Exhibit 99.2
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES | (UNAUDITED) |
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
|
| August 1, 2015 |
| January 31, 2015 |
| August 2, 2014 |
| |||
Assets |
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|
| |||
Current assets: |
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|
|
|
|
|
| |||
Cash and cash equivalents |
| $ | 62,408 |
| $ | 38,044 |
| $ | 38,423 |
|
Accounts receivable, less allowance for uncollectible accounts of $1,719, $1,604 and $2,102 |
| 29,762 |
| 31,013 |
| 27,908 |
| |||
Merchandise inventories |
| 636,692 |
| 656,957 |
| 659,547 |
| |||
Prepaid expenses |
| 20,831 |
| 27,952 |
| 21,314 |
| |||
Other current assets |
| 50,866 |
| 55,986 |
| 56,172 |
| |||
Assets held for disposal |
| 2,466 |
| 2,648 |
| 2,647 |
| |||
Total current assets |
| 803,025 |
| 812,600 |
| 806,011 |
| |||
Property and equipment, net of accumulated depreciation of $1,276,588, $1,251,797 and $1,254,126 |
| 587,805 |
| 604,380 |
| 623,285 |
| |||
Goodwill |
| 32,869 |
| 32,869 |
| 56,794 |
| |||
Deferred income taxes |
| 49,136 |
| 56,571 |
| 56,406 |
| |||
Other long-term assets |
| 34,345 |
| 35,321 |
| 38,236 |
| |||
Total assets |
| $ | 1,507,180 |
| $ | 1,541,741 |
| $ | 1,580,732 |
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| |||
Liabilities and stockholders’ equity |
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| |||
Current liabilities: |
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|
|
|
| |||
Accounts payable |
| $ | 216,826 |
| $ | 227,132 |
| $ | 219,423 |
|
Trade payable program liability |
| 134,356 |
| 140,904 |
| 137,214 |
| |||
Accrued expenses |
| 210,689 |
| 226,176 |
| 224,399 |
| |||
Deferred income taxes |
| 65,542 |
| 61,216 |
| 70,785 |
| |||
Current maturities of long-term debt |
| 2,000 |
| 2,000 |
| 2,000 |
| |||
Total current liabilities |
| 629,413 |
| 657,428 |
| 653,821 |
| |||
|
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|
| |||
Long-term debt less current maturities |
| 193,000 |
| 211,000 |
| 220,000 |
| |||
Other long-term liabilities |
| 43,154 |
| 45,567 |
| 46,899 |
| |||
Deferred gain from asset sales |
| 97,125 |
| 103,596 |
| 108,521 |
| |||
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 68,557,046 shares |
| 68,557 |
| 68,557 |
| 68,557 |
| |||
Additional paid-in capital |
| 296,750 |
| 298,299 |
| 297,924 |
| |||
Retained earnings |
| 408,565 |
| 397,890 |
| 432,476 |
| |||
Accumulated other comprehensive income |
| (294 | ) | (391 | ) | 213 |
| |||
Treasury stock, at cost - 14,576,481 shares; 14,988,205 shares and 15,265,028 shares |
| (229,090 | ) | (240,205 | ) | (247,679 | ) | |||
Total stockholders’ equity |
| 544,488 |
| 524,150 |
| 551,491 |
| |||
Total liabilities and stockholders’ equity |
| $ | 1,507,180 |
| $ | 1,541,741 |
| $ | 1,580,732 |
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| |||
Supplemental balance sheet information: |
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| |||
Working capital |
| $ | 173,612 |
| $ | 155,172 |
| $ | 152,190 |
|
Current ratio |
| 1.28 |
| 1.24 |
| 1.23 |
| |||
Accounts payable to inventory ratio |
| 55.2 | % | 56.0 | % | 54.1 | % | |||
Total debt as a percent of total capitalization |
| 26.4 | % | 28.9 | % | 28.7 | % | |||
Debt as a percent of total capitalization, net |
| 19.6 | % | 25.0 | % | 25.0 | % |
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollar amounts in thousands, except per share amounts)
|
| Thirteen weeks ended |
| Twenty-six weeks ended |
| ||||||||||||||||
|
| August 1, 2015 |
| August 2, 2014 |
| August 1, 2015 |
| August 2, 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 |
| $ | 401,880 |
| 76.3 |
| $ | 400,931 |
| 76.3 |
| $ | 815,005 |
| 76.3 |
| $ | 812,837 |
| 76.4 |
|
Service revenue |
| 124,666 |
| 23.7 |
| 124,842 |
| 23.7 |
| 253,802 |
| 23.7 |
| 251,758 |
| 23.6 |
| ||||
Total revenues |
| 526,546 |
| 100.0 |
| 525,773 |
| 100.0 |
| 1,068,807 |
| 100.0 |
| 1,064,595 |
| 100.0 |
| ||||
Costs of merchandise sales |
| 279,707 |
| 69.6 |
| 280,100 |
| 69.9 |
| 565,950 |
| 69.4 |
| 565,147 |
| 69.5 |
| ||||
Costs of service revenue |
| 119,267 |
| 95.7 |
| 121,376 |
| 97.2 |
| 241,518 |
| 95.2 |
| 242,024 |
| 96.1 |
| ||||
Total costs of revenues |
| 398,974 |
| 75.8 |
| 401,476 |
| 76.4 |
| 807,468 |
| 75.5 |
| 807,171 |
| 75.8 |
| ||||
Gross profit from merchandise sales |
| 122,173 |
| 30.4 |
| 120,831 |
| 30.1 |
| 249,055 |
| 30.6 |
| 247,690 |
| 30.5 |
| ||||
Gross profit from service revenue |
| 5,399 |
| 4.3 |
| 3,466 |
| 2.8 |
| 12,284 |
| 4.8 |
| 9,734 |
| 3.9 |
| ||||
Total gross profit |
| 127,572 |
| 24.2 |
| 124,297 |
| 23.6 |
| 261,339 |
| 24.5 |
| 257,424 |
| 24.2 |
| ||||
Selling, general and administrative expenses |
| 117,272 |
| 22.3 |
| 120,624 |
| 22.9 |
| 238,118 |
| 22.3 |
| 247,694 |
| 23.3 |
| ||||
Net gain (loss) from dispositions of assets |
| 267 |
| 0.1 |
| (400 | ) | (0.1 | ) | 485 |
| — |
| (410 | ) | — |
| ||||
Gain on sale from leasehold interest |
| — |
| — |
| — |
| — |
| 10,000 |
| 0.9 |
| — |
| — |
| ||||
Operating profit |
| 10,567 |
| 2.0 |
| 3,273 |
| 0.6 |
| 33,706 |
| 3.2 |
| 9,320 |
| 0.9 |
| ||||
Other income |
| 334 |
| 0.1 |
| 316 |
| 0.1 |
| 706 |
| 0.1 |
| 758 |
| 0.1 |
| ||||
Interest expense |
| (3,262 | ) | (0.6 | ) | (3,002 | ) | (0.6 | ) | (6,591 | ) | (0.6 | ) | (6,784 | ) | (0.6 | ) | ||||
Earnings from continuing operations before income taxes and discontinued operations |
| 7,639 |
| 1.5 |
| 587 |
| 0.1 |
| 27,821 |
| 2.6 |
| 3,294 |
| 0.3 |
| ||||
Income tax expense |
| (2,903 | ) | (38.0 | )(1) | (764 | ) | (130.1 | )(1) | (11,225 | ) | (40.3 | )(1) | (1,831 | ) | (55.6 | )(1) | ||||
Earnings (loss) from continuing operations before discontinued operations |
| 4,736 |
| 0.9 |
| (177 | ) | — |
| 16,596 |
| 1.6 |
| 1,463 |
| 0.1 |
| ||||
Earnings (loss) from discontinued operations, net of tax |
| 74 |
| — |
| (96 | ) | — |
| 108 |
| — |
| (125 | ) | — |
| ||||
Net earnings (loss) |
| 4,810 |
| 0.9 |
| (273 | ) | (0.1 | ) | 16,704 |
| 1.6 |
| 1,338 |
| 0.1 |
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Basic earnings per share: |
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| ||||
Earnings from continuing operations before discontinued operations |
| $ | 0.09 |
|
|
| $ | — |
|
|
| $ | 0.31 |
|
|
| $ | 0.03 |
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|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| ||||
Basic earnings per share |
| $ | 0.09 |
|
|
| $ | — |
|
|
| $ | 0.31 |
|
|
| $ | 0.03 |
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Diluted earnings per share: |
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| ||||
Earnings from continuing operations before discontinued operations |
| $ | 0.09 |
|
|
| $ | — |
|
|
| $ | 0.31 |
|
|
| $ | 0.03 |
|
|
|
Discontinued operations, net of tax |
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| ||||
Diluted earnings per share |
| $ | 0.09 |
|
|
| $ | — |
|
|
| $ | 0.31 |
|
|
| $ | 0.03 |
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Other comprehensive (loss) income: |
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Derivative financial instruments adjustment, net of tax |
| (49 | ) |
|
| (128 | ) |
|
| 97 |
|
|
| (166 | ) |
|
| ||||
Other comprehensive (loss) income |
| (49 | ) |
|
| (128 | ) |
|
| 97 |
|
|
| (166 | ) |
|
| ||||
Comprehensive income (loss) |
| $ | 4,761 |
|
|
| $ | (401 | ) |
|
| $ | 16,801 |
|
|
| $ | 1,172 |
|
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|
(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)
Twenty-six weeks ended |
| August 1, 2015 |
| August 2, 2014 |
| ||
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Cash flows from operating activities: |
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| ||
Net earnings |
| $ | 16,704 |
| $ | 1,338 |
|
Adjustments to reconcile net earnings to net cash provided by continuing operations: |
|
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|
|
| ||
Net (earnings) loss from discontinued operations |
| (108 | ) | 125 |
| ||
Depreciation |
| 33,195 |
| 36,346 |
| ||
Amortization of deferred gain from asset sales |
| (6,471 | ) | (6,302 | ) | ||
Amortization of deferred financing costs |
| 1,252 |
| 1,311 |
| ||
Stock compensation expense |
| 2,267 |
| 1,799 |
| ||
Deferred income taxes |
| 10,261 |
| 2,727 |
| ||
Net (gain) loss from dispositions of assets |
| (485 | ) | 410 |
| ||
Loss from asset impairment |
| 2,476 |
| 3,839 |
| ||
Other |
| (554 | ) | (79 | ) | ||
Changes in assets and liabilities, net of the effects of acquisitions: |
|
|
|
|
| ||
Decrease in accounts receivable, prepaid expenses and other |
| 14,675 |
| 12,572 |
| ||
Decrease in merchandise inventories |
| 20,265 |
| 12,807 |
| ||
Decrease in accounts payable |
| (9,022 | ) | (34,591 | ) | ||
Decrease in accrued expenses |
| (15,147 | ) | (15,167 | ) | ||
Decrease in other long-term liabilities |
| (1,839 | ) | (1,277 | ) | ||
Net cash provided by continuing operations |
| 67,469 |
| 15,858 |
| ||
Net cash used in discontinued operations |
| (194 | ) | (300 | ) | ||
Net cash provided by operating activities |
| 67,275 |
| 15,558 |
| ||
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Cash flows from investing activities: |
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| ||
Capital expenditures |
| (22,102 | ) | (39,010 | ) | ||
Proceeds from dispositions of assets |
| 2,066 |
| 35 |
| ||
Net cash used in investing activities |
| (20,036 | ) | (38,975 | ) | ||
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Cash flows from financing activities: |
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Borrowings under line of credit agreements |
| 112,193 |
| 339,179 |
| ||
Payments under line of credit agreements |
| (129,193 | ) | (317,679 | ) | ||
Borrowings on trade payable program liability |
| 80,890 |
| 94,353 |
| ||
Payments on trade payable program liability |
| (87,438 | ) | (86,940 | ) | ||
Debt payments |
| (1,000 | ) | (1,000 | ) | ||
Proceeds from stock issuance |
| 1,673 |
| 496 |
| ||
Net cash (used in) provided by financing activities |
| (22,875 | ) | 28,409 |
| ||
Net increase in cash and cash equivalents |
| 24,364 |
| 4,992 |
| ||
Cash and cash equivalents at beginning of period |
| 38,044 |
| 33,431 |
| ||
Cash and cash equivalents at end of period |
| $ | 62,408 |
| $ | 38,423 |
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Supplemental cash flow information: |
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Cash paid for income taxes |
| $ | 940 |
| $ | 660 |
|
Cash received from income tax refunds |
| $ | — |
| $ | 244 |
|
Cash paid for interest |
| $ | 5,257 |
| $ | 5,584 |
|
Accrued purchases of property and equipment |
| $ | 2,110 |
| $ | 3,537 |
|
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 |
| Twenty-six weeks ended |
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|
| August 1, 2015 |
| August 2, 2014 |
| August 1, 2015 |
| August 2, 2014 |
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(a) |
| Earnings (loss) from continuing operations before discontinued operations |
|
|
| $ | 4,736 |
| $ | (177 | ) | $ | 16,596 |
| $ | 1,463 |
|
|
| Earnings (loss) from discontinued operations, net of tax |
|
|
| 74 |
| (96 | ) | 108 |
| (125 | ) | ||||
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| Net earnings (loss) |
|
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| $ | 4,810 |
| $ | (273 | ) | $ | 16,704 |
| $ | 1,338 |
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(b) |
| Basic average number of common shares outstanding during period |
|
|
| 54,239 |
| 53,528 |
| 54,167 |
| 53,499 |
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| Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price |
|
|
| 192 |
| — |
| 141 |
| 526 |
| ||||
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(c) |
| Diluted average number of common shares assumed outstanding during period |
|
|
| 54,431 |
| 53,528 |
| 54,308 |
| 54,025 |
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| Basic earnings per share: |
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| Earnings from continuing operations before discontinued operations |
| (a) / (b) |
| $ | 0.09 |
| $ | — |
| $ | 0.31 |
| $ | 0.03 |
|
|
| Discontinued operations, net of tax |
|
|
| — |
| — |
| — |
| — |
| ||||
|
| Basic earnings per share |
|
|
| $ | 0.09 |
| $ | — |
| $ | 0.31 |
| $ | 0.03 |
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| Diluted earnings per share: |
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|
| Earnings from continuing operations before discontinued operations |
| (a) / (c) |
| $ | 0.09 |
| $ | — |
| $ | 0.31 |
| $ | 0.03 |
|
|
| Discontinued operations, net of tax |
|
|
| — |
| — |
| — |
| — |
| ||||
|
| Diluted earnings per share |
|
|
| $ | 0.09 |
| $ | — |
| $ | 0.31 |
| $ | 0.03 |
|
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES |
|
ADDITIONAL INFORMATION | (dollar amounts in thousands) |
|
| Thirteen weeks ended |
| Twenty-six weeks ended |
| ||||||||
|
| August 1, 2015 |
| August 2, 2014 |
| August 1, 2015 |
| August 2, 2014 |
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Capital expenditures |
| $ | 9,835 |
| $ | 24,445 |
| $ | 22,102 |
| $ | 39,010 |
|
Depreciation |
| $ | 16,301 |
| $ | 18,026 |
| $ | 33,195 |
| $ | 36,346 |
|
Non-operating income: |
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|
|
|
|
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| ||||
Net rental revenue |
| $ | 277 |
| $ | 284 |
| $ | 581 |
| $ | 683 |
|
Investment income |
| 52 |
| 46 |
| 112 |
| 93 |
| ||||
Other income |
| 5 |
| (14 | ) | 13 |
| (18 | ) | ||||
Total |
| $ | 334 |
| $ | 316 |
| $ | 706 |
| $ | 758 |
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Comparable sales percentages: |
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Service |
| -0.4 | % | 5.4 | % | 0.5 | % | 4.3 | % | ||||
Merchandise |
| 0.5 | % | -3.8 | % | 0.6 | % | -3.3 | % | ||||
Total |
| 0.3 | % | -1.8 | % | 0.6 | % | -1.6 | % | ||||
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Total square feet of retail space (including service centers) |
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|
| 12,885,000 |
| 12,807,000 |
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Store count |
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Supercenter |
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| 562 |
| 565 |
| ||||
Service & Tire Center |
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|
| 234 |
| 228 |
| ||||
Retail Only |
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|
|
| 5 |
| 6 |
| ||||
Total |
|
|
|
|
| 801 |
| 799 |
| ||||
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Sales and gross profit by line of business (A): |
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Service center revenue |
| $ | 290,806 |
| $ | 288,302 |
| $ | 591,689 |
| 582,215 |
| |
Retail sales |
| 235,740 |
| 237,471 |
| 477,118 |
| 482,380 |
| ||||
Total revenues |
| $ | 526,546 |
| $ | 525,773 |
| $ | 1,068,807 |
| $ | 1,064,595 |
|
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| ||||
Gross profit from service center revenue, prior to impairment charge |
| $ | 64,316 |
| $ | 62,063 |
| $ | 131,966 |
| 126,798 |
| |
Service center revenue impairment charge |
| (605 | ) | (1,379 | ) | (1,356 | ) | (2,335 | ) | ||||
Gross profit from service center revenue |
| $ | 63,711 |
| $ | 60,684 |
| $ | 130,610 |
| $ | 124,463 |
|
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|
|
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|
| ||||
Gross profit from retail sales, prior to impairment charge |
| $ | 64,934 |
| $ | 64,901 |
| $ | 131,847 |
| 134,464 |
| |
Retail sales impairment charge |
| (1,073 | ) | (1,288 | ) | (1,118 | ) | (1,503 | ) | ||||
Gross profit from retail sales |
| $ | 63,861 |
| $ | 63,613 |
| $ | 130,729 |
| $ | 132,961 |
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Total gross profit |
| $ | 127,572 |
| $ | 124,297 |
| $ | 261,339 |
| $ | 257,424 |
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Comparable sales percentages by line of business (A): |
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Service center revenue |
| 0.6 | % | -0.2 | % | 1.2 | % | -0.6 | % | ||||
Retail sales |
| 0.0 | % | -3.6 | % | -0.2 | % | -2.7 | % | ||||
Total revenues |
| 0.3 | % | -1.8 | % | 0.6 | % | -1.6 | % | ||||
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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 |
| 22.1 | % | 21.5 | % | 22.3 | % | 21.8 | % | ||||
Impairment charge |
| (0.2 | ) | (0.5 | ) | (0.2 | ) | (0.4 | ) | ||||
Gross profit percentage from service center revenue |
| 21.9 | % | 21.0 | % | 22.1 | % | 21.4 | % | ||||
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Gross profit percentage from retail sales, prior to impairment charge |
| 27.5 | % | 27.3 | % | 27.6 | % | 27.9 | % | ||||
Impairment charge |
| (0.5 | ) | (0.5 | ) | (0.2 | ) | (0.3 | ) | ||||
Gross profit percentage from retail sales |
| 27.1 | % | 26.8 | % | 27.4 | % | 27.6 | % | ||||
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Total gross profit percentage |
| 24.2 | % | 23.6 | % | 24.5 | % | 24.2 | % |
(A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.