Exhibit 99.2
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
| (dollar amounts in thousands, except per share amounts) |
|
| Thirteen weeks ended |
| Fifty-two weeks ended |
| ||||||||||||||||
|
| January 28, 2006 |
| January 29, 2005 |
| January 28, 2006 |
| January 29, 2005 |
| ||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
| ||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Merchandise Sales |
| $ | 457,022 |
| 83.1 |
| $ | 456,033 |
| 82.4 |
| $ | 1,852,067 |
| 82.9 |
| $ | 1,860,628 |
| 82.0 |
|
Service Revenue |
| 92,795 |
| 16.9 |
| 97,407 |
| 17.6 |
| 383,159 |
| 17.1 |
| 409,346 |
| 18.0 |
| ||||
Total Revenues |
| 549,817 |
| 100.0 |
| 553,440 |
| 100.0 |
| 2,235,226 |
| 100.0 |
| 2,269,974 |
| 100.0 |
| ||||
Costs of Merchandise Sales |
| 344,507 |
| 75.4 |
| 330,842 |
| 72.5 |
| 1,371,195 |
| 74.0 |
| 1,331,728 |
| 71.6 |
| ||||
Costs of Service Revenue |
| 93,105 |
| 100.3 |
| 78,139 |
| 80.2 |
| 352,713 |
| 92.1 |
| 316,652 |
| 77.4 |
| ||||
Total Costs of Revenues |
| 437,612 |
| 79.6 |
| 408,981 |
| 73.9 |
| 1,723,908 |
| 77.1 |
| 1,648,380 |
| 72.6 |
| ||||
Gross Profit from Merchandise Sales |
| 112,515 |
| 24.6 |
| 125,191 |
| 27.5 |
| 480,872 |
| 26.0 |
| 528,900 |
| 28.4 |
| ||||
Gross (Loss) Profit from Service Revenue |
| (310 | ) | (0.3 | ) | 19,268 |
| 19.8 |
| 30,446 |
| 7.9 |
| 92,694 |
| 22.6 |
| ||||
Total Gross Profit |
| 112,205 |
| 20.4 |
| 144,459 |
| 26.1 |
| 511,318 |
| 22.9 |
| 621,594 |
| 27.4 |
| ||||
Selling, General and Administrative Expenses |
| 127,639 |
| 23.2 |
| 148,478 |
| 26.8 |
| 522,501 |
| 23.4 |
| 546,808 |
| 24.1 |
| ||||
Operating (Loss) Profit |
| (15,434 | ) | (2.8 | ) | (4,019 | ) | (0.7 | ) | (11,183 | ) | (0.5 | ) | 74,786 |
| 3.3 |
| ||||
Non-operating Income |
| 1,149 |
| 0.2 |
| (327 | ) | 0.0 |
| 3,897 |
| 0.2 |
| 1,824 |
| 0.1 |
| ||||
Interest Expense |
| 21,686 |
| 3.9 |
| 10,811 |
| 2.0 |
| 49,040 |
| 2.2 |
| 35,965 |
| 1.6 |
| ||||
(Loss) Earnings From Continuing Operations Before Income Taxes and Cumulative Effect of Change in Accounting Principle |
| (35,971 | ) | (6.5 | ) | (15,157 | ) | (2.7 | ) | (56,326 | ) | (2.5 | ) | 40,645 |
| 1.8 |
| ||||
Income Tax (Benefit) Expense |
| (13,268 | ) | 36.9 | (1) | (5,456 | ) | 36.0 | (1) | (20,553 | ) | 36.5 | (1) | 15,190 |
| 37.4 | (1) | ||||
Net (Loss) Earnings From Continuing Operations Before Cumulative Effect of Change in Accounting Principle |
| (22,703 | ) | (4.1 | ) | (9,701 | ) | (1.8 | ) | (35,773 | ) | (1.6 | ) | 25,455 |
| 1.1 |
| ||||
Discontinued Operations, Net of Tax |
| 123 |
| 0.0 |
| (434 | ) | 0.0 |
| 266 |
| 0.0 |
| (1,876 | ) | (0.1 | ) | ||||
Cumulative Effect of Change in Accounting Principle, Net of Tax |
| (2,021 | ) | (0.4 | ) | — |
| 0.0 |
| (2,021 | ) | (0.1 | ) | — |
| 0.0 |
| ||||
Net (Loss) Earnings |
| (24,601 | ) | (4.5 | ) | (10,135 | ) | (1.8 | ) | (37,528 | ) | (1.7 | ) | 23,579 |
| 1.0 |
| ||||
Retained Earnings, beginning of period |
| 510,532 |
|
|
| 551,247 |
|
|
| 536,780 |
|
|
| 531,933 |
|
|
| ||||
Cash Dividends |
| (3,702 | ) |
|
| (3,938 | ) |
|
| (14,686 | ) |
|
| (15,676 | ) |
|
| ||||
Effect of Stock Options |
| (289 | ) |
|
| (394 | ) |
|
| (2,520 | ) |
|
| (2,984 | ) |
|
| ||||
Dividend Reinvestment Plan |
| (14 | ) |
|
| — |
|
|
| (120 | ) |
|
| (72 | ) |
|
| ||||
Retained Earnings, end of period |
| $ | 481,926 |
|
|
| $ | 536,780 |
|
|
| $ | 481,926 |
|
|
| $ | 536,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic (Loss) Earnings per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net (Loss) Earnings From Continuing Operations Before Cumulative Effect of Change in Accounting Principle |
| $ | (0.42 | ) |
|
| $ | (0.18 | ) |
|
| $ | (0.65 | ) |
|
| $ | 0.45 |
|
|
|
Discontinued Operations, Net of Tax |
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.03 | ) |
|
| ||||
Cumulative Effect of Change in Accounting Principle, Net of Tax |
| (0.04 | ) |
|
| — |
|
|
| (0.04 | ) |
|
| — |
|
|
| ||||
Basic (Loss) Earnings per Share |
| $ | (0.46 | ) |
|
| $ | (0.19 | ) |
|
| $ | (0.69 | ) |
|
| $ | 0.42 |
|
|
|
Diluted (Loss) Earnings per Share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net (Loss) Earnings From Continuing Operations Before Cumulative Effect of Change in Accounting Principle |
| $ | (0.42 | ) |
|
| $ | (0.18 | ) |
|
| $ | (0.65 | ) |
|
| $ | 0.44 |
|
|
|
Discontinued Operations, Net of Tax |
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.03 | ) |
|
| ||||
Cumulative Effect of Change in Accounting Principle, Net of Tax |
| (0.04 | ) |
|
| — |
|
|
| (0.04 | ) |
|
| — |
|
|
| ||||
Diluted (Loss) Earnings per Share |
| $ | (0.46 | ) |
|
| $ | (0.19 | ) |
|
| $ | (0.69 | ) |
|
| $ | 0.41 |
|
|
|
Cash Dividends per Share |
| $ | 0.0675 |
|
|
| $ | 0.0675 |
|
|
| $ | 0.2700 |
|
|
| $ | 0.2700 |
|
|
|
(1) As a percentage of (Loss) Earnings From Continuing Operations before Income Taxes and Cumulative Effect of Change in Accounting Principle.
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
CONSOLIDATED BALANCE SHEETS |
| (dollar amounts in thousands, except per share amounts) |
|
| January 28, 2006 |
| January 29, 2005 |
| ||
|
|
|
|
|
| ||
Assets |
|
|
|
|
| ||
Current Assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 48,281 |
| $ | 82,758 |
|
Accounts receivable, net |
| 36,434 |
| 30,994 |
| ||
Merchandise inventories |
| 616,292 |
| 602,760 |
| ||
Prepaid expenses |
| 40,952 |
| 45,349 |
| ||
Other |
| 85,446 |
| 96,065 |
| ||
Assets held for disposal |
| 652 |
| 665 |
| ||
Total Current Assets |
| 828,057 |
| 858,591 |
| ||
Property and Equipment - at cost: |
|
|
|
|
| ||
Land |
| 257,802 |
| 261,985 |
| ||
Buildings and improvements |
| 916,580 |
| 916,099 |
| ||
Furniture, fixtures and equipment |
| 671,189 |
| 633,098 |
| ||
Construction in progress |
| 15,858 |
| 40,426 |
| ||
|
| 1,861,429 |
| 1,851,608 |
| ||
Less accumulated depreciation and amortization |
| 914,040 |
| 906,577 |
| ||
Property and Equipment - net |
| 947,389 |
| 945,031 |
| ||
Other |
| 46,307 |
| 63,401 |
| ||
Total Assets |
| $ | 1,821,753 |
| $ | 1,867,023 |
|
|
|
|
|
|
| ||
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
Current Liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 261,940 |
| $ | 310,981 |
|
Trade payable program liability |
| 11,156 |
| — |
| ||
Accrued expenses |
| 290,761 |
| 306,671 |
| ||
Deferred income taxes |
| 15,624 |
| 19,406 |
| ||
Current maturities of long-term debt and obligations under capital leases |
| 1,257 |
| 40,882 |
| ||
Total Current Liabilities |
| 580,738 |
| 677,940 |
| ||
|
|
|
|
|
| ||
Long-term debt and obligations under capital leases, less current maturities |
| 467,239 |
| 352,682 |
| ||
Convertible long-term debt |
| 119,000 |
| 119,000 |
| ||
Other long-term liabilities |
| 56,929 |
| 37,977 |
| ||
Deferred income taxes |
| 2,937 |
| 25,968 |
| ||
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 |
| ||
Additional paid-in capital |
| 288,098 |
| 284,966 |
| ||
Retained earnings |
| 481,926 |
| 536,780 |
| ||
Accumulated other comprehensive loss |
| (3,220 | ) | (4,852 | ) | ||
Less cost of shares in treasury - 12,152,968 shares and 11,305,130 shares |
| 181,187 |
| 172,731 |
| ||
Less cost of shares in benefits trust - 2,195,270 shares |
| 59,264 |
| 59,264 |
| ||
Total Stockholders’ Equity |
| 594,910 |
| 653,456 |
| ||
Total Liabilities and Stockholders’ Equity |
| $ | 1,821,753 |
| $ | 1,867,023 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (dollar amounts in thousands) |
Fifty-two Weeks Ended |
| January 28, 2006 |
| January 29, 2005 |
| ||
|
|
|
|
|
| ||
Cash Flows from Operating Activities: |
|
|
|
|
| ||
Net (loss) earnings |
| $ | (37,528 | ) | $ | 23,579 |
|
Net income (loss) from discontinued operations |
| 266 |
| (1,876 | ) | ||
Net (loss) earnings from continuing operations |
| $ | (37,794 | ) | $ | 25,455 |
|
Adjustment to Reconcile Net (Loss) Earnings from Continuing Operations to Net Cash (Used in) Provided by Continuing Operations: |
|
|
|
|
| ||
Depreciation and amortization |
| 79,887 |
| 76,620 |
| ||
Cumulative effect of change in accounting principle, net of tax |
| 2,021 |
| — |
| ||
Accretion of asset disposal obligation |
| 109 |
| 135 |
| ||
Stock compensation expense |
| 2,049 |
| 1,184 |
| ||
Deferred income taxes |
| (27,792 | ) | 26,183 |
| ||
Deferred gain on sale lease back |
| — |
| (130 | ) | ||
Net gain from reduction in asset retirement liability |
| (1,815 | ) | — |
| ||
Gain from sales of assets |
| (4,826 | ) | (11,848 | ) | ||
Loss on impairment of assets |
| 4,200 |
| — |
| ||
Increase in cash surrender value of life insurance policies |
| (3,389 | ) | (3,540 | ) | ||
Changes in Operating Assets and Liabilities: |
|
|
|
|
| ||
Decrease (increase) in accounts receivable, prepaid expenses and other |
| 15,166 |
| (17,206 | ) | ||
Increase in merchandise inventories |
| (13,532 | ) | (49,198 | ) | ||
Decrease in accounts payable |
| (49,041 | ) | (24,387 | ) | ||
(Decrease) increase in accrued expenses |
| (18,313 | ) | 27,221 |
| ||
Increase (decrease) in other long-term liabilities |
| 16,209 |
| (1,272 | ) | ||
Net cash (used in) provided by continuing operations |
| (36,861 | ) | 49,217 |
| ||
Net cash used in discontinued operations |
| (1,526 | ) | (3,766 | ) | ||
Net Cash (Used in) Provided by Operating Activities |
| (38,387 | ) | 45,451 |
| ||
|
|
|
|
|
| ||
Cash Flows from Investing Activities: |
|
|
|
|
| ||
Capital expenditures |
| (85,945 | ) | (88,068 | ) | ||
Proceeds from sales of assets |
| 4,043 |
| 18,021 |
| ||
Proceeds from sales of assets held for disposal |
| 6,913 |
| — |
| ||
Proceeds from life insurance policies |
| 24,655 |
| — |
| ||
Premiums paid on life insurance policies |
| (605 | ) | (1,778 | ) | ||
Net cash used in continuing operations |
| (50,939 | ) | (71,825 | ) | ||
Net cash provided by discontinued operations |
| 916 |
| 13,327 |
| ||
Net Cash Used in Investing Activities |
| (50,023 | ) | (58,498 | ) | ||
|
|
|
|
|
| ||
Cash Flows from Financing Activities: |
|
|
|
|
| ||
Net borrowings under line of credit agreements |
| 57,985 |
| 8,102 |
| ||
Net borrowings (payments) on trade payable program liability |
| 11,156 |
| (7,216 | ) | ||
Payments for finance issuance costs |
| (5,150 | ) | (5,500 | ) | ||
Proceeds from issuance of notes |
| 200,000 |
| 200,000 |
| ||
Reduction of long-term debt |
| (183,459 | ) | (189,991 | ) | ||
Reduction of convertible debt |
| — |
| (31,000 | ) | ||
Payments on capital lease obligations |
| (383 | ) | (1,040 | ) | ||
Dividends paid |
| (14,686 | ) | (15,676 | ) | ||
Repurchase of common stock |
| (15,562 | ) | (39,718 | ) | ||
Proceeds from issuance of common stock |
| — |
| 108,854 |
| ||
Proceeds from exercise of stock options |
| 3,071 |
| 6,887 |
| ||
Proceeds from dividend reinvestment plan |
| 961 |
| 1,119 |
| ||
Net Cash Provided by Financing Activities |
| 53,933 |
| 34,821 |
| ||
Net (Decrease) Increase in Cash |
| (34,477 | ) | 21,774 |
| ||
Cash and Cash Equivalents at Beginning of Period |
| 82,758 |
| 60,984 |
| ||
Cash and Cash Equivalents at End of Period |
| $ | 48,281 |
| $ | 82,758 |
|
|
|
|
|
|
| ||
Cash paid for interest, net of amounts capitalized |
| $ | 50,602 |
| $ | 30,019 |
|
Cash received from income tax refunds |
| $ | 10,097 |
| $ | 23,290 |
|
Cash paid for income taxes |
| $ | 1,770 |
| $ | 48,732 |
|
|
|
|
|
|
| ||
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
| ||
Non-cash investing activities: |
|
|
|
|
| ||
Accrued purchases of property and equipment |
| $ | 6,138 |
| $ | 15,698 |
|
Write off of equipment to insurance receivable |
| $ | 346 |
| $ | — |
|
Non-cash financing activities: |
|
|
|
|
| ||
Equipment capital leases |
| $ | 789 |
| $ | 1,413 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE |
| (in thousands, except per share data) |
|
| Thirteen weeks ended |
| Fifty-two weeks ended |
| |||||||||
|
| January 28, 2006 |
| January 29, 2005 |
| January 28, 2006 |
| January 29, 2005 |
| |||||
|
|
|
|
|
|
|
|
|
| |||||
(a) | Net (loss) earnings from continuing operations before cumulative effect of change in accounting principle |
| $ | (22,703 | ) | $ | (9,701 | ) | $ | (35,773 | ) | $ | 25,455 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Adjustment for interest on convertible senior notes, net of income tax effect |
| — |
| — |
| — |
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
(b) | Adjusted net (loss) earnings from continuing operations before cumulative effect of change in accounting principle |
| $ | (22,703 | ) | $ | (9,701 | ) | $ | (35,773 | ) | $ | 25,455 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
(c) | Average number of common shares outstanding during period |
| 54,180 |
| 55,017 |
| 54,794 |
| 56,353 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
| Common shares assumed issued upon conversion of convertible senior notes |
| — |
| — |
| — |
| — |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
| Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
| — |
| — |
| — |
| 1,296 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
(d) | Average number of common shares assumed outstanding during period |
| 54,180 |
| 55,017 |
| 54,794 |
| 57,649 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
| Basic (Loss) Earnings per Share: |
|
|
|
|
|
|
|
|
| ||||
| Net (Loss) Earnings From Continuing Operations Before Cumulative Effect of Change in Accounting Principle (a/c) |
| $ | (0.42 | ) | $ | (0.18 | ) | $ | (0.65 | ) | $ | 0.45 |
|
| Discontinued Operations, Net of Tax |
| — |
| (0.01 | ) | — |
| (0.03 | ) | ||||
| Cumulative Effect of Change in Accounting Principle, Net of Tax |
| (0.04 | ) | — |
| (0.04 | ) | — |
| ||||
| Basic (Loss) Earnings per Share |
| $ | (0.46 | ) | $ | (0.19 | ) | $ | (0.69 | ) | $ | 0.42 |
|
| Diluted (Loss) Earnings per Share: |
|
|
|
|
|
|
|
|
| ||||
| Net (Loss) Earnings From Continuing Operations Before Cumulative Effect of Change in Accounting Principle (b/d) |
| $ | (0.42 | ) | $ | (0.18 | ) | $ | (0.65 | ) | $ | 0.44 |
|
| Discontinued Operations, Net of Tax |
| — |
| (0.01 | ) | — |
| (0.03 | ) | ||||
| Cumulative Effect of Change in Accounting Principle, Net of Tax |
| (0.04 | ) | — |
| (0.04 | ) | — |
| ||||
| Diluted (Loss) Earnings per Share |
| $ | (0.46 | ) | $ | (0.19 | ) | $ | (0.69 | ) | $ | 0.41 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
| |
ADDITIONAL INFORMATION |
| (dollar amounts in thousands) | |
|
| Thirteen weeks ended |
| Fifty-two weeks ended |
| ||||||||
|
| January 28, 2006 |
| January 29, 2005 |
| January 28, 2006 |
| January 29, 2005 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Capital expenditures |
| $ | 24,701 |
| $ | 51,135 |
| $ | 92,083 |
| $ | 103,766 |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| $ | 20,604 |
| $ | 20,146 |
| $ | 79,887 |
| $ | 76,620 |
|
|
|
|
|
|
|
|
|
|
| ||||
Non-operating income: |
|
|
|
|
|
|
|
|
| ||||
Net rental revenue |
| $ | 564 |
| $ | 28 |
| $ | 1,634 |
| $ | 1,883 |
|
Investment income |
| 340 |
| 205 |
| 1,117 |
| 680 |
| ||||
Other (expense) income |
| 245 |
| (560 | ) | 1,146 |
| (739 | ) | ||||
Total |
| $ | 1,149 |
| $ | (327 | ) | $ | 3,897 |
| $ | 1,824 |
|
|
|
|
|
|
|
|
|
|
| ||||
Comparable sales percentages: |
|
|
|
|
|
|
|
|
| ||||
Merchandise |
| 0.7 | % | 6.0 | % | -0.2 | % | 7.9 | % | ||||
Service |
| -4.3 |
| -1.2 |
| -6.1 |
| 1.1 |
| ||||
Total |
| -0.2 |
| 4.6 |
| -1.3 |
| 6.6 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total square feet of retail space (including service centers) |
|
|
|
|
| 12,167,089 |
| 12,206,785 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total Store Count |
|
|
|
|
| 593 |
| 595 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Sales and Gross Profit by Line of Business (A): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Retail Sales |
| $ | 332,436 |
| $ | 332,199 |
| $ | 1,354,910 |
| $ | 1,351,018 |
|
Service Center Revenue |
| 217,381 |
| 221,241 |
| 880,316 |
| 918,956 |
| ||||
Total Revenues |
| $ | 549,817 |
| $ | 553,440 |
| $ | 2,235,226 |
| $ | 2,269,974 |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit from Retail Sales |
| $ | 79,464 |
| $ | 83,328 |
| $ | 344,893 |
| $ | 370,687 |
|
Gross Profit from Service Center Revenue |
| 32,741 |
| 61,131 |
| 166,425 |
| 250,907 |
| ||||
Total Gross Profit |
| $ | 112,205 |
| $ | 144,459 |
| $ | 511,318 |
| $ | 621,594 |
|
|
|
|
|
|
|
|
|
|
| ||||
Comparable Sales Percentages (A): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Retail Sales |
| 0.6 | % | 8.2 | % | 0.6 | % | 13.2 | % | ||||
Service Center Revenue |
| -1.3 |
| -0.3 |
| -3.9 |
| -1.9 |
| ||||
Total Revenues |
| -0.2 |
| 4.6 |
| -1.3 |
| 6.6 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit Percentage by Line of Business (A): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit Percentage from Retail Sales |
| 23.9 | % | 25.0 | % | 25.4 | % | 27.4 | % | ||||
Gross Profit Percentage from Service Center Revenue |
| 15.1 | % | 27.6 | % | 18.9 | % | 27.3 | % | ||||
Total Gross Profit Percentage |
| 20.4 | % | 26.1 | % | 22.9 | % | 27.4 | % | ||||
(A) Retail Sales include DIY and Commercial sales. Service Center Revenue includes revenue from labor and installed parts and tires.
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
| |
ADDITIONAL INFORMATION (continued) |
| (dollar amounts in thousands) | |
Adjustments
In the fourth quarter of 2005 we completed the restructuring of substantially all of our vendor agreements to provide flexibility in how we use vendor support funds. Previously, the vendor agreements required us to use certain vendor support funds exclusively for promotions and to partially offset certain other direct expenses. Under EITF No. 02-16, these types of allowances are to be netted against the appropriate expenses they offset, once it is determined that the allowances are for specific, identifiable and incremental expenses. Under the restructured contracts it is not possible to make this determination. Therefore, going forward all vendor support funds will be treated as a reduction of inventories and be recognized as a reduction to Costs of Sales as the inventories are sold, in accordance with EITF No. 02-16. For the periods below, all previously identified costs which had been netted against Selling, General and Administrative Expenses (SG&A) have been reclassified to Gross Profit from Merchandise Sales as if the vendor agreements had been restructured as of February 1, 2004 (A).
Certain adjustments have been made to all periods presented to eliminate the impact of unusual or nonrecurring events, in order to make the periods more comparable (B). Both periods of 2005 remove the effect of a fourth-quarter write-down of certain commercial sales information system assets ($4,200), while both periods of 2004 remove the effects of a fourth-quarter warehouse gain ($12,695) and severance accrual ($6,911).
Effective January 30, 2005, the Company restructured its field operations into separate retail and service teams. In connection with this restructuring, certain retail personnel, who were previously utilized in merchandising roles supporting the service business, were reassigned to purely service-related responsibilities. The labor and benefit costs related to these associates, which were previously recognized in SG&A, are now recognized in Costs of Service Revenue. Therefore, these costs have been reclassified from SG&A to Gross Profit from Service Revenue for both periods in 2004 (C).
Please see the table below illustrating the effect of these adjustments on both the thirteen and fifty-two week periods ended January 28, 2006 and January 29, 2005 (presented in GAAP format), assuming that such changes had been in effect during such periods.
STATEMENTS OF OPERATIONS
GAAP Format
|
| Thirteen weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Thirteen weeks ended |
| ||||||||
|
| January 28, 2006 |
| ADJUSTMENTS |
|
|
|
|
| January 28, 2006 |
| ||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
|
|
|
|
| AS ADJUSTED |
| ||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
|
|
|
|
| % |
| ||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
|
|
|
|
| Amount |
| Sales |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit from Merchandise Sales |
| $ | 112,515 |
| 24.6 |
| $ | 8,774 |
| 1.9 |
| $ | — |
| — |
|
|
|
|
| $ | 121,289 |
| 26.5 |
|
Gross Profit from Service Revenue |
| (310 | ) | (0.3 | ) | — |
| — |
| — |
| — |
|
|
|
|
| (310 | ) | (0.3 | ) | ||||
Total Gross Profit |
| 112,205 |
| 20.4 |
| 8,774 |
| 1.6 |
| — |
| — |
|
|
|
|
| 120,979 |
| 22.0 |
| ||||
Selling, General and Administrative Expenses |
| 127,639 |
| 23.2 |
| 8,774 |
| 1.6 |
| (4,200 | ) | (0.8 | ) |
|
|
|
| 132,213 |
| 24.0 |
| ||||
Operating Profit (Loss) |
| $ | (15,434 | ) | (2.8 | ) | $ | — |
| — |
| $ | 4,200 |
| 0.8 |
|
|
|
|
| $ | (11,234 | ) | (2.0 | ) |
|
| Thirteen weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Thirteen weeks ended |
| |||||||||
|
| January 29, 2005 |
| ADJUSTMENTS |
| January 29, 2005 |
| |||||||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
| (C) |
| AS ADJUSTED |
| |||||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
| |||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross Profit from Merchandise Sales |
| $ | 125,191 |
| 27.5 |
| $ | 915 |
| 0.2 |
| $ | (12,695 | ) | (2.8 | ) | $ | — |
| — |
| $ | 113,411 |
| 24.9 |
|
Gross Profit from Service Revenue |
| 19,268 |
| 19.8 |
| — |
| — |
| — |
| — |
| (5,801 | ) | (6.0 | ) | 13,467 |
| 13.8 |
| |||||
Total Gross Profit |
| 144,459 |
| 26.1 |
| 915 |
| 0.2 |
| (12,695 | ) | (2.3 | ) | (5,801 | ) | (1.0 | ) | 126,878 |
| 22.9 |
| |||||
Selling, General and Administrative Expenses |
| 148,478 |
| 26.8 |
| 915 |
| 0.2 |
| (6,911 | ) | (1.2 | ) | (5,801 | ) | (1.0 | ) | 136,681 |
| 24.7 |
| |||||
Operating Profit (Loss) |
| $ | (4,019 | ) | (0.7 | ) | $ | — |
| — |
| $ | (5,784 | ) | (1.1 | ) | $ | — |
| — |
| $ | (9,803 | ) | (1.8 | ) |
|
| Fifty-two weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Fifty-two weeks ended |
| ||||||||
|
| January 28, 2006 |
| ADJUSTMENTS |
|
|
|
|
| January 28, 2006 |
| ||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
|
|
|
|
| AS ADJUSTED |
| ||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
|
|
|
|
| % |
| ||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
|
|
|
|
| Amount |
| Sales |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit from Merchandise Sales |
| $ | 480,872 |
| 26.0 |
| $ | 35,702 |
| 1.9 |
| $ | — |
| — |
|
|
|
|
| $ | 516,574 |
| 27.9 |
|
Gross Profit from Service Revenue |
| 30,446 |
| 7.9 |
| — |
| — |
| — |
| — |
|
|
|
|
| 30,446 |
| 7.9 |
| ||||
Total Gross Profit |
| 511,318 |
| 22.9 |
| 35,702 |
| 1.6 |
| — |
| — |
|
|
|
|
| 547,020 |
| 24.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling, General and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Administrative Expenses |
| 522,501 |
| 23.4 |
| 35,702 |
| 1.6 |
| (4,200 | ) | (0.2 | ) |
|
|
|
| 554,003 |
| 24.8 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Profit |
| $ | (11,183 | ) | (0.5 | ) | $ | — |
| — |
| $ | 4,200 |
| 0.2 |
|
|
|
|
| $ | (6,983 | ) | (0.3 | ) |
|
| Fifty-two weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Fifty-two weeks ended |
| |||||||||
|
| January 29, 2005 |
| ADJUSTMENTS |
| January 29, 2005 |
| |||||||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
| (C) |
| AS ADJUSTED |
| |||||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
| |||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross Profit from Merchandise Sales |
| $ | 528,900 |
| 28.4 |
| $ | 36,579 |
| 2.0 |
| $ | (12,695 | ) | (0.7 | ) | $ | — |
| — |
| $ | 552,784 |
| 29.7 |
|
Gross Profit from Service Revenue |
| 92,694 |
| 22.6 |
| — |
| — |
| — |
| — |
| (21,132 | ) | (5.2 | ) | 71,562 |
| 17.5 |
| |||||
Total Gross Profit |
| 621,594 |
| 27.4 |
| 36,579 |
| 1.6 |
| (12,695 | ) | (0.6 | ) | (21,132 | ) | (0.9 | ) | 624,346 |
| 27.5 |
| |||||
Selling, General and Administrative Expenses |
| 546,808 |
| 24.1 |
| 36,579 |
| 1.6 |
| (6,911 | ) | (0.3 | ) | (21,132 | ) | (0.9 | ) | 555,344 |
| 24.5 |
| |||||
Operating Profit |
| $ | 74,786 |
| 3.3 |
| $ | — |
| — |
| $ | (5,784 | ) | (0.3 | ) | $ | — |
| — |
| $ | 69,002 |
| 3.0 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
|
|
|
| |
ADDITIONAL INFORMATION (continued) |
| (dollar amounts in thousands) | |
Adjustments
In the fourth quarter of 2005 we completed the restructuring of substantially all of our vendor agreements to provide flexibility in how we use vendor support funds. Previously, the vendor agreements required us to use certain vendor support funds exclusively for promotions and to partially offset certain other direct expenses. Under EITF No. 02-16, these types of allowances are to be netted against the appropriate expenses they offset, once it is determined that the allowances are for specific, identifiable and incremental expenses. Under the restructured contracts it is not possible to make this determination. Therefore, going forward all vendor support funds will be treated as a reduction of inventories and be recognized as a reduction to Costs of Sales as the inventories are sold, in accordance with EITF No. 02-16. For the periods below, all previously identified costs which had been netted against Selling, General and Administrative Expenses (SG&A) have been reclassified to Gross Profit from Retail Sales as if the vendor agreements had been restructured as of February 1, 2004 (A).
Certain adjustments have been made to all periods presented to eliminate the impact of unusual or nonrecurring events, in order to make the periods more comparable (B). Both periods of 2005 remove the effect of a fourth-quarter write-down of certain commercial sales information system assets ($4,200), while both periods of 2004 remove the effects of a fourth-quarter warehouse gain ($12,695) and severance accrual ($6,911).
Effective January 30, 2005, the Company restructured its field operations into separate retail and service teams. In connection with this restructuring, certain retail personnel, who were previously utilized in merchandising roles supporting the service business, were reassigned to purely service-related responsibilities. The labor and benefit costs related to these associates, which were previously recognized in SG&A, are now recognized in Costs of Service Center Revenue. Therefore, these costs have been reclassified from SG&A to Gross Profit from Service Center Revenue for both periods in 2004 (C).
Please see the table below illustrating the effect of these adjustments on both the thirteen and fifty-two week periods ended January 28, 2006 and January 29, 2005 (presented in Line of Business format), assuming that such changes had been in effect during such periods.
STATEMENTS OF OPERATIONS
Line of Business Format
|
| Thirteen weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Thirteen weeks ended |
| ||||||||
|
| January 28, 2006 |
| ADJUSTMENTS |
|
|
|
|
| January 28, 2006 |
| ||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
|
|
|
|
| AS ADJUSTED |
| ||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
|
|
|
|
| % |
| ||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
|
|
|
|
| Amount |
| Sales |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit from Retail Sales |
| $ | 79,464 |
| 23.9 |
| $ | 5,264 |
| 1.6 |
| $ | — |
| — |
|
|
|
|
| $ | 84,728 |
| 25.5 |
|
Gross Profit from Service Center Revenue |
| 32,741 |
| 15.1 |
| 3,510 |
| 1.6 |
| — |
| — |
|
|
|
|
| 36,251 |
| 16.7 |
| ||||
Total Gross Profit |
| 112,205 |
| 20.4 |
| 8,774 |
| 1.6 |
| — |
| — |
|
|
|
|
| 120,979 |
| 22.0 |
| ||||
Selling, General and Administrative Expenses |
| 127,639 |
| 23.2 |
| 8,774 |
| 1.6 |
| (4,200 | ) | (0.8 | ) |
|
|
|
| 132,213 |
| 24.0 |
| ||||
Operating Profit (Loss) |
| $ | (15,434 | ) | (2.8 | ) | $ | — |
| — |
| $ | 4,200 |
| 0.8 |
|
|
|
|
| $ | (11,234 | ) | (2.0 | ) |
|
| Thirteen weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Thirteen weeks ended |
| |||||||||
|
| January 29, 2005 |
| ADJUSTMENTS |
| January 29, 2005 |
| |||||||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
| (C) |
| AS ADJUSTED |
| |||||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
| |||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross Profit from Retail Sales |
| $ | 83,328 |
| 25.0 |
| $ | 549 |
| 0.2 |
| $ | (9,267 | ) | (2.8 | ) | $ | — |
| — |
| $ | 74,610 |
| 22.5 |
|
Gross Profit from Service Center Revenue |
| 61,131 |
| 27.6 |
| 366 |
| 0.2 |
| (3,428 | ) | (1.5 | ) | (5,801 | ) | (2.6 | ) | 52,268 |
| 23.6 |
| |||||
Total Gross Profit |
| 144,459 |
| 26.1 |
| 915 |
| 0.2 |
| (12,695 | ) | (2.3 | ) | (5,801 | ) | (1.0 | ) | 126,878 |
| 22.9 |
| |||||
Selling, General and Administrative Expenses |
| 148,478 |
| 26.8 |
| 915 |
| 0.2 |
| (6,911 | ) | (1.2 | ) | (5,801 | ) | (1.0 | ) | 136,681 |
| 24.7 |
| |||||
Operating Profit (Loss) |
| $ | (4,019 | ) | (0.7 | ) | $ | — |
| — |
| $ | (5,784 | ) | (1.1 | ) | $ | — |
| — |
| $ | (9,803 | ) | (1.8 | ) |
|
| Fifty-two weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Fifty-two weeks ended |
| ||||||||
|
| January 28, 2006 |
| ADJUSTMENTS |
|
|
|
|
| January 28, 2006 |
| ||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
|
|
|
|
| AS ADJUSTED |
| ||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
|
|
|
|
| % |
| ||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
|
|
|
|
| Amount |
| Sales |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Gross Profit from Retail Sales |
| $ | 344,893 |
| 25.4 |
| $ | 21,421 |
| 1.6 |
| $ | — |
| — |
|
|
|
|
| $ | 366,314 |
| 27.0 |
|
Gross Profit from Service Center Revenue |
| 166,425 |
| 18.9 |
| 14,281 |
| 1.6 |
| — |
| — |
|
|
|
|
| 180,706 |
| 20.5 |
| ||||
Total Gross Profit |
| 511,318 |
| 22.9 |
| 35,702 |
| 1.6 |
| — |
| — |
|
|
|
|
| 547,020 |
| 24.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Selling, General and Administrative Expenses |
| 522,501 |
| 23.4 |
| 35,702 |
| 1.6 |
| (4,200 | ) | (0.2 | ) |
|
|
|
| 554,003 |
| 24.8 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Profit |
| $ | (11,183 | ) | (0.5 | ) | $ | — |
| — |
| $ | 4,200 |
| 0.2 |
|
|
|
|
| $ | (6,983 | ) | (0.3 | ) |
|
| Fifty-two weeks ended |
|
|
|
|
|
|
|
|
|
|
|
|
| Fifty-two weeks ended |
| |||||||||
|
| January 29, 2005 |
| ADJUSTMENTS |
| January 29, 2005 |
| |||||||||||||||||||
|
| ACTUAL |
| (A) |
| (B) |
| (C) |
| AS ADJUSTED |
| |||||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
| |||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Gross Profit from Retail Sales |
| $ | 370,687 |
| 27.4 |
| $ | 21,947 |
| 1.6 |
| $ | (9,267 | ) | (0.7 | ) | $ | — |
| — |
| $ | 383,367 |
| 28.4 |
|
Gross Profit from Service Center Revenue |
| 250,907 |
| 27.3 |
| 14,632 |
| 1.6 |
| (3,428 | ) | (0.4 | ) | (21,132 | ) | (2.3 | ) | 240,979 |
| 26.2 |
| |||||
Total Gross Profit |
| 621,594 |
| 27.4 |
| 36,579 |
| 1.6 |
| (12,695 | ) | (0.6 | ) | (21,132 | ) | (0.9 | ) | 624,346 |
| 27.5 |
| |||||
Selling, General and Administrative Expenses |
| 546,808 |
| 24.1 |
| 36,579 |
| 1.6 |
| (6,911 | ) | (0.3 | ) | (21,132 | ) | (0.9 | ) | 555,344 |
| 24.5 |
| |||||
Operating Profit |
| $ | 74,786 |
| 3.3 |
| $ | — |
| — |
| $ | (5,784 | ) | (0.3 | ) | $ | — |
| — |
| $ | 69,002 |
| 3.0 |
|