Thirteen Weeks Ended

October 31, 2009

November 1, 2008

Total Revenues

$

472,643,000

$

464,166,000

Net Earnings

$

2,124,000

$

(7,282,000

)

Basic Earnings Per Share:

Average Shares

52,419,000

52,099,000

Net Earnings Per Share

$

0.04

$

(0.14

)

Diluted Earnings Per Share:

Average Shares

52,786,000

52,099,000

Net Earnings Per Share

$

0.04

$

(0.14

)

Thirty-Nine Weeks Ended

October 31, 2009

November 1, 2008

Total Revenues

$

1,458,042,000

$

1,462,252,000

Net Earnings

$

20,768,000

$

2,838,000

Basic Earnings Per Share:

Average Shares

52,379,000

52,106,000

Net Earnings Per Share

$

0.40

$

0.05

Diluted Earnings Per Share:

Average Shares

52,621,000

52,189,000

Net Earnings Per Share

$

0.40

$

0.05

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollar amounts in thousands, except per share amounts)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 31, 2009

November 1, 2008

October 31, 2009

November 1, 2008

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise Sales

$

378,860

80.2

$

378,461

81.5

$

1,169,108

80.2

1,189,872

81.4

Service Revenue

93,783

19.8

85,705

18.5

288,934

19.8

272,380

18.6

Total Revenues

472,643

100.0

464,166

100.0

1,458,042

100.0

1,462,252

100.0

Costs of Merchandise Sales

269,604

71.2

268,235

70.9

826,429

70.7

838,574

70.5

Costs of Service Revenue

84,770

90.4

81,087

94.6

255,553

88.4

250,434

91.9

Total Costs of Revenues

354,374

75.0

349,322

75.3

1,081,982

74.2

1,089,008

74.5

Gross Profit from Merchandise Sales

109,256

28.8

110,226

29.1

342,679

29.3

351,298

29.5

Gross Profit from Service Revenue

9,013

9.6

4,618

5.4

33,381

11.6

21,946

8.1

Total Gross Profit

118,269

25.0

114,844

24.7

376,060

25.8

373,244

25.5

Selling, General and Administrative Expenses

109,545

23.2

119,827

25.8

327,080

22.4

361,445

24.7

Net (Loss) Gain from Dispositions of Assets

1,332

0.3

(53

)

—

1,319

0.1

9,555

0.7

Operating Profit (Loss)

10,056

2.1

(5,036

)

(1.1

)

50,299

3.4

21,354

1.5

Non-operating Income

724

0.2

305

0.1

1,666

0.1

1,797

0.1

Interest Expense

6,922

1.5

7,098

1.5

15,324

1.1

18,977

1.3

Earnings (Loss) From Continuing Operations Before Income Taxes

3,858

0.8

(11,829

)

(2.5

)

36,641

2.5

4,174

0.3

Income Tax Expense (Benefit)

1,501

38.9

(1)

(4,775

)

40.4

(1)

15,363

41.9

(1)

185

4.4

(1)

Net Earnings (Loss) From Continuing Operations

2,357

0.5

(7,054

)

(1.5

)

21,278

1.5

3,989

0.3

Discontinued Operations, Net of Tax

(233

)

—

(228

)

—

(510

)

—

(1,151

)

(0.1

)

Net Earnings (Loss)

2,124

0.4

(7,282

)

(1.6

)

20,768

1.4

2,838

0.2

Retained Earnings, beginning of period

373,963

408,351

358,670

406,819

Cumulative effect of change in method of accounting for split dollar life insurance, net of tax

—

—

—

(1,165

)

Cash Dividends

(1,557

)

(3,523

)

(4,709

)

(10,551

)

Dividend Reinvested and Other

(69

)

(849

)

(268

)

(1,244

)

Retained Earnings, end of period

$

374,461

$

396,697

$

374,461

$

396,697

Basic Earnings (Loss) per Share:

Net Earnings (Loss) From Continuing Operations

$

0.05

$

(0.13

)

$

0.41

$

0.08

Discontinued Operations, Net of Tax

(0.01

)

(0.01

)

(0.01

)

(0.03

)

Basic Earnings (Loss) per Share

$

0.04

$

(0.14

)

$

0.40

$

0.05

Diluted Earnings (Loss) per Share:

Net Earnings (Loss) From Continuing Operations

$

0.04

$

(0.13

)

$

0.40

$

0.08

Discontinued Operations, Net of Tax

—

(0.01

)

—

(0.03

)

Diluted Earnings (Loss) per Share

$

0.04

$

(0.14

)

$

0.40

$

0.05

Cash Dividends per Share

$

0.0300

$

0.0675

$

0.0900

$

0.2025

(1)

As a percentage of earnings from continuing operations before income taxes and cumulative effect of change in accounting principle.

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands, except share and per share amounts)

October 31, 2009

January 31, 2009

November 1, 2008

Assets

Current Assets:

Cash and cash equivalents

$

40,843

$

21,332

$

38,371

Accounts receivable, less allowance for uncollectible accounts of $1,853; $1,912 and $2,109

20,461

28,831

25,838

Merchandise inventories

571,789

564,931

584,700

Prepaid expenses

14,946

25,390

30,133

Other

50,205

62,421

43,774

Assets held for disposal

6,616

12,653

18,222

Total Current Assets

704,860

715,558

741,038

Property and Equipment - net

708,972

740,331

747,921

Deferred income taxes

72,970

77,708

50,315

Other

20,118

18,792

28,669

Total Assets

$

1,506,920

$

1,552,389

$

1,567,943

Liabilities and Stockholders’ Equity

Current Liabilities:

Accounts payable

$

219,205

$

212,340

$

221,863

Trade payable program liability

26,459

31,930

38,316

Accrued expenses

231,468

254,754

256,620

Deferred income taxes

39,170

35,848

15,013

Current maturities of long-term debt and obligations under capital leases

1,079

1,453

2,060

Total Current Liabilities

517,381

536,325

533,872

Long-term debt and obligations under capital leases, less current maturities

306,471

352,382

330,535

Other long-term liabilities

72,164

70,322

64,487

Deferred gain from asset sales

168,243

170,204

173,184

Commitments and Contingencies

Stockholders’ Equity:

Common Stock, par value $1 per share:

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

68,557

68,557

68,557

Additional paid-in capital

293,330

292,728

292,585

Retained earnings

374,461

358,670

396,697

Accumulated other comprehensive loss

(16,739

)

(18,075

)

(11,470

)

Less cost of shares in treasury - 14,014,018 shares, 14,124,021 shares and 14,234,313 shares

217,684

219,460

221,240

Less cost of shares in benefits trust - 2,195,270 shares

59,264

59,264

59,264

Total Stockholders’ Equity

442,661

423,156

465,865

Total Liabilities and Stockholders’ Equity

$

1,506,920

$

1,552,389

$

1,567,943

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

Thirty-Nine Weeks Ended

October 31, 2009

November 1, 2008

Cash Flows from Operating Activities:

Net Earnings

$

20,768

$

2,838

Adjustments to reconcile net earnings to net cash provided by (used in) continuing operations:

Discontinued operations

510

1,151

Depreciation and amortization

53,248

55,109

Amortization of deferred gain from asset sales

(9,186

)

(7,305

)

Stock compensation expense

1,930

2,314

Gain on debt retirement

(6,248

)

(3,460

)

Deferred income taxes

7,270

(3,603

)

Gain from dispositions of assets

(1,319

)

(9,555

)

Loss from asset impairment

3,117

370

Other

267

441

Changes in Operating Assets and Liabilities:

Decrease in accounts receivable, prepaid expenses and other

33,241

39,759

Increase in merchandise inventories

(5,806

)

(23,548

)

Increase (decrease) in accounts payable

6,455

(23,560

)

Decrease in accrued expenses

(23,922

)

(37,077

)

Increase (decrease) in other long-term liabilities

2,230

(3,818

)

Net cash provided by (used in) continuing operations

82,555

(9,944

)

Net cash used in discontinued operations

(594

)

(880

)

Net Cash Provided by (Used in) Operating Activities

81,961

(10,824

)

Cash Flows from Investing Activities:

Cash paid for master lease properties

—

(117,121

)

Cash paid for property and equipment

(27,775

)

(22,653

)

Proceeds from dispositions of assets

12,093

209,085

Acquisition of Florida Tire, Inc.

(2,610

)

—

Other

(500

)

—

Net cash (used in) provided by continuing operations

(18,792

)

69,311

Net cash provided by discontinued operations

1,762

2,558

Net Cash (Used in) Provided by Investing Activities

(17,030

)

71,869

Cash Flows from Financing Activities:

Borrowings under line of credit agreements

244,011

99,888

Payments under line of credit agreements

(267,873

)

(141,413

)

Borrowings on trade payable program liability

122,914

154,886

Payments on trade payable program liability

(128,385

)

(130,824

)

Payment for finance issuance cost

—

(182

)

Proceeds from lease financing

—

8,661

Long-term debt and capital lease obligations payments

(11,720

)

(24,696

)

Dividends paid

(4,709

)

(10,551

)

Other

342

631

Net Cash Used in Financing Activities

(45,420

)

(43,600

)

Net Increase in Cash and Cash Equivalents

19,511

17,445

Cash and Cash Equivalents at Beginning of Period

21,332

20,926

Cash and Cash Equivalents at End of Period

$

40,843

$

38,371

Supplemental Disclosure of Cash Flow Information:

Cash paid for income taxes

$

4,046

$

1,070

Cash paid for interest

$

15,492

$

17,043

Accrued purchases of property and equipment

$

1,575

$

1,435

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

(in thousands, except per share data)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 31,
2009

November 1,
2008

October 31,
2009

November 1,
2008

(a)

Net Earnings (Loss) From Continuing Operations

$

2,357

$

(7,054

)

$

21,278

$

3,989

Discontinued Operations, Net of Tax

(233

)

(228

)

(510

)

(1,151

)

Net Earnings (Loss)

$

2,124

$

(7,282

)

$

20,768

$

2,838

(b)

Basic average number of common shares outstanding during period

52,419

52,099

52,379

52,106

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

367

—

242

83

(c)

Diluted average number of common shares assumed outstanding during period

52,786

52,099

52,621

52,189

Basic Earnings (Loss) per Share:

Net Earnings (Loss) From Continuing Operations (a) /(b)

$

0.05

$

(0.13

)

$

0.41

$

0.08

Discontinued Operations, Net of Tax

(0.01

)

(0.01

)

(0.01

)

(0.03

)

Basic Earnings (Loss) per Share

$

0.04

$

(0.14

)

$

0.40

$

0.05

Diluted Earnings (Loss) per Share:

Net Earnings (Loss) From Continuing Operations (a) /(c)

$

0.04

$

(0.13

)

$

0.40

$

0.08

Discontinued Operations, Net of Tax

—

(0.01

)

—

$

(0.03

)

Diluted Earnings (Loss) per Share

$

0.04

$

(0.14

)

$

0.40

$

0.05

Thirteen Weeks Ended

Thirty-Nine Weeks Ended

October 31, 2009

November 1, 2008

October 31, 2009

November 1, 2008

Capital expenditures (A)

$

10,294

$

8,934

$

27,775

$

139,774

Depreciation and amortization

$

17,910

$

18,181

$

53,248

$

55,109

Non-operating income:

Net rental revenue

$

463

$

115

$

1,252

$

1,069

Investment income

47

178

173

745

Other (expense) income

214

12

241

(17

)

Total

$

724

$

305

$

1,666

$

1,797

Comparable sales percentages:

Merchandise

-0.1

%

-10.3

%

-1.8

%

-8.1

%

Service

8.9

%

-11.0

%

5.9

%

-6.3

%

Total

1.6

%

-10.4

%

-0.4

%

-7.8

%

Total square feet of retail space (including service centers)

11,639,000

11,514,000

Total Store Count

581

562

Sales and Gross Profit by Line of Business (B):

Retail Sales

$

246,275

$

253,492

$

770,121

802,707

Service Center Revenue

226,368

210,674

687,921

659,545

Total Revenues

$

472,643

$

464,166

$

1,458,042

$

1,462,252

Gross Profit from Retail Sales

$

65,846

$

68,360

$

210,147

220,139

Gross Profit from Service Center Revenue

52,423

46,484

165,913

153,105

Total Gross Profit

$

118,269

$

114,844

$

376,060

$

373,244

Comparable Sales Percentages (B):

Retail Sales

-2.9

%

-12.1

%

-4.1

%

-11.3

%

Service Center Revenue

7.0

%

-8.2

%

4.1

%

-3.2

%

Total Revenues

1.6

%

-10.4

%

-0.4

%

-7.8

%

Gross Profit Percentage by Line of Business (B):

Gross Profit Percentage from Retail Sales

26.7

%

27.0

%

27.3

%

27.4

%

Gross Profit Percentage from Service Center Revenue

23.2

%

22.1

%

24.1

%

23.2

%

Total Gross Profit Percentage

25.0

%

24.7

%

25.8

%

25.5

%