Thirteen weeks ended

October 30, 2010

October 31, 2009

Total revenues

$

496,364,000

$

472,643,000

Net earnings

$

5,718,000

$

2,124,000

Basic earnings per share:

Average shares

52,717,000

52,419,000

Basic earnings per share:

$

0.11

$

0.04

Diluted earnings per share:

Average shares

53,164,000

52,786,000

Diluted earnings per share:

$

0.11

$

0.04

Thirty-nine weeks ended

October 30, 2010

October 31, 2009

Total revenues

$

1,511,252,000

$

1,458,042,000

Net earnings

$

28,266,000

$

20,768,000

Basic earnings per share:

Average shares

52,637,000

52,379,000

Basic earnings per share:

$

0.53

$

0.40

Diluted earnings per share:

Average shares

53,071,000

52,621,000

Diluted earnings per share:

$

0.53

$

0.40

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirteen weeks ended

Thirty-nine weeks ended

October 30, 2010

October 31, 2009

October 30, 2010

October 31, 2009

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise sales

$

398,368

80.3

$

378,860

80.2

$

1,213,736

80.3

$

1,169,108

80.2

Service revenue

97,996

19.7

93,783

19.8

297,516

19.7

288,934

19.8

Total revenues

496,364

100.0

472,643

100.0

1,511,252

100.0

1,458,042

100.0

Costs of merchandise sales

279,690

70.2

269,604

71.2

845,848

69.7

826,429

70.7

Costs of service revenue

90,818

92.7

84,770

90.4

267,452

89.9

255,553

88.4

Total costs of revenues

370,508

74.6

354,374

75.0

1,113,300

73.7

1,081,982

74.2

Gross profit from merchandise sales

118,678

29.8

109,256

28.8

367,888

30.3

342,679

29.3

Gross profit from service revenue

7,178

7.3

9,013

9.6

30,064

10.1

33,381

11.6

Total gross profit

125,856

25.4

118,269

25.0

397,952

26.3

376,060

25.8

Selling, general and administrative expenses

110,840

22.3

109,545

23.2

335,580

22.2

327,080

22.4

Net gain from dispositions of assets

109

—

1,332

0.3

2,603

0.2

1,319

0.1

Operating profit

15,125

3.0

10,056

2.1

64,975

4.3

50,299

3.4

Non-operating income

650

0.1

724

0.2

1,855

0.1

1,666

0.1

Interest expense

6,630

1.3

6,922

1.5

19,881

1.3

15,324

1.1

Earnings from continuing operations before income taxes

9,145

1.8

3,858

0.8

46,949

3.1

36,641

2.5

Income tax expense

3,471

38.0

(1)

1,501

38.9

(1)

18,316

39.0

(1)

15,363

41.9

(1)

Earnings from continuing operations

5,674

1.1

2,357

0.5

28,633

1.9

21,278

1.5

Income (loss) from discontinued operations, net of tax

44

—

(233

)

—

(367

)

—

(510

)

—

Net earnings

5,718

1.2

2,124

0.4

28,266

1.9

20,768

1.4

Retained earnings, beginning of period

393,245

373,963

374,836

358,670

Cash dividends

(1,581

)

(1,557

)

(4,741

)

(4,709

)

Shares issued and other

(282

)

(69

)

(1,261

)

(268

)

Retained earnings, end of period

$

397,100

$

374,461

$

397,100

$

374,461

Basic earnings per share:

Earnings from continuing operations

$

0.11

$

0.05

$

0.54

$

0.41

Discontinued operations, net of tax

—

(0.01

)

(0.01

)

(0.01

)

Basic earnings per share

$

0.11

$

0.04

$

0.53

$

0.40

Diluted earnings per share:

Earnings from continuing operations

$

0.11

$

0.04

$

0.54

$

0.40

Discontinued operations, net of tax

—

—

(0.01

)

—

Diluted earnings per share

$

0.11

$

0.04

$

0.53

$

0.40

Cash dividends per share

$

0.03

$

0.03

$

0.09

$

0.09

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

October 30, 2010

January 30, 2010

October 31, 2009

Assets

Current assets:

Cash and cash equivalents

$

107,253

$

39,326

$

40,843

Accounts receivable, less allowance for uncollectible accounts of $1,593; $1,488 and $1,853

20,469

22,983

20,461

Merchandise inventories

568,592

559,118

571,789

Prepaid expenses

16,647

24,784

14,946

Other current assets

48,350

65,428

50,205

Assets held for disposal

1,378

4,438

6,616

Total current assets

762,689

716,077

704,860

Property and equipment - net

691,833

706,450

708,972

Deferred income taxes

54,461

58,171

72,970

Other long-term assets

22,017

18,388

20,118

Total assets

$

1,531,000

$

1,499,086

$

1,506,920

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

207,838

$

202,974

$

219,205

Trade payable program liability

57,017

34,099

26,459

Accrued expenses

224,262

242,416

231,468

Deferred income taxes

37,461

29,984

39,170

Current maturities of long-term debt

1,079

1,079

1,079

Total current liabilities

527,657

510,552

517,381

Long-term debt less current maturities

305,392

306,201

306,471

Other long-term liabilities

73,127

73,933

72,164

Deferred gain from asset sales

156,026

165,105

168,243

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

294,781

293,810

293,330

Retained earnings

397,100

374,836

374,461

Accumulated other comprehensive loss

(18,720

)

(17,691

)

(16,739

)

Less cost of shares in treasury - 16,041,930 shares, 16,164,074 shares and 14,014,018 shares

272,920

276,217

217,684

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

—

—

59,264

Total stockholders’ equity

468,798

443,295

442,661

Total liabilities and stockholders’ equity

$

1,531,000

$

1,499,086

$

1,506,920

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirty-nine weeks ended

October 30, 2010

October 31, 2009

Cash flows from operating activities:

Net earnings

$

28,266

$

20,768

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

Loss from discontinued operations, net of tax

367

510

Depreciation and amortization

55,260

53,248

Amortization of deferred gain from asset sales

(9,451

)

(9,186

)

Stock compensation expense

2,748

1,930

Gain on debt retirement

—

(6,248

)

Deferred income taxes

11,795

7,270

Net gain from disposition of assets

(2,603

)

(1,319

)

Loss from asset impairment

970

3,117

Other

52

267

Changes in operating assets and liabilities:

Decrease in accounts receivable, prepaid expenses and other

29,382

33,241

Increase in merchandise inventories

(9,474

)

(5,806

)

Increase in accounts payable

4,864

6,455

Decrease in accrued expenses

(17,993

)

(23,922

)

(Decrease) increase in other long-term liabilities

(2,122

)

2,230

Net cash provided by continuing operations

92,061

82,555

Net cash used in discontinued operations

(1,263

)

(594

)

Net cash provided by operating activities

90,798

81,961

Cash flows from investing activities:

Cash paid for property and equipment

(42,976

)

(27,775

)

Proceeds from dispositions of assets

6,713

12,093

Acquisition of Florida Tire, Inc.

(144

)

(2,610

)

Collateral investment

(5,000

)

—

Other

—

(500

)

Net cash used in continuing operations

(41,407

)

(18,792

)

Net cash provided by discontinued operations

569

1,762

Net cash used in investing activities

(40,838

)

(17,030

)

Cash flows from financing activities:

Borrowings under line of credit agreements

20,482

244,011

Payments under line of credit agreements

(20,482

)

(267,873

)

Borrowings on trade payable program liability

247,346

122,914

Payments on trade payable program liability

(224,428

)

(128,385

)

Debt payments

(809

)

(11,720

)

Dividends paid

(4,741

)

(4,709

)

Other

599

342

Net cash provided by (used in) financing activities

17,967

(45,420

)

Net increase in cash and cash equivalents

67,927

19,511

Cash and cash equivalents at beginning of period

39,326

21,332

Cash and cash equivalents at end of period

$

107,253

$

40,843

Supplemental cash flow information:

Cash paid for income taxes

$

882

$

4,046

Cash paid for interest

$

14,412

$

15,492

Accrued purchases of property and equipment

$

1,280

$

1,575

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

Thirteen weeks ended

Thirty-nine weeks ended

October 30,
2010

October 31,
2009

October 30,
2010

October 31,
2009

(a)

Earnings from continuing operations

$

5,674

$

2,357

$

28,633

$

21,278

Income (loss) from discontinued operations, net of tax

44

(233

)

(367

)

(510

)

Net earnings

$

5,718

$

2,124

$

28,266

$

20,768

(b)

Basic average number of common shares outstanding during period

52,717

52,419

52,637

52,379

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

447

367

434

242

(c)

Diluted average number of common shares assumed outstanding during period

53,164

52,786

53,071

52,621

Basic earnings per share:

Earnings from continuing operations

(a) / (b)

$

0.11

$

0.05

$

0.54

$

0.41

Discontinued operations, net of tax

—

(0.01

)

(0.01

)

(0.01

)

Basic earnings per share

$

0.11

$

0.04

$

0.53

$

0.40

Diluted earnings per share:

Earnings from continuing operations

(a) / (c)

$

0.11

$

0.04

$

0.54

$

0.40

Discontinued operations, net of tax

—

—

(0.01

)

—

Diluted earnings per share

$

0.11

$

0.04

$

0.53

$

0.40

ADDITIONAL INFORMATION

(dollar amounts in thousands)

Thirteen weeks ended

Thirty-nine weeks ended

October 30, 2010

October 31, 2009

October 30, 2010

October 31, 2009

Capital expenditures

$

15,152

$

10,294

$

42,976

$

27,775

Depreciation and amortization

$

18,604

$

17,910

$

55,260

$

53,248

Non-operating income:

Net rental revenue

$

563

$

463

$

1,649

$

1,252

Investment income

51

47

163

173

Other income

36

214

43

241

Total

$

650

$

724

$

1,855

$

1,666

Comparable sales percentages:

Merchandise

3.9

%

-0.1

%

2.7

%

-1.8

%

Service

1.9

%

8.9

%

0.4

%

5.9

%

Total

3.5

%

1.6

%

2.2

%

-0.4

%

Total square feet of retail space (including service centers)

11,812,000

11,639,000

Total store count

602

581

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

Retail sales

$

256,862

$

246,275

$

795,373

770,121

Service center revenue

239,502

226,368

715,879

687,921

Total revenues

$

496,364

$

472,643

$

1,511,252

$

1,458,042

Gross profit from retail sales

$

73,954

$

65,846

$

232,538

210,147

Gross profit from service center revenue

51,902

52,423

165,414

165,913

Total gross profit

$

125,856

$

118,269

$

397,952

$

376,060

Comparable sales percentages (A):

Retail sales

4.0

%

-2.9

%

3.0

%

-4.1

%

Service center revenue

3.0

%

7.0

%

1.3

%

4.1

%

Total revenues

3.5

%

1.6

%

2.2

%

-0.4

%

Gross profit percentage by line of business (A):

Gross profit percentage from retail sales

28.8

%

26.7

%

29.2

%

27.3

%

Gross profit percentage from service center revenue

21.7

%

23.2

%

23.1

%

24.1

%

Total gross profit percentage

25.4

%

25.0

%

26.3

%

25.8

%