Exhibit 99.2
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
|
| February 1, 2014 |
| February 2, 2013 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 33,431 |
| $ | 59,186 |
|
Accounts receivable, less allowance for uncollectible accounts of $1,320 and $1,302 |
| 25,152 |
| 23,897 |
| ||
Merchandise inventories |
| 672,354 |
| 641,208 |
| ||
Prepaid expenses |
| 29,282 |
| 28,908 |
| ||
Other current assets |
| 63,405 |
| 60,438 |
| ||
Assets held for disposal |
| 2,013 |
| — |
| ||
Total current assets |
| 825,637 |
| 813,637 |
| ||
Property and equipment, net of accumulated depreciation of $1,227,121 and $1,162,909 |
| 625,525 |
| 657,270 |
| ||
Goodwill |
| 56,794 |
| 46,917 |
| ||
Deferred income taxes |
| 57,686 |
| 47,691 |
| ||
Other long-term assets |
| 39,839 |
| 38,434 |
| ||
Total assets |
| $ | 1,605,481 |
| $ | 1,603,949 |
|
|
|
|
|
|
| ||
Liabilities and stockholders’ equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
| $ | 256,031 |
| $ | 244,696 |
|
Trade payable program liability |
| 129,801 |
| 149,718 |
| ||
Accrued expenses |
| 237,403 |
| 232,277 |
| ||
Deferred income taxes |
| 69,373 |
| 58,441 |
| ||
Current maturities of long-term debt |
| 2,000 |
| 2,000 |
| ||
Total current liabilities |
| 694,608 |
| 687,132 |
| ||
|
|
|
|
|
| ||
Long-term debt less current maturities |
| 199,500 |
| 198,000 |
| ||
Other long-term liabilities |
| 48,485 |
| 53,818 |
| ||
Deferred gain from asset sales |
| 114,823 |
| 127,427 |
| ||
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 |
| 297,009 |
| 295,679 |
| ||
Retained earnings |
| 432,332 |
| 430,148 |
| ||
Accumulated other comprehensive income (loss) |
| 379 |
| (980 | ) | ||
Treasury stock, at cost - 15,358,872 shares and 15,431,298 shares |
| (250,212 | ) | (255,832 | ) | ||
Total stockholders’ equity |
| 548,065 |
| 537,572 |
| ||
Total liabilities and stockholders’ equity |
| $ | 1,605,481 |
| $ | 1,603,949 |
|
|
|
|
|
|
| ||
Supplemental balance sheet information: |
|
|
|
|
| ||
Working capital |
| $ | 131,029 |
| $ | 126,505 |
|
Current ratio |
| 1.19 |
| 1.18 |
| ||
Accounts payable to inventory ratio |
| 57.4 | % | 61.5 | % | ||
Total debt as a percent of total capitalization |
| 26.9 | % | 27.1 | % | ||
Debt as a percent of total capitalization, net |
| 23.5 | % | 20.8 | % |
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(dollar amounts in thousands, except per share amounts)
|
| Thirteen and fourteen weeks ended |
| Fifty-two and fifty-three weeks ended |
| ||||||||||||||||
|
| February 1, 2014 |
| February 2, 2013 |
| February 1, 2014 |
| February 2, 2013 |
| ||||||||||||
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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 |
| $ | 384,884 |
| 77.6 |
| $ | 417,090 |
| 78.6 |
| $ | 1,608,697 |
| 77.8 |
| $ | 1,643,948 |
| 78.6 |
|
Service revenue |
| 110,849 |
| 22.4 |
| 113,757 |
| 21.4 |
| 457,871 |
| 22.2 |
| 446,782 |
| 21.4 |
| ||||
Total revenues |
| 495,733 |
| 100.0 |
| 530,847 |
| 100.0 |
| 2,066,568 |
| 100.0 |
| 2,090,730 |
| 100.0 |
| ||||
Costs of merchandise sales |
| 270,233 |
| 70.2 |
| 296,462 |
| 71.1 |
| 1,108,359 |
| 68.9 |
| 1,159,994 |
| 70.6 |
| ||||
Costs of service revenue |
| 121,484 |
| 109.6 |
| 117,179 |
| 103.0 |
| 470,832 |
| 102.8 |
| 439,236 |
| 98.3 |
| ||||
Total costs of revenues |
| 391,717 |
| 79.0 |
| 413,641 |
| 77.9 |
| 1,579,191 |
| 76.4 |
| 1,599,230 |
| 76.5 |
| ||||
Gross profit from merchandise sales |
| 114,651 |
| 29.8 |
| 120,628 |
| 28.9 |
| 500,338 |
| 31.1 |
| 483,954 |
| 29.4 |
| ||||
Gross (loss) profit from service revenue |
| (10,635 | ) | (9.6 | ) | (3,422 | ) | (3.0 | ) | (12,961 | ) | (2.8 | ) | 7,546 |
| 1.7 |
| ||||
Total gross profit |
| 104,016 |
| 21.0 |
| 117,206 |
| 22.1 |
| 487,377 |
| 23.6 |
| 491,500 |
| 23.5 |
| ||||
Selling, general and administrative expenses |
| 110,617 |
| 22.3 |
| 117,401 |
| 22.1 |
| 464,852 |
| 22.5 |
| 463,416 |
| 22.2 |
| ||||
Pension settlement expense |
| — |
| — |
| 17,753 |
| 3.3 |
| — |
| — |
| 17,753 |
| 0.8 |
| ||||
Net (loss) gain from dispositions of assets |
| (13 | ) | — |
| 1,554 |
| 0.3 |
| (227 | ) | — |
| 1,323 |
| 0.1 |
| ||||
Operating (loss) profit |
| (6,614 | ) | (1.3 | ) | (16,394 | ) | (3.1 | ) | 22,298 |
| 1.1 |
| 11,654 |
| 0.6 |
| ||||
Merger termination fees, net |
| — |
| — |
| — |
| — |
| — |
| — |
| 42,816 |
| 2.0 |
| ||||
Other income |
| 422 |
| 0.1 |
| 366 |
| 0.1 |
| 1,789 |
| 0.1 |
| 2,012 |
| 0.1 |
| ||||
Interest expense |
| 3,912 |
| 0.8 |
| 3,982 |
| 0.8 |
| 14,797 |
| 0.7 |
| 33,982 |
| 1.6 |
| ||||
(Loss) earnings from continuing operations before income taxes and discontinued operations |
| (10,104 | ) | (2.0 | ) | (20,010 | ) | (3.8 | ) | 9,290 |
| 0.4 |
| 22,500 |
| 1.1 |
| ||||
Income tax (benefit) expense |
| (6,837 | ) | 67.7 | (1) | (5,690 | ) | 28.4 | (1) | 2,237 |
| 24.1 | (1) | 9,345 |
| 41.5 | (1) | ||||
(Loss) earnings from continuing operations before discontinued operations |
| (3,267 | ) | (0.7 | ) | (14,320 | ) | (2.7 | ) | 7,053 |
| 0.3 |
| 13,155 |
| 0.6 |
| ||||
Loss from discontinued operations, net of tax |
| (64 | ) | — |
| (223 | ) | — |
| (188 | ) | — |
| (345 | ) | — |
| ||||
Net (loss) earnings |
| (3,331 | ) | (0.7 | ) | (14,543 | ) | (2.7 | ) | 6,865 |
| 0.3 |
| 12,810 |
| 0.6 |
| ||||
|
|
|
|
|
|
|
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|
|
|
|
| ||||
Basic (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) earnings from continuing operations before discontinued operations |
| $ | (0.06 | ) |
|
| $ | (0.27 | ) |
|
| $ | 0.13 |
|
|
| $ | 0.25 |
|
|
|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| (0.01 | ) |
|
| ||||
Basic (loss) earnings per share |
| $ | (0.06 | ) |
|
| $ | (0.27 | ) |
|
| $ | 0.13 |
|
|
| $ | 0.24 |
|
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|
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| ||||
Diluted (loss) earnings per share: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) earnings from continuing operations before discontinued operations |
| $ | (0.06 | ) |
|
| $ | (0.27 | ) |
|
| $ | 0.13 |
|
|
| $ | 0.24 |
|
|
|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| ||||
Diluted (loss) earnings per share |
| $ | (0.06 | ) |
|
| $ | (0.27 | ) |
|
| $ | 0.13 |
|
|
| $ | 0.24 |
|
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|
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Other comprehensive income: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Defined benefit plan adjustment, net of tax |
| — |
|
|
| 8,634 |
|
|
| — |
|
|
| 9,696 |
|
|
| ||||
Derivative financial instruments adjustment, net of tax |
| 40 |
|
|
| 436 |
|
|
| 1,359 |
|
|
| 6,973 |
|
|
| ||||
Other comprehensive income |
| 40 |
|
|
| 9,070 |
|
|
| 1,359 |
|
|
| 16,669 |
|
|
| ||||
Comprehensive (loss) income |
| $ | (3,291 | ) |
|
| $ | (5,473 | ) |
|
| $ | 8,224 |
|
|
| $ | 29,479 |
|
|
|
(1) As a percentage of (loss) earnings from continuing operations before income taxes and discontinued operations.
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
Fifty-two and fifty-three weeks ended |
| February 1, 2014 |
| February 2, 2013 |
| ||
|
|
|
|
|
| ||
Cash flows from operating activities: |
|
|
|
|
| ||
Net earnings |
| $ | 6,865 |
| $ | 12,810 |
|
Adjustments to reconcile net earnings to net cash provided by continuing operations: |
|
|
|
|
| ||
Net loss from discontinued operations |
| 188 |
| 345 |
| ||
Depreciation |
| 78,439 |
| 79,104 |
| ||
Amortization of deferred gain from asset sales |
| (12,604 | ) | (12,846 | ) | ||
Amortization of deferred financing costs |
| 2,993 |
| 4,431 |
| ||
Stock compensation expense |
| 2,992 |
| 1,299 |
| ||
Deferred income taxes |
| (79 | ) | 7,576 |
| ||
Net loss (gain) from dispositions of assets |
| 227 |
| (1,323 | ) | ||
Loss from asset impairment |
| 7,659 |
| 10,555 |
| ||
Other |
| (493 | ) | (269 | ) | ||
Changes in assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
| ||
Increase in accounts receivable, prepaid expenses and other |
| (6,511 | ) | (602 | ) | ||
Increase in merchandise inventories |
| (31,146 | ) | (27,074 | ) | ||
Increase in accounts payable |
| 8,378 |
| 984 |
| ||
Increase in accrued expenses |
| 6,115 |
| 10,481 |
| ||
(Decrease) increase in other long-term liabilities |
| (3,345 | ) | 3,487 |
| ||
Net cash provided by continuing operations |
| 59,678 |
| 88,958 |
| ||
Net cash used in discontinued operations |
| (274 | ) | (467 | ) | ||
Net cash provided by operating activities |
| 59,404 |
| 88,491 |
| ||
|
|
|
|
|
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Capital expenditures |
| (53,982 | ) | (54,696 | ) | ||
Proceeds from dispositions of assets |
| 21 |
| 5,588 |
| ||
Cash paid for acquisitions |
| (10,694 | ) | — |
| ||
Additions to collateral investment |
| (2,312 | ) | (3,654 | ) | ||
Release of collateral investment |
| 1,650 |
| — |
| ||
Net cash used in investing activities |
| (65,317 | ) | (52,762 | ) | ||
|
|
|
|
|
| ||
Cash flows from financing activities: |
|
|
|
|
| ||
Borrowings under line of credit agreements |
| 40,745 |
| 2,319 |
| ||
Payments under line of credit agreements |
| (37,245 | ) | (2,319 | ) | ||
Borrowings on trade payable program liability |
| 154,985 |
| 179,751 |
| ||
Payments on trade payable program liability |
| (174,902 | ) | (115,247 | ) | ||
Payment for finance issuance cost |
| (770 | ) | (6,520 | ) | ||
Borrowings under new debt |
| — |
| 200,000 |
| ||
Debt payments |
| (2,000 | ) | (295,122 | ) | ||
Proceeds from stock issuance |
| 2,095 |
| 2,693 |
| ||
Repurchase of common stock |
| (2,750 | ) | (342 | ) | ||
Net cash used in financing activities |
| (19,842 | ) | (34,787 | ) | ||
Net (decrease) increase in cash and cash equivalents |
| (25,755 | ) | 942 |
| ||
Cash and cash equivalents at beginning of period |
| 59,186 |
| 58,244 |
| ||
Cash and cash equivalents at end of period |
| $ | 33,431 |
| $ | 59,186 |
|
|
|
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|
| ||
Supplemental cash flow information: |
|
|
|
|
| ||
Cash paid for income taxes |
| $ | 4,377 |
| $ | 2,826 |
|
Cash received from income tax refunds |
| 1,251 |
| 108 |
| ||
Cash paid for interest |
| 12,027 |
| 31,290 |
| ||
Accrued purchases of property and equipment |
| 3,467 |
| 1,371 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED (LOSS) EARNINGS PER SHARE |
| (in thousands, except per share data) |
|
|
|
| Thirteen and fourteen weeks ended |
| Fifty-two and fifty-three weeks ended |
| ||||||||
|
|
|
| February 1, 2014 |
| February 2, 2013 |
| February 1, 2014 |
| February 2, 2013 |
| ||||
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| ||||
(a) (Loss) earnings from continuing operations before discontinued operations |
|
|
| $ | (3,267 | ) | $ | (14,320 | ) | $ | 7,053 |
| $ | 13,155 |
|
Loss from discontinued operations, net of tax |
|
|
| (64 | ) | (223 | ) | (188 | ) | (345 | ) | ||||
|
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| ||||
Net (loss) earnings |
|
|
| $ | (3,331 | ) | $ | (14,543 | ) | $ | 6,865 |
| $ | 12,810 |
|
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| ||||
(b) Basic average number of common shares outstanding during period |
|
|
| 53,422 |
| 53,364 |
| 53,378 |
| 53,225 |
| ||||
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| ||||
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
|
|
| 546 |
| 611 |
| 585 |
| 729 |
| ||||
|
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|
|
|
|
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|
|
|
|
| ||||
(c) Diluted average number of common shares assumed outstanding during period |
|
|
| 53,968 |
| 53,975 |
| 53,963 |
| 53,954 |
| ||||
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| ||||
Basic (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) earnings from continuing operations before discontinued operations |
| (a) / (b) |
| $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.13 |
| $ | 0.25 |
|
Discontinued operations, net of tax |
|
|
| — |
| — |
| — |
| (0.01 | ) | ||||
Basic (loss) earnings per share |
|
|
| $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.13 |
| $ | 0.24 |
|
|
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| ||||
Diluted (loss) earnings per share: |
|
|
|
|
|
|
|
|
|
|
| ||||
(Loss) earnings from continuing operations before discontinued operations |
| (a) / (c) |
| $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.13 |
| $ | 0.24 |
|
Discontinued operations, net of tax |
|
|
| — |
| — |
| — |
| — |
| ||||
Diluted (loss) earnings per share |
|
|
| $ | (0.06 | ) | $ | (0.27 | ) | $ | 0.13 |
| $ | 0.24 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
ADDITIONAL INFORMATION | (dollar amounts in thousands) |
|
| Thirteen and fourteen weeks ended |
| Fifty-two and fifty-three weeks ended |
| ||||||||
|
| February 1, 2014 |
| February 2, 2013 |
| February 1, 2014 |
| February 2, 2013 |
| ||||
|
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|
|
|
|
| ||||
Capital expenditures |
| $ | 15,648 |
| $ | 17,936 |
| $ | 53,982 |
| $ | 54,696 |
|
Depreciation |
| $ | 18,498 |
| $ | 19,825 |
| $ | 78,439 |
| $ | 79,104 |
|
Non-operating income: |
|
|
|
|
|
|
|
|
| ||||
Net rental revenue |
| $ | 377 |
| $ | 344 |
| $ | 1,409 |
| $ | 1,645 |
|
Investment income |
| 43 |
| 48 |
| 175 |
| 181 |
| ||||
Merger termination fees, net |
| — |
| — |
| — |
| 42,816 |
| ||||
Other income |
| 2 |
| (26 | ) | 205 |
| 186 |
| ||||
Total |
| $ | 422 |
| $ | 366 |
| $ | 1,789 |
| $ | 44,828 |
|
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|
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|
| ||||
Comparable sales percentages: |
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Service |
| 1.4 | % | 3.2 | % | 1.6 | % | 1.3 | % | ||||
Merchandise |
| -3.4 | % | -4.1 | % | -2.1 | % | -2.9 | % | ||||
Total |
| -2.4 | % | -2.6 | % | -1.3 | % | -2.0 | % | ||||
|
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|
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| ||||
Total square feet of retail space (including service centers) |
|
|
|
|
| 12,907,000 |
| 12,777,000 |
| ||||
|
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|
| ||||
Store count |
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|
| ||||
Supercenter |
|
|
|
|
| 568 |
| 567 |
| ||||
Service & Tire Center |
|
|
|
|
| 225 |
| 185 |
| ||||
Retail Only |
|
|
|
|
| 6 |
| 6 |
| ||||
Total |
|
|
|
|
| 799 |
| 758 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Sales and gross profit by line of business (A): |
|
|
|
|
|
|
|
|
| ||||
Service center revenue |
| $ | 269,131 |
| $ | 278,554 |
| $ | 1,110,958 |
| 1,095,284 |
| |
Retail sales |
| 226,602 |
| 252,293 |
| 955,610 |
| 995,446 |
| ||||
Total revenues |
| $ | 495,733 |
| $ | 530,847 |
| $ | 2,066,568 |
| $ | 2,090,730 |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross profit from service center revenue, prior to impairment charge |
| $ | 43,942 |
| $ | 47,881 |
| $ | 215,181 |
| 214,240 |
| |
Service center revenue impairment charge |
| (1,836 | ) | (827 | ) | (5,328 | ) | (5,445 | ) | ||||
Gross profit from service center revenue |
| $ | 42,106 |
| $ | 47,054 |
| $ | 209,853 |
| $ | 208,795 |
|
|
|
|
|
|
|
|
|
|
| ||||
Gross profit from retail sales, prior to impairment charge |
| $ | 62,851 |
| $ | 71,078 |
| $ | 279,855 |
| 287,815 |
| |
Retail sales impairment charge |
| (941 | ) | (926 | ) | (2,331 | ) | (5,110 | ) | ||||
Gross profit from retail sales |
| $ | 61,910 |
| $ | 70,152 |
| $ | 277,524 |
| $ | 282,705 |
|
|
|
|
|
|
|
|
|
|
| ||||
Total gross profit |
| $ | 104,016 |
| $ | 117,206 |
| $ | 487,377 |
| $ | 491,500 |
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Comparable sales percentages by line of business (A): |
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Service center revenue |
| -0.3 | % | -1.6 | % | 0.2 | % | 0.3 | % | ||||
Retail sales |
| -4.6 | % | -3.6 | % | -3.1 | % | -4.4 | % | ||||
Total revenues |
| -2.4 | % | -2.6 | % | -1.3 | % | -2.0 | % | ||||
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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 |
| 16.3 | % | 17.2 | % | 19.4 | % | 19.6 | % | ||||
Impairment charge |
| (0.7 | ) | (0.3 | ) | (0.5 | ) | (0.5 | ) | ||||
Gross profit percentage from service center revenue |
| 15.6 | % | 16.9 | % | 18.9 | % | 19.1 | % | ||||
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Gross profit percentage from retail sales, prior to impairment charge |
| 27.7 | % | 28.2 | % | 29.3 | % | 28.9 | % | ||||
Impairment charge |
| (0.4 | ) | (0.4 | ) | (0.2 | ) | (0.5 | ) | ||||
Gross profit percentage from retail sales |
| 27.3 | % | 27.8 | % | 29.0 | % | 28.4 | % | ||||
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Total gross profit percentage |
| 21.0 | % | 22.1 | % | 23.6 | % | 23.5 | % |
(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.