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 |
| Thirty-nine weeks ended |
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|
| October 27, 2012 |
| October 29, 2011 |
| October 27, 2012 |
| October 29, 2011 |
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| % |
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| % |
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| % |
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| % |
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| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
| Amount |
| Sales |
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Merchandise sales |
| $ | 401,146 |
| 78.7 |
| $ | 414,530 |
| 79.4 |
| $ | 1,226,858 |
| 78.7 |
| $ | 1,238,424 |
| 79.5 |
|
Service revenue |
| 108,462 |
| 21.3 |
| 107,643 |
| 20.6 |
| 333,025 |
| 21.3 |
| 319,884 |
| 20.5 |
| ||||
Total revenues |
| 509,608 |
| 100.0 |
| 522,173 |
| 100.0 |
| 1,559,883 |
| 100.0 |
| 1,558,308 |
| 100.0 |
| ||||
Costs of merchandise sales |
| 284,626 |
| 71.0 |
| 292,397 |
| 70.5 |
| 863,533 |
| 70.4 |
| 865,446 |
| 69.9 |
| ||||
Costs of service revenue |
| 108,942 |
| 100.4 |
| 102,855 |
| 95.6 |
| 322,057 |
| 96.7 |
| 295,607 |
| 92.4 |
| ||||
Total costs of revenues |
| 393,568 |
| 77.2 |
| 395,252 |
| 75.7 |
| 1,185,590 |
| 76.0 |
| 1,161,053 |
| 74.5 |
| ||||
Gross profit from merchandise sales |
| 116,520 |
| 29.0 |
| 122,133 |
| 29.5 |
| 363,325 |
| 29.6 |
| 372,978 |
| 30.1 |
| ||||
Gross (loss) profit from service revenue |
| (480 | ) | (0.4 | ) | 4,788 |
| 4.5 |
| 10,968 |
| 3.3 |
| 24,277 |
| 7.6 |
| ||||
Total gross profit |
| 116,040 |
| 22.8 |
| 126,921 |
| 24.3 |
| 374,293 |
| 24.0 |
| 397,255 |
| 25.5 |
| ||||
Selling, general and administrative expenses |
| 112,028 |
| 22.0 |
| 109,549 |
| 21.0 |
| 346,015 |
| 22.2 |
| 331,717 |
| 21.3 |
| ||||
Net (loss) gain from dispositions of assets |
| (221 | ) | — |
| (25 | ) | — |
| (232 | ) | — |
| 61 |
| — |
| ||||
Operating profit |
| 3,791 |
| 0.7 |
| 17,347 |
| 3.3 |
| 28,046 |
| 1.8 |
| 65,599 |
| 4.2 |
| ||||
Merger termination fees, net |
| (139 | ) | — |
| — |
| — |
| 42,816 |
| 2.7 |
| — |
| — |
| ||||
Other income |
| 655 |
| 0.1 |
| 627 |
| 0.1 |
| 1,646 |
| 0.1 |
| 1,783 |
| 0.1 |
| ||||
Interest expense |
| 17,057 |
| 3.3 |
| 6,889 |
| 1.3 |
| 30,000 |
| 1.9 |
| 19,831 |
| 1.3 |
| ||||
(Loss) earnings from continuing operations before income taxes and discontinued operations |
| (12,750 | ) | (2.5 | ) | 11,085 |
| 2.1 |
| 42,508 |
| 2.7 |
| 47,551 |
| 3.1 |
| ||||
Income tax (benefit) expense |
| (6,055 | ) | 47.5 | (1) | 4,063 |
| 36.7 | (1) | 15,035 |
| 35.4 | (1) | 14,232 |
| 29.9 | (1) | ||||
(Loss) earnings from continuing operations before discontinued operations |
| (6,695 | ) | (1.3 | ) | 7,022 |
| 1.3 |
| 27,473 |
| 1.8 |
| 33,319 |
| 2.1 |
| ||||
(Loss) income from discontinued operations, net of tax |
| (64 | ) | — |
| (11 | ) | — |
| (122 | ) | — |
| 3 |
| — |
| ||||
Net (loss) earnings |
| (6,759 | ) | (1.3 | ) | 7,011 |
| 1.3 |
| 27,351 |
| 1.8 |
| 33,322 |
| 2.1 |
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Basic earnings per share: |
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(Loss) earnings from continuing operations before discontinued operations |
| $ | (0.13 | ) |
|
| $ | 0.13 |
|
|
| $ | 0.51 |
|
|
| $ | 0.63 |
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|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
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| ||||
Basic (loss) earnings per share |
| $ | (0.13 | ) |
|
| $ | 0.13 |
|
|
| $ | 0.51 |
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| $ | 0.63 |
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Diluted earnings per share: |
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(Loss) earnings from continuing operations before discontinued operations |
| $ | (0.13 | ) |
|
| $ | 0.13 |
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|
| $ | 0.51 |
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|
| $ | 0.62 |
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|
Discontinued operations, net of tax |
| — |
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| — |
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| — |
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|
| — |
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Diluted (loss) earnings per share |
| $ | (0.13 | ) |
|
| $ | 0.13 |
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| $ | 0.51 |
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| $ | 0.62 |
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Other comprehensive income: |
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Defined benefit plan adjustment, net of tax |
| 354 |
|
|
| 236 |
|
|
| 1,062 |
|
|
| 709 |
|
|
| ||||
Derivative financial instruments adjustment, net of tax |
| 4,607 |
|
|
| 907 |
|
|
| 6,537 |
|
|
| 1,592 |
|
|
| ||||
Other comprehensive income |
| 4,961 |
|
|
| 1,143 |
|
|
| 7,599 |
|
|
| 2,301 |
|
|
| ||||
Comprehensive (loss) income |
| (1,798 | ) |
|
| 8,154 |
|
|
| 34,950 |
|
|
| 35,623 |
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|
(1) As a percentage of earnings from continuing operations before income taxes
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
|
| October 27, 2012 |
| January 28, 2012 |
| October 29, 2011 |
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Assets |
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Current assets: |
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| |||
Cash and cash equivalents |
| $ | 78,667 |
| $ | 58,244 |
| $ | 80,716 |
|
Accounts receivable, less allowance for uncollectible accounts of $1,424; $1,303 and $1,257 |
| 25,225 |
| 25,792 |
| 23,524 |
| |||
Merchandise inventories |
| 634,252 |
| 614,136 |
| 606,254 |
| |||
Prepaid expenses |
| 15,086 |
| 26,394 |
| 15,571 |
| |||
Other current assets |
| 49,543 |
| 59,979 |
| 47,550 |
| |||
Total current assets |
| 802,773 |
| 784,545 |
| 773,615 |
| |||
Property and equipment - net |
| 665,529 |
| 696,339 |
| 693,779 |
| |||
Goodwill |
| 46,917 |
| 46,917 |
| 46,219 |
| |||
Deferred income taxes |
| 53,011 |
| 72,870 |
| 66,674 |
| |||
Other long-term assets |
| 35,547 |
| 33,108 |
| 30,821 |
| |||
Total assets |
| $ | 1,603,777 |
| $ | 1,633,779 |
| $ | 1,611,108 |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
| $ | 258,222 |
| $ | 243,712 |
| $ | 238,599 |
|
Trade payable program liability |
| 125,718 |
| 85,214 |
| 68,320 |
| |||
Accrued expenses |
| 218,167 |
| 221,705 |
| 221,976 |
| |||
Deferred income taxes |
| 65,429 |
| 66,208 |
| 58,898 |
| |||
Current maturities of long-term debt |
| 2,000 |
| 1,079 |
| 1,079 |
| |||
Total current liabilities |
| 669,536 |
| 617,918 |
| 588,872 |
| |||
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| |||
Long-term debt less current maturities |
| 198,000 |
| 294,043 |
| 294,313 |
| |||
Other long-term liabilities |
| 63,536 |
| 77,216 |
| 72,257 |
| |||
Deferred gain from asset sales |
| 130,820 |
| 140,273 |
| 143,424 |
| |||
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Stockholders’ equity: |
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Common stock, par value $1 per share: |
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Authorized 500,000,000 shares; issued 68,557,041 shares |
| 68,557 |
| 68,557 |
| 68,557 |
| |||
Additional paid-in capital |
| 295,086 |
| 296,462 |
| 295,813 |
| |||
Retained earnings |
| 445,503 |
| 423,437 |
| 429,935 |
| |||
Accumulated other comprehensive loss |
| (10,050 | ) | (17,649 | ) | (14,727 | ) | |||
Treasury stock, at cost - 15,460,049 shares; |
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15,803,322 shares and 15,835,096 shares |
| (257,211 | ) | (266,478 | ) | (267,336 | ) | |||
Total stockholders’ equity |
| 541,885 |
| 504,329 |
| 512,242 |
| |||
Total liabilities and stockholders’ equity |
| $ | 1,603,777 |
| $ | 1,633,779 |
| $ | 1,611,108 |
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Supplemental Balance Sheet Information: |
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Working capital |
| $ | 133,237 |
| $ | 166,627 |
| $ | 184,743 |
|
Accounts payable to inventory ratio |
| 60.5 | % | 53.6 | % | 50.6 | % | |||
Total debt as a percent of total capitalization |
| 27.0 | % | 36.9 | % | 36.6 | % | |||
Net debt as a percent of total capitalization, net |
| 18.3 | % | 32.0 | % | 29.5 | % |
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES | (UNAUDITED) |
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(dollar amounts in thousands) |
|
Thirty-nine weeks ended |
| October 27, 2012 |
| October 29, 2011 |
| ||
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Cash flows from operating activities: |
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| ||
Net earnings |
| $ | 27,351 |
| $ | 33,322 |
|
Adjustments to reconcile net earnings to net cash provided by continuing operations: |
|
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| ||
Net loss (income) from discontinued operations |
| 122 |
| (3 | ) | ||
Depreciation and amortization |
| 59,129 |
| 59,779 |
| ||
Amortization of deferred gain from asset sales |
| (9,453 | ) | (9,451 | ) | ||
Stock compensation expense |
| 622 |
| 2,539 |
| ||
Deferred income taxes |
| 14,521 |
| 8,021 |
| ||
Net loss (gain) from disposition of assets |
| 232 |
| (61 | ) | ||
Loss from asset impairment |
| 8,802 |
| 389 |
| ||
Other |
| 88 |
| — |
| ||
Changes in assets and liabilities, net of the effects of acquisitions: |
|
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|
| ||
Decrease in accounts receivable, prepaid expenses and other |
| 26,213 |
| 27,767 |
| ||
Increase in merchandise inventories |
| (20,116 | ) | (34,874 | ) | ||
Increase in accounts payable |
| 14,510 |
| 19,758 |
| ||
Decrease in accrued expenses |
| (4,208 | ) | (18,693 | ) | ||
Decrease in other long-term liabilities |
| (1,369 | ) | (3,483 | ) | ||
Net cash provided by continuing operations |
| 116,444 |
| 85,010 |
| ||
Net cash (used in) provided by discontinued operations |
| (215 | ) | 40 |
| ||
Net cash provided by operating activities |
| 116,229 |
| 85,050 |
| ||
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Cash flows from investing activities: |
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Capital expenditures |
| (36,760 | ) | (50,793 | ) | ||
Proceeds from dispositions of assets |
| 15 |
| 89 |
| ||
Premiums paid on life insurance policies |
| — |
| (837 | ) | ||
Acquisitions, net of cash acquired |
| — |
| (42,901 | ) | ||
Collateral investment |
| — |
| (4,763 | ) | ||
Net cash used in investing activities |
| (36,745 | ) | (99,205 | ) | ||
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Cash flows from financing activities: |
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Borrowings under line of credit agreements |
| 1,780 |
| 5,181 |
| ||
Payments under line of credit agreements |
| (1,780 | ) | (5,181 | ) | ||
Borrowings on trade payable program liability |
| 123,408 |
| 97,400 |
| ||
Payments on trade payable program liability |
| (82,904 | ) | (85,367 | ) | ||
Payment for finance issuance cost |
| (6,442 | ) | (2,441 | ) | ||
Borrowings under new debt |
| 200,000 |
| — |
| ||
Debt payments |
| (295,122 | ) | (809 | ) | ||
Dividends paid |
| — |
| (4,757 | ) | ||
Proceeds from stock issuance |
| 1,999 |
| 605 |
| ||
Net cash (used in) provided by financing activities |
| (59,061 | ) | 4,631 |
| ||
Net increase (decrease) in cash and cash equivalents |
| 20,423 |
| (9,524 | ) | ||
Cash and cash equivalents at beginning of period |
| 58,244 |
| 90,240 |
| ||
Cash and cash equivalents at end of period |
| $ | 78,667 |
| $ | 80,716 |
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Supplemental cash flow information: |
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Cash paid for income taxes |
| $ | 2,635 |
| $ | 1,015 |
|
Cash paid for interest |
| $ | 28,554 |
| $ | 14,577 |
|
Accrued purchases of property and equipment |
| $ | 2,008 |
| $ | 1,486 |
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THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
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COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE | (in thousands, except per share data) |
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|
| Thirteen weeks ended |
| Thirty-nine weeks ended |
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| October 27, |
| October 29, |
| October 27, |
| October 29, |
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(a) |
| (Loss) earnings from continuing operations before discontinued operations |
| $ | (6,695 | ) | $ | 7,022 |
| $ | 27,473 |
| $ | 33,319 |
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| (Loss) income from discontinued operations, net of tax |
| (64 | ) | (11 | ) | (122 | ) | 3 |
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| Net (loss) earnings |
| $ | (6,759 | ) | $ | 7,011 |
| $ | 27,351 |
| $ | 33,322 |
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(b) |
| Basic average number of common shares outstanding during period |
| 53,304 |
| 52,998 |
| 53,175 |
| 52,933 |
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| Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
| — |
| 600 |
| 768 |
| 661 |
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(c) |
| Diluted average number of common shares assumed outstanding during period |
| 53,304 |
| 53,598 |
| 53,943 |
| 53,594 |
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| Basic earnings per share: |
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| (Loss) earnings from continuing operations before discontinued operations (a) / (b) |
| $ | (0.13 | ) | $ | 0.13 |
| $ | 0.51 |
| $ | 0.63 |
|
|
| Discontinued operations, net of tax |
| — |
| — |
| — |
| — |
| ||||
|
| Basic (loss) earnings per share |
| $ | (0.13 | ) | $ | 0.13 |
| $ | 0.51 |
| $ | 0.63 |
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| Diluted earnings per share: |
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|
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|
| (Loss) earnings from continuing operations before discontinued operations (a) / (c) |
| $ | (0.13 | ) | $ | 0.13 |
| $ | 0.51 |
| $ | 0.62 |
|
|
| Discontinued operations, net of tax |
| — |
| — |
| — |
| — |
| ||||
|
| Diluted (loss) earnings per share |
| $ | (0.13 | ) | $ | 0.13 |
| $ | 0.51 |
| $ | 0.62 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
|
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|
ADDITIONAL INFORMATION | (dollar amounts in thousands) |
|
| Thirteen weeks ended |
| Thirty-nine weeks ended |
| ||||||||
|
| October 27, 2012 |
| October 29, 2011 |
| October 27, 2012 |
| October 29, 2011 |
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Capital expenditures |
| $ | 10,413 |
| $ | 20,157 |
| $ | 36,760 |
| $ | 50,793 |
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Depreciation and amortization |
| $ | 19,841 |
| $ | 20,125 |
| $ | 59,129 |
| $ | 59,779 |
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Non-operating income: |
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Net rental revenue |
| $ | 487 |
| $ | 575 |
| $ | 1,302 |
| $ | 1,592 |
|
Investment income |
| 39 |
| 46 |
| 133 |
| 168 |
| ||||
Merger termination fees, net |
| (139 | ) | — |
| 42,816 |
| — |
| ||||
Other income |
| 129 |
| 6 |
| 211 |
| 23 |
| ||||
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Total |
| $ | 516 |
| $ | 627 |
| $ | 44,462 |
| $ | 1,783 |
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Comparable sales percentages: |
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Service |
| 0.2 | % | 0.4 | % | 0.7 | % | 0.8 | % | ||||
Merchandise |
| -3.5 | % | -0.6 | % | -2.5 | % | -1.4 | % | ||||
Total |
| -2.7 | % | -0.4 | % | -1.8 | % | -1.0 | % | ||||
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Total square feet of retail space (including service centers) |
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| 12,667,000 |
| 12,597,000 |
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Store count |
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Supercenter |
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| 562 |
| 562 |
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Service & Tire Center |
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| 175 |
| 159 |
| ||||
Retail Only |
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|
| 7 |
| 8 |
| ||||
Total |
|
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|
| 744 |
| 729 |
| ||||
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Sales and gross profit by line of business (A): |
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Service center revenue |
| $ | 271,370 |
| $ | 269,726 |
| $ | 816,730 |
| 777,891 |
| |
Retail sales |
| 238,238 |
| 252,447 |
| 743,153 |
| 780,417 |
| ||||
Total revenues |
| $ | 509,608 |
| $ | 522,173 |
| $ | 1,559,883 |
| $ | 1,558,308 |
|
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Gross profit from service center revenue, prior to impairment charge |
| $ | 56,592 |
| $ | 55,400 |
| $ | 166,347 |
| $ | 175,314 |
|
Service center revenue impairment charge |
| (4,618 | ) | — |
| (4,618 | ) | (281 | ) | ||||
Gross profit from service center revenue |
| $ | 51,974 |
| $ | 55,400 |
| $ | 161,729 |
| $ | 175,033 |
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Gross profit from retail sales, prior to impairment charge |
| $ | 68,250 |
| $ | 71,521 |
| $ | 216,748 |
| $ | 222,330 |
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Retail sales impairment charge |
| (4,184 | ) | — |
| (4,184 | ) | (108 | ) | ||||
Gross profit from retail sales |
| $ | 64,066 |
| $ | 71,521 |
| $ | 212,564 |
| $ | 222,222 |
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Total gross profit |
| $ | 116,040 |
| $ | 126,921 |
| $ | 374,293 |
| $ | 397,255 |
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Comparable sales percentages by line of business (A): |
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Service center revenue |
| -0.1 | % | 1.3 | % | 1.0 | % | 0.3 | % | ||||
Retail sales |
| -5.4 | % | -2.0 | % | -4.6 | % | -2.2 | % | ||||
Total revenues |
| -2.7 | % | -0.4 | % | -1.8 | % | -1.0 | % | ||||
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Gross profit percentage by line of business (A): |
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Gross profit percentage from service center revenue, prior to impairment charge |
| 20.9 | % | 20.5 | % | 20.4 | % | 22.5 | % | ||||
Impairment charge |
| (1.7 | ) | — |
| (0.6 | ) | (0.0 | ) | ||||
Gross profit percentage from service center revenue |
| 19.2 | % | 20.5 | % | 19.8 | % | 22.5 | % | ||||
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Gross profit percentage from retail sales, prior to impairment charge |
| 28.6 | % | 28.3 | % | 29.2 | % | 28.5 | % | ||||
Impairment charge |
| (1.8 | ) | — |
| (0.6 | ) | (0.0 | ) | ||||
Gross profit percentage from retail sales |
| 26.8 | % | 28.3 | % | 28.6 | % | 28.5 | % | ||||
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Total gross profit percentage |
| 22.8 | % | 24.3 | % | 24.0 | % | 25.5 | % |
(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.