EX-99.4 7 dex994.htm UNAUDITED CONDENSED FINANCIALS FOR DISCOUNT Prepared by R.R. Donnelley Financial -- Unaudited Condensed Financials for Discount
EXHIBIT 99.4
 
DISCOUNT AUTO PARTS, INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
    
May 29
2001

    
November 27 2001

 
    
(In thousands)
 
ASSETS

             
Current assets:
                 
Cash
  
$
9,669
 
  
$
9,377
 
Inventories
  
 
242,718
 
  
 
240,529
 
Prepaid expenses and other current assets
  
 
14,391
 
  
 
14,633
 
    


  


Total current assets
  
 
266,778
 
  
 
264,539
 
Property and equipment
  
 
507,255
 
  
 
515,897
 
Less allowances for depreciation and amortization
  
 
(122,742
)
  
 
(134,798
)
    


  


    
 
384,513
 
  
 
381,099
 
Other assets
  
 
4,638
 
  
 
4,525
 
    


  


Total assets
  
$
655,929
 
  
$
650,163
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY

             
Current liabilities:
                 
Trade accounts payable
  
$
96,442
 
  
$
79,141
 
Other current liabilities
  
 
25,286
 
  
 
24,204
 
Current maturities of long-term debt
  
 
1,200
 
  
 
1,200
 
    


  


Total current liabilities
  
 
122,928
 
  
 
104,545
 
Deferred gain on sale/leaseback
  
 
5,966
 
  
 
5,812
 
Deferred income taxes
  
 
13,273
 
  
 
13,331
 
Long-term debt
  
 
192,900
 
  
 
195,989
 
Stockholders’ equity:
                 
Preferred stock
  
 
—  
 
  
 
—  
 
Common stock
  
 
167
 
  
 
167
 
Additional paid-in capital
  
 
142,429
 
  
 
142,917
 
Retained earnings
  
 
178,266
 
  
 
187,402
 
    


  


Total stockholders’ equity
  
 
320,862
 
  
 
330,486
 
    


  


Total liabilities and stockholders’ equity
  
$
655,929
 
  
$
650,163
 
    


  


 
 
See accompanying notes.


DISCOUNT AUTO PARTS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
    
Twenty-six Weeks Ended

 
    
November 28 2000

    
November 27 2001

 
    
(In thousands, except per share amounts)
 
Net sales
  
$
328,024
 
  
$
338,545
 
Cost of sales, including distribution costs
  
 
200,736
 
  
 
203,945
 
    


  


Gross profit
  
 
127,288
 
  
 
134,600
 
Selling, general and administrative expenses
  
 
106,727
 
  
 
113,394
 
Merger related expenses
  
 
—  
 
  
 
1,264
 
    


  


Income from operations
  
 
20,561
 
  
 
19,942
 
Other income, net
  
 
120
 
  
 
221
 
Interest expense
  
 
(11,541
)
  
 
(5,892
)
    


  


Income before income taxes
  
 
9,140
 
  
 
14,271
 
Income taxes
  
 
3,290
 
  
 
5,135
 
    


  


Net income
  
$
5,850
 
  
$
9,136
 
    


  


Net income per share:
                 
Basic net income per common share
  
$
0.35
 
  
$
0.55
 
Diluted net income per common share
  
$
0.35
 
  
$
0.54
 
    


  


Average common shares outstanding
  
 
16,696
 
  
 
16,708
 
Dilutive effect of stock options
  
 
—  
 
  
 
187
 
    


  


Average common shares outstanding—assuming dilution
  
 
16,696
 
  
 
16,895
 
    


  


 
 
 
 
See accompanying notes.

2


DISCOUNT AUTO PARTS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
    
Twenty-Six Weeks Ended

 
    
November 28 2000

    
November 27 2001

 
    
(in thousands)
 
Operating activities
                 
Net income
  
$
5,850
 
  
$
9,136
 
Adjustments to reconcile net income to net cash used in operating activities:
                 
Deferred income tax benefit
  
 
185
 
  
 
(2
)
Depreciation and amortization
  
 
12,328
 
  
 
12,391
 
Gain on disposals of property and equipment
  
 
(14
)
  
 
(198
)
Amortization of deferred gain on sale/leaseback
  
 
—  
 
  
 
(154
)
Changes in operating assets and liabilities:
                 
Decrease in inventories
  
 
5,187
 
  
 
2,189
 
Increase in prepaid expenses and other current assets
  
 
(2,728
)
  
 
89
 
Decrease (increase) in other assets
  
 
(1,115
)
  
 
(160
)
Decrease in trade accounts payable
  
 
(37,338
)
  
 
(17,301
)
Decrease in other current liabilities
  
 
47
 
  
 
(1,141
)
    


  


Net cash (used in) provided by operating activities
  
 
(17,598
)
  
 
4,849
 
Investing activities
                 
Proceeds from sales of property and equipment
  
 
744
 
  
 
1,258
 
Purchases of property and equipment
  
 
(20,757
)
  
 
(9,765
)
    


  


Net cash used in investing activities
  
 
(20,013
)
  
 
(8,507
)
Financing activities
                 
Proceeds from short-term borrowings and long-term debt
  
 
60,236
 
  
 
39,108
 
Payments of short-term borrowings and long-term debt
  
 
(29,608
)
  
 
(36,019
)
Proceeds from other issuances of common stock
  
 
20
 
  
 
277
 
    


  


Net cash provided by financing activities
  
 
30,648
 
  
 
3,366
 
Net decrease in cash
  
 
(6,963
)
  
 
(292
)
Cash at beginning of period
  
 
12,612
 
  
 
9,669
 
    


  


Cash at end of period
  
$
5,649
 
  
$
9,377
 
    


  


 
 
See accompanying notes.

3


DISCOUNT AUTO PARTS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
November 27, 2001
 
1.    BASIS OF PRESENTATION
 
The accompanying unaudited condensed consolidated financial statements of Discount Auto Parts, Inc. (the Company) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended May 29, 2001.
 
Operating results for the twenty-six-week period ended November 27, 2001 are not necessarily indicative of the results that may be expected for the entire fiscal year.
 
2.    SALE/LEASEBACK TRANSACTION
 
On February 27, 2001, the Company completed a sale/leaseback transaction. Under the terms of the transaction, the Company sold 101 properties, including land, buildings, and improvements, for a net price of approximately $62.2 million. The stores were leased back from the purchaser under non-cancelable operating leases with lease terms of 22.5 years each. The sale of the properties generated a gain for financial reporting purposes, net of expenses incurred, of $6.0 million, which gain has been deferred and is being amortized over the lease term.
 
3.    LONG-TERM DEBT
 
Long-term debt consists of the following (in thousands):
 
    
May 29, 2001

      
November 27, 2001

 
Revolving credit agreements
  
$
140,500
 
    
$
144,789
 
Senior term notes
  
 
50,000
 
    
 
50,000
 
Senior secured notes
  
 
3,600
 
    
 
2,400
 
    


    


    
 
194,100
 
    
 
197,189
 
Less current maturities
  
 
(1,200
)
    
 
(1,200
)
    


    


    
$
192,900
 
    
$
195,989
 
    


    


 
Effective July 29, 1999, the Company entered into a five year $265 million unsecured revolving credit agreement (the Revolver). The rate of interest payable under the Revolver is a function of LIBOR or the prime rate of the lead agent bank, at the option of the Company. During the term of the Revolver, the Company is also obligated to pay a fee, which fluctuates based on the Company’s debt-to-capitalization ratio, for the unused portion of the Revolver.
 
Effective August 8, 1997, the Company issued $50 million of senior term notes (the Notes). The Notes provide for interest at a fixed rate of 7.46%, payable semi-annually, with semi-annual principal payments of $7.1 million, beginning July 15, 2004.

4


DISCOUNT AUTO PARTS, INC.
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)—(Continued)
November 27, 2001
 

 
3.    LONG-TERM DEBT — CONTINUED
 
At May 29, 2001 and November 27, 2001, the Company’s weighted average interest rate on its borrowings under the revolving credit agreement was 7.1% and 3.4%, respectively.
 
As of November 27, 2001, the Company had approximately $120.2 million of available borrowings.
 
As of November 27, 2001, the Company has outstanding a senior secured note of $2.4 million. The note provides for interest at a fixed rate of 9.8%, payable quarterly, with annual principal payments of $1.2 million due on May 31. The note is collateralized by a first mortgage on certain store properties, equipment and fixtures.
 
The Company’s debt agreements contain various restrictions, including the maintenance of certain financial ratios and restrictions on dividends, with which the Company is in compliance.
 
4.    PENDING MERGER
 
On August 7, 2001, the Company entered into a definitive agreement with Advance Holding Corporation, Advance Auto Parts, Inc., Advance Stores Company, Incorporated and AAP Acquisition Corporation (collectively, Advance) under which the Company will be acquired by Advance in a merger transaction. Terms of the agreement call for each share of Discount Auto Parts common stock to be exchanged for $7.50 in cash and 0.2577 shares of common stock of Advance Auto Parts, Inc., a holding company which has been formed to own and operate the combined companies. The transaction has been approved by the boards of directors of both companies and is subject to approval by shareholders of the Company, and other customary closing conditions. The Hart-Scott-Rodino Antitrust Improvements Act of 1976 waiting period expired September 18, 2001. The transaction closed on November 28, 2001.
 
As a result of the above described transaction, the Company incurred expenses in the first twenty-six weeks of fiscal 2002 of approximately $1.3 million.
 
5.    COMPREHENSIVE INCOME
 
Comprehensive income for the periods presented equals net income.

5