CSK Auto Corporation Reports 1998 Fiscal Year Sales Earnings
17 March 1999
CSK Auto Corporation Reports $1 Billion in Net Sales and Record Earnings for its 1998 Fiscal Year
PHOENIX, March 17 -- CSK Auto Corporation , the
parent company of CSK Auto, Inc., today reported financial results for the
fourth quarter and full year ended January 31, 1999.
FISCAL 1998
For fiscal 1998, net sales increased 18.7% to $1.0 billion from
$845.8 million for fiscal 1997, primarily reflecting an increase in the number
of stores operated from 718 stores at February 1, 1998 to 807 stores at
January 31, 1999. Comparable store sales increased 2% in fiscal 1998.
Operating profit for fiscal 1998, excluding one-time charges, totaled
$81.4 million, or 8.1% of net sales, compared to $49.8 million, or 5.9% of net
sales, for fiscal 1997. During fiscal 1998, the Company incurred $3.1 million
of expenses associated with the integration of the stores acquired in December
1997 from Trak Auto Corporation, 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 and $0.8 million of costs in connection with
a secondary offering of common stock. During fiscal 1997, the Company
incurred $3.4 million of expenses associated with the integration of the
stores acquired from Trak Auto and $0.9 million of stock-based compensation
expense. Including the one-time charges discussed above in both years,
operating profit for fiscal 1998 increased by 63% to $74.0 million from
$45.5 million in fiscal 1997.
Interest expense for fiscal 1998 decreased to $30.7 million from
$40.7 million for fiscal 1997, primarily due to the reduction of debt by use
of the net proceeds from the Company's initial public offering.
Net income for fiscal 1998 was $32.2 million, or $1.13 per diluted share,
excluding the above-mentioned charges and an extraordinary loss of
$6.8 million, net of taxes. This compares to net income of $5.4 million, or
$0.30 per diluted common share, excluding one-time charges of $5.3 million and
an extraordinary loss of $3.0 million, net of taxes, for fiscal 1997.
Including the above-mentioned charges and extraordinary losses, the Company
reported net income for fiscal 1998 of $20.7 million, or $0.75 per diluted
common share, compared to a net loss of $0.8 million, or $0.04 per diluted
common share, for fiscal 1997. The fiscal 1998 $6.8 million extraordinary
loss, 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 made
possible by the Company's initial public offering. The fiscal 1997
$3.0 million extraordinary loss, net of tax, was related to the early
retirement of debt.
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
fiscal 1998 was $33.0 million, or $1.15 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 and extraordinary loss listed above.
During fiscal 1998, the Company opened 94 new stores, relocated 31 stores,
expanded 5 stores, acquired 2 stores and closed 7 stores in addition to those
closed due to relocations.
FOURTH QUARTER OF FISCAL 1998
Net sales for the fourth quarter of fiscal 1998 totaled $248.1 million, an
increase of 18.5% from $209.4 million of net sales reported for the fourth
quarter of fiscal 1997, primarily reflecting an increase in the number of
stores operated. Comparable store sales for the fourth quarter of fiscal 1998
increased 5%.
Operating profit for the fourth quarter of fiscal 1998, excluding one-time
costs of $0.8 million, increased to $21.0 million, or 8.5% of net sales, from
operating profit of $13.6 million, or 6.5% of net sales, excluding one-time
charges for the fourth quarter of fiscal 1997. The fourth quarter of fiscal
1998 included the above-mentioned $0.8 million of costs associated with the
December 1998 secondary offering of the Company's common stock, while the
fiscal 1997 fourth quarter included the above-mentioned $3.4 million of costs
associated with the Trak Auto store acquisitions and the $0.9 million stock
based compensation cost. Including these one-time items in both years,
operating profit increased 118% to $20.2 million in fiscal 1998 from
$9.3 million in fiscal 1997.
Interest expense for the fourth quarter of fiscal 1998 decreased to
$7.2 million from $10.9 million for the 1997 fourth quarter, primarily due to
the reduction of debt by use of the net proceeds from the Company's initial
public offering.
Excluding the secondary offering costs and their tax effect, net income
for the fourth quarter of fiscal 1998 increased to $8.9 million, or $0.31 per
diluted common share from $1.8 million, or $0.09 per diluted common share, for
the fourth quarter of fiscal 1997, excluding the above mentioned one-time
costs and a $3.0 million extraordinary loss related to the early retirement
of debt. Including such costs in both years, net income increased to
$8.4 million, or $0.29 per diluted common share, for the fourth quarter of
fiscal 1998, compared to a net loss of $4.7 million, or $0.25 per diluted
common share, for the fourth quarter of fiscal 1997
During the fourth quarter of fiscal 1998, the Company opened 34 new
stores, relocated 7 stores, expanded 1 store and closed 2 stores in addition
to those closed due to relocations. In addition, during the quarter, the
Company acquired 2 stores in Fairbanks, Alaska, thereby increasing its
presence in Alaska to 8 stores.
"We are very pleased with our fourth quarter and fiscal 1998 financial
results," said Maynard Jenkins, Chairman and Chief Executive Officer of CSK
Auto Corporation. "The comparable store sales increase of 5% for the fourth
quarter represents a significant improvement over the comparable store sales
level achieved earlier in the year. We are achieving similar comparable store
sales increases during the first quarter of fiscal 1999. In addition, we
continue to make progress in improving our gross profit margins which are
benefiting from increased vendor support and more favorable pricing terms."
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 807 stores in 13 Western states as of January 31, 1999.
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 share and per share data)
As Adjusted
Thirteen Weeks Ended for One-Time
Charges
January 31, February 1, January 31,
1999 1998 1999
Net sales $248,119 $209,350 $248,119
Cost and expenses:
Cost of sales 127,216 109,254 127,216
Operating and administrative 99,897 86,514 99,897
Transition and integration expenses -- 3,407 --
Stock-based compensation -- 909 --
Secondary stock offering costs 770 --- --
227,883 200,084 227,113
Operating profit 20,236 9,266 21,006
Other acquisition and financings fees -- 1,009 --
Interest expense 7,198 10,865 7,198
Income before income taxes
and extraordinary item 13,038 (2,608) 13,808
Income tax expense 4,670 (914) 4,946
Income before extraordinary loss 8,368 (1,694) 8,862
Extraordinary loss,
net of income taxes -- (3,015) --
Net income $8,368 $(4,709) $8,862
Basic earnings per share:
Income (loss) before
extraordinary loss $0.30 $(0.09) $0.32
Extraordinary loss,
net of income taxes -- (0.17) --
Net income (loss) $0.30 $(0.26) $0.32
Shares used in computing
per share amounts 27,760,967 18,289,101 27,760,967
Diluted earnings per share:
Income (loss) before
extraordinary loss $0.29 $(0.09) $0.31
Extraordinary loss,
net of income taxes -- (0.16) --
Net income $ 0.29 $(0.25) $0.31
Shares used in computing
per share amounts 28,742,794 18,900,553 28,742,794
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except share and per share data)
As Adjusted Pro forma,
Fiscal Year Ended for One-Time as adjusted
Charges
January 31, February 1, January 31, January 31,
1999 1998 1999 1999
Net sales $1,004,385 $845,815 $1,004,385 $1,004,385
Cost and expenses:
Cost of sales 531,073 468,171 531,073 531,073
Operating and
administrative 391,863 327,838 391,863 391,863
Transition and
integration expenses 3,075 3,407 -- --
Stock-based compensation -- 909 -- --
Secondary stock offering costs 770 -- -- --
Write-off of unamortized
management fee 3,643 -- -- --
930,424 800,325 922,936 922,936
Operating profit 73,961 45,490 81,449 81,449
Other acquisition and
financings fees -- 1,009 -- --
Interest expense 30,730 40,680 30,730 29,620
Income (loss) before
income taxes and
extraordinary item 43,231 3,801 50,719 51,829
Income tax expense
(benefit) 15,746 1,557 18,473 18,878
Income (loss) before
extraordinary item 27,485 2,244 32,246 32,951
Extraordinary loss,
net of income taxes (6,767) (3,015) -- --
Net income (loss) $20,718 $(771) $32,246 $32,951
Basic earnings per share:
Income (loss) before
extraordinary item $1.03 $0.13 $1.16 $1.19
Extraordinary loss,
net of income taxes (0.25) (0.17) -- --
Net income (loss) $ 0.78 $(0.04) $1.16 $1.19
Shares used in computing
per share amounts 26,722,322 17,400,214 27,738,415 27,738,415
Diluted earnings per share:
Income (loss) before
extraordinary item $0.99 $0.12 $1.13 $1.15
Extraordinary loss,
net of income taxes (0.24) (0.16) -- --
Net income (loss) $ 0.75 $(0.04) $1.13 $1.15
Shares used in computing
per share amounts 27,640,099 18,011,666 28,643,770 28,643,770