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 22, 2007
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 22, 2007, AutoZone, Inc. ("the Company") issued a press release announcing its earnings for the fiscal quarter ended May 5, 2007, 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 22, 2007.
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) |
||
|
May 22, 2007
(Date) |
/s/ WILLIAM T. GILES
William T. Giles Executive Vice President - Chief Financial Officer, Information Technology & Store Development |
| Exhibit Index | ||
| 99.1 | Press release dated May 22, 2007 | |
EXHIBIT 99.1
AutoZone 3rd Quarter Sales Increase 4.0 Percent; EPS Increases 15.0 Percent
MEMPHIS, Tenn., May 22, 2007 (PRIME NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.474 billion for its third quarter (12 weeks) ended May 5, 2007, an increase of 4.0% from fiscal third quarter 2006. Domestic same store sales, or sales for stores open at least one year, increased 0.4% for the quarter.
Net income for the quarter increased 5.0% over the same period last year to $151.6 million, while diluted earnings per share increased 15.0% to $2.17 per share from $1.89 per share reported in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 49.9% (versus 49.7% last year). The improvement in gross margin was largely due to the Company's ongoing category management initiatives and a focus on driving supply chain efficiencies. Additionally, operating expenses, as a percentage of sales, were 31.9% (versus 31.8% last year). The increase in operating expenses, as a percentage of sales, reflected higher occupancy costs versus last year.
Under its share repurchase program, AutoZone repurchased 1.9 million shares of its common stock for $244.8 million during the third quarter, at an average price of $128 per share. For the fiscal year to date, the Company has repurchased 3.8 million shares of its common stock for $464.5 million, at an average price of $123 per share.
The Company's adjusted inventory per store, which includes supplier owned pay-on-scan inventory, as of May 5, 2007, was $504 thousand versus $495 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store level to $73 thousand from $82 thousand last year.
"We continue to be pleased with our earnings performance, and are encouraged with the progress we are making on our major initiatives. While we experienced disappointing sales in the first half of April, we were pleased to deliver 15.0% growth in earnings per share for the quarter. As we enter our busiest selling season, we feel we are well positioned based on the progress we have made with our sales initiatives including improving merchandise assortment and implementation of Z-net, our updated electronic parts catalog. As our operating model continues to be strong, we will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, President and Chief Executive Officer.
During the quarter ended May 5, 2007, AutoZone opened 33 new stores and replaced five stores in the U.S. Additionally, the Company re-opened one of the remaining two U.S. stores closed due to hurricane-related damage in last year's first quarter. As of May 5, 2007, the Company had 3,881 stores in 48 states plus the District of Columbia and Puerto Rico in the U.S. and 110 stores in Mexico.
AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. 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 conference call this morning, Tuesday, May 22, 2007, 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) 369-1211 through Tuesday, May 29, 2007 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 inventory, adjusted inventory per store, adjusted debt, adjusted debt/EBITDAR, and adjusted rent expense. 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 targets 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. The Company believes this is important information for the management 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; energy 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. Forw ard-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 26, 2006, for more information related to those risks.
AutoZone's 3rd Quarter Highlights - Fiscal 2007
Condensed Consolidated Statements of Operations
3rd Quarter
(in thousands, except per share data)
GAAP Results
--------------------------------
12 Weeks Ended 12 Weeks Ended
May 5, 2007 May 6, 2006
-------------- --------------
Net sales $ 1,473,671 $ 1,417,433
Cost of sales 738,272 713,392
-------------- --------------
Gross profit 735,399 704,041
Operating, SG&A expenses 470,422 450,872
-------------- --------------
Operating profit(EBIT) 264,977 253,169
Interest expense, net 27,115 24,921
-------------- --------------
Income before taxes 237,862 228,248
Income taxes 86,271 83,820
-------------- --------------
Net income $ 151,591 $ 144,428
============== ==============
Net income per share:
Basic $ 2.19 $ 1.90
Diluted $ 2.17 $ 1.89
Weighted average shares outstanding:
Basic 69,142 75,909
Diluted 69,901 76,583
Year-to-date 3rd Quarter, FY2007
(in thousands, except per share data) GAAP Results
--------------------------------
36 Weeks Ended 36 Weeks Ended
May 5, 2007 May 6, 2006
-------------- --------------
Net sales $ 4,167,097 $ 4,009,325
Cost of sales 2,107,191 2,033,566
-------------- --------------
Gross profit 2,059,906 1,975,759
Operating, SG&A expenses 1,383,010 1,338,952
-------------- --------------
Operating profit(EBIT) 676,896 636,807
Interest expense, net 81,025 72,994
-------------- --------------
Income before taxes 595,871 563,813
Income taxes 217,374 207,990
-------------- --------------
Net income $ 378,497 $ 355,823
============== ==============
Net income per share:
Basic $ 5.39 $ 4.66
Diluted $ 5.33 $ 4.62
Weighted average shares outstanding:
Basic 70,233 76,427
Diluted 70,980 77,070
Selected Balance Sheet Information
(in thousands)
May 5, May 6, August 26,
2007 2006 2006
----------- ----------- -----------
Merchandise inventories $ 1,979,238 $ 1,752,687 $ 1,846,650
Current assets 2,230,781 2,040,376 2,118,927
Property and equipment, net 2,134,272 2,021,692 2,051,308
Total assets 4,722,498 4,442,919 4,526,306
Accounts payable 1,686,814 1,442,132 1,699,667
Current liabilities 2,160,150 1,865,729 2,054,568
Debt 1,938,942 1,825,125 1,857,157
Stockholders' equity 459,355 568,545 469,528
Working capital 70,631 174,647 64,359
--------------------------------------------------------------------
Adjusted Debt / EBITDAR May 5, May 6,
(Trailing 4 Qtrs) 2007 2006
----------- -----------
Net income $ 591,949 $ 562,438
Add: Interest 115,921 105,778
Taxes 342,145 319,761
----------- -----------
EBIT 1,050,015 987,977
Add: Depreciation 153,470 133,528
Rent expense 144,202 136,630
Option expense 18,220 12,145
----------- -----------
EBITDAR $ 1,365,907 $ 1,270,280
Debt $ 1,938,942 $ 1,825,125
Capital lease obligations* 28,576 --
Add : Adjusted rent x 6** 848,412 819,780
----------- -----------
Adjusted debt $ 2,815,930 $ 2,644,905
Adjusted debt to EBITDAR 2.1 2.1
* At the beginning of fiscal 2007, the Company converted the
majority of its vehicles accounted for as operating leases to
capital leases.
** Adjusted rent is defined as GAAP rent expense less the rent
expense associated with operating leases converted to capital
leases in fiscal 2007.
Selected Cash Flow Information
(in thousands)
12 Weeks Ended 36 Weeks Ended
May 5, May 6, May 5, May 6,
2007 2006 2007 2006
--------- --------- --------- ---------
Depreciation $ 36,946 $ 32,291 $ 108,605 $ 94,600
Capital spending $ 55,498 $ 66,306 $ 157,760 $ 182,168
Cash flow before share
repurchases:
Net increase (decrease)
in cash and cash
equivalents $ (3,489) $ 2,596 $ (8,985) $ 9,158
Subtract increase
(decrease) in debt 84,638 45,825 81,785 (36,725)
Subtract share
repurchases (244,806) (228,324) (464,464) (238,111)
--------- --------- --------- ---------
Cash flow before share
repurchases and changes
in debt $ 156,679 $ 185,095 $ 373,694 $ 283,994
========= ========= ========= =========
Trailing 4 Quarters
May 5, 2007 May 6, 2006
----------- -----------
Depreciation $ 153,470 $ 133,528
Capital spending $ 239,172 $ 278,707
Cash flow before share repurchases:
Net increase (decrease) in cash and
cash equivalents $ (1,395) $ 6,590
Subtract increase (decrease)
in debt 113,817 (89,400)
Subtract share repurchases (804,419) (356,405)
----------- -----------
Cash flow before share repurchases
and changes in debt $ 689,207 $ 452,395
=========== ===========
Other Selected Financial Information
(in thousands)
May 5, 2007 May 6, 2006
----------- -----------
Cumulative share repurchases ($) $ 5,144,296 $ 4,339,876
Cumulative share repurchases (shares) 96,993 89,481
Shares outstanding, end of quarter 68,099 74,750
--------------------------------------------------------------------
Trailing 4 Quarters
May 5, 2007 May 6, 2006
----------- -----------
Net income $ 591,949 $ 562,438
Add: After-tax interest 73,461 67,433
After-tax rent 91,384 87,102
----------- -----------
After-tax return 756,794 716,973
Average debt 1,931,309 1,928,245
Average capital lease obligations*** 17,210 --
Average equity 513,651 474,459
Rent x 6 865,212 819,780
----------- -----------
Pre-tax invested capital 3,327,382 3,222,484
Return on Invested Capital (ROIC) 22.7% 22.2%
--------------------------------------------------------------------
*** Average of the capital lease obligations relating to vehicle
capital leases entered into at the beginning of fiscal 2007 is
computed as the average over the trailing 4 quarters. Rent expense
associated with the vehicles prior to the conversion to capital
leases is included in the rent for purposes of calculating return
on invested capital.
AutoZone's 3rd Quarter Fiscal 2007
Selected Operating Highlights
Store Count & Square Footage
- ----------------------------
12 Weeks Ended 36 Weeks Ended
May 5, May 6, May 5, May 6,
2007 2006 2007 2006
------ ------ ------ ------
Domestic stores:
Store count:
Stores opened 33 42 107 116
Stores closed -- -- -- 1
Re-opened hurricane stores 1 2 3 5
Hurricane-related store
closures -- 8 -- 13
Replacement stores 5 4 15 11
Total domestic stores 3,881 3,699 3,881 3,699
Stores with commercial
sales 2,157 2,123 2,157 2,123
Square footage
(in thousands): 24,782 23,524 24,782 23,524
Square footage per store 6,385 6,360 6,385 6,360
Mexico stores:
Stores opened 2 4 10 11
Total stores in Mexico 110 92 110 92
Total stores chainwide 3,991 3,791 3,991 3,791
Sales Statistics (Domestic Stores Only)
---------------------------------------
12 Weeks Ended Trailing 4 quarters
May 5, May 6, May 5, May 6,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Total retail sales
($ in thousands) $ 1,234,318 $ 1,189,158 $ 5,116,555 $ 4,943,059
% Increase vs. LY
retail sales 3.8% 6.0% 3.5% 4.1%
Total commercial sales
($ in thousands) $ 169,195 $ 169,846 $ 704,487 $ 714,703
% Increase vs.
LY commercial sales (0.4%) (0.3%) (1.4%) (1.8%)
Sales per average
store
($ in thousands) $ 363 $ 370 $ 1,536 $ 1,571
Sales per average
square foot 57 58 241 247
12 Weeks Ended 36 Weeks Ended
May 5, May 6, May 5, May 6,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Same store sales 0.4% 2.1% 0.2% 1.1%
Inventory Statistics (Total Stores)
-----------------------------------
as of as of
May 5, May 6,
2007 2006
----------- -----------
Accounts payable/
inventory 85.2% 82.3%
($ in thousands)
Inventory* $ 1,979,238 $ 1,752,687
Pay-on-scan inventory 31,313 123,354
----------- -----------
Adjusted inventory $ 2,010,551 $ 1,876,041
Adjusted inventory
per store $ 504 $ 495
Net inventory
(net of payables) $ 292,424 $ 310,555
Net inventory/ store $ 73 $ 82
Trailing 4 Quarters
May 5, May 6,
2007 2006
----------- -----------
Inventory turns** 1.6 x 1.8 x
* This is reported balance sheet inventory
** Inventory turns is calculated as cost of sales divided by the
average of the beginning and ending merchandise inventories. The
calculation includes cost of sales related to pay-on-scan sales,
which were $121.0MM for the trailing 52 weeks ended May 5, 2007
and $234.8MM for the trailing 52 weeks ended May 6, 2006.
CONTACT: AutoZone, Inc.
Financial:
Brian Campbell
(901) 495-7005
brian.campbell@autozone.com
Media:
Ray Pohlman
(901) 495-7962
ray.pohlman@autozone.com