<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended July 29, 1995
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from to
----------- ----------
Commission File No. 1-3381
------
The Pep Boys - Manny, Moe & Jack
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer ID number)
incorporation or organization)
3111 W. Allegheny Ave. Philadelphia, PA 19132
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
215-229-9000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days. Yes ( x ) No ( )
As of July 29, 1995 there were 62,001,488 shares of the registrant's Common
Stock outstanding.
<PAGE>
<PAGE>2
- -------------------------------------------------------------------
Index Page
- -------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Condensed Consolidated
Financial Statements (Unaudited)
Consolidated Balance Sheets -
July 29, 1995 and January 28, 1995 3
Consolidated Statements of Earnings -
Thirteen and Twenty-six weeks ended
July 29, 1995 and July 30, 1994 4
Condensed Consolidated Statements of
Cash Flows - Twenty-six weeks ended
July 29, 1995 and July 30, 1994 5
Notes to Condensed Consolidated
Financial Statements 6
Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7-11
PART II - OTHER INFORMATION 12
- ---------------------------
SIGNATURE 13
- -------------------------------------------------------------------
<PAGE>
<PAGE>3
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except per share amounts)
<CAPTION>
July 29, 1995 Jan. 28, 1995*
------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash....................................................... $ 17,882 $ 11,748
Accounts receivable, net................................... 3,467 3,804
Merchandise inventories.................................... 378,371 366,843
Deferred income taxes...................................... 12,000 12,000
Other...................................................... 10,474 16,914
------------- -------------
Total Current Assets.................................... 422,194 411,309
Property and Equipment - at cost
Land....................................................... 232,116 215,623
Building and improvements.................................. 629,092 592,748
Furniture, fixtures and equipment.......................... 304,089 283,317
Construction in progress................................... 24,564 13,287
------------ -------------
1,189,861 1,104,975
Less accumulated depreciation and amortization............. 267,491 243,065
------------- -------------
Total Property and Equipment............................ 922,370 861,910
Other........................................................ 19,064 17,800
------------- -------------
Total Assets.................................................. $1,363,628 $1,291,019
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Checks outstanding......................................... $ 25,860 $ 8,422
Accounts payable........................................... 110,745 91,742
Accrued expenses........................................... 89,426 72,318
Short-term borrowings...................................... - 97,200
Income taxes payable....................................... 9,605 -
Current maturities of long-term debt....................... 108,201 19,769
------------- -------------
Total Current Liabilities............................... 343,837 289,451
Long-Term Debt, less current maturities...................... 273,362 294,537
Deferred Income Taxes........................................ 34,528 34,528
Convertible Subordinated Notes............................... 86,250 86,250
Commitments
Stockholders' Equity:
Common Stock, par value $1 per share:
Authorized 500,000,000 shares - Issued and
outstanding 62,001,488 and 61,501,679..................... 62,001 61,502
Additional paid-in capital................................. 133,955 130,732
Retained earnings.......................................... 489,964 454,288
------------- ------------
685,920 646,522
Less:
Shares held in benefits trust, 2,232,500 shares, at cost. 60,269 60,269
------------- ------------
Total Stockholders' Equity.............................. 625,651 586,253
------------- ------------
Total Liabilities and Stockholders' Equity.................... $1,363,628 $1,291,019
============= ============
<FN>
See notes to condensed consolidated financial statements.
*Taken from the audited financial statements at Jan. 28, 1995.
/TABLE
<PAGE>
<PAGE>4
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollar amounts in thousands, except per share amounts)
UNAUDITED
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
--------------------------------- ---------------------------------
July 29, 1995 July 30, 1994 July 29, 1995 July 30, 1994
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Merchandise Sales.................................... $ 349,567 $ 319,775 $ 657,116 $ 610,601
Service Revenue...................................... 61,271 50,620 114,931 97,494
------------- ------------- ------------- -------------
Total Revenues....................................... 410,838 370,395 772,047 708,095
Costs of Merchandise Sales........................... 242,825 226,640 460,086 434,863
Costs of Service Revenue............................. 48,270 40,870 91,831 79,820
------------- ------------- ------------- -------------
Total Costs of Revenues.............................. 291,095 267,510 551,917 514,683
Gross Profit from Merchandise Sales.................. 106,742 93,135 197,030 175,738
Gross Profit from Service Revenue.................... 13,001 9,750 23,100 17,674
------------- ------------- ------------- -------------
Total Gross Profit................................... 119,743 102,885 220,130 193,412
Selling, General and Administrative Expenses......... 72,503 60,437 139,558 118,363
------------- ------------- ------------- -------------
Operating Profit..................................... 47,240 42,448 80,572 75,049
Nonoperating Income.................................. 692 1,086 1,148 2,185
Interest Expense..................................... 7,718 6,056 15,683 11,776
------------- ------------- ------------- ------------
Earnings Before Income Taxes and Cumulative
Effect of Change in Accounting Principle............ 40,214 37,478 66,037 65,458
Income Taxes......................................... 14,980 13,960 24,599 24,383
------------- ------------- ------------- ------------
Earnings Before Cumulative Effect of Change in
Accounting Principle................................ 25,234 23,518 41,438 41,075
Cumulative Effect of Change in Accounting Principle.. - - - (4,300)
------------ ------------- ------------ -------------
Net Earnings......................................... 25,234 23,518 41,438 36,775
Retained Earnings, beginning of period............... 467,675 399,398 454,288 388,653
Cash Dividends....................................... 2,945 2,607 5,762 5,119
------------ ------------- ------------ -------------
Retained Earnings, end of period..................... $ 489,964 $ 420,309 $ 489,964 $ 420,309
============ ============= ============ =============
Earnings per Share Before Cumulative Effect
of Change in Accounting Principle................... $ .41 $ .39 $ .68 $ .68
Cumulative Effect of Change in Accounting Principle.. - - - (.07)
------------ ------------- ------------ -------------
Net Earnings per Share............................... $ .41 $ .39 $ .68 $ .61
============ ============= ============ =============
Cash Dividends per Share............................. $ .0475 $ .0425 $ .095 $ .085
============ ============= ============ =============
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>5
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
UNAUDITED
<CAPTION>
Twenty-six weeks ended
---------------------------------
July 29, 1995 July 30, 1994
------------- -------------
<S> <C> <C>
Net Cash Provided by Operating Activities....................... $ 125,162 $ 21,985
Cash Flows from Investing Activities:
Capital expenditures............................................ (86,074) (71,245)
Other, net...................................................... 37 41
------------ ------------
Net Cash Used in Investing Activities........................... (86,037) (71,204)
Cash Flows from Financing Activities:
Net (payments) borrowings under line of credit agreements....... (110,200) 93,200
Net proceeds from issuance of notes............................. 98,992 -
Reduction of long-term debt..................................... (19,743) (7,882)
Dividends paid.................................................. (5,762) (5,119)
Proceeds from exercise of stock options
and dividend reinvestment plan................................ 3,722 3,708
Acquisition of treasury stock................................... - (29,946)
------------ -----------
Net Cash (Used in) Provided by Financing Activities............. (32,991) 53,961
------------ -----------
Net Increase in Cash................................................. 6,134 4,742
Cash at Beginning of Year............................................ 11,748 12,050
------------ -----------
Cash at End of Period................................................ $ 17,882 $ 16,792
============ ===========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>6
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Condensed Consolidated Financial Statements
The consolidated balance sheet as of July 29, 1995, the consolidated
statements of earnings for the thirteen and twenty-six week periods ended
July 29, 1995 and July 30, 1994 and the condensed consolidated statements of
cash flows for the twenty-six week periods ended July 29, 1995 and July 30,
1994 have been prepared by the Company without audit. In the opinion of
management, all adjustments (which included only normal recurring adjustments
) necessary to present fairly the financial position, results of operations
and cash flows at July 29, 1995 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's January 28,
1995 annual report to shareholders. The results of operations for the
thirteen and twenty-six week periods ended July 29, 1995 are not necessarily
indicative of the operating results for the full year.
NOTE 2. Merchandise Inventories
Merchandise inventories are valued at the lower of cost (last-in, first-out)
or market. If the first-in, first-out method of valuing inventories had been
used by the Company, inventories would have been approximately $15,319,000
higher at July 29, 1995 and January 28, 1995.
<PAGE>
<PAGE>7
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED JULY 29, 1995
Results of Operations -
The following table presents for the periods indicated certain items in the consolidated statements of earnings as a
percentage of total revenues (except as otherwise provided) and the percentage change in dollar amounts of such items
compared to the indicated prior period.
<CAPTION>
Percentage of Total Revenues Percentage Change
- ------------------------------------------------------ ---------------------------------- -----------------
Thirteen weeks ended July 29, 1995 July 30, 1994 Fiscal 1995 vs.
(Fiscal 1995) (Fiscal 1994) Fiscal 1994
- ------------------------------------------------------ -------------- ------------- -----------------
<S> <C> <C> <C>
Merchandise Sales..................................... 85.1% 86.3% 9.3%
Service Revenue (1)................................... 14.9 13.7 21.0
------ ------ ------
Total Revenues........................................ 100.0 100.0 10.9
Costs of Merchandise Sales (2)........................ 69.5 (3) 70.9 (3) 7.1
Costs of Service Revenue (2).......................... 78.8 (3) 80.7 (3) 18.1
------ ------ ------
Total Costs of Revenues............................... 70.9 72.2 8.8
Gross Profit from Merchandise Sales................... 30.5 (3) 29.1 (3) 14.6
Gross Profit from Service Revenue..................... 21.2 (3) 19.3 (3) 33.3
------ ------ ------
Total Gross Profit.................................... 29.1 27.8 16.4
Selling, General and Administrative Expenses.......... 17.6 16.3 20.0
------ ------ ------
Operating Profit...................................... 11.5 11.5 11.3
Nonoperating Income................................... .2 .3 (36.3)
Interest Expense...................................... 1.9 1.6 27.4
------ ------ ------
Earnings Before Income Taxes and Cumulative Effect
of Change in Accounting Principle.................... 9.8 10.2 7.3
Income Taxes.......................................... 37.3 (4) 37.2 (4) 7.3
------ ------ ------
Earnings Before Cumulative Effect
of Change in Accounting Principle.................... 6.1 6.3 7.3
Cumulative Effect of Change in Accounting Principle... - - -
------ ------ ------
Net Earnings.......................................... 6.1 6.3 7.3
====== ====== ======
<FN>
(1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the sale
of any installed parts or materials.
(2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of service
revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include
utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes.
</TABLE>
<PAGE>
<PAGE>8
Thirteen Weeks Ended July 29, 1995 vs. Thirteen Weeks Ended July 30, 1994
- ------------------------------------------------------------------------
Total revenues for the second quarter increased 11% due to a higher store
count (453 at July 29, 1995 compared with 395 at July 30, 1994) coupled with
a 1% increase in comparable store revenues (revenues generated by stores in
operation during the same months of each period). Comparable store
merchandise sales decreased 1% while comparable service revenue increased 9%.
Gross profit from merchandise sales increased, as a percentage of merchandise
sales, due primarily to higher merchandise margins offset, in part, by an
increase in store occupancy costs.
Gross profit from service revenue increased, as a percentage of service
revenue, due primarily to lower service employee benefits costs.
Selling, general and administrative expenses increased, as a percentage of
total revenues, due primarily to an increase in store expenses.
<TABLE>
Nonoperating income consisted of the following:
(in thousands)
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Rental revenue $ 632 $ 319
Investment income 33 226
Other income 27 541
------ ------
Total $ 692 $1,086
====== ======
</TABLE>
The 27% increase in interest expense was due primarily to higher debt levels
coupled with higher interest rates.
The 7% increase in net earnings before the cumulative effect of a change in
accounting principle in 1995 as compared with 1994, was due primarily to
increases in gross profit from merchandise sales and gross profit from
service revenue, as a percentage of related sales and revenues, offset, in
part, by an increase in selling, general and administrative expenses, as a
percentage of total revenues, and higher interest expense.
<PAGE>
<PAGE>9
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
TWENTY-SIX WEEKS ENDED JULY 29, 1995
Results of Operations -
The following table presents for the periods indicated certain items in the consolidated statements of earnings as a
percentage of total revenues (except as otherwise provided) and the percentage change in dollar amounts of such items
compared to the indicated prior period.
<CAPTION>
Percentage of Total Revenues Percentage Change
- ------------------------------------------------------ ---------------------------------- -----------------
Twenty-six weeks ended July 29, 1995 July 30, 1994 Fiscal 1995 vs.
(Fiscal 1995) (Fiscal 1994) Fiscal 1994
- ------------------------------------------------------ -------------- ------------- -----------------
<S> <C> <C> <C>
Merchandise Sales..................................... 85.1% 86.2% 7.6%
Service Revenue (1)................................... 14.9 13.8 17.9
------- ------- -------
Total Revenues........................................ 100.0 100.0 9.0
Costs of Merchandise Sales (2)........................ 70.0 (3) 71.2 (3) 5.8
Costs of Service Revenue (2).......................... 79.9 (3) 81.9 (3) 15.0
------ ------ ------
Total Costs of Revenues............................... 71.5 72.7 7.2
Gross Profit from Merchandise Sales................... 30.0 (3) 28.8 (3) 12.1
Gross Profit from Service Revenue..................... 20.1 (3) 18.1 (3) 30.7
------ ------ ------
Total Gross Profit.................................... 28.5 27.3 13.8
Selling, General and Administrative Expenses.......... 18.1 16.7 17.9
------ ------ ------
Operating Profit...................................... 10.4 10.6 7.4
Nonoperating Income................................... .1 .3 (47.5)
Interest Expense...................................... 2.0 1.7 33.2
------ ------ ------
Earnings Before Income Taxes and Cumulative Effect
of Change in Accounting Principle.................... 8.5 9.2 .9
Income Taxes.......................................... 37.3 (4) 37.2 (4) .9
------ ------ ------
Earnings Before Cumulative Effect
of Change in Accounting Principle.................... 5.4 5.8 .9
Cumulative Effect of Change in Accounting Principle... - (.6) -
------ ------ ------
Net Earnings.......................................... 5.4 5.2 12.7
====== ====== ======
<FN>
(1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the sale
of any installed parts or materials.
(2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of service
revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include
utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes.
</TABLE>
<PAGE>
<PAGE>10
Twenty-six Weeks Ended July 29, 1995 vs. Twenty-six Weeks Ended July 30, 1994
- -----------------------------------------------------------------------------
Total revenues for the first half increased 9% due to a higher store count
(453 at July 29, 1995 compared with 395 at July 30, 1994) while comparable
store revenues decreased 1%. Comparable store merchandise sales decreased 2%
while comparable service revenue increased 6%.
Gross profit from merchandise sales increased, as a percentage of merchandise
sales, due primarily to higher merchandise margins offset, in part, by an
increase in store occupancy costs.
Gross profit from service revenue increased, as a percentage of service
revenue, due primarily to a decrease in service employee benefits costs.
Selling, general and administrative expenses increased, as a percentage of
total revenues, due primarily to increases in store expenses, general office
expenses and media costs.
<TABLE>
Nonoperating income consisted of the following:
(in thousands)
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Rental revenue $1,010 $ 647
Investment income 77 700
Other income 61 838
------ ------
Total $1,148 $2,185
====== ======
</TABLE>
The 33% increase in interest expense was due primarily to higher debt levels
coupled with higher interest rates.
The 1% increase in earnings before the cumulative effect of a change in
accounting principle in 1995 as compared with 1994, was due primarily to
increases in gross profit from merchandise sales and gross profit from
service revenue, as a percentage of related sales and revenues, offset, in
part, by increases in selling, general and administrative expenses and
interest expense.
On January 30, 1994, the Company adopted SFAS No. 112, "Employers' Accounting
for Postemployment Benefits." This statement establishes accrual accounting
standards for employer-provided benefits which cover former or inactive
employees after employment, but before retirement. Adoption of this
accounting standard on January 30, 1994 resulted in a one-time charge to
earnings of $4,300,000 (net of income tax benefit of $2,552,000) or $.07 per
share recognized as a cumulative effect of a change in accounting principle.
<PAGE>
<PAGE>11
LIQUIDITY AND CAPITAL RESOURCES - July 29, 1995
- ----------------------------------------------
The Company's cash requirements arise principally from the need to finance
the acquisition, construction and equipping of new stores and to purchase
inventory. During the first twenty-six weeks of 1995, the Company invested
$86,074,000 in property and equipment while net inventory (the increase in
inventory less the net change in checks outstanding and accounts payable)
decreased $24,913,000. Working capital decreased from $121,858,000 at January
28, 1995 to $78,357,000 at July 29, 1995. At July 29, 1995 the Company had
stockholders' equity of $625,651,000 and long-term debt of $359,612,000. The
Company's long-term debt was 36% of its total capitalization at July 29, 1995
and 39% at January 28, 1995.
The Company plans to open approximately 54 new stores during the balance of
the current fiscal year. Management estimates that the cost of this
expansion, coupled with expenditures in existing stores, warehouses and
offices will be approximately $114,000,000. Funds required to finance the
store expansion including related inventory requirements are expected to come
primarily from operating activities with the remainder provided by unused
lines of credit which totalled $247,000,000 at July 29, 1995, or from
accessing traditional lending sources such as the public capital markets.
On June 12, 1995 the Company sold $100,000,000 of 7% notes due June 1, 2005.
Proceeds were used to repay portions of the Company's long-term variable-rate
bank debt, and for general corporate purposes.<PAGE>
<PAGE>12
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
An annual meeting of shareholders was held on May 31, 1995, The
shareholders approved the election of directors shown below.
Directors Elected at Annual Meeting of Shareholders
---------------------------------------------------
Malcolmn D. Pryor Chairman of the Board;
Pryor, McClendon, Counts & Co., Inc.
Benjamin Strauss Consultant to Pep Boys
Myles H. Tanenbaum President; Arbor Property Trust
David V. Wachs Chairman of the Board & CEO;
Charming Shoppes, Inc.
.................................................................
Directors whose term of office continued after the Annual Meeting
of Shareholders
-----------------------------------------------------------------
Mitchell G. Leibovitz Chairman of the Board & CEO; Pep Boys
Lennox K. Black Chairman of the Board & CEO;
Teleflex Incorporated
Chairman of the Board & CEO;
Penn Virginia Corporation
Lester Rosenfeld Private Investor
Pemberton Hutchinson Chairman of the Board;
Westmoreland Coal Company
Bernard J. Korman President & CEO; MEDIQ, Incorporated
J. Richard Leaman, Jr. President & CEO; S.D. Warren Company
...................................................................
The shareholders approved the appointment of the independent
auditors Deloitte & Touche, LLP with 45,354,012 affirmative votes,
119,576 negative votes and 149,373 abstentions.
The shareholders approved an amendment to the Company's 1990 Stock
Incentive Plan with 38,888,846 affirmative votes, 6,566,985
negative votes and 167,126 abstentions.
The shareholders approved an amendment to the Company's Bonus
Compensation Plan with 43,949,026 affirmative votes, 1,450,924
negative votes and 223,009 abstentions.
The shareholders did not approve a shareholder proposal to
recommend that management seek rewards other than stock options or
stock appreciation rights with 1,681,865 affirmative votes,
36,894,605 negative votes and 1,294,950 abstentions.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(10.1) Amendment to the Company's Bonus Compensation Plan
(11) Statement Re: Computation of Earnings Per Share
(27) Financial Data Schedules
(b) Reports on Form 8-K. No reports on Form 8-K have been filed
during the quarter for which this report is filed.<PAGE>
<PAGE>13
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PEP BOYS - MANNY, MOE & JACK
--------------------------------
(Registrant)
Date: August 31, 1995 By: /s/ Michael J. Holden
----------------------- -------------------------
Michael J. Holden
Senior Vice President &
Chief Financial Officer and Treasurer
<PAGE>
<PAGE>14
INDEX TO EXHIBITS
- -----------------
(10.1) Amendment to the Company's Bonus Compensation Plan
(11) Computations of Earnings Per Share
(27) Financial Data Schedule
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
---------------------------------- ---------------------------------
July 29, 1995 July 30, 1994 July 29, 1995 July 30, 1994
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Earnings before cumulative effect
of change in accounting principle.............. $25,234 $23,518 $41,438 $41,075
Adjustment for interest on $86,250,000, 4%
convertible subordinated notes, net of income
tax effect..................................... 540 - 1,079 -
------------- -------------- ------------- ------------
(a) Adjusted earnings before cumulative effect of
change in accounting principle................. 25,774 23,518 42,517 41,075
(b) Cumulative effect of change in
accounting principle........................... - - - (4,300)
------------- -------------- ------------- ------------
(c) Adjusted net earnings............................ $25,774 $23,518 $42,517 $36,775
============= ============== ============= ============
Average number of common shares outstanding
during the period.............................. 59,414 59,270 59,357 59,256
Common shares assumed issued upon conversion of
4% convertible subordinated notes 2,104 - 2,104 -
Common shares assumed issued upon exercise
of dilutive stock options, net of assumed
repurchase, at the average market price,
using the treasury stock method (1)............ 952 1,353 1,073 1,299
------------- ------------- ------------ ------------
(d) Average number of common shares assumed
outstanding during the period.................. 62,470 60,623 62,534 60,555
============= ============= ============ ============
Earnings per share before cumulative effect
of change in accounting principle (a/d)........ $ .41 $ .39 $ .68 $ .68
Cumulative effect of change in accounting
principle (b/d)................................ - - - (.07)
------------ ------------- ----------- -----------
Net earnings per share (c/d)..................... $ .41 $ .39 $ .68 $ .61
============ ============= =========== ============
<FN>
(1) The number of Common Shares assumed issued upon exercise of dilutive stock options is essentially the same for fully diluted
earnings per share.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE
SHEET AS OF JULY 29, 1995 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE TWENTY-SIX WEEK
PERIOD ENDED JULY 29, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> JUL-29-1995
<CASH> 17,882
<SECURITIES> 0
<RECEIVABLES> 3,568
<ALLOWANCES> 101
<INVENTORY> 378,371
<CURRENT-ASSETS> 422,194
<PP&E> 1,189,861
<DEPRECIATION> 267,491
<TOTAL-ASSETS> 1,363,628
<CURRENT-LIABILITIES> 343,837
<BONDS> 359,612
0
0
<COMMON> 62,001
<OTHER-SE> 563,650
<TOTAL-LIABILITY-AND-EQUITY> 1,363,628
<SALES> 657,116
<TOTAL-REVENUES> 772,047
<CGS> 460,086
<TOTAL-COSTS> 551,917
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,683
<INCOME-PRETAX> 66,037
<INCOME-TAX> 24,599
<INCOME-CONTINUING> 41,438
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,438
<EPS-PRIMARY> .68
<EPS-DILUTED> .68
THE PEP BOYS - MANNY, MOE & JACK
EXECUTIVE INCENTIVE BONUS PLAN
(as amended and restated as of March 31, 1995)
The Pep Boys - Manny, Moe & Jack, a Pennsylvania
corporation (the "Company") established, effective January 29,
1989, an Executive Incentive Bonus Plan for the benefit of officers
of the Company who are eligible to participate as provided herein.
On March 31, 1992 and March 30, 1994, the Board of Directors of the
Company (the "Board") amended the plan in numerous respects. By
action of the Board on March 31, 1995, the plan was further amended
to read in its entirety as hereinafter set forth (the "Plan").
1. Purpose. The Plan is intended to increase the
profitability of the Company by giving the officers of the Company
a financial stake in the growth and profitability of the Company.
The Plan has the further objective of enhancing the Company's
executive compensation package, thus enabling the Company to
attract and retain executive officers of the highest ability. The
Plan is intended to supplement, not replace, any other bonus paid
by the Company to its officers and is not intended to preclude the
continuation of such arrangements or the adoption of additional
bonus or incentive plans, programs or contracts.
2. Definitions.
(a) "Award Period" shall mean a measuring period of
one Fiscal Year.
(b) "Bonus" shall mean a cash payment made by the
Company to a Participant after an Award Period, based on increases
in EBIT, all as calculated and as more fully set forth under
paragraph 5 hereof.
(c) "Bonus Group" shall mean the level at which
Participants shall participate in the Plan as set forth in Section
4(b).
(d) "CEO" shall mean the person elected to the
office of Chief Executive Officer of the Company by the Board of
Directors.
(e) "CEO Level" shall mean the level that the CEO
shall participate in the Plan as set forth in Section 4(b).
(f) "Company" shall mean The Pep Boys - Manny, Moe
& Jack, a Pennsylvania corporation.
(g) "Compensation Committee" shall mean the
Compensation Committee of the Board.
(h) "Covered Employee" shall mean any Participant
that the Compensation Committee reasonably believes may be a
"covered employee" within the meaning of Section 162(m) of the
Internal Revenue Code for the taxable year of the Company in which
a Bonus would be deductible.
(i) "EBIT" shall have the meaning set forth in
Paragraph 5 hereof.
(j) "Fiscal Year" shall mean the Fiscal Year of the
Company which ends on the Saturday nearest January 31 in each year.
(k) "Participant" shall have the meaning set forth
in Paragraph 4 hereof.
(l) "President" shall mean the person elected to
the office of President of the Company by the Board.
(m) "Salary" shall mean the base salary of an
officer of the Company for a Fiscal Year, including amounts which
Participant elects to forego to provide benefits under a plan which
satisfies the provisions of Section 401(k) or Section 125 of the
Internal Revenue Code, exclusive of all bonuses paid or accrued
with respect to that Fiscal Year, whether or not pursuant to a plan
or program.
3. Administration, Amendment and Termination.
(a) The Plan shall be administered by the
Compensation Committee acting by a majority vote of its members.
The Compensation Committee shall have the power and authority to
take all actions and make all determinations which it deems
necessary or desirable to effectuate, administer or interpret the
Plan. The Company's adoption and continuation of the Plan is
voluntary. The Compensation Committee shall have the power and
authority to extend, amend, modify or terminate the Plan at any
time, including without limitation, to change Award Periods, to
determine the time or times of paying Bonuses, to establish
performance and EBIT goals, and to establish such other measures as
may be necessary to meet the objectives of the Plan; provided,
however, that, with respect to any Covered Employee, no amendment
shall change the Bonus calculation formula, as set forth in Section
5 herein, so as to increase the amount of Bonus payable upon
attainment of a goal for any Award Period after the beginning of
such Award Period. An action to terminate or to substantively
amend or modify the Plan shall become effective immediately upon
its adoption or on such date as specified by the Compensation
Committee, but not with respect to any Fiscal Year prior to the
Fiscal Year in which the Compensation Committee so acts.
(b) All actions taken and all determinations made
by the Compensation Committee in accordance with the power and
authority conferred upon the Compensation Committee under
subsection (a) above shall be final, binding and conclusive on all
parties, including the Company and all Participants.
4. Participants.
(a) Each officer of the Company selected by the
Board to fill such office shall be entitled to participate in the
Plan for each Fiscal Year or portion thereof in which such person
serves as an officer (the "Participants", or individually,
"Participant"), unless excluded from participation by the
Compensation Committee or as provided by paragraph 7 hereof. With
respect to a Participant who became an officer during a Fiscal
Year, such Participant shall be paid an amount equal to the amount
which would have been paid if the Participant had been employed for
the entire Award Period, multiplied by a fraction the numerator of
which is the number of days during the Award Period that the
Participant was an officer of the Company and the denominator of
which is the number of days in the Award Period.
(b) Participants shall participate in the Plan and
earn Bonuses in one of four Bonus Groups or at the CEO Level.
Prior to the beginning of any Award Period or, in the event that a
person first becomes a Participant after the beginning of an Award
Period, with respect to such person at such time he first becomes
a Participant, the Committee shall determine which Participants
will participate in Bonus Group A, Bonus Group B and Bonus Group C.
The Chief Executive Officer of the Company shall participate in the
Plan at the CEO level. All other Participants shall participate in
Bonus Group D.
5. Calculation of Bonus.
(a) Each Participant shall be entitled to payment
from the Company of a Bonus equal to the applicable percentage of
such Participant's Salary for the Bonus Group in which the
Participant participates in the Plan, as set forth in the tables
below, for certain percentage increases in EBIT during an Award
Period over EBIT for the fiscal year which precedes the Award
Period. For purposes of this Plan, "EBIT" shall mean the
consolidated earnings before income taxes of the Company, as
determined in accordance with generally accepted accounting
principles, and adjusted for any additions or reductions thereto
that the President recommends and the Compensation Committee
approves in order to eliminate the effect of extraordinary or non-
recurring items of income or loss. In determining EBIT, there
shall be included as an expense of the Company all bonuses,
including, without limitation, those Bonuses paid or accrued under
this Plan with respect to the Fiscal Year. For purposes of this
Plan, the column in the table below entitled "EBIT Increase"
measures EBIT for the Fiscal Year with respect to which the Bonus
is being calculated, against EBIT for the immediately preceding
Fiscal Year.
<PAGE>
EBIT
Increase CEO Level Group A Group B Group C Group D
20% 50.00 % 33.75 % 30.00 % 22.50 % 18.75%
21 52.50 35.44 31.31 23.63 19.69
22 55.00 37.13 32.63 24.75 20.63
23 57.50 38.81 33.94 25.88 21.56
24 60.00 40.50 35.25 27.00 22.50
25 62.50 42.19 36.56 28.13 23.44
26 65.00 43.88 37.88 29.25 24.38
27 67.50 45.56 39.19 30.38 25.31
28 70.00 47.25 40.50 31.50 26.25
29 72.50 48.94 41.81 32.63 27.19
30 75.00 50.63 43.13 33.75 28.13
31 77.50 52.31 44.44 34.88 29.06
32 80.00 54.00 45.75 36.00 30.00
33 82.50 55.69 47.06 37.13 30.94
34 85.00 57.38 48.38 38.25 31.88
35 87.50 59.06 49.69 39.38 32.81
36 90.00 60.75 51.00 40.50 33.75
37 92.50 62.44 52.31 41.63 34.69
38 95.00 64.13 53.63 42.75 35.63
39 97.50 65.81 54.94 43.88 36.56
40 100.00 67.50 56.25 45.00 37.50
41 or more 100.00 67.50 56.25 45.00 37.50
<PAGE>
Except for EBIT increase calculations above 19.5% but less than 20%,
calculations of percentage increases in EBIT shall be rounded to the
nearest whole percentage.
(b) Nothing in this Paragraph 5 shall be used to
create any presumption that Bonuses under the Plan are the exclusive
means of providing incentive compensation for officers, it being
expressly understood and agreed that the Compensation Committee has
the authority to recommend to the Board of Directors payments to the
officers, in cash or otherwise, based on EBIT or otherwise, other than
Bonuses under this Plan, to Participants.
6. Payment of Awards. Bonuses shall be paid in cash
within fifteen days after the Company has publicly announced its
consolidated earnings before income taxes for the Fiscal Year with
respect to which the Bonus is payable; provided, however, that, with
respect to any Covered Employee, no Bonus shall be paid unless and
until the Compensation Committee has certified in writing that the
EBIT goals as set forth in Section 5 have been met.
7. Termination of Employment.
(a) Other than as set forth in subparagraph (b) below,
a participant may not receive a Bonus for any Award Period if the
Participant's employment by the Company has terminated, for any reason
whatsoever, with or without cause, prior to the payment of the Bonus
with respect to such Award Period.
(b) If during an Award Period, a participant dies;
becomes disabled; or retires on or after his Early Retirement Date (as
defined in the Company's defined benefit pension plan), such
Participant (or the Participant's designated beneficiary) shall be
paid an amount equal to the amount which would have been paid if the
Participant had been an officer for the Award Period, multiplied by
a fraction, the numerator of which is the number of days during the
Award Period that the Participant was an officer of the Company and
the denominator of which is the number of days in the Award Period.
8. Assignment and Alienation of Benefits.
(a) To the maximum extent permitted by law, a
Participant's right or benefits under this Plan shall not be subject
to anticipation, alienation, sale, assignment, pledge, encumbrance or
charge, and any attempt to anticipate, alienate, sell, assign, pledge,
encumber or charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to the debts,
contracts, liabilities or torts of the person entitled to such
benefit.
(b) If any Participant becomes bankrupt or attempts
to anticipate, alienate, sell, assign, pledge, encumber, or charge any
rights to a benefit hereunder, then such right or benefit, in the
discretion of the Compensation Committee, may be terminated. In such
event, the Company may hold or apply the same or any part thereof for
the benefit of the Participant, his or her spouse, children or the
dependents, or any of them, in such manner and portion as the
Compensation Committee may deem proper.
9. Miscellaneous.
(a) The establishment of this Plan shall not be
construed as granting any Participant the right to remain in the
employ of the Company, nor shall this Plan be construed as limiting
the right of the Company to discharge a Participant from employment
at any time for any reason whatsoever, with or without cause.
(b) Notwithstanding anything to the contrary herein,
no Bonus shall be paid to any Covered Employee pursuant to the terms
hereof unless and until the material terms of the performance goals
as set forth in Section 5 are approved by the majority vote of the
Company's shareholders in a manner which complies with the
requirements of Section 162(m) of the Internal Revenue Code.
(c) The paragraph headings in this Plan are for
convenience only; they form no part of the Plan and shall not affect
its interpretation.
(d) This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
THE PEP BOYS - MANNY, MOE & JACK
By:\S\ Mitchell G. Leibovitz
