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                                                                   EXHIBIT 13

 
                           DISCOUNT AUTO PARTS, INC.
                               1998 ANNUAL REPORT
 
                                 DRIVEN TO WIN
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                           (YEARLY GROWTH BAR GRAPHS)
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TABLE OF CONTENTS
 
              DISCOUNT AUTO PARTS, INC. IS ONE OF THE SOUTHEAST'S LEADING
            SPECIALTY RETAILERS OF AUTOMOTIVE REPLACEMENT PARTS, MAINTENANCE
            ITEMS AND ACCESSORIES FOR THE DO-IT-YOURSELF ("DIY") CONSUMER. AS OF
            AUGUST 12, 1998, DISCOUNT AUTO PARTS OPERATED 467 STORES LOCATED
            THROUGHOUT FLORIDA, GEORGIA, ALABAMA, MISSISSIPPI, SOUTH CAROLINA
            AND LOUISIANA.
 
<TABLE>
                               <S>                                                           <C>
                               LETTER TO SHAREHOLDERS AND TEAM                                  2
 
                               BUILDING THE BUSINESS                                            4
 
                               SELECTED FINANCIAL DATA                                         13
 
                               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                 AND RESULTS OF OPERATIONS                                     14
 
                               CONSOLIDATED STATEMENTS OF INCOME                               20
 
                               CONSOLIDATED BALANCE SHEETS                                     21
 
                               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY                 22
 
                               CONSOLIDATED STATEMENTS OF CASH FLOWS                           23
 
                               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                      24
 
                               REPORT OF MANAGEMENT                                            34
 
                               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS              35
 
                               CORPORATE INFORMATION                                           36
</TABLE>
 
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TO OUR SHAREHOLDERS AND TEAM:


     We're pleased to report another strong fiscal year, with do-it-yourself
("DIY") sales up 23 percent, a 32 percent increase in profits from our core
business, and ending our fourth quarter with some of the highest gross margins
in our history - 40 percent. These strong results continue to give us confidence
that our team is highly motivated and passionate about serving our customers for
a lifetime and developing ideas to better develop our team and serve our
customers. In short, we have the team that is "Driven to Win."

     At fiscal year-end our store count totaled 452, and our Team began to serve
customers in the exciting aftermarket parts markets of Atlanta, Georgia (17
stores) and Mississippi (20 stores), as well as continued expansion in our
existing markets. During July 1998, we also opened our first stores in the State
of Louisiana.

     Our goal is to be the dominant auto parts supplier in every market we
serve. We're the clear leader in Florida, and we continue to cement that top
position by executing what we call our "scorch the earth" strategy. Florida is
one of the fastest growing states, with a total available parts aftermarket of
approximately $4 billion and a ideal climate for year round auto repair work. It
ranks third in the number of registered vehicles, has a median income of $25,255
and is the fourth most populated state in the nation. And most important,
there's still room for us to expand our DIY market dominance in Florida by
continuing to open more stores in the state while continuing to position
Discount Auto Parts to be the aftermarket parts supplier to the vast amount of
commercial installer customers we will be serving. With nearly a quarter of our
stores outside the state of Florida, we believe we have built the same
foundation to "scorch the earth" in every market we serve. We're focused, we're
confident, and we're in motion.

     We doubled the size of our distribution center this year. This will allow
us to expand our total SKU count availability, as well as better serve our DIY
and commercial installer customers. With a higher percentage of products in
stock, customers rarely have to wait for special orders. In fact, our
distribution center filled, on average, approximately 97 percent of all orders
requested by our stores. Our expanded 600,000 square foot distribution center
will also allow Discount Auto Parts to serve more stores with greater
efficiency. This will provide our Express Warehouses with daily delivery of
thousands of new part numbers. Our Express Warehouse, a mini-distribution
center, was introduced this year and we currently have four opened with four
more under development for fiscal 1999. These sites are designed to provide
tremendous parts availability to our DIY and commercial customers.

     Like many industries, ours is consolidating, with significant mergers and
acquisitions by and among many of the top companies. According to the magazine
Automotive Marketing (July 1998), the top 10 national chains now account for 70
percent of all stores on the Top 100. It can be expected that the top tier
companies, like Discount Auto Parts, will use their strengths - experienced
teams, capital resources and strategic advantages - to continue to capture even
greater market share. We believe the industry will continue to consolidate and
that there continue to be opportunities to expand. One only needs to consider
that the top 10 automotive parts retailers only account for approximately 14% of
the estimated $70 billion parts market.

     As you'll note further on in this Annual Report, our management team has
deep experience in the automotive parts market. With an average of over 12 years
in the business, many starting at the store level, they know the industry and
are well-equipped to lead our charge into new markets and new ventures.
Providing our Team opportunity to grow into anything they dream they can be is a
strategic advantage that has helped us meet every challenge we've faced so far.
We are certain that our Team will carry us ably into the future.



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     This year, Warren Shatzer, our executive vice president of merchandising
retired. The team he's coached and prepared over the years is confidently taking
over where he left off. Warren continues to serve our Company as a director but
we must thank him for his many years of exceptional service as an officer of
Discount Auto Parts. We wish him well in his retirement.

     Our entry this year into the commercial market has allowed us to leverage
our retail capabilities and pursue part of what is believed to be a $45 billion
nationwide market. Careful to protect our core business of retail auto parts,
we've set up a separate business unit to handle the special needs of commercial
installers. You'll read more about this later in this Annual Report. 

                          [PICTURE OF CEO & PRESIDENT]

     We also believe involvement in our communities is important for our team.
Many of our team members are involved in community service, such as youth sport
teams, civic clubs and other activities that help improve their communities. We
support these efforts wholeheartedly. In fact, our team members throughout the
Company raised more than $100,000 for the Children's Miracle Network this year,
on top of participating in the Hope Worldwide toy drive, the Juvenile Diabetes
Foundation, and many other worthy charities.

     As usual, it has been an exciting year. But as exciting as this past year
has been we believe it is simply a stepping stone and outstanding bridge for the
robust times ahead for our Team, our Customers and our Company. History always
identifies moments of great change and we believe fiscal 1998 will be identified
as one of those moments as it relates to Discount Auto Parts. Our commitment to
our Team, our Customers and the numerous new Ideas to operating more efficiently
gives us confidence to march forward toward our goals and continue to be the low
cost provider for our Customers.

     We thank our over 4,300 team members, our Customers and our shareholders
for their support this past year, and look forward to an exciting and
challenging future for Discount Auto Parts.


/s/ Peter J. Fontaine                                  /s/ William C.  Perkins
Peter J. Fontaine                                      William C. Perkins
Chairman & CEO                                         President & COO



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BUILDING THE BUSINESS

     "There is only one way to build a business. First you build the team,
         and then the team builds the business. There is no other way."
                            Herman and Denis Fontaine
                         Discount Auto Parts Co-Founders

     At Discount Auto Parts, we believe that a company's business strategy is
only as good as the people who execute it. Our 27-year success story can be
credited to the hard work and devotion of our Team, and they are playing a
pivotal role as we move forward with new products into new markets, new ventures
and new opportunities. Our Team is "Driven to Win."

     Our business strategy is driven by what we call the three "P"s: People,
Parts and Profit. People-our Team-are the linchpin of our success. Our expanded
product offering, the second "P", is an important way we can provide our
customers with what they want when they want it. And profit is really what it
all adds up to. It's the yardstick of our success.

     We learned long ago that if we give our Team the tools and skills they need
to succeed, they will. Combine a committed, focused Team with a customer-focused
business strategy, and the result is a win for everyone. Just look at our solid
financial performance for the past five years: sales have grown at 21 percent
annually; operating income has grown at a rate of 19 percent annually; and our
five-year adjusted annual growth in net income has been at a 19 percent rate.

A CUSTOMER-DRIVEN BUSINESS STRATEGY

     It all begins with knowing the customer. The "do-it-yourself" customer has
very specific needs. When he or she is looking for an auto part, it's usually
because the car is either broken down, or needs work then and now. A convenient,
neighborhood store with convenient store hours is appreciated, and appreciated
even more is the ability to find the right part in stock. In the store, the
customer wants to be assisted by a knowledgeable and courteous store
representative. And price is paramount: our customers are looking for
affordability and that means we need to deliver low cost.

[TEAM MEMBER BEHIND COUNTER HELPING CUSTOMER]

     Discount Auto Parts' success is built on our ability to provide customers
with exactly what they want: convenience, availability, customer service and low
cost. That's the formula for our success.



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IT BEGINS WITH THE TEAM

     A key component of our business strategy is our investment in the training
and development of our Team. We've learned that if the Team understands our core
values, our business strategies and what our customers need, they're better
prepared to execute our plan. Every team member receives not only technical
training, but continual training on the Company's operations, goals and
objectives. The Company's commitment to customer service and low cost is
ingrained in every team member and becomes the guidepost for his or her daily
work.

     The entire Team is tenacious about cost savings-because they understand the
connection between company costs and our ability to provide our customers with
low prices. This company-wide focus on cost control allows us to remain a
low-cost provider in our business-yet still be profitable. We work hard to make
sure that Discount Auto Parts has some of the highest operating margins in the
business.

     Our profitability allows us to open more stores, providing customers with
the convenience they seek and building our revenue and bottom line income in the
process. It also allows us to invest in systems and inventory to ensure parts
are available when customers need them. And, the Team's focus on customer
service builds repeat business, adding even further to our bottom line.

     We're proud to have one of the highest team member retention rates in our
industry. That means our staffing and turnover costs tend to be lower than
others in our industry, which plays a key role in the company's cost-efficiency.

ACHIEVING MARKET DOMINANCE

     Our goal is market dominance and our customer-driven business strategy is a
reliable formula for getting us there. We've proved it in Florida, where we're
number one in almost every market we serve, and we're on our way to proving it
in other states. Starting from our strong base in Florida, we've been
geographically and strategically expanding our presence through the south. We're
now in six states and growing.

     Over the years, we've refined and tested our market strategy so that today,
we have a proven formula for how to enter a market and succeed. Our strategy is
built around the tried and tested concept of store saturation.

                                    [GRAPH]


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STORE SATURATION

     We're often asked why we place Discount Auto Parts stores so close
together. Doesn't the opening of a new Company store reduce sales from the
adjacent store?

     Experience has taught us that immediately after we open a new store in
close proximity to an existing Discount Auto Parts store, we usually see an
overall increase in sales for the entire area. Besides increased total sales,
this store saturation strategy allows us to leverage advertising, distribution
and other costs, helping keep our retail prices low. In addition, we believe
this strategy helps us to attack new markets successfully.

[STORE EXTERIOR]

     If the strategy sounds familiar, it's the same one that's been used
successfully by the retail fast food industry, which shares a focus on customer
convenience. Clustering stores works. We may not have invented it, but we've
certainly refined it.

     We took this strategy to a new level in 1991, when we opened our first
"Discount Auto Parts Depot" store. A depot store is larger than our standard
store, offers a wider assortment of parts and is usually located in a highly
populated urban area. It serves as a sort of hub, surrounded by our standard
mini-depot stores, and not only serves customers, but supports the surrounding
stores with additional parts. We have 23 Discount Auto Parts Depots now, each
carrying an average of 20,000 SKUs.

COMMERCIAL INSTALLERS: NEW SALES OPPORTUNITIES

     For some time, we've been looking at the feasibility of applying our
formula for success to a new, even bigger and faster-growing market: commercial
installers. This market, which is estimated to be over $45 billion in size,
offers us the opportunity for additional sales growth, at a lower capital cost,
since we can leverage our current real estate, systems, and to a great extent,
our inventory.

     Our research told us that this commercial customer wanted access to a large
inventory of high quality parts, a fast delivery system, knowledgeable service
and competitive prices. We knew we had the ability to service each one of those
needs.

     After more than a year of study and test, we began to roll out our
commercial business plan in the third quarter of fiscal 1998, with plans to
expand the roll-out chain-wide over the next 18 to 24 months. When complete we
expect that commercial delivery will be provided from approximately two-thirds
of our store base. Our aim has been to prudently enter this market, adding
incremental sales while taking care to not dilute our retail business, and so
far we've been able to do just that.

                                   PRO 2 CALL
                         Auto Parts for Professionals


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     Using our existing infrastructure, we established "Pro2Call", our
commercial business unit, and staffed it with a team of highly qualified,
dedicated professionals trained to respond to the issues important to commercial
installers. The commercial team operates separately from our retail-focused
team, so that our retail business can continue its own focus without disruption.

     The commercial business actually leverages our existing retail
capabilities. It was fairly simple to expand our Express Warehouse concept to
serve the commercial market. This mini-distribution center concept was
originally intended to provide our retail customer with quick access to an
expanded product line. Usually attached to the depot store in a major
metropolitan market, the Express Warehouse stocks tens of thousands of
additional parts and can serve up to 80 stores in a geographic area.

     We have been able to leverage the Express Warehouse to efficiently service
our commercial customers as well, allowing us to utilize fixed assets-our land
and buildings-more efficiently. We operate four Express Warehouses today and
expect to open another four in the coming fiscal year. Our stores stock
thousands of SKU's and are positioned to serve the retail and commercial
customers' needs. The infrequent times we are unable to serve our customers
needs from our retail store location, the parts can usually be quickly accessed
from our Express Warehouse inventory.

MORE PRODUCTS MEANS BETTER CUSTOMER SERVICE

     It's important that customers find the parts they need quickly and easily,
and to that end, we've expanded our product line extensively through the Depot
and Express Warehouse concepts. After nearly three decades of experience, we
have learned to examine emerging trends in the automotive industry (such as the
increasing proliferation of trucks and sports-utility vehicles) and data on the
popularity of parts to come up with the right mix to serve customer needs.

                                [STORE INTERIOR]
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     Further, we've worked hard to increase margins on parts without sacrificing
our base as a low-cost provider through such mechanisms as premium product
categories.

     The right mix of products is an ever changing challenge, but we believe
we're getting closer every day. Our DIY comparable store sales increase of 7.7%
for fiscal 1998 would appear to be proof positive.

MEET THE SENIOR MANAGEMENT TEAM

     When all is said and done, it's the Team that makes it all happen. We'd
like you to meet some of the men and women who lead our Discount Auto Parts
Team. Our senior management team is experienced, committed, and motivated-and
most important-they're able to motivate and inspire the more than 4,300 Team
Members they lead.

[MEMBERS OF SENIOR MANAGEMENT TEAM: VP - MARKETING, VP - REAL ESTATE,
DIRECTOR - ADMINISTRATION AND INVESTOR RELATIONS, VP - MIS,
VP - HUMAN RESOURCES, DIRECTOR - COMMERCIAL SALES AND CFO]

BILL PERKINS: From Store Clerk to Company President

     When a new team member asks about opportunities to succeed, he or she need
look for inspiration no further than Discount Auto Parts President Bill Perkins.

     In 1983, Bill worked behind the counter at Store #2 on Memorial Boulevard
in Lakeland, Florida. He received his first promotion to team leader in a few
months. Then, in 1985 he was named manager of another Florida store, in 1986 was
promoted to a Training Manager, in 1987 received a promotion to Key Manager and
by 1988 he transferred to corporate headquarters and was placed in charge of
inventory valuation. Just four years later he was named chief financial officer.
In 1994 he took charge of operations and, in 1997, he took the reins as company
president.

     During that same period, Discount Auto Parts grew from less than 50 stores
and $50 million in revenue to 452 stores and $447.5 million in revenue at the
end of fiscal year 1998. Bill Perkins' success story epitomizes the Company's
belief that if you build the team, the team builds the business. And he's not
alone. The depth of experience in the entire senior management team inspires
young team members to believe that old-fashioned hard work and commitment pay
off and that they, too, can build long, successful careers at Discount Auto
Parts.

Operations

     STEVE BAIR, vice president-operations, is a 20-year company veteran who is
directly responsible for day-to-day operation of our stores, and, in fact, Steve
started his career in the stores too. He eventually became a store manager, then
served as division manager and regional manager. His deep experience in our
retail operations has served him well in his senior management role.


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     "I've held just about every position in retail, which gives me a unique
understanding of customer needs, as well as what the team needs to support our
customers. I believe it's important to stay abreast of current management
practices, so I've taken numerous management seminars, Dale Carnegie programs,
the Covey Leadership Conference, as well as others."

Commercial Sales

     JIM MULLIGAN, director-commercial sales, also began his career with
Discount Auto Parts in our stores. During his 12 years at the company, he worked
his way up to division manager and then moved to our corporate headquarters as
merchandising manager. Jim was chosen to head up our entry into the important
commercial market based on his ability to meet head-on every challenge he's been
given.

     "One thing I learned early in my career at Discount Auto Parts: a team
member is given as much responsibility as he or she is capable of and willing to
take on. There's no end to the opportunities available. This year, I've enjoyed
building a new team of capable professionals for our entry into the commercial
market."

Human Resources

     CLEMENT BOTTINO, vice president-human resources, will celebrate his 20th
anniversary with the company next year. His responsibilities include all
staffing and benefits programs, as well as team training and development. Like
so many other senior managers, Clement began his career at the store level and
worked his way up through store and division management positions. This unique
blend of skills and experience makes him a more effective human resources
professional.

     "I was a teacher for a year after college, and coached basketball and
football, and I've called on those skills many times in working with our team.
Executives from other companies have told me they admire our team's performance,
and I tell them the key is training, development and coaching."

[MEMBERS OF SENIOR MANAGEMENT TEAM: DIRECTOR - MERCHANDISING, DISTRIBUTION
CENTER MANAGER, DISTRIBUTION CENTER - GENERAL MANAGER, VP - PURCHASING, 
VP - OPERATIONS & DIRECTOR - PURCHASING]

Distribution

     ROSS MULLIS, general manager-distribution, came to Discount Auto Parts in
1990, working in the shipping department and as a part-time driver. He was
promoted to shipping supervisor and gained experience managing all aspects of
the distribution center. Today, Ross is responsible for the distribution
center's current expansion program and its long-term vision.


     "Planning future distribution needs can be a formidable task, but
fortunately, we have a good handle on where the company is going long-term, and
a good grasp of what's needed by our stores to serve our customers even better."

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     RUSSELL MORRISON, distribution center manager, is a 12-year Discount Auto
Parts veteran, having begun in the distribution center and having run every one
of its departments. Today, he manages our Lakeland distribution center team and
its operations.

     "I work with more than 400 team members and am responsible for our entire
distribution budget. It's a big job-and it gets bigger every year as we continue
to expand through the Southeast. Expansion can only mean more opportunities for
our company and the team. It's an exciting time to be at Discount Auto Parts."

Purchasing

     DAVE VIELE, vice president-purchasing, is a 22-year Discount Auto Parts
veteran with extensive experience in all facets of supply chain management. Dave
began his career loading trucks in the distribution center, and moved up in the
organization over the years, learning all aspects of both distribution and the
buying systems. His natural talent for negotiation has led Dave to his present
position, where he's responsible for inventory performance, profitability and
key vendor negotiations and relationships.

     "I've seen many similarities between my tenure in the U.S. Navy and my
career at Discount Auto Parts. Team work and effective leadership are key in
both organizations. A team needs to work together to accomplish extraordinary
things, and it's not uncommon for our team to exceed expectations. That's what
it's all about at Discount Auto Parts."

[26 DIVISION MANAGERS]

     ROB WILLIS, director-purchasing, has served the company for more than 13
years. He, too, started in our stores, and worked his way up to division
manager. Rob was one of our first Depot store managers, where he developed
expertise in product selection and the testing of new products. He's drawing on
that experience today, in his responsibility for the day to day operations of
the purchasing department, as well as the management and development of our
buyers.

     "The diversity of my job keeps me interested and challenged every day. I
work with talented buyers and get to assist them in selecting new products for
our customers. It's a stimulating environment in which every day brings a new
opportunity and a new test of our skills."


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Merchandising

     TOM MERK, director-merchandising, joined the company in 1989 as a store
manager, and has held several senior management positions and played a major
role in our success in the highly competitive Jacksonville, Florida market. Tom
was experienced in our industry when he joined us: for 15 years he had owned and
operated multiple auto parts stores in New York.

[EIGHT DISTRIBUTION CENTER MANAGERS]

     "As I look back over the past 25 years I can see many changes in the
automotive aftermarket. But one thing hasn't changed, and that's the requirement
to understand the customer's needs- and then be responsive to them. Discount
Auto Parts shares that philosophy, and that's why I came to work here."

Marketing

     STEVE JOINER, vice president-marketing, started work at Discount Auto Parts
in 1983 as an advertising professional, after beginning his career in a Florida
advertising agency. At the time, the company had 32 stores, and Steve was called
on to create its advertising and marketing strategy from scratch. As the company
grew and evolved, so did Steve's job, and he is now responsible for an extensive
marketing and advertising program to support and grow sales.

     "When I received my degree in marketing and journalism I never thought it
would lead to what is now a 15-year career in retail marketing. Advertising is a
key marketing tactic in any retail business, and we're no different. We use it
to prove to our customers daily that we're the low-cost provider of auto parts
in their community."

Real Estate

     CLIFF WILEY, vice president-real estate, began his career in commercial
real estate and joined the Company 14 years ago in the real estate department.
Cliff worked directly for and learned from Co-founder Denis Fontaine, who seemed
to know how to select exactly the right store location. Over the years Cliff has
continued to hone his research and analytical skills.

     "Sometimes I'm asked how my accounting degree has helped me select property
for new stores. Actually, the analytical skills I learned in college have helped
me develop a means of weighing the many factors that go into site selection. We
look at traffic patterns, population, competition, neighborhood demographics-
all sorts of data that must be factored in to come up with the perfect site for
a new store."

Systems

     HANK HARRAH, vice president-information systems, came to the company in
1992, after a more than 20-year career in data processing and information
systems. He leads the company's ongoing efforts to achieve economies through
more effective use of technology and computer systems and has played a key role
in setting up the company's management information systems.


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     "The technology changes that have taken place since my college days have
been enormous. Today, technology means more than a mainframe at corporate
headquarters processing historical data. Technology has an impact on all aspects
of our business. It's especially exciting to use technology to better serve our
customers and team and keep us on the cutting edge of our industry".

Finance

     MIKE MOORE, chief financial officer and a CPA, came to Discount Auto Parts
in 1996 after a 15-year career in public accounting with Ernst & Young LLP. In
fact, Discount Auto Parts was his client for many years, giving him a unique,
below-the-surface perspective on the Company. He brings to his position superb
financial management skills.

     "While my career at Ernst & Young focused on the retail sector, I also
worked in numerous other industry sectors with clients ranging from millions of
dollars in revenues to billions of dollars. Everyday I draw from those
experiences to assist Discount Auto Parts in its growth and market expansion."

Administration / Investor Relations

     KRISTI MULLIS, director-administration and investor relations, joined the
Company's finance department in 1990 after over a decade in the banking
industry. She left banking management to come to Discount Auto Parts and, never
shying from a challenge, has been able to use that experience to help lend shape
and order to several Company programs which included the creation of the
investor relations department when the Company went public in 1992.

     "Talking with our shareholders and working with Wall Street gives me a
broad perspective on our Company and our industry and also generates new ideas
about how we can continue to improve communications with our shareholders and
those who follow our stock. My separate role in risk management affords me the
challenge of identifying, analyzing and correcting potential areas of risk to
the company."

Other Key Management

     While we have separately listed certain key members of management herein,
those individuals are also backed and supported by the Company's 26 Division
Managers ( "DM's"). On average, our DM's have over 12 years of experience with
Discount Auto Parts and are on average 35 years old. These are the members of
management that ensure our over 4,300 team members and our 467-plus stores
perform consistently every day.

     In addition to the DM's, the Company has a distribution center management
team that has on average over 12 years experience with Discount Auto Parts. The
distribution management team oversees our newly expanded 600,000 square foot
distribution center and its approximately 450 team members. Their experience has
helped keep our distribution costs among the lowest in our industry.



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                            SELECTED FINANCIAL DATA
 
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<CAPTION>
                                                                         FISCAL YEAR ENDED
                                                        ----------------------------------------------------
                                                         JUNE 2     JUNE 3     MAY 28     MAY 30     MAY 31
                                                          1998     1997(1)      1996       1995       1994
                                                        --------   --------   --------   --------   --------
                                                         (IN THOUSANDS, EXCEPT PER SHARE DATA AND SELECTED
                                                                          OPERATING DATA)
<S>                                                     <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA
Net sales                                               $447,491   $405,186   $307,476   $253,700   $207,569
Cost of sales, including distribution costs              271,404    256,646    186,917    158,710    131,469
                                                        --------   --------   --------   --------   --------
Gross profit                                             176,087    148,540    120,559     94,990     76,100
Selling, general and administrative expenses             124,125    101,336     80,090     64,081     49,985
                                                        --------   --------   --------   --------   --------
Income from operations                                    51,962     47,204     40,469     30,909     26,115
Litigation settlement                                         --    (20,545)        --         --         --
Other income                                               2,434        187      1,164      1,133        799
Gain on life insurance proceeds                               --         --         --      4,836         --
Interest expense                                         (10,203)    (6,125)    (5,078)    (6,295)    (3,635)
                                                        --------   --------   --------   --------   --------
Income before income taxes                                44,193     20,721     36,555     30,583     23,279
Income taxes                                              17,013      7,980     14,092     10,020      8,962
                                                        --------   --------   --------   --------   --------
Net income                                              $ 27,180   $ 12,741   $ 22,463   $ 20,563   $ 14,317
                                                        ========   ========   ========   ========   ========
Basic net income per common share                       $   1.64   $    .77   $   1.44   $   1.48   $   1.03
                                                        ========   ========   ========   ========   ========
Diluted net income per common share                     $   1.63   $    .77   $   1.41   $   1.47   $   1.02
                                                        ========   ========   ========   ========   ========
Weighted average common shares outstanding                16,604     16,581     15,647     13,907     13,954
 
SELECTED OPERATING DATA
NUMBER OF STORES AT YEAR END                                 452        400        314        248        208
TOTAL STORE SQUARE FOOTAGE AT YEAR END (IN
  THOUSANDS)(2)                                            2,007      1,836      1,610      1,405      1,197
AVERAGE NET SALES PER STORE (IN THOUSANDS)(3)(4)        $  1,050   $  1,023   $  1,094   $  1,113   $  1,084
AVERAGE NET SALES PER SQUARE FOOT(3)(4)                 $    233   $    212   $    204   $    195   $    195
PERCENTAGE INCREASE (DECREASE) IN COMPARABLE STORE NET
  SALES(4)(5)                                                7.7%       (.6)%      4.9%       5.8%       4.0%
TEAM MEMBERS                                               4,350      3,677      3,148      2,826      2,172
 
BALANCE SHEET DATA
INVENTORIES                                             $172,027   $151,644   $111,408   $ 91,187   $ 59,581
WORKING CAPITAL                                          105,662     80,573     59,801     46,420     34,055
PROPERTY AND EQUIPMENT, NET                              314,519    265,589    208,094    166,169    131,893
TOTAL ASSETS                                             511,735    443,066    338,263    270,832    213,174
LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES             160,695    114,117     50,400     94,550     70,118
STOCKHOLDERS' EQUITY                                     256,885    229,061    216,046    117,895     97,214
</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
    DECREASE FOR FISCAL 1997 HAS BEEN ADJUSTED TO EXCLUDE THE EFFECT OF THE
    FIFTY-THIRD WEEK.
 
                                                                              13
    
                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   16
 
        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 ITEM PRESENTED:
 
<TABLE>
<CAPTION>
                                                              FISCAL YEAR ENDED
                                           --------------------------------------------------------
                                            JUNE 2              JUNE 3              MAY 28
                                             1998       %        1997       %        1996       %
                                           --------   -----    --------   -----    --------   -----
                                                            (DOLLARS IN THOUSANDS)
<S>                                        <C>        <C>      <C>        <C>      <C>        <C>
Net sales                                  $447,491   100.0%   $405,186   100.0%   $307,476   100.0%
Cost of sales, including distribution
  costs                                     271,404    60.7     256,646    63.3     186,917    60.8
                                           --------   -----    --------   -----    --------   -----
  Gross profit                              176,087    39.3     148,540    36.7     120,559    39.2
Selling, general and administrative
     expenses                               124,125    27.7     101,336    25.0      80,090    26.0
                                           --------   -----    --------   -----    --------   -----
  Income from operations                     51,962    11.6      47,204    11.7      40,469    13.2
Litigation settlement                            --      --     (20,545)   (5.1)         --      --
Other income, net                             2,434      .6         187      --       1,164      .4
Interest expense                            (10,203)   (2.3)     (6,125)   (1.5)     (5,078)   (1.7)
                                           --------   -----    --------   -----    --------   -----
Income before income taxes                   44,193     9.9      20,721     5.1      36,555    11.9
Income taxes                                 17,013     3.8       7,980     2.0      14,092     4.6
                                           --------   -----    --------   -----    --------   -----
Net income                                 $ 27,180     6.1%   $ 12,741     3.1%   $ 22,463     7.3%
                                           ========   =====    ========   =====    ========   =====
</TABLE>
 
FISCAL 1998 COMPARED TO FISCAL 1997
 
  NET SALES FOR THE FIFTY-TWO WEEK PERIOD ENDED JUNE 2, 1998 INCREASED $42.3
MILLION, OR 10.4%, OVER NET SALES FOR THE FIFTY-THREE WEEK PERIOD ENDED JUNE 3,
1997. 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 APPROXIMATELY $83.1
MILLION IN 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
 
 14

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   17
 
IMPROVEMENT IN GROSS MARGIN FOR FISCAL 1998 WAS PRIMARILY ATTRIBUTABLE TO LOWER
PRODUCT COSTS AND MODIFICATIONS TO THE COMPANY'S MERCHANDISING STRATEGY.
 
  SELLING, GENERAL AND ADMINISTRATIVE ("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 ROLLOUT 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 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 9 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.
 
FISCAL 1997 COMPARED TO FISCAL 1996
 
  NET SALES FOR THE FIFTY-THREE WEEK PERIOD ENDED JUNE 3, 1997 INCREASED $97.7
MILLION, OR 31.8%, OVER NET SALES FOR THE FIFTY-TWO WEEK PERIOD ENDED MAY 28,
1996. COMMERCIAL SALES OF R-12 FREON REPRESENTED APPROXIMATELY $32.7 MILLION OR
8.1% OF THE TOTAL SALES FOR FISCAL 1997. NET SALES FOR THE FIFTY-THREE WEEKS
ENDED JUNE 3, 1997 FROM THE COMPANY'S CORE RETAIL STORE OPERATIONS INCREASED
$67.7 MILLION OR 22.2% OVER THE FIFTY-TWO WEEK PERIOD ENDED MAY 28, 1996.
COMPARABLE STORE SALES FROM THE COMPANY'S CORE RETAIL STORE OPERATIONS
 
                                                                              15

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   18
 
DECREASED BY .6% FOR FISCAL 1997 ON A COMPARABLE WEEK BASIS, WHEN EXCLUDING
COMMERCIAL SALES OF R-12 FREON. WHEN INCLUDING SUCH SALES, COMPARABLE STORE
SALES INCREASED 9.7% FOR FISCAL 1997 ON A COMPARABLE WEEK BASIS AS COMPARED TO
FISCAL 1996. THE REMAINING INCREASE IN NET SALES FROM THE COMPANY'S CORE
OPERATIONS WAS ATTRIBUTABLE TO APPROXIMATELY $84.0 MILLION IN SALES FROM NEW
STORES OPENED SINCE THE BEGINNING OF FISCAL 1996. AS OF JUNE 3, 1997, THE
COMPANY HAD 400 STORES IN OPERATION COMPARED TO 314 AT THE END OF FISCAL 1996.
 
  GROSS PROFIT FOR THE FIFTY-THREE WEEK PERIOD ENDED JUNE 3, 1997 WAS $148.5
MILLION, OR 36.7% OF NET SALES COMPARED WITH $120.6 MILLION, OR 39.2% OF NET
SALES FOR FISCAL 1996. THE LOWER GROSS PROFIT PERCENTAGE FOR FISCAL 1997 WAS
PRIMARILY THE RESULT OF INCREASED REVENUES ASSOCIATED WITH COMMERCIAL SALES OF
R-12 FREON IN FISCAL 1997, WHICH GENERALLY TEND TO HAVE 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 REDUCTION IN FISCAL 1997 TRADITIONAL DIY GROSS MARGIN WAS PRIMARILY THE
RESULT OF THE CONTINUING EFFECTS OF THE DECREASE IN RETAIL PRICING WHICH
OCCURRED LATE IN THE FOURTH QUARTER OF FISCAL 1996 AND HIGHER PROMOTIONAL
MARKDOWNS WHICH RESULTED FROM INCREASED ADVERTISING EFFORTS IN THE SECOND HALF
OF FISCAL 1997.
 
  SG&A EXPENSES FOR FISCAL 1997 INCREASED BY $21.2 MILLION OVER SUCH EXPENSES
FOR FISCAL 1996, AND DECREASED AS A PERCENTAGE OF NET SALES TO 25.0% FROM 26.0%.
THIS DECREASE WAS PRIMARILY THE RESULT OF THE IMPACT OF THE HIGHER LEVELS OF
COMMERCIAL SALES OF R-12 FREON IN FISCAL 1997, WHICH HAD RELATIVELY LOW SG&A
EXPENSES. THE DECREASE WAS OFFSET IN PART BY AN INCREASE IN NET ADVERTISING
EXPENSE.
 
  AS FURTHER DISCUSSED IN NOTE 9 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 PRIMARILY INCLUDES GAINS AND LOSSES ON REAL ESTATE DISPOSALS AND
INTEREST INCOME. THE DECREASE IN FISCAL 1997 IN OTHER INCOME IS PRIMARILY
ATTRIBUTABLE TO THE LOWER AMOUNT OF NET REAL ESTATE GAINS OF APPROXIMATELY
$100,000 IN FISCAL 1997 AS COMPARED TO $1.5 MILLION OF NET REAL ESTATE GAINS IN
FISCAL 1996.
 
  INTEREST EXPENSE FOR FISCAL 1997 WAS $6.1 MILLION AS COMPARED TO $5.1 MILLION
FOR FISCAL 1996. THE INCREASE FOR FISCAL 1997 WAS PRIMARILY THE RESULT OF
INCREASED AVERAGE BORROWINGS ASSOCIATED WITH NEW STORE GROWTH.
 
  THE COMPANY'S EFFECTIVE TAX RATE FOR FISCAL 1997 WAS 38.5% AS COMPARED WITH
38.6% IN FISCAL 1996.
 
  AFTER REFLECTING THE CHARGE ASSOCIATED WITH THE AIRGAS LITIGATION SETTLEMENT,
NET INCOME FOR FISCAL 1997 WAS $12.7 MILLION OR $.77 PER DILUTED SHARE AS
COMPARED TO $22.5 MILLION OR $1.44 PER DILUTED SHARE REPORTED FOR FISCAL 1996.
EXCLUDING THE IMPACT OF THE LITIGATION SETTLEMENT AND ALL RELATED EXPENSES, NET
INCOME WOULD HAVE BEEN $25.6 MILLION OR $1.54 PER DILUTED SHARE FOR FISCAL 1997.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  NET CASH PROVIDED BY OPERATING ACTIVITIES WAS $14.5 MILLION IN FISCAL 1998,
$8.7 MILLION IN FISCAL 1997 AND $22.8 MILLION IN FISCAL 1996. THE OVERALL
DECREASE IN NET CASH PROVIDED BY OPERATING ACTIVITIES IN FISCAL 1998 AS COMPARED
TO NET CASH PROVIDED BY OPERATING ACTIVITIES IN FISCAL 1996 WAS PRIMARILY THE
RESULT OF THE FUNDING OF THE AIRGAS SETTLEMENT IN FISCAL 1998. THE INCREASE IN
FISCAL 1998 AS COMPARED TO FISCAL 1997 WAS PRINCIPALLY THE
 
 16

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   19
 
RESULT OF AN INCREASE IN NET INCOME, SUBSTANTIAL DEFERRED INCOME TAX EXPENSE IN
FISCAL 1998 AS COMPARED TO A DEFERRED INCOME TAX BENEFIT IN FISCAL 1997,
INVENTORY GROWTH IN FISCAL 1998 AT A LEVEL SUBSTANTIALLY LESS THAN IN FISCAL
1997, AN INCREASE IN THE AMOUNT OF DEPRECIATION AND AN INCREASE IN CURRENT
LIABILITIES, OFFSET IN PART BY THE FUNDING OF THE AIRGAS SETTLEMENT, A DECREASE
IN THE AMOUNT OF INCREASE IN ACCOUNTS PAYABLE AND ADDITIONAL INCREASES IN THE
AMOUNTS OF PREPAID EXPENSES AND OTHER CURRENT ASSETS.
 
  CAPITAL EXPENDITURES FOR FISCAL 1998 WERE $64.6 MILLION AS COMPARED TO $70.2
MILLION IN FISCAL 1997 AND $52.2 MILLION IN FISCAL 1996. THE MAJORITY OF THE
FISCAL 1998 CAPITAL EXPENDITURES RELATED TO THE 53 NEW STORES OPENED DURING THAT
PERIOD AND COSTS ASSOCIATED WITH A MAJOR EXPANSION OF THE COMPANY'S DISTRIBUTION
CENTER, WHICH INVOLVES AN INCREASE OF THE COMPANY'S EXISTING DISTRIBUTION CENTER
FROM APPROXIMATELY 300,000 SQUARE FEET TO APPROXIMATELY 600,000 SQUARE FEET.
MOST OF THE EXPANSION PROJECT HAS BEEN COMPLETED AND THE BALANCE OF THE PROJECT
IS PRINCIPALLY A SIGNIFICANT ADDITION OF OFFICE SPACE. THE TOTAL COST OF THE
EXPANSION IS ESTIMATED TO BE APPROXIMATELY $20 TO $22 MILLION. THROUGH JUNE 2,
1998, THE COMPANY HAS SPENT APPROXIMATELY $12.0 MILLION ON THE DISTRIBUTION
CENTER EXPANSION PROJECT.
 
  THE COMPANY ALSO BEGAN THE ROLLOUT OF A COMMERCIAL DELIVERY SERVICE IN THE
THIRD QUARTER OF FISCAL 1998. THE COMPANY'S COMMERCIAL DELIVERY SERVICE CONSISTS
OF A PROGRAM WHEREBY COMMERCIAL CUSTOMERS (SUCH AS AUTO SERVICE CENTERS,
COMMERCIAL MECHANICS, GARAGES AND THE LIKE) ESTABLISH COMMERCIAL ACCOUNTS WITH
THE COMPANY AND ORDER AUTOMOTIVE PARTS FROM THE COMPANY WITH SUCH PARTS BEING
DELIVERED FROM, OR PICKED UP FROM, NEARBY DISCOUNT AUTO PARTS STORES. DURING
FISCAL 1998, THE COMPANY'S ENTRY INTO THE COMMERCIAL DELIVERY MARKET INVOLVED
TOTAL CAPITAL EXPENDITURES OF APPROXIMATELY $3.6 MILLION. IN ADDITION, THE
COMMERCIAL DELIVERY PROGRAM HAS REQUIRED, AND CAN BE EXPECTED TO CONTINUE TO
REQUIRE, THE COMPANY TO EXTEND TRADE CREDIT TO CERTAIN OF THE COMMERCIAL ACCOUNT
CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS. THE EXTENSION OF SUCH TRADE CREDIT
INCREASES THE CAPITAL REQUIREMENTS ASSOCIATED WITH THE ROLLOUT OF THE PROGRAM
AND EXPOSES THE COMPANY TO CREDIT RISK AND THE ASSOCIATED LOSS ATTRIBUTABLE TO
UNCOLLECTIBLE ACCOUNTS. THE COMPANY HAS ESTABLISHED SYSTEMS TO MANAGE AND
CONTROL SUCH CREDIT RISK. THE AMOUNT OF CAPITAL THAT IS NEEDED FOR 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 AND/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.
 
  THE COMPANY ANTICIPATES THAT TOTAL CAPITAL EXPENDITURES FOR FISCAL 1999,
INCLUDING THE COSTS ASSOCIATED WITH THE ADDITION OF APPROXIMATELY 75 NEW STORES,
THE DISTRIBUTION CENTER EXPANSION AND THE WORKING CAPITAL COSTS ASSOCIATED WITH
THE ROLL-OUT OF THE COMMERCIAL DELIVERY SERVICE, WILL BE IN THE RANGE OF $70
MILLION TO $80 MILLION.
 
  THE COMPANY'S CREDIT FACILITIES ARE DISCLOSED IN NOTE 3 OF THE NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS. AS OF JUNE 2, 1998, THE COMPANY HAD $71.5
MILLION OF ADDITIONAL AVAILABILITY UNDER ITS EXISTING REVOLVING CREDIT AGREEMENT
WITH A SYNDICATE OF BANKS.
 
  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. CONSISTENT WITH ITS HISTORICAL PRACTICE, THE COMPANY EXPECTS
 
                                                                              17

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   20
 
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 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 2, 1998, 36 OR 8.0% 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 BOTH SHORT TERM AND
LONG TERM CAPITAL AND LIQUIDITY NEEDS OF THE COMPANY.
 
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
 
  MANAGEMENT HAS DEVELOPED A PLAN TO MODIFY THE COMPANY'S INFORMATION TECHNOLOGY
TO RECOGNIZE THE YEAR 2000 AND HAS BEGUN CONVERTING CRITICAL DATA PROCESSING
SYSTEMS. THE COMPANY'S YEAR 2000 INITIATIVE IS BEING MANAGED BY A TEAM OF
INTERNAL STAFF AND MANAGEMENT. MANAGEMENT CURRENTLY EXPECTS THE PROJECT TO BE
SUBSTANTIALLY COMPLETE BY EARLY 1999 AND THAT THE COST OF THE YEAR 2000
INITIATIVE, PRINCIPALLY INCLUDING INTERNAL COSTS, WILL NOT BE MATERIAL TO THE
COMPANY'S RESULTS OF OPERATIONS OR FINANCIAL POSITION. FURTHERMORE, THIS PROJECT
IS NOT EXPECTED TO HAVE A SIGNIFICANT EFFECT ON OPERATIONS.
 
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
 
 18

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   21
 
BELIEFS AND THE ASSUMPTIONS MADE BY MANAGEMENT. THESE STATEMENTS INCLUDE THE
WORDS "ANTICIPATES", "EXPECTS", "EXPECTED" 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 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 COMPLETE TIMELY EXPANSION OF THE
DISTRIBUTION CENTER, ABILITY TO SUCCESSFULLY ROLL-OUT THE COMMERCIAL DELIVERY
SERVICE, CREDIT RISK ASSOCIATED WITH THE COMMERCIAL DELIVERY SERVICE,
ENVIRONMENTAL RISKS, AVAILABILITY OF EXPANDED AND EXTENDED CREDIT FACILITIES,
LEGAL EXPENSES ASSOCIATED WITH DISPUTES AND INVESTIGATIONS CONCERNING FREON
MATTERS, POTENTIAL FOR LIABILITY WITH RESPECT TO THESE MATTERS AND OTHER FACTORS
DISCUSSED IN THE REPORTS -- INCLUDING FORM 10-K -- FILED FROM TIME TO TIME BY
THE COMPANY WITH THE SEC.
 
                                                                              19

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   22
 
CONSOLIDATED STATEMENTS OF INCOME
 
<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED
                                                              ----------------------------------------
                                                                JUNE 2         JUNE 3         MAY 28
                                                                 1998           1997           1996
                                                              ----------    ------------    ----------
                                                              (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                           <C>           <C>             <C>
Net sales                                                      $447,491       $405,186       $307,476
Cost of sales, including distribution costs                     271,404        256,646        186,917
                                                               --------       --------       --------
  Gross profit                                                  176,087        148,540        120,559
Selling, general and administrative expenses                    124,125        101,336         80,090
                                                               --------       --------       --------
  Income from operations                                         51,962         47,204         40,469
Litigation settlement                                                --        (20,545)            --
Other income, net                                                 2,434            187          1,164
Interest expense                                                (10,203)        (6,125)        (5,078)
                                                               --------       --------       --------
Income before income taxes                                       44,193         20,721         36,555
Income taxes                                                     17,013          7,980         14,092
                                                               --------       --------       --------
Net income                                                     $ 27,180       $ 12,741       $ 22,463
                                                               ========       ========       ========
Net income per share:
Basic net income per common share                              $   1.64       $   0.77       $   1.44
                                                               ========       ========       ========
Diluted net income per common share                            $   1.63       $   0.77       $   1.41
                                                               ========       ========       ========
Average common shares outstanding                                16,604         16,581         15,647
Dilutive effect of stock options                                    111             73            257
                                                               --------       --------       --------
Average common shares outstanding -- assuming dilution           16,715         16,654         15,904
                                                               ========       ========       ========
</TABLE>
 
SEE ACCOMPANYING NOTES.
 
 20

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   23
 
CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                               JUNE 2     JUNE 3
                                                                1998       1997
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
                                     ASSETS
Current assets:
  Cash                                                        $  5,064   $  6,409
  Inventories                                                  172,027    151,644
  Prepaid expenses and other current assets                     17,657     12,332
  Deferred income taxes                                             --      6,312
                                                              --------   --------
       Total current assets                                    194,748    176,697
Property and equipment                                         379,991    316,315
  Less allowances for depreciation and amortization            (65,472)   (50,726)
                                                              --------   --------
                                                               314,519    265,589
Other assets                                                     2,468        780
                                                              --------   --------
Total assets                                                  $511,735   $443,066
                                                              ========   ========
 
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Trade accounts payable                                      $ 67,083   $ 63,753
  Accrued salaries, wages and benefits                           7,317      6,035
  Litigation settlement                                             --     20,400
  Deferred income taxes                                          1,101         --
  Other current liabilities                                     11,185      3,536
  Current maturities of long-term debt                           2,400      2,400
                                                              --------   --------
       Total current liabilities                                89,086     96,124
Deferred income taxes                                            5,069      3,764
Long-term debt                                                 160,695    114,117
 
Stockholders' equity:
  Preferred stock, $.01 par value, 5,000 shares
     authorized, none issued or outstanding                         --         --
  Common Stock, $.01 par value, 50,000 shares
     authorized, 16,630 and 16,594 shares issued and
     outstanding at June 2, 1998 and June 3, 1997,
     respectively                                                  166        166
 Additional paid-in capital                                    141,163    140,519
 Retained earnings                                             115,556     88,376
                                                              --------   --------
       Total stockholders' equity                              256,885    229,061
                                                              --------   --------
Total liabilities and stockholders' equity                    $511,735   $443,066
                                                              ========   ========
</TABLE>
 
SEE ACCOMPANYING NOTES.
 
                                                                              21

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   24
 
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 30, 1995                            $    --    13,912    $139     $ 64,584    $ 53,172   $117,895
Stock issued under stock purchase and stock
  option plans                                                    13      --          273          --        273
Stock issued in secondary stock offering                       2,650      27       75,388          --     75,415
Net income                                                                                     22,463     22,463
                                                   -------    ------    ----     --------    --------   --------
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
                                                   =======    ======    ====     ========    ========   ========
</TABLE>
 
SEE ACCOMPANYING NOTES.
 
 22

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   25
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                     FISCAL YEAR ENDED
                                                              --------------------------------
                                                               JUNE 2      JUNE 3      MAY 28
                                                                1998        1997        1996
                                                              --------    --------    --------
                                                                       (IN THOUSANDS)
<S>                                                           <C>         <C>         <C>
Operating activities
Net income                                                    $ 27,180    $ 12,741    $ 22,463
Adjustments to reconcile net income to net cash provided
    by operating activities:
  Depreciation and amortization                                 15,011      12,490       9,936
  Deferred income tax expense (benefit)                          8,718      (6,344)      1,696
  Gain on disposals of property and equipment                     (783)        (92)     (1,452)
  Changes in operating assets and liabilities:
     (Increase) in inventories                                 (20,383)    (40,236)    (20,221)
     (Increase) in prepaid expenses and other current assets    (5,325)     (3,135)     (2,099)
     (Increase) decrease in other assets                        (1,819)        130         (85)
     Increase in trade accounts payable                          3,330      10,698      11,749
     Increase in accrued salaries, wages and benefits            1,282       1,773         543
     (Decrease) increase in accrued litigation settlement      (20,400)     20,400          --
     Increase in other current liabilities                       7,649         232         232
                                                              --------    --------    --------
Net cash provided by operating activities                       14,460       8,657      22,762
 
Investing activities
Proceeds from sales of property and equipment                    1,614         397       1,896
Purchases of property and equipment                            (64,641)    (70,187)    (52,185)
                                                              --------    --------    --------
Net cash used in investing activities                          (63,027)    (69,790)    (50,289)
 
Financing activities
Proceeds from short-term borrowings and long-term debt         148,971      89,023      34,000
Payments of short-term borrowings and long-term debt          (102,393)    (30,306)    (78,940)
Net proceeds from secondary offering of common stock                --          --      75,415
Proceeds from other issuances of common stock                      644         274         273
                                                              --------    --------    --------
Net cash provided by financing activities                       47,222      58,991      30,748
 
Net (decrease) increase in cash                                 (1,345)     (2,142)      3,221
Cash at beginning of year                                        6,409       8,551       5,330
                                                              --------    --------    --------
Cash at end of year                                           $  5,064    $  6,409    $  8,551
                                                              ========    ========    ========
</TABLE>
 
SEE ACCOMPANYING NOTES.
 
                                                                              23

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   26
 
                           DISCOUNT AUTO PARTS, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 2, 1998
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
BUSINESS
 
  DISCOUNT AUTO PARTS, INC. IS A SPECIALTY RETAILER OF AUTOMOTIVE REPLACEMENT
PARTS, MAINTENANCE ITEMS AND ACCESSORIES FOR THE "DO-IT-YOURSELF" CONSUMER.
DURING THE THIRD QUARTER OF FISCAL 1998, THE COMPANY ALSO BEGAN SERVICING THE
COMMERCIAL INSTALLER MARKET THROUGH THE ROLLOUT OF ITS COMMERCIAL DELIVERY
PROGRAM. AS OF JUNE 2, 1998, JUNE 3, 1997, AND MAY 28, 1996, THE COMPANY
OPERATED A CHAIN OF 452, 400, AND 314 STORES, RESPECTIVELY. AS OF JUNE 2, 1998,
351 OF THE STORES WERE LOCATED IN FLORIDA, 61 WERE LOCATED IN GEORGIA, 20 IN
MISSISSIPPI, 16 IN ALABAMA, 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 2, 1998 AND MAY 28, 1996 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.
 
INVENTORIES
 
  INVENTORIES ARE REPORTED AT THE LOWER OF COST OR MARKET USING THE FIRST-IN,
FIRST-OUT (FIFO) METHOD.
 
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.
 
PRE-OPENING COSTS
 
  COSTS ASSOCIATED WITH THE OPENING OF NEW STORES, WHICH PRIMARILY CONSISTS OF
PAYROLL AND OCCUPANCY COSTS, ARE CHARGED AGAINST OPERATIONS AS INCURRED.
 
 24

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   27
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
ADVERTISING COSTS
 
  THE COMPANY EXPENSES ITS SHARE OF ALL ADVERTISING COSTS AS SUCH COSTS ARE
INCURRED. THE PORTION OF ADVERTISING EXPENDITURES, WHICH ARE TO BE RECOVERED
THROUGH VENDOR COOPERATIVE ADVERTISING AND OTHER SIMILAR PROGRAMS, ARE RECORDED
AS RECEIVABLES. ADVERTISING EXPENSE, NET OF VENDOR REBATES, WAS APPROXIMATELY
$2.3 MILLION FOR FISCAL 1998, $2.1 MILLION FOR FISCAL 1997 AND WAS INSIGNIFICANT
FOR FISCAL 1996.
 
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.
 
EARNINGS PER SHARE
 
  IN 1997, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED STATEMENT NO. 128,
EARNINGS PER SHARE. STATEMENT 128 REPLACED THE CALCULATION OF PRIMARY AND FULLY
DILUTED EARNINGS PER SHARE WITH BASIC AND DILUTED EARNINGS PER SHARE. BASIC
EARNINGS PER SHARE IS COMPUTED BY DIVIDING NET INCOME BY THE WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING DURING THE YEAR. THE COMPUTATION OF DILUTED
EARNINGS PER SHARE INCLUDES THE DILUTIVE EFFECT OF STOCK OPTIONS. ALL EARNINGS
PER SHARE AMOUNTS FOR ALL PERIODS HAVE BEEN PRESENTED, AND WHERE APPROPRIATE,
RESTATED TO CONFORM TO THE REQUIREMENTS OF STATEMENT 128.
 
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 APPROXIMATE
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.
 
                                                                              25

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   28
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
NEW ACCOUNTING STANDARDS
 
  IN 1997, THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUED STATEMENT NO. 130,
REPORTING COMPREHENSIVE INCOME AND NO. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. THESE STATEMENTS, WHICH ARE EFFECTIVE FOR
FISCAL YEARS BEGINNING AFTER DECEMBER 15, 1997, EXPAND OR MODIFY DISCLOSURES AND
ARE NOT EXPECTED TO HAVE AN IMPACT ON THE COMPANY'S CONSOLIDATED FINANCIAL
POSITION, RESULTS OF OPERATIONS OR CASH FLOWS.
 
2. PROPERTY AND EQUIPMENT
 
PROPERTY AND EQUIPMENT CONSISTS OF THE FOLLOWING (DOLLARS IN THOUSANDS):
 
<TABLE>
<CAPTION>
                                                              JUNE 2, 1998    JUNE 3, 1997    LIFE (YEARS)
                                                              ------------    ------------    ------------
<S>                                                           <C>             <C>             <C>
LAND                                                            $134,582        $104,103
BUILDINGS                                                        138,338         132,540        5 -- 31.5
FURNITURE, FIXTURES AND EQUIPMENT                                 73,762          61,581        5 -- 7
BUILDING AND LEASEHOLD IMPROVEMENTS                                3,102           3,021        5 -- 31.5
AUTOMOTIVE EQUIPMENT                                               3,741           3,725        3 -- 7
CONSTRUCTION IN PROGRESS                                          26,466          11,345
                                                                --------        --------
                                                                $379,991        $316,315
                                                                ========        ========
</TABLE>
 
  DEPRECIATION EXPENSE TOTALED APPROXIMATELY $14,880,000, $12,387,000, AND
$9,815,000 FOR FISCAL YEARS 1998, 1997 AND 1996, RESPECTIVELY.
 
3. LONG-TERM DEBT
 
LONG-TERM DEBT CONSISTS OF THE FOLLOWING (IN THOUSANDS):
 
<TABLE>
<CAPTION>
                                                              JUNE 2, 1998    JUNE 3, 1997
                                                              ------------    ------------
<S>                                                           <C>             <C>
REVOLVING LOAN                                                  $     --        $ 12,500
REAL ESTATE ACQUISITION AND CONSTRUCTION LINES OF CREDIT              --          92,017
REVOLVING CREDIT AGREEMENT                                       103,495              --
SENIOR TERM NOTES                                                 50,000              --
SENIOR SECURED NOTES                                               9,600          12,000
                                                                --------        --------
                                                                 163,095         116,517
LESS CURRENT MATURITIES                                           (2,400)         (2,400)
                                                                --------        --------
                                                                $160,695        $114,117
                                                                ========        ========
</TABLE>
 
  AS OF JUNE 3, 1997, THE COMPANY HAD AN UNSECURED REVOLVING LOAN AGREEMENT WITH
A BANK. THE AGREEMENT PROVIDED FOR MAXIMUM BORROWINGS OF $20 MILLION, INCLUDING
UP TO $1 MILLION FOR LETTERS OF CREDIT. INTEREST WAS PAYABLE MONTHLY AND WAS A
FUNCTION OF THE PRIME RATE OR THE LONDON INTERBANK OFFERED RATE (LIBOR).
 
  THE COMPANY'S REAL ESTATE ACQUISITION AND CONSTRUCTION LINES OF CREDIT
PROVIDED FOR MAXIMUM AGGREGATE BORROWINGS OF $130 MILLION FOR THE ACQUISITION
AND CONSTRUCTION OF PROPERTIES. INTEREST WAS PAYABLE MONTHLY AND WAS A FUNCTION
OF THE PRIME RATE OR LIBOR. THE FACILITIES WERE PROVIDED BY TWO SEPARATE BANKS.
 
 26

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   29
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  EFFECTIVE JULY 16, 1997, THE COMPANY REPLACED ITS AFOREMENTIONED CREDIT
FACILITIES WITH A NEW THREE YEAR $175 MILLION UNSECURED REVOLVING CREDIT
AGREEMENT (THE "REVOLVER") DUE IN FISCAL YEAR 2001. THE RATE OF INTEREST PAYABLE
UNDER THE REVOLVER IS A FUNCTION OF LIBOR OR THE PRIME RATE OF THE LEAD AGENT
BANK, AT THE OPTION OF THE COMPANY. THE COMPANY MAY INCREASE THE AMOUNT OF THE
FACILITY TO $200 MILLION WITH THE CONSENT OF THE SYNDICATE OF BANKS. DURING THE
TERM OF THE REVOLVER, THE COMPANY IS OBLIGATED TO PAY A FEE OF .125% PER ANNUM
FOR THE UNUSED PORTION OF THE REVOLVER.
 
  EFFECTIVE AUGUST 8, 1997, THE COMPANY ISSUED $50 MILLION OF SENIOR TERM NOTES
(THE "NOTES"). THE NOTES PROVIDE FOR INTEREST AT A FIXED RATE OF 7.46%, PAYABLE
SEMI-ANNUALLY, WITH SEMI-ANNUAL PRINCIPAL PAYMENTS OF $7.1 MILLION, BEGINNING
JULY 15, 2004. THE NET PROCEEDS FROM THE NOTES WERE USED TO REDUCE THE COMPANY'S
INDEBTEDNESS UNDER THE REVOLVER.
 
  AT JUNE 2, 1998 AND JUNE 3, 1997, THE COMPANY'S WEIGHTED AVERAGE INTEREST RATE
ON ITS BORROWINGS UNDER THE REVOLVER, THE REVOLVING LOAN, AND THE REAL ESTATE
ACQUISITION AND CONSTRUCTION LINES OF CREDIT WERE 6.0% AND 6.2%, RESPECTIVELY.
 
  AS OF JUNE 2, 1998, THE COMPANY HAD APPROXIMATELY $71.5 MILLION OF AVAILABLE
BORROWINGS UNDER THE 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 $17.9 MILLION AT JUNE 2, 1998.
 
  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 2, 1998, APPROXIMATELY $36.9 MILLION OF RETAINED EARNINGS WAS
AVAILABLE FOR DIVIDEND DISTRIBUTION.
 
  ANNUAL MATURITIES, AS OF JUNE 2, 1998, OF ALL LONG-TERM DEBT FOR THE NEXT FIVE
YEARS ARE AS FOLLOWS (IN THOUSANDS):
 
<TABLE>
<CAPTION>
FISCAL YEAR                                                   AMOUNT
-----------                                                   ------
<S>                                                           <C>
1999                                                          $2,400
2000                                                           2,400
2001                                                           2,400
2002                                                           1,200
2003                                                           1,200
</TABLE>
 
                                                                              27

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   30
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  THE AMOUNTS EXCLUDE AMOUNTS DUE IN FISCAL YEAR 2001 UNDER THE REVOLVER
DESCRIBED ABOVE, BECAUSE MANAGEMENT BELIEVES BASED UPON HISTORICAL PERFORMANCE
THAT THE AGREEMENT WILL BE RENEWED OR REPLACED PRIOR TO ITS EXPIRATION.
 
  TOTAL INTEREST PAID DURING FISCAL YEARS 1998, 1997 AND 1996 WAS APPROXIMATELY
$8,402,000, $6,287,000, AND $5,518,000, RESPECTIVELY, NET OF CAPITALIZED
INTEREST. CAPITALIZED INTEREST FOR FISCAL YEARS 1998, 1997 AND 1996 TOTALED
APPROXIMATELY $384,000, $281,000 AND $118,000, RESPECTIVELY.
 
4. STOCKHOLDERS' EQUITY
 
  IN OCTOBER 1995, THE COMPANY CONSUMMATED A SECONDARY PUBLIC OFFERING OF
APPROXIMATELY 2,650,000 SHARES OF ITS COMMON STOCK. FROM THE OFFERING, THE
COMPANY REALIZED NET PROCEEDS OF APPROXIMATELY $75.4 MILLION. PROCEEDS FROM THE
OFFERING WERE USED TO REPAY CERTAIN INDEBTEDNESS OF APPROXIMATELY $71.1 MILLION.
THE BALANCE OF THE NET PROCEEDS WERE USED FOR GENERAL CORPORATE PURPOSES.
 
  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
2, 1998, 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.
 
5. 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>
1999                                                          $1,810
2000                                                           1,433
2001                                                           1,214
2002                                                             788
2003 and thereafter                                              380
                                                              ------
                                                              $5,625
                                                              ======
</TABLE>
 
  RENTAL EXPENSE FOR FISCAL YEARS 1998, 1997 AND 1996 TOTALED APPROXIMATELY
$1,987,000, $1,815,000 AND $1,625,000, 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.
 
 28

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   31
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  THE COMPANY ALSO LEASES CERTAIN PORTIONS OF ITS OWNED FACILITIES TO OUTSIDE
PARTIES. RENTAL INCOME FOR FISCAL YEARS 1998, 1997 AND 1996 TOTALED
APPROXIMATELY $492,000, $328,000 AND $366,000, RESPECTIVELY.
 
6. 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
1998, 1997 AND 1996 WERE APPROXIMATELY $864,000, $547,000 AND $449,000,
RESPECTIVELY.
 
  EFFECTIVE MAY 30, 1995, THE COMPANY ADOPTED 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 2, 1998 AND JUNE 3, 1997,
THE COMPANY HAS ACCRUED APPROXIMATELY $880,000, AND $520,000, RESPECTIVELY, FOR
BENEFITS DUE UNDER THE SEPS PLAN.
 
  THE BOARD OF DIRECTORS HAS ADOPTED A STOCK PURCHASE PLAN (THE "PURCHASE
PLAN"), WHICH INITIALLY RESERVED AN AGGREGATE OF 550,000 SHARES OF COMMON STOCK.
UNDER THE PURCHASE PLAN, ALL TEAM MEMBERS HAVE THE RIGHT TO PURCHASE SHARES OF
COMMON STOCK OF THE COMPANY AT A PRICE EQUAL TO 85% OF THE VALUE OF THE STOCK
IMMEDIATELY PRIOR TO THE BEGINNING OF EACH EXERCISE PERIOD. ALL TEAM MEMBERS ARE
ELIGIBLE TO PARTICIPATE EXCEPT FOR THOSE WHO HAVE BEEN EMPLOYED BY THE COMPANY
FOR LESS THAN ONE YEAR, TEAM MEMBERS WHO CUSTOMARILY WORK TWENTY HOURS OR LESS
PER WEEK, TEAM MEMBERS WHO CUSTOMARILY WORK FIVE MONTHS OR LESS IN ANY CALENDAR
YEAR, AND TEAM MEMBERS OWNING AT LEAST 5% OF THE COMPANY'S STOCK. DURING FISCAL
YEARS 1998, 1997 AND 1996, 9,740, 15,082, AND 7,165 SHARES, RESPECTIVELY, WERE
PURCHASED UNDER THE TERMS OF THE PURCHASE PLAN. AS OF JUNE 2, 1998, 486,760
SHARES OF COMMON STOCK WERE RESERVED FOR ISSUANCE UNDER THE PURCHASE PLAN.
 
7. STOCK OPTION PLANS
 
  THE COMPANY HAS STOCK OPTION PLANS WHICH PROVIDES 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 2, 1998, A TOTAL OF 1,663,787 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.
 
                                                                              29

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   32
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  A SUMMARY OF THE COMPANY'S STOCK OPTION ACTIVITY AND RELATED INFORMATION ARE
AS FOLLOWS (SHARES IN THOUSANDS):
 
<TABLE>
<CAPTION>
                                               JUNE 2, 1998        JUNE 3, 1997        MAY 28, 1996
                                             -----------------   -----------------   -----------------
                                                      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...........   1,017     $21         955     $21         787     $20
Granted....................................     218      19         117      22         198      28
Exercised..................................     (27)     24          (4)     18          (6)     18
Canceled...................................     (81)     22         (51)     21         (24)     21
                                             ------              ------              ------
Outstanding at end of year.................   1,127     $21       1,017     $21         955     $21
                                             ======              ======              ======
Exercisable at end of year.................     289     $22         138     $21          34     $18
                                             ======              ======              ======
Weighted-average fair value of options
  granted during the year..................  $ 9.98              $11.66              $14.59
                                             ======              ======              ======
Shares available for future grants.........   1,704               1,130               1,140
                                             ======              ======              ======
</TABLE>
 
  EXERCISE PRICES FOR OPTIONS EXERCISED DURING 1998 RANGED FROM APPROXIMATELY
$16 TO $22. EXERCISE PRICES FOR OPTIONS OUTSTANDING AS OF JUNE 2, 1998 RANGED
FROM APPROXIMATELY $16 TO $31. THE WEIGHTED-AVERAGE REMAINING CONTRACTUAL LIFE
OF THOSE OPTIONS IS 7 YEARS.
 
  ALL OPTIONS OUTSTANDING GENERALLY VEST BEGINNING AFTER THREE YEARS AND THEN
OVER A FOUR YEAR PERIOD AND HAVE A TEN YEAR DURATION.
 
  IN MAY 1993, THE BOARD OF DIRECTORS ADOPTED THE DISCOUNT AUTO PARTS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN. A TOTAL OF 40,000 SHARES ARE RESERVED
FOR FUTURE ISSUANCE UNDER THIS PLAN. AS OF JUNE 2, 1998, 12,000 OPTIONS HAD BEEN
GRANTED UNDER THIS PLAN AT AN AVERAGE PRICE OF $24.02. AS OF JUNE 2, 1998, 5,250
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 5.75% FOR 1998 AND 6.00% FOR
1997 AND 1996; VOLATILITY FACTOR OF .405 FOR 1998 AND .376 FOR 1997 AND 1996;
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
 
 30

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   33
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
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>
                                                                       1998       1997       1996
                                                                      -------    -------    -------
<S>                                                                   <C>        <C>        <C>
Pro forma net income                                                  $26,680    $12,443    $22,341
Pro forma basic net income per common share                           $  1.61    $   .75    $  1.43
Pro forma diluted net income per common share                         $  1.60    $   .75    $  1.43
</TABLE>
 
8. INCOME TAXES
 
  THE PROVISION FOR INCOME TAXES IS COMPRISED OF THE FOLLOWING (IN THOUSANDS):
 
<TABLE>
<CAPTION>
                                                                                         FISCAL YEAR ENDED
                                                                             ------------------------------------------
                                                                             JUNE 2, 1998   JUNE 3, 1997   MAY 28, 1996
                                                                             ------------   ------------   ------------
<S>                                                                          <C>            <C>            <C>
Current:
  Federal                                                                      $ 7,442        $12,185        $ 10,782
  State                                                                            853          2,139           1,614
                                                                               -------        -------        --------
                                                                                 8,295         14,324          12,396
Deferred:
  Federal                                                                        7,468         (5,438)          1,456
  State                                                                          1,250           (906)            240
                                                                               -------        -------        --------
                                                                                 8,718         (6,344)          1,696
                                                                               -------        -------        --------
                                                                               $17,013        $ 7,980        $ 14,092
                                                                               =======        =======        ========
</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 2, 1998   JUNE 3, 1997   MAY 28, 1996
                                                                             ------------   ------------   ------------
<S>                                                                          <C>            <C>            
Federal income taxes at statutory rate                                         $15,468        $ 7,252        $ 12,794
State income taxes, net of federal tax benefit                                   1,367            801           1,205
Other items, net                                                                   178            (73)             93
                                                                               -------        -------        --------
                                                                               $17,013        $ 7,980        $ 14,092
                                                                               =======        =======        ========
</TABLE>
 
                                                                              31

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   34
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  SIGNIFICANT COMPONENTS OF THE COMPANY'S DEFERRED TAX ASSETS AND LIABILITIES
ARE AS FOLLOWS (IN THOUSANDS):
 
<TABLE>
<CAPTION>
                                                              JUNE 2, 1998   JUNE 3, 1997
                                                              ------------   ------------
<S>                                                           <C>            <C>
Deferred tax assets:
  Litigation settlement                                          $    -        $ 7,224
  Various accrued expenses                                        1,204            702
  Other, net                                                        274            117
                                                                 ------        -------
  Total deferred tax assets                                       1,478          8,043
Deferred tax liabilities:
  Depreciation                                                    5,435          3,910
  Accrued liabilities                                               866            746
  Inventory related items                                           844            553
  Other, net                                                        503            286
                                                                 ------        -------
  Total deferred tax liabilities                                  7,648          5,495
                                                                 ------        -------
Net deferred tax liability (asset)                               $6,170        $(2,548)
                                                                 ======        =======
</TABLE>
 
  FOR FISCAL YEARS 1998, 1997 AND 1996, THE COMPANY PAID INCOME TAXES OF
APPROXIMATELY $6,723,000, $15,110,000 AND $12,962,000, RESPECTIVELY.
 
9.  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
 
 32

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   35
 
                           DISCOUNT AUTO PARTS, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
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.
 
  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.
 
10.  COMMITMENTS AND CONTINGENCIES
 
  EXCEPT AS DISCLOSED IN NOTE 9, 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 2, 1998, THE COMPANY'S COST TO COMPLETE CONSTRUCTION CONTRACTS IN
PROGRESS WAS APPROXIMATELY $12.4 MILLION.
 
11. 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 FISCAL 1997 AND
FIRST TWO QUARTERS OF FISCAL 1998 EARNINGS PER SHARE AMOUNTS HAVE BEEN RESTATED,
WHERE NECESSARY, TO COMPLY WITH SFAS NO. 128, EARNINGS PER SHARE.
 
<TABLE>
<CAPTION>
                                                               FIRST      SECOND      THIRD       FOURTH
                                                              QUARTER    QUARTER    QUARTER(1)   QUARTER
                                                              --------   --------   ----------   --------
                                                               (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                           <C>        <C>        <C>          <C>
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
Fiscal Year Ended June 3, 1997:
  Net sales                                                   $ 90,101   $105,788    $101,876    $107,421
  Gross profit                                                  33,948     36,726      37,853      40,013
  Net income (loss)                                              6,413      6,898       5,612      (6,182)(2)
  BASIC NET INCOME (LOSS) PER COMMON SHARE                         .39        .42         .34        (.37)(2)
  DILUTED NET INCOME (LOSS) PER COMMON SHARE                       .38        .42         .34        (.37)(2)
</TABLE>
 
---------------
 
(1) THE THIRD QUARTER OF FISCAL 1997 INCLUDES 14 WEEKS OF OPERATIONS AS COMPARED
    TO 13 WEEKS OF OPERATIONS FOR ALL OTHER QUARTERS PRESENTED.
(2) INCLUDES A $12.6 MILLION, OR $.76 PER BASIC AND DILUTED INCOME PER COMMON
    SHARE AFTER TAX IMPACT OF THE AIRGAS LITIGATION SETTLEMENT. SEE NOTE 9.
    EXCLUDING THE IMPACT OF THE LITIGATION SETTLEMENT AND ALL RELATED EXPENSES,
    THE COMPANY WOULD HAVE REPORTED NET INCOME OF $6.5 MILLION OR $.39 PER BASIC
    AND DILUTED INCOME PER COMMON SHARE.
 
                                                                              33

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   36
 
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 2, 1998, JUNE 3,
1997 AND MAY 28, 1996. 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>
 
 34

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   37
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 2, 1998 AND JUNE 3, 1997, AND THE RELATED CONSOLIDATED
STATEMENTS OF INCOME, STOCKHOLDERS' EQUITY AND CASH FLOWS FOR EACH OF THE THREE
YEARS IN THE PERIOD ENDED JUNE 2, 1998. 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 2, 1998 AND JUNE 3, 1997 AND THE CONSOLIDATED
RESULTS OF ITS OPERATIONS AND ITS CASH FLOWS FOR EACH OF THE THREE YEARS IN THE
PERIOD ENDED JUNE 2, 1998, IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.
 
                                      /S/ ERNST & YOUNG LLP
 
TAMPA, FLORIDA
JULY 6, 1998
 
                                                                              35

                                                      [DISCOUNT AUTO PARTS LOGO]
<PAGE>   38
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
P.O. BOX 740
TAMPA, FLORIDA 33601
 
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
6, 1998 AT:
          THE LAKELAND CENTER
          700 WEST LEMON STREET
          LAKELAND, FLORIDA 33801
 
NUMBER OF STOCKHOLDERS
AS OF AUGUST 10, 1998, THERE WERE APPROXIMATELY 630 STOCKHOLDERS OF RECORD.
 
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JUNE 2, 1998, 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 1998         FISCAL 1997
           -------------        -----------
           HIGH      LOW        HIGH    LOW
           ----      ---        ----    ---
<S>      <C>        <C>       <C>      <C>
QTR 1    20 15/16   17 5/8    26 1/4   22 3/8
QTR 2    24 15/16   18 3/16   25 7/8   21 1/4
QTR 3    22 5/8     18 1/2    26 3/8   12 7/8
QTR 4    25 5/8     21 1/8    19 1/4   14 1/4
</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
 
 36

 [DISCOUNT AUTO PARTS LOGO]
<PAGE>   39
 
   STORES AS OF AUGUST 12, 1998
 
<TABLE>
    <S>                  <C>    <C>
    STATE                STORES
 
    FLORIDA               354
    GEORGIA                65
    MISSISSIPPI            25
    ALABAMA                17
    SOUTH CAROLINA          4
    LOUISIANA               2
</TABLE>
 
   * DISTRIBUTION CENTER/
     CORPORATE HEADQUARTERS
 
                             [MAP OF UNITED STATES]
 
                           [DISCOUNT AUTO PARTS LOGO]
<PAGE>   40
 
                           [DISCOUNT AUTO PARTS LOGO]
 
                             CORPORATE HEADQUARTERS
                           DISCOUNT AUTO PARTS, INC.
                           4900 FRONTAGE ROAD, SOUTH
                            LAKELAND, FLORIDA 33815
                           TELEPHONE: (941) 687-9226
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