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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 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. 333-24029
CHIEF AUTO PARTS INC.
(Exact name of registrant as specified in its charter)
DELAWARE ONE LINCOLN CENTRE, SUITE 200 13-3440178
(State or other 5400 LBJ FREEWAY (IRS Employer
jurisdiction of DALLAS, TEXAS 75240-6223 Identification No.)
incorporation or (Address of principal executive
organization) offices) (Zip Code)
(972) 341-2000
(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 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 [ ]
There were 54,738.28 shares of the registrant's common stock ($.01 par value)
outstanding as of November 11, 1997.
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CHIEF AUTO PARTS INC.
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
PART 1 FINANCIAL INFORMATION PAGE
<S> <C>
Condensed Balance Sheets - September 28, 1997 and December 29, 1996................................. 3
Statements of Income - three months and nine months ended September 28, 1997 and
September 29, 1996.................................................................................. 4
Condensed Statements of Cash Flows - nine months ended September 28, 1997 and
September 29, 1996.................................................................................. 5
Statement of Stockholders' Equity - nine months ended September 28, 1997............................ 6
Notes to Condensed Financial Statements............................................................. 7
Management's Discussion and Analysis of Financial Condition and Results of Operations............... 9
PART II OTHER INFORMATION
Item 1 -- Legal Proceedings......................................................................... 12
Item 6 -- Exhibits and Reports on Form 8-K.......................................................... 12
Signatures.......................................................................................... 13
Index to Exhibits................................................................................... 14
</TABLE>
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PART I -- FINANCIAL INFORMATION
CHIEF AUTO PARTS INC.
CONDENSED BALANCE SHEETS -- SEPTEMBER 28, 1997 AND DECEMBER 29, 1996
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 28, DECEMBER 29,
1997 1996
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 1,168 $ 1,140
Accounts receivable, trade 2,301 1,529
Accounts receivable, other, less allowances of $300 6,285 3,955
Merchandise inventories 151,419 140,418
Deferred income taxes 5,777 6,084
Prepaid and other 1,198 1,014
--------- ---------
Total current assets 168,148 154,140
PROPERTY AND EQUIPMENT, at cost 119,799 109,728
Less accumulated depreciation and amortization 29,897 22,018
--------- ---------
Net property and equipment 89,902 87,710
GOODWILL, less accumulated amortization of $4,414 and $3,574 41,166 42,006
DEFERRED INCOME TAXES 12,362 13,018
OTHER ASSETS 6,452 1,474
--------- ---------
TOTAL $ 318,030 $ 298,348
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 662 $ 622
Current portion of obligations under capital leases 1,315 1,318
Trade accounts payable 76,153 71,928
Other current and accrued liabilities 30,880 32,285
--------- ---------
Total current liabilities 109,010 106,153
LONG-TERM DEBT, less current portion 161,646 62,400
OBLIGATIONS UNDER CAPITAL LEASES, less current portion 16,649 17,646
OTHER NONCURRENT LIABILITIES 25,136 40,669
COMMITMENTS AND CONTINGENCIES
Common stock, $.01 par, 100,000 shares authorized, shares
issued and outstanding: 1997: 54,738; 1996: 49,898 1 1
Additional paid-in capital 5,858 70,815
Less management notes receivable (908) (1,821)
Retained earnings 638 2,485
--------- ---------
Total stockholders' equity 5,589 71,480
--------- ---------
TOTAL $ 318,030 $ 298,348
========= =========
</TABLE>
See notes to condensed financial statements
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CHIEF AUTO PARTS INC.
STATEMENTS OF INCOME -- THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- -----------------------
SEPT. 28, SEPT. 29, SEPT. 28, SEPT. 29,
1997 1996 1997 1996
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales $ 122,770 $ 114,729 $352,946 $ 330,495
Cost of goods sold, warehousing and distribution 72,682 66,752 206,149 191,106
--------- --------- -------- ---------
Gross profit 50,088 47,977 146,797 139,389
Selling, general and administrative 40,561 48,169 123,957 126,514
Depreciation and amortization 3,492 2,973 10,153 8,443
--------- --------- -------- ---------
Operating income (loss) 6,035 (3,165) 12,687 4,432
Interest expense, net 4,836 1,657 10,365 4,499
Other (income) expense, net (20) 1 35 71
--------- --------- -------- ---------
Income (loss) before income taxes 1,219 (4,823) 2,287 (138)
Income tax expense (benefit) 513 (1,555) 963 700
--------- --------- -------- ---------
Net income (loss) $ 706 $ (3,268) $ 1,324 $ (838)
========= ========= ======== =========
</TABLE>
See notes to condensed financial statements
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CHIEF AUTO PARTS INC.
CONDENSED STATEMENTS OF CASH FLOWS -- NINE MONTHS ENDED
SEPTEMBER 28, 1997 AND SEPTEMBER 29, 1996
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
SEPT. 28, SEPT. 29,
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,324 $ (838)
Depreciation and amortization 10,153 8,443
Increase in merchandise inventories (11,001) (29,548)
Increase in accounts payable 4,225 23,529
Other balance sheet changes, net (13,386) 5,496
--------- --------
Net cash (used) provided by operating activities (8,685) 7,082
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 454 127
Additions to property and equipment (12,256) (15,598)
--------- --------
Net cash used by investing activities (11,802) (15,471)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of Senior Notes 126,200 --
Initial funding of new revolving credit loan 14,735 --
Net borrowings under new revolving credit loan since initial funding 16,015 --
Net (payments) borrowings under retired revolving credit loan (61,000) 9,500
Proceeds from exercise of stock options 6,872 --
Payment of deferred compensation (3,995) --
Payments on management notes receivable for common stock 913 101
Distribution to stockholders (75,000) --
Deferred financing costs (2,789) (144)
Principal payments on long-term debt (463) (425)
Other (973) (735)
--------- --------
Net cash provided by financing activities 20,515 8,297
--------- --------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 28 (92)
CASH AND EQUIVALENTS, beginning of period 1,140 1,202
--------- --------
CASH AND EQUIVALENTS, end of period $ 1,168 $ 1,110
========= ========
</TABLE>
See notes to condensed financial statements
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CHIEF AUTO PARTS INC.
STATEMENT OF STOCKHOLDERS' EQUITY -- NINE MONTHS ENDED
SEPTEMBER 28, 1997
(UNAUDITED)
(dollars in thousands)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
-------------------- NOTES PAID-IN RETAINED
SHARES AMOUNT RECEIVABLE CAPITAL EARNINGS TOTAL
------ ------- -------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 29, 1996 49,898 $ 1 $ (1,821) $70,815 $2,485 $71,480
Exercise of stock options 4,840 -- 6,872 6,872
Payments on notes receivable 913 913
Distribution to stockholders (71,829) (3,171) (75,000)
Net income 1,324 1,324
------ ------- -------- ------- ------ -------
Balance, September 28, 1997 54,738 $ 1 $ (908) $ 5,858 $ 638 $ 5,589
====== ======= ======== ======= ====== =======
</TABLE>
See notes to condensed financial statements
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CHIEF AUTO PARTS INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Chief Auto Parts Inc. (the "Company" or "Chief") is engaged in the sale and
distribution of automotive parts to the retail and wholesale aftermarket through
a chain of 553 stores (located primarily in California and Texas) at September
28, 1997.
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months and nine months ended September 28, 1997
are not necessarily indicative of the results that may be expected for the year
ended December 28, 1997. For further information, refer to the financial
statements for the year ended December 29, 1996 and footnotes thereto included
in the Company's May 1997 Form S-1 Registration Statement filed by the Company
under the Securities Act (No. 333-24029).
2. RECAPITALIZATION
On May 28, 1997, the Company completed a series of related transactions that
resulted in the recapitalization of the Company (collectively, such transactions
comprise the "Recapitalization"). The primary components of the Recapitalization
were as follows:
o The Company issued $130 million of 10.5% Senior Notes due 2005 (the
"Senior Notes"), from which the net proceeds were $126.2 million.
Additionally, the Company received $7.8 million from the exercise of
stock options and payments on management notes receivable. The Company
also made its initial borrowing under a new $100 million revolving credit
loan (the "$100 million Revolving Credit Loan").
o A distribution of $75 million was made to stockholders, and the existing
revolving credit loan was repaid in full ($65 million). In addition, the
Company paid $4 million of accrued employee incentive compensation, and
incurred approximately $6.6 million of deferred financing costs.
3. LONG-TERM DEBT
Long-term debt consists of the following at September 28, 1997 and December 29,
1996 (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 29,
1997 1996
-------- -------
<S> <C> <C> <C>
10.5% Senior Notes, due May 2005 $130,000 $ --
$100 million Revolving Credit Loan, due May 2002 30,750 --
$7.7 million industrial development bonds,
due through December 1999 1,558 2,022
$80 million Revolving Credit Loan, retired May 1997 -- 61,000
-------- -------
Total 162,308 63,022
Less current portion 662 622
-------- -------
Long-term debt $161,646 $62,400
======== =======
</TABLE>
The Senior Notes are unsecured, and the related indenture contains various
covenants that, among other things, provide for the maintenance of minimum cash
flow levels, and place restrictions on additional indebtedness, payment of
dividends, investments, certain asset dispositions, and mergers. On or after May
15, 2001, the Senior Notes may be
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<PAGE> 8
Notes to Condensed Financial Statements
redeemed at the Company's option, at stated redemption prices. If a change of
control (as defined) occurs, the Company may be required to repurchase the
Senior Notes.
The $100 million Revolving Credit Loan is secured by Chief's merchandise
inventory. Borrowings under this facility are available subject to a borrowing
base formula. At September 28, 1997, approximately $56.6 million was available
for borrowing, excluding $30.8 million outstanding at such date. A commitment
fee of 0.375% is payable on the unused portion. Covenants contained in the $100
million Revolving Credit Loan are similar to those described above for the
Senior Notes.
At the Company's option, interest on the $100 million Revolving Credit Loan is
based on either (a) the higher of prime or the federal funds rate plus 0.5%
(plus, in either case, a defined margin rate ranging up to 1%), or (b) the
London Interbank Offered Rate ("LIBOR") plus a defined margin rate ranging from
1.5% to 2.5%. The weighted average interest rate in effect at September 28, 1997
was 7.79%.
4. EARNINGS PER SHARE
Earnings per share has not been presented because the information is not
considered to be meaningful.
5. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income," and
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
Chief will adopt each of these statements in fiscal 1998. As these statements
only require additional disclosures in the Company's financial statements, their
adoption will not have any impact on the Company's financial position or results
of operations.
6. INCOME TAXES
The effective income tax rate for the nine months ended September 28, 1997
differs from the expected statutory rate primarily due to the effect of state
income taxes and nondeductible goodwill amortization.
7. CONTINGENCIES
On September 10, 1997, Chief settled two lawsuits in which it was a defendant.
The lawsuits were filed in September 1993 in the Superior Court of California,
County of Alameda by Stephen Cooper and in March 1996 in the Superior Court of
California, County of San Joaquin by 15 current and former store managers. Both
lawsuits alleged that the Company failed to pay store managers and associate
store managers for overtime compensation as required by California law.
Under the terms of the settlement, the Company paid the plaintiffs and their
attorneys an aggregate amount of $9 million. The settlement payments were funded
from borrowings under the Company's $100 million Revolving Credit Loan. In light
of provisions for potential losses previously recorded by the Company, the
settlement had no adverse impact on the results of operations in 1997. In
agreeing to settle these lawsuits, the Company did not admit any liability or
wrongdoing.
There are approximately 700 store managers and associate store managers
previously or currently employed by the Company in California who have not
brought or joined in the suits against the Company. During July 1997, the
Company and approximately 400 current employees entered into release agreements
with respect to any overtime claims that such employees may have had against the
Company through the date of the release agreement.
The Company has been and is involved in various other legal proceedings.
Management believes that such other litigation is routine in nature and
incidental to the conduct of its business, and that none of such other
litigation, if determined adversely to the Company, would have a material
adverse effect, individually or in the aggregate, on the Company's financial
position or results of operations.
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<PAGE> 9
CHIEF AUTO PARTS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------- --------------------
SEPT. 28, SEPT. 29, SEPT. 28, SEPT. 29,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
Cost of goods sold, warehousing and distribution 59.2 58.2 58.4 57.8
----- ----- ----- -----
Gross profit 40.8 41.8 41.6 42.2
Selling, general and administrative 33.0 42.0 35.1 38.3
Depreciation and amortization 2.8 2.6 2.9 2.6
----- ----- ----- -----
Operating income (loss) 5.0 (2.8) 3.6 1.3
Interest expense, net 4.0 1.4 2.9 1.4
Other (income) expense, net -- -- -- --
----- ----- ----- -----
Income (loss) before income taxes 1.0 (4.2) 0.7 (0.1)
Income tax expense (benefit) 0.4 (1.4) 0.3 0.2
----- ----- ----- -----
Net income (loss) 0.6 (2.8) 0.4 (0.3)
===== ===== ===== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 28, 1997 VS. THREE MONTHS ENDED SEPTEMBER 29, 1996
Net sales increased by $8.0 million, or 7.0%, to $122.8 million in the third
quarter of 1997 from $114.7 million in the third quarter of 1996. The increase
was due primarily to growth in the Company's store base, as well as a 2.9%
increase in comparable store sales.
There were 553 stores open at September 28, 1997 compared to 539 at September
29, 1996. During the third quarter of 1997, the Company opened 11 new stores
(including the relocation of 5 stores) and closed 8 stores (including the
relocations).
Gross profit increased by $2.1 million, or 4.4%, to $50.1 million in the third
quarter of 1997 from $48.0 million in the third quarter of 1996, primarily as a
result of sales volume increases. Gross profit margin decreased due to higher
markdowns and sales discounts in the third quarter of 1997 compared to the third
quarter of 1996, as well as lower purchasing incentives provided by vendors
relating to store remodeling.
Selling, general and administrative ("SG&A") expenses decreased by $7.6 million,
or 15.8%, to $40.6 million in the third quarter of 1997 from $48.2 million in
the third quarter of 1996. The decrease was principally due to a $7.0 million
non-cash provision for store closings in 1996, which had no equivalent in 1997.
The provision related primarily to the Company's exit from the Little Rock
market in 1996. Excluding the non-cash provision in 1996, SG&A decreased by
$608,000, or 1.5% in the third quarter of 1997 as compared to the third quarter
of 1996. The decrease was due primarily to a decrease in net advertising expense
and a credit to expense from the negotiation of favorable lease terminations
relating to several closed stores, partially offset by increases in store labor
and occupancy costs due to increased sales volume and new stores. As a
percentage of net sales, SG&A expenses improved to 33.0% for
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<PAGE> 10
Management's Discussion, cont.
the third quarter of 1997 from 42.0% for the third quarter of 1996, due
principally to the non-cash provision of $7.0 million noted above. Excluding the
non-cash provision, SG&A expenses were 35.9% for the third quarter of 1996.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $2.7 million, or 40.3%, to $9.5 million in the third quarter of
1997 from $6.8 million (excluding the $7.0 million non-cash provision for store
closings) in the third quarter of 1996, due to the factors discussed above.
EBITDA is used by the Company for the purpose of analyzing operating
performance, leverage and liquidity. Additionally, the indenture under which the
Senior Notes were issued and the $100 million Revolving Credit Loan contain
various restrictive covenants which are derived from EBITDA as defined in each
of those agreements. EBITDA is not a measure of financial performance under
generally accepted accounting principles, and should not be considered as an
alternative to net income as an indicator of the Company's operating
performance.
Depreciation and amortization expense increased by $519,000, or 17.5%, to $3.5
million in the third quarter of 1997 from $3.0 million in the third quarter of
1996. This increase was primarily due to an increase in the depreciable asset
base, including leasehold improvements and furniture and equipment, resulting
from extensive store remodeling throughout fiscal 1996, as well as to an
increase in the number of stores open.
Interest expense increased by $3.2 million, or 192.0%, to $4.8 million in the
third quarter of 1997 from $1.7 million in the third quarter of 1996. This
increase was due primarily to the sale of the Senior Notes in conjunction with
the Recapitalization, which resulted in an increase to long-term debt.
Net income increased by $4.0 million, to $706,000 in the third quarter of 1997
from a loss of $3.3 million in the third quarter of 1996, due to the factors
discussed above.
NINE MONTHS ENDED SEPTEMBER 28, 1997 VS. NINE MONTHS ENDED SEPTEMBER 29, 1996
Net sales increased by $22.5 million, or 6.8%, to $352.9 million in 1997 from
$330.5 million in 1996. The increase was due primarily to growth in the
Company's store base, as well as a 2.1% increase in comparable store sales.
During 1997, the Company opened 29 new stores (including the relocation of 10
stores) and closed 20 stores (including the relocations).
Gross profit increased by $7.4 million, or 5.3%, to $146.8 million in 1997 from
$139.4 million in 1996, primarily as a result of sales volume increases. Gross
profit margin decreased slightly due to higher markdowns and sales discounts in
1997 compared to 1996, as well as lower purchasing incentives provided by
vendors relating to store remodeling.
SG&A expenses decreased by $2.6 million, or 2.0%, to $124.0 million in 1997 from
$126.5 million in 1996. The decrease was principally due to a $7.0 million
non-cash provision for store closings in 1996 as noted above, which had no
equivalent in 1997. The provision related primarily to the Company's exit from
the Little Rock market in 1996. Excluding the non-cash provision in 1996, SG&A
increased by $4.4 million, or 3.7% in 1997 as compared to 1996. The increase was
due primarily to an increase in sales volume and a corresponding increase in
related expenses such as store labor and occupancy costs, partially offset by a
decrease in net advertising expense and a credit to expense from the negotiation
of favorable lease terminations relating to several closed stores. As a
percentage of net sales, SG&A expenses improved to 35.1% for 1997 from 38.3% for
1996, due principally to the non-cash provision noted above. Excluding the
non-cash provision, SG&A expenses were 36.2% for 1996.
EBITDA increased by $3.0 million, or 15.1%, to $22.8 million in 1997 from $19.8
million (excluding the $7.0 million non-cash provision for store closings) in
1996, due to the factors discussed above.
Depreciation and amortization expense increased by $1.7 million, or 20.3%, to
$10.2 million in 1997 from $8.4 million in 1996. This increase was primarily due
to an increase in the depreciable asset base, including leasehold improvements
and furniture and equipment, resulting from extensive store remodeling
throughout fiscal 1996, as well as to an increase in the number of stores open.
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<PAGE> 11
Management's Discussion, cont.
Interest expense increased by $5.9 million, or 130.4%, to $10.4 million in 1997
from $4.5 million in 1996. This increase was due primarily to the sale of the
Senior Notes in conjunction with the Recapitalization, which resulted in an
increase to long-term debt.
Net income increased by $2.2 million, to $1.3 million in 1997 from a loss of
$838,000 in 1996, due to the factors discussed above.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
The Company utilizes funds generated from operations and borrowings under credit
facilities to meet working capital requirements (principally merchandise
inventory) and to fund capital expenditures (principally the opening of new
stores, remodeling and expansion of existing stores). At September 28, 1997, the
Company had net working capital of $59.1 million (compared to $48 million at
December 29, 1996) and $56.6 million available for additional borrowings under
the $100 million Revolving Credit Loan (compared to $18.5 million at December
29, 1996 under the revolving credit loan in place at that time).
During the first nine months of 1997, the Company's principal sources of cash
were $11.5 million from net income and depreciation and amortization, $126.2
million from the sale of the Senior Notes, $30.8 million from borrowings under
the $100 million Revolving Credit Loan, and $6.9 million from the exercise of
stock options; collectively $175.4 million. These amounts were used primarily to
service working capital requirements (including the settlement of two lawsuits
for an aggregate amount of $9.0 million), fund capital expenditures of $12.3
million, pay a distribution of $75 million to stockholders, and to repay debt of
$61 million.
The Company anticipates that substantially all of its new and relocated stores
during fiscal 1997 will be financed by arrangements structured as operating
leases that require no net capital expenditures by the Company except for
fixtures and store equipment. Merchandise inventories and related capital
expenditures for the new stores and remodeling are expected to be funded by
operations, working capital and credit facilities.
During the fourth quarter of 1997, the Company will begin the process of
relocating its Cerritos, California warehouse distribution center to a new
facility in Ontario, California. The process should be completed by the end of
the first quarter of fiscal 1998. The new facility consists of 447,000 square
feet, as compared to 304,000 at the Cerritos location. Both of these facilities
are leased under operating leases. The remaining lease commitment for the
Cerritos location will be absorbed through a sublet arrangement, and as such
there should be minimal future cash outlays for this location after the sublet
has commenced. The lease commitment for the Ontario location (initial term of
ten years, plus options) will be funded by operations.
The Company believes that funds provided from operations and from credit
facilities currently in place will be sufficient to meet planned financial
commitments.
FORWARD-LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis contains certain
forward-looking statements about the future performance of the Company that are
based on management's assumptions and beliefs in light of the information
currently available to it. These forward-looking statements are subject to
uncertainties and other factors that could cause actual results to differ
materially from those statements. Factors which may cause such differences are
identified in the Company's May 1997 Form S-1 Registration Statement filed by
the Company under the Securities Act (No. 333-24029), and are incorporated
herein by reference.
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<PAGE> 12
Chief Auto Parts Inc.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Note 7 of the notes to condensed financial statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed as part of this report:
3.1 Fourth Restated Certificate of Incorporation of Chief Auto Parts
Inc. Incorporated by reference to Exhibit 3.1 to Pre-Effective
Amendment No. 5 to the Form S-1 Registration Statement filed by
the Company under the Securities Act (No. 333-24029).
3.2 Bylaws of Chief Auto Parts Inc. Incorporated by reference to
Exhibit 3.2 to the Form S-1 Registration Statement filed by the
Company under the Securities Act (No. 333-24029).
4.1 Form of Indenture between Chief Auto Parts Inc. and First Trust
National Association, as trustee. Incorporated by reference to
Exhibit 4.1 to Pre-Effective Amendment No. 5 to the Form S-1
Registration Statement filed by the Company under the Securities
Act (No. 333-24029).
27.1 Financial Data Schedule (electronic filing only).
(b) Reports on Form 8-K
On September 10, 1997, the Company filed a Current Report on Form 8-K
stating under "Item 5. Other Events" that the Company had settled two
lawsuits in which it was a defendant. Both lawsuits alleged that the
Company failed to pay store managers and associate store managers for
overtime compensation as required by California law. Under the terms of
the settlement, the Company paid the plaintiffs and their attorneys an
aggregate amount of $9 million, for which provision had been previously
recorded. In agreeing to settle these lawsuits, the Company did not
admit any liability or wrongdoing.
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<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHIEF AUTO PARTS INC.
Date: November 11, 1997 /s/ Thomas A. Hough
----------------------------------------
Thomas A. Hough
Senior Vice President - Finance,
Treasurer, and Chief Financial Officer
(Principal Financial Officer)
Date: November 11, 1997 /s/ Patrick J. Corbett
----------------------------------------
Patrick J. Corbett
Director of Financial Reporting
(Principal Accounting Officer)
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<PAGE> 14
CHIEF AUTO PARTS INC.
INDEX TO EXHIBITS
LIST OF EXHIBITS FILED WITH FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 28, 1997
3.1 Fourth Restated Certificate of Incorporation of Chief Auto Parts Inc.
Incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment
No. 5 to the Form S-1 Registration Statement filed by the Company
under the Securities Act (No. 333-24029).
3.2 Bylaws of Chief Auto Parts Inc. Incorporated by reference to Exhibit
3.2 to the Form S-1 Registration Statement filed by the Company under
the Securities Act (No. 333-24029).
4.1 Form of Indenture between Chief Auto Parts Inc. and First Trust
National Association, as trustee. Incorporated by reference to Exhibit
4.1 to Pre-Effective Amendment No. 5 to the Form S-1 Registration
Statement filed by the Company under the Securities Act (No.
333-24029).
27.1 Financial Data Schedule (electronic filing only).
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> SEP-28-1997
<CASH> 1,168
<SECURITIES> 0
<RECEIVABLES> 8,586
<ALLOWANCES> 300
<INVENTORY> 151,419
<CURRENT-ASSETS> 168,148
<PP&E> 119,799
<DEPRECIATION> 29,897
<TOTAL-ASSETS> 318,030
<CURRENT-LIABILITIES> 109,010
<BONDS> 161,646
0
0
<COMMON> 1
<OTHER-SE> 5,588
<TOTAL-LIABILITY-AND-EQUITY> 318,030
<SALES> 122,770
<TOTAL-REVENUES> 122,770
<CGS> 72,682
<TOTAL-COSTS> 72,682
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,836
<INCOME-PRETAX> 1,219
<INCOME-TAX> 513
<INCOME-CONTINUING> 706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 706
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
