<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
(x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 1, 1997
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period
from to
----------- -----------
Commission File No. 1-3381
------
The Pep Boys - Manny, Moe & Jack
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer ID number)
incorporation or organization)
3111 W. Allegheny Ave. Philadelphia, PA 19132
---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
215-229-9000
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports); and (2) has been subject
to such filing requirements for the past 90 days. Yes ( x ) No ( )
As of November 1, 1997 there were 63,471,251 shares of the registrant's
Common Stock outstanding.
<PAGE>
<PAGE>2
- -------------------------------------------------------------------------
Index Page
- -------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Condensed Consolidated
Financial Statements (Unaudited)
Consolidated Balance Sheets -
November 1, 1997 and February 1, 1997 3
Consolidated Statements of Earnings -
Thirteen and Thirty-nine weeks ended
November 1, 1997 and November 2, 1996 4
Condensed Consolidated Statements of
Cash Flows - Thirty-nine weeks ended
November 1, 1997 and November 2, 1996 5
Notes to Condensed Consolidated
Financial Statements 6-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8-13
PART II - OTHER INFORMATION 14
- ---------------------------
SIGNATURE 15
- -------------------------------------------------------------------------
<PAGE>
<PAGE>3
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands, except per share amounts)
<CAPTION>
Nov. 1, 1997 Feb. 1, 1997*
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash....................................................... $ 3,587 $ 2,589
Accounts receivable, net................................... 11,371 7,653
Merchandise inventories.................................... 568,185 520,082
Prepaid expenses........................................... 15,869 33,042
Deferred income taxes...................................... 16,982 16,982
Other...................................................... 23,024 24,570
------------ -------------
Total Current Assets.................................... 639,018 604,918
Property and Equipment - at cost:
Land....................................................... 290,128 278,345
Building and improvements.................................. 889,697 794,244
Furniture, fixtures and equipment.......................... 527,274 448,425
Construction in progress................................... 49,331 22,528
------------ -------------
1,756,430 1,543,542
Less accumulated depreciation and amortization............. 411,779 353,808
------------ -------------
Total Property and Equipment............................ 1,344,651 1,189,734
Other........................................................ 25,520 23,713
------------ -------------
Total Assets.................................................. $2,009,189 $1,818,365
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable........................................... $ 202,639 $ 337,536
Accrued expenses........................................... 151,512 133,557
Short-term borrowings...................................... 87,100 63,000
Current maturities of long-term debt....................... 154 134
------------ -------------
Total Current Liabilities............................... 441,405 534,227
Long-Term Debt, less current maturities...................... 415,790 217,178
Deferred Income Taxes........................................ 58,748 50,382
Convertible Subordinated Notes............................... 86,250 86,250
Zero Coupon Convertible Subordinated Notes................... 156,801 152,237
Commitments and Contingencies
Stockholders' Equity:
Common Stock, par value $1 per share:
Authorized 500,000,000 shares;
Issued and outstanding 63,471,251 and 63,119,491.......... 63,471 63,119
Additional paid-in capital................................. 168,061 162,660
Retained earnings.......................................... 678,932 612,581
------------ -------------
910,464 838,360
Less:
Shares held in benefits trust - 2,232,500 shares, at cost 60,269 60,269
------------ -------------
Total Stockholders' Equity.............................. 850,195 778,091
------------ -------------
Total Liabilities and Stockholders' Equity.................... $2,009,189 $1,818,365
============ =============
<FN>
See notes to condensed consolidated financial statements.
*Taken from the audited financial statements at Feb. 1, 1997.
/TABLE
<PAGE>
<PAGE>4
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(dollar amounts in thousands, except per share amounts)
UNAUDITED
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
--------------------------------- ----------------------------------
Nov. 1, 1997 Nov. 2, 1996 Nov. 1, 1997 Nov. 2, 1996
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Merchandise Sales.................................... $ 440,500 $ 408,670 $1,303,518 $1,178,644
Service Revenue...................................... 85,064 70,149 250,622 205,462
------------- ------------- -------------- --------------
Total Revenues....................................... 525,564 478,819 1,554,140 1,384,106
Costs of Merchandise Sales........................... 304,759 284,029 901,184 819,393
Costs of Service Revenue............................. 67,939 56,503 197,683 163,704
------------- ------------- -------------- --------------
Total Costs of Revenues.............................. 372,698 340,532 1,098,867 983,097
Gross Profit from Merchandise Sales.................. 135,741 124,641 402,334 359,251
Gross Profit from Service Revenue.................... 17,125 13,646 52,939 41,758
------------- ------------- -------------- --------------
Total Gross Profit................................... 152,866 138,287 455,273 401,009
Selling, General and Administrative Expenses......... 106,548 88,178 309,342 255,973
------------- ------------- -------------- --------------
Operating Profit..................................... 46,318 50,109 145,931 145,036
Nonoperating Income.................................. 1,129 925 3,738 1,872
Interest Expense..................................... 9,758 6,943 28,147 22,895
------------- ------------- -------------- --------------
Earnings Before Income Taxes......................... 37,689 44,091 121,522 124,013
Income Taxes......................................... 13,569 16,314 44,168 45,885
------------- ------------- -------------- --------------
Net Earnings......................................... 24,120 27,777 77,354 78,128
Retained Earnings, beginning of period............... 658,485 568,483 612,581 524,443
Cash Dividends....................................... 3,673 3,179 11,003 9,490
------------- ------------- ------------- --------------
Retained Earnings, end of period..................... $ 678,932 $ 593,081 $ 678,932 $ 593,081
============= ============= ============= ==============
Net Earnings per Share............................... $ .38 $ .44 $ 1.22 $ 1.26
============= ============= ============== ==============
Cash Dividends per Share............................. $ .0600 $ .0525 $ .1800 $ .1575
============= ============= ============== ==============
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>5
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
UNAUDITED
<CAPTION>
Thirty-nine weeks ended
----------------------------------
Nov. 1, 1997 Nov. 2, 1996
-------------- --------------
<S> <C> <C>
Net Cash (Used in) Provided by Operating Activities............. $ (1,850) $ 73,182
Cash Flows from Investing Activities:
Capital expenditures............................................ (215,422) (137,618)
Other, net...................................................... 788 1,283
---------- ----------
Net Cash Used in Investing Activities........................... (214,634) (136,335)
Cash Flows from Financing Activities:
Net borrowings under line of credit agreements.................. 124,100 35,086
Reduction of long-term debt..................................... (368) (107,141)
Dividends paid.................................................. (11,003) (9,490)
Net proceeds from issuance of debt.............................. 99,000 146,250
Proceeds from exercise of stock options
and dividend reinvestment plan................................ 5,753 14,301
---------- ----------
Net Cash Provided by Financing Activities....................... 217,482 79,006
---------- ----------
Net Increase in Cash................................................. 998 15,853
Cash at Beginning of Period.......................................... 2,589 11,487
---------- ----------
Cash at End of Period................................................ $ 3,587 $ 27,340
========== ==========
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>6
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Condensed Consolidated Financial Statements
The consolidated balance sheet as of November 1, 1997, the consolidated
statements of earnings for the thirteen and thirty-nine week periods ended
November 1, 1997 and November 2, 1996 and the condensed consolidated statements
of cash flows for the thirty-nine week periods ended November 1, 1997 and
November 2, 1996 have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows at November 1, 1997 and for all periods presented have
been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's February 1,
1997 annual report to shareholders. The results of operations for the
thirteen and thirty-nine week periods ended Novemeber 1, 1997 are not
necessarily indicative of the operating results for the full year.
NOTE 2. Merchandise Inventories
Merchandise inventories are valued at the lower of cost (last-in, first-out)
or market. If the first-in, first-out method of valuing inventories had been
used by the Company, inventories would have been approximately $2,300,000 and
$3,300,000 higher at November 1, 1997 and February 1, 1997, respectively.
NOTE 3. Earnings Per Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." This new standard requires dual presentation of basic and diluted
earnings per share (EPS) on the face of the statement of earnings and requires
reconciliation of the numerators and denominators of the basic and diluted EPS
calculations. This statement will be effective for the fourth quarter of the
Company's 1997 fiscal year. Assuming the Company had adopted the provisions of
SFAS No. 128, the pro forma effect on the Company's EPS calculations for the
thirteen week periods ended November 1, 1997 and November 2, 1996 are as
follows: November 1, 1997 - as reported: $.38, basic: $.39; November 2, 1996 -
as reported: $.44, basic: $.45. The Company's EPS calculations for the
thirty-nine week periods ended November 1, 1997 and November 2, 1996 are as
follows: November 1, 1997 - as reported: $1.22, basic: $1.25; November 2,
1996 - as reported: $1.26, basic: $1.28. The Company's reported EPS
calculations are the same as pro forma diluted EPS.
NOTE 4. Reporting Comprehensive Income
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement, which establishes standards for reporting and disclosure of
comprehensive income, is effective for interim and annual periods beginning
after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative purposes is required under SFAS No. 130. As this statement only
requires additional disclosures in the Company's consolidated financial
statements, its adoption will not have any impact on the Company's consolidated
financial position or results of operations. The Company expects to adopt SFAS
No. 130 in fiscal 1998.
<PAGE>
<PAGE>7
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont)
NOTE 5. Disclosures about Segments of an Enterprise and Related Information
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement, which establishes
standards for the reporting of information about operating segments and requires
the reporting of selected information about operating segments in interim
financial statements, is effective for fiscal years beginning after
December 15, 1997, although earlier application is permitted. Reclassification
of segment information for earlier periods presented for comparative purposes is
required under SFAS No. 131. If applicable, this statement would only require
additional disclosures in the Company's consolidated financial statements and as
such, its adoption will not have any impact on the Company's consolidated
financial position or results of operations. The Company expects to adopt SFAS
No. 131 in fiscal 1998.
NOTE 6. Subsequent Event
On July 10, 1997, the Company established a Medium-Term Note program which
permitted the Company to issue up to $150,000,000 of Medium-Term Notes.
Under this program, on November 3, 1997 and November 5, 1997 the Company sold
$35,000,000 and $16,000,000 principal amounts of 6.71% and 6.67% senior notes
maturing on November 3, 2004 and November 5, 2004, respectively. Interest is
payable semi-annually. The net proceeds of $34,807,500 and $15,912,000 were
used for working capital, the repayment of debt and for general corporate
purposes.
<PAGE>
<PAGE>8
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
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.
<CAPTION>
Percentage of Total Revenues Percentage Change
- ------------------------------------------------------ ---------------------------------- -----------------
Thirteen weeks ended November 1, 1997 November 2, 1996 Fiscal 1997 vs.
(Fiscal 1997) (Fiscal 1996) Fiscal 1996
- ------------------------------------------------------ ---------------- ---------------- -----------------
<S> <C> <C> <C>
Merchandise Sales..................................... 83.8% 85.3% 7.8%
Service Revenue (1)................................... 16.2 14.7 21.3
----- ----- -----
Total Revenues........................................ 100.0 100.0 9.8
Costs of Merchandise Sales (2)........................ 69.2 (3) 69.5 (3) 7.3
Costs of Service Revenue (2).......................... 79.9 (3) 80.5 (3) 20.2
----- ----- -----
Total Costs of Revenues............................... 70.9 71.1 9.4
Gross Profit from Merchandise Sales................... 30.8 (3) 30.5 (3) 8.9
Gross Profit from Service Revenue..................... 20.1 (3) 19.5 (3) 25.5
----- ----- -----
Total Gross Profit.................................... 29.1 28.9 10.5
Selling, General and Administrative Expenses.......... 20.3 18.4 20.8
----- ----- -----
Operating Profit...................................... 8.8 10.5 (7.6)
Nonoperating Income................................... .2 .2 22.1
Interest Expense...................................... 1.8 1.5 40.5
----- ----- -----
Earnings Before Income Taxes.......................... 7.2 9.2 (14.5)
Income Taxes.......................................... 36.0 (4) 37.0 (4) (16.8)
----- ----- -----
Net Earnings.......................................... 4.6 5.8 (13.2)
===== ===== =====
<FN>
(1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the
sale of any installed parts or materials.
(2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of service
revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include
utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes.
</TABLE>
<PAGE>
<PAGE>9
Thirteen Weeks Ended November 1, 1997 vs. Thirteen Weeks Ended November 2, 1996
- -------------------------------------------------------------------------------
Total revenues for the third quarter increased 9.8% due to a higher store
count (675 at November 1, 1997 compared with 561 at November 2, 1996) offset,
in part, by a 3.6% decrease in comparable store revenues (revenues generated
by stores in operation during the same months of each period). Comparable
store merchandise sales decreased 5.7% while comparable service revenue
increased by 8.3%.
Gross profit from merchandise sales increased, as a percentage of merchandise
sales, due primarily to substantially higher merchandise margins offset, in
part, by increases in store occupancy and warehousing costs.
Gross profit from service revenue increased, as a percentage of service
revenue, due primarily to a decrease in service center employee benefits
expense.
Selling, general and administrative expenses increased substantially, as a
percentage of total revenues, due primarily to lower than expected revenues
as well as increases in store expenses and general office costs.
<TABLE>
Nonoperating income consisted of the following:
(in thousands)
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Rental revenue $ 289 $ 275
Investment income 836 625
Other income 4 25
------ ------
Total $1,129 $ 925
====== ======
</TABLE>
Interest expense increased, as a percentage of total revenues, due primarily
to higher debt levels necessary to fund the Company's store expansion program
and related working capital requirements.
Net earnings decreased, as a percentage of total revenues, due primarily to a
decrease in comparable store revenues, substantially higher selling, general
and administrative expenses, as a percentage of total revenues and an increase
in interest expense, as a percentage of total revenues, offset, in part,
by an increase in gross profit from merchandise sales, as a percentage of
merchandise sales.
<PAGE>
<PAGE>10
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
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.
<CAPTION>
Percentage of Total Revenues Percentage Change
- ------------------------------------------------------ -------------------------------------- -----------------
Thirty-nine weeks ended November 1, 1997 November 2, 1996 Fiscal 1997 vs.
(Fiscal 1997) (Fiscal 1996) Fiscal 1996
- ------------------------------------------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
Merchandise Sales..................................... 83.9% 85.2% 10.6%
Service Revenue (1)................................... 16.1 14.8 22.0
------- ------- -------
Total Revenues........................................ 100.0 100.0 12.3
Costs of Merchandise Sales (2)........................ 69.1 (3) 69.5 (3) 10.0
Costs of Service Revenue (2).......................... 78.9 (3) 79.7 (3) 20.8
------ ------ ------
Total Costs of Revenues............................... 70.7 71.0 11.8
Gross Profit from Merchandise Sales................... 30.9 (3) 30.5 (3) 12.0
Gross Profit from Service Revenue..................... 21.1 (3) 20.3 (3) 26.8
------ ------ ------
Total Gross Profit.................................... 29.3 29.0 13.5
Selling, General and Administrative Expenses.......... 19.9 18.5 20.8
------ ------ ------
Operating Profit...................................... 9.4 10.5 .6
Nonoperating Income................................... .2 .1 99.7
Interest Expense...................................... 1.8 1.6 22.9
------ ------ ------
Earnings Before Income Taxes.......................... 7.8 9.0 (2.0)
Income Taxes.......................................... 36.3 (4) 37.0 (4) (3.7)
------ ------ ------
Net Earnings.......................................... 5.0 5.6 (1.0)
====== ====== ======
<FN>
(1) Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the
sale of any installed parts or materials.
(2) Costs of merchandise sales include the cost of products sold, buying, warehousing and store occupancy costs. Costs of service
revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include
utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses.
(3) As a percentage of related sales or revenue, as applicable.
(4) As a percentage of earnings before income taxes.
</TABLE>
<PAGE>
<PAGE>11
Thirty-nine Weeks Ended November 1, 1997 vs. Thirty-nine Weeks Ended
November 2, 1996
- --------------------------------------------------------------------
Total revenues for the thirty-nine weeks ended November 1, 1997 increased
12.3% due to a higher store count (675 at November 1, 1997 compared with 561
at November 2, 1996) offset, in part, by a 0.4% decrease in comparable
store revenues. Comparable store merchandise sales decreased 2.2% while
comparable service revenue increased 9.9%.
Gross profit from merchandise sales increased, as a percentage of merchandise
sales, due primarily to substantially higher merchandise margins offset, in
part, by increases in store occupancy and warehousing costs.
Gross profit from service revenue increased, as a percentage of service
revenue, due primarily to a decrease in service center employee benefits
expense offset, in part, by an increase in service center personnel costs.
Selling, general and administrative expenses increased substantially, as a
percentage of total revenues, due primarily to lower than expected revenues as
well as increases in store expenses and general office costs offset, in part,
by a decrease in media costs.
<TABLE>
Nonoperating income consisted of the following:
(in thousands)
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Rental revenue $1,197 $1,082
Investment income 2,497 754
Other income 44 36
------ ------
Total $3,738 $1,872
====== ======
</TABLE>
Interest expense increased, as a percentage of total revenues, due primarily
to higher debt levels necessary to fund the Company's store expansion program
and related working capital requirements.
The decrease in net earnings, as a percentage of total revenues, was due
primarily to an increase in selling, general and administrative expenses, as a
percentage of total revenues offset, in part, by an increase in gross profit
from merchandise sales, as a percentage of merchandise sales.
<PAGE>
<PAGE>12
LIQUIDITY AND CAPITAL RESOURCES - November 1, 1997
- --------------------------------------------------
The Company's cash requirements arise principally from the need to finance
the acquisition, construction and equipping of new stores and to purchase
inventory. During the first thirty-nine weeks of 1997, the Company invested
$215,422,000 in property and equipment while net inventory (net inventory
includes the increase in inventory less the change in accounts payable)
increased $183,000,000. Working capital increased from $70,691,000 at
February 1, 1997 to $197,613,000 at November 1, 1997. At November 1, 1997 the
Company had stockholders' equity of $850,195,000 and long-term debt of
$658,841,000. The Company's long-term debt was 44% of its total capitalization
at November 1, 1997 and 37% at February 1, 1997.
The Company plans to open as many as 39 new stores during the fourth quarter
of fiscal 1997. Management estimates that if all 39 new stores are
opened the cost of this expansion, coupled with expenditures in existing stores,
warehouses and offices will be approximately $35,000,000. Funds required to
finance the store expansion including related inventory requirements are
expected to come primarily from operating activities with the remainder
provided by unused lines of credit which totalled $142,000,000 at November 1,
1997, or from accessing traditional lending sources such as the public capital
markets.
In fiscal 1998, the Company plans to open between 70 and 75 new stores. Funds
required to finance the store expansion including related inventory requirements
are expected to be less than the funds required for fiscal 1997.
On July 10, 1997 the Company established a Medium-Term Note program which
permitted the Company to issue up to $150,000,000 of Medium-Term Notes.
Under this program the Company has sold senior notes as follows.
Interest Maturity Principal Net
Date Rate Date Amount Proceeds
- --------------------------------------------------------------------------------
July 15, 1997 6.52% July 16, 2007 $ 50,000,000 $ 49,750,000
September 19, 1997 6.40% September 19, 2007 $ 49,000,000 $ 48,755,000
November 3, 1997 6.71% November 3, 2004 $ 35,000,000 $ 34,807,500
November 5, 1997 6.67% November 5, 2004 $ 16,000,000 $ 15,912,000
- --------------------------------------------------------------------------------
$150,000,000 $149,224,500
Interest on these senior notes is payable semi-annually. The net proceeds
were used for working capital, the repayment of debt and for general corporate
purposes.
NEW ACCOUNTING PRONOUNCEMENTS
- -----------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." This new
standard requires dual presentation of basic and diluted earnings per share
(EPS) on the face of the statement of earnings and requires reconciliation of
the numerators and denominators of the basic and diluted EPS calculations.
This statement will be effective for the fourth quarter of the Company's 1997
fiscal year. Assuming the Company had adopted the provisions of SFAS No. 128,
the pro forma effect on the Company's EPS calculations for the thirteen week
periods ended November 1, 1997 and November 2, 1996 are as follows:
November 1, 1997 - as reported: $.38, basic: $.39; November 2, 1996 - as
reported: $.44, basic: $.45. The Company's EPS calculations for the
thirty-nine week periods ended November 1, 1997 and November 2, 1996 are as
follows: November 1, 1997 - as reported: $1.22, basic: $1.25; November 2,
1996 - as reported: $1.26, basic: $1.28. The Company's reported EPS
calculations are the same as pro forma diluted EPS.
<PAGE>
<PAGE>13
NEW ACCOUNTING PRONOUNCEMENTS (cont)
- ------------------------------------
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement, which establishes standards for reporting and disclosure of
comprehensive income, is effective for interim and annual periods beginning
after December 15, 1997, although earlier adoption is permitted.
Reclassification of financial information for earlier periods presented for
comparative purposes is required under SFAS No. 130. As this statement only
requires additional disclosures in the Company's consolidated financial
statements, its adoption will not have any impact on the Company's consolidated
financial position or results of operations. The Company expects to adopt SFAS
No. 130 in fiscal 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement, which establishes
standards for the reporting of information about operating segments and requires
the reporting of selected information about operating segments in interim
financial statements, is effective for fiscal years beginning after
December 15, 1997, although earlier application is permitted. Reclassification
of segment information for earlier periods presented for comparative purposes is
required under SFAS No. 131. If applicable, this statement would only require
additional disclosures in the Company's consolidated financial statements and as
such, its adoption will not have any impact on the Company's consolidated
financial position or results of operations. The Company expects to adopt SFAS
No. 131 in fiscal 1998.
<PAGE>
<PAGE>14
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Reference is made to the Company's quarterly report on Form 10-Q for the
quarterly period ended August 2, 1997.
The Company is party to various lawsuits and claims that arise, from time to
time, in the normal course of business. In the opinion of management, these
lawsuits and claims are not singularly or in the aggregate, material to the
Company's financial position or results of operations.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(11) Statement Re: Computation of Earnings Per Share
(27) Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K have been filed
during the quarter for which this report is filed.
<PAGE>
<PAGE>15
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE PEP BOYS - MANNY, MOE & JACK
--------------------------------
(Registrant)
Date: 12/15/97 By: /s/ Michael J. Holden
----------------------- -------------------------
Michael J. Holden
Executive Vice President,
& Chief Financial Officer
<PAGE>
<PAGE>16
INDEX TO EXHIBITS
- -----------------
(11) Computations of Earnings Per Share
(27) Financial Data Schedule
<TABLE>
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
(in thousands, except per share data)
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
----------------------------------- ------------------------------------
November 1, 1997 November 2, 1996 November 1, 1997 November 2, 1996
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net Earnings..................................... $24,120 $27,777 $77,354 $78,128
Adjustment for interest on 4% convertible
subordinated notes, net of income tax effect... 554 542 1,661 1,626
Adjustment for interest on zero coupon convertible
subordinated notes, net of income tax effect... 978 462 2,898 462
- ----------------------------------------------------------------------------------------------------------------------------------
(a) Adjusted net earnings $25,652 $28,781 $81,913 $80,216
- ----------------------------------------------------------------------------------------------------------------------------------
Average number of Common Shares outstanding
during the period.............................. 61,210 60,385 61,070 60,145
Common shares assumed issued upon conversion of
4% convertible subordinated notes.............. 2,104 2,104 2,104 2,104
Common shares assumed issued upon conversion of
zero coupon convertible subordinated notes..... 3,513 1,699 3,513 566
Common Shares assumed issued upon exercise
of dilutive stock options, net of assumed
repurchase, at the average market price,
using the treasury stock method (1)............ 435 958 590 937
- ----------------------------------------------------------------------------------------------------------------------------------
(b) Average number of Common Shares assumed
outstanding during the period.................. 67,262 65,146 67,277 63,752
- ----------------------------------------------------------------------------------------------------------------------------------
Net Earnings per Share (a/b)..................... $ .38 $ .44 $ 1.22 $ 1.26
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The number of Common Shares assumed issued upon exercise of dilutive stock options is essentially
the same for fully diluted earnings per share.
</TABLE>
</DOCUMEMT>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE
SHEET AS OF NOVEMBER 1, 1997 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE THIRTY-NINE WEEK
PERIOD ENDED NOVEMBER 1, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<S>
<C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> NOV-1-1997
<CASH> 3,587
<SECURITIES> 0
<RECEIVABLES> 11,656
<ALLOWANCES> 285
<INVENTORY> 568,185
<CURRENT-ASSETS> 639,018
<PP&E> 1,756,430
<DEPRECIATION> 411,779
<TOTAL-ASSETS> 2,009,189
<CURRENT-LIABILITIES> 441,405
<BONDS> 658,841
0
0
<COMMON> 63,471
<OTHER-SE> 786,724
<TOTAL-LIABILITY-AND-EQUITY> 2,009,189
<SALES> 1,303,518
<TOTAL-REVENUES> 1,554,140
<CGS> 901,184
<TOTAL-COSTS> 1,098,867
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,147
<INCOME-PRETAX> 121,522
<INCOME-TAX> 44,168
<INCOME-CONTINUING> 77,354
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,354
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
