Interest expense for quarter was $27.1 million compared with $24.9 million a year-ago.

The increase in interest expense reflects higher levels of debt, the ongoing efforts to turn out the company’s debt on a long-term basis as well as the year-over-year increase in short-term rates. Additionally, interest was higher due to the accounting for the firm’s capitalized leases established in the first quarter of this year. The firm expects interest expense to remain higher than the previous year for the remainder of fiscal 2007. The firm’s adjusted debt level were maintained in line with its guideline of 2.1 times of its trailing 12 months EBITDA income.

- EBIT for the quarter was $265 million, up 4.7% over last year.
- Debt outstanding at the end of the quarter was $1,939 million or approximately $114 million more than last year.
- For the quarter, the tax rate was 36.3% below last year’s rate of 36.7%. Over the next several quarters, the firm expects to maintain an approximate 37% effective tax rate.

- In the third quarter, the firm generated $203.7 million of operating cash flow and repurchased $245 million of AutoZone’s stock as part of its ongoing stock repurchase program. The firm intends to continue to repurchase stock after it has appropriately located capital to its existing stores and new-store openings as long as it is accretive to earnings and consistent with our 2.1 times adjusted debt-to-EBITDA liquidity target, which the firm has maintained again for the quarter.

- For the third quarter of this year, the firm recorded an industry-leading ROIC of 22.7%.

For the quarter, inventory first store on the balance sheet plus the excluded Pay on Scan inventory was $504,000 versus $495,000 in last year. This inventory amount reflects new skews added in connection with the firm’s new product assortment initiatives.

Accounts payable as a percent of growth inventory finished the quarter at 85% compared to 82% last year.

The firm continues to be committed to its goal of achieving 100% account payable to inventory and it is pleased with the momentum. This quarter, the firm has reported a total of $31 million of inventory on POS, which in accordance with GAAP is not reflected on the balance sheet. POS is about aligning the interest of AutoZone and its suppliers and is one of programs the firm used to achieve its financial goals.

- Total working capital was $71 million versus last year’s balance of $175 million. The firm will continue to focus on minimizing working capital as this reflects its ongoing focus on increasing cash flow.
- Depreciation totaled $37 million for the quarter, which is higher than last year due primarily to new stores and the accounting for new capital leases established in the quarter.

- Net fixed assets were up 5.6% versus last year.
- Capital expenditures for the quarter totaled $55 million and reflects the additional expenditures required to open 41 new stores this quarter, maintenance on existing stores and work on development of new stores for upcoming quarters. Specifically related to new store opening, the firm’s new stores are on track to achieve at least a 15% IRR and the company continues to see ample opportunity opened stores in the US at a mid-single-digit growth rate for the foreseeable future. The firm opened 33 new stores in the quarter for a total of 3,881 stores in 48 states the District of Columbia and Puerto Rico. The goal this year was to open stores more evenly throughout our fiscal year. The firm also relocated five stores this past quarter and continues to see opportunities to expand this initiative in the future.

The company had expected to substantially complete its product additions in the third quarter.

The firm has substantially completed the rollout of the line reviews it expected and added more hard parts coverage into its stores than it has in years. The company accomplished this all while managing to a targeted inventory level per store. The inventory per store is up over the last year, $504,000. The inventory per store net of payables is lower than last year at a $73,000 per store.

The management believes that this additional coverage means a great deal to its customers. The firm is very excited about what it has done in this area and believes that it can continue to refine these efforts well into the future, building on its reputation for having the right merchandise at the right price. While it will have a few additional rollouts in the fourth quarter, it was substantially complete in the third quarter.

The Energy Information Administration is expecting gas prices to remain in the $3 per gallon range for the next couple of months.

While the firm cannot control the prices of gases, it certainly feels with more cars on the road than ever before, its ability to grow sales remains strong over the long run and consumers ultimately adjust their spending habits for higher prices. The company will continue to develop marketing programs to support its customers’ needs during the high price times.

AutoZone saw decreases in miles driven in January and February and a slight increase in March.

April is not yet available. While miles driven have been challenged recently, there are most registered vehicles on the road today than in our country’s history. The firm estimates that weather had a negative impact on its sales during the third quarter, specifically in April. When temperatures dropped noticeably across the majority of the country, this April was the coldest April in the last ten years according to the Planalytics Corporation and the management believes that this did slow its progress.

The company has brought its accounts receivable processing in-house.

This is a critical point of contact with the customers and now that the firm is interacting with its customers on a daily basis, it is finding more ways to leverage technology to streamline this important process.

At the end of June, AutoZone will no longer be the supplier of stocking orders to Midas International or their dealers.