CSK Auto Corp. Announces Successful Completion of Refinancing and Revises Fiscal 2004 Guidance Upward.Business Editors/Automotive Writers PHOENIX--(BUSINESS WIRE)--Jan. 19, 2004 CSK Auto CSK Auto Inc. is the largest specialty retailer of automotive parts and accessories in the western United States and one of the largest retailers of such products in the entire country. Corp. (NYSE NYSE See: New York Stock Exchange : CAO), the parent company of CSK Auto Inc., a specialty retailer in the automotive aftermarket Aftermarket See: Secondary market. aftermarket See secondary market. , announced today the consummation of its refinancing Refinancing An extension and/or increase in amount of existing debt. . The components of the refinancing consist of the following: -- CSK Auto Inc. repurchased approximately $265 million, or approximately 94%, of its $280 million outstanding principal amount of 12% senior notes due 2006 pursuant to a cash tender offer commenced Dec. 16, 2003. The tender offer expired at 12 midnight, New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. time, on Jan. 15. CSK Auto Inc. also received the requisite consents to amend the indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. that will govern the remaining outstanding notes, which the company expects to redeem in December 2004, the first time such notes become redeemable pursuant to the indenture governing the notes. -- CSK Auto Inc. amended and restated its senior credit facility, increasing the size of the facility from $325 million to $400 million and lowering the interest rate margin on the term loan portion of such facility by 50 basis points. The amended and restated senior credit facility is comprised of $145 million of revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facilities maturing in June 2008 and $255 million of term loans maturing in June 2009. -- CSK Auto Inc. issued $225 million of 7% senior subordinated notes due 2014. The new notes will be unsecured general senior subordinated obligations of CSK Auto Inc. Interest on the new notes is payable each Jan. 15 and July 15 and the new notes will mature on Jan. 15, 2014. The note offering was increased from $200 million due to strong investor demand. "We are extremely pleased to close this refinancing on such favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. terms to the company," said Maynard Jenkins, chairman and chief executive officer of CSK Auto Corp. "The strong investor demand is a further indication of the continuing positive momentum resulting from our significantly improved financial condition and strong operating results. Completing this refinancing is another step in the company's strategic plan to reduce our overall cost of capital and improve our free cash flow." As a result of the refinancing, we expect pre-tax savings of approximately $12 million to $14 million in annual interest expense. Accordingly, this will increase our fiscal 2004 net income estimate from a range of $58 million to $61 million to a range of $65 million to $69 million. This results in an increase in diluted earnings per common share of $0.16 to $0.18, assuming approximately 47 million diluted shares outstanding. We are also increasing our fiscal 2004 free cash flow estimate to between $73 million and $83 million. In connection with the refinancing, we expect to record a charge of approximately $44 million to $45 million ($27 million to $28 million after income taxes) in our fourth quarter ending Feb. 1, 2004. This charge will consist of premiums paid upon retirement of CSK Auto Inc.'s $265 million of 12% senior notes, the write-off of the unamortized debt discount associated with such notes, the write-off of certain unamortized debt issuance costs, and certain other fees and expenses associated with the refinancing, partially offset by a fair market value adjustment to the senior notes associated with the termination in June 2003 of an interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. agreement. The actual amount of the charge will be determined upon final settlement of related costs and expenses. Portions of this release may constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " as defined by federal law. Although the company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in the company's performance is contained in the company's filings with the Securities and Exchange Commission. |
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