<PAGE>   1
                                                              2000 ANNUAL REPORT









               (PHOTO OF DISCOUNT AUTO PARTS STORE WITH SIGN AND
            PRO2CALL AUTO PARTS FOR PROFESSIONALS VAN IN FOREGROUND)














<PAGE>   2

YEARLY GROWTH
---------------------------------------------------

---------------------------------------------------
                YEAR IN REVIEW
---------------------------------------------------
- Net sales rose 17% to $598.3 million.
- Pro2Call sales volume rose nearly 250 percent.
- Opened 85 new stores.
- Pro2Call is now being operated out of 172 stores,
  with more to come.
- Opened our 100th store in Georgia.
- Continued to enter new markets by opening stores
  in New Orleans, Shreveport, Lafayette and
  Charleston.
- Ended the year with a total of 643 stores located
  in six states.
- Increased inventory availability with over 45,000
  SKU's now in our system.
- Increased our Team Member base to over 6,400
  motivated and enthusiastic individuals, providing
  excellent service to both the do-it-yourself
  consumer and the professional mechanic.
- Broke ground on a second distribution facility
  located in Mississippi.
- Engaged a well-respected international consulting
  firm to assist us in conducting a year-long
  comprehensive review of our supply chain
  processes.

         NET SALES (IN THOUSANDS)

   2000        1999          1998          1997         1996
--------     --------      --------     --------      --------
$598,258     $511,483      $447,491     $405,186      $307,476

         INCOME FROM OPERATIONS (IN THOUSANDS)

   2000        1999          1998          1997         1996
--------     --------      --------     --------      --------
$ 57,104     $ 55,863      $ 51,962     $ 47,204      $ 40,469

         NUMBER OF STORES

   2000        1999          1998          1997         1996
--------     --------      --------     --------      --------
    643         558           452          400           314

         TEAM MEMBERS

   2000        1999          1998          1997         1996
--------     --------      --------     --------      --------
  6,390       5,586         4,350         3,677        3,148

<PAGE>   3

TABLE OF CONTENTS
------------------------------------------------------------------













                          (PHOTO OF EXTERIOR OF STORE)

     Discount Auto Parts, Inc. is one of the Southeast's leading specialty
retailers and suppliers of automotive replacement parts, maintenance items and
accessories to both Do-It-Yourself ("DIY") consumers and professional mechanics
and service technicians. As of August 1, 2000, Discount Auto Parts operated 652
stores located throughout Florida, Georgia, Mississippi, Alabama, Louisiana and
South Carolina.

<TABLE>
<S>                                                           <C>
LETTER TO SHAREHOLDERS AND TEAM                                 2
------------------------------------------------------------------
SELECTED FINANCIAL DATA                                         6
------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
  AND RESULTS OF OPERATIONS                                     7
------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME                              13
------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS                                    14
------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                15
------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS                          16
------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     17
------------------------------------------------------------------
REPORT OF MANAGEMENT                                           26
------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS             27
------------------------------------------------------------------
CORPORATE INFORMATION                                          28
</TABLE>
<PAGE>   4

TO OUR SHAREHOLDERS
AND TEAM
------------------------------------------------------------------

(PHOTO OF PETER J. FONTAINE, CEO AND CHAIRMAN)
                                                 During fiscal year 2000, the
                                            Discount Auto Parts management team
                                            invested our time and resources in
                                            continuing to build and cement the
                                            strategy that is designed to
                                            maintain our position as a long-term
                                            player in the auto parts industry.
                                            This is a large undertaking and our
                                            objective throughout has been -- and
                                            continues to be -- to build
                                            long-term shareholder value. It is
                                            very clear today that when companies
                                            fail to think through their
                                            long-term strategy and execution,
                                            serious consequences can result. Our
                                            approach has always been to move
                                            deliberately and strategically.

                                                 Even though our sales for the
                                            fiscal year increased by nearly 17
                                            percent over the prior year, we were
                                            disappointed in our overall
                                            financial results. Still, we are
                                            pleased with the foundation we have
built for the future. We firmly believe that it was necessary for us to devote
the time and resources this past year in completing the infrastructure that will
serve as this foundation for the future. With that in mind, we can report that
we have made some vitally important progress.

     Among our many significant accomplishments during the year were:

     - Sales volume in our commercial segment, Pro2Call, grew nearly 250
       percent. Although we've made a considerable investment in Pro2Call over
       the past two years, we believe our growing revenue stream will soon
       offset fixed costs and that we should break even sometime in the first
       half of the new fiscal year.

       With two years of study and real-time experience, and 172 stores in
       Florida now servicing the commercial segment, we have a good
       understanding of the factors and focus required for success. We're
       reviewing our commercial strategy on a store-by-store basis, adjusting
       where necessary, and we plan to continue to expand the program to
       additional stores this fall.

       To meet the additional inventory demands of the commercial customer,
       we've added approximately 1,500 SKUs to the product offerings of most of
       the stores servicing commercial customers. The products, primarily hard
       parts, were selected to meet the specific needs of our commercial
       customers that weren't being served by the product selection of our
       standard retail store. This change has the additional bonus of making
       these additional items also available to our retail customers.

     - Our core retail business
       continues to be fundamentally
       sound. We have maintained and
       enhanced our focus on offering
       do-it-yourself customers the
       three things they want most
       from an auto parts supplier:
       convenience, pricing and
       product selection.

     - We have continued our
       geographic expansion, steadily
       growing our retail store count
       in Georgia, Mississippi,
       Alabama, Louisiana and South
       Carolina. During the last
       fiscal year, we entered New
       Orleans, Shreveport and
       Lafayette. This was a
       strategic move, since we
       believe that the state of
       Louisiana can serve as a
       gateway into other markets in
       the future.
                                (PHOTO OF WILLIAM C. PERKINS, PRESIDENT AND COO)


2
<PAGE>   5


       In the very competitive market of Atlanta, our 32 stores are continuing
       to make noticeable improvements. We believe Atlanta could support 50 to
       70 stores and we aim to be a major player in that market. We've made a
       good start.

       We also celebrated our 100th store milestone in Georgia during the year
       and 600th store nationwide. In fact, we had 643 stores by fiscal year
       end, an increase of 15 percent over fiscal 1999. More than 30 percent of
       our stores are now outside the state of Florida and we're establishing a
       strong base in these new markets. This base will be critical to our
       launch of Pro2Call outside of Florida this fall. We're encouraged by the
       reception we're getting in our new communities and plan to continue
       expanding our presence in adjoining markets.

     - Over the past 18 months, we have been re-merchandising our stores to make
       them more customer-friendly and easier for the team to maintain. Strong
       promotion of our ability to respond to special orders on the same
       day -- through our Parts Express -- has increased sales of some
       high-ticket parts. This is a competitive advantage for Discount Auto
       Parts, as our customers can now count on us for hard-to-find items, such
       as antique car parts, gas tanks and collision parts.

       We're also using bold new in-store signage to help educate customers
       about our availability of hard-to-find items, about do-it-yourself
       ("DIY") installation techniques, about our low prices and about the
       increased product availability in most of our product categories.

       The powerful new store layouts and new in-store graphics are not only
       more visually appealing, but they also open up more space for additional
       products. As a result, we have seen a significant increase in sales per
       customer.

     - To serve our future store growth, we broke ground on a new, 400,000
       square foot distribution center (DC) in Copiah County, Mississippi just
       south of Jackson in May 2000. From this carefully chosen location, we
       initially plan for the new DC to serve approximately 150 stores and
       employ 200 team members. When fully operational, the new DC will be able
       to service 450 stores. This new DC is scheduled to open in February 2001.











                                    (PHOTO)
      CONSTRUCTION OF THE COMPANY'S SECOND D.C. FACILITY BEGAN IN MAY 2000

                                                                               3
<PAGE>   6

    - We've begun an extensive, year-long supply chain review that aims to
      improve significantly the Company's overall inventory performance and
      product distribution efficiency. In March 2000, we engaged the firm of
      Cap Gemini Ernst & Young to assist us in an all-encompassing evaluation
      of our supply chain processes. Together, we are looking at ways to lower
      distribution costs, reduce total inventory and improve inventory turns
      and improve overall gross margins without sacrificing customer service
      and overall parts availability.

      Specifically, our goals over the next two years are to reduce $50 million
      of existing inventory in order to improve inventory turns to 2.0 and to
      improve our gross margins by 1.5 to 3 percentage points.

      As part of that effort, we are reviewing our inventory network and
      stocking strategy in order to develop an optimal distribution network. Our
      challenge is to be able to meet our service goals at the lowest total
      logistics cost. We are also looking at ways to cut costs by improving
      transportation management and by partnering more closely with our
      suppliers.

      We number more than 45,000 SKUs in our system today. Thanks to our Parts
      Express initiative, more parts are now available to customers with same
      day delivery, yet we have minimized the company's overall inventory
      investment.

      We are proud to report that we have approximately 6,500 team members today
and that they are enthusiastic and motivated. In a full-employment economy, our
investment in the Discount Auto Parts team has truly paid off in loyalty and the
resulting high retention rates, compared to others in our industry. Our
founder's motto "First you build the team, then the team builds the business"
continues to pay high dividends to the Company and our shareholders.

      In July, we promoted four members of our management team to vice president
and one to executive vice president. We now have three regional Vice Presidents
of Store Operations responsible for store operations in their regions. Overall,
we have 39 division managers, up from 23 a year ago. This has allowed us to
reduce the number of stores assigned to each. With responsibility for fewer
stores, our division managers are more actively involved in each store's
operation. This attention has already paid off, contributing to better
comparable store sales results. These strategic moves, as well as the efforts of
our entire team, play a key role as we continue to sharpen our focus on the
Discount Auto Parts operation.













                                    (PHOTO)
                 PARTS DELIVERY TO PRO2CALL COMMERCIAL CUSTOMER

4
<PAGE>   7

















                                    (PHOTO)
      DISCOUNT AUTO PARTS STORES OFFER UP TO 22,000 PARTS AND ACCESSORIES

     As one might expect during a robust economy, last year the industry appears
to have seen a slight, but identifiable, shift to commercial sales from DIY
sales. This validated our strategy of building the commercial segment of our
business over the long term. However, if the economy slows, we could very well
see a pronounced shift back to DIY sales. Regardless, we're well positioned for
the future.

     We believe strongly that one of our most important missions is to create
value to shareholders and we measure our activities against that benchmark.
Sometimes, achieving that objective takes longer than we -- and our
shareholders -- would like. Nonetheless, we remain focused.

     As the new fiscal year gets underway, we see clear evidence that our
strategy is sound and investments are worthwhile and both will continue to add
positively to the value of the company. Comparable store sales and fill rates,
especially, have increased dramatically as we entered the new fiscal year.

     We thank you for your continuing support and trust and we, along with you,
look forward to seeing some of the fruits of last year's labors in our
performance over the next two fiscal years.

<TABLE>
<S>                                 <C>

/s/ Peter J. Fontaine               /s/ William C. Perkins
-----------------------             ----------------------------
Peter J. Fontaine                   William C. Perkins
Chairman and                        President and
Chief Executive Officer             Chief Operating Officer
</TABLE>

                                                                               5
<PAGE>   8

                            SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                           FISCAL YEAR ENDED
                                                          ----------------------------------------------------
                                                           MAY 30     JUNE 1     JUNE 2     JUNE 3     MAY 28
                                                            2000       1999       1998     1997(1)      1996
                                                          --------   --------   --------   --------   --------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA AND
                                                                        SELECTED OPERATING DATA)
<S>                                                       <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA
Net sales...............................................  $598,258   $511,483   $447,491   $405,186   $307,476
Cost of sales, including distribution costs.............   356,783    302,843    271,404    256,646    186,917
                                                          --------   --------   --------   --------   --------
Gross profit............................................   241,475    208,640    176,087    148,540    120,559
Selling, general and administrative expenses............   184,371    152,777    124,125    101,336     80,090
                                                          --------   --------   --------   --------   --------
Income from operations..................................    57,104     55,863     51,962     47,204     40,469
Litigation settlement...................................        --         --         --    (20,545)        --
Other income, net.......................................     2,770        817      2,434        187      1,164
Interest expense........................................   (18,079)   (12,856)   (10,203)    (6,125)    (5,078)
                                                          --------   --------   --------   --------   --------
Income before income taxes and cumulative effect of
  change in accounting principle........................    41,795     43,824     44,193     20,721     36,555
Income taxes............................................    15,506     16,766     17,013      7,980     14,092
                                                          --------   --------   --------   --------   --------
Income before cumulative effect of change in accounting
  principle.............................................    26,289     27,058     27,180     12,741     22,463
Cumulative effect of change in accounting principle, net
  of income tax benefit.................................        --     (8,245)        --         --         --
                                                          --------   --------   --------   --------   --------
Net income..............................................  $ 26,289   $ 18,813   $ 27,180   $ 12,741   $ 22,463
                                                          ========   ========   ========   ========   ========
Net income (loss) per basic share from:
  Income before cumulative effect of change in
    accounting principle................................  $   1.57   $   1.63   $   1.64   $   0.77   $   1.44
Cumulative effect of change in accounting principle.....        --      (0.50)        --         --         --
                                                          --------   --------   --------   --------   --------
  Net income............................................  $   1.57   $   1.13   $   1.64   $   0.77   $   1.44
                                                          ========   ========   ========   ========   ========
Net income (loss) per diluted share from:
  Income before cumulative effect of change in
    accounting principle................................  $   1.57   $   1.61   $   1.63   $   0.77   $   1.41
Cumulative effect of change in accounting principle.....        --      (0.49)        --         --         --
                                                          --------   --------   --------   --------   --------
  Net income............................................  $   1.57   $   1.12   $   1.63   $   0.77   $   1.41
                                                          ========   ========   ========   ========   ========
Average common shares outstanding.......................    16,695     16,650     16,604     16,581     15,647
Dilutive effect of stock options........................        30        153        111         73        257
                                                          --------   --------   --------   --------   --------
Average common shares outstanding -- assuming
  dilution..............................................    16,725     16,803     16,715     16,654     15,904
                                                          ========   ========   ========   ========   ========
SELECTED OPERATING DATA
Number of stores at year end............................       643        558        452        400        314
Total store square footage at year end (in
  thousands)(2).........................................     2,761      2,450      2,007      1,836      1,610
Average net sales per store (in thousands)(3)(4)........  $    996   $  1,013   $  1,050   $  1,023   $  1,094
Average net sales per square foot(3)(4).................  $    230   $    230   $    233   $    212   $    204
Percentage increase (decrease) in comparable store net
  sales(4)..............................................      3.3%        .6%       7.7%       (.6%)      4.9%
Team members............................................     6,390      5,586      4,350      3,677      3,148
BALANCE SHEET DATA
Inventories.............................................  $253,113   $209,028   $172,027   $151,644   $111,408
Working capital.........................................   153,769    128,939    105,662     80,573     59,801
Property and equipment, net.............................   419,282    374,577    314,519    265,589    208,094
Total assets............................................   704,709    620,314    511,735    443,066    338,263
Long-term debt, excluding current maturities............   264,600    224,800    160,695    114,117     50,400
Stockholders' equity....................................   303,204    276,766    256,885    229,061    216,046
</TABLE>

---------------

(1) Fiscal year 1997 consisted of 53 weeks; all other years reported consisted
    of 52 weeks.
(2) Store square footage includes only selling and merchandising space.
(3) Average net sales per store and average net sales per square foot are based
    on the average of beginning and ending number of stores and store square
    footage for the respective period. For fiscal 1997, average net sales per
    store and average net sales per square foot have been adjusted to exclude
    the effect of the fifty-third week.
(4) The amounts shown for fiscal 1997 exclude bulk commercial sales of air
    conditioning products, such as freon. If these commercial sales of freon
    were to have been included, the average net sales per store, average net
    sales per square foot and the increase in comparable store sales for fiscal
    1997 would have been $1,115,000, $231 and 9.7%, respectively.

6
<PAGE>   9

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the income
statement data and the percentage of the Company's net sales represented by each
line presented:

<TABLE>
<CAPTION>
                                                    FISCAL YEAR ENDED
                                 --------------------------------------------------------
                                  MAY 30              JUNE 1              JUNE 2
                                   2000       %        1999       %        1998       %
                                 --------   -----    --------   -----    --------   -----
                                                  (DOLLARS IN THOUSANDS)
<S>                              <C>        <C>      <C>        <C>      <C>        <C>
Net sales......................  $598,258   100.0%   $511,483   100.0%   $447,491   100.0%
Cost of sales, including
  distribution costs...........   356,783    59.6     302,843    59.2     271,404    60.7
                                 --------   -----    --------   -----    --------   -----
  Gross profit.................   241,475    40.4     208,640    40.8     176,087    39.3
Selling, general and
  administrative expenses......   184,371    30.8     152,777    29.9     124,125    27.7
                                 --------   -----    --------   -----    --------   -----
  Income from operations.......    57,104     9.6      55,863    10.9      51,962    11.6
Other income, net..............     2,770      .5         817      .2       2,434      .6
Interest expense...............   (18,079)   (3.1)    (12,856)   (2.5)    (10,203)   (2.3)
                                 --------   -----    --------   -----    --------   -----
Income before income taxes and
  cumulative effect of change
  in accounting principle......    41,795     7.0      43,824     8.6      44,193     9.9
Income taxes...................    15,506     2.6      16,766     3.3      17,013     3.8
                                 --------   -----    --------   -----    --------   -----
  Income before cumulative
     effect of change in
     accounting principle......    26,289     4.4      27,058     5.3      27,180     6.1
Cumulative effect of change in
  accounting principle, net of
  income tax benefit...........        --      --      (8,245)   (1.6)         --      --
                                 --------   -----    --------   -----    --------   -----
  Net income...................  $ 26,289     4.4%   $ 18,813     3.7%   $ 27,180     6.1%
                                 ========   =====    ========   =====    ========   =====
</TABLE>

FISCAL 2000 COMPARED TO FISCAL 1999

     Net sales for the fifty-two week period ended May 30, 2000 increased 17.0%
to $598.3 million, from $511.5 million a year earlier. Comparable store sales
increased 3.3% for fiscal 2000 as compared to fiscal 1999. Comparable store
sales results include sales from the Company's commercial delivery program. The
balance of the increase in total sales for fiscal 2000 was attributable to sales
from new stores opened since the beginning of fiscal 1999. At May 30, 2000, the
Company had 643 stores in operation compared to 558 at the end of fiscal 1999.

     Gross profit for the fifty-two week period ended May 30, 2000 was $241.5
million, or 40.4% of net sales, compared with $208.6 million, or 40.8% for
fiscal 1999. The reduction in the gross margin percentage as a percentage of net
sales for fiscal 2000 was impacted by higher product distribution

                                                                               7
<PAGE>   10

costs. The comparison to fiscal 1999 was also impacted by the inclusion of
additional vendor incentives in 1999 resulting from the September 1998 purchase
of the Rose Automotive stores.

     Selling, general and administrative ("SG&A") expenses for fiscal 2000
increased 20.7% over such expenses for fiscal 1999, and increased as a
percentage of net sales from 29.9% in fiscal 1999 to 30.8% in fiscal 2000. The
increase was primarily due to the expenses incurred related to the continued
implementation and expansion of the Company's commercial delivery program for
fiscal 2000 as compared to fiscal 1999, as well as a loss, during December and
January, of the Company's ability to leverage certain expenses during those
periods as a result of lower than anticipated sales.

     Income from operations for fiscal 2000 was $57.1 million as compared to
$55.9 million for fiscal 1999. Operating margins for fiscal 2000 were 9.6% as
compared to 10.9% for fiscal 1999. Operating income and the resulting operating
margin for fiscal 2000 were negatively impacted by the implementation and
expansion of the Company's commercial delivery program. For fiscal 2000 and
fiscal 1999 the Company incurred an estimated operating loss from the commercial
delivery program of approximately $4.7 million and $4.8 million, respectively.
Excluding the estimated operating loss impact of the commercial delivery
program, the operating margin for fiscal 2000 and fiscal 1999 would have been
approximately 10.3% and 11.9%, respectively.

     Other income primarily includes gains and losses on real estate disposals.
The variance between years primarily reflects the overall change in level of
activity between years.

     Interest expense for fiscal 2000 increased 40.6% to $18.1 million as
compared to $12.9 million for fiscal 1999. The increase was the result of
increased borrowings primarily associated with new store growth and overall
higher interest rates.

     The Company's effective tax rate for fiscal 2000 was 37.1% as compared to
38.3% in fiscal 1999. The reduction in the effective tax rate for fiscal 2000 is
primarily the result of state tax planning and restructuring initiatives, which
were implemented as of the end of the second quarter of fiscal 2000.

     Income before the cumulative effect of an accounting change for fiscal 2000
was $26.3 million or $1.57 per diluted share as compared to $27.1 million or
$1.61 per diluted share for fiscal 1999.

     During the fourth quarter of fiscal 1999, the Company implemented a change
in its method of accounting for store inventories from the first-in, first-out
method calculated using a form of the retail inventory method to the weighted
average cost method. The Company made this change in connection with new
computerized store-level perpetual inventory systems installed throughout fiscal
1999. As a result of the change in accounting method, the Company reported a
non-cash, fiscal 1999 after tax charge of $8.2 million, or $.49 per diluted
share which was reflected as of the beginning of the year and which represented
the beginning 1999 fiscal year impact of the change in accounting method.

     As a result of the above factors, net income for fiscal 2000 was $26.3
million, or $1.57 per diluted share as compared to $18.8 million, or $1.12 per
diluted share for fiscal 1999.

8
<PAGE>   11

FISCAL 1999 COMPARED TO FISCAL 1998

     Net sales for the fifty-two week period ended June 1, 1999 increased 14.3%
to $511.5 million, from $447.5 million a year earlier. Comparable store sales
increased 1% for fiscal 1999. Comparable store sales results include sales from
the Company's commercial delivery program. The balance of the increase in total
sales was attributable to sales from new stores opened since the beginning of
fiscal 1998, as well as sales associated with the Rose Auto Parts stores which
were acquired effective September 28, 1998. As of June 1, 1999, the Company had
558 stores in operation compared to 452 at the end of fiscal 1998.

     Gross profit for the fifty-two week period ended June 1, 1999 was $208.6
million, or 40.8% of net sales, compared with $176.1 million, or 39.3% for
fiscal 1998. Gross profit for fiscal 1999 was reduced by $1.3 million for the
estimated current year impact of the Company's change in inventory accounting
method, as discussed below. The improvement in gross margins for fiscal 1999 was
due in part to overall lower product cost, a shift in merchandising strategies
to promote higher gross margin product offerings, and a shift in vendor
cooperative advertising allowances to direct product purchase price reductions.

     SG&A expenses for fiscal 1999 increased by $28.7 million over such expenses
for fiscal 1998, and increased as a percentage of net sales from 27.7% in fiscal
1998 to 29.9% in fiscal 1999. The increase, as a percentage of sales, was
primarily due to the expenses incurred related to the implementation and
expansion of the Company's commercial delivery program and the shift in
cooperative advertising credits to direct product purchase price reductions.

     Income from operations for fiscal 1999 increased 7.5% to $55.9 million as
compared to $52.0 million for fiscal 1998. Operating margins for fiscal 1999
were 10.9% as compared to 11.6% for fiscal 1998. Operating income and the
resulting operating margin for fiscal 1999 were negatively impacted by the
implementation and expansion of the Company's commercial delivery program.
Excluding the estimated $4.8 million operating loss impact of the commercial
delivery program, the operating margin for fiscal 1999 would have been
approximately 11.9%.

     Other income for fiscal 1998 included a $4.0 million fee received from the
termination of the proposed acquisition of Hi-Lo Automotive, Inc., less related
expenses.

     Interest expense for fiscal 1999 was $12.9 million as compared to $10.2
million for fiscal 1998. The increase was primarily the result of increased
borrowings associated with new store growth and the costs associated with the
expansion of the Company's existing distribution center and corporate office
space which was completed in the first half of fiscal 1999.

     The Company's effective tax rate for fiscal 1999 was 38.3% as compared to
38.5% in fiscal 1998.

     Including the negative earnings impact of the implementation and expansion
of the commercial delivery program, income before cumulative effect of change in
accounting principle for fiscal 1999 was $27.1 million or $1.61 per diluted
share as compared to $27.2 million or $1.63 per diluted share for fiscal 1998.

     During the fourth quarter of fiscal 1999, the Company implemented a change
in its method of accounting for store inventories from the first-in, first-out
retail inventory method to the weighted

                                                                               9
<PAGE>   12

average cost method. The Company believed the new method for computing inventory
was preferable because it more accurately measures the cost of the Company's
merchandise and produces a better matching of revenues and expenses. The Company
made this change in connection with new computerized store-level perpetual
inventory systems installed throughout fiscal 1999. Accordingly, it is believed
that the new inventory valuation method will better correspond with the
Company's current operating practices for store inventory management. As a
result of this change in accounting method, the Company reported a non-cash,
fiscal 1999 after tax charge of $8.2 million, or $.49 per diluted share,
representing the beginning of the year impact of the change in accounting
method.

     As a result of the above factors, net income for fiscal 1999 was $18.8
million, or $1.12 per diluted share as compared to $27.2 million, or $1.63 per
diluted share, for fiscal 1998.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by operating activities was $28.0 million in fiscal 2000,
$23.8 million in fiscal 1999, and $14.5 million in fiscal 1998. The increase in
fiscal 2000 over fiscal 1999 was primarily due to a decrease in prepaid expenses
and other current assets resulting from the improved timing of collecting vendor
program receivables, higher net income and increased depreciation and
amortization offset in part by a decrease in the amount of inventory growth
funded by vendor payables.

     The primary reason for the increased cash from operations in fiscal 1999
over fiscal 1998 was the funding of the Airgas litigation and related income tax
impact, which occurred in fiscal 1998.

     Capital expenditures for fiscal 2000 were $69.3 million as compared to
$81.0 million in fiscal 1999 and $64.6 million in fiscal 1998. Capital
expenditures have fluctuated over the periods primarily based on new store
openings in the respective periods. Capital expenditures for fiscal 2000
primarily related to the 85 new stores opened. Fiscal 1999 capital expenditures
also included costs associated with the completion of the expansion of the
Company's Lakeland, Florida distribution center and additional office space.

     In May 2000, the Company broke ground on a second distribution center in
Copiah County, Mississippi. The second distribution center is expected to be
approximately 400,000 square feet and, ultimately, support approximately 450
stores. The new distribution center is expected to be opened and operational
early in calendar 2001. Expenditures associated with the construction of the
second distribution center are expected to be approximately $30 million. The
second distribution center is being leased under a new $28 million operating
lease agreement, which was consummated in May 2000. The lease will cover the
land, buildings and certain integrated operating equipment, such as conveyor
systems. Additional rolling stock, computer equipment, etc. will be funded
through other lease arrangements or the Company's existing revolving line of
credit.

     The Company also continued the roll-out of its commercial delivery service,
which began in the third quarter of fiscal 1998. The Company's commercial
delivery service consists of a program whereby commercial customers (such as
auto service centers, commercial mechanics, garages and the like) establish
commercial accounts with the Company and order automotive parts from the
Company, with such parts being delivered by the Company or picked up by the
customer from nearby Discount Auto Parts stores. The commercial delivery program
requires the Company to extend trade credit to certain of the commercial account
customers as part of the ordinary course of business. The

10
<PAGE>   13

extension of such trade credit increases the capital requirements associated
with the roll-out of the program and exposes the Company to credit risk from
uncollectible accounts. The Company has established systems to manage and
control such credit risk. The amount of capital that is needed to cover
extension of trade credit will be dependent in large part upon the success of
the commercial delivery service roll-out and how quickly the commercial business
develops. To date, the commercial delivery program has incurred operating losses
of approximately $9.7 million, which have been funded by the Company's retail
operations and its revolving line of credit. Although there can be no
assurances, management expects the commercial delivery program to break even on
a direct cost basis sometime during the first half of fiscal 2001.

     The Company anticipates that total capital expenditures for fiscal 2001,
including the costs associated with the addition of approximately 60 to 65 new
stores, and the expenditures associated with the construction of the second
distribution center exclusive of the operating lease will be in the range of $50
to $55 million.

     The Company has historically been able to finance most of its new store
growth through unsecured lines of credit and medium and longer-term mortgage
financing provided by banks and other institutional lenders, and through cash
flow from operations. As further discussed in Note 4 of the Notes to
Consolidated Financial Statements, effective July 29, 1999, the Company entered
into a new five year $265 million unsecured revolving credit facility with a
syndication of banks. As of August 1, 2000, the Company had approximately $17.1
million of additional borrowing availability under its $265 million revolving
credit facility.

     The Company is currently in the process of completing a sale/leaseback
transaction for approximately 150 of its store locations outside the state of
Florida. The transaction is expected to provide the Company with $80 to $85
million of net proceeds. The proceeds will be used to reduce outstanding
indebtedness under the Company's revolving line of credit, thus creating
additional borrowing availability under that line. The Company expects the
transaction to be completed by the end of August.

     Consistent with its historical practice, the Company expects to finance
much of its short and long-term liquidity needs for new store growth, as to land
and buildings, primarily through revolving lines of credit and as to equipment
and fixtures, primarily through cash flow from operations.

     The Company is exposed to changes in interest rates, primarily from its
revolving credit agreement. The Company also has long-term debt that bears a
fixed rate. As to the fixed rate debt, there is a risk that market rates will
decline and the required payments will exceed those based on current market
rates on the long-term debt.

     As of May 30, 2000, 89 or 14% of the Company's stores were leased. Upon
completion of the sale/leaseback transaction the Company's leased store
percentage would increase to approximately 37%. Although the Company generally
anticipates a similar own/lease percentage relationship for new stores in the
future, the Company may explore opportunities that could lead to increases in
this percentage.

     The Company believes that the expected cash flows from operations, proceeds
from the pending sale/leaseback transaction, available bank borrowings and trade
credit, will be sufficient to fund the capital and liquidity needs of the
Company for the next two to three years. If the sale/leaseback were

                                                                              11
<PAGE>   14

not completed, the Company would need to immediately seek alternative types of
funding in order to supplement the existing revolving credit facility.

INFLATION AND SEASONALITY

     The Company does not believe its operations have been materially affected
by inflation. The Company has been successful, in many cases, in reducing the
effects of merchandise cost increases principally by taking advantage of vendor
incentive programs, economies of scale resulting from increased volumes or
purchases, and selective forward buying.

     Although sales have historically been somewhat higher in the Company's
fourth quarter (March through May), the Company does not consider its business
to be seasonal.

FORWARD LOOKING STATEMENTS

     The Management's Discussion and Analysis of Financial Condition and Results
of Operations and other sections of this Annual Report contain forward looking
statements that are based on the current expectations, estimates and projections
about the industry in which the Company operates, management's beliefs and the
assumptions made by management. These statements include the words
"anticipates", "expects", "expected", "should", and "believes", variations of
such words, and similar expressions which are intended to identify such forward
looking statements. These forward looking statements are subject to potential
risks and uncertainties that could cause actual results to differ materially
from historical results or those currently anticipated.

     These potential risks and uncertainties include, but are not limited to,
increased competition, extent of the market demand for auto parts, availability
of inventory supply, inventory shrinkage, propriety of inventory mix, adequacy
and perception of customer service, product quality and defect experience,
availability of and ability to take advantage of vendor pricing programs and
incentives, sourcing availability, rate of new store openings, cannibalization
of store sites, mix and types of merchandise sold, governmental regulation of
products, new store development and related costs, performance of information
systems, effectiveness of deliveries from the Company's distribution centers,
ability to hire, train and retain qualified team members, availability of
quality store sites, ability to successfully implement the commercial delivery
service, credit risk associated with the commercial delivery service,
environmental risks, availability of expanded and extended credit facilities,
expenses associated with investigations concerning freon matters, and potential
for liability with respect to these matters and other risks.

12
<PAGE>   15

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                      FISCAL YEAR ENDED
                                                          -----------------------------------------
                                                            MAY 30         JUNE 1         JUNE 2
                                                             2000           1999           1998
                                                          -----------    -----------    -----------
                                                          (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                       <C>            <C>            <C>
Net sales...............................................   $598,258       $511,483       $447,491
Cost of sales, including distribution costs.............    356,783        302,843        271,404
                                                           --------       --------       --------
  Gross profit..........................................    241,475        208,640        176,087
Selling, general and administrative expenses............    184,371        152,777        124,125
                                                           --------       --------       --------
  Income from operations................................     57,104         55,863         51,962
Other income, net.......................................      2,770            817          2,434
Interest expense........................................    (18,079)       (12,856)       (10,203)
                                                           --------       --------       --------
Income before income taxes and cumulative effect of
  change in accounting principle........................     41,795         43,824         44,193
Income taxes............................................     15,506         16,766         17,013
                                                           --------       --------       --------
  Income before cumulative effect of change in
     accounting principle...............................     26,289         27,058         27,180
Cumulative effect of change in accounting principle, net
  of income tax benefit.................................         --         (8,245)            --
                                                           --------       --------       --------
  Net income............................................   $ 26,289       $ 18,813       $ 27,180
                                                           ========       ========       ========
Net income per basic share from:
     Income before cumulative effect of change in
       accounting principle.............................   $   1.57       $   1.63       $   1.64
     Cumulative effect of change in accounting
       principle........................................         --          (0.50)            --
                                                           --------       --------       --------
  Net income............................................   $   1.57       $   1.13       $   1.64
                                                           ========       ========       ========
Net income per diluted share from:
     Income before cumulative effect of change in
       accounting principle.............................   $   1.57       $   1.61       $   1.63
     Cumulative effect of change in accounting
       principle........................................         --          (0.49)            --
                                                           --------       --------       --------
  Net income............................................   $   1.57       $   1.12       $   1.63
                                                           ========       ========       ========

Average common shares outstanding.......................     16,695         16,650         16,604
Dilutive effect of stock options........................         30            153            111
                                                           --------       --------       --------
Average common shares outstanding -- assuming
  dilution..............................................     16,725         16,803         16,715
                                                           ========       ========       ========
</TABLE>

See accompanying notes.

                                                                              13
<PAGE>   16

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               MAY 30      JUNE 1
                                                                2000        1999
                                                              ---------   --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
          ASSETS
Current assets:
     Cash...................................................  $  12,612   $  8,795
     Inventories............................................    253,113    209,028
     Prepaid expenses and other current assets..............     13,986     20,363
     Deferred income taxes..................................        469      2,410
                                                              ---------   --------
          Total current assets..............................    280,180    240,596

Property and equipment......................................    524,053    457,994
     Less allowances for depreciation and amortization......   (104,771)   (83,417)
                                                              ---------   --------
                                                                419,282    374,577
Other assets................................................      5,247      5,141
                                                              ---------   --------
Total assets................................................  $ 704,709   $620,314
                                                              =========   ========
          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Trade accounts payable.................................  $ 100,804   $ 87,867
     Accrued salaries, wages and benefits...................      8,804      8,008
     Other current liabilities..............................     14,403     13,382
     Current maturities of long-term debt...................      2,400      2,400
                                                              ---------   --------
          Total current liabilities.........................    126,411    111,657
Deferred income taxes.......................................     10,494      7,091
Long-term debt..............................................    264,600    224,800
Stockholders' equity:
     Preferred stock, $.01 par value, 5,000 shares
      authorized, none issued or outstanding................         --         --
     Common Stock, $.01 par value, 50,000 shares authorized,
      16,700 and 16,690 shares issued and outstanding at May
      30, 2000 and June 1, 1999, respectively...............        167        167
     Additional paid-in capital.............................    142,379    142,230
     Retained earnings......................................    160,658    134,369
                                                              ---------   --------
          Total stockholders' equity........................    303,204    276,766
                                                              ---------   --------
Total liabilities and stockholders' equity..................  $ 704,709   $620,314
                                                              =========   ========
</TABLE>

See accompanying notes.

14
<PAGE>   17

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                COMMON STOCK      ADDITIONAL
                                  PREFERRED   -----------------    PAID-IN     RETAINED
                                    STOCK     SHARES    AMOUNT     CAPITAL     EARNINGS    TOTAL
                                  ---------   ------   --------   ----------   --------   --------
                                                           (IN THOUSANDS)
<S>                               <C>         <C>      <C>        <C>          <C>        <C>
Balance at June 3, 1997.........  $     --    16,594   $    166    $140,519    $ 88,376   $229,061
Stock issued under stock
  purchase and stock option
  plans.........................                  36         --         644          --        644
Net income......................                                                 27,180     27,180
                                  --------    ------   --------    --------    --------   --------
Balance at June 2, 1998.........        --    16,630        166     141,163     115,556    256,885
Stock issued under stock
  purchase and stock option
  plans.........................                  60          1       1,067          --      1,068
Net income......................                                                 18,813     18,813
                                  --------    ------   --------    --------    --------   --------
Balance at June 1, 1999.........        --    16,690        167     142,230     134,369    276,766
Stock issued under stock
  purchase and stock option
  plans.........................                  10         --         149          --        149
Net income......................                                                 26,289     26,289
                                  --------    ------   --------    --------    --------   --------
Balance at May 30, 2000.........  $     --    16,700   $    167    $142,379    $160,658   $303,204
                                  ========    ======   ========    ========    ========   ========
</TABLE>

See accompanying notes.

                                                                              15
<PAGE>   18

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED
                                                           -------------------------------
                                                            MAY 30     JUNE 1     JUNE 2
                                                             2000       1999       1998
                                                           --------   --------   ---------
                                                                   (IN THOUSANDS)
<S>                                                        <C>        <C>        <C>
OPERATING ACTIVITIES
Net income...............................................  $ 26,289   $ 18,813   $  27,180
Adjustments to reconcile net income to net cash provided
  by operating activities:
     Depreciation and amortization.......................    22,441     18,555      15,011
     Cumulative effect of change in accounting
       principle.........................................        --      8,245          --
     Deferred income tax expense (benefit)...............     5,344     (1,489)      8,718
     Gain on disposals of property and equipment.........    (2,565)      (594)       (783)
     Changes in operating assets and liabilities:
       Increase in inventories...........................   (44,085)   (37,840)    (20,383)
       Decrease (increase) in prepaid expenses and other
          current assets.................................     6,377     (2,706)     (5,325)
       Increase in other assets..........................      (534)      (112)     (1,819)
       Increase in trade accounts payable................    12,937     20,784       3,330
       Increase in accrued salaries, wages and
          benefits.......................................       796        691       1,282
       Decrease in accrued litigation settlement.........        --         --     (20,400)
       Increase (decrease) in other current
          liabilities....................................     1,021       (504)      7,649
                                                           --------   --------   ---------
Net cash provided by operating activities................    28,021     23,843      14,460
INVESTING ACTIVITIES
Proceeds from sales of property and equipment............     5,104      3,904       1,614
Purchases of property and equipment......................   (69,257)   (80,964)    (64,641)
Business acquisition.....................................        --     (8,225)         --
                                                           --------   --------   ---------
Net cash used in investing activities....................   (64,153)   (85,285)    (63,027)
FINANCING ACTIVITIES
Proceeds from short-term borrowings and long-term debt...    92,344    105,359     148,971
Payments of short-term borrowings and long-term debt.....   (52,544)   (41,254)   (102,393)
Proceeds from other issuances of common stock............       149      1,068         644
                                                           --------   --------   ---------
Net cash provided by financing activities................    39,949     65,173      47,222
Net increase (decrease) in cash..........................     3,817      3,731      (1,345)
Cash at beginning of year................................     8,795      5,064       6,409
                                                           --------   --------   ---------
Cash at end of year......................................  $ 12,612   $  8,795   $   5,064
                                                           ========   ========   =========
</TABLE>

See accompanying notes.

16
<PAGE>   19

                           DISCOUNT AUTO PARTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  MAY 30, 2000

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

     Discount Auto Parts, Inc. is one of the Southeast's leading specialty
retailers and suppliers of automotive replacement parts, maintenance items and
accessories to both DIY consumers and professional mechanics and service
technicians. As of May 30, 2000, June 1, 1999, and June 2, 1998, the Company
operated a chain of 643, 558, and 452 stores, respectively. As of May 30, 2000,
441 of the stores were located in Florida, 106 were located in Georgia, 38 in
Mississippi, 32 in Louisiana, 19 in Alabama, and 7 in South Carolina.

FISCAL YEAR END

     The Company's fiscal year consists of 52 or 53 weeks ending on the Tuesday
closest to May 31. The years ended May 30, 2000, June 1, 1999 and June 2, 1998
consisted of 52 weeks.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of Discount Auto
Parts, Inc. and its subsidiaries (the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.

REVENUE RECOGNITION

     The Company recognizes sales upon shipment of products.

PREPAID EXPENSES AND OTHER CURRENT ASSETS

     Prepaid expenses and other current assets principally include amounts due
from vendors related to cooperative advertising and various incentive programs
and trade accounts receivable resulting from the Company's commercial delivery
program.

PROPERTY AND EQUIPMENT

     Property and equipment is stated at cost. Depreciation is provided using
accelerated and straight-line methods over periods that approximate the assets'
estimated useful lives. Maintenance and repairs are charged against operations
as incurred.

PRE-OPENING COSTS

     Costs associated with the opening of new stores, which primarily consist of
payroll and occupancy costs, are charged against operations as incurred.

ADVERTISING COSTS

     The Company expenses its share of all advertising costs as such costs are
incurred. The portion of advertising expenditures, which is to be recovered
through vendor cooperative advertising and other similar programs, is recorded
as receivables. Advertising expense, net of vendor rebates, was approximately
$1.9 million for fiscal 2000, $4.0 million for fiscal 1999, and $2.3 million for
fiscal 1998.

INCOME TAXES

     The Company accounts for income taxes under the liability method. Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities.

                                                                              17
<PAGE>   20

STOCK OPTION PLANS

     The Company has elected to follow Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations in accounting for its employee stock options and presents
disclosures required under Statement of Financial Accounting Standards Statement
No. 123, Accounting for Stock-Based Compensation. Under APB 25, because the
exercise price of the Company's stock options equals the market price of the
underlying stock on the date of grant, no compensation expense is recognized.

FAIR VALUES OF FINANCIAL INSTRUMENTS

     The Company's financial instruments consist of cash, accounts payable and
long-term debt. The carrying value of cash and accounts payable approximates
fair market values. The carrying amount of long-term debt approximates fair
market value based on current interest rates.

USE OF ESTIMATES

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NEW ACCOUNTING STANDARDS

     In June 1998, the Financial Accounting Standards Board issued Statement No.
133 (Statement 133), Accounting for Derivative Instruments and Hedging
Activities. The Company expects to adopt Statement 133 effective at the
beginning of fiscal year 2002. The Statement will require the Company to
recognize all derivatives on the balance sheet at fair value. Because the
Company generally does not use derivatives, the Company does not anticipate that
the adoption of this Statement will have a significant effect on its results of
operations or financial position.

2.   ACCOUNTING CHANGE

     During the fourth quarter of fiscal year 1999, the Company changed its
method of accounting for store inventories from the first-in, first-out retail
inventory method to the weighted average cost method. The new method for
computing inventory is preferable because it more accurately measures the cost
of the Company's merchandise and produces a better matching of revenues and
expenses.

     The effect of the change as of June 3, 1998 has been presented as a
cumulative effect of a change in accounting method, net of a $5,190,000 income
tax benefit, of $8,245,000, and has been recorded as of the beginning of fiscal
year 1999. The effect of this change in fiscal year 1999 was to decrease income
before cumulative effect of change in accounting principle by $805,000 ($.05 per
diluted share).

     The pro forma amounts for fiscal year 1998, as reflected below, have been
adjusted for the effect of the retroactive application of the weighted average
cost method, net of related taxes, had the new method been in effect for the
entire year.

<TABLE>
<S>                                                           <C>
As Reported (in thousands):.................................  $27,180
Net income per basic share..................................  $  1.64
Net income per diluted share................................  $  1.63

Pro Forma (in thousands):...................................  $26,073
Net income per basic share..................................  $  1.57
Net income per diluted share................................  $  1.56
</TABLE>

18
<PAGE>   21

3.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following (dollars in thousands):

<TABLE>
<CAPTION>
                                             MAY 30, 2000   JUNE 1, 1999   LIFE (YEARS)
                                             ------------   ------------   ------------
<S>                                          <C>            <C>            <C>
Land.......................................    $197,489       $166,715
Buildings..................................     182,982        165,258       5 - 31.5
Furniture, fixtures and equipment..........     121,698        102,119       5 - 7
Building and leasehold improvements........       4,470          3,346       5 - 31.5
Automotive equipment.......................       4,907          4,505       3 - 7
Construction in progress...................      12,507         16,051
                                               --------       --------
                                               $524,053       $457,994
                                               ========       ========
</TABLE>

     Depreciation expense totaled approximately $22,013,000, $18,415,000, and
$14,880,000 for fiscal years 2000, 1999 and 1998, respectively.

4.   LONG-TERM DEBT

     Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                         MAY 30, 2000   JUNE 1, 1999
                                                         ------------   ------------
<S>                                                      <C>            <C>
Revolving credit agreements............................    $211,000       $170,000
Senior term notes......................................      50,000         50,000
Senior secured notes...................................       6,000          7,200
                                                           --------       --------
                                                            267,000        227,200
Less current maturities................................      (2,400)        (2,400)
                                                           --------       --------
                                                           $264,600       $224,800
                                                           ========       ========
</TABLE>

     Effective July 16, 1997, the Company entered into a three year $175 million
unsecured revolving credit agreement (the "Revolver") due in fiscal year 2001.
The rate of interest payable under the Revolver was 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 was obligated to pay a fee of .125% per annum for
the unused portion of the Revolver.

     Effective January 29, 1999, the Company entered into a separate $20 million
unsecured revolving credit agreement with a financial institution. The facility
was scheduled to mature September 1, 1999. The rate of interest payable under
the facility was a function of LIBOR.

     Effective July 29, 1999, the Company entered into a new five year $265
million unsecured revolving credit agreement (the "New Revolver"). The New
Revolver replaced both of the aforementioned revolving credit facilities. The
rate of interest payable under the New 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 New 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 New Revolver.

     Effective August 8, 1997, the Company issued $50 million senior term notes
facility (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.
     At May 30, 2000, and June 1, 1999, the Company's weighted average interest
rate on its borrowings under the revolving credit agreements were 7.3% and 5.3%,
respectively.

     As of May 30, 2000, the Company had approximately $54.0 million of
available borrowings.

                                                                              19
<PAGE>   22

     The Company has issued two senior secured notes, each for an original
principal of $12 million, to an insurance company. The notes are collateralized
by a first mortgage on certain store properties, equipment and fixtures. The
agreements provide for interest at fixed rates of 10.11% and 9.8%, payable
quarterly, with annual principal payments of $1.2 million each due on December
15 and May 31.

     The carrying value of all assets mortgaged or otherwise subject to lien
totaled approximately $16.5 million at May 30, 2000.

     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. Based on the terms of the debt agreements,
as of May 30, 2000, all of retained earnings were available for dividend
distribution.

     Annual maturities, as of May 30, 2000, of all long-term debt for the next
five years are as follows (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR                                                   AMOUNT
-----------                                                   -------
<S>                                                           <C>
2001........................................................  $ 2,400
2002........................................................    1,200
2003........................................................    1,200
2004........................................................    1,200
2005........................................................   14,286
</TABLE>

     The table excludes amounts due under the New Revolver in fiscal 2005 as it
is expected to be renewed or replaced prior to its expiration.

     Total interest paid during fiscal years 2000, 1999 and 1998 was
approximately $18,558,000, $13,175,000, and $8,402,000, respectively, net of
capitalized interest. Capitalized interest for fiscal years 2000, 1999 and 1998
totaled approximately $684,000, $668,000, and $384,000, respectively.

5.   BUSINESS ACQUISITION

     Effective September 28, 1998, the Company acquired, pursuant to a
definitive purchase agreement dated September 21, 1998, all the Rose Auto Parts
stores through an asset purchase from Eastern Automotive Warehouse, Inc., a
wholly-owned subsidiary of National Auto Parts Warehouse, Inc. The total
purchase price was approximately $8.2 million. The acquisition included 39
leased retail store locations, primarily located in south Florida, and a leased
warehouse facility in Miami, Florida. The acquisition involved the purchase of
inventory and furniture and equipment at these various locations and the
assumption of the respective leases. At the time of the acquisition, the Company
continued to operate 26 of the 39 Rose retail locations. Discount Auto Parts
discontinued operations in the remaining 13 stores.

     The acquisition has been accounted for using the purchase method of
accounting, and, accordingly, the purchase price has been allocated to the
assets purchased and the liabilities assumed based upon the fair values at the
date of acquisition. Operating results of the acquired business have been
included in operations since the date of the acquisition. Goodwill of $2.7
million, resulting from the acquisition, is being amortized over twenty years.

     The pro forma impact of the acquired business on results of operation is
not material.

20
<PAGE>   23

6.   STOCKHOLDERS' EQUITY

     The Board of Directors is authorized, without further stockholder action,
to divide any or all shares of the authorized preferred stock into series and to
fix and determine the designation, preferences and relative participating,
option or other special rights, and qualifications, limitations, or restrictions
thereon, of any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. As of May
30, 2000, the Board had not authorized any series of preferred stock and there
are no plans, agreements or understandings for the authorization or issuance of
any shares of preferred stock.

7.   LEASES

     Certain of the Company's retail stores and equipment are leased under
noncancelable operating leases. The majority of the retail store leases include
options to purchase and provisions for rental increases based on the consumer
price index.

     Future minimum annual rental commitments under noncancelable operating
leases with initial or remaining terms of one year or more are as follows (in
thousands):

<TABLE>
<CAPTION>
FISCAL YEAR                                                   AMOUNT
-----------                                                   -------
<S>                                                           <C>
2001........................................................  $ 4,140
2002........................................................    3,439
2003........................................................    2,232
2004........................................................    1,459
2005 and thereafter.........................................    2,762
                                                              -------
                                                              $14,032
                                                              =======
</TABLE>

     Rental expense for fiscal years 2000, 1999 and 1998 totaled approximately
$7,720,000, $5,094,000, and $1,987,000, respectively. Rental expense in each of
the fiscal years includes approximately $127,000 of rent paid to a partnership
that included the Company's two majority stockholders.

     The Company also leases certain portions of its owned facilities to outside
parties. Rental income for fiscal years 2000, 1999 and 1998 totaled
approximately $1,099,000, $719,000, and $492,000, respectively.

     In May 2000, the Company entered into a synthetic lease agreement in which
the lessor has agreed to fund up to $28 million for construction of a new
400,000 square foot distribution center in Copiah County, Mississippi. The term
of the agreement commenced in May 2000 and continues through the date which is
five years following completion of the construction. The completion of
construction is expected in February 2001. At the end of the lease term, the
Company has the option to renew the lease for two five-year terms, or to
purchase the building for a price including the outstanding lease balance. If
the Company elects not to renew the lease or purchase the building, the Company
must arrange the sale of the building to a third party. Under the sale option,
the Company has guaranteed a percentage of the total original cost as the
residual fair value of the building. Lease payments are expected to be
approximately $2.2 million on an annual basis. The table of future minimum
rental payments due under non-cancelable operating leases shown above excludes
any payments related to this agreement.

                                                                              21
<PAGE>   24

8.   BENEFIT PLANS

     The Company has a 401(k) profit-sharing plan covering substantially all of
its team members (employees) who have at least one year of service and work more
than 1,000 hours per year. Team members may contribute up to 15% of their annual
compensation subject to Internal Revenue Code maximum limitations. The Company
has agreed to make matching contributions, based upon the team member's first
six percent of compensation, ranging from 25% to 100% of the team member's
contribution depending on the team member's years of service. After three years
of service, Company contributions and earnings thereon vest at the rate of 20%
per year of service with the Company. Costs under this plan for fiscal years
2000, 1999 and 1998 were approximately $947,000, $964,000, and $864,000,
respectively.

     The Company has a Supplemental Executive Profit Sharing Plan (the "SEPS
Plan"). The SEPS Plan is an unfunded deferred compensation plan covering certain
key members of management. The amount of benefit each participant is entitled to
is established annually by the Board of Directors or, in certain cases, by a
committee of the Board of Directors. Each participant's account accrues interest
on unpaid awards at a rate determined annually as defined in the plan agreement.
As of May 30, 2000 and June 1, 1999, the Company has accrued approximately
$1,049,000 and $890,000, respectively, for benefits due under the SEPS Plan.

     The Board of Directors has adopted a stock purchase plan (the "Purchase
Plan"), which initially reserved an aggregate of 550,000 shares of common stock.
Under the Purchase Plan, all team members have the right to purchase shares of
common stock of the Company at a price equal to 85% of the value of the stock
immediately prior to the beginning of each exercise period. All team members are
eligible to participate except for those who have been employed by the Company
for less than one year, team members who customarily work twenty hours or less
per week, team members who customarily work five months or less in any calendar
year, and team members owning at least 5% of the Company's stock. During fiscal
years 2000, 1999 and 1998, 6,499, 8,805, and 9,740 shares, respectively, were
purchased under the terms of the Purchase Plan. As of May 30, 2000, 471,456
shares of common stock remain reserved for issuance under the Purchase Plan.

9.   STOCK OPTION PLANS

     The Company has stock option plans, which provide for the granting to key
team member's options to purchase shares of its common stock. A total of
2,540,000 shares of common stock were reserved for issuance under the plans and,
as of May 30, 2000, a total of 2,448,808 shares of common stock remain so
reserved. The per share exercise price of each stock option is generally not
less than the fair market value of the stock on the date of the grant or, in the
case of a team member owning more than 10% of the outstanding stock of the
Company, the price for incentive stock options is not less than 110% of such
fair market value.

22
<PAGE>   25

     A summary of the Company's stock option activity and related information is
as follows (shares in thousands):

<TABLE>
<CAPTION>
                                MAY 30, 2000        JUNE 1, 1999        JUNE 2, 1998
                              -----------------   -----------------   -----------------
                                       WEIGHTED            WEIGHTED            WEIGHTED
                                       AVERAGE             AVERAGE             AVERAGE
                                       EXERCISE            EXERCISE            EXERCISE
                              SHARES    PRICE     SHARES    PRICE     SHARES    PRICE
                              ------   --------   ------   --------   ------   --------
<S>                           <C>      <C>        <C>      <C>        <C>      <C>
Outstanding at beginning of
  year......................   1,337     $23       1,127     $21      1,017      $21
Granted.....................     376      19         333      27        218       19
Exercised...................      (4)     19         (51)     18        (27)      24
Canceled....................    (194)     22         (72)     24        (81)      22
                              ------              ------              -----
Outstanding at end of
  year......................   1,515     $22       1,337     $23      1,127      $21
                              ======              ======              =====
Exercisable at end of
  year......................     556     $24         445     $21        289      $22
                              ======              ======              =====
Weighted-average fair value
  of options granted during
  the year..................  $10.64              $14.22              $9.98
                              ======              ======              =====
</TABLE>

     Exercise prices for options exercised during 2000 ranged from approximately
$16 to $18. Exercise prices for options outstanding as of May 30, 2000 ranged
from approximately $12 to $31. The weighted-average remaining contractual life
of those options is 6.49 years.

     All options outstanding generally vest beginning after three years and then
in equal installments over a four-year period and have a ten-year duration.

     The Company also has a Non-Employee Directors' Stock Option Plan. A total
of 40,000 shares are reserved for future issuance under this plan. As of May 30,
2000, 18,000 options had been granted under this plan at an average price of
$22.42. As of May 30, 2000, 9,500 of such options were exercisable.

     Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
and has been determined as if the Company had accounted for its employee and
non-employee director stock options under the fair value method of SFAS 123.

     The fair values for these options were estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of return of 6.57% for 2000, 6.50% for 1999
and 5.75% for 1998; volatility factor of .44 for 2000, .41 for 1999 and 1998,
and weighted average expected option life of seven years for all options. The
Company assumed that no dividends would be paid over the expected life of the
options.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's stock options have characteristics
significantly different from those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing model does not necessarily provide a reliable
single measure of the fair value of its employee stock options. For purposes of
pro forma disclosures, the estimated fair value of the options is amortized to
expense over the options' vesting period. The effects of applying SFAS 123 for
pro forma disclosures are not likely to be representative of the effects on
reported net income or losses for future years.

                                                                              23
<PAGE>   26

     The Company's pro forma information follows (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                      2000      1999      1998
                                                     -------   -------   -------
<S>                                                  <C>       <C>       <C>
Pro forma net income...............................  $25,534   $18,579   $26,680
Pro forma net income per basic share...............  $  1.53   $  1.12   $  1.61
Pro forma net income per diluted share.............  $  1.53   $  1.11   $  1.60
</TABLE>

10.  INCOME TAXES

     The provision for income taxes is comprised of the following (in
thousands):

<TABLE>
<CAPTION>
                                                         FISCAL YEAR ENDED
                                             ------------------------------------------
                                             MAY 30, 2000   JUNE 1, 1999   JUNE 2, 1998
                                             ------------   ------------   ------------
<S>                                          <C>            <C>            <C>
Current:
  Federal..................................    $ 9,264        $12,233        $ 7,442
  State....................................        898          2,129            853
                                               -------        -------        -------
                                                10,162         14,362          8,295
Deferred:
  Federal..................................      5,219          2,062          7,468
  State....................................        125            342          1,250
                                               -------        -------        -------
                                                 5,344          2,404          8,718
                                               -------        -------        -------
                                               $15,506        $16,766        $17,013
                                               =======        =======        =======
</TABLE>

     A reconciliation of the provision for income taxes to the amounts computed
at the federal statutory tax rate is as follows (in thousands):

<TABLE>
<CAPTION>
                                                         FISCAL YEAR ENDED
                                             ------------------------------------------
                                             MAY 30, 2000   JUNE 1, 1999   JUNE 2, 1998
                                             ------------   ------------   ------------
<S>                                          <C>            <C>            <C>
Federal income taxes at statutory rate.....    $14,635        $15,339        $15,468
State income taxes, net of federal tax
  benefit..................................        850          1,606          1,367
Other items, net...........................         21           (179)           178
                                               -------        -------        -------
                                               $15,506        $16,766        $17,013
                                               =======        =======        =======
</TABLE>

     Significant components of the Company's deferred tax assets and liabilities
are as follows (in thousands):

<TABLE>
<CAPTION>
                                                         MAY 30, 2000   JUNE 1, 1999
                                                         ------------   ------------
<S>                                                      <C>            <C>
Deferred tax assets:
  Change in inventory accounting method................    $ 2,487         $3,894
  Various accrued expenses.............................        735            828
  Other, net...........................................        736            665
                                                           -------         ------
          Total deferred tax assets....................      3,958          5,387
Deferred tax liabilities:
  Depreciation.........................................     10,977          7,482
  Accrued liabilities..................................      1,397          1,103
  Inventory related items..............................      1,124            980
  Other, net...........................................        485            503
                                                           -------         ------
          Total deferred tax liabilities...............     13,983         10,068
                                                           -------         ------
Net deferred tax liability.............................    $10,025         $4,681
                                                           =======         ======
</TABLE>

     For fiscal years 2000, 1999 and 1998, the Company paid income taxes of
approximately $9,921,500, $15,526,000, and $6,723,000, respectively.

24
<PAGE>   27

11.  COMMITMENTS AND CONTINGENCIES

     The Company is involved in various legal proceedings primarily arising out
of the normal conduct of its business. Although the Company cannot ascertain the
amount of liability that it may incur from any of these matters, it does not
currently believe that, individually or in the aggregate, they will have a
material adverse effect on the consolidated financial position, results of
operations or cash flows of the Company.

     As of May 30, 2000, the Company's cost to complete construction contracts
in progress was approximately $16.7 million.

12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following quarterly financial data is unaudited, but in the opinion of
management, all adjustments necessary for a fair presentation of the selected
data for these interim periods presented have been included.

     The first, second, and third quarters of fiscal year 1999 have been
restated to give effect to the change in the Company's method of accounting for
inventories.

<TABLE>
<CAPTION>
                                                FIRST      SECOND     THIRD      FOURTH
                                               QUARTER    QUARTER    QUARTER    QUARTER
                                               --------   --------   --------   --------
                                               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                            <C>        <C>        <C>        <C>
Fiscal Year Ended May 30, 2000:
  Net sales..................................  $143,625   $142,643   $147,374   $164,616
  Gross profit...............................    58,427     58,547     58,683     65,818
  Net income.................................     7,346      6,020      5,813      7,110
  Basic net income per common share..........       .44        .36        .35        .43
  Diluted net income per common share........       .44        .36        .35        .43
Fiscal Year Ended June 1, 1999:
  Net sales..................................  $123,039   $120,290   $127,380   $140,774
  Gross profit...............................    49,344     48,856     52,873     57,567
  Income before cumulative effect of change
     in accounting principle.................     7,145      5,601      6,498      7,814
  Cumulative effect of change in accounting
     principle...............................    (8,245)        --         --         --
  Net income (loss)..........................    (1,100)     5,601      6,498      7,814
  Basic net income (loss) per common share
     from:
     Income before cumulative effect of
       change in accounting principle........       .43        .34        .39        .47
     Cumulative effect of change in
       accounting principle..................      (.50)        --         --         --
     Net income (loss).......................      (.07)       .34        .39        .47
  Diluted net income (loss) per common share
     from:
     Income before cumulative effect of
       change in accounting principle........       .42        .33        .39        .47
     Cumulative effect of change in
       accounting principle..................      (.49)        --         --         --
     Net income (loss).......................      (.07)       .33        .39        .47
</TABLE>

                                                                              25
<PAGE>   28

REPORT OF MANAGEMENT

Discount Auto Parts, Inc.

     We have prepared the accompanying consolidated financial statements and
related information included herein for the years ended May 30, 2000, June 1,
1999, and June 2, 1998. The opinion of Ernst & Young LLP, the Company's
independent auditors, on those financial statements is included herein. The
primary responsibility for the integrity of the financial information included
in this annual report rests with management. Such information was prepared in
accordance with generally accepted accounting principles appropriate in the
circumstances based on our best estimates and judgments and giving due
consideration to materiality.

     Discount Auto Parts maintains internal accounting control systems which are
adequate to provide reasonable assurance that assets are safeguarded from loss
or unauthorized use and which produce records adequate for preparation of
financial information. The system and controls and compliance therewith are
monitored, revised and improved to meet changing business conditions, Company
growth, and recommendations made by the independent auditors. There are limits
inherent in all systems of internal accounting control based on the recognition
that the cost of such a system should not exceed the benefits to be derived. We
believe the Company's system provides this appropriate balance.

     The Audit Committee of Discount Auto Parts' Board of Directors is
responsible for reviewing and monitoring the Company's financial reports and
accounting practices to ascertain that they are within acceptable limits of
sound practice in such matters. The membership of the Committee consists of
non-employee Directors. At periodic meetings, the Audit Committee discusses
audit and financial reporting matters and the internal audit function with
representatives of financial management and with representatives from Ernst &
Young LLP.

<TABLE>
<S>                                      <C>

/s/ Peter J. Fontaine                    /s/ C. Michael Moore
------------------------------------     -----------------------------------
Peter J. Fontaine                        C. Michael Moore
Chairman and Chief Executive Officer     Executive Vice President -
                                         Finance and Chief Financial Officer
</TABLE>

26
<PAGE>   29

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Discount Auto Parts, Inc.

     We have audited the accompanying consolidated balance sheets of Discount
Auto Parts, Inc. as of May 30, 2000 and June 1, 1999, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended May 30, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Discount Auto Parts, Inc. at May 30, 2000 and June 1, 1999 and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended May 30, 2000, in conformity with accounting principles generally
accepted in the United States.

     As discussed in Note 2 to the financial statements, during fiscal 1999 the
Company changed its method of accounting for inventories.

                                          /s/ ERNST & YOUNG LLP
                                          ---------------------

Tampa, Florida
June 30, 2000

                                                                              27
<PAGE>   30
CORPORATE INFORMATION

CORPORATE HEADQUARTERS

DISCOUNT AUTO PARTS, INC.
4900 FRONTAGE ROAD, SOUTH
LAKELAND, FLORIDA 33815
TELEPHONE: (863) 687-9226
WWW.DISCOUNTAUTOPARTS.NET

TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road
Overpeck Centre
Ridgefield Park, New Jersey 07660
www.chasemellon.com

INDEPENDENT AUDITORS

Ernst & Young LLP
Tampa, Florida

STOCK EXCHANGE LISTING

New York Stock Exchange
Trading Symbol -- DAP

ANNUAL MEETING

The Annual Meeting of the Stockholders will be held at 10:30 am Wednesday,
October 11, 2000 at:
     Orange County Convention Center
     9800 International Drive
     Orlando, Florida 32819

NUMBER OF STOCKHOLDERS

As of August 14, 2000, there were approximately 700 stockholders of record.

FORM 10-K

A copy of the Company's Annual Report on Form 10-K for the fiscal year ended May
30, 2000, as filed with the Securities and Exchange Commission, will be sent to
any stockholder upon request in writing to:
     Investor Relations
     Discount Auto Parts, Inc.
     4900 Frontage Road, South
     Lakeland, Florida 33815

MARKET INFORMATION

The Company has not paid or declared cash distributions or dividends since the
consummation of its initial public offering in August 1992, and does not intend
to pay cash dividends on its Common Stock in the foreseeable future.

COMMON STOCK PRICE RANGE
<TABLE>
<CAPTION>
                          FISCAL 2000        FISCAL 1999
                        --------------     --------------
                        HIGH      LOW      HIGH      LOW
                        -----     ----     -----     ----
<S>                     <C>       <C>      <C>      <C>
Qtr 1................   24-1/2    18-15/16 27-1/2   21
Qtr 2................   19-1/8    11       26       21-1/8
Qtr 3................   20-13/16  10-1/8   26-3/8   19-1/2
Qtr 4................   12-3/8    8-1/2    26-7/16  20-1/16
</TABLE>

OFFICERS AND DIRECTORS

Peter J. Fontaine
Chairman, Chief Executive Officer and Director

William C. Perkins
President, Chief Operating Officer and Director

C. Michael Moore
Executive Vice President -- Finance, Chief
Financial Officer and Secretary

E. E. Wardlow
Director
Former President and Chief Operating Officer,
Kmart Corporation

David P. Walling
Director
Former Vice President, General Controller,
Kmart Corporation

Charles W. Webster, II
Director
President, Strategic Consulting

28
<PAGE>   31


                                OVER 650 STORES







 (MAP OF LOUISIANA, MISSISSIPPI, ALABAMA, GEORGIA, SOUTH CAROLINA AND FLORIDA)



                                                      STORES

                                                    FL    442
                                                    GA    110
                                                    MS    39
                                                    LA    36
                                                    AL    18
                                                    SC    7



                                   SINCE 1971



* = DISTRIBUTION CENTERS

- = PARTS EXPRESS WAREHOUSES


<PAGE>   32










                              DISCOUNT AUTO PARTS














                             CORPORATE HEADQUARTERS
                           DISCOUNT AUTO PARTS, INC.
                           4900 FRONTAGE ROAD, SOUTH
                            LAKELAND, FLORIDA 33815
                           TELEPHONE: (863) 687-9226
                           WWW.DISCOUNTAUTOPARTS.NET