Exhibit 99.2
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES | (UNAUDITED) |
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
|
| November 1, 2014 |
| February 1, 2014 |
| November 2, 2013 |
| |||
Assets |
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|
|
|
| |||
Current assets: |
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|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 36,430 |
| $ | 33,431 |
| $ | 55,798 |
|
Accounts receivable, less allowance for uncollectible accounts of $1,616, $1,320 and $1,310 |
| 31,622 |
| 25,152 |
| 24,942 |
| |||
Merchandise inventories |
| 667,438 |
| 672,354 |
| 664,901 |
| |||
Prepaid expenses |
| 15,314 |
| 29,282 |
| 16,801 |
| |||
Other current assets |
| 51,470 |
| 63,405 |
| 52,249 |
| |||
Assets held for disposal |
| 4,636 |
| 2,013 |
| 500 |
| |||
Total current assets |
| 806,910 |
| 825,637 |
| 815,191 |
| |||
Property and equipment, net of accumulated depreciation of $1,257,988 $1,227,121 and $1,214,802 |
| 614,326 |
| 625,525 |
| 631,639 |
| |||
Goodwill |
| 56,794 |
| 56,794 |
| 56,841 |
| |||
Deferred income taxes |
| 57,070 |
| 57,686 |
| 48,311 |
| |||
Other long-term assets |
| 37,301 |
| 39,839 |
| 37,265 |
| |||
Total assets |
| $ | 1,572,401 |
| $ | 1,605,481 |
| $ | 1,589,247 |
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|
| |||
Liabilities and stockholders’ equity |
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| |||
Current liabilities: |
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|
|
|
|
|
| |||
Accounts payable |
| $ | 217,066 |
| $ | 256,031 |
| $ | 253,818 |
|
Trade payable program liability |
| 145,105 |
| 129,801 |
| 134,703 |
| |||
Accrued expenses |
| 209,524 |
| 237,403 |
| 225,249 |
| |||
Deferred income taxes |
| 68,556 |
| 69,373 |
| 59,455 |
| |||
Current maturities of long-term debt |
| 2,000 |
| 2,000 |
| 2,000 |
| |||
Total current liabilities |
| 642,251 |
| 694,608 |
| 675,225 |
| |||
|
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|
|
|
|
|
| |||
Long-term debt less current maturities |
| 229,500 |
| 199,500 |
| 196,500 |
| |||
Other long-term liabilities |
| 45,843 |
| 48,485 |
| 49,618 |
| |||
Deferred gain from asset sales |
| 105,370 |
| 114,823 |
| 117,974 |
| |||
Commitments and contingencies |
|
|
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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 |
| 297,313 |
| 297,009 |
| 296,578 |
| |||
Retained earnings |
| 428,845 |
| 432,332 |
| 436,933 |
| |||
Accumulated other comprehensive income |
| 43 |
| 379 |
| 339 |
| |||
Treasury stock, at cost - 15,177,705 shares; 15,358,872 shares and 15,442,779 shares |
| (245,321 | ) | (250,212 | ) | (252,477 | ) | |||
Total stockholders’ equity |
| 549,437 |
| 548,065 |
| 549,930 |
| |||
Total liabilities and stockholders’ equity |
| $ | 1,572,401 |
| $ | 1,605,481 |
| $ | 1,589,247 |
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| |||
Supplemental balance sheet information: |
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| |||
Working capital |
| $ | 164,659 |
| $ | 131,029 |
| $ | 139,966 |
|
Current ratio |
| 1.26 |
| 1.19 |
| 1.21 |
| |||
Accounts payable to inventory ratio |
| 54.3 | % | 57.4 | % | 58.4 | % | |||
Total debt as a percent of total capitalization |
| 29.6 | % | 26.9 | % | 26.5 | % | |||
Debt as a percent of total capitalization, net |
| 26.2 | % | 23.5 | % | 20.6 | % |
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 |
| Thirty-nine weeks ended |
| ||||||||||||||||
|
| November 1, 2014 |
| November 2, 2013 |
| November 1, 2014 |
| November 2, 2013 |
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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 |
| $ | 395,941 |
| 76.5 |
| $ | 394,346 |
| 77.8 |
| $ | 1,208,778 |
| 76.4 |
| $ | 1,223,813 |
| 77.9 |
|
Service revenue |
| 121,643 |
| 23.5 |
| 112,696 |
| 22.2 |
| 373,401 |
| 23.6 |
| 347,022 |
| 22.1 |
| ||||
Total revenues |
| 517,584 |
| 100.0 |
| 507,042 |
| 100.0 |
| 1,582,179 |
| 100.0 |
| 1,570,835 |
| 100.0 |
| ||||
Costs of merchandise sales |
| 278,800 |
| 70.4 |
| 267,489 |
| 67.8 |
| 843,946 |
| 69.8 |
| 838,126 |
| 68.5 |
| ||||
Costs of service revenue |
| 120,450 |
| 99.0 |
| 116,741 |
| 103.6 |
| 362,473 |
| 97.1 |
| 349,348 |
| 100.7 |
| ||||
Total costs of revenues |
| 399,250 |
| 77.1 |
| 384,230 |
| 75.8 |
| 1,206,419 |
| 76.3 |
| 1,187,474 |
| 75.6 |
| ||||
Gross profit from merchandise sales |
| 117,141 |
| 29.6 |
| 126,857 |
| 32.2 |
| 364,832 |
| 30.2 |
| 385,687 |
| 31.5 |
| ||||
Gross profit from service revenue |
| 1,193 |
| 1.0 |
| (4,045 | ) | (3.6 | ) | 10,928 |
| 2.9 |
| (2,326 | ) | (0.7 | ) | ||||
Total gross profit |
| 118,334 |
| 22.9 |
| 122,812 |
| 24.2 |
| 375,760 |
| 23.8 |
| 383,361 |
| 24.4 |
| ||||
Selling, general and administrative expenses |
| 117,651 |
| 22.7 |
| 115,104 |
| 22.7 |
| 365,345 |
| 23.1 |
| 354,236 |
| 22.6 |
| ||||
Net loss from dispositions of assets |
| (109 | ) | — |
| (67 | ) | — |
| (519 | ) | — |
| (213 | ) | — |
| ||||
Operating profit |
| 574 |
| 0.1 |
| 7,641 |
| 1.5 |
| 9,896 |
| 0.6 |
| 28,912 |
| 1.8 |
| ||||
Other income |
| 418 |
| 0.1 |
| 524 |
| 0.1 |
| 1,175 |
| 0.1 |
| 1,367 |
| 0.1 |
| ||||
Interest expense |
| 3,485 |
| 0.7 |
| 3,643 |
| 0.7 |
| 10,269 |
| 0.7 |
| 10,885 |
| 0.7 |
| ||||
(Loss) earnings from continuing operations before income taxes and discontinued operations |
| (2,493 | ) | (0.5 | ) | 4,522 |
| 0.9 |
| 802 |
| 0.1 |
| 19,394 |
| 1.2 |
| ||||
Income tax (benefit) expense |
| (723 | ) | 29.0 | (1) | 3,509 |
| 77.6 | (1) | 1,108 |
| 138.2 | (1) | 9,074 |
| 46.8 | (1) | ||||
(Loss) earnings from continuing operations before discontinued operations |
| (1,770 | ) | (0.3 | ) | 1,013 |
| 0.2 |
| (306 | ) | — |
| 10,320 |
| 0.7 |
| ||||
Loss from discontinued operations, net of tax |
| (194 | ) | — |
| (49 | ) | — |
| (319 | ) | — |
| (124 | ) | — |
| ||||
Net (loss) earnings |
| (1,964 | ) | (0.4 | ) | 964 |
| 0.2 |
| (625 | ) | (0.0 | ) | 10,196 |
| 0.7 |
| ||||
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Basic (loss) earnings per share: |
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(Loss) earnings from continuing operations before discontinued operations |
| $ | (0.03 | ) |
|
| $ | 0.02 |
|
|
| $ | — |
|
|
| $ | 0.19 |
|
|
|
(Loss) from discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| ||||
Basic (loss) earnings per share |
| $ | (0.03 | ) |
|
| $ | 0.02 |
|
|
| $ | (0.01 | ) |
|
| $ | 0.19 |
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Diluted (loss) earnings per share: |
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(Loss) earnings from continuing operations before discontinued operations |
| $ | (0.03 | ) |
|
| $ | 0.02 |
|
|
| $ | — |
|
|
| $ | 0.19 |
|
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|
(Loss) from discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| ||||
Diluted (loss) earnings per share |
| $ | (0.03 | ) |
|
| $ | 0.02 |
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|
| $ | (0.01 | ) |
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| $ | 0.19 |
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Other comprehensive (loss) income: |
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Derivative financial instruments adjustment, net of tax |
| (170 | ) |
|
| (372 | ) |
|
| (336 | ) |
|
| 1,319 |
|
|
| ||||
Other comprehensive (loss) income |
| (170 | ) |
|
| (372 | ) |
|
| (336 | ) |
|
| 1,319 |
|
|
| ||||
Comprehensive (loss) income |
| $ | (2,134 | ) |
|
| $ | 592 |
|
|
| $ | (961 | ) |
|
| $ | 11,515 |
|
|
|
(1) As a percentage of 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)
Thirty-nine weeks ended |
| November 1, 2014 |
| November 2, 2013 |
| ||
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Cash flows from operating activities: |
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|
|
| ||
Net (loss) earnings |
| $ | (625 | ) | $ | 10,196 |
|
Adjustments to reconcile net (loss) earnings to net cash provided by continuing operations: |
|
|
|
|
| ||
Net loss from discontinued operations |
| 319 |
| 124 |
| ||
Depreciation |
| 55,518 |
| 59,941 |
| ||
Amortization of deferred gain from asset sales |
| (9,453 | ) | (9,453 | ) | ||
Amortization of deferred financing costs |
| 1,937 |
| 1,952 |
| ||
Stock compensation expense |
| 1,533 |
| 2,451 |
| ||
Deferred income taxes |
| (66 | ) | (478 | ) | ||
Net loss from dispositions of assets |
| 519 |
| 213 |
| ||
Loss from asset impairment |
| 5,243 |
| 4,882 |
| ||
Other |
| (238 | ) | (322 | ) | ||
Changes in assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
| ||
Decrease in accounts receivable, prepaid expenses and other |
| 19,644 |
| 18,431 |
| ||
Decrease (increase) in merchandise inventories |
| 4,916 |
| (23,693 | ) | ||
(Decrease) increase in accounts payable |
| (36,494 | ) | 7,746 |
| ||
Decrease in accrued expenses |
| (28,363 | ) | (6,589 | ) | ||
Decrease in other long-term liabilities |
| (2,182 | ) | (2,354 | ) | ||
Net cash provided by continuing operations |
| 12,208 |
| 63,047 |
| ||
Net cash used in discontinued operations |
| (583 | ) | (193 | ) | ||
Net cash provided by operating activities |
| 11,625 |
| 62,854 |
| ||
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Cash flows from investing activities: |
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| ||
Capital expenditures |
| (54,975 | ) | (38,334 | ) | ||
Proceeds from dispositions of assets |
| 56 |
| 19 |
| ||
Acquisitions, net of cash acquired |
| — |
| (10,741 | ) | ||
Release of collateral investment |
| — |
| 1,000 |
| ||
Net cash used in investing activities |
| (54,919 | ) | (48,056 | ) | ||
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Cash flows from financing activities: |
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| ||
Borrowings under line of credit agreements |
| 479,438 |
| 1,926 |
| ||
Payments under line of credit agreements |
| (447,938 | ) | (1,926 | ) | ||
Borrowings on trade payable program liability |
| 143,614 |
| 114,804 |
| ||
Payments on trade payable program liability |
| (128,310 | ) | (129,819 | ) | ||
Debt payments |
| (1,500 | ) | (1,500 | ) | ||
Proceeds from stock issuance |
| 989 |
| 1,079 |
| ||
Repurchase of common stock |
| — |
| (2,750 | ) | ||
Net cash provided by (used in) financing activities |
| 46,293 |
| (18,186 | ) | ||
Net increase (decrease) in cash and cash equivalents |
| 2,999 |
| (3,388 | ) | ||
Cash and cash equivalents at beginning of period |
| 33,431 |
| 59,186 |
| ||
Cash and cash equivalents at end of period |
| $ | 36,430 |
| $ | 55,798 |
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Supplemental cash flow information: |
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Cash paid for income taxes |
| $ | 845 |
| $ | 4,322 |
|
Cash received from income tax refunds |
| $ | 244 |
| $ | 51 |
|
Cash paid for interest |
| $ | 8,482 |
| $ | 9,149 |
|
Accrued purchases of property and equipment |
| $ | 1,350 |
| $ | 2,369 |
|
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 |
| Thirty-nine weeks ended |
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| November 1, 2014 |
| November 2, 2013 |
| November 1, 2014 |
| November 2, 2013 |
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(a) | (Loss) earnings from continuing operations before discontinued operations |
|
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| $ | (1,770 | ) | $ | 1,013 |
| $ | (306 | ) | $ | 10,320 |
|
| Loss from discontinued operations, net of tax |
|
|
| (194 | ) | (49 | ) | (319 | ) | (124 | ) | ||||
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| Net (loss) earnings |
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| $ | (1,964 | ) | $ | 964 |
| $ | (625 | ) | $ | 10,196 |
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(b) | Basic average number of common shares outstanding during period |
|
|
| 53,590 |
| 53,315 |
| 53,533 |
| 53,363 |
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| Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
|
|
| — |
| 615 |
| — |
| 599 |
| ||||
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(c) | Diluted average number of common shares assumed outstanding during period |
|
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| 53,590 |
| 53,930 |
| 53,533 |
| 53,962 |
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| Basic (loss) earnings per share: |
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| (Loss) earnings from continuing operations before discontinued operations |
| (a) / (b) |
| $ | (0.03 | ) | $ | 0.02 |
| $ | — |
| $ | 0.19 |
|
| (Loss) from discontinued operations, net of tax |
|
|
| — |
| — |
| (0.01 | ) | — |
| ||||
| Basic (loss) earnings per share |
|
|
| $ | (0.03 | ) | $ | 0.02 |
| $ | (0.01 | ) | $ | 0.19 |
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| Diluted (loss) earnings per share: |
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| (Loss) earnings from continuing operations before discontinued operations |
| (a) / (c) |
| $ | (0.03 | ) | $ | 0.02 |
| $ | — |
| $ | 0.19 |
|
| (Loss) from discontinued operations, net of tax |
|
|
| — |
| — |
| (0.01 | ) | — |
| ||||
| Diluted (loss) earnings per share |
|
|
| $ | (0.03 | ) | $ | 0.02 |
| $ | (0.01 | ) | $ | 0.19 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
ADDITIONAL INFORMATION | (dollar amounts in thousands) |
|
| Thirteen weeks ended |
| Thirty-nine weeks ended |
| ||||||||
|
| November 1, 2014 |
| November 2, 2013 |
| November 1, 2014 |
| November 2, 2013 |
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Capital expenditures |
| $ | 15,965 |
| $ | 13,832 |
| $ | 54,975 |
| $ | 38,334 |
|
Depreciation |
| $ | 19,172 |
| $ | 19,756 |
| $ | 55,518 |
| $ | 59,941 |
|
Non-operating income: |
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|
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|
|
| ||||
Net rental revenue |
| $ | 358 |
| $ | 432 |
| $ | 1,040 |
| $ | 1,032 |
|
Investment income |
| 59 |
| 42 |
| 152 |
| 132 |
| ||||
Other income |
| 1 |
| 50 |
| (17 | ) | 203 |
| ||||
Total |
| $ | 418 |
| $ | 524 |
| $ | 1,175 |
| $ | 1,367 |
|
Comparable sales percentages: |
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Service |
| 6.1 | % | 0.5 | % | 4.9 | % | 1.6 | % | ||||
Merchandise |
| -0.2 | % | -3.6 | % | -2.3 | % | -1.7 | % | ||||
Total |
| 1.2 | % | -2.8 | % | -0.7 | % | -1.0 | % | ||||
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Total square feet of retail space (including service centers) |
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|
| 12,922,000 |
| 12,924,000 |
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Store count |
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Supercenter |
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| 563 |
| 572 |
| ||||
Service & Tire Center |
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|
| 233 |
| 215 |
| ||||
Retail Only |
|
|
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|
| 6 |
| 6 |
| ||||
Total |
|
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|
|
| 802 |
| 793 |
| ||||
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Sales and gross profit by line of business (A): |
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Service center revenue |
| $ | 289,375 |
| $ | 273,944 |
| $ | 871,590 |
| 841,827 |
| |
Retail sales |
| 228,209 |
| 233,098 |
| 710,589 |
| 729,008 |
| ||||
Total revenues |
| $ | 517,584 |
| $ | 507,042 |
| $ | 1,582,179 |
| $ | 1,570,835 |
|
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|
|
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Gross profit from service center revenue, prior to impairment charge |
| $ | 58,817 |
| $ | 55,169 |
| $ | 185,616 |
| 171,244 |
| |
Service center revenue impairment charge |
| (1,144 | ) | (1,153 | ) | (3,479 | ) | (3,493 | ) | ||||
Gross profit from service center revenue |
| $ | 57,673 |
| $ | 54,016 |
| $ | 182,137 |
| $ | 167,751 |
|
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|
|
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Gross profit from retail sales, prior to impairment charge |
| $ | 60,922 |
| $ | 69,676 |
| $ | 195,387 |
| 217,000 |
| |
Retail sales impairment charge |
| (261 | ) | (880 | ) | (1,764 | ) | (1,390 | ) | ||||
Gross profit from retail sales |
| $ | 60,661 |
| $ | 68,796 |
| $ | 193,623 |
| $ | 215,610 |
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Total gross profit |
| $ | 118,334 |
| $ | 122,812 |
| $ | 375,760 |
| $ | 383,361 |
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Comparable sales percentages by line of business (A): |
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Service center revenue |
| 3.7 | % | -2.5 | % | 0.8 | % | 0.4 | % | ||||
Retail sales |
| -1.8 | % | -3.1 | % | -2.4 | % | -2.6 | % | ||||
Total revenues |
| 1.2 | % | -2.8 | % | -0.7 | % | -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 |
| 20.3 | % | 20.1 | % | 21.3 | % | 20.3 | % | ||||
Impairment charge |
| (0.4 | ) | (0.4 | ) | (0.4 | ) | (0.4 | ) | ||||
Gross profit percentage from service center revenue |
| 19.9 | % | 19.7 | % | 20.9 | % | 19.9 | % | ||||
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Gross profit percentage from retail sales, prior to impairment charge |
| 26.7 | % | 29.9 | % | 27.5 | % | 29.8 | % | ||||
Impairment charge |
| (0.1 | ) | (0.4 | ) | (0.2 | ) | (0.2 | ) | ||||
Gross profit percentage from retail sales |
| 26.6 | % | 29.5 | % | 27.2 | % | 29.6 | % | ||||
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Total gross profit percentage |
| 22.9 | % | 24.2 | % | 23.7 | % | 24.4 | % |
(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.