THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirteen Weeks Ended

Fifty-two weeks ended

January 28, 2012

January 29, 2011

January 28, 2012

January 29, 2011

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise sales

$

404,332

80.0

$

384,432

80.5

$

1,642,757

79.6

$

1,598,168

80.4

Service revenue

100,986

20.0

92,957

19.5

420,870

20.4

390,473

19.6

Total revenues

505,318

100.0

477,389

100.0

2,063,627

100.0

1,988,641

100.0

Costs of merchandise sales

288,875

71.5

264,532

68.8

1,154,322

70.3

1,110,380

69.5

Costs of service revenue

104,170

103.2

88,457

95.2

399,776

95.0

355,909

91.1

Total costs of revenues

393,045

77.8

352,989

73.9

1,554,098

75.3

1,466,289

73.7

Gross profit from merchandise sales

115,457

28.6

119,900

31.2

488,435

29.7

487,788

30.5

Gross (loss) profit from service revenue

(3,184

)

(3.2

)

4,500

4.8

21,094

5.0

34,564

8.9

Total gross profit

112,273

22.2

124,400

26.1

509,529

24.7

522,352

26.3

Selling, general and administrative expenses

112,268

22.2

106,659

22.3

443,986

21.5

442,239

22.2

Net (loss) gain from dispositions of assets

(34

)

—

(136

)

—

27

—

2,467

0.1

Operating (loss) profit

(29

)

—

17,605

3.7

65,570

3.2

82,580

4.2

Non-operating income

541

0.1

754

0.2

2,324

0.1

2,609

0.1

Interest expense

6,475

1.3

6,864

1.4

26,306

1.3

26,745

1.3

(Loss) earnings from continuing operations before income taxes

(5,963

)

(1.2

)

11,495

2.4

41,588

2.0

58,444

2.9

Income tax (benefit) expense

(1,772

)

29.7

(1)

2,957

25.7

(1)

12,460

30.0

(1)

21,273

36.4

(1)

(Loss) earnings from continuing operations

(4,191

)

(0.8

)

8,538

1.8

29,128

1.4

37,171

1.9

Loss from discontinued operations, net of tax

(229

)

—

(173

)

—

(225

)

—

(540

)

—

Net (loss) earnings

(4,420

)

(0.9

)

8,365

1.8

28,903

1.4

36,631

1.8

Retained earnings, beginning of period

429,935

397,100

402,600

374,836

Cash dividends

(1,589

)

(1,582

)

(6,344

)

(6,323

)

Shares issued and other

(489

)

(1,283

)

(1,722

)

(2,544

)

Retained earnings, end of period

$

423,437

$

402,600

$

423,437

$

402,600

Basic earnings per share:

(Loss) earnings from continuing operations

$

(0.08

)

$

0.16

$

0.55

$

0.71

Discontinued operations, net of tax

—

—

(0.01

)

(0.01

)

Basic earnings per share

$

(0.08

)

$

0.16

$

0.54

$

0.70

Diluted earnings per share:

(Loss) earnings from continuing operations

$

(0.08

)

$

0.16

$

0.54

$

0.70

Discontinued operations, net of tax

—

—

—

(0.01

)

Diluted earnings per share

$

(0.08

)

$

0.16

$

0.54

$

0.69

Cash dividends per share

$

0.03

$

0.03

$

0.12

$

0.12

January 28, 2012

January 29, 2011

Assets

Current assets:

Cash and cash equivalents

$

58,244

$

90,240

Accounts receivable, less allowance for uncollectible accounts of $1,303 and $1,551

25,792

19,540

Merchandise inventories

614,136

564,402

Prepaid expenses

26,394

28,542

Other current assets

59,979

60,812

Total current assets

784,545

763,536

Property and equipment - net

696,339

700,981

Goodwill

46,917

2,549

Deferred income taxes

72,870

66,019

Other long-term assets

33,108

23,587

Total assets

$

1,633,779

$

1,556,672

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

243,712

$

210,440

Trade payable program liability

85,214

56,287

Accrued expenses

221,705

236,028

Deferred income taxes

66,208

56,335

Current maturities of long-term debt

1,079

1,079

Total current liabilities

617,918

560,169

Long-term debt less current maturities

294,043

295,122

Other long-term liabilities

77,216

70,046

Deferred gain from asset sales

140,273

152,875

Stockholders’ equity:

Common stock, par value $1 per share:

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

68,557

68,557

Additional paid-in capital

296,462

295,361

Retained earnings

423,437

402,600

Accumulated other comprehensive loss

(17,649

)

(17,028

)

Treasury stock, at cost - 15,803,322 shares and 15,971,910 shares

(266,478

)

(271,030

)

Total stockholders’ equity

504,329

478,460

Total liabilities and stockholders’ equity

$

1,633,779

$

1,556,672

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Fifty-two weeks ended

January 28, 2012

January 29, 2011

Cash flows from operating activities:

Net earnings

$

28,903

$

36,631

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

Net loss from discontinued operations

225

540

Depreciation and amortization

79,542

74,151

Amortization of deferred gain from asset sales

(12,602

)

(12,602

)

Stock compensation expense

3,237

3,497

Loss on debt retirement

—

200

Deferred income taxes

10,301

18,572

Net gain from disposition of assets

(27

)

(2,467

)

Loss from asset impairment

1,619

970

Other

(573

)

(479

)

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

Decrease in accounts receivable, prepaid expenses and other

2,391

7,060

Increase in merchandise inventories

(42,756

)

(5,284

)

Increase in accounts payable

24,871

7,466

Decrease in accrued expenses

(18,745

)

(8,394

)

Decrease in other long-term liabilities

(2,463

)

(1,200

)

Net cash provided by continuing operations

73,923

118,661

Net cash used in discontinued operations

(273

)

(1,466

)

Net cash provided by operating activities

73,650

117,195

Cash flows from investing activities:

Capital expenditures

(74,746

)

(70,252

)

Proceeds from dispositions of assets

515

7,515

Acquisitions, net of cash acquired

(42,901

)

(288

)

Collateral investment

(7,638

)

(9,638

)

Other

(837

)

—

Net cash used in continuing operations

(125,607

)

(72,663

)

Net cash provided by discontinued operations

—

569

Net cash used in investing activities

(125,607

)

(72,094

)

Cash flows from financing activities:

Borrowings under line of credit agreements

5,721

21,795

Payments under line of credit agreements

(5,721

)

(21,795

)

Borrowings on trade payable program liability

144,180

121,824

Payments on trade payable program liability

(115,253

)

(99,636

)

Payment for finance issuance cost

(2,441

)

—

Debt payments

(1,079

)

(11,279

)

Dividends paid

(6,344

)

(6,323

)

Other

898

1,227

Net cash provided by financing activities

19,961

5,813

Net (decrease) increase in cash and cash equivalents

(31,996

)

50,914

Cash and cash equivalents at beginning of period

90,240

39,326

Cash and cash equivalents at end of period

$

58,244

$

90,240

Supplemental cash flow information:

Cash paid for income taxes

$

1,150

$

890

Cash received from income tax refunds

$

479

$

195

Cash paid for interest

$

23,097

$

23,098

Accrued purchases of property and equipment

$

1,526

$

2,926

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

Thirteen Weeks Ended

Fifty-two weeks ended

January 28,
2012

January 29,
2011

January 28,
2012

January 29,
2011

(a)  (Loss) earnings from continuing operations

$

(4,191

)

$

8,538

$

29,128

$

37,171

Loss from discontinued operations, net of tax

(229

)

(173

)

(225

)

(540

)

Net (loss) earnings

$

(4,420

)

$

8,365

$

28,903

$

36,631

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

53,032

52,778

52,958

52,677

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

711

638

673

485

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

53,743

53,416

53,631

53,162

Basic earnings per share:

(Loss) earnings from continuing operations (a) / (b)

$

(0.08

)

$

0.16

$

0.55

$

0.71

Discontinued operations, net of tax

—

—

(0.01

)

(0.01

)

Basic earnings per share

$

(0.08

)

$

0.16

$

0.54

$

0.70

Diluted earnings per share:

(Loss) earnings from continuing operations (a) / (c)

$

(0.08

)

$

0.16

$

0.54

$

0.70

Discontinued operations, net of tax

—

—

—

(0.01

)

Diluted earnings per share

$

(0.08

)

$

0.16

$

0.54

$

0.69

ADDITIONAL INFORMATION

(dollar amounts in thousands)

Thirteen Weeks Ended

Fifty-two weeks ended

January 28, 2012

January 29, 2011

January 28, 2012

January 29, 2011

Capital expenditures

$

23,827

$

27,276

$

74,746

$

70,252

Depreciation and amortization

$

19,763

$

18,891

$

79,542

$

74,151

Non-operating income:

Net rental revenue

$

479

$

569

$

2,071

$

2,218

Investment income

51

133

219

296

Other income

11

52

34

95

Total

$

541

$

754

$

2,324

$

2,609

Comparable sales percentages:

Service

-0.1

%

3.4

%

0.6

%

1.1

%

Merchandise

1.0

%

4.6

%

-0.9

%

3.1

%

Total

0.8

%

4.3

%

-0.6

%

2.7

%

Total square feet of retail space (including service centers)

12,643,000

11,932,000

Store count

Supercenter

562

560

Service & Tire Center

169

53

Retail Only

7

8

Total

738

621

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

Service center revenue

$

260,823

$

225,990

$

1,038,714

941,869

Retail sales

244,495

251,399

1,024,913

1,046,772

Total revenues

$

505,318

$

477,389

$

2,063,627

$

1,988,641

Gross profit from service center revenue

$

45,282

$

50,762

$

220,315

216,176

Gross profit from retail sales

66,991

73,638

289,214

306,176

Total gross profit

$

112,273

$

124,400

$

509,529

$

522,352

Comparable sales percentages by line of business (A):

Service center revenue

4.6

%

5.8

%

1.3

%

2.4

%

Retail sales

-2.7

%

3.1

%

-2.3

%

3.0

%

Total revenues

0.8

%

4.3

%

-0.6

%

2.7

%

Gross profit percentage by line of business (A):

Gross profit percentage from service center revenue

17.4

%

22.5

%

21.2

%

23.0

%

Gross profit percentage from retail sales

27.4

%

29.3

%

28.2

%

29.2

%

Total gross profit percentage

22.2

%

26.1

%

24.7

%

26.3

%