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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[x] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (FEE REQUIRED)
For the fiscal year ended January 29, 1994
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (NO FEE REQUIRED)
For the transition period from to .
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Commission file number 1-3381
The Pep Boys - Manny, Moe & Jack
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-0962915
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
3111 West Allegheny Avenue, Philadelphia, PA 19132
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(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code 215-229-9000
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ----------------------------- -----------------------------------------
Common Stock, $1.00 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [x]
As of the close of business on April 8, 1994, the aggregate market value of the
voting stock held by nonaffiliates of the registrant was not less than
$1,606,297,795.
As of April 8, 1994 there were 59,138,455 shares of the registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
PART III Portions of the registrant's definitive proxy statement,
which will be filed with the commission pursuant to
Regulation 14A not later than 120 days after the end of the
Company's fiscal year, for the Company's Annual Meeting of
Shareholders presently scheduled to be held on May 31,
1994.
This Annual Report on Form 10-K for the year ended January 29, 1994, at
the time of filing with the Securities and Exchange Commission, modifies and
supersedes all prior documents filed pursuant to Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934 for purposes of any offers or sales of any
securities on or after the date of such filing, pursuant to any Registration
Statement or Prospectus filed pursuant to the Securities Act of 1933 which
incorporates by reference this Annual Report.
PART I
ITEM I BUSINESS
GENERAL
The Company is engaged principally in the retail sale of automotive parts and
accessories, automotive maintenance and service and the installation of parts
sold by it through its chain of 386 Pep Boys stores (as of January 29, 1994),
having an aggregate of 3,626 service bays. The Company operates approximately
7,771,000 gross square feet of retail space for an average of approximately
20,100 gross square feet per store.
The following table indicates by state the number of stores of the Company in operation at the end of fiscal 1990, 1991, 1992 and
1993 and the number of stores opened and closed by the Company during each of the last three fiscal years:
NUMBER OF STORES AT END OF FISCAL YEARS 1990 THROUGH 1993
1991 1992 1993
1990 -------------------------- -------------------------- --------------------------
State YEAR END Opened Closed Year End Opened Closed Year End Opened Closed Year End
- -------------------- -------- ------ ------ -------- ------ ------ -------- ------ ------ --------
Alabama - - - - 1 - 1 - - 1
Arizona 24 1 - 25 - 1 24 - - 24
Arkansas - - - - - - - 1 - 1
California 93 2 1 94 4 6 92 8 7 * 93
Delaware 5 - - 5 - - 5 - - 5
Florida 12 8 - 20 7 - 27 6 - 33
Georgia 19 1 - 20 - - 20 - - 20
Illinois - - - - - - - 3 - 3
Indiana - - - - - - - 1 - 1
Kansas - - - - - - - 1 - 1
Kentucky - - - - - - - 1 - 1
Louisiana - 7 - 7 2 - 9 3 - 12
Maryland 14 - - 14 1 - 15 1 - 16
Massachusetts - - - - - - - 2 - 2
Missouri - - - - - - - 1 - 1
Nevada 8 - - 8 - - 8 - - 8
New Jersey 14 - 1 13 - - 13 1 - 14
New Mexico 8 - - 8 - - 8 - - 8
New York - - - - 7 - 7 2 - 9
North Carolina 10 1 - 11 - - 11 - - 11
Oklahoma 6 - - 6 - - 6 - - 6
Pennsylvania 30 1 1 30 1 1 30 2 1 31
Rhode Island - - - - - - - 1 - 1
South Carolina 4 1 - 5 1 - 6 - - 6
Tennessee 3 4 - 7 - - 7 - - 7
Texas 46 1 - 47 2 - 49 3 - 52
Utah 5 - - 5 1 - 6 - - 6
Virginia 12 - - 12 2 1 13 - - 13
--- --- --- --- --- --- --- --- --- ---
Total 313 27 3 337 29 9 357 37 8 386
=== === === === === === === === === ===
* Included in this number is the Company's Santa Monica store which is temporarily closed.
/TABLE
NEW STORES AND EXPANSION STRATEGY
The most important factors considered by the Company when deciding to
open new stores are the population density of the target area and the
automotive traffic count at the site of the proposed store. The most
important factors considered by the Company when deciding whether to close a
store are profitability and whether the store is outmoded by virtue of store
size, location and surroundings, number of service bays, number of other
stores within the same market area and the cost/benefit of establishing a
replacement store rather than expanding or otherwise upgrading an older
store.
The Company currently plans to open as many as 50 new stores with
service bays in fiscal 1994. If the Company opens stores in all 50
locations, it anticipates spending approximately $115,900,000 in addition to
the $17,223,000 it had already spent as of January 29, 1994 in connection
with certain of these locations. Funds required to finance this expansion
are expected to come primarily from operating activities with the remainder
provided by unused lines of credit or from accessing traditional lending
sources such as the public capital markets.
All 37 of the stores opened during fiscal 1993 were the new "warehouse"
format automotive supercenter, which was introduced in fiscal 1991. The
Company had 71 warehouse format stores as of January 29, 1994. In addition
to lower capital costs and a shorter construction schedule, the warehouse
format stores provide a more convenient shopping environment to customers.
The Company anticipates that all the stores to be opened in fiscal 1994 will
be in the warehouse format and will consist of approximately 22,000 gross
square feet, including 11 service bays with computerized diagnostic
equipment.
The Company's ability to meet its expansion goals will depend, in large
measure, upon the availability of suitable sites, prevailing economic
conditions, its success in completing negotiations to purchase or lease
properties, and its ability to obtain governmental approvals and meet
construction deadlines.
MERCHANDISING
Each Pep Boys' store carries the same basic product line, with
variations based on the number and type of cars registered in the different
markets. A full complement of a store's inventory currently includes
approximately 24,000 items. The Company's automotive product line includes:
tires; batteries; new and rebuilt parts for domestic and imported cars,
including suspension parts, ignition parts, mufflers, engines and engine
parts, oil and air filters, belts, hoses, air conditioning parts, and brake
parts; chemicals, including oil, antifreeze, polishes, additives, cleansers
and paints; mobile electronics, including sound systems, alarms and cellular
telephones; car accessories, including seat covers, floor mats, gauges,
mirrors and booster cables; and a large selection of truck and van
accessories.
In addition to offering a wide variety of high quality, branded
products, the Company sells an array of high quality products under the Pep
Boys and various other private label names. The Company sells oil,
transmission fluid, chemicals, paints, and batteries under the Pep Boys
name. The Company sells antifreeze under the name PURE AS GOLD(R). The
Company sells starters and alternators under the names "True Blue" and PRO-
START(R) and water pumps under the names "True Blue" and PRO-COOL(tm).
Brakes are sold under the names SHUR GRIP(R) and PROSTOP(tm) and tires under
the names CORNELL(R) and FUTURA(R). The Company also sells shock absorbers
under the name "ProRyder", and trunk and hatchback lift supports under the
name PROLIFT(tm). All products sold by the Company under the Pep Boys and
various other private label names accounted for approximately 23% of the
Company's merchandise sales in fiscal 1993. The remaining merchandise is
sold under the brand names of others. Except for revenues from maintaining
or repairing automobiles and installing products, which accounted for
approximately 12.8%, 12.8% and 13.3% of the Company's total revenues in
fiscal years 1991, 1992 and 1993, respectively, no class of products or
services accounted for as much as 10% of the Company's total revenues.
The Company has a point-of-sale system in all of its stores which
gathers sales and gross profit data by stock keeping unit from each store on
a daily basis. This information is then used by the Company to help
formulate its pricing, marketing and merchandising strategies.
The Company has installed a new electronic work order system in all of
its service centers. This system creates a service history for each
vehicle, provides customers with a comprehensive, professional sales
document and will enable the Company to establish a service customer
database.
The Company uses an "Everyday Low Price" (EDLP) strategy in
establishing its selling prices. Management believes that EDLP provides
better value to its customers on a day-to-day basis, helps level customer
demand and allows more efficient management of inventories.
The Company uses various forms of advertising to promote its category
dominant product offering, its state-of-the-art automotive service and
repair capabilities and its commitment to customer service and satisfaction.
The Company's advertising vehicles include, but are not limited to,
multipage catalogs, television and radio commercials and in-store
promotions. The Company's net advertising expenditures were approximately
$3,873,000 or .39% of total revenues in fiscal 1991, $2,294,000 or .20% of
total revenues in fiscal 1992 and $2,665,000 or .21% of total revenues in
fiscal 1993. A large portion of the gross cost of the advertising directed
by the Company is customarily borne by the suppliers of the products
advertised.
In fiscal 1993, approximately 75% of the Company's total revenues were
cash transactions (including personal checks), and the remainder were credit
and charge card sales.
The Company does not experience significant seasonal fluctuation in the
generation of its revenues.
STORE OPERATIONS AND MANAGEMENT
All Pep Boys' stores are open seven days a week. Each store with
service bays has a manager, a service manager, a parts manager and two or
more assistant managers. A store manager's average length of service with
the Company is approximately eight years.
The Company has service bays in 378 of its 386 locations. Each service
department can perform a variety of services which include: engine tune-ups,
wheel alignments, state inspections, air conditioning service; the repair
and installation of parts and accessories including brake parts, suspension
parts, exhaust systems, front end parts, ignition parts, belts, hoses,
clutches, filters, radios, alarms, sun roofs, cruise controls, and various
other merchandise sold in Pep Boys' stores; installation and balancing of
tires, and oil and lubrication services.
The Company coordinates the operation and merchandising of each store
through a network of district and regional managers. The regional managers
report to one of three Vice Presidents - Store Operations who report to the
Company's Senior Vice President - Store Operations who reports to the
Company's Chief Operating Officer. Supervision and control over the
individual stores are facilitated by means of the Company's computer system,
operational handbooks and regular visits to the individual stores by the
district operations managers and loss prevention personnel.
All of the Company's advertising, accounting, management information
systems, purchasing and most administrative functions are conducted at its
corporate headquarters in Philadelphia, Pennsylvania. Certain
administrative functions for the Company's western, southwestern, and
southeastern operations are performed at various regional offices of the
Company. See "Properties."
INVENTORY CONTROL AND DISTRIBUTION
Almost all of the Company's merchandise is distributed to its stores
from its warehouses by Company-owned or leased trucks. Target levels of
inventory for each product have been established for each of the Company's
warehouses and stores and are based upon prior shipment history, sales
trends and seasonal demand. Inventory on hand is compared to the target
levels on a weekly basis at each warehouse. If the inventory on hand at a
warehouse is below the target levels, the Company's buyers order merchandise
from its suppliers.
Each Pep Boys store has an automatic inventory replenishment system
that automatically orders additional inventory when a store's inventory on
hand falls below the target level. The Company is in the process of
developing a new store-specific inventory control system that will establish
the optimum quantity on hand for all stock keeping units.
In addition, the Company's centralized buying system installed in fiscal
1992, coupled with a new warehousing system which is currently operating in
two of its main distribution facilities, has greatly enhanced the Company's
ability to control its inventory. The Company plans to install the new
warehousing system in its other distribution centers.
SUPPLIERS
During fiscal 1993, the Company's ten largest suppliers accounted for
approximately 33% of the merchandise purchased by the Company. No single
supplier accounted for more than 6% of the Company's purchases. The Company
has no long-term contracts for the purchase of merchandise. Management
believes that the relationships the Company has established with its
suppliers are generally good.
In the past, the Company has not experienced difficulty in obtaining
satisfactory sources of supply and believes that adequate alternative
sources of supply exist, at substantially similar cost, for virtually all
types of merchandise sold in its stores.
COMPETITION
The business of the Company is generally highly competitive. The
Company encounters competition from nationwide and regional chains and from
local independent merchants. Some of the Company's competitors are general,
full range, discount or traditional department stores which carry automotive
parts and accessories and/or have automotive service centers, and others,
similar to the Company, are specialized automotive service retailers.
Certain of its competitors are larger in terms of sales volume and/or store
size, have access to greater capital and management resources and have been
operating longer in particular geographic areas than the Company.
Although the Company's competition varies by geographical area, the
Company believes that it generally has a favorable competitive position in
terms of depth and breadth of product line, price, quality of personnel and
customer service.
In addition, the Company believes that its operation of service bays in
its stores' automotive service centers positively differentiates it from
most of its competitors. The Company believes that the warranty policies in
connection with the higher priced items it sells, such as tires, batteries,
brake linings and other major automotive parts and accessories, are
comparable or superior to those of its competitors.
EMPLOYEES
At January 29, 1994, the Company employed 14,895 persons as follows:
Full-time Part-time Total
Description Numbers % Numbers % Numbers %
- ------------------------------------------------------------------------------------------------------------------------------------
Store Sales 4,136 39.3 3,337 76.1 7,473 50.2
Store Service 4,819 45.9 910 20.7 5,729 38.5
Store Regional Management 69 .7 - - 69 .4
------ ----- ----- ----- ------ -----
STORE TOTAL 9,024 85.9 4,247 96.8 13,271 89.1
Warehouses 793 7.5 116 2.7 909 6.1
Offices 692 6.6 23 .5 715 4.8
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TOTAL EMPLOYEES 10,509 100.0 4,386 100.0 14,895 100.0
====== ===== ===== ===== ====== =====
Of the 793 full-time warehouse employees referred to above, 148
employees at the Company's New Jersey warehouse facilities are members of a
union. The Company believes employee relations are generally good. At the end
of fiscal 1992, the Company employed approximately 9,300 full-time and 4,100
part-time employees, and at the end of fiscal 1991, the Company employed
approximately 8,200 full-time and 3,700 part-time employees.
ITEM 2 PROPERTIES
The Company's headquarters in Philadelphia, Pennsylvania, which also
serves as an administrative regional office for its eastern operations,
occupies approximately 263,000 square feet of a five-story structure owned by
the Company with approximately 300,000 square feet of floor space. The Company
owns a 60,000 square foot three-story structure in Los Angeles, California
which serves as an administrative regional office for its western operations.
The Company leases approximately 4,000 square feet of office space in each of
Decatur, Georgia and Richardson, Texas which serve as administrative regional
offices for its southeastern and southwestern operations, respectively.
Of the 386 stores operated by the Company at January 29, 1994, 272 are
owned and 114 are leased.
The following table sets forth certain information regarding the owned and
leased warehouse space utilized by the Company at January 29, 1994.
Warehouse Products Square Owned or Stores States
Location Warehoused Footage Leased Serviced Serviced
- ---------------------------------------------------------------------------
Los Angeles, CA All except 216,000 Owned 96 AZ, CA, NV,
tires
Los Angeles, CA Tires 73,000 Leased 96 AZ, CA, NV,
Los Angeles, CA All except 137,000 Leased 96 AZ, CA, NV,
tires
Phoenix, AZ All except 100,000 Owned 49 AZ, NM, NV,
tires and TX, UT
chemicals
Phoenix, AZ Tires and 57,000 Leased 49 AZ, NM, NV,
chemicals TX, UT
Phoenix, AZ Tires and 42,000 Leased 49 AZ, NM, NV,
chemicals TX, UT
Bridgeport, NJ All except 195,000 Owned 82 DE, MA, MD,
tires NJ, NY, PA,
RI, VA
Bridgeport, NJ Tires and 273,000 Leased 82 DE, MA, MD,
chemicals NJ, NY, PA,
RI, VA
Atlanta, GA All 262,000 Owned 92 AL, FL, GA,
IL, IN, KY,
NC, SC, TN,
VA
Atlanta, GA All except 59,000 Leased 92 AL, FL, GA
tires IL, IN, KY,
NC, SC, TN,
VA
Mesquite, TX All 244,000 Owned 67 AR, KS, LA,
MO, OK, TX
---------
Total 1,658,000
The Company currently intends to add an additional 130,000 square feet to
the Atlanta, Georgia warehouse facility during fiscal 1994. The Company
anticipates that during fiscal 1994 it will utilize leased warehouse space in
close proximity to certain main warehouse facilities to accommodate inventory
necessary to support store expansion and any increase in stock keeping units.
ITEM 3 LEGAL PROCEEDINGS
Except for routine litigation arising in the ordinary course of business,
neither the Company nor any of its subsidiaries is a party to any material
pending legal proceedings.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year ended January 29, 1994.
ITEM A EXECUTIVE OFFICERS OF THE COMPANY
The following table indicates the names, ages, years with the Company and
positions (together with the year of election to such positions) of the
executive officers of the Company:
Years with Position with the Company and
Name Age Company Year of Election to Position
- --------------------- ---- ---------- -----------------------------
Mitchell G. Leibovitz 48 15 Chairman of the Board since
March 1994; Chief Executive
Officer since March 1990;
President since 1986
Michael J. Holden 42 14 Senior Vice President - Chief
Financial Officer since March
1987; Treasurer since 1984
Wendel H. Province 46 4 Senior Vice President - Chief
Operating Officer since March
1993
Frederick A. Stampone 38 12 Senior Vice President - Chief
Administrative Officer since
March 1993; Secretary since
December 1988
Mark L. Page 37 18 Senior Vice President - Store
Operations since March 1993
Messrs. Leibovitz, Holden and Stampone have been executive officers of the
Company for more than the past five years. Messrs. Province and Page have been
an executive officer of the Company for less than the past five years. Mr.
Province was Vice President - Merchandising for Auto Zone, Inc. (formerly Auto
Shack, Inc.) from 1985 until June 1987. From June 1987 until August 1989 he
was Vice President - Merchandising for the Whitlock Corporation. He commenced
employment with the Company on September 5, 1989 and was a Merchandising
Manager until he became Senior Vice President - Merchandising on October 27,
1989. On March 31, 1993 Mr. Province became Senior Vice President - Chief
Operating Officer. Mr. Page was a regional manager for the Company from
February 1987 until February 1991 when he was elected Vice President - Western
Store Operations. On March 14, 1993 Mr. Page became Senior Vice President -
Store Operations. Each of the officers serves at the pleasure of the Board of
Directors of the Company. There are no arrangements or understandings pursuant
to which any officer was elected to office.
PART II
ITEM 5 MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The common stock of The Pep Boys - Manny, Moe & Jack is listed on the New
York Stock Exchange under the symbol "PBY". There were 3,682 registered
shareholders as of January 29, 1994. The following table sets forth for the
periods listed the high and low sale prices and the cash dividends paid on the
Company's common stock.
MARKET PRICE PER SHARE
Market Price Per Share Cash Dividends
Fiscal year ended January 29, 1994 High Low Per Share
- -----------------------------------------------------------------------------
First Quarter $26 1/2 $20 3/4 $.0375
Second Quarter 23 7/8 20 1/2 .0375
Third Quarter 24 7/8 20 3/4 .0375
Fourth Quarter 27 1/2 23 1/4 .0375
Fiscal year ended January 30, 1993
- -----------------------------------------------------------------------------
First Quarter $23 5/8 $17 1/8 $.0325
Second Quarter 24 7/8 19 1/4 .035
Third Quarter 27 3/8 21 1/4 .035
Fourth Quarter 27 1/4 21 3/4 .035
/TABLE
ITEM 6 SELECTED FINANCIAL DATA
The following tables sets forth the selected financial data for the Company and should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere herein.
SELECTED FINANCIAL DATA (UNAUDITED)
(dollar amounts in thousands, except per share amounts)
Year ended Jan. 29, 1994 Jan. 30, 1993 Feb. 1, 1992 Feb. 2, 1991 Feb. 3, 1990*
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS STATEMENT DATA
Merchandise sales $1,076,543 $1,008,191 $ 873,381 $ 774,502 $ 703,487
Service revenue 164,590 147,403 128,127 110,172 95,204
Total revenues 1,241,133 1,155,594 1,001,508 884,674 798,691
Gross profit from merchandise sales 307,861 272,412 240,199 217,052 190,874
Gross profit from service revenue 27,457 24,528 19,726 17,854 18,120
Total gross profit 335,318 296,940 259,925 234,906 208,994
Selling, general and
administrative expenses 214,710 194,160 176,275 157,468 139,913
Operating profit 120,608 102,780 83,650 77,438 69,081
Nonoperating income 3,601 3,015 1,933 1,601 4,097
Interest expense 19,701 20,180 25,071 20,262 18,054
Earnings before income taxes 104,508 85,615 60,512 58,777 55,124
Net earnings 65,512 54,579 38,872 37,530 35,063
BALANCE SHEET DATA
Working capital $ 92,518 $ 104,622 $ 81,935 $ 91,801 $ 70,160
Current ratio 1.37 to 1 1.47 to 1 1.46 to 1 1.55 to 1 1.60 to 1
Merchandise inventories $ 305,872 $ 295,179 $ 230,894 $ 234,688 $ 163,849
Property and equipment-net 723,452 628,918 588,593 556,990 480,597
Total assets 1,078,518 967,813 856,925 819,421 676,030
Long-term debt 253,000 209,347 279,250 285,868 227,648
Stockholders' equity 547,759 509,763 378,514 344,603 311,754
DATA PER COMMON SHARE
Net earnings $ 1.06 $ .90 $ .69 $ .67 $ .63
Cash dividends .15 .1375 .1275 .1175 .1075
Stockholders' equity 8.97 8.40 6.79 6.20 5.62
Common share price range: high-low 27 1/2-20 1/2 27 3/8-17 1/8 19 1/2-10 3/8 17 1/4-8 3/8 17 1/4-10 1/2
OTHER STATISTICS
Return on average
stockholders' equity 12.4% 12.3% 10.8% 11.4% 11.9%
Common shares outstanding 61,060,055 60,669,102 55,773,813 55,606,116 55,436,057
Capital expenditures $ 135,165 $ 78,025 $ 65,801 $ 105,826 $ 88,398
Number of retail outlets 386 357 337 313 281
*Fiscal year ended February 3, 1990 included 53 weeks.
/TABLE
ITEM 7 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.
Percentage of Total Revenues Percentage Change
-------------------------------------------- -------------------------------
Jan. 29, 1994 Jan. 30, 1993 Feb. 1, 1992 Fiscal 1993 vs. Fiscal 1992 vs.
Year ended (Fiscal 1993) (Fiscal 1992) (Fiscal 1991) Fiscal 1992 Fiscal 1991
- --------------------------------------- ------------- ------------- ------------ ----------- -----------
Merchandise Sales...................... 86.7% 87.2% 87.2% 6.8% 15.4%
Service Revenue(1)..................... 13.3 12.8 12.8 11.7 15.0
------------- ------------- ------------ ----------- -----------
Total Revenues 100.0 100.0 100.0 7.4 15.4
Costs of Merchandise Sales(2).......... 71.4(3) 73.0(3) 72.5(3) 4.5 16.2
Costs of Service Revenue(2)............ 83.3(3) 83.4(3) 84.6(3) 11.6 13.4
------------- ------------- ------------ ----------- -----------
Total Costs of Revenues................ 73.0 74.3 74.0 5.5 15.8
Gross Profit from Merchandise Sales.... 28.6(3) 27.0(3) 27.5(3) 13.0 13.4
Gross Profit from Service Revenue...... 16.7(3) 16.6(3) 15.4(3) 11.9 24.3
------------- ------------- ------------ ----------- -----------
Total Gross Profit..................... 27.0 25.7 26.0 12.9 14.2
Selling, General and
Administrative Expenses.............. 17.3 16.8 17.6 10.6 10.1
------------- ------------- ------------ ----------- -----------
Operating Profit....................... 9.7 8.9 8.4 17.3 22.9
Nonoperating Income.................... .3 .3 .2 19.4 56.0
Interest Expense....................... 1.6 1.8 2.5 (2.4) (19.5)
------------- ------------- ------------ ----------- -----------
Earnings Before Income Taxes........... 8.4 7.4 6.1 22.1 41.5
Income Taxes........................... 37.3(4) 36.3(4) 35.8(4) 25.6 43.4
------------- ------------- ------------ ----------- -----------
Net Earnings........................... 5.3 4.7 3.9 20.0 40.4
============= ============= ============ =========== ===========
(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
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 (revenues
generated by stores in operation during the same months of each period).
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 higher merchandise margins offset, in
part, by increases in store occupancy costs and warehousing costs. The Company
currently intends to continue its policy of taking what it deems appropriate
measures to respond to the price reduction practices of certain competitors.
The small increase in gross profit from service revenue, as a percentage
of service revenue, was due primarily to a decrease in service employee benefit
costs offset, in part, by an increase in service personnel and occupancy costs.
The increase in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to an increase in store
expenses.
The 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, 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.
FISCAL 1992 vs. FISCAL 1991
Total revenues for fiscal 1992 increased 15% over fiscal 1991 due to a
higher store count (357 at January 30, 1993 compared with 337 at February 1,
1992) coupled with a substantial increase in comparable store revenues.
Comparable store revenues increased 12% over fiscal 1991. Comparable store
merchandise sales increased 12% and comparable store service revenue increased
10% over fiscal 1991.
The decrease in gross profit from merchandise sales, as a percentage of
merchandise sales, was due primarily to lower merchandise margins offset, in
part, by a decrease in store occupancy costs. During fiscal 1992, selling
prices on certain merchandise were lowered in an effort to increase market
share. Additionally, the Company lowered its selling prices in certain markets
on a significant number of items in response to the actions of certain
competitors.
The increase in gross profit from service revenue, as a percentage of
service revenue, was due primarily to decreases in service personnel and
occupancy costs offset, in part, by an increase in service employee benefit
costs.
The decrease in selling, general and administrative expenses, as a
percentage of total revenues, was due primarily to a decrease in store expenses
and lower employee benefit and advertising costs. This was partially offset by
a slight increase in general office costs.
The substantial decrease in interest expense was due primarily to the
conversion of substantially all of the Company's $75,000,000 convertible
subordinated debentures into equity during fiscal 1992.
The 40% increase in net earnings in fiscal 1992, as compared with fiscal
1991, was due to a substantial increase in comparable store revenues, and
decreases, as a percentage of total revenues, in selling, general and
administrative costs and interest expense offset, in part, by a decrease in
gross profit from merchandise sales.
In December 1993, the Financial Accounting Standards Board issued SFAS No.
112, "Employers' Accounting for Postemployment Benefits." This statement
established accrual accounting standards for employer-provided benefits which
cover former or inactive employees after employment, but before retirement.
The Company will adopt this accounting standard during fiscal 1994. The
Company estimates that the cumulative effect of this change in accounting
principle will result in a charge to earnings in a range of between $3,100,000
and $4,400,000, net of income tax benefit of between $1,900,000 and $2,600,000.
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 during fiscal 1993, fiscal 1992 or fiscal 1991.
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 37 stores in fiscal 1993, 29 stores in fiscal
1992 and 27 stores in fiscal 1991. In fiscal 1993, with increased levels of
capital expenditures due to an accelerated expansion program coupled with cash
utilized to acquire treasury stock, 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, the Company reduced its debt by $72,639,000. In
fiscal 1991, with the increased cash flows from operating activities and
reduced levels of capital expenditures, the Company reduced its debt by
$25,037,000.
The following table indicates the Company's principal cash requirements
for the past three years.
(dollar amounts Fiscal Fiscal Fiscal
in thousands) 1993 1992 1991 Total
- ----------------------------------------------------------------------------
Cash Requirements
Capital expenditures $135,165 $ 78,025 $ 65,801 $278,991
Increase (decrease) in
inventory (net of
checks outstanding and
accounts payable) 26,487 24,001 (21,715) 28,773
==========================================================================
Total $161,652 $102,026 $44,086 $307,764
--------------------------------------------------------------------------
Cash provided by
operating activities
(excluding net
inventory additions) $111,595 $100,415 $73,625 $285,635
--------------------------------------------------------------------------
Inventories have increased in the past three years as the Company added a
net of 73 stores while stock keeping units per store rose during the period
from approximately 19,000 to approximately 24,000, many of which were higher
cost hard parts.
The Company currently plans to open approximately 50 stores in fiscal
1994. Management estimates that the cost to open 50 stores, coupled with
capital expenditures in existing stores, warehouses and offices during fiscal
1994 will be approximately $155,000,000. In addition to the funds required to
finance the Company's store expansion, the Company has authorization to
repurchase an additional $50,069,000 of its stock to fund an employee benefits
trust. Funds required to finance the store expansion and stock repurchase are
expected to come from operating activities with the remainder provided by
unused lines of credit, which totalled $139,500,000 at January 29, 1994, or
from accessing traditional lending sources such as the public capital markets.
The Company's working capital decreased to $92,518,000 at January 29, 1994
from $104,622,000 at January 30, 1993. The Company's long-term debt increased,
as a percentage of its total capitalization, to 32% at January 29, 1994 from
29% at January 30, 1993.
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
The Pep Boys - Manny, Moe & Jack
Philadelphia, Pennsylvania
We have audited the accompanying consolidated balance sheets of
The Pep Boys - Manny, Moe & Jack and subsidiaries as of January 29, 1994
and January 30, 1993 , and the related consolidated statements of earnings,
stockholders' equity, and cash flows for each of the three years in the
period ended January 29, 1994. Our audits also included the financial
statement schedules listed in the index at Item 14. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The Pep Boys - Manny, Moe & Jack
and subsidiaries at January 29, 1994 and January 30, 1993, and the results of
their operations and their cash flows for each of the three years in the period
ended January 29, 1994 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
Deloitte & Touche
Philadelphia, Pennsylvania
March 22, 1994
CONSOLIDATED BALANCE SHEETS The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
January 29, January 30,
1994 1993
---------- ----------
ASSETS
Current Assets:
Cash ......................................................... $ 12,050 $ 11,644
Accounts receivable, less allowance for uncollectible
accounts of $50 and $85...................................... 1,525 2,845
Merchandise inventories....................................... 305,872 295,179
Deferred income taxes......................................... 9,100 7,400
Other......................................................... 13,161 10,068
---------- ----------
Total Current Assets....................................... 341,708 327,136
Property and Equipment - at cost:
Land.......................................................... 183,601 157,947
Building and improvements..................................... 500,467 434,144
Furniture, fixtures and equipment............................. 229,730 198,902
Construction in progress...................................... 9,364 5,922
---------- ----------
923,162 796,915
Less accumulated depreciation and amortization................ 199,710 167,997
---------- ----------
Total Property and Equipment............................... 723,452 628,918
Other.............................................................. 13,358 11,759
---------- ----------
Total Assets $1,078,518 $967,813
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Checks outstanding............................................ $ 22,193 $ 16,458
Accounts payable.............................................. 104,248 125,777
Accrued expenses.............................................. 59,574 51,249
Short-term borrowings......................................... 54,500 10,000
Income taxes payable.......................................... 1,278 1,005
Current maturities of long-term debt.......................... 7,397 18,025
---------- ----------
Total Current Liabilities.................................. 249,190 222,514
Long-Term Debt, less current maturities............................ 253,000 209,347
Deferred Income Taxes.............................................. 28,569 26,189
Commitments
Stockholders' Equity:
Common Stock, par value $1 per share:
Authorized 500,000,000 shares;
Issued and outstanding 61,060,055 and 60,669,102............ 61,060 60,669
Additional paid-in capital.................................... 122,977 116,833
Retained earnings............................................. 388,653 332,261
---------- ----------
572,690 509,763
Less Treasury Stock, 948,200 shares at cost................... 24,931 _
---------- ----------
Total Stockholders' Equity................................. 547,759 509,763
---------- ----------
Total Liabilities and Stockholders' Equity $1,078,518 $967,813
========== ==========
See notes to consolidated financial statements.
/TABLE
CONSOLIDATED STATEMENTS OF EARNINGS The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
January 29, January 30, February 1,
Year ended 1994 1993 1992
- ---------------------------------------------------- ---------- ---------- ----------
Merchandise Sales................................... $1,076,543 $1,008,191 $ 873,381
Service Revenue..................................... 164,590 147,403 128,127
---------- ---------- ----------
Total Revenues...................................... 1,241,133 1,155,594 1,001,508
---------- ---------- ----------
Costs of Merchandise Sales.......................... 768,682 735,779 633,182
Costs of Service Revenue............................ 137,133 122,875 108,401
---------- ---------- ----------
Total Costs of Revenues............................. 905,815 858,654 741,583
---------- ---------- ----------
Gross Profit from Merchandise Sales................. 307,861 272,412 240,199
Gross Profit from Service Revenue................... 27,457 24,528 19,726
---------- ---------- ----------
Total Gross Profit.................................. 335,318 296,940 259,925
Selling, General and Administrative Expenses........ 214,710 194,160 176,275
---------- ---------- ----------
Operating Profit.................................... 120,608 102,780 83,650
Nonoperating Income................................. 3,601 3,015 1,933
Interest Expense.................................... 19,701 20,180 25,071
---------- ---------- ----------
Earnings Before Income Taxes........................ 104,508 85,615 60,512
Income Taxes........................................ 38,996 31,036 21,640
---------- ---------- ----------
Net Earnings........................................ $ 65,512 $ 54,579 $ 38,872
========== ========== ==========
Net Earnings per Share.............................. $ 1.06 $ .90 $ .69
========== ========== ==========
See notes to consolidated financial statements.
/TABLE
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
Common Stock
-------------------- Additional Retained Treasury Total Stock-
Shares Amount Paid-in Capital Earnings Stock holders' Equity
---------- ------- --------------- --------- -------- ---------------
Balance, February 2, 1991.......................... 55,606,116 $55,606 $ 34,917 $254,080 $ - $344,603
Net earnings....................................... 38,872 38,872
Cash dividends ($.1275 per share)................. (7,097) (7,097)
Exercise of stock options
and related tax benefits......................... 154,484 155 1,869 2,024
Dividend reinvestment plan......................... 13,213 13 182 195
Acquisitions and transfers of 35,000
shares to employees' savings plan................ (83) (83)
---------- ------- --------------- -------- -------- ---------------
Balance, February 1, 1992.......................... 55,773,813 55,774 36,885 285,855 - 378,514
Net earnings....................................... 54,579 54,579
Cash dividends ($.1375 per share).................. (8,173) (8,173)
Conversion of 6% convertible subordinated
debentures into equity........................... 4,162,776 4,163 71,211 75,374
Exercise of stock options and related
tax benefits..................................... 720,699 720 8,761 9,481
Dividend reinvestment plan......................... 11,814 12 267 279
Acquisitions and transfers of 107,700
shares to employees' savings plan................ (291) (291)
---------- ------- --------------- -------- -------- ---------------
Balance, January 30, 1993.......................... 60,669,102 60,669 116,833 332,261 - 509,763
Net earnings....................................... 65,512 65,512
Cash dividends ($.15 per share).................... (9,120) (9,120)
Exercise of stock options and related
tax benefits..................................... 377,569 378 5,744 6,122
Dividend reinvestment plan......................... 13,384 13 291 304
Acquisitions and transfers of 80,000
shares to employees' savings plan................ 109 109
Acquisition of 948,200 shares of treasury stock.... (24,931) (24,931)
---------- ------- --------------- -------- --------- ---------------
Balance, January 29, 1994.......................... 61,060,055 $61,060 $122,977 $388,653 $(24,931) $547,759
========== ======= =============== ======== ========= ===============
See notes to consolidated financial statements.
/TABLE
CONSOLIDATED STATEMENTS OF CASH FLOWS The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands)
January 29, January 30, February 1,
Year ended 1994 1993 1992
- -------------------------------------------------------------------------- ----------- ----------- -----------
Cash Flows from Operating Activities:
Net earnings............................................................ $65,512 $54,579 $38,872
Adjustments to Reconcile Net Earnings to Net Cash
Provided by Operating Activities:
Depreciation and amortization........................................... 39,125 36,674 33,439
Increase (decrease)in deferred income taxes............................. 680 (2,266) 3,568
(Gain)loss from sales of assets......................................... (297) 266 (66)
Increase in accounts receivable and other............................... (2,023) (2,865) (10,746)
(Increase) decrease in merchandise inventories.......................... (10,693) (64,285) 3,794
(Decrease) increase in checks outstanding and accounts payable.......... (15,794) 40,284 17,921
Increase in accrued expenses............................................ 8,325 9,256 9,341
Increase (decrease) in income taxes payable............................. 273 4,771 (783)
----------- ----------- -----------
Total Adjustments................................................. 19,596 21,835 56,468
----------- ----------- -----------
Net Cash Provided by Operating Activities................................. 85,108 76,414 95,340
----------- ----------- -----------
Cash Flows from Investing Activities:
Capital expenditures.................................................... (135,165) (78,025) (65,801)
Net sales and maturities of marketable securities....................... - 3,286 2,340
Proceeds from sales of assets........................................... 1,494 738 1,076
Other, net.............................................................. 68 (1,993) 621
----------- ----------- -----------
Net Cash Used in Investing Activities..................................... (133,603) (75,994) (61,764)
----------- ----------- -----------
Cash Flows from Financing Activities:
Net proceeds from sale of 6 5/8% notes.................................. 73,892 - -
Net borrowings (payments) under line of credit agreements............... 44,500 18,301 (148,869)
Reduction of long-term debt............................................. (41,975) (16,177) (1,168)
Acquisition of treasury stock........................................... (24,931) - -
Dividends paid.......................................................... (9,120) (8,173) (7,097)
Proceeds from exercise of stock options................................. 6,122 6,252 1,487
Gain (loss) on stock purchased for employees' savings plan.............. 109 (291) (83)
Proceeds from dividend reinvestment plan................................ 304 279 195
Net proceeds from sale of 8 7/8% notes.................................. - - 123,596
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities....................... 48,901 191 (31,939)
----------- ----------- -----------
Net Increase in Cash...................................................... 406 611 1,637
Cash at Beginning of Year................................................. 11,644 11,033 9,396
----------- ----------- -----------
Cash at End of Year....................................................... $12,050 $11,644 $11,033
=========== =========== ===========
....................................................................................................................................
Supplemental Disclosure of Cash Flow Information:
Income taxes paid....................................................... $38,043 $28,531 $18,855
Interest paid, net of amounts capitalized............................... 19,110 18,915 21,687
Supplemental Disclosure of Noncash Financing Activities:
Conversion of 6% convertible subordinated debentures into equity........ $ - $74,763 $ -
See notes to consolidated financial statements
THE PEP BOYS- MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended January 29, 1994, January 30, 1993 and February 1, 1992
(dollar amounts in thousands, except per share amounts)
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS The Pep Boys is engaged principally in the retail sale of automotive
parts and accessories, automotive maintenance and service and the installation
of parts through a chain of 386 stores at January 29, 1994.
FISCAL YEAR END The Company's fiscal year ends on the Saturday nearest to
January 31. Fiscal years 1993, 1992 and 1991 each comprised 52 weeks.
PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.
MERCHANDISE INVENTORIES Merchandise inventories are valued at the lower of
cost (last-in, first-out method) or market. If the first-in, first-out method
of valuing inventories had been used, inventories would have been approximately
$15,452 and $18,169 higher at January 29, 1994 and January 30, 1993,
respectively.
PROPERTY AND EQUIPMENT Property and equipment are recorded at cost.
Depreciation and amortization are computed using the straight-line method over
the following estimated useful lives: building and improvements, 5 1/2 to 40
years; furniture, fixtures and equipment, 3 to 10 years.
CAPITALIZED INTEREST Interest on borrowed funds is capitalized in connection
with the construction of certain long-term assets. Capitalized interest
amounted to $1,254, $852 and $602 in fiscal years 1993, 1992 and 1991,
respectively.
SERVICE REVENUE Service revenue consists of the labor charge for installing
merchandise or maintaining or repairing vehicles, excluding the sale of any
installed parts or materials.
COSTS OF REVENUES 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.
PENSION EXPENSE Annual pension expense is actuarially computed using the
"projected unit credit method" which attributes an equal portion of total
projected benefits to each year of employee service.
INCOME TAXES The Company used the liability method of accounting for income
taxes in accordance with SFAS No. 109, "Accounting for Income Taxes" for the
years ended January 29, 1994 and January 30, 1993 and in accordance with SFAS
No. 96 "Accounting for Income Taxes" for the year ended February 1, 1992.
Under the liability method, deferred income taxes are determined based upon
enacted tax laws and rates applied to the differences between the financial
statement and tax bases of assets and liabilities. The adoption of SFAS No.
109 on February 2, 1992 did not have any effect on the Company's financial
position or results of operations.
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS Effective February 2, 1992 the
Company adopted SFAS No. 106, "Accounting for Postretirement Benefits Other
than Pensions." As a result of adopting this standard, the Company recognized
an expense of $12 in fiscal year 1992, which is the full impact of SFAS No. 106
on the Company's financial position and results of operation.
In December 1993, the Financial Accounting Standards Board issued 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. The
Company will adopt this accounting standard during fiscal year 1994. The
Company estimates that the cumulative effect of this change in accounting
principle will result in a charge to earnings in a range of between $3,100 and
$4,400, net of income tax benefit of between $1,900 and $2,600, respectively.
RECLASSIFICATIONS Certain reclassifications have been made to the prior years'
consolidated financial statements to conform to the current year's
presentation.
NOTE B - DEBT
SHORT-TERM BORROWINGS The Company had short-term borrowings of $54,500 at
January 29, 1994 and $10,000 at January 30, 1993. The Company had available
short-term lines of credit with several banks totalling $119,000 on January 29,
1994 and $54,000 on January 30, 1993. The interest rates on these lines are
negotiated based upon market conditions. The weighted average interest rate on
borrowings from these lines was 3.4% for 1993 and 3.7% for 1992. The average
and maximum month end balances on these borrowings were $30,435 and $54,500 in
1993 and $3,654 and $15,000 in 1992.
LONG-TERM DEBT
...............................................................................
Jan. 29, Jan. 30,
1994 1993
-------- --------
8 7/8% notes due April 15, 1996 (a)................. $125,000 $125,000
6 5/8% notes due May 15, 2003 (a)................... 75,000 -
Indebtedness to banks under revolving
credit loan agreement dated
June 16, 1989 (b)................................ 35,000 45,000
Other revolving lines of credit (c)................. - 13,950
9.33% senior notes (d).............................. 23,214 35,714
Mortgage notes payable at annual
interest rates ranging from 4.2%
to 10.75% (e)................................... 2,183 7,708
-------- --------
260,397 227,372
Less current maturities.......................... 7,397 18,025
-------- --------
Total long-term debt................................ $253,000 $209,347
======== ========
.............................................................................
(a) On March 7, 1991, the Company filed a shelf registration with the
Securities and Exchange Commission, which permits the Company to issue up
to $225,000 of debt securities. On April 8, 1991, the Company sold
$125,000 of 5 years notes and on May 18, 1993, the Company sold $75,000 of
10 year notes.
(b) The Company has a revolving credit agreement with eight major banks
providing for borrowings of up to $100,000. Funds may be drawn and repaid
anytime prior to June 30, 1995, at which time the total commitment, or any
portion thereof, may be converted, at the Company's election, into term
loans payable at 6.25% of the term commitment amount each quarter for the
next four years. At the Company's option, the interest rate on any loan
may be based on the prime rate, a "CD-based" rate, a "LIBOR-based" rate or
a negotiated rate based upon market conditions. The weighted average
interest rate was 3.3% at January 29, 1994 and 3.5% at January 30, 1993.
(c) The Company has entered into a revolving credit agreement with a bank which
permits the Company to borrow an aggregate of $10,000. Upon the bank's
demand, this line is due and payable in thirteen months. The interest rate
on this line, at the Company's election, is based on a negotiated rate
based upon market conditions, the prime rate, a "CD-based" rate or a
"LIBOR-based" rate. In fiscal year 1992, the Company had an additional
revolving credit agreement with a Bank which permitted the Company to
borrow an aggregate of $15,000. The weighted average interest rate was
3.5% at January 30, 1993.
(d) Annual maturities for the 9.33% senior notes are as follows: $7,143 due in
each of 1994, 1995 and 1996 and $1,785 due in 1997.
(e) The weighted average interest rate as of January 29, 1994 on the mortgage
notes payable was 5.25%. These notes, which mature at various times
through August 2016, are collateralized by land and building with an
aggregate carrying value of approximately $6,014.
Several of the Company's debt agreements require the maintenance of certain
financial ratios and covenants. Approximately $193,920 of the Company's net
worth was not restricted by these covenants at fiscal year end. The Company is
currently in compliance with all debt covenants.
The annual maturities of all long-term debt for the next five years are $7,397
in 1994, $13,601 in 1995, $145,851 in 1996, $14,369 in 1997 and $12,561 in
1998. Any compensating balance requirements related to all revolving credit
agreements and debt were satisfied by balances available from normal business
operations.
The Company was contingently liable for outstanding letters of credit in the
amount of approximately $28,673 as of January 29, 1994.
NOTE C - LEASE COMMITMENTS
The Company leases certain property and equipment under operating leases
which contain renewal and escalation clauses. Aggregate minimum rental
commitments for leases having noncancellable lease terms of more than one year
are approximately: 1994 - $14,843; 1995 - $15,002; 1996 - $12,990; 1997 -
$12,678; 1998 - $11,867; thereafter - $152,966. The present value of the
aggregate minimum rental commitments for operating leases, discounted at 10% is
approximately $107,124. Rental expenses incurred for operating leases in 1993,
1992 and 1991 were $16,786, $14,094 and $10,371, respectively.
NOTE D - STOCKHOLDERS' EQUITY
On December 31, 1987, the Company distributed as a dividend one common
share purchase right on each of its common shares. The rights will not be
exercisable or transferable apart from the Company's common stock until a
person or group, as defined in the rights agreement, (dated December 17, 1987
and as amended on June 6, 1989), without the proper consent of the Company's
Board of Directors, acquires 20% or more, or makes an offer to acquire 30% or
more of the Company's outstanding stock, exclusive of stock holdings as of
December 17, 1987. When exercisable, the rights entitle the holder to purchase
one share of the Company's common stock for $55. Under certain circumstances,
including the acquisition of 20% of the Company's stock by a person or group,
the rights entitle the holder to purchase common stock of the Company or common
stock of an acquiring company having a market value of twice the exercise price
of the right. The rights do not have voting power and are subject to
redemption by the Company's Board of Directors for $.02 per right anytime
before a 20% position has been acquired and for 15 days thereafter, at which
time the rights become nonredeemable. The rights expire on December 31, 1997.
On December 6, 1993 the Company's Board of Directors announced its
intention to establish a flexible employee benefit trust and approved the
repurchase of up to $75,000 worth of the Company's common shares. The
repurchased shares will be held in the trust and will be used to finance
various existing employee compensation and benefit plans, including healthcare
programs, savings and retirement plans and other benefit obligations. The
trust will allocate or sell the repurchased shares over the next 15 years to
fund these benefit programs. As of January 29, 1994, the Company has
repurchased $24,931 or 948,200 shares of its common stock which is shown as
treasury stock on the Company's consolidated balance sheets.
NOTE E - PENSION AND SAVINGS PLANS
The Company has a pension plan covering substantially all of its full-time
employees hired on or before February 1, 1992. Normal retirement age is 65.
Pension benefits are based on salary and years of service. The Company's
policy is to fund amounts as are necessary on an actuarial basis to provide
assets sufficient to meet the benefits to be paid to plan members in accordance
with the requirements of ERISA. As of January 31, 1992, the plan was amended
to exclude employees hired on or after February 2, 1992.
The 1993, 1992 and 1991 actuarial computations using the "projected unit
credit method" assumed a discount rate on benefit obligations of 8%, and an
expected long-term rate of return on plan assets of 8.5%. The assumption for
annual salary increases over the average remaining service lives of employees
under the plan was changed to 4% in 1993, versus 6.5% in 1992 and 1991.
Variances between actual experience and assumptions for costs and returns on
assets are amortized over the remaining service lives of employees under the
plan.
Pension expense includes the following:
.............................................................................
Jan. 29, Jan. 30, Feb. 1,
1994 1993 1992
-------- -------- -------
Normal service costs................ $1,478 $1,733 $1,444
Interest cost on projected
benefit obligation................ 1,250 1,291 1,120
Actual return on plan assets........ (1,361) (1,474) (1,420)
Net amortization of transition
asset and unrecognized net loss... (257) (256) (156)
Prior service cost.................. 23 23 23
Asset (loss) deferred............... (217) - -
-------- -------- -------
Total pension expense $ 916 $1,317 $1,011
======== ======== =======
.............................................................................
Pension plan assets are stated at fair market value and are composed primarily
of guaranteed investment contracts, group annuity contracts and money market
funds, all with major insurance companies and banking institutions and the
Company's common stock. The amount of excess plan assets at the adoption of
SFAS No. 87 and unrecognized prior service costs are being amortized against
net pension costs over 15 years.
The following table sets forth the reconciliation of the plan's funded status
as of December 31 of each year. The actuarial present value of benefit
obligation assumed a discount rate of 7.75% at December 31, 1993 and 8.00% at
December 31, 1992.
.............................................................................
Dec. 31, Dec. 31,
1993 1992
---------- ----------
Actuarial present value of benefit
obligation:
Vested benefit obligation....................... $(14,218) $(12,094)
---------- ----------
Accumulated benefit obligation.................. $(15,506) $(13,089)
---------- ----------
Projected benefit obligation for
service rendered to date..................... $(18,918) $(18,583)
Plan assets at fair value....................... 19,637 18,751
---------- ----------
Assets in excess of projected
benefit obligation........................... 719 168
Unrecognized net asset (at date of transition).. (1,714) (1,928)
Unrecognized net (gain) loss from past
experience different from previous
assumption................................... (1,204) 454
Unrecognized prior service cost................. 127 150
---------- ----------
Accrued pension expense
as of January 29, 1994 and
January 30, 1993, respectively............... $ (2,072) $ (1,156)
========== ==========
.............................................................................
The Company has a 401(k) savings plan which covers all full-time employees who
are at least 21 years of age with one or more years of service. The Company
contributes the lesser of 50% of the first 6% of a participant's contributions
or 3% of the participant's compensation. The Company's savings plan
contribution expense was $2,277 in 1993, $1,980 in 1992 and $1,851 in 1991.
NOTE F - INCOME TAXES
The provision for income taxes includes the following:
.............................................................................
Jan. 29, Jan. 30, Feb. 1,
Year ended 1994 1993 1992
- -------------------------------- --------- --------- ---------
Current:
Federal...................... $34,234 $29,739 $16,826
State........................ 3,587 3,563 1,925
Deferred:
Federal...................... 2,527 (1,946) 2,620
State........................ (1,352) (320) 269
--------- --------- ---------
$38,996 $31,036 $21,640
========= ========= =========
.............................................................................
A reconciliation of the statutory federal income tax rate to the effective
rate of the provision for income taxes follows:
.............................................................................
Jan. 29, Jan. 30, Feb. 1,
Year ended 1994 1993 1992
- -------------------------------- --------- --------- ---------
Statutory tax rate.............. 35.0% 34.0% 34.0%
State income taxes,
net of federal
tax benefits................. 2.3 2.5 2.4
Other, net...................... - (0.2) (0.6)
--------- --------- ---------
37.3% 36.3% 35.8%
========= ========= =========
.............................................................................
Deferred income taxes relate to the following temporary differences:
.............................................................................
Jan. 29, Jan. 30, Feb. 1,
Year ended 1994 1993 1992
- -------------------------------- --------- --------- ---------
Depreciation.................... $ 2,293 $ 1,124 $2,033
Inventories..................... (2,244) (1,504) (12)
Vacation accrual................ (189) (216) (330)
Pension accrual................. (344) (1,178) 29
Casualty gain................... 544 - -
Insurance....................... 680 - -
VEBA............................ (11) (14) 1,794
All other....................... 446 (478) (625)
--------- --------- ---------
$ 1,175 $(2,266) $2,889
========= ========= =========
.............................................................................
The following are components of the net deferred tax accounts as of January
29, 1994:
...............................................................................
Federal State Total
------- ------ -------
Deferred tax assets:
Current....................... $11,887 $ 807 $12,694
Long-term..................... 11,212 758 11,970
Deferred tax liabilities:
Current....................... $ 3,366 $ 228 $ 3,594
Long-term..................... 37,966 2,573 40,539
.............................................................................
The following are components of the net deferred tax accounts as of January
30, 1993:
..............................................................................
Federal State Total
------- ----- -----
Deferred tax assets:
Current....................... $ 8,863 $1,461 $10,324
Long-term..................... 9,151 1,507 10,658
Deferred tax liabilities:
Current....................... $ 2,511 $ 413 $ 2,924
Long-term..................... 31,706 5,141 36,847
.............................................................................
Items that gave rise to significant portions of the deferred tax accounts
are as follows:
.............................................................................
Jan. 29, Jan. 30,
Year ended 1994 1993
- -------------------------- --------- --------
Deferred tax assets:
Inventories................. $ 6,678 $ 5,530
Vacation accrual............ 2,164 1,998
Other....................... 258 (128)
--------- --------
$ 9,100 $ 7,400
========= ========
Deferred tax liabilities:
Depreciation................ $28,034 $25,673
Other....................... 535 516
--------- --------
$28,569 $26,189
========= ========
..............................................................................
NOTE G --- NET EARNINGS PER SHARE
Net earnings per share is computed by dividing net earnings by the weighted
average number of common shares outstanding after reduction for treasury shares
and assuming exercise of dilutive stock options computed by the treasury stock
method using the average market price during the period. Primary and fully
diluted earnings per share are essentially the same.
The weighted average number of shares and share equivalents used in
computing net earnings per share were: 61,891,000 in 1993, 60,636,000 in 1992
and 56,494,000 in 1991.
NOTE H --- STOCK OPTIONS AND AWARDS
Options to purchase the Company's common stock have been granted to key
employees and certain members of the Board of Directors. The option prices are
at least 100% of the fair market value of the common stock on the grant date.
Under the terms of the Company's Incentive Stock Option Plan adopted in
1982, options were authorized to purchase up to 3,600,000 shares of the
Company's common stock. Options granted prior to 1988 are exercisable from the
date of grant. Options granted in 1988 and thereafter are exercisable on the
second anniversary of the grant date. All options under this plan cannot be
exercised more than ten years from the grant date. As of May 21, 1990, no
additional options will be granted under this plan.
Under the terms of the Company's Nonqualified Stock Option Plans, adopted in
1984 and 1985, options were authorized to purchase up to 3,300,000 shares of
the Company's common stock. The options become exercisable over a five year
period with one-fifth exercisable on the grant date and one-fifth on each
anniversary date for the four years following the grant date. Options granted
cannot be exercised more than 10 1/2 years after the grant date. As of May 21,
1990, no additional options will be granted under these plans.
On May 21, 1990, the stockholders approved the 1990 Stock Incentive Plan
which authorizes the issuance of restricted stock and/or options to purchase up
to 1,000,000 shares of the Company's common stock. An additional 1,500,000
shares were authorized by stockholders on June 1, 1993. Under this plan, both
incentive and nonqualified stock options may be granted to eligible
participants. Incentive stock options are exercisable on the second
anniversary of the grant date and nonqualified options become exercisable over
a five-year period with one-fifth exercisable on the grant date and one-fifth
on each anniversary date for the four years following the grant date. Options
cannot be exercised more than 10 years after the grant date. As of January 29,
1994, 1,020,315 shares remain available for grant.
The Company has reserved sufficient shares of common stock to meet its stock
option plans' obligations.
............................................................................
Stock option transactions are summarized as follows:
.............................................................................
Incentive Nonqualified
Fiscal 1992 Stock Options Stock Options
- ------------------------- ------------- -------------
Outstanding--beginning of
year 1,031,736 2,829,235
Granted 218,850 336,915
Exercised (345,395) (389,760)
Canceled (75,150) -
------------- -------------
Outstanding--end of year 830,041 2,776,390
Exercisable--end of year 526,241 2,215,719
Price range of options exercised $3.43 to $14.98 $3.97 to $14.69
Price range of options
outstanding end of year $3.97 to $26.25 $3.97 to $22.875
.............................................................................
Fiscal 1993
- -----------------------------------------------------------------------------
Outstanding--beginning of
year 830,041 2,776,390
Granted 234,100 322,585
Exercised (178,111) (191,750)
Canceled (73,050) (6,500)
------------- -------------
Outstanding--end of year 812,980 2,900,725
Exercisable--end of year 456,930 2,397,911
Price range of options exercised $3.97 to $14.98 $10.94 to $16.19
Price range of options
outstanding end of year $3.97 to $26.25 $3.97 to $23.13
.............................................................................
NOTE I --- FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments are as
follows:
January 29, 1994 January 30, 1993
---------------------- ---------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
---------- ---------- -------- ----------
Assets:
Cash $ 12,050 $ 12,050 $ 11,644 $ 11,644
Accounts receivable 1,525 1,525 2,845 2,845
Liabilities:
Checks outstanding $ 22,193 $ 22,193 $ 16,458 $ 16,458
Accounts payable 104,248 104,248 125,777 125,777
Short-term borrowings 54,500 54,500 10,000 10,000
Long-term debt including
current maturities 260,397 275,430 227,372 242,612
...............................................................................
CASH, ACCOUNTS RECEIVABLE, CHECKS OUTSTANDING AND ACCOUNTS PAYABLE The
carrying amounts approximate fair value because of the short maturity of these
items.
SHORT-TERM BORROWINGS AND LONG-TERM DEBT INCLUDING CURRENT MATURITIES Interest
rates that are currently available to the Company for issuance of debt with
similar terms and remaining maturities are used to estimate fair value for debt
issues that are not quoted on an exchange.
The fair value estimates presented herein are based on pertinent information
available to management as of January 29, 1994 and January 30, 1993. Although
management is not aware of any factors that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since those dates, and
current estimates of fair value may differ significantly from amounts presented
herein.
QUARTERLY FINANCIAL DATA (UNAUDITED) The Pep Boys - Manny, Moe & Jack and Subsidiaries
(dollar amounts in thousands, except per share amounts)
....................................................................................................................................
Net Cash Market Price
Year ended Total Gross Operating Net Earnings Dividends Per Share
Jan. 29, 1994 Revenues Profit Profit Earnings per Share per Share High Low
- ------------------------------------------------------------------------------------------------------------------------------------
1st Quarter $299,147 $74,789 $25,093 $13,442 $.22 $.0375 26 1/2 20 3/4
2nd Quarter 329,146 87,752 34,226 19,102 .31 .0375 23 7/8 20 1/2
3rd Quarter 316,015 84,492 31,954 17,443 .28 .0375 24 7/8 20 3/4
4th Quarter 296,825 88,285 29,335 15,525 .25 .0375 27 1/2 23 1/4
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended
Jan. 30, 1993
1st Quarter $275,563 $70,193 $22,900 $10,836 $.19 $.0325 23 5/8 17 1/8
2nd Quarter 309,211 79,775 30,176 16,665 .27 .035 24 7/8 19 1/4
3rd Quarter 298,809 75,040 26,205 14,755 .24 .035 27 3/8 21 1/4
4th Quarter 272,011 71,932 23,499 12,323 .20 .035 27 1/4 21 3/4
---------------------------------------------------------------------------------------------------------------------------------
Under the Company's present accounting system, actual gross profit from merchandise sales can be determined only at the time of
physical inventory, which is taken at the end of the fiscal year. Gross profit from merchandise sales for the first, second and
third quarters is estimated by the Company based upon recent historical gross profit experience and other appropriate factors. Any
variation between estimated and actual gross profit from merchandise sales for the first three quarters are reflected in the fourth
quarter's results.
/TABLE
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The material contained in the registrant's definitive proxy statement,
which will be filed pursuant to Regulation 14A not later than 120 days after
the end of the Company's fiscal year, (the "Proxy Statement") under the caption
"Election of Directors" is hereby incorporated herein by reference. The
information regarding executive officers called for by Item 401 of Regulation
S-K is included in Part I as Item A, in accordance with General Instruction
G(3) to Form 10-K.
ITEM 11 EXECUTIVE COMPENSATION
The material in the Proxy Statement under the caption "Executive
Compensation" other than the material under the caption "Executive Compensation
- - Report of Compensation Committee of the Board of Directors" and "Executive
Compensation - Performance Graph" is hereby incorporated herein by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The material in the Proxy Statement under the caption "Share Ownership of
Certain Beneficial Owners and Management" is hereby incorporated herein by
reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The material in the Proxy Statement in the last two paragraphs under the
caption "Executive Compensation - Compensation Arrangements" is hereby
incorporated herein by reference.
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a).
1. The following consolidated financial statements
of The Pep Boys - Manny, Moe & Jack are included
in Item 8.
Consolidated Balance Sheets - January 29, 1994
and January 30, 1993
Consolidated Statements of Earnings - Years
ended January 29, 1994, January 30, 1993 and
February 1, 1992
Consolidated Statements of Cash Flows - Years
ended January 29, 1994, January 30, 1993
and February 1, 1992
Notes to Consolidated Financial Statements
2. The following consolidated financial statement
schedules of The Pep Boys - Manny, Moe & Jack
are included.
Schedule V Property, Plant and Equipment
Schedule VI Accumulated Depreciation,
Depletion and Amortization
of Property, Plant and
Equipment
Schedule VIII Valuation and Qualifying
Accounts and Reserves
Schedule X Supplementary Income
Statement Information
All other schedules have been omitted because they are not applicable or
not required or the required information is included in the consolidated
financial statements or notes thereto.
3. Exhibits
(3.1) Articles of Incorporation, Incorporated by reference from
as amended the Company's Form 10-K for the
fiscal year ended January 30,
1988.
(3.2) By-Laws, as amended Incorporated by reference from
the Registration Statement on
Form S-3 (File No. 33-39225).
(4.1) Indenture dated as of November 1, Incorporated by reference from
1986 between the Company and the the Company's Form 10-K for the
Philadelphia National Bank, as fiscal year ended January 31,
Trustee, including Form of 1987.
Debenture
(4.2) Indenture dated as of March 22, Incorporated by reference from
1991 between the Company and the Registration Statement on
Bank America Trust Company of Form S-3 (File No. 33-39225).
New York as Trustee, including
Form of Debt Security
(10.1) Medical Reimbursement Plan of Incorporated by reference from
the Company the Company's Form 10-K for the
fiscal year ended January 31,
1982.
(10.2)* 1982 Incentive Stock Option Plan Incorporated by reference from
of the Company the Company's Form 10-K for the
fiscal year ended January 31,
1982.
(10.3)* 1984 Non-Qualified Stock Option Incorporated by reference from
Plan the Company's Form 10-K for the
fiscal year ended February 2,
1985.
(10.4)* 1985 Non-Qualified Stock Option Incorporated by reference from
Plan the Company's Form 10-K for the
fiscal year ended February 2,
1985.
(10.5)* The Pep Boys Savings Plan, Incorporated by reference from
as amended the Company's Registration
Statement on Form S-8 (File No.
33-14904) filed June 12, 1987.
(10.6) Rights Agreement dated as of Incorporated by reference from
December 17, 1987 between the the Company's Form 8-K dated
Company and the Philadelphia December 17, 1987.
National Bank
(10.7)* Directors' Deferred Compensation Incorporated by reference from
Plan, as amended the Company's Form 10-K for the
fiscal year ended January 30,
1988.
(10.8)* Form of Employment Agreement, as Incorporated by reference from
amended, dated as of December 12, the Company's Form 10-K for the
1989 fiscal year ended February 3,
1990.
(10.9) Loan Agreement dated as of Incorporated by reference from
June 28, 1988 related to 9.33% the Company's Form 10-K for the
Senior Notes due May 30, 1998 fiscal year ended January 28,
1989.
(10.10)* Amendment No. 1 to the 1985 Incorporated by reference from
Non-Qualified Stock Option Plan the Company's Form 10-K for the
fiscal year ended January 28,
1989.
(10.11)* Amendment No. 1 to the 1982 Incorporated by reference from
Incentive Stock Option Plan the Company's Form 10-K for the
fiscal year ended January 28,
1989.
(10.12) Amendment dated June 6, 1989 Incorporated by reference from
to Rights Agreement dated as of the Company's Report on Form 8
December 17, 1987 between the filed July 6, 1989.
Company and the Philadelphia
National Bank
(10.13) Dividend Reinvestment and Stock Incorporated by reference from
Purchase Plan dated January 4, the Registration Statement on
1990 Form S-3 (File No. 33-32857)
filed January 5, 1990.
(10.14) Credit Agreement dated as of Incorporated by reference from
June 16, 1989 between the the Company's Form 10-K for the
Company and the Chase Manhattan fiscal year ended February 3,
Bank (Agent) 1990.
(10.15)* The Pep Boys - Manny, Moe and Incorporated by reference from
Jack Pension Plan, as amended the Company's Form 10-K for the
and restated effective fiscal year ended February 3,
January 1, 1988 1990.
(10.16)* Amendment No. 3 to The Pep Boys Incorporated by reference from
Savings Plan, as amended the Company's Form 10-K for the
fiscal year ended February 3,
1990.
(10.17)* Amendment No. 4 to The Pep Boys Incorporated by reference from
Savings Plan, as amended the Company's Form 10-K for the
fiscal year ended February 3,
1990.
(10.18)* Executive Supplemental Pension Incorporated by reference from
Plan amended and restated the Company's Form 10-K for the
effective January 1, 1988 fiscal year ended February 3,
1990.
(10.19)* 1990 Stock Incentive Plan Incorporated by reference from
the Company's Form 10-Q for the
quarter ended November 3, 1990.
(10.20)* Amendment No. 1 to 1990 Stock Incorporated by reference from
Incentive Plan the Company's Form 10-K for the
fiscal year ended February 1,
1992.
(10.21)* The Pep Boys - Manny, Moe & Incorporated by reference from
Jack Trust Agreement for the the Company's Form 10-K for the
Executive Supplemental Pension fiscal year ended February 1,
Plan and Certain Contingent 1992.
Compensation Arrangements,
dated as of February 13, 1992.
(10.22)* Amendments to The Pep Boys - Incorporated by reference from
Manny, Moe & Jack Pension Plan the Company's Form 10-K for the
(amended and restated effective fiscal year ended February 1,
January 1, 1988), dated as of 1992.
January 31, 1992
(10.23)* Amendment to the Executive Incorporated by reference from
Supplemental Pension Plan the Company's Form 10-K for the
(amended and restated effective fiscal year ended February 1,
January 1, 1988), dated as of 1992.
February 13, 1992
(10.24)* Consulting and Retirement Incorporated by reference from
Agreement by and between the the Company's Form 10-K for the
Company and Benjamin Strauss, fiscal year ended February 1,
dated as of February 2, 1992 1992.
(10.25)* Amendment No. 2 to the 1982 Incorporated by reference from
Incentive Stock Option Plan the Company's Form 10-Q for the
quarter ended October 31, 1992.
(10.26)* Amendment No. 3 to the Non- Incorporated by reference from
Qualified Stock Option Plan the Company's Form 10-Q for the
quarter ended October 31, 1992.
(10.27)* Amendment No. 2 to the 1990 Incorporated by reference from
Stock Incentive Plan the Company's Form 10-Q for the
quarter ended October 31, 1992.
(10.28)* Amendment No. 5 to The Pep Incorporated by reference from
Boys Savings Plan, as amended the Company's Form 10-K for the
year ended January 30, 1993.
(10.29)* Executive Incentive Bonus Plan Incorporated by reference from
of the Company, as amended, the Company's Form 10-K for the
dated as of April 1, 1992 year ended January 30, 1993.
(10.30)* President's Merit Award Program Incorporated by reference from
of the Company, as amended, the Company's Form 10-K for the
dated as of April 1, 1992 year ended January 30, 1993.
(11) Computation of Earnings Per Share
(12) Computation of Ratio of Earnings
to Fixed Charges
(21) Subsidiaries of the Company Incorporated by reference from
the Company's Form 10-K for the
fiscal year ended January 30,
1988.
(23) Independent Auditors' Consent
(b) No Form 8-K was filed for the fourth quarter of the year ended
January 29, 1994.
*Management contract or compensatory plan or arrangement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
Dated: April 20, 1994 by: /s/Michael J. Holden
--------------------------
Michael J. Holden
Senior Vice President and
Chief Financial Officer and
Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
Chairman of the Board, President
/s/Mitchell G. Leibovitz and Chief Executive Officer April 20, 1994
- ------------------------ (Principal Executive Officer)
Mitchell G. Leibovitz
/s/Michael J. Holden Senior Vice President - Chief April 20, 1994
- ------------------------ Financial Officer and Treasurer
Michael J. Holden (Principal Financial and
Accounting Officer)
/s/Walter G. Arader Director April 8, 1994
- ------------------------
Walter G. Arader
Director April , 1994
- ------------------------
Lennox K. Black
/s/Pemberton Hutchinson Director April 18, 1994
- ------------------------
Pemberton Hutchinson
/s/Bernard J. Korman Director April 8, 1994
- ------------------------
Bernard J. Korman
/s/J. Richard Leaman, Jr. Director April 7, 1994
- ------------------------
J. Richard Leaman, Jr.
/s/Lester Rosenfeld Director April 7, 1994
- ------------------------
Lester Rosenfeld
/s/Benjamin Strauss Director April 9, 1994
- ------------------------
Benjamin Strauss
/s/Myles H. Tanenbaum
- ------------------------ Director April 8,1994
Myles H. Tanenbaum
/s/David V. Wachs Director April 8, 1994
- ------------------------
David V. Wachs
FINANCIAL STATEMENT SCHEDULES FURNISHED PURSUANT TO THE REQUIREMENTS OF FORM
10-K
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES SCHEDULE V -PROPERTY, PLANT AND EQUIPMENT
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Classifications Balance at Additions Balance at
Beginning of at Other End of
Period Cost Retirements Changes Period
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED January 29, 1994
Land $157,947 $ 26,001 $ (347) $ - $183,601
Building and improvements 434,144 68,675 (2,352) - 500,467
Furniture, fixtures and
equipment 198,902 37,047 (6,219) - 229,730
Construction in progress 5,922 3,442 * - - 9,364
- ------------------------------------------------------------------------------------------------------------------------------------
$796,915 $135,165 $(8,918) $ - $923,162
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED January 30, 1993
Land $147,347 $ 10,799 $ (199) $ - $157,947
Building and improvements 395,794 41,119 (2,769) - 434,144
Furniture, fixtures and
equipment 179,360 26,114 (6,572) - 198,902
Construction in progress 5,929 (7) * - - 5,922
- ------------------------------------------------------------------------------------------------------------------------------------
$728,430 $ 78,025 $ (9,540) $ - $796,915
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED February 1, 1992
Land $139,433 $ 8,165 $ (219) $ (32) ** $147,347
Building and improvements 356,553 40,171 (874) (56) ** 395,794
Furniture, fixtures and
equipment 151,811 29,575 (2,109) 83 ** 179,360
Construction in progress 18,034 (12,110) * - 5 ** 5,929
- ------------------------------------------------------------------------------------------------------------------------------------
$665,831 $ 65,801 $(3,202) $ - $728,430
- ------------------------------------------------------------------------------------------------------------------------------------
* Net change in construction in progress
** Reclassification from other balance sheet accounts
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
(in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- ------------------------------------------------------------------------------------------------------------------------------------
Descriptions Balance at Additions Balance at
Beginning of at Other End of
Period Cost Retirements Changes Period
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED January 29, 1994
Building and improvements $ 76,687 $13,451 $(1,394) $ 58 $ 88,802
Furniture, fixtures and
equipment 91,310 25,674 (6,004) (72) 110,908
- ------------------------------------------------------------------------------------------------------------------------------------
$167,997 $39,125 $(7,398) $ (14) $199,710
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED January 30, 1993
Building and improvements $ 66,834 $12,430 $(2,427) $(150) $ 76,687
Furniture, fixtures and
equipment 73,003 24,244 (6,087) 150 91,310
- ------------------------------------------------------------------------------------------------------------------------------------
$139,837 $36,674 $(8,514) $ - $167,997
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED February 1, 1992
Building and improvements $ 55,952 $11,539 $ (657) $ - $ 66,834
Furniture, fixtures and
equipment 52,889 21,900 (1,786) - 73,003
- ------------------------------------------------------------------------------------------------------------------------------------
$108,841 $33,439 $(2,443) $ - $139,837
- ------------------------------------------------------------------------------------------------------------------------------------
The annual provision for depreciation has been computed using the straight-line method over the following estimated useful lives:
Building and improvements 5 1/2 to 40 years
Furniture, fixtures and equipment 3 to 10 years
/TABLE
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(in thousands)
- ----------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ----------------------------------------------------------------------------------------------------------------------------------
Additions Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Descriptions Period Expenses Accounts Deductions-* Period
- ----------------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
Year Ended January 29, 1994 $85 $4 $ - $39 $50
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended January 30, 1993 $246 $41 $ - $202 $85
- ----------------------------------------------------------------------------------------------------------------------------------
Year Ended February 1, 1992 $137 $354 $ - $245 $246
- ----------------------------------------------------------------------------------------------------------------------------------
*Uncollectible accounts written off.
/TABLE
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
- ------------------------------------------------------------------------------------------
Column A Column B
- ------------------------------------------------------------------------------------------
YEAR ENDED January 29, 1994
Depreciation and amortization
of property and equipment $39,125
Taxes other than income taxes:
Payroll 22,052
Other 12,689
Advertising 2,665
Repairs and maintenance 19,174
YEAR ENDED January 30, 1993
Depreciation and amortization
of property and equipment $36,674
Taxes other than income taxes:
Payroll 18,610
Other 10,843
Advertising 2,294
Repairs and maintenance 16,730
YEAR ENDED February 1, 1992
Depreciation and amortization
of property and equipment $33,439
Taxes other than income taxes:
Payroll 16,495
Other 10,448
Advertising 3,873
Repairs and maintenance 14,916
- ---------------------------------------------------------------------------------------------
No other items required by this schedule exceeded one percent of total revenues as reported in
the related consolidated statements of earnings for the years ended January 29, 1994, January 30, 1993 and
February 1, 1992.
/TABLE
INDEX TO EXHIBITS
(11) Computation of Earnings Per Share
(12) Computation of Ratio of Earnings to Fixed Charges
(23) Independent Auditors' Consent