EX-99.2 3 a15-13587_1ex99d2.htm EX-99.2

Exhibit 99.2

 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

 

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

 

 

 

May 2, 2015

 

January 31, 2015

 

May 3, 2014

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

42,166

 

$

38,044

 

$

37,817

 

Accounts receivable, less allowance for uncollectible accounts of $1,680, $1,604 and $1,486

 

29,101

 

31,013

 

27,385

 

Merchandise inventories

 

651,461

 

656,957

 

663,554

 

Prepaid expenses

 

26,159

 

27,952

 

26,430

 

Other current assets

 

52,450

 

55,986

 

60,047

 

Assets held for disposal

 

2,377

 

2,648

 

2,013

 

Total current assets

 

803,714

 

812,600

 

817,246

 

Property and equipment, net of accumulated depreciation of $1,264,412, $1,251,797 and $1,245,488

 

597,783

 

604,380

 

622,866

 

Goodwill

 

32,869

 

32,869

 

56,794

 

Deferred income taxes

 

51,666

 

56,571

 

57,068

 

Other long-term assets

 

34,696

 

35,321

 

38,977

 

Total assets

 

$

1,520,728

 

$

1,541,741

 

$

1,592,951

 

 

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

230,211

 

$

227,132

 

$

247,756

 

Trade payable program liability

 

139,279

 

140,904

 

134,121

 

Accrued expenses

 

208,794

 

226,176

 

226,667

 

Deferred income taxes

 

64,357

 

61,216

 

69,498

 

Current maturities of long-term debt

 

2,000

 

2,000

 

2,000

 

Total current liabilities

 

644,641

 

657,428

 

680,042

 

 

 

 

 

 

 

 

 

Long-term debt less current maturities

 

193,500

 

211,000

 

202,500

 

Other long-term liabilities

 

44,128

 

45,567

 

48,186

 

Deferred gain from asset sales

 

100,360

 

103,596

 

111,672

 

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

 

297,563

 

298,299

 

297,002

 

Retained earnings

 

404,465

 

397,890

 

433,673

 

Accumulated other comprehensive income (loss)

 

(245

)

(391

)

341

 

Treasury stock, at cost - 14,693,191 shares; 14,988,205 shares and 15,314,768 shares

 

(232,241

)

(240,205

)

(249,022

)

Total stockholders’ equity

 

538,099

 

524,150

 

550,551

 

Total liabilities and stockholders’ equity

 

$

1,520,728

 

$

1,541,741

 

$

1,592,951

 

 

 

 

 

 

 

 

 

Supplemental balance sheet information:

 

 

 

 

 

 

 

Working capital

 

$

159,073

 

$

155,172

 

$

137,204

 

Current ratio

 

1.25

 

1.24

 

1.20

 

Accounts payable to inventory ratio

 

56.7

%

56.0

%

57.6

%

Total debt as a percent of total capitalization

 

26.6

%

28.9

%

27.1

%

Debt as a percent of total capitalization, net

 

22.2

%

25.0

%

23.2

%

 



 

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

 

 

 

May 2, 2015

 

May 3, 2014

 

 

 

 

 

%

 

 

 

%

 

 

 

Amount

 

Sales

 

Amount

 

Sales

 

 

 

 

 

 

 

 

 

 

 

Merchandise sales

 

$

413,125

 

76.2

 

$

411,906

 

76.4

 

Service revenue

 

129,136

 

23.8

 

126,915

 

23.6

 

Total revenues

 

542,261

 

100.0

 

538,821

 

100.0

 

Costs of merchandise sales

 

286,243

 

69.3

 

285,047

 

69.2

 

Costs of service revenue

 

122,251

 

94.7

 

120,648

 

95.1

 

Total costs of revenues

 

408,494

 

75.3

 

405,695

 

75.3

 

Gross profit from merchandise sales

 

126,882

 

30.7

 

126,859

 

30.8

 

Gross profit from service revenue

 

6,885

 

5.3

 

6,267

 

4.9

 

Total gross profit

 

133,767

 

24.7

 

133,126

 

24.7

 

Selling, general and administrative expenses

 

120,847

 

22.3

 

127,071

 

23.6

 

Net gain (loss) from dispositions of assets

 

218

 

 

(10

)

 

Gain on sale from leasehold interest

 

10,000

 

1.8

 

 

 

Operating profit

 

23,138

 

4.3

 

6,045

 

1.1

 

Other income

 

372

 

0.1

 

441

 

0.1

 

Interest expense

 

(3,329

)

(0.6

)

(3,782

)

(0.7

)

Earnings from continuing operations before income taxes and discontinued operations

 

20,181

 

3.7

 

2,704

 

0.5

 

Income tax expense

 

(8,322

)

(41.2

)(1)

(1,067

)

(39.5

)(1)

Earnings from continuing operations before discontinued operations

 

11,859

 

2.2

 

1,637

 

0.3

 

Gain (loss) from discontinued operations, net of tax

 

34

 

 

(29

)

 

Net earnings

 

11,893

 

2.2

 

1,608

 

0.3

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

$

0.22

 

 

 

$

0.03

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.22

 

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

$

0.22

 

 

 

$

0.03

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.22

 

 

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Derivative financial instruments adjustment, net of tax

 

146

 

 

 

(38

)

 

 

Other comprehensive income (loss)

 

146

 

 

 

(38

)

 

 

Comprehensive income

 

$

12,039

 

 

 

$

1,570

 

 

 

 


(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)

 

Thirteen weeks ended

 

May 2, 2015

 

May 3, 2014

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net earnings

 

$

11,893

 

$

1,608

 

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

 

 

 

 

 

Net (earnings) loss from discontinued operations

 

(34

)

29

 

Depreciation

 

16,894

 

18,320

 

Amortization of deferred gain from asset sales

 

(3,236

)

(3,151

)

Amortization of deferred financing costs

 

626

 

664

 

Stock compensation expense

 

1,017

 

826

 

Deferred income taxes

 

7,927

 

743

 

Net (gain) loss from dispositions of assets

 

(218

)

10

 

Loss from asset impairment

 

798

 

1,172

 

Other

 

(473

)

(111

)

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

 

 

 

 

 

Decrease in accounts receivable, prepaid expenses and other

 

7,347

 

4,174

 

Decrease in merchandise inventories

 

5,496

 

8,800

 

Increase (decrease) in accounts payable

 

4,735

 

(8,903

)

Decrease in accrued expenses

 

(17,829

)

(12,467

)

Decrease in other long-term liabilities

 

(859

)

(231

)

Net cash provided by continuing operations

 

34,084

 

11,483

 

Net cash used in discontinued operations

 

(255

)

(29

)

Net cash provided by operating activities

 

33,829

 

11,454

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Capital expenditures

 

(12,267

)

(14,565

)

Proceeds from dispositions of assets

 

515

 

 

Net cash used in investing activities

 

(11,752

)

(14,565

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Borrowings under line of credit agreements

 

95,155

 

164,206

 

Payments under line of credit agreements

 

(112,155

)

(160,706

)

Borrowings on trade payable program liability

 

40,872

 

49,708

 

Payments on trade payable program liability

 

(42,497

)

(45,388

)

Debt payments

 

(500

)

(500

)

Proceeds from stock issuance

 

1,170

 

177

 

Net cash (used in) provided by financing activities

 

(17,955

)

7,497

 

Net increase in cash and cash equivalents

 

4,122

 

4,386

 

Cash and cash equivalents at beginning of period

 

38,044

 

33,431

 

Cash and cash equivalents at end of period

 

$

42,166

 

$

37,817

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

Accrued purchases of property and equipment

 

 

 

 

 

Cash paid for income taxes

 

$

42

 

$

 

Cash received from income tax refunds

 

$

 

$

174

 

Cash paid for interest

 

$

2,674

 

$

2,659

 

Accrued purchases of property and equipment

 

$

2,247

 

$

5,748

 

 



 

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

 

 

 

 

 

 

 

May 2, 2015

 

May 3, 2014

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Earnings from continuing operations before discontinued operations

 

 

 

$

11,859

 

$

1,637

 

 

 

Gain (loss) from discontinued operations, net of tax

 

 

 

34

 

(29

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

 

 

$

11,893

 

$

1,608

 

 

 

 

 

 

 

 

 

 

 

(b)

 

Basic average number of common shares outstanding during period

 

 

 

54,094

 

53,470

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

90

 

539

 

 

 

 

 

 

 

 

 

 

 

(c)

 

Diluted average number of common shares assumed outstanding during period

 

 

 

54,184

 

54,009

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

(a) / (b)

 

$

0.22

 

$

0.03

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

$

0.22

 

$

0.03

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before discontinued operations

 

(a) / (c)

 

$

0.22

 

$

0.03

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

$

0.22

 

$

0.03

 

 



 

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

 

 

 

ADDITIONAL INFORMATION

(dollar amounts in thousands)

 

 

 

Thirteen weeks ended

 

 

 

May 2, 2015

 

May 3, 2014

 

 

 

 

 

 

 

Capital expenditures

 

$

12,267

 

$

14,565

 

Depreciation

 

$

16,894

 

$

18,320

 

Non-operating income:

 

 

 

 

 

Net rental revenue

 

$

304

 

$

399

 

Investment income

 

60

 

47

 

Other income

 

8

 

(5

)

Total

 

$

372

 

$

441

 

 

 

 

 

 

 

Comparable sales percentages:

 

 

 

 

 

Service

 

1.3

%

3.2

%

Merchandise

 

0.6

%

-2.8

%

Total

 

0.8

%

-1.4

%

 

 

 

 

 

 

Total square feet of retail space (including service centers)

 

12,912,000

 

12,845,000

 

 

 

 

 

 

 

Store count

 

 

 

 

 

Supercenter

 

562

 

567

 

Service & Tire Center

 

235

 

225

 

Retail Only

 

6

 

6

 

Total

 

803

 

798

 

 

 

 

 

 

 

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

 

 

 

 

 

Service center revenue

 

$

300,883

 

$

293,913

 

Retail sales

 

241,378

 

244,908

 

Total revenues

 

$

542,261

 

$

538,821

 

 

 

 

 

 

 

Gross profit from service center revenue, prior to impairment charge

 

$

67,652

 

64,735

 

Service center revenue impairment charge

 

(753

)

(956

)

Gross profit from service center revenue

 

$

66,899

 

$

63,779

 

 

 

 

 

 

 

Gross profit from retail sales, prior to impairment charge

 

$

66,913

 

69,562

 

Retail sales impairment charge

 

(45

)

(215

)

Gross profit from retail sales

 

$

66,868

 

$

69,347

 

 

 

 

 

 

 

Total gross profit

 

$

133,767

 

$

133,126

 

 

 

 

 

 

 

Comparable sales percentages by line of business (A):

 

 

 

 

 

Service center revenue

 

1.9

%

-1.0

%

Retail sales

 

-0.5

%

-1.9

%

Total revenues

 

0.8

%

-1.4

%

 

 

 

 

 

 

Gross profit percentage by line of business (A):

 

 

 

 

 

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

 

22.5

%

22.0

%

Impairment charge

 

(0.3

)

(0.3

)

Gross profit percentage from service center revenue

 

22.2

%

21.7

%

 

 

 

 

 

 

Gross profit percentage from retail sales, prior to impairment charge

 

27.7

%

28.4

%

Impairment charge

 

(0.0

)

(0.1

)

Gross profit percentage from retail sales

 

27.7

%

28.3

%

 

 

 

 

 

 

Total gross profit percentage

 

24.7

%

24.7

%

 


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