Exhibit 99.2
ITEM 6. SELECTED FINANCIAL DATA
The following tables set forth selected historical financial information as of and for the periods indicated and reflects our retrospective adoption, for all periods presented, of a change in our accounting for our interest in our variable interest entity, or VIE. See Note 2 in our Notes to Consolidated Financial Statements for the year ended January 31, 2010 for additional information. We have provided the following selected historical financial information for your reference. We have derived the selected statement of operations and balance sheet data as of January 31, 2010 and 2009 and for each of the years ended January 31, 2010, 2009 and 2008 from our audited consolidated financial statements included as Exhibit 99.4 to this Current Report on Form 8-K. Balance sheet data as of January 31, 2008 and statement of operations data for the years ended January 31, 2007 and 2006 have been derived from our unaudited consolidated financial statements which do not appear in this in this Current Report on Form 8-K.
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| | Year Ended January 31, |
| | (dollars and shares in thousands, except per share amounts) |
| | 2006 | | 2007 | | 2008 | | 2009 | | 2010 |
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Statement Operations: | | | | | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
Product sales | | $ | 569,877 | | | $ | 623,959 | | | $ | 671,571 | | | $ | 743,729 | | | $ | 667,401 | |
Repair service agreement commissions, net (1) | | | 30,583 | | | | 30,567 | | | | 36,424 | | | | 40,199 | | | | 33,272 | |
Service revenues (2) | | | 20,278 | | | | 22,411 | | | | 22,997 | | | | 21,121 | | | | 22,115 | |
Total net sales | | | 620,738 | | | | 676,937 | | | | 730,992 | | | | 805,049 | | | | 722,788 | |
Finance charges and other (3) | | | 109,250 | | | | 122,649 | | | | 139,538 | | | | 154,492 | | | | 152,797 | |
Total revenues | | $ | 729,988 | | | $ | 799,586 | | | $ | 870,530 | | | $ | 959,541 | | | $ | 875,585 | |
Costs and expenses: | | | | | | | | | | | | | | | | | | | | |
Cost of goods sold, including warehousing and occupancy cost | | | 422,533 | | | | 466,279 | | | | 508,787 | | | | 580,423 | | | | 534,299 | |
Cost of parts sold, including warehousing and occupancy costs | | | 5,310 | | | | 6,785 | | | | 8,379 | | | | 9,638 | | | | 10,401 | |
Selling, general and administrative expense | | | 208,652 | | | | 225,434 | | | | 245,761 | | | | 254,172 | | | | 255,942 | |
Goodwill impairment (4) | | | — | | | | — | | | | — | | | | — | | | | 9,617 | |
Provision for bad debts | | | 14,519 | | | | 22,173 | | | | 19,465 | | | | 27,952 | | | | 36,843 | |
Total costs and expenses | | $ | 651,014 | | | $ | 720,671 | | | $ | 782,392 | | | $ | 872,185 | | | $ | 847,102 | |
Operating income | | | 78,974 | | | | 78,915 | | | | 88,138 | | | | 87,356 | | | | 28,483 | |
Interest expense, net | | | 17,423 | | | | 21,454 | | | | 24,839 | | | | 23,597 | | | | 20,571 | |
Other (income) expense (5) | | | 69 | | | | (772 | ) | | | (943 | ) | | | 117 | | | | (123 | ) |
Income before income taxes | | | 61,482 | | | | 58,233 | | | | 64,242 | | | | 63,642 | | | | 8,035 | |
Provision for income taxes | | | 21,380 | | | | 20,613 | | | | 22,575 | | | | 23,624 | | | | 4,111 | |
Net income | | $ | 40,102 | | | $ | 37,620 | | | $ | 41,667 | | | $ | 40,018 | | | $ | 3,924 | |
Earnings per common share: | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 1.71 | | | $ | 1.59 | | | $ | 1.80 | | | $ | 1.79 | | | $ | 0.17 | |
Diluted | | $ | 1.66 | | | $ | 1.55 | | | $ | 1.76 | | | $ | 1.77 | | | $ | 0.17 | |
Average common shares outstanding: | | | | | | | | | | | | | | | | | | | | |
Basic | | | 23,412 | | | | 23,663 | | | | 23,193 | | | | 22,413 | | | | 22,456 | |
Diluted | | | 24,088 | | | | 24,289 | | | | 23,673 | | | | 22,577 | | | | 22,610 | |
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Other Financial Data: | | | | | | | | | | | | | | | | | | | | |
Stores open at end of period | | | 56 | | | | 62 | | | | 69 | | | | 76 | | | | 76 | |
Same stores sales growth (6) | | | 16.9 | % | | | 3.6 | % | | | 3.2 | % | | | 2.0 | % | | | (13.8 | )% |
Inventory turns (7) | | | 6.1 | | | | 5.7 | | | | 5.7 | | | | 6.0 | | | | 6.1 | |
Gross margin percentage (8) | | | 41.4 | % | | | 40.8 | % | | | 40.6 | % | | | 38.5 | % | | | 37.8 | % |
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| | Year Ended January 31, |
| | (dollars and shares in thousands, except per share amounts) |
| | 2006 | | 2007 | | 2008 | | 2009 | | 2010 |
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Operating margin (9) | | | 10.8 | % | | | 9.9 | % | | | 10.1 | % | | | 9.1 | % | | | 3.3 | % |
Ratio of earnings to fixed charges (10) | | | 3.3 | | | | 2.8 | | | | 2.8 | | | | 2.7 | | | | 1.2 | |
Return on average equity (11) | | | 18.7 | % | | | 14.7 | % | | | 14.8 | % | | | 12.9 | % | | | 1.2 | % |
Capital expenditures | | $ | 18,490 | | | $ | 18,425 | | | $ | 18,955 | | | $ | 17,597 | | | $ | 10,255 | |
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Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | |
Working capital | | $ | 307,948 | | | $ | 372,668 | | | $ | 387,730 | | | $ | 277,296 | | | $ | 340,122 | |
Cash and cash equivalents | | $ | 45,179 | | | $ | 56,598 | | | $ | 11,024 | | | $ | 11,909 | | | $ | 12,247 | |
Inventory | | | 73,986 | | | | 87,098 | | | | 81,495 | | | | 95,971 | | | | 63,499 | |
Other accounts receivable, net | | | 17,796 | | | | 22,329 | | | | 27,722 | | | | 32,505 | | | | 23,254 | |
Total assets | | | 721,447 | | | | 810,511 | | | | 835,499 | | | | 957,566 | | | | 892,466 | |
Total debt, including current maturities | | $ | 385,136 | | | $ | 438,198 | | | $ | 468,119 | | | $ | 505,417 | | | $ | 452,304 | |
Total stockholders’ equity | | $ | 236,962 | | | $ | 274,182 | | | $ | 288,726 | | | $ | 332,784 | | | $ | 339,163 | |
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| | Year Ended January 31, |
| | (dollars and shares in thousands) |
| | 2008 | | 2009 | | 2010 |
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Other Relevant Data: | | | | | | | | | | | | |
Rent expense (12) | | $ | 18,905 | | | $ | 22,242 | | | $ | 23,703 | |
Percent of retail sales financed | | | 62.2 | % | | | 62.6 | % | | | 58.1 | % |
Allowance for bad debts as a percent of average outstanding balance (13) | | | 3.5 | % | | | 3.9 | % | | | 4.8 | % |
Weighted average monthly payment rate (14) | | | 5.7 | % | | | 5.5 | % | | | 5.2 | % |
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(1) | | Includes commissions from sales of third-party repair service agreements and replacement product programs, and income from company-obligor repair service agreements. |
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(2) | | Includes revenues derived from parts sales and labor sales on products serviced for customers, both covered under manufacturer warranty and outside manufacturer’s warranty coverage. |
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(3) | | Includes primarily interest income and fees earned on credit accounts and commissions earned from the sale of third-party credit insurance products. |
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(4) | | Includes the write-off of the carrying amount of goodwill after interim testing in the third quarter of fiscal 2010 determined that the goodwill was fully impaired. |
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(5) | | Includes primarily gains or losses resulting from sales of fixed assets during the period. |
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(6) | | Same store sales is calculated by comparing the reported sales for all stores that were open during the entirety of a period and the entirety of the same period during the prior fiscal year. Sales from closed stores, if any, are removed from each period. Sales from relocated stores have been included in each period because each such store was relocated within the same general geographic market. Sales from expanded stores have been included in each period. |
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(7) | | Inventory turns are defined as the cost of goods sold, excluding warehousing and occupancy cost, divided by the monthly average product inventory balance, excluding consigned goods. |
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(8) | | Gross margin percentage is defined as total revenues less cost of goods and parts sold, including warehousing and occupancy cost, divided by total revenues. |
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(9) | | Operating margin is defined as operating income divided by total revenues. |
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(10) | | Ratio of earnings to fixed charges is calculated as income before provision for income taxes plus fixed charges (excluding capitalized interest), divided by fixed charges. Fixed charges consist of the sum of interest expensed and capitalized, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of the interest within rental expense. |
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(11) | | Return on average equity is calculated as current period net income divided by the average of the beginning and ending equity. |
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(12) | | Rent expense includes rent expense incurred on our properties, equipment and vehicles, and is net of any rental income received. |
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(13) | | Includes Reserve for uncollectible interest. |
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(14) | | Represents the monthly weighted average of gross cash collections received on the credit portfolio as a percentage of the average monthly portfolio balances for each period. |
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