EX-99.2 3 a13-20230_1ex99d2.htm EX-99.2

Exhibit 99.2

 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

CONSOLIDATED BALANCE SHEETS

 

 

(dollar amounts in thousands)

 

 

 

 

 

August 3, 2013

 

February 2, 2013

 

July 28, 2012

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

64,885

 

$

59,186

 

$

150,833

 

Accounts receivable, less allowance for uncollectible accounts of $1,211; $1,302; and $1,247

 

25,386

 

23,897

 

27,962

 

Merchandise inventories

 

649,832

 

641,208

 

626,555

 

Prepaid expenses

 

21,696

 

28,908

 

21,021

 

Other current assets

 

56,199

 

60,438

 

53,083

 

Total current assets

 

817,998

 

813,637

 

879,454

 

Property and equipment, net of accumulated depreciation of $1,197,253; $1,162,909; and $1,149,556

 

638,727

 

657,270

 

682,619

 

Goodwill

 

46,917

 

46,917

 

46,917

 

Deferred income taxes

 

41,447

 

47,691

 

45,825

 

Other long-term assets

 

38,240

 

38,434

 

31,660

 

Total assets

 

$

1,583,329

 

$

1,603,949

 

$

1,686,475

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

226,684

 

$

244,696

 

$

246,522

 

Trade payable program liability

 

149,357

 

149,718

 

115,746

 

Accrued expenses

 

231,580

 

232,277

 

218,548

 

Deferred income taxes

 

55,236

 

58,441

 

61,231

 

Current maturities of long-term debt

 

2,000

 

2,000

 

1,254

 

Total current liabilities

 

664,857

 

687,132

 

643,301

 

 

 

 

 

 

 

 

 

Long-term debt less current maturities

 

197,000

 

198,000

 

293,504

 

Other long-term liabilities

 

50,960

 

53,818

 

72,290

 

Deferred gain from asset sales

 

121,125

 

127,427

 

133,971

 

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

 

295,882

 

295,679

 

295,536

 

Retained earnings

 

438,035

 

430,148

 

454,343

 

Accumulated other comprehensive income (loss)

 

711

 

(980

)

(15,011

)

Treasury stock, at cost - 15,417,020 shares; 15,431,298 shares; and 15,563,931 shares

 

(253,798

)

(255,832

)

(260,016

)

Total stockholders’ equity

 

549,387

 

537,572

 

543,409

 

Total liabilities and stockholders’ equity

 

$

1,583,329

 

$

1,603,949

 

$

1,686,475

 

 

 

 

 

 

 

 

 

Supplemental balance sheet information:

 

 

 

 

 

 

 

Working capital

 

$

153,141

 

$

126,505

 

$

236,153

 

Current ratio

 

1.23

 

1.18

 

1.37

 

Accounts payable to inventory ratio

 

57.9

%

61.5

%

57.8

%

Total debt as a percent of total capitalization

 

26.6

%

27.1

%

35.2

%

Debt as a percent of total capitalization, net

 

19.6

%

20.8

%

20.9

%

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

(UNAUDITED)

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 

 

(dollar amounts in thousands, except per share amounts)

 

 

 

 

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

 

 

August 3, 2013

 

July 28, 2012

 

August 3, 2013

 

July 28, 2012

 

 

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

 

$

412,317

 

78.1

 

$

413,380

 

78.6

 

$

829,467

 

78.0

 

$

825,712

 

78.6

 

Service revenue

 

115,302

 

21.9

 

112,291

 

21.4

 

234,325

 

22.0

 

224,563

 

21.4

 

Total revenues

 

527,619

 

100.0

 

525,671

 

100.0

 

1,063,792

 

100.0

 

1,050,275

 

100.0

 

Costs of merchandise sales

 

273,764

 

66.4

 

288,051

 

69.7

 

570,638

 

68.8

 

578,907

 

70.1

 

Costs of service revenue

 

115,147

 

99.9

 

107,019

 

95.3

 

232,605

 

99.3

 

213,115

 

94.9

 

Total costs of revenues

 

388,911

 

73.7

 

395,070

 

75.2

 

803,243

 

75.5

 

792,022

 

75.4

 

Gross profit from merchandise sales

 

138,553

 

33.6

 

125,329

 

30.3

 

258,829

 

31.2

 

246,805

 

29.9

 

Gross profit from service revenue

 

155

 

0.1

 

5,272

 

4.8

 

1,720

 

0.7

 

11,448

 

5.1

 

Total gross profit

 

138,708

 

26.3

 

130,601

 

24.8

 

260,549

 

24.5

 

258,253

 

24.6

 

Selling, general and administrative expenses

 

120,929

 

22.9

 

114,277

 

21.7

 

239,133

 

22.5

 

233,987

 

22.3

 

Net loss from dispositions of assets

 

(31

)

 

(9

)

 

(147

)

 

(11

)

 

Operating profit

 

17,748

 

3.4

 

16,315

 

3.1

 

21,269

 

2.0

 

24,255

 

2.3

 

Merger termination fees, net

 

 

 

42,955

 

8.2

 

 

 

42,955

 

4.1

 

Other income

 

466

 

0.1

 

521

 

0.1

 

844

 

0.1

 

991

 

0.1

 

Interest expense

 

3,562

 

0.7

 

6,427

 

1.2

 

7,242

 

0.7

 

12,943

 

1.2

 

Earnings from continuing operations before income taxes and discontinued operations

 

14,652

 

2.8

 

53,364

 

10.2

 

14,871

 

1.4

 

55,258

 

5.3

 

Income tax expense

 

9,273

 

63.3

(1)

20,330

 

38.1

(1)

5,565

 

37.4

(1)

21,090

 

38.2

(1)

Earnings from continuing operations before discontinued operations

 

5,379

 

1.0

 

33,034

 

6.3

 

9,306

 

0.9

 

34,168

 

3.3

 

(Loss) gain from discontinued operations, net of tax

 

(11

)

 

14

 

 

(75

)

 

(58

)

 

Net earnings

 

5,368

 

1.0

 

33,048

 

6.3

 

9,231

 

0.9

 

34,110

 

3.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

$

0.10

 

 

 

$

0.62

 

 

 

$

0.17

 

 

 

$

0.64

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.10

 

 

 

$

0.62

 

 

 

$

0.17

 

 

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

$

0.10

 

 

 

$

0.61

 

 

 

$

0.17

 

 

 

$

0.63

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.10

 

 

 

$

0.61

 

 

 

$

0.17

 

 

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined benefit plan adjustment, net of tax

 

 

 

 

354

 

 

 

 

 

 

708

 

 

 

Derivative financial instruments adjustment, net of tax

 

1,578

 

 

 

910

 

 

 

1,691

 

 

 

1,930

 

 

 

Other comprehensive income

 

1,578

 

 

 

1,264

 

 

 

1,691

 

 

 

2,638

 

 

 

Comprehensive income

 

$

6,946

 

 

 

$

34,312

 

 

 

$

10,922

 

 

 

$

36,748

 

 

 

 


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

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

 

Twenty-six weeks ended

 

August 3, 2013

 

July 28, 2012

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net earnings

 

$

9,231

 

$

34,110

 

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

 

 

 

 

 

Net loss from discontinued operations

 

75

 

58

 

Depreciation

 

40,185

 

39,309

 

Amortization of deferred gain from asset sales

 

(6,302

)

(6,302

)

Amortization of deferred financing costs

 

1,302

 

1,268

 

Stock compensation expense

 

1,660

 

1,043

 

Deferred income taxes

 

1,825

 

20,485

 

Net loss from disposition of assets

 

147

 

11

 

Loss from asset impairment

 

2,849

 

 

Other

 

(269

)

(8

)

Changes in assets and liabilities:

 

 

 

 

 

Decrease in accounts receivable, prepaid expenses and other

 

9,647

 

10,180

 

Increase in merchandise inventories

 

(8,624

)

(12,419

)

(Decrease) increase in accounts payable

 

(18,611

)

2,810

 

Decrease in accrued expenses

 

(696

)

(2,451

)

Decrease in other long-term liabilities

 

(1,100

)

(552

)

Net cash provided by continuing operations

 

31,319

 

87,542

 

Net cash used in discontinued operations

 

(121

)

(92

)

Net cash provided by operating activities

 

31,198

 

87,450

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(24,502

)

(26,347

)

Proceeds from dispositions of assets

 

18

 

 

Release of collateral investment

 

1,000

 

 

Net cash used in investing activities

 

(23,484

)

(26,347

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under line of credit agreements

 

1,354

 

1,106

 

Payments under line of credit agreements

 

(1,354

)

(931

)

Borrowings on trade payable program liability

 

80,690

 

80,836

 

Payments on trade payable program liability

 

(81,051

)

(50,304

)

Debt payments

 

(1,000

)

(539

)

Proceeds from stock issuance

 

592

 

1,318

 

Repurchase of common stock

 

(1,246

)

 

Net cash (used in) provided by financing activities

 

(2,015

)

31,486

 

Net increase in cash and cash equivalents

 

5,699

 

92,589

 

Cash and cash equivalents at beginning of period

 

59,186

 

58,244

 

Cash and cash equivalents at end of period

 

$

64,885

 

$

150,833

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

Cash paid for income taxes

 

$

3,288

 

$

1,705

 

Cash received from income tax refunds

 

$

51

 

$

 

Cash paid for interest

 

$

6,108

 

$

11,449

 

Accrued purchases of property and equipment

 

$

2,031

 

$

632

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

 

 

 

 

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

 

 

 

 

August 3, 2013

 

July 28, 2012

 

August 3, 2013

 

July 28, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)  Earnings from continuing operations before discontinued operations

 

 

 

$

5,379

 

$

33,034

 

$

9,306

 

$

34,168

 

(Loss) gain from discontinued operations, net of tax

 

 

 

(11

)

14

 

(75

)

(58

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

 

 

$

5,368

 

$

33,048

 

$

9,231

 

$

34,110

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)  Basic average number of common shares outstanding during period

 

 

 

53,392

 

53,146

 

53,388

 

53,110

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

578

 

651

 

591

 

765

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)  Diluted average number of common shares assumed outstanding during period

 

 

 

53,970

 

53,797

 

53,979

 

53,875

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

(a) / (b)

 

$

0.10

 

$

0.62

 

$

0.17

 

$

0.64

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

$

0.10

 

$

0.62

 

$

0.17

 

$

0.64

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

(a) / (c)

 

$

0.10

 

$

0.61

 

$

0.17

 

$

0.63

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

$

0.10

 

$

0.61

 

$

0.17

 

$

0.63

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

ADDITIONAL INFORMATION

(dollar amounts in thousands)

 

 

 

Thirteen weeks ended

 

Twenty-six weeks ended

 

 

 

August 3, 2013

 

July 28, 2012

 

August 3, 2013

 

July 28, 2012

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

11,662

 

$

14,407

 

$

24,502

 

$

26,347

 

Depreciation

 

$

19,328

 

$

19,371

 

$

40,185

 

$

39,309

 

Non-operating income:

 

 

 

 

 

 

 

 

 

Net rental revenue

 

$

350

 

$

429

 

$

600

 

$

814

 

Investment income

 

42

 

46

 

91

 

94

 

Merger termination fees, net

 

 

42,955

 

 

42,955

 

Other income

 

74

 

46

 

153

 

83

 

Total

 

$

466

 

$

43,476

 

$

844

 

$

43,946

 

 

 

 

 

 

 

 

 

 

 

Comparable sales percentages:

 

 

 

 

 

 

 

 

 

Service

 

0.2

%

3.1

%

2.2

%

1.0

%

Merchandise

 

-1.7

%

-0.9

%

-0.8

%

-2.0

%

Total

 

-1.3

%

0.0

%

-0.2

%

-1.4

%

 

 

 

 

 

 

 

 

 

 

Total square feet of retail space (including service centers)

 

 

 

 

 

12,830,000

 

12,660,000

 

 

 

 

 

 

 

 

 

 

 

Store count

 

 

 

 

 

 

 

 

 

Supercenter

 

 

 

 

 

570

 

562

 

Service & Tire Center

 

 

 

 

 

193

 

173

 

Retail Only

 

 

 

 

 

6

 

7

 

Total

 

 

 

 

 

769

 

742

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Service center revenue

 

$

280,905

 

$

274,257

 

$

567,882

 

$

545,346

 

Retail sales

 

246,714

 

251,414

 

495,910

 

504,929

 

Total revenues

 

$

527,619

 

$

525,671

 

$

1,063,792

 

$

1,050,275

 

 

 

 

 

 

 

 

 

 

 

Gross profit from service center revenue, prior to impairment charge

 

$

62,916

 

$

55,868

 

$

116,072

 

$

109,756

 

Service center revenue impairment charge

 

(1,323

)

 

(2,339

)

 

Gross profit from service center revenue

 

$

61,593

 

$

55,868

 

$

113,733

 

$

109,756

 

 

 

 

 

 

 

 

 

 

 

Gross profit from retail sales, prior to impairment charge

 

$

77,459

 

$

74,733

 

$

147,326

 

$

148,497

 

Retail sales impairment charge

 

(344

)

 

(510

)

 

Gross profit from retail sales

 

$

77,115

 

$

74,733

 

$

146,816

 

$

148,497

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

$

138,708

 

$

130,601

 

$

260,549

 

$

258,253

 

 

 

 

 

 

 

 

 

 

 

Comparable sales percentages by line of business (A):

 

 

 

 

 

 

 

 

 

Service center revenue

 

-0.1

%

3.8

%

1.9

%

1.6

%

Retail sales

 

-2.6

%

-3.8

%

-2.4

%

-4.2

%

Total revenues

 

-1.3

%

0.0

%

-0.2

%

-1.4

%

 

 

 

 

 

 

 

 

 

 

Gross profit percentage by line of business (A):

 

 

 

 

 

 

 

 

 

Gross profit percentage from service center revenue, prior to impairment charge

 

22.4

%

20.4

%

20.4

%

20.1

%

Impairment charge

 

(0.5

)

 

(0.4

)

 

Gross profit percentage from service center revenue

 

21.9

%

20.4

%

20.0

%

20.1

%

 

 

 

 

 

 

 

 

 

 

Gross profit percentage from retail sales, prior to impairment charge

 

31.4

%

29.7

%

29.7

%

29.4

%

Impairment charge

 

(0.1

)

 

(0.1

)

 

Gross profit percentage from retail sales

 

31.3

%

29.7

%

29.6

%

29.4

%

 

 

 

 

 

 

 

 

 

 

Total gross profit percentage

 

26.3

%

24.8

%

24.5

%

24.6

%

 


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