EX-99.2 3 a08-16144_1ex99d2.htm EX-99.2

Exhibit 99.2

 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(dollar amounts in thousands, except per share amounts)

 

 

 

May 3, 2008

 

May 5, 2007

 

 

 

 

 

%

 

 

 

%

 

Thirteen weeks ended

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

Merchandise Sales

 

$

403,334

 

81.0

 

$

439,794

 

81.5

 

Service Revenue

 

94,709

 

19.0

 

99,789

 

18.5

 

Total Revenues

 

498,043

 

100.0

 

539,583

 

100.0

 

Costs of Merchandise Sales

 

285,923

 

70.9

 

311,530

 

70.8

 

Costs of Service Revenue

 

84,154

 

88.9

 

87,464

 

87.6

 

Total Costs of Revenues

 

370,077

 

74.3

 

398,994

 

73.9

 

Gross Profit from Merchandise Sales

 

117,411

 

29.1

 

128,264

 

29.2

 

Gross Profit from Service Revenue

 

10,555

 

11.1

 

12,325

 

12.4

 

Total Gross Profit

 

127,966

 

25.7

 

140,589

 

26.1

 

Selling, General and Administrative Expenses

 

119,015

 

23.9

 

127,110

 

23.6

 

 

 

 

 

 

 

 

 

 

 

Net Gain from Dispositions of Assets

 

5,531

 

1.1

 

2,359

 

0.4

 

 

 

 

 

 

 

 

 

 

 

Operating Profit

 

14,482

 

2.9

 

15,838

 

2.9

 

 

 

 

 

 

 

 

 

 

 

Non-operating Income

 

330

 

0.1

 

1,905

 

0.4

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

5,427

 

1.1

 

12,656

 

2.3

 

 

 

 

 

 

 

 

 

 

 

Earnings From Continuing Operations Before Income Taxes

 

9,385

 

1.9

 

5,087

 

0.9

 

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

4,094

 

43.6

(1)

2,036

 

40.0

(1)

 

 

 

 

 

 

 

 

 

 

Net Earnings From Continuing Operations

 

5,291

 

1.1

 

3,051

 

0.6

 

 

 

 

 

 

 

 

 

 

 

(Loss) Gain from Discontinued Operations, Net of Tax

 

(619

)

(0.1

)

124

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings

 

4,672

 

0.9

 

3,175

 

0.6

 

Retained Earnings, beginning of period

 

406,819

 

 

 

463,797

 

 

 

Cumulative effect adjustment for adoption of EITF 06-10, net of tax

 

(1,165

)

 

 

 

 

 

Cumulative effect adjustment for adoption of FIN 48

 

 

 

 

(155

)

 

 

Cash Dividends

 

(3,495

)

 

 

(3,581

)

 

 

Effect of Stock Options

 

(12

)

 

 

(479

)

 

 

 

 

 

 

 

 

 

 

 

 

Retained Earnings, end of period

 

$

406,819

 

 

 

$

462,757

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings per Share:

 

 

 

 

 

 

 

 

 

Basic Weighted Average Shares Outstanding

 

52,063

 

 

 

53,122

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings From Continuing Operations

 

$

0.10

 

 

 

$

0.06

 

 

 

Discontinued Operations, Net of Tax

 

(0.01

)

 

 

 

 

 

Basic Earnings per Share

 

$

0.09

 

 

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings per Share:

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Shares Outstanding

 

52,170

 

 

 

53,634

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Earnings From Continuing Operations

 

$

0.10

 

 

 

$

0.06

 

 

 

Discontinued Operations, Net of Tax

 

(0.01

)

 

 

 

 

 

Diluted Earnings per Share

 

$

0.09

 

 

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Dividends per Share

 

$

0.0675

 

 

 

$

0.0675

 

 

 

 


(1)  As a percentage of earnings from continuing operations before income taxes

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

CONSOLIDATED BALANCE SHEETS

 

(dollar amounts in thousands, except per share amounts)

 

 

 

May 3, 2008

 

February 2, 2008

 

May 5, 2007

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

87,277

 

$

20,926

 

$

30,781

 

Accounts receivable, less allowance for uncollectible accounts of $2,299; $1,937; and $1,593

 

30,726

 

29,450

 

31,261

 

Merchandise inventories

 

561,439

 

561,152

 

618,814

 

Prepaid expenses

 

39,601

 

43,842

 

40,145

 

Other

 

65,411

 

77,469

 

62,142

 

Assets held for disposal

 

16,592

 

16,918

 

 

Total Current Assets

 

801,046

 

749,757

 

783,143

 

Property and Equipment - Net

 

705,557

 

780,779

 

895,828

 

Deferred income taxes

 

27,332

 

20,775

 

24,845

 

Other

 

30,756

 

32,609

 

64,476

 

Total Assets

 

$

1,564,691

 

$

1,583,920

 

$

1,768,292

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

230,185

 

$

245,423

 

$

232,872

 

Trade payable program liability

 

19,020

 

14,254

 

14,046

 

Accrued expenses

 

282,322

 

292,623

 

281,120

 

Deferred income taxes

 

 

 

25,215

 

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

 

2,278

 

2,114

 

3,474

 

Total Current Liabilities

 

533,805

 

554,414

 

556,727

 

 

 

 

 

 

 

 

 

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

 

341,317

 

400,016

 

623,761

 

Other long-term liabilities

 

70,032

 

72,183

 

66,339

 

Deferred gain from asset sales

 

146,062

 

86,595

 

 

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

 

296,715

 

296,074

 

292,837

 

Retained earnings

 

406,819

 

406,819

 

462,757

 

Accumulated other comprehensive loss

 

(12,486

)

(14,183

)

(9,906

)

Less cost of shares in treasury - 14,582,741 shares, 14,609,094 shares and 15,000,595 shares

 

226,866

 

227,291

 

233,516

 

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

 

59,264

 

59,264

 

59,264

 

Total Stockholders’ Equity

 

473,475

 

470,712

 

521,465

 

Total Liabilities and Stockholders’ Equity

 

$

1,564,691

 

$

1,583,920

 

$

1,768,292

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(dollar amounts in thousands)

 

Thirteen weeks ended

 

May 3, 2008

 

May 5, 2007

 

 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net Earnings

 

$

4,672

 

$

3,175

 

Adjustments to reconcile net earnings to net cash used in continuing operations:

 

 

 

 

 

Net loss (earnings) from discontinued operations

 

619

 

(124

)

Depreciation and amortization

 

19,019

 

20,884

 

Amortization of deferred gain from asset sales

 

(1,825

)

 

Accretion of asset retirement obligation

 

93

 

64

 

Stock compensation expense

 

1,322

 

4,390

 

Gain on debt retirement

 

(2,883

)

 

Deferred income taxes

 

1,437

 

1,642

 

Gain from dispositions of assets & insurance recoveries

 

(5,531

)

(3,719

)

Loss from asset impairment

 

370

 

 

Change in fair value of derivatives

 

69

 

1,802

 

Excess tax benefits from stock based awards

 

 

(301

)

Increase (decrease) in cash surrender value of life insurance policies

 

979

 

(534

)

Changes in Operating Assets and Liabilities:

 

 

 

 

 

Decrease in accounts receivable, prepaid expenses and other

 

7,586

 

10,178

 

Increase in merchandise inventories

 

(287

)

(11,772

)

Decrease in accounts payable

 

(15,238

)

(32,617

)

Decrease in accrued expenses

 

(12,281

)

(2,257

)

(Decrease) increase in other long-term liabilities

 

(2,394

)

1,075

 

Net cash used in continuing operations

 

(4,273

)

(8,114

)

Net cash (used in) provided by discontinued operations

 

(58

)

307

 

Net Cash Used in Operating Activities

 

(4,331

)

(7,807

)

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

Cash paid for property and equipment

 

(6,942

)

(11,525

)

Proceeds from dispositions of assets

 

132,090

 

 

Net cash provided by (used in) investing activities

 

125,148

 

(11,525

)

Net cash used in discontinued operations

 

 

(85

)

Net Cash Provided by (Used in) Investing Activities

 

125,148

 

(11,610

)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

Borrowings under line of credit agreements

 

97,909

 

207,505

 

Payments under line of credit agreements

 

(139,332

)

(117,900

)

Excess tax benefits from stock based awards

 

 

301

 

Borrowings on trade payable program liability

 

27,222

 

17,461

 

Payments on trade payable program liability

 

(22,456

)

(17,405

)

Payment for finance issuance cost

 

(93

)

 

Proceeds from lease financing

 

4,676

 

 

Reduction of long-term debt

 

(18,856

)

(808

)

Payments on capital lease obligations

 

(49

)

(83

)

Dividends paid

 

(3,495

)

(3,581

)

Repurchase of common stock

 

 

(58,152

)

Proceeds from exercise of stock options

 

8

 

773

 

Proceeds from dividend reinvestment plan

 

 

203

 

Net Cash (Used in) Provided by Financing Activities

 

(54,466

)

28,314

 

Net Increase in Cash and Cash Equivalents

 

66,351

 

8,897

 

Cash and Cash Equivalents at Beginning of Period

 

20,926

 

21,884

 

Cash and Cash Equivalents at End of Period

 

$

87,277

 

$

30,781

 

 

 

 

 

 

 

Cash paid for interest, net of amounts capitalized

 

$

3,994

 

$

7,770

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

Non-cash investing activities:

 

 

 

 

 

Accrued purchases of property and equipment

 

$

3,689

 

$

2,804

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

ADDITIONAL INFORMATION

 

(dollar amounts in thousands)

 

Thirteen weeks ended

 

May 3, 2008

 

May 5, 2007

 

 

 

 

 

 

 

Capital expenditures

 

$

8,646

 

$

10,453

 

 

 

 

 

 

 

Depreciation and amortization

 

$

19,019

 

$

20,884

 

 

 

 

 

 

 

Non-operating income:

 

 

 

 

 

Net rental revenue

 

$

173

 

$

798

 

Investment income

 

167

 

1,133

 

Other expense

 

(10

)

(26

)

 

 

 

 

 

 

Total

 

$

330

 

$

1,905

 

 

 

 

 

 

 

Comparable sales percentages:

 

 

 

 

 

Merchandise

 

-6.2

%

-3.1

%

Service

 

-2.9

%

1.5

%

Total

 

-5.6

%

-2.3

%

 

 

 

 

 

 

Total square feet of retail space (including service centers)

 

11,514,000

 

12,164,029

 

 

 

 

 

 

 

Total Store Count

 

562

 

593

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

Retail Sales

 

$

273,325

 

$

311,119

 

Service Center Revenue

 

$

224,718

 

228,464

 

Total Revenues

 

$

498,043

 

$

539,583

 

 

 

 

 

 

 

Gross Profit from Retail Sales

 

$

73,404

 

$

88,766

 

Gross Profit from Service Center Revenue

 

54,562

 

51,823

 

Total Gross Profit

 

$

127,966

 

$

140,589

 

 

 

 

 

 

 

Comparable Sales Percentages (A):

 

 

 

 

 

 

 

 

 

 

 

Retail Sales

 

-10.2

%

-4.6

%

Service Center Revenue

 

0.6

%

1.0

%

Total Revenues

 

-5.6

%

-2.3

%

 

 

 

 

 

 

Gross Profit Percentage by Line of Business (A):

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Percentage from Retail Sales

 

26.9

%

28.5

%

Gross Profit Percentage from Service Center Revenue

 

24.3

%

22.7

%

Total Gross Profit Percentage

 

25.7

%

26.1

%

 


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