Pep Boys Manny Moe & Jack (PBY) 8-K Pep Boys Reports Q3 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)

	Thirteen weeks ended										Thirty-nine weeks ended
	November 1, 2008					November 3, 2007					November 1, 2008					November 3, 2007
	Amount			% Sales		Amount			% Sales		Amount			% Sales		Amount			% Sales
Merchandise Sales	$	378,461		81.5		$	430,368		81.4		$	1,189,872		81.4		1,323,161			81.7
Service Revenue	85,705			18.5		98,393			18.6		272,380			18.6		297,275			18.3
Total Revenues	464,166			100.0		528,761			100.0		1,462,252			100.0		1,620,436			100.0
Costs of Merchandise Sales	268,235			70.9		343,933			79.9		838,574			70.5		971,358			73.4
Costs of Service Revenue	81,087			94.6		86,902			88.3		250,434			91.9		261,847			88.1
Total Costs of Revenues	349,322			75.3		430,835			81.5		1,089,008			74.5		1,233,205			76.1
Gross Profit from Merchandise Sales	110,226			29.1		86,435			20.1		351,298			29.5		351,803			26.6
Gross Profit from Service Revenue	4,618			5.4		11,491			11.7		21,946			8.1		35,428			11.9
Total Gross Profit	114,844			24.7		97,926			18.5		373,244			25.5		387,231			23.9
Selling, General and Administrative Expenses	119,827			25.8		133,550			25.3		361,445			24.7		392,501			24.2
Net (Loss) Gain from Dispositions of Assets	(53		)	—		(515		)	(0.1	)	9,555			0.7		1,829			0.1
Operating (Loss) Profit	(5,036		)	(1.1	)	(36,139		)	(6.8	)	21,354			1.5		(3,441		)	(0.2	)
Non-operating Income	305			0.1		1,032			0.2		1,797			0.1		4,703			0.3
Interest Expense	7,098			1.5		11,501			2.2		18,977			1.3		36,488			2.3
(Loss) Earnings From Continuing Operations Before Income Taxes	(11,829		)	(2.5	)	(46,608		)	(8.8	)	4,174			0.3		(35,226		)	(2.2	)
Income Tax (Benefit) Expense	(4,775		)	40.4	(1)	(20,677		)	44.4	(1)	185			4.4	(1)	(16,293		)	46.3	(1)
Net (Loss) Earnings From Continuing Operations	(7,054		)	(1.5	)	(25,931		)	(4.9	)	3,989			0.3		(18,933		)	(1.2	)
Discontinued Operations, Net of Tax	(228		)	—		(2,059		)	(0.4	)	(1,151		)	(0.1	)	(1,703		)	(0.1	)
Net (Loss) Earnings	(7,282		)	(1.6	)	(27,990		)	(5.3	)	2,838			0.2		(20,636		)	(1.3	)
Retained Earnings, beginning of period	408,351					462,615					406,819					463,797
Cumulative effect adjustment for adoption of EITF 06-10, net of tax	—					—					(1,165		)			—
Cumulative effect adjustment for adoption of FIN 48	—					—					—					(155		)
Cash Dividends	(3,523		)			(3,510		)			(10,551		)			(10,630		)
Effect of Stock Options	—					—					(37		)			(1,261		)
Dividend Reinvestment Plan	(849		)			(27		)			(1,207		)			(27		)
Retained Earnings, end of period	$	396,697				$	431,088				$	396,697				$	431,088
Basic and Diluted (Loss) Earnings per Share:
Net (Loss) Earnings From Continuing Operations	$	(0.13	)			$	(0.49	)			$	0.08				$	(0.36	)
Discontinued Operations, Net of Tax	(0.01		)			(0.05		)			(0.03		)			(0.04		)
(Loss) Earnings per Share	$	(0.14	)			$	(0.54	)			$	0.05				$	(0.40	)
Cash Dividends per Share	$	0.0675				$	0.0675				$	0.2025				$	0.2025

(1) As a percentage of earnings from continuing operations before income taxes

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES (UNAUDITED)

CONSOLIDATED BALANCE SHEETS	(dollar amounts in thousands, except share amounts)
	November 1, 2008			February 2, 2008			November 3, 2007
Assets
Current Assets:
Cash and cash equivalents	$	38,371		$	20,926		$	26,200
Accounts receivable, less allowance for uncollectible accounts of $2,109; $1,937; and $1,562	25,838			29,450			28,325
Merchandise inventories	584,700			561,152			589,916
Prepaid expenses	30,133			43,842			27,894
Other	43,774			77,469			65,751
Assets held for disposal	18,222			16,918			—
Total Current Assets	741,038			749,757			738,086
Property and Equipment - net	747,921			780,779			862,760
Deferred income taxes	50,315			20,775			28,669
Other	28,669			32,609			23,472
Total Assets	$	1,567,943		$	1,583,920		$	1,652,987
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	221,863		$	245,423		$	226,535
Trade payable program liability	38,316			14,254			21,596
Accrued expenses	256,620			292,623			276,429
Deferred income taxes	15,013			—			—
Current maturities of long-term debt and obligations under capital leases	2,060			2,114			3,445
Total Current Liabilities	533,872			554,414			528,005
Long-term debt and obligations under capital leases, less current maturities	330,535			400,016			549,751
Other long-term liabilities	64,487			72,183			78,930
Deferred gain from asset sales	173,184			86,595			—
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	292,585			296,074			294,911
Retained earnings	396,697			406,819			431,088
Accumulated other comprehensive loss	(11,470		)	(14,183		)	(11,299		)
Less cost of shares in treasury - 14,234,313 shares, 14,609,094 shares and 14,633,938 shares	221,240			227,291			227,692
Less cost of shares in benefits trust - 2,195,270 shares	59,264			59,264			59,264
Total Stockholders’ Equity	465,865			470,712			496,301
Total Liabilities and Stockholders’ Equity	$	1,567,943		$	1,583,920		$	1,652,987
Working Capital	207,166			195,343			210,081
Long-term debt and obligations under capital leases,	330,535			400,016			549,751
Total Stockholders’ Equity	465,865			470,712			496,301
Total Capitalization	796,400			870,728			1,046,052
LTD as percent of total capitalization	41.50		%	45.94		%	52.55		%

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

Thirty-nine weeks ended	November 1, 2008			November 3, 2007
Cash Flows from Operating Activities:
Net Earnings (Loss)	$	2,838		$	(20,636	)
Adjustments to reconcile net earnings (loss) to net cash (used in) provided by continuing operations:
Discontinued operations	1,151			1,703
Depreciation and amortization	55,109			61,724
Inventory impairment				32,803
Amortization of deferred gain from asset sales	(7,305		)	—
Accretion of asset retirement obligation	206			191
Stock compensation expense	2,314			8,529
Gain from debt retirement	(3,460		)	—
Deferred income taxes	(3,603		)	(11,812		)
Gain from dispositions of assets	(9,555		)	(1,829		)
Change in fair value of derivative	140			3,665
Loss from asset impairment	370			7,199
Excess tax benefits from stock based awards	(3		)	(687		)
Change in cash surrender value of life insurance policies	98			(5,423		)
Changes in Operating Assets and Liabilities:
Decrease in accounts receivable, prepaid expenses and other	39,759			32,004
Increase in merchandise inventories	(23,548		)	(15,677		)
Decrease in accounts payable	(23,560		)	(38,954		)
Decrease in accrued expenses	(37,077		)	(5,911		)
(Decrease) increase in other long-term liabilities	(3,818		)	682
Net cash (used in) provided by continuing operations	(9,944		)	47,571
Net cash (used in) provided by discontinued operations	(880		)	2,752
Net Cash (Used in) Provided by Operating Activities	(10,824		)	50,323
Cash Flows from Investing Activities:
Cash paid for master lease properties	(117,121		)	—
Cash paid for property and equipment	(22,653		)	(33,074		)
Proceeds from dispositions of assets	209,085			2,376
Proceeds from surrender of life insurance policies	—			26,714
Net cash provided by (used in) continuing operations	69,311			(3,984		)
Net cash provided by (used in) discontinued operations	2,558			(432		)
Net Cash Provided by (Used in) Investing Activities	71,869			(4,416		)
Cash Flows from Financing Activities:
Borrowings under line of credit agreements	99,888			436,584
Payments under line of credit agreements	(141,413		)	(419,267		)
Excess tax benefits from stock based awards	3			687
Borrowings on trade payable program liability	154,886			87,578
Payments on trade payable program liability	(130,824		)	(79,972		)
Payment for finance issuance cost	(182		)	—
Proceeds from lease financing	8,661			—
Reduction of long-term debt	(24,550		)	(2,432		)
Payments on capital lease obligations	(146		)	(210		)
Dividends paid	(10,550		)	(10,630		)
Repurchase of common stock	—			(58,152		)
Proceeds from exercise of stock options	23			3,632
Proceeds from dividend reinvestment plan	604			591
Net Cash Used in Financing Activities	(43,600		)	(41,591		)
Net Increase in Cash and Cash Equivalents	17,445			4,316
Cash and Cash Equivalents at Beginning of Period	20,926			21,884
Cash and Cash Equivalents at End of Period	$	38,371		$	26,200
Supplemental Disclosure of Cash Flow Information:	—			—
Cash paid for income taxes	$	1,070		$	214
Cash paid for interest	$	17,043		$	30,100
Accrued purchases of property and equipment	$	1,435		$	258

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

	Thirteen weeks ended						Thirty-nine weeks ended
	November 1, 2008			November 3, 2007			November 1, 2008			November 3, 2007
(a)   Net (Loss) Earnings From Continuing Operations	$	(7,054	)	$	(25,931	)	$	3,989		$	(18,933	)
Discontinued Operations, Net of Tax	(228		)	(2,059		)	(1,151		)	(1,703		)
Net (Loss) Earnings	$	(7,282	)	$	(27,990	)	$	2,838		$	(20,636	)
(b)   Basic average number of common shares outstanding during period	52,099			51,844			52,106			52,206
Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price	—			—			83			—
(c)   Diluted average number of common shares assumed outstanding during period	52,099			51,844			52,189			52,206
Basic (Loss) Earnings per Share:
Net (Loss) Earnings From Continuing Operations    (a/b)	$	(0.13	)	$	(0.49	)	$	0.08		$	(0.36	)
Discontinued Operations, Net of Tax	(0.01		)	(0.05		)	(0.03		)	(0.04		)
Basic (Loss) Earnings per Share	$	(0.14	)	$	(0.54	)	$	0.05		$	(0.40	)
Diluted (Loss) Earnings per Share:
Net (Loss) Earnings From Continuing Operations    (a/c)	$	(0.13	)	$	(0.49	)	$	0.08		$	(0.36	)
Discontinued Operations, Net of Tax	(0.01		)	(0.05		)	(0.03		)	$	(0.04	)
Diluted (Loss) Earnings per Share	$	(0.14	)	$	(0.54	)	$	0.05		$	(0.40	)

THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES (UNAUDITED)

ADDITIONAL INFORMATION (dollar amounts in thousands)

	Thirteen weeks ended						Thirty-nine weeks ended
	November 1, 2008			November 3, 2007			November 1, 2008			November 3, 2007
Capital expenditures (A)	$	8,934		$	11,728		$	139,224		$	30,073
Depreciation and amortization	$	18,181		$	20,727		$	55,109		$	62,416
Non-operating income:
Net rental revenue	$	115		$	724		$	1,069		$	1,849
Investment income	178			322			745			2,899
Other (expense) income	12			(14		)	(17		)	(45		)
Total	$	305		$	1,032		$	1,797		$	4,703
Comparable sales percentages:
Merchandise	-10.3		%	-4.1		%	-8.1		%	-4.1		%
Service	-11.0		%	2.6		%	-6.3		%	2.6		%
Total	-10.4		%	-2.9		%	-7.8		%	-2.9		%
Total square feet of retail space (including service centers)							11,514,000			12,142,100
Total Store Count							562			592
Sales and Gross Profit by Line of Business (B):
Retail Sales	$	253,492		$	294,232		$	802,707		$	924,043
Service Center Revenue	210,674			234,529			659,545			696,393
Total Revenues	$	464,166		$	528,761		$	1,462,252		$	1,620,436
Gross Profit from Retail Sales	$	68,360		$	43,867		$	220,139		$	224,396
Gross Profit from Service Center Revenue	46,484			54,059			153,105			162,835
Total Gross Profit	$	114,844		$	97,926		$	373,244		$	387,231
Comparable Sales Percentages (B):
Retail Sales	-12.1		%	-8.1		%	-11.3		%	-7.3		%
Service Center Revenue	-8.2		%	4.5		%	-3.2		%	3.4		%
Total Revenues	-10.4		%	-2.9		%	-7.8		%	-2.9		%
Gross Profit Percentage by Line of Business (A):
Gross Profit Percentage from Retail Sales	27.0		%	14.9		%	27.4		%	24.3		%
Gross Profit Percentage from Service Center Revenue	22.1		%	23.1		%	23.2		%	23.4		%
Total Gross Profit Percentage	24.7		%	18.5		%	25.5		%	23.9		%

(A) Capital expenditures includes $117.1 million for the purchase of master lease properties during the second quarter of fiscal 2008.

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