THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

November 2, 2013

February 2, 2013

October 27, 2012

Assets

Current assets:

Cash and cash equivalents

$

55,798

$

59,186

$

78,667

Accounts receivable, less allowance for uncollectible accounts of $1,310; $1,302; and $1,424

24,942

23,897

25,225

Merchandise inventories

664,901

641,208

634,252

Prepaid expenses

16,801

28,908

15,086

Other current assets

52,249

60,438

49,543

Assets held for disposal

500

—

—

Total current assets

815,191

813,637

802,773

Property and equipment, net of accumulated depreciation of $1,214,802; $1,162,909; and $1,158,656

631,639

657,270

665,529

Goodwill

56,841

46,917

46,917

Deferred income taxes

48,311

47,691

53,011

Other long-term assets

37,265

38,434

35,547

Total assets

$

1,589,247

$

1,603,949

$

1,603,777

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

253,818

$

244,696

$

258,222

Trade payable program liability

134,703

149,718

125,718

Accrued expenses

225,249

232,277

218,167

Deferred income taxes

59,455

58,441

65,429

Current maturities of long-term debt

2,000

2,000

2,000

Total current liabilities

675,225

687,132

669,536

Long-term debt less current maturities

196,500

198,000

198,000

Other long-term liabilities

49,618

53,818

63,536

Deferred gain from asset sales

117,974

127,427

130,820

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

296,578

295,679

295,086

Retained earnings

436,933

430,148

445,503

Accumulated other comprehensive income (loss)

339

(980

)

(10,050

)

Treasury stock, at cost - 15,442,779 shares; 15,431,298 shares; and 15,460,049 shares

(252,477

)

(255,832

)

(257,211

)

Total stockholders’ equity

549,930

537,572

541,885

Total liabilities and stockholders’ equity

$

1,589,247

$

1,603,949

$

1,603,777

Supplemental balance sheet information:

Working capital

$

139,966

$

126,505

$

133,237

Current ratio

1.21

1.18

1.20

Accounts payable to inventory ratio

58.4

%

61.5

%

60.5

%

Total debt as a percent of total capitalization

26.5

%

27.1

%

27.0

%

Debt as a percent of total capitalization, net

20.6

%

20.8

%

18.3

%

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirteen weeks ended

Thirty-nine weeks ended

November 2, 2013

October 27, 2012

November 2, 2013

October 27, 2012

%

%

%

%

Amount

Sales

Amount

Sales

Amount

Sales

Amount

Sales

Merchandise sales

$

394,346

77.8

$

401,146

78.7

$

1,223,813

77.9

$

1,226,858

78.7

Service revenue

112,696

22.2

108,462

21.3

347,022

22.1

333,025

21.3

Total revenues

507,042

100.0

509,608

100.0

1,570,835

100.0

1,559,883

100.0

Costs of merchandise sales

267,489

67.8

284,626

71.0

838,126

68.5

863,533

70.4

Costs of service revenue

116,741

103.6

108,942

100.4

349,348

100.7

322,057

96.7

Total costs of revenues

384,230

75.8

393,568

77.2

1,187,474

75.6

1,185,590

76.0

Gross profit from merchandise sales

126,857

32.2

116,520

29.0

385,687

31.5

363,325

29.6

Gross (loss) profit from service revenue

(4,045

)

(3.6

)

(480

)

(0.3

)

(2,326

)

(0.7

)

10,968

3.3

Total gross profit

122,812

24.2

116,040

22.8

383,361

24.4

374,293

24.0

Selling, general and administrative expenses

115,104

22.7

112,028

22.0

354,236

22.6

346,015

22.2

Net loss from dispositions of assets

(67

)

—

(221

)

—

(213

)

—

(232

)

—

Operating profit

7,641

1.5

3,791

0.7

28,912

1.8

28,046

1.8

Merger termination fees, net

—

—

(139

)

—

—

—

42,816

2.7

Other income

524

0.1

655

0.1

1,367

0.1

1,646

0.1

Interest expense

3,643

0.7

17,057

3.3

10,885

0.7

30,000

1.9

Earnings (loss) from continuing operations before income taxes and discontinued operations

4,522

0.9

(12,750

)

(2.5

)

19,394

1.2

42,508

2.7

Income tax expense (benefit)

3,509

77.6

(1)

(6,055

)

47.5

(1)

9,074

46.8

(1)

15,035

35.4

(1)

Earnings (loss) from continuing operations before discontinued operations

1,013

0.2

(6,695

)

(1.3

)

10,320

0.7

27,473

1.8

Loss from discontinued operations, net of tax

(49

)

—

(64

)

—

(124

)

—

(122

)

—

Net earnings (loss)

964

0.2

(6,759

)

(1.3

)

10,196

0.7

27,351

1.8

Basic earnings (loss) per share:

Earnings (loss) from continuing operations before discontinued operations

$

0.02

$

(0.13

)

$

0.19

$

0.51

Discontinued operations, net of tax

—

—

—

—

Basic earnings (loss) per share

$

0.02

$

(0.13

)

$

0.19

$

0.51

Diluted earnings (loss) per share:

Earnings (loss) from continuing operations before discontinued operations

$

0.02

$

(0.13

)

$

0.19

$

0.51

Discontinued operations, net of tax

—

—

—

—

Diluted earnings (loss) per share

$

0.02

$

(0.13

)

$

0.19

$

0.51

Other comprehensive (loss) income:

Defined benefit plan adjustment, net of tax

—

354

—

1,062

Derivative financial instruments adjustment, net of tax

(372

)

4,607

1,319

6,537

Other comprehensive (loss) income

(372

)

4,961

1,319

7,599

Comprehensive income (loss)

$

592

$

(1,798

)

$

11,515

$

34,950

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

Thirty-nine weeks ended

November 2, 2013

October 27, 2012

Cash flows from operating activities:

Net earnings

$

10,196

$

27,351

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

Net loss from discontinued operations

124

122

Depreciation

59,941

59,279

Amortization of deferred gain from asset sales

(9,453

)

(9,453

)

Amortization of deferred financing costs

1,952

3,703

Stock compensation expense

2,451

622

Deferred income taxes

(478

)

14,521

Net loss from disposition of assets

213

232

Loss from asset impairment

4,882

8,802

Other

(322

)

(62

)

Changes in assets and liabilities:

Decrease in accounts receivable, prepaid expenses and other

18,431

22,510

Increase in merchandise inventories

(23,693

)

(20,116

)

Increase in accounts payable

7,746

14,510

Decrease in accrued expenses

(6,589

)

(4,208

)

Decrease in other long-term liabilities

(2,354

)

(1,369

)

Net cash provided by continuing operations

63,047

116,444

Net cash used in discontinued operations

(193

)

(215

)

Net cash provided by operating activities

62,854

116,229

Cash flows from investing activities:

Capital expenditures

(38,334

)

(36,760

)

Proceeds from dispositions of assets

19

15

Acquisitions, net of cash acquired

(10,741

)

—

Release of collateral investment

1,000

—

Net cash used in investing activities

(48,056

)

(36,745

)

Cash flows from financing activities:

Borrowings under line of credit agreements

1,926

1,780

Payments under line of credit agreements

(1,926

)

(1,780

)

Borrowings on trade payable program liability

114,804

123,408

Payments on trade payable program liability

(129,819

)

(82,904

)

Payment for finance issuance cost

—

(6,442

)

Borrowings under new debt

—

200,000

Debt payments

(1,500

)

(295,122

)

Proceeds from stock issuance

1,079

1,999

Repurchase of common stock

(2,750

)

—

Net cash used in financing activities

(18,186

)

(59,061

)

Net (decrease) increase in cash and cash equivalents

(3,388

)

20,423

Cash and cash equivalents at beginning of period

59,186

58,244

Cash and cash equivalents at end of period

$

55,798

$

78,667

Supplemental cash flow information:

Cash paid for income taxes

$

4,322

$

2,635

Cash received from income tax refunds

$

51

$

—

Cash paid for interest

$

9,149

$

28,554

Accrued purchases of property and equipment

$

2,369

$

2,008

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE

(in thousands, except per share data)

Thirteen weeks ended

Thirty-nine weeks ended

November 2, 2013

October 27, 2012

November 2, 2013

October 27, 2012

(a)

Earnings (loss) from continuing operations before discontinued operations

$

1,013

$

(6,695

)

$

10,320

$

27,473

Loss from discontinued operations, net of tax

(49

)

(64

)

(124

)

(122

)

Net earnings (loss)

$

964

$

(6,759

)

$

10,196

$

27,351

(b)

Basic average number of common shares outstanding during period

53,315

53,304

53,363

53,175

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

615

—

599

768

(c)

Diluted average number of common shares assumed outstanding during period

53,930

53,304

53,962

53,943

Basic earnings (loss) per share:

Earnings (loss) from continuing operations before discontinued operations

(a) / (b)

$

0.02

$

(0.13

)

$

0.19

$

0.51

Discontinued operations, net of tax

—

—

—

—

Basic earnings (loss) per share

$

0.02

$

(0.13

)

$

0.19

$

0.51

Diluted earnings (loss) per share:

Earnings (loss) from continuing operations before discontinued operations

(a) / (c)

$

0.02

$

(0.13

)

$

0.19

$

0.51

Discontinued operations, net of tax

—

—

—

—

Diluted earnings (loss) per share

$

0.02

$

(0.13

)

$

0.19

$

0.51

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

(UNAUDITED)

ADDITIONAL INFORMATION

(dollar amounts in thousands)

Thirteen weeks ended

Thirty-nine weeks ended

November 2, 2013

October 27, 2012

November 2, 2013

October 27, 2012

Capital expenditures

$

13,832

$

10,413

$

38,334

$

36,760

Depreciation

$

19,756

$

19,970

$

59,941

$

59,279

Non-operating income:

Net rental revenue

$

432

$

487

$

1,032

$

1,302

Investment income

42

39

132

133

Merger termination fees, net

—

(139

)

—

42,816

Other income

50

129

203

211

Total

$

524

$

516

$

1,367

$

44,462

Comparable sales percentages:

Service

0.5

%

0.2

%

1.6

%

0.7

%

Merchandise

-3.6

%

-3.5

%

-1.7

%

-2.5

%

Total

-2.8

%

-2.7

%

-1.0

%

-1.8

%

Total square feet of retail space (including service centers)

12,924,000

12,667,000

Store count

Supercenter

572

562

Service & Tire Center

215

175

Retail Only

6

7

Total

793

744

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

Service center revenue

$

273,944

$

271,370

$

841,827

$

816,730

Retail sales

233,098

238,238

729,008

743,153

Total revenues

$

507,042

$

509,608

$

1,570,835

$

1,559,883

Gross profit from service center revenue, prior to impairment charge

$

55,169

$

56,592

$

171,244

$

166,347

Service center revenue impairment charge

(1,153

)

(4,618

)

(3,493

)

(4,618

)

Gross profit from service center revenue

$

54,016

$

51,974

$

167,751

$

161,729

Gross profit from retail sales, prior to impairment charge

$

69,676

$

68,250

$

217,000

$

216,748

Retail sales impairment charge

(880

)

(4,184

)

(1,390

)

(4,184

)

Gross profit from retail sales

$

68,796

$

64,066

$

215,610

$

212,564

Total gross profit

$

122,812

$

116,040

$

383,361

$

374,293

Comparable sales percentages by line of business (A):

Service center revenue

-2.5

%

-0.1

%

0.4

%

1.0

%

Retail sales

-3.1

%

-5.4

%

-2.6

%

-4.6

%

Total revenues

-2.8

%

-2.7

%

-1.0

%

-1.8

%

Gross profit percentage by line of business (A):

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

20.1

%

20.9

%

20.3

%

20.4

%

Impairment charge

(0.4

)

(1.7

)

(0.4

)

(0.6

)

Gross profit percentage from service center revenue

19.7

%

19.2

%

19.9

%

19.8

%

Gross profit percentage from retail sales, prior to impairment charge

29.9

%

28.6

%

29.8

%

29.2

%

Impairment charge

(0.4

)

(1.8

)

(0.2

)

(0.6

)

Gross profit percentage from retail sales

29.5

%

26.9

%

29.6

%

28.6

%

Total gross profit percentage

24.2

%

22.8

%

24.4

%

24.0

%