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AutoZone Reports Record Year With $2.00 EPS, up 23%; Fourth Quarter EPS Hits 84 Cents, up 25%; CEO Adams to Begin Transition

MEMPHIS, Tenn., Sept. 21 /PRNewswire/ -- AutoZone, Inc. (NYSE: AZO) today reported record diluted earnings per share of $2.00 for the fiscal year ended August 26, 2000, an increase of 23% from $1.63 per share in fiscal 1999. Earnings before interest and taxes for the year were $512 million, an increase of 18% from $433 million in the prior year. Net income for the year was $268 million, an increase of 9% from $245 million in the prior year. Sales for the year rose 9% to $4.48 billion from $4.12 billion in fiscal 1999, with same store sales, or sales for domestic auto parts stores open at least one year, increasing 5%.

For the 16 weeks ended August 26, 2000, AutoZone reported diluted earnings per share of 84 cents, a 25% increase over prior year diluted earnings per share of 67 cents. Earnings before interest and taxes for the quarter of $200 million were up 16% from $172 million in the prior year. Net income for the quarter was $105 million, an increase of 7% from $99 million for the fiscal fourth quarter of 1999. Sales for the quarter rose 7% to $1.49 billion from $1.39 billion a year earlier. Same store sales, or sales for domestic auto parts stores open at least a year, rose 3% for the quarter.

"We achieved important milestones this fiscal year," said John C. Adams, chairman and chief executive officer. "We regained our earnings growth momentum by showing we can still build sales in the DIY business, by becoming an increasingly large and successful participant in the commercial business, and by demonstrating our ability to bring our acquired stores to AutoZone standards of operating performance. Specifically, we met and exceeded the fiscal 2000 sales and profitability goals for the former Chief stores we set for ourselves in 1998 -- $1 million per store in sales and a 10% EBITDA margin.

"We also met our objectives for improved returns. Higher sales per store and lower inventories helped us reach our goal of 13% after tax return on capital for fiscal 2000. Our free cash flow before stock repurchases exceeded $200 million for the year. Return on equity grew from 19% last year to 23% this year.

"This solid performance gives us confidence that our long-term EPS growth goal of 15% is achievable and our goal of increasing after-tax return on capital to 15% by fiscal 2002 is on track.

"On a personal note, the success we've achieved didn't come without personal sacrifice. Leading the company through a period of industry consolidation while, at the same time, developing our commercial and international businesses, and directing our push into truck parts and e- commerce all took considerable time and energy away from my family. I'm ready now to give someone else the opportunity to build on these successes, and I have decided to step aside as CEO.

"We have established a search committee of the board to seek a recognized leader as CEO who will be able to take the company to the next level. I will remain as CEO until the replacement is appointed and will continue as chairman as long as the board deems appropriate. Tim Vargo has expressed a desire to continue in his present role as president and COO rather than be a candidate for CEO.

"Tim and our management team have put together a strong plan for the upcoming year, and we're confident AutoZone can continue to build sales, profitability and returns in fiscal 2001. We are very comfortable with EPS estimates of $.46 for the current quarter and $2.30 for the fiscal year."

During the quarter, AutoZone opened 63 new auto parts stores and replaced 11 in the U.S. Two stores were closed. For the year, AutoZone opened 208 new auto parts stores in the U.S. and 7 in Mexico, replaced 30 stores and closed four. In addition, AutoZone opened one new TruckPro store and relocated one during the quarter for year-to-date totals of 3 new TruckPro stores and 5 relocations.

At the end of the quarter, aggregate share repurchases under the share repurchase program totaled $1.151 billion and 44.4 million shares, including $280 million and 11.6 million shares under forward purchase contracts. Currently, the total share repurchase authorization is $1.25 billion. Management expects to request board approval for an additional $100 million stock repurchase authority in the near future.

There will be a one-hour conference call beginning at 4:00 P.M. (CDT) to discuss this press release. Investors may listen to the conference call live and review supporting slides on the AutoZone website, www.autozone.com , by clicking "About Us," "Investor Relations," "Conference Calls" or by going directly to http://www.autozone.com/aboutUs/Investors/Investors.html . A replay of the call and slides will also be available on the website. In addition, a replay of the call will be available by dialing (402) 998-1014 through Friday, September 28, 2000, at 11:00 PM (CDT).

AutoZone sells auto and light truck parts, chemicals and accessories through 2,915 AutoZone stores in 42 states plus the District of Columbia in the U.S. and 13 AutoZone stores in Mexico. AutoZone also sells heavy duty truck parts through 49 TruckPro stores in 15 states, and automotive diagnostic and repair information through ALLDATA, and diagnostic and repair information on the Internet through www.alldatadiy.com

Certain statements contained in this press release are forward-looking statements. These statements discuss, among other things, expected growth, domestic and international development and expansion strategy, business strategies and future performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including without limitation, competition, product demand, domestic and international economies, government approvals, inflation, the ability to hire and retain qualified employees, consumer debt levels and the weather. Actual results may materially differ from anticipated results. Please refer to the Risk Factors section of Form 10- K for the year ended August 28,1999, for more details.

                                AUTOZONE, INC.
                         CONSOLIDATED BALANCE SHEETS
                                (in thousands)
    Subject to reclassification                    August 26,     August 28,
                                                        2000           1999

                                    ASSETS
    Current assets:
      Cash and cash equivalents                    $     6,969    $     5,918
      Accounts receivable                               21,407         25,917
      Merchandise inventories                        1,108,978      1,129,693
      Prepaid expenses                                  30,214         33,468
      Deferred income taxes                             18,438         30,088
       Total current assets                          1,186,006      1,225,084

    Property and equipment:
      Property and equipment                         2,320,376      2,089,052
      Less accumulated depreciation
       and amortization                                561,936        450,566
                                                     1,758,440      1,638,486
    Other assets:
      Cost in excess of net assets acquired            328,499        337,261
      Deferred income taxes                             54,774         76,412
      Other assets                                      11,321          7,524
                                                       394,594        421,197
                                                   $ 3,339,040    $ 3,284,767
                       LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                                $788,825       $757,447
      Accrued expenses                                 229,655        230,036
      Income taxes payable                              21,886         13,071
       Total current liabilities                     1,040,366      1,000,554
    Long-term debt                                   1,249,937        888,340
    Other liabilities                                   56,558         72,072
    Stockholders' equity                               992,179      1,323,801
                                                   $ 3,339,040    $ 3,284,767

                                AUTOZONE, INC.
                      CONSOLIDATED STATEMENTS OF INCOME
                   (in thousands, except per share amounts)
                                Sixteen Weeks Ended    Fifty-Two Weeks Ended
                             August 26,    August 28,  August 26,   August 28,
                                  2000          1999        2000         1999
    Net sales              $ 1,492,645    $1,392,669 $ 4,482,696   $4,116,392
    Cost of sales,
     including warehouse
     and delivery expenses     872,196       800,155   2,602,386    2,384,970
    Operating, selling,
     general and administrative
     expenses                  420,874       420,819   1,368,290    1,298,327
    Operating profit           199,575       171,695     512,020      433,095
    Interest expense, net       28,355        15,386      76,830       45,312
    Income before income
     taxes                     171,220       156,309     435,190      387,783
    Income taxes                66,000        57,600     167,600      143,000
      Net income              $105,220       $98,709    $267,590     $244,783

    Weighted average shares
     for basic earnings
     per share                 124,095       146,929     132,945      149,014
    Effect of dilutive
     stock options                 805           930         924        1,243
    Adjusted weighted average
     shares for diluted earnings
     per share                 124,900       147,859     133,869      150,257
    Basic earnings per share     $0.85        $ 0.67       $2.01        $1.64
    Diluted earnings per share   $0.84        $ 0.67       $2.00        $1.63

AutoZone's 4th Quarter - Fiscal 2000

    Selected Cash Flow Information
             16 Weeks Ended   16 Weeks Ended   52 Weeks Ended   52 Weeks Ended
                  August 26,       August 28,       August 26,      August 28,
                       2000             1999             2000            1999
    Capital
     spending*      $79,913         $102,180         $249,657        $428,315
    Depreciation &
     amortization   $32,718          $40,881         $126,799        $128,531

Selected Operating Highlights

    Store Count & Square Footage:
             16 Weeks Ended   16 Weeks Ended   52 Weeks Ended   52 Weeks Ended
                  August 26,       August 28,       August 26,      August 28,
                       2000             1999             2000            1999
    Domestic auto
     parts stores:
      Store count:
      Stores opened      63               26              208             245
      Stores closed(A)    2               10                4             191
      Replacement
       stores            11               15               30              59
      Total domestic
       auto parts
       stores         2,915            2,711
     Square footage  18,719           17,405
    Auto parts stores in Mexico:
     Stores opened       --                2                7               6
     Total auto parts
      stores in Mexico   13                6
    TruckPro stores:
     Stores opened        1                3                3               3
     Replacement stores   1                1                5               6
     Total TruckPro
      stores             49               46

(A) 1999 closings include 5 former Auto Palace locations and 167 former

Chief locations.

    Sales & Inventory Statistics:
    (Domestic auto parts)
             16 Weeks Ended   16 Weeks Ended   52 Weeks Ended   52 Weeks Ended
                  August 26,       August 28,       August 26,      August 28,
                       2000             1999             2000            1999
    Sales per
     average store
    ($ in thousands)   $493             $493           $1,517          $1,465
    Sales per average
     sq foot            $77              $77             $236            $232

Same store sales

  • rolling 13 periods

      Total               3%               5%               5%              5%
      Organic vs acquired:
       Organic stores     0%               3%               2%              5%
       Former Auto
       Palace stores      9%              42%              15%             47%
       Former Chief
        stores           27%               7%              31%              7%
       Former Pep
        Express stores   23%              --               30%             --
      Commercial
        vs retail:
       Retail             3%               4%               4%              5%
       Commercial         7%              14%               8%             12%

    Same store sales
     - static             2%               2%               4%              4%
    Inventory turns:
     Based on average
      inventories       2.3X             2.2X
     Based on ending
      inventories       2.3X             2.1X
    Accounts
     payable/inventory   71%              67%

SOURCE AutoZone, Inc.

CONTACT: financial, Emma Jo Kauffman, 901-495-7005, or media, Lesley Hartney, 901-495-7304, both of AutoZone, Inc./