Pep Boys Manny Moe & Jack (PBY) 8-K Pep Boys Reports Fourth Quarter 2014 Results

Exhibit 99.2

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands)

	January 31, 2015			February 1, 2014
Assets
Current assets:
Cash and cash equivalents	$	38,044		$	33,431
Accounts receivable, less allowance for uncollectible accounts of $1,604 and $1,320	31,013			25,152
Merchandise inventories	656,957			672,354
Prepaid expenses	27,952			29,282
Other current assets	55,986			63,405
Assets held for disposal	2,648			2,013
Total current assets	812,600			825,637
Property and equipment, net of accumulated depreciation of $1,251,797 and $1,227,121	604,380			625,525
Goodwill	32,869			56,794
Deferred income taxes	56,571			57,686
Other long-term assets	35,321			39,839
Total assets	$	1,541,741		$	1,605,481
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	227,132		$	256,031
Trade payable program liability	140,904			129,801
Accrued expenses	226,176			237,403
Deferred income taxes	61,216			69,373
Current maturities of long-term debt	2,000			2,000
Total current liabilities	657,428			694,608
Long-term debt less current maturities	211,000			199,500
Other long-term liabilities	45,567			48,485
Deferred gain from asset sales	103,596			114,823
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	298,299			297,009
Retained earnings	397,890			432,332
Accumulated other comprehensive income	(391		)	379
Treasury stock, at cost - 14,988,205 shares and 15,358,872 shares	(240,205		)	(250,212		)
Total stockholders’ equity	524,150			548,065
Total liabilities and stockholders’ equity	$	1,541,741		$	1,605,481
Supplemental balance sheet information:
Working capital	$	155,172		$	131,029
Current ratio	1.24			1.19
Accounts payable to inventory ratio	56.0		%	57.4		%
Total debt as a percent of total capitalization	28.9		%	26.9		%
Debt as a percent of total capitalization, net	25.0		%	23.5		%

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 weeks ended										Fifty-two weeks ended
	January 31, 2015					February 1, 2014					January 31, 2015					February 1, 2014
				%					%					%					%
	Amount			Sales		Amount			Sales		Amount			Sales		Amount			Sales
Merchandise sales	$	385,105		76.6		$	384,884		77.6		$	1,593,883		76.5		$	1,608,697		77.8
Service revenue	117,318			23.4		110,849			22.4		490,720			23.5		457,871			22.2
Total revenues	502,423			100.0		495,733			100.0		2,084,603			100.0		2,066,568			100.0
Costs of merchandise sales	280,807			72.9		270,233			70.2		1,124,755			70.6		1,108,359			68.9
Costs of service revenue	121,931			103.9		121,484			109.6		484,404			98.7		470,832			102.8
Total costs of revenues	402,738			80.2		391,717			79.0		1,609,159			77.2		1,579,191			76.4
Gross profit from merchandise sales	104,298			27.1		114,651			29.8		469,128			29.4		500,338			31.1
Gross (loss) profit from service revenue	(4,613		)	(3.9	)	(10,635		)	(9.6	)	6,316			1.3		(12,961		)	(2.8	)
Total gross profit	99,685			19.8		104,016			21.0		475,444			22.8		487,377			23.6
Selling, general and administrative expenses	118,837			23.7		110,617			22.3		484,182			23.2		464,852			22.5
Goodwill impairment	23,925			4.8		0			—		23,925			1.1		—			—
Net (gain) loss from dispositions of assets	(14,325		)	(2.9	)	13			—		(13,806		)	(0.7	)	227			—
Operating (loss) profit	(28,752		)	(5.7	)	(6,614		)	(1.3	)	(18,857		)	(0.9	)	22,298			1.1
Other income	13			—		422			0.1		1,188			0.1		1,789			0.1
Interest expense	(3,604		)	(0.7	)	(3,912		)	(0.8	)	(13,873		)	(0.7	)	(14,797		)	(0.7	)
(Loss) earnings from continuing operations before income taxes and discontinued operations	(32,343		)	(6.4	)	(10,104		)	(2.0	)	(31,542		)	(1.5	)	9,290			0.5
Income tax (benefit) expense	(5,690		)	17.6	(1)	(6,837		)	67.7	(1)	(4,581		)	(14.5	)(1)	2,237			24.1	(1)
(Loss) earnings from continuing operations before discontinued operations	(26,653		)	(5.3	)	(3,267		)	(0.7	)	(26,961		)	(1.3	)	7,053			0.3
Loss from discontinued operations, net of tax	(13		)	—		(64		)	—		(332		)	—		(188		)	—
Net (loss) earnings	(26,666		)	(5.3	)	(3,331		)	(0.7	)	(27,293		)	(1.3	)	6,865			0.3
Basic (loss) earnings per share:
(Loss) earnings from continuing operations before discontinued operations	$	(0.50	)			$	(0.06	)			$	(0.50	)			$	0.13
(Loss) from discontinued operations, net of tax	—					—					(0.01		)			—
Basic (loss) earnings per share	$	(0.50	)			$	(0.06	)			$	(0.51	)			$	0.13
Diluted (loss) earnings per share:
(Loss) earnings from continuing operations before discontinued operations	$	(0.50	)			$	(0.06	)			$	(0.50	)			$	0.13
(Loss) from discontinued operations, net of tax	—					—					(0.01		)			—
Diluted (loss) earnings per share	$	(0.50	)			$	(0.06	)			$	(0.51	)			$	0.13
Other comprehensive (loss) income:
Derivative financial instruments adjustment, net of tax	(434		)			40					(770		)			1,359
Other comprehensive (loss) income	(434		)			40					(770		)			1,359
Comprehensive (loss) income	$	(27,100	)			$	(3,291	)			$	(28,063	)			$	8,224

(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)

Fifty-two weeks ended	January 31, 2015			February 1, 2014
Cash flows from operating activities:
Net (loss) earnings	$	(27,293	)	$	6,865
Adjustments to reconcile net (loss) earnings to net cash provided by continuing operations:
Net loss from discontinued operations	332			188
Depreciation	75,099			78,439
Amortization of deferred gain from asset sales	(13,389		)	(12,604		)
Amortization of deferred financing costs	2,563			2,993
Stock compensation expense	2,257			2,992
Deferred income taxes	(6,588		)	(79		)
Net (gain) loss from dispositions of assets	(13,806		)	227
Asset impairment	7,535			7,659
Goodwill impairment	23,925			—
Other	(139		)	(493		)
Changes in assets and liabilities, net of the effects of acquisitions:
Decrease (increase) in accounts receivable, prepaid expenses and other	4,366			(6,511		)
Decrease (increase) in merchandise inventories	15,397			(31,146		)
(Decrease) increase in accounts payable	(27,963		)	8,378
(Decrease) increase in accrued expenses	(11,853		)	6,115
Decrease in other long-term liabilities	(2,391		)	(3,345		)
Net cash provided by continuing operations	28,052			59,678
Net cash used in discontinued operations	(608		)	(274		)
Net cash provided by operating activities	27,444			59,404
Cash flows from investing activities:
Capital expenditures	(67,269		)	(53,982		)
Proceeds from dispositions of assets	20,227			21
Acquisitions, net of cash acquired	—			(10,694		)
Additions to collateral investment	—			(2,312		)
Release of collateral investment	—			1,650
Net cash used in investing activities	(47,042		)	(65,317		)
Cash flows from financing activities:
Borrowings under line of credit agreements	598,495			40,745
Payments under line of credit agreements	(584,995		)	(37,245		)
Borrowings on trade payable program liability	182,462			154,985
Payments on trade payable program liability	(171,359		)	(174,902		)
Payment for finance issuance cost	—			(770		)
Debt payments	(2,000		)	(2,000		)
Proceeds from stock issuance	1,608			2,095
Repurchase of common stock	—			(2,750		)
Net cash provided by (used in) financing activities	24,211			(19,842		)
Net increase (decrease) in cash and cash equivalents	4,613			(25,755		)
Cash and cash equivalents at beginning of period	33,431			59,186
Cash and cash equivalents at end of period	$	38,044		$	33,431
Supplemental cash flow information:
Cash paid for income taxes	$	1,418		$	4,377
Cash received from income tax refunds	$	292		$	1,251
Cash paid for interest	$	11,377		$	12,027
Accrued purchases of property and equipment	$	3,346		$	3,467

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE (in thousands, except per share data)

		Thirteen weeks ended						Fifty-two weeks ended
		January 31, 2015			February 1, 2014			January 31, 2015			February 1, 2014
(a)    (Loss) earnings from continuing operations before discontinued operations		$	(26,653	)	$	(3,267	)	$	(26,961	)	$	7,053
Loss from discontinued operations, net of tax		(13		)	(64		)	(332		)	(188		)
Net (loss) earnings		$	(26,666	)	$	(3,331	)	$	(27,293	)	$	6,865
(b)    Basic average number of common shares outstanding during period		53,816			53,422			53,608			53,378
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price		—			546			—			585
(c)    Diluted average number of common shares assumed outstanding during period		53,816			53,968			53,608			53,963
Basic (loss) earnings per share:
(Loss) earnings from continuing operations before discontinued operations	(a) / (b)	$	(0.50	)	$	(0.06	)	$	(0.50	)	$	0.13
(Loss) from discontinued operations, net of tax		—			—			(0.01		)	—
Basic (loss) earnings per share		$	(0.50	)	$	(0.06	)	$	(0.51	)	$	0.13
Diluted (loss) earnings per share:
(Loss) earnings from continuing operations before discontinued operations	(a) / (c)	$	(0.50	)	$	(0.06	)	$	(0.50	)	$	0.13
(Loss) from discontinued operations, net of tax		—			—			(0.01		)	—
Diluted (loss) earnings per share		$	(0.50	)	$	(0.06	)	$	(0.51	)	$	0.13

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

ADDITIONAL INFORMATION (dollar amounts in thousands)

	Thirteen weeks ended						Fifty-two weeks ended
	January 31, 2015			February 1, 2014			January 31, 2015			February 1, 2014
Capital expenditures	$	12,294		$	15,648		$	67,269		$	53,982
Depreciation	$	19,581		$	18,948		$	75,099		$	78,439
Non-operating income:
Net rental revenue	$	(30	)	$	377		$	1,009		$	1,409
Investment income	35			43			187			175
Other income	8			2			(8		)	205
Total	$	13		$	422		$	1,188		$	1,789
Comparable sales percentages:
Service	5.1		%	1.4		%	4.9		%	1.6		%
Merchandise	-0.2		%	-3.4		%	-1.6		%	-2.1		%
Total	1.3		%	-2.4		%	-0.1		%	-1.3		%
Total square feet of retail space (including service centers)							12,942,000			12,907,000
Store count
Supercenter							563			568
Service & Tire Center							237			225
Retail Only							6			6
Total							806			799
Sales and gross profit by line of business (A):
Service center revenue	$	279,985		$	269,131		$	1,151,575		1,110,958
Retail sales	222,438			226,602			933,028			955,610
Total revenues	$	502,423		$	495,733		$	2,084,603		$	2,066,568
Gross profit from service center revenue, prior to impairment charge	$	49,554		$	43,942		$	235,169		215,181
Service center revenue impairment charge	(1,560		)	(1,836		)	(5,039		)	(5,328		)
Gross profit from service center revenue	$	47,994		$	42,106		$	230,130		$	209,853
Gross profit from retail sales, prior to impairment charge	$	52,422		$	62,851		$	247,809		279,855
Retail sales impairment charge	(731		)	(941		)	(2,495		)	(2,331		)
Gross profit from retail sales	$	51,691		$	61,910		$	245,314		$	277,524
Total gross profit	$	99,685		$	104,016		$	475,444		$	487,377
Comparable sales percentages by line of business (A):
Service center revenue	3.2		%	-0.3		%	1.4		%	0.2		%
Retail sales	-1.0		%	-4.6		%	-1.9		%	-3.1		%
Total revenues	1.3		%	-2.4		%	-0.1		%	-1.3		%
Gross profit percentage by line of business (A):
Gross profit percentage from service center revenue, prior to impairment charge	17.7		%	16.3		%	20.4		%	19.4		%
Impairment charge	(0.6		)	(0.7		)	(0.4		)	(0.5		)
Gross profit percentage from service center revenue	17.1		%	15.6		%	20.0		%	18.9		%
Gross profit percentage from retail sales, prior to impairment charge	23.6		%	27.7		%	26.6		%	29.3		%
Impairment charge	(0.3		)	(0.4		)	(0.3		)	(0.2		)
Gross profit percentage from retail sales	23.2		%	27.3		%	26.3		%	29.0		%
Total gross profit percentage	19.8		%	21.0		%	22.8		%	23.6		%

(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.