CSK Auto Corporation Reports Results for its 1999 Fiscal Year
22 March 2000
CSK Auto Corporation Reports Results for its 1999 Fiscal Year
PHOENIX, March 21 CSK Auto Corporation , the
parent company of CSK Auto, Inc., the largest retailer of automotive parts and
accessories in the Western United States and one of the largest such retailers
in the country, today reported financial results for the fourth quarter and
full year ended January 30, 2000 ("fiscal 1999"). Among the significant
accomplishments of fiscal 1999 were:
-- Fourth quarter and full year earnings per share increases of 32% and
50%, respectively, to $0.41 and $1.69, excluding non-recurring
charges;
-- Acquisition of 280 stores in two separate transactions (Big
Wheel/Rossi and Al's and Grand Auto Supply);
-- The successful integration and re-merchandising of the acquired
stores;
-- The acquisition of Automotive Information Systems, the premier
provider of diagnostic vehicle repair information;
-- The continued profitable expansion of our commercial business; and
-- The completion of an agreement to form PartsAmerica.com, an
e-commerce joint venture among CSK Auto, Advance Auto Parts and
Sequoia Capital.
FISCAL 1999
Net sales increased 23% to $1.23 billion for fiscal 1999 from
$1.00 billion for fiscal 1998, primarily reflecting an increase in the number
of stores operated from 807 stores at January 31, 1999 to 1,120 stores at
January 30, 2000. Comparable store sales increased 4% in fiscal 1999.
Operating profit for fiscal 1999, excluding one-time charges, totaled
$119.6 million, or 9.7% of net sales, compared to $81.4 million, or 8.1% of
net sales, for fiscal 1998, an increase of approximately 47%. The increase in
operating profit reflects both continued improvement in gross profit margins
arising from lower product acquisition costs, as well as a leveraging of
operating and administrative expenses over an expanding sales base. During
fiscal 1999, the Company incurred $32.7 million of non-recurring expenses for
the integration and conversion of the acquired stores and for store closing
costs for CSK Auto stores that were identified for closure due to overlap with
certain acquired stores. During fiscal 1998, the Company incurred $7.5 million
of non-recurring expenses as more fully described on the following table.
Including these one-time charges in both years, operating profit for fiscal
1999 increased by 17% to $86.8 million from $74.0 million in fiscal 1998.
Interest expense for fiscal 1999 increased to $41.3 million from
$30.7 million for fiscal 1998, primarily due to the expansion of the Company's
senior credit facility to finance the acquisitions.
Net income for fiscal 1999 rose to $48.3 million, or $1.69 per diluted
share, excluding the above-mentioned $32.7 million of non-recurring charges
and the cumulative effect of a change in the method of accounting for store
pre-opening costs of $0.7 million. This compares to net income of
$32.2 million, or $1.13 per diluted common share, excluding non-recurring
expenses of $7.5 million, and an extraordinary loss of $6.8 million, net of
taxes, for fiscal 1998. Including the above-mentioned one-time charges and
extraordinary losses, the Company reported fiscal 1999 net income of
$27.4 million, or $0.96 per diluted common share, compared to net income of
$20.7 million, or $0.75 per diluted common share, for fiscal 1998.
During fiscal 1999, the Company acquired 280 stores, opened 84 new stores,
relocated 26 stores, expanded 9 stores and closed 51 stores in addition to
those closed due to relocations. Thirty-seven of the 51 closed stores were
acquired stores and 10 stores were CSK Auto stores closed due to overlap
arising from an acquisition.
FOURTH QUARTER OF FISCAL 1999
Net sales for the fourth quarter of fiscal 1999 totaled $328.4 million, an
increase of 32%, from $248.1 million reported for the fourth quarter of fiscal
1998, primarily reflecting an increase in the number of stores operated.
Comparable store sales for the fourth quarter of fiscal 1999 increased 3%.
Operating profit for the fourth quarter of fiscal 1999 increased
approximately 57% to $32.9 million, or 10.0% of net sales, from $21.0 million,
or 8.5% of net sales, for the fourth quarter of fiscal 1998, excluding
one-time charges in both periods. The increase in operating profit reflects
both continued improvement in gross profit margins arising from lower product
acquisition costs, as well as a leveraging of operating and administrative
expenses over an expanding sales base. The fourth quarter of fiscal 1999
included $28.6 million of acquisition-related and store closing costs, while
the fiscal 1998 fourth quarter included $0.8 million of costs associated with
the December 1998 secondary offering of the Company's common stock. Including
these one-time charges in both years, operating profit decreased by
$15.9 million to $4.3 million in fiscal 1999 from $20.2 million in fiscal
1998.
Interest expense for the fourth quarter of fiscal 1999 increased to
$14.3 million from $7.2 million for the 1998 fourth quarter, primarily due to
the expansion of the Company's senior credit facility to finance the
acquisitions.
Net income for the fourth quarter of fiscal 1999 increased to
$11.5 million, or $0.41 per diluted common share from $8.9 million, or $0.31
per diluted common share, for the fourth quarter of fiscal 1998, excluding
one-time charges in both years. Including these one-time charges in both
years, the Company incurred a net loss of $6.1 million, or $0.22 per diluted
common share, for the fourth quarter of fiscal 1999, compared to net income of
$8.4 million, or $0.29 per diluted common share, for the fourth quarter of
fiscal 1998.
During the fourth quarter of fiscal 1999, the Company opened 25 new
stores, relocated 7 stores, expanded 1 store and closed 25 stores in addition
to those closed due to relocations. Fifteen of the 25 closed stores were
acquired stores and 10 stores were CSK Auto stores closed due to overlap
arising from an acquisition.
"1999 was a very exciting year for CSK Auto," said Maynard Jenkins,
Chairman and Chief Executive Officer of CSK Auto Corporation. "During 1999, we
completed several strategic transactions including two major acquisitions
involving 280 stores; the acquisition of Automotive Information Systems, the
premier provider of diagnostic vehicle repair information; as well as the
agreement to form PartsAmerica.com, which is expected to become the largest
automotive parts and accessories e-commerce destination in the $90 billion
automotive parts and accessories market. Furthermore, we continued the
profitable expansion of our commercial business, and delivered a 50% increase
in diluted earnings per share."
"We are pleased with the current sales and operating margin trends in the
business and the outlook for fiscal 2000 is good," said Mr. Jenkins. "With the
integration efforts now complete for both the Big Wheel/Rossi and Al's and
Grand Auto Supply stores, we look forward to the positive contribution to our
operating results that we expect these acquired stores to provide. Our
recently announced acquisition of the 22 All-Car Distributors stores will
further solidify our position in the Upper Midwest."
CSK Auto Corporation is the parent company of CSK Auto, Inc., which is a
specialty retailer in the automotive aftermarket operating 1,120 stores as of
January 30, 2000, in 18 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.
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share data)
(As Adjusted) (1)
Fifty-two Weeks Ended Fifty-two Weeks Ended
January 30, January 31, January 30, January 31,
2000 1999 2000 1999
Net sales $1,231,455 $1,004,385 $1,231,455 $1,004,385
Cost of sales 636,239 531,073 636,239 531,073
Gross profit 595,216 473,312 595,216 473,312
Other costs and expenses:
Operating and
administrative 471,340 391,528 471,340 391,528
Store closing
costs (2) 4,900 335 2,344 335
Transition and
integration
expenses (3) 30,187 3,075 -- --
Goodwill amortization 1,941 -- 1,941 --
Secondary stock
offering costs (4) -- 770 -- --
Write-off of unamortized
management fee (5) -- 3,643 -- --
Operating profit 86,848 73,961 119,591 81,449
Interest expense, net 41,300 30,730 41,300 30,730
Income before income
taxes, extraordinary
loss and cumulative
effect of change in
accounting principle 45,548 43,231 78,291 50,719
Income tax expense 17,436 15,746 29,970 18,473
Income before
extraordinary loss and
cumulative effect of
change in accounting
principle 28,112 27,485 48,321 32,246
Extraordinary loss, net
of $4,236 of income
taxes (6) -- (6,767) -- --
Income before cumulative
effect of change in
accounting principle 28,112 20,718 48,321 32,246
Cumulative effect of
change in accounting
principle, net of $468
of income taxes (7) (741) -- -- --
Net income $27,371 $20,718 $48,321 $32,246
Basic earnings (loss) per share:
Income before
extraordinary loss and
cumulative effect of
change in accounting
principle $1.01 $1.03 $1.74 $1.16
Extraordinary loss, net
of income taxes -- (0.25) -- --
Income before cumulative
effect of change in
accounting principle 1.01 0.78 1.74 1.16
Cumulative effect of
change in accounting
principle, net of income
taxes (0.03) -- -- --
Net income $0.98 $0.78 $1.74 $1.16
Shares used in computing
per share
amounts 27,815,160 26,722,322 27,815,160 27,738,415
Diluted earnings (loss) per share:
Income before extraordinary
loss and cumulative effect of
change in accounting
principle $0.98 $0.99 $1.69 $1.13
Extraordinary loss, net
of income taxes -- (0.24) -- --
Income before cumulative
effect of change in
accounting principle 0.98 0.75 1.69 1.13
Cumulative effect of
change in accounting
principle, net of income
taxes (0.02) -- -- --
Net income $0.96 $0.75 $1.69 $1.13
Shares used in computing
per share
amounts 28,626,776 27,640,099 28,626,776 28,643,770
1. The "As Adjusted" column excludes certain charges more fully
described in the following notes.
2. The "As Adjusted" column excludes $2.5 million of store closing
costs that were incurred in fiscal 1999 due to overlap of certain
CSK stores with more favorably sized or situated stores acquired
from Al's and Grand Auto Supply.
3. Reflects costs incurred to replace store systems, re-merchandise
stores, train employees and conduct other activities associated with
the integration of acquired stores into the Company's operations.
4. Reflects costs incurred in connection with the Company's December
1998 secondary stock offering.
5. Reflects the cost associated with terminating a management agreement
in connection with the Company's initial public stock offering.
6. Reflects premiums paid to noteholders and the write-off of debt
issuance costs in connection with the early retirement of debt.
7. 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) (1)
Thirteen Weeks Ended Thirteen Weeks Ended
January 30, January 31 January 30, January 31
2000 1999 2000 1999
Net sales $328,411 $248,119 $328,411 $248,119
Cost of sales 166,449 127,216 166,449 127,216
Gross profit 161,962 120,903 161,962 120,903
Other costs and expenses:
Operating and
administrative 126,920 99,701 126,920 99,701
Store closing
costs (2) 3,455 196 899 196
Transition and
integration
expenses (3) 26,017 -- -- --
Goodwill amortization 1,222 -- 1,222 --
Secondary stock offering
costs (4) -- 770 -- --
Operating profit 4,348 20,236 32,921 21,006
Interest expense, net 14,284 7,198 14,284 7,198
Income (loss) before
income taxes (9,936) 13,038 18,637 13,808
Income tax expense
(benefit) (3,825) 4,670 7,175 4,946
Net income (loss) $(6,111) $8,368 $11,462 $8,862
Basic earnings (loss) per share:
Net income (loss) $(0.22) $0.30 $0.41 $0.32
Shares used in computing
per share amounts 27,834,377 27,760,967 27,834,377 27,760,967
Diluted earnings (loss) per share:
Net income (loss) $(0.22) $0.29 $0.41 $0.31
Shares used in computing
per share amounts 28,210,486 28,742,794 28,210,486 28,742,794
1. The "As Adjusted" column excludes certain charges more fully
described in the following notes.
2. The "As Adjusted" column excludes $2.5 million of store closing
costs that were incurred in fiscal 1999 due to overlap of certain
CSK stores with more favorably sized or situated stores acquired
from Al's and Grand Auto Supply.
3. Reflects costs incurred to replace store systems, re-merchandise
stores, train employees and conduct other activities associated with
the integration of acquired stores into the Company's operations.
4. Reflects costs incurred in connection with the Company's December
1998 secondary stock offering.