CSK Auto Corporation Reports Fiscal 1997 Financial Results
16 April 1998
CSK Auto Corporation Reports Fiscal 1997 Financial Results
PHOENIX, April 15 -- CSK Auto Corporation, , the
parent company of CSK Auto, Inc. today reported financial results for the
fiscal year ended February 1, 1998 ("fiscal 1997").
Net sales for fiscal 1997 totaled $845.8 million, an increase of 6.6% over
the $793.1 million of net sales reported for fiscal 1996. Comparable store
sales increased 4% during fiscal 1997. Fiscal 1997, which included
approximately eight weeks of operating results of 82 former Trak Auto stores,
was a 52 week year. Fiscal 1996 was a 53 week year.
Operating income totaled $45.5 million in fiscal 1997, an increase of
$48.9 million over the $3.4 million operating loss reported in fiscal 1996.
Operating income or loss for each of these two fiscal years includes certain
unusual or non-recurring charges as follows, (in millions):
Fiscal 1997 Fiscal 1996
Acquisition charge -
equity participation agreements $-- $20.2
Store closing costs -- 12.9
Transition and integration
expenses 3.4 --
Stock-based compensation 0.9 --
Total $4.3 $33.1
Excluding these charges, operating income would have been $49.8 million
for fiscal 1997 and $29.7 million for 1996. The $3.4 million of transition and
integration expenses are associated with the December 8, 1997 acquisition of
82 stores in the Los Angeles area from Trak Auto Corporation. The stock-based
compensation charge consists primarily of the excess of the fair market value
over the selling price of common stock sold to certain company executives in
December 1997. The fiscal 1996 charges are primarily associated with the
acquisition of 51% of the then outstanding equity of the Company by certain
affiliates of Investcorp, the international investment firm, and related
financing and recapitalization transactions (the "Recapitalization").
The Company reported a net loss of $0.8 million or ($0.04) per common
share for fiscal 1997, an improvement of $23.9 million over the net loss of
$24.7 million net loss or ($2.25) per common share reported for fiscal 1996.
In addition to the items already discussed that affected year-to-year
comparisons of operating income, the following items affected year-to-year
comparisons of net loss (in millions):
Fiscal 1997 Fiscal 1996
Interest expense $40.7 $20.7
Other acquisition and
financing expenses 1.0 12.5
Extraordinary loss, net of tax 3.0 --
Interest expense increased in fiscal 1997 as a result of the debt incurred
in connection with the Recapitalization. Other acquisition and financing
expenses consist principally of legal, accounting and consulting fees incurred
in connection with the Recapitalization. The extraordinary loss, net of tax,
reflects the write-off of the remaining unamortized deferred charges
associated with the establishment of the Company's senior credit facility.
These charges were written off when the facility was amended and restated in
December 1997.
On March 17, 1998, the Company completed an initial public offering of
approximately 8.6 million shares of common stock. The offering raised
approximately $159.1 million of proceeds, net of underwriting discounts and
offering expenses. These net proceeds were used to reduce debt. On a pro forma
basis, net income for fiscal 1997 would have been approximately $15.2 million,
or $0.53 per fully diluted common share, assuming that the initial public
offering and related retirement of indebtedness had occurred on the first day
of fiscal 1997 and adjusting for the non-recurring items listed above.
"The strong year to year improvement realized in net sales and operating
income is very encouraging to us as we look ahead to the future. We believe
that we are now poised for continued and profitable growth in the months and
years ahead," said Maynard Jenkins, chairman and chief executive officer of
CSK Auto Corporation. "We have successfully completed the integration of the
former Trak stores into our operations and are excited about the contribution
of these stores to our business."
CSK Auto Corporation is a specialty retailer in the automotive
aftermarket. Wholly owned subsidiary, CSK Auto, Inc., operated 718 stores in
12 Western states as of February 1, 1998.
The following table outlines financial results for CSK Auto Corporation:
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Pro forma
February 1, February 2, February 1,
1998 1997 1998
Net sales $845,815 $793,092 $845,815
Cost and expenses:
Cost of sales 468,171 463,374 468,171
Operating and administrative 326,198 298,004 326,198
Store closing costs 1,640 14,904 1,640
Transition and integration
expenses 3,407 -- --
Stock-based compensation 909 -- --
Acquisition charge - equity
Participation agreements -- 20,174 --
Total costs and expenses 800,325 796,456 796,009
Operating profit (loss) 45,490 (3,364) 49,806
Other Acquisition and
Financings fees 1,009 12,463 --
Interest expense 40,680 20,691 24,431
Income (loss) before income
taxes and
Extraordinary item 3,801 (36,518) 25,375
Income tax expense
(benefit) 1,557 (11,859) 10,200
Income (loss) before
extraordinary item 2,244 (24,659) 15,175
Extraordinary loss,
net of income taxes 3,015 -- --
Net income (loss) $ (771) $(24,659) $15,175
Basic earnings per share:
Income (loss) before
extraordinary item $ 0.13 $ (2.28) $0.55
Extraordinary loss,
net of income taxes $(0.17) $ -- $--
Net income (loss) $(0.04) $ (2.28) $0.55
Shares used in computation 17,400,214 10,818,913 27,738,388
Diluted earnings per share:
Income (loss) before
extraordinary item $0.12 $(2.25) 0.53
Extraordinary loss,
net of income taxes $(0.16) $-- $ --
Net income (loss) $(0.04) $(2.25) $0.53
Shares used in computation 18,011,666 10,975,128 28,434,650
SOURCE CSK Auto Corporation