EX-99.2 3 a14-25666_1ex99d2.htm EX-99.2

Exhibit 99.2

 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

 

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

 

 

 

November 1, 2014

 

February 1, 2014

 

November 2, 2013

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

36,430

 

$

33,431

 

$

55,798

 

Accounts receivable, less allowance for uncollectible accounts of $1,616, $1,320 and $1,310

 

31,622

 

25,152

 

24,942

 

Merchandise inventories

 

667,438

 

672,354

 

664,901

 

Prepaid expenses

 

15,314

 

29,282

 

16,801

 

Other current assets

 

51,470

 

63,405

 

52,249

 

Assets held for disposal

 

4,636

 

2,013

 

500

 

Total current assets

 

806,910

 

825,637

 

815,191

 

Property and equipment, net of accumulated depreciation of $1,257,988 $1,227,121 and $1,214,802

 

614,326

 

625,525

 

631,639

 

Goodwill

 

56,794

 

56,794

 

56,841

 

Deferred income taxes

 

57,070

 

57,686

 

48,311

 

Other long-term assets

 

37,301

 

39,839

 

37,265

 

Total assets

 

$

1,572,401

 

$

1,605,481

 

$

1,589,247

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

217,066

 

$

256,031

 

$

253,818

 

Trade payable program liability

 

145,105

 

129,801

 

134,703

 

Accrued expenses

 

209,524

 

237,403

 

225,249

 

Deferred income taxes

 

68,556

 

69,373

 

59,455

 

Current maturities of long-term debt

 

2,000

 

2,000

 

2,000

 

Total current liabilities

 

642,251

 

694,608

 

675,225

 

 

 

 

 

 

 

 

 

Long-term debt less current maturities

 

229,500

 

199,500

 

196,500

 

Other long-term liabilities

 

45,843

 

48,485

 

49,618

 

Deferred gain from asset sales

 

105,370

 

114,823

 

117,974

 

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

 

297,313

 

297,009

 

296,578

 

Retained earnings

 

428,845

 

432,332

 

436,933

 

Accumulated other comprehensive income

 

43

 

379

 

339

 

Treasury stock, at cost - 15,177,705 shares; 15,358,872 shares and 15,442,779 shares

 

(245,321

)

(250,212

)

(252,477

)

Total stockholders’ equity

 

549,437

 

548,065

 

549,930

 

Total liabilities and stockholders’ equity

 

$

1,572,401

 

$

1,605,481

 

$

1,589,247

 

 

 

 

 

 

 

 

 

Supplemental balance sheet information:

 

 

 

 

 

 

 

Working capital

 

$

164,659

 

$

131,029

 

$

139,966

 

Current ratio

 

1.26

 

1.19

 

1.21

 

Accounts payable to inventory ratio

 

54.3

%

57.4

%

58.4

%

Total debt as a percent of total capitalization

 

29.6

%

26.9

%

26.5

%

Debt as a percent of total capitalization, net

 

26.2

%

23.5

%

20.6

%

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(dollar amounts in thousands, except per share amounts)

 

 

 

Thirteen weeks ended

 

Thirty-nine weeks ended

 

 

 

November 1, 2014

 

November 2, 2013

 

November 1, 2014

 

November 2, 2013

 

 

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

 

$

395,941

 

76.5

 

$

394,346

 

77.8

 

$

1,208,778

 

76.4

 

$

1,223,813

 

77.9

 

Service revenue

 

121,643

 

23.5

 

112,696

 

22.2

 

373,401

 

23.6

 

347,022

 

22.1

 

Total revenues

 

517,584

 

100.0

 

507,042

 

100.0

 

1,582,179

 

100.0

 

1,570,835

 

100.0

 

Costs of merchandise sales

 

278,800

 

70.4

 

267,489

 

67.8

 

843,946

 

69.8

 

838,126

 

68.5

 

Costs of service revenue

 

120,450

 

99.0

 

116,741

 

103.6

 

362,473

 

97.1

 

349,348

 

100.7

 

Total costs of revenues

 

399,250

 

77.1

 

384,230

 

75.8

 

1,206,419

 

76.3

 

1,187,474

 

75.6

 

Gross profit from merchandise sales

 

117,141

 

29.6

 

126,857

 

32.2

 

364,832

 

30.2

 

385,687

 

31.5

 

Gross profit from service revenue

 

1,193

 

1.0

 

(4,045

)

(3.6

)

10,928

 

2.9

 

(2,326

)

(0.7

)

Total gross profit

 

118,334

 

22.9

 

122,812

 

24.2

 

375,760

 

23.8

 

383,361

 

24.4

 

Selling, general and administrative expenses

 

117,651

 

22.7

 

115,104

 

22.7

 

365,345

 

23.1

 

354,236

 

22.6

 

Net loss from dispositions of assets

 

(109

)

 

(67

)

 

(519

)

 

(213

)

 

Operating profit

 

574

 

0.1

 

7,641

 

1.5

 

9,896

 

0.6

 

28,912

 

1.8

 

Other income

 

418

 

0.1

 

524

 

0.1

 

1,175

 

0.1

 

1,367

 

0.1

 

Interest expense

 

3,485

 

0.7

 

3,643

 

0.7

 

10,269

 

0.7

 

10,885

 

0.7

 

(Loss) earnings from continuing operations before income taxes and discontinued operations

 

(2,493

)

(0.5

)

4,522

 

0.9

 

802

 

0.1

 

19,394

 

1.2

 

Income tax (benefit) expense

 

(723

)

29.0

(1)

3,509

 

77.6

(1)

1,108

 

138.2

(1)

9,074

 

46.8

(1)

(Loss) earnings from continuing operations before discontinued operations

 

(1,770

)

(0.3

)

1,013

 

0.2

 

(306

)

 

10,320

 

0.7

 

Loss from discontinued operations, net of tax

 

(194

)

 

(49

)

 

(319

)

 

(124

)

 

Net (loss) earnings

 

(1,964

)

(0.4

)

964

 

0.2

 

(625

)

(0.0

)

10,196

 

0.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings from continuing operations before discontinued operations

 

$

(0.03

)

 

 

$

0.02

 

 

 

$

 

 

 

$

0.19

 

 

 

(Loss) from discontinued operations, net of tax

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

Basic (loss) earnings per share

 

$

(0.03

)

 

 

$

0.02

 

 

 

$

(0.01

)

 

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings from continuing operations before discontinued operations

 

$

(0.03

)

 

 

$

0.02

 

 

 

$

 

 

 

$

0.19

 

 

 

(Loss) from discontinued operations, net of tax

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

 

Diluted (loss) earnings per share

 

$

(0.03

)

 

 

$

0.02

 

 

 

$

(0.01

)

 

 

$

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments adjustment, net of tax

 

(170

)

 

 

(372

)

 

 

(336

)

 

 

1,319

 

 

 

Other comprehensive (loss) income

 

(170

)

 

 

(372

)

 

 

(336

)

 

 

1,319

 

 

 

Comprehensive (loss) income

 

$

(2,134

)

 

 

$

592

 

 

 

$

(961

)

 

 

$

11,515

 

 

 

 


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

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

 

Thirty-nine weeks ended

 

November 1, 2014

 

November 2, 2013

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net (loss) earnings

 

$

(625

)

$

10,196

 

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

 

 

 

 

 

Net loss from discontinued operations

 

319

 

124

 

Depreciation

 

55,518

 

59,941

 

Amortization of deferred gain from asset sales

 

(9,453

)

(9,453

)

Amortization of deferred financing costs

 

1,937

 

1,952

 

Stock compensation expense

 

1,533

 

2,451

 

Deferred income taxes

 

(66

)

(478

)

Net loss from dispositions of assets

 

519

 

213

 

Loss from asset impairment

 

5,243

 

4,882

 

Other

 

(238

)

(322

)

Changes in assets and liabilities, net of the effects of acquisitions:

 

 

 

 

 

Decrease in accounts receivable, prepaid expenses and other

 

19,644

 

18,431

 

Decrease (increase) in merchandise inventories

 

4,916

 

(23,693

)

(Decrease) increase in accounts payable

 

(36,494

)

7,746

 

Decrease in accrued expenses

 

(28,363

)

(6,589

)

Decrease in other long-term liabilities

 

(2,182

)

(2,354

)

Net cash provided by continuing operations

 

12,208

 

63,047

 

Net cash used in discontinued operations

 

(583

)

(193

)

Net cash provided by operating activities

 

11,625

 

62,854

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(54,975

)

(38,334

)

Proceeds from dispositions of assets

 

56

 

19

 

Acquisitions, net of cash acquired

 

 

(10,741

)

Release of collateral investment

 

 

1,000

 

Net cash used in investing activities

 

(54,919

)

(48,056

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under line of credit agreements

 

479,438

 

1,926

 

Payments under line of credit agreements

 

(447,938

)

(1,926

)

Borrowings on trade payable program liability

 

143,614

 

114,804

 

Payments on trade payable program liability

 

(128,310

)

(129,819

)

Debt payments

 

(1,500

)

(1,500

)

Proceeds from stock issuance

 

989

 

1,079

 

Repurchase of common stock

 

 

(2,750

)

Net cash provided by (used in) financing activities

 

46,293

 

(18,186

)

Net increase (decrease) in cash and cash equivalents

 

2,999

 

(3,388

)

Cash and cash equivalents at beginning of period

 

33,431

 

59,186

 

Cash and cash equivalents at end of period

 

$

36,430

 

$

55,798

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

Cash paid for income taxes

 

$

845

 

$

4,322

 

Cash received from income tax refunds

 

$

244

 

$

51

 

Cash paid for interest

 

$

8,482

 

$

9,149

 

Accrued purchases of property and equipment

 

$

1,350

 

$

2,369

 

 



 

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

 

Thirty-nine weeks ended

 

 

 

 

 

 

November 1, 2014

 

November 2, 2013

 

November 1, 2014

 

November 2, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

(Loss) earnings from continuing operations before discontinued operations

 

 

 

$

(1,770

)

$

1,013

 

$

(306

)

$

10,320

 

 

Loss from discontinued operations, net of tax

 

 

 

(194

)

(49

)

(319

)

(124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings

 

 

 

$

(1,964

)

$

964

 

$

(625

)

$

10,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b)

Basic average number of common shares outstanding during period

 

 

 

53,590

 

53,315

 

53,533

 

53,363

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

615

 

 

599

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c)

Diluted average number of common shares assumed outstanding during period

 

 

 

53,590

 

53,930

 

53,533

 

53,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings from continuing operations before discontinued operations

 

(a) / (b)

 

$

(0.03

)

$

0.02

 

$

 

$

0.19

 

 

(Loss) from discontinued operations, net of tax

 

 

 

 

 

(0.01

)

 

 

Basic (loss) earnings per share

 

 

 

$

(0.03

)

$

0.02

 

$

(0.01

)

$

0.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) earnings from continuing operations before discontinued operations

 

(a) / (c)

 

$

(0.03

)

$

0.02

 

$

 

$

0.19

 

 

(Loss) from discontinued operations, net of tax

 

 

 

 

 

(0.01

)

 

 

Diluted (loss) earnings per share

 

 

 

$

(0.03

)

$

0.02

 

$

(0.01

)

$

0.19

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

ADDITIONAL INFORMATION

(dollar amounts in thousands)

 

 

 

Thirteen weeks ended

 

Thirty-nine weeks ended

 

 

 

November 1, 2014

 

November 2, 2013

 

November 1, 2014

 

November 2, 2013

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

15,965

 

$

13,832

 

$

54,975

 

$

38,334

 

Depreciation

 

$

19,172

 

$

19,756

 

$

55,518

 

$

59,941

 

Non-operating income:

 

 

 

 

 

 

 

 

 

Net rental revenue

 

$

358

 

$

432

 

$

1,040

 

$

1,032

 

Investment income

 

59

 

42

 

152

 

132

 

Other income

 

1

 

50

 

(17

)

203

 

Total

 

$

418

 

$

524

 

$

1,175

 

$

1,367

 

Comparable sales percentages:

 

 

 

 

 

 

 

 

 

Service

 

6.1

%

0.5

%

4.9

%

1.6

%

Merchandise

 

-0.2

%

-3.6

%

-2.3

%

-1.7

%

Total

 

1.2

%

-2.8

%

-0.7

%

-1.0

%

 

 

 

 

 

 

 

 

 

 

Total square feet of retail space (including service centers)

 

 

 

 

 

12,922,000

 

12,924,000

 

 

 

 

 

 

 

 

 

 

 

Store count

 

 

 

 

 

 

 

 

 

Supercenter

 

 

 

 

 

563

 

572

 

Service & Tire Center

 

 

 

 

 

233

 

215

 

Retail Only

 

 

 

 

 

6

 

6

 

Total

 

 

 

 

 

802

 

793

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Service center revenue

 

$

289,375

 

$

273,944

 

$

871,590

 

841,827

 

Retail sales

 

228,209

 

233,098

 

710,589

 

729,008

 

Total revenues

 

$

517,584

 

$

507,042

 

$

1,582,179

 

$

1,570,835

 

 

 

 

 

 

 

 

 

 

 

Gross profit from service center revenue, prior to impairment charge

 

$

58,817

 

$

55,169

 

$

185,616

 

171,244

 

Service center revenue impairment charge

 

(1,144

)

(1,153

)

(3,479

)

(3,493

)

Gross profit from service center revenue

 

$

57,673

 

$

54,016

 

$

182,137

 

$

167,751

 

 

 

 

 

 

 

 

 

 

 

Gross profit from retail sales, prior to impairment charge

 

$

60,922

 

$

69,676

 

$

195,387

 

217,000

 

Retail sales impairment charge

 

(261

)

(880

)

(1,764

)

(1,390

)

Gross profit from retail sales

 

$

60,661

 

$

68,796

 

$

193,623

 

$

215,610

 

 

 

 

 

 

 

 

 

 

 

Total gross profit

 

$

118,334

 

$

122,812

 

$

375,760

 

$

383,361

 

 

 

 

 

 

 

 

 

 

 

Comparable sales percentages by line of business (A):

 

 

 

 

 

 

 

 

 

Service center revenue

 

3.7

%

-2.5

%

0.8

%

0.4

%

Retail sales

 

-1.8

%

-3.1

%

-2.4

%

-2.6

%

Total revenues

 

1.2

%

-2.8

%

-0.7

%

-1.0

%

 

 

 

 

 

 

 

 

 

 

Gross profit percentage by line of business (A):

 

 

 

 

 

 

 

 

 

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

 

20.3

%

20.1

%

21.3

%

20.3

%

Impairment charge

 

(0.4

)

(0.4

)

(0.4

)

(0.4

)

Gross profit percentage from service center revenue

 

19.9

%

19.7

%

20.9

%

19.9

%

 

 

 

 

 

 

 

 

 

 

Gross profit percentage from retail sales, prior to impairment charge

 

26.7

%

29.9

%

27.5

%

29.8

%

Impairment charge

 

(0.1

)

(0.4

)

(0.2

)

(0.2

)

Gross profit percentage from retail sales

 

26.6

%

29.5

%

27.2

%

29.6

%

 

 

 

 

 

 

 

 

 

 

Total gross profit percentage

 

22.9

%

24.2

%

23.7

%

24.4

%

 


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