CSK Auto Corp. Reports Third Quarter 2005 Results.PHOENIX -- 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. , today reported its financial results for the third quarter of fiscal 2005. Financial Results Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the 13 weeks ended Oct. 30, 2005 (the "third quarter of fiscal 2005") increased 1.7% to $408.3 million from $401.5 million for the 13 weeks ended Oct. 31, 2004 (the "third quarter of fiscal 2004"). Same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of for the third quarter of fiscal 2005 increased 0.4% over the third quarter of fiscal 2004, consisting of an increase of 7.5% in commercial same store sales and a decline of 1.0% in retail same store sales. Net sales for the 39 weeks ended Oct. 30, 2005, increased 1.4% to $1,224.6 million from $1,207.6 million for the 39 weeks ended Oct. 31, 2004. Same store sales for the 39 weeks of fiscal 2005 increased 0.1% compared to the 39 weeks of fiscal 2004, consisting of an increase of 7.8% in commercial same store sales and a decline of 1.4% in retail same store sales. Since Oct. 31, 2004, we have added 26 net new stores (based on year-to-year end of third quarter store count), which contributed to the increase in our sales for the third quarter and the 39 weeks of fiscal 2005. Sales of discretionary items such as wipers
The Wipers were a punk rock group formed in Portland, Oregon in 1977 by guitarist Greg Sage, drummer Sam Henry and bassist Dave Koupal. , jacks and ramps, and certain power tools declined, which we believe was due to high gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by prices. During the third quarter of fiscal 2005, gross profit increased $0.3 million to $188.2 million, or 46.1% of net sales, compared to $187.9 million, or 46.8% of net sales, for the third quarter of fiscal 2004. The decline in gross margin rate is primarily attributed to less vendor allowances, a result of lower purchase levels, and to a higher balance of commercial sales, which carry lower gross margin rates. Also during the third quarter of fiscal 2005, we recorded a $1.5 million customer product returns allowance, which negatively impacted our gross margins. Partially offsetting these amounts was lower shrink shrink Vox populi noun A psychiatrist resulting from improved store procedures and enhanced inventory control systems. During the 39 weeks of fiscal 2005, gross profit decreased by $9.5 million to $561.2 million, or 45.8% of net sales, compared to $570.7 million, or 47.3% of net sales, for the 39 weeks of fiscal 2004. The decline in gross margin rate is primarily attributed to less vendor allowances, a result of lower purchase levels, and to a higher balance of commercial sales, which carry lower gross margin rates. The customer product returns allowance, described above, negatively impacted our gross margins for the 39 weeks of fiscal 2005. Operating and administrative expenses for the third quarter of fiscal 2005 were $162.5 million, or 39.8% of net sales, compared to $158.9 million, or 39.6% of net sales, for the third quarter of fiscal 2004. Operating and administrative expenses for the 39 weeks of fiscal 2005 were $481.4 million, or 39.3% of net sales, compared to $478.1 million, or 39.6% of net sales, for the 39 weeks of fiscal 2004. The amount of our operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased primarily as a result of the addition of 26 net new stores since Oct. 31, 2004. Interest expense for the third quarter of fiscal 2005 decreased to $7.6 million from $8.2 million in the third quarter of fiscal 2004. Interest expense for the 39 weeks of fiscal 2005 decreased to $24.5 million from $24.8 million in the 39 weeks of fiscal 2004. Interest expense decreased primarily as a result of lower outstanding balances, partially offset by higher variable interest rates. Net income for the third quarter of fiscal 2005 was $10.5 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. common share, compared to net income of $12.2 million, or $0.27 per diluted common share, for the third quarter of fiscal 2004. Net income for the 39 weeks of fiscal 2005 was $31.6 million, or $0.70 per diluted common share, compared to net income of $40.3 million or $0.87 per diluted common share, for the 39 weeks of fiscal 2004. During the third quarter of fiscal 2005, the above described customer product returns allowance (net of income tax) negatively impacted earnings per fully diluted share by $0.02. During the 39 weeks of fiscal 2005, we incurred charges of $1.6 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a loss on debt retirement resulting from our second quarter 2005 refinancing Refinancing An extension and/or increase in amount of existing debt. , approximately $0.7 million of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs and the customer product returns allowance. These charges (net of income tax) negatively impacted net income and fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the 39 weeks of fiscal 2005 by $2.3 million and $0.05, respectively. "While we are not pleased with our sales performance for the third quarter, we continue to see strength in our commercial sales business" said Maynard Maynard can refer to: It is a surname used across the English-speaking world. Places in the United States of America:
n. 1. A name of contempt for a flatterer of persons high in social or official life; as, the Jenkins employed by a newspaper s>. , chairman and chief executive officer of CSK Auto Corp. "We believe that the higher gas prices have negatively impacted our retail sales, however, our expense control initiatives are proving to be effective and we continue to focus on improving our inventory mix. In addition, we are excited about our pending acquisition of Murray's Discount Auto Stores Inc. and the anticipated synergies, which we believe will increase value to our shareholders." Conference Call In conjunction with this release, we will hold a quarterly conference call for the investing public commencing at 5 p.m. (ET) on Monday Monday: see week. , Dec. 5, 2005. Interested parties may hear a replay of the conference call from 8 p.m. (ET) Monday, Dec. 5, 2005, through 9 p.m. (ET) Tuesday, Dec. 6, 2005, by dialing 888-266-2081 and using passcode 816016. (If retrieving digital replay outside of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , please dial 703-925-2510, passcode 816016.) Additionally, a simultaneous webcast of the conference call will be available at www.cskauto.com by clicking on "Investors" and then "Conference Call." This webcast will be archived for five days. CSK Auto Corp. is the parent company of CSK Auto Inc., a specialty retailer in the automotive aftermarket. As of Oct. 30, 2005, we operated 1,151 stores in 19 states under the brand names Checker check·er n. 1. a. One, such as an inspector or examiner, that checks. b. One that receives items for temporary safekeeping or for shipment: a baggage checker. 2. Auto Parts Auto parts are components of automobiles. They mainly are, in alphabetic order (only car specific articles or articles with car section):
Certain statements contained in this release are 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. . They discuss, among other things, expected growth, future store development and relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. strategy, business strategies, future revenues and future performance. The forward-looking statements are subject to risks, uncertainties and assumptions, including, but not limited to, competitive pressures, the overall condition of the national and regional economies, factors affecting import of products, factors impacting consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. and driving habits such as high gas prices, war and terrorism, natural disasters, consumer debt levels and inflation, demand for our products, conditions affecting new store development, weather and regional conditions, risks related to compliance with Section 404 of the Sarbanes-Oxley Act See SOX. , and litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and regulatory matters. Actual results may differ materially from anticipated results described in these forward-looking statements.
CSK AUTO CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------- ------------------------
Oct. 30, Oct. 31, Oct. 30, Oct. 31,
2005 2004 2005 2004
---------- ---------- ----------- -----------
Net sales $ 408,318 $ 401,457 $1,224,567 $1,207,568
Cost of sales 220,079 213,551 663,379 636,899
--------- --------- ---------- ----------
Gross profit 188,239 187,906 561,188 570,669
Other costs and
expenses:
Operating and
administrative 162,521 158,879 481,351 478,089
Store closing
costs 910 721 1,879 1,608
--------- --------- ---------- ----------
Operating profit 24,808 28,306 77,958 90,972
Interest expense,
net 7,585 8,217 24,455 24,797
Loss on debt
retirement -- -- 1,600 --
--------- --------- ---------- ----------
Income before income
taxes 17,223 20,089 51,903 66,175
Income tax expense 6,706 7,862 20,283 25,869
--------- --------- ---------- ----------
Net income $ 10,517 $ 12,227 $ 31,620 $ 40,306
========= ========= ========== ==========
Basic earnings per
share:
Net income per
share $ 0.24 $ 0.27 $ 0.71 $ 0.88
========= ========= ========== ==========
Shares used in
computing per share
amounts 43,787 45,126 44,683 45,939
========= ========= ========== ==========
Diluted earnings per
share:
Net income per
share $ 0.24 $ 0.27 $ 0.70 $ 0.87
========= ========= ========== ==========
Shares used in
computing per share
amounts 44,121 45,269 45,049 46,211
========= ========= ========== ==========
The following table provides certain financial information:
Selected Financial Data:
($ in thousands)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------- -----------------------
Oct. 30, Oct. 31, Oct. 30, Oct. 31,
2005 2004 2005 2004
---------- ---------- ----------- ----------
Cash $ 19,287 $ 54,673 $ 19,287 $ 54,673
Inventory (excluding
supplies) $ 563,039 $ 547,562 $ 563,039 $ 547,562
Accounts payable $ 204,186 $ 183,557 $ 204,186 $ 183,557
Interest expense, net $ 7,585 $ 8,217 $ 24,455 $ 24,797
Depreciation and
amortization (net of
deferred financing
costs) $ 8,530 $ 8,758 $ 25,422 $ 26,543
Rent expense $ 28,802 $ 27,670 $ 85,636 $ 83,364
Cash provided by
operating activities $ 48,164 $ 20,872 $ 127,209 $ 74,421
Capital expenditures $ 10,666 $ 4,242 $ 24,322 $ 18,770
Availability under
revolving credit
facility $ 190,441 $ 115,038 $ 190,441 $ 115,038
Total debt (including
capital leases) $ 395,087 $ 511,265 $ 395,087 $ 511,265
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