CSK Auto Corporation Reports Record Sales and Earnings
19 November 1998
CSK Auto Corporation Reports Record Sales and Earnings for its Fiscal 1998 Third Quarter
PHOENIX, Nov. 18 -- CSK Auto Corporation , the
parent company of CSK Auto, Inc., today reported record financial results for
the third quarter of fiscal 1998.
Net sales for the thirteen weeks ended November 1, 1998 totaled
$263.1 million, an increase of 21.3% over the $216.9 million of net sales
reported for the third 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 82 Trak Auto stores in
December 1997 and new store openings during the past twelve months, the
Company operated 773 stores at quarter-end 1998 versus 606 stores at
quarter-end last year. Comparable store sales for the third quarter of fiscal
1998 increased 3%.
Operating profit increased to $23.5 million, or 8.9% of net sales, for the
third quarter of fiscal 1998, an increase of 37.4%, compared with operating
profit of $17.1 million, or 7.9% of net sales, for the third quarter of fiscal
1997. The increase in operating profit resulted primarily from 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 $6.9 million for the third quarter of fiscal
1998 compared to $10.1 million for the 1997 third quarter, primarily due to
the reduction of debt with the net proceeds from the Company's March 1998
initial public offering.
Net income, also a record for the Company, increased to $10.5 million, or
$0.37 per diluted common share, for the third quarter of fiscal 1998, compared
to $4.3 million, or $0.25 per diluted common share, for the third quarter of
fiscal 1997.
"We are very pleased with our third quarter and year-to-date financial
results," said Maynard Jenkins, Chairman and Chief Executive Officer of CSK
Auto Corporation. "Comparable store sales gains have returned to what is a
more normal level for the Company and we continue to realize improvement in
our gross profit margins."
During the third quarter of fiscal 1998, the Company opened 27 new stores,
relocated 5 stores, expanded 2 additional stores and closed 1 store in
addition to those relocated.
For the thirty-nine weeks ended November 1, 1998, net sales increased by
18.8% to $756.3 million, compared to $636.5 million for the same period of
fiscal 1997. Operating profit, excluding one-time charges, totaled
$60.4 million or 8.0% of net sales, for the thirty-nine weeks ended
November 1, 1998, compared to $36.2 million or 5.7% of net sales, for the same
period of 1997. During the first quarter of fiscal 1998, the Company incurred
a $3.1 million one-time expense associated with the integration of the stores
acquired in December 1997 from Trak Auto 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 thirty-nine weeks ended
November 1, 1998 increased $17.5 million to $53.7 million.
Net income for the thirty-nine weeks ended November 1, 1998, excluding the
above mentioned charges and an extraordinary loss of $6.8 million was
$23.4 million, or $0.82 per diluted share (based on 28.6 million shares
outstanding), compared to $3.9 million, or $0.23 per diluted common share
(based on 17.1 million shares outstanding), for the comparable period of
fiscal 1997. Including the one-time charges and extraordinary loss, the
Company reported net income of $12.4 million, or $0.45 per diluted common
share, for the thirty-nine weeks ended November 1, 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.
Pro forma net income for the thirty-nine weeks ended November 1, 1998 was
approximately $24.1 million, or $0.84 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.
During the thirty-nine week period of fiscal 1998, the Company opened
60 new stores, relocated 24 stores, expanded 4 stores and closed 5 stores in
addition to those closed due to relocations.
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 773 stores in 12 Western states as of November 1, 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
November 1, November 2,
1998 1997
Net sales $263,142 $216,908
Cost and expenses:
Cost of sales 136,111 116,671
Operating and administrative 103,521 83,129
239,632 199,800
Operating profit 23,510 17,108
Interest expense 6,924 10,101
Income before income taxes 16,586 7,007
Income tax expense 6,059 2,687
Net income $10,527 $4,320
Basic earnings per share:
Net income $0.38 $0.25
Shares used in computing
per share amounts 27,738,468 17,105,000
Diluted earnings
per share: Net income $0.37 $0.25
Shares used in computing
per share amounts 28,579,609 17,105,000
CSK AUTO CORPORATION AND SUBSIDIARY
Consolidated Statements Of Operations
(Unaudited)
(in thousands, except per share data)
As Adjusted for
One-Time Pro
Thirty-nine Weeks Ended Charges forma
November 1, November 2, November 1, November 1,
1998 1997 1998 1998
Net Sales $756,266 $636,465 $756,266 $756,266
Cost and expenses:
Cost of sales 403,857 358,917 403,857 403,857
Operating and
administrative 291,966 241,324 291,966 291,966
Transition and
integration expenses 3,075 -- -- --
Write-off of unamortized
management fee 3,643 -- -- --
702,541 600,241 695,823 695,823
Operating profit 53,725 36,224 60,443 60,443
Interest expense 23,532 29,815 23,532 22,422
Income before income
taxes and
extraordinary loss 30,193 6,409 36,911 38,021
Income tax expense 11,076 2,471 13,553 13,962
Income before
extraordinary loss 19,117 3,938 23,358 24,059
Extraordinary loss, net
of $4,236 of income
taxes (6,767) -- -- --
Net income $12,350 $3,938 $23,358 $24,059
Basic earnings per share:
Income before
extraordinary loss $0.73 $0.23 $0.84 $0.87
Extraordinary loss, net
of income taxes (0.26) -- -- --
Net income $0.47 $0.23 $0.84 $0.87
Shares used in
computing per share
amounts 26,348,305 17,105,000 27,738,415 27,738,415
Diluted earnings
per share:
Income before
extraordinary loss $0.70 $0.23 $0.82 $0.84
Extraordinary loss, net
of income taxes (0.25) -- -- --
Net income $0.45 $0.23 $0.82 $0.84
Shares used in computing
per share amounts 27,253,660 17,105,000 28,643,770 28,643,770