10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

xQuarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended April 28, 2012

OR

oTransition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from             to            

Commission File No.  1-3381

The Pep Boys - Manny, Moe & Jack

(Exact name of registrant as specified in its charter)

Pennsylvania	23-0962915
(State or other jurisdiction of	(I.R.S. Employer ID number)
incorporation or organization)
3111 W. Allegheny Ave. Philadelphia, PA	19132
(Address of principal executive offices)	(Zip code)

215-430-9000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer x
Non-accelerated filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

As of May 25, 2012, there were 52,851,617 shares of the registrant’s Common Stock outstanding.

Index

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)
	Consolidated Balance Sheets — April 28, 2012 and January 28, 2012	3
	Consolidated Statements of Operations and Comprehensive Income - Thirteen Weeks Ended April 28, 2012 and April 30, 2011	4
	Consolidated Statements of Cash Flows — Thirteen Weeks Ended April 28, 2012 and April 30, 2011	5
	Notes to the Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
SIGNATURES		27
INDEX TO EXHIBITS		28

2

PART I - FINANCIAL INFORMATION

ITEM 1  CONSOLIDATED FINANCIAL STATEMENTS

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollar amounts in thousands, except share data)

(unaudited)

	April 28, 2012			January 28, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	99,439		$	58,244
Accounts receivable, less allowance for uncollectible accounts of $1,289 and $1,303	22,542			25,792
Merchandise inventories	627,314			614,136
Prepaid expenses	26,077			26,394
Other current assets	57,197			59,979
Total current assets	832,569			784,545
Property and equipment - net	688,909			696,339
Goodwill	46,917			46,917
Deferred income taxes	67,745			72,870
Other long-term assets	32,393			33,108
Total assets	$	1,668,533		$	1,633,779
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	261,834		$	243,712
Trade payable program liability	100,414			85,214
Accrued expenses	228,675			221,705
Deferred income taxes	62,627			66,208
Current maturities of long-term debt	1,079			1,079
Total current liabilities	654,629			617,918
Long-term debt less current maturities	293,773			294,043
Other long-term liabilities	75,391			77,216
Deferred gain from asset sales	137,110			140,273
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
Additional paid-in capital	295,411			296,462
Retained earnings	424,083			423,437
Accumulated other comprehensive loss	(16,275		)	(17,649		)
Treasury stock, at cost — 15,716,914 shares and 15,803,322 shares	(264,146		)	(266,478		)
Total stockholders’ equity	507,630			504,329
Total liabilities and stockholders’ equity	$	1,668,533		$	1,633,779

See notes to consolidated financial statements.

3

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(dollar amounts in thousands, except per share amounts)

(unaudited)

Thirteen weeks ended	April 28, 2012			April 30, 2011
Merchandise sales	$	412,332		$	408,627
Service revenue	112,272			104,913
Total revenues	524,604			513,540
Costs of merchandise sales	290,856			285,329
Costs of service revenue	106,096			93,089
Total costs of revenues	396,952			378,418
Gross profit from merchandise sales	121,476			123,298
Gross profit from service revenue	6,176			11,824
Total gross profit	127,652			135,122
Selling, general and administrative expenses	119,710			108,900
Net (loss) gain from dispositions of assets	(2		)	89
Operating profit	7,940			26,311
Non-operating income	470			587
Interest expense	6,516			6,497
Earnings from continuing operations before income taxes and discontinued operations	1,894			20,401
Income tax expense	760			7,996
Earnings from continuing operations before discontinued operations	1,134			12,405
Loss from discontinued operations, net of tax	(72		)	(37		)
Net earnings	1,062			12,368
Basic earnings per share:
Earnings from continuing operations before discontinued operations	$	0.02		$	0.23
Loss from discontinued operations, net of tax	—			—
Basic earnings per share	$	0.02		$	0.23
Diluted earnings per share:
Earnings from continuing operations before discontinued operations	$	0.02		$	0.23
Loss from discontinued operations, net of tax	—			—
Diluted earnings per share	$	0.02		$	0.23
Other comprehensive income:
Defined benefit plan adjustment, net of tax	354			220
Derivative financial instruments adjustment, net of tax	1,020			515
Other comprehensive income	1,374			735
Comprehensive income	$	2,436		$	13,103

See notes to consolidated financial statements.

4

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

(unaudited)

Thirteen weeks ended	April 28, 2012			April 30, 2011
Cash flows from operating activities:
Net earnings	$	1,062		$	12,368
Adjustments to reconcile net earnings to net cash provided by continuing operations:
Loss from discontinued operations, net of tax	72			37
Depreciation and amortization	19,938			19,884
Amortization of deferred gain from asset sales	(3,163		)	(3,143		)
Stock compensation expense	652			638
Deferred income taxes	719			4,458
Net loss (gain) from disposition of assets	2			(89		)
Other	(85		)	(63		)
Changes in assets and liabilities, net of the effects of acquisitions:
Decrease in accounts receivable, prepaid expenses and other	7,124			7,406
Increase in merchandise inventories	(13,178		)	(13,323		)
Increase in accounts payable	18,122			21,223
Increase (decrease) in accrued expenses	6,385			(8,242		)
Increase (decrease) in other long-term liabilities	466			(2,458		)
Net cash provided by continuing operations	38,116			38,696
Net cash used in discontinued operations	(106		)	(66		)
Net cash provided by operating activities	38,010			38,630
Cash flows from investing activities:
Capital expenditures	(11,940		)	(18,123		)
Proceeds from dispositions of assets	—			89
Premiums paid on life insurance policies	—			(741		)
Collateral investment	—			(4,763		)
Other	—			(144		)
Net cash used in investing activities	(11,940		)	(23,682		)
Cash flows from financing activities:
Borrowings under line of credit agreements	524			1,067
Payments under line of credit agreements	(524		)	(1,067		)
Borrowings on trade payable program liability	42,722			24,589
Payments on trade payable program liability	(27,522		)	(27,816		)
Debt payments	(270		)	(270		)
Dividends paid	—			(1,585		)
Other	195			268
Net cash provided by (used in) financing activities	15,125			(4,814		)
Net increase in cash and cash equivalents	41,195			10,134
Cash and cash equivalents at beginning of period	58,244			90,240
Cash and cash equivalents at end of period	$	99,439		$	100,374
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	1,227		$	57
Cash paid for interest	$	2,940		$	2,885
Non-cash investing activities:
Accrued purchases of property and equipment	$	1,970		$	993

See notes to consolidated financial statements

5

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1—BASIS OF PRESENTATION

The Pep Boys — Manny, Moe & Jack and subsidiaries (the “Company”) consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the Company’s financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, costs and expenses, as well as the disclosure of contingent assets and liabilities and other related disclosures. The Company bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of the Company’s assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates, and the Company includes any revisions to its estimates in the results for the period in which the actual amounts become known.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted, as permitted by Rule 10-01 of the Securities and Exchange Commission’s Regulation S-X, “Interim Financial Statements.” It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2012. The results of operations for the thirteen weeks ended April 28, 2012 are not necessarily indicative of the operating results for the full fiscal year.

The consolidated financial statements presented herein are unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows as of April 28, 2012 and for all periods presented have been made.

The Company’s fiscal year ends on the Saturday nearest January 31. Accordingly, references to fiscal years 2012 and 2011 refer to the year ending February 2, 2013 and the year ended January 28, 2012, respectively.

The Company operated 738 store locations at April 28, 2012, of which 232 were owned and 506 were leased.

NOTE 2—NEW ACCOUNTING STANDARDS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, “Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. The adoption of ASU 2011-04 did not have a material impact on the consolidated financial statements.

In June of 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 was issued to improve the comparability of financial reporting between U.S. GAAP and International Financial Reporting Standards, and eliminates previous U.S. GAAP guidance that allowed an entity to present components of other comprehensive income (“OCI”) as part of its statement of changes in shareholders’ equity. With the issuance of ASU 2011-05, companies are now required to report all components of OCI either in a single continuous statement of total comprehensive income, which includes components of both OCI and net income, or in a separate statement appearing consecutively with the statement of income. ASU 2011-05 does not affect current guidance for the accounting of the components of OCI, or which items are included within total comprehensive income, and is effective for periods beginning after December 15, 2011. On December 23, 2011, the FASB issued ASU 2011-12, which indefinitely defers the provision in ASU 2011-05 that required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statements in which net income is presented and the statement in which OCI is presented. The other provisions in ASU 2011-05 are unaffected by the deferral. The adoption of ASU 2011-05 affected presentation only and therefore did not have an impact on the Company’s consolidated financial condition, results of operations or cash flows.

In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350) —Testing Goodwill for Impairment” (“ASU 2011-08”). The new guidance provides entities with the option to perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the quantitative two-step goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the quantitative two-step goodwill impairment test. Entities also have the option to bypass the assessment of qualitative factors for any reporting unit in any period and proceed directly to performing the first step of the quantitative two-step goodwill impairment test, as was required prior to the issuance of this new guidance. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-08 will not have a material impact on the consolidated financial statements.

6

NOTE 3—MERCHANDISE INVENTORIES

Merchandise inventories are valued at the lower of cost or market. Cost is determined by using the last-in, first-out (“LIFO”) method. An actual valuation of inventory under the LIFO method can be made only at the end of each fiscal year based on inventory and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected fiscal year-end inventory levels and costs. If the first-in, first-out (“FIFO”) method of costing inventory had been used by the Company, inventory would have been $554.1 million and $536.4 million as of April 28, 2012 and January 28, 2012, respectively.

The Company’s inventory, consisting primarily of automotive parts and accessories, is used on vehicles. Because of the relatively long lives of vehicles, along with historical experiences of returning most excess inventory to vendors for full credit, the risk of obsolescence is minimal. The Company establishes a reserve for excess inventory for instances where less than full credit will be received for such returns or where the Company anticipates items will be sold at retail prices that are less than recorded costs. The reserve is based on management’s judgment, including estimates and assumptions regarding marketability of products, the market value of inventory to be sold in future periods and on historical experiences where the Company received less than full credit from vendors for product returns. The Company also provides for estimated inventory shrinkage based upon historical levels and the results of its cycle counting program. The Company’s inventory adjustments for these matters were approximately $4.4 million and $4.6 million at April 28, 2012 and January 28, 2012, respectively.

NOTE 4—PROPERTY AND EQUIPMENT

The Company’s property and equipment as of April 28, 2012 and January 28, 2012 was as follows:

(dollar amounts in thousands)	April 28, 2012			January 28, 2012
Property and equipment
Land	$	204,023		$	204,023
Buildings and improvements	880,733			875,999
Furniture, fixtures and equipment	730,700			723,938
Construction in progress	3,772			3,279
Accumulated depreciation and amortization	(1,130,319		)	(1,110,900		)
Property and equipment — net	$	688,909		$	696,339

NOTE 5—WARRANTY RESERVE

The Company provides warranties for both its merchandise sales and service labor. Warranties for merchandise are generally covered by the respective vendors, with the Company covering any costs above the vendor’s stipulated allowance. Service labor is warranted in full by the Company for a limited specific time period. The Company establishes its warranty reserves based on historical experiences. These costs are included in either costs of merchandise sales or costs of service revenues in the consolidated statements of operations.

The reserve for warranty cost activity for the thirteen weeks ended April 28, 2012 and the fifty-two weeks ended January 28, 2012 is as follows:

(dollar amounts in thousands)	April 28,2012			January 28, 2012
Beginning balance	$	673		$	673
Additions related to current period sales	2,804			12,122
Warranty costs incurred in current period	(2,804		)	(12,122		)
Ending balance	$	673		$	673

7

NOTE 6—DEBT AND FINANCING ARRANGEMENTS

The following are the components of debt and financing arrangements:

(dollar amounts in thousands)	April 28, 2012			January 28, 2012
7.50% Senior Subordinated Notes, due December 2014	$	147,565		$	147,565
Senior Secured Term Loan, due October 2013	147,287			147,557
Revolving Credit Agreement, through January 2016	—			—
Long-term debt	294,852			295,122
Current maturities	(1,079		)	(1,079		)
Long-term debt less current maturities	$	293,773		$	294,043

As of April 28, 2012, 126 stores collateralized the Senior Secured Term Loan.

The Company’s ability to borrow under its Revolving Credit Agreement is based on a specific borrowing base consisting of inventory and accounts receivable. The interest rate on this credit line is daily LIBOR plus 2.00% to 2.50% based upon the then current availability under the Agreement. As of April 28, 2012, there were no outstanding borrowings under this agreement and $29.6 million of availability was utilized to support outstanding letters of credit. Taking this into account and the borrowing base requirements, as of April 28, 2012, there was $189.4 million of availability remaining.

Several of the Company’s debt agreements require compliance with covenants. The most restrictive of these covenants, an earnings before interest, taxes, depreciation and amortization (“EBITDA”) requirement, is triggered if the Company’s availability under its Revolving Credit Agreement drops below $50.0 million. As of April 28, 2012, the Company was in compliance with all financial covenants contained in its debt agreements.

Interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities are used to estimate fair value for debt issues that are not quoted on an exchange and are considered a level 2 measure under the fair value hierarchy. The estimated fair value of long-term debt including current maturities was $296.1 million and $293.6 million as of April 28, 2012 and January 28, 2012, respectively.

NOTE 7—ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are:

(dollar amounts in thousands)	April 28, 2012			January 28, 2012
Defined benefit plan adjustment, net of tax	$	(9,342	)	$	(9,696	)
Derivative financial instrument adjustment, net of tax	(6,933		)	(7,953		)
Accumulated other comprehensive loss	$	(16,275	)	$	(17,649	)

8

NOTE 8—EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per share for earnings from continuing operations and net earnings:

	Thirteen Weeks Ended
(dollar amounts in thousands, except per share amounts)	April 28,2012			April 30,2011
(a) Earnings from continuing operations	$	1,134		$	12,405
Loss from discontinued operations, net of tax	(72		)	(37		)
Net earnings	$	1,062		$	12,368
(b) Basic average number of common shares outstanding during period	53,071			52,881
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price	878			685
(c) Diluted average number of common shares assumed outstanding during period	53,949			53,566
Basic earnings per share:
Earnings from continuing operations (a/b)	$	0.02		$	0.23
Discontinued operations, net of tax	—			—
Basic earnings per share	$	0.02		$	0.23
Diluted earnings per share:
Earnings from continuing operations (a/c)	$	0.02		$	0.23
Discontinued operations, net of tax	—			—
Diluted earnings per share	$	0.02		$	0.23

At April 28, 2012 and April 30, 2011, respectively, there were 2,654,000 and 2,717,000 outstanding options and restricted stock units. Certain stock options were excluded from the calculation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares for the periods then ended and therefore would be anti-dilutive. The total number of such shares excluded from the diluted earnings per share calculation are 299,000 and 773,000 for the thirteen weeks ended April 28, 2012 and April 30, 2011, respectively.

NOTE 9—BENEFIT PLANS

The Company has a qualified 401(k) savings plan and a separate plan for employees residing in Puerto Rico, which cover all full-time employees who are at least 21 years of age with one or more years of service. The Company also maintains a non-qualified defined contribution Supplemental Executive Retirement Plan (the “Account Plan”) for key employees designated by the Board of Directors. The Company’s contribution to these plans for fiscal 2012 is contingent upon meeting certain performance metrics. The Company did not record any contribution expense for these plans in the first quarter of 2012 or 2011.

The Company also has a frozen defined benefit pension plan covering the Company’s full-time employees hired on or before February 1, 1992. The Company’s expense for its pension plan follows:

	Thirteen weeks ended
(dollar amounts in thousands)	April 28, 2012			April 30, 2011
Interest cost	$	619		$	651
Expected return on plan assets	(704		)	(651		)
Amortization of net loss	566			351
Net periodic benefit cost	$	481		$	351

9

The Plan is subject to minimum funding requirements of the Employee Retirement Income Security Act of 1974 as amended. While the Company had no minimum funding requirement during fiscal 2011, it made a $3.0 million discretionary contribution to the defined benefit pension plan on April 28, 2011.  There were no discretionary contributions made during the first quarter of 2012.

During the third quarter of fiscal 2011, the Company began the process of terminating the Plan. The termination of the Plan is expected to be completed by the end of fiscal 2012. In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, the Company is required to fully fund the Plan on a termination basis and will commit to contribute the additional assets necessary to do so. Plan participants will not be adversely affected by the Plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.

NOTE 10—FAIR VALUE MEASUREMENTS AND DERIVATIVES

The Company’s fair value measurements consist of (a) financial assets and liabilities that are recognized or disclosed at fair value in the Company’s financial statements on a recurring basis (at least annually) and (b) all non-recurring non-financial assets and liabilities.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. There is a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table provides information by level for assets and liabilities that are measured at fair value, on a recurring basis:

(dollar amounts in thousands)	Fair Value at		Fair Value Measurements Using Inputs Considered as
Description	April 28, 2012		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	99,439	$	99,439	$	—	$	—
Collateral investments (1)	17,276		17,276		—		—
Rabbi trust assets (1)	3,696		—		3,696		—
Liabilities:
Other liabilities
Derivative liability (2)	10,929		—		10,929		—

(dollar amounts in thousands)	Fair Value at		Fair Value Measurements Using Inputs Considered as
Description	January 28, 2012		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	58,244	$	58,244	$	—	$	—
Collateral investments (1)	17,276		17,276		—		—
Rabbi trust assets (1)	3,576		—		3,576		—
Liabilities:
Other liabilities
Derivative liability (2)	12,540		—		12,540		—

(1) included in other long-term assets

(2) included in other long-term liabilities

As of January 28, 2012 the Company invested $17.3 million in restricted accounts as collateral for its retained liabilities included within existing insurance programs in lieu of previously outstanding letters of credit, of which $4.8 million was invested during the first quarter of fiscal year 2011.

10

The Company has one interest rate swap designated as a cash flow hedge on $145.0 million of the Company’s Senior Secured Term Loan that is due in October 2013. The swap is used to minimize interest rate exposure and overall interest costs by converting the variable component of the total interest rate to a fixed rate of 5.036%. Since February 1, 2008, this swap was deemed to be fully effective and all adjustments in the interest rate swap’s fair value have been recorded to accumulated other comprehensive loss.

The table below shows the effect of the Company’s interest rate swap on the consolidated financial statements for the periods indicated:

(dollar amounts in thousands)	Amount of Gain in Other Comprehensive Income (Effective Portion)		Earnings Statement Classification	Amount of Loss Recognized in Earnings (Effective Portion) (a)
Thirteen weeks ended April 28, 2012	$	1,007	Interest expense	$	(1,654	)
Thirteen weeks ended April 30, 2011	$	498	Interest expense	$	(1,719	)

(a) represents the effective portion of the loss reclassified from accumulated other comprehensive loss

The fair value of the derivative was $10.9 million and $12.5 million payable at April 28, 2012 and January 28, 2012, respectively. Of the $1.6 million decrease in the fair value during the thirteen weeks ended April 28, 2012, $1.0 million net of tax was recorded to accumulated other comprehensive loss on the consolidated balance sheet.

Non-financial assets measured at fair value on a non-recurring basis:

Certain assets are measured at fair value on a non-recurring basis, that is, the assets are subject to fair value adjustments in certain circumstances such as when there is evidence of impairment. These measures of fair value, and related inputs, are considered level 2 or level 3 measures under the fair value hierarchy. There were no remeasurements of non-financial assets in the first quarter of 2012 or 2011.

NOTE 11—LEGAL MATTERS

The Company is party to various actions and claims arising in the normal course of business. The Company believes that amounts accrued for awards or assessments in connection with all such matters are adequate and that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position. However, there exists a reasonable possibility of loss in excess of the amounts accrued, the amount of which cannot currently be estimated. While the Company does not believe that the amount of such excess loss could be material to the Company’s financial position, any such loss could have a material adverse effect on the Company’s results of operations in the period(s) during which the underlying matters are resolved.

NOTE 12—MERGER UPDATE

On May 29, 2012, the Company, Auto Acquisition Company, LLC, a Delaware limited liability company (“Parent”), Auto Mergersub, Inc., a Delaware corporation (“Merger Sub”), and The Gores Group, LLC, a Delaware limited liability company (“Gores”), entered into a Settlement Agreement (the “Settlement Agreement”) relating to the previously announced Agreement and Plan of Merger, dated as of January 29, 2012, by and among the Company, Parent and Merger Sub (the “Merger Agreement”).  The Settlement Agreement provides for, among other things: (i) the termination of the Merger Agreement and the related financing commitments from Gores Capital Partners II, L.P. and Gores Capital Partners III, L.P.; (ii) Parent’s agreement to pay a $50.0 million fee to the Company and reimburse the Company for certain of its merger related expenses; and (iii) mutual releases of the parties. Each of Gores Capital Partners II, L.P. and Gores Capital Partners III, L.P. , investment funds affiliated with Gores, have entered into guarantee agreements in favor of the Company pursuant to which each fund has agreed to guarantee its pro rata portion of amounts payable by Parent under the Settlement Agreement.

11

NOTE 13—SUPPLEMENTAL GUARANTOR INFORMATION

The Company’s Notes are fully and unconditionally and joint and severally guaranteed by certain of the Company’s direct and indirectly wholly-owned subsidiaries—namely, The Pep Boys Manny Moe & Jack of California, The Pep Boys—Manny Moe & Jack of Delaware, Inc. (the “Pep Boys of Delaware”); Pep Boys—Manny Moe & Jack of Puerto Rico, Inc.; Tire Stores Group Holding Corporation (on and after May 5, 2011); Big 10 Tire Stores, LLC (on and after May 5, 2011), (collectively, the “Subsidiary Guarantors”). The Notes are not guaranteed by the Company’s wholly owned subsidiary, Colchester Insurance Company.

The following consolidating information presents, in separate columns, the condensed consolidating balance sheets as of April 28, 2012 and January 28, 2012 and the related condensed consolidating statements of operations and comprehensive income for the thirteen weeks ended April 28, 2012 and April 30, 2011 and condensed consolidating statements of cash flows for the thirteen weeks ended April 28, 2012 and April 30, 2011 for (i) the Company (“Pep Boys”) on a parent only basis, with its investment in subsidiaries recorded under the equity method, (ii) the Subsidiary Guarantors on a combined basis, (iii) the subsidiary of the Company that does not guarantee the Notes, and (iv) the Company on a consolidated basis. The Company made an immaterial adjustment to the January 29, 2011 amounts reported for cash, intercompany receivables and intercompany liabilities to account for certain intercompany borrowing activity between Pep Boys and a subsidiary guarantor, which affected net cash provided by (used in) financing activities for the thirteen weeks ended April 30, 2011.

12

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

As of April 28, 2012	Pep Boys		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidation/ Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	27,764	$	61,170	$	10,505	$	—		$	99,439
Accounts receivable, net	10,664		11,878		—		—			22,542
Merchandise inventories	221,428		405,886		—		—			627,314
Prepaid expenses	12,806		14,701		10,921		(12,351		)	26,077
Other current assets	1,803		—		60,235		(4,841		)	57,197
Total current assets	274,465		493,635		81,661		(17,192		)	832,569
Property and equipment—net	246,121		431,278		30,006		(18,496		)	688,909
Investment in subsidiaries	2,188,204		—		—		(2,188,204		)	—
Intercompany receivables	—		1,377,856		75,537		(1,453,393		)	—
Goodwill	2,549		44,368		—		—			46,917
Deferred income taxes	16,586		51,159		—		—			67,745
Other long-term assets	30,480		1,913		—		—			32,393
Total assets	$	2,758,405	$	2,400,209	$	187,204	$	(3,677,285	)	$	1,668,533
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	261,834	$	—	$	—	$	—		$	261,834
Trade payable program liability	100,414		—		—		—			100,414
Accrued expenses	24,543		62,227		154,256		(12,351		)	228,675
Deferred income taxes	25,985		41,483		—		(4,841		)	62,627
Current maturities of long-term debt	1,079		—		—		—			1,079
Total current liabilities	413,855		103,710		154,256		(17,192		)	654,629
Long-term debt less current maturities	293,773		—		—		—			293,773
Other long-term liabilities	29,496		45,895		—		—			75,391
Deferred gain from asset sales	60,258		95,348		—		(18,496		)	137,110
Intercompany liabilities	1,453,393		—		—		(1,453,393		)	—
Total stockholders’ equity	507,630		2,155,256		32,948		(2,188,204		)	507,630
Total liabilities and stockholders’ equity	$	2,758,405	$	2,400,209	$	187,204	$	(3,677,285	)	$	1,668,533

13

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

As of January 28, 2012	Pep Boys		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidation/ Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	22,740	$	27,181	$	8,323	$	—		$	58,244
Accounts receivable, net	14,566		11,226		—		—			25,792
Merchandise inventories	214,584		399,552		—		—			614,136
Prepaid expenses	12,945		16,873		14,996		(18,420		)	26,394
Other current assets	606		—		64,214		(4,841		)	59,979
Total current assets	265,441		454,832		87,533		(23,261		)	784,545
Property and equipment—net	243,108		441,645		30,177		(18,591		)	696,339
Investment in subsidiaries	2,176,992		—		—		(2,176,992		)	—
Intercompany receivables	—		1,389,910		82,206		(1,472,116		)	—
Goodwill	2,549		44,368		—		—			46,917
Deferred income taxes	20,468		52,402		—		—			72,870
Other long-term assets	31,068		2,040		—		—			33,108
Total assets	$	2,739,626	$	2,385,197	$	199,916	$	(3, 690,960)		$	1,633,779
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	243,712	$	—	$	—	$	—		$	243,712
Trade payable program liability	85,214		—		—		—			85,214
Accrued expenses	17,887		55,527		166,711		(18,420		)	221,705
Deferred income taxes	29,383		41,666		—		(4,841		)	66,208
Current maturities of long-term debt	1,079		—		—		—			1,079
Total current liabilities	377,275		97,193		166,711		(23,261		)	617,918
Long-term debt less current maturities	294,043		—		—		—			294,043
Other long-term liabilities	30,540		46,676		—		—			77,216
Deferred gain from asset sales	61,323		97,541		—		(18,591		)	140,273
Intercompany liabilities	1,472,116		—		—		(1,472,116		)	—
Total stockholders’ equity	504,329		2,143,787		33,205		(2,176,992		)	504,329
Total liabilities and stockholders’ equity	$	2,739,626	$	2,385,197	$	199,916	$	(3,690,960	)	$	1,633,779

14

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

				Subsidiary			Subsidiary Non-			Consolidation /
Thirteen Weeks Ended April 28, 2012	Pep Boys			Guarantors			Guarantors			Elimination			Consolidated
Merchandise sales	$	136,583		$	275,749		$	—		$	—		$	412,332
Service revenue	38,041			74,231			—			—			112,272
Other revenue	—			—			6,159			(6,159		)	—
Total revenues	174,624			349,980			6,159			(6,159		)	524,604
Costs of merchandise sales	97,710			193,606			—			(460		)	290,856
Costs of service revenue	34,286			71,857			—			(47		)	106,096
Costs of other revenue	—			—			6,572			(6,572		)	—
Total costs of revenues	131,996			265,463			6,572			(7,079		)	396,952
Gross profit from merchandise sales	38,873			82,143			—			460			121,476
Gross profit from service revenue	3,755			2,374			—			47			6,176
Gross profit from other revenue	—			—			(413		)	413			—
Total gross profit	42,628			84,517			(413		)	920			127,652
Selling, general and administrative expenses	38,937			80,447			84			242			119,710
Net loss from dispositions of assets	—			(2		)	—			—			(2		)
Operating profit (loss)	3,691			4,068			(497		)	678			7,940
Non-operating (expense) income	(4,108		)	15,959			678			(12,059		)	470
Interest expense (income)	17,660			759			(522		)	(11,381		)	6,516
(Loss) earnings from continuing operations before income taxes	(18,077		)	19,268			703			—			1,894
Income tax (benefit) expense	(7,244		)	7,722			282			—			760
Equity in earnings of subsidiaries	11,890			—			—			(11,890		)	—
Net earnings from continuing operations	1,057			11,546			421			(11,890		)	1,134
Discontinued operations, net of tax	5			(77		)	—			—			(72		)
Net earnings	$	1,062		$	11,469		$	421		$	(11,890	)	$	1,062
Other comprehensive income
Defined benefit plan adjustment	354			—			—			—			354
Derivative financial instruments adjustment	1,020			—			—			—			1,020
Other comprehensive income	1,374			—			—			—			1,374
Comprehensive income	$	2,436		$	11,469		$	421		$	(11,890	)	$	2,436

15

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

				Subsidiary			Subsidiary Non-			Consolidation /
Thirteen Weeks Ended April 30, 2011	Pep Boys			Guarantors			Guarantors			Elimination			Consolidated
Merchandise sales	$	141,381		$	267,246		$	—		$	—		$	408,627
Service revenue	38,535			66,378			—			—			104,913
Other revenue	—			—			5,734			(5,734		)	—
Total revenues	179,916			333,624			5,734			(5,734		)	513,540
Costs of merchandise sales	99,173			186,563			—			(407		)	285,329
Costs of service revenue	33,088			60,039			—			(38		)	93,089
Costs of other revenue	—			—			5,826			(5,826		)	—
Total costs of revenues	132,261			246,602			5,826			(6,271		)	378,418
Gross profit from merchandise sales	42,208			80,683			—			407			123,298
Gross profit from service revenue	5,447			6,339			—			38			11,824
Gross profit from other revenue	—			—			(92		)	92			—
Total gross profit	47,655			87,022			(92		)	537			135,122
Selling, general and administrative expenses	37,824			71,069			86			(79		)	108,900
Net gain from dispositions of assets	—			89			—			—			89
Operating profit (loss)	9,831			16,042			(178		)	616			26,311
Non-operating (expense) income	(4,275		)	16,069			616			(11,823		)	587
Interest expense (income)	17,325			901			(522		)	(11,207		)	6,497
(Loss) earnings from continuing operations before income taxes	(11,769		)	31,210			960			—			20,401
Income tax (benefit) expense	(4,614		)	12,233			377			—			7,996
Equity in earnings of subsidiaries	19,531			—			—			(19,531		)	—
Net earnings from continuing operations	12,376			18,977			583			(19,531		)	12,405
Discontinued operations, net of tax	(8		)	(29		)	—			—			(37		)
Net earnings	$	12,368		$	18,948		$	583		$	(19,531	)	$	12,368
Other comprehensive income
Defined benefit plan adjustment	220			—			—			—			220
Derivative financial instruments adjustment	515			—			—			—			515
Other comprehensive income	735			—			—			—			735
Comprehensive income	$	13,103		$	18,948		$	583		$	(19,531	)	$	13,103

16

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

Thirteen Weeks Ended April 28, 2012	Pep Boys			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidation / Elimination			Consolidated
Net earnings	$	1,062		$	11,469		$	421		$	(11,890	)	$	1,062
Adjustments to Reconcile Net Earnings to Net Cash (Used In) Provided By Continuing Operations	(4,431		)	11,183			171			11,212			18,135
Changes in operating assets and liabilities	22,271			1,049			(4,401		)	—			18,919
Net cash provided by (used in) continuing operations	18,902			23,701			(3,809		)	(678		)	38,116
Net cash used in discontinued operations	(5		)	(101		)	—			—			(106		)
Net Cash (Used in) Provided by Operating Activities	18,897			23,600			(3,809		)	(678		)	38,010
Net Cash Used in Investing Activities	(7,055		)	(4,885		)	—			—			(11,940		)
Net Cash (Used in) Provided by Financing Activities	(6,818		)	15,274			5,991			678			15,125
Net Increase in Cash	5,024			33,989			2,182			—			41,195
Cash and Cash Equivalents at Beginning of Period	22,740			27,181			8,323			—			58,244
Cash and cash equivalents at end of period	$	27,764		$	61,170		$	10,505		$	—		$	99,439

Thirteen Weeks Ended April 30, 2011	Pep Boys			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidation / Elimination			Consolidated
Net earnings	$	12,368		$	18,948		$	583		$	(19,531	)	$	12,368
Adjustments to Reconcile Net Earnings to Net Cash (Used In) Provided By Continuing Operations	(10,555		)	13,169			193			18,915			21,722
Changes in operating assets and liabilities	16,980			(6,587		)	(5,787		)	—			4,606
Net cash provided by (used in) continuing operations	18,793			25,530			(5,011		)	(616		)	38,696
Net cash (used in) discontinued operations	(37		)	(29		)	—			—			(66		)
Net Cash Provided by (Used in) Operating Activities	18,756			25,501			(5,011		)	(616		)	38,630
Net Cash Used in Investing Activities	(14,323		)	(9,359		)	—			—			(23,682		)
Net Cash Provided by (Used in) Financing Activities	16,486			(27,013		)	5,097			616			(4,814		)
Net Increase (Decrease) in Cash	20,919			(10,871		)	86			—			10,134
Cash and Cash Equivalents at Beginning of Period	37,912			42,779			9,549			—			90,240
Cash and cash equivalents at end of period	$	58,831		$	31,908		$	9,635		$	—		$	100,374

17

ITEM 2  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion and analysis explains the results of operations for the first fiscal quarter of 2012 and 2011 and significant developments affecting our financial condition for the three months ended April 28, 2012. This discussion and analysis should be read in conjunction with the consolidated interim financial statements and the notes to such consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, and the consolidated financial statements and the notes to such financial statements included in Item 8, “Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the fiscal year ended January 28, 2012.

INTRODUCTION

The Pep Boys—Manny, Moe & Jack is the leading national chain offering automotive service, tires, parts and accessories. This positioning allows us to streamline the distribution channel and pass the savings on to our customers facilitating our vision to be the automotive solutions provider of choice for the value-oriented customer. The majority of our stores are in a Supercenter format, which serves both “do-it-for-me” (“DIFM”, which includes service labor, installed merchandise and tires) and “do-it-yourself” (“DIY”) customers with the highest quality service offerings and merchandise. Most of our Supercenters also have a commercial sales program that provides delivery of tires, parts and other products to automotive repair shops and dealers. In 2009, as part of our long-term strategy to lead with automotive service, we began complementing our existing Supercenters store base with Service & Tire Centers. These Service & Tire Centers are designed to capture market share and leverage our existing Supercenters and support infrastructure. This growth will occur both organically and through acquisitions. The growth is targeted at existing markets, but may include new markets opportunistically. Acquisitions will be used to accelerate growth in markets where the Company is under-penetrated.

In the first quarter of fiscal 2012, we opened four Service & Tire Centers and closed four others whose leases expired and were not renewed. We are targeting a total of 30 new Service & Tire Centers and 10 Supercenters in fiscal 2012. As of April 28, 2012, we operated 562 Supercenters and 169 Service & Tire Centers, as well as seven legacy Pep Boys Express (retail only) stores throughout 35 states and Puerto Rico.

EXECUTIVE SUMMARY

Net earnings for the first quarter of 2012 were $1.1 million, an $11.3 million decline from the $12.4 million reported for the first quarter of 2011. The decrease in profitability was primarily due to lower comparable store revenues combined with lower total gross profit margins, and higher selling, general and administrative expenses. Our diluted earnings per share were $0.02 for the first quarter of 2012, compared to the $0.23 for same period in the prior year.

Total revenue increased for the first quarter of 2012 by 2.2%, or $11.1 million, as compared to the same period of the prior year as a result of our growth strategy. This increase in total revenues was comprised of a 7.0% increase in service revenue and a 0.9% increase in merchandise sales. In the prior year second quarter we acquired Tire Stores Group Holding Corporation which operated an 85-store chain in Florida, Georgia and Alabama under the name Big 10. The Big 10 stores contributed $22.1 million of revenue in the current year first quarter. For the first quarter of 2012, comparable store sales (sales generated by locations in operation during the same period of the prior year) decreased by 2.8% or $14.0 million. This decrease in comparable store sales was comprised of a 1.2% decrease in comparable store service revenue and a 3.2% decrease in comparable store merchandise sales.

Sales of our services and non-discretionary products are favorably impacted by an increase in miles driven. From February through April 2012, unleaded gasoline prices averaged $3.78 per gallon (national average) as compared to $3.52 in the corresponding period of the prior year thereby reducing our customers’ disposable income while miles driven grew between 1 to 2 percent from December, 2011 through March, 2012 after declining the previous 9 months. The financial burden of higher gasoline prices, continued high unemployment and negative consumer confidence in the overall U.S. economy depressed first quarter sales. We believe these factors have also led customers to maintain their existing vehicles, rather than purchasing new ones which, in turn, has partially offset the negative impact the factors described above have had on our sales of services and non-discretionary products. In addition, our first quarter 2012 sales were also impacted by the unusually mild weather which led to decreased demand for tires, automotive repair and maintenance products and services and weather-related merchandise (such as batteries, wiper blades and snow-chains). Given the nature of the above, we cannot predict whether or for how long these trends will continue, nor can we predict to what degree these trends will affect us in the future.

18

Our primary response to fluctuations in customer demand is to adjust our service and product assortment, store staffing and advertising messages. In the first quarter, we increased our spending on marketing and continued to roll out new technologies which did not result in short term sales increases of a magnitude that we had anticipated. However, we believe that these initiatives including our TreadSmart solution, which gives customers the ability to research, purchase and schedule the installation of tires online at a local Pep Boys location, and the recent roll out nationally of an eCommerce solution that allows retail customers to purchase products online for pick up at their local store will contribute to our long-term success. We also believe that we are well positioned to help our customers save money and meet their needs in a challenging macroeconomic environment.

RESULTS OF OPERATIONS

The following discussion explains the material changes in our results of operations.

Analysis of Statement of Operations

Thirteen weeks ended April 28, 2012 vs. Thirteen weeks ended April 30, 2011

The following table presents for the periods indicated certain items in the consolidated statements of operations as a percentage of total revenues (except as otherwise provided) and the percentage change in dollar amounts of such items compared to the indicated prior period.

	Percentage of Total Revenues				Percentage Change
Thirteen weeks ended	April 28, 2012 (Fiscal 2012)		April 30, 2011  (Fiscal 2011)		Favorable (Unfavorable)
Merchandise sales	78.6	%	79.6	%	0.9	%
Service revenue (1)	21.4		20.4		7.0
Total revenues	100.0		100.0		2.2
Costs of merchandise sales (2)	70.5	(3)	69.8	(3)	(1.9	)
Costs of service revenue (2)	94.5	(3)	88.7	(3)	(14.0	)
Total costs of revenues	75.7		73.7		(4.9	)
Gross profit from merchandise sales	29.5	(3)	30.2	(3)	(1.5	)
Gross profit from service revenue	5.5	(3)	11.3	(3)	(47.8	)
Total gross profit	24.3		26.3		(5.5	)
Selling, general and administrative expenses	22.8		21.2		(9.9	)
Net gain (loss) from dispositions of assets	—		—		—
Operating profit	1.5		5.1		(69.8	)
Non-operating income	0.1		0.1		(19.9	)
Interest expense	1.2		1.3		(0.3	)
Earnings from continuing operations before income taxes	0.4		4.0		(90.7	)
Income tax expense	40.1	(4)	39.2	(4)	90.5
Earnings from continuing operations	0.2		2.4		(90.9	)
Discontinued operations, net of tax	—		—		—
Net earnings	0.2		2.4		(91.4	)

(1)	Service revenue consists of the labor charge for installing merchandise or maintaining or repairing vehicles, excluding the sale of any installed parts or materials.
(2)	Costs of merchandise sales include the cost of products sold, purchasing, warehousing and store occupancy costs. Costs of service revenue include service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses.
(3)	As a percentage of related sales or revenue, as applicable.
(4)	As a percentage of earnings from continuing operations before income taxes.

Total revenue for the first quarter of 2012 increased by 2.2%, or $11.1 million, to $524.6 million from $513.5 million in the first quarter of 2011, while comparable store sales for the first quarter of 2012 decreased 2.8% as compared to the first quarter of 2011.

19

This decrease in comparable store sales consisted of a decrease of 1.2% in comparable store service revenue and a decrease of 3.2% in comparable store merchandise sales. Total comparable store sales decreased due to lower customer counts partially offset by an increase in the average transaction value. While our total revenue figures were favorably impacted by the opening of new stores, a new store is not added to our comparable store sales until it reaches its 13th month of operation. Non-comparable stores contributed an additional $25.1 million of total revenue in the first quarter of 2012 as compared to the first quarter of 2011.

Total merchandise sales increased 0.9%, or $3.7 million, to $412.3 million in the first quarter of fiscal 2012, compared to $408.6 million during the prior year quarter. The increase in merchandise sales was due to our non-comparable stores which contributed an additional $16.5 million of sales during the quarter, partially offset by a decline in comparable store merchandise sales of 3.2%, or $12.8 million due to lower comparable store customer counts offset by a higher average transaction value. The decrease in comparable store merchandise sales was comprised of a 4.6% decline in our retail business and a 0.4% decline in merchandise sold through our service business. Retail comparable store merchandise sales were negatively impacted by 70 basis points due to the temporary disruption of converting stores to our new Supercenter format, called “One Team”. One Team is designed to improve the customer experience, highlight our service department, employ a consolidated, performance-based labor pay model and reduce the store footprint. Over the long term, we expect that these transitional issues will be resolved and sales will return to, if not exceed, pre-conversion levels. Total service revenue increased 7.0%, or $7.4 million, to $112.3 million in the first quarter of 2012 from the $104.9 million recorded in the prior year quarter. The increase in service revenue was due to the contribution from our new stores, which accounted for an additional $8.6 million of service revenue, partially offset by a decline in comparable store service revenue of $1.2 million, or 1.2%. The decrease in comparable store service revenue was due to lower average transaction value. Both our retail and service revenues were impacted by unusually mild weather in the current year first quarter which led to decreased demand for tires, automotive repair and maintenance products and services and weather-related merchandise (such as batteries, wiper blades and snow-chains).

We believe that comparable store customer counts decreased in the quarter due to macroeconomic conditions including increased gasoline prices, while the average transaction value increased due to selling price increases that were implemented to reflect the significant inflation in material costs. We believe that higher gasoline prices negatively affected our customers’ disposable income in the first quarter of 2012. This negative headwind was somewhat mitigated by the continued aging of the US light vehicle fleet as consumers spent more money on maintaining their vehicles as opposed to buying new vehicles. We believe that utilizing innovative marketing programs to communicate our value-priced, differentiated service and merchandise assortment will drive increased customer counts and that our continued focus on delivering a better customer experience than our competitors will convert those increased customer counts into sales improvements consistently over all lines of business over the long-term.

Total gross profit decreased by $7.5 million, or 5.5%, to $127.7 million in the first quarter of 2012 from $135.1 million in the first quarter of 2011. Total gross profit margin decreased to 24.3% for the first quarter of 2012 from 26.3% for the first quarter 2011. The decrease in total gross profit margin was primarily due to the growth of our Service & Tire Centers, which lowered total gross profit margin by 170 and 60 basis points in the first quarter of 2012 and 2011, respectively. The sales mix in our new Service & Tire Centers is more highly concentrated in tires which have lower product margins combined with higher rent and payroll costs as a percent of total sales. In addition, the new stores opened by the Company are in their ramp up stage for sales while incurring their full amount of fixed expenses, including payroll and occupancy costs (rent, utilities and building maintenance), which has negatively affected total gross profit margin. Excluding the impact of the Service & Tire Centers from both periods, the total gross profit margin declined by 90 basis points to 26.0% from 26.9 % in the prior year. This decline was mostly due to a shift in sales to lower margin tires and decreased tire margin rates due to cost increases exceeding retail price increases. While the acquired and new organic Service & Tire Centers have had a negative impact on total gross profit margin, these Service & Tire Centers positively contributed to total gross profit for the current fiscal year.

Gross profit from merchandise sales decreased by $1.8 million, or 1.5%, to $121.5 million for the first quarter of 2012 from $123.3 million in the first quarter of 2011. Gross profit margin from merchandise sales decreased to 29.5% for the first quarter of 2012 from 30.2% for the first quarter of 2011. The decrease in gross profit margin was primarily due to a decline in product gross margins partially offset by lower store occupancy costs. Product gross margin decreased 160 basis points primarily due to a shift in sales to lower margin tires and decreased tire margin rates due to cost increases exceeding retail price increases. Occupancy costs decreased as a percent of merchandise sales by 100 basis points due to lower utilities and repairs and maintenance expenses due to the unusually mild weather in the first quarter of 2012 as compared to the prior year.

Gross profit from service revenue decreased by $5.6 million, or 47.8%, to $6.2 million in the first quarter of 2012 from $11.8 million recorded in the first quarter of 2011. Gross profit margin from service revenue decreased to 5.5% for the first quarter of 2012 from 11.3% for the prior year quarter. In accordance with GAAP, service revenue is limited to labor sales (excludes any revenue from installed parts and materials) and costs of service revenue includes the fully loaded service center payroll, and related employee benefits, and service center occupancy costs (rent, utilities and building maintenance). The decrease in service revenue gross profit margin was primarily due to the growth of our Service & Tire Centers, which lowered margins by 660 and 270 basis points in the first

20

quarter of 2012 and 2011, respectively. Excluding the impact of Service & Tire Centers, gross profit from service revenue decreased to 12.1% for the first quarter of 2012 from 14.0% for the first quarter of 2011. The decrease in gross profit, exclusive of Service & Tire Centers, was mostly due to the deleveraging effect of lower service revenues on store occupancy costs and payroll and related benefits.

Selling, general and administrative expenses as a percentage of total revenues increased to 22.8% for the first quarter of 2012 from 21.2% for the first quarter of 2011. Selling, general and administrative expenses increased $10.8 million, or 9.9%, to $119.7 million in the first quarter of 2012 from $108.9 million in the prior year quarter primarily due to higher payroll and related costs of $5.0 million, higher media expense of $3.5 million, merger related costs of $1.6 million, and higher legal and professional services costs of $0.6 million.

Interest expense remained relatively flat at $6.5 million in the first quarter of 2012 and 2011.

Our income tax expense for the first quarter of 2012 was $0.8 million, or an effective rate of 40.1%, as compared to an expense of $8.0 million, or an effective rate of 39.2%, for the first quarter of 2011. The annual rate depends on a number of factors, including the jurisdiction in which operating profit is earned and the timing and nature of discrete items.

As a result of the foregoing, we reported net earnings of $1.1 million in the first quarter of 2012 as compared to net earnings of $12.4 million in the prior year period. Our basic and diluted earnings per share were $0.02 for the first quarter of 2012 as compared to $0.23 for the first quarter of 2011.

INDUSTRY COMPARISON

We operate in the U.S. automotive aftermarket, which has two general lines of business: (1) the Service business, defined as Do-It-For-Me (service labor, installed merchandise and tires) and (2) the Retail business, defined as Do-It-Yourself (retail merchandise) and commercial. Generally, specialized automotive retailers focus on either the Retail or Service area of the business. We believe that operation in both the Retail and Service areas of the business positively differentiates us from most of our competitors. Although we manage our store performance at a store level in aggregation, we believe that the following presentation, which includes the reclassification of revenue from installed products from retail sales to service center revenue, shows an accurate comparison against competitors within the two sales arenas. We compete in the Retail area of the business through our retail sales floor and commercial sales business. Our Service Center business competes in the Service area of the industry.

The following table presents the revenues and gross profit for each area of our business:

	Thirteen weeks ended
(dollar amounts in thousands)	April 28, 2012		April 30, 2011
Service Center Revenue (1)	$	271,089	$	247,330
Retail Sales (2)	253,515		266,210
Total revenues	$	524,604	$	513,540
Gross profit from Service Center Revenue (3)	$	53,888	$	58,962
Gross profit from Retail Sales (3)	73,764		76,160
Total gross profit	$	127,652	$	135,122

(1)	Includes revenues from installed products.
(2)	Excludes revenues from installed products.
(3)	Gross profit from Service Center Revenue includes the cost of installed products sold, purchasing, warehousing, service center payroll and related employee benefits and service center occupancy costs. Occupancy costs include utilities, rents, real estate and property taxes, repairs and maintenance and depreciation and amortization expenses. Gross profit from Retail Sales includes the cost of products sold, purchasing, warehousing and store occupancy costs

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CAPITAL AND LIQUIDITY

Our cash requirements arise principally from (1) the purchase of inventory and capital expenditures related to existing and new stores, offices and distribution centers, (2) debt service and (3) contractual obligations. Cash flows realized through the sales of automotive services, tires, parts and accessories are our primary source of liquidity. Net cash provided by operating activities was $38.0 million in the first quarter of 2012, as compared to $38.6 million in the prior year period. The $0.6 million decrease from the prior year period was due to decreased net earnings, net of non-cash adjustments of $14.9 million mostly offset by a favorable change in operating assets and liabilities of $14.3 million. The change in operating assets and liabilities was primarily due to a favorable change in accrued expenses of $14.6 million and a change in other long-term liabilities of $2.9 million.

In both fiscal year 2012 and 2011, the increased investment in inventory of $13.2 million and $13.3 million, respectively, was funded entirely by the improvement in our trade vendor payment terms. Taking into consideration changes in our trade payable program liability (shown as cash flows from financing activities on the consolidated statements of cash flows), cash generated from accounts payable was $33.3 million and $18.0 million for 2012 and 2011, respectively. The ratio of accounts payable, including our trade payable program, to inventory was 57.7% at April 28, 2012, 53.6% at January 28, 2012 and 49.2% at April 30, 2011, respectively. The $13.2 million increase in inventory from January 28, 2012 was primarily due to expanded coverage in tires and certain hard part categories.

The change in accrued expenses was primarily due to an increase in payroll and related accruals of $7.3 million and an increase in employee payroll tax accruals of $6.3 million due to the timing of payments to taxing authorities. The change in other long-term liabilities was primarily due to a voluntary pension contribution of $3.0 million made in the first quarter of 2011. There were no discretionary contributions made during the first quarter of 2012.

Cash used in investing activities was $11.9 million in the first quarter of 2012 as compared to $23.7 million in the prior year period. Capital expenditures were $11.9 million and $18.1 million in the first quarter of 2012 and 2011, respectively. Capital expenditures for the first quarter of 2012, in addition to our regularly scheduled store, distribution center improvements and information technology enhancements, included the addition of four new Service & Tire Centers. Capital expenditures for the first quarter of 2011 included the addition of two new Service & Tire Centers and the acquisition of seven service and tire centers in the Seattle/Tacoma area. During the first quarter of 2011, we invested $4.8 million in a restricted account as collateral for retained liabilities included within existing insurance programs in lieu of previously outstanding letters of credit.

Our targeted capital expenditures for fiscal 2012 are $65.0 million. Our fiscal year 2012 capital expenditures include the addition of approximately 40 new locations, the conversion of 15 Supercenters into Superhubs and required expenditures for our existing stores, offices and distribution centers. These expenditures are expected to be funded by cash on hand and net cash generated from operating activities. Additional capacity, if needed, exists under our existing line of credit.

In the first quarter of 2012, cash provided by financing activities was $15.1 million, as compared to cash used in financing of $4.8 million in the prior year period. The cash provided by financing activities in the first quarter of 2012 was primarily related to net borrowings on our trade payable program liability. The trade payable program is funded by various bank participants who have the ability, but not the obligation, to purchase, directly from our vendors, account receivables owed by Pep Boys. As of April 28, 2012 and January 28, 2012, we had an outstanding balance of $100.4 million and $85.2 million, respectively (classified as trade payable program liability on the consolidated balance sheet).

We anticipate that cash on hand and cash generated by operating activities will exceed our expected cash requirements in fiscal year 2012. In addition, we expect to have excess availability under our existing revolving credit agreement during the entirety of fiscal year 2012. As of April 28, 2012, we had zero drawn on our revolving credit facility and maintained undrawn availability of $189.4 million.

During fiscal 2011, the Company began the process of terminating its defined benefit pension plan (the “Plan”), which covered full-time employees hired on or before February 1, 1992. The termination of the Plan, which has been frozen since December 31, 1996, is expected to be completed by the end of fiscal 2012. In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, the Company is required to fully fund the Plan on a termination basis and will commit to contribute the additional assets necessary to do so. The amount necessary to do so is not yet known, but is currently estimated to be between $13.0 and $18.0 million. Plan participants will not be adversely affected by the Plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.

Our working capital was $177.9 million and $166.6 million at April 28, 2012 and January 28, 2012, respectively. Our long-term debt, as a percentage of our total capitalization, was 36.7% and 36.8% at April 28, 2012 and January 28, 2012, respectively.

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Contractual Obligations

For a discussion of our other contractual obligations, see a discussion of future commitments under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Form 10-K for the fiscal year ended January 28, 2012. There have been no significant developments with respect to our contractual obligations since January 28, 2012.

NEW ACCOUNTING STANDARDS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, “Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. The adoption of ASU 2011-04 did not have a material impact on the consolidated financial statements.

In June of 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 was issued to improve the comparability of financial reporting between U.S. GAAP and International Financial Reporting Standards, and eliminates previous U.S. GAAP guidance that allowed an entity to present components of other comprehensive income (“OCI”) as part of its statement of changes in shareholders’ equity. With the issuance of ASU 2011-05, companies are now required to report all components of OCI either in a single continuous statement of total comprehensive income, which includes components of both OCI and net income, or in a separate statement appearing consecutively with the statement of income. ASU 2011-05 does not affect current guidance for the accounting of the components of OCI, or which items are included within total comprehensive income, and is effective for periods beginning after December 15, 2011. On December 23, 2011, the FASB issued ASU 2011-12, which indefinitely defers the provision in ASU 2011-05 that required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statements in which net income is presented and the statement in which OCI is presented. The other provisions in ASU 2011-05 are unaffected by the deferral. The adoption of ASU 2011-05 affected presentation only and therefore did not have an impact on the Company’s consolidated financial condition, results of operations or cash flows.

In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350) —Testing Goodwill for Impairment” (“ASU 2011-08”). The new guidance provides entities with the option to perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the quantitative two-step goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the quantitative two-step goodwill impairment test. Entities also have the option to bypass the assessment of qualitative factors for any reporting unit in any period and proceed directly to performing the first step of the quantitative two-step goodwill impairment test, as was required prior to the issuance of this new guidance. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-08 will not have a material impact on the consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to customer incentives, product returns and warranty obligations, bad debts, inventories, income taxes, financing operations, restructuring costs, retirement benefits, share-based compensation, risk participation agreements, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For a detailed discussion of significant accounting policies that may involve a higher degree of judgment or complexity, refer to “Critical Accounting Policies and Estimates” as reported in our Annual Report on Form 10-K for the fiscal year ended January 28, 2012.

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FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. The words “guidance,” “expect,” “anticipate,” “estimates,” “forecasts” and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include management’s expectations regarding implementation of its long-term strategic plan, future financial performance, automotive aftermarket trends, levels of competition, business development activities, future capital expenditures, financing sources and availability and the effects of regulation and litigation. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be achieved. Our actual results may differ materially from the results discussed in the forward-looking statements due to factors beyond our control, including the strength of the national and regional economies, retail and commercial consumers’ ability to spend, the health of the various sectors of the automotive aftermarket, the weather in geographical regions with a high concentration of our stores, competitive pricing, the location and number of competitors’ stores, product and labor costs and the additional factors described in our filings with the Securities and Exchange Commission (SEC). We assume no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

ITEM 3  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposure with regard to financial instruments is due to changes in interest rates. Pursuant to the terms of our Revolving Credit Agreement, changes in daily LIBOR could affect the rates at which we could borrow funds thereunder. At April 28, 2012 we had no borrowings under this facility. Additionally, we have a $147.3 million Senior Secured Term Loan that bears interest at three month LIBOR plus 2.0%.

We have an interest rate swap for a notional amount of $145.0 million, which is designated as a cash flow hedge on our Senior Secured Term Loan. We record the effective portion of the change in fair value through accumulated other comprehensive loss.

The fair value of the derivative was $10.9 million and $12.5 million payable at April 28, 2012 and January 28, 2012, respectively. Of the $1.6 million decrease in the liabilities during the thirteen weeks ended April 28, 2012, $1.0 million net of tax was recorded to accumulated other comprehensive loss on the consolidated balance sheet.

ITEM 4  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our disclosure controls and procedures (as defined in Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to provide reasonable assurance that the information required to be disclosed is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective in providing reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No change in the Company’s internal control over financial reporting occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1  LEGAL PROCEEDINGS

The Company is party to various actions and claims arising in the normal course of business. The Company believes that amounts accrued for awards or assessments in connection with all such matters are adequate and that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position. However, there exists a reasonable possibility of loss in excess of the amounts accrued, the amount of which cannot currently be estimated. While the Company does not believe that the amount of such excess loss could be material to the Company’s financial position, any such loss could have a material adverse effect on the Company’s results of operations in the period(s) during which the underlying matters are resolved.

ITEM 1A  RISK FACTORS

There have been no changes to the risks described in the Company’s previously filed Annual Report on Form 10-K for the fiscal year ended January 28, 2012, except that the Risk Factor entitled “Failure to complete the proposed Merger could adversely affect our business.” is no longer applicable.

ITEM 2  UNREGRISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4  MINE SAFETY DISCLOSURES

None.

ITEM 5  OTHER INFORMATION

None.

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ITEM 6  EXHIBITS

10.19	The Pep Boys—Manny, Moe & Jack Pension Plan — Termination Amendment
10.20	The Pep Boys Savings Plan — Amendment 2012 -1
10.21	The Pep Boys Savings Plan — Amendment 2012 -2
10.22	The Pep Boys Savings Plan—Puerto Rico — Amendment 2012 -1
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS (1)	XBRL Instance Document
101.SCH(1)	XBRL Taxonomy Extension Schema Document
101.CAL(1)	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB(1)	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE(1)	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF(1)	XBRL Taxonomy Extension Definition Linkbase Document

(1) In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except to the extent expressly set forth by specific reference in such filing.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE PEP BOYS - MANNY, MOE & JACK
	(Registrant)
Date: June 7, 2012	by:	/s/ Raymond L. Arthur
	Raymond L. Arthur
	Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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INDEX TO EXHIBITS

10.19	The Pep Boys—Manny, Moe & Jack Pension Plan — Termination Amendment
10.20	The Pep Boys Savings Plan — Amendment 2012 -1
10.21	The Pep Boys Savings Plan — Amendment 2012 -2
10.22	The Pep Boys Savings Plan—Puerto Rico — Amendment 2012 -1
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS (1)	XBRL Instance Document
101.SCH(1)	XBRL Taxonomy Extension Schema Document
101.CAL(1)	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB(1)	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE(1)	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF(1)	XBRL Taxonomy Extension Definition Linkbase Document

(1) In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except to the extent expressly set forth by specific reference in such filing.

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EX-10.19

Exhibit 10.19

TERMINATION AMENDMENT

TO THE

PEP BOYS — MANNY, MOE & JACK PENSION PLAN

WHEREAS, The Pep Boys — Manny, Moe & Jack (the “Company”) sponsors The Pep Boys — Manny, Moe & Jack Pension Plan (the “Plan”), which was frozen to new hires after February 1, 1992 and frozen for all purposes on December 31, 1996, and which was most recently amended and restated effective as of January 1, 2010; and

WHEREAS, Article VII of the Plan gives the Company the authority to amend the Plan at any time, and to terminate the Plan at any time; and

WHEREAS, on June 15, 2011, the Board of Directors of the Company approved the termination of the Plan and directed the Benefits Plan Committee (the “Committee”) to take, or cause to be taken, all such actions as may be necessary, desirable and appropriate, in connection with the termination; and

WHEREAS, the Committee wishes to amend the Plan to reflect the Plan’s termination, add a temporary lump sum benefit, and make clarifying, conforming, and other changes as necessary in connection with the Plan termination.

NOW, THEREFORE, BE IT RESOLVED THAT, the Plan is amended as follows, generally effective as of December 31, 2011, except as otherwise provided herein:

1.The Preamble is amended by adding the following new paragraph to the end thereof to read as follows:

Anything in the Plan implying ongoing participation, recognition of compensation, service, or reemployment for Plan purposes, or forfeiture of benefits, is not applicable after the December 31, 1996 freeze date.  The Plan is terminated effective as of December 31, 2011.

2.Section 2.1, the definition of Actuarial Equivalent(ce) or Actuarially Equivalent, in subsection (e) the clause “notwithstanding any other Plan provision to the contrary” is deleted, and subsections (b) and (c) are amended and restated effective January 1, 2011 to read as follows:

(b)For purposes of any lump sum distribution that is made to any Participant on or after January 1, 1998, the Actuarial Equivalent value for such lump sum distribution shall be determined by using the annual interest rate on 30-year Treasury securities, as specified by the Commissioner, that is in effect for the month of November which precedes the applicable Plan Year (the “stability period”) in which the lump sum distribution is made, and by using the applicable mortality table under section 417(e)(3) of the Code and Treas. Reg. section 1.417(e)-1(d)(2). The Actuarial Equivalent value of a lump distribution that is payable to a Former Participant prior to Early Retirement Date, shall be the Actuarial Equivalent value of the benefit determined as of Normal

1

Retirement Date (using the applicable 30-year Treasury security rate).  For purposes of any lump sum distribution that is made on or after January 1, 2008 and on or before the Plan Termination Date (or on or before, for purposes of Section 13.7(i), the first anniversary of the Plan Termination Date), the Actuarial Equivalent single-sum value of a single life annuity with 120 payments guaranteed shall be determined using the annual interest rate specified under section 417(e)(3) of the Code, in effect for the month of November preceding the first day of the Plan Year in which the lump sum distribution is made, and by using the applicable morality table under section 417(e)(3)(B) of the Code.  For purposes of any lump sum distribution that is made after the Plan Termination Date (or after, for purposes of Section 13.7(i), the first anniversary of the Plan Termination Date), the Actuarial Equivalent single-sum value of a single life annuity with 120 payments guaranteed shall be determined using the annual interest rate specified under section 417(e)(3) of the Code, in effect for the month of August preceding the first day of the Plan Year in which the lump sum distribution is made, and by using the applicable morality table under section 417(e)(3)(B) of the Code.

(c)For periods prior to January 1, 2007, except as provided in the following paragraph, for conversions under Section 4.6(b), for optional forms paid according to Section 4.6(e), early retirement under Section 4.3, disability under Section 4.4, deferred retirement under Sections 4.2, deferred commencement under Section 4.9, conversions with respect to annuity payments made pursuant to qualified domestic relations orders, and adjustments under Sections 9.4 and 9.4A(b)(2)(B)(i)(B), the UP-1994 Table of Mortality at 7½ percent interest, shall be used. For purposes of establishing present value for Top-Heavy determinations, interest at 7½ percent shall be used and the UP-1994 Table of Mortality.

Effective January 1, 2007, for conversions under Section 4.6(b), for optional forms paid according to Section 4.6(e), early retirement under Section 4.3, disability under Section 4.4, deferred retirement under Sections 4.2, deferred commencement under Section 4.9, conversions with respect to annuity payments made pursuant to qualified domestic relations orders, and adjustments under Sections 9.4 and 9.4A(b)(2)(B)(i)(B), the UP-1994 Mortality Table projected to 2002 using Scale AA (blended 50% male, 50% female; without adjustment collar) at 7½ percent interest, shall be used.  Notwithstanding the foregoing, the benefit determined under this paragraph shall not be less than the benefit determined under the first paragraph of this subsection (c).  For purposes of establishing present value for Top-Heavy determinations, interest at 7½ percent and the UP-1994 Mortality Table projected to 2002 using Scale AA (blended 50% male, 50% female; without adjustment collar)) shall be used.

3.In Section 2.1, the definition of Early Retirement Age is amended and restated effective January 1, 2011 to read as follows:

Early Retirement Age means the date on which a Participant or Former Participant has attained age 55.

2

4.In Section 2.1, the definition of Early Retirement Date is amended and restated effective January 1, 2011 to read as follows:

Early Retirement Date means the first day of any month on or following attainment of his Early Retirement Age.

5.Section 2.1 is amended by adding the following new definition:

Plan Termination Date means December 31, 2011, the date of the termination of this Plan.

6.Section 2.2 is amended and restated to read as follows:

2.2Construction. The masculine gender, where appearing in this Plan, shall be deemed to include the feminine gender, unless the context clearly indicates to the contrary.  Titles of sections are inserted for convenience and shall not affect the meaning or construction of the Plan.  The insurance company shall be substituted for the Employer and the Administrative Committee with respect to all powers, actions, and decisions after the purchase of the Group Annuity Contract following the Plan Termination Date.

7.Section 4.1, on Normal Retirement, shall be amended by deleting the second full paragraph thereof effective January 1, 2011, relating to suspension of benefits upon reemployment.

8.Section 4.5 is amended and restated to read as follows:

Section 4.5Termination Benefit. A Participant who Terminates his employment with a vested interest in his Accrued Annual Pension shall be eligible to receive his benefit in accordance with Section 4.1 (Normal Retirement), or as of the first day of any month on or after attainment of age 55, in accordance with Section 4.3 (Early Retirement), or, if and to the extent applicable, as provided under Section 4.6(e)(5) (Limited Plan Termination Distribution Provisions).

9.After the flush language that follows Section 4.6(e)(4), a new Section 4.6(e)(5) is added to the Plan to read as follows:

(5)Limited Plan Termination Distribution Provisions.  This Section 4.6(e)(5) shall not apply to any Distributee who is already in pay status prior to the commencement of the Plan Termination Election Period provided below.

(A)Plan Termination Distribution Options.  As of the Plan Termination Date, any Participant or Former Participant whose benefits have not commenced shall be permitted to elect (even if such Participant has not Terminated), during the Plan Termination Election Period, one of the forms of payment listed below.  Applicable notices and information shall be provided in accordance with Section 4.6(c) (Notice and Information to Participants), with the timing modified as necessary to reflect the Plan Termination Election Period.

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(i)A lump sum distribution that is Actuarially Equivalent to such Participant’s or Former Participant’s Accrued Annual Pension payable as a single life annuity with payments guaranteed for 120 months as of such Participant’s or Former Participant’s Normal Retirement Date, in lieu of the Normal Annual Pension otherwise payable under this Article IV.  Except as provided in Section 4.11(f) (regarding cash-out of small benefits following Plan termination), any election of a lump sum by a married Participant or married Former Participant shall require spousal consent in accordance with Section 4.6(d) (Election and Revocation of Spouse’s Annuities), including consent of an Alternate Payee under a shared payment qualified domestic relations order under which benefits have not commenced.  Distribution of a lump sum shall be in complete satisfaction of the Participant’s or Former Participant’s right to benefits under the Plan, and no other benefits shall thereafter be payable to or on behalf of such Participant or Former Participant from the Plan.

(ii)If such Participant or Former Participant is or will be at least age 55 as of the proposed distribution date following the Plan Termination Election Period, a Limited Immediate Annuity in any applicable automatic or optional form of payment as provided in Sections 4.6(a) (Single Participants), 4.6(b) (Married Participants), or 4.6(e) (Optional Forms), in accordance with 4.6(d) (Election and Revocation of Spouse’s Annuities).

(iii)If such Participant or Former Participant is not or will not be at least age 55 as of the proposed distribution date following the Plan Termination Election Period, a Limited Immediate Annuity in one of the following forms of payment:

(x) if such Participant or Former Participant is unmarried, the life annuity with payments guaranteed for 120 months, as provided in Section 4.6(a); or

(y) if such Participant or Former Participant is married, a qualified joint and 50% survivor annuity as provided in Section 4.6(b), or a 75% joint and survivor annuity as provided in 4.6(e)(3).

(iv)A deferred benefit, commencing to the Participant or Former Participant as provided under Section 4.1 (Normal Retirement), Section 4.2 (Deferred Retirement), Section 4.3 (Early Retirement), Section 4.5 (Termination Benefit), or Section 4.11(f) (regarding cash-out of small benefits following Plan termination), provided that the Participant is not required to have a Termination; or, if applicable, under Section 4.4 (Disability Retirement), in all cases as provided under the Plan until the Group Annuity Contract is purchased, if applicable, and thereafter under the Group Annuity Contract.

(B)Death Prior to Annuity Starting Date.  Elections under Section 4.6, including the election of a lump sum, shall be null and void if the Participant or Former Participant dies before such Participant’s or Former Participant’s Annuity Starting Date.  In such event, if the Participant or Former Participant was married, survivor benefits can be payable to an eligible Surviving Spouse under Section 4.7 (Death Prior to the Annuity Starting Date).

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(C)No Election.  If, prior to the end of the Plan Termination Election Period, any Participant or Former Participant cannot be located, or any Surviving Spouse or Alternate Payee cannot be located or is unknown, or if for any other reason any otherwise eligible Distributee fails to make an election under Section 4.6(e)(5)(A) during the Plan Termination Election Period, such election shall not thereafter be available to such individual, and Section 4.6(e)(5)(A)(iv) (Deferred Benefit) shall apply as the default.

(D)Definitions.  The following shall apply in place of or in addition to other applicable Plan provisions, as required by context:

Annuity Starting Date for Distributees who elect a lump sum distribution shall be the date on which the Participant’s or Former Participant’s (or other Distributee’s) benefit is paid as a lump sum or for Distributees who elect a Limited Immediate Annuity shall be the date as of which the first monthly benefit is payable.

Group Annuity Contract means a terminally funded, paid-up group annuity contract that the Plan purchases from an insurance company to provide retirement benefits following the Plan termination.

Limited Immediate Annuity means an annuity that is the Actuarial Equivalent of the Participant’s or Former Participant’s Accrued Annual Pension payable as a single life annuity with payments guaranteed for 120 months as of such Participant’s or Former Participant’s Normal Retirement Date, commencing as of the Annuity Starting Date and payable as soon as administratively possible following the Plan Termination Election Period, in the form elected by the Participant or Former Participant under Section 4.6(e)(5)(A)(ii) (At or After Age 55) or Section 4.6(e)(5)(A)(iii) (Before Age 55), even if the Participant has not Terminated or met the age and service requirements for commencement of benefits as in effect prior to the Plan Termination Date and, if applicable, further adjusted for commencement before the Participant’s or Former Participant’s Early Retirement Date using the same Actuarial Equivalence factors as are used under Section 4.3 (Early Retirement).

Plan Termination Election Period means the period that begins as soon as administratively possible after the end of the Pension Benefit Guaranty Corporation’s standard termination notice review period, as determined by the Administrative Committee and as specified in the applicable election forms; provided, however, that the Annuity Starting Date shall be no more than 180 days after the Participant or Former Participant is supplied with the notice and information as provided in Section 4.6(c) (Notice and Information to Participants).

10.Section 4.7 is amended and restated to read as follows:

4.7Death Prior to the Annuity Starting Date.  If a Participant or Former Participant dies prior to the Annuity Starting Date, and such Participant or Former Participant is married, a death benefit may be payable to the Surviving Spouse under the circumstances described below, subject to Section 4.11(c) (regarding cash-out of small benefits) or Section 4.11(f) (regarding cash-out of small benefits following Plan termination), if

5

applicable.  Nothing in this Plan shall require payment of benefits for 120 months, or payment under any other Plan provision, if an unmarried Participant or an unmarried Former Participant (or a Participant or Former Participant whose marital status is unknown) dies prior to his Annuity Starting Date.

(a)On the death of a vested Participant or Former Participant who has reached his Early Retirement Date, his Spouse shall, if his Spouse has survived him and they have been married through the one-year period ending on the date of death, be entitled to receive a monthly benefit equal to one-half (1/2) of the Participant’s Accrued Annual Pension or Normal Annual Pension, payable as an Actuarially Equivalent qualified joint and 50% survivor annuity set forth in Section 4.6(b) as of the Participant’s or Former Participant’s Normal Retirement Date.  This benefit is payable as early as the first of the month following the Participant’s or Former Participant’s death, and is reduced for early payment, if applicable, in accordance with Section 4.3 (Early Retirement).

(b)On the death of a vested Participant or Former Participant who has not reached his Early Retirement Date, but who is entitled to a vested interest in his Accrued Annual Pension, his Spouse shall, if his Spouse has survived him and they have been married through the one-year period ending on the date of death, be entitled to receive a monthly benefit equal to one-half (1/2) of the Participant’s Accrued Annual Pension payable as an Actuarially Equivalent qualified joint and 50% survivor annuity set forth in Section 4.6(b) as of the Participant’s or Former Participant’s Normal Retirement Date.  This benefit is payable as early as the Participant’s or Former Participant’s Early Retirement Date, and is reduced for early payment, if applicable, in accordance with Section 4.3 (Early Retirement).

(c)A Participant’s or Former Participant’s Surviving Spouse shall have the right to elect to defer payment of the Spouse’s survivor benefit until the date the Participant would have reached his Normal Retirement Date, had he lived, calculated as provided under Sections 4.7(a) or (b), as of the Surviving Spouse’s Annuity Starting Date.

(d)If during the election period under Section 4.6(c) (Notice and Information to Participants), or the Plan Termination Election Period, if applicable, the Participant or Former Participant had elected the 75% joint and survivor annuity, and such Participant or Former Participant dies within such election period but prior to such Participant’s or Former Participant’s Annuity Starting Date, the pre-retirement survivor annuity under this Section 4.6 shall be calculated based upon the 75% survivor percentage that was elected by such Participant.

(e)Any Surviving Spouse whose benefits did not commence prior to the Plan Termination Election Period may elect to have the survivor benefit otherwise payable under this Section 4.7 paid instead as:

(1)an Actuarial Equivalent lump sum, or

(2)an Actuarial Equivalent immediate annuity.

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The limitations provided in Section 4.6(e)(5)(B) (Death Prior to Annuity Starting Date) and Section 4.6(e)(5)(C) (No Election), apply to Surviving Spouses under this Section 4.7(e), except that if the Surviving Spouse fails to make an election under this Section 4.7(e) during the Plan Termination Election Period, such Surviving Spouse shall receive the survivor annuity that would have been payable without regard to this Section 4.7(e), payable as a deferred benefit from the Plan or the Group Annuity Contract, if applicable.

11.          Section 4.11 is amended and restated to read as follows:

4.11        Cash-Out of Small Benefits.

(a)           Prior to the Plan Termination Election Period, if the Actuarial Equivalent of a Participant’s or Former Participant’s vested Accrued Annual Pension or Normal Annual Pension, payable as a single life annuity with payments guaranteed for 120 months at Normal Retirement Date, does not exceed $1,000, such benefit shall be paid in a single sum as soon as practicable after the Participant’s Termination.  A distribution pursuant to this Section 4.11(a) shall not require the consent of the Participant or the consent of his Spouse, and annuity forms of payment shall not be available.

(b)           Prior to the Plan Termination Election Period, a Participant who Terminates for any reason other than death shall be eligible for a voluntary single sum payment of the Actuarial Equivalent of his vested Accrued Annual Pension or Normal Annual Pension, payable as a single life annuity with payments guaranteed for 120 months at such Participant’s Normal Retirement Date, if such Actuarial Equivalent is more than $1,000, but equal to or less than $5,000, determined as of the Participant’s date of Termination, and such Participant shall be eligible to elect to receive such payment as settlement of all liabilities of the Plan in connection with the Participant, provided that such payment is made no later than the last day of the Plan Year following the Plan Year in which the Participant’s Termination occurred.  A distribution pursuant to this Section 4.11(b) shall not require the consent of the Participant’s Spouse.

(c)           Prior to the Plan Termination Election Period, the Actuarial Equivalent of the Spouse’s death benefit payable to the Surviving Spouse of a Participant or Former Participant as of such Participant’s or Former Participant’s Normal Retirement Date pursuant to Section 4.7 shall be distributed to such Surviving Spouse as a single sum as soon as practicable following the Participant’s or Former Participant’s death if such Actuarial Equivalent is $5,000 or less.  A distribution pursuant to this Section 4.11(c) shall not require the consent of the Surviving Spouse, and the annuity form of payment shall not be available.

(d)           Prior to the Plan Termination Election Period, if a Participant has attained his Normal Retirement Age and the Actuarial Equivalent of the vested Accrued Annual Pension or Normal Annual Pension payable as a single life annuity with payments guaranteed for 120 months, does not exceed $5,000 as of the Annuity Starting Date, such Actuarial Equivalent shall be paid in a single sum as soon as administratively practicable following the later of the Participant’s Termination or attainment of Normal Retirement Age.  A distribution pursuant to this Section 4.11(d) shall not require the consent of the

7

Participant or the consent of his Spouse, and annuity forms of payment shall not be available.

(e)           A Participant who has a zero vested interest in his Accrued Annual Pension shall be deemed to have received a distribution of his Accrued Annual Pension immediately upon his Termination of employment.

(f)            Effective for distributions made following the Plan Termination Election Period, if the Actuarial Equivalent of the vested Accrued Annual Pension or Normal Annual Pension payable as a single life annuity with payments guaranteed for 120 months at the Participant’s or Former Participant’s Normal Retirement Date, or the Actuarial Equivalent of the benefit payable to any other Distributee, is $5,000 or less as of the applicable Annuity Starting Date under the Plan or the Group Annuity Contract, such benefit shall be payable with such Participant’s, Former Participant’s, or other Distributee’s written consent in a single sum as settlement of all liabilities under the Plan, even if such Participant has not Terminated.  Any distribution payable pursuant to this Section 4.11(f) shall not require spousal consent, and annuity forms of payment shall not be available.  If such Participant, Former Participant, or other Distributee does not consent to such distribution during the Plan Termination Election Period or any later applicable election period under the Plan or the Group Annuity Contract in accordance with Section 4.6(c) (Notice and Information to Participants), such benefit shall remain in the Plan (or the Group Annuity Contract, if applicable) until such consent is received or until such benefit is required to be distributed under Sections 4.9 or 4.9A (regarding required beginning date), or any other applicable Plan provision.

12.          Section 4.13 is amended and restated to read as follows:

4.13        Payments to an Alternate Payee.

(a)           Payments to an Alternate Payee pursuant to a qualified domestic relations order under section 414(p) of the Code shall not be made prior to the date that the Participant or Former Participant has reached or would have reached his earliest Early Retirement Date under the Plan, except as provided in Sections 4.13(b) and (c) (below).

(b)           Prior to the Plan Termination Election Period, in the event that the Actuarial Equivalent single sum value of the benefit payable to an Alternate Payee as of the Participant’s or Former Participant’s Normal Retirement Date pursuant to a qualified domestic relations order under section 414(p) of the Code does not exceed $5,000, such amount shall be paid to such Alternate Payee in a single sum as soon as practicable following the Administrative Committee’s receipt of the order and verification of its status as a qualified domestic relations order under section 414(p) of the Code, and annuity forms of payment shall not be available.

(c)           Any Alternate Payee whose benefits did not commence prior to the Plan Termination Election Period and whose benefits are payable under a separate interest qualified domestic relations order, may elect to have the benefit otherwise payable under such qualified domestic relations order paid instead as:

8

(1)           an Actuarial Equivalent lump sum, or

(2)           an Actuarial Equivalent immediate annuity,

based on the Alternate Payee’s benefit payable as of the Participant’s Normal Retirement Date, subject to the terms of such qualified domestic relations order, and the provisions in Section 4.6(e)(5).

The limitations provided in Section 4.6(e)(5)(B) (Death Prior to Annuity Starting Date) and Section 4.6(e)(5)(C) (No Election), apply to Alternate Payees under this Section 4.13(c), except that if the Alternate Payee fails to make an election under this Section 4.13(c) during the Plan Termination Election Period, such Alternate Payee shall receive the benefit that would have been payable under the qualified domestic relations order without regard to this Section 4.13(c), payable as a deferred benefit from the Plan or the Group Annuity Contract, if applicable, subject to Section 4.11(f) (regarding cash-out of small benefits following Plan termination).

13.          Section 9.5 is amended and restated to read as follows:

9.5          Suspension of Benefits on Reemployment.

The Plan’s suspension of benefits provisions shall not apply on or after the Plan Termination Date.

14.          Section 11.1 is amended and restated effective January 1, 2011 to read as follows:

11.1        Mandatory Commencement of Benefits.  Notwithstanding any provision of this Plan to the contrary, payment of benefits under this Plan shall commence upon the written election of a Participant or Former Participant not later than sixty days after the close of the Plan Year in which the latest of the following events occurs: (a) the Participant attains Normal Retirement Date; (b) the tenth anniversary of the Plan Year in which the Participant commenced participation in the Plan; or (c) the Termination of the Participant’s service with the Employer; provided, however, that a failure to apply for benefits shall be deemed to be an election to defer commencement, except as provided in Sections 4.9 and 4.9A (regarding required beginning date) or Section 11.5 (Inability to Locate Payee).

15.          In order to continue to set forth the provisions of the Plan in a single document, changes made by this Amendment may be incorporated into a working copy of the Plan.  Any numbering and cross reference corrections to reflect this amendment, or appropriate changes to conform other provisions of the Plan to the changes made by this amendment, shall be made to the Plan as necessary for consistency if this amendment is incorporated into a working copy of the Plan.  This Amendment is hereby adopted subject to the condition that the Plan, as so amended, shall continue to be a tax-qualified retirement plan, within the meaning of Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (“Code”).  Notwithstanding anything herein to the contrary (i) if the Internal Revenue Service does not approve all or any portion of this Amendment, or determines that the Amendment adversely affects the Plan’s qualified status, said portion of this Amendment (or, in the latter case, this Amendment in its entirety) shall be deemed

9

voidable; (ii) in the event that the proposed termination of the Plan is revoked by the Company, or if the Pension Benefit Guaranty Corporation (“PBGC”) issues a notice of noncompliance in connection with the proposed termination of the Plan that is not subsequently revoked by the PBGC, no distributions shall be made and no other actions relating to the Plan termination shall be taken solely as a result of this Amendment; and (iii) the provisions of this Amendment that are effective January 1, 2011 (which do not relate to the Plan termination) shall take effect even if the proposed termination of the Plan is revoked by the Company or the PBGC issues a notice of noncompliance, except as provided in (i).

[SIGNATURE PAGE FOLLOWS]

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The Pep Boys — Manny, Moe & Jack, intending to be legally bound, has caused this Amendment to The Pep Boys — Manny, Moe & Jack Pension Plan to be executed by a duly authorized member of the Benefits Plan Committee, on this 16th day of November, 2011.

THE PEP BOYS — MANNY, MOE & JACK
By:	/s/ Bernard K. McElroy
Title:	VP Finance & Treasurer
On behalf of the Benefits Plan Committee

11

EX-10.20

Exhibit 10.20

AMENDMENT 2012-1

TO

THE PEP BOYS SAVINGS PLAN

Pursuant to the authority previously delegated to it by the Board of Directors of The Pep Boys — Manny, Moe & Jack (the “Company”), the Benefits Plan Committee of the Company hereby amends The Pep Boys Savings Plan (the “Plan”) as follows:

1.Effective as of January 1, 2008, Section 5.3 of the Plan is hereby amended to delete subsection (c) in its entirety.

2.Effective as of January 1, 2008, Section 5.4 of the Plan is hereby amended to delete the fifth through eighth paragraphs thereof, starting with the paragraph that begins, “For Limitation Years beginning on and after January 1, 1998….”

3.Section 13.2A(a)(2)(A) of the Plan is hereby amended to replace “separation from service” with “severance from employment.”

4.Section 13.3 of the Plan is hereby amended to add a new sentence to the end thereof to read as follows:

“This Section 13.3 shall not apply with respect to Plan Years beginning on and after January 1, 2002.”

IN WITNESS WHEREOF, this Amendment to the Plan set forth herein has been executed this 18th day of April, 2012.

BENEFITS PLAN COMMITTEE

/s/ Troy E. Fee

Troy E. Fee

/s/ Raymond L. Arthur

Raymond L. Arthur

/s/ Bernard K. McElroy

Bernard K. McElroy

EX-10.21

Exhibit 10.21

AMENDMENT 2012-2

TO

THE PEP BOYS SAVINGS PLAN

Pursuant to the authority previously delegated to it by the Board of Directors of The Pep Boys — Manny, Moe & Jack (the “Company”), the Benefits Plan Committee of the Company hereby amends The Pep Boys Savings Plan (the “Plan”) as follows:

1.Section 7.2(b) of the Plan is hereby amended in its entirety to read as follows:

“(b)Notwithstanding Sections 5.2(a) and 8.4, all earnings and expenses, including commissions and transfer taxes, realized or incurred in connection with any investments pursuant to a Participant’s or Former Participant’s directions shall be credited or charged to the Participant’s or Former Participant’s Account for which the investment is made.  Effective as of January 1, 2012, a Participant or Former Participant who fails to designate an investment option for his Pre-Tax Contribution Account, Rollover Account and Matching Contribution Account, shall be deemed to have elected to have such Accounts invested in the age-appropriate Fidelity Freedom Fund.”

IN WITNESS WHEREOF, and as evidence of the adoption of this amendment set forth herein, the Committee has caused this instrument to be executed this 26th day of April, 2012.

Attest:	COMMITTEE FOR
	THE PEP BOYS SAVINGS PLAN
/s/ Brian D. Zuckerman	By:	/s/ Bernard K. McElroy
Brian D. Zuckerman		Bernard K. McElroy
Senior Vice President		Vice President Finance & Treasurer
General Counsel & Secretary

EX-10.22

Exhibit 10.22

AMENDMENT 2012-1

TO

THE PEP BOYS SAVINGS PLAN — PUERTO RICO

Pursuant to the authority previously delegated to it by the Board of Directors of The Pep Boys — Manny, Moe & Jack (the “Company”), the Benefits Plan Committee of the Company hereby amends The Pep Boys Savings Plan — Puerto Rico (the “Plan”) as follows:

1.Section 7.2(b) of the Plan is hereby amended in its entirety to read as follows:

“(b)Notwithstanding Sections 5.2(a) and 8.4, all earnings and expenses, including commissions and transfer taxes, realized or incurred in connection with any investments pursuant to a Participant’s or Former Participant’s directions shall be credited or charged to the Participant’s or Former Participant’s Account for which the investment is made.  Effective as of January 1, 2012, a Participant or Former Participant who fails to designate an investment option for his Pre-Tax Contribution Account, Rollover Account and Matching Contribution Account, shall be deemed to have elected to have such Accounts invested in the age-appropriate Fidelity Freedom Fund.”

IN WITNESS WHEREOF, and as evidence of the adoption of this amendment set forth herein, the Committee has caused this instrument to be executed this 26th day of April, 2012.

Attest:	COMMITTEE FOR
	THE PEP BOYS SAVINGS PLAN — PUERTO RICO
/s/ Brian D. Zuckerman	By:	/s/ Bernard K. McElroy
Brian D. Zuckerman		Bernard K. McElroy
Senior Vice President		Vice President Finance & Treasurer
General Counsel & Secretary

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael R. Odell, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Pep Boys - Manny, Moe & Jack;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 7, 2012
by:	/s/ Michael R. Odell
Michael R. Odell
President and Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Raymond L. Arthur, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Pep Boys - Manny, Moe & Jack

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this report based on such evaluation; and

(d) Disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: June 7, 2012
by	/s/ Raymond L. Arthur
Raymond L. Arthur
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of The Pep Boys - Manny, Moe & Jack (the “Company”) for the quarterly period ending April 28, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),

I, Michael R. Odell, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(i)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: June 7, 2012	by:	/s/ Michael R. Odell
	Michael R. Odell
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of The Pep Boys - Manny, Moe & Jack (the “Company”) for the quarterly period ending April 28, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),

I, Raymond L. Arthur, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(i)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Date: June 7, 2012	by:	/s/ Raymond L. Arthur
	Raymond L. Arthur
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

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PROPERTY AND EQUIPMENT

3 Months Ended

Apr. 28, 2012

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

NOTE 4—PROPERTY AND EQUIPMENT

The Company’s property and equipment as of April 28, 2012 and January 28, 2012 was as follows:

(dollar amounts in thousands)	April 28, 2012			January 28, 2012
Property and equipment
Land	$	204,023		$	204,023
Buildings and improvements	880,733			875,999
Furniture, fixtures and equipment	730,700			723,938
Construction in progress	3,772			3,279
Accumulated depreciation and amortization	(1,130,319		)	(1,110,900		)
Property and equipment — net	$	688,909		$	696,339

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MERCHANDISE INVENTORIES

3 Months Ended

Apr. 28, 2012

MERCHANDISE INVENTORIES

MERCHANDISE INVENTORIES

NOTE 3—MERCHANDISE INVENTORIES

Merchandise inventories are valued at the lower of cost or market. Cost is determined by using the last-in, first-out (“LIFO”) method. An actual valuation of inventory under the LIFO method can be made only at the end of each fiscal year based on inventory and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected fiscal year-end inventory levels and costs. If the first-in, first-out (“FIFO”) method of costing inventory had been used by the Company, inventory would have been $554.1 million and $536.4 million as of April 28, 2012 and January 28, 2012, respectively.

The Company’s inventory, consisting primarily of automotive parts and accessories, is used on vehicles. Because of the relatively long lives of vehicles, along with historical experiences of returning most excess inventory to vendors for full credit, the risk of obsolescence is minimal. The Company establishes a reserve for excess inventory for instances where less than full credit will be received for such returns or where the Company anticipates items will be sold at retail prices that are less than recorded costs. The reserve is based on management’s judgment, including estimates and assumptions regarding marketability of products, the market value of inventory to be sold in future periods and on historical experiences where the Company received less than full credit from vendors for product returns. The Company also provides for estimated inventory shrinkage based upon historical levels and the results of its cycle counting program. The Company’s inventory adjustments for these matters were approximately $4.4 million and $4.6 million at April 28, 2012 and January 28, 2012, respectively.

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Apr. 28, 2012	Jan. 28, 2012
Current assets:
Cash and cash equivalents	$ 99,439	$ 58,244
Accounts receivable, less allowance for uncollectible accounts of $1,289 and $1,303	22,542	25,792
Merchandise inventories	627,314	614,136
Prepaid expenses	26,077	26,394
Other current assets	57,197	59,979
Total current assets	832,569	784,545
Property and equipment - net	688,909	696,339
Goodwill	46,917	46,917
Deferred income taxes	67,745	72,870
Other long-term assets	32,393	33,108
Total assets	1,668,533	1,633,779
Current liabilities:
Accounts payable	261,834	243,712
Trade payable program liability	100,414	85,214
Accrued expenses	228,675	221,705
Deferred income taxes	62,627	66,208
Current maturities of long-term debt	1,079	1,079
Total current liabilities	654,629	617,918
Long-term debt less current maturities	293,773	294,043
Other long-term liabilities	75,391	77,216
Deferred gain from asset sales	137,110	140,273
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
Additional paid-in capital	295,411	296,462
Retained earnings	424,083	423,437
Accumulated other comprehensive loss	(16,275)	(17,649)
Treasury stock, at cost - 15,716,914 shares and 15,803,322 shares	(264,146)	(266,478)
Total stockholders' equity	507,630	504,329
Total liabilities and stockholders' equity	$ 1,668,533	$ 1,633,779

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BASIS OF PRESENTATION

3 Months Ended

Apr. 28, 2012

BASIS OF PRESENTATION

BASIS OF PRESENTATION

NOTE 1—BASIS OF PRESENTATION

The Pep Boys — Manny, Moe & Jack and subsidiaries (the “Company”) consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the Company’s financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, costs and expenses, as well as the disclosure of contingent assets and liabilities and other related disclosures. The Company bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of the Company’s assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates, and the Company includes any revisions to its estimates in the results for the period in which the actual amounts become known.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted, as permitted by Rule 10-01 of the Securities and Exchange Commission’s Regulation S-X, “Interim Financial Statements.” It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2012. The results of operations for the thirteen weeks ended April 28, 2012 are not necessarily indicative of the operating results for the full fiscal year.

The consolidated financial statements presented herein are unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows as of April 28, 2012 and for all periods presented have been made.

The Company’s fiscal year ends on the Saturday nearest January 31. Accordingly, references to fiscal years 2012 and 2011 refer to the year ending February 2, 2013 and the year ended January 28, 2012, respectively.

The Company operated 738 store locations at April 28, 2012, of which 232 were owned and 506 were leased.

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NEW ACCOUNTING STANDARDS

3 Months Ended

Apr. 28, 2012

NEW ACCOUNTING STANDARDS

NEW ACCOUNTING STANDARDS

NOTE 2—NEW ACCOUNTING STANDARDS

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, “Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. The adoption of ASU 2011-04 did not have a material impact on the consolidated financial statements.

In June of 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 was issued to improve the comparability of financial reporting between U.S. GAAP and International Financial Reporting Standards, and eliminates previous U.S. GAAP guidance that allowed an entity to present components of other comprehensive income (“OCI”) as part of its statement of changes in shareholders’ equity. With the issuance of ASU 2011-05, companies are now required to report all components of OCI either in a single continuous statement of total comprehensive income, which includes components of both OCI and net income, or in a separate statement appearing consecutively with the statement of income. ASU 2011-05 does not affect current guidance for the accounting of the components of OCI, or which items are included within total comprehensive income, and is effective for periods beginning after December 15, 2011. On December 23, 2011, the FASB issued ASU 2011-12, which indefinitely defers the provision in ASU 2011-05 that required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statements in which net income is presented and the statement in which OCI is presented. The other provisions in ASU 2011-05 are unaffected by the deferral. The adoption of ASU 2011-05 affected presentation only and therefore did not have an impact on the Company’s consolidated financial condition, results of operations or cash flows.

In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350) —Testing Goodwill for Impairment” (“ASU 2011-08”). The new guidance provides entities with the option to perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the quantitative two-step goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the quantitative two-step goodwill impairment test. Entities also have the option to bypass the assessment of qualitative factors for any reporting unit in any period and proceed directly to performing the first step of the quantitative two-step goodwill impairment test, as was required prior to the issuance of this new guidance. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU 2011-08 will not have a material impact on the consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Apr. 28, 2012	Jan. 28, 2012
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for uncollectible accounts (in dollars)	$ 1,289	$ 1,303
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized shares	500,000,000	500,000,000
Common stock, issued shares	68,557,041	68,557,041
Treasury stock, shares	15,716,914	15,803,322

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MERGER UPDATE

3 Months Ended

Apr. 28, 2012

MERGER UPDATE

MERGER UPDATE

NOTE 12—MERGER UPDATE

On May 29, 2012, the Company, Auto Acquisition Company, LLC, a Delaware limited liability company (“Parent”), Auto Mergersub, Inc., a Delaware corporation (“Merger Sub”), and The Gores Group, LLC, a Delaware limited liability company (“Gores”), entered into a Settlement Agreement (the “Settlement Agreement”) relating to the previously announced Agreement and Plan of Merger, dated as of January 29, 2012, by and among the Company, Parent and Merger Sub (the “Merger Agreement”).  The Settlement Agreement provides for, among other things: (i) the termination of the Merger Agreement and the related financing commitments from Gores Capital Partners II, L.P. and Gores Capital Partners III, L.P.; (ii) Parent’s agreement to pay a $50.0 million fee to the Company and reimburse the Company for certain of its merger related expenses; and (iii) mutual releases of the parties. Each of Gores Capital Partners II, L.P. and Gores Capital Partners III, L.P. , investment funds affiliated with Gores, have entered into guarantee agreements in favor of the Company pursuant to which each fund has agreed to guarantee its pro rata portion of amounts payable by Parent under the Settlement Agreement.

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Document and Entity Information	3 Months Ended
	Apr. 28, 2012	May 25, 2012
Document and Entity Information
Entity Registrant Name	PEP BOYS MANNY MOE & JACK
Entity Central Index Key	0000077449
Document Type	10-Q
Document Period End Date	Apr. 28, 2012
Amendment Flag	false
Current Fiscal Year End Date	--02-02
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		52,851,617
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1

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SUPPLEMENTAL GUARANTOR INFORMATION

3 Months Ended

Apr. 28, 2012

SUPPLEMENTAL GUARANTOR INFORMATION

SUPPLEMENTAL GUARANTOR INFORMATION

NOTE 13—SUPPLEMENTAL GUARANTOR INFORMATION

The Company’s Notes are fully and unconditionally and joint and severally guaranteed by certain of the Company’s direct and indirectly wholly-owned subsidiaries—namely, The Pep Boys Manny Moe & Jack of California, The Pep Boys—Manny Moe & Jack of Delaware, Inc. (the “Pep Boys of Delaware”); Pep Boys—Manny Moe & Jack of Puerto Rico, Inc.; Tire Stores Group Holding Corporation (on and after May 5, 2011); Big 10 Tire Stores, LLC (on and after May 5, 2011), (collectively, the “Subsidiary Guarantors”). The Notes are not guaranteed by the Company’s wholly owned subsidiary, Colchester Insurance Company.

The following consolidating information presents, in separate columns, the condensed consolidating balance sheets as of April 28, 2012 and January 28, 2012 and the related condensed consolidating statements of operations and comprehensive income for the thirteen weeks ended April 28, 2012 and April 30, 2011 and condensed consolidating statements of cash flows for the thirteen weeks ended April 28, 2012 and April 30, 2011 for (i) the Company (“Pep Boys”) on a parent only basis, with its investment in subsidiaries recorded under the equity method, (ii) the Subsidiary Guarantors on a combined basis, (iii) the subsidiary of the Company that does not guarantee the Notes, and (iv) the Company on a consolidated basis. The Company made an immaterial adjustment to the January 29, 2011 amounts reported for cash, intercompany receivables and intercompany liabilities to account for certain intercompany borrowing activity between Pep Boys and a subsidiary guarantor, which affected net cash provided by (used in) financing activities for the thirteen weeks ended April 30, 2011.

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

As of April 28, 2012	Pep Boys		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidation/ Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	27,764	$	61,170	$	10,505	$	—		$	99,439
Accounts receivable, net	10,664		11,878		—		—			22,542
Merchandise inventories	221,428		405,886		—		—			627,314
Prepaid expenses	12,806		14,701		10,921		(12,351		)	26,077
Other current assets	1,803		—		60,235		(4,841		)	57,197
Total current assets	274,465		493,635		81,661		(17,192		)	832,569
Property and equipment—net	246,121		431,278		30,006		(18,496		)	688,909
Investment in subsidiaries	2,188,204		—		—		(2,188,204		)	—
Intercompany receivables	—		1,377,856		75,537		(1,453,393		)	—
Goodwill	2,549		44,368		—		—			46,917
Deferred income taxes	16,586		51,159		—		—			67,745
Other long-term assets	30,480		1,913		—		—			32,393
Total assets	$	2,758,405	$	2,400,209	$	187,204	$	(3,677,285	)	$	1,668,533
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	261,834	$	—	$	—	$	—		$	261,834
Trade payable program liability	100,414		—		—		—			100,414
Accrued expenses	24,543		62,227		154,256		(12,351		)	228,675
Deferred income taxes	25,985		41,483		—		(4,841		)	62,627
Current maturities of long-term debt	1,079		—		—		—			1,079
Total current liabilities	413,855		103,710		154,256		(17,192		)	654,629
Long-term debt less current maturities	293,773		—		—		—			293,773
Other long-term liabilities	29,496		45,895		—		—			75,391
Deferred gain from asset sales	60,258		95,348		—		(18,496		)	137,110
Intercompany liabilities	1,453,393		—		—		(1,453,393		)	—
Total stockholders’ equity	507,630		2,155,256		32,948		(2,188,204		)	507,630
Total liabilities and stockholders’ equity	$	2,758,405	$	2,400,209	$	187,204	$	(3,677,285	)	$	1,668,533

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

As of January 28, 2012	Pep Boys		Subsidiary Guarantors		Subsidiary Non- Guarantors		Consolidation/ Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	22,740	$	27,181	$	8,323	$	—		$	58,244
Accounts receivable, net	14,566		11,226		—		—			25,792
Merchandise inventories	214,584		399,552		—		—			614,136
Prepaid expenses	12,945		16,873		14,996		(18,420		)	26,394
Other current assets	606		—		64,214		(4,841		)	59,979
Total current assets	265,441		454,832		87,533		(23,261		)	784,545
Property and equipment—net	243,108		441,645		30,177		(18,591		)	696,339
Investment in subsidiaries	2,176,992		—		—		(2,176,992		)	—
Intercompany receivables	—		1,389,910		82,206		(1,472,116		)	—
Goodwill	2,549		44,368		—		—			46,917
Deferred income taxes	20,468		52,402		—		—			72,870
Other long-term assets	31,068		2,040		—		—			33,108
Total assets	$	2,739,626	$	2,385,197	$	199,916	$	(3, 690,960)		$	1,633,779
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	243,712	$	—	$	—	$	—		$	243,712
Trade payable program liability	85,214		—		—		—			85,214
Accrued expenses	17,887		55,527		166,711		(18,420		)	221,705
Deferred income taxes	29,383		41,666		—		(4,841		)	66,208
Current maturities of long-term debt	1,079		—		—		—			1,079
Total current liabilities	377,275		97,193		166,711		(23,261		)	617,918
Long-term debt less current maturities	294,043		—		—		—			294,043
Other long-term liabilities	30,540		46,676		—		—			77,216
Deferred gain from asset sales	61,323		97,541		—		(18,591		)	140,273
Intercompany liabilities	1,472,116		—		—		(1,472,116		)	—
Total stockholders’ equity	504,329		2,143,787		33,205		(2,176,992		)	504,329
Total liabilities and stockholders’ equity	$	2,739,626	$	2,385,197	$	199,916	$	(3,690,960	)	$	1,633,779

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

				Subsidiary			Subsidiary Non-			Consolidation /
Thirteen Weeks Ended April 28, 2012	Pep Boys			Guarantors			Guarantors			Elimination			Consolidated
Merchandise sales	$	136,583		$	275,749		$	—		$	—		$	412,332
Service revenue	38,041			74,231			—			—			112,272
Other revenue	—			—			6,159			(6,159		)	—
Total revenues	174,624			349,980			6,159			(6,159		)	524,604
Costs of merchandise sales	97,710			193,606			—			(460		)	290,856
Costs of service revenue	34,286			71,857			—			(47		)	106,096
Costs of other revenue	—			—			6,572			(6,572		)	—
Total costs of revenues	131,996			265,463			6,572			(7,079		)	396,952
Gross profit from merchandise sales	38,873			82,143			—			460			121,476
Gross profit from service revenue	3,755			2,374			—			47			6,176
Gross profit from other revenue	—			—			(413		)	413			—
Total gross profit	42,628			84,517			(413		)	920			127,652
Selling, general and administrative expenses	38,937			80,447			84			242			119,710
Net loss from dispositions of assets	—			(2		)	—			—			(2		)
Operating profit (loss)	3,691			4,068			(497		)	678			7,940
Non-operating (expense) income	(4,108		)	15,959			678			(12,059		)	470
Interest expense (income)	17,660			759			(522		)	(11,381		)	6,516
(Loss) earnings from continuing operations before income taxes	(18,077		)	19,268			703			—			1,894
Income tax (benefit) expense	(7,244		)	7,722			282			—			760
Equity in earnings of subsidiaries	11,890			—			—			(11,890		)	—
Net earnings from continuing operations	1,057			11,546			421			(11,890		)	1,134
Discontinued operations, net of tax	5			(77		)	—			—			(72		)
Net earnings	$	1,062		$	11,469		$	421		$	(11,890	)	$	1,062
Other comprehensive income
Defined benefit plan adjustment	354			—			—			—			354
Derivative financial instruments adjustment	1,020			—			—			—			1,020
Other comprehensive income	1,374			—			—			—			1,374
Comprehensive income	$	2,436		$	11,469		$	421		$	(11,890	)	$	2,436

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

(dollars in thousands)

(unaudited)

				Subsidiary			Subsidiary Non-			Consolidation /
Thirteen Weeks Ended April 30, 2011	Pep Boys			Guarantors			Guarantors			Elimination			Consolidated
Merchandise sales	$	141,381		$	267,246		$	—		$	—		$	408,627
Service revenue	38,535			66,378			—			—			104,913
Other revenue	—			—			5,734			(5,734		)	—
Total revenues	179,916			333,624			5,734			(5,734		)	513,540
Costs of merchandise sales	99,173			186,563			—			(407		)	285,329
Costs of service revenue	33,088			60,039			—			(38		)	93,089
Costs of other revenue	—			—			5,826			(5,826		)	—
Total costs of revenues	132,261			246,602			5,826			(6,271		)	378,418
Gross profit from merchandise sales	42,208			80,683			—			407			123,298
Gross profit from service revenue	5,447			6,339			—			38			11,824
Gross profit from other revenue	—			—			(92		)	92			—
Total gross profit	47,655			87,022			(92		)	537			135,122
Selling, general and administrative expenses	37,824			71,069			86			(79		)	108,900
Net gain from dispositions of assets	—			89			—			—			89
Operating profit (loss)	9,831			16,042			(178		)	616			26,311
Non-operating (expense) income	(4,275		)	16,069			616			(11,823		)	587
Interest expense (income)	17,325			901			(522		)	(11,207		)	6,497
(Loss) earnings from continuing operations before income taxes	(11,769		)	31,210			960			—			20,401
Income tax (benefit) expense	(4,614		)	12,233			377			—			7,996
Equity in earnings of subsidiaries	19,531			—			—			(19,531		)	—
Net earnings from continuing operations	12,376			18,977			583			(19,531		)	12,405
Discontinued operations, net of tax	(8		)	(29		)	—			—			(37		)
Net earnings	$	12,368		$	18,948		$	583		$	(19,531	)	$	12,368
Other comprehensive income
Defined benefit plan adjustment	220			—			—			—			220
Derivative financial instruments adjustment	515			—			—			—			515
Other comprehensive income	735			—			—			—			735
Comprehensive income	$	13,103		$	18,948		$	583		$	(19,531	)	$	13,103

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

Thirteen Weeks Ended April 28, 2012	Pep Boys			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidation / Elimination			Consolidated
Net earnings	$	1,062		$	11,469		$	421		$	(11,890	)	$	1,062
Adjustments to Reconcile Net Earnings to Net Cash (Used In) Provided By Continuing Operations	(4,431		)	11,183			171			11,212			18,135
Changes in operating assets and liabilities	22,271			1,049			(4,401		)	—			18,919
Net cash provided by (used in) continuing operations	18,902			23,701			(3,809		)	(678		)	38,116
Net cash used in discontinued operations	(5		)	(101		)	—			—			(106		)
Net Cash (Used in) Provided by Operating Activities	18,897			23,600			(3,809		)	(678		)	38,010
Net Cash Used in Investing Activities	(7,055		)	(4,885		)	—			—			(11,940		)
Net Cash (Used in) Provided by Financing Activities	(6,818		)	15,274			5,991			678			15,125
Net Increase in Cash	5,024			33,989			2,182			—			41,195
Cash and Cash Equivalents at Beginning of Period	22,740			27,181			8,323			—			58,244
Cash and cash equivalents at end of period	$	27,764		$	61,170		$	10,505		$	—		$	99,439

Thirteen Weeks Ended April 30, 2011	Pep Boys			Subsidiary Guarantors			Subsidiary Non- Guarantors			Consolidation / Elimination			Consolidated
Net earnings	$	12,368		$	18,948		$	583		$	(19,531	)	$	12,368
Adjustments to Reconcile Net Earnings to Net Cash (Used In) Provided By Continuing Operations	(10,555		)	13,169			193			18,915			21,722
Changes in operating assets and liabilities	16,980			(6,587		)	(5,787		)	—			4,606
Net cash provided by (used in) continuing operations	18,793			25,530			(5,011		)	(616		)	38,696
Net cash (used in) discontinued operations	(37		)	(29		)	—			—			(66		)
Net Cash Provided by (Used in) Operating Activities	18,756			25,501			(5,011		)	(616		)	38,630
Net Cash Used in Investing Activities	(14,323		)	(9,359		)	—			—			(23,682		)
Net Cash Provided by (Used in) Financing Activities	16,486			(27,013		)	5,097			616			(4,814		)
Net Increase (Decrease) in Cash	20,919			(10,871		)	86			—			10,134
Cash and Cash Equivalents at Beginning of Period	37,912			42,779			9,549			—			90,240
Cash and cash equivalents at end of period	$	58,831		$	31,908		$	9,635		$	—		$	100,374

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Apr. 28, 2012	Apr. 30, 2011
Merchandise sales	$ 412,332	$ 408,627
Service revenue	112,272	104,913
Total revenues	524,604	513,540
Costs of merchandise sales	290,856	285,329
Costs of service revenue	106,096	93,089
Total costs of revenues	396,952	378,418
Gross profit from merchandise sales	121,476	123,298
Gross profit from service revenue	6,176	11,824
Total gross profit	127,652	135,122
Selling, general and administrative expenses	119,710	108,900
Net (loss) gain from dispositions of assets	(2)	89
Operating profit	7,940	26,311
Non-operating income	470	587
Interest expense	6,516	6,497
Earnings from continuing operations before income taxes and discontinued operations	1,894	20,401
Income tax expense	760	7,996
Earnings from continuing operations before discontinued operations	1,134	12,405
Loss from discontinued operations, net of tax	(72)	(37)
Net earnings	1,062	12,368
Basic earnings per share:
Earnings from continuing operations before discontinued operations (in dollars per share)	$ 0.02	$ 0.23
Loss from discontinued operations, net of tax (in dollars per share)	$ 0.00	$ 0.00
Basic earnings per share (in dollars per share)	$ 0.02	$ 0.23
Diluted earnings per share:
Earnings from continuing operations before discontinued operations (in dollars per share)	$ 0.02	$ 0.23
Loss from discontinued operations, net of tax (in dollars per share)	$ 0.00	$ 0.00
Diluted earnings per share (in dollars per share)	$ 0.02	$ 0.23
Other comprehensive income:
Defined benefit plan adjustment, net of tax	354	220
Derivative financial instruments adjustment, net of tax	1,020	515
Other comprehensive income	1,374	735
Comprehensive income	$ 2,436	$ 13,103

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ACCUMULATED OTHER COMPREHENSIVE LOSS

3 Months Ended

Apr. 28, 2012

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 7—ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are:

(dollar amounts in thousands)	April 28, 2012			January 28, 2012
Defined benefit plan adjustment, net of tax	$	(9,342	)	$	(9,696	)
Derivative financial instrument adjustment, net of tax	(6,933		)	(7,953		)
Accumulated other comprehensive loss	$	(16,275	)	$	(17,649	)

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DEBT AND FINANCING ARRANGEMENTS

3 Months Ended

Apr. 28, 2012

DEBT AND FINANCING ARRANGEMENTS

DEBT AND FINANCING ARRANGEMENTS

NOTE 6—DEBT AND FINANCING ARRANGEMENTS

The following are the components of debt and financing arrangements:

(dollar amounts in thousands)	April 28, 2012			January 28, 2012
7.50% Senior Subordinated Notes, due December 2014	$	147,565		$	147,565
Senior Secured Term Loan, due October 2013	147,287			147,557
Revolving Credit Agreement, through January 2016	—			—
Long-term debt	294,852			295,122
Current maturities	(1,079		)	(1,079		)
Long-term debt less current maturities	$	293,773		$	294,043

As of April 28, 2012, 126 stores collateralized the Senior Secured Term Loan.

The Company’s ability to borrow under its Revolving Credit Agreement is based on a specific borrowing base consisting of inventory and accounts receivable. The interest rate on this credit line is daily LIBOR plus 2.00% to 2.50% based upon the then current availability under the Agreement. As of April 28, 2012, there were no outstanding borrowings under this agreement and $29.6 million of availability was utilized to support outstanding letters of credit. Taking this into account and the borrowing base requirements, as of April 28, 2012, there was $189.4 million of availability remaining.

Several of the Company’s debt agreements require compliance with covenants. The most restrictive of these covenants, an earnings before interest, taxes, depreciation and amortization (“EBITDA”) requirement, is triggered if the Company’s availability under its Revolving Credit Agreement drops below $50.0 million. As of April 28, 2012, the Company was in compliance with all financial covenants contained in its debt agreements.

Interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities are used to estimate fair value for debt issues that are not quoted on an exchange and are considered a level 2 measure under the fair value hierarchy. The estimated fair value of long-term debt including current maturities was $296.1 million and $293.6 million as of April 28, 2012 and January 28, 2012, respectively.

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FAIR VALUE MEASUREMENTS AND DERIVATIVES

3 Months Ended

Apr. 28, 2012

FAIR VALUE MEASUREMENTS AND DERIVATIVES

FAIR VALUE MEASUREMENTS AND DERIVATIVES

NOTE 10—FAIR VALUE MEASUREMENTS AND DERIVATIVES

The Company’s fair value measurements consist of (a) financial assets and liabilities that are recognized or disclosed at fair value in the Company’s financial statements on a recurring basis (at least annually) and (b) all non-recurring non-financial assets and liabilities.

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. There is a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table provides information by level for assets and liabilities that are measured at fair value, on a recurring basis:

(dollar amounts in thousands)	Fair Value at		Fair Value Measurements Using Inputs Considered as
Description	April 28, 2012		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	99,439	$	99,439	$	—	$	—
Collateral investments (1)	17,276		17,276		—		—
Rabbi trust assets (1)	3,696		—		3,696		—
Liabilities:
Other liabilities
Derivative liability (2)	10,929		—		10,929		—

(dollar amounts in thousands)	Fair Value at		Fair Value Measurements Using Inputs Considered as
Description	January 28, 2012		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	58,244	$	58,244	$	—	$	—
Collateral investments (1)	17,276		17,276		—		—
Rabbi trust assets (1)	3,576		—		3,576		—
Liabilities:
Other liabilities
Derivative liability (2)	12,540		—		12,540		—

(1) included in other long-term assets

(2) included in other long-term liabilities

As of January 28, 2012 the Company invested $17.3 million in restricted accounts as collateral for its retained liabilities included within existing insurance programs in lieu of previously outstanding letters of credit, of which $4.8 million was invested during the first quarter of fiscal year 2011.

The Company has one interest rate swap designated as a cash flow hedge on $145.0 million of the Company’s Senior Secured Term Loan that is due in October 2013. The swap is used to minimize interest rate exposure and overall interest costs by converting the variable component of the total interest rate to a fixed rate of 5.036%. Since February 1, 2008, this swap was deemed to be fully effective and all adjustments in the interest rate swap’s fair value have been recorded to accumulated other comprehensive loss.

The table below shows the effect of the Company’s interest rate swap on the consolidated financial statements for the periods indicated:

(dollar amounts in thousands)	Amount of Gain in Other Comprehensive Income (Effective Portion)		Earnings Statement Classification	Amount of Loss Recognized in Earnings (Effective Portion) (a)
Thirteen weeks ended April 28, 2012	$	1,007	Interest expense	$	(1,654	)
Thirteen weeks ended April 30, 2011	$	498	Interest expense	$	(1,719	)

(a) represents the effective portion of the loss reclassified from accumulated other comprehensive loss

The fair value of the derivative was $10.9 million and $12.5 million payable at April 28, 2012 and January 28, 2012, respectively. Of the $1.6 million decrease in the fair value during the thirteen weeks ended April 28, 2012, $1.0 million net of tax was recorded to accumulated other comprehensive loss on the consolidated balance sheet.

Non-financial assets measured at fair value on a non-recurring basis:

Certain assets are measured at fair value on a non-recurring basis, that is, the assets are subject to fair value adjustments in certain circumstances such as when there is evidence of impairment. These measures of fair value, and related inputs, are considered level 2 or level 3 measures under the fair value hierarchy. There were no remeasurements of non-financial assets in the first quarter of 2012 or 2011.

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EARNINGS PER SHARE

3 Months Ended

Apr. 28, 2012

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 8—EARNINGS PER SHARE

The following table presents the calculation of basic and diluted earnings per share for earnings from continuing operations and net earnings:

	Thirteen Weeks Ended
(dollar amounts in thousands, except per share amounts)	April 28,2012			April 30,2011
(a) Earnings from continuing operations	$	1,134		$	12,405
Loss from discontinued operations, net of tax	(72		)	(37		)
Net earnings	$	1,062		$	12,368
(b) Basic average number of common shares outstanding during period	53,071			52,881
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price	878			685
(c) Diluted average number of common shares assumed outstanding during period	53,949			53,566
Basic earnings per share:
Earnings from continuing operations (a/b)	$	0.02		$	0.23
Discontinued operations, net of tax	—			—
Basic earnings per share	$	0.02		$	0.23
Diluted earnings per share:
Earnings from continuing operations (a/c)	$	0.02		$	0.23
Discontinued operations, net of tax	—			—
Diluted earnings per share	$	0.02		$	0.23

At April 28, 2012 and April 30, 2011, respectively, there were 2,654,000 and 2,717,000 outstanding options and restricted stock units. Certain stock options were excluded from the calculation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares for the periods then ended and therefore would be anti-dilutive. The total number of such shares excluded from the diluted earnings per share calculation are 299,000 and 773,000 for the thirteen weeks ended April 28, 2012 and April 30, 2011, respectively.

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BENEFIT PLANS

3 Months Ended

Apr. 28, 2012

BENEFIT PLANS

BENEFIT PLANS

NOTE 9—BENEFIT PLANS

The Company has a qualified 401(k) savings plan and a separate plan for employees residing in Puerto Rico, which cover all full-time employees who are at least 21 years of age with one or more years of service. The Company also maintains a non-qualified defined contribution Supplemental Executive Retirement Plan (the “Account Plan”) for key employees designated by the Board of Directors. The Company’s contribution to these plans for fiscal 2012 is contingent upon meeting certain performance metrics. The Company did not record any contribution expense for these plans in the first quarter of 2012 or 2011.

The Company also has a frozen defined benefit pension plan covering the Company’s full-time employees hired on or before February 1, 1992. The Company’s expense for its pension plan follows:

	Thirteen weeks ended
(dollar amounts in thousands)	April 28, 2012			April 30, 2011
Interest cost	$	619		$	651
Expected return on plan assets	(704		)	(651		)
Amortization of net loss	566			351
Net periodic benefit cost	$	481		$	351

The Plan is subject to minimum funding requirements of the Employee Retirement Income Security Act of 1974 as amended. While the Company had no minimum funding requirement during fiscal 2011, it made a $3.0 million discretionary contribution to the defined benefit pension plan on April 28, 2011.  There were no discretionary contributions made during the first quarter of 2012.

During the third quarter of fiscal 2011, the Company began the process of terminating the Plan. The termination of the Plan is expected to be completed by the end of fiscal 2012. In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, the Company is required to fully fund the Plan on a termination basis and will commit to contribute the additional assets necessary to do so. Plan participants will not be adversely affected by the Plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.

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LEGAL MATTERS

3 Months Ended

Apr. 28, 2012

LEGAL MATTERS

LEGAL MATTERS

NOTE 11—LEGAL MATTERS

The Company is party to various actions and claims arising in the normal course of business. The Company believes that amounts accrued for awards or assessments in connection with all such matters are adequate and that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position. However, there exists a reasonable possibility of loss in excess of the amounts accrued, the amount of which cannot currently be estimated. While the Company does not believe that the amount of such excess loss could be material to the Company’s financial position, any such loss could have a material adverse effect on the Company’s results of operations in the period(s) during which the underlying matters are resolved.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Apr. 28, 2012	Apr. 30, 2011
Cash flows from operating activities:
Net earnings	$ 1,062	$ 12,368
Adjustments to reconcile net earnings to net cash provided by continuing operations:
Loss from discontinued operations, net of tax	72	37
Depreciation and amortization	19,938	19,884
Amortization of deferred gain from asset sales	(3,163)	(3,143)
Stock compensation expense	652	638
Deferred income taxes	719	4,458
Net loss (gain) from disposition of assets	2	(89)
Other	(85)	(63)
Changes in assets and liabilities, net of the effects of acquisitions:
Decrease in accounts receivable, prepaid expenses and other	7,124	7,406
Increase in merchandise inventories	(13,178)	(13,323)
Increase in accounts payable	18,122	21,223
Increase (decrease) in accrued expenses	6,385	(8,242)
Increase (decrease) in other long-term liabilities	466	(2,458)
Net cash provided by continuing operations	38,116	38,696
Net cash used in discontinued operations	(106)	(66)
Net cash provided by operating activities	38,010	38,630
Cash flows from investing activities:
Capital expenditures	(11,940)	(18,123)
Proceeds from dispositions of assets		89
Premiums paid on life insurance policies		(741)
Collateral investment		(4,763)
Other		(144)
Net cash used in investing activities	(11,940)	(23,682)
Cash flows from financing activities:
Borrowings under line of credit agreements	524	1,067
Payments under line of credit agreements	(524)	(1,067)
Borrowings on trade payable program liability	42,722	24,589
Payments on trade payable program liability	(27,522)	(27,816)
Debt payments	(270)	(270)
Dividends paid		(1,585)
Other	195	268
Net cash provided by (used in) financing activities	15,125	(4,814)
Net increase in cash and cash equivalents	41,195	10,134
Cash and cash equivalents at beginning of period	58,244	90,240
Cash and cash equivalents at end of period	99,439	100,374
Supplemental disclosure of cash flow information:
Cash paid for income taxes	1,227	57
Cash paid for interest	2,940	2,885
Non-cash investing activities:
Accrued purchases of property and equipment	$ 1,970	$ 993

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WARRANTY RESERVE

3 Months Ended

Apr. 28, 2012

WARRANTY RESERVE

WARRANTY RESERVE

NOTE 5—WARRANTY RESERVE

The Company provides warranties for both its merchandise sales and service labor. Warranties for merchandise are generally covered by the respective vendors, with the Company covering any costs above the vendor’s stipulated allowance. Service labor is warranted in full by the Company for a limited specific time period. The Company establishes its warranty reserves based on historical experiences. These costs are included in either costs of merchandise sales or costs of service revenues in the consolidated statements of operations.

The reserve for warranty cost activity for the thirteen weeks ended April 28, 2012 and the fifty-two weeks ended January 28, 2012 is as follows:

(dollar amounts in thousands)	April 28,2012			January 28, 2012
Beginning balance	$	673		$	673
Additions related to current period sales	2,804			12,122
Warranty costs incurred in current period	(2,804		)	(12,122		)
Ending balance	$	673		$	673