CSK Auto Corporation Reports Fiscal 2000
Financial Results
PHOENIX, March 22 CSK Auto Corporation , the
parent company of CSK Auto, Inc., a leading specialty retailer in the
automotive aftermarket, today reported its financial results for the fiscal
year ended February 4, 2001. The Company highlighted the following:
* Net sales increased approximately 18% to $1.45 billion;
* Comparable store sales increased 2%;
* Earnings per share, as adjusted for non-recurring items, were $1.26;
* Store development activity for the year consisted of 37 new store
openings, 14 store relocations, 23 store acquisitions, 9 store
expansions and 28 store closures. Year end store count totaled
1,152 units; and
* The Company exited the automotive service business, as previously
announced.
Fiscal 2000
The Company acquired 86 former Big Wheel/Rossi ("BWR") stores on
June 30, 1999, and 192 Al's and Grand Auto Supply ("AGA") stores on
October 1, 1999. As a result, the operating results for fiscal 1999 include
the results of these acquired stores for 30 weeks and 17 weeks, respectively,
while fiscal 2000 includes their operating results for the entire period.
Additionally, fiscal 2000 was a 53-week period whereas fiscal 1999 was a
52-week period.
Net sales increased 18% to $1.45 billion for fiscal 2000 from
$1.23 billion for fiscal 1999, primarily reflecting an increase in the number
of stores operated as of February 4, 2001. Comparable store sales increased
2% in fiscal 2000. Commercial sales increased 15% to $249.3 million in fiscal
2000, from $217.7 million in fiscal 1999.
Excluding certain non-recurring charges discussed below, operating profit
was $116.1 million for fiscal 2000, as compared to $119.6 million for fiscal
1999. The decline in operating profit primarily reflects a $2.9 million
increase in goodwill amortization and a lower gross profit margin rate.
Inclusive of all charges, operating profit was $67.5 million for the fiscal
year, as compared to $86.8 million for fiscal 1999. During fiscal 2000, the
Company incurred the following non-recurring items:
1) $30.4 million of acquisition-related expenses for the transition of
acquired stores to the CSK format, store closing costs associated with
the closure of CSK stores that overlap with better situated acquired
stores and the operating losses of acquired automotive service centers
that have been closed;
2) $8.8 million relating to the settlement of the previously disclosed
class action lawsuits relating to overtime pay that was being sought by
a class of former and current California store managers and senior
assistant store managers;
3) non-cash charges of $3.2 million to fully write off the Company's
investment in the PartsAmerica.com joint venture in which the Company
participates; and
4) $5.7 million of non-cash charges associated with the liquidation of
certain acquired inventory that the Company was not able to return to
vendors at full carrying value.
Interest expense for fiscal 2000 increased to $62.4 million from
$41.3 million for the comparable period of fiscal 1999, primarily due to the
increased debt levels, higher variable interest rates and a 53rd week of
expense accrual during fiscal 2000.
Net income for fiscal 2000, excluding all of the non-recurring items
discussed above that affected operating profit, was $35.0 million, or
$1.26 per diluted common share, as compared to $48.3 million, or $1.69 per
diluted common share, excluding non-recurring charges, for fiscal 1999.
Inclusive of all non-recurring charges, net income for fiscal 2000 totaled
$5.0 million, or $0.18 per diluted share, compared to net income of
$27.4 million, or $0.96 per diluted common share, for fiscal 1999.
"Despite a very challenging economic environment, the Company generated
$1.26 per share of pro forma earnings, year-over-year net sales increases of
18% and comparable store sales increases of 2% during fiscal 2000," said
Maynard Jenkins, Chairman and Chief Executive Officer of CSK Auto Corporation.
"The sometimes painful process of integrating acquired stores into our
operations is behind us and a final settlement of the class action lawsuits
was achieved. Our focus in fiscal 2001 will be directed towards the reduction
of debt and the improvement of our inventory turnover. We are optimistic
about the future of the automotive aftermarket, in general, and of CSK Auto,
in particular, based on our position as an industry leader in the Western
United States. We believe that fiscal 2001 will be a better year for our
company, our employees and our shareholders."
Quarter Ended February 4, 2001
The fiscal year ended February 4, 2001 consisted of 53 weeks.
Consequently, the fiscal quarter ended February 4, 2001 ("fourth quarter of
fiscal 2000") consisted of 14 weeks, whereas the fourth quarter of fiscal 1999
consisted of 13 weeks. Net sales for the fourth quarter of fiscal 2000
increased approximately 7% to $352.1 million from $328.4 million in the fourth
quarter of fiscal 1999. Comparable store sales increased 2% in the fourth
quarter of fiscal 2000.
Excluding certain non-recurring charges discussed below, operating profit
was $22.9 million for the fourth quarter of fiscal 2000, as compared to
$32.9 million for the fourth quarter of fiscal 1999. Inclusive of all
charges, operating profit was $6.4 million for the fourth quarter of fiscal
2000 as compared to $4.3 million for the fourth quarter of fiscal 1999.
During fourth quarter of fiscal 2000, the Company incurred the following
non-recurring items:
1) $8.8 million relating to the settlement of the class action lawsuits;
2) $5.7 million of non-cash charges associated with the liquidation of
certain acquired inventory that the Company was not able to return to
vendors at full carrying value; and
3) non-cash charges of $1.3 million to complete the write off of the
Company's investment in the PartsAmerica.com joint venture in which the
Company participates.
Interest expense for the fourth quarter of fiscal 2000 was $17.1 million
as compared to $14.3 million for the fourth quarter of fiscal 1999, primarily
due to increased debt levels, higher variable interest rates and a 14th week
of expense accrual during the fiscal 2000 quarter. In connection with the
amendment of the senior credit facility in December 2000, the interest rates
applicable to the facility increased approximately 100 basis points which,
when coupled with a higher outstanding revolver balance, caused interest
expense to increase by approximately $1.4 million for the fiscal 2000 fourth
quarter. In addition, the interest expense on all outstanding debt that was
accrued as a result of the 14th week in the quarter was approximately
$1.1 million.
Excluding the above-described non-recurring charges, net income for the
fourth quarter of fiscal 2000 was $4.6 million, or $0.17 per diluted common
share. This compares to net income of $11.5 million, or $0.41 per diluted
common share, for the fourth quarter of fiscal 1999. Including the one-time
charges, net loss for the fourth quarter of fiscal 2000 was $5.1 million, or
($0.18) per diluted common share, compared to a net loss of $6.1 million, or
($0.22) per diluted common share, for the fiscal 1999 fourth quarter.
During the fourth quarter of fiscal 2000, the Company opened 9 new stores,
relocated 2 stores, expanded 3 stores, and closed 4 stores in addition to
those closed due to relocation.
CSK Auto Corporation is the parent of CSK Auto, Inc., a specialty retailer
in the automotive aftermarket. As of February 4, 2001, the Company operated
1,152 stores in 19 states under the brand names Checker Auto Parts, Schuck's
Auto Supply and Kragen Auto Parts.
Certain statements contained in this release are forward-looking
statements. They discuss, among other things, expected growth, future store
development and relocation strategy, business strategies, future revenues and
future performance. The forward-looking statements are subject to risks,
uncertainties and assumptions, including, but not limited to, competitive
pressures, demand for the Company's products, the state of the economy,
inflation, consumer debt levels and the weather. Actual results may differ
materially from anticipated results described in these forward-looking
statements.
Conference Call and Outlook For 2001
In conjunction with this release, the Company will hold a quarterly
conference call for the investing public, in which management also will
discuss the Company's outlook for 2001. Interested parties may hear a replay
of the conference call from 7:30 p.m. (ET) Thursday March 22, 2001 through
7:30 p.m. (ET) Friday March 23, 2001 by dialing (800) 615-3210 and using
access code 5059569. Additionally, a simultaneous webcast of the conference
call will be available commencing at 5:00 p.m. (ET) on March 22, 2001 at
http://www.cskauto.com by pointing one's browser and clicking on "Company" and
then "Conference Calls".
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share data)
(As adjusted)
Fiscal Year Ended(1) Fiscal Year Ended(1)
February 4, January 30, February 4, January 30,
2001 2000 2001 (2) 2000 (3)
Net sales $1,452,109 $1,231,455 $1,444,499 $1,231,455
Cost of sales 769,043 636,239 756,118 636,239
Gross profit 683,066 595,216 688,381 595,216
Other costs and expenses:
Operating and
administrative 568,873 471,340 565,173 471,340
Store closing costs 6,060 4,900 2,333 2,344
Legal settlement 8,800 -- -- --
Transition
and integration
expenses (4) 23,818 30,187 -- --
Equity in loss
of joint venture 3,168 -- -- --
Goodwill amortization 4,799 1,941 4,799 1,941
Operating profit 67,548 86,848 116,076 119,591
Interest expense, net 62,355 41,300 62,355 41,300
Income before income
taxes and cumulative
effect of change in
accounting principle 5,193 45,548 53,721 78,291
Income tax expense 193 17,436 18,718 29,970
Income before
cumulative effect
of change in
accounting principle 5,000 28,112 35,003 48,321
Cumulative effect of
change in accounting
principle, net of
$468 of income taxes (5) -- (741) -- --
Net income $5,000 $27,371 $35,003 $48,321
Basic earnings (loss) per share:
Income before cumulative
effect of change in
accounting principle $.18 $1.01 $1.26 $1.74
Cumulative effect of
change in accounting
principle, net
of income taxes -- (0.03) -- --
Net income $.18 $0.98 $1.26 $1.74
Shares used in
computing per
share amounts 27,839,348 27,815,160 27,839,348 27,815,160
Diluted earnings (loss) per share:
Income before
cumulative effect
of change in
accounting principle $.18 $0.98 $1.26 $1.69
Cumulative effect of
change in accounting
principle, net
of income taxes -- (0.02) -- --
Net income $.18 $0.96 $1.26 $1.69
Shares used in computing
per share amounts 27,839,348 28,626,776 27,839,348 28,626,776
(1) The fiscal year ended February 4, 2001 included 53 weeks, while the
fiscal year ended January 30, 2000 included 52 weeks.
(2) The "As adjusted" column excludes: (i) $7.6 million of sales made by
acquired automotive service centers that the Company has closed;
(ii) $7.2 million of cost of sales associated with the excluded sales;
(iii) $ 3.3 million of operating expenses of the automotive service
centers that the Company has closed; (iv) $3.7 million of store
closing costs incurred with respect to CSK stores that overlap with
acquired stores; (v) $8.8 million relating to the settlement of the
class action lawsuit; (vi) $0.4 million of bad debt expense associated
with the bankruptcy of a commercial customer; (vii) a $3.2 million
non-cash charge relating to the write off of the Company's joint
venture investment; and (viii) $5.7 million of non-cash charges
associated with the liquidation of certain acquired inventory that the
Company was not able to return to vendors at full carrying value.
(3) The "As adjusted" column excludes $2.6 million of store closing costs
that were incurred due to overlap of certain CSK stores with more
favorably sized or situated stores acquired from Al's and Grand Auto
Supply.
(4) Reflects costs incurred to replace store systems, re-merchandise
stores, and train employees and conduct other activities associated
with the integration of acquired stores into the Company's operations.
(5) Reflects the cumulative effect of a change in the method of accounting
for store pre-opening costs.
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share data)
(As adjusted)
Quarter Ended (1) Quarter Ended (1)
February 4, January 30, February 4, January 30,
2001 2000 2001 (2) 2000 (3)
Net sales $352,055 $328,411 $351,963 $328,411
Cost of sales 188,684 166,449 182,766 166,449
Gross profit 163,371 161,962 169,197 161,962
Other costs and expenses:
Operating and
administrative 145,680 126,920 145,048 126,920
Store closing costs 48 3,455 48 899
Legal settlement 8,800 -- -- --
Transition and
integration expenses(4) -- 26,017 -- --
Equity in loss
of joint venture 1,264 -- -- --
Goodwill amortization 1,179 1,222 1,179 1,222
Operating profit 6,400 4,348 22,922 32,921
Interest expense, net 17,077 14,284 17,077 14,284
Income (loss)
before income taxes (10,677) (9,936) 5,845 18,637
Income tax
expense (benefit) (5,605) (3,825) 1,227 7,175
Net income (loss) $(5,072) $(6,111) $4,618 $11,462
Basic earnings (loss) per share:
Net income (loss) $(.18) $(0.22) $.17 $0.41
Shares used in
computing per
share amounts 27,840,691 27,834,377 27,840,691 27,834,377
Diluted earnings (loss) per share:
Net income (loss) $(.18) $(0.22) $.17 $0.41
Shares used in
computing per
share amounts 27,840,691 28,210,486 27,840,691 28,210,486
(1) The quarter ended February 4, 2001 included 14 weeks, while the
quarter period ended January 30, 2000 included 13 weeks.
(2) The "As adjusted" column excludes: (i) $.09 million of sales made by
acquired automotive service centers that the Company has closed;
(ii) $0.2 million of cost of sales associated with the excluded sales;
(iii) $0.2 million of operating expenses of the automotive service
centers that the Company has closed; (iv) $8.8 million relating to the
settlement of the class action lawsuit; (v) $0.4 million of bad debt
expense associated with the bankruptcy of a commercial customer; (vi)
a $1.3 million non-cash charge relating to the write off of the
Company's joint venture investment; and (vii) $5.7 million of non-cash
charges associated with the liquidation of certain acquired inventory
that the Company was not able to return to vendors at full carrying
value.
(3) The "As adjusted" column excludes: (i) $2.6 million of store closing
costs that were incurred due to overlap of certain CSK stores with
more favorably sized or situated stores acquired from Al's and Grand
Auto Supply; and (ii) $26.0 million of transition and integration
expenses associated with the Company's acquisitions.
(4) Reflects costs incurred to replace store systems, re-merchandise
stores, and train employees and conduct other activities associated
with the integration of acquired stores into the Company's operations.
