February 1, 2014

February 2, 2013

Assets

Current assets:

Cash and cash equivalents

$

33,431

$

59,186

Accounts receivable, less allowance for uncollectible accounts of $1,320 and $1,302

25,152

23,897

Merchandise inventories

672,354

641,208

Prepaid expenses

29,282

28,908

Other current assets

63,405

60,438

Assets held for disposal

2,013

—

Total current assets

825,637

813,637

Property and equipment, net of accumulated depreciation of $1,227,121 and $1,162,909

625,525

657,270

Goodwill

56,794

46,917

Deferred income taxes

57,686

47,691

Other long-term assets

39,839

38,434

Total assets

$

1,605,481

$

1,603,949

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

256,031

$

244,696

Trade payable program liability

129,801

149,718

Accrued expenses

237,403

232,277

Deferred income taxes

69,373

58,441

Current maturities of long-term debt

2,000

2,000

Total current liabilities

694,608

687,132

Long-term debt less current maturities

199,500

198,000

Other long-term liabilities

48,485

53,818

Deferred gain from asset sales

114,823

127,427

Commitments and contingencies

Stockholders’ equity:

Common stock, par value $1 per share:

Authorized 500,000,000 shares; issued 68,557,041 shares

68,557

68,557

Additional paid-in capital

297,009

295,679

Retained earnings

432,332

430,148

Accumulated other comprehensive income (loss)

379

(980

)

Treasury stock, at cost - 15,358,872 shares and 15,431,298 shares

(250,212

)

(255,832

)

Total stockholders’ equity

548,065

537,572

Total liabilities and stockholders’ equity

$

1,605,481

$

1,603,949

Supplemental balance sheet information:

Working capital

$

131,029

$

126,505

Current ratio

1.19

1.18

Accounts payable to inventory ratio

57.4

%

61.5

%

Total debt as a percent of total capitalization

26.9

%

27.1

%

Debt as a percent of total capitalization, net

23.5

%

20.8

%

Thirteen and fourteen weeks ended

Fifty-two and fifty-three weeks ended

February 1, 2014

February 2, 2013

February 1, 2014

February 2, 2013

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise sales

$

384,884

77.6

$

417,090

78.6

$

1,608,697

77.8

$

1,643,948

78.6

Service revenue

110,849

22.4

113,757

21.4

457,871

22.2

446,782

21.4

Total revenues

495,733

100.0

530,847

100.0

2,066,568

100.0

2,090,730

100.0

Costs of merchandise sales

270,233

70.2

296,462

71.1

1,108,359

68.9

1,159,994

70.6

Costs of service revenue

121,484

109.6

117,179

103.0

470,832

102.8

439,236

98.3

Total costs of revenues

391,717

79.0

413,641

77.9

1,579,191

76.4

1,599,230

76.5

Gross profit from merchandise sales

114,651

29.8

120,628

28.9

500,338

31.1

483,954

29.4

Gross (loss) profit from service revenue

(10,635

)

(9.6

)

(3,422

)

(3.0

)

(12,961

)

(2.8

)

7,546

1.7

Total gross profit

104,016

21.0

117,206

22.1

487,377

23.6

491,500

23.5

Selling, general and administrative expenses

110,617

22.3

117,401

22.1

464,852

22.5

463,416

22.2

Pension settlement expense

—

—

17,753

3.3

—

—

17,753

0.8

Net (loss) gain from dispositions of assets

(13

)

—

1,554

0.3

(227

)

—

1,323

0.1

Operating (loss) profit

(6,614

)

(1.3

)

(16,394

)

(3.1

)

22,298

1.1

11,654

0.6

Merger termination fees, net

—

—

—

—

—

—

42,816

2.0

Other income

422

0.1

366

0.1

1,789

0.1

2,012

0.1

Interest expense

3,912

0.8

3,982

0.8

14,797

0.7

33,982

1.6

(Loss) earnings from continuing operations before income taxes and discontinued operations

(10,104

)

(2.0

)

(20,010

)

(3.8

)

9,290

0.4

22,500

1.1

Income tax (benefit) expense

(6,837

)

67.7

(1)

(5,690

)

28.4

(1)

2,237

24.1

(1)

9,345

41.5

(1)

(Loss) earnings from continuing operations before discontinued operations

(3,267

)

(0.7

)

(14,320

)

(2.7

)

7,053

0.3

13,155

0.6

Loss from discontinued operations, net of tax

(64

)

—

(223

)

—

(188

)

—

(345

)

—

Net (loss) earnings

(3,331

)

(0.7

)

(14,543

)

(2.7

)

6,865

0.3

12,810

0.6

Basic (loss) earnings per share:

(Loss) earnings from continuing operations before discontinued operations

$

(0.06

)

$

(0.27

)

$

0.13

$

0.25

Discontinued operations, net of tax

—

—

—

(0.01

)

Basic (loss) earnings per share

$

(0.06

)

$

(0.27

)

$

0.13

$

0.24

Diluted (loss) earnings per share:

(Loss) earnings from continuing operations before discontinued operations

$

(0.06

)

$

(0.27

)

$

0.13

$

0.24

Discontinued operations, net of tax

—

—

—

—

Diluted (loss) earnings per share

$

(0.06

)

$

(0.27

)

$

0.13

$

0.24

Other comprehensive income:

Defined benefit plan adjustment, net of tax

—

8,634

—

9,696

Derivative financial instruments adjustment, net of tax

40

436

1,359

6,973

Other comprehensive income

40

9,070

1,359

16,669

Comprehensive (loss) income

$

(3,291

)

$

(5,473

)

$

8,224

$

29,479

Fifty-two and fifty-three weeks ended

February 1, 2014

February 2, 2013

Cash flows from operating activities:

Net earnings

$

6,865

$

12,810

Adjustments to reconcile net earnings to net cash provided by continuing operations:

Net loss from discontinued operations

188

345

Depreciation

78,439

79,104

Amortization of deferred gain from asset sales

(12,604

)

(12,846

)

Amortization of deferred financing costs

2,993

4,431

Stock compensation expense

2,992

1,299

Deferred income taxes

(79

)

7,576

Net loss (gain) from dispositions of assets

227

(1,323

)

Loss from asset impairment

7,659

10,555

Other

(493

)

(269

)

Changes in assets and liabilities, net of the effects of acquisitions:

Increase in accounts receivable, prepaid expenses and other

(6,511

)

(602

)

Increase in merchandise inventories

(31,146

)

(27,074

)

Increase in accounts payable

8,378

984

Increase in accrued expenses

6,115

10,481

(Decrease) increase in other long-term liabilities

(3,345

)

3,487

Net cash provided by continuing operations

59,678

88,958

Net cash used in discontinued operations

(274

)

(467

)

Net cash provided by operating activities

59,404

88,491

Cash flows from investing activities:

Capital expenditures

(53,982

)

(54,696

)

Proceeds from dispositions of assets

21

5,588

Cash paid for acquisitions

(10,694

)

—

Additions to collateral investment

(2,312

)

(3,654

)

Release of collateral investment

1,650

—

Net cash used in investing activities

(65,317

)

(52,762

)

Cash flows from financing activities:

Borrowings under line of credit agreements

40,745

2,319

Payments under line of credit agreements

(37,245

)

(2,319

)

Borrowings on trade payable program liability

154,985

179,751

Payments on trade payable program liability

(174,902

)

(115,247

)

Payment for finance issuance cost

(770

)

(6,520

)

Borrowings under new debt

—

200,000

Debt payments

(2,000

)

(295,122

)

Proceeds from stock issuance

2,095

2,693

Repurchase of common stock

(2,750

)

(342

)

Net cash used in financing activities

(19,842

)

(34,787

)

Net (decrease) increase in cash and cash equivalents

(25,755

)

942

Cash and cash equivalents at beginning of period

59,186

58,244

Cash and cash equivalents at end of period

$

33,431

$

59,186

Supplemental cash flow information:

Cash paid for income taxes

$

4,377

$

2,826

Cash received from income tax refunds

1,251

108

Cash paid for interest

12,027

31,290

Accrued purchases of property and equipment

3,467

1,371

COMPUTATION OF BASIC AND DILUTED (LOSS) EARNINGS PER SHARE

(in thousands, except per share data)

Thirteen and fourteen weeks ended

Fifty-two and fifty-three weeks ended

February 1, 2014

February 2, 2013

February 1, 2014

February 2, 2013

(a) (Loss) earnings from continuing operations before discontinued operations

$

(3,267

)

$

(14,320

)

$

7,053

$

13,155

Loss from discontinued operations, net of tax

(64

)

(223

)

(188

)

(345

)

Net (loss) earnings

$

(3,331

)

$

(14,543

)

$

6,865

$

12,810

(b) Basic average number of common shares outstanding during period

53,422

53,364

53,378

53,225

Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price

546

611

585

729

(c) Diluted average number of common shares assumed outstanding during period

53,968

53,975

53,963

53,954

   Basic (loss) earnings per share:

(Loss) earnings from continuing operations before discontinued operations

(a) / (b)

$

(0.06

)

$

(0.27

)

$

0.13

$

0.25

Discontinued operations, net of tax

—

—

—

(0.01

)

   Basic (loss) earnings per share

$

(0.06

)

$

(0.27

)

$

0.13

$

0.24

   Diluted (loss) earnings per share:

(Loss) earnings from continuing operations before discontinued operations

(a) / (c)

$

(0.06

)

$

(0.27

)

$

0.13

$

0.24

Discontinued operations, net of tax

—

—

—

—

   Diluted (loss) earnings per share

$

(0.06

)

$

(0.27

)

$

0.13

$

0.24

ADDITIONAL INFORMATION

(dollar amounts in thousands)

Thirteen and fourteen weeks ended

Fifty-two and fifty-three weeks ended

February 1, 2014

February 2, 2013

February 1, 2014

February 2, 2013

Capital expenditures

$

15,648

$

17,936

$

53,982

$

54,696

Depreciation

$

18,498

$

19,825

$

78,439

$

79,104

Non-operating income:

Net rental revenue

$

377

$

344

$

1,409

$

1,645

Investment income

43

48

175

181

Merger termination fees, net

—

—

—

42,816

Other income

2

(26

)

205

186

Total

$

422

$

366

$

1,789

$

44,828

Comparable sales percentages:

Service

1.4

%

3.2

%

1.6

%

1.3

%

Merchandise

-3.4

%

-4.1

%

-2.1

%

-2.9

%

Total

-2.4

%

-2.6

%

-1.3

%

-2.0

%

Total square feet of retail space (including service centers)

12,907,000

12,777,000

Store count

Supercenter

568

567

Service & Tire Center

225

185

Retail Only

6

6

Total

799

758

Sales and gross profit by line of business (A):

Service center revenue

$

269,131

$

278,554

$

1,110,958

1,095,284

Retail sales

226,602

252,293

955,610

995,446

Total revenues

$

495,733

$

530,847

$

2,066,568

$

2,090,730

Gross profit from service center revenue, prior to impairment charge

$

43,942

$

47,881

$

215,181

214,240

Service center revenue impairment charge

(1,836

)

(827

)

(5,328

)

(5,445

)

Gross profit from service center revenue

$

42,106

$

47,054

$

209,853

$

208,795

Gross profit from retail sales, prior to impairment charge

$

62,851

$

71,078

$

279,855

287,815

Retail sales impairment charge

(941

)

(926

)

(2,331

)

(5,110

)

Gross profit from retail sales

$

61,910

$

70,152

$

277,524

$

282,705

Total gross profit

$

104,016

$

117,206

$

487,377

$

491,500

Comparable sales percentages by line of business (A):

Service center revenue

-0.3

%

-1.6

%

0.2

%

0.3

%

Retail sales

-4.6

%

-3.6

%

-3.1

%

-4.4

%

Total revenues

-2.4

%

-2.6

%

-1.3

%

-2.0

%

Gross profit percentage by line of business (A):

Gross profit percentage from service center revenue, prior to impairment charge

16.3

%

17.2

%

19.4

%

19.6

%

Impairment charge

(0.7

)

(0.3

)

(0.5

)

(0.5

)

Gross profit percentage from service center revenue

15.6

%

16.9

%

18.9

%

19.1

%

Gross profit percentage from retail sales, prior to impairment charge

27.7

%

28.2

%

29.3

%

28.9

%

Impairment charge

(0.4

)

(0.4

)

(0.2

)

(0.5

)

Gross profit percentage from retail sales

27.3

%

27.8

%

29.0

%

28.4

%

Total gross profit percentage

21.0

%

22.1

%

23.6

%

23.5

%