’s Day. It really comes on pretty hard and it has ups and downs over the next 6 months but remains pretty strong throughout the summertime. Chris Horvers – JP Morgan: On the gross margin, it seems like there is a step up in tone there. Previously you had talked about gross margin continuing to look good but maybe not at the same pace as what you saw in that quarter. What is driving that? Is that acceptance of the private label brands on the commercial side? Is it sourcing efforts? What exactly is driving that step up?

I think we have talked before about it being as much of mix in products. I think that is a lot of the offering and the work the merchandise organization has done I think there has been a piece of that in lower acquisition costs which I think is our merchant’s ability to source product in a more effective basis in order to help lower costs. I think we have also experienced some improvements in our supply chain organization and their ability to continue to squeeze costs out of their organization and leverage it. We run a very healthy gross margin. We have generated some slight improvements over the quarters and we continue to remain positive.

At this time I will turn the call back over to Bill Rhodes.

Thank you. Before we conclude the call I would like to take a moment to reiterate our business model remains very solid. Our customers continue to tell us we are improving on our efforts to meet or exceed their needs. Market share data confirms their opinion. We have a solid and consistent plan and a great team. I want to stress this is a marathon and not a sprint. Our focus is on our critical success factors. As we continue to focus on the basics and never, ever take our eye off of optimizing long-term shareholder value we are confident AutoZone will continue to be incredibly successful. With this Memorial Day extended weekend upcoming I hope we all take time to remember those heroes who died servicing our country. Thank you very much for participating in today’s call.

Thank you. This does conclude today’s conference. We thank you for your participation. At this time you may disconnect your lines.