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 |
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|
|
|
| ||
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 |
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|
|
| ||
Supplemental balance sheet information: |
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|
|
|
| ||
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 |
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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 |
| $ | 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 |
| ||||
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Basic (loss) earnings per share: |
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|
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|
|
| ||||
(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 |
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Diluted (loss) earnings per share: |
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|
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|
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|
|
|
|
|
| ||||
(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 |
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Other comprehensive (loss) income: |
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|
| ||||
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 |
| ||
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|
| ||
Cash flows from operating activities: |
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|
|
|
| ||
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: |
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|
|
|
| ||
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 |
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Supplemental cash flow information: |
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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 |
| ||||
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(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 | ) | ||||
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Net (loss) earnings |
|
| $ | (26,666 | ) | $ | (3,331 | ) | $ | (27,293 | ) | $ | 6,865 |
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(b) Basic average number of common shares outstanding during period |
|
| 53,816 |
| 53,422 |
| 53,608 |
| 53,378 |
| ||||
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Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
|
| — |
| 546 |
| — |
| 585 |
| ||||
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(c) Diluted average number of common shares assumed outstanding during period |
|
| 53,816 |
| 53,968 |
| 53,608 |
| 53,963 |
| ||||
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Basic (loss) earnings per share: |
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(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 |
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Diluted (loss) earnings per share: |
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(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 |
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Capital expenditures |
| $ | 12,294 |
| $ | 15,648 |
| $ | 67,269 |
| $ | 53,982 |
|
Depreciation |
| $ | 19,581 |
| $ | 18,948 |
| $ | 75,099 |
| $ | 78,439 |
|
Non-operating income: |
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|
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| ||||
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 |
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Comparable sales percentages: |
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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 | % | ||||
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Total square feet of retail space (including service centers) |
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|
|
| 12,942,000 |
| 12,907,000 |
| ||||
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Store count |
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Supercenter |
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|
| 563 |
| 568 |
| ||||
Service & Tire Center |
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|
| 237 |
| 225 |
| ||||
Retail Only |
|
|
|
|
| 6 |
| 6 |
| ||||
Total |
|
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|
|
| 806 |
| 799 |
| ||||
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Sales and gross profit by line of business (A): |
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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 |
|
|
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|
|
|
|
|
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|
| ||||
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 |
|
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| ||||
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 |
|
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|
|
|
|
| ||||
Comparable sales percentages by line of business (A): |
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| ||||
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 | % | ||||
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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 |
| 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 | % | ||||
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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 | % | ||||
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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.