Exhibit 99.2
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(dollar amounts in thousands, except per share amounts)
|
| Thirteen weeks ended |
| Twenty-six weeks ended |
| ||||||||||||||||
|
| July 28, 2012 |
| July 30, 2011 |
| July 28, 2012 |
| July 30, 2011 |
| ||||||||||||
|
|
|
| % |
|
|
| % |
|
|
| % |
|
|
| % |
| ||||
|
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| ||||
|
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|
|
|
| ||||
Merchandise sales |
| $ | 413,380 |
| 78.6 |
| $ | 415,267 |
| 79.5 |
| $ | 825,712 |
| 78.6 |
| $ | 823,894 |
| 79.5 |
|
Service revenue |
| 112,291 |
| 21.4 |
| 107,327 |
| 20.5 |
| 224,563 |
| 21.4 |
| 212,240 |
| 20.5 |
| ||||
Total revenues |
| 525,671 |
| 100.0 |
| 522,594 |
| 100.0 |
| 1,050,275 |
| 100.0 |
| 1,036,134 |
| 100.0 |
| ||||
Costs of merchandise sales |
| 288,051 |
| 69.7 |
| 287,721 |
| 69.3 |
| 578,907 |
| 70.1 |
| 573,050 |
| 69.6 |
| ||||
Costs of service revenue |
| 107,019 |
| 95.3 |
| 99,663 |
| 92.9 |
| 213,115 |
| 94.9 |
| 192,752 |
| 90.8 |
| ||||
Total costs of revenues |
| 395,070 |
| 75.2 |
| 387,384 |
| 74.1 |
| 792,022 |
| 75.4 |
| 765,802 |
| 73.9 |
| ||||
Gross profit from merchandise sales |
| 125,329 |
| 30.3 |
| 127,546 |
| 30.7 |
| 246,805 |
| 29.9 |
| 250,844 |
| 30.5 |
| ||||
Gross profit from service revenue |
| 5,272 |
| 4.7 |
| 7,664 |
| 7.1 |
| 11,448 |
| 5.1 |
| 19,488 |
| 9.2 |
| ||||
Total gross profit |
| 130,601 |
| 24.8 |
| 135,210 |
| 25.9 |
| 258,253 |
| 24.6 |
| 270,332 |
| 26.1 |
| ||||
Selling, general and administrative expenses |
| 114,277 |
| 21.7 |
| 113,268 |
| 21.7 |
| 233,987 |
| 22.3 |
| 222,168 |
| 21.4 |
| ||||
Net (loss) gain from dispositions of assets |
| (9 | ) | — |
| (3 | ) | — |
| (11 | ) | — |
| 86 |
| — |
| ||||
Operating profit |
| 16,315 |
| 3.1 |
| 21,939 |
| 4.2 |
| 24,255 |
| 2.3 |
| 48,250 |
| 4.7 |
| ||||
Merger termination fees, net |
| 42,955 |
| 8.2 |
| — |
| — |
| 42,955 |
| 4.1 |
| — |
| — |
| ||||
Other income |
| 521 |
| 0.1 |
| 569 |
| 0.1 |
| 991 |
| 0.1 |
| 1,156 |
| 0.1 |
| ||||
Interest expense |
| 6,427 |
| 1.2 |
| 6,444 |
| 1.2 |
| 12,943 |
| 1.2 |
| 12,941 |
| 1.3 |
| ||||
Earnings from continuing operations before income taxes and discontinued operations |
| 53,364 |
| 10.2 |
| 16,064 |
| 3.1 |
| 55,258 |
| 5.3 |
| 36,465 |
| 3.5 |
| ||||
Income tax expense |
| 20,330 |
| 38.1 | (1) | 2,173 |
| 13.5 | (1) | 21,090 |
| 38.2 | (1) | 10,169 |
| 27.9 | (1) | ||||
Earnings from continuing operations before discontinued operations |
| 33,034 |
| 6.3 |
| 13,891 |
| 2.7 |
| 34,168 |
| 3.3 |
| 26,296 |
| 2.5 |
| ||||
Income (loss) from discontinued operations, net of tax |
| 14 |
| — |
| 52 |
| — |
| (58 | ) | — |
| 15 |
| — |
| ||||
Net earnings |
| 33,048 |
| 6.3 |
| 13,943 |
| 2.7 |
| 34,110 |
| 3.3 |
| 26,311 |
| 2.5 |
| ||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
| ||||
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings from continuing operations before discontinued operations |
| $ | 0.62 |
|
|
| $ | 0.26 |
|
|
| $ | 0.64 |
|
|
| $ | 0.49 |
|
|
|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| ||||
Basic earnings per share |
| $ | 0.62 |
|
|
| $ | 0.26 |
|
|
| $ | 0.64 |
|
|
| $ | 0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
| ||||
Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings from continuing operations before discontinued operations |
| $ | 0.61 |
|
|
| $ | 0.26 |
|
|
| $ | 0.63 |
|
|
| $ | 0.49 |
|
|
|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| ||||
Diluted earnings per share |
| $ | 0.61 |
|
|
| $ | 0.26 |
|
|
| $ | 0.63 |
|
|
| $ | 0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Defined benefit plan adjustment, net of tax |
| 354 |
|
|
| 253 |
|
|
| 708 |
|
|
| 473 |
|
|
| ||||
Derivative financial instruments adjustment, net of tax |
| 910 |
|
|
| 170 |
|
|
| 1,930 |
|
|
| 685 |
|
|
| ||||
Other comprehensive income |
| 1,264 |
|
|
| 423 |
|
|
| 2,638 |
|
|
| 1,158 |
|
|
| ||||
Comprehensive income |
| 34,312 |
|
|
| 14,366 |
|
|
| 36,748 |
|
|
| 27,469 |
|
|
|
(1) As a percentage of earnings from continuing operations before income taxes
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
|
| July 28, 2012 |
| January 28, 2012 |
| July 30, 2011 |
| |||
|
|
|
|
|
|
|
| |||
Assets |
|
|
|
|
|
|
| |||
Current assets: |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 150,833 |
| $ | 58,244 |
| $ | 61,977 |
|
Accounts receivable, less allowance for uncollectible accounts of $1,247; $1,303 and $1,406 |
| 27,962 |
| 25,792 |
| 21,731 |
| |||
Merchandise inventories |
| 626,555 |
| 614,136 |
| 584,297 |
| |||
Prepaid expenses |
| 21,021 |
| 26,394 |
| 19,694 |
| |||
Other current assets |
| 53,083 |
| 59,979 |
| 50,891 |
| |||
Total current assets |
| 879,454 |
| 784,545 |
| 738,590 |
| |||
Property and equipment - net |
| 682,619 |
| 696,339 |
| 693,742 |
| |||
Goodwill |
| 46,917 |
| 46,917 |
| 48,584 |
| |||
Deferred income taxes |
| 45,825 |
| 72,870 |
| 67,988 |
| |||
Other long-term assets |
| 31,660 |
| 33,108 |
| 31,700 |
| |||
Total assets |
| $ | 1,686,475 |
| $ | 1,633,779 |
| $ | 1,580,604 |
|
|
|
|
|
|
|
|
| |||
Liabilities and stockholders’ equity |
|
|
|
|
|
|
| |||
Current liabilities: |
|
|
|
|
|
|
| |||
Accounts payable |
| $ | 246,522 |
| $ | 243,712 |
| $ | 230,884 |
|
Trade payable program liability |
| 115,746 |
| 85,214 |
| 61,440 |
| |||
Accrued expenses |
| 218,548 |
| 221,705 |
| 206,627 |
| |||
Deferred income taxes |
| 61,231 |
| 66,208 |
| 58,825 |
| |||
Current maturities of long-term debt |
| 1,254 |
| 1,079 |
| 1,079 |
| |||
Total current liabilities |
| 643,301 |
| 617,918 |
| 558,855 |
| |||
|
|
|
|
|
|
|
| |||
Long-term debt less current maturities |
| 293,504 |
| 294,043 |
| 294,583 |
| |||
Other long-term liabilities |
| 72,290 |
| 77,216 |
| 75,688 |
| |||
Deferred gain from asset sales |
| 133,971 |
| 140,273 |
| 146,573 |
| |||
|
|
|
|
|
|
|
| |||
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 |
| 295,536 |
| 296,462 |
| 295,934 |
| |||
Retained earnings |
| 454,343 |
| 423,437 |
| 424,923 |
| |||
Accumulated other comprehensive loss |
| (15,011 | ) | (17,649 | ) | (15,870 | ) | |||
Treasury stock, at cost - 15,563,931 shares; 15,803,322 shares and 15,894,177 shares |
| (260,016 | ) | (266,478 | ) | (268,639 | ) | |||
Total stockholders’ equity |
| 543,409 |
| 504,329 |
| 504,905 |
| |||
Total liabilities and stockholders’ equity |
| $ | 1,686,475 |
| $ | 1,633,779 |
| $ | 1,580,604 |
|
|
|
|
|
|
|
|
| |||
Supplemental Balance Sheet Information: |
|
|
|
|
|
|
| |||
Working capital |
| $ | 236,153 |
| $ | 166,627 |
| $ | 179,735 |
|
Accounts payable to inventory ratio |
| 57.8 | % | 53.6 | % | 50.0 | % | |||
Total debt as a percent of total capitalization |
| 35.2 | % | 36.9 | % | 36.9 | % | |||
Net debt as a percent of total capitalization, net |
| 20.9 | % | 32.0 | % | 31.6 | % |
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
Twenty-six weeks ended |
| July 28, 2012 |
| July 30, 2011 |
| ||
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net earnings |
| $ | 34,110 |
| $ | 26,311 |
|
Adjustments to reconcile net earnings to net cash provided by continuing operations: |
|
|
|
|
| ||
Net loss (income) from discontinued operations |
| 58 |
| (15 | ) | ||
Depreciation and amortization |
| 39,288 |
| 39,654 |
| ||
Amortization of deferred gain from asset sales |
| (6,302 | ) | (6,302 | ) | ||
Stock compensation expense |
| 1,043 |
| 1,908 |
| ||
Deferred income taxes |
| 20,485 |
| 4,238 |
| ||
Net loss (gain) from disposition of assets |
| 11 |
| (86 | ) | ||
Loss from asset impairment |
| — |
| 389 |
| ||
Other |
| 13 |
| 272 |
| ||
Changes in assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
| ||
Decrease in accounts receivable, prepaid expenses and other |
| 11,448 |
| 21,816 |
| ||
Increase in merchandise inventories |
| (12,419 | ) | (12,917 | ) | ||
Increase in accounts payable |
| 2,810 |
| 12,043 |
| ||
Decrease in accrued expenses |
| (2,451 | ) | (33,202 | ) | ||
Decrease in other long-term liabilities |
| (552 | ) | (2,831 | ) | ||
Net cash provided by continuing operations |
| 87,542 |
| 51,278 |
| ||
Net cash used in discontinued operations |
| (92 | ) | (44 | ) | ||
Net cash provided by operating activities |
| 87,450 |
| 51,234 |
| ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Capital expenditures |
| (26,347 | ) | (30,636 | ) | ||
Proceeds from dispositions of assets |
| — |
| 89 |
| ||
Premiums paid on life insurance policies |
| — |
| (795 | ) | ||
Acquisitions, net of cash acquired |
| — |
| (42,757 | ) | ||
Collateral investment |
| — |
| (4,763 | ) | ||
Net cash used in investing activities |
| (26,347 | ) | (78,862 | ) | ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Borrowings under line of credit agreements |
| 1,106 |
| 5,045 |
| ||
Payments under line of credit agreements |
| (931 | ) | (5,045 | ) | ||
Borrowings on trade payable program liability |
| 80,836 |
| 59,097 |
| ||
Payments on trade payable program liability |
| (50,304 | ) | (53,944 | ) | ||
Payment for finance issuance cost |
|
|
| (2,441 | ) | ||
Debt payments |
| (539 | ) | (539 | ) | ||
Dividends paid |
| — |
| (3,171 | ) | ||
Proceeds from stock issuance |
| 1,318 |
| 363 |
| ||
Net cash provided by (used in) financing activities |
| 31,486 |
| (635 | ) | ||
Net increase (decrease) in cash and cash equivalents |
| 92,589 |
| (28,263 | ) | ||
Cash and cash equivalents at beginning of period |
| 58,244 |
| 90,240 |
| ||
Cash and cash equivalents at end of period |
| $ | 150,833 |
| $ | 61,977 |
|
|
|
|
|
|
| ||
Supplemental cash flow information: |
|
|
|
|
| ||
Cash paid for income taxes |
| $ | 1,705 |
| $ | 629 |
|
Cash paid for interest |
| $ | 11,449 |
| $ | 11,523 |
|
Accrued purchases of property and equipment |
| $ | 632 |
| $ | 1,416 |
|
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 |
| Twenty-six weeks ended |
| ||||||||
|
|
|
|
| July 28, 2012 |
| July 30, 2011 |
| July 28, 2012 |
| July 30, 2011 |
| ||||
|
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|
|
|
|
|
|
|
|
|
| ||||
(a) | Earnings from continuing operations |
|
|
| $ | 33,034 |
| $ | 13,891 |
| $ | 34,168 |
| $ | 26,296 |
|
| Income (loss) from discontinued operations, net of tax |
|
|
| 14 |
| 52 |
| (58 | ) | 15 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Net earnings |
|
|
| $ | 33,048 |
| $ | 13,943 |
| $ | 34,110 |
| $ | 26,311 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(b) | Basic average number of common shares outstanding during period |
|
|
| 53,146 |
| 52,952 |
| 53,110 |
| 52,901 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
|
|
| 651 |
| 697 |
| 765 |
| 691 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(c) | Diluted average number of common shares assumed outstanding during period |
|
|
| 53,797 |
| 53,649 |
| 53,875 |
| 53,592 |
| ||||
|
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|
|
|
|
|
| ||||
| Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
| ||||
| Earnings from continuing operations |
| (a) / (b) |
| $ | 0.62 |
| $ | 0.26 |
| $ | 0.64 |
| $ | 0.49 |
|
| Discontinued operations, net of tax |
|
|
| — |
| — |
| — |
| — |
| ||||
| Basic earnings per share |
|
|
| $ | 0.62 |
| $ | 0.26 |
| $ | 0.64 |
| $ | 0.49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
| Diluted earnings per share: |
|
|
|
|
|
|
|
|
|
|
| ||||
| Earnings from continuing operations |
| (a) / (c) |
| $ | 0.61 |
| $ | 0.26 |
| $ | 0.63 |
| $ | 0.49 |
|
| Discontinued operations, net of tax |
|
|
| — |
| — |
| — |
| — |
| ||||
| Diluted earnings per share |
|
|
| $ | 0.61 |
| $ | 0.26 |
| $ | 0.63 |
| $ | 0.49 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
ADDITIONAL INFORMATION |
| (dollar amounts in thousands) |
|
| Thirteen weeks ended |
| Twenty-six weeks ended |
| ||||||||
|
| July 28, 2012 |
| July 30, 2011 |
| July 28, 2012 |
| July 30, 2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Capital expenditures |
| $ | 14,407 |
| $ | 12,513 |
| $ | 26,347 |
| $ | 30,636 |
|
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| $ | 19,350 |
| $ | 19,770 |
| $ | 39,288 |
| $ | 39,654 |
|
|
|
|
|
|
|
|
|
|
| ||||
Non-operating income: |
|
|
|
|
|
|
|
|
| ||||
Net rental revenue |
| $ | 429 |
| $ | 523 |
| $ | 814 |
| $ | 1,017 |
|
Investment income |
| 46 |
| 40 |
| 94 |
| 122 |
| ||||
Merger termination fees, net |
| 42,955 |
| — |
| 42,955 |
| — |
| ||||
Other income |
| 46 |
| 6 |
| 83 |
| 17 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ | 43,476 |
| $ | 569 |
| $ | 43,946 |
| $ | 1,156 |
|
|
|
|
|
|
|
|
|
|
| ||||
Comparable sales percentages: |
|
|
|
|
|
|
|
|
| ||||
Service |
| 3.1 | % | 0.3 | % | 1.0 | % | 0.9 | % | ||||
Merchandise |
| -0.9 | % | -2.5 | % | -2.0 | % | -1.8 | % | ||||
Total |
| 0.0 | % | -2.0 | % | -1.4 | % | -1.3 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Total square feet of retail space (including service centers) |
|
|
|
|
| 12,660,000 |
| 12,563,000 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Store count |
|
|
|
|
|
|
|
|
| ||||
Supercenter |
|
|
|
|
| 562 |
| 561 |
| ||||
Service & Tire Center |
|
|
|
|
| 173 |
| 156 |
| ||||
Retail Only |
|
|
|
|
| 7 |
| 8 |
| ||||
Total |
|
|
|
|
| 742 |
| 725 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Sales and gross profit by line of business (A): |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Service center revenue |
| $ | 274,257 |
| $ | 260,835 |
| $ | 545,346 |
| 508,165 |
| |
Retail sales |
| 251,414 |
| 261,759 |
| 504,929 |
| 527,969 |
| ||||
Total revenues |
| $ | 525,671 |
| $ | 522,594 |
| $ | 1,050,275 |
| $ | 1,036,134 |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross profit from service center revenue |
| $ | 55,868 |
| $ | 60,669 |
| $ | 109,756 |
| 119,631 |
| |
Gross profit from retail sales |
| 74,733 |
| 74,541 |
| 148,497 |
| 150,701 |
| ||||
Total gross profit |
| $ | 130,601 |
| $ | 135,210 |
| $ | 258,253 |
| $ | 270,332 |
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Comparable sales percentages by line of business (A): |
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Service center revenue |
| 3.8 | % | -0.7 | % | 1.6 | % | -0.2 | % | ||||
Retail sales |
| -3.8 | % | -3.1 | % | -4.2 | % | -2.3 | % | ||||
Total revenues |
| 0.0 | % | -2.0 | % | -1.4 | % | -1.3 | % | ||||
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Gross profit percentage by line of business (A): |
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Gross profit percentage from service center revenue |
| 20.4 | % | 23.3 | % | 20.1 | % | 23.5 | % | ||||
Gross profit percentage from retail sales |
| 29.7 | % | 28.5 | % | 29.4 | % | 28.5 | % | ||||
Total gross profit percentage |
| 24.8 | % | 25.9 | % | 24.6 | % | 26.1 | % |
(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.