THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirteen weeks ended

Thirty-nine weeks ended

October 27, 2012

October 29, 2011

October 27, 2012

October 29, 2011

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise sales

$

401,146

78.7

$

414,530

79.4

$

1,226,858

78.7

$

1,238,424

79.5

Service revenue

108,462

21.3

107,643

20.6

333,025

21.3

319,884

20.5

Total revenues

509,608

100.0

522,173

100.0

1,559,883

100.0

1,558,308

100.0

Costs of merchandise sales

284,626

71.0

292,397

70.5

863,533

70.4

865,446

69.9

Costs of service revenue

108,942

100.4

102,855

95.6

322,057

96.7

295,607

92.4

Total costs of revenues

393,568

77.2

395,252

75.7

1,185,590

76.0

1,161,053

74.5

Gross profit from merchandise sales

116,520

29.0

122,133

29.5

363,325

29.6

372,978

30.1

Gross (loss) profit from service revenue

(480

)

(0.4

)

4,788

4.5

10,968

3.3

24,277

7.6

Total gross profit

116,040

22.8

126,921

24.3

374,293

24.0

397,255

25.5

Selling, general and administrative expenses

112,028

22.0

109,549

21.0

346,015

22.2

331,717

21.3

Net (loss) gain from dispositions of assets

(221

)

—

(25

)

—

(232

)

—

61

—

Operating profit

3,791

0.7

17,347

3.3

28,046

1.8

65,599

4.2

Merger termination fees, net

(139

)

—

—

—

42,816

2.7

—

—

Other income

655

0.1

627

0.1

1,646

0.1

1,783

0.1

Interest expense

17,057

3.3

6,889

1.3

30,000

1.9

19,831

1.3

(Loss) earnings from continuing operations before income taxes and discontinued operations

(12,750

)

(2.5

)

11,085

2.1

42,508

2.7

47,551

3.1

Income tax (benefit) expense

(6,055

)

47.5

(1)

4,063

36.7

(1)

15,035

35.4

(1)

14,232

29.9

(1)

(Loss) earnings from continuing operations before discontinued operations

(6,695

)

(1.3

)

7,022

1.3

27,473

1.8

33,319

2.1

(Loss) income from discontinued operations, net of tax

(64

)

—

(11

)

—

(122

)

—

3

—

Net (loss) earnings

(6,759

)

(1.3

)

7,011

1.3

27,351

1.8

33,322

2.1

Basic earnings per share:

(Loss) earnings from continuing operations before discontinued operations

$

(0.13

)

$

0.13

$

0.51

$

0.63

Discontinued operations, net of tax

—

—

—

—

Basic (loss) earnings per share

$

(0.13

)

$

0.13

$

0.51

$

0.63

Diluted earnings per share:

(Loss) earnings from continuing operations before discontinued operations

$

(0.13

)

$

0.13

$

0.51

$

0.62

Discontinued operations, net of tax

—

—

—

—

Diluted (loss) earnings per share

$

(0.13

)

$

0.13

$

0.51

$

0.62

Other comprehensive income:

Defined benefit plan adjustment, net of tax

354

236

1,062

709

Derivative financial instruments adjustment, net of tax

4,607

907

6,537

1,592

Other comprehensive income

4,961

1,143

7,599

2,301

Comprehensive (loss) income

(1,798

)

8,154

34,950

35,623

October 27, 2012

January 28, 2012

October 29, 2011

Assets

Current assets:

Cash and cash equivalents

$

78,667

$

58,244

$

80,716

Accounts receivable, less allowance for uncollectible accounts of $1,424; $1,303 and $1,257

25,225

25,792

23,524

Merchandise inventories

634,252

614,136

606,254

Prepaid expenses

15,086

26,394

15,571

Other current assets

49,543

59,979

47,550

Total current assets

802,773

784,545

773,615

Property and equipment - net

665,529

696,339

693,779

Goodwill

46,917

46,917

46,219

Deferred income taxes

53,011

72,870

66,674

Other long-term assets

35,547

33,108

30,821

Total assets

$

1,603,777

$

1,633,779

$

1,611,108

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

258,222

$

243,712

$

238,599

Trade payable program liability

125,718

85,214

68,320

Accrued expenses

218,167

221,705

221,976

Deferred income taxes

65,429

66,208

58,898

Current maturities of long-term debt

2,000

1,079

1,079

Total current liabilities

669,536

617,918

588,872

Long-term debt less current maturities

198,000

294,043

294,313

Other long-term liabilities

63,536

77,216

72,257

Deferred gain from asset sales

130,820

140,273

143,424

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

295,086

296,462

295,813

Retained earnings

445,503

423,437

429,935

Accumulated other comprehensive loss

(10,050

)

(17,649

)

(14,727

)

Treasury stock, at cost - 15,460,049 shares;

15,803,322 shares and 15,835,096 shares

(257,211

)

(266,478

)

(267,336

)

Total stockholders’ equity

541,885

504,329

512,242

Total liabilities and stockholders’ equity

$

1,603,777

$

1,633,779

$

1,611,108

Supplemental Balance Sheet Information:

Working capital

$

133,237

$

166,627

$

184,743

Accounts payable to inventory ratio

60.5

%

53.6

%

50.6

%

Total debt as a percent of total capitalization

27.0

%

36.9

%

36.6

%

Net debt as a percent of total capitalization, net

18.3

%

32.0

%

29.5

%

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

Thirty-nine weeks ended

October 27, 2012

October 29, 2011

Cash flows from operating activities:

Net earnings

$

27,351

$

33,322

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

Net loss (income) from discontinued operations

122

(3

)

Depreciation and amortization

59,129

59,779

Amortization of deferred gain from asset sales

(9,453

)

(9,451

)

Stock compensation expense

622

2,539

Deferred income taxes

14,521

8,021

Net loss (gain) from disposition of assets

232

(61

)

Loss from asset impairment

8,802

389

Other

88

—

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

Decrease in accounts receivable, prepaid expenses and other

26,213

27,767

Increase in merchandise inventories

(20,116

)

(34,874

)

Increase in accounts payable

14,510

19,758

Decrease in accrued expenses

(4,208

)

(18,693

)

Decrease in other long-term liabilities

(1,369

)

(3,483

)

Net cash provided by continuing operations

116,444

85,010

Net cash (used in) provided by discontinued operations

(215

)

40

Net cash provided by operating activities

116,229

85,050

Cash flows from investing activities:

Capital expenditures

(36,760

)

(50,793

)

Proceeds from dispositions of assets

15

89

Premiums paid on life insurance policies

—

(837

)

Acquisitions, net of cash acquired

—

(42,901

)

Collateral investment

—

(4,763

)

Net cash used in investing activities

(36,745

)

(99,205

)

Cash flows from financing activities:

Borrowings under line of credit agreements

1,780

5,181

Payments under line of credit agreements

(1,780

)

(5,181

)

Borrowings on trade payable program liability

123,408

97,400

Payments on trade payable program liability

(82,904

)

(85,367

)

Payment for finance issuance cost

(6,442

)

(2,441

)

Borrowings under new debt

200,000

—

Debt payments

(295,122

)

(809

)

Dividends paid

—

(4,757

)

Proceeds from stock issuance

1,999

605

Net cash (used in) provided by financing activities

(59,061

)

4,631

Net increase (decrease) in cash and cash equivalents

20,423

(9,524

)

Cash and cash equivalents at beginning of period

58,244

90,240

Cash and cash equivalents at end of period

$

78,667

$

80,716

Supplemental cash flow information:

Cash paid for income taxes

$

2,635

$

1,015

Cash paid for interest

$

28,554

$

14,577

Accrued purchases of property and equipment

$

2,008

$

1,486

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

Thirteen weeks ended

Thirty-nine weeks ended

October 27,
2012

October 29,
2011

October 27,
2012

October 29,
2011

(a)

(Loss) earnings from continuing operations before discontinued operations

$

(6,695

)

$

7,022

$

27,473

$

33,319

(Loss) income from discontinued operations, net of tax

(64

)

(11

)

(122

)

3

Net (loss) earnings

$

(6,759

)

$

7,011

$

27,351

$

33,322

(b)

Basic average number of common shares outstanding during period

53,304

52,998

53,175

52,933

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

—

600

768

661

(c)

Diluted average number of common shares assumed outstanding during period

53,304

53,598

53,943

53,594

Basic earnings per share:

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

$

(0.13

)

$

0.13

$

0.51

$

0.63

Discontinued operations, net of tax

—

—

—

—

Basic (loss) earnings per share

$

(0.13

)

$

0.13

$

0.51

$

0.63

Diluted earnings per share:

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

$

(0.13

)

$

0.13

$

0.51

$

0.62

Discontinued operations, net of tax

—

—

—

—

Diluted (loss) earnings per share

$

(0.13

)

$

0.13

$

0.51

$

0.62

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

ADDITIONAL INFORMATION

(dollar amounts in thousands)

Thirteen weeks ended

Thirty-nine weeks ended

October 27, 2012

October 29, 2011

October 27, 2012

October 29, 2011

Capital expenditures

$

10,413

$

20,157

$

36,760

$

50,793

Depreciation and amortization

$

19,841

$

20,125

$

59,129

$

59,779

Non-operating income:

Net rental revenue

$

487

$

575

$

1,302

$

1,592

Investment income

39

46

133

168

Merger termination fees, net

(139

)

—

42,816

—

Other income

129

6

211

23

Total

$

516

$

627

$

44,462

$

1,783

Comparable sales percentages:

Service

0.2

%

0.4

%

0.7

%

0.8

%

Merchandise

-3.5

%

-0.6

%

-2.5

%

-1.4

%

Total

-2.7

%

-0.4

%

-1.8

%

-1.0

%

Total square feet of retail space (including service centers)

12,667,000

12,597,000

Store count

Supercenter

562

562

Service & Tire Center

175

159

Retail Only

7

8

Total

744

729

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

Service center revenue

$

271,370

$

269,726

$

816,730

777,891

Retail sales

238,238

252,447

743,153

780,417

Total revenues

$

509,608

$

522,173

$

1,559,883

$

1,558,308

Gross profit from service center revenue, prior to impairment charge

$

56,592

$

55,400

$

166,347

$

175,314

Service center revenue impairment charge

(4,618

)

—

(4,618

)

(281

)

Gross profit from service center revenue

$

51,974

$

55,400

$

161,729

$

175,033

Gross profit from retail sales, prior to impairment charge

$

68,250

$

71,521

$

216,748

$

222,330

Retail sales impairment charge

(4,184

)

—

(4,184

)

(108

)

Gross profit from retail sales

$

64,066

$

71,521

$

212,564

$

222,222

Total gross profit

$

116,040

$

126,921

$

374,293

$

397,255

Comparable sales percentages by line of business (A):

Service center revenue

-0.1

%

1.3

%

1.0

%

0.3

%

Retail sales

-5.4

%

-2.0

%

-4.6

%

-2.2

%

Total revenues

-2.7

%

-0.4

%

-1.8

%

-1.0

%

Gross profit percentage by line of business (A):

Gross profit percentage from service center revenue, prior to impairment charge

20.9

%

20.5

%

20.4

%

22.5

%

Impairment charge

(1.7

)

—

(0.6

)

(0.0

)

Gross profit percentage from service center revenue

19.2

%

20.5

%

19.8

%

22.5

%

Gross profit percentage from retail sales, prior to impairment charge

28.6

%

28.3

%

29.2

%

28.5

%

Impairment charge

(1.8

)

—

(0.6

)

(0.0

)

Gross profit percentage from retail sales

26.8

%

28.3

%

28.6

%

28.5

%

Total gross profit percentage

22.8

%

24.3

%

24.0

%

25.5

%