EX-99.2 3 a06-11731_1ex99d2.htm EX-99

Exhibit 99.2

 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollar amounts in thousands, except per share amounts)

 

 

 

Thirteen weeks ended

 

 

 

April 29, 2006

 

April 30, 2005

 

 

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

Merchandise Sales

 

$

456,742

 

82.2

 

$

463,263

 

82.2

 

Service Revenue

 

99,187

 

17.8

 

100,251

 

17.8

 

Total Revenues

 

555,929

 

100.0

 

563,514

 

100.0

 

Costs of Merchandise Sales

 

329,583

 

72.2

 

341,318

 

73.7

 

Costs of Service Revenue

 

88,066

 

88.8

 

83,807

 

83.6

 

Total Costs of Revenues

 

417,649

 

75.1

 

425,125

 

75.4

 

Gross Profit from Merchandise Sales

 

127,159

 

27.8

 

121,945

 

26.3

 

Gross Profit from Service Revenue

 

11,121

 

11.2

 

16,444

 

16.4

 

Total Gross Profit

 

138,280

 

24.9

 

138,389

 

24.6

 

 

 

 

 

 

 

 

 

 

 

Selling, General and Administrative Expenses

 

131,093

 

23.6

 

135,161

 

24.0

 

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

7,187

 

1.3

 

3,228

 

0.6

 

 

 

 

 

 

 

 

 

 

 

Non-operating Income

 

2,259

 

0.4

 

1,738

 

0.3

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

10,337

 

1.9

 

8,915

 

1.6

 

 

 

 

 

 

 

 

 

 

 

Loss From Continuing Operations Before Income Tax Expense (Benefit) and Cumulative Effect of Change in Accounting Principle

 

(891

)

(0.2

)

(3,949

)

(0.7

)

 

 

 

 

 

 

 

 

 

 

Income Tax Expense (Benefit)

 

31

 

(3.5

)

(1,481

)

37.5

 

 

 

 

 

 

 

 

 

 

 

Net Loss From Continuing Operations Before Cumulative Effect of Change in Accounting Principle

 

(922

)

(0.2

)

(2,468

)

(0.4

)

 

 

 

 

 

 

 

 

 

 

Loss From Discontinued Operations, Net of Tax

 

(48

)

 

(306

)

(0.1

)

 

 

 

 

 

 

 

 

 

 

Cumulative Effect of Change in Accounting Principle, Net of Tax

 

267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

(703

)

(0.1

)

(2,774

)

(0.5

)

 

 

 

 

 

 

 

 

 

 

Retained Earnings, beginning of period

 

481,926

 

 

 

536,780

 

 

 

Cash Dividends

 

(3,705

)

 

 

(3,562

)

 

 

Effect of Stock Options

 

(66

)

 

 

(1,257

)

 

 

Dividend Reinvestment Plan

 

(14

)

 

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

 

Retained Earnings, end of period

 

$

477,438

 

 

 

$

529,177

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Share:

 

 

 

 

 

 

 

 

 

Net Loss From Continuing Operations Before Cumulative Effect of Change in Accounting Principle

 

$

(0.02

)

 

 

$

(0.04

)

 

 

Discontinued Operations, Net of Tax

 

 

 

 

(0.01

)

 

 

Cumulative Effect of Change in Accounting Principle, Net of Tax

 

0.01

 

 

 

 

 

 

Basic and Diluted Loss per Share

 

$

(0.01

)

 

 

$

(0.05

)

 

 

Cash Dividends per Share

 

$

0.0675

 

 

 

$

0.0675

 

 

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

CONSOLIDATED BALANCE SHEETS

 

(dollar amounts in thousands, except per share amounts)

 

 

 

April 29, 2006

 

January 28, 2006

 

April 30, 2005

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

51,698

 

$

48,281

 

$

84,258

 

Accounts receivable, net

 

37,928

 

36,434

 

30,514

 

Merchandise inventories

 

618,650

 

616,292

 

619,712

 

Prepaid expenses

 

40,648

 

40,952

 

40,499

 

Other

 

72,049

 

85,446

 

88,083

 

Assets held for disposal

 

2,083

 

652

 

2,569

 

Total Current Assets

 

823,056

 

828,057

 

865,635

 

Property and Equipment - at cost:

 

 

 

 

 

 

 

Land

 

257,105

 

257,802

 

260,758

 

Buildings and improvements

 

917,007

 

916,580

 

913,697

 

Furniture, fixtures and equipment

 

667,145

 

671,189

 

618,466

 

Construction in progress

 

16,672

 

15,858

 

26,152

 

 

 

1,857,929

 

1,861,429

 

1,819,073

 

Less accumulated depreciation and amortization

 

926,857

 

914,040

 

873,193

 

Property and Equipment - net

 

931,072

 

947,389

 

945,880

 

Other

 

46,471

 

46,307

 

65,041

 

Total Assets

 

$

1,800,599

 

$

1,821,753

 

$

1,876,556

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

256,740

 

$

261,940

 

$

333,424

 

Trade payable program liability

 

13,243

 

11,156

 

3,643

 

Accrued expenses

 

281,487

 

290,761

 

284,784

 

Deferred income taxes

 

14,957

 

15,417

 

20,084

 

Current maturities of long-term debt and obligations under capital leases

 

1,258

 

1,257

 

83,865

 

Total Current Liabilities

 

567,685

 

580,531

 

725,800

 

 

 

 

 

 

 

 

 

Long-term debt and obligations under capital leases, less current maturities

 

460,702

 

467,239

 

301,331

 

Convertible long-term debt

 

119,000

 

119,000

 

119,000

 

Other long-term liabilities

 

58,177

 

57,481

 

51,428

 

Deferred income taxes

 

3,509

 

2,937

 

27,911

 

Commitments and Contingencies

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

Common Stock, par value $1 per share:

 

 

 

 

 

 

 

Authorized 500,000,000 shares; Issued 68,557,041 shares

 

68,557

 

68,557

 

68,557

 

Additional paid-in capital

 

288,570

 

288,098

 

285,631

 

Retained earnings

 

477,438

 

481,926

 

529,177

 

Accumulated other comprehensive loss

 

(3,229

)

(3,565

)

(3,936

)

 

 

 

 

 

 

 

 

Less cost of shares in treasury - 12,109,304 shares

 

 

 

 

 

 

 

12,152,968 shares and 11,027,159 shares

 

180,546

 

181,187

 

169,079

 

Less cost of shares in benefits trust - 2,195,270 shares

 

59,264

 

59,264

 

59,264

 

Total Stockholders’ Equity

 

591,526

 

594,565

 

651,086

 

Total Liabilities and Stockholders’ Equity

 

$

1,800,599

 

$

1,821,753

 

$

1,876,556

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(dollar amounts in thousands)

 

 

Thirteen Weeks Ended

 

April 29, 2006

 

April 30, 2005

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net loss

 

$

(703

)

$

(2,774

)

Adjustments to reconcile net loss to net cash provided by continuing operations:

 

 

 

 

 

Net loss from discontinued operations

 

48

 

306

 

Depreciation and amortization

 

20,723

 

18,785

 

Cumulative effect of change in accounting principle, net of tax

 

(267

)

 

Accretion of asset disposal obligation

 

67

 

28

 

Stock compensation expense

 

1,148

 

788

 

Deferred income taxes

 

(90

)

3,019

 

Loss from sales of assets

 

422

 

893

 

Excess tax benefits from stock based awards

 

(23

)

 

Increase in cash surrender value of life insurance policies

 

(385

)

(1,090

)

Changes in Operating Assets and Liabilities:

 

 

 

 

 

Decrease in accounts receivable, prepaid expenses and other

 

12,901

 

14,097

 

Increase in merchandise inventories

 

(2,358

)

(16,952

)

(Decrease) Increase in accounts payable

 

(5,200

)

22,443

 

Decrease in accrued expenses

 

(10,088

)

(25,262

)

Increase in other long-term liabilities

 

696

 

13,451

 

Net cash provided by continuing operations

 

16,891

 

27,732

 

Net cash used in discontinued operations

 

(117

)

(615

)

Net Cash Provided by Operating Activities

 

16,774

 

27,117

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Cash paid for property and equipment

 

(5,628

)

(19,413

)

Proceeds from sales of assets

 

135

 

68

 

Net Cash Used in Investing Activities

 

(5,493

)

(19,345

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Net payments under line of credit agreements

 

(6,450

)

(8,346

)

Excess tax benefits from stock based awards

 

23

 

 

Net borrowings on trade payable program liability

 

2,087

 

3,643

 

Reduction of long-term debt

 

(5

)

(4

)

Payments on capital lease obligations

 

(81

)

(18

)

Dividends paid

 

(3,705

)

(3,562

)

Proceeds from exercise of stock options

 

48

 

2,025

 

Proceeds from dividend reinvestment plan

 

219

 

(10

)

Net Cash Used in Financing Activities

 

(7,864

)

(6,272

)

Net Increase in Cash

 

3,417

 

1,500

 

Cash and Cash Equivalents at Beginning of Period

 

48,281

 

82,758

 

Cash and Cash Equivalents at End of Period

 

$

51,698

 

$

84,258

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

Non-cash operating activities:

 

 

 

 

 

Accrued employee payroll tax withheld related to conversions of restricted stock units

 

$

138

 

$

178

 

Non-cash investing activities:

 

 

 

 

 

Accrued purchases of property and equipment

 

$

672

 

$

3,079

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

COMPUTATION OF BASIC AND DILUTED LOSS PER SHARE

 

(in thousands, except per share data)

 

 

 

Thirteen weeks ended

 

 

 

April 29, 2006

 

April 30, 2005

 

Net loss from continuing operations before cumulative effect of change in accounting principle

 

$

(922

)

$

(2,468

)

 

 

 

 

 

 

Average number of common shares assumed outstanding during period

 

54,224

 

55,185

 

 

 

 

 

 

 

Basic and Diluted Loss per Share:

 

 

 

 

 

Net Loss From Continuing Operations Before Cumulative Effect of Change in Accounting Principle

 

$

(0.02

)

$

(0.04

)

Discontinued Operations, Net of Tax

 

 

(0.01

)

Cumulative Effect of Change in Accounting Principle, Net of Tax

 

0.01

 

 

Basic and Diluted Loss per Share

 

$

(0.01

)

$

(0.05

)

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

ADDITIONAL INFORMATION

 

(dollar amounts in thousands)

 

 

 

Thirteen weeks ended

 

 

 

April 29, 2006

 

April 30, 2005

 

 

 

 

 

 

 

Capital expenditures

 

$

6,300

 

$

22,492

 

 

 

 

 

 

 

Depreciation and amortization

 

$

20,723

 

$

18,785

 

 

 

 

 

 

 

Non-operating income:

 

 

 

 

 

Net rental revenue

 

$

673

 

$

365

 

Investment income

 

1,707

 

295

 

Other (expense) income

 

(121

)

1,078

 

Total

 

$

2,259

 

$

1,738

 

 

 

 

 

 

 

Comparable sales percentages:

 

 

 

 

 

Merchandise

 

-1.0

%

0.7

%

Service

 

-0.6

%

-4.6

%

Total

 

-0.9

%

-0.3

%

 

 

 

 

 

 

Total square feet of retail space (including service centers)

 

12,167,089

 

12,184,574

 

 

 

 

 

 

 

Total Store Count

 

593

 

594

 

 

 

 

 

 

 

Sales and Gross Profit by Line of Business (A):

 

 

 

 

 

 

 

 

 

 

 

Retail Sales

 

$

327,492

 

$

338,886

 

Service Center Revenue

 

228,437

 

224,628

 

Total Revenues

 

$

555,929

 

$

563,514

 

 

 

 

 

 

 

Gross Profit from Retail Sales

 

$

89,100

 

$

84,884

 

Gross Profit from Service Center Revenue

 

49,180

 

53,505

 

Total Gross Profit

 

$

138,280

 

$

138,389

 

 

 

 

 

 

 

Comparable Sales Percentages (A):

 

 

 

 

 

 

 

 

 

 

 

Retail Sales

 

-3.0

%

1.0

%

Service Center Revenue

 

2.2

%

-2.1

%

Total Revenues

 

-0.9

%

-0.3

%

 

 

 

 

 

 

Gross Profit Percentage by Line of Business (A):

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Percentage from Retail Sales

 

27.2

%

25.0

%

Gross Profit Percentage from Service Center Revenue

 

21.5

%

23.8

%

Total Gross Profit Percentage

 

24.9

%

24.6

%

 

 

 

 

 

 

 


(A) Retail Sales include DIY and Commercial sales. Service Center Revenue includes revenue from labor and installed parts and tires.

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

ADDITIONAL INFORMATION (Continued)

 

(dollar amounts in thousands)

 

Adjustments

 

In the fourth quarter of 2005 we completed the restructuring of substantially all of our vendor agreements to provide flexibility in how we use vendor support funds. Previously, the vendor agreements required us to use certain vendor support funds exclusively for promotions and to partially offset certain other direct expenses. Under EITF No. 02-16, these types of allowances are to be netted against the appropriate expenses they offset, once it is determined that the allowances are for specific, identifiable and incremental expenses. Under the restructured contracts it is not possible to make this determination. Therefore all vendor support funds are now treated as a reduction of inventories and are recognized as a reduction to Costs of Merchandise Sales as the inventories are sold, in accordance with EITF No. 02-16. For the periods below, all previously identified costs which had been netted against Selling, General and Administrative Expenses (SG&A) have been reclassified to Gross Profit from Merchandise Sales as if the vendor

agreements had been restructured as of January 30, 2005.

 

Please see the table below illustrating the effect of this adjustment on the thirteen week period ended April 30, 2005 (presented in both GAAP and Line of Busines formats), assuming that such change had been in effect during such period.

 

STATEMENTS OF OPERATIONS

 

GAAP Format

 

 

 

Thirteen weeks ended

 

 

 

Thirteen weeks ended

 

Thirteen weeks ended

 

 

 

April 30, 2005

 

 

 

April 30, 2005

 

April 29, 2006

 

 

 

ACTUAL

 

ADJUSTMENTS

 

AS ADJUSTED

 

ACTUAL

 

 

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit from Merchandise Sales

 

$

121,945

 

26.3

 

$

8,826

 

1.9

 

$

130,771

 

28.2

 

$

127,159

 

27.8

 

Gross Profit from Service Revenue

 

16,444

 

16.4

 

 

 

16,444

 

16.4

 

11,121

 

11.2

 

Total Gross Profit

 

138,389

 

24.6

 

8,826

 

1.9

 

147,215

 

26.2

 

138,280

 

24.9

 

Selling, General and Administrative Expenses

 

135,161

 

24.0

 

8,826

 

1.9

 

143,987

 

25.6

 

131,093

 

23.6

 

Operating Profit

 

$

3,228

 

0.6

 

$

 

 

$

3,228

 

0.6

 

$

7,187

 

1.3

 

 

Line of Business Format

 

 

 

Thirteen weeks ended

 

 

 

Thirteen weeks ended

 

Thirteen weeks ended

 

 

 

April 30, 2005

 

 

 

April 30, 2005

 

April 29, 2006

 

 

 

ACTUAL

 

ADJUSTMENTS

 

AS ADJUSTED

 

ACTUAL

 

 

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit from Retail Sales

 

$

84,884

 

25.0

 

$

6,347

 

1.9

 

$

91,231

 

26.9

 

$

89,100

 

27.2

 

Gross Profit from Service Center Revenue

 

53,505

 

23.8

 

2,479

 

1.1

 

55,984

 

24.9

 

49,180

 

21.5

 

Total Gross Profit

 

138,389

 

24.6

 

8,826

 

1.6

 

147,215

 

26.2

 

138,280

 

24.9

 

Selling, General and Administrative Expenses

 

135,161

 

24.0

 

8,826

 

1.6

 

143,987

 

25.6

 

131,093

 

23.6

 

Operating Profit

 

$

3,228

 

0.6

 

$

 

 

$

3,228

 

0.6

 

$

7,187

 

1.3