AutoZone Named as Defendant in Several Asbestos Suits ----------------------------------------------------- Published December 06, 2002 AutoZone Inc. (NYSE:AZO), the largest US automotive parts retailer, said it has been named as a defendant in asbestos lawsuits involving the sale of brake parts. The Memphis, Tennessee Csaid it was named as a defendant along with numerous others in an "insignificant" number of lawsuits. The retailer said it has never manufactured nor installed brake products and does not believe it has material liability in the cases. The Company, which sells vehicle parts, chemicals and accessories through more than 3,000 stores, said it will vigorously defend each case. COMPANY PROFILE AutoZone Inc. (NYSE:AZO) 123 S. Front St. Memphis, TN 38103 Phone: 901-495-6500 Fax: 901-495-8300 http://www.autozone.com Employees : 44,179 Revenue : $ 5,325,500,000 Net Income : $ 428,100,000 Assets : $ 3,477,800,000 Liabilities : $ 2,788,600,000 ( As of December 31, 2001) Description: AutoZone is the US's #1 auto parts chain. (It also operates about 40 stores in Mexico.) AutoZone stores sell hard parts (alternators, engines, batteries), maintenance items (oil, antifreeze), accessories (car stereos, floor mats), and other merchandise under brand names as well as under private labels, including Duralast and Valucraft. More than two-thirds of AutoZone's stores serve professional auto repair shops. Director Edward Lampert owns more than 26% of the company. Firms Reveal Findings on Asbestos to Avoid Suits ------------------------------------------------ Advance Auto Parts Inc. stated in its quarterly 10-Q report that its Western Auto subsidiary, "with other defendants including automobile manufacturers, automotive parts manufacturers and other retailers," had been named in a number of asbestos lawsuits. A week later, AutoZone Inc. issued a press release saying that it, too, had been named in asbestos lawsuits. Since it doesn't manufacture or install brakes, AutoZone said it "does not believe it has material liability in these cases, and will vigorously defend each case." Four hours after the AutoZone release, Pep Boys Inc. issued a statement acknowledging that it was involved in such litigation, but that the lawsuits weren't "material to the company's financial position or results of operations." Some disclosures are simply to reassure investors that the company has nothing to disclose. After another faucet company revealed it faced asbestos lawsuits, Masco Corp. of Taylor, Mich., hustled out a release Nov. 19 saying it didn't face any asbestos litigation. Another firm, Swedish-based Hoganas AB, said it had no asbestos claims confronting it. Furthermore, the metal-powder manufacturer said, "Hoganas' production facilities inside and outside Sweden are not and have not been engaged in any kind of operation involving asbestos." If there's nothing there, why even bring it up? Hoganas said it was responding to "queries received recently concerning asbestos-related claims for damages." All the denials sometimes do little good, at least in the short term. On the day AutoZone denied liability in asbestos lawsuits, its stock closed down $2.98, off 3.6 percent. Pep Boys' shares dropped 66 cents, down 5.7 percent. Advance Auto Parts, which started the spate of auto-part disclosures, fell 58 cents, down 1.2 percent, on Nov. 19, even though its shares had climbed 50 cents a week earlier when it filed its quarterly report. "Some courts have interpreted that to mean that 'Well, if you say something or you don't say something and the stock price changes, clearly a reasonable investor would have wanted to know that ahead of time,' " said Mr. Sokobin, the SEC economist. Mr. Steinberg, the former SEC attorney who is now a law professor at Southern Methodist University, said a lot of the additional disclosures won't be important to investors. However, it's important that investors have the maximum amount of information to make investment decisions, with everyone on a level playing field, he said.