Exhibit 99.2
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
| (UNAUDITED) |
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
|
| May 3, 2014 |
| February 1, 2014 |
| May 4, 2013 |
| |||
Assets |
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|
|
| |||
Current assets: |
|
|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 37,817 |
| $ | 33,431 |
| $ | 56,116 |
|
Accounts receivable, less allowance for uncollectible accounts of $1,486, $1,320 and $1,230 |
| 27,385 |
| 25,152 |
| 25,215 |
| |||
Merchandise inventories |
| 663,554 |
| 672,354 |
| 648,148 |
| |||
Prepaid expenses |
| 26,430 |
| 29,282 |
| 29,135 |
| |||
Other current assets |
| 60,047 |
| 63,405 |
| 59,048 |
| |||
Assets held for disposal |
| 2,013 |
| 2,013 |
| — |
| |||
Total current assets |
| 817,246 |
| 825,637 |
| 817,662 |
| |||
Property and equipment, net of accumulated depreciation of $1,245,488, $1,227,121 and $1,182,713 |
| 622,866 |
| 625,525 |
| 647,636 |
| |||
Goodwill |
| 56,794 |
| 56,794 |
| 46,917 |
| |||
Deferred income taxes |
| 57,068 |
| 57,686 |
| 46,303 |
| |||
Other long-term assets |
| 38,977 |
| 39,839 |
| 37,410 |
| |||
Total assets |
| $ | 1,592,951 |
| $ | 1,605,481 |
| $ | 1,595,928 |
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| |||
Liabilities and stockholders’ equity |
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Current liabilities: |
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|
|
|
| |||
Accounts payable |
| $ | 247,756 |
| $ | 256,031 |
| $ | 245,193 |
|
Trade payable program liability |
| 134,121 |
| 129,801 |
| 149,387 |
| |||
Accrued expenses |
| 226,667 |
| 237,403 |
| 229,452 |
| |||
Deferred income taxes |
| 69,498 |
| 69,373 |
| 53,481 |
| |||
Current maturities of long-term debt |
| 2,000 |
| 2,000 |
| 2,000 |
| |||
Total current liabilities |
| 680,042 |
| 694,608 |
| 679,513 |
| |||
|
|
|
|
|
|
|
| |||
Long-term debt less current maturities |
| 202,500 |
| 199,500 |
| 197,500 |
| |||
Other long-term liabilities |
| 48,186 |
| 48,485 |
| 52,202 |
| |||
Deferred gain from asset sales |
| 111,672 |
| 114,823 |
| 124,276 |
| |||
Commitments and contingencies |
|
|
|
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|
|
| |||
Stockholders’ equity: |
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|
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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 |
| 297,002 |
| 297,009 |
| 295,059 |
| |||
Retained earnings |
| 433,673 |
| 432,332 |
| 433,734 |
| |||
Accumulated other comprehensive income (loss) |
| 341 |
| 379 |
| (867 | ) | |||
Treasury stock, at cost - 15,314,768 shares; 15,358,872 shares and 15,365,117 shares |
| (249,022 | ) | (250,212 | ) | (254,046 | ) | |||
Total stockholders’ equity |
| 550,551 |
| 548,065 |
| 542,437 |
| |||
Total liabilities and stockholders’ equity |
| $ | 1,592,951 |
| $ | 1,605,481 |
| $ | 1,595,928 |
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Supplemental balance sheet information: |
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| |||
Working capital |
| $ | 137,204 |
| $ | 131,029 |
| $ | 138,149 |
|
Current ratio |
| 1.20 |
| 1.19 |
| 1.20 |
| |||
Accounts payable to inventory ratio |
| 57.6 | % | 57.4 | % | 60.9 | % | |||
Total debt as a percent of total capitalization |
| 27.1 | % | 26.9 | % | 26.9 | % | |||
Debt as a percent of total capitalization, net |
| 23.2 | % | 23.5 | % | 20.9 | % |
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(dollar amounts in thousands, except per share amounts)
|
| Thirteen weeks ended |
| ||||||||
|
| May 3, 2014 |
| May 4, 2013 |
| ||||||
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|
| % |
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| % |
| ||
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| Amount |
| Sales |
| Amount |
| Sales |
| ||
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Merchandise sales |
| $ | 411,906 |
| 76.4 |
| $ | 417,150 |
| 77.8 |
|
Service revenue |
| 126,915 |
| 23.6 |
| 119,023 |
| 22.2 |
| ||
Total revenues |
| 538,821 |
| 100.0 |
| 536,173 |
| 100.0 |
| ||
Costs of merchandise sales |
| 285,047 |
| 69.2 |
| 296,857 |
| 71.2 |
| ||
Costs of service revenue |
| 120,648 |
| 95.1 |
| 117,476 |
| 98.7 |
| ||
Total costs of revenues |
| 405,695 |
| 75.3 |
| 414,333 |
| 77.3 |
| ||
Gross profit from merchandise sales |
| 126,859 |
| 30.8 |
| 120,293 |
| 28.8 |
| ||
Gross profit from service revenue |
| 6,267 |
| 4.9 |
| 1,547 |
| 1.3 |
| ||
Total gross profit |
| 133,126 |
| 24.7 |
| 121,840 |
| 22.7 |
| ||
Selling, general and administrative expenses |
| 127,071 |
| 23.6 |
| 118,203 |
| 22.0 |
| ||
Net loss from dispositions of assets |
| (10 | ) | — |
| (116 | ) | — |
| ||
Operating profit |
| 6,045 |
| 1.1 |
| 3,521 |
| 0.7 |
| ||
Other income |
| 441 |
| 0.1 |
| 378 |
| 0.1 |
| ||
Interest expense |
| 3,782 |
| 0.7 |
| 3,679 |
| 0.7 |
| ||
Earnings from continuing operations before income taxes and discontinued operations |
| 2,704 |
| 0.5 |
| 220 |
| — |
| ||
Income tax expense (benefit) |
| 1,067 |
| 39.5 | (1) | (3,708 | ) | N/M | (1) | ||
Earnings from continuing operations before discontinued operations |
| 1,637 |
| 0.3 |
| 3,928 |
| 0.7 |
| ||
Loss from discontinued operations, net of tax |
| (29 | ) | — |
| (65 | ) | — |
| ||
Net earnings |
| 1,608 |
| 0.3 |
| 3,863 |
| 0.7 |
| ||
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|
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Basic earnings per share: |
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|
|
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Earnings from continuing operations before discontinued operations |
| $ | 0.03 |
|
|
| $ | 0.07 |
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|
|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| ||
Basic earnings per share |
| $ | 0.03 |
|
|
| $ | 0.07 |
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Diluted earnings per share: |
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Earnings from continuing operations before discontinued operations |
| $ | 0.03 |
|
|
| $ | 0.07 |
|
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|
Discontinued operations, net of tax |
| — |
|
|
| — |
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| ||
Diluted earnings per share |
| $ | 0.03 |
|
|
| $ | 0.07 |
|
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|
|
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Other comprehensive (loss) income: |
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|
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|
|
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Derivative financial instruments adjustment, net of tax |
| (38 | ) |
|
| 113 |
|
|
| ||
Other comprehensive (loss) income |
| (38 | ) |
|
| 113 |
|
|
| ||
Comprehensive income |
| $ | 1,570 |
|
|
| $ | 3,976 |
|
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|
(1) As a percentage of earnings from continuing operations before income taxes and discontinued operations. The percentage for the first quarter of fiscal 2013 is not meaningful.
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
Thirteen weeks ended |
| May 3, 2014 |
| May 4, 2013 |
| ||
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Cash flows from operating activities: |
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|
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Net earnings |
| $ | 1,608 |
| $ | 3,863 |
|
Adjustments to reconcile net earnings to net cash provided by continuing operations: |
|
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|
|
| ||
Net loss from discontinued operations |
| 29 |
| 65 |
| ||
Depreciation |
| 18,320 |
| 20,852 |
| ||
Amortization of deferred gain from asset sales |
| (3,151 | ) | (3,151 | ) | ||
Amortization of deferred financing costs |
| 664 |
| 650 |
| ||
Stock compensation expense |
| 826 |
| 869 |
| ||
Deferred income taxes |
| 743 |
| (3,872 | ) | ||
Net loss from dispositions of assets |
| 10 |
| 116 |
| ||
Loss from asset impairment |
| 1,172 |
| 1,183 |
| ||
Other |
| (111 | ) | (126 | ) | ||
Changes in assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
| ||
Decrease (increase) in accounts receivable, prepaid expenses and other |
| 4,174 |
| (699 | ) | ||
Decrease (increase) in merchandise inventories |
| 8,800 |
| (6,940 | ) | ||
(Decrease) increase in accounts payable |
| (8,903 | ) | 262 |
| ||
Decrease in accrued expenses |
| (12,467 | ) | (2,211 | ) | ||
Decrease in other long-term liabilities |
| (231 | ) | (1,338 | ) | ||
Net cash provided by continuing operations |
| 11,483 |
| 9,523 |
| ||
Net cash used in discontinued operations |
| (29 | ) | (88 | ) | ||
Net cash provided by operating activities |
| 11,454 |
| 9,435 |
| ||
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Cash flows from investing activities: |
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Capital expenditures |
| (14,565 | ) | (12,840 | ) | ||
Proceeds from dispositions of assets |
| — |
| 2 |
| ||
Release of collateral investment |
| — |
| 1,000 |
| ||
Net cash used in investing activities |
| (14,565 | ) | (11,838 | ) | ||
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Cash flows from financing activities: |
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Borrowings under line of credit agreements |
| 164,206 |
| 590 |
| ||
Payments under line of credit agreements |
| (160,706 | ) | (590 | ) | ||
Borrowings on trade payable program liability |
| 49,708 |
| 46,181 |
| ||
Payments on trade payable program liability |
| (45,388 | ) | (46,512 | ) | ||
Debt payments |
| (500 | ) | (500 | ) | ||
Proceeds from stock issuance |
| 177 |
| 164 |
| ||
Net cash provided by (used in) financing activities |
| 7,497 |
| (667 | ) | ||
Net increase (decrease) in cash and cash equivalents |
| 4,386 |
| (3,070 | ) | ||
Cash and cash equivalents at beginning of period |
| 33,431 |
| 59,186 |
| ||
Cash and cash equivalents at end of period |
| $ | 37,817 |
| $ | 56,116 |
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Supplemental cash flow information: |
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Cash paid for income taxes |
| $ | — |
| $ | 1,430 |
|
Cash received from income tax refunds |
| $ | 174 |
| $ | 51 |
|
Cash paid for interest |
| $ | 2,659 |
| $ | 2,987 |
|
Accrued purchases of property and equipment |
| $ | 5,748 |
| $ | 1,055 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE | (in thousands, except per share data) |
|
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|
| Thirteen weeks ended |
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|
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| May 3, 2014 |
| May 4, 2013 |
| ||
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(a) Earnings from continuing operations before discontinued operations |
|
|
| $ | 1,637 |
| $ | 3,928 |
|
Loss from discontinued operations, net of tax |
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|
| (29 | ) | (65 | ) | ||
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Net earnings |
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| $ | 1,608 |
| $ | 3,863 |
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(b) Basic average number of common shares outstanding during period |
|
|
| 53,470 |
| 53,388 |
| ||
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Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
|
|
| 539 |
| 603 |
| ||
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(c) Diluted average number of common shares assumed outstanding during period |
|
|
| 54,009 |
| 53,991 |
| ||
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Basic earnings per share: |
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Earnings from continuing operations before discontinued operations |
| (a) / (b) |
| $ | 0.03 |
| $ | 0.07 |
|
Discontinued operations, net of tax |
|
|
| — |
| — |
| ||
Basic earnings per share |
|
|
| $ | 0.03 |
| $ | 0.07 |
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Diluted earnings per share: |
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Earnings from continuing operations before discontinued operations |
| (a) / (c) |
| $ | 0.03 |
| $ | 0.07 |
|
Discontinued operations, net of tax |
|
|
| — |
| — |
| ||
Diluted earnings per share |
|
|
| $ | 0.03 |
| $ | 0.07 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
ADDITIONAL INFORMATION | (dollar amounts in thousands) |
|
| Thirteen weeks ended |
| ||||
|
| May 3, 2014 |
| May 4, 2013 |
| ||
|
|
|
|
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| ||
Capital expenditures |
| $ | 14,565 |
| $ | 12,840 |
|
Depreciation |
| $ | 18,320 |
| $ | 20,852 |
|
Non-operating income: |
|
|
|
|
| ||
Net rental revenue |
| $ | 399 |
| $ | 250 |
|
Investment income |
| 47 |
| 49 |
| ||
Other income |
| (5 | ) | 79 |
| ||
Total |
| $ | 441 |
| $ | 378 |
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Comparable sales percentages: |
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Service |
| 3.2 | % | 4.2 | % | ||
Merchandise |
| -2.8 | % | 0.1 | % | ||
Total |
| -1.4 | % | 1.0 | % | ||
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Total square feet of retail space (including service centers) |
| 12,845,000 |
| 12,815,000 |
| ||
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Store count |
|
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Supercenter |
| 567 |
| 569 |
| ||
Service & Tire Center |
| 225 |
| 188 |
| ||
Retail Only |
| 6 |
| 6 |
| ||
Total |
| 798 |
| 763 |
| ||
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Sales and gross profit by line of business (A): |
|
|
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Service center revenue |
| $ | 293,913 |
| 286,978 |
| |
Retail sales |
| 244,908 |
| 249,195 |
| ||
Total revenues |
| $ | 538,821 |
| $ | 536,173 |
|
|
|
|
|
|
| ||
Gross profit from service center revenue, prior to impairment charge |
| $ | 64,735 |
| 53,012 |
| |
Service center revenue impairment charge |
| (956 | ) | (1,017 | ) | ||
Gross profit from service center revenue |
| $ | 63,779 |
| $ | 51,995 |
|
|
|
|
|
|
| ||
Gross profit from retail sales, prior to impairment charge |
| $ | 69,562 |
| 70,011 |
| |
Retail sales impairment charge |
| (215 | ) | (166 | ) | ||
Gross profit from retail sales |
| $ | 69,347 |
| $ | 69,845 |
|
|
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|
|
| ||
Total gross profit |
| $ | 133,126 |
| $ | 121,840 |
|
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Comparable sales percentages by line of business (A): |
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Service center revenue |
| -1.0 | % | 3.9 | % | ||
Retail sales |
| -1.9 | % | -2.1 | % | ||
Total revenues |
| -1.4 | % | 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 |
| 22.0 | % | 18.5 | % | ||
Impairment charge |
| (0.3 | ) | (0.4 | ) | ||
Gross profit percentage from service center revenue |
| 21.7 | % | 18.1 | % | ||
|
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|
|
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| ||
Gross profit percentage from retail sales, prior to impairment charge |
| 28.4 | % | 28.1 | % | ||
Impairment charge |
| (0.1 | ) | (0.1 | ) | ||
Gross profit percentage from retail sales |
| 28.3 | % | 28.0 | % | ||
|
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|
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| ||
Total gross profit percentage |
| 24.7 | % | 22.7 | % |
(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.