Brian Campbell William C. Rhodes - Chairman, Chief Executive Officer and President William T. Giles - Chief Financial Officer, Executive Vice President - Finance, Information Technology & Alldata and Treasurer

Kate McShane - Citigroup Inc, Research Division Matthew J. Fassler - Goldman Sachs Group Inc., Research Division Daniel R. Wewer - Raymond James & Associates, Inc., Research Division Simeon Gutman - Crédit Suisse AG, Research Division Gregory S. Melich - ISI Group Inc., Research Division Aram Rubinson - Nomura Securities Co. Ltd., Research Division Christopher Horvers - JP Morgan Chase & Co, Research Division Michael Lasser - UBS Investment Bank, Research Division

Good morning, and welcome to the AutoZone conference call. [Operator Instructions] Please be advised, today's call is being recorded. If you have any objections, please disconnect at this time. This conference call will discuss AutoZone's second 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 a.m. Central Time, 11 a.m. 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 presentation 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 25, 2012, and these risk factors should be read carefully.

Mr. Rhodes, you may now begin. William C. Rhodes: Good morning, and thank you for joining us today for AutoZone's 2013 Second Quarter Conference Call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer of IT and ALLDATA; and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax. Regarding the second quarter, I hope you've had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, is available on our website, www.autozoneinc.com. Please click on Quarterly Earnings Conference Calls to see them. To begin this morning, I want to thank all AutoZoners across the globe for another very solid quarter, in spite of a great deal of volatility across the 12 weeks. We continue to execute on our strategies to improve the customer shopping experience, the initiative we call Great People Providing Great Service! We also grew our Commercial program count, sales and profitability. We expanded 10 additional hub locations during the quarter to take our total remodeled hubs to 77 locations. These remodels entail adding additional inventory into the market that benefits both our Retail and Commercial sales. Additionally, we accelerated our efforts to further leverage the Internet with the closing of our purchase of Autozone AutoAnything in December. We are very excited about having this wonderful business and team join our organization, and we believe their expertise in online retailing will help us grow this category. We believe combining their knowledge and the expertise with the AutoZone E-Commerce team, will create material sales growth in this sector in the future. While we felt we made advances during the quarter, sales have remained inconsistent and below our desires and expectations. On the last call, we noted that the last couple of weeks of the first quarter showed improving sales trends in our Midwest and Northeast markets. However, we remained cautious on our outlook. We understood we were facing our most challenging same-store sales comparison for the fiscal year during the second quarter. Basically, this quarter felt very similar to last quarter on a sales basis through the first 10 weeks. Our same-store sales results through 10 weeks were basically flat. However, historically, we have experienced significant sequential week-to-week growth in sales during the last 2 weeks of our second quarter. This year, we saw some modest growth, but not to the level we had historically experienced, and during those 2 weeks, our total domestic same-store sales were down 8%. We believe the sharp fall off in sales for those 2 weeks were attributable, in large part, to the delay in income tax refunds being processed by the IRS. According to Nick Colas, Chief Market Strategist at the ConvergEx Group, the delay in the IRS accepting returns for processing until January 30 compared to January 15 last year missed $30 billion less in refunds to individuals through February 9th as compared to last year. From all indications, we expect the same amount of dollars will be refunded this year as last, and we expect our sales to respond as more refund dollars are distributed into the economy. Unfortunately for us, our fiscal quarter finishes at an odd time in early February. Historically, we have benefited from a ramp in sales due to income tax refunds, and that ramp typically carries through to the usual increases from the spring selling season. This year, that was not the case. Aside from the severely challenged last 2 weeks, our Northeast and Midwest markets, on a 2-year same-store basis, did show some improvement. However, they were still negative and approximately 500 basis points worse than the Western and Southern store markets. Before the last week of January, sales were sequentially improving in these markets. Maintenance categories, especially brake-related categories, continued to be our worst-performing categories. The merchandise that we sell under the banner of maintenance-related remains our biggest opportunity for improvement. This category experienced high single-digit percentage growth in 2009, '10 and most of 2011. But starting in 2012, this category slowed markedly. At approximately 40% of our merchandise mix on the Retail front, it has been the primary reason our sales have slowed over the last 12 months. Excluding the impact from the late tax returns, although we were not pleased by our same-store sales performance, we were encouraged to see our business stabilize and begin to show some signs of improvement. As we look forward to the back half of our fiscal 2013, we're enthusiastic about the progress we're making on many of our initiatives. We've increased the availability of inventory throughout our hub network and satellite stores, we further expanded our Commercial program openings, and we continue to grow our Mexico ALLDATA E-Commerce and Brazil businesses. We are encouraged by our learnings and feel we can have improving sales trends for the remainder of the year. Our belief is, as stated on the last quarter's call, this past Q2 would be a low point, and we could see growth again in the back half of the year. The most recent quarter's results marked our 26th consecutive quarter of double-digit earnings per share growth. We are very pleased with our ability to consistently deliver strong EPS growth through our financial model of steady, mid-single digit EBIT dollar growth or better, along with high single-digit reductions in diluted share count through our share repurchases. Our goal, quarter-over-quarter, continues to be to provide consistency to our shareholders, our AutoZoners, and of course, our customers. We feel this targeted consistency in both financial performance as well as execution of our key initiatives results in stability and confidence for our shareholders, AutoZoners and customers. Next, I'd like to discuss our sales results for this past quarter in more detail. Our sales were up 2.8% and our same-store sales were down 1.8%. This quarter, same-store sales results compare to last year's second quarter comps of 5.9%. Our same-store sales results are a combination of both our Retail and Commercial businesses. I should point out, our total Commercial sales were up 9% over the last year's second quarter, driven by a combination of existing programs and the addition of 321 net new programs over the trailing 12 months. Commercial was negatively impacted by having Christmas and New Year's Day shift to Tuesday from Sunday last year. On average, Sunday is a substantially lower Commercial selling day than Tuesday. We estimate, excluding this shift, Commercial sales would have been up approximately 10%. Our overall sales performance for the quarter was softer than we'd hoped. But aside from the last 2 weeks, it was not entirely unexpected. Our sales patterns for Commercial track basically in line with Retail sales trends. For the first 10 weeks, the correlation was tied to the regional performance differences between the Northeast and Midwest and the rest of the country. The last 2 weeks were correlated to, we believe, income tax refund delays. On last quarter's conference call, we spent time discussing how we felt the differences in sales results experienced between the Northeast and Midwest were primarily a weather phenomenon. The substantial differences of sales by region, similar to the last 2 quarters, continued for us during the second quarter. The 3 regions of the Northeast, Midwest and Plains states continued to track materially below the remainder of the country for the quarter. In fact, the 5 percentage points difference in same-store sales between the remaining 7 regions and the 3 affected areas, was basically present through the first 10 weeks of the quarter. It was in the last 2 weeks where the whole country's results weakened. As we have stated previously, we will know for sure about weather's impact this spring. As our business regionally weakened starting in April of 2012, we feel our comparisons are most favorable starting at that time. This morning, we want to call out some key accomplishments this past quarter. We completed 10 additional hub projects this quarter, taking our hub resets life-to-date to 77. We continue to be quite pleased with the sales benefits from these reset hubs, as we have increased the size and/or improved the location, allowing us to expand the number of SKUs offered on a same-day basis in the market. These SKUs have benefited both Retail and Commercial customers. Due to our hub strategy and more specifically, what the additional hub space offers, we were able to place additional hard parts inventory into the local markets, allowing us to better meet the ever-increasing needs of our customers. I know many of you have read how inventory per store has increased within our industry over the last few years and not in a small way. This is due to the proliferation of unique makes and models constantly being rolled out each year. Our listeners should expect us to talk about proper inventory placement for years to come. We believe our evolving hub strategy better positions us to address this need. Regarding Mexico, we opened 9 stores this quarter and finished with 334 stores. Sales in our other businesses achieved very solid sales results. Our ALLDATA and E-Commerce businesses, which includes autozone.com and autoanything.com, continue to perform well, increasing 43.1% over last year. They are great opportunities for E-Commerce sales growth on both a business-to-business basis and through individual customers or B2C. While both businesses are relatively small for us, we are experimenting to understand where the most potential exists. At this point, we still view our traditional autozone.com DIY E-Commerce business as a complement to our walk-in business, but we wanted the best website possible for our customers to research their vehicle needs. We continue to spend our resources on this design element. I also want to officially recognize and welcome AutoAnything's wonderful team to AutoZone, as we closed on our acquisition at the end of calendar 2012. Thus far, I can unequivocally say, the management and philosophical fit could not be better. I am very excited about what we can do together going forward. For the second quarter, AutoAnything had 2 months of results in our consolidated financials. With the continued aging of the car population and suddenly improving miles driven, we continue to feel positive trends exist for our industry. We continue to remain bullish on our industry sales growth opportunities on both Retail and Commercial over the long term. As the vehicle population remains at an all-time high and consumers continue to look for good values while maintaining their vehicles, we see AutoZone's opportunity to sell to these customers only growing. Now let me review our highlights regarding execution of our operating theme for 2013: 1 TEAM Delivering WOW! The key priorities for the year are Great People Providing Great Service!, profitably growing our Commercial business, leveraging the Internet, hub store improvements and leveraging technology to improve the customer experience while optimizing efficiency. On the Retail front this past quarter, under the Great People Providing Great Service! theme, we continued with our intense focus on improving execution. We also invested in technology to enhance information available at the point of sale as well as tools to better optimize our execution. In regards to Commercial, we opened 56 programs during the quarter. Year-to-date, we've opened 93 versus 166 through the second quarter last year. We rolled the majority of these additional programs after January 1. We do not expect to open quite as many programs as last year, which was the most we have opened in a single year in recent history. However, we're on track to open approximately 300 programs for the year, which is consistent with our annual plan. We continue to see Commercial as a material sales driver -- growth driver for us for many years to come. Our results continue to provide us confidence to be aggressive in adding additional resources and new programs to this important growth initiative. I'll take a moment now to talk more specifically about our second quarter performance in more detail. Our domestic same-store sales declined 1.8% for the quarter. As noted earlier, our second quarter which ended March 9, did experience some variability in month-to-month sales results. More importantly, the impact on our regional basis continued. This separation in results began in April for us and continued through this quarter. As we've said previously, the category of sales we define as maintenance have the most challenging comparison on the quarter. With approximately 40% of our sales in this classification, sales of this category were soft, particularly in the subset of geographic regions previously discussed. As we experienced more normal winter patterns in these parts of the country this past winter, we continue to feel there is upside opportunity as we move into the spring and summer months. This regional difference in results carried through to our Commercial business as well. Our small market share and current growth trajectory from our newer programs continues to give us confidence in our future buildout potential. We will continue to invest to grow our Commercial business and penetrate a larger percentage of our existing store base. As I've said earlier, ALLDATA and E-Commerce, which now includes AutoAnything, had another fine quarter, up 43% in sales from this time last year. AutoAnything's inclusion in this bucket drove the majority of this growth. This portion of our business, while small as a percentage of our overall sales mix, continues to experience faster sales growth than the auto parts stores. We should also highlight another strong performance in return on invested capital as we were able to finish the quarter at 32.4%. We strive to improve on this metric over time as it reflects our efforts to efficiently use the capital we deploy. It's important to reinforce that we will always maintain our diligence regarding capital stewardship as the capital we invest is our investors' capital. Before I pass the discussion over to Bill Giles to talk about our financial results, I'd like to state how proud we are of our entire organization's efforts to manage the business appropriately the past few quarters. I'm very proud of our team for their commitment to great service and for their commitment to success. As we look forward, we will continue to aggressively manage our cost structure while simultaneously executing our initiatives to drive productive sales growth. Now here's Bill. William T. Giles: Good morning, everyone. To start this morning, let me take a few moments to talk more specifically about our Retail, Commercial and International results for the quarter. For the quarter, total auto parts sales, which includes our domestic Retail and Commercial businesses, our Mexico stores and 1 store in Brazil, increased 1.9% on top of last year's second quarter's growth of 8.6%. Regarding macro trends during the quarter, nationally, unleaded gas prices started out at $3.43 a gallon and ended the quarter at $3.61 a gallon, an $0.18 increase. Last year, gas prices increased similarly by $0.15 per gallon during the second quarter, starting at $3.37 and ending at $3.52 a gallon. We continue to believe gas prices have a real impact on our customers' abilities to maintain their vehicles, and we will continue to monitor prices closely in the future. We also recognize that the impact of miles driven on cars over 10 years old, the current average, is much different than on newer cars in terms of wear and tear. Miles driven were up in both October and November, 0.4% in October and up 0.8% in November. December showed miles driven were down 2.8%. For 2012, miles driven were up slightly, plus 0.3% from last year. The other statistic we highlighted, the number of 7-year-old and older vehicles on the road, which continues to trend in our industry's favor. Another key macro issue facing our customers today is the reinstitution of payroll taxes back to historic norms. This reduction in our customers' take-home pay just began at the beginning of the new calendar year, and at this point, combined with the delay in income tax refunds, it is hard to objectively quantify the ramifications of this change. For the trailing 4 quarters, total sales for auto parts store was $1,715,000. This statistic continues to set the pace for the rest of the industry. Total Commercial sales increased 8.8% for the second quarter and represented 15.6% of our total sales, growing $23 million over last year's Q2. Last year's Commercial sales mix percent was 14.8%. As we have said previously, overall, we have been very pleased with the progress we're making in our Commercial business, both operationally and financially, and we remain on track with our plans. We believe there are ample opportunities for us to continue to improve many facets of our operations and offerings, and therefore, we are optimistic about the future of this business. We continue to believe we can grow revenues in existing stores, and we will continue to open additional Commercial programs. This past quarter, we opened 56 new programs versus 92 programs opened in our second quarter of last fiscal year. We now have our Commercial program in 3,146 stores supported by 152 hub stores. Approximately 800 of our programs are 3 years old or younger, with only 66% of our domestic stores having the Commercial program and our average revenue per program materially below several of our competitors, we believe there's ample opportunity for additional program growth, in addition to improved productivity opportunities in current programs. While we recognize that our Commercial sales productivity per program is well below our peers, we do not believe there are any structural impediments that prevent us from achieving similar productivity numbers. In regard to our future, we're focused on building upon the Commercial initiatives that we have in place for the last few years. We continue to watch our sales force mature, we're also enhancing training and introducing additional technology to optimize the productivity of our sales force. We have increased our efforts around analyzing customer purchasing trends and in-stock trends. We feel our product distribution model is scalable going forward, and we're continuing to test additional enhancements to our offerings. In summary, we remain committed to our long-term growth strategy. We have accelerated the growth of our Commercial programs, again, having opened over 800 programs over the last 36 months, effectively 26% of the programs are 3 years old or younger. We believe we are well positioned to grow this business and capture market share. The regional variances in our Commercial sales results give us comfort. Our underperforming markets are not solely the direct cause of something we have specifically done. We believe we can scale this business in a profitable manner and we continue to be excited about our opportunities in this business for many years to come. Our Mexico stores continued to perform well. We opened 9 new stores during the second quarter, we currently have 334 stores in Mexico. We remain resolute on the strategy to open stores at a steady pace, while managing our Mexico business for the long run. We've operated stores in Mexico now for over 14 years, and we continue to see great opportunity for growth going forward. Our returns and profit growth have been in line with our expectations. Regarding Brazil, our first store is up and running and we look forward to opening another here in the third quarter. We are currently in various stages of development on future stores. Our plans are to open 10 to 15 stores over the next couple of years, and then, slow additional development as we refine our offerings and prove that our concept works for our customers and financially. Then, we will determine our long-term growth plans. Recapping our second quarter performance for the company in total, our sales for the quarter were $1,855,000,000, an increase of 2.8% from last year's second quarter. Domestic same-store sales or sales for stores opened more than 1 year, were down, 1.8% for the quarter. Gross margin for the quarter was 51.9% of the sales, up 51 basis points compared to last year's second quarter. The improvements in gross margin were attributable to higher margins on merchandise growth. The increased merchandise margins were primarily due to lower acquisition costs. In regards to inflation, we have seen some increases in cost year-over-year but at a much slower pace than last year at this time. At this point, our assumption is we'll experience subdued producer pricing heading into calendar year, therefore, we feel cost will be predictable and manageable. We will remain cognizant of future developments regarding the inflation, and we'll make the appropriate adjustments should they arise. Looking forward, we continue to believe there remains opportunity for gross margin expansion within both the Retail and Commercial business. However, we do not manage to a targeted gross profit margin percentage. As the growth of our Commercial business has been the steady headwind on our overall gross margin rate for a few years, we have to continuously work strategies to offset this. Additionally, AutoAnything had a slight drag on our gross margin this past quarter. AutoAnything runs at a lower gross margin than our base business, and we expect that it will be a slightly larger drag once they're in our numbers for a full reporting period. Our primary focus remains growing absolute gross profit dollars in our total auto parts segment which, for the quarter, increased approximately $30 million. SG&A for the quarter was 34.7% of sales, higher by 6 basis points from last year's second quarter. Operating expenses, as a percentage of sales, increased slightly due to the lower sales growth rates, partially offset by lower incentive compensation expense. As we entered the second quarter, we were mindful of the current sales environment and due to this cautious nature, we aggressively managed our cost during the quarter. I want to take a moment to thank our entire team for their incredible diligence on cost control which, ultimately, was a significant contributor to our performance in Q2. We continue to believe we're well-positioned to manage our cost structure for the foreseeable future. Earnings before interest and taxes for the quarter was $318 million, up 5.6% over last year's second quarter. Our EBIT margin improved to 17.1% or up 45 basis points versus the previous year's second quarter. Interest expense for the quarter was $41.3 million compared with $38.9 million in Q2 a year ago. Debt outstanding at the end of the quarter was $3,998,000,000 or approximately $530 million more than last year's second quarter balance of $3,464,000,000. Our adjusted debt level metric finished the quarter at 2.6x EBITDAR, while in any given quarter, we may increase or decrease our leverage metric based on management's opinion regarding debt and equity market conditions, we remain committed to both our investment-grade rating and our capital allocation strategy, and share repurchases are an important element of that strategy. For the quarter, our tax rate was approximately 36.2%, flat with last year's second quarter of 36.2%. We expect our full year rate to be approximately 37%. Net income for the quarter of $176 million was up 5.6% versus the prior year's second quarter. Our diluted share count of 36.9 million was down 8.3% from last year's second quarter. The combination of these factors drove earnings per share for the quarter to $4.78, up 15.1% over the prior year's second quarter. Relating to the cash flow statement for the second fiscal quarter of 2013, we generated $193 million of operating cash flow. Net fixed assets were up 8% versus last year. Capital expenditures for the quarter totaled $89 million and reflected the additional expenditures required to open 41 new stores this quarter, capital expenditures on existing stores, hub store remodels, and work on development of new stores for upcoming quarters. For all of fiscal 2013, our CapEx is expected to be approximately $400 million. With new stores opened, we finished this past quarter with 4,735 stores in 49 states, the District of Columbia and Puerto Rico; 334 stores in Mexico; and 1 in Brazil for a total store count of 5,070. We also had a cash outflow during the second quarter of $115 million due to the AutoAnything acquisition. Depreciation totaled $52.3 million for the quarter versus last year's second quarter expense of $47.5 million. With our excess cash flow, we repurchased $185 million of AutoZone stock in the second quarter. At the end of the quarter, we had $603 million remaining under our share buyback authorization. Our leverage metric was slightly above 2.5x EBITDAR this past quarter. We ran higher than usual this past quarter due to our completed acquisition for AutoAnything. We have traditionally remained right at 2.5x. Again, I want to stress, we manage to appropriate credit ratings and not any one metric. The metric we report is meant as a guide only, as each trading firm has its own criteria. We continue to view our share repurchase program as an attractive capital deployment strategy. Accounts payable, as a percent of gross inventory, finished the quarter at 110%. Next, I'd like to update you on our inventory levels in total and on a per-store basis. We reported an inventory balance of $2.8 billion, up 7% versus the Q2 ending balance last year. Increased inventory reflects new store growth along with additional investments and coverage for select categories. Inventory per store was up 2.6%, reflecting our continued investments in hard parts coverage. Finally, as Bill previously mentioned, our continued disciplined capital management approach resulted in return on invested capital for the trailing 4 quarters of 32.4%. We have and will continue to make investments that we believe will generate returns that significantly exceed our cost of capital. As the last point, I'd like to point out that this year, fiscal year 2013, has an extra week in it. More specifically, the extra week will fall during the fourth quarter. Already our longest quarter in terms of number of weeks, this year's fourth quarter will have an extra week, taking us to 17 total weeks in Q4. As a result, our year will end this year on August 31. The last time we had an extra week in our financials was fiscal 2008, and we would encourage each of you to review the impact this extra week had on our performance in Q4 2008 to better understand the impact this extra week will have on our fourth quarter and fiscal 2013 results. Now I'll turn it back to Bill Rhodes. William C. Rhodes: Thanks, Bill. We are pleased to report our 26th consecutive quarter of double-digit earnings per share growth and reported EPS growth rate of 15% for our fiscal second quarter. Clearly, our sales performance has not met our expectations as we had experienced softer sales over the past few quarters. In large part, we believe it has primarily been attributable to macro factors. Now regarding current sales trends, we report our earnings 2.5 weeks after the end of our quarter. Historically, we've had a practice of not discussing our results for the current quarter because it is such a short timeframe. It just isn't prudent to try to assess our trajectory off of such a short period of time. We did attribute our performance in the last 2 weeks to the 2-week delay in tax refunds. The reason we called out that 2-week periods performance was because it was such a significant change. Recently, we have begun to see some of those refunds show up in our performance. But from the information we have, tax refunds are still significantly below the prior year. As an organization, we don't want to be victims of a challenging macro environment, nor do we want to be reliant on strong macro trends to drive our success. We must continue to modify our game plan in order to succeed in good and not-so-good selling environments. We've historically been able to do that, and we're built to do that going forward. Our organization is well adept at quickly altering our activities to appropriately respond to the current sales environment. While doing so, we have also -- we also have a strong commitment to continue to deliver WOW! Customer Service and drive sales. We believe the initiatives we have outlined are accomplishing that objective and our customer surveys reinforce that belief. Keep in mind that roughly half of our product sales are failure-related. What's great about that statistic is, in good times and bad, we will sell those items. We cannot insist customers to proactively replace those parts. Last year's mild winter, we believe, contributed to less failures and lower levels of maintenance. As we begin to experience the effects from a more normalized winter this year, we expect trends to improve. Again, we're excited about our initiatives around inventory assortment, hub stores, Commercial growth, Mexico, ALLDATA, E-Commerce and Brazil. Our charge remains to optimize our performance regardless of market conditions and continue to ensure we are investing in the key initiatives that will drive our long-term performance. In the end, delivering strong EPS growth and ROIC each and every quarter is how we measure ourselves. Despite this quarter's sales weakness, we are quite pleased with our earnings per share growth and our return on invested capital for Q2. Our long-term model is to grow new store square footage in a low single-digit growth rate and we expect to continue growing our Commercial business at an accelerated rate. Therefore, we look to routinely grow EBIT dollars in the mid-single digit range, or better, in times of strength. And we leverage our very strong and highly predictable cash flow to repurchase shares, enhancing our earnings per share growth into double digits. This model had been quite successful for an extended period of time. Finally, I want to, again, thank our entire organization for their dedication to our customers, fellow AutoZoners, stockholders and communities. Our approach remains consistent. We're focused on succeeding in the third quarter of 2013, and we are excited about the next 2 quarters' opportunities. Thank you for your time. Now we'd like to open up the call for questions.

[Operator Instructions] Our first question today is from Kate McShane with Citi Research. Kate McShane - Citigroup Inc, Research Division: My question is on the Commercial business. I think you had said during prepared comments that you expect 300 new programs for 2013, is that correct? William C. Rhodes: That's correct. Kate McShane - Citigroup Inc, Research Division: Okay. Which sounds in line with what you did in 2012, so I was just wondering, with your investment -- your emphasis on investment in Commercial in the hub system and the sales force, why we can't see an acceleration in the program growth this year? William C. Rhodes: Yes, actually, it's going to be down this year, but that's consistent with our plan. Last year, we opened 400 programs, this year, we're saying we're opening roughly 300 programs. We want to make sure that we -- the most important part of opening a Commercial program is to make sure that we have the right resources in place and particularly, the right people resources. One of the things we learned last year when we opened 400 programs, it was a strain to make sure that we had the right people in place to start those programs. This year, we decided to back off a little bit, but opening 300 programs is still a pretty aggressive growth trajectory. We just want to make sure that we can do it right. We're in this for the long term, and we think 300 program growth, which is over roughly 10%, is pretty aggressive. Kate McShane - Citigroup Inc, Research Division: Okay. And can you comment, at all, on any changes that may be different in the competitive environment in Commercial this year versus last year? William C. Rhodes: Yes. I don't think that there's any significant competitive changes in the Commercial environment. I think everybody's out there fighting in a pretty tough environment, particularly in the Northeast and the Midwest. What we hear from our customers on the Commercial side is, car counts are down. It's a tough business right now and so everybody's out there, we're out there trying to give our best to make sure we provide them great service.

Our next question is from Matthew Fassler with Goldman Sachs. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: A couple of questions. First of all, obviously, lots of other retailers from Walmart to many restaurants and others have discussed tax refunds. But this is not the first time, I guess, in the history of your business that we've seen tax refunds fluctuate in the environment. So is there anything that you see about ticket or the kind of transaction that you're witnessing that would suggest to you that beyond the environmental influences, that this is actually the culprit for the recent drop off? William C. Rhodes: Yes. Matt, first of all, as you know, I've been in this business for 18 years. I've never seen this, what we experienced in those last 2 weeks. Now we've always known that we had this huge ramp, typically, in the last 2 weeks of our quarters. So we've always been, frankly, pretty darn nervous. Always saying, "What happens if that ramp doesn't mature at some point in time?" Well, guess what? We found out this year, and it hurt us. Fortunately, we had very effectively managed our business before that point in time, and we still delivered pretty reasonable results considering the sales environment. Yes, in the last 2 weeks, we saw material degradation in the ticket because people are not doing the kind of jobs that they typically do when they get that flow of money, which is their tax refunds. That's the only reason we've ever been able to appoint for the reason our sales spiked so much in those last 2 weeks, and so I think we found out this year. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: Understood. And then, a second question, if you look at your Commercial sales per store from peak to trough, you probably have seen a bit of a bigger dip in growth rates than you have in DIY? And as you think about the maturation of your roll out, you think about the fact that the incremental stores you're opening might be in regions we've already achieved some initial penetration. What's your up-to-date thinking on the white space that you have and the ability to continue to comp in Commercial, say, once weather normalizes as a factor in your business? William C. Rhodes: Yes. I'd first of all say, we opened the most productive programs first. So as we get deeper in the cycle, those store -- programs, they're in the markets that don't have the same kind of potential as the ones we did in the first part. Now we still think they have great potential and we still have 2.5% market share, so we think that white space is amazing as we look out. Look, we -- our performance in Commercial has been disappointing. We've gone from growing 20% to growing roughly 9% this quarter, 10% when you adjust for those days. But what we've seen is, we're continuing to grow pretty significant market share in Commercial. We think we have a long-term plan to grow it, and we're going to be able to do just fine. Matthew J. Fassler - Goldman Sachs Group Inc., Research Division: And just lastly, I have to clean up. You obviously have the regional differences. If you could just update us, if you look at cold-weather markets versus the rest of the country, whether the Commercial DIY relationship is different in those 2 groups of markets. William C. Rhodes: Yes, it is not different. The numbers are different because as you highlighted, the growth trajectory at Commercial has been different. But directionally, the trends are very, very similar.

Our next question is from Dan Wewer with Raymond James. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: Bill, you had noted that your productivity per program is 40%, 50% lower than some of your competitors, but there's not any inherent reason for it to run at that big of a discount. When we talked with some of the technicians and asked them, why do you choose AutoZone or why do you choose some of your competitors? The one pushback that we hear on AutoZone is the quality of the parts that are available and delivery times. Certainly, AutoZone has not had made the same investment in distribution as some of your competitors have with the exception of the hub stores. So when you think about closing that productivity gap, is it going to require a significant capital investment on the part of AutoZone? William C. Rhodes: Yes. At this point in time, we think our strategy is fantastic. The biggest thing that we're working on is the continued evolution of these hub stores. Yes, in-local market availability is critical to our success, frankly, in Commercial and Retail. And so what we're trying to do is leverage our hub stores so that we can have the best in-local market availability in the industry. And we think when we do that, we'll be fine. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: Okay. And then, just as a follow-up question, your comments about the weakness in brakes and rotors and the other 3 cold-weather markets is consistent with your competitors. But can you draw a link between what happened with warmer weather last February and March to why brake replacement rates would be dropping so quickly in that region of the country? I mean, after all, the changes in gasoline prices are about the same in the North as they are on your sunbelt markets. Miles driven is not significantly different in the North than in the Sunbelt markets. You would think that the failure rate or the replacement needs for brakes would be almost identical? William C. Rhodes: Yes. Intuitively, I would have thought that as well, Dan, and I have never seen this kind of an issue in the past. But as we've gotten out and talked to our AutoZoners, who were talking to their customers and talked particularly to our Commercial shops, what we're hearing is the road conditions had a big part of that last year, that the lack of salt and brine and the things that they do to deal with high levels of snow put less wear and tear on those brake components. The fewer holes and the potholes on road, the less wear and tear in chassis components and the like. And it's been remarkable how significant those -- how significantly poorer those categories have performed just in the Midwest and the Northeast. And so at this point in time, that's our best thinking. And as we've said before, we're going to know in April. Frankly, if we kind of get to April and they're not improving, we were wrong and we've got to figure out what it's going to take to grow in the future. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: Are you working on a contingency plan now if sales still don't come back in April? William C. Rhodes: No. As you talked about, everybody's saying the same thing. So I don't think we're standing on this island by ourselves.

We'll move on to the next question, Gary Balter with Crédit Suisse. Simeon Gutman - Crédit Suisse AG, Research Division: It's Simeon for Gary. You mentioned inflation in the prepared remarks, I think you said some cost increases for next year at a slower rate. In the past, we've also talked about innovation driving the ticket and granted that the recent trends are obscured by weather. But can you talk about where we are in that cycle? Is there more innovation coming through product so that when we see the maintenance repair or some of the deferred maintenance pick back up, you could get a bigger inflation or innovation lift? William T. Giles: Yes, I think that's a good way to think about it, Simeon. I mean, we have not seen a lot of inflation and our expectation is that we will not see inflation, certainly, from a commodity-based product standpoint. But from an innovation standpoint, we continue to see that. As the newer cars continue to work their way through from an aging perspective, we continue to see some -- I'd hate to call it inflation, but inflation in the pricing from an innovation standpoint. So our expectation is that -- and it's very consistent with our model over time, is that traffic has been down consistently over time in this industry for a very long period of time, and we continue to see either commodity book price inflation, which we're not seeing a lot of now or product innovation inflation which we continue to see. But our expectation is that will continue in the future. Simeon Gutman - Crédit Suisse AG, Research Division: Okay. And then, following on to the question that was asked about infrastructure, I think Bill Rhodes mentioned that the speed to market and the end-market availability is important. And I think the speed-to-market that AutoZone delivers is pretty good, but what about the selection? Does the hub model give you the ability to go as deep as you want or as you can in terms of product selection? William C. Rhodes: Yes, Simeon, and we spend a lot of times looking at that. And if you look at the sales trends of the SKUs, the percentage of sales that we get in the high velocity SKUs versus the tail SKUs, it's remarkable how quickly that tail goes down, how slow the slower-moving products turn. But we have to have those slow-moving products because we need them to be able to build a relationship with our customers. So we believe the thing that we need to do is continue to build out our hub stores. As I've said in our prepared remarks, we now have 77 hub stores that we've expanded the size of so we can significantly increase the assortment. And as we continue to build those larger expansions, we go deeper and deeper so that we can find where that sweet spot is. Simeon Gutman - Crédit Suisse AG, Research Division: And are you able to track -- if you don't have a product because it's either not carried, is that a number that you track? And is that number -- is it small number or trending down? William C. Rhodes: Yes, absolutely, we can track it. And as we continue to improve these hub stores, yes, it goes down in those hub stores. Our hub penetration continues to grow and frankly, meet -- exceed our expectations.

Our next question is from Greg Melich with ISI Group. Gregory S. Melich - ISI Group Inc., Research Division: I have a housekeeping question and a bigger picture follow-up. The AutoAnything acquisition, how much does that add in terms of sales in the quarter? Or help us back out how much that ALLDATA and E-Com line was, excluding the acquisition? William T. Giles: Yes, I think AutoAnything was probably sub-$20 million for the quarter, overall, in sales. And from an earnings perspective, it was negligible impact overall. Gregory S. Melich - ISI Group Inc., Research Division: Okay. So if I just -- just backing out a little, if I put in $15 million, that ALLDATA and E-Commerce line, back that out, maybe 5% or 10% growth? Is that about right? William T. Giles: Yes, it would be probably in the neighborhood. Gregory S. Melich - ISI Group Inc., Research Division: Okay. And then second, maybe a little bigger picture is, I think in the release and Bill, on your prepared comments, you talked about getting back to a more normalized volume. What would you consider normalized volume? William C. Rhodes: That's a great question, Greg. Obviously, over the last 4 years, our industry had seen significant strength and you've certainly seen it in our same-store sales performance over the last 3 years before the last 12 months. I think there were clear industry tailwinds during that period of time that benefited all of us. I think right now we've got some pretty significant industry headwinds. So my personal point of view is that it's probably somewhere in between. Gregory S. Melich - ISI Group Inc., Research Division: So if we were to say normalized volume was slightly positive still, 1% or 2%, would you -- [indiscernible] up on that, some normal inflation? William C. Rhodes: Yes. I think the normalized volume is definitely positive. And I think on the DIY business, the components of that may be that customer count continues to be pressured, but is offset by the structural increases in average ticket due to the technological advancements in parts and the innovation that Bill Giles was talking about a few minutes ago. Gregory S. Melich - ISI Group Inc., Research Division: Great. And Bill, maybe on the inflation, a follow-up.... William C. Rhodes: Greg, I can't hardly hear you, I don't know if you can speak up. Gregory S. Melich - ISI Group Inc., Research Division: I'm sorry, just a follow-up on Simeon's question on inflation. Just as a reminder, what was it a year ago? Right now it's basically flattish, was it a couple percent a year ago? William T. Giles: Yes, I'd say it's probably just a couple of percent a year ago, maybe a little bit less than that. And I think the year before that, it was much higher.

Our next question is from Aram Rubinson with Nomura. Aram Rubinson - Nomura Securities Co. Ltd., Research Division: A question just around the types of vehicles that you're seeing. Is there a way to look at the business by class of vehicle, or SUVs versus sedans or age of vehicle? Just trying to get a sense on the shifting vehicle population effect on the business. And then, I had a follow-up. William C. Rhodes: Yes. We don't look at it that specific on those things -- the thing we do look out the most is the age of the vehicles, but we don't see any material shift as you've seen from AAIA's numbers, that the average age of vehicles continues to eke up a little bit, I think it went from 10.6 to 10.8. So I don't think there's any material changes in the mix of products we're selling. Aram Rubinson - Nomura Securities Co. Ltd., Research Division: Okay. And then, as a follow-up, I had once thought that ALLDATA could be kind of a useful tool in getting into the Commercial business, which you've kind of got your network kind of installed in the garages already. Can you talk about how you either decided to use that or not use that, and whether or not it's been effective, or maybe it wasn't quite as I -- as it laid out? William T. Giles: That's a good question. I mean, we think that ALLDATA is a stand-alone business and it's been very effective for us. They've got a very high market share from a repair and diagnostic standpoint, and they continue to add additional products, whether it be shop manager -- market, et cetera. So they've done a great job and continuing to penetrate it. We continue to seek opportunities to be able to bridge some of the synergies that exist between ALLDATA and our overall Commercial business. They're not probably as problem as you would think intuitively because they're very different businesses and they're providing different things to the shops, very different sales force, very different skill set from the sales force perspective. So I would say that there are some synergies, probably, not as high as you're thinking.

Our next question is from Chris Horvers with JPMC. Christopher Horvers - JP Morgan Chase & Co, Research Division: I did want to just follow up a bit on the past 2.5 weeks, the commentary that you said, Bill. It looks like tax refunds have flattened out here in the past couple of weeks. So should we interpret that these weeks look a lot more like the first 10 weeks of the quarter you just reported? Or how should we think about that? William C. Rhodes: Yes, I'm going to go back to what I've said in the prepared remarks. I don't want to -- we called out those specific 2 weeks because they were in the quarter and they were vastly different than our other experiences, and we felt like we had a good handle on what drove it. But this time of year, there is such volatility in our business because the weather patterns change day-to-day and week-to-week. What we see is that the overall tax refunds are still substantially behind last year, and we don't necessarily know what the trajectory of how people are going to spend those tax refunds are. I don't want to get in -- any further into that 2.5-week period of time except to say, clearly, we're not running the negative 8 that we called out before, but they're still a lot variability in our sales at this point. Christopher Horvers - JP Morgan Chase & Co, Research Division: Fair enough. So is there a way to say -- or how are you thinking about what you get back from these deferred refunds? So is there a way to say, is it simple enough to say, hey, discretionary is x percentage of sales this time of year and that's what we could potentially forego? Or how do you think about it? William C. Rhodes: I think that we don't have a good way to think about it because we haven't experienced it before. We believe when market flows in the -- when money flows in economy, particularly, through our kind of customers, that they get caught up on a lot of their maintenance and repair work. And I see no reason that, that will happen again this year. But then, you do worry about the timing changes. Hopefully, that will benefit us even more. If we can get some nice breaks in the weather and people want to get out and work on their car, it might be to our benefit. We just don't know at this point. Christopher Horvers - JP Morgan Chase & Co, Research Division: That's a good segue, on the warm weather side, do you think that, that sequential increase into weeks 11 and 12 last year and likely, February and March's, is there -- have you done the analysis to say how much of that just warm weather pull-forward out of that April, May timeframe? William C. Rhodes: Yes. Clearly, the mix of business that we did last year in those weeks was very different. We were experiencing a lot of -- we talked last year about the fact that we -- a lot of the spring categories got pulled forward into that period of time. But the overall trajectory of the business in weeks 11 and 12 was very consistent with the last 5 or 6 years that we'd had. Now the mix, we might have been selling batteries, while this last year, we were selling brake pads. But overall, we have always seen that significant lift and it didn't happen this year. Christopher Horvers - JP Morgan Chase & Co, Research Division: And then finally, Bill Giles, maybe, could you talk about how you -- the long-term EPS double-digit growth algorithm. I guess, how long would you have to stay flat or negative for that algorithm not to hold true? William T. Giles: I think if you look back historically, I mean, the organization has done a very good job of managing our expense structure in line with our environment that we're performing in. And so I mean, this is a good example of our company and virtually every facet of the organization doing a really good job of assessing their expense structure needs and cutting back where they need to. And so if you look back even before our business took off in '09, we were successful in growing our EPS growth at a double-digit rate and a flat comp. And so obviously, we don't believe that flat comp is in our future. We believe the industry will remain healthy and that we will continue to gain market share. But we certainly believe that we can -- the model that Bill articulated in his prepared remarks is the model that we can operate into the future. And certainly, at a slightly positive comp, we can perform very well.

Our next question is from Michael Lasser with UBS. Michael Lasser - UBS Investment Bank, Research Division: Can you provide us with the mix of business between maintenance, failure, discretionary, for the Commercial side versus, I think, you've provided the overall? William T. Giles: Yes, we typically stick with the overall. In fact, I don't even have the Commercial numbers in front of me to give you a view of that. Although, that's going to be, probably, a little bit more weighted towards the failure than on the DIY side. But I don't have the -- we don't disclose those numbers exactly. Clearly, the discretionary side would be way down so that would change that. Michael Lasser - UBS Investment Bank, Research Division: When you look at the performance of sales to existing Commercial customers, how did that compare -- how has that compared over time? Has that basically tracked the overall performance of Commercial? Or has that been higher or lower? William T. Giles: I would say, it has basically tracked the overall performance in Commercial. I think that what we're seeing is that we're still gaining good traction out of our existing customers, and more importantly, our older programs continue to perform well. Obviously, we clearly have opportunities, based on this quarter's performance, to improve our overall performance. But existing customers continue to do well. Michael Lasser - UBS Investment Bank, Research Division: And then, the last question on that. Are you also seeing -- because you indicated that some of the newer programs haven't been as productive, are you seeing any increases in cannibalization rates as a result? William T. Giles: Yes. I think, over time, we will see some impact of cannibalization. That will probably affect the overall numbers, but the reality of it is, is that, as Bill said before, we've got a very small market share and we've got a lot of work to do in order to capture more and more market share. The one thing I would mention on the newer programs, I wouldn't so much say that the newer programs are less productive, it's that we have a higher percentage of newer programs in the mix. And as a result of that, from a math perspective, it winds up taking down your average weekly sales for the total 3,000 programs.

I would now like to turn the call over to Mr. Bill Rhodes for any closing comments. William C. Rhodes: Great. Before we conclude the call, I'd like to take a moment to reiterate that our business model continues to be solid. We're excited about our growth prospects for the year. We will not take anything for granted as we understand our customers have alternatives. Our culture remains our key point of differentiation from our competition, and we must not lose sight of the importance of basic store execution in order to remain very successful. We have a solid plan to succeed for the remainder of 2013. But I want to stress that this is a marathon and not a sprint. As we continue to focus on the basics and focus on optimizing long-term shareholder value, we are confident AutoZone will continue to be very successful. We thank you for participating in today's call.

Thank you. This does conclude today's conference. Thank you very much, for joining. You may disconnect at this time.