<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 15, 1996
REGISTRATION NO. 333-
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------
THE PEP BOYS -- MANNY, MOE & JACK
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
------
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
(215) 229-9000
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------
Mitchell G. Leibovitz
Chairman of the Board,
President and Chief Executive Officer
3111 West Allegheny Avenue
Philadelphia, Pennsylvania 19132
(215) 229-9000
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------
with copies to:
Daniel D. Rubino, Esq. Morton A. Pierce, Esq.
Willkie Farr & Gallagher Dewey Ballantine
One Citicorp Center 1301 Avenue of the Americas
153 East 53rd Street NEW YORK, NEW YORK 10019
New York, New York 10022 (212) 259-8000
(212) 821-8000
(Counsel for Registrant) (Counsel for Underwriters)
------
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
<PAGE>
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price per Aggregate Offering Registration
to be Registered Registered Security(1) Price(1) Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
% Notes Due 2006 ............... $100,000,000 100% $100,000,000 $34,483
==========================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
=============================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 15, 1996
LOGO
PEP BOYS
$100,000,000
The Pep Boys -- Manny, Moe & Jack
% Notes Due 2006
Interest payable and Due , 2006
------
The Notes will not be redeemable prior to maturity and will not be subject to
any sinking fund.
------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public (1) Commissions Company (1)(2)
-------------- ----------------- ---------------
<S> <C> <C> <C>
Per Note ............ % % %
Total ............... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from , 1996.
(2) Before deduction of estimated expenses of $225,000 payable by the
Company.
------
The Notes are offered by the several Underwriters when, as and if issued
by the Company, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that
delivery of the Notes, in book-entry form, will be made through the
facilities of The Depository Trust Company on or about , 1996,
against payment in immediately available funds.
CS First Boston
The date of this Prospectus is , 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information concerning the Company
may be inspected, and copies of such material may be obtained at prescribed
rates, at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the Commission's Regional
Offices at Seven World Trade Center, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Room 1400, Chicago, Illinois 60661-2511. The
Company's Common Stock is listed on the New York Stock Exchange (the "NYSE").
Reports, proxy statements and other information concerning the Company may be
inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005.
This Prospectus constitutes part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement and the exhibits and schedules thereto, in accordance with the
rules and regulations of the Commission. For further information concerning
the Company and the Notes offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith, which
may be inspected without charge at the office of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and copies of which may be obtained from
the Commission at prescribed rates. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and,
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended January 28,
1995 and the Company's Quarterly Reports on Form 10-Q for the quarters ended
April 29, 1995, July 29, 1995 and October 28, 1995, each as filed with the
Commission pursuant to the Exchange Act, are incorporated into this
Prospectus by reference.
All reports and other documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this Prospectus and prior to the termination of this Offering shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such reports and documents. Any statement incorporated herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such document). Requests for such documents
should be submitted in writing to Mr. Michael J. Holden, Senior Vice
President -- Chief Financial Officer and Treasurer, The Pep Boys -- Manny,
Moe & Jack, 3111 West Allegheny Avenue, Philadelphia, Pennsylvania 19132,
telephone (215) 229-9000.
2
<PAGE>
THE COMPANY
The Pep Boys -- Manny, Moe & Jack (together with its subsidiaries, the
"Pep Boys" or the "Company") is a leading automotive aftermarket retail and
service chain. The Company is engaged principally in the retail sale of
automotive parts and accessories, automotive maintenance and service and the
installation of parts. Pep Boys operates its business through its chain of
506 Pep Boys stores (as of February 3, 1996) located in 33 states, the
District of Columbia and Puerto Rico, of which 318 stores are owned and 188
stores are leased. Pep Boys' operations are supplied by distribution
facilities in five locations.
The Company operates approximately 10,255,000 gross square feet of retail
space for an average of approximately 20,300 gross square feet per store,
including an aggregate of 4,727 service bays. A typical Pep Boys store is a
free-standing warehouse format Supercenter of approximately 22,000 square
feet. The new prototype for Supercenter stores is approximately 19,500 square
feet in size. Each new Supercenter will continue to have approximately 12
service bays along with a product offering of approximately 25,000 stock-keeping
units ("SKUs") and will generally be located in an area with high automotive
traffic count and population density. Pep Boys believes that the operation of
service bays in its Supercenter stores differentiates it from most of its
competitors by providing its customers with the ability to purchase parts and
have them installed at the same location.
In fiscal 1994, the Company introduced a supplemental store format under
the name "PARTS USA" to operate in locations that the Company believes will
be better served by stores with an extensive selection of parts and
accessories but without tires or service bays. These locations consist of
certain urban areas and areas located between Supercenters. PARTS USA stores
average approximately 11,900 square feet and stock approximately 23,000 SKUs.
The new prototype for PARTS USA stores is approximately 7,800 square feet in
size. As compared to the Supercenters, PARTS USA stores have a higher percentage
of hard parts and accessories, the highest margin merchandise categories, in the
sales mix. By supplementing its Supercenter expansion with PARTS USA stores, the
Company seeks to increase its market penetration and share over time.
During fiscal years 1992, 1993 and 1994, Pep Boys added a net of 20, 29
and 49 stores, respectively, including the first PARTS USA store in fiscal
1994. In fiscal 1995, the Company added a net of 71 stores which includes 46
new warehouse format Supercenters and 29 PARTS USA stores, and closed four
older stores. Included in the Company's expansion were seven stores in Puerto
Rico -- its initial units outside of the continental United States. As of
February 3, 1996, the Company had 475 Supercenters and 31 PARTS USA stores.
Although the Company's competition varies by geographical area, the
Company believes that it generally has a favorable competitive position in
terms of price, depth and breadth of merchandise, quality of personnel and
customer service. The Company believes that it provides customers with among
the lowest prices in each of its markets. Pep Boys employs an
everyday-low-price strategy which it believes provides its customers better
value and consistency on a day-to-day basis and improves inventory
management. In addition, Pep Boys believes that it carries among the largest
selection of parts, accessories and chemicals in the automotive aftermarket
retail industry, with approximately 25,000 SKUs per Supercenter. The Company
also believes it provides a high level of customer service through its
well-trained and knowledgeable employees. The Company's advertising strategy
consists primarily of television advertising and multi-page catalogs,
supplemented with radio advertising and various in-store promotions.
The Company utilizes electronic parts catalogs, enabling employees to
reference and access parts instantly while noting price, related items and
in-stock position. In addition, the Company monitors product sales by SKU
through its point-of-sale system which utilizes bar code slot scanning. This
system enables the Company to monitor its gross margins and set minimum and
maximum inventory levels for each store. The Company's centralized buying
system and a perpetual inventory-automatic replenishment system orders
additional inventory from one of the Company's warehouses when a store's
inventory on hand falls below the minimum level set for each SKU.
The Pep Boys -- Manny, Moe & Jack, a Pennsylvania corporation, was
incorporated in 1925. The Company's executive offices are located at 3111
West Allegheny Avenue, Philadelphia, Pennsylvania 19132, telephone (215)
229-9000.
3
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the Notes due 2006 (the "Notes") offered
hereby will be used to repay portions of the Company's long-term
variable-rate bank debt, bearing interest at rates which range from 5.5% to
5.7%, and for general corporate purposes. The long-term debt expected to be
repaid was incurred within one year of the date hereof to finance a portion
of the capital expenditures incurred in connection with the opening of new
stores and for working capital purposes. The long-term debt expected to be
repaid matures in March 2000. See "Capitalization." Pending use of the
proceeds of the Offering, the Company expects to invest such funds in
short-term marketable securities.
CAPITALIZATION
The following table sets forth the capitalization of the Company at
October 28, 1995, and as adjusted to give effect to the sale of the Notes
offered hereby. See "Use of Proceeds."
<TABLE>
<CAPTION>
Actual As Adjusted
-------- -----------
(amounts in thousands)
<S> <C> <C>
Short-term debt ................................ $ -- $ --
Current maturities of long-term debt ........... 108,203 108,203
Long-term debt less current maturities:
Indebtedness to banks under revolving credit
loan agreement ............................ $ 90,000 $ --
Other lines of credit with banks ............. 28,000 18,875
Mortgage notes ............................... 2,491 2,491
8 7/8% Notes due April 15, 1996 ............. 107,040 107,040
7% Notes due June 1, 2005 .................... 100,000 100,000
6 5/8% Notes due May 15, 2003 ............... 75,000 75,000
4% Convertible subordinated notes due
September 1, 1999 ......................... 86,250 86,250
Notes offered hereby ......................... -- 100,000
---------- ----------
$ 488,781 $ 489,656
Less current maturities .................. 108,203 108,203
---------- ----------
Total long-term debt ........................ $ 380,578 $ 381,453
---------- ----------
Stockholders' equity:
Common Stock, par value $1.00 per share:
Authorized 500,000,000 shares; 62,046,289
shares issued and outstanding ............. 62,046 62,046
Paid-in capital .............................. 134,678 134,678
Retained earnings ............................ 508,665 508,665
---------- ----------
705,389 705,389
Less:
Shares held in benefits trust, 2,232,500
shares at cost .......................... 60,269 60,269
---------- ----------
Total stockholders' equity ............... 645,120 645,120
---------- ----------
Total long-term debt and stockholders' equity .. $1,025,698 $1,026,573
========== ==========
</TABLE>
4
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data for the five years ended January 28, 1995
(except for "Number of retail outlets," "Ratio of earnings to fixed charges"
and "Total square footage") were derived from audited financial statements.
The financial statements for the three years ended January 28, 1995, which
have been audited by Deloitte & Touche LLP, independent auditors, are
incorporated by reference herein. The selected financial data for the 39-week
periods ended October 28, 1995 and October 29, 1994, respectively, have been
derived from unaudited financial statements and reflect, in the opinion of
the Company, all adjustments necessary to present fairly the information for
such periods. The results of operations in the 39-week period ended October
28, 1995 are not necessarily indicative of the operating results for the full
year. The selected financial data should be read in conjunction with the
financial statements and other information contained in the Company's Annual
Report on Form 10-K for the year ended January 28, 1995, the Company's
Quarterly Report on Form 10-Q for the quarter ended October 28, 1995 and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
39 Weeks Ended
------------------------------------
Oct. 28, 1995 Oct. 29, 1994
--------------- ---------------
<S> <C> <C>
Earnings Statement Data
Merchandise sales ....... $1,007,589 $ 924,795
Service revenue ......... 176,245 146,529
----------- -----------
Total revenues .......... 1,183,834 1,071,324
Gross profit from
merchandise sales .... 301,677 267,934
Gross profit from service
revenue .............. 34,427 25,673
----------- -----------
Total gross profit ...... 336,104 293,607
Selling, general and
administrative
expenses ............. 214,070 180,247
Operating profit ........ 122,034 113,360
Nonoperating income ..... 1,605 3,024
Interest expense ........ 23,441 18,033
Earnings before income
taxes and change in
accounting principle . 100,198 98,351
Income taxes ............ 37,324 36,636
Earnings before change in
accounting principle . 62,874 61,715
Cumulative effect of
change in accounting
principle ............ -- (4,300)
Net earnings ............ 62,874 57,415
Balance Sheet Data
Working capital ......... $ 85,113 $ 135,390
Total assets ............ 1,393,313 1,250,600
Long-term debt .......... 380,578 368,007
Stockholders' equity .... 645,120 570,101
Other Statistics
Ratio of earnings to
fixed charges(1) ..... 4.3x 5.1x
Depreciation and
amortization ......... $ 38,953 $ 32,380
Capital expenditures .... $ 132,933 $ 122,601
Number of retail outlets 472 408
Total square footage .... 9,688,000 8,293,000
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Year Ended
--------------------------------------------------------------------------------------
Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993 Feb. 1, 1992 Feb. 2, 1991
--------------- --------------- --------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Earnings Statement Data
Merchandise sales ....... $1,211,536 $1,076,543 $1,008,191 $ 873,381 $ 774,502
Service revenue ......... 195,449 164,590 147,403 128,127 110,172
--------------- --------------- --------------- -------------- --------------
Total revenues .......... 1,406,985 1,241,133 1,155,594 1,001,508 884,674
Gross profit from
merchandise sales .... 364,378 307,861 272,412 240,199 217,052
Gross profit from service
revenue .............. 32,417 27,457 24,528 19,726 17,854
--------------- --------------- --------------- -------------- --------------
Total gross profit ...... 396,795 335,318 296,940 259,925 234,906
Selling, general and
administrative
expenses ............. 247,872 214,710 194,160 176,275 157,468
Operating profit ........ 148,923 120,608 102,780 83,650 77,438
Nonoperating income ..... 3,490 3,601 3,015 1,933 1,601
Interest expense ........ 25,931 19,701 20,180 25,071 20,262
Earnings before income
taxes and change in
accounting principle .. 126,482 104,508 85,615 60,512 58,777
Income taxes ............ 46,474 38,996 31,036 21,640 21,247
Earnings before change in
accounting principle . 80,008 65,512 54,579 38,872 37,530
Cumulative effect of
change in accounting
principle ............ (4,300) -- -- -- --
Net earnings ............ 75,708 65,512 54,579 38,872 37,530
Balance Sheet Data ........
Working capital ......... $ 121,858 $ 92,518 $ 104,622 $ 81,935 $ 91,801
Total assets ............ 1,291,019 1,078,518 967,813 856,925 819,421
Long-term debt .......... 380,787 253,000 209,347 279,250 285,868
Stockholders' equity .... 586,253 547,759 509,763 378,514 344,603
Other Statistics
Ratio of earnings to
fixed charges(1) ..... 4.7x 4.9x 4.3x 3.1x 3.3x
Depreciation and
amortization ......... $ 44,402 $ 39,125 $ 36,674 $ 33,439 $ 27,838
Capital expenditures .... $ 185,072 $ 135,165 $ 78,025 $ 65,801 $ 105,826
Number of retail outlets 435 386 357 337 313
Total square footage .... 8,900,000 7,771,000 7,039,000 6,522,000 5,950,000
</TABLE>
- ------
(1) Computed by dividing earnings by fixed charges. "Earnings" consist of
earnings before income taxes and change in accounting principle plus
fixed charges (exclusive of capitalized interest costs). "Fixed charges"
consist of interest costs (including capitalized interest costs) plus
one-third of rental expense (which amount is considered representative of
the interest factor in rental expense).
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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.
<TABLE>
<CAPTION>
Percentage of Total Revenues
-----------------------------------------------------------------------------------
39 Weeks Ended Fiscal Year Ended
------------------------------ ---------------------------------------------------
Oct. 28, 1995 Oct. 29, 1994 Jan. 28, 1995 Jan. 29, 1994 Jan. 30, 1993
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Merchandise sales ..... 85.1% 86.3% 86.1% 86.7% 87.2%
Service revenue(1) .... 14.9 13.7 13.9 13.3 12.8
------ ------ ------ ------ ------
Total revenues ........ 100.0 100.0 100.0 100.0 100.0
Costs of merchandise
sales(2) ............. 70.1(3) 71.0(3) 69.9(3) 71.4(3) 73.0(3)
Costs of service
revenue(2) ........... 80.5(3) 82.5(3) 83.4(3) 83.3(3) 83.4(3)
------ ------ ------ ------ ------
Total costs of revenues 71.6 72.6 71.8 73.0 74.3
Gross profit from
merchandise sales .... 29.9(3) 29.0(3) 30.1(3) 28.6(3) 27.0(3)
Gross profit from
service revenue ...... 19.5(3) 17.5(3) 16.6(3) 16.7(3) 16.6(3)
------ ------ ------ ------ ------
Total gross profit .... 28.4 27.4 28.2 27.0 25.7
Selling, general and
administrative
expenses ............. 18.0 16.8 17.6 17.3 16.8
----- ----- ------ ------ ------
Operating profit ...... 10.4 10.6 10.6 9.7 8.9
Nonoperating income ... .1 .3 .2 .3 .3
Interest expense ...... 2.0 1.7 1.8 1.6 1.8
----- ----- ------ ------ ------
Earnings before income
taxes and cumulative
effect of change in
accounting principle . 8.5 9.2 9.0 8.4 7.4
Income taxes .......... 37.3(4) 37.3(4) 36.7(4) 37.3(4) 36.3(4)
----- ----- ------ ------ ------
Earnings before
cumulative effect of
change in accounting
principle ............ 5.3 5.8 5.7 5.3 4.7
Cumulative effect of
change in accounting
principle ............ -- (.4) (.3) -- --
----- ----- ------ ------ ------
Net earnings .......... 5.3 5.4 5.4 5.3 4.7
===== ===== ====== ====== ======
</TABLE>
<PAGE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
Percentage Change
-----------------------------------------------------
39 Weeks Ended
-----------------
Oct. 28, 1995 vs.
39 Weeks Ended Fiscal 1994 vs. Fiscal 1993 vs.
Oct. 29, 1994 Fiscal 1993 Fiscal 1992
----------------- --------------- ---------------
<S> <C> <C> <C>
Merchandise sales ..... 9.0% 12.5% 6.8%
Service revenue(1) .... 20.3 18.7 11.7
----- ---- ----
Total revenues ........ 10.5 13.4 7.4
Costs of merchandise
sales(2) ............. 7.5 10.2 4.5
Costs of service
revenue(2) ........... 17.3 18.9 11.6
----- ---- ----
Total costs of revenues 9.0 11.5 5.5
Gross profit from
merchandise sales .... 12.6 18.4 13.0
Gross profit from
service revenue ...... 34.1 18.1 11.9
----- ---- ----
Total gross profit .... 14.5 18.3 12.9
Selling, general and
administrative
expenses ............. 18.8 15.4 10.6
----- ---- ----
Operating profit ...... 7.7 23.5 17.3
Nonoperating income ... (46.9) (3.1) 19.4
Interest expense ...... 30.0 31.6 (2.4)
------- ---- -----
Earnings before income
taxes and cumulative
effect of change in
accounting principle . 1.9 21.0 22.1
Income taxes .......... 1.9 19.2 25.6
----- ---- -----
Earnings before
cumulative effect of
change in accounting
principle ............ 1.9 22.1 20.0
Cumulative effect of
change in accounting
principle ............ -- -- --
----- ---- -----
Net earnings .......... 9.5 15.6 20.0
===== ==== ====
</TABLE>
- ------
(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.
THIRTY-NINE WEEKS ENDED OCTOBER 28, 1995 VS. THIRTY-NINE WEEKS ENDED OCTOBER
29, 1994
Total revenues increased 11% due to a higher store count (472 at October
28, 1995 compared with 408 at October 29, 1994) while comparable store
revenues (revenues generated by stores in operation during the same months of
each period) decreased 1%. Comparable store merchandise sales decreased 2%
while comparable service revenue increased 7%.
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.
6
<PAGE>
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 higher store expenses and slightly higher
general office expenses.
The 30% increase in interest expense was due primarily to higher debt
levels coupled with higher interest rates.
The 2% 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.
FISCAL 1994 VS. FISCAL 1993
Total revenues for fiscal 1994 increased 13% over fiscal 1993 due to a
higher store count (435 at January 28, 1995 compared with 386 at January 29,
1994) coupled with a 5% increase in comparable store revenues (revenues
generated by stores in operation during the same months of each period).
Comparable store merchandise sales increased 5% while comparable store
service revenue increased 8% over fiscal 1993.
The increase in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to significantly higher merchandise
margins and a slight decrease in store occupancy costs.
The small decrease in gross profit from service revenue, as a percentage
of service revenue, was due primarily to an increase in service payroll
costs, offset, in part, by a decrease in service employee benefits costs.
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses, offset, in part, by a decrease in employee benefits costs.
The 32% increase in interest expense was due to higher debt levels
incurred to fund the Company's store expansion program coupled with higher
interest rates.
The 22% increase in earnings before cumulative effect of change in
accounting principle in fiscal 1994, as compared with fiscal 1993, was due to
increases in comparable store revenues and gross profit from merchandise
sales, as a percentage of merchandise sales, offset, in part, by increases in
selling, general and administrative expenses and interest expense, as a
percentage of total revenues.
FISCAL 1993 VS. FISCAL 1992
Total revenues for fiscal 1993 increased 7% over fiscal 1992 due to a
higher store count (386 at January 29, 1994 compared with 357 at January 30,
1993) coupled with a 1% increase in comparable store revenues. Comparable
store merchandise sales remained constant while comparable store service
revenue increased 3% over fiscal 1992.
The increase in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to significantly higher merchandise
margins, offset, in part, by increases in store occupancy costs and
warehousing costs.
The small increase in gross profit from service revenue, as a percentage
of service revenue, was due primarily to a decrease in service employee
benefits costs, offset, in part, by an increase in service payroll and
occupancy costs.
7
<PAGE>
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses.
The 2% decrease in interest expense was due to lower interest rates,
offset, in part, by higher debt levels incurred to fund the Company's store
expansion program.
The increase in income taxes, as a percentage of earnings before income
taxes and cumulative effect of change in accounting principle was due
primarily to a 1% increase in the federal statutory tax rate from 34% to 35%.
The 20% increase in net earnings in fiscal 1993, as compared with fiscal
1992, was due to a substantial increase in gross profit from merchandise
sales, as a percentage of merchandise sales, offset, in part, by an increase
in selling, general and administrative expenses, as a percentage of total
revenues.
EFFECTS OF INFLATION
The Company uses the LIFO method of inventory valuation. Thus, the cost of
merchandise sold approximates current cost. Although the Company cannot
accurately determine the precise effect of inflation on its operations, it
does not believe inflation has had a material effect on revenues or results
of operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements arise principally from the need to finance
the acquisition, construction and equipping of new stores and to purchase
inventory. The Company opened 51 stores in fiscal 1994, 37 stores in fiscal 1993
and 29 stores in fiscal 1992. In fiscal 1994, with increased levels of capital
expenditures coupled with cash from operating activities and lines of credit
utilized to purchase its stock for transfer to the flexible employee benefits
trust (established on April 29, 1994 to fund a portion of the Company's
obligations arising from various employee compensation and benefit plans), the
Company increased its debt by $182,859,000. In fiscal 1993, with increased
levels of capital expenditures coupled with cash from operating activities and
lines of credit utilized to purchase its stock for transfer to the benefits
trust, the Company increased its debt by $77,525,000. In fiscal 1992, with
substantial cash flows from operating activities and the conversion of
substantially all its $75,000,000 convertible subordinated debentures into
stockholders' equity, the Company reduced its debt by $72,639,000.
The following table indicates the Company's principal cash requirements
beginning in fiscal 1992.
<TABLE>
<CAPTION>
39 Weeks Ended
Oct. 28, 1995 Fiscal 1994 Fiscal 1993 Fiscal 1992
-------------- ------------- ------------- -------------
(dollar amounts in thousands)
<S> <C> <C> <C> <C>
Capital expenditures .................... $132,933 $185,072 $135,165 $ 78,025
Net inventory (decrease) increase (1) ... (14,903) 87,248 26,487 24,001
-------- -------- --------- ---------
Total cash requirements ................. $118,030 $272,320 $161,652 $102,026
======== ======== ======== ========
Net cash provided by operating activities
(excluding net inventory) .............. $137,232 $124,474 $111,595 $100,415
======== ======== ======== ========
</TABLE>
- ------
(1) Net inventory includes the change in inventory less the net change in
checks outstanding and accounts payable.
Beginning in fiscal 1992, inventories have increased as the Company added a
net of 135 stores while stock- keeping units per store rose during the period
from approximately 22,000 to approximately 25,000, many of which were higher
cost hard parts.
The Company opened 75 new stores in fiscal 1995 and currently plans to
open approximately 100 new stores in fiscal 1996. Management estimates that
the cost to open all 100 stores, coupled with capital expenditures relating
to existing stores, warehouses and offices during fiscal 1996, will be
approximately $200,000,000. In addition to the funds required to finance the
Company's store expansion, the Company has $107,040,000 in long-term debt
that matures on April 15, 1996. Funds required to finance the store
expansion, including related inventory requirements, and to repay the
8
<PAGE>
long-term debt maturing on April 15, 1996 are expected to come from operating
activities with the remainder provided by unused lines of credit, which totalled
$249,500,000 at February 3, 1996, or from accessing traditional lending sources
which may include the public capital markets.
On August 25, 1994, the Company sold $86,250,000 of 4% convertible
subordinated notes due September 1, 1999. Proceeds were used to repay portions
of the Company's short-term variable rate debt.
On April 21, 1995, the Company amended and restated a revolving credit
agreement it had with several major banks to increase the amount of
borrowings provided from up to $100,000,000 to up to $200,000,000. At the
Company's option, the interest rate on any loan may be based on (i) the higher
of the Federal funds rate plus 1/4% or the prime rate, (ii) LIBOR plus up to
.63% or (iii) a negotiated rate based upon market conditions.
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.
The Company's working capital was $85,113,000 at October 28, 1995,
$121,858,000 at January 28, 1995 and $92,518,000 at January 29, 1994. The
Company's long-term debt, as a percentage of its total capitalization, was
37% at October 28, 1995, 39% at January 28, 1995 and 32% at January 29, 1994.
9
<PAGE>
DESCRIPTION OF NOTES
The Notes will be issued under an Indenture, dated as of February _____,
1996 (the "Indenture") between the Company and First Union National Bank, as
Trustee (the "Trustee"), a form of which will be filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following
summaries of certain provisions of the Indenture do not purport to be complete,
and where particular provisions of the Indenture are referred to, such
provisions, including definitions of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by reference to the provisions of the Indenture. The section references
appearing below are to sections in the Indenture.
GENERAL
The Notes will be unsecured obligations of the Company, will mature on
________ __, 2006 and will be limited to $100,000,000 aggregate principal
amount and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Notes are not redeemable prior to maturity
by the Company and do not provide for any sinking fund. The Notes will bear
interest at the rate per annum stated on the cover page of this Prospectus
from the date of issuance, payable semi-annually on ________ ____ and
________ ____ of each year, commencing _____________ __, 1996, to the person
in whose name such Note is registered at the close of business on the _____
__ or __________ __, respectively, prior to the payment date.
Principal of and interest on the Notes will be payable, and the Notes will
be exchangeable and transfers thereof will be registrable, at the corporate
trust office of the Trustee in New York, New York, provided that, at the
option of the Company, payment of any interest may be made by check mailed to
the address of the person entitled thereto as it appears in the Note
Register. Payment of any interest due on any Note will be made to the person
in whose name such Note is registered at the close of business on the Regular
Record Date for such interest. (Sections 301, 305, 307 and 1002)
FORM OF NOTES
The Notes will be represented by one or more global securities
(collectively, a "Global Note") registered in the name of The Depository
Trust Company (the "Depositary"). Except as set forth below, a Global Note
may be transferred in whole and not in part, only to the Depositary or
another nominee of the Depositary or to a successor of the Depositary or its
nominee.
Upon the issuance of a Global Note, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Notes represented by such Global Note to the accounts of institutions
that have accounts with the Depositary or its nominee ("Participants"). The
accounts to be credited will be designated by the Underwriters, dealers or
agents. Ownership of beneficial interests in a Global Note will be limited to
Participants or persons that may hold interests through Participants.
Ownership of interests in such Global Note will be shown on, and the transfer
of those ownership interests will be effected only through, records
maintained by the Depositary (with respect to Participants' interests) and
such Participants (with respect to the owners of beneficial interests in such
Global Note). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to transfer or
pledge beneficial interests in a Global Note.
So long as the Depositary, or its nominee, is the registered holder and
owner of such Global Note, the Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the related Notes for all
purposes of such Notes and for all purposes under the Indenture. Except as
set forth below, owners of beneficial interests in a Global Note will not be
entitled to have the Notes represented by such Global Note registered in
their names, will not receive or be entitled to receive physical delivery of
Notes in definitive form and will not be considered to be the owners or
holders of any Notes under the Indenture or such Global Note.
Accordingly, each person owning a beneficial interest in a Global Note
must rely on the procedures of the Depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interest, to exercise all rights of a holder of Notes under the
Indenture or such Global Note. The Company understands that under existing
industry practice, in the event the Company requests any action of
10
<PAGE>
holders of Notes or an owner of a beneficial interest in a Global Note
desires to take any action that the Depositary, as the holder of such Global
Note, is entitled to take, the Depositary would authorize the Participants to
take such action, and that the Participants would authorize beneficial owners
owning through such Participants to take such action or would otherwise act
upon the instructions of beneficial owners owning through them.
Payment of principal and interest on Notes represented by a Global Note
will be made to the Depositary or its nominee, as the case may be, as the
registered owner and holder of such Global Note.
The Company expects that the Depositary, upon receipt of any payment of
principal or interest, will immediately credit the accounts of the
Participants with such payment in amounts proportionate to their respective
holdings in principal amount of beneficial interest in the Global Note as
shown in the records of the Depositary. Payments by Participants to owners of
beneficial interests in a Global Note held through such Participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in "street
name", and will be the responsibility of such Participants. The Company and
the Trustee will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in a Global Note for any Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for
any other aspect of the relationship between the Depositary and its
Participants or the relationship between such Participants and the owners of
beneficial interests in such Global Note owned through such Participants.
Unless and until it is exchanged in whole or in part for Notes in
definitive form, a Global Note may not be transferred except as a whole by
the Depositary to a nominee of such Depositary, by a nominee of such
Depositary to such Depositary or another nominee of such Depositary, or to a
successor of the Depositary or in its nominee.
Notes represented by a Global Note will be exchangeable for Notes in
definitive form of like tenor as such Global Note in denominations of $1,000
and in any greater amount that is an integral multiple thereof if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Note or if at any time the Depositary ceases to be
qualified to act as Depositary under applicable law and the Company does not
appoint a successor depositary within 90 days or (ii) the Company in its
discretion at any time determines not to have such Notes represented by a
Global Note and notifies the Trustee thereof. Any Global Note that is
exchangeable pursuant to the preceding sentence is exchangeable for Notes
issuable in authorized denominations and registered in such names as the
Depositary shall direct and an owner of a beneficial interest in a Global
Note will be entitled to physical delivery of such Notes in definitive form.
Subject to the foregoing, a Global Note is not exchangeable except for a
Global Note or Global Notes of the same aggregate denominations to be
registered in the name of the Depositary or its nominee.
The Depositary has advised the Company and the Underwriters as follows:
The Depositary is a limited- purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary was created to hold securities of Participants and to
facilitate the clearance and settlement of securities transactions among the
Participants in deposited securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities and certificates. Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations, some of which (and/or
their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly ("indirect participants").
Persons who are not Participants may beneficially own securities held by the
Depositary only through Participants or indirect Participants. The rules
applicable to the Depositary and the Participants are on file with the
Commission. The Depositary currently accepts only notes denominated and
payable in U.S. dollars.
11
<PAGE>
CERTAIN COVENANTS OF THE COMPANY
Restrictions on Liens
The Company will not, and will not permit any Restricted Subsidiary to,
issue, assume or guarantee any Indebtedness secured by any mortgage, security
interest, pledge, lien or other encumbrance upon, or any interest or title of
any lessor, lender or other secured party to, or under any Capital Lease with
respect to, any Operating Property or Operating Asset of the Company or any
Restricted Subsidiary, whether such assets are now owned or hereafter
acquired (herein referred to as a "Mortgage" or "Mortgages"), without in any
such case effectively providing that the Notes (together with, if the Company
shall so determine, any other Indebtedness ranking equally with the Notes)
shall be secured equally and ratably with such Indebtedness, except that the
foregoing restrictions shall not apply to: (a) Mortgages incurred or created
in the ordinary course of business not arising in connection with
Indebtedness that do not in the aggregate materially impair the use or value
of the properties or assets of the Company and its Restricted Subsidiaries
taken as a whole, (b) Mortgages existing as of the date of the Indenture, (c)
Mortgages (other than Capital Leases) to secure the payment of all or any
part of the purchase price or construction costs in respect of property or
properties acquired by the Company or a Restricted Subsidiary after the date
of the Indenture securing Indebtedness incurred prior to, at the time of, or
within 360 days after, the acquisition of any such property or the completion
of any such construction and which secures Indebtedness not in excess of the
amount expended in the acquisition and improvements thereof, (d) Mortgages
upon any property or assets owned by any Restricted Subsidiary when it
becomes a Restricted Subsidiary, (e) Mortgages upon any property or assets of
any corporation existing at the time such corporation is merged into or
consolidated with the Company or any Restricted Subsidiary, or at the time of
a sale, lease or other disposition of the properties of an entity as an
entirety or substantially as an entirety to the Company or any Restricted
Subsidiary, (f) Mortgages upon any property when the property is acquired by
the Company or a Restricted Subsidiary, (g) Mortgages to secure the payment
of all or any part of the cost of improvements to any property owned by the
Company or a Restricted Subsidiary, (h) the extension, renewal or replacement
of any Mortgage permitted by subparagraph (b), (c), (d), (e), (f) or (g)
above, but only if the principal amount of Indebtedness secured by the
Mortgage immediately prior thereto is not increased and the Mortgage is not
extended to other property, (i) Mortgages for certain taxes or other
governmental charges, (j) Mortgages arising out of any final judgment for the
payment of money aggregating not in excess of $10,000,000, (k) Mortgages
arising out of any legal proceeding or final judgment which is being
contested in good faith, provided enforcement of any such lien has been
stayed, (l) easements or similar encumbrances, the existence of which do not
materially impair the use of the property subject thereto and (m) Mortgages
securing Indebtedness of a Restricted Subsidiary to the Company or to another
Restricted Subsidiary. (Section 1007(a) Notwithstanding the foregoing, the
Company or any Restricted Subsidiary may create or assume Mortgages in
addition to those permitted above, and renew, extend or replace such
Mortgages provided that at the time of such creation, assumption, renewal,
extension or replacement, and after giving effect thereto, Exempted Debt does
not exceed 15% of Consolidated Net Tangible Assets. (Section 1007(b)
Restrictions on Sale and Leaseback Transactions
The Company will not, nor will it permit any Restricted Subsidiary to,
enter into any arrangement with any person providing for the leasing by the
Company or any Restricted Subsidiary of any Operating Property or Operating
Asset, whether now owned or hereafter acquired, which has been or is to be
sold or transferred by the Company or such Restricted Subsidiary to such
persons with the intention of taking back a lease on such property (a "Sale
and Leaseback Transaction") unless (a) such transaction involves a lease or
right to possession or use for a temporary period not to exceed three years
following such sale, by the end of which it is intended that the use of such
property by the lessee will be discontinued, (b) the Company or a Restricted
Subsidiary would, on the effective date of such transaction, be entitled to
issue, assume or guarantee indebtedness secured by a Mortgage on such
property at least equal in an amount to the Attributable Debt in respect
thereof, without equally and ratably securing the Notes as set forth in the
Indenture, or (c) if the proceeds of such sale (i) are equal to or greater
than the fair market value of such property and (ii) are applied within 360
days after the receipt of the proceeds of sale or transfer to either the
purchase or acquisition of fixed assets or equipment used in the operation of
the business or the construction of improvements on real property or to the
repayment of Senior Funded Debt of the Company or any Restricted Subsidiary.
The preceding restriction shall not apply to any Sale and Leaseback Transaction
12
<PAGE>
between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries. (Section 1008(a) The Company or any Restricted Subsidiary may
enter into Sale and Leaseback Transactions in addition to those permitted above,
and without any obligation to retire any Senior Funded Debt of the Company or a
Restricted Subsidiary, provided that, at the time of entering into such Sale and
Leaseback Transactions, and after giving effect thereto, Exempted Debt does not
exceed 15% of Consolidated Net Tangible Assets. (Section 1008(b)
Certain Definitions
Set forth below are certain significant terms which are defined in Section
101 of the Indenture:
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
at the time of determination, the present value (discounted at the actual
rate of interest of such transaction) of the obligation of the lessee for net
rental payments during the remaining term of the lease included in such Sale
and Leaseback Transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended).
"Capital Lease" means any lease of property which, in accordance with
generally accepted accounting principles, should be capitalized on the
lessee's balance sheet or for which the amount of the asset and liability
thereunder as if so capitalized should be disclosed in a note to such balance
sheet.
"Consolidated" when used with respect to any of the terms defined in the
Indenture, refers to such terms as reflected in a consolidation of the
accounts of the Company and its Restricted Subsidiaries in accordance with
generally accepted accounting principles.
"Exempted Debt" means the sum of the following items outstanding as of the
date Exempted Debt is being determined: (i) Indebtedness for money borrowed
of the Company and its Restricted Subsidiaries incurred after the date of the
Indenture and secured by liens created or assumed or permitted to exist
pursuant to Section 1007(b) (excluding Indebtedness incurred in connection
with pollution control financings and industrial revenue bond financings) and
(ii) Attributable Debt of the Company and its Restricted Subsidiaries in
respect of all Sale and Leaseback Transactions entered into pursuant to
Section 1008(b).
"Funded Debt" means Indebtedness, whether incurred, assumed or guaranteed,
which matures more than one year from the date of creation thereof, or which
is extendable or renewable at the sole option of the obligor so that it may
become payable more than one year from such date.
"Indebtedness" of any person means, without duplication, indebtedness for
borrowed money and all indebtedness under purchase money mortgages or other
purchase money liens or conditional sales or similar title retention
agreements, in each case where such indebtedness has been created, incurred,
assumed or guaranteed by such person or where such person is otherwise liable
therefor, and indebtedness for borrowed money secured by any mortgage, pledge
or other lien or encumbrance upon property owned by such person even though
such person has not assumed or become liable for the payment of such
indebtedness.
"Investment" means and includes any investment in stock, evidences of
indebtedness, loans or advances, however made or acquired, but shall not
include accounts receivable of the Company or of any Restricted Subsidiary
arising from transactions in the ordinary course of business, or any
evidences of indebtedness, loans or advances made in connection with the sale
to any Restricted Subsidiary of accounts receivable of the Company or any
Restricted Subsidiary arising from transactions in the ordinary course of
business of the Company or any Restricted Subsidiary.
"Net Tangible Assets" means the total amounts of assets (less depreciation
and valuation reserves and other reserves and items deductible from gross
book value of specific asset accounts under generally accepted accounting
principles) which under generally accepted accounting principles would be
included on a balance sheet after deducting therefrom (a) all liability items
except Funded Debt, Capitalized Lease Obligations, stockholders' equity and
reserves for deferred income taxes and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles, which in each such case would be so included on such balance
sheet.
13
<PAGE>
"Operating Assets" means all merchandise inventories, furniture, fixtures
and equipment (including all transportation and warehousing equipment but
excluding office equipment and data processing equipment) owned or leased
pursuant to Capital Leases by the Company or a Restricted Subsidiary.
"Operating Property" means all real property and improvements thereon
owned or leased pursuant to Capital Leases by the Company or a Restricted
Subsidiary and constituting, without limitation, any store, warehouse,
service center or distribution center wherever located, provided that such
term shall not include any store, warehouse, service center or distribution
center which the Company's Board of Directors declares by resolution not to
be of material importance to the business of the Company and its Restricted
Subsidiaries.
"Restricted Subsidiaries" means all Subsidiaries other than Non-Restricted
Subsidiaries. "Non-Restricted Subsidiaries" means (a) any Subsidiary so
designated by the Board of Directors of the Company in accordance with the
Indenture and (b) any other Subsidiary of which the majority of the voting
stock is owned directly or indirectly by one or more Non-Restricted
Subsidiaries. The Indenture provides that, subject to certain restrictions,
the Company's Board of Directors may change the designations of Restricted
Subsidiaries and Non- Restricted Subsidiaries. (Section 1009) Initially the
Company will have no Non-Restricted Subsidiaries.
"Senior Funded Debt" means all Funded Debt, except Funded Debt the payment
of which is subordinated to the payment of the Notes.
"Subsidiary" means any corporation of which at least a majority of the
outstanding stock having voting power under ordinary circumstances for the
election of directors of said corporation is at the time owned by the
Company, or by the Company and one or more Subsidiaries, or by any one or
more Subsidiaries.
MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS
The Company will not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, and the Company will not permit any person to
consolidate with or merge into the Company or convey, transfer or lease its
assets and properties substantially as an entirety to the Company, unless (a)
the successor shall be a corporation organized under the laws of the United
States or a jurisdiction thereof, and such successor shall expressly assume
the Company's obligations under the Indenture and the Notes, (b) immediately
after giving effect to such transaction, no Event of Default under the
Indenture or event which, after notice or lapse of time or both, would become
an Event of Default thereunder would exist and be continuing, (c) if, as a
result of such transaction, properties or assets of the Company would become
subject to a Mortgage not permitted by the Indenture, the successor shall
cause the Notes to be secured equally and ratably with (or prior to) all
indebtedness secured by such Mortgage and (d) the Company has delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such transaction complies with the Indenture. Upon compliance with these
provisions by a successor corporation, the Company will be relieved (except
in the case of a lease) of its obligations under the Indenture and the Notes.
(Sections 801 and 802)
The Indenture would not necessarily afford holders of the Notes protection
in the event of a highly leveraged transaction involving the Company, such as
a leveraged buyout.
MODIFICATION OF THE INDENTURE; WAIVERS
The Indenture provides that the Company and the Trustee, with the consent
of not less than a majority in principal amount of the Notes at the time
outstanding, may execute supplemental indentures adding any provisions to, or
changing or eliminating any of the provisions of, the Indenture or modifying
the rights of the holders of the Notes at the time outstanding, except that
no such supplemental indenture may, without the consent of the holders of all
the Notes at the time outstanding, (a) change the stated maturity date of the
principal of, or any installment of principal of or any interest on, any Note
or reduce the principal amount thereof or the rate of interest thereon, or
change the place of payment or the currency in which payment is to be made,
or impair the right to institute suit for the enforcement of any such payment
on or after the due date thereof, (b) reduce the percentage of outstanding
Notes, the consent of the holders of which is required for any supplemental
indenture, (c) reduce the percentage of outstanding Notes required to waive
certain provisions of the Indenture or (d) modify certain provisions of the
Indenture. (Section 902)
14
<PAGE>
The Holders of a majority in principal amount of the Notes at the time
outstanding may on behalf of the holders of all Notes waive compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1011)
The holders of a majority in principal amount of the Notes at the time
outstanding may on behalf of the Holders of all Notes waive any past default
under the Indenture except a default not heretofore cured in the payment of
the principal of or any interest on any Note or in respect of a provision
under which the Indenture cannot be modified or amended without the consent
of the holder of each outstanding Note. (Section 513)
EVENTS OF DEFAULT, WAIVER, AND NOTICE
"Event of Default" is defined in the Indenture with respect to the Notes
as being (a) default for 30 days in the payment of any interest installment
on any Notes, (b) default in the payment when due of principal of any Note,
(c) default for 60 days, after notice to the Company by the Trustee or to the
Company and the Trustee by the holders of not less than 25% in principal
amount of the Notes at that time outstanding, in the performance, or breach,
of any covenant or warranty of the Indenture (other than covenants and
warranties specifically dealt with elsewhere), (d) default in respect to
certain indebtedness in excess of $10,000,000 for money borrowed by the
Company, which indebtedness shall have been accelerated for 30 days after
notice specified in the next preceding clause and (e) certain events of
bankruptcy, insolvency and reorganization. (Section 501)
If an Event of Default with respect to the Notes at that time outstanding
shall occur and be continuing, either the Trustee or the holders of not less
than 25% in principal amount of the outstanding Notes may, by notice in
writing to the Company (and to the Trustee if given by holders), declare the
principal amount of all Notes to be due and payable. (Section 502) In certain
cases, the holders of a majority in principal amount of the outstanding Notes
may, on behalf of the holders of all the Notes, rescind and annul such
acceleration or waive any past default or Event of Default, except a default
not theretofore cured in payment of the principal of or interest on any of
the Notes or a default relating to a covenant or provision of the Indenture
which could not be modified or amended without the consent of all holders of
Notes. (Sections 502 and 513) See "-- Modification of the Indenture;
Waivers."
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default with respect to the Notes, give to the holders of the
Notes notice of such default known to it, unless such default shall have been
cured or waived; but the Trustee shall be protected in withholding such
notice if in good faith it determines that the withholding of such notice is
in the interest of such holders, except in the case of a default in the
payment of the principal of or interest on any of the Notes and except that
in the case of a default in respect of certain covenants and warranties, no
such notice shall be given until at least 60 days after the occurrence of
such default. (Section 602) The Indenture contains a provision entitling the
Trustee, subject to the duty of the Trustee during a default to act with the
required standard of care, to be indemnified by holders of the Notes before
proceeding to exercise any right or power under the Indenture at the request
of such holders. (Sections 601 and 603) The Indenture provides that the
holders of a majority in principal amount of the outstanding Notes may direct
the time, method and place of conducting proceedings for remedies available
to the Trustee or of exercising any trust or power conferred on the Trustee
with respect to the Notes. (Section 512)
No holder of any Notes will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless (a) such
holder shall have previously given to the Trustee written notice of a
continuing Event of Default with respect to the Notes, (b) the holders of at
least 25% in aggregate principal amount of the outstanding Notes shall have
made written request to the Trustee to institute proceedings as Trustee, (c)
such holder or holders shall have offered to the Trustee reasonable
indemnity, (d) the Trustee shall have failed to institute such proceeding
within 60 days thereafter and (e) the Trustee shall not have received from
the holders of a majority in aggregate principal amount of the outstanding
Notes a direction inconsistent with such request. (Section 507) However, the
holder of any Notes will have an absolute right to receive payment of the
principal of and any interest on such Notes on or after the due dates
expressed in such Notes and to institute suit for the enforcement of any such
payment. (Section 508)
The Company will be required to file with the Trustee annually, within 120
days of the end of each fiscal year of the Company, a certificate as to the
compliance with all conditions and covenants of the Indenture. (Section 704)
15
<PAGE>
DISCHARGE AND DEFEASANCE OF NOTES OR CERTAIN COVENANTS
Defeasance and Discharge
The Indenture provides that the Company, at its option, (a) will be
discharged from any and all obligations with respect to the Notes (except for
certain obligations which include registering the transfer or exchange of the
Notes, replacing stolen, lost or mutilated Notes, maintaining paying agencies
and holding monies for payment in trust), or (b) need not comply with certain
restrictive covenants of the Indenture, upon the deposit with the Trustee
(and in the case of a discharge, 91 days after such deposit), in trust, cash
in U.S. dollars or U.S. Government Obligations, or a combination thereof,
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
each installment of principal of and any interest on the Notes on the dates
such payments are due in accordance with the terms of the Indenture. To
exercise any such option, the Company is required to meet certain conditions,
including delivery to the Trustee of an Opinion of Counsel to the effect that
the deposit and related defeasance and discharge would not cause the holders
of the Notes to recognize income, gain or loss for Federal income tax
purposes which, in the case of a discharge pursuant to clause (a), must refer
to and be based upon a ruling or administrative pronouncement of the Internal
Revenue Service. (Sections 403 and 1010)
Defeasance and Events of Default
In the event the Company exercises its option to omit compliance with
certain covenants of the Indenture and the Notes are declared due and payable
because of the occurrence of any Event of Default, the amount of money and
U.S. Government Obligations on deposit with the Trustee should be sufficient
to pay amounts due on the Notes at the time of their Stated Maturity but may
not be sufficient to pay amounts due on the Notes at the time of the
acceleration resulting from such Event of Default. However, the Company shall
remain liable for such payments.
CONCERNING THE TRUSTEE
The Trustee acts as trustee under the indenture in connection with the
Company's 4% Convertible Subordinated Notes due 1999 and the Company's 7%
Notes due 2005. In the ordinary course of business, the Company maintains
deposits with the Trustee and the Trustee provides other banking and lending
services to the Company.
16
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated February , 1996 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom CS First Boston
Corporation is acting as representative (the "Representative"), have
severally but not jointly agreed to purchase from the Company the following
respective principal amounts of the Notes:
Principal
Underwriter Amount
------------- -------------
CS First Boston Corporation........... $
--------------
Total .......................... $100,000,000
==============
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Notes being offered
hereby if any are purchased. The Underwriting Agreement provides that, in the
event of a default by an Underwriter, in certain circumstances the purchase
commitments of non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Company has been advised by the Representative that the Underwriters
propose to offer the Notes to the public initially at the public offering
price set forth on the cover page of this Prospectus and, through the
Representative, to certain dealers at such price less a concession of % of
the principal amount per Note and the Underwriters and such dealers may allow
a discount of % of such principal amount per Note on sales to certain other
dealers. After the initial public offering, the public offering price and
concession and discount to dealers may be changed by the Representative.
The Notes are a new issue of securities with no established trading
market. The Representative has advised the Company that it intends to act as
a market maker for the Notes. However, the Representative is not obligated to
do so and may discontinue any market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including civil liabilities under the Securities Act, and under
certain circumstances, to contribute to payments which the Underwriters may
be required to make in respect thereof.
CS First Boston Corporation from time to time performs investment banking
services for the Company for customary fees.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Company prepare and file
a prospectus with the securities regulatory authorities in each province
where trades of Notes are effected. Accordingly, any resale of the Notes in
Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to
be made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities
regulatory authority. Purchasers are advised to seek legal advice prior to
any resale of the Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation
will be deemed to represent to the Company and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled
17
<PAGE>
under applicable provincial securities laws to purchase such Notes without
the benefit of a prospectus qualified under such securities laws, (ii) where
required by law, such purchaser is purchasing as principal and not as agent,
and (iii) such purchaser has reviewed the text above under "Resale
Restrictions."
RIGHTS OF ACTION AND ENFORCEMENT
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available,
including common law rights of action for damages or rescission or rights of
action under the civil liability provisions of the U.S. federal securities
laws.
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Ontario purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets
of the issuer and such persons may be located outside Canada and, as a
result, it may not be possible to satisfy a judgment against the issuer or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against such issuer or person outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes to whom the Securities Act (British Columbia) applies
is advised that such purchaser is required to file with the British Columbia
Securities Commission a report within ten days of the sale of any Notes
acquired by such purchaser pursuant to this offering. Such report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#88/5, a copy of which may be obtained from the Company. Only one such report
must be filed in respect of Notes acquired on the same date and under the
same prospectus exemption.
LEGAL MATTERS
The validity of the authorization and issuance of the Notes offered hereby
is being passed upon for the Company by Willkie Farr & Gallagher, New York,
New York, and for the Underwriters by Dewey Ballantine, New York, New York.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from the Company's Annual Report
on Form 10-K for the year ended January 28, 1995 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which
is incorporated herein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
18
<PAGE>
- -----------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any Underwriter. This
Prospectus does not constitute an offer to sell or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction to any person
to whom it is unlawful to make such offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is correct
as of any time subsequent to the date hereof or that there has been no change
in the affairs of the Company since such date.
------
TABLE OF CONTENTS
Page
--------
Available Information ..................... 2
Incorporation of Certain Documents by
Reference ................................ 2
The Company ............................... 3
Use of Proceeds ........................... 4
Capitalization ............................ 4
Selected Financial Data ................... 5
Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................... 6
Description of Notes ...................... 10
Underwriting .............................. 17
Notice to Canadian Residents .............. 17
Legal Matters ............................. 18
Experts ................................... 18
- -----------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------
LOGO
PEP BOYS
$100,000,000
% Notes Due 2006
PROSPECTUS
LOGO
CS FIRST BOSTON
- -----------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses (other than the underwriting
discounts and commissions) in connection with the sale and distribution of
the securities being registered, which will be paid solely by the Company.
All the amounts shown are estimates, except the Commission registration fee
and the NASD fee:
SEC Registration Fee ....................... $ 34,483
Printing and Engraving Expenses ............. 15,000
Legal Fees and Expenses .................... 80,000
Accounting Fees and Expenses .. ............ 10,000
Blue Sky Fees and Expenses ................. 10,000
Trustee Fees ............................... 8,500
Rating Agency Fees ......................... 50,000
Miscellaneous Expenses ..................... 17,017
----------
Total ............................... $225,000
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1741 through 1750 of Subchapter D, Chapter 17, of the BCL contain
provisions for mandatory and discretionary indemnification of a corporation's
directors, officers and other personnel, and related matters.
Under Section 1741, subject to certain limitations, a corporation has the
power to indemnify directors and officers under certain prescribed
circumstances against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with an action or proceeding, whether civil, criminal, administrative or
investigative (other than derivative actions), to which any of them is a
party or is threatened to be made a party by reason of his being a
representative of the corporation or serving at the request of the
corporation as a representative of another corporation, partnership, joint
venture, trust or other enterprise, if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
Section 1742 permits indemnification in derivative actions if the
appropriate standard of conduct is met, except in respect of any claim, issue
or matter as to which the person has been adjudged to be liable to the
corporation unless and only to the extent that the proper court determines
upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, the person is fairly and reasonably
entitled to indemnity for the expenses that the court deems proper.
Under Section 1743, indemnification is mandatory to the extent that the
officer or director has been successful on the merits or otherwise in defense
of any action or proceeding referred to in Section 1741 or 1742.
Section 1744 provides that, unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation only as
authorized in the specific case upon a determination that the representative
met the applicable standard of conduct and that such determination will be
made (i) by the board of directors by a majority vote of a quorum of
directors not parties to the action or proceeding; (ii) if a quorum is not
obtainable, or if obtainable and a majority of disinterested directors so
directs, by independent legal counsel; or (iii) by the shareholders.
Section 1745 provides that expenses incurred by an officer or director in
defending an action or proceeding may be paid by the corporation in advance
of the final disposition of such action or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation.
II-1
<PAGE>
Section 1746 provides generally that the indemnification and advancement
of expenses provided by Subchapter 17D of the BCL (i) will not be deemed
exclusive of any other rights to which a person seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding that
office, and (ii) may not be made in any case where the act or failure to act
giving rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness.
Section 1747 grants a corporation the power to purchase and maintain
insurance on behalf of any director or officer against any liability incurred
by him in his capacity as officer or director, whether or not the corporation
would have the power to indemnify him against that liability under Subchapter
17D of BCL.
Sections 1748 and 1749 extend the indemnification and advancement of
expenses provisions contained in Subchapter 17D of the BCL to successor
corporations in fundamental corporate changes and to representatives serving
as fiduciaries of employee benefit plans.
Section 1750 provides that the indemnification and advancement of expenses
provided by, or granted pursuant to, Subchapter 17D of the BCL shall, unless
otherwise provided when authorized or ratified, continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs and personal representative of such person.
Article VII of the Company's Bylaws provides in general that the Company
shall indemnify its officers and directors to the fullest extent permitted by
law. The Bylaws further provide that any alteration, amendment, or repeal of
the indemnification provisions, if not approved by 80% of the Board of
Directors, requires the affirmative vote of shareholders owning at least 80%
of the outstanding shares entitled to vote.
The Company maintains liability insurance on behalf of its directors
and officers.
See Section 7 of the Underwriting Agreement, filed as Exhibit 1 hereto,
pursuant to which the Underwriters agree to indemnify the Company, its
directors, certain officers and controlling persons against certain
liabilities, including liabilities under the Securities Act.
II-2
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- -------------
<S> <C>
*1 Form of Underwriting Agreement
*4 Form of Indenture between the Company and First Union National Bank, as Trustee,
including form of Note
*5 Opinion of Willkie Farr & Gallagher
12.1 Calculation of Ratio of Earnings to Fixed Charges (incorporated by reference to Exhibit 12 to the
Company's Annual Report on Form 10-K for the year ended January 28, 1995)
12.2 Calculation of Ratio of Earnings to Fixed Charges for the 39 weeks ended October 28, 1995
*23.1 Consent of Willkie Farr & Gallagher (included as part of Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
24 Power of Attorney (included on page II-4)
*25 Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of the Trustee
</TABLE>
- ------
*To be filed by amendment.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that, in the opinion of the Commission, such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question of whether such
indemnification by them is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that: (1) for purposes of
determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective; and (2) for the purpose of determining any
liability under the Securities Act, each post- effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
February 15, 1996.
THE PEP BOYS - MANNY, MOE & JACK
By: /s/ MITCHELL G. LEIBOVITZ
----------------------------------
Mitchell G. Leibovitz
Chairman of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Mitchell G. Leibovitz and Michael J. Holden,
and each of them, his true and lawful attorneys-in- fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, and any registration statement for the same offering
covered by this Registration Statement that is to be effective upon filing
pursuant to Rule 424(b) under the Securities Act, and to file the same, with
all exhibits thereto, and other documentation in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
----------------------------- ----------------------------------------- ---------------------
<S> <C> <C>
/s/ MITCHELL G. LEIBOVITZ Chairman of the Board, President and February 15, 1996
---------------------------- Chief Executive Officer and Director
Mitchell G. Leibovitz (Principal Executive Officer)
/s/ MICHAEL J. HOLDEN Senior Vice President and Chief Financial February 15, 1996
---------------------------- Officer (Principal Financial and
Michael J. Holden Accounting Officer)
/s/ LENNOX K. BLACK Director February 15, 1996
----------------------------
Lennox K. Black
/s/ PEMBERTON HUTCHINSON Director February 15, 1996
----------------------------
Pemberton Hutchinson
/s/ BERNARD J. KORMAN Director February 15, 1996
----------------------------
Bernard J. Korman
/s/ J. RICHARD LEAMAN, JR. Director February 15, 1996
----------------------------
J. Richard Leaman, Jr.
/s/ MALCOLMN D. PRYOR Director February 15, 1996
----------------------------
Malcolmn D. Pryor
/s/ LESTER ROSENFELD Director February 15, 1996
----------------------------
Lester Rosenfeld
/s/ BENJAMIN STRAUSS Director February 15, 1996
----------------------------
Benjamin Strauss
/s/ MYLES H. TANENBAUM Director February 15, 1996
----------------------------
Myles H. Tanenbaum
</TABLE>
II-4
<PAGE>
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------
THE PEP BOYS -- MANNY, MOE & JACK
================================================================================
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ----- --------------
<S> <C>
*1 Form of Underwriting Agreement
*4 Form of Indenture between the Company and First Union National Bank,
as Trustee, including form of Note
*5 Opinion of Willkie Farr & Gallagher
Calculation of Ratio of Earnings to Fixed Charges (incorporated by reference to
Exhibit 12 to the Company's Annual Report on Form 10-K for the year ended
12.1 January 28, 1995)
Calculation of Ratio of Earnings to Fixed Charges for the 39 weeks ended
12.2 October 28, 1995
*23.1 Consent of Willkie Farr & Gallagher (included as part of Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
24 Power of Attorney (included on page II-4)
Form T-1, Statement of Eligibility under the Trust Indenture Act of 1939 of the
*25 Trustee
</TABLE>
- ------
*To be filed by amendment.
<PAGE>
EXHIBIT 12.2
STATEMENT REGARDING COMPUTATION OF RATIOS
RATIOS OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
Thirty-nine weeks ended
------------------------------------
October 28, 1995 October 29, 1994
---------------- ----------------
<S> <C> <C> <C>
Interest $ 23,441 $ 18,033
Interest factor in rental expense 5,438 4,285
Capitalized interest 1,111 1,418
-------- -------
(a) Fixed charges, as defined 29,990 23,736
Earnings before income taxes and cumulative effect of change in
accounting principle 100,198 98,351
Fixed charges 29,990 23,736
Capitalized interest (1,111) (1,418)
--------- --------
(b) Earnings, as defined 129,077 120,669
(c) Ratio of earnings to fixed charges (b/a) 4.3x 5.1x
</TABLE>
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of The Pep Boys -- Manny, Moe & Jack on Form S-3 of our report
dated March 20, 1995, appearing in the Annual Report on Form 10-K of The Pep
Boys -- Manny, Moe and Jack for the year ended January 28, 1995 and to the
reference to us under the headings "Selected Financial Data" and "Experts" in
the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
February 15, 1996
