EX-99.2 3 a10-7628_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)

 

 

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

 

 

January 30, 2010

 

January 31, 2009

 

January 30, 2010

 

January 31, 2009

 

 

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

 

$

364,511

 

80.5

 

$

379,792

 

81.6

 

$

1,533,619

 

80.3

 

1,569,664

 

81.4

 

Service revenue

 

88,385

 

19.5

 

85,744

 

18.4

 

377,319

 

19.7

 

358,124

 

18.6

 

Total revenues

 

452,896

 

100.0

 

465,536

 

100.0

 

1,910,938

 

100.0

 

1,927,788

 

100.0

 

Costs of merchandise sales

 

258,375

 

70.9

 

290,588

 

76.5

 

1,084,804

 

70.7

 

1,129,162

 

71.9

 

Costs of service revenue

 

84,474

 

95.6

 

82,760

 

96.5

 

340,027

 

90.1

 

333,194

 

93.0

 

Total costs of revenues

 

342,849

 

75.7

 

373,348

 

80.2

 

1,424,831

 

74.6

 

1,462,356

 

75.9

 

Gross profit from merchandise sales

 

106,136

 

29.1

 

89,204

 

23.5

 

448,815

 

29.3

 

440,502

 

28.1

 

Gross profit from service revenue

 

3,911

 

4.4

 

2,984

 

3.5

 

37,292

 

9.9

 

24,930

 

7.0

 

Total gross profit

 

110,047

 

24.3

 

92,188

 

19.8

 

486,107

 

25.4

 

465,432

 

24.1

 

Selling, general and administrative expenses

 

103,181

 

22.8

 

123,599

 

26.5

 

430,261

 

22.5

 

485,044

 

25.2

 

Net (loss) gain from dispositions of assets

 

(106

)

 

161

 

 

1,213

 

0.1

 

9,716

 

0.5

 

Operating profit (loss)

 

6,760

 

1.5

 

(31,250

)

(6.7

)

57,059

 

3.0

 

(9,896

)

(0.5

)

Non-operating income

 

595

 

0.1

 

170

 

 

2,261

 

0.1

 

1,967

 

0.1

 

Interest expense

 

6,380

 

1.4

 

8,071

 

1.7

 

21,704

 

1.1

 

27,048

 

1.4

 

Earnings (loss) from continuing operations before income taxes

 

975

 

0.2

 

(39,151

)

(8.4

)

37,616

 

2.0

 

(34,977

)

(1.8

)

Income tax (benefit) expense

 

(1,860

)

(190.8

)(1)

(6,324

)

16.2

(1)

13,503

 

35.9

(1)

(6,139

)

17.6

(1)

Earnings (loss) from continuing operations

 

2,835

 

0.6

 

(32,827

)

(7.1

)

24,113

 

1.3

 

(28,838

)

(1.5

)

Discontinued operations, net of tax

 

(567

)

(0.1

)

(440

)

(0.1

)

(1,077

)

(0.1

)

(1,591

)

(0.1

)

Net earnings (loss)

 

2,268

 

0.5

 

(33,267

)

(7.1

)

23,036

 

1.2

 

(30,429

)

(1.6

)

Retained earnings, beginning of period

 

374,461

 

 

 

396,697

 

 

 

358,670

 

 

 

406,819

 

 

 

Cumulative effect of change in method of accounting for split dollar life insurance, net of tax

 

 

 

 

 

 

 

 

 

 

(1,165

)

 

 

Cash dividends

 

(1,577

)

 

 

(3,560

)

 

 

(6,286

)

 

 

(14,111

)

 

 

Dividend reinvested and other

 

(316

)

 

 

(1,200

)

 

 

(584

)

 

 

(2,444

)

 

 

Retained earnings, end of period

 

$

374,836

 

 

 

$

358,670

 

 

 

$

374,836

 

 

 

$

358,670

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

 

$

0.05

 

 

 

$

(0.63

)

 

 

$

0.46

 

 

 

$

(0.55

)

 

 

Discontinued operations, net of tax

 

(0.01

)

 

 

 

 

 

(0.02

)

 

 

(0.03

)

 

 

Basic earnings (loss) per share

 

$

0.04

 

 

 

$

(0.63

)

 

 

$

0.44

 

 

 

$

(0.58

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

 

$

0.06

 

 

 

$

(0.63

)

 

 

$

0.46

 

 

 

$

(0.55

)

 

 

Discontinued operations, net of tax

 

(0.02

)

 

 

 

 

 

(0.02

)

 

 

(0.03

)

 

 

Diluted earnings (loss) per share

 

$

0.04

 

 

 

$

(0.63

)

 

 

$

0.44

 

 

 

$

(0.58

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.0300

 

 

 

$

0.0675

 

 

 

$

0.1200

 

 

 

$

0.2700

 

 

 

 


(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 share and per share amounts)

 

 

 

January 30, 2010

 

January 31, 2009

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

39,326

 

$

21,332

 

Accounts receivable, less allowance for uncollectible accounts of $1,488 and $1,912

 

22,983

 

28,831

 

Merchandise inventories

 

559,118

 

564,931

 

Prepaid expenses

 

24,784

 

25,390

 

Other current assets

 

65,428

 

62,421

 

Assets held for disposal

 

4,438

 

12,653

 

Total current assets

 

716,077

 

715,558

 

Property and equipment - net

 

706,450

 

740,331

 

Deferred income taxes

 

58,171

 

77,708

 

Other long-term assets

 

18,388

 

18,792

 

Total assets

 

$

1,499,086

 

$

1,552,389

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

202,974

 

$

212,340

 

Trade payable program liability

 

34,099

 

31,930

 

Accrued expenses

 

242,416

 

254,754

 

Deferred income taxes

 

29,984

 

35,848

 

Current maturities of long-term debt

 

1,079

 

1,453

 

Total current liabilities

 

510,552

 

536,325

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

306,201

 

352,382

 

Other long-term liabilities

 

73,933

 

70,322

 

Deferred gain from asset sales

 

165,105

 

170,204

 

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

 

Additional paid-in capital

 

293,810

 

292,728

 

Retained earnings

 

374,836

 

358,670

 

Accumulated other comprehensive loss

 

(17,691

)

(18,075

)

Less cost of shares in treasury - 16,164,074 shares and 14,124,021 shares

 

276,217

 

219,460

 

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

 

 

59,264

 

Total stockholders’ equity

 

443,295

 

423,156

 

Total liabilities and stockholders’ equity

 

$

1,499,086

 

$

1,552,389

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(dollar amounts in thousands)

 

Fifty-Two Weeks Ended

 

January 30, 2010

 

January 31, 2009

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net earnings (loss)

 

$

23,036

 

$

(30,429

)

Adjustments to reconcile net earnings to net cash provided by (used in) continuing operations:

 

 

 

 

 

Discontinued operations

 

1,077

 

1,591

 

Depreciation and amortization

 

70,529

 

73,207

 

Amortization of deferred gain from asset sales

 

(12,325

)

(10,285

)

Stock compensation expense

 

2,575

 

2,743

 

Gain on debt retirement

 

(6,248

)

(3,460

)

Deferred income taxes

 

13,446

 

(6,258

)

Gain from dispositions of assets

 

(1,213

)

(9,716

)

Loss from asset impairment

 

2,884

 

3,427

 

Other

 

345

 

537

 

Changes in operating assets and liabilities:

 

 

 

 

 

Decrease in accounts receivable, prepaid expenses and other

 

7,175

 

23,904

 

Decrease (increase) in merchandise inventories

 

7,039

 

(3,779

)

Decrease in accounts payable

 

(9,640

)

(33,083

)

Decrease in accrued expenses

 

(13,238

)

(34,993

)

Increase (decrease) in other long-term liabilities

 

2,384

 

(11,992

)

Net cash provided by (used in) continuing operations

 

87,826

 

(38,586

)

Net cash used in discontinued operations

 

(603

)

(921

)

Net cash provided by (used in) operating activities

 

87,223

 

(39,507

)

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Cash paid for master lease properties

 

 

(117,121

)

Cash paid for property and equipment

 

(43,214

)

(34,762

)

Proceeds from dispositions of assets

 

14,776

 

210,635

 

Life insurance proceeds received

 

 

15,588

 

Acquisition of Florida Tire, Inc.

 

(2,695

)

 

Other

 

(500

)

 

Net cash (used in) provided by continuing operations

 

(31,633

)

74,340

 

Net cash provided by discontinued operations

 

1,762

 

4,386

 

Net cash (used in) provided by investing activities

 

(29,871

)

78,726

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under line of credit agreements

 

249,704

 

205,162

 

Payments under line of credit agreements

 

(273,566

)

(223,345

)

Borrowings on trade payable program liability

 

192,324

 

196,680

 

Payments on trade payable program liability

 

(190,155

)

(179,004

)

Payment for finance issuance cost

 

 

(6,936

)

Proceeds from lease financing

 

 

8,661

 

Long-term debt and capital lease obligations payments

 

(11,990

)

(26,798

)

Dividends paid

 

(6,286

)

(14,111

)

Other

 

611

 

878

 

Net cash used in financing activities

 

(39,358

)

(38,813

)

Net increase in cash and cash equivalents

 

17,994

 

406

 

Cash and cash equivalents at beginning of period

 

21,332

 

20,926

 

Cash and cash equivalents at end of period

 

$

39,326

 

$

21,332

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid for income taxes

 

$

4,768

 

$

1,330

 

Cash paid for interest

 

$

24,509

 

$

26,548

 

Accrued purchases of property and equipment

 

$

1,738

 

$

1,214

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

 

 

 

 

COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

 

(in thousands, except per share data)

 

 

 

 

 

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

 

 

 

 

 

January 30, 2010

 

January 31, 2009

 

January 30, 2010

 

January 31, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Earnings (loss) from continuing operations

 

 

 

$

2,835

 

$

(32,827

)

$

24,113

 

$

(28,838

)

 

Discontinued operations, net of tax

 

 

 

(567

)

(440

)

(1,077

)

(1,591

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

 

 

$

2,268

 

$

(33,267

)

$

23,036

 

$

(30,429

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

Basic average number of common shares outstanding during period

 

 

 

52,452

 

52,223

 

52,397

 

52,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price

 

 

 

356

 

 

270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)

Diluted average number of common shares assumed outstanding during period

 

 

 

52,808

 

52,223

 

52,667

 

52,136

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

 

(a) /(b)

 

$

0.05

 

$

(0.63

)

$

0.46

 

$

(0.55

)

 

Discontinued operations, net of tax

 

 

 

(0.01

)

 

(0.02

)

(0.03

)

 

Basic earnings (loss) per share

 

 

 

$

0.04

 

$

(0.63

)

$

0.44

 

$

(0.58

)

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from continuing operations

 

(a) /(c)

 

$

0.06

 

$

(0.63

)

$

0.46

 

$

(0.55

)

 

Discontinued operations, net of tax

 

 

 

(0.02

)

 

(0.02

)

$

(0.03

)

 

Diluted earnings (loss) per share

 

 

 

$

0.04

 

$

(0.63

)

$

0.44

 

$

(0.58

)

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

 

 

 

 

ADDITIONAL INFORMATION

 

(dollar amounts in thousands)

 

 

 

Thirteen Weeks Ended

 

Fifty-Two Weeks Ended

 

 

 

January 30, 2010

 

January 31, 2009

 

January 30, 2010

 

January 31, 2009

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures (A)

 

$

15,439

 

$

12,109

 

$

43,214

 

$

151,883

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

17,281

 

$

18,098

 

$

70,529

 

$

73,207

 

 

 

 

 

 

 

 

 

 

 

Non-operating income:

 

 

 

 

 

 

 

 

 

Net rental revenue

 

$

522

 

$

123

 

$

1,774

 

$

1,193

 

Investment income

 

46

 

35

 

219

 

780

 

Other (expense) income

 

27

 

12

 

268

 

(6

)

 

 

 

 

 

 

 

 

 

 

Total

 

$

595

 

$

170

 

$

2,261

 

$

1,967

 

 

 

 

 

 

 

 

 

 

 

Comparable sales percentages:

 

 

 

 

 

 

 

 

 

Merchandise

 

-4.9

%

-9.1

%

-2.6

%

-8.4

%

Service

 

0.7

%

-5.5

%

4.7

%

-6.2

%

Total

 

-3.9

%

-8.5

%

-1.2

%

-8.0

%

 

 

 

 

 

 

 

 

 

 

Total square feet of retail space (including service centers)

 

 

 

 

 

11,687,000

 

11,514,000

 

 

 

 

 

 

 

 

 

 

 

Total store count

 

 

 

 

 

587

 

562

 

 

 

 

 

 

 

 

 

 

 

Sales and gross profit by line of business (B):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail sales

 

$

243,187

 

$

255,314

 

$

1,013,308

 

1,058,021

 

Service center revenue

 

209,709

 

210,222

 

897,630

 

869,767

 

Total revenues

 

$

452,896

 

$

465,536

 

$

1,910,938

 

$

1,927,788

 

 

 

 

 

 

 

 

 

 

 

Gross profit from retail sales

 

$

64,904

 

$

53,123

 

$

275,051

 

273,262

 

Gross profit from service center revenue

 

45,143

 

39,065

 

211,056

 

192,170

 

Total gross profit

 

$

110,047

 

$

92,188

 

$

486,107

 

$

465,432

 

 

 

 

 

 

 

 

 

 

 

Comparable sales percentages (B):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail sales

 

-5.1

%

-13.2

%

-4.3

%

-11.8

%

Service center revenue

 

-2.4

%

-1.9

%

2.5

%

-2.9

%

Total revenues

 

-3.9

%

-8.5

%

-1.2

%

-8.0

%

 

 

 

 

 

 

 

 

 

 

Gross profit percentage by line of business (B):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit percentage from retail sales

 

26.7

%

20.8

%

27.1

%

25.8

%

Gross profit percentage from service center revenue

 

21.5

%

18.6

%

23.5

%

22.1

%

Total gross profit percentage

 

24.3

%

19.8

%

25.4

%

24.1

%

 


(A) Fiscal 2008 capital expenditures includes $117.1 million for the purchase of master lease properties.

(B) Retail sales include DIY and commercial sales.  Service center revenue includes revenue from labor and installed parts and tires.