-----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, MLOk8S4xNiaoqyTHM0sp7s5WgKtpV5HHp4RLSQAiR0RI6AchW5F2qQzhTDStcoM1 o5Hx4wsUCRZFBQud3UsvwA== 0000077449-99-000023.txt : 19990914 0000077449-99-000023.hdr.sgml : 19990914 ACCESSION NUMBER: 0000077449-99-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19990913 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: 0201 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03381 FILM NUMBER: 99709993 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 1999 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 31, 1999 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) 215-430-9000 ---------------------------------------------------- (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 31, 1999 there were 52,633,879 shares of the registrant's Common Stock outstanding. 1 - --------------------------------------------------------------------------- Index Page - --------------------------------------------------------------------------- PART I - FINANCIAL INFORMATION: Item 1. Condensed Consolidated Financial Statements (Unaudited) Consolidated Balance Sheets - July 31, 1999 and January 30, 1999 3 Consolidated Statements of Earnings - Thirteen and Twenty-six weeks ended July 31, 1999 and August 1, 1998 4 Consolidated Statements of Cash Flows - Twenty-six weeks ended July 31, 1999 and August 1, 1998 5 Notes to Condensed Consolidated Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-14 Item 3. Quantitative and Qualitative Disclosures 15 About Market Risk PART II - OTHER INFORMATION: Item 1. Legal Proceedings 16 Item 2. Changes in Securities and Use of Proceeds 16 Item 3. Defaults Upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16-17 Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8-K 17 SIGNATURE PAGE 18 2 PART I - FINANCIAL INFORMATION - ------------------------------ Item 1. Condensed Consolidated Financial Statements (Unaudited) THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollar amounts in thousands, except per share amounts)
July 31, 1999 Jan. 30, 1999* ------------- ------------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents.................................. $ 92,193 $ 114,548 Accounts receivable, net................................... 21,999 17,393 Merchandise inventories.................................... 513,070 527,397 Prepaid expenses........................................... 18,964 36,634 Deferred income taxes...................................... 17,073 17,073 Other...................................................... 37,168 41,099 ------------- ------------- Total Current Assets.................................... 700,467 754,144 Property and Equipment - at cost: Land....................................................... 286,048 281,804 Building and improvements.................................. 929,362 907,309 Furniture, fixtures and equipment.......................... 614,512 596,840 Construction in progress................................... 36,658 30,951 ------------ ------------- 1,866,580 1,816,904 Less accumulated depreciation and amortization............. 533,592 486,648 ------------- ------------- Total Property and Equipment............................ 1,332,988 1,330,256 Other........................................................ 14,160 11,712 ------------- ------------- $2,047,615 $2,096,112 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable........................................... $ 256,933 $ 240,391 Accrued expenses........................................... 229,091 199,551 Current maturities of convertible debt..................... 55,794 72,294 Current maturities of long-term debt....................... 176 170 ------------- ------------- Total Current Liabilities............................... 541,994 512,406 Long-Term Debt, less current maturities...................... 602,761 526,851 Convertible Debt, less current maturities.................... 168,157 164,863 Deferred Income Taxes........................................ 80,208 80,208 Commitments and Contingencies Stockholders' Equity: Common Stock, par value $1 per share: Authorized 500,000,000 shares - Issued 63,910,577 and 63,847,640................................. 63,911 63,848 Additional paid-in capital................................. 176,715 175,940 Retained earnings.......................................... 659,408 636,475 Accumulated other comprehensive income..................... (4,210) (4,210) ------------- ------------ 895,824 872,053 Less shares in treasury - 11,276,698 shares, at cost 182,065 - Less shares in benefits trust - 2,195,270 and 2,232,500 shares, at cost 59,264 60,269 ------------- ------------ Total Stockholders' Equity.............................. 654,495 811,784 ------------- ------------ $2,047,615 $2,096,112 ============= ============ See notes to condensed consolidated financial statements. *Taken from the audited financial statements at Jan. 30, 1999.
3 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 31, 1999 August 1, 1998 July 31, 1999 August 1, 1998 -------------- -------------- -------------- -------------- Merchandise Sales.................................... $520,686 $530,944 $1,009,384 $1,014,580 Service Revenue...................................... 114,717 104,357 224,335 204,945 -------------- -------------- -------------- -------------- Total Revenues....................................... 635,403 635,301 1,233,719 1,219,525 Costs of Merchandise Sales........................... 368,583 380,559 717,756 730,536 Costs of Service Revenue............................. 90,300 82,334 177,416 162,199 -------------- -------------- -------------- -------------- Total Costs of Revenues.............................. 458,883 462,893 895,172 892,735 Gross Profit from Merchandise Sales.................. 152,103 150,385 291,628 284,044 Gross Profit from Service Revenue.................... 24,417 22,023 46,919 42,746 -------------- -------------- -------------- -------------- Total Gross Profit................................... 176,520 172,408 338,547 326,790 Selling, General and Administrative Expenses......... 132,668 132,040 265,655 258,279 -------------- -------------- -------------- -------------- Operating Profit..................................... 43,852 40,368 72,892 68,511 Nonoperating Income.................................. 762 163 1,070 247 Interest Expense..................................... 13,262 12,868 26,840 25,380 -------------- -------------- -------------- -------------- Earnings Before Income Taxes 31,352 27,663 47,122 43,378 Income Taxes......................................... 11,287 9,959 16,964 15,616 -------------- -------------- -------------- -------------- Net Earnings......................................... 20,065 17,704 30,158 27,762 Retained Earnings, beginning of period............... 642,600 653,564 636,475 647,505 Cash Dividends....................................... 3,257 4,000 6,815 7,999 Effect of Shares Repurchased from Benefits Trust..... - - 410 - -------------- -------------- -------------- -------------- Retained Earnings, end of period..................... $659,408 $667,268 $659,408 $667,268 ============== ============== ============== ============== Basic Earnings per Share............................. $ .40 $ .29 $ .60 $ .45 Diluted Earnings per Share........................... $ .39 $ .29 $ .59 $ .45 ============== ============== ============== ============== Cash Dividends per Share............................. $ .0675 $ .0650 $ .1350 $ .1300 ============== ============== ============== ============== See notes to condensed consolidated financial statements.
4 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollar amounts in thousands) (Unaudited)
Twenty-six weeks ended ---------------------------------- July 31, 1999 August 1, 1998 -------------- -------------- Cash Flows from Operating Activities: Net earnings $ 30,158 $ 27,762 Adjustments to Reconcile Net Earnings to Net Cash Provided by (Used in) Operating Activities: Depreciation and amortization 48,510 47,526 Accretion of bond discount 3,294 3,147 Decrease in deferred income taxes - (2,419) Gain from sales of assets (592) (395) Changes in operating assets and liabilities: Decrease in accounts receivable, prepaid expenses and other 14,547 18,870 Decrease in merchandise inventories 14,327 77,386 Increase (Decrease) in accounts payable 16,542 (221,066) Increase in accrued expenses 30,135 49,107 ------------- ------------- Net Cash Provided by (Used in) Operating Activities............. 156,921 (82) Cash Flows from Investing Activities: Capital expenditures............................................ (52,053) (96,367) Net proceeds from sales of assets............................... 1,403 820 ------------- ------------- Net Cash Used in Investing Activities........................... (50,650) (95,547) Cash Flows from Financing Activities: Net payments under line of credit agreements.................... - (102,000) Net proceeds from issuance of notes............................. 76,000 201,941 Reduction of long-term debt..................................... (84) (77) Reduction of convertible debt................................... (16,500) - Dividends paid.................................................. (6,815) (7,999) Purchase of treasury shares..................................... (182,065) - Proceeds from exercise of stock options......................... 269 1,853 Proceeds from dividend reinvestment plan........................ 569 753 ------------- ------------- Net Cash (Used In) Provided by Financing Activities............. (128,626) 94,471 ------------- ------------- Net Decrease in Cash................................................. (22,355) (1,158) Cash and Cash Equivalents at Beginning of Period..................... 114,548 10,811 ------------- ------------- Cash and Cash Equivalents at End of Period........................... $ 92,193 $ 9,653 ============= ============= See notes to condensed consolidated financial statements.
5 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 31, 1999, the consolidated statements of earnings for the thirteen and twenty-six week periods ended July 31, 1999 and August 1, 1998 and the consolidated statements of cash flows for the twenty-six week periods ended July 31, 1999 and August 1, 1998 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 July 31, 1999 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 annual report to shareholders for the year ended January 30, 1999. The results of operations for the thirteen and twenty-six week periods ended July 31, 1999 are not necessarily indicative of the operating results for the full year. Certain reclassifications have been made to the prior year's condensed consolidated financial statements to conform to the current year's presentation. 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 $0 higher at both July 31, 1999 and January 30, 1999. NOTE 3. Comprehensive Income Comprehensive Income is reported in accordance with Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income." Accumulated other comprehensive income in the consolidated balance sheets as of July 31, 1999 and January 30, 1999 consists of a minimum pension liability adjustment. There were no differences between net earnings and comprehensive income for the thirteen and twenty-six week periods ended July 31, 1999 and August 1, 1998. NOTE 4. Accounting for Derivative Instruments and Hedging Activities In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. As amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," this statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000, although early adoption is encouraged. The Company is still in the process of analyzing the impact of the adoption of this statement on its consolidated financial statements. NOTE 5. Dutch Auction Self-Tender Stock Repurchase On February 1, 1999, the Company repurchased 11,276,698 of its common shares outstanding pursuant to a Dutch Auction self-tender offer at a price of $16.00 per share. The repurchased shares included 1,276,698 common shares which were repurchased as a result of the Company exercising its option to purchase an additional 2% of its outstanding shares. Prior to the repurchase of the common shares, the Company had 63,847,640 shares outstanding, with 2,232,500 shares in a benefits trust, at January 30, 1999. As a result of the tender offer share repurchase, the Company had 52,570,942 shares outstanding, with 2,195,270 shares in the benefits trust, at February 1, 1999. Expenses related to the share repurchase were approximately $1,638,000 and were included as part of the cost of the shares acquired. A portion of the treasury shares will be used by the Company to provide benefits to employees under its compensation plans and in conjunction with the Company's dividend reinvestment program. 6 The Company financed the tender offer share repurchase with $110,427,000 in cash and with the $70,000,000 proceeds received in connection with a private placement of Senior Notes on February 1, 1999. The Senior Notes were issued in two series at par, and pay interest semiannually on January 31 and July 31. Series A Senior Notes, with an aggregate principal balance of $25,000,000, will mature in 2009 and bear interest at 7.80% per annum. Series B Senior Notes, with an aggregate principal balance of $45,000,000, will mature in 2011 and bear interest at 7.95% per annum. In addition, the interest rates on the Senior Notes are subject to a .50% increase for such time as the credit rating of the Company's long-term unsecured debt securities decreases below investment grade as rated by both Moody's and Standard & Poor's. NOTE 6. Net Earnings Per Share
Thirteen weeks ended Twenty-six weeks ended (in thousands, except per share data) ---------------------------------- ---------------------------------- July 31, 1999 August 1, 1998 July 31, 1999 August 1, 1998 -------------- -------------- -------------- -------------- (a) Net earnings..................................... $20,065 $17,704 $30,158 $27,762 Adjustment for interest on 4% convertible subordinated notes, net of income tax effect... 403 552 866 - Adjustment for interest on zero coupon convertible subordinated notes, net of income tax effect... 1,060 - - - - ---------------------------------------------------------------------------------------------------------------------------------- (b) Adjusted net earnings $21,528 $18,256 $31,024 $27,762 - ---------------------------------------------------------------------------------------------------------------------------------- (c) Average number of common shares outstanding during the period.............................. 50,420 61,544 50,466 61,507 Common shares assumed issued upon conversion of 4% convertible subordinated notes.............. 1,525 2,104 1,644 - Common shares assumed issued upon conversion of zero coupon convertible subordinated notes..... 3,513 - - - Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price........ 380 224 316 265 - ---------------------------------------------------------------------------------------------------------------------------------- (d) Average number of common shares assumed outstanding during the period.................. 55,838 63,872 52,426 61,772 - ---------------------------------------------------------------------------------------------------------------------------------- Basic Earnings per Share (a/c)................... $ .40 $ .29 $ .60 $ .45 Diluted Earnings per Share (b/d)................. $ .39 $ .29 $ .59 $ .45 - ---------------------------------------------------------------------------------------------------------------------------------
Adjustments for certain convertible securities were antidilutive during the twenty-six week period ended July 31, 1999 and the thirteen and twenty-six week periods ended August 1, 1998, and therefore, excluded from the computation of diluted EPS; however, these securities could potentially be dilutive in the future. Options to purchase shares of common stock which were not included in the computation of diluted EPS because the options' exercise prices were greater than the average market price of the shares of common stock during the thirteen and twenty-six week periods ended July 31, 1999 and August 1, 1998 were as follows:
Thirteen weeks ended Twenty-six weeks ended (in thousands) ---------------------------------- ---------------------------------- July 31, 1999 August 1, 1998 July 31, 1999 August 1, 1998 -------------- -------------- -------------- -------------- Common shares associated with antidilutive stock options excluded from computation of diluted EPS ...... 3,679 4,129 3,695 4,010 -------------- -------------- -------------- --------------
7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 July 31, 1999 August 1, 1998 Fiscal 1999 vs. (Fiscal 1999) (Fiscal 1998) Fiscal 1998 - ------------------------------------------------------ -------------- -------------- ----------------- Merchandise Sales..................................... 81.9% 83.6% (1.9)% Service Revenue (1)................................... 18.1 16.4 9.9 ------ ------ ------ Total Revenues........................................ 100.0 100.0 - Costs of Merchandise Sales (2)........................ 70.8 (3) 71.7 (3) (3.1) Costs of Service Revenue (2).......................... 78.7 (3) 78.9 (3) 9.7 ------ ------ ------ Total Costs of Revenues............................... 72.2 72.9 (.9) Gross Profit from Merchandise Sales................... 29.2 (3) 28.3 (3) 1.1 Gross Profit from Service Revenue..................... 21.3 (3) 21.1 (3) 10.9 ------ ------ ------ Total Gross Profit.................................... 27.8 27.1 2.4 Selling, General and Administrative Expenses.......... 20.9 20.8 .5 ------ ------ ------ Operating Profit...................................... 6.9 6.3 8.6 Nonoperating Income................................... .1 .1 367.5 Interest Expense...................................... 2.1 2.0 3.1 ------ ------ ------ Earnings Before Income Taxes.......................... 4.9 4.4 13.3 Income Taxes.......................................... 36.0 (4) 36.0 (4) 13.3 ------ ------ ------ Net Earnings.......................................... 3.2 2.8 13.3 ====== ====== ====== (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 31, 1999 vs. Thirteen Weeks Ended August 1, 1998 - --------------------------------------------------------------------------- Total revenues for the second quarter remained stable despite a lower store count (650 at July 31, 1999 compared with 723 at August 1, 1998). Comparable store revenues (revenues generated by stores in operation during the same months of each period) increased 3.6% in 1999. Comparable store merchandise sales increased 3.1% while comparable service revenue increased 5.7%. Gross profit from merchandise sales increased, as a percentage of merchandise sales, due primarily to higher merchandise margins and a decrease in store occupancy costs, as a percentage of merchandise sales. Gross profit from service revenue remained constant, as a percentage of service revenue, due primarily to a decrease in service center personnel costs offset by an increase in employee benefit costs, as a percentage of service revenue. Selling, general and administrative expenses remained constant, as a percentage of total revenues, due primarily to increases in general office costs and employee benefit costs offset by decreases in media costs and store expenses, as a percentage of total revenues. Nonoperating income consisted of the following: (in thousands)
1999 1998 ------ ------ Net rental revenue $ 201 $ 86 Investment income 481 46 Other income 80 31 ------ ------ Total $ 762 $ 163 ====== ======
Net earnings increased, as a percentage of total revenues, due primarily to an increase in gross profit from merchandise sales. 9 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 - ------------------------------------------------------ ---------------------------------- ----------------- Twenty-six weeks ended July 31, 1999 August 1, 1998 Fiscal 1999 vs. (Fiscal 1999) (Fiscal 1998) Fiscal 1998 - ------------------------------------------------------ -------------- -------------- ----------------- Merchandise Sales..................................... 81.8% 83.2% (.5)% Service Revenue (1)................................... 18.2 16.8 9.5 ------ ------ ------ Total Revenues........................................ 100.0 100.0 1.2 Costs of Merchandise Sales (2)........................ 71.1 (3) 72.0 (3) (1.7) Costs of Service Revenue (2).......................... 79.1 (3) 79.1 (3) 9.4 ------ ------ ------ Total Costs of Revenues............................... 72.6 73.2 .3 Gross Profit from Merchandise Sales................... 28.9 (3) 28.0 (3) 2.7 Gross Profit from Service Revenue..................... 20.9 (3) 20.9 (3) 9.8 ------ ------ ------ Total Gross Profit.................................... 27.4 26.8 3.6 Selling, General and Administrative Expenses.......... 21.5 21.2 2.9 ------ ------ ------ Operating Profit...................................... 5.9 5.6 6.4 Nonoperating Income................................... .1 .1 333.2 Interest Expense...................................... 2.2 2.1 5.8 ------ ------ ------ Earnings Before Income Taxes.......................... 3.8 3.6 8.6 Income Taxes.......................................... 36.0 (4) 36.0 (4) 8.6 ------ ------ ------ Net Earnings.......................................... 2.4 2.3 8.6 ====== ====== ====== (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 31, 1999 vs. Twenty-six Weeks Ended August 1, 1998 - ------------------------------------------------------------------------------- Total revenues for the first half increased 1.2% due to a 4.7% increase in comparable store revenues despite a lower store count (650 at July 31, 1999 compared with 723 at August 1, 1998). Comparable store merchandise sales increased 4.6% while comparable service revenue increased 5.1%. Gross profit from merchandise sales increased, as a percentage of merchandise sales, due primarily to higher merchandise margins and a decrease in store occupancy costs, as a percentage of merchandise sales. Selling, general and administrative expenses increased, as a percentage of total revenues, due primarily to increases in general office costs and employee benefit costs offset, in part, by a decrease in media costs, as a percentage of total revenues. Nonoperating income consisted of the following: (in thousands)
1999 1998 ------ ------ Net rental revenue $ 377 $ 124 Investment income 613 99 Other income 80 24 ------ ------ Total $1,070 $ 247 ====== ======
Net earnings increased, as a percentage of total revenues, due primarily to an increase in gross profit from merchandise sales, as a percentage of merchandise sales offset, in part, by higher selling, general and administrative expenses, as a percentage of total revenues. 11 LIQUIDITY AND CAPITAL RESOURCES - July 31, 1999 - ------------------------------------------------ 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 1999, the Company invested $52,053,000 in property and equipment while net inventory (net inventory includes the decrease in inventory less the change in accounts payable) decreased $30,869,000. Working capital decreased from $241,738,000 at January 30, 1999 to $158,473,000 at July 31, 1999. At July 31, 1999, the Company had stockholders' equity of $654,495,000 and long-term debt of $770,918,000. The Company's long-term debt was 54% of its total capitalization at July 31, 1999 and 46% at January 30, 1999. As of July 31, 1999, the Company had available lines of credit totaling $255,000,000. On February 1, 1999, the Company repurchased 11,276,698 of its common shares outstanding. The Company financed the share repurchase with $110,427,000 in cash and with the $70,000,000 proceeds received in connection with a private placement of Senior Notes issued on February 1, 1999. The Senior Notes were issued in two series at par and pay interest semiannually on January 31 and July 31. Series A Senior Notes, with an aggregate principal balance of $25,000,000, will mature in 2009 and bear interest at 7.80% per annum. Series B Senior Notes, with an aggregate principal balance of $45,000,000, will mature in 2011 and bear interest at 7.95% per annum. In addition, the interest rates on the Senior Notes are subject to a .50% increase for such time as the credit rating of the Company's long-term unsecured debt securities decreases below investment grade as rated by both Moody's and Standard & Poor's. The Company plans to open approximately 13 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 $61,000,000. In addition, the Company has cash requirements for the balance of the current fiscal year to repay debt maturities totaling $55,880,000, of which $55,794,000 relates to Convertible Subordinated Notes due in September 1999. During the second quarter of 1999, the Company redeemed $16,500,000 of the Convertible Subordinated Notes due in September of 1999, with cash provided by operating activities. The store expansion including related inventory requirements, the expenditures in existing stores, warehouses and offices, and the repayment of debt maturities are expected to be financed primarily from funds from operating activities. Certain of the Company's debt agreements require the maintenance of financial ratios and covenants which were amended during the second quarter of 1999. The Company was in compliance with all financial ratios and covenants as of July 31, 1999. NEW ACCOUNTING STANDARDS - ------------------------ In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. As amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133," this statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000, although early adoption is encouraged. The Company is still in the process of analyzing the impact of the adoption of this statement on its consolidated financial statements. 12 INFORMATION SYSTEMS AND THE YEAR 2000 - ------------------------------------- During 1997, the Company initiated a project to assess the impact of Year 2000 issues on a corporate-wide basis. A Year 2000 Project Director, reporting directly to the Chief Information Officer, was assigned to lead the project and, in conjunction with senior management of the Company, has formulated a project plan to address Year 2000 compliance issues. The Project Director monitors and coordinates the project plan through regular meetings with operational managers who execute the specifics of the project plan. The Project Director regularly updates senior management, including the Company's Chief Financial Officer. In addition, the Board of Directors is periodically updated by the Company's senior management. The project plan is comprehensive and focuses on both information technology (IT) systems and non-IT systems. Execution of the project plan has been divided into five key phases: inventory, assessment, remediation, testing, and implementation. The Company is utilizing both internal and external resources to complete its Year 2000 project plan initiatives. IT systems include the Company's application software, both proprietary and third party, as well as the hardware infrastructure. Specifically, this includes all software and related hardware for the Company's systems, namely: mainframe, store, personal computer, local area network, and data communication. The inventory, assessment, remediation, testing, and implementation phases for the IT systems are substantially complete. The Company estimates that approximately 95% of its IT systems are currently Year 2000 compliant and expects to have substantially all of its IT systems Year 2000 compliant by October 1999. The non-IT systems include equipment and systems that contain embedded computer chips, such as energy management, HVAC, telephone and the Company's service center equipment, which specifically includes its engine diagnostic, wheel alignment and emission testing equipment. The Company estimates that 80% of its non-IT systems are Year 2000 compliant and expects to have substantially all of its non-IT systems Year 2000 compliant by October 1999. The Company's critical third party vendor relationships (other than those relating to IT and non-IT systems), such as relationships with critical merchandise, transportation, utility, financial institutions and other general service providers, are currently being reviewed for Year 2000 compliance. The Company will use the information obtained in its review of third party vendor relationships in its contingency plan development. The Company is in the process of developing contingency plans. These plans will identify what actions would need to be taken if a critical system or third party service provider were not Year 2000 compliant. The Company expects such plans to be completed by October 1999. 13 Although the Company is making significant progress to ensure that its systems and facilities are Year 2000 compliant, the ability of third party service providers, merchandise vendors and certain other third parties, including communications and utility companies, to be Year 2000 compliant is beyond the Company's control. Therefore, the Company can offer no assurances that the systems of other entities on which the Company's systems may rely will be modified to be Year 2000 compliant or, if so modified, will be compatible with the Company's systems. The failure of these entities to achieve Year 2000 compliance on a timely basis could have a material adverse effect on the Company. At this time, the Company does not expect any Year 2000 issues to materially affect its operations, merchandise sales, service revenues, competitive position or financial performance. The Company estimates that total costs associated with the Year 2000 effort will range from approximately $10,000,000 to $12,000,000, of which approximately $7,800,000 has been incurred through July 31, 1999. The Company's Year 2000 costs have been and are expected to be funded out of cash flows from operating activities. The foregoing statements as to costs and dates relating to the Year 2000 effort are forward-looking and as a result involve risks and uncertainties. They are based on the Company's best estimates which may be updated as additional information becomes available. The Company's forward-looking statements are also based on assumptions about many important factors, including the technical skills of employees and independent contractors, the representations and preparedness of third parties, the ability or failure of vendors to deliver merchandise or perform services required by the Company and the collateral effects of Year 2000 issues on the Company's business partners and customers. While the Company believes its assumptions are reasonable, it cautions that it is impossible to predict the impact of certain factors that could cause actual costs or timetables to differ materially from the expected results. FORWARD LOOKING STATEMENTS - -------------------------- Certain statements made herein are forward-looking which involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements due to factors beyond the control of the Company, including the strength of the national and regional economies and consumers' ability to spend, the health of the various sectors of the market that the Company serves, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, location and number of competitors' stores, product costs, and the ability to enhance the profitability of the commercial delivery program. Further factors that might cause such a difference include, but are not limited to, the factors described in the Company's filings with the Securities and Exchange Commission. 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company does not utilize financial instruments for trading purposes and holds no derivative financial instruments which could expose the Company to significant market risk. The Company's primary market risk exposure with regard to financial instruments is to changes in interest rates. Pursuant to the terms of certain revolving credit agreements, changes in the federal funds rate, the lenders' prime rate or LIBOR could affect the rates at which the Company could borrow funds thereunder. At July 31, 1999, the Company had no outstanding borrowings under these credit facilities. There have been no material changes to the market risk disclosures as reported in the Company's Form 10-K for the fiscal year ended January 30, 1999. 15 PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds 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 June 2, 1999. The shareholders approved the election of directors shown below. Directors Elected at Annual Meeting of Shareholders --------------------------------------------------- Name Votes For Votes Withheld ---- --------- -------------- Mitchell G. Leibovitz 43,205,794 1,030,210 Lester Rosenfeld 43,193,455 1,042,549 Lennox K. Black 43,183,962 1,052,042 .................................................................. Directors whose term of office continued after the Annual Meeting of Shareholders ----------------------------------------------------------------- Name ---- Bernard J. Korman J. Richard Leaman, Jr. Benjamin Strauss Myles H. Tanenbaum Malcolmn D. Pryor .................................................................. The shareholders also approved the 1999 Stock Incentive Plan with 37,018,836 affirmative votes, 6,905,151 negative votes and 312,017 abstentions. .................................................................. 16 The shareholders also approved the appointment of the independent auditors Deloitte & Touche LLP with 43,624,157 affirmative votes, 382,790 negative votes and 229,057 abstentions. .................................................................. The shareholders also approved the shareholder proposal recommending that the Board of Directors consider declassification of the Board of Directors with 23,365,014 affirmative votes, 12,863,069 negative votes, 588,086 abstentions, and 7,419,835 broker non-votes. .................................................................. The shareholders disapproved the shareholder proposal regarding the sale of the Company to the highest bidder with 34,535,670 negative votes, 1,815,221 affirmative votes, 435,279 abstentions, and 7,449,834 broker non-votes. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
(10.51) 1999 Stock Incentive Plan Incorporated by reference from the Schedule 14A filed on April 26, 1999 (10.52) Amendment No. 5 dated as of July 23, 1999 to the Amended and Restated Credit Agreement dated as of April 21, 1995 among the Pep Boys - Manny, Moe & Jack, the Banks signatory thereto and the Chase Manhattan Bank, as Agent. (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. 17 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: September 10, 1999 By: /s/ Michael J. Holden ----------------------- ------------------------- Michael J. Holden Executive Vice President & Chief Financial Officer 18 INDEX TO EXHIBITS - ----------------- (10.52) Amendment No. 5 dated as of July 23, 1999 to the Amended and Restated Credit Agreement dated as of April 21, 1995 among the Pep Boys - Manny, Moe & Jack, the Banks signatory thereto and the Chase Manhattan Bank, as Agent. (11) Computations of Earnings Per Share (27) Financial Data Schedule EX-10.52 2 Exhibit 10.52 AMENDMENT NO. 5 AMENDMENT NO. 5 dated as of July 23, 1999 to the AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 21, 1995 among THE PEP BOYS - MANNY, MOE & JACK, the Banks signatory thereto and THE CHASE MANHATTAN BANK, as Agent. W I T N E S S E T H: WHEREAS, the Company, the Banks and the Agent are parties to the Amended and Restated Credit Agreement referred to above (as heretofore amended, the "Credit Agreement") pursuant to which the Banks have agreed to extend credit to the Company as provided therein; WHEREAS, the Company has requested the Banks and the Agent to amend the Credit Agreement as hereinafter set forth; WHEREAS, the Majority Banks and the Agent are agreeable to such amendment on the terms and conditions set forth below; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein it is hereby agreed as follows: Section 1. Definitions. All terms defined in the Credit Agreement shall be used herein as defined in the Credit Agreement unless otherwise defined herein or the context otherwise requires. Section 2. Amendments to the Agreement. 2.1 Section 1.01 of the Credit Agreement is hereby amended by inserting the new following definitions in the appropriate alphabetical order: "Amendment No. 5" shall mean Amendment No. 5 dated as of July 23, 1999 to this Agreement. "Amendment No. 5 Effective Date " shall mean the effective date of Amendment No. 5. 1 "EBITDA" shall mean , for any period, the sum, for the Company and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following for such period: (a) net income for such period plus (b) to the extent deducted in computing such net income, the sum of (i) income tax expense, plus (ii) depreciation and amortization for such period (including amortization of any goodwill or other intangibles), plus (iii) Interest Expense for such period plus (iv) all other non-cash, extraordinary charges minus (c) to the extent added in computing such net income, the sum of (i) any gains and losses attributable to any fixed asset sales plus (ii) any non-cash, extraordinary gains. "Interest Coverage Ratio" means, as at any date, the ratio of (a) EBITDA for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date to (b) Interest Expense for such period; provided that in calculating the Interest Coverage Ratio at any date prior to April 29, 2000, each component of the Interest Coverage Ratio shall be determined only for the period commencing on January 31, 1999 and ending on July 31, 1999, October 30, 1999 and January 29, 2000, as applicable. 2.2 The following definition in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety: "Leverage Ratio" shall mean, as at any date of determination thereof, the ratio of (a) all Indebtedness of the Company and its Subsidiaries (determined on a consolidated basis, without duplication, in accordance with GAAP) as at such date to (b) EBITDA for the period of four fiscal quarters ending on or most recently ended prior to such date; provided that for the purposes of determining the Leverage Ratio for the fiscal quarters ending July 31, 1999 and October 30, 1999, EBITDA for the relevant period shall be deemed to equal EBITDA for the period from the beginning of the current fiscal year to the end of such fiscal quarter multiplied by 2 and 4/3, respectively. 2.3 Section 1.01 of the Credit Agreement is hereby amended by deleting in their entirety the following definitions: "Debt to Capital Ratio", "Net Earnings", "Net Operating Profit", "NOP/Interest Charges Ratio", "Senior Funded Debt", "Tangible Net Worth" and "Total Liabilities". 2 2.4 Section 2.05 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "2.05 Facility Fee. (a) The Company shall pay to the Agent for the account of each Bank a facility fee on the daily average (whether used or unused) amount of such Bank's Commitment for the period from and including the Amendment No. 5 Effective Date to but not including the earlier of the date the Commitments are terminated or the Commitment Termination Date, at a rate per annum in accordance with the Pricing Schedule. (b) Accrued facility fee shall be payable on each Quarterly Date and on the earlier of the date the Commitments are terminated or the Commitment Termination Date. (c) Notwithstanding anything herein to the contrary, all accrued and unpaid facility fee pursuant to Section 2.05 of this Agreement (as in effect immediately prior to the Amendment No. 5 Effective Date) shall be payable on the Quarterly Date immediately following such date." 2.5 Section 2.11 of the Credit Agreement is hereby deleted in its entirety. 2.6 Section 9.07 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "9.07 Leverage Ratio. The Company will not permit the Leverage Ratio to exceed the following respective ratios at any time during the following respective periods: Period Ratio ------ ----- From July 31, 1999 through July 28, 2000 4.50:1.0 From July 29, 2000 through February 2, 2001 4.25:1.0 From February 3, 2001 through August 3, 2001 4.00:1.0 From August 4, 2001 through February 1, 2002 3.75:1.0 From February 2, 2002 and 3.50:1.0" thereafter 3 2.7 Section 9.08 of the Credit Agreement shall be deleted in its entirety and replaced with "[Intentionally Omitted]", and each reference thereto in the Credit Agreement shall be deleted. 2.8 Section 9.09 of the Credit Agreement shall be deleted in its entirety and replaced with "[Intentionally Omitted]", and each reference thereto in the Credit Agreement shall be deleted. 2.9 Section 9.10 of the Credit Agreement is hereby amended in its entirety to read as follows: "9.10 Interest Coverage Ratio. The Company will not permit the Interest Coverage Ratio to be less than the following respective ratios as at the last day of any fiscal quarter ending during the following respective periods: Period Ratio ------ ----- From July 31, 1999 through February 2, 2001 3.50:1.0 From February 3, 2001 through August 3, 2001 3.75:1.0 From August 4, 2001 through February 1, 2002 4.00:1.0 From February 2, 2002 and 4.25:1.0 thereafter 4 2.10 The Pricing Schedule is hereby amended in its entirety to read as follows: "PRICING SCHEDULE Each of the "Applicable Margin for Eurodollar Loans," "Applicable Margin for Base Rate Loans" and "Facility Fee" shall mean, for any day, the per annum rates set forth below in the column under such term and in the row corresponding to the "Leverage Ratio", based upon the Leverage Ratio as of the most recent determination date; provided that for the period from and after the Amendment No. 5 Effective Date until the third Business Day after delivery of the Company's unaudited consolidated financial statements for the fiscal quarter ending July 31, 1999, the "Applicable Margin for Eurodollar Loans," "Applicable Margin for Base Rate Loans" and "Facility Fee" shall be the applicable rate per annum set forth below in the row corresponding to the "Leverage Ratio" in the range of > 3.50:1 < or = 4.00:1: Leverage Ratio Applicable Applicable Margin for Margin for Eurodollar Loans Base Rate Loans Facility Fee >4.00:1 1.50% 0.50% 0.50% > 3.50:1 < or = 4.00:1 1.30% 0.30% 0.45% > or = 3.00:1 < or = 3.50:1 1.125% 0.125% 0.375% < 3.00:1 0.95% 0 0.30% For purposes of the foregoing (but subject to the proviso above), (a) the Leverage Ratio shall be determined as of the end of each fiscal quarter of the Company's fiscal year based upon the Company's consolidated financial statements delivered pursuant to Section 9.01(a) or (b) hereof and (b) each change in the "Applicable Margin for Eurodollar Loans," "Applicable Margin for Base Rate Loans" and "Facility Fee" resulting from a change in the Leverage Ratio shall be effective during the period commencing on and including the date three Business Days after delivery to the Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change. Notwithstanding the foregoing, for each day during any period that the Company's senior unsecured long-term debt that is not guaranteed by any other Person or subject to any credit enhancement shall be rated Ba2 or lower by Moody's Investors Service, Inc. and BB or lower by Standard & Poor's Ratings Services, the "Applicable Margin for Eurodollar Loans" and "Applicable Margin for Base Rate Loans" then in effect shall be increased by 0.40% per annum and the "Facility Fee" then in effect shall be increased by 0.10% per annum." 5 3. Representations and Warranties. In order to induce the Majority Banks and the Agent to make this Amendment, the Company hereby represents that: (a) the execution and delivery of this Amendment and the performance of the Company thereunder and under the Credit Agreement as amended hereby (i) have been duly authorized by all necessary corporate action, will not violate any provision of law, or the Company's charter or by-laws, or result in the breach of or constitute a default, or require a consent, under any indenture or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or their respective property may be bound or affected, and (ii) each of this Amendment and the Credit Agreement as amended hereby constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms; (b) the representations and warranties in Section 8 of the Credit Agreement are true and correct as of the Amendment No. 5 Effective Date (as hereinafter defined) as if they were being made on such date and as if reference therein to the Credit Agreement (or words of similar import) referred to the Credit Agreement as amended hereby and to this Amendment; and (c) no Event of Default or event which with notice or lapse of time, or both, would constitute an Event of Default, has occurred and is continuing on the Amendment No. 5 Effective Date. 4. Conditions of Effectiveness. This Amendment shall be effective (as of the date hereof) on the date when all of the following conditions shall have been met, and such date shall be the "Amendment No. 5 Effective Date": (a) Counterparts of this Amendment shall have been executed by the Company, the Majority Banks and the Agent; 6 (b) The Agent shall have received a certificate dated the Amendment No. 5 Effective Date specifying the names and titles and including specimen signatures of the officers authorized to sign this Amendment. (c) The Agent shall have received such legal opinions, documents and other instruments with respect to this Amendment and the transactions contemplated hereby as it may reasonably request. (d) The Company shall have paid to the Agent for the account of each Bank that has executed and delivered a counterpart of this Amendment on or prior to 5:00 p.m. (New York time) on July 23, 1999 (or has advised the Agent in a manner satisfactory to the Agent that such Bank has executed this Amendment on or prior to such time) an amendment fee equal to 0.20% of the amount of such Bank's Commitment. 5. Miscellaneous. (a) Except as specifically amended hereby, all the provisions of the Credit Agreement shall remain unchanged and in full force and effect, and the term "Credit Agreement", and words of like import shall be deemed to refer to the Credit Agreement as amended by this Amendment unless otherwise provided herein or the context otherwise requires. Nothing herein shall affect the obligations of the Company under the Credit Agreement with respect to any period prior to the Amendment No. 5 Effective Date. (b) This Amendment shall be governed by and construed and interpreted in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the day and year first above written. THE PEP BOYS - MANNY, MOE & JACK By /s/ Michael J. Holden ------------------------------ Title: 7 THE PEP BOYS - MANNY, MOE & JACK OF CALIFORNIA, as a Guarantor By /s/ Michael J. Holden ------------------------------- Title: PBY CORPORATION, as a Guarantor By /s/ Michael J. Holden ------------------------------- Title: PEP BOYS - MANNY, MOE & JACK OF DELAWARE, INC., as a Guarantor By /s/ Michael J. Holden ------------------------------- Title: PEP BOYS - MANNY, MOE & JACK OF PUERTO RICO, INC., as a Guarantor By /s/ Michael J. Holden ------------------------------- Title: CARRUS SUPPLY CORPORATION, as a Guarantor By /s/ Michael J. Holden ------------------------------- Title: 8 BANKS THE CHASE MANHATTAN BANK, as Agent and a Bank By /s/ Lee Brennan ------------------------------- Title: Vice President BANK OF AMERICA NT&SA By /s/ Timothy H. Spanos ------------------------------- Title: Senior Vice President SUN TRUST BANKS INC. By /s/ Laura G. Harrison ------------------------------- Title: Assistant Vice President FIRST UNION NATIONAL BANK By /s/ Irene Rosen Marks ------------------------------- Title: Vice President PNC BANK By /s/ Brennan T. Danile ------------------------------- Title: Assistant Vice President FLEET BANK By /s/ Thomas J. Bullard ------------------------------- Title: Vice President 9 UNION BANK OF CALIFORNIA By /s/ Cecilia M. Valente -------------------------------- Title: Senior Vice President CREDIT SUISSE FIRST BOSTON By /s/ Jay Chall ------------------------------- Title: Director By /s/ James H. Lee ------------------------------- Title: Assistant Vice President 10 EX-11 3 THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 11 COMPUTATION OF NET EARNINGS PER SHARE (in thousands, except per share data) (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------- Thirteen weeks ended Twenty-six weeks ended ---------------------------------- ---------------------------------- July 31, 1999 August 1, 1998 July 31, 1999 August 1, 1998 -------------- -------------- -------------- -------------- (a) Net earnings..................................... $20,065 $17,704 $30,158 $27,762 Adjustment for interest on 4% convertible subordinated notes, net of income tax effect... 403 552 866 - Adjustment for interest on zero coupon convertible subordinated notes, net of income tax effect... 1,060 - - - - --------------------------------------------------------------------------------------------------------------------------------- (b) Adjusted net earnings $21,528 $18,256 $31,024 $27,762 - --------------------------------------------------------------------------------------------------------------------------------- (c) Average number of common shares outstanding during the period.............................. 50,420 61,544 50,466 61,507 Common shares assumed issued upon conversion of 4% convertible subordinated notes.............. 1,525 2,104 1,644 - Common shares assumed issued upon conversion of zero coupon convertible subordinated notes..... 3,513 - - - Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price........ 380 224 316 265 - --------------------------------------------------------------------------------------------------------------------------------- (d) Average number of common shares assumed outstanding during the period.................. 55,838 63,872 52,426 61,772 - --------------------------------------------------------------------------------------------------------------------------------- Basic Earnings per Share (a/c)................... $ .40 $ .29 $ .60 $ .45 Diluted Earnings per Share (b/d)................. $ .39 $ .29 $ .59 $ .45 - ---------------------------------------------------------------------------------------------------------------------------------
EX-27 4 ART 5. FDS FOR 2ND QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AS OF JULY 31, 1999 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE TWENTY-SIX WEEK PERIOD ENDED JULY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS JAN-29-2000 JUL-31-1999 92,193 0 23,297 1,298 513,070 700,467 1,866,580 533,592 2,047,615 541,994 770,918 0 0 63,911 590,584 2,047,615 1,009,384 1,233,719 717,756 895,172 0 0 26,840 47,122 16,964 30,158 0 0 0 30,158 .60 .59 -----END PRIVACY-ENHANCED MESSAGE-----