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) December 5, 2006
AutoZone, Inc.
(Exact name of registrant as specified in its charter)
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Nevada |
1-10714 |
62-1482048 |
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(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
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123 South Front Street, Memphis, Tennessee |
38103 |
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| (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 December 5, 2006, AutoZone, Inc. issued a press release announcing its earnings for the fiscal quarter ended November 18, 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 December 5, 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.
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AutoZone, Inc.
(Registrant) |
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December 5, 2006
(Date) |
/s/ WILLIAM T. GILES
William T. Giles Executive Vice President and Chief Financial Officer |
| Exhibit Index | ||
| 99.1 | Press release dated December 5, 2006 | |
EXHIBIT 99.1
AutoZone 1st Quarter Sales up 4.1 Percent; EPS up 16.4 Percent
MEMPHIS, Tenn., Dec. 5, 2006 (PRIME NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.393 billion for its first fiscal quarter (12 weeks) ended November 18, 2006, up 4.1% from fiscal first quarter 2006. Same store sales, or sales for stores open at least one year, were up 0.3% for the quarter.
Net income for the quarter increased 8.3% over the same period last year to $123.9 million, while diluted earnings per share increased 16.4% to $1.73 per share from $1.48 per share reported in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 49.2% (versus 49.0% last year). The Company's improvement in gross margin has largely been due to the Company's ongoing category management initiatives which include continued optimization of merchandise assortment and pricing, and an increasing focus on direct importing initiatives. Additionally, operating expenses, as a percentage of sales, were 33.2% (versus 33.6% last year). A substantial portion of the favorable variance in operating expenses reflects a $2.8 million hurricane related charge taken in last year's quarter, our store reset efforts initiated in last year's first quarter, and an ongoing focus to reduce expenditures throughout the organization.
Under its share repurchase program, AutoZone repurchased 816 thousand shares of its common stock for $90.8 million during the first quarter, at an average price of $111 per share. The Company has approximately $130 million remaining under its current share repurchase authorization.
The Company's adjusted inventory per store, including supplier owned pay-on-scan inventory, as of November 18, 2006, was $503 thousand versus $495 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, increased on a per store level to $60 thousand from $45 thousand last year.
"I'd like to thank our AutoZoners across the country for delivering record first quarter sales and EPS. While we're continuing to build momentum with our ongoing efforts to improve the customer shopping experience, driving measurable increases in customer service metrics, resulting sales improvements have been slower to materialize. As our financial model continues to be strong, we will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively. Additionally, we believe our focus on driving our unique and powerful culture and refining our merchandise assortment during fiscal 2007 will positively impact sales for the foreseeable future," said Bill Rhodes, President and Chief Executive Officer.
During the quarter ended November 18, 2006, AutoZone opened 40 new stores and replaced 5 stores in the U.S. Additionally, the Company re-opened 1 of the remaining 4 U.S. stores closed due to hurricane-related damage in last year's first quarter. As of November 18, 2006, the Company had 3,812 stores in 48 states plus the District of Columbia and Puerto Rico in the U.S. and 100 stores in Mexico.
AutoZone is the leading retailer and 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, December 5, 2006, beginning at 10:00 a.m. (EST) to discuss the first 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) 369-1831 through Monday, December 11, 2006, at 11:59 p.m. (EST).
This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP measures include total inventory, total inventory per store, adjusted debt, adjusted debt/EBITDAR, 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 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 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 rec onciliation 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 1st Quarter Highlights - Fiscal 2007
Condensed Consolidated Statements of Operations
1st Quarter
(in thousands, except per share data)
GAAP Results
-----------------------------------------
12 Weeks Ended 12 Weeks Ended
November 18, 2006 November 19, 2005
----------------- -----------------
Net sales $1,393,069 $1,338,076
Cost of sales 707,774 682,547
---------- ----------
Gross profit 685,295 655,529
Operating, SG&A expenses 462,299 450,236
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Operating profit (EBIT) 222,996 205,293
Interest expense, net 27,093 23,739
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Income before taxes 195,903 181,554
Income taxes 72,014 67,180
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Net income $ 123,889 $ 114,374
========== ==========
Net income per share:
Basic $ 1.74 $ 1.49
Diluted $ 1.73 $ 1.48
Weighted average
shares outstanding:
Basic 71,082 76,588
Diluted 71,813 77,152
Selected Balance Sheet Information
(in thousands)
November 18, November 19, August 26,
2006 2005 2006
----------- ----------- -----------
Merchandise inventories $ 1,883,348 $ 1,681,015 $ 1,846,650
Current assets 2,157,294 2,000,758 2,118,927
Property and equipment,
net 2,096,377 1,965,632 2,051,308
Total assets 4,611,685 4,339,831 4,526,306
Accounts payable 1,649,632 1,514,571 1,699,667
Current liabilities 2,047,289 1,844,868 2,054,568
Debt 1,858,921 1,789,775 1,857,157
Stockholders' equity 537,838 521,282 469,528
Working capital 110,005 155,890 64,359
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Adjusted Debt / EBITDAR (Trailing 4 Qtrs)
-----------------------------------------
November 18, 2006 November 19, 2005
----------------- -----------------
Net income $ 578,790 $ 562,870
Add: Interest 111,243 104,392
Taxes 337,595 297,382
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EBIT 1,027,628 964,644
Add: Depreciation 144,203 140,756
Rent expense* 144,238 154,203
Option expense 17,933 3,739
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EBITDAR $1,334,002 $1,263,342
Debt $1,858,921 $1,789,775
Capital lease obligations** 26,053 --
Add: Adjusted rent x 6*** 823,425 796,056
---------- ----------
Adjusted debt $2,708,399 $2,585,831
Adjusted debt to EBITDAR 2.0 2.0
* The second quarter of fiscal 2005 rent expense includes a $21.5
million non-cash adjustment associated with accounting for leases
and leasehold improvements.
** 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 impact
from the cumulative lease accounting adjustment recorded in the
second quarter of fiscal year 2005 and excludes the rent expense
associated with operating leases converted to capital leases in
fiscal 2007.
Selected Cash Flow Information
------------------------------
(in thousands)
12 Weeks Ended 12 Weeks Ended
November 18, 2006 November 19, 2005
----------------- -----------------
Depreciation $ 35,554 $ 30,816
Capital spending $ 52,198 $ 58,457
Cash flow before share
repurchases:
Net increase (decrease) in
cash and cash equivalents $ (18,199) $ 6,568
Subtract increase (decrease)
in debt 1,764 (72,075)
Subtract share repurchases (90,767) (9,787)
----------------- -----------------
Cash flow before share
repurchases and changes
in debt $ 70,804 $ 88,430
================= =================
Other Selected Financial Information
------------------------------------
(in thousands)
November 18, 2006 November 19, 2005
----------------- -----------------
Cumulative share
repurchases ($) $ 4,770,598 $ 4,111,553
Cumulative share
repurchases (shares) 94,038 87,158
Shares outstanding,
end of quarter 70,659 76,682
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Trailing 4 Quarters
November 18, 2006 November 19, 2005
----------------- -----------------
Net income $ 578,790 $ 562,870
Add: After-tax interest 70,261 65,934
After-tax rent 91,100 97,395
----------------- -----------------
After-tax return 740,151 726,199
Average debt 1,910,896 1,965,684
Average capital lease
obligations**** 6,187 --
Average equity 534,372 365,095
Adjusted rent x 6 865,425 796,056
----------------- -----------------
Pre-tax invested capital 3,316,881 3,126,835
Return on Invested Capital (ROIC) 22.3% 23.2%
---------------------------------------------------------------------
**** 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 adjusted rent for purposes of
calculating return on invested capital.
AutoZone's 1st Quarter Fiscal 2007
Selected Operating Highlights
Store Count & Square Footage
----------------------------
12 Weeks Ended 12 Weeks Ended
November 18, 2006 November 19, 2005
----------------- -----------------
Domestic stores:
Store count:
Stores opened 40 33
Store closures - -
Re-opened hurricane stores 1 -
Hurricane-related store closures - 13
Replacement stores 5 3
Total domestic stores 3,812 3,612
Stores with commercial sales 2,140 2,103
Square footage (in thousands): 24,300 22,937
Square footage per store 6,375 6,350
Mexico stores:
Stores opened - 3
Total stores in Mexico 100 84
Total stores chainwide 3,912 3,696
Sales Statistics (Domestic Stores Only)
--------------------------------------
12 Weeks Ended
Nov. 18, 2006 Nov. 19, 2005
------------- -------------
Total retail sales ($ in thousands) $ 1,171,084 $ 1,126,631
% Increase vs. LY retail sales 4% 4%
Total commercial sales
($ in thousands) $ 160,682 $ 160,425
% Increase vs. LY commercial sales 0% (2%)
Sales per average store
($ in thousands) $ 351 $ 357
Sales per average square foot 55 56
Trailing 4 quarters
Nov. 18, 2006 Nov. 19, 2005
------------- -------------
Total retail sales ($ in thousands) $ 5,033,718 $ 4,840,521
% Increase vs. LY retail sales 4% 2%
Total commercial sales
($ in thousands) $ 708,971 $ 714,968
% Increase vs. LY commercial sales (1%) (3%)
Sales per average store
($ in thousands) $ 1,547 $ 1,574
Sales per average square foot 243 248
12 Weeks Ended 12 Weeks Ended
November 18, 2006 November 19, 2005
----------------- -----------------
Same store sales 0.3% 0.8%
Inventory Statistics (Total Stores)
----------------------------------
as of as of
November 18, 2006 November 19, 2005
----------------- -----------------
Accounts payable/inventory 87.6% 90.1%
($ in thousands)
Inventory* $ 1,883,348 $ 1,681,015
Pay-on-scan inventory 85,146 148,834
----------------- -----------------
Total inventory $ 1,968,494 $ 1,829,849
Total inventory per store $ 503 $ 495
Net inventory (net of payables) $ 233,716 $ 166,444
Net inventory / store $ 60 $ 45
* This is reported balance sheet inventory
Trailing 4 Quarters
November 18, 2006 November 19, 2005
----------------- -----------------
Inventory turns** 1.7 x 1.8 x
** 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 $169.4MM for the trailing 52 weeks ended November
18, 2006 and $246.0MM for the trailing 52 weeks ended November
19, 2005.
CONTACT: AutoZone, Inc.
Financial:
Brian Campbell
(901) 495-7005
brian.campbell@autozone.com
Media:
Ray Pohlman
(901) 495-7962
ray.pohlman@autozone.com