MEMPHIS, Tenn., Sept. 22 /PRNewswire-FirstCall/ -- AutoZone, Inc.
(NYSE: AZO) today reported sales of $1.829 billion for its fourth fiscal
quarter (16 weeks) ended August 30, 2003, a decrease of 0.8% from the fourth
quarter (17 weeks) ended August 31, 2002. Excluding sales from the extra week
included in the prior year, sales were up 5.5%. Same store sales, or sales for
domestic stores open at least one year, increased 3% during the quarter,
including an increase of 1% for retail same store sales and an increase of 24%
for commercial same store sales. Gross profit, as a percentage of sales, for
the quarter improved by 1.90 percentage points while operating expenses, as a
percentage of sales, declined by 0.86 percentage points. This resulted in an
operating margin of 19.7%, up 2.76 percentage points from last year.
Operating profit increased 15% over the prior year. However, both years were
impacted by certain non-recurring items including:
- For fiscal 2003 fourth quarter, a $4.6 million pre-tax favorable
adjustment this year for the reversal of restructuring accruals
- For fiscal 2003 fourth quarter, a $7.4 million pre-tax negative impact
related to the continued implementation of Emerging Issues Task Force
Issue 02-16
- For fiscal 2002 fourth quarter, a $29 million pre-tax positive impact
based on the benefit of the additional week.
Excluding these items, comparable operating profit increased for the
quarter 28% as operating margin improved 3.55 percentage points to 19.8% from
16.3% last year.
Net income for the quarter increased by 17% to $207.4 million, and diluted
earnings per share, reflecting net income and the benefit of our share
repurchase program, increased 31% to $2.27 from $1.73 reported in the year-ago
quarter. Excluding the non-recurring items, comparable net income increased
31% and earnings per share increased 47%.
For the fiscal year ended August 30, 2003, AutoZone reported sales of
$5.457 billion (52 weeks), a 2.5% increase from fiscal 2002. Excluding sales
from the extra week included in the prior year, sales were up 4.6%. Same
store sales, or sales for domestic stores open at least one year, increased 3%
during the year, including flat retail same store sales (against 8% same store
sales growth last year) and an increase of 27% for commercial same store
sales. Gross profit, as a percentage of sales, for the year improved by 1.48
percentage points while operating expenses, as a percentage of sales, declined
by 0.86 percentage points. This resulted in an operating margin of 16.8%, up
2.34 percentage points from last year. Operating profit increased 19% over
the prior year. In addition to the above-mentioned non-recurring items,
operating profit for the full fiscal year was also impacted by:
- For fiscal 2003 third quarter, a $4.7 million pre-tax favorable
adjustment associated with the sale of the TruckPro business
- For fiscal 2003 third quarter, a $2.6 million pre-tax negative impact
related to the implementation of EITF Issue 02-16
Excluding these items, and the fourth fiscal quarter non-recurring items,
comparable operating profit for fiscal 2003 increased by 24% as operating
margin improved 2.62 percentage points to 16.8% from 14.2% last year.
Net income for the fiscal year increased by 21% to $517.6 million, and
diluted earnings per share increased by 34% to $5.34 from $4.00 reported for
the year-ago. Excluding the non-recurring items, comparable net income
increased 26% and earnings per share increased 40%.
Return on invested capital for the fiscal year increased to 23.4% from
19.8% the previous year.
"We are very pleased with our comparable performance as we have continued
to build on the growth from our prior fiscal year. Our industry-leading
results continue to show that AutoZone is a significant cash generator which
has enabled us to add shareholder value over time," said Steve Odland,
Chairman, President, and Chief Executive Officer. "This is the fourth
straight quarter of over 20% AZ Commercial comparable sales increases. Not
only have we continued to build our customer base in this area, but we
continue to expand the volume of business we do with our existing commercial
customers.
"Additionally, our ongoing focus on gross margin improvement and
relentless expense discipline continues to drive profitability. The combined
impact of these efforts considerably improved our operating margin in the
quarter over the last year."
Under its ongoing share repurchase program, AutoZone repurchased 5.8
million shares of its common stock for $447 million during the fourth quarter.
Since 1998, cumulative share repurchases have totaled $2.827 billion, or 72.0
million shares at an average price of $39.25 per share.
As required by the Emerging Issues Task Force Issue 02-16, "Accounting by
a Customer (including a Reseller) for Cash Consideration Received from a
Vendor" (EITF Issue 02-16), AutoZone reflected the new accounting for new and
modified vendor funding arrangements during the fourth quarter. This resulted
in a non-cash pretax deferral of vendor funding of $7.4 million (or $0.05 per
share) during the quarter and a reclassification of $37 million of vendor
funding from operating expenses to cost of goods sold. Additionally, as a
result of EITF Issue 02-16, for the sixteen weeks ended August 30, 2003,
selling, general, and administrative expenses were approximately $37 million
higher and gross margin was approximately $30 million higher than such amounts
would have been prior to the accounting change. Excluding the impact of the
new pronouncement, gross margin for the quarter would have been 46.0% (vs.
45.7% last year) and selling, general and administrative expenses as a percent
of sales would have been 25.9% (vs. 28.8% last year).
The new accounting pronouncement for vendor funding does not impact the
way AutoZone runs its business or its relationships with vendors. It is a
non-cash deferral of vendor funding. Based on the timing of the issuance of
the pronouncement and guidelines, AutoZone was precluded from adopting EITF
Issue 02-16 as a cumulative effect of a change in accounting principle.
AutoZone's timing and accounting treatment of EITF Issue 02-16 was not
discretionary. The timing of recognition for the remaining pre-tax impact of
approximately $15 million is expected to flow evenly over the four quarters of
fiscal 2004.
During the quarter AutoZone opened 68 new stores, replaced 2 stores, and
closed 1 store in the U.S. and opened 6 new stores in Mexico. As of August
30, 2003, AutoZone sells auto and light truck parts, chemicals and accessories
through 3,219 AutoZone stores in 48 states plus the District of Columbia in
the U.S. and 49 AutoZone stores in Mexico and also sells the ALLDATA brand
diagnostic and repair software. On the web, AutoZone sells diagnostic and
repair information though www.alldatadiy.com, and auto and light truck parts
through www.autozone.com.
AutoZone will host a one-hour conference call this evening Monday,
September 22, 2003, beginning at 4:30 p.m. (EDT) to discuss the fourth quarter
results. Investors may listen to the conference call live and review
supporting slides on the AutoZone website, www.autozone.com by clicking
"Investor Relations," "Conference Calls," or by going directly to
http://www.autozone.com/investors. The call will also be available by dialing
(210) 234-0004. A replay of the call and slides will be available on
AutoZone's website. In addition, a replay of the call will be available by
dialing (402) 220-9742 through Monday, September 29, 2003, at 11:00 p.m. EDT.
This release includes certain financial information not derived in
accordance with generally accepted accounting principles ("GAAP"). This
information should not be considered a substitute for any measures derived in
accordance with GAAP. The Company believes that this information is useful to
investors as it indicates more clearly the Company's comparative year-to-year
operating results. The financial impacts of the fifty-third week of operating
results last year, the recognized gain associated with the sale of this year,
the adoption of EITF Issue 02-16, and, lastly, the gain related to the
reversal of the restructuring reserve this year were all identified as
"adjustments" for comparative purposes. Management and the Company's
Compensation Committee use this information to analyze and compare the
Company's underlying operating results and to determine payments of
performance-based compensation. We have included a reconciliation of this
information to the most comparable GAAP measures in the accompanying
reconciliation tables.
Certain statements contained in this press release are forward-looking
statements. These statements discuss, among other things, business strategies
and future performance. These forward-looking statements are subject to
risks, uncertainties and assumptions, including, without limitation,
competition, product demand, the economy, inflation, gasoline prices, consumer
debt levels, war and the prospect of war, including terrorist activity, and
the availability of commercial transportation. Actual results may materially
differ from anticipated results. Please refer to the Risk Factors section of
AutoZone's Form 10-K for the fiscal year ended August 31, 2002, for more
information related to those risks. AutoZone undertakes no obligation to
publicly release any revisions to any forward-looking statements contained in
this press release to reflect events or circumstances occurring after the date
of this release or to reflect the occurrence of unanticipated events.
AutoZone's 4th Quarter Highlights - Fiscal 2003
Condensed Consolidated Statements of Operations
4th Quarter, F2003
(in thousands, except per share data)
GAAP Results
16 Weeks Ended 17 Weeks Ended
August 30, 2003 August 31, 2002
Net sales $1,829,347 $1,843,337
Cost of goods sold 958,550 1,000,970
Gross profit 870,797 842,367
Operating expenses 510,707 530,445
Operating profit (EBIT) 360,090 311,922
Interest expense, net 26,699 24,736
Income before taxes 333,391 287,186
Taxes 125,950 109,200
Net income $207,441 $177,986
Net income per share:
Basic $2.32 $1.77
Diluted $2.27 $1.73
Weighted Average Shares outstanding:
Basic 89,504 100,356
Diluted 91,320 102,827
AutoZone's 4th Quarter Highlights - Fiscal 2003
Condensed Consolidated Statements of Operations
4th Quarter, F2003
(in thousands, except per share data)
Adjustments
16 Weeks Ended 17 Weeks Ended
August 30, 2003 August 31, 2002
Net sales $-- $(109,079)
Cost of goods sold 29,600 (58,688)
Gross profit (29,600) (50,391)
Operating expenses (32,400) (20,911)
Operating profit (EBIT) 2,800 (29,480)
Interest expense, net 0 0
Income before taxes 2,800 (29,480)
Taxes 1,058 (11,210)
Net income $1,742 $(18,270)
Net income per share:
Basic $0.02 $(0.18)
Diluted $0.02 $(0.18)
Weighted Average Shares outstanding:
Basic 89,504 100,356
Diluted 91,320 102,827
*Adjusted Statement of Operations for F2003 excludes EITF Issue 02-16
impact of $7.4 million deferred from Cost of Goods and Restructuring
Accrual Gain of $4.6 million added back to Operating Expenses.
Adjusted Statement of Operations for F2002 excludes 53rd week of
operations.
AutoZone's 4th Quarter Highlights - Fiscal 2003
Condensed Consolidated Statements of Operations
4th Quarter, F2003
(in thousands, except per share data)
*Adjusted
Quarter Ended Quarter Ended
August 30, 2003 August 31, 2002
Net sales $1,829,347 $1,734,258
Cost of goods sold 988,150 942,282
Gross profit 841,197 791,976
Operating expenses 478,307 509,534
Operating profit (EBIT) 362,890 282,442
Interest expense, net 26,699 24,736
Income before taxes 336,191 257,706
Taxes 127,008 97,990
Net income $209,183 $159,716
Net income per share:
Basic $2.34 $1.59
Diluted $2.29 $1.55
Weighted Average Shares outstanding:
Basic 89,504 100,356
Diluted 91,320 102,827
*Adjusted Statement of Operations for F2003 excludes EITF Issue 02-16
impact of $7.4 million deferred from Cost of Goods and Restructuring
Accrual Gain of $4.6 million added back to Operating Expenses.
Adjusted Statement of Operations for F2002 excludes 53rd week of
operations.
Condensed Consolidated Statements of Operations
Full Year, F2003
(in thousands, except per share data)
GAAP Results
52 Weeks Ended 53 Weeks Ended
August 30, 2003 August 31, 2002
Net sales $5,457,123 $5,325,510
Cost of goods sold 2,942,114 2,950,123
Gross profit 2,515,009 2,375,387
Operating expenses 1,597,212 1,604,379
Operating profit (EBIT) 917,797 771,008
Interest expense, net 84,790 79,860
Income before taxes 833,007 691,148
Taxes 315,403 263,000
Net income $517,604 $428,148
Net income per share:
Basic $5.45 $4.10
Diluted $5.34 $4.00
Weighted Average Shares outstanding:
Basic 94,906 104,446
Diluted 96,963 107,111
Condensed Consolidated Statements of Operations
Full Year, F2003
(in thousands, except per share data)
Adjustments
52 Weeks Ended 53 Weeks Ended
August 30, 2003 August 31, 2002
Net sales $-- $(109,079)
Cost of goods sold 42,600 (58,688)
Gross profit (42,600) (50,391)
Operating expenses (43,300) (20,911)
Operating profit (EBIT) 700 (29,480)
Interest expense, net 0 0
Income before taxes 700 (29,480)
Taxes 265 (11,210)
Net income $435 $(18,270)
Net income per share:
Basic $0.00 $(0.17)
Diluted $0.00 $(0.17)
Weighted Average Shares outstanding:
Basic 94,906 104,446
Diluted 96,963 107,111
*Adjusted Statement of Operations for F2003 excludes EITF Issue 02-16
impact in both Quarters 3 and 4, Restructuring Accrual Gain added
back to Operating Expenses in Quarter 4, and TruckPro gain added back
in Quarter 3. Adjusted Statement of Operations for F2002 excludes 53rd
week of operations.
Condensed Consolidated Statements of Operations
Full Year, F2003
(in thousands, except per share data)
*Adjusted
Fiscal Year Ended Fiscal Year Ended
August 30, 2003 August 31, 2002
Net sales $5,457,123 $5,216,431
Cost of goods sold 2,984,714 2,891,435
Gross profit 2,472,409 2,324,996
Operating expenses 1,553,912 1,583,468
Operating profit (EBIT) 918,497 741,528
Interest expense, net 84,790 79,860
Income before taxes 833,707 661,668
Taxes 315,668 251,790
Net income $518,039 $409,878
Net income per share:
Basic $5.46 $3.92
Diluted $5.34 $3.83
Weighted Average Shares outstanding:
Basic 94,906 104,446
Diluted 96,963 107,111
*Adjusted Statement of Operations for F2003 excludes EITF Issue 02-16
impact in both Quarters 3 and 4, Restructuring Accrual Gain added
back to Operating Expenses in Quarter 4, and TruckPro gain added back
in Quarter 3. Adjusted Statement of Operations for F2002 excludes 53rd
week of operations.
Selected Balance Sheet Information
(in thousands)
August 30, 2003 August 31, 2002
Merchandise inventories $1,511,316 $1,375,584
Current assets 1,584,994 1,450,128
Property and equipment, net 1,715,753 1,661,728
Total assets 3,680,466 3,477,791
Accounts payable 1,321,905 1,145,533
Current liabilities 1,675,566 1,533,571
Stockholders' equity 373,758 689,127
Debt 1,546,845 1,194,517
Working capital (90,572) (83,443)
Adjusted Debt / EBITDAR (Trailing 4
Qtrs) August 30, 2003 August 31, 2002
Net income 517,604 428,148
Add: Interest 84,790 79,860
Taxes 315,403 263,000
EBIT 917,797 771,008
Depreciation/Amortization 109,748 118,255
Rent Expense 110,665 99,032
EBITDAR 1,138,210 988,295
Debt 1,546,845 1,194,517
Add: Rent x 6 663,990 594,192
Adjusted Debt 2,210,835 1,788,709
Adjusted Debt to EBITDAR 1.9 1.8
Selected Cash Flow Information
(in thousands)
16 Weeks 17 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
August 30, August 31, August 30, August 31,
2003 2002 2003 2002
Depreciation & amortization $34,222 $35,758 $109,748 $118,255
Capital spending $84,467 $35,394 $182,242 $117,239
Net increase (decrease) in
cash and cash equivalents, $104 $(744) $244 $(788)
as reported
Net decrease (increase)
in total debt $(126,982) $57,361 $(352,572) $31,673
Share repurchases $446,537 $286,541 $891,095 $698,983
Cash flow before share
repurchases $319,659 $343,158 $538,767 $729,868
Other Selected Financial Information
(in thousands)
August 30, 2003 August 31, 2002
Cumulative share repurchases ($):
On balance sheet $2,826,811 $1,935,716
Forward contracts -- 150,058
Total $2,826,811 $2,085,774
Cumulative share repurchases
(shares):
On balance sheet 72,020 59,753
Forward contracts -- 2,181
Total 72,020 61,934
Shares outstanding, end of quarter 88,708 99,268
Return on Equity (ROE) August 30, 2003 August 31, 2002
97.4% 55.1%
Return on Invested Capital (ROIC) August 30, 2003 August 31, 2002
23.4% 19.8%
AutoZone's 4th Quarter Fiscal 2003
Selected Operating Highlights
Store Count & Square Footage
16 Weeks 17 Weeks 52 Weeks 53 Weeks
Ended Ended Ended Ended
August 30, August 31, August 30, August 31,
2003 2002 2003 2002
Domestic stores:
Store count:
Stores opened 68 30 160 102
Stores closed 1 14 9 53
Replacement stores 2 3 6 15
Total domestic stores 3,219 3,068 3,219 3,068
Stores with commercial
sales 1,941 2,009 1,941 2,009
Square footage (in
thousands): 20,500 19,683 20,500 19,683
Stores in Mexico:
Stores opened 6 12 10 18
Total stores in Mexico 49 39 49 39
Sales & Inventory Statistics (Domestic Stores Only):
16 *17 52 *53
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
August August August August
30, 31, 30, 31,
2003 2002 2003 2002
Sales per average store ($ in
thousands) $559 $553 $1,689 $1,658
Sales per average square foot $88 $86 $264 $258
Same store sales - rolling 13 periods
Total 3% 7% 3% 9%
Retail vs. commercial
Retail 1% 5% 0% 8%
Commercial 24% 18% 27% 17%
* For comparison purposes, excludes 53rd week in fiscal 2002.
Inventory turns:
Based on average inventories 2.0 X 2.2 X
Based on ending inventories 2.0 X 2.1 X
Inventory turns, net of payables:
Based on average inventories 7.5 X 8.7 X
Based on ending inventories 18.5 X 13.8 X
Inventory Statistics (Total Stores):
52 Weeks Ended 53 Weeks Ended
August 30, 2003 August 31, 2002
Accounts
payable/inventory
(total company) 87% 83%
as of as of as of as of
($ in thousands) August 30, May 10, Feb 15, Nov 23,
2003 2003 2003 2002
Gross Inventory $1,511,316 $1,497,643 $1,490,172 $1,484,699
Gross Inventory /
Store $462 $469 $471 $473
Net Inventory (net
of payables) $189,411 $407,485 $442,095 $363,951
Net Inventory /
Store $58 $128 $140 $116
SOURCE AutoZone, Inc.
CONTACT: financial, Brian Campbell, +1-901-495-7005, or
brian.campbell@autozone.com, or media, Ray Pohlman, +1-901-495-7962, or
ray.pohlman@autozone.com, both of AutoZone, Inc.
Audio: http://www.autozone.com/investors /
Web site: http://www.alldatadiy.com /
Web site: http://www.autozone.com /
(AZO)