UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 24, 2006
AutoZone, Inc.
(Exact name of registrant as specified in its charter)
|
Nevada |
1-10714 |
62-1482048 |
||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
|
123 South Front Street, Memphis, Tennessee |
38103 |
|||
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (901) 495-6500
________________________________________________________________________________
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02 Results of Operations and Financial Condition
On May 24, 2006, AutoZone, Inc. issued a press release announcing its earnings for the fiscal quarter ended May 6, 2006, which is furnished as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
The following exhibit is furnished with this Current Report pursuant to Item 2.02:
(d) Exhibits
99.1 Press Release dated May 24, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
AutoZone, Inc.
(Registrant) |
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|
May 24, 2006
(Date) |
/s/ WILLIAM T. GILES
William T. Giles Executive Vice President and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated May 24, 2006 | |
EXHIBIT 99.1
AutoZone 3rd Quarter Sales up 5.9%; Same Store Sales up 2.1%
MEMPHIS, Tenn., May 24, 2006 (PRIMEZONE) -- AutoZone, Inc. (NYSE:AZO) today reported sales of $1.417 billion for its third quarter (12 weeks) ended May 6, 2006, up 5.9% from fiscal third quarter 2005. Same store sales, or sales for stores open at least one year, were up 2.1% for the quarter.
Net income for the quarter decreased 2.3% over the same period last year to $144.4 million, while diluted earnings per share increased 1.4% to $1.89 per share from $1.86 per share reported in the year-ago quarter.
Under its share repurchase program, AutoZone repurchased 2.3 million shares of its common stock for $228.3 million during the third quarter, at an average price of $98 per share. Since 1998 cumulative share repurchases have totaled $4.3 billion, or 89.5 million shares at an average price of $49 per share.
For the quarter, gross profit, as a percentage of sales, was 49.7% (versus 50.3% last year). The reduction in comparable gross margin was primarily due to a higher penetration of commodity and maintenance items versus last year, which typically have lower margins. Additionally, operating expenses, as a percentage of sales, were 31.8% (versus 30.9% last year). A portion of the increase in operating expenses this year reflected $4.2 million in share-based expenses resulting from the adoption of the Financial Accounting Standards Board ("FASB") Statement No. 123(R), "Share-Based Payments." Adjusting for this non-comparable expense item, operating expenses were 31.5% (versus 30.9% last year) or 61 basis points over last year. The increase in comparable operating expenses reflected both the Company's ongoing initiatives to improve the customer shopping experience, such as additional training and extended hours of operation, and higher occupancy costs versus last year.
Excluding this quarter's share-based charges, adjusted net income decreased 0.5%, while adjusted diluted earnings per share of $1.92 were up 3.3% versus the year-ago quarter.
The Company's total per store inventory level, including supplier owned pay-on-scan inventory, as of May 6, 2006, was $495 thousand versus $497 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, increased on a per store level to $82 thousand from $59 thousand last year.
"We are pleased with the progress we are making on the major initiatives launched at the beginning of the year. These initiatives, which focus on improving the customer shopping experience, have resulted in improved sales and measurable increases in customer service metrics. I would like to thank all of our AutoZoners for their commitment to deliver exceptional service to our customers," said Bill Rhodes, President and Chief Executive Officer. "We will continue our disciplined approach to growing operating earnings over the long-term while effectively deploying capital."
During the quarter ended May 6, 2006, AutoZone opened 42 new stores and replaced 4 stores in the U.S. while additionally opening 4 new stores in Mexico. Additionally, the Company re-opened 2 U.S. stores closed due to hurricane-related damage. As of May 6, 2006, the Company had 3,699 domestic stores and 92 stores in Mexico.
AutoZone is the nation's leading retailer of automotive parts and accessories. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, and service stations. AutoZone also sells the ALLDATA brand diagnostic and repair software. On the web, AutoZone sells diagnostic and repair information, and auto and light truck parts through www.autozone.com. AutoZone does not derive revenue from automotive repair or installation.
AutoZone will host a one-hour conference call this morning, Wednesday, May 24, 2006, beginning at 10:00 a.m. (EDT) to discuss the third quarter results. Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozoneinc.com by clicking "Investor Relations," "Conference Calls." The call will also be available by dialing (210) 839-8923. 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 (203) 369-3495 through Tuesday, May 30, 2006, at 11:59 p.m. (EDT).
This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP measures include adjusted debt, adjusted debt/EBITDAR, adjusted rent expense, adjusted operating expense, adjusted operating profit, adjusted income before taxes, adjusted income taxes, adjusted net income, adjusted basic earnings per share, and adjusted diluted earnings per share. The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the Company's comparative year-to-year operating results, but this information should not be considered a substitute for any measures derived in accordance with GAAP. Management manages the Company's debt levels to a ratio of adjusted debt to EBITDAR and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables. This is important information for the Company's manage ment of its debt levels and share repurchases. 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. Forward-looking statements typically use words such as "believe," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy," and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: competition; product demand; the economy; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; gasoline prices; war and the prospect of war, including terrorist activity; availability of consumer transportation; construction delays; access to available and feasible financing; and changes in laws or regulations. Fo rward-looking statements are not guarantees of future performance and actual results; developments and business decisions may differ from those contemplated by such forward-looking statements, and such events could materially and adversely affect our business. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 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 27, 2005, for more information related to those risks.
AutoZone's 3rd Quarter Highlights - Fiscal 2006
Condensed Consolidated Statements of Operations
3rd Quarter
(in thousands, except per share data)
GAAP Results Adjustments
------------------------ -----------------------
12 Weeks Ended 12 Weeks Ended
May 6, May 7, May 6, May 7,
2006 2005 2006* 2005
---------- ---------- ---------- ----------
Net sales $1,417,433 $1,338,387 $ -- $ --
Cost of sales 713,392 665,284 -- --
---------- ---------- ---------- ----------
Gross profit 704,041 673,103 -- --
Operating, SG&A
expenses 450,872 413,641 (4,163) --
---------- ---------- ---------- ----------
Operating profit
(EBIT) 253,169 259,462 4,163 --
Interest expense,
net 24,921 24,223 -- --
---------- ---------- ---------- ----------
Income before taxes 228,248 235,239 4,163 --
Income taxes 83,820 87,450 1,529 --
---------- ---------- ---------- ----------
Net income $ 144,428 $ 147,789 $ 2,634 $ --
========== ========== ========== ==========
Net income per
share:
Basic $ 1.90 $ 1.88
Diluted $ 1.89 $ 1.86
Weighted average
shares outstanding:
Basic 75,909 78,521
Diluted 76,583 79,494
Adjusted
--------------------------
12 Weeks Ended
May 6, May 7,
2006 2005
---------- ----------
Net sales $1,417,433 $1,338,387
Cost of sales 713,392 665,284
---------- ----------
Gross profit 704,041 673,103
Operating, SG&A expenses 446,709 413,641
---------- ----------
Operating profit (EBIT) 257,332 259,462
Interest expense, net 24,921 24,223
---------- ----------
Income before taxes 232,411 235,239
Income taxes 85,349 87,450
---------- ----------
Net income $ 147,062 $ 147,789
========== ==========
Net income per share:
Basic $ 1.94 $ 1.88
Diluted $ 1.92 $ 1.86
Weighted average shares
outstanding:
Basic 75,909 78,521
Diluted 76,583 79,494
* Fiscal 2006 operating expense includes $4.2MM in share-based
compensation expense related to the adoption of SFAS No.123(R).
Year-to-date 3rd Quarter, F2006
GAAP Results Adjustments
----------------------- -----------------------
36 Weeks Ended 36 Weeks Ended
May 6, May 7, May 6, May 7,
2006 2005 2006* 2005**
---------- ---------- ---------- ----------
Net sales $4,009,325 $3,828,645 $ -- $ --
Cost of sales 2,033,566 1,952,370 -- --
---------- ---------- ---------- ----------
Gross profit 1,975,759 1,876,275 -- --
Operating,
SG&A expenses 1,338,952 1,251,781 (12,145) (40,321)
---------- ---------- ---------- ----------
Operating profit
(EBIT) 636,807 624,494 12,145 40,321
Interest expense,
net 72,994 69,659 -- --
---------- ---------- ---------- ----------
Income before taxes 563,813 554,835 12,145 40,321
Income taxes 207,990 190,431 4,480 30,219
---------- ---------- ---------- ----------
Net income $ 355,823 $ 364,404 $ 7,665 $ 10,102
========== ========== ========== ==========
Net income
per share:
Basic $ 4.66 $ 4.59
Diluted $ 4.62 $ 4.53
Weighted Average
Shares outstanding:
Basic 76,427 79,308
Diluted 77,070 80,369
Adjusted
----------------------------
36 Weeks Ended
May 6, 2006 May 7, 2005
----------- -----------
Net sales $ 4,009,325 $ 3,828,645
Cost of sales 2,033,566 1,952,370
----------- -----------
Gross profit 1,975,759 1,876,275
Operating,
SG&A expenses 1,326,807 1,211,460
----------- -----------
Operating profit
(EBIT) 648,952 664,815
Interest expense,
net 72,994 69,659
----------- -----------
Income before taxes 575,958 595,156
Income taxes 212,470 220,650
----------- -----------
Net income $ 363,488 $ 374,506
=========== ===========
Net income
per share:
Basic $ 4.76 $ 4.72
Diluted $ 4.72 $ 4.66
Weighted Average
Shares outstanding:
Basic 76,427 79,308
Diluted 77,070 80,369
* Fiscal 2006 operating expense includes $12.1MM in share-based
compensation expense related to the adoption of SFAS No.123(R).
** Fiscal year 2005 includes a non-cash adjustment, substantially
all of which relates to prior years, of $40.3 million ($25.4
million net of tax) associated with accounting for leases and
leasehold improvements. Additionally, fiscal year 2005 income
taxes include a $15.3 million benefit primarily from the planned
one-time repatriation from foreign subsidiaries.
Selected Balance Sheet Information
(in thousands)
May 6, May 7, August 27,
2006 2005 2005
---------- ---------- ----------
Merchandise inventories $1,752,687 $1,639,190 $1,663,860
Current assets 2,040,376 1,911,738 1,929,459
Property and equipment, net 2,021,692 1,880,218 1,937,615
Total assets 4,442,919 4,168,502 4,245,257
Accounts payable 1,442,132 1,429,675 1,539,776
Current liabilities 1,865,729 1,816,585 1,811,159
Debt 1,825,125 1,914,525 1,861,850
Stockholders' equity 568,545 298,746 391,007
Working capital 174,647 95,153 118,300
---------------------------------------------------------------------
Adjusted Debt /
EBITDAR (Trailing 4 Qtrs) May 6, 2006 May 7, 2005
------------------------- ---------- ----------
Net income $ 562,438 $ 573,797
Add: Interest 105,778 98,371
Taxes 319,761 316,081
---------- ----------
EBIT 987,977 988,249
Add: Depreciation 133,528 130,719
Rent expense* 136,630 146,924
Option expense 12,145 --
---------- ----------
EBITDAR $1,270,280 $1,265,892
Debt $1,825,125 $1,914,525
Add: Adjusted rent x 6** 819,780 752,382
---------- ----------
Adjusted debt $2,644,905 $2,666,907
Adjusted debt to EBITDAR 2.1 2.1
* Fiscal 2005 rent expense includes a $21.5 million non-cash
adjustment associated with accounting for leases and leasehold
improvements.
** Adjusted rent is defined as GAAP rent expense less the impact
from the cumulative lease accounting adjustment recorded in the
second quarter of fiscal year 2005.
Selected Cash Flow Information
(in thousands)
12 Weeks Ended 36 Weeks Ended
-------------------- --------------------
May 6, May 7, May 6, May 7,
2006 2005 2006 2005
-------- -------- -------- --------
Depreciation $ 32,291 $ 25,345 $ 94,600 $ 96,669
Capital spending $ 66,306 $ 68,161 $182,168 $186,939
Cash flow before
share repurchase:
Net increase
(decrease) in cash
and cash equivalents $ 2,596 $ (2,761) $ 9,158 $ 526
Subtract increase
(decrease) in debt 45,825 13,025 (36,725) 45,275
Subtract share
repurchases (228,324) (278,558) (238,111) (308,558)
-------- -------- -------- --------
Cash flow before
share repurchases
and changes in debt $185,095 $262,772 $283,994 $263,809
======== ======== ======== ========
Trailing 4 Quarters
------------------------
May 6, 2006 May 7, 2005
--------- ---------
Depreciation $ 133,528 $ 130,719
Capital spending $ 278,707 $ 259,631
Cash flow before share repurchase:
Net increase(decrease) in cash
and cash equivalents $ 6,590 $ (10,424)
Subtract increase (decrease) in debt (89,400) 115,608
Subtract share repurchases (356,405) (626,357)
--------- ---------
Cash flow before share repurchases
and changes in debt $ 452,395 $ 500,325
========= =========
Other Selected Financial Information
(in thousands)
May 6, 2006 May 7, 2005
----------- -----------
Cumulative share repurchases ($) $4,339,876 $3,983,472
Cumulative share repurchases (shares) 89,481 85,767
Shares outstanding, end of quarter 74,750 77,317
---------------------------------------------------------------------
Trailing 4 Quarters
May 6, 2006 May 7, 2005
----------- -----------
Net income $ 562,438 $ 573,797
Add: After-tax interest 67,433 63,430
After-tax rent 87,102 94,737
----------- -----------
After-tax return 716,973 731,964
Average debt 1,928,245 1,938,801
Average equity 474,459 275,324
Rent x 6 819,780 881,544
----------- -----------
Pre-tax invested capital 3,222,484 3,095,669
Return on Invested Capital (ROIC) 22.2% 23.6%
---------------------------------------------------------------------
AutoZone's 3rd Quarter Fiscal 2006
Selected Operating Highlights
Store Count & Square Footage
----------------------------
12 Weeks Ended 36 Weeks Ended
---------------- ---------------
May 6, May 7, May 6, May 7,
2006 2005 2006 2005
------ ------ ------ ------
Domestic stores:
Store count:
Stores opened 42 33 116 88
Store closures - 2 1 3
Re-opened hurricane
stores 2 - 5 -
Hurricane-related
store closures 8 - 13 -
Replacement stores 4 2 11 4
Total domestic stores 3,699 3,505 - -
Stores with commercial sales 2,123 2,052 - -
Square footage
(in thousands): 23,524 22,236 - -
Square footage per store 6,360 6,344 - -
Mexico stores:
Stores opened 4 6 11 10
Total stores in Mexico 92 73 - -
Total stores chainwide 3,791 3,578 - -
Sales Statistics
(Domestic Stores Only)
----------------------
12 Weeks Ended Trailing 4 Quarters
----------------------- ------------------------
May 6, 2006 May 7, 2005 May 6, 2006 May 7, 2005
---------- ---------- ---------- ----------
Total retail
sales ($ in
thousands) $1,189,158 $1,122,259 $4,943,059 $4,750,163
% Increase vs
LY retail sales 6% (2%) 4% 0%
Total commercial
sales ($ in
thousands) $ 169,846 $ 170,425 $ 714,703 $ 728,162
% Increase vs
LY commercial
sales 0% (5%) (2%) 0%
Sales per
average store
($ in thousands) $ 370 $ 370 $ 1,571 $ 1,601
Sales per average
square foot 58 58 247 252
12 Weeks Ended 36 Weeks Ended
----------------------- ------------------------
May 6, 2006 May 7, 2005 May 6, 2006 May 7, 2005
---------- ---------- ---------- ----------
Same store sales 2.1% (5.0%) 1.1% (2.7%)
Inventory Statistics (Total Stores)
-----------------------------------
as of as of
May 6, 2006 May 7, 2005
----------- -----------
Accounts payable/inventory 82.3% 87.2%
($ in thousands)
Inventory* $1,752,687 $1,639,190
Pay-on-scan inventory 123,354 140,715
---------- ----------
Total inventory $1,876,041 $1,779,905
Total inventory per store $ 495 $ 497
Net inventory (net of payables) $ 310,555 $ 209,515
Net inventory / store $ 82 $ 59
* This is reported balance sheet inventory
Trailing 4 Quarters
-------------------------------
May 6, 2006 May 7, 2005
----------- -----------
Inventory turns based on
ending inventories** 1.7 x 1.8 x
** Inventory turns calculation includes the pay-on-scan inventory
balances disclosed above and the cost of sales related to
pay-on-scan sales, which were $236.5MM for the trailing 4
quarters May 6, 2006 and $200.7MM for the trailing 4 quarters
May 7, 2005.
CONTACT: AutoZone, Inc.
Financial:
Brian Campbell
(901) 495-7005
brian.campbell@autozone.com
Media:
Ray Pohlman
(901) 495-7962
ray.pohlman@autozone.com