AutoZone 2014 Annual Report Download - page 93

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23
Interest expense, net for fiscal 2014 was $167.5 million compared with $185.4 million during fiscal 2013. This
decrease was primarily due to a decline in borrowing rates, partially offset by higher borrowing levels over the
comparable year period. Average borrowings for fiscal 2014 were $4.274 billion, compared with $3.927 billion
for fiscal 2013 and weighted average borrowing rates were 3.6% for fiscal 2014, compared to 4.5% for fiscal
2013.
Our effective income tax rate was 35.7% of pre-tax income for fiscal 2014 compared to 36.0% for fiscal 2013.
Net income for fiscal 2014 increased by 5.2% to $1.070 billion, and diluted earnings per share increased 13.6% to
$31.57 from $27.79 in fiscal 2013. The impact of the fiscal 2014 stock repurchases on diluted earnings per share
in fiscal 2014 was an increase of approximately $1.04.
Fiscal 2013 Compared with Fiscal 2012
For the fiscal year ended August 31, 2013, we reported net sales of $9.148 billion compared with $8.604 billion
for the year ended August 25, 2012, a 6.3% increase from fiscal 2012. This growth was driven primarily by sales
from new stores of $222.3 million, the 53rd week sales of $177.7 million, and sales from AutoAnything for a
portion of the fiscal year.
At August 31, 2013, we operated 4,836 domestic stores, 362 stores in Mexico and three stores in Brazil, compared
with 4,685 domestic stores, 321 stores in Mexico and none in Brazil at August 25, 2012. We reported a total auto
parts (domestic, Mexico, and Brazil operations) sales increase of 5.2% for fiscal 2013.
Gross profit for fiscal 2013 was $4.741 billion, or 51.8% of net sales, compared with $4.432 billion, or 51.5% of
net sales for fiscal 2012. The improvement in gross margin was primarily driven by lower product acquisition
costs, partially offset by the inclusion of AutoAnything (28 basis points).
Operating, selling, general and administrative expenses for fiscal 2013 increased to $2.968 billion, or 32.4% of net
sales, from $2.803 billion, or 32.6% of net sales for fiscal 2012. Operating expenses, as a percentage of sales,
improved due to lower incentive compensation (19 basis points), partially offset by lower sales growth rates.
Interest expense, net for fiscal 2013 was $185.4 million compared with $175.9 million during fiscal 2012. This
increase was primarily due to higher average borrowing levels over the comparable prior year period; partially
offset by a decline in borrowing rates. Average borrowings for fiscal 2013 were $3.927 billion, compared with
$3.507 billion for fiscal 2012 and weighted average borrowing rates were 4.5% for fiscal 2013, compared to 4.7%
for fiscal 2012.
Our effective income tax rate was 36.0% of pre-tax income for fiscal 2013 compared to 36.0% for fiscal 2012.
Net income for fiscal 2013 increased by 9.3% to $1.016 billion, and diluted earnings per share increased 18.3% to
$27.79 from $23.48 in fiscal 2012. The impact of the fiscal 2013 stock repurchases on diluted earnings per share
in fiscal 2013 was an increase of approximately $1.09.
In December 2012, we acquired certain assets and liabilities of AutoAnything, an online retailer of specialized
automotive products for $116 million. With the acquisition, we expect to bolster our online presence in the
automotive accessory and performance markets. The results of operations from AutoAnything have been
included in our Other business activities since the date of acquisition.
We performed our annual impairment testing in the fourth quarter of fiscal 2013 for the goodwill and indefinite-
lived intangible asset related to the acquisition of AutoAnything. Based on an analysis of AutoAnything’s revised
planned financial results compared to the initial projections, we determined it was more likely than not the
goodwill attributed to AutoAnything was impaired. Accordingly, we performed a goodwill impairment test by
comparing the fair value of the reporting unit with its carrying amount, including goodwill. Because the fair value
of the reporting unit was lower than its carrying value, we recorded a goodwill impairment charge of $18.3
million during the fourth quarter of fiscal 2013. Based on our evaluation of the future discounted cash flows of
AutoAnything’s trade name as compared to its carrying value, it was determined that AutoAnything’s trade name
10-K