-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A0r1wdkr0qXVn+JZWF+NU9DflIgk0g4SHu1Ho+E+4BiCXA9NPDeLXp6ECmT4tUz8 jRIAHlBrFsN7iSdg9yoQuQ== 0000077449-96-000003.txt : 19960613 0000077449-96-000003.hdr.sgml : 19960613 ACCESSION NUMBER: 0000077449-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960504 FILED AS OF DATE: 19960611 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: 96579370 BUSINESS ADDRESS: STREET 1: 3111 W ALLEGHENY AVE CITY: PHILADELPHIA STATE: PA ZIP: 19132 BUSINESS PHONE: 2152299000 10-Q 1 FORM 10-Q - 1ST QTR 1996 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 May 4, 1996 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 May 4, 1996 there were 62,237,087 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 - May 4, 1996 and February 3, 1996 3 Consolidated Statements of Earnings - Thirteen weeks ended May 4, 1996 and April 29, 1995 4 Condensed Consolidated Statements of Cash Flows - Thirteen weeks ended May 4, 1996 and April 29, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II - OTHER INFORMATION 10 - --------------------------- SIGNATURE 11 - ------------------------------------------------------------------- 3 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands, except per share amounts)
May 4, 1996 Feb. 3, 1996* ----------- ------------- (Unaudited) ASSETS Current Assets: Cash....................................................... $ 23,751 $ 11,487 Accounts receivable, net................................... 8,472 4,832 Merchandise inventories.................................... 399,740 417,852 Deferred income taxes...................................... 16,338 16,338 Other...................................................... 10,878 15,964 ------------- ------------- Total Current Assets.................................... 459,179 466,473 Property and Equipment-at cost: Land....................................................... 244,037 243,738 Building and improvements.................................. 711,210 695,029 Furniture, fixtures and equipment.......................... 373,308 356,605 Construction in progress................................... 10,967 12,431 ------------ ------------- 1,339,522 1,307,803 Less accumulated depreciation and amortization............. 308,435 293,751 ------------- ------------- Total Property and Equipment............................ 1,031,087 1,014,052 Other........................................................ 19,824 19,483 ------------- ------------- Total Assets.................................................. $1,510,090 $1,500,008 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable........................................... 151,693 222,524 Accrued expenses........................................... 104,139 95,875 Short-term borrowings...................................... 41,900 - Income taxes payable....................................... 13,016 - Current maturities of long-term debt....................... 1,168 108,206 ------------- ------------- Total Current Liabilities............................... 311,916 426,605 Long-Term Debt, less current maturities...................... 386,258 280,793 Deferred Income Taxes........................................ 40,900 40,900 Convertible Subordinated Notes............................... 86,250 86,250 Commitments and Contingencies Stockholders' Equity: Common Stock, par value $1 per share: Authorized 500,000,000 shares - Issued and outstanding 62,237,087 and 62,084,021..................... 62,237 62,084 Additional paid-in capital................................. 141,387 139,202 Retained earnings.......................................... 541,411 524,443 ------------- ------------ 745,035 725,729 Less: Cost of shares in benefits trust-2,232,500 shares, at cost. 60,269 60,269 ------------- ------------ Total Stockholders' Equity.............................. 684,766 665,460 ------------- ------------ Total Liabilities and Stockholders' Equity.................... $1,510,090 $1,500,008 ============= ============ See notes to condensed consolidated financial statements. *Taken from the audited financial statements at Feb. 3, 1996. /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 ------------------------------- May 4, 1996 April 29, 1995 -------------- --------------- Merchandise Sales.................................... $364,250 $307,549 Service Revenue...................................... 64,364 53,660 ------------- ------------- Total Revenues....................................... 428,614 361,209 Costs of Merchandise Sales........................... 255,730 217,261 Costs of Service Revenue............................. 51,583 43,561 ------------- ------------- Total Costs of Revenues.............................. 307,313 260,822 Gross Profit from Merchandise Sales.................. 108,520 90,288 Gross Profit from Service Revenue.................... 12,781 10,099 ------------- ------------- Total Gross Profit................................... 121,301 100,387 Selling, General and Administrative Expenses......... 81,707 67,055 ------------- ------------- Operating Profit..................................... 39,594 33,332 Nonoperating Income.................................. 464 456 Interest Expense..................................... 8,128 7,965 ------------- ------------- Earnings Before Income Taxes 31,930 25,823 Income Taxes......................................... 11,814 9,619 ------------- ------------- Net Earnings......................................... 20,116 16,204 Retained Earnings, beginning of year................. 524,443 454,288 Cash Dividends....................................... 3,148 2,817 ------------ ------------- Retained Earnings, end of period..................... $541,411 $467,675 ============ ============= Net Earnings per Share............................... $ .33 $ .27 ============ ============= Cash Dividends per Share............................. $ .0525 $ .0475 ============ ============= 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
Thirteen weeks ended ---------------------------------- May 4, 1996 April 29, 1995 -------------- -------------- Net Cash Provided by Operating Activities....................... $ 5,108 $ 81,157 Cash Flows from Investing Activities: Capital expenditures............................................ (32,413) (39,211) Other, net...................................................... 52 23 ------------ ------------ Net Cash Used in Investing Activities........................... (32,361) (39,188) Cash Flows from Financing Activities: Net borrowings (payments) under line of credit agreements....... 147,400 (18,800) Reduction of long-term debt..................................... (107,073) (13,640) Acquisition of treasury stock................................... - (2,705) Dividends paid.................................................. (3,148) (2,817) Proceeds from exercise of stock options and dividend reinvestment plan................................ 2,338 604 ------------ ----------- Net Cash Provided by (Used in) Financing Activities............. 39,517 (37,358) ------------ ----------- Net Increase in Cash................................................. 12,264 4,611 Cash at Beginning of Year............................................ 11,487 11,748 ------------ ----------- Cash at End of Period................................................ $ 23,751 $ 16,359 ============ =========== 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 May 4, 1996, the consolidated statements of earnings for the thirteen week periods ended May 4, 1996 and April 29, 1995 and the condensed consolidated statements of cash flows for the thirteen week periods ended May 4, 1996 and April 29, 1995 have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows at May 4, 1996 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 February 3, 1996 annual report to shareholders. The results of operations for the thirteen week period ended May 4, 1996 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 $9,991,000 and $10,491,000 higher at May 4, 1996 and February 3, 1996,respectively. NOTE 3. Accounting for Stock Based Compensation In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," which was effective for the Company beginning February 4, 1996. SFAS No. 123 requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to measure its stock based compensation awards to employees and will disclose the required pro forma effect on net income in the fiscal year ended February 1, 1997 financial statements. 7 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIRTEEN WEEKS ENDED MAY 4, 1996 Results of Operation - 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 May 4, 1996 April 29, 1995 Fiscal 1996 vs. (Fiscal 1996) (Fiscal 1995) Fiscal 1995 - ------------------------------------------------------ -------------- ------------- ----------------- Merchandise Sales..................................... 85.0% 85.1% 18.4% Service Revenue (1)................................... 15.0 14.9 19.9 ------ ------ ------ Total Revenues........................................ 100.0 100.0 18.7 Costs of Merchandise Sales (2)........................ 70.2 (3) 70.6 (3) 17.7 Costs of Service Revenue (2).......................... 80.1 (3) 81.2 (3) 18.4 ------ ------ ------ Total Costs of Revenues............................... 71.7 72.2 17.8 Gross Profit from Merchandise Sales................... 29.8 (3) 29.4 (3) 20.2 Gross Profit from Service Revenue..................... 19.9 (3) 18.8 (3) 26.6 ------ ------ ------ Total Gross Profit.................................... 28.3 27.8 20.8 Selling, General and Administrative Expenses.......... 19.1 18.6 21.9 ------ ------ ------ Operating Profit...................................... 9.2 9.2 18.8 Nonoperating Income................................... .1 .1 1.8 Interest Expense...................................... 1.9 2.2 2.0 ------ ------ ------ Earnings Before Income Taxes.......................... 7.4 7.1 23.6 Income Taxes.......................................... 37.0(4) 37.2(4) 22.8 ------ ------ ------ Net Earnings.......................................... 4.7 4.5 24.1 ====== ====== ====== (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 May 4, 1996 vs. Thirteen Weeks Ended April 29, 1995 - ------------------------------------------------------------------------ Total revenues for the first quarter increased 19% due to a higher store count (518 at May 4, 1996 compared with 436 at April 29, 1995) coupled with a 6% increase in comparable store revenues (revenues generated by stores in operation during the same months of each period). Comparable store merchandise sales increased 5% 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 decreases in service center personnel and service center occupancy costs. Selling, general and administrative expenses increased, as a percentage of total revenues, due primarily to increases in general office expenses coupled with slight increases in store expenses, media costs and employee benefit costs. Nonoperating income consisted of the following: (in thousands)
1996 1995 ------ ------ Rental revenue $ 401 $ 378 Investment income 53 44 Other income 10 34 ------ ------ Total $ 464 $ 456 ====== ======
Interest expense decreased, as a percentage of total revenues, due mainly to spreading similar costs over higher sales volume. Net earnings increased, as a percentage of total revenues, due to an increase in comparable store sales coupled with increases, as a percentage of related revenues in gross profit from merchandise sales and gross profit from service revenues, and a decrease, as a percentage of total revenues, in interest expense offset, in part, by an increase in selling general and administrative expenses, as a percentage of total revenues. 9 LIQUIDITY AND CAPITAL RESOURCES - May 4, 1996 - ---------------------------------------------- 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 quarter of 1996, the Company invested $32,413,000 in property and equipment while net inventory (net inventory includes the increase in inventory less the change in accounts payable) increased $52,719,000. Working capital increased from $39,868,000 at February 3, 1996 to $147,263,000 at May 4, 1996. At May 4, 1996, the Company had stockholders' equity of $684,766,000 and long-term debt of $472,508,000. The Company's long-term debt was 41% of its total capitalization at May 4, 1996 and 36% at February 3, 1996. The Company plans to open approximately 88 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 $168,000,000. 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 $177,100,000 at May 4, 1996, or from accessing traditional lending sources such as the public capital markets. In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," which was effective for the Company beginning February 4, 1996. SFAS No. 123 requires expanded disclosures of stock-based compensation arrangements with employees and encourages (but does not require) compensation cost to be measured based on the fair value of the equity instrument awarded. Companies are permitted, however, to continue to apply APB Opinion No. 25, which recognizes compensation cost based on the intrinsic value of the equity instrument awarded. The Company will continue to apply APB Opinion No. 25 to measure its stock based compensation awards to employees and will disclose the required proforma effect on net income in the fiscal year ended February 1, 1997 financial statements. 10 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 None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits (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. 11 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: June 6, 1996 By: /s/ Michael J. Holden ----------------------- ------------------------- Michael J. Holden Executive Vice President, Chief Financial Officer and Treasurer 12 INDEX TO EXHIBITS - ----------------- (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 NET EARNINGS PER SHARE (in thousands, except per share data)
Thirteen weeks ended ---------------------------------- May 4, 1996 April 29, 1995 -------------- -------------- (a) Net Earnings..................................... $20,116 $16,204 Average number of Common Shares outstanding during the period.............................. 59,919 59,300 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)............ 924 1,194 ------------- ------------- (b) Average number of Common Shares assumed outstanding during the period.................. 60,843 60,494 ============= ============= Net Earnings per Share (a/b)..................... $ .33 $ .27 ============ ============= (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 1ST QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF MAY 4, 1996 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE THIRTEEN WEEK PERIOD ENDED MAY 4, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS FEB-1-1997 MAY-4-1996 23,751 0 8,723 251 399,740 459,179 1,339,522 308,435 1,510,090 311,916 472,508 0 0 62,237 622,529 1,510,090 364,250 428,614 255,730 133,290 0 0 8,128 31,930 11,814 20,116 0 0 0 20,116 .33 .33 -----END PRIVACY-ENHANCED MESSAGE-----