Pep Boys Manny Moe & Jack (PBY) 8-K Pep Boys Reports Q4 Results

Exhibit 99.2

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

	Fourteen weeks ended					Thirteen weeks ended					Fifty-three weeks ended					Fifty-two weeks ended
	February 3, 2007					January 28, 2006					February 3, 2007					January 28, 2006
	Amount			% Sales		Amount			% Sales		Amount			% Sales		Amount			% Sales
Merchandise Sales	$	483,267		82.4		$	457,596		83.1		$	1,876,290		82.6		$	1,854,408		82.9
Service Revenue	102,879			17.6		92,885			16.9		395,871			17.4		383,621			17.1
Total Revenues	586,146			100.0		550,481			100.0		2,272,161			100.0		2,238,029			100.0
Costs of Merchandise Sales	340,889			70.5		346,439			75.7		1,336,336			71.2		1,377,552			74.3
Costs of Service Revenue	95,174			92.5		93,630			100.8		364,069			92.0		353,210			92.1
Total Costs of Revenues	436,063			74.4		440,069			79.9		1,700,405			74.8		1,730,762			77.3
Gross Profit from Merchandise Sales	142,378			29.5		111,157			24.3		539,954			28.8		476,856			74.4
Gross Profit from Service Revenue	7,705			7.5		(745		)	(0.8	)	31,802			8.0		30,411			7.9
Total Gross Profit	150,083			25.6		110,412			20.1		571,756			25.2		507,267			22.7
Selling, General and Administrative Expenses	141,011			24.1		127,951			23.2		551,031			24.3		523,318			23.4
Net Gain from Sales of Assets	9,068			1.5		1,849			0.3		15,297			0.7		4,826			0.2
Operating Profit (Loss)	18,140			3.1		(15,690		)	(2.9	)	36,022			1.6		(11,225		)	(0.5	)
Non-operating Income	1,729			0.3		1,150			0.2		7,023			0.3		3,897			0.2
Interest Expense	11,456			2.0		21,686			3.9		49,342			2.2		49,040			2.2
Earnings (Loss) From Continuing Operations Before Income Taxes and  Cumulative Effect of Change in Accounting Principle	8,413			1.4		(36,226		)	(6.6	)	(6,297		)	(0.3	)	(56,368		)	(2.5	)
Income Tax Expense (Benefit)	303			3.6	(1)	(13,357		)	36.9	(1)	(4,297		)	68.2	(1)	(20,569		)	36.5	(1)
Net Earnings (Loss) From Continuing Operations Before Cumulative
Effect of Change in Accounting Principle	8,110			1.4		(22,869		)	(4.2	)	(2,000		)	(0.1	)	(35,799		)	(1.6	)
Discontinued Operations, Net of Tax	(400		)	(0.1	)	289			0.1		(738		)	—		292			—
Cumulative Effect of Change in Accounting Principle, Net of Tax	6			—		(2,021		)	(0.4	)	189			—		(2,021		)	(0.1	)
Net Earnings (Loss)	7,716			1.3		(24,601		)	(4.5	)	(2,549		)	(0.1	)	(37,528		)	(1.7	)
Retained Earnings, beginning of period	460,013					510,532					481,926					536,780
Cash Dividends	(3,550		)			(3,702		)			(14,757		)			(14,686		)
Effect of Stock Options	(372		)			(289		)			(657		)			(2,520		)
Dividend Reinvestment Plan	(10		)			(14		)			(166		)			(120		)
Retained Earnings, end of period	$	463,797				$	481,926				$	463,797				$	481,926
Basic Earnings (Loss) per Share:
Basic Weighted Average Shares Outstanding	54,274					54,180					54,266					54,794
Net Earnings (Loss) From Continuing Operations Before Cumulative
Effect of Change in Accounting Principle	$	0.15				$	(0.42	)			$	(0.04	)			$	(0.65	)
Discontinued Operations, Net of Tax	(0.01		)			—					(0.01		)			—
Cumulative Effect of Change in Accounting Principle,
Net of Tax	—					(0.04		)			—					(0.04		)
Basic Earnings (Loss) per Share	$	0.14				$	(0.46	)			$	(0.05	)			$	(0.69	)
Diluted Earnings (Loss) per Share:
Diluted Weighted Average Shares Outstanding	54,595					54,180					54,266					54,794
Net Earnings (Loss) From Continuing Operations Before Cumulative
Effect of Change in Accounting Principle	$	0.15				$	(0.42	)			$	(0.04	)			$	(0.65	)
Discontinued Operations, Net of Tax	(0.01		)			—					(0.01		)			—
Cumulative Effect of Change in Accounting Principle,
Net of Tax	—					(0.04		)			—					(0.04		)
Diluted Earnings (Loss) per Share	$	0.14				$	(0.46	)			$	(0.05	)			$	(0.69	)
Cash Dividends per Share	$	0.0675				$	0.0675				$	0.2700				$	0.2700

(1)As a percentage of earnings (loss) from continuing operations before income taxes and cumulative effect of change in accounting principle.

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

	February 3, 2007			January 28, 2006
Assets
Current Assets:
Cash and cash equivalents	$	21,884		$	48,281
Accounts receivable, net	29,582			36,434
Merchandise inventories	607,042			616,292
Prepaid expenses	39,264			40,952
Other	70,368			85,446
Assets held for disposal	—			652
Total Current Assets	768,140			828,057
Property and Equipment — at cost:
Land	251,705			257,802
Buildings and improvements	929,225			916,580
Furniture, fixtures and equipment	684,042			671,189
Construction in progress	3,464			15,858
	1,868,436			1,861,429
Less accumulated depreciation and amortization	962,189			914,040
Property and Equipment — net	906,247			947,389
Other	92,812			46,307
Total Assets	$	1,767,199		$	1,821,753
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	265,489		$	261,940
Trade payable program liability	13,990			11,156
Accrued expenses	292,280			290,761
Deferred income taxes	28,931			15,417
Current maturities of long-term debt and obligations under capital leases	3,490			1,257
Total Current Liabilities	604,180			580,531
Long-term debt and obligations under capital leases,  less current maturities	535,031			467,239
Convertible long-term debt	—			119,000
Other long-term liabilities	60,233			57,481
Deferred income taxes	—			2,937
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	289,384			288,098
Retained earnings	463,797			481,926
Accumulated other comprehensive loss	(9,380		)	(3,565		)
Less cost of shares in treasury — 12,427,687 shares and  12,152,968 shares	185,339			181,187
Less cost of shares in benefits trust — 2,195,270 shares	59,264			59,264
Total Stockholders’ Equity	567,755			594,565
Total Liabilities and Stockholders’ Equity	$	1,767,199		$	1,821,753

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

	Fifty-three Weeks Ended			Fifty-two weeks ended
	February 3, 2007			January 28, 2006
Cash Flows from Operating Activities:
Net loss	$	(2,549	)	$	(37,528	)
Adjustments to reconcile net loss to net cash provided by continuing operations:
Net loss (earnings) from discontinued operations	738			(292		)
Depreciation and amortization	88,476			79,887
Cumulative effect of change in accounting principle, net of tax	(189		)	2,021
Accretion of asset disposal obligation	269			109
Loss on defeasance of convertible debt	755			—
Stock compensation expense	3,051			2,049
Cancellation of vested stock options	(1,056		)	—
Deferred income taxes	(8,316		)	(27,792		)
Net gain from reduction in asset retirement liability	—			(1,815		)
Gain from sales of assets	(15,297		)	(4,826		)
Loss from asset impairment	840			4,200
Gain from derivative valuation	(5,568		)	—
Excess tax benefits from stock based awards	(95		)	—
Increase in cash surrender value of life insurance policies	(2,143		)	(3,389		)
Changes in Operating Assets and Liabilities:
Decrease in accounts receivable, prepaid expenses and other	21,828			15,166
(Increase) decrease in merchandise inventories	9,250			(13,532		)
Increase (decrease) in accounts payable	3,549			(49,041		)
Increase (decrease) in accrued expenses	(4,165		)	(18,864		)
Increase in other long-term liabilities	2,093			16,760
Net cash provided (used) by continuing operations	91,471			(36,887		)
Net cash used in discontinued operations	(1,258		)	(1,500		)
Net Cash Provided (Used) by Operating Activities	90,213			(38,387		)
Cash Flows from Investing Activities:
Cash paid for property and equipment	(50,212		)	(85,945		)
Proceeds from sales of assets	17,542			4,043
Proceeds from sales of assets held for disposal				6,913
Life insurance proceeds received (paid)	(24,669		)	24,655
Premiums paid on life insurance policies	—			(605		)
Net cash used in continuing operations	(57,339		)	(50,939		)
Net cash provided by discontinued operations	—			916
Net Cash Used in Investing Activities	(57,339		)	(50,023		)
Cash Flows from Financing Activities:
Net (payments) borrowings under line of credit agreements	(48,569		)	57,985
Excess tax benefits from stock based awards	95			—
Net borrowings on trade payable program liability	2,834			11,156
Payments for finance issuance costs	—			(5,150		)
Proceeds from issuance of note	121,000			200,000
Reduction of long-term debt	(2,263		)	(183,459		)
Reduction of convertible debt	(119,000		)	—
Payments on capital lease obligations	(227		)	(383		)
Dividends paid	(14,757		)	(14,686		)
Repurchase of common stock	—			(15,562		)
Proceeds from exercise of stock options	722			3,071
Proceeds from dividend reinvestment plan	894			961
Net Cash (Used in) Provided by Financing Activities	(59,271		)	53,933
Net Decrease in Cash	(26,397		)	(34,477		)
Cash and Cash Equivalents at Beginning of Period	48,281			82,758
Cash and Cash Equivalents at End of Period	$	21,884		$	48,281
Supplemental Disclosure of Cash Flow Information:
Non-cash investing activities:
Accrued purchases of property and equipment	$	3,691		$	6,138
Non-cash financing activities:
Equipment capital leases	$	84		$	789

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

	Fourteen weeks ended			Thirteen weeks ended			Fifty-three weeks ended			Fifty-two weeks ended
	February 3, 2007			January 28, 2006			February 3, 2007			January 28, 2006
(a)     Net earnings (loss) from continuing      operations Before Cumulative Effect of      Change in Accounting Principle	$	8,110		$	(22,869	)	$	(2,000	)	$	(35,799	)
Discontinued Operations, Net of Tax	(400		)	289			(738		)	292
Cumulative Effect of Change in Accounting Principle, Net of Tax	6			(2,021		)	189			(2,021		)
Net Earnings (Loss)	$	7,716		$	(24,601	)	$	(2,549	)	$	(37,528	)
(b)    Average number of common shares      outstanding during period	54,274			54,180			54,266			54,794
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price	321			—			—			—
(c)     Average number of common shares assumed      outstanding during period	54,595			54,180			54,266			54,794
Basic Earnings (Loss) per Share:
Net Earnings (Loss) From Continuing Operations Before Cumulative Effect of Change in Accounting Principle	$	0.15		$	(0.42	)	$	(0.04	)	$	(0.65	)
Discontinued Operations, Net of Tax	(0.01		)	—			(0.01		)	—
Cumulative Effect of Change in Accounting Principle, Net of Tax	—			(0.04		)	—			(0.04		)
Basic Earnings (Loss) per Share	$	0.14		$	(0.46	)	$	(0.05	)	$	(0.69	)
Diluted Earnings (Loss) per Share:
Net Earnings (Loss) From Continuing Operations Before Cumulative Effect of Change in Accounting Principle	$	0.15		$	(0.42	)	$	(0.04	)	$	(0.65	)
Discontinued Operations, Net of Tax	(0.01		)	—			(0.01		)	—
Cumulative Effect of Change in Accounting Principle, Net of Tax	—			(0.04		)	—			(0.04		)
Diluted Earnings (Loss) per Share	$	0.14		$	(0.46	)	$	(0.05	)	$	(0.69	)

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

	Fourteen weeks ended			Thirteen weeks ended			Fifty-three weeks ended			Fifty-two weeks ended
	February 3, 2007			January 28, 2006			February 3, 2007			January 28, 2006
Capital expenditures	$	28,054		$	24,701		$	53,903		$	92,083
Depreciation and amortization	$	25,930		$	20,604		$	88,476		$	79,887
Non-operating income:
Net rental revenue	$	518		$	564		$	2,268		$	1,634
Investment income	1,280			340			5,030			1,117
Other (expense) income	(69		)	246			(275		)	1,146
Total	$	1,729		$	1,150		$	7,023		$	3,897
Comparable sales percentages (A)(B):
Merchandise	-1.5		%	0.7		%	-0.5		%	-0.2		%
Service	2.0		%	-4.3		%	1.3		%	-6.1		%
Total	-0.9		%	-0.2		%	-0.2		%	-1.3		%
Total square feet of retail space (including service centers)							12,167,089			12,167,089
Total Store Count							593			593
Sales and Gross Profit by Line of Business (A)(C):
Retail Sales	$	347,364		$	332,901		$	1,352,395		$	1,356,784
Service Center Revenue	238,782			217,580			919,766			881,245
Total Revenues	$	586,146		$	550,481		$	2,272,161		$	2,238,029
Gross Profit from Retail Sales	$	98,094		$	78,173		$	381,247		$	343,860
Gross Profit from Service Center Revenue	51,989			32,239			190,509			163,407
Total Gross Profit	$	150,083		$	110,412		$	571,756		$	507,267
Comparable Sales Percentages (A)(B):
Retail Sales	-2.2		%	0.6		%	-1.9		%	0.6		%
Service Center Revenue	1.0		%	-1.3		%	2.4		%	-3.9		%
Total Revenues	-0.9		%	-0.2		%	-0.2		%	-1.3		%
Gross Profit Percentage by Line of Business (A)(C):
Gross Profit Percentage from Retail Sales	28.2		%	23.5		%	28.2		%	25.3		%
Gross Profit Percentage from Service Center Revenue	21.8		%	14.8		%	20.7		%	18.5		%
Total Gross Profit Percentage	25.6		%	20.1		%	25.2		%	22.7		%

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

(B)  Revenue earned during the week ending February 3, 2007 is considered “non-comparable” and, accordingly, excluded from the calculation of comparable sales percentages.

(C) Sales and Gross Profit represent fourteen and fifty-three weeks ending February 3, 2007 and thirteen and fifty-two weeks ending January 28, 2006.

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

Adjustments

In the fourth quarter of 2005 we completed the restructuring of substantially all of our vendor agreements to provide flexibility in how we use vendor support funds. Previously, the vendor agreements required us to use certain vendor support funds exclusively for promotions and to partially offset certain other direct expenses. Under EITF No. 02-16, these types of allowances are to be netted against the appropriate expenses they offset, once it is determined that the allowances are for specific, identifiable and incremental expenses.  Under the restructured contracts it is not possible to make this determination.  Therefore, going forward all vendor support funds will be treated as a reduction of inventories and be recognized as a reduction to Costs of Sales as the inventories are sold, in accordance with EITF No. 02-16.  For the periods below, all previously identified costs which had been netted against Selling, General and Administrative Expenses (SG&A) have been reclassified to Gross Profit from Retail Sales as if the vendor agreements had been restructured as of January 30, 2005 (A).

Certain adjustments have been made to all periods presented to eliminate the impact of unusual or nonrecurring events, in order to make the periods more comparable (B).  Both periods of 2005 remove the effect of a fourth-quarter write-down of certain commercial sales information system  assets ($4,200).

Please see the table below illustrating the effect of these adjustments on both the fourteen and fifty-three week periods ended February 3, 2007 and the thirteen and fifty two weeks ended January 28, 2006 (presented in Line of Business format), assuming that such changes had been in effect during such periods.

STATEMENTS OF OPERATIONS

GAAP Format

	Thirteen weeks ended													Thirteen weeks ended					Fourteen weeks ended
	January 28, 2006					ADJUSTMENTS								January 28, 2006					February 3, 2007
	ACTUAL					(A)			(B)					AS ADJUSTED					ACTUAL
				%				%				%					%				%
	Amount			Sales		Amount		Sales	Amount			Sales		Amount			Sales		Amount		Sales
Gross Profit from Merchandise Sales	$	111,157		24.3		$	8,774	1.9	$	—		—		$	119,931		26.2		$	142,378	29.5
Gross Profit from Service Revenue	(745		)	(0.8	)	—		—	—			—		(745		)	(0.8	)	7,705		7.5
Total Gross Profit	110,412			20.1		8,774		1.6	—			—		119,186			21.7		150,083		25.6
Selling, General and Administrative Expenses	127,951			23.2		8,774		1.6	(4,200		)	(0.8	)	132,525			24.0		141,011		24.1
Gain on Sale of Assets	1,849			0.3										1,849			0.3		9,068		1.5
Operating Profit (Loss)	$	(15,690	)	(2.9	)	$	—	—	$	4,200		0.8		$	(11,490	)	(2.1	)	$	18,140	3.0

	Fifty-two weeks ended													Fifty-two weeks ended					Fifty-three weeks ended
	January 28, 2006					ADJUSTMENTS								January 28, 2006					February 3, 2007
	ACTUAL					(A)			(B)					AS ADJUSTED					ACTUAL
				%				%				%					%				%
	Amount			Sales		Amount		Sales	Amount			Sales		Amount			Sales		Amount		Sales
Gross Profit from Merchandise Sales	$	476,856		25.7		$	35,702	1.9	$	—		—		$	512,558		27.6		$	539,954	28.8
Gross Profit from Service Revenue	30,411			7.9		—		—	—			—		30,411			7.9		31,802		8.0
Total Gross Profit	507,267			22.7		35,702		1.6	—			—		542,969			24.3		571,756		25.2
Selling, General and Administrative Expenses	523,318			23.4		35,702		1.6	(4,200		)	(0.2	)	554,820			24.8		551,031		24.3
Gain on Sale of Assets	4,826			0.2										4,826			0.2		15,297		0.7
Operating Profit	$	(11,225	)	(0.5	)	$	—	—	$	4,200		0.2		$	(7,025	)	(0.3	)	$	36,022	1.6

Line of Business Format

	Thirteen weeks ended													Thirteen weeks ended					Fourteen weeks ended
	January 28, 2006					ADJUSTMENTS								January 28, 2006					February 3, 2007
	ACTUAL					(A)			(B)					AS ADJUSTED					ACTUAL
				%				%				%					%				%
	Amount			Sales		Amount		Sales	Amount			Sales		Amount			Sales		Amount		Sales
Gross Profit from Retail Sales	$	78,173		23.5		$	5,264	1.6	$	—		—		$	83,437		25.1		$	98,094	28.2
Gross Profit from Service Center Revenue	32,239			14.8		3,510		1.6	—			—		35,749			16.4		51,989		21.8
Total Gross Profit	110,412			20.1		8,774		1.6	—			—		119,186			21.7		150,083		25.6
Selling, General and Administrative Expenses	127,951			23.2		8,774		1.6	(4,200		)	(0.8	)	132,525			24.0		141,011		24.1
Gain on Sale of Assets	1,849			0.3										1,849			0.3		9,068		1.5
Operating Profit (Loss)	$	(15,690	)	(2.9	)	$	—	—	$	4,200		0.8		$	(11,490	)	(2.1	)	$	18,140	3.1

	Fifty-two weeks ended													Fifty-two weeks ended					Fifty-three weeks ended
	January 28, 2006					ADJUSTMENTS								January 28, 2006					February 3, 2007
	ACTUAL					(A)			(B)					AS ADJUSTED					ACTUAL
				%				%				%					%				%
	Amount			Sales		Amount		Sales	Amount			Sales		Amount			Sales		Amount		Sales
Gross Profit from Retail Sales	$	343,860		25.3		$	21,421	1.6	$	—		—		$	365,281		26.9		$	381,247	28.2
Gross Profit from Service Center Revenue	163,407			18.5		14,281		1.6	—			—		177,688			20.1		190,509		20.7
Total Gross Profit	507,267			22.7		35,702		1.6	—			—		542,969			24.3		571,756		25.2
Selling, General and Administrative Expenses	523,318			23.4		35,702		1.6	(4,200		)	(0.2	)	554,820			24.8		551,031		24.6
Gain on Sale of Assets	4,826			0.2										4,826			0.2		15,297		0.7
Operating Profit	$	(11,225	)	(0.5	)	$	—	—	$	4,200		0.2		$	(7,025	)	(0.3	)	$	36,022	1.2