Pep Boys Manny Moe & Jack (PBY) 8-K Pep Boys Reports Fourth Quarter 2013 Results

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
				%					%					%					%
	Amount			Sales		Amount			Sales		Amount			Sales		Amount			Sales
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
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
Diluted (loss) earnings per share:
(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
Other comprehensive income:
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
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
(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		)
Net (loss) earnings		$	(3,331	)	$	(14,543	)	$	6,865		$	12,810
(b) Basic average number of common shares outstanding during period		53,422			53,364			53,378			53,225
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price		546			611			585			729
(c) Diluted average number of common shares assumed outstanding during period		53,968			53,975			53,963			53,954
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
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
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
Comparable sales percentages:
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		%
Total square feet of retail space (including service centers)							12,907,000			12,777,000
Store count
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
Comparable sales percentages by line of business (A):
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		%
Gross profit percentage by line of business (A):
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		%
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		%
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.