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FORM 10-Q10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended August 28, 2001
Commission file number 1-11276
DISCOUNT AUTO PARTS, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-1447420
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
4900 Frontage Road, South 33815
Lakeland, Florida
33815
--------------------------------------- ---------------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (zip code)
(863) 687-9226
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X](X) No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock $.01 Par Value - 16,707,923 shares as of August 28, 2001
Explanatory Note
----------------
The following discussion incorporates certain revisions to historical financial
data and related descriptions but is not intended to update other information
presented in this report as originally filed except where specifically noted. It
also includes forward looking statements and other information included in the
original filing which have not been updated to address events occurring
subsequent to the date of the original filing, or changes in circumstances or
information that has come to light since the original filing of this report.
The registrant is amending Part I of its quarterly report on Form 10-Q for the
quarter ended August 28, 2001 to reflect certain merger related expenses
incurred in connection with the pending merger with Advance Auto Parts as a
component of operating expenses rather than an extraordinary item.
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DISCOUNT AUTO PARTS, INC.
INDEX
Discount Auto Parts, Inc.
Index
Page
----
PART I. FINANCIAL INFORMATION Page
------------------------------ ----
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - August 28, 2001 and May 29, 2001...............................32001............................ 4
Condensed Consolidated Statements of Income - for the thirteen weeks
ended August 28, 2001 and August 29, 2000....................................................................42000........................................................... 5
Condensed Consolidated Statements of Cash Flows - for the thirteen weeks ended
August 28, 2001 and August 29, 2000....................................................................52000................................................................. 6
Notes to Condensed Consolidated Financial
Statements...................................................6Statements.......................................................................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..........8Resultsof Operations.........9
Item 3. Quantitative and Qualitative Disclosures about Market Risk....................................11Risk..................................12
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings.............................................................................11Proceedings...........................................................................12
Item 6. Exhibits and Reports on Form 8-K .............................................................12
SIGNATURES ...........................................................................................138-K............................................................13
SIGNATURES..........................................................................................14
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ITEMItem 1. FINANCIAL STATEMENTS (UNAUDITED)
DISCOUNT AUTO PARTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)Financial Statements (Unaudited)
Discount Auto Parts, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
AUGUSTAugust 28 MAYMay 29
2001 2001
--------- ----------------
(In thousands)
ASSETS (In thousands)
Current assets:
Cash $ 6,372 $ 9,669
Inventories 243,053 242,718
Prepaid expenses and other current assets 18,734 14,391
--------- ---------
Total current assets 268,159 266,778
Property and equipment 513,102 507,255
Less allowances for depreciation and amortization (128,639) (122,742)
--------- ----------------- --------
384,463 384,513
Other assets 4,431 4,638
--------- ---------
Total assets $ 657,053 $ 655,929
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 75,609 $ 96,442
Other current liabilities 25,105 25,286
Current maturities of long-term debt 1,200 1,200
--------- ---------
Total current liabilities 101,914 122,928
Deferred gain on sale/leaseback 5,874 5,966
Deferred income taxes 13,333 13,273
Long-term debt 209,608 192,900
Stockholders' equity:
Preferred stock -- --- -
Common stock 167 167
Additional paid-in capital 142,640 142,429
Retained earnings 183,517 178,266
--------- ---------
Total stockholders' equity 326,324 320,862
--------- ---------
Total liabilities and stockholders' equity $ 657,053 $ 655,929
========= =========
See accompanying notes.
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DISCOUNT AUTO PARTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)Discount Auto Parts, Inc.
Condensed Consolidated Statements of Income (Unaudited)
THIRTEEN WEEKS ENDED
-------------------------
AUGUSTThirteen Weeks Ended
----------------------------------
August 28 AUGUSTAugust 29
2001 2000
--------- ---------
(In thousands, except per share amounts)
Net sales $ 173,381 $ 167,074$173,381 $167,074
Cost of sales, including distribution costs 104,189 103,150
--------- ----------------- --------
Gross profit 69,192 63,924
Selling, general and administrative expenses 56,830 52,850
--------- ---------Merger related expenses 943 -
-------- --------
Income from operations 12,36211,419 11,074
Other income, net 100 85
Interest expense (3,318) (5,583)
--------- ----------------- --------
Income before income taxes 9,1448,201 5,576
Income taxes 3,2902,950 2,007
--------- ---------
Income before extraordinary loss 5,854 3,569
Extraordinary loss, net of income tax benefit (603) --
--------- ----------------- --------
Net income $ 5,251 $ 3,569
========= ================= ========
Net income per basicshare:
Basic net income per common share from:
Income before extraordinary loss $ 0.35 $ 0.21
Extraordinary loss (.04) --
--------- ---------
Net income $ 0.31 $ 0.21
========= =========
Net======== ========
Diluted net income per dilutedcommon share from:
Income before extraordinary loss $ 0.35 $ 0.21
Extraordinary loss (.04) --
--------- ---------
Net income $ 0.31 $ 0.21
========= ================= ========
Average common shares outstanding 16,708 16,695
Dilutive effect of stock options 156 --
--------- ----------
-------- --------
Average common shares outstanding - assuming dilution 16,864 16,695
========= ================= ========
See accompanying notes.
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DISCOUNT AUTO PARTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)Discount Auto Parts, Inc.
Condensed Consolidated Statements Of Cash Flows (Unaudited)
THIRTEEN WEEKS ENDEDThirteen Weeks Ended
------------------------
AUGUSTAugust 28 AUGUSTAugust 29
2001 2000
--------- ---------
(In thousands)
OPERATING ACTIVITIESOperating activities
Net income $ 5,251 $ 3,569
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 6,070 6,129
Gain on disposals of property and equipment (47) (3)
Amortization of deferred gain on sale/leaseback (92) ---
Changes in operating assets and liabilities:
(Increase) decrease in inventories (335) 4,324
Increase in prepaid expenses and other
current assets (4,013) (973)
Decrease (increase) in other assets 36 (423)
Decrease in trade accounts payable (20,833) (35,436)
Decrease in other current liabilities (240) (4,640)
-------- --------
Net cash used in operating activities (14,203) (27,453)
INVESTING ACTIVITIESInvesting activities
Proceeds from sales of property and equipment 520 282
Purchases of property and equipment (6,322) (10,616)
-------- --------
Net cash used in investing activities (5,802) (10,334)
FINANCING ACTIVITIESFinancing activities
Proceeds from short-term borrowings and long-term debt 36,819 57,374
Payments of short-term borrowings and long-term debt (20,111) (26,261)
-------- --------
Net cash provided by financing activities 16,708 31,113
Net decrease in cash (3,297) (6,674)
Cash at beginning of period 9,669 12,612
-------- --------
Cash at end of period $ 6,372 $ 5,938
======== ========
See accompanying notes.
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DISCOUNT AUTO PARTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
AUGUSTDiscount Auto Parts, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
August 28, 2001
1. BASIS OF PRESENTATIONBasis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Discount Auto Parts, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. For
further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended May 29,
2001.
Operating results for the thirteen-week period ended August 28, 2001 are not
necessarily indicative of the results that may be expected for the entire fiscal
year.
2. SALE/LEASEBACK TRANSACTIONSale/Leaseback Transaction
On February 27, 2001, the Company completed a sale/leaseback transaction. Under
the terms of the transaction, the Company sold 101 properties, including land,
buildings, and improvements, for a net price of approximately $62.2 million. The
stores were leased back from the purchaser under non-cancelable operating leases
with lease terms of 22.5 years each. The sale of the properties generated a gain
for financial reporting purposes, net of expenses incurred, of $6.0 million,
which gain has been deferred and is being amortized over the lease term.
3. LONG-TERM DEBTLong-Term Debt
Long-term debt consists of the following (in thousands):
August 28 May 29
2001 2001
--------- -----------------
Revolving credit agreements $ 158,408 $ 140,500$158,408 $140,500
Senior term notes 50,000 50,000
Senior secured notes 2,400 3,600
--------- ----------------- --------
210,808 194,100
Less current maturities (1,200) (1,200)
--------- ---------
$ 209,608 $ 192,900
========= =========-------- --------
$209,608 $192,900
======== ========
Effective July 29, 1999, the Company entered into a five year $265 million
unsecured revolving credit agreement (the "Revolver"). The rate of interest
payable under the Revolver is a function of LIBOR or the prime rate of the lead
agent bank, at the option of the Company. During the term of the Revolver, the
Company is also obligated to pay a fee, which fluctuates based on the Company's
debt-to-capitalization ratio, for the unused portion of the Revolver.
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Effective August 8, 1997, the Company issued $50 million of senior term notes
(the "Notes"). The Notes provide for interest at a fixed rate of 7.46%, payable
semi-annually, with semi-annual principal payments of $7.1 million, beginning
July 15, 2004.
At August 28, 2001 and May 29, 2001, the Company's weighted average interest
rate on its borrowings under the revolving credit agreement was 5.3% and 7.1%,
respectively.
As of August 28, 2001, the Company had approximately $106.6 million of available
borrowings.
As of August 28, 2001, the Company has outstanding a senior secured note of $2.4
million. The note provides for interest at a fixed rate of 9.8%, payable
quarterly, with annual principal payments of $1.2 million due on May 31. The
note is collateralized by a first mortgage on certain store properties,
equipment and fixtures.
The Company's debt agreements contain various restrictions, including the
maintenance of certain financial ratios and restrictions on dividends, with
which the Company is in compliance.
4. PENDING MERGER/EXTRAORDINARY LOSSPending Merger
On August 7, 2001, the Company entered into a definitive agreement with Advance
Holding Corporation, Advance Auto Parts, Inc., Advance Stores Company,
Incorporated and AAP Acquisition Corporation (collectively "Advance") under
which the Company will be acquired by Advance in a merger transaction. Terms of
the agreement call for each share of Discount Auto Parts common stock to be
exchanged for $7.50 in cash and 0.2577 shares of common stock of Advance Auto
Parts, Inc., a holding company which has been formed to own and operate the
combined companies. The transaction has been approved by the boards of directors
of both companies and is subject to approval by shareholders of the Company, and
other customary closing conditions. The Hart-Scott-Rodino Antitrust Improvements
Act of 1976 waiting period expired September 18, 2001. The transaction is
expected to close in the fourth calendar quarter of 2001.
As a result of expenses incurred in connection with the above described transaction, the Company reported an extraordinary lossincurred expenses in
the first quarter of fiscal 2002 net of a $340,000 income tax benefit, of $603,000.$943,000. Additional
extraordinary expenses associated
with the described transaction are expected to be incurred during the second
quarter of fiscal 2002.
5. COMPREHENSIVE INCOMEComprehensive Income
Comprehensive income for the periods presented equals net income.
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ITEMItem 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED AUGUSTManagement's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Thirteen Weeks Ended August 28, 2001 COMPARED TO THIRTEEN WEEKS ENDED
AUGUSTCompared to Thirteen Weeks Ended August
29, 2000
Total sales for the first quarter of fiscal 2002 increased 3.8% to $173.4
million, as compared to $167.1 million for the first quarter a year earlier.
Comparable store sales increased 1.9% for the first quarter of fiscal 2002 as
compared to the first quarter of fiscal 2001. Such comparable store sales growth
was generated on a relatively equal basis from both do-it-yourself (DIY) and
commercial sales. The balance of the increase in total sales for the first
quarter was attributable to sales from new stores opened since the beginning of
fiscal 2001.
At August 28, 2001, the Company had 668 stores in operation, compared with 666
stores at May 29, 2001 and 653 stores at August 29, 2000.
Gross profit for the first quarter of fiscal 2002 increased 8.2% to $69.2
million as compared to $63.9 million for the first quarter of fiscal 2001. As a
percentage of sales, gross profit was 39.9% for the first quarter of fiscal 2002
as compared to 38.3% for the first quarter of fiscal 2001. Gross profit for the
first quarter of fiscal 2002 was positively impacted by the Company's supply
chain initiatives implemented in the latter half of fiscal 2001 and lower
inventory shrinkage expense. These positive impacts were offset in part by lower
overall vendor incentives primarily stemming from the reduced number of store
openings and additional operating expenses associated with the Company's second
distribution center which became operational in the fourth quarter of fiscal
2001.
Selling, general and administrative ("SG&A") expenses increased as a percentage
of sales from 31.6% in the first quarter of fiscal 2001 to 32.8% in the first
quarter of fiscal 2002. The increase in SG&A expenses as a percentage of sales
for the first quarter was primarily the result of (1) rent under the February
2001 sale/leaseback of 101 of the Company's store locations exceeding the
historical cost depreciation expense associated with such store location prior
to the sale/leaseback, and (2) increased health and workers' compensation
insurance costs.
Income from operations for the first quarter of fiscal 2002 increased 11.6% to
$12.4 million as compared to $11.1 million for the first quarter of fiscal 2001.
Excluding the effects of the excess of rent expense over the related
depreciation expense related to the stores sold under the sale/leaseback
transaction and the rent expense related to the Company's second distribution
center, both of which did not exist in the first quarter of fiscal 2001,
operating income for the first quarter of fiscal 2002 would have increased 28%.
EBITDA (income from operations plus depreciation and amortization) for the first
quarter of fiscal 2002 increased 7.1% to $18.4 million from $17.2 million for
the first quarter of fiscal 2001. Excluding the effects of the excess of rent
expense over the related depreciation expense related to the stores sold under
the sale/leaseback transaction and the rent expense related to the Company's
second distribution center, both of which did not exist in the first quarter of
fiscal 2001, EBITDA for the first quarter of 2002 would have increased 20%.
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Interest expense for the first quarter of fiscal 2002 decreased 40.6% to $3.3
million as compared to $5.6 million for the first quarter of fiscal 2001. The
decrease was due to overall lower borrowings for the first quarter of fiscal
2002, which resulted primarily from the paydown in debt with the proceeds of the
February 2001 sale/leaseback closing, and overall lower interest rates on the
Company's variable rate debt.
The Company's effective tax rate for both the first quarter of fiscal 2002 and
the first quarter of fiscal 2001 was 36.0%.
As a result of the above factors, income before extraordinary loss for the first
quarter of fiscal 2002 increased 64.0% to $5.9 million or $.35 per share as
compared to $3.6 million or $.21 per share for the first quarter of fiscal 2001.
On August 7, 2001, the Company entered into a definitive agreement with Advance
Holding Corporation, Advance Auto Parts, Inc., Advance Stores Company,
Incorporated and AAP Acquisition Corporation (collectively "Advance") under
which the Company will be acquired by Advance in a merger transaction. Advance
is the second largest retailer and supplier of automotive replacement parts,
maintenance items and accessories in the nation, with over 1,700 stores in 38
states. Terms of the agreement call for each share of Discount Auto Parts common
stock to be exchanged for $7.50 in cash and 0.2577 shares of common stock of
Advance Auto Parts, Inc., a holding company which has been formed to own and
operate the combined companies. The transaction has been approved by the boards
of directors of both companies and is subject to approval by shareholders of
Discount Auto Parts, and other customary closing conditions. The Hart-Scott-RodinoHart-Scott-
Rodino Antitrust Improvements Act of 1976 waiting period expired September 18,
2001. The transaction is expected to close in the fourth calendar quarter of
2001.
As a result of expenses incurred in connection with the above described transaction, the Company reported an extraordinary lossincurred expenses in
the first quarter of fiscal 2002 net of a $340,000 income tax benefit, of $603,000.$943,000. Additional
extraordinary expenses are expected
to be incurred during the second quarter of fiscal 2002. Such additional
expenses, inclusive of the fees and expenses payable to the Company's financial
advisor, lawyers and accountants, are estimated to be $3.2 million in the
aggregate.
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Income from operations for the first quarter of fiscal 2002 increased 3.1% to
$11.4 million as compared to $11.1 million for the first quarter of fiscal 2001.
Excluding the effects of the excess of rent expense over the related
depreciation expense related to the stores sold under the sale/leaseback
transaction and the rent expense related to the Company's second distribution
center, both of which did not exist in the first quarter of fiscal 2001, and the
merger related expenses, operating income for the first quarter of fiscal 2002
would have increased 28%.
EBITDA (income from operations plus depreciation and amortization) for the first
quarter of fiscal 2002 increased 7.1% to $18.4 (excluding the merger related
expenses) million from $17.2 million for the first quarter of fiscal 2001.
Excluding the effects of the excess of rent expense over the related
depreciation expense related to the stores sold under the sale/leaseback
transaction and the rent expense related to the Company's second distribution
center, both of which did not exist in the first quarter of fiscal 2001, and the
merger related expenses, EBITDA for the first quarter of 2002 would have
increased 20%.
Interest expense for the first quarter of fiscal 2002 decreased 40.6% to $3.3
million as compared to $5.6 million for the first quarter of fiscal 2001. The
decrease was due to overall lower borrowings for the first quarter of fiscal
2002, which resulted primarily from the paydown in debt with the proceeds of the
February 2001 sale/leaseback closing, and overall lower interest rates on the
Company's variable rate debt.
The Company's effective tax rate for both the first quarter of fiscal 2002 and
the first quarter of fiscal 2001 was 36.0%.
Taking into account all of the above described factors, net income for the first
quarter of fiscal 2002 increased 47.1% to $5.3 million or $.31 per diluted share
as compared to net income of $3.6 million or $.21 per diluted share for first
quarter of fiscal 2001.
LIQUIDITY AND CAPITAL RESOURCESLiquidity and Capital Resources
For the thirteen weeks ended August 28, 2001, net cash of $14.2 million was used
in the Company's operations versus $27.5 million used by the Company's
operations for the comparable thirteen week period of fiscal 2001. During both
of the thirteen week periods, this net use of cash was due primarily to a
reduction in trade accounts payable resulting from the repayment of normal year
end extensions of credit terms. The reduction of cash used in the fiscal 2002
first quarter versus the fiscal 2001 first quarter primarily related to the
timing of vendor payments.
Capital expenditures for the thirteen weeks ended August 28, 2001 were $6.3
million. The majority of the capital expenditures related to the 3 new stores
opened during that period plus stores opened near the end of fiscal 2001.
On February 27, 2001, the Company completed a sale/leaseback transaction. Under
the terms of the transaction, the Company sold 101 properties, including land,
buildings, and improvements, for a net 9
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price of approximately $62.2 million. The
stores were leased back from the purchaser under non-cancelable operating leases
with lease terms of 22.5 years each. The sale of the properties generated a gain
for financial reporting purposes, net of expenses incurred, of $6.0 million,
which gain has been deferred and is being amortized over the lease term. Net
rent expense during the first five years of the lease term will be approximately
$6.4 million annually, with increases periodically thereafter. Proceeds from
the transaction were used to reduce outstanding borrowings under the Company's
Revolving Credit Facility.
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Under the terms of the pending merger transaction with Advance, the Company is
subject to limits on the amount of its capital expenditures through the date of
closing. Accordingly, the Company expects to open no more than seven new stores
prior to the anticipated closing of the merger in November or December 2001. If
the merger does not close, the Company expects to open between 12 and 20 new
stores for fiscal 2002.
The Company has historically been able to finance most of its new store growth
through unsecured lines of credit and medium and longer-term mortgage financing
provided by banks and other institutional lenders, and through cash flow from
operations. As of August 28, 2001, the Company had $106.6 million of additional
availability under its existing financing agreements.
The Company is exposed to changes in interest rates, primarily from its
revolving credit agreement. The Company also has long-term debt that bears a
fixed rate. As to the fixed rate debt, there is a risk that market rates will
decline and the required payments will exceed those based on current market
rates on the long-term debt.
The Company believes that the expected cash flows from operations, available
bank borrowings and trade credit, will be sufficient to fund the capital and
liquidity needs of the Company for the next two to three years.
INFLATION AND SEASONALITYInflation and Seasonality
The Company does not believe its operations have been materially affected by
inflation. The Company has been successful, in many cases, in reducing the
effects of merchandise cost increases principally by taking advantage of vendor
incentive programs, economies of scale resulting from increased volumes or
purchases, and selective forward buying.
Although sales have historically been somewhat higher in the Company's fourth
quarter (March through May), the Company does not consider its business to be
seasonal.
FORWARD LOOKING STATEMENTSForward Looking Statements
The Management's Discussion and Analysis of Financial Condition and Results of
Operations and other sections of this quarterly report may contain forward-lookingforward-
looking statements, which reflect the current views of the Company with respect
to certain events that could have an effect on the Company's future financial
performance. These statements include the words "anticipates", "should",
"expect", "expected" and similar expressions. Any such forward-looking
statements are subject to various risks and uncertainties that could cause
actual results to differ materially from historical results or those currently
anticipated.
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These risks and uncertainties include, but are not limited to, increased
competition, extent of market demand for auto parts, availability of inventory
supply, inventory shrinkage, propriety of inventory mix, adequacy and perception
of customer service, product quality and defect experience, availability of and
ability to take advantage of vendor pricing programs and incentives, sourcing
availability, rate of new store openings, cannibalization of store sites, mix of
types of merchandise sold, governmental regulation of products, weather, new
store development, performance of information systems, effectiveness of
deliveries from the distribution center, ability to hire, train and retain
qualified team members, availability of quality store sites, ability to
successfully implement the commercial delivery service, credit risk
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associated with the commercial delivery service, environmental risks,
availability of expanded and extended credit facilities, ability to successfully
and efficiently establish and coordinate operations at the second distribution
center and other risks. In addition, specific risks and uncertainties associated
with the previously announced proposed merger with Advance Auto Parts include,
but are not limited to: (1) the risk that the businesses of Advance Auto Parts
and the Company will not be integrated successfully or such integration may be
more difficult, time-consuming or costly than expected; (2) expected
efficiencies and cost savings from the merger may not be fully realized or
realized within the expected time frame; (3) revenues following the merger may
be lower than expected; (4) operating costs, customer loss and business
disruption following the merger, including, without limitation, difficulties in
maintaining relationships with suppliers and employees, may be greater than
expected; (5) inability to obtain or meet conditions imposed for governmental
approval for the merger or merger schedule; (6) the failure of the Company's
stockholders to approve the merger; (7) recessionary trends in general or in
specific areas where Advance Auto Parts and the Company operate; (8) competitive
pricing and other competitive pressures; and (9) other economic, business,
competitive and/or regulatory factors affecting Advance Auto Parts' and the
Company's businesses generally.
ITEMItem 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures about Market Risk
No material changes have occurred in the quantitative and qualitative
market risk disclosure of the Company as presented in the Company's Annual
Report on Form 10-K for the year ended May 29, 2001.
PART II. OTHER INFORMATION
ITEMItem 1. LEGAL PROCEEDINGSLegal Proceedings
Coalition for a Level Playing Field, et. al. V. AutoZone, Inc. et. al, Case No.
----------------------------------------------------------------------
00-0953 in and for the United District Court, Eastern District of New York. In
February 2000, the Coalition for a Level Playing Field ("Coalition") and over
one hundred independent automotive parts and accessories aftermarket warehouse
distributors and and/or jobbers filed a lawsuit in the United States District
for the Eastern District of New York against the Company. The plaintiffs claim
that the defendants have knowingly received volume discounts, rebates, slotting
and other allowances, fees, free inventory, sham advertising and promotional
payments, a share in the manufacturers' profits, and excessive payments for
services purportedly performed for the manufacturers in violation of the
Robinson-Patman Act. The complaint seeks injunctive and declaratory relief,
unspecified treble damages on behalf of each of the plaintiffs, as well as
attorneys' fees and costs. The defendants, including the Company, filed a motion
to dismiss in late October 2000. The plaintiff's filed their response to such
motion to dismiss in January 2001 and the defendants have filed a response to
the plaintiff's responsive pleadings. Any discovery would follow after
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disposition by the court of such motion to dismiss, which remains pending. The
Company believes the claims to be without merit and intends to vigorously defend
the action.
Discount Auto Parts is not a party to any other legal proceedings, other than
various claims and lawsuits arising in the normal course of the Company's
business. The Company does not believe that such claims and lawsuits,
individually or in the aggregate, will have a material adverse effect on its
financial condition or results of operations.
ITEM12
Item 6. EXHIBITS AND REPORTS ON FORMExhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
A current report on Form 8-K dated August 8, 2001 was filed with the
Securities and Exchange Commission reporting a merger agreement and related
documents with Advance Holding Company and certain of its affiliated
companies.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DISCOUNT AUTO PARTS, INC.
Date: September 27,November 6, 2001 By: /s/ Peter J. Fontaine
---------------------------------- ---------------------
Peter J. Fontaine
Chief Executive Officer
(Principal Executive Officer)
Date: September 27,November 6, 2001 By: /s/ C. Michael Moore
---------------------------------- --------------------
C. Michael Moore
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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