-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gSsJNBcdmg+Ze1bksiKoQEkMEQi58nWOgFZX7vXccQg9HFjwK8T8cE4qHXU8wA2U XTMliIVq8Gv9Z3v2yukT2Q== 0000077449-95-000007.txt : 19950905 0000077449-95-000007.hdr.sgml : 19950905 ACCESSION NUMBER: 0000077449-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950729 FILED AS OF DATE: 19950831 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEP BOYS MANNY MOE & JACK CENTRAL INDEX KEY: 0000077449 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 230962915 STATE OF INCORPORATION: PA FISCAL YEAR END: 0203 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03381 FILM NUMBER: 95569692 BUSINESS ADDRESS: STREET 1: 3111 W ALLEGHENY AVE CITY: PHILADELPHIA STATE: PA ZIP: 19132 BUSINESS PHONE: 2152299000 10-Q 1 FORM 10-Q - 2ND QTR 1995 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 10-Q (Mark One) (x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July 29, 1995 OR ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to ----------- ---------- Commission File No. 1-3381 ------ The Pep Boys - Manny, Moe & Jack ------------------------------------------------------ (Exact name of registrant as specified in its charter) Pennsylvania 23-0962915 ------------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer ID number) incorporation or organization) 3111 W. Allegheny Ave. Philadelphia, PA 19132 ---------------------------------------- ---------- (Address of principal executive offices) (Zip code) 215-229-9000 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ( x ) No ( ) As of July 29, 1995 there were 62,001,488 shares of the registrant's Common Stock outstanding. 2 - ------------------------------------------------------------------- Index Page - ------------------------------------------------------------------- PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Condensed Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets - July 29, 1995 and January 28, 1995 3 Consolidated Statements of Earnings - Thirteen and Twenty-six weeks ended July 29, 1995 and July 30, 1994 4 Condensed Consolidated Statements of Cash Flows - Twenty-six weeks ended July 29, 1995 and July 30, 1994 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-11 PART II - OTHER INFORMATION 12 - --------------------------- SIGNATURE 13 - ------------------------------------------------------------------- 3 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands, except per share amounts)
July 29, 1995 Jan. 28, 1995* ------------- -------------- (Unaudited) ASSETS Current Assets: Cash....................................................... $ 17,882 $ 11,748 Accounts receivable, net................................... 3,467 3,804 Merchandise inventories.................................... 378,371 366,843 Deferred income taxes...................................... 12,000 12,000 Other...................................................... 10,474 16,914 ------------- ------------- Total Current Assets.................................... 422,194 411,309 Property and Equipment - at cost Land....................................................... 232,116 215,623 Building and improvements.................................. 629,092 592,748 Furniture, fixtures and equipment.......................... 304,089 283,317 Construction in progress................................... 24,564 13,287 ------------ ------------- 1,189,861 1,104,975 Less accumulated depreciation and amortization............. 267,491 243,065 ------------- ------------- Total Property and Equipment............................ 922,370 861,910 Other........................................................ 19,064 17,800 ------------- ------------- Total Assets.................................................. $1,363,628 $1,291,019 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Checks outstanding......................................... $ 25,860 $ 8,422 Accounts payable........................................... 110,745 91,742 Accrued expenses........................................... 89,426 72,318 Short-term borrowings...................................... - 97,200 Income taxes payable....................................... 9,605 - Current maturities of long-term debt....................... 108,201 19,769 ------------- ------------- Total Current Liabilities............................... 343,837 289,451 Long-Term Debt, less current maturities...................... 273,362 294,537 Deferred Income Taxes........................................ 34,528 34,528 Convertible Subordinated Notes............................... 86,250 86,250 Commitments Stockholders' Equity: Common Stock, par value $1 per share: Authorized 500,000,000 shares - Issued and outstanding 62,001,488 and 61,501,679..................... 62,001 61,502 Additional paid-in capital................................. 133,955 130,732 Retained earnings.......................................... 489,964 454,288 ------------- ------------ 685,920 646,522 Less: Shares held in benefits trust, 2,232,500 shares, at cost. 60,269 60,269 ------------- ------------ Total Stockholders' Equity.............................. 625,651 586,253 ------------- ------------ Total Liabilities and Stockholders' Equity.................... $1,363,628 $1,291,019 ============= ============ See notes to condensed consolidated financial statements. *Taken from the audited financial statements at Jan. 28, 1995. /TABLE 4 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (dollar amounts in thousands, except per share amounts) UNAUDITED
Thirteen weeks ended Twenty-six weeks ended --------------------------------- --------------------------------- July 29, 1995 July 30, 1994 July 29, 1995 July 30, 1994 ------------- --------------- ------------- ------------- Merchandise Sales.................................... $ 349,567 $ 319,775 $ 657,116 $ 610,601 Service Revenue...................................... 61,271 50,620 114,931 97,494 ------------- ------------- ------------- ------------- Total Revenues....................................... 410,838 370,395 772,047 708,095 Costs of Merchandise Sales........................... 242,825 226,640 460,086 434,863 Costs of Service Revenue............................. 48,270 40,870 91,831 79,820 ------------- ------------- ------------- ------------- Total Costs of Revenues.............................. 291,095 267,510 551,917 514,683 Gross Profit from Merchandise Sales.................. 106,742 93,135 197,030 175,738 Gross Profit from Service Revenue.................... 13,001 9,750 23,100 17,674 ------------- ------------- ------------- ------------- Total Gross Profit................................... 119,743 102,885 220,130 193,412 Selling, General and Administrative Expenses......... 72,503 60,437 139,558 118,363 ------------- ------------- ------------- ------------- Operating Profit..................................... 47,240 42,448 80,572 75,049 Nonoperating Income.................................. 692 1,086 1,148 2,185 Interest Expense..................................... 7,718 6,056 15,683 11,776 ------------- ------------- ------------- ------------ Earnings Before Income Taxes and Cumulative Effect of Change in Accounting Principle............ 40,214 37,478 66,037 65,458 Income Taxes......................................... 14,980 13,960 24,599 24,383 ------------- ------------- ------------- ------------ Earnings Before Cumulative Effect of Change in Accounting Principle................................ 25,234 23,518 41,438 41,075 Cumulative Effect of Change in Accounting Principle.. - - - (4,300) ------------ ------------- ------------ ------------- Net Earnings......................................... 25,234 23,518 41,438 36,775 Retained Earnings, beginning of period............... 467,675 399,398 454,288 388,653 Cash Dividends....................................... 2,945 2,607 5,762 5,119 ------------ ------------- ------------ ------------- Retained Earnings, end of period..................... $ 489,964 $ 420,309 $ 489,964 $ 420,309 ============ ============= ============ ============= Earnings per Share Before Cumulative Effect of Change in Accounting Principle................... $ .41 $ .39 $ .68 $ .68 Cumulative Effect of Change in Accounting Principle.. - - - (.07) ------------ ------------- ------------ ------------- Net Earnings per Share............................... $ .41 $ .39 $ .68 $ .61 ============ ============= ============ ============= Cash Dividends per Share............................. $ .0475 $ .0425 $ .095 $ .085 ============ ============= ============ ============= See notes to condensed consolidated financial statements.
5 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollar amounts in thousands) UNAUDITED
Twenty-six weeks ended --------------------------------- July 29, 1995 July 30, 1994 ------------- ------------- Net Cash Provided by Operating Activities....................... $ 125,162 $ 21,985 Cash Flows from Investing Activities: Capital expenditures............................................ (86,074) (71,245) Other, net...................................................... 37 41 ------------ ------------ Net Cash Used in Investing Activities........................... (86,037) (71,204) Cash Flows from Financing Activities: Net (payments) borrowings under line of credit agreements....... (110,200) 93,200 Net proceeds from issuance of notes............................. 98,992 - Reduction of long-term debt..................................... (19,743) (7,882) Dividends paid.................................................. (5,762) (5,119) Proceeds from exercise of stock options and dividend reinvestment plan................................ 3,722 3,708 Acquisition of treasury stock................................... - (29,946) ------------ ----------- Net Cash (Used in) Provided by Financing Activities............. (32,991) 53,961 ------------ ----------- Net Increase in Cash................................................. 6,134 4,742 Cash at Beginning of Year............................................ 11,748 12,050 ------------ ----------- Cash at End of Period................................................ $ 17,882 $ 16,792 ============ =========== See notes to condensed consolidated financial statements.
6 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. Condensed Consolidated Financial Statements The consolidated balance sheet as of July 29, 1995, the consolidated statements of earnings for the thirteen and twenty-six week periods ended July 29, 1995 and July 30, 1994 and the condensed consolidated statements of cash flows for the twenty-six week periods ended July 29, 1995 and July 30, 1994 have been prepared by the Company without audit. In the opinion of management, all adjustments (which included only normal recurring adjustments ) necessary to present fairly the financial position, results of operations and cash flows at July 29, 1995 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's January 28, 1995 annual report to shareholders. The results of operations for the thirteen and twenty-six week periods ended July 29, 1995 are not necessarily indicative of the operating results for the full year. NOTE 2. Merchandise Inventories Merchandise inventories are valued at the lower of cost (last-in, first-out) or market. If the first-in, first-out method of valuing inventories had been used by the Company, inventories would have been approximately $15,319,000 higher at July 29, 1995 and January 28, 1995. 7 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRTEEN WEEKS ENDED JULY 29, 1995 Results of Operations - The following table presents for the periods indicated certain items in the consolidated statements of earnings as a percentage of total revenues (except as otherwise provided) and the percentage change in dollar amounts of such items compared to the indicated prior period.
Percentage of Total Revenues Percentage Change - ------------------------------------------------------ ---------------------------------- ----------------- Thirteen weeks ended July 29, 1995 July 30, 1994 Fiscal 1995 vs. (Fiscal 1995) (Fiscal 1994) Fiscal 1994 - ------------------------------------------------------ -------------- ------------- ----------------- Merchandise Sales..................................... 85.1% 86.3% 9.3% Service Revenue (1)................................... 14.9 13.7 21.0 ------ ------ ------ Total Revenues........................................ 100.0 100.0 10.9 Costs of Merchandise Sales (2)........................ 69.5 (3) 70.9 (3) 7.1 Costs of Service Revenue (2).......................... 78.8 (3) 80.7 (3) 18.1 ------ ------ ------ Total Costs of Revenues............................... 70.9 72.2 8.8 Gross Profit from Merchandise Sales................... 30.5 (3) 29.1 (3) 14.6 Gross Profit from Service Revenue..................... 21.2 (3) 19.3 (3) 33.3 ------ ------ ------ Total Gross Profit.................................... 29.1 27.8 16.4 Selling, General and Administrative Expenses.......... 17.6 16.3 20.0 ------ ------ ------ Operating Profit...................................... 11.5 11.5 11.3 Nonoperating Income................................... .2 .3 (36.3) Interest Expense...................................... 1.9 1.6 27.4 ------ ------ ------ Earnings Before Income Taxes and Cumulative Effect of Change in Accounting Principle.................... 9.8 10.2 7.3 Income Taxes.......................................... 37.3 (4) 37.2 (4) 7.3 ------ ------ ------ Earnings Before Cumulative Effect of Change in Accounting Principle.................... 6.1 6.3 7.3 Cumulative Effect of Change in Accounting Principle... - - - ------ ------ ------ Net Earnings.......................................... 6.1 6.3 7.3 ====== ====== ====== (1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the sale of any installed parts or materials. (2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of service revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses. (3) As a percentage of related sales or revenue, as applicable. (4) As a percentage of earnings before income taxes.
8 Thirteen Weeks Ended July 29, 1995 vs. Thirteen Weeks Ended July 30, 1994 - ------------------------------------------------------------------------ Total revenues for the second quarter increased 11% due to a higher store count (453 at July 29, 1995 compared with 395 at July 30, 1994) coupled with a 1% increase in comparable store revenues (revenues generated by stores in operation during the same months of each period). Comparable store merchandise sales decreased 1% while comparable service revenue increased 9%. Gross profit from merchandise sales increased, as a percentage of merchandise sales, due primarily to higher merchandise margins offset, in part, by an increase in store occupancy costs. Gross profit from service revenue increased, as a percentage of service revenue, due primarily to lower service employee benefits costs. Selling, general and administrative expenses increased, as a percentage of total revenues, due primarily to an increase in store expenses. Nonoperating income consisted of the following: (in thousands)
1995 1994 ------ ------ Rental revenue $ 632 $ 319 Investment income 33 226 Other income 27 541 ------ ------ Total $ 692 $1,086 ====== ======
The 27% increase in interest expense was due primarily to higher debt levels coupled with higher interest rates. The 7% increase in net earnings before the cumulative effect of a change in accounting principle in 1995 as compared with 1994, was due primarily to increases in gross profit from merchandise sales and gross profit from service revenue, as a percentage of related sales and revenues, offset, in part, by an increase in selling, general and administrative expenses, as a percentage of total revenues, and higher interest expense. 9 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TWENTY-SIX WEEKS ENDED JULY 29, 1995 Results of Operations - The following table presents for the periods indicated certain items in the consolidated statements of earnings as a percentage of total revenues (except as otherwise provided) and the percentage change in dollar amounts of such items compared to the indicated prior period.
Percentage of Total Revenues Percentage Change - ------------------------------------------------------ ---------------------------------- ----------------- Twenty-six weeks ended July 29, 1995 July 30, 1994 Fiscal 1995 vs. (Fiscal 1995) (Fiscal 1994) Fiscal 1994 - ------------------------------------------------------ -------------- ------------- ----------------- Merchandise Sales..................................... 85.1% 86.2% 7.6% Service Revenue (1)................................... 14.9 13.8 17.9 ------- ------- ------- Total Revenues........................................ 100.0 100.0 9.0 Costs of Merchandise Sales (2)........................ 70.0 (3) 71.2 (3) 5.8 Costs of Service Revenue (2).......................... 79.9 (3) 81.9 (3) 15.0 ------ ------ ------ Total Costs of Revenues............................... 71.5 72.7 7.2 Gross Profit from Merchandise Sales................... 30.0 (3) 28.8 (3) 12.1 Gross Profit from Service Revenue..................... 20.1 (3) 18.1 (3) 30.7 ------ ------ ------ Total Gross Profit.................................... 28.5 27.3 13.8 Selling, General and Administrative Expenses.......... 18.1 16.7 17.9 ------ ------ ------ Operating Profit...................................... 10.4 10.6 7.4 Nonoperating Income................................... .1 .3 (47.5) Interest Expense...................................... 2.0 1.7 33.2 ------ ------ ------ Earnings Before Income Taxes and Cumulative Effect of Change in Accounting Principle.................... 8.5 9.2 .9 Income Taxes.......................................... 37.3 (4) 37.2 (4) .9 ------ ------ ------ Earnings Before Cumulative Effect of Change in Accounting Principle.................... 5.4 5.8 .9 Cumulative Effect of Change in Accounting Principle... - (.6) - ------ ------ ------ Net Earnings.......................................... 5.4 5.2 12.7 ====== ====== ====== (1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the sale of any installed parts or materials. (2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of service revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses. (3) As a percentage of related sales or revenue, as applicable. (4) As a percentage of earnings before income taxes.
10 Twenty-six Weeks Ended July 29, 1995 vs. Twenty-six Weeks Ended July 30, 1994 - ----------------------------------------------------------------------------- Total revenues for the first half increased 9% due to a higher store count (453 at July 29, 1995 compared with 395 at July 30, 1994) while comparable store revenues decreased 1%. Comparable store merchandise sales decreased 2% while comparable service revenue increased 6%. Gross profit from merchandise sales increased, as a percentage of merchandise sales, due primarily to higher merchandise margins offset, in part, by an increase in store occupancy costs. Gross profit from service revenue increased, as a percentage of service revenue, due primarily to a decrease in service employee benefits costs. Selling, general and administrative expenses increased, as a percentage of total revenues, due primarily to increases in store expenses, general office expenses and media costs. Nonoperating income consisted of the following: (in thousands)
1995 1994 ------ ------ Rental revenue $1,010 $ 647 Investment income 77 700 Other income 61 838 ------ ------ Total $1,148 $2,185 ====== ======
The 33% increase in interest expense was due primarily to higher debt levels coupled with higher interest rates. The 1% increase in earnings before the cumulative effect of a change in accounting principle in 1995 as compared with 1994, was due primarily to increases in gross profit from merchandise sales and gross profit from service revenue, as a percentage of related sales and revenues, offset, in part, by increases in selling, general and administrative expenses and interest expense. On January 30, 1994, the Company adopted SFAS No. 112, "Employers' Accounting for Postemployment Benefits." This statement establishes accrual accounting standards for employer-provided benefits which cover former or inactive employees after employment, but before retirement. Adoption of this accounting standard on January 30, 1994 resulted in a one-time charge to earnings of $4,300,000 (net of income tax benefit of $2,552,000) or $.07 per share recognized as a cumulative effect of a change in accounting principle. 11 LIQUIDITY AND CAPITAL RESOURCES - July 29, 1995 - ---------------------------------------------- The Company's cash requirements arise principally from the need to finance the acquisition, construction and equipping of new stores and to purchase inventory. During the first twenty-six weeks of 1995, the Company invested $86,074,000 in property and equipment while net inventory (the increase in inventory less the net change in checks outstanding and accounts payable) decreased $24,913,000. Working capital decreased from $121,858,000 at January 28, 1995 to $78,357,000 at July 29, 1995. At July 29, 1995 the Company had stockholders' equity of $625,651,000 and long-term debt of $359,612,000. The Company's long-term debt was 36% of its total capitalization at July 29, 1995 and 39% at January 28, 1995. The Company plans to open approximately 54 new stores during the balance of the current fiscal year. Management estimates that the cost of this expansion, coupled with expenditures in existing stores, warehouses and offices will be approximately $114,000,000. Funds required to finance the store expansion including related inventory requirements are expected to come primarily from operating activities with the remainder provided by unused lines of credit which totalled $247,000,000 at July 29, 1995, or from accessing traditional lending sources such as the public capital markets. On June 12, 1995 the Company sold $100,000,000 of 7% notes due June 1, 2005. Proceeds were used to repay portions of the Company's long-term variable-rate bank debt, and for general corporate purposes. 12 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings None. Item 2. Changes in Securities None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders An annual meeting of shareholders was held on May 31, 1995, The shareholders approved the election of directors shown below. Directors Elected at Annual Meeting of Shareholders --------------------------------------------------- Malcolmn D. Pryor Chairman of the Board; Pryor, McClendon, Counts & Co., Inc. Benjamin Strauss Consultant to Pep Boys Myles H. Tanenbaum President; Arbor Property Trust David V. Wachs Chairman of the Board & CEO; Charming Shoppes, Inc. ................................................................. Directors whose term of office continued after the Annual Meeting of Shareholders ----------------------------------------------------------------- Mitchell G. Leibovitz Chairman of the Board & CEO; Pep Boys Lennox K. Black Chairman of the Board & CEO; Teleflex Incorporated Chairman of the Board & CEO; Penn Virginia Corporation Lester Rosenfeld Private Investor Pemberton Hutchinson Chairman of the Board; Westmoreland Coal Company Bernard J. Korman President & CEO; MEDIQ, Incorporated J. Richard Leaman, Jr. President & CEO; S.D. Warren Company ................................................................... The shareholders approved the appointment of the independent auditors Deloitte & Touche, LLP with 45,354,012 affirmative votes, 119,576 negative votes and 149,373 abstentions. The shareholders approved an amendment to the Company's 1990 Stock Incentive Plan with 38,888,846 affirmative votes, 6,566,985 negative votes and 167,126 abstentions. The shareholders approved an amendment to the Company's Bonus Compensation Plan with 43,949,026 affirmative votes, 1,450,924 negative votes and 223,009 abstentions. The shareholders did not approve a shareholder proposal to recommend that management seek rewards other than stock options or stock appreciation rights with 1,681,865 affirmative votes, 36,894,605 negative votes and 1,294,950 abstentions. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (10.1) Amendment to the Company's Bonus Compensation Plan (11) Statement Re: Computation of Earnings Per Share (27) Financial Data Schedules (b) Reports on Form 8-K. No reports on Form 8-K have been filed during the quarter for which this report is filed. 13 SIGNATURES - ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE PEP BOYS - MANNY, MOE & JACK -------------------------------- (Registrant) Date: August 31, 1995 By: /s/ Michael J. Holden ----------------------- ------------------------- Michael J. Holden Senior Vice President & Chief Financial Officer and Treasurer 14 INDEX TO EXHIBITS - ----------------- (10.1) Amendment to the Company's Bonus Compensation Plan (11) Computations of Earnings Per Share (27) Financial Data Schedule EX-11 2 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 11 COMPUTATION OF EARNINGS PER SHARE (in thousands, except per share data)
Thirteen weeks ended Twenty-six weeks ended ---------------------------------- --------------------------------- July 29, 1995 July 30, 1994 July 29, 1995 July 30, 1994 -------------- -------------- ------------- ------------- Earnings before cumulative effect of change in accounting principle.............. $25,234 $23,518 $41,438 $41,075 Adjustment for interest on $86,250,000, 4% convertible subordinated notes, net of income tax effect..................................... 540 - 1,079 - ------------- -------------- ------------- ------------ (a) Adjusted earnings before cumulative effect of change in accounting principle................. 25,774 23,518 42,517 41,075 (b) Cumulative effect of change in accounting principle........................... - - - (4,300) ------------- -------------- ------------- ------------ (c) Adjusted net earnings............................ $25,774 $23,518 $42,517 $36,775 ============= ============== ============= ============ Average number of common shares outstanding during the period.............................. 59,414 59,270 59,357 59,256 Common shares assumed issued upon conversion of 4% convertible subordinated notes 2,104 - 2,104 - Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price, using the treasury stock method (1)............ 952 1,353 1,073 1,299 ------------- ------------- ------------ ------------ (d) Average number of common shares assumed outstanding during the period.................. 62,470 60,623 62,534 60,555 ============= ============= ============ ============ Earnings per share before cumulative effect of change in accounting principle (a/d)........ $ .41 $ .39 $ .68 $ .68 Cumulative effect of change in accounting principle (b/d)................................ - - - (.07) ------------ ------------- ----------- ----------- Net earnings per share (c/d)..................... $ .41 $ .39 $ .68 $ .61 ============ ============= =========== ============ (1) The number of Common Shares assumed issued upon exercise of dilutive stock options is essentially the same for fully diluted earnings per share.
EX-27 3 ART 5. FDS FOR 2ND QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JULY 29, 1995 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE TWENTY-SIX WEEK PERIOD ENDED JULY 29, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS FEB-3-1996 JUL-29-1995 17,882 0 3,568 101 378,371 422,194 1,189,861 267,491 1,363,628 343,837 359,612 0 0 62,001 563,650 1,363,628 657,116 772,047 460,086 551,917 0 0 15,683 66,037 24,599 41,438 0 0 0 41,438 .68 .68 EX-10.1 4 THE PEP BOYS - MANNY, MOE & JACK EXECUTIVE INCENTIVE BONUS PLAN (as amended and restated as of March 31, 1995) The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation (the "Company") established, effective January 29, 1989, an Executive Incentive Bonus Plan for the benefit of officers of the Company who are eligible to participate as provided herein. On March 31, 1992 and March 30, 1994, the Board of Directors of the Company (the "Board") amended the plan in numerous respects. By action of the Board on March 31, 1995, the plan was further amended to read in its entirety as hereinafter set forth (the "Plan"). 1. Purpose. The Plan is intended to increase the profitability of the Company by giving the officers of the Company a financial stake in the growth and profitability of the Company. The Plan has the further objective of enhancing the Company's executive compensation package, thus enabling the Company to attract and retain executive officers of the highest ability. The Plan is intended to supplement, not replace, any other bonus paid by the Company to its officers and is not intended to preclude the continuation of such arrangements or the adoption of additional bonus or incentive plans, programs or contracts. 2. Definitions. (a) "Award Period" shall mean a measuring period of one Fiscal Year. (b) "Bonus" shall mean a cash payment made by the Company to a Participant after an Award Period, based on increases in EBIT, all as calculated and as more fully set forth under paragraph 5 hereof. (c) "Bonus Group" shall mean the level at which Participants shall participate in the Plan as set forth in Section 4(b). (d) "CEO" shall mean the person elected to the office of Chief Executive Officer of the Company by the Board of Directors. (e) "CEO Level" shall mean the level that the CEO shall participate in the Plan as set forth in Section 4(b). (f) "Company" shall mean The Pep Boys - Manny, Moe & Jack, a Pennsylvania corporation. (g) "Compensation Committee" shall mean the Compensation Committee of the Board. (h) "Covered Employee" shall mean any Participant that the Compensation Committee reasonably believes may be a "covered employee" within the meaning of Section 162(m) of the Internal Revenue Code for the taxable year of the Company in which a Bonus would be deductible. (i) "EBIT" shall have the meaning set forth in Paragraph 5 hereof. (j) "Fiscal Year" shall mean the Fiscal Year of the Company which ends on the Saturday nearest January 31 in each year. (k) "Participant" shall have the meaning set forth in Paragraph 4 hereof. (l) "President" shall mean the person elected to the office of President of the Company by the Board. (m) "Salary" shall mean the base salary of an officer of the Company for a Fiscal Year, including amounts which Participant elects to forego to provide benefits under a plan which satisfies the provisions of Section 401(k) or Section 125 of the Internal Revenue Code, exclusive of all bonuses paid or accrued with respect to that Fiscal Year, whether or not pursuant to a plan or program. 3. Administration, Amendment and Termination. (a) The Plan shall be administered by the Compensation Committee acting by a majority vote of its members. The Compensation Committee shall have the power and authority to take all actions and make all determinations which it deems necessary or desirable to effectuate, administer or interpret the Plan. The Company's adoption and continuation of the Plan is voluntary. The Compensation Committee shall have the power and authority to extend, amend, modify or terminate the Plan at any time, including without limitation, to change Award Periods, to determine the time or times of paying Bonuses, to establish performance and EBIT goals, and to establish such other measures as may be necessary to meet the objectives of the Plan; provided, however, that, with respect to any Covered Employee, no amendment shall change the Bonus calculation formula, as set forth in Section 5 herein, so as to increase the amount of Bonus payable upon attainment of a goal for any Award Period after the beginning of such Award Period. An action to terminate or to substantively amend or modify the Plan shall become effective immediately upon its adoption or on such date as specified by the Compensation Committee, but not with respect to any Fiscal Year prior to the Fiscal Year in which the Compensation Committee so acts. (b) All actions taken and all determinations made by the Compensation Committee in accordance with the power and authority conferred upon the Compensation Committee under subsection (a) above shall be final, binding and conclusive on all parties, including the Company and all Participants. 4. Participants. (a) Each officer of the Company selected by the Board to fill such office shall be entitled to participate in the Plan for each Fiscal Year or portion thereof in which such person serves as an officer (the "Participants", or individually, "Participant"), unless excluded from participation by the Compensation Committee or as provided by paragraph 7 hereof. With respect to a Participant who became an officer during a Fiscal Year, such Participant shall be paid an amount equal to the amount which would have been paid if the Participant had been employed for the entire Award Period, multiplied by a fraction the numerator of which is the number of days during the Award Period that the Participant was an officer of the Company and the denominator of which is the number of days in the Award Period. (b) Participants shall participate in the Plan and earn Bonuses in one of four Bonus Groups or at the CEO Level. Prior to the beginning of any Award Period or, in the event that a person first becomes a Participant after the beginning of an Award Period, with respect to such person at such time he first becomes a Participant, the Committee shall determine which Participants will participate in Bonus Group A, Bonus Group B and Bonus Group C. The Chief Executive Officer of the Company shall participate in the Plan at the CEO level. All other Participants shall participate in Bonus Group D. 5. Calculation of Bonus. (a) Each Participant shall be entitled to payment from the Company of a Bonus equal to the applicable percentage of such Participant's Salary for the Bonus Group in which the Participant participates in the Plan, as set forth in the tables below, for certain percentage increases in EBIT during an Award Period over EBIT for the fiscal year which precedes the Award Period. For purposes of this Plan, "EBIT" shall mean the consolidated earnings before income taxes of the Company, as determined in accordance with generally accepted accounting principles, and adjusted for any additions or reductions thereto that the President recommends and the Compensation Committee approves in order to eliminate the effect of extraordinary or non- recurring items of income or loss. In determining EBIT, there shall be included as an expense of the Company all bonuses, including, without limitation, those Bonuses paid or accrued under this Plan with respect to the Fiscal Year. For purposes of this Plan, the column in the table below entitled "EBIT Increase" measures EBIT for the Fiscal Year with respect to which the Bonus is being calculated, against EBIT for the immediately preceding Fiscal Year. EBIT Increase CEO Level Group A Group B Group C Group D 20% 50.00 % 33.75 % 30.00 % 22.50 % 18.75% 21 52.50 35.44 31.31 23.63 19.69 22 55.00 37.13 32.63 24.75 20.63 23 57.50 38.81 33.94 25.88 21.56 24 60.00 40.50 35.25 27.00 22.50 25 62.50 42.19 36.56 28.13 23.44 26 65.00 43.88 37.88 29.25 24.38 27 67.50 45.56 39.19 30.38 25.31 28 70.00 47.25 40.50 31.50 26.25 29 72.50 48.94 41.81 32.63 27.19 30 75.00 50.63 43.13 33.75 28.13 31 77.50 52.31 44.44 34.88 29.06 32 80.00 54.00 45.75 36.00 30.00 33 82.50 55.69 47.06 37.13 30.94 34 85.00 57.38 48.38 38.25 31.88 35 87.50 59.06 49.69 39.38 32.81 36 90.00 60.75 51.00 40.50 33.75 37 92.50 62.44 52.31 41.63 34.69 38 95.00 64.13 53.63 42.75 35.63 39 97.50 65.81 54.94 43.88 36.56 40 100.00 67.50 56.25 45.00 37.50 41 or more 100.00 67.50 56.25 45.00 37.50 Except for EBIT increase calculations above 19.5% but less than 20%, calculations of percentage increases in EBIT shall be rounded to the nearest whole percentage. (b) Nothing in this Paragraph 5 shall be used to create any presumption that Bonuses under the Plan are the exclusive means of providing incentive compensation for officers, it being expressly understood and agreed that the Compensation Committee has the authority to recommend to the Board of Directors payments to the officers, in cash or otherwise, based on EBIT or otherwise, other than Bonuses under this Plan, to Participants. 6. Payment of Awards. Bonuses shall be paid in cash within fifteen days after the Company has publicly announced its consolidated earnings before income taxes for the Fiscal Year with respect to which the Bonus is payable; provided, however, that, with respect to any Covered Employee, no Bonus shall be paid unless and until the Compensation Committee has certified in writing that the EBIT goals as set forth in Section 5 have been met. 7. Termination of Employment. (a) Other than as set forth in subparagraph (b) below, a participant may not receive a Bonus for any Award Period if the Participant's employment by the Company has terminated, for any reason whatsoever, with or without cause, prior to the payment of the Bonus with respect to such Award Period. (b) If during an Award Period, a participant dies; becomes disabled; or retires on or after his Early Retirement Date (as defined in the Company's defined benefit pension plan), such Participant (or the Participant's designated beneficiary) shall be paid an amount equal to the amount which would have been paid if the Participant had been an officer for the Award Period, multiplied by a fraction, the numerator of which is the number of days during the Award Period that the Participant was an officer of the Company and the denominator of which is the number of days in the Award Period. 8. Assignment and Alienation of Benefits. (a) To the maximum extent permitted by law, a Participant's right or benefits under this Plan shall not be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of the person entitled to such benefit. (b) If any Participant becomes bankrupt or attempts to anticipate, alienate, sell, assign, pledge, encumber, or charge any rights to a benefit hereunder, then such right or benefit, in the discretion of the Compensation Committee, may be terminated. In such event, the Company may hold or apply the same or any part thereof for the benefit of the Participant, his or her spouse, children or the dependents, or any of them, in such manner and portion as the Compensation Committee may deem proper. 9. Miscellaneous. (a) The establishment of this Plan shall not be construed as granting any Participant the right to remain in the employ of the Company, nor shall this Plan be construed as limiting the right of the Company to discharge a Participant from employment at any time for any reason whatsoever, with or without cause. (b) Notwithstanding anything to the contrary herein, no Bonus shall be paid to any Covered Employee pursuant to the terms hereof unless and until the material terms of the performance goals as set forth in Section 5 are approved by the majority vote of the Company's shareholders in a manner which complies with the requirements of Section 162(m) of the Internal Revenue Code. (c) The paragraph headings in this Plan are for convenience only; they form no part of the Plan and shall not affect its interpretation. (d) This Plan shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. THE PEP BOYS - MANNY, MOE & JACK By:\S\ Mitchell G. Leibovitz -----END PRIVACY-ENHANCED MESSAGE-----