CSK Auto Corporation Reports Q2 Sales and Earnings
9 September 1998
CSK Auto Corporation Reports Record Sales and Earnings for its Fiscal 1998 Second Quarter
PHOENIX, Sept. 8 -- CSK Auto Corporation , the
parent company of CSK Auto, Inc., today reported record financial results
for the second quarter of fiscal 1998.
Net sales for the thirteen weeks ended August 2, 1998 totaled
$254.7 million, an increase of 16.9% over the $217.9 million of net sales
reported for the second quarter of fiscal 1997, and the highest quarterly net
sales in the Company's history, primarily reflecting an increase in the number
of stores operated. As a result of the acquisition of Trak Auto West in
December 1997 and new store openings during the fiscal year, the Company
operated 747 stores at quarter-end 1998 versus 591 stores at quarter-end last
year. Comparable store sales for the second quarter of fiscal 1998 were flat
compared to the prior year primarily due to unseasonably cooler temperatures
and rain in many of the Company's key markets early in the second quarter.
Operating profit increased to $22.2 million for the second quarter of
fiscal 1998 compared with operating profit of $12.1 million for the second
quarter of fiscal 1997, primarily as the result of continued improvement in
gross profit margins arising from the Company's ability to obtain generally
better pricing and more favorable terms and support from its vendors due to
the Company's improving operating results and financial condition.
Interest expense decreased to $7.4 million for the second quarter of
fiscal 1998 compared to $10.0 million for the 1997 second quarter, primarily
due to the reduction of debt by use of the net proceeds from the Company's
March 1998 initial public offering.
Net income, also a record for the Company, increased to $9.3 million, or
$0.33 per diluted common share, for the second quarter of fiscal 1998,
compared to $1.3 million, or $0.07 per diluted common share for the second
quarter of fiscal 1997.
"We are very pleased with our second quarter and first half financial
results," said Maynard Jenkins, Chairman and Chief Executive Officer of CSK
Auto Corporation. "With the return in July of more typical seasonal weather
patterns, especially in California and the Southwest, we experienced an
acceleration in comparable store sales. This trend has continued into the
third quarter. In addition, we continue to make progress in improving our
gross profit margins."
During the second quarter of fiscal 1998, the Company opened 17 new
stores, relocated 7 stores and expanded 2 additional stores.
For the twenty-six weeks ended August 2, 1998, net sales increased by
17.5% to $493.1 million compared to $419.6 million for the comparable period
of fiscal 1997. Operating profit, excluding one-time charges, totaled
$36.9 million for the twenty-six weeks ended August 2, 1998, compared to
$19.1 million for the comparable 1997 period. During the first quarter of
1998, the Company incurred a $3.1 million one-time expense associated with the
integration of the December 1997 Trak Auto West acquisition and a $3.6 million
non-recurring charge associated with the termination of a management agreement
as a result of the Company's initial public offering in March 1998. Including
these one-time charges, operating profit for the twenty-six weeks ended August
2, 1998 increased $11.1 million to $30.2 million.
Net income for the twenty-six weeks ended August 2, 1998, excluding the
above mentioned charges and an extraordinary item of $6.8 million, was
$12.8 million, or $0.45 per diluted common share, compared to a net loss of
$0.4 million, or $0.02 per diluted common share, for the comparable period of
fiscal 1997. Including the one-time charges, the Company reported net income
of $1.8 million, or $0.07 per diluted common share, for the twenty-six weeks
ended August 2, 1998. The $6.8 million extraordinary charge, net of tax, was
associated with premiums paid to noteholders and the write-off of debt-
issuance costs produced by the early retirement of debt as a result of the
Company's initial public offering.
During the twenty-six week period of fiscal 1998, the Company opened
33 new stores, expanded 2 stores, relocated 19 stores and closed 4 stores in
addition to those closed due to relocations.
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, which were used to reduce debt. Pro forma net income for
the twenty-six weeks ended August 2, 1998 was approximately $13.5 million, or
$0.47 per diluted common share, assuming that the initial public offering and
related retirement of indebtedness had occurred on the first day of fiscal
1998 and adjusting for the non-recurring items listed above.
CSK Auto Corporation is the parent company of its wholly-owned subsidiary,
CSK Auto, Inc., which is a specialty retailer in the automotive aftermarket
operating 747 stores in 12 Western states as of August 2, 1998.
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.
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)
Thirteen Weeks Ended
August 2, August 3,
1998 1997
Net sales $254,701 $217,944
Cost and expenses:
Cost of sales 137,040 124,745
Operating and administrative 95,422 81,100
Transition and integration expenses-- --
Write-off of unamortized
management fee -- --
232,462 205,845
Operating profit 22,239 12,099
Interest expense 7,410 9,989
Income before income taxes 14,829 2,110
Income tax expense 5,487 843
Net income $9,342 $1,267
Basic earnings per share:
Net income $0.34 $0.07
Shares used in computing
per share amounts 27,738,388 17,105,000
Diluted earnings per share:
Net income $0.33 $0.07
Shares used in computing
per share amounts 28,662,448 17,105,000
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
As Adjusted for Pro
Twenty-six Weeks Ended One-Time Charges forma
August 2, August 3, August 2, August 2,
1998 1997 1998 1998
Net sales $493,124 $419,557 $493,124 $493,124
Cost and expenses:
Cost of sales 267,746 242,246 267,746 267,746
Operating and
administrative 188,445 158,195 188,445 188,445
Transition and
integration
expenses 3,075 -- -- --
Write-off of
unamortized
management fee 3,643 -- -- --
462,909 400,441 456,191 456,191
Operating
profit 30,215 19,116 36,933 36,933
Interest expense 16,608 19,714 16,608 15,498
Income (loss)
before income
taxes and
extraordinary
item 13,607 (598) 20,325 21,435
Income tax expense
(benefit) 5,017 (216) 7,494 7,903
Income (loss) before
extraordinary
item 8,590 (382) 12,831 13,532
Extraordinary loss, net of
$4,236 of income
taxes (6,767) -- -- --
Net income
(loss) $1,823 $(382) $12,831 $13,532
Basic earnings
per share:
Income (loss)
before extraordinary
item $0.33 $(0.02) $0.46 $0.49
Extraordinary loss,
net of income
taxes (0.26) -- -- --
Net income (loss) $0.07 $(0.02) $0.46 $0.49
Shares used in
computing per
share
amounts 25,653,223 17,105,000 27,738,388 27,738,388
Diluted earnings
per share:
Income (loss) before
extraordinary
item $0.32 $(0.02) $0.45 $0.47
Extraordinary loss,
net of income
taxes (0.25) -- -- --
Net income (loss) $0.07 $(0.02) $0.45 $0.47
Shares used in
computing per
share
amounts 26,578,154 17,105,000 28,662,448 28,662,448