-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CGZx+uHkHkUDrUgkPxRAqehhsLq0GiGGt1EMn25IMYHWn4yJIoc1SpkWLwmQFOQ2 QQur9Q7Z1JdPGXys/UtB5w== 0000891092-03-002537.txt : 20030922 0000891092-03-002537.hdr.sgml : 20030922 20030922160319 ACCESSION NUMBER: 0000891092-03-002537 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030922 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030922 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOZONE INC CENTRAL INDEX KEY: 0000866787 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 621482048 STATE OF INCORPORATION: NV FISCAL YEAR END: 0830 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10714 FILM NUMBER: 03904367 BUSINESS ADDRESS: STREET 1: 123 SOUTH FRONT ST CITY: MEMPHIS STATE: TN ZIP: 38103 BUSINESS PHONE: 9014956500 MAIL ADDRESS: STREET 1: P O BOX 2198 STREET 2: DEPT 8074 CITY: MEMPHIS STATE: TN ZIP: 38101-2198 8-K 1 e15733_8k.txt FORM 8-K 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 September 22, 2003 Date of Report (Date of earliest event reported) AUTOZONE, INC. (Exact name of registrant as specified in its charter) Nevada 1-10714 62-1482048 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer incorporation or organization) Identification No.) 123 South Front Street Memphis, Tennessee 38103 (Address of principal executive offices) (Zip Code) (901) 495-6500 Registrant's telephone number, including area code (not applicable) Former name, former address and former fiscal year, if changed since last report. Item 7. Financial Statements and Exhibits (c) Exhibits 99.1 Press Release dated September 22, 2003. Item 12. Results of Operations and Financial Condition On September 22, 2003, the Company issued a press release announcing its earnings for the fiscal year ended August 30, 2003, which is attached hereto as Exhibit 99.1. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AUTOZONE, INC. By: /s/ Michael G. Archbold ------------------------------------------------- Michael G. Archbold Senior Vice President and Chief Financial Officer Customer Satisfaction Dated: September 22, 2003 EXHIBIT INDEX 99.1 Press Release dated September 22, 2003 2 EX-99.1 3 e15733ex99-1.txt PRESS RELEASE AutoZone Fourth Quarter GAAP EPS $2.27; Same Store Sales Up 3%; ROIC Improves to 23.4% 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. -0- 09/22/2003 /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./ -----END PRIVACY-ENHANCED MESSAGE-----