<PAGE>   1

<TABLE>
<S>                                                        <C>

PHOTO (EXTERIOR OF STORE)                                       ANNUAL REPORT

PHOTO (MARK MARTIN)
                                                           DISCOUNT AUTO PARTS LOGO

PHOTO (SINGLE TEAM MEMBER STOCKING SHELF)
                                                              Fiscal YEAR 1999
PHOTO (TEAM MEMBER DELIVERING PART TO
COMMERCIAL ACCOUNT)

</TABLE>
<PAGE>   2

                               TABLE OF CONTENTS


                                      PHOTOS ON FRONT COVER, FROM TOP TO BOTTOM:

                                  Mini-Depot Store #685 in Meridian, Mississippi

                  Corporate spokesperson, NASCAR Winston Cup driver, Mark Martin

                Discount Auto Parts Team Member's Insure High In-stock Positions

Timely Deliveries Are One of the Cornerstones of the Pro2Call Commercial Program



                               Discount Auto Parts, Inc. is one of the
                               Southeast's leading specialty retailers and
                               suppliers of automotive replacement parts,
                               maintenance items and accessories for both
                               Do-It-Yourself ("DIY") consumers and professional
                               mechanics and service technicians. As of August
                               9, 1999 Discount Auto Parts operated 573 stores
                               located throughout Florida, Georgia, Mississippi,
                               Alabama, Louisiana and South Carolina.

<TABLE>
                                             <S>                                                           <C>
                                             LETTER TO SHAREHOLDERS AND TEAM                                 2

                                             SELECTED FINANCIAL DATA                                         7

                                             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                                               CONDITION AND RESULTS OF OPERATIONS                           8

                                             CONSOLIDATED STATEMENTS OF INCOME                              16

                                             CONSOLIDATED BALANCE SHEETS                                    17

                                             CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                18

                                             CONSOLIDATED STATEMENTS OF CASH FLOWS                          19

                                             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     20

                                             REPORT OF MANAGEMENT                                           30

                                             REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS             31

                                             CORPORATE INFORMATION                                          32
</TABLE>
<PAGE>   3

             NET SALES                             INCOME FROM OPERATIONS
          (IN THOUSANDS)                               (IN THOUSANDS)
         (NET SALES GRAPH)                    (INCOME FROM OPERATIONS GRAPH)



     (NUMBER OF STORES GRAPH)                       (TEAM MEMBERS GRAPH)
          NUMBER OF STORES                              TEAM MEMBERS



DISCOUNT AUTO PARTS LOGO                                                       1
<PAGE>   4
LETTER TO SHAREHOLDERS AND TEAM



                               TO OUR SHAREHOLDERS AND TEAM:
                                 Parts availability. Convenience. Competitive
                               pricing. That's the name of the game in the
                               automotive replacement parts business. It's what
                               today's demanding do-it-yourself (DIY) and
                               commercial installer customers want from their
                               automotive parts and accessories provider. Auto
                               parts suppliers that deliver these three core
                               elements with superior service consistently lead
                               the industry.

                                 That's why Discount Auto Parts experienced
                               another record year of growth and profitability
                               for fiscal year 1999. Sales for fiscal 1999
                               totaled a record $511 million, a 14.3% increase
                               over previous years sales. Our operating income
                               for fiscal 1999 totaled a record $55.9 million,
                               representing a 10.9% operating margin. Our
                               operating margins continue to be among the
                               highest in our industry.

                               ACHIEVING GROWTH MILESTONES

                                 We reached
                               an
                               impressive
                               milestone in
                               November
                               1998, when
                               we opened
                               our 500th
                               store in
                               Titusville,
                               Florida. By
                               the end of
                               fiscal 1999,
                               our store                     (PHOTO)
                               count had               DISCOUNT AUTO PARTS
                               increased to            500 STORES & GROWING
                               558 stores,
                               representing
                               a 23.5%
                               increase
                               from 452
                               stores at
                               the end of
                               fiscal 1998.
                               We continue
                               to expand in
                               our existing
                               markets and open stores in exciting new markets.
                               We entered our sixth state, Louisiana, in July
                               1998. During fiscal year 2000, additional stores
                               will open in Louisiana, including our first New
                               Orleans stores. We anticipate opening 80 to 90
                               new stores during fiscal year 2000.

                                 In September 1998, we acquired the Rose Auto
                               Parts chain. The purchase included 39 stores
                               primarily in south Florida, further strengthening
                               our already dominant position in south Florida.
                               We refurbished and reopened 26 stores under the
                               Discount Auto Parts banner, and we permanently
                               closed 13 of the acquired locations.


2                                                       DISCOUNT AUTO PARTS LOGO







<PAGE>   5

  We have developed a formula for successful expansion into new and existing
markets, whether we grow through acquisition or new store construction. Simply
put, we open stores that are efficiently run by Team Members who are empowered
to give our customers excellent service with a broad assortment of available,
quality parts at low prices. Our sheer number of stores ensures convenience to
our customers. This formula has enabled us to expand rapidly, while positioning
us in new markets to be a dominant auto parts supplier.

ENHANCING PARTS AVAILABILITY

  In our marketing efforts, we promise customers that when they need parts we
will be the place to start. We deliver on this promise by seeking to have the
right parts available at the right place, at the right time and at the right
price. We can only do so with superior parts availability, which we believe we
achieve through effective utilization of our Parts Express program. We
successfully tested the concept during fiscal year 1997 with one location. Based
on those results, we added 3 Parts Express locations during fiscal 1998, and 4
additional locations in fiscal 1999. We expect to add 2 to 4 additional Parts
Express locations in fiscal 2000.

  Our Parts Express program allows us to offer a significantly expanded
inventory of parts to our customers by rapidly delivering additional inventory
to our stores as needed. The Parts Express facilities (which operate like mini-
satellite warehouses) support our standard mini-depot stores, which typically
carries approximately 15,000 SKUs. It also supports our depot, hub and
commercial stores, which stock between 17,500 and 22,000 SKUs. Parts Express
shuttles needed parts to our stores to meet customer demand. This means that
customers can and do get the right part where and when they need it and at a
competitive price.

  In addition to Parts Express, we have
pushed our inventory closer to our
customers by rolling out our new perpetual
inventory system in all stores. This new
inventory management system helps each
store stock items that reflect that store's
individual market conditions. Stores are
better able to carry the parts that suit
their customers' needs, while at the same
time reducing or eliminating slow or
non-moving items from their shelves. In
addition, the new automated inventory
management system helps free up the store           INTEGRATED PARTS LOOK-UP
manager's time, allowing him or her to              SYSTEMS ENHANCE THE
better coach and develop their Team.                STORES ABILITY TO SOURCE
                                                    INVENTORY
  To further enhance our inventory
management, we have launched an integrated
parts look-up system in the stores. The
system capitalizes on our greater inventory
availability and accelerates our Team
Members' response to customers' needs. The
system permits Team Members to more quickly
locate parts in surrounding stores, if
needed. It basically augments each store's
on-hand inventory by calling upon inventory
in Parts Express facilities or other
stores.

DISCOUNT AUTO PARTS LOGO                                                       3
<PAGE>   6


  All of our inventory needs currently are supported by the expansion of our
Lakeland, Florida, distribution center to 600,000 square feet in fiscal 1999.
The newly expanded center can support approximately 700 stores and will
accommodate 50,000 to 60,000 SKUs. A second strategically located distribution
center is anticipated in the fall of calendar year 2000 to support our
continuing store expansion efforts.

DEVELOPING COMMERCIAL BUSINESS

  Parts availability helps us capitalize not only on the DIY market but also on
commercial business. According to our research, one critical need of
professional mechanics and service technicians is parts availability. Discount
Auto Parts is uniquely positioned to satisfy this need in most markets in which
we operate. That's because we tend to have expanded inventory availability and
more stores in more locations than our competitors.

  During fiscal year 1999, we continued our commitment to building our
commercial business, which we launched in the second half of fiscal 1998 under
the Pro2Call name. With this initiative, we are leveraging our bricks and mortar
infrastructure of stores and our Team Members' hard work to capitalize on what
we believe to be a tremendous opportunity in commercial sales. The market is
estimated to be approximately $50 billion nationwide and $3 billion in Florida
alone.

  We believe our system is unique.
Commercial customers call a central
toll-free number, which rings to our Call
Center. Qualified parts people staff the
Call Center, most of whom are ASE
certified. They source the desired part
from the store closest to the customer and
arrange for its delivery to the mechanic
generally within 30 minutes.

  As we enter new markets, we will continue          STATE-OF-THE-ART TECHNOLOGY
to work to maximize the return on our                ENABLES THE CALL CENTER TO
capital investment and increase shareholder          PROVIDE SUPERIOR CUSTOMER
value, by serving both DIY and commercial            SERVICE
accounts with our strategy of store
saturation and with support from our Parts
Express program. We currently serve
commercial accounts through approximately
150 stores in Florida. Our goal is to
service commercial delivery from
approximately two-thirds of our total
stores by fiscal year 2001.

  Because the commercial market is highly fragmented, we believe it offers
tremendous potential. We also believe we will be successful in our commercial
endeavor because of the efficiency of our product distribution, the market
saturation of our stores and our commitment to parts availability. Considering
that our Parts Express locations stock approximately 95 percent of the parts
most widely needed by commercial accounts, we believe this is a realistic goal.
We particularly see opportunity to become the dominant parts supplier to
automotive mechanics in Florida, where we have the highest concentration of
stores.


4                                                       DISCOUNT AUTO PARTS LOGO
<PAGE>   7

ATTRACTING CUSTOMERS FOR A LIFETIME

  Just as we are making in-roads in our commercial development efforts, we are
also making strides in our marketing efforts to the DIYer. Our most recent
initiative on this front is the formation of a Discount Auto Parts Racing Team
developed to tap into the passionate auto racing fans who comprise a significant
portion of our core DIY customer.

  Discount Auto Parts has long been a sponsor and supporter of various auto
racing drivers, teams and events; but in fiscal 1999, we began marketing all of
our racing involvement under the Discount Auto Parts Racing Team banner. The
kingpin of this umbrella initiative is a multi-year affiliation with popular
NASCAR driver Mark Martin. As one of the most respected, competitive and
successful drivers on the NASCAR circuit, Martin has helped elevate the Discount
Auto Parts brand in the eyes of our core customers, on both the DIY and
commercial sides of our business.

  Further building the Racing Team aura is our continued title sponsorship of
the Discount Auto Parts 200 held each year in February at the Daytona
International Speedway and our sponsorship of the Hooters ProCup Series, a
southeast regional auto racing circuit. We also support a variety of additional
auto racing events, including Monster Truck Shows that are wildly popular with
our customers.

  Research shows that auto-racing fans are some of the most loyal supporters of
sponsors of any sport today. So we are dedicated to getting closer to our core
customers by increasing our Racing Team's market presence and by expanding its
activities and affiliations in fiscal 2000.

BUILDING THE TEAM

  None of our growth, systems or inventory
expansion, commercial program development
or marketing successes would be possible
without the continued hard work and
dedication of our more than 5,500 Discount
Auto Parts Team Members. We are proud of
their accomplishments and their ability to
serve our ever-expanding network of DIY and
commercial customers.

  Throughout our 28-year success story, we
have remained true to the core operating
philosophy of our founders Herman Fontaine
and Denis Fontaine: "There is only one way
to build a business. First you build the               THOUSANDS OF HIGH QUALITY
Team, and then the Team builds the                     PARTS AND ACCESSORIES ARE
business. There is no other way."                      AVAILABLE IN EVERY STORE

  We accomplish this through ongoing
training and development, giving our
diverse group of Team Members the highest
level of training and support of any
automotive aftermarket supplier today. New
leadership positions are created on a
regular basis by both new store expansion
and commercial delivery opportunities. The
result is a seasoned and well-trained Team.


DISCOUNT AUTO PARTS LOGO                                                       5
<PAGE>   8

  Team, Customers, Ideas, or TCI as our Team Members know it. It's the
three-part philosophy upon which our Team Members build their careers with
Discount Auto Parts. It's a belief system that inspires our Team to attack new
markets and new business lines with the goal of serving customers for a
lifetime. It empowers our Team Members to continually renew themselves with new
ideas for enhanced customer service and new ways of doing business more
productively.

PREPARING THE WAY

  As you can see, many milestones marked fiscal year 1999. We once again
achieved impressive growth, made tremendous strides in delivering parts
availability to both our DIY and commercial customers, further developed our
commercial business, stepped up our auto racing marketing and continued our
emphasis on the Team.

  We believe that all of these efforts have prepared the way for an even more
successful and profitable fiscal year 2000. We have laid the foundation for a
bright future for Discount Auto Parts, and we very much look forward to
realizing the tremendous potential we envision as one of the southeast's leading
specialty retailers and suppliers of automotive parts and accessories.

<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>



                                                CHAIRMAN AND CHIEF EXECUTIVE
                                                OFFICER, PETER J. FONTAINE;
                                                PRESIDENT AND CHIEF OPERATING
                                                OFFICER, WILLIAM C. PERKINS


6                                                       DISCOUNT AUTO PARTS LOGO
<PAGE>   9

                            SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                               FISCAL YEAR ENDED
                                                              ----------------------------------------------------
                                                               JUNE 1     JUNE 2     JUNE 3     MAY 28     MAY 30
                                                                1999       1998     1997(1)      1996       1995
                                                              --------   --------   --------   --------   --------
                                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA AND
                                                                            SELECTED OPERATING DATA)
<S>                                                           <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA
Net sales...................................................  $511,483   $447,491   $405,186   $307,476   $253,700
Cost of sales, including distribution costs.................   302,843    271,404    256,646    186,917    158,710
                                                              --------   --------   --------   --------   --------
Gross profit................................................   208,640    176,087    148,540    120,559     94,990
Selling, general and administrative expenses................   152,777    124,125    101,336     80,090     64,081
                                                              --------   --------   --------   --------   --------
Income from operations......................................    55,863     51,962     47,204     40,469     30,909
Other income, net...........................................       817      2,434        187      1,164      1,133
Litigation settlement.......................................        --         --    (20,545)        --         --
Gain on life insurance proceeds.............................        --         --         --         --      4,836
Interest expense............................................   (12,856)   (10,203)    (6,125)    (5,078)    (6,295)
                                                              --------   --------   --------   --------   --------
Income before income taxes and cumulative effect of change
  in accounting principle...................................    43,824     44,193     20,721     36,555     30,583
Income taxes................................................    16,766     17,013      7,980     14,092     10,020
                                                              --------   --------   --------   --------   --------
Income before cumulative effect of change in accounting
  principle.................................................    27,058     27,180     12,741     22,463     20,563
Cumulative effect of change in accounting principle, net of
  income tax benefit........................................    (8,245)        --         --         --         --
                                                              --------   --------   --------   --------   --------
Net income..................................................  $ 18,813   $ 27,180   $ 12,741   $ 22,463   $ 20,563
                                                              ========   ========   ========   ========   ========
Net income (loss) per basic share from:
  Income before cumulative effect of change in accounting
    principle...............................................  $   1.63   $   1.64   $   0.77   $   1.44   $   1.48
  Cumulative effect of change in accounting principle.......     (0.50)        --         --         --         --
                                                              --------   --------   --------   --------   --------
  Net income................................................  $   1.13   $   1.64   $   0.77   $   1.44   $   1.48
                                                              ========   ========   ========   ========   ========
Net income (loss) per diluted share from:
  Income before cumulative effect of change in accounting
    principle...............................................  $   1.61   $   1.63   $   0.77   $   1.41   $   1.47
  Cumulative effect of change in accounting principle.......     (0.49)        --         --         --         --
                                                              --------   --------   --------   --------   --------
  Net income................................................  $   1.12   $   1.63   $   0.77   $   1.41   $   1.47
                                                              ========   ========   ========   ========   ========
Average common shares outstanding...........................    16,650     16,604     16,581     15,647     13,907
Dilutive effect of stock options............................       153        111         73        257         50
                                                              --------   --------   --------   --------   --------
Average common shares outstanding -- assuming dilution......    16,803     16,715     16,654     15,904     13,957
                                                              ========   ========   ========   ========   ========
SELECTED OPERATING DATA
Number of stores at year end................................       558        452        400        314        248
Total store square footage at year end (in thousands)(2)....     2,450      2,007      1,836      1,610      1,405
Average net sales per store (in thousands)(3)(4)............  $  1,013   $  1,050   $  1,023   $  1,094   $  1,113
Average net sales per square foot(3)(4).....................  $    230   $    233   $    212   $    204   $    195
Percentage increase (decrease) in comparable store net
  sales(4)(5)...............................................        .6%       7.7%       (.6%)      4.9%       5.8%
Team members................................................     5,586      4,350      3,677      3,148      2,826
BALANCE SHEET DATA
Inventories.................................................  $209,028   $172,027   $151,644   $111,408   $ 91,187
Working capital.............................................   128,939    105,662     80,573     59,801     46,420
Property and equipment, net.................................   374,577    314,519    265,589    208,094    166,169
Total assets................................................   620,314    511,735    443,066    338,263    270,832
Long-term debt, excluding current maturities................   224,800    160,695    114,117     50,400     94,550
Stockholders' equity........................................   276,766    256,885    229,061    216,046    117,895
</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 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.
(5) Comparable store net sales data are calculated based on the change in net
    sales of all stores open at the beginning of the preceding fiscal year. The
    fiscal 1997 amount has been adjusted to exclude the effect of the
    fifty-third week.

DISCOUNT AUTO PARTS LOGO                                                      7
<PAGE>   10

          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
                                                 ------------------------------------------------------
                                                  JUNE 1             JUNE 2             JUNE 3
                                                   1999       %       1998       %       1997       %
                                                 --------   -----   --------   -----   --------   -----
                                                                 (DOLLARS IN THOUSANDS)
<S>                                              <C>        <C>     <C>        <C>     <C>        <C>

Net sales......................................  $511,483   100.0%  $447,491   100.0%  $405,186   100.0%
Cost of sales, including distribution costs....   302,843    59.2    271,404    60.7    256,646    63.3
                                                 --------   -----   --------   -----   --------   -----
  Gross profit.................................   208,640    40.8    176,087    39.3    148,540    36.7
Selling, general and administrative expenses...   152,777    29.9    124,125    27.7    101,336    25.0
                                                 --------   -----   --------   -----   --------   -----
  Income from operations.......................    55,863    10.9     51,962    11.6     47,204    11.7
Litigation settlement..........................        --      --         --      --    (20,545)   (5.1)
Other income, net..............................       817      .2      2,434      .6        187      --
Interest expense...............................   (12,856)   (2.5)   (10,203)   (2.3)    (6,125)   (1.5)
                                                 --------   -----   --------   -----   --------   -----
Income before income taxes and cumulative
  effect of change in accounting principle.....    43,824     8.6     44,193     9.9     20,721     5.1
Income taxes...................................    16,766     3.3     17,013     3.8      7,980     2.0
                                                 --------   -----   --------   -----   --------   -----
  Income before cumulative effect of change in
     accounting principle......................    27,058     5.3     27,180     6.1     12,741     3.1
Cumulative effect of change in accounting
     principle, net of income tax benefit......    (8,245)   (1.6)        --      --         --      --
                                                 --------   -----   --------   -----   --------   -----
  Net income...................................  $ 18,813     3.7%  $ 27,180     6.1%  $ 12,741     3.1%
                                                 ========   =====   ========   =====   ========   =====
</TABLE>

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.


8                                                       DISCOUNT AUTO PARTS LOGO
<PAGE>   11

  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.

  Selling, general and administrative ("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%.

  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.

  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.

  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 average cost method. The Company
believes 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 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


DISCOUNT AUTO PARTS LOGO                                                       9
<PAGE>   12

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.

FISCAL 1998 COMPARED TO FISCAL 1997

  Net sales for the fifty-two week period ended June 2, 1998 increased 10.4%, to
$447.5 million, from $405.2 million a year earlier. Commercial sales of R-12
freon represented approximately $32.7 million or 8.1% of the total sales for
fiscal 1997. Such commercial sales were negligible for fiscal 1998. Excluding
the impact of such commercial sales and the extra week in fiscal 1997,
traditional DIY retail sales for fiscal 1998 increased 22.5% over the comparable
fiscal 1997 period. Traditional DIY comparable store sales increased 7.7% for
fiscal 1998 as compared to fiscal 1997, after excluding the effect of the extra
week. When including commercial sales of freon in comparable store sales for
fiscal 1997, comparable store sales would have reflected a decrease of 1.9% for
fiscal 1998. The remaining increase in net sales from the Company's core
operations was attributable to sales from new stores opened since the beginning
of fiscal 1997. As of June 2, 1998, the Company had 452 stores in operation
compared to 400 at the end of fiscal 1997.

  Gross profit for the fifty-two week period ended June 2, 1998 was $176.1
million, or 39.3% of net sales, compared with $148.5 million, or 36.7% for
fiscal 1997. The improvement in gross margins for fiscal 1998 was due in part to
the higher level of commercial sales of R-12 freon in the fiscal 1997 comparable
period, which generally had lower gross margins due to the product's commodity
nature. Excluding the impact of commercial freon sales in fiscal 1997, the gross
margin would have been 38.0% for fiscal 1997. The remaining improvement in gross
margin for fiscal 1998 was primarily attributable to lower product costs and
modifications to the Company's merchandising strategy.

  SG&A expenses for fiscal 1998 increased by $22.8 million over such expenses
for fiscal 1997, and increased as a percentage of net sales from 25.0% in fiscal
1997 to 27.7% in fiscal 1998. The increase was primarily the result of higher
levels of commercial sales of R-12 freon in fiscal 1997. Such commercial sales
generally had very limited associated SG&A expenses. Excluding the commercial
sales of R-12 freon, SG&A expenses as a percentage of sales for fiscal 1997
would have been 27.2%. After the exclusion of such sales, the increase in SG&A
expense as a percentage of sales for fiscal 1998 was primarily attributable to
expenses incurred in the development and roll-out of the Company's commercial
delivery program.

  Income from operations for fiscal 1998 increased 10.1% to $52.0 million as
compared to $47.2 million for fiscal 1997. Income from operations for fiscal
1997 include earnings associated with commercial sales of freon while similar
sales generally were not made in fiscal 1998. The fiscal 1997 income from
operations also reflects an extra week of results. When excluding the impact of
such commercial sales and the effects of the extra week of


10                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   13

operations in the fiscal 1997 period, traditional DIY operating income (which
reflects operating income exclusive of commercial freon sales and associated
cost of sales) increased 31.6% for fiscal 1998 over the fiscal 1997 results.

  As further discussed in Note 11 of the Notes to Consolidated Financial
Statements, the Company reached an agreement in July 1997 to settle a lawsuit
brought by Airgas, Inc. and certain Airgas affiliates against several
defendants, including the Company and one of its employees. As a result of the
settlement, the Company recorded a pre-tax charge of $20.5 million in the fourth
quarter of fiscal 1997. The charge reflects the payments made pursuant to the
terms of the actual settlement plus associated legal and professional fees.

  Other income for fiscal 1998 primarily includes 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 1998 was $10.2 million as compared to $6.1 million
for fiscal 1997. The increase for fiscal 1998 was primarily the result of
increased borrowings associated with new store growth, the expansion of the
Company's existing distribution center, and the September 1997 funding of the
amounts due pursuant to the terms of the settlement agreement with Airgas.

  The Company's effective tax rate for both fiscal 1998 and fiscal 1997 was
38.5%.

  Primarily as a result of the foregoing, net income for fiscal 1998 was $27.2
million or $1.63 per diluted share as compared to $12.7 million or $.77 per
diluted share reported for fiscal 1997.

LIQUIDITY AND CAPITAL RESOURCES

  Net cash provided by operating activities was $23.8 in fiscal 1999, $14.5
million in fiscal 1998, and $8.7 million in fiscal 1997. The primary reason for
the increase in fiscal 1999 over fiscal 1998 was the funding of the Airgas
litigation and related income tax impact, which occurred in fiscal 1998. The
increase in fiscal 1998 over fiscal 1997 was primarily due to an increase in
fiscal 1998 net income and the lower inventory growth in fiscal 1998.

  Capital expenditures for fiscal 1999 were $81.0 million as compared to $64.6
million in fiscal 1998 and $70.2 million in fiscal 1997. Capital expenditures
have fluctuated over the periods primarily based on new store openings in the
respective periods. Capital expenditures for fiscal 1999 primarily related to
the 80 new stores opened (excluding the 26 leased Rose Auto Stores) and costs
associated with the completion of the expansion of the Company's distribution
center and additional office space.

  In July 1998, the Company completed the expansion of its distribution center
to double its size. The expanded distribution center, which is comprised of
approximately 600,000 square feet, should be capable of serving approximately
700 stores. Additional office space and support facilities were also completed
during fiscal 1999. The expanded distribution center also provides service to
the Company's Parts Express warehouses, and is being utilized to support the
commercial delivery program. During fiscal 1999, the Company spent approximately
$11.5 million on the distribution center and office expansion projects.


DISCOUNT AUTO PARTS LOGO                                                      11
<PAGE>   14

  The Company is currently in the process of planning and developing a second
distribution center. Such distribution center is expected to be opened and
operational in the fall of calendar year 2000. Capital expenditures associated
with the second distribution center are still being finalized, but are expected
to be approximately $20 million to $25 million.

  The Company also continued the roll-out of a 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
and such parts are delivered from, or can be picked up from, nearby Discount
Auto Parts stores. The commercial delivery program is expected to require the
Company to extend trade credit to certain of the commercial account customers as
part of the ordinary course of business. The extension of such trade credit will
increase the capital requirements associated with the roll-out of the program
and will expose 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. Because this is a
relatively new aspect of the auto parts supply business for the Company, there
are risks associated with the Company's entry into this new aspect of the
business and there can be no assurance as to if or when the commercial delivery
service business will be profitable or as to whether the Company will experience
any financial or other challenges in managing and controlling the credit risk.

  As further discussed in Note 5 of the Notes to Consolidated Financial
Statements, effective September 28, 1998, the Company acquired substantially all
of the assets of Rose Auto Parts stores for approximately $8.2 million. Funding
for the acquisition was provided from available borrowings under the Company's
revolving line of credit.

  The Company anticipates that total capital expenditures for fiscal 2000,
including the costs associated with the addition of approximately 80 to 90 new
stores, initial construction of the second distribution center and the working
capital costs associated with the continued expansion of the commercial delivery
service, will be in the range of $70 million to $75 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 syndicate of
banks. The new agreement replaces the previous $175 million revolving credit
facility. As of July 29, 1999, the Company had approximately $72.4 million of
additional borrowing availability under its new $265 million revolving credit
facility.

  Consistent with its historical practice, the Company expects to finance both
its short and long-term liquidity needs for new store growth, as to land and
buildings, primarily through these lines of credit and mortgage financing
(renewals and replacements thereof), and as to equipment and fixtures, primarily
through cash flow from


12                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   15

operations. The Company's new store development program also requires
significant working capital, principally for inventories. The Company has
historically used trade credit to partially finance new store inventories and
has been successful in negotiating extended payment terms and incentives from
many suppliers through volume purchases. The Company believes that it will be
able to continue financing some of its inventory growth through the extension of
favorable payment terms and incentives from its vendors, but there can be no
assurance that the Company will be successful in doing so. The additional
funding for inventory expansion has been provided in large part from cash flow
from operations.

  As of June 1, 1999, 77 or 13.8% of the Company's stores were leased. Although
the Company generally anticipates a similar own/lease percentage relationship
for new stores in the future, the Company may explore opportunities, which could
lead to increases in this percentage.

  The Company believes that the expected cash flows from operations, available
bank borrowings and trade credit will be sufficient to fund the capital and
liquidity needs of the Company through fiscal 2001. The Company expects that by
the end of fiscal 2001 additional funding sources will be necessary to
supplement the new 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 of
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.

YEAR 2000

  The Year 2000 issue results from computer programs and electronic circuitry
that do not differentiate between the year 1900 and the year 2000 because they
are written using two rather than four digit dates to define the applicable
year. If not corrected, many computer applications and date-sensitive devices
could fail or produce erroneous results when processing dates after December 31,
1999. The Year 2000 issue affects virtually all companies and organizations,
including the Company.

  The Company employs a number of information technology systems in its
operations, including, without limitation, computer networking systems,
financial systems and other similar systems, some of which are internally
developed and others are licensed from outside vendors. A number of these
systems have been recently implemented by the Company and thus most of these
recently implemented systems are believed to be Year 2000 compliant.

DISCOUNT AUTO PARTS LOGO                                                      13
<PAGE>   16

Management developed and has been pursuing a plan to modify the Company's other
information technology systems. As of July 1999, this plan was substantially
complete.

  Throughout its operations, the Company also employs electronic equipment such
as building security, product handling and other devices containing embedded
electronic circuits. The Company has identified and prioritized the embedded
technology devices which may be deemed to be mission critical or that tend to
have a more significant impact on normal operations. A team of internal staff
and management that has been identified to manage the Company's Year 2000
initiative has developed and is in the process of completing the implementation
of a separate plan to upgrade these higher priority embedded technology devices.
Management currently expects these activities to be substantially complete by
September 1999.

  The Company anticipates spending less than $250,000 to address the Year 2000
issue. This includes the estimated costs of all equipment upgrades, software
modifications, the salaries of employees, and the fees of consultants addressing
the issue. The majority of these funds were spent January through June 1999. The
funds to pay for addressing the Year 2000 issue have come from available funds.
The Company believes that the cost of addressing the Year 2000 issue will not
have a material effect on the Company's consolidated financial position or
results of operations.

  The Company is also in the process of evaluating and managing the potential
risk posed by the impact of the Year 2000 issue on its major suppliers and
vendors. Formal and informal communications with these major suppliers and
vendors have been initiated, with an expectation and plan to substantially
complete an assessment in this regard by September 1999. However, it may be
difficult to determine with any certainty whether such suppliers and vendors
will be able to successfully address the Year 2000 issue with respect to their
own systems and thus be able to process purchase orders immediately following
January 1, 2000.

  Should the Company or any third party with whom the Company has a significant
business relationship have a systems failure due to the century change, the
Company believes that the most significant impact would likely be the inability,
with respect to a store or group of stores, to conduct operations due to a power
failure, to timely deliver inventory, to receive certain products from vendors,
or to electronically process sales to the customer at the store level. The
Company does not expect any such event to have a significant effect on its
overall operations. However, the Company's initiatives with respect to the Year
2000 issue are subject to a variety of risks and uncertainties, some of which
are beyond the Company's control. The failure of the Company or any of its major
suppliers or vendors to achieve Year 2000 readiness could have adverse impacts
on the Company's business operations not currently anticipated, which in turn
could have an adverse effect on the Company's future financial results.
Accordingly, the Company is in the process of developing contingency plans for
such events and estimates such plans will be finalized by approximately
September 1999.


14                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   17

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, 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 the like, performance of information systems, effectiveness of
deliveries from the distribution center, 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, Year 2000 compliance issues, expenses
associated with investigations concerning freon matters, and potential for
liability with respect to these matters and other risks.


DISCOUNT AUTO PARTS LOGO                                                      15
<PAGE>   18

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                      FISCAL YEAR ENDED
                                                              ---------------------------------
                                                               JUNE 1      JUNE 2      JUNE 3
                                                                1999        1998        1997
                                                              ---------   ---------   ---------
                                                               (IN THOUSANDS, EXCEPT PER SHARE
                                                                          AMOUNTS)
<S>                                                           <C>         <C>         <C>
Net sales...................................................  $511,483    $447,491    $405,186
Cost of sales, including distribution costs.................   302,843     271,404     256,646
                                                              --------    --------    --------
  Gross profit..............................................   208,640     176,087     148,540
Selling, general and administrative expenses................   152,777     124,125     101,336
                                                              --------    --------    --------
  Income from operations....................................    55,863      51,962      47,204
Litigation settlement.......................................        --          --     (20,545)
Other income, net...........................................       817       2,434         187
Interest expense............................................   (12,856)    (10,203)     (6,125)
                                                              --------    --------    --------
Income before income taxes and cumulative effect of change
  in accounting principle...................................    43,824      44,193      20,721
Income taxes................................................    16,766      17,013       7,980
                                                              --------    --------    --------
  Income before cumulative effect of change in accounting
     principle..............................................    27,058      27,180      12,741
Cumulative effect of change in accounting principle, net of
  income tax benefit........................................    (8,245)         --          --
                                                              --------    --------    --------
  Net income................................................  $ 18,813    $ 27,180    $ 12,741
                                                              ========    ========    ========
Net income (loss) per basic share from:
     Income before cumulative effect of change in accounting
      principle.............................................  $   1.63    $   1.64    $   0.77
     Cumulative effect of change in accounting principle....     (0.50)         --          --
                                                              --------    --------    --------
  Net income................................................  $   1.13    $   1.64    $   0.77
                                                              ========    ========    ========
Net income (loss) per diluted share from:
     Income before cumulative effect of change in accounting
      principle.............................................  $   1.61    $   1.63    $   0.77
     Cumulative effect of change in accounting principle....     (0.49)         --          --
                                                              --------    --------    --------
  Net income................................................  $   1.12    $   1.63    $   0.77
                                                              ========    ========    ========

Average common shares outstanding...........................    16,650      16,604      16,581
Dilutive effect of stock options............................       153         111          73
                                                              --------    --------    --------
Average common shares outstanding -- assuming dilution......    16,803      16,715      16,654
                                                              ========    ========    ========
</TABLE>

See accompanying notes.


16                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   19

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               JUNE 1     JUNE 2
                                                                1999       1998
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
          ASSETS
Current assets:
     Cash...................................................  $  8,795   $  5,064
     Inventories............................................   209,028    172,027
     Prepaid expenses and other current assets..............    20,363     17,657
     Deferred income taxes..................................     2,410         --
                                                              --------   --------
          Total current assets..............................   240,596    194,748

Property and equipment......................................   457,994    379,991
     Less allowances for depreciation and amortization......   (83,417)   (65,472)
                                                              --------   --------
                                                               374,577    314,519
Other assets................................................     5,141      2,468
                                                              --------   --------
Total assets................................................  $620,314   $511,735
                                                              ========   ========
          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Trade accounts payable.................................  $ 87,867   $ 67,083
     Accrued salaries, wages and benefits...................     8,008      7,317
     Deferred income taxes..................................        --      1,101
     Other current liabilities..............................    13,382     11,185
     Current maturities of long-term debt...................     2,400      2,400
                                                              --------   --------
          Total current liabilities.........................   111,657     89,086
Deferred income taxes.......................................     7,091      5,069
Long-term debt..............................................   224,800    160,695
Stockholders' equity:
     Preferred stock, $.01 par value, 5,000 shares
      authorized, none issued or outstanding................        --         --
     Common Stock, $.01 par value, 50,000 shares authorized,
      16,690 and 16,630 shares issued and outstanding at
      June 1, 1999 and June 2, 1998, respectively...........       167        166
     Additional paid-in capital.............................   142,230    141,163
     Retained earnings......................................   134,369    115,556
                                                              --------   --------
          Total stockholders' equity........................   276,766    256,885
                                                              --------   --------
Total liabilities and stockholders' equity..................  $620,314   $511,735
                                                              ========   ========
</TABLE>

See accompanying notes.


DISCOUNT AUTO PARTS LOGO                                                      17
<PAGE>   20

                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 May 28, 1996.....................   $    --    16,575    $166     $140,245    $ 75,635   $216,046
Stock issued under stock purchase and stock
  option plans..............................                  19      --          274          --        274
Net income..................................                                               12,741     12,741
                                               -------    ------    ----     --------    --------   --------
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
                                               =======    ======    ====     ========    ========   ========
</TABLE>

See accompanying notes.


18                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   21

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   FISCAL YEAR ENDED
                                                              ----------------------------
                                                              JUNE 1     JUNE 2    JUNE 3
                                                               1999       1998      1997
                                                              -------   --------   -------
                                                                     (IN THOUSANDS)
<S>                                                           <C>       <C>        <C>
OPERATING ACTIVITIES
Net income..................................................  $18,813   $ 27,180   $12,741
Adjustments to reconcile net income to net cash provided by
  operating activities:
     Depreciation and amortization..........................   18,555     15,011    12,490
     Cumulative effect of change in accounting principle....    8,245         --        --
     Deferred income tax (benefit) expense..................   (1,489)     8,718    (6,344)
     Gain on disposals of property and equipment............     (594)      (783)      (92)
     Changes in operating assets and liabilities:
       (Increase) in inventories............................  (37,840)   (20,383)  (40,236)
       (Increase) in prepaid expenses and other current
        assets..............................................   (2,706)    (5,325)   (3,135)
       (Increase) decrease in other assets..................     (112)    (1,819)      130
       Increase in trade accounts payable...................   20,784      3,330    10,698
       Increase in accrued salaries, wages and benefits.....      691      1,282     1,773
       (Decrease) increase in accrued litigation
        settlement..........................................       --    (20,400)   20,400
       (Decrease) increase in other current liabilities.....     (504)     7,649       232
                                                              -------   --------   -------
Net cash provided by operating activities...................   23,843     14,460     8,657
INVESTING ACTIVITIES
Proceeds from sales of property and equipment...............    3,904      1,614       397
Purchases of property and equipment.........................  (80,964)   (64,641)  (70,187)
Business acquisition........................................   (8,225)        --        --
                                                              -------   --------   -------
Net cash used in investing activities.......................  (85,285)   (63,027)  (69,790)
FINANCING ACTIVITIES
Proceeds from short-term borrowings and long-term debt......  105,359    148,971    89,023
Payments of short-term borrowings and long-term debt........  (41,254)  (102,393)  (30,306)
Proceeds from other issuances of common stock...............    1,068        644       274
                                                              -------   --------   -------
Net cash provided by financing activities...................   65,173     47,222    58,991

Net increase (decrease) in cash.............................    3,731     (1,345)   (2,142)
Cash at beginning of year...................................    5,064      6,409     8,551
                                                              -------   --------   -------
Cash at end of year.........................................  $ 8,795   $  5,064   $ 6,409
                                                              =======   ========   =======
</TABLE>

See accompanying notes.


DISCOUNT AUTO PARTS LOGO                                                      19
<PAGE>   22

                           DISCOUNT AUTO PARTS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 1, 1999

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

  Discount Auto Parts, Inc. is a specialty retailer and supplier of automotive
replacement parts, maintenance items and accessories to both Do-It-Yourself
("DIY") consumers and professional mechanics and service technicians. As of June
1, 1999, June 2, 1998, and June 3, 1997, the Company operated a chain of 558,
452, and 400 stores, respectively. As of June 1, 1999, 409 of the stores were
located in Florida, 83 were located in Georgia, 32 in Mississippi, 18 in
Alabama, 12 in Louisiana and four 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 June 1, 1999 and June 2, 1998 consisted of 52
weeks. The year ended June 3, 1997 consisted of 53 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.

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.

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.

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.


20                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   23

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 a receivable. Advertising expense, net of vendor rebates, was approximately
$4.0 million for fiscal 1999, $2.3 million for fiscal 1998, and $2.1 million for
fiscal 1997.

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.

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
their 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. The Company does
not anticipate that the adoption of this Statement will have a significant
effect on its results of operations or financial position.

  Effective June 3, 1998, the Company adopted Statement No. 130, Reporting
Comprehensive Income, which established new rules for the reporting and display
of comprehensive income and its components. Statement No. 130 had no impact on
the Company's financial statements.


DISCOUNT AUTO PARTS LOGO                                                      21
<PAGE>   24

  Effective June 3, 1998, the Company adopted Statement No. 131, Disclosures
about Segments of an Enterprise and Related Information, which established new
standards for the way public companies report information about operating
segments in annual and interim financial statements. The Company operates in a
single segment and accordingly, no segment disclosures are warranted for the
fiscal years ended 1999, 1998 and 1997.

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 inventories 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 and 1997, 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
during the respective fiscal years.

<TABLE>
<CAPTION>
                                                              FISCAL YEAR ENDED
                                                              -----------------
                                                              JUNE 2    JUNE 3
                                                               1998      1997
                                                              -------   -------
<S>                                                           <C>       <C>
As Reported:................................................  $27,180   $12,741
Net income per basic share..................................  $  1.64   $   .77
Net income per diluted share................................  $  1.63   $   .77
Pro Forma:..................................................  $26,073   $11,457
Net income per basic share..................................  $  1.57   $   .69
Net income per diluted share................................  $  1.56   $   .69
</TABLE>

3.  PROPERTY AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                             JUNE 1, 1999   JUNE 2, 1998   LIFE (YEARS)
                                                             ------------   ------------   ------------
<S>                                                          <C>            <C>            <C>
Land.......................................................    $166,715       $134,582
Buildings..................................................     165,258        138,338     5 - 31.5
Furniture, fixtures and equipment..........................     102,119         73,762     5 - 7
Building and leasehold improvements........................       3,346          3,102     5 - 31.5
Automotive equipment.......................................       4,505          3,741     3 - 7
Construction in progress...................................      16,051         26,466
                                                               --------       --------
                                                               $457,994       $379,991
                                                               ========       ========
</TABLE>

  Depreciation expense totaled approximately $18,415,000, $14,880,000, and
$12,387,000 for fiscal years 1999, 1998 and 1997, respectively.


22                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   25

4.  LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                              JUNE 1, 1999   JUNE 2, 1998
                                                              ------------   ------------
<S>                                                           <C>            <C>
Revolving credit agreements.................................    $170,000       $103,495
Senior term notes...........................................      50,000         50,000
Senior secured notes........................................       7,200          9,600
                                                                --------       --------
                                                                 227,200        163,095
Less current maturities.....................................      (2,400)        (2,400)
                                                                --------       --------
                                                                $224,800       $160,695
                                                                ========       ========
</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 is 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
replaces 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 of senior term notes
(the "Notes"). The Notes provide for interest at a fixed rate of 7.46%, payable
semi-annually, with semi-annual principal payments of $7.1 million, beginning
July 15, 2004.

  At June 1, 1999, and June 2, 1998, the Company's weighted average interest
rate on its borrowings under the revolving credit agreements were 5.3% and 6.0%,
respectively.

  As of June 1, 1999, the Company had approximately $95.0 million of available
borrowings, after giving retroactive effect to the New Revolver.

  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 $15.6 million at June 1, 1999.


DISCOUNT AUTO PARTS LOGO                                                      23
<PAGE>   26

  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 Revolver and the
Notes, as of June 1, 1999, approximately $47.4 million of retained earnings were
available for dividend distribution.

  Annual maturities, as of June 1, 1999, of all long-term debt for the next five
years are as follows (in thousands):

<TABLE>
<CAPTION>
FISCAL YEAR                                                   AMOUNT
-----------                                                   ------
<S>                                                           <C>
2000........................................................  $2,400
2001........................................................   2,400
2002........................................................   1,200
2003........................................................   1,200
2004........................................................       0
</TABLE>

  The table excludes amounts due under the Revolver as a result of its
subsequent replacement with the New Revolver which is due in July 2004.

  Total interest paid during fiscal years 1999, 1998 and 1997 was approximately
$13,175,000, $8,402,000, and $6,287,000, respectively, net of capitalized
interest. Capitalized interest for fiscal years 1999, 1998 and 1997 totaled
approximately $668,000, $384,000, and $281,000, 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 June 1, 1999, 26 of the 39 Rose retail
locations were in operation. Consistent with its plan, Discount Auto Parts has
not continued operations in any of 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.

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 June
1, 1999, 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.


24                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   27

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>
2000........................................................  $ 4,696
2001........................................................    4,049
2002........................................................    2,606
2003........................................................      646
2004 and thereafter.........................................      638
                                                              -------
                                                              $12,635
                                                              =======
</TABLE>

  Rental expense for fiscal years 1999, 1998 and 1997 totaled approximately
$5,094,000, $1,987,000, and $1,815,000, respectively. Rental expense in each of
the fiscal years includes approximately $127,000 of rent paid to a partnership,
which 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 1999, 1998 and 1997 totaled
approximately $719,000, $492,000, and $328,000, respectively.

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
1999, 1998 and 1997 were approximately $964,000, $864,000, and $547,000,
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 June 1, 1999 and June 2, 1998, the Company has accrued approximately
$890,000 and $880,000, 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


DISCOUNT AUTO PARTS LOGO                                                      25
<PAGE>   28

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 1999, 1998 and 1997, 8,805,
9,740, and 15,082 shares, respectively, were purchased under the terms of the
Purchase Plan. As of June 1, 1999, 477,955 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
members options to purchase shares of its common stock. A total of 1,700,000
shares of common stock were initially reserved for issuance under the plans and,
as of June 1, 1999, a total of 1,612,556 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.

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

<TABLE>
<CAPTION>
                                            JUNE 1, 1999        JUNE 2, 1998        JUNE 3, 1997
                                          -----------------   -----------------   -----------------
                                                   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........   1,127     $21       1,017     $21         955     $21
Granted.................................     333      27         218      19         117      22
Exercised...............................     (51)     18         (27)     24          (4)     18
Canceled................................     (72)     24         (81)     22         (51)     21
                                          ------              ------              ------
Outstanding at end of year..............   1,337     $23       1,127     $21       1,017     $21
                                          ======              ======              ======
Exercisable at end of year..............     445     $21         289     $22         138     $21
                                          ======              ======              ======
Weighted-average fair value of options
  granted during the year...............  $14.22              $ 9.98              $11.66
                                          ======              ======              ======
</TABLE>

  Exercise prices for options exercised during 1999 ranged from approximately
$16 to $24. Exercise prices for options outstanding as of June 1, 1999 ranged
from approximately $16 to $31. The weighted-average remaining contractual life
of those options is 6.4 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 June 1,
1999, 15,000 options had been granted under this plan at an average price of
$23.96. As of June 1, 1999, 7,750 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 6.50% for 1999, 5.75% for


26                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   29

1998 and 6.00% for 1997; volatility factor of .405 for 1999 and 1998 and .376
for 1997; 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.

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

<TABLE>
<CAPTION>
                                                               1999      1998      1997
                                                              -------   -------   -------
<S>                                                           <C>       <C>       <C>
Pro forma net income........................................  $18,579   $26,680   $12,443
Pro forma net income per basic share........................  $  1.12   $  1.61   $   .75
Pro forma net income per diluted share......................  $  1.11   $  1.60   $   .75
</TABLE>

10.  INCOME TAXES

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

<TABLE>
<CAPTION>
                                                                        FISCAL YEAR ENDED
                                                          ---------------------------------------------
                                                          JUNE 1, 1999    JUNE 2, 1998    JUNE 3, 1997
                                                          -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>
Current:
  Federal...............................................     $12,233         $ 7,442         $12,185
  State.................................................       2,129             853           2,139
                                                             -------         -------         -------
                                                              14,362           8,295          14,324
Deferred:
  Federal...............................................       2,062           7,468          (5,438)
  State.................................................         342           1,250            (906)
                                                             -------         -------         -------
                                                               2,404           8,718          (6,344)
                                                             -------         -------         -------
                                                             $16,766         $17,013         $ 7,980
                                                             =======         =======         =======
</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
                                                          ---------------------------------------------
                                                          JUNE 1, 1999    JUNE 2, 1998    JUNE 3, 1997
                                                          -------------   -------------   -------------
<S>                                                       <C>             <C>             <C>
Federal income taxes at statutory rate..................     $15,339         $15,468         $ 7,252
State income taxes, net of federal tax benefit..........       1,606           1,367             801
Other items, net........................................        (179)            178             (73)
                                                             -------         -------         -------
                                                             $16,766         $17,013         $ 7,980
                                                             =======         =======         =======
</TABLE>


DISCOUNT AUTO PARTS LOGO                                                      27
<PAGE>   30

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

<TABLE>
<CAPTION>
                                                              JUNE 1, 1999   JUNE 2, 1998
                                                              ------------   ------------
<S>                                                           <C>            <C>
Deferred tax assets:
  Change in inventory accounting method.....................    $ 3,894         $   --
  Various accrued expenses..................................        828          1,204
  Other, net................................................        665            274
                                                                -------         ------
          Total deferred tax assets.........................      5,387          1,478
Deferred tax liabilities:
  Depreciation..............................................      7,482          5,435
  Accrued liabilities.......................................      1,103            866
  Inventory related items...................................        980            844
  Other, net................................................        503            503
                                                                -------         ------
          Total deferred tax liabilities....................     10,068          7,648
                                                                -------         ------
Net deferred tax liability..................................    $ 4,681         $6,170
                                                                =======         ======
</TABLE>

  For fiscal years 1999, 1998 and 1997, the Company paid income taxes of
approximately $15,526,000, $6,723,000, and $15,110,000, respectively.

11.  LITIGATION SETTLEMENT

  In February 1997, a complaint was filed by Airgas, Inc. and certain Airgas
affiliates against several defendants, including the Company and one of its
employees. The complaint alleged, among other things, that the Company took part
in a conspiracy with other companies and individuals unrelated to Discount Auto
Parts, Inc. to defraud Airgas in connection with commercial sales of refrigerant
R-12 (freon) and sought compensatory damages in excess of $20 million, treble
damages and other relief totaling in excess of $80 million. The trial was
scheduled to begin on August 4, 1997.

  Effective July 26, 1997, the Company entered into a Compromise and Settlement
Agreement (the "Settlement Agreement") with Airgas and its affiliates, the other
defendants, and certain other parties. Under the terms of the Settlement
Agreement, the Company purchased from Airgas Specialty Gases, on an "as is,
where is" basis, approximately 6,500 cylinders believed to contain an
alternative to R-12 refrigerant for an aggregate price of $4.0 million, which
represented a price that was believed by the Company to be approximately $3.6
million in excess of the current market value of such product. In addition, the
Company agreed to pay an additional $13.0 million to Airgas Specialty Gases.

  As a separate but related part of the Settlement Agreement, the Company paid
$500,000 to the bankruptcy estate of Refrigeration Station, Inc. ("RSI") to
settle any claims, including claims of preference, that the RSI bankruptcy
estate might have asserted against the Company and purchased from the bankruptcy
estate approximately 7,200 cylinders of merchantable Freeze 12 refrigerant (an
R-12 alternative), for an additional $1.0 million (believed to have a bulk sale
value of approximately $600,000). Discount Auto Parts, Inc., Airgas, the RSI
bankruptcy estate, the other defendants and certain other parties have exchanged
mutual releases of all claims and issues between them. In the Settlement
Agreement, there is no finding or admission of wrongdoing on the part of
Discount Auto Parts, Inc. Based on the terms of the Settlement Agreement, the
Company recorded a charge to earnings in the fourth quarter of fiscal 1997 of
$20,545,000. The charge included related legal expenses.


28                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   31

  The Company is presently involved in litigation with its insurance carrier
pursuant to which the Company is seeking recovery under its insurance policy of
certain amounts incurred in connection with the Airgas litigation and the
settlement thereof. The ultimate outcome of such litigation or an estimate of
the amount of potential insurance recoveries, if any, cannot be determined at
this time. No benefit for any recovery which may result has been reflected in
the accompanying financial statements.

12.  COMMITMENTS AND CONTINGENCIES

  Except as disclosed in Note 11, the Company is not a party to any other legal
proceedings other than various claims and lawsuits arising in the normal course
of business. Management of the Company does not believe that any such claims or
lawsuits will have a material adverse effect on the Company's financial
condition or results of operation.

  As of June 1, 1999, the Company's cost to complete construction contracts in
progress was approximately $19.3 million.

13.  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 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
Fiscal Year Ended June 2, 1998:
  Net sales.................................................  $109,737   $105,240   $110,329   $122,185
  Gross profit..............................................    42,402     41,350     43,387     48,948
  Net income................................................     6,450      6,087      6,972      7,671
  Basic net income per common share.........................       .39        .37        .42        .46
  Diluted net income per common share.......................       .39        .37        .42        .46
</TABLE>

DISCOUNT AUTO PARTS LOGO                                                      29
<PAGE>   32

REPORT OF MANAGEMENT

Discount Auto Parts, Inc.

  We have prepared the accompanying consolidated financial statements and
related information included herein for the years ended June 1, 1999, June 2,
1998, and June 3, 1997. 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            Chief Financial Officer
</TABLE>


30                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   33

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 June 1, 1999 and June 2, 1998, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the three
years in the period ended June 1, 1999. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Discount Auto Parts, Inc. at June 1, 1999 and June 2, 1998 and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended June 1, 1999, in conformity with generally accepted accounting
principles.

  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
July 2, 1999, except as to
Note 4, as to which the date
is July 29, 1999


DISCOUNT AUTO PARTS LOGO                                                      31
<PAGE>   34

CORPORATE INFORMATION

CORPORATE HEADQUARTERS

Discount Auto Parts, Inc.
4900 Frontage Road, South
Lakeland, Florida 33815
Telephone: (941) 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 Tuesday, October
5, 1999 at:
     The Lakeland Center
     700 West Lemon Street
     Lakeland, Florida 33801

NUMBER OF STOCKHOLDERS

As of August 9, 1999, there were approximately 625 stockholders of record.

FORM 10-K

A copy of the Company's Annual Report on Form 10-K for the fiscal year ended
June 1, 1999, 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 1999            FISCAL 1998
                       ------------------     -------------------
                         HIGH       LOW         HIGH        LOW
                       --------    ------     --------    -------
<S>                    <C>        <C>         <C>        <C>
Qtr 1................  27 1/2     21          20 15/16    17 5/8
Qtr 2................  26         21 1/8      24 15/16    18 3/16
Qtr 3................  26 3/8     19 1/2      22 5/8      18 1/2
Qtr 4................  26 7/16    20 1/16     25 5/8      21 1/8
</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
Chief Financial Officer and Secretary

Warren Shatzer
Director
Former Executive Vice President -- Merchandising,
Discount Auto Parts, Inc.

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

A Gordon Tunstall
Director
President, Tunstall Consulting

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


32                                                      DISCOUNT AUTO PARTS LOGO
<PAGE>   35

                                      LOGO

                             CORPORATE HEADQUARTERS
                           DISCOUNT AUTO PARTS, INC.
                           4900 FRONTAGE ROAD, SOUTH
                            LAKELAND, FLORIDA 33815
                           TELEPHONE: (941) 687-9226
                           WWW.DISCOUNTAUTOPARTS.NET


DISCOUNT AUTO PARTS LOGO                                                      33