THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirteen weeks ended

Twenty-six weeks ended

July 28, 2012

July 30, 2011

July 28, 2012

July 30, 2011

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise sales

$

413,380

78.6

$

415,267

79.5

$

825,712

78.6

$

823,894

79.5

Service revenue

112,291

21.4

107,327

20.5

224,563

21.4

212,240

20.5

Total revenues

525,671

100.0

522,594

100.0

1,050,275

100.0

1,036,134

100.0

Costs of merchandise sales

288,051

69.7

287,721

69.3

578,907

70.1

573,050

69.6

Costs of service revenue

107,019

95.3

99,663

92.9

213,115

94.9

192,752

90.8

Total costs of revenues

395,070

75.2

387,384

74.1

792,022

75.4

765,802

73.9

Gross profit from merchandise sales

125,329

30.3

127,546

30.7

246,805

29.9

250,844

30.5

Gross profit from service revenue

5,272

4.7

7,664

7.1

11,448

5.1

19,488

9.2

Total gross profit

130,601

24.8

135,210

25.9

258,253

24.6

270,332

26.1

Selling, general and administrative expenses

114,277

21.7

113,268

21.7

233,987

22.3

222,168

21.4

Net (loss) gain from dispositions of assets

(9

)

—

(3

)

—

(11

)

—

86

—

Operating profit

16,315

3.1

21,939

4.2

24,255

2.3

48,250

4.7

Merger termination fees, net

42,955

8.2

—

—

42,955

4.1

—

—

Other income

521

0.1

569

0.1

991

0.1

1,156

0.1

Interest expense

6,427

1.2

6,444

1.2

12,943

1.2

12,941

1.3

Earnings from continuing operations before income taxes and discontinued operations

53,364

10.2

16,064

3.1

55,258

5.3

36,465

3.5

Income tax expense

20,330

38.1

(1)

2,173

13.5

(1)

21,090

38.2

(1)

10,169

27.9

(1)

Earnings from continuing operations before discontinued operations

33,034

6.3

13,891

2.7

34,168

3.3

26,296

2.5

Income (loss) from discontinued operations, net of tax

14

—

52

—

(58

)

—

15

—

Net earnings

33,048

6.3

13,943

2.7

34,110

3.3

26,311

2.5

Basic earnings per share:

Earnings from continuing operations before discontinued operations

$

0.62

$

0.26

$

0.64

$

0.49

Discontinued operations, net of tax

—

—

—

—

Basic earnings per share

$

0.62

$

0.26

$

0.64

$

0.49

Diluted earnings per share:

Earnings from continuing operations before discontinued operations

$

0.61

$

0.26

$

0.63

$

0.49

Discontinued operations, net of tax

—

—

—

—

Diluted earnings per share

$

0.61

$

0.26

$

0.63

$

0.49

Other comprehensive income:

Defined benefit plan adjustment, net of tax

354

253

708

473

Derivative financial instruments adjustment, net of tax

910

170

1,930

685

Other comprehensive income

1,264

423

2,638

1,158

Comprehensive income

34,312

14,366

36,748

27,469

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

July 28, 2012

January 28, 2012

July 30, 2011

Assets

Current assets:

Cash and cash equivalents

$

150,833

$

58,244

$

61,977

Accounts receivable, less allowance for uncollectible accounts of $1,247; $1,303 and $1,406

27,962

25,792

21,731

Merchandise inventories

626,555

614,136

584,297

Prepaid expenses

21,021

26,394

19,694

Other current assets

53,083

59,979

50,891

Total current assets

879,454

784,545

738,590

Property and equipment - net

682,619

696,339

693,742

Goodwill

46,917

46,917

48,584

Deferred income taxes

45,825

72,870

67,988

Other long-term assets

31,660

33,108

31,700

Total assets

$

1,686,475

$

1,633,779

$

1,580,604

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

246,522

$

243,712

$

230,884

Trade payable program liability

115,746

85,214

61,440

Accrued expenses

218,548

221,705

206,627

Deferred income taxes

61,231

66,208

58,825

Current maturities of long-term debt

1,254

1,079

1,079

Total current liabilities

643,301

617,918

558,855

Long-term debt less current maturities

293,504

294,043

294,583

Other long-term liabilities

72,290

77,216

75,688

Deferred gain from asset sales

133,971

140,273

146,573

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

295,536

296,462

295,934

Retained earnings

454,343

423,437

424,923

Accumulated other comprehensive loss

(15,011

)

(17,649

)

(15,870

)

Treasury stock, at cost - 15,563,931 shares; 15,803,322 shares and 15,894,177 shares

(260,016

)

(266,478

)

(268,639

)

Total stockholders’ equity

543,409

504,329

504,905

Total liabilities and stockholders’ equity

$

1,686,475

$

1,633,779

$

1,580,604

Supplemental Balance Sheet Information:

Working capital

$

236,153

$

166,627

$

179,735

Accounts payable to inventory ratio

57.8

%

53.6

%

50.0

%

Total debt as a percent of total capitalization

35.2

%

36.9

%

36.9

%

Net debt as a percent of total capitalization, net

20.9

%

32.0

%

31.6

%

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Twenty-six weeks ended

July 28, 2012

July 30, 2011

Cash flows from operating activities:

Net earnings

$

34,110

$

26,311

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

Net loss (income) from discontinued operations

58

(15

)

Depreciation and amortization

39,288

39,654

Amortization of deferred gain from asset sales

(6,302

)

(6,302

)

Stock compensation expense

1,043

1,908

Deferred income taxes

20,485

4,238

Net loss (gain) from disposition of assets

11

(86

)

Loss from asset impairment

—

389

Other

13

272

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

Decrease in accounts receivable, prepaid expenses and other

11,448

21,816

Increase in merchandise inventories

(12,419

)

(12,917

)

Increase in accounts payable

2,810

12,043

Decrease in accrued expenses

(2,451

)

(33,202

)

Decrease in other long-term liabilities

(552

)

(2,831

)

Net cash provided by continuing operations

87,542

51,278

Net cash used in discontinued operations

(92

)

(44

)

Net cash provided by operating activities

87,450

51,234

Cash flows from investing activities:

Capital expenditures

(26,347

)

(30,636

)

Proceeds from dispositions of assets

—

89

Premiums paid on life insurance policies

—

(795

)

Acquisitions, net of cash acquired

—

(42,757

)

Collateral investment

—

(4,763

)

Net cash used in investing activities

(26,347

)

(78,862

)

Cash flows from financing activities:

Borrowings under line of credit agreements

1,106

5,045

Payments under line of credit agreements

(931

)

(5,045

)

Borrowings on trade payable program liability

80,836

59,097

Payments on trade payable program liability

(50,304

)

(53,944

)

Payment for finance issuance cost

(2,441

)

Debt payments

(539

)

(539

)

Dividends paid

—

(3,171

)

Proceeds from stock issuance

1,318

363

Net cash provided by (used in) financing activities

31,486

(635

)

Net increase (decrease) in cash and cash equivalents

92,589

(28,263

)

Cash and cash equivalents at beginning of period

58,244

90,240

Cash and cash equivalents at end of period

$

150,833

$

61,977

Supplemental cash flow information:

Cash paid for income taxes

$

1,705

$

629

Cash paid for interest

$

11,449

$

11,523

Accrued purchases of property and equipment

$

632

$

1,416

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

Thirteen weeks ended

Twenty-six weeks ended

July 28, 2012

July 30, 2011

July 28, 2012

July 30, 2011

(a)

Earnings from continuing operations

$

33,034

$

13,891

$

34,168

$

26,296

Income (loss) from discontinued operations, net of tax

14

52

(58

)

15

Net earnings

$

33,048

$

13,943

$

34,110

$

26,311

(b)

Basic average number of common shares outstanding during period

53,146

52,952

53,110

52,901

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

651

697

765

691

(c)

Diluted average number of common shares assumed outstanding during period

53,797

53,649

53,875

53,592

Basic earnings per share:

Earnings from continuing operations

(a) / (b)

$

0.62

$

0.26

$

0.64

$

0.49

Discontinued operations, net of tax

—

—

—

—

Basic earnings per share

$

0.62

$

0.26

$

0.64

$

0.49

Diluted earnings per share:

Earnings from continuing operations

(a) / (c)

$

0.61

$

0.26

$

0.63

$

0.49

Discontinued operations, net of tax

—

—

—

—

Diluted earnings per share

$

0.61

$

0.26

$

0.63

$

0.49

ADDITIONAL INFORMATION

(dollar amounts in thousands)

Thirteen weeks ended

Twenty-six weeks ended

July 28, 2012

July 30, 2011

July 28, 2012

July 30, 2011

Capital expenditures

$

14,407

$

12,513

$

26,347

$

30,636

Depreciation and amortization

$

19,350

$

19,770

$

39,288

$

39,654

Non-operating income:

Net rental revenue

$

429

$

523

$

814

$

1,017

Investment income

46

40

94

122

Merger termination fees, net

42,955

—

42,955

—

Other income

46

6

83

17

Total

$

43,476

$

569

$

43,946

$

1,156

Comparable sales percentages:

Service

3.1

%

0.3

%

1.0

%

0.9

%

Merchandise

-0.9

%

-2.5

%

-2.0

%

-1.8

%

Total

0.0

%

-2.0

%

-1.4

%

-1.3

%

Total square feet of retail space (including service centers)

12,660,000

12,563,000

Store count

Supercenter

562

561

Service & Tire Center

173

156

Retail Only

7

8

Total

742

725

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

Service center revenue

$

274,257

$

260,835

$

545,346

508,165

Retail sales

251,414

261,759

504,929

527,969

Total revenues

$

525,671

$

522,594

$

1,050,275

$

1,036,134

Gross profit from service center revenue

$

55,868

$

60,669

$

109,756

119,631

Gross profit from retail sales

74,733

74,541

148,497

150,701

Total gross profit

$

130,601

$

135,210

$

258,253

$

270,332

Comparable sales percentages by line of business (A):

Service center revenue

3.8

%

-0.7

%

1.6

%

-0.2

%

Retail sales

-3.8

%

-3.1

%

-4.2

%

-2.3

%

Total revenues

0.0

%

-2.0

%

-1.4

%

-1.3

%

Gross profit percentage by line of business (A):

Gross profit percentage from service center revenue

20.4

%

23.3

%

20.1

%

23.5

%

Gross profit percentage from retail sales

29.7

%

28.5

%

29.4

%

28.5

%

Total gross profit percentage

24.8

%

25.9

%

24.6

%

26.1

%