Dear Customers, AutoZoners and Shareholders: “The definition of insanity is doing the same thing over and over, and expecting different results.”— Attributed to Benjamin Franklin In our emerging $670 million AZ Commercial business, sales to professional repair shops advanced a remarkable 27 percent. Taking advantage of the national reach, extensive inventories and efficient supply chain of our AutoZone stores,  AZ Commercial drove incremental sales, income and return on invested capital, with minimal added capital. Sales for ALLDATA  also hit a record level in fiscal 2003, as we provided over 50,000 professional technicians with the most comprehensive automotive diagnostic and repair software available. At AutoZone, we relentlessly establish all targets to focus on our customers, AutoZoners and shareholders.  We believe that we need to do things differently and innovatively every day to drive improved results. We are determined to test new ideas in every area of our business, in order to not only meet, but exceed the expectations of our most demanding critics…ourselves. In Mexico, we opened ten additional stores in fiscal 2003, bringing our total count to 49 AutoZone stores, primarily along the U.S. border. Each features our signature store format and attentive customer service. Fiscal 2003 proved to be another year of record performance for our company! The hard work, innovative spirit and uncompromising drive of AutoZoners set us apart, once again. Sales grew to a record $5.5 billion. Operating margins expanded from 14.5 percent to 16.8 percent. Net income rose 20.9 percent and earnings per share increased 33.5 percent to $5.34 per share.  Income growth combined with effec- tive asset management led to a record 23.4 percent after-tax return on invested capital. Operations generated just under $700 million in cash flow, enabling us to open 160 new U.S. AutoZone stores and to repurchase over 12 million shares of our stock, while maintaining robust coverage ratios and investment-grade credit ratings. For shareholders, our strong financial results translated to a 23.4 percent return on invested capital in fiscal 2003 and ranked us among the top-performing companies in our industry and among the top-performing retailers in the nation. We made significant strides in advancing our position in both the retail and commercial markets. Each of our three core businesses contributed to these results. In our U.S. Retail Business, we achieved a record $4.6 bil- lion in sales. Same store sales were unchanged following fiscal 2002’s incredibly strong 8 percent growth. We maintained the larger customer base established in the prior year, while we were able to increase our average transaction size. We now have 3,219 stores across 48 continental states. The number and age of cars on the road are increasing, as is the number of miles being driven. SUVs, vans and light trucks, which have dominated new car sales the past five years, are beginning to move out of warranty cycles and into repair cycles—becoming “our-kind-of-vehicles.” Almost half of all U.S. households are engaging in do-it-yourself automotive maintenance and repairs.* Embedded within each of these statistics are opportunities for us to bring in new customers and drive future growth. All and all, it was an outstanding year. Much was accomplished. But in many ways, fiscal 2003 was just another milestone in our long- term journey leveraging our strategic advantage. We have only begun to scratch the surface of the tremendously profitable growth potential in the vehicle solutions market. The opportunities ahead are as compelling as ever. Nearly $60 billion* of routine automotive maintenance goes unperformed each year. An estimated 25 million cars** are on the road with an activated check engine light. Our goal is to break this maintenance inertia. Capturing even a portion of the market’s latent demand has the potential to significantly increase our industry and market share. Automotive trends also bode well for continued growth. * AAIA 2003/2004 Factbook ** internal research 9