Pep Boys Manny Moe & Jack (PBY) 8-K Pep Boys Reports 2.5% Q2 Comp Sales Decrease

Exhibit 99.2

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES	(UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATIONS	(dollar amounts in thousands, except per share amounts)

	Thirteen weeks ended										Twenty-six weeks ended
	July 30, 2005					July 31, 2004					July 30, 2005					July 31, 2004
	Amount			% Sales		Amount			% Sales		Amount			% Sales		Amount			% Sales
Merchandise Sales	$	480,608		83.2		$	488,716		82.4		$	944,456		82.7		$	949,597		81.9
Service Revenue	96,810			16.8		104,710			17.6		197,188			17.3		209,962			18.1
Total Revenues	577,418			100.0		593,426			100.0		1,141,644			100.0		1,159,559			100.0
Costs of Merchandise Sales	347,725			72.4		347,249			71.1		689,416			73.0		672,623			70.8
Costs of Service Revenue	86,834			89.7		80,701			77.1		170,748			86.6		159,252			75.8
Total Costs of Revenues	434,559			75.3		427,950			72.1		860,164			75.3		831,875			71.7
Gross Profit from Merchandise Sales	132,883			27.6		141,467			28.9		255,040			27.0		276,974			29.2
Gross Profit from Service Revenue	9,976			10.3		24,009			22.9		26,440			13.4		50,710			24.2
Total Gross Profit	142,859			24.7		165,476			27.9		281,480			24.7		327,684			28.3
Selling, General and Administrative Expenses	133,200			23.0		136,694			23.0		268,462			23.5		266,256			23.0
Operating Profit	9,659			1.7		28,782			4.9		13,018			1.2		61,428			5.3
Non-operating Income	483			0.1		470			0.1		2,221			0.2		1,062			0.1
Interest Expense	9,234			1.6		7,800			1.3		18,149			1.6		17,098			1.5
Earnings (Loss) From Continuing Operations Before Income Taxes	908			0.2		21,452			3.7		(2,910		)	(0.2	)	45,392			3.9
Income Tax Expense (Benefit)	76			8.4	(1)	7,937			37.0	(1)	(1,356		)	(46.6	)(1)	16,795			37.0	(1)
Net Earnings (Loss) From Continuing Operations	832			0.1		13,515			2.2		(1,554		)	(0.1	)	28,597			2.4
Discontinued Operations, Net of Tax	210			0.1		(852		)	(0.1	)	(178		)	(0.0	)	(1,383		)	(0.1	)
Net Earnings (Loss)	1,042			0.2		12,663			2.1		(1,732		)	(0.1	)	27,214			2.3
Retained Earnings, beginning of period	529,177					541,203					536,780					531,933
Cash Dividends	(3,758		)			(3,915		)			(7,320		)			(7,813		)
Effect of Stock Options	(717		)			(818		)			(1,974		)			(2,201		)
Dividend Reinvestment Plan	(41		)			—					(51		)			—
Retained Earnings, end of period	$	525,703				$	549,133				$	525,703				$	549,133
Basic Earnings (Loss) per Share:
Net Earnings (Loss) From Continuing Operations	$	0.01				$	0.23				$	(0.03	)			$	0.51
Discontinued Operations, Net of Tax	0.01					(0.01		)			—					(0.03		)
Basic Earnings (Loss) per Share	$	0.02				$	0.22				$	(0.03	)			$	0.48
Diluted Earnings (Loss) per Share:
Net Earnings (Loss) From Continuing Operations	$	0.01				$	0.22				$	(0.03	)			$	0.47
Discontinued Operations, Net of Tax	0.01					(0.01		)			—					(0.02		)
Diluted Earnings (Loss) per Share	$	0.02				$	0.21				$	(0.03	)			$	0.45
Cash Dividends per Share	$	0.0675				$	0.0675				$	0.1350				$	0.1350

⁽¹⁾ As a percentage of earnings (loss) before income taxes.

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES	(UNAUDITED)
CONSOLIDATED BALANCE SHEETS	(dollar amounts in thousands, except per share amounts)

	July 30, 2005			January 29, 2005			July 31, 2004
Assets
Current Assets:
Cash and cash equivalents	$	41,670		$	82,758		$	83,893
Accounts receivable, net	35,093			30,994			40,355
Merchandise inventories	634,352			602,760			596,451
Prepaid expenses	34,250			45,349			32,714
Deferred income taxes	—			—			10,645
Other	77,893			96,065			77,430
Assets held for disposal	—			665			3,118
Total Current Assets	823,258			858,591			844,606
Property and Equipment - at cost:
Land	259,239			261,985			263,199
Buildings and improvements	913,324			916,099			908,139
Furniture, fixtures and equipment	644,224			633,098			596,497
Construction in progress	20,712			40,426			19,255
	1,837,499			1,851,608			1,787,090
Less accumulated depreciation and amortization	890,859			906,577			873,873
Property and Equipment - net	946,640			945,031			913,217
Other	66,663			63,401			52,526
Total Assets	$	1,836,561		$	1,867,023		$	1,810,349
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	333,303		$	310,981		$	335,890
Trade payable program liability	12,071			—			—
Accrued expenses	263,610			306,671			244,831
Deferred income taxes	18,383			19,406			—
Current maturities of long-term debt and obligations under capital leases	144,461			40,882			147,258
Total Current Liabilities	771,828			677,940			727,979
Long-term debt and obligations under capital leases, less current maturities	215,534			352,682			144,727
Convertible long-term debt	119,000			119,000			150,000
Other long-term liabilities	52,172			37,977			38,481
Deferred income taxes	27,333			25,968			40,497
Commitments and Contingencies
Stockholders’ Equity:
Common Stock, par value $1 per share:
Authorized 500,000,000 shares; Issued 68,557,041 shares	68,557			68,557			68,557
Additional paid-in capital	286,617			284,966			284,465
Retained earnings	525,703			536,780			549,133
Common stock subscriptions receivable	(39		)	(167		)	(144		)
Accumulated other comprehensive (loss) income	(3,524		)	(4,852		)	1,098
	877,314			885,284			903,109
Less cost of shares in treasury - 10,981,577 shares 11,305,130 shares and 8,372,727 shares	167,356			172,564			135,180
Less cost of shares in benefits trust - 2,195,270 shares	59,264			59,264			59,264
Total Stockholders’ Equity	650,694			653,456			708,665
Total Liabilities and Stockholders’ Equity	$	1,836,561		$	1,867,023		$	1,810,349

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES	(UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS	(dollar amounts in thousands)

Twenty-six Weeks Ended	July 30, 2005			July 31, 2004
Cash Flows from Operating Activities:
Net (loss) earnings	$	(1,732	)	$	27,214
Net loss from discontinued operations	(178		)	(1,383		)
Net (loss) earnings from continuing operations	$	(1,554	)	$	28,597
Adjustments to Reconcile Net (Loss) Earnings from Continuing Operations to Net Cash Provided by Continuing Operations:
Depreciation and amortization	38,655			37,767
Accretion of asset disposal obligation	56			71
Stock compensation expense	1,403			847
Deferred income taxes	(239		)	20,553
(Gain) loss from sales of assets	(3,606		)	360
Changes in Operating Assets and Liabilities:
Decrease in accounts receivable, prepaid expenses and other	24,421			3,711
Increase in merchandise inventories	(31,592		)	(42,889		)
Increase (decrease) in accounts payable	22,322			(3,493		)
Decrease in accrued expenses	(45,060		)	(22,554		)
Increase (decrease) in other long-term liabilities	14,195			(898		)
Net cash provided by continuing operations	19,001			22,072
Net cash used in discontinued operations	(734		)	(1,728		)
Net Cash Provided by Operating Activities	18,267			20,344
Cash Flows from Investing Activities:
Capital expenditures	(42,463		)	(28,830		)
Proceeds from sales of assets	8,174			1,453
Proceeds from sales of assets held for disposal	932			10,532
Net Cash Used in Investing Activities	(33,357		)	(16,845		)
Cash Flows from Financing Activities:
Net borrowings under line of credit agreements	6,815			137
Net borrowings (payments) on trade payable program liability	12,071			(7,216		)
Reduction of long-term debt	(40,452		)	(84,425		)
Other	(53		)	3,283
Dividends paid	(7,320		)	(7,813		)
Proceeds from issuance of common stock	—			108,854
Proceeds from exercise of stock options	2,451			6,049
Proceeds from dividend reinvestment plan	490			541
Net Cash (Used in) Provided by Financing Activities	(25,998		)	19,410
Net (Decrease) Increase in Cash	(41,088		)	22,909
Cash and Cash Equivalents at Beginning of Period	82,758			60,984
Cash and Cash Equivalents at End of Period	$	41,670		$	83,893
Supplemental Disclosure of Cash Flow Information:
Non-cash operating activities:
Accrued employee payroll tax withheld related to conversions of restricted stock units	$	178		$	—
Non-cash investing activities:
Accrued purchases of property and equipment	$	2,148		$	—
Non-cash financing activities:
Equipment Capital Lease	$	124		$	1,413

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES	(UNAUDITED)
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE	(in thousands, except per share data)

		Thirteen weeks ended					Twenty-six weeks ended
		July 30, 2005		July 31, 2004			July 30, 2005			July 31, 2004
(a)	Net earnings (loss from continuing operations)	$	832	$	13,515		$	(1,554	)	$	28,597
	Adjustment for interest on convertible senior notes, net of income tax effect	—		1,001			—			2,003
(b)	Adjusted net earnings (loss from continuing operations)	$	832	$	14,516		$	(1,554	)	$	30,600
(c)	Average number of common shares outstanding during period	55,683		57,875			55,597			56,410
	Common shares assumed issued upon conversion of convertible senior notes	—		6,697			—			6,697
	Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price	449		1,749			—			1,847
(d)	Average number of common shares assumed outstanding during period	56,132		66,321			55,597			64,954
	Basic Earnings (Loss) per Share:
	Net Earnings (Loss) From Continuing Operations (a/c)	$	0.01	$	0.23		$	(0.03	)	$	0.51
	Discontinued Operations, Net of Tax	0.01		(0.01		)	—			(0.03		)
	Basic Earnings (Loss) per Share	$	0.02	$	0.22		$	(0.03	)	$	0.48
	Diluted Earnings (Loss) per Share:
	Net Earnings (Loss) From Continuing Operations (b/d)	$	0.01	$	0.22		$	(0.03	)	$	0.47
	Discontinued Operations, Net of Tax	0.01		(0.01		)	—			(0.02		)
	Diluted Earnings (Loss) per Share	$	0.02	$	0.21		$	(0.03	)	$	0.45

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES	(UNAUDITED)
ADDITIONAL INFORMATION	(dollar amounts in thousands)

	Thirteen weeks ended						Twenty-six weeks ended
	July 30, 2005			July 31, 2004			July 30, 2005			July 31, 2004
Capital expenditures	$	22,119		$	21,147		$	44,611		$	28,830
Depreciation and amortization	$	19,870		$	18,971		$	38,655		$	37,767
Non-operating income:
Net rental revenue	$	349		$	474		$	714		$	848
Investment income	210			111			505			348
Other (expense) income	(76		)	(115		)	1,002			(134		)
Total	$	483		$	470		$	2,221		$	1,062
Comparable sales percentages:
Merchandise	-1.5		%	8.4		%	-0.4		%	10.3		%
Service	-7.4		%	0.0		%	-6.0		%	2.8		%
Total	-2.5		%	6.9		%	-1.4		%	8.8		%
Total square feet of retail space (including service centers)							12,167,089			12,206,785
Total Store Count							593			595
Sales and Gross Profit by Line of Business (A):
Retail Sales	$	355,593		$	355,986		$	695,289		$	691,285
Service Center Revenue	221,825			237,440			446,355			468,274
Total Revenues	$	577,418		$	593,426		$	1,141,644		$	1,159,559
Gross Profit from Retail Sales	$	98,274		$	99,879		$	184,553		$	197,119
Gross Profit from Service Center Revenue	44,585			65,597			96,927			130,565
Total Gross Profit	$	142,859		$	165,476		$	281,480		$	327,684
Comparable Sales Percentages (A):
Retail Sales	0.1		%				0.7		%
Service Center Revenue	-6.4		%				-4.5		%
Total Revenues	-2.5		%				-1.4		%
Gross Profit Percentage by Line of Business (A):
Gross Profit Percentage from Retail Sales	27.6		%	28.1		%	26.5		%	28.5		%
Gross Profit Percentage from Service Center Revenue	20.1		%	27.6		%	21.7		%	27.9		%
Total Gross Profit Percentage	24.7		%	27.9		%	24.7		%	28.3		%

(A) Retail Sales include DIY and Commercial sales.  Service Center Revenue includes revenue from labor and installed parts and tires.

Service Labor Reallocation

Effective January 30, 2005, the Company restructured its field operations into separate retail and service teams.  In connection with this restructuring, certain retail personnel, who were previously utilized in merchandising roles supporting the service business, were reassigned to purely service-related responsibilities.  The labor and benefit costs related to these associates, which were previously recognized in Selling, General and Administrative Expenses, are now recognized in Costs of Service Revenue.  Please see the table below illustrating the pro forma effect of this change on both the thirteen and twenty-six weeks ended July 31, 2004 (presented in GAAP and line of business formats), assuming that such associates had been reassigned from retail to service during such period.

PRO FORMA STATEMENTS OF OPERATIONS

GAAP Format

	Thirteen weeks ended July 31, 2004 ACTUAL			PRO FORMA ADJUSTMENTS					Thirteen weeks ended July 31, 2004 PRO FORMA			Thirteen weeks ended July 30, 2005 ACTUAL
	Amount		% Sales	Amount			% Sales		Amount		% Sales	Amount		% Sales
Gross Profit from Merchandise Sales	$	141,467	28.9	$	—		0.0		$	141,467	28.9	$	132,883	27.6
Gross Profit from Service Revenue	24,009		22.9	(5,159		)	(4.9	)	18,850		18.0	9,976		10.3
Total Gross Profit	165,476		27.9	(5,159		)	(0.9	)	160,317		27.0	142,859		24.7
Selling, General and Administrative Expenses	136,694		23.0	(5,159		)	(0.9	)	131,535		22.1	133,200		23.0
Operating Profit	$	28,782	4.9	$	—		0.0		$	28,782	4.9	$	9,659	1.7

	Twenty-six weeks ended July 31, 2004 ACTUAL			PRO FORMA ADJUSTMENTS					Twenty-six weeks ended July 31, 2004 PRO FORMA			Twenty-six weeks ended July 30, 2005 ACTUAL
	Amount		% Sales	Amount			% Sales		Amount		% Sales	Amount		% Sales
Gross Profit from Merchandise Sales	$	276,974	29.2	$	—		0.0		$	276,974	29.2	$	255,040	27.0
Gross Profit from Service Revenue	50,710		24.2	(9,884		)	(4.7	)	40,826		19.4	26,440		13.4
Total Gross Profit	327,684		28.3	(9,884		)	(0.9	)	317,800		27.4	281,480		24.7
Selling, General and Administrative Expenses	266,256		23.0	(9,884		)	(0.9	)	256,372		22.1	268,462		23.5
Operating Profit	$	61,428	5.3	$	—		0.0		$	61,428	5.3	$	13,018	1.2

Line of Business Format

	Thirteen weeks ended July 31, 2004 ACTUAL			PRO FORMA ADJUSTMENTS					Thirteen weeks ended July 31, 2004 PRO FORMA			Thirteen weeks ended July 30, 2005 ACTUAL
	Amount		% Sales	Amount			% Sales		Amount		% Sales	Amount		% Sales
Gross Profit from Retail Sales	$	99,879	28.1	$	—		0.0		$	99,879	28.1	$	98,274	27.6
Gross Profit from Service Center Revenue	65,597		27.6	(5,159		)	(2.2	)	60,438		25.5	44,585		20.1
Total Gross Profit	165,476		27.9	(5,159		)	(2.2	)	160,317		27.0	142,859		24.7
Selling, General and Administrative Expenses	136,694		23.0	(5,159		)	(0.9	)	131,535		22.2	133,200		23.0
Operating Profit	$	28,782	4.9	$	—		0.0		$	28,782	4.9	$	9,659	1.7

	Twenty-six weeks ended July 31, 2004 ACTUAL			PRO FORMA ADJUSTMENTS					Twenty-six weeks ended July 31, 2004 PRO FORMA			Twenty-six weeks ended July 30, 2005 ACTUAL
	Amount		% Sales	Amount			% Sales		Amount		% Sales	Amount		% Sales
Gross Profit from Retail Sales	$	197,119	28.5	$	—		0.0		$	197,119	28.5	$	184,553	26.5
Gross Profit from Service Center Revenue	130,565		27.9	(9,884		)	(2.1	)	120,681		25.8	96,927		21.7
Total Gross Profit	327,684		28.3	(9,884		)	(0.9	)	317,800		27.4	281,480		24.7
Selling, General and Administrative Expenses	266,256		23.0	(9,884		)	(0.9	)	256,372		22.1	268,462		23.5
Operating Profit	$	61,428	5.3	$	—		0.0		$	61,428	5.3	$	13,018	1.2