Pep Boys Manny Moe & Jack 10Q 2013 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended November 2, 2013

o	Transition 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 November 29, 2013, there were 53,177,972 shares of the registrant’s Common Stock outstanding.

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Index

		Page
PART I - FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited)

	Consolidated Balance Sheets — November 2, 2013 and February 2, 2013	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) — Thirteen and Thirty-nine Weeks Ended November 2, 2013 and October 27, 2012	2

	Consolidated Statements of Cash Flows — Thirty-nine Weeks Ended November 2, 2013 and October 27, 2012	3

	Notes to the Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20

Item 4.	Controls and Procedures	20


PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	21

Item 1A.	Risk Factors	21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21

Item 3.	Defaults Upon Senior Securities	21

Item 4.	Mine Safety Disclosures	21

Item 5.	Other Information	21

Item 6.	Exhibits	22

SIGNATURES		23

INDEX TO EXHIBITS		24

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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)

	November 2, 2013			February 2, 2013
ASSETS
Current assets:
Cash and cash equivalents	$	55,798		$	59,186
Accounts receivable, less allowance for uncollectible accounts of $1,310 and $1,302	24,942			23,897
Merchandise inventories	664,901			641,208
Prepaid expenses	16,801			28,908
Other current assets	52,249			60,438
Assets held for sale	500			—
Total current assets	815,191			813,637

Property and equipment, net of accumulated depreciation of $1,214,802 and $1,162,909	631,639			657,270
Goodwill	56,841			46,917
Deferred income taxes	48,311			47,691
Other long-term assets	37,265			38,434
Total assets	$	1,589,247		$	1,603,949

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	253,818		$	244,696
Trade payable program liability	134,703			149,718
Accrued expenses	225,249			232,277
Deferred income taxes	59,455			58,441
Current maturities of long-term debt	2,000			2,000
Total current liabilities	675,225			687,132

Long-term debt less current maturities	196,500			198,000
Other long-term liabilities	49,618			53,818
Deferred gain from asset sales	117,974			127,427
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	296,578			295,679
Retained earnings	436,933			430,148
Accumulated other comprehensive income (loss)	339			(980		)
Treasury stock, at cost — 15,442,779 shares and 15,431,298 shares	(252,477		)	(255,832		)
Total stockholders’ equity	549,930			537,572
Total liabilities and stockholders’ equity	$	1,589,247		$	1,603,949

See notes to consolidated financial statements.

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THE PEP BOYS — MANNY, MOE & JACK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollar amounts in thousands, except per share data)

(unaudited)

	Thirteen weeks ended						Thirty-nine weeks ended
	November 2, 2013			October 27, 2012			November 2, 2013			October 27, 2012
Merchandise sales	$	394,346		$	401,146		$	1,223,813		$	1,226,858
Service revenue	112,696			108,462			347,022			333,025
Total revenues	507,042			509,608			1,570,835			1,559,883
Costs of merchandise sales	267,489			284,626			838,126			863,533
Costs of service revenue	116,741			108,942			349,348			322,057
Total costs of revenues	384,230			393,568			1,187,474			1,185,590
Gross profit from merchandise sales	126,857			116,520			385,687			363,325
Gross (loss) profit from service revenue	(4,045		)	(480		)	(2,326		)	10,968
Total gross profit	122,812			116,040			383,361			374,293
Selling, general and administrative expenses	115,104			112,028			354,236			346,015
Net loss from dispositions of assets	(67		)	(221		)	(213		)	(232		)
Operating profit	7,641			3,791			28,912			28,046
Merger termination fees, net	—			(139		)	—			42,816
Other income	524			655			1,367			1,646
Interest expense	3,643			17,057			10,885			30,000
Earnings (loss) from continuing operations before income taxes and discontinued operations	4,522			(12,750		)	19,394			42,508
Income tax expense (benefit)	3,509			(6,055		)	9,074			15,035
Earnings (loss) from continuing operations before discontinued operations	1,013			(6,695		)	10,320			27,473
Loss from discontinued operations, net of tax	(49		)	(64		)	(124		)	(122		)
Net earnings (loss)	964			(6,759		)	10,196			27,351

Basic earnings (loss) per share:
Earnings (loss) from continuing operations before discontinued operations	$	0.02		$	(0.13	)	$	0.19		$	0.51
Discontinued operations, net of tax	—			—			—			—
Basic earnings (loss) per share	$	0.02		$	(0.13	)	$	0.19		$	0.51

Diluted earnings (loss) per share:
Earnings (loss) from continuing operations before discontinued operations	$	0.02		$	(0.13	)	$	0.19		$	0.51
Discontinued operations, net of tax	—			—			—			—
Diluted earnings (loss) per share	$	0.02		$	(0.13	)	$	0.19		$	0.51

Other comprehensive (loss) income:
Defined benefit plan adjustment, net of tax	—			354			—			1,062
Derivative financial instruments adjustment, net of tax	(372		)	4,607			1,319			6,537
Other comprehensive (loss) income	(372		)	4,961			1,319			7,599
Comprehensive income (loss)	$	592		$	(1,798	)	$	11,515		$	34,950

See notes to consolidated financial statements.

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THE PEP BOYS — MANNY, MOE & JACK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollar amounts in thousands)

(unaudited)

	Thirty-nine weeks ended
	November 2, 2013			October 27, 2012
Cash flows from operating activities:
Net earnings	$	10,196		$	27,351
Adjustments to reconcile net earnings to net cash provided by continuing operations:
Loss from discontinued operations, net of tax	124			122
Depreciation	59,941			59,279
Amortization of deferred gain from asset sales	(9,453		)	(9,453		)
Amortization of deferred financing costs	1,952			3,703
Stock compensation expense	2,451			622
Deferred income taxes	(478		)	14,521
Net loss from disposition of assets	213			232
Loss from asset impairment	4,882			8,802
Other	(322		)	(62		)
Changes in operating assets and liabilities:
Decrease in accounts receivable, prepaid expenses and other	18,431			22,510
Increase in merchandise inventories	(23,693		)	(20,116		)
Increase in accounts payable	7,746			14,510
Decrease in accrued expenses	(6,589		)	(4,208		)
Decrease in other long-term liabilities	(2,354		)	(1,369		)
Net cash provided by continuing operations	63,047			116,444
Net cash used in discontinued operations	(193		)	(215		)
Net cash provided by operating activities	62,854			116,229

Cash flows from investing activities:
Capital expenditures	(38,334		)	(36,760		)
Proceeds from dispositions of assets	19			15
Acquisitions, net of cash acquired	(10,741		)	—
Release of collateral investment	1,000			—
Net cash used in investing activities	(48,056		)	(36,745		)

Cash flows from financing activities:
Borrowings under line of credit agreements	1,926			1,780
Payments under line of credit agreements	(1,926		)	(1,780		)
Borrowings on trade payable program liability	114,804			123,408
Payments on trade payable program liability	(129,819		)	(82,904		)
Payments for finance issuance costs	—			(6,442		)
Borrowings under new debt	—			200,000
Debt payments	(1,500		)	(295,122		)
Proceeds from stock issuance	1,079			1,999
Repurchase of common stock	(2,750		)	—
Net cash used in financing activities	(18,186		)	(59,061		)
Net (decrease) increase in cash and cash equivalents	(3,388		)	20,423
Cash and cash equivalents at beginning of period	59,186			58,244
Cash and cash equivalents at end of period	$	55,798		$	78,667

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	4,322		$	2,635
Cash received from income tax refunds	$	51		$	—
Cash paid for interest	$	9,149		$	28,554
Non-cash investing activities:
Accrued purchases of property and equipment	$	2,369		$	2,008

See notes to consolidated financial statements.

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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 February 2, 2013. The results of operations for the thirty-nine weeks ended November 2, 2013 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 November 2, 2013 and for all periods presented have been made. Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on reported totals for assets, liabilities, shareholders’ equity, cash flows or net income.

The Company’s fiscal year ends on the Saturday nearest to January 31. Fiscal 2013, which ends February 1, 2014, is comprised of 52 weeks. Fiscal 2012, which ended February 2, 2013, was comprised of 53 weeks. The Company operated 793 store locations at November 2, 2013, of which 249 were owned and 544 were leased.

NOTE 2—NEW ACCOUNTING STANDARDS

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013-11 states that an unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, if available at the reporting date under the applicable tax law to settle any additional income taxes that would result from the disallowance of a tax position. If the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements.

In February 2013, the FASB issued ASU No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”), which requires companies to provide information about the amounts reclassified out of accumulated other comprehensive income (“AOCI”) by component. In addition, companies are required to report significant amounts reclassified out of AOCI by the respective line items of net income if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, companies are required to cross-reference to other disclosures that provide additional detail on those amounts. ASU 2013-02 does not change the current requirements for reporting net income or other comprehensive income in the financial statements, and is effective prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material impact on the Company’s consolidated financial statements.

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NOTE 3—ACQUISITIONS

During the third quarter of Fiscal 2013, the Company paid $10.7 million to purchase 18 Service & Tire Centers located in Southern California from AKH Company, Inc., which had operated under the name Discount Tire Centers. This acquisition was financed using cash on hand. Collectively, the acquired stores produced approximately $26.1 million in sales annually based on unaudited pre-acquisition historical information. The results of operations of these acquired stores are included in the Company’s results of operations as of the date of acquisition.

The Company expensed all costs related to this acquisition during Fiscal 2013. The total costs related to this acquisition were immaterial and are included in the consolidated statement of operations within selling, general and administrative expenses.

The purchase price of the acquisition was preliminarily allocated to tangible assets of approximately $0.8 million and $0.1 million in intangible assets, with the remaining $9.9 million recorded as goodwill. The goodwill was primarily related to growth opportunities. The Company believes that any subsequent adjustments to the purchase price allocation will not be material.

As the acquisition was immaterial to the Company’s operating results for the thirteen and thirty-nine week periods ended November 2, 2013, pro forma results of operations are not disclosed.

NOTE 4—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 $589.8 million and $565.8 million as of November 2, 2013 and February 2, 2013, respectively.

The Company’s inventory, consisting primarily of automotive tires, parts, and accessories, is used on vehicles typically having long lives. Because of this, and combined with the Company’s historical experience of returning excess inventory to the Company’s 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 $5.1 million and $4.6 million as of November 2, 2013 and February 2, 2013, respectively.

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 thirty-nine weeks ended November 2, 2013 and the fifty-three weeks ended February 2, 2013 is as follows:

(dollar amounts in thousands)	November 2, 2013			February 2, 2013
Beginning balance	$	864		$	673

Additions related to current period sales	10,474			11,920

Warranty costs incurred in current period	(10,433		)	(11,729		)

Ending balance	$	905		$	864

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NOTE 6—DEBT AND FINANCING ARRANGEMENTS

The following are the components of debt and financing arrangements:

(dollar amounts in thousands)	November 2, 2013			February 2, 2013
Senior Secured Term Loan, due October 2018	$	198,500		$	200,000
Revolving Credit Agreement, through July 2016	—			—
Long-term debt	198,500			200,000
Current maturities	(2,000		)	(2,000		)
Long-term debt less current maturities	$	196,500		$	198,000

The Company has a Revolving Credit Agreement (the “Agreement”) with available borrowings up to $300.0 million and a maturity of July 2016. As of November 2, 2013, the Company had no borrowings outstanding under the Agreement and $44.8 million of availability was utilized to support outstanding letters of credit. Taking this into account and the borrowing base requirements (including reduction for amounts outstanding under the vendor financing program), as of November 2, 2013 there was $152.7 million of availability remaining under the Agreement.

On November 12, 2013, the Company entered into the First Amendment to the Second Amended and Restated Credit Agreement, dated October 11, 2012, among the Company, Wells Fargo Bank, N.A., as Administrative Agent, and the other parties thereto. The First Amendment reduces the interest rate payable by the Company from LIBOR, subject to a 1.25% floor, plus 3.75% to LIBOR, subject to a 1.25% floor, plus 3.00%. The reduction in the interest rate is anticipated to result in approximately $1.5 million in annualized interest savings.

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 plus unrestricted cash drops below $50.0 million. As of November 2, 2013, the Company was in compliance with all financial covenants contained in its debt agreements.

The Company has a vendor financing program with availability up to $200.0 million which is funded by various bank participants who have the ability, but not the obligation, to purchase account receivables owed by the Company directly from vendors. The Company, in turn, makes the regularly scheduled full vendor payments to the bank participants. There was an outstanding balance of $134.7 million and $149.7 million under the program as of November 2, 2013 and February 2, 2013, respectively.

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 obligations and are considered a level 2 measure under the fair value hierarchy. The estimated fair value of long-term debt including current maturities was $199.5 million and $203.5 million as of November 2, 2013 and February 2, 2013, respectively.

NOTE 7—INCOME TAXES

The Company recognizes taxes payable for the current year, as well as deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. The Company’s effective income tax rate differs from the U.S. statutory rate principally due to foreign taxes related to the Company’s Puerto Rico operations, state taxes, and certain other permanent tax items. 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. The effective tax rate of 77.6% for the thirteen weeks ended November 2, 2013 increased by 30.1% from the 47.5% recorded in the corresponding period of the prior year. The increase in rate was primarily due to a change in the mix of operating profit within certain tax jurisdictions and the impact of a tax law change in Puerto Rico that was enacted in the second quarter of 2013.

For the thirty-nine weeks ended November 2, 2013 and October 27, 2012, the effective tax rate was 46.8% and 35.4%, respectively.

For income tax benefits related to uncertain tax positions to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. During the thirty-nine weeks ended November 2, 2013, there were no material changes to the Company’s liability for uncertain tax positions.

NOTE 8—EARNINGS PER SHARE

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

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		Thirteen Weeks Ended						Thirty-nine Weeks Ended
(dollar amounts in thousands, except per share amounts)		November 2, 2013			October 27, 2012			November 2, 2013			October 27, 2012

(a)	Earnings (loss) from continuing operations	$	1,013		$	(6,695	)	$	10,320		$	27,473

	Loss from discontinued operations, net of tax	(49		)	(64		)	(124		)	(122		)

	Net earnings (loss)	$	964		$	(6,759	)	$	10,196		$	27,351

(b)	Basic average number of common shares outstanding during period	53,315			53,304			53,363			53,175

	Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price	615			—			599			768

(c)	Diluted average number of common shares assumed outstanding during period	53,930			53,304			53,962			53,943

	Basic earnings (loss) per share:
	Earnings (loss) from continuing operations (a/b)	$	0.02		$	(0.13	)	$	0.19		$	0.51
	Discontinued operations, net of tax	—			—			—			—
	Basic earnings (loss) per share	$	0.02		$	(0.13	)	$	0.19		$	0.51

	Diluted earnings (loss) per share:
	Earnings (loss) from continuing operations (a/c)	$	0.02		$	(0.13	)	$	0.19		$	0.51
	Discontinued operations, net of tax	—			—			—			—
	Diluted earnings (loss) per share	$	0.02		$	(0.13	)	$	0.19		$	0.51

As of November 2, 2013 and October 27, 2012, respectively, there were 2,572,000 and 2,571,000 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 is 824,000 and 2,571,000 for the thirteen weeks ended November 2, 2013 and October 27, 2012, respectively. The total number of such shares excluded from the diluted earnings per share calculation is 1,011,000 and 740,494 for the thirty-nine weeks ended November 2, 2013 and October 27, 2012.

NOTE 9—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents changes in accumulated other comprehensive income (loss) for the thirteen and thirty-nine weeks ended November 2, 2013, net of tax:

	Gains on Cash Flow Hedges
	Thirteen weeks ended			Thirty-nine weeks ended
(dollar amounts in thousands)	November 2, 2013			November 2, 2013
Beginning balance	$	711		$	(980	)

Other comprehensive income before reclassifications, net of $283 tax benefit and $618 tax	(471		)	1,032
Amounts reclassified from accumulated other comprehensive income (loss), net of $59 and $172 tax (a)	99			287
Net current-period other comprehensive income	(372		)	1,319

Ending balance	$	339		$	339

(a) Reclassified amount increased interest expense.

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NOTE 10—BENEFIT PLANS

During the first three quarters of fiscal 2013, contribution expense to the Company’s defined contribution supplemental executive retirement plan (the “Account Plan”) and qualified 401(k) savings plan was $2.5 million. For fiscal 2013, contributions to the Account Plan are contingent upon meeting certain performance metrics. The Company did not record any contribution expense for these plans in fiscal 2012.

During the fourth quarter of fiscal 2012, the Company terminated its defined benefit pension plan and contributed $14.1 million to fully fund the plan on a termination basis. Accordingly, the Company has no further defined benefit pension expense.

Pension expense for the first three quarters of fiscal 2012 was as follows:

	Thirty-nine weeks ended
(dollar amounts in thousands)	October 27, 2012
Interest cost	$	1,857
Expected return on plan assets	(2,112		)
Amortization of net loss	1,699
Net periodic benefit cost	$	1,444

NOTE 11—STOCKHOLDERS’ EQUITY

On December 12, 2012, the Company’s Board of Directors authorized a program to repurchase up to $50.0 million of the Company’s common stock to be made from time to time in the open market or in privately negotiated transactions, with no expiration date. During the first three quarters of fiscal 2013, the Company repurchased 237,624 shares of common stock for $2.8 million. The repurchased shares are included in the Company’s treasury stock.

NOTE 12—EQUITY COMPENSATION PLANS

The Company has stock-based compensation plans, under which it grants stock options and restricted stock units to key employees and members of its Board of Directors. The Company generally recognizes compensation expense on a straight-line basis over the vesting period.

STOCK OPTIONS

The following table summarizes options activity under the Company’s plans for the thirty-nine weeks ended November 2, 2013:

	Number of Shares
Outstanding — beginning balance	1,678,593
Granted	308,963
Exercised	(123,159	)
Forfeited	(70,195	)
Expired	(63,420	)
Outstanding — ending balance	1,730,782

In the first nine months of fiscal 2013, the Company granted approximately 309,000 stock options with a weighted average grant date fair value of $5.11 per unit. These options have a seven-year term and vest over a three-year period with a third vesting on each of the first three anniversaries of their grant date. The compensation expense recorded for the options granted during the thirteen and thirty-nine weeks ended November 2, 2013 was immaterial.

In the first nine months of fiscal 2012, the Company granted approximately 288,000 stock options with a weighted average grant date fair value of $4.65 per unit. These options have a seven-year term and vest over a three-year period with a third vesting on each of the first three anniversaries of their grant date. The compensation expense recorded for the options granted during the thirteen weeks and thirty-nine weeks ended October 27, 2012 was immaterial.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on historical volatilities for a time period similar to that of the expected term blended with market based implied volatility at the time of the grant. The risk-free rate is based on the U.S. treasury yield curve for issues with a remaining term equal to the expected term.

The following are the weighted-average assumptions:

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	November 2, 2013
Dividend yield	0.0	%
Expected volatility	52.5	%
Risk-free interest rate range:
High	0.73	%
Low	0.67	%
Ranges of expected lives in years	4-5

RESTRICTED STOCK UNITS

Performance Based Awards

In the first nine months of fiscal 2013, the Company granted approximately 109,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal 2015. The number of underlying shares that may be issued upon vesting will range from 0% to 150%, depending upon the Company achieving the financial targets in fiscal 2015. The fair value for these awards was $11.85 per unit at the date of the grant. The compensation expense recorded for these restricted stock units was immaterial during the thirteen and thirty-nine weeks ended November 2, 2013.

In the third quarter of fiscal 2012, the Company granted approximately 106,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal year 2014. The number of underlying shares that may be issued upon vesting will range from 0% to 150%, depending upon the Company achieving the financial targets in fiscal year 2014. The fair value for these awards was $9.98 per unit at the date of the grant. The compensation expense recorded for these restricted stock units was immaterial during the thirteen weeks and thirty-nine weeks ended October 27, 2012.

In the third quarter of fiscal 2012, the Company concluded that it is not likely to achieve the financial targets for the performance based awards granted in fiscal 2010 and 2011 and accordingly, recorded a $0.9 million benefit to reverse the to-date compensation expense recognized for these awards.

Market Based Awards

In the first nine months of fiscal 2013, the Company granted approximately 55,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target for the three-year period ending with fiscal 2015. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $13.41 per unit grant date fair value. The compensation expense recorded for these restricted stock units during the thirteen and thirty-nine weeks ended November 2, 2013 was immaterial.

In the third quarter of fiscal 2012, the Company granted approximately 53,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target for the three-year period ending with fiscal 2014. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $7.96 per unit grant date fair value. The compensation expense recorded for these restricted stock units during the thirteen weeks and thirty-nine weeks ended October 27, 2012, was immaterial.

Other Awards

The Company granted restricted stock units for officers’ deferred bonus matches under the Company’s non-qualified deferred compensation plan during the first nine months of fiscal 2013, which vest over a three-year period. The compensation expense recorded for these awards during the thirteen and thirty-nine weeks ended November 2, 2013 was immaterial. The Company did not grant any restricted stock units for officers’ deferred bonus matches under the Company’s non-qualified deferred compensation plan during the first nine months of fiscal 2012.

In the first nine months of fiscal 2013, the Company granted approximately 54,000 restricted stock units to its non-employee directors of the board, which vest over a one year period with a quarter vesting on each of the first four quarters following their grant date. The fair value was $12.05 per unit and the compensation expense recorded for these restricted stock units during the thirteen weeks and thirty-nine weeks ended November 2, 2013 was immaterial.

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In the third quarter of fiscal 2012, the Company granted approximately 33,000 restricted stock units to its non-employee directors of the board, which vest over a one year period with a quarter vesting on each of the first four quarters following their grant date. The fair value was $9.98 per unit and the compensation expense recorded for these restricted stock units during the thirteen weeks and thirty-nine weeks ended October 27, 2012 was immaterial.

The following table summarizes the nonvested units’ activity under the Company’s plan for the thirty-nine weeks ended November 2, 2013, assuming maximum vesting of underlying shares for the performance and market based awards described above:

	Number of Units
Beginning balance	796,600
Granted	337,593
Forfeited	(240,834	)
Vested	(51,863	)
Ending balance	841,496

NOTE 13—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-financial assets and liabilities that are recognized or disclosed at fair value on a non-recurring basis.

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.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis:

The Company’s long-term investments and interest rate swap agreements are measured at fair value on a recurring basis. The information in the following paragraphs and tables primarily addresses matters relative to these assets and liabilities.

Cash equivalents:

Cash equivalents, other than credit card receivables, include highly liquid investments with an original maturity of three months or less at acquisition. The Company carries these investments at fair value. As a result, the Company has determined that its cash equivalents in their entirety are classified as a Level 1 measure within the fair value hierarchy.

Collateral investments:

Collateral investments include monies on deposit that are restricted. The Company carries these investments at fair value. As a result, the Company has determined that its collateral investments are classified as a Level 1 measure within the fair value hierarchy.

Deferred compensation assets:

Deferred compensation assets include variable life insurance policies held in a Rabbi Trust. The Company values these policies using observable market data. The inputs used to value the variable life insurance policy fall within Level 2 of the fair value hierarchy.

Derivative liability:

The Company has two interest rate swaps designated as cash flow hedges on $100.0 million of the Company’s Senior Secured Term Loan facility that expires in October 2018. The Company values these swaps using observable market data to discount projected cash flows and for credit risk adjustments. The inputs used to value derivatives fall within Level 2 of the fair value hierarchy.

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

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(dollar amounts in thousands)	Fair Value at		Fair Value Measurements Using Inputs Considered as
Description	November 2, 2013		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	55,798	$	55,798	$	—	$	—
Collateral investments (1)	19,929		19,929		—		—
Deferred compensation assets (1)	4,205		—		4,205		—
Derivative asset (1)	543		—		543		—

(dollar amounts in thousands)	Fair Value at		Fair Value Measurements Using Inputs Considered as
Description	February 2, 2013		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	59,186	$	59,186	$	—	$	—
Collateral investments (1)	20,929		20,929		—		—
Deferred compensation assets (1)	3,834		—		3,834		—
Liabilities:
Derivative liability (2)	1,567		—		1,567		—

(1) Included in other long-term assets.

(2) Included in other long-term liabilities.

On October 11, 2012, the Company settled its interest rate swap designated as a cash flow hedge on $145.0 million of the Company’s Term Loan prior to its amendment and restatement. The swap was 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 income (loss). The settlement of this swap resulted in an interest charge of $7.5 million, which was previously recorded within accumulated other comprehensive income (loss).

On October 11, 2012, the Company entered into two new interest rate swaps for a notional amount of $50.0 million each that together were designated as a cash flow hedge on the first $100.0 million of the amended and restated Term Loan. The interest rate swaps convert the variable LIBOR portion of the interest payments due on the first $100.0 million of the Term Loan to a fixed rate of 1.855%.

The following represents the impact of fair value accounting for the Company’s derivative liability on its consolidated financial statements:

(dollar amounts in thousands)	Amount of Gain in Other Comprehensive Income (Loss) (Effective Portion)			Earnings Statement Classification	Amount of Loss Recognized in Earnings (Effective Portion) (a)
Thirteen weeks ended November 2, 2013	$	(372	)	Interest expense	$	(158	)
Thirteen weeks ended October 27, 2012	$	(170	)	Interest expense	$	(1,201	)

Thirty-nine weeks ended November 2, 2013	$	1,319		Interest expense	$	(459	)
Thirty-nine weeks ended October 27, 2012	$	1,734		Interest expense	$	(4,540	)

(a) Represents the effective portion of the loss reclassified from accumulated other comprehensive income (loss).

The fair value of the derivative was a $0.5 million asset and a $1.6 million liability as of November 2, 2013 and February 2, 2013, respectively. Of the $2.1 million increase in the fair value during the thirty-nine weeks ended November 2, 2013, $1.3 million, net of tax, was recorded to accumulated other comprehensive income (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 3 measures under the fair value hierarchy. Measurements of assets held and used are discussed in Note 14, “Impairments”.

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NOTE 14—IMPAIRMENTS

During the third quarter of fiscal 2013, the Company recorded a $2.0 million impairment charge related to 10 stores classified as held and used. The impairment charge includes $0.9 million for three owned store locations which will be closed and marketed for sale before the end of fiscal 2013. As the Company continues to operate these stores into the fourth quarter of fiscal 2013, the related assets are classified as “held for use” at November 2, 2013. Of the $2.0 million impairment charge, $0.9 million was charged to costs of merchandise sales, and $1.1 million was charged to costs of service revenue. In the third quarter of fiscal 2012, the Company recorded an $8.8 million impairment charge related to 35 stores classified as held and used. Of the $8.8 million impairment charge, $4.2 million was charged to costs of merchandise sales, and $4.6 million was charged to costs of service revenue. In both periods, the Company used a probability-weighted approach and estimates of expected future cash flows to determine the fair value of these stores. Discount and growth rate assumptions were derived from current economic conditions, management’s expectations and projected trends of current operating results. The remaining fair value of the impaired stores is approximately $2.0 million as of November 2, 2013 and is classified as a Level 2 or 3 measure within the fair value hierarchy.

NOTE 15—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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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 third quarter and first nine months of fiscal 2013 and 2012 and significant developments affecting our financial condition as of November 2, 2013. 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 February 2, 2013.

Introduction

The Pep Boys—Manny, Moe & Jack and subsidiaries (the “Company”) has been the best place to shop and care for your car since it began operations in 1921. Approximately 20,000 associates are focused on delivering the best customer service in the automotive aftermarket to our customers across our 750+ locations throughout the United States and Puerto Rico. Pep Boys satisfies all of a customer’s automotive needs through our unique offering of service, tires, parts and accessories.

Our stores are organized into a hub and spoke network consisting of Supercenters and Service & Tire Centers. Supercenters average approximately 20,000 square feet (our new Supercenter format is approximately 14,000 square feet) and combine do-it-for-me service labor, installed merchandise and tire offerings (“DIFM”) with do-it-yourself parts and accessories (“DIY”). Most of our Supercenters also have a commercial sales program that delivers parts, tires and equipment to automotive repair shops and dealers. Service & Tire Centers, which average approximately 5,000 square feet, provide DIFM services in neighborhood locations that are conveniently located where our customers live or work. Service & Tire Centers are designed to capture market share and leverage our existing Supercenters and support infrastructure. We also operate a handful of legacy DIY only Pep Express stores.

In the first nine months of 2013, we opened or acquired 32 Service & Tire Centers and opened six Supercenters. We also closed two Service & Tire Centers and one Supercenter. In the third quarter of 2013, we acquired 18 Service & Tire Centers located in Southern California. As of November 2, 2013, we operated 572 Supercenters, 215 Service & Tire Centers and six Pep Express stores located in 35 states and Puerto Rico.

EXECUTIVE SUMMARY

Net earnings for the third quarter of 2013 were $1.0 million, or $0.02 per share, as compared to a net loss of $6.8 million, or $0.13 per share, for the third quarter of 2012. Current period net earnings included, on a pre-tax basis, a $2.0 million asset impairment charge and a $0.6 million severance charge. The prior year period included, on a pre-tax basis, debt refinancing expense of $11.2 million and an asset impairment charge of $8.8 million.

Total revenues decreased for the third quarter of 2013 by 0.5%, or $2.6 million, as compared to the third quarter of 2012 due to a 2.8% decrease in comparable store sales which was mostly offset by the contribution from our non-comparable store locations. The decline in comparable store sales (sales generated by locations in operation during the same period of the prior year) was comprised of a 3.6% decrease in comparable store merchandise sales (primarily tires), which was partially offset by a 0.5% increase in comparable store service revenues.

We believe that the industry fundamentals of increasing vehicle complexity and customer preference for DIFM remain solid over the long-term resulting in consistent demand for maintenance and repair services. Consistent with this long-term trend, we have adopted a long-term strategy of growing our automotive service business, while maintaining our DIY customer base by offering the newest and broadest product assortment in the automotive aftermarket.

In the short-term, however, various factors within the economy affect both our customers and our industry, including the impact of the recent recession, continued high unemployment/underemployment and the restoration of payroll taxes back to previous levels. Another macroeconomic factor affecting our customers and our industry is gasoline prices. Gasoline prices have not only increased to historical highs in recent years, but have also experienced significant spikes in prices during each year. We believe that these gasoline price trends challenge our customers’ spending relative to discretionary and deferrable purchases. In addition, gasoline prices impact miles driven which, in turn, impact sales of our services and non-discretionary products. Recently, gasoline prices have been declining which should increase miles driven. However, given the nature of these macroeconomic factors, we cannot predict whether or for how long these trends may continue, nor can we predict to what degree these trends will affect us in the future.

Our primary response to fluctuations in customer demand is to adjust our product assortment, store staffing and advertising messages. We work continuously to make it easy for customers to choose us to do it for them and to expand our online efforts to make

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Pep Boys the most convenient place to shop for all of their automotive needs. Our more focused customer-centered strategy to ensure that Pep Boys is the best place to shop and care for your car is beginning to take hold. Through the first nine months of fiscal 2013, it has led to increased customer traffic in our service center line of business. We are optimistic that our efforts to build long lasting relationships with all of our customers, along with offering solutions for all of their automotive needs will yield consistent sales growth in all lines of business.

RESULTS OF OPERATIONS

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

Analysis of Statement of Operations

Thirteen weeks ended November 2, 2013 vs. Thirteen weeks ended October 27, 2012

The following table presents for the periods indicated certain items in the consolidated statements of operations and comprehensive income (loss) 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	November 2, 2013 (Fiscal 2013)		October 27, 2012 (Fiscal 2012)		Favorable (Unfavorable)

Merchandise sales	77.8	%	78.7	%	(1.7	)%
Service revenue (1)	22.2		21.3		3.9
Total revenues	100.0		100.0		(0.5	)
Costs of merchandise sales (2)	67.8	(3)	71.0	(3)	6.0
Costs of service revenue (2)	103.6	(3)	100.4	(3)	(7.2	)
Total costs of revenues	75.8		77.2		2.4
Gross profit from merchandise sales	32.2	(3)	29.1	(3)	8.9
Gross loss from service revenue	(3.6	)(3)	(0.4	)(3)	(742.8	)
Total gross profit	24.2		22.8		5.8
Selling, general and administrative expenses	22.7		22.0		(2.7	)
Net loss from dispositions of assets	—		—		69.5
Operating profit	1.5		0.7		101.5
Merger termination fees, net	—		—		100.0
Other income	0.1		0.1		(20.1	)
Interest expense	0.7		3.4		78.6
Earnings (loss) from continuing operations before income taxes	0.9		(2.5	)	135.4
Income tax expense (benefit)	77.6	(4)	47.5	(4)	(157.9	)
Earnings (loss) from continuing operations	0.2		(1.3	)	115.1
Discontinued operations, net of tax	—		—		22.7
Net earnings (loss)	0.2		(1.3	)	114.2

(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 (loss) from continuing operations before income taxes.

Total revenues for the third quarter of 2013 decreased by 0.5%, or $2.6 million, to $507.0 million from $509.6 million in the third quarter of 2012. Comparable store sales for the third quarter of 2013 decreased 2.8% as compared to the third quarter of 2012. This decrease in comparable store sales consisted of a 0.5% increase in comparable store service revenue and a 3.6% decrease in comparable store merchandise sales, primarily tires. While our total revenues 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 $11.4 million of revenues in the third quarter of 2013 as compared to the third quarter of 2012.

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Total merchandise sales for the third quarter of 2013 decreased 1.7%, or $6.8 million, to $394.3 million from $401.1 million for the third quarter of 2012. Comparable store merchandise sales decreased by 3.6%, or $14.5 million, partially offset by a $7.8 million contribution from our non-comparable store locations. Comparable store merchandise sales decreased primarily due to lower tire sales. Excluding the impact of tires sold through our service business, comparable store merchandise sales declined by 1.2%. Merchandise sold through our retail business declined by 3.1% which was mostly offset by a 4.6% increase in non-tire merchandise sold through our service business. For the retail business and our tire category, we believe that the difficult macroeconomic conditions continued to impact our customers and led to comparable store customer count declines. In our service business (excluding tires), comparable store customer counts increased due to the strength of our repair and maintenance service offerings and the consistent promotion of oil changes. The promotion of these oil changes is designed to attract new service customers to Pep Boys to introduce them to our full service capabilities in order to satisfy their future needs.

Total service revenue for the third quarter of 2013 increased 3.9%, or $4.2 million, to $112.7 million from $108.5 million for the third quarter of 2012 primarily due to a $3.6 million contribution from our non-comparable store locations combined with a slight increase in comparable store revenue.

Total gross profit for the third quarter of 2013 increased by $6.8 million, or 5.8%, to $122.8 million from $116.0 million for the third quarter of 2012. Total gross profit margin increased to 24.2% for the third quarter of 2013 from 22.8% for the third quarter of 2012. Excluding impairment charges of $2.0 million and $8.8 million in the third quarter of 2013 and 2012, respectively, total gross profit margin improved by 10 basis points period over period. Improved product gross margins of 240 basis points were mostly offset by higher payroll and related expenses of 180 basis points and higher store occupancy cost of 40 basis points. The increase in product gross margins was primarily due to improved tire margins driven by reduction in costs, increased retail and service product (non-tire) margins related to increased selling prices and a shift in sales mix to higher margin products.

Gross profit from merchandise sales for the third quarter of 2013 increased by $10.4 million, or 8.9%, to $126.9 million from $116.5 million for the third quarter of 2012. Gross profit margin from merchandise sales increased to 32.2% for the third quarter of 2013 from 29.1% for the third quarter of 2012. Excluding impairment charges of $0.9 million and $4.2 million in the third quarter of 2013 and 2012, respectively, gross profit margin from merchandise sales increased by 230 basis points period over period. The increase in gross profit margin was primarily due to higher product gross margins (significantly improved tire margins, higher retail and non-tire service merchandise margins and shift in sales mix to higher margin products).

Gross margin loss from service revenue for the third quarter of 2013 widened by $3.5 million to a loss of $4.0 million from a loss of $0.5 million for the third quarter of 2012. Gross margin loss from service revenue widened to 3.6% for the third quarter of 2013 from 0.4% for the prior year quarter. In accordance with GAAP, service revenue is limited to labor sales (excludes any revenue from installed parts and materials). Costs of service revenue include the fully loaded service center payroll and related employee benefits, and service center occupancy costs (rent, utilities and building maintenance). Excluding impairment charges of $1.2 million and $4.6 million in the third quarter of 2013 and 2012, respectively, gross margin from service revenue decreased by 640 basis points period over period. Excluding the impact of Service & Tire Centers (which reduced margins by 865 basis points and 733 basis points in 2013 and 2012, respectively) and the impairment charges, gross profit from service revenue decreased to 6.1% for the third quarter of 2013 from 11.1% for the third quarter of 2012. This decrease in gross profit of 500 basis points was primarily due to higher payroll and related expense of 370 basis points and higher occupancy costs of 160 basis points (depreciation).

Selling, general and administrative expenses as a percentage of total revenues for the third quarter of 2013 increased to 22.7% from 22.0% for the third quarter of 2012. Selling, general and administrative expenses increased $3.1 million, or 2.7%, to $115.1 million in the third quarter of 2013 from $112.0 million in the prior year quarter primarily due to an increase in severance payments of $0.6 million, an increase in store selling expenses due to store growth of $0.3 million, higher credit card fees of $0.3 million and higher depreciation for ecommerce software of $0.6 million. In addition, the prior year third quarter included the reversal of $0.9 million of compensation expense related to previously issued performance based stock grants that were not expected to meet performance metrics for vesting.

Interest expense for the third quarter of 2013 was $3.6 million, a decrease of $13.4 million, from $17.1 million reported for the third quarter of 2012. Excluding refinancing costs of $11.2 million in the prior year third quarter, interest declined by $2.2 million and reflects a lower interest rate and reduced total debt outstanding. Subsequent to quarter end we further amended our Senior Secured Term Loan by reducing the interest rate by 75 basis points which will result in annual savings of approximately $1.5 million (see Note 6 to the Consolidated Financial Statements).

Our income tax expense for the third quarter of 2013 was $3.5 million, or an effective rate of 77.6%, as compared to a benefit of $6.1 million, or an effective rate of 47.5%, for the third quarter of 2012. 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.

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As a result of the foregoing, we reported net earnings of $1.0 million for the third quarter of 2013 as compared to a net loss of $6.8 million for the third quarter of 2012. Our diluted earnings (loss) per share were $0.02 and $(0.13) for the third quarter of 2013 and 2012, respectively.

Thirty-nine weeks ended November 2, 2013 vs. Thirty-nine weeks ended October 27, 2012

	Percentage of Total Revenues				Percentage Change
Thirty-nine weeks ended	November 2, 2013 (Fiscal 2013)		October 27, 2012 (Fiscal 2012)		Favorable (Unfavorable)

Merchandise sales	77.9	%	78.7	%	(0.2	)%
Service revenue (1)	22.1		21.3		4.2
Total revenues	100.0		100.0		0.7
Costs of merchandise sales (2)	68.5	(3)	70.4	(3)	2.9
Costs of service revenue (2)	100.7	(3)	96.7	(3)	(8.5	)
Total costs of revenues	75.6		76.0		(0.2	)
Gross profit from merchandise sales	31.5	(3)	29.6	(3)	6.2
Gross (loss) profit from service revenue	(0.7	)(3)	3.3	(3)	(121.2	)
Total gross profit	24.4		24.0		2.4
Selling, general and administrative expenses	22.6		22.2		(2.4	)
Net loss from dispositions of assets	—		—		8.0
Operating profit	1.8		1.8		3.1
Merger termination fees, net	—		2.7		(100.0	)
Non-operating income	0.1		0.1		(17.0	)
Interest expense	0.7		1.9		63.7
Earnings from continuing operations before income taxes	1.2		2.7		(54.4	)
Income tax expense	46.8	(4)	35.4	(4)	39.6
Earnings from continuing operations	0.7		1.8		(62.4	)
Discontinued operations, net of tax	—		—		2.0
Net earnings	0.7		1.8		(62.7	)

(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.

(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 nine months of 2013 increased by $11.0 million to $1,570.8 million from $1,559.9 million for the first nine months of 2012, while comparable store sales for the first nine months of 2013 decreased by $15.7 million, or 1.0%, as compared to the first nine months of 2012. The decrease in comparable store sales consisted of a decrease of 1.7% in comparable store merchandise sales partially offset by an increase of 1.6% in comparable store service revenues. The decrease in total comparable store sales was primarily due to lower tire sales. Excluding tires sold through our service business, total comparable store sales increased by 0.2%. While our total revenues were favorably impacted by the opening of the 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 $26.7 million of total revenue in the first nine months of 2013 as compared to the prior year period.

Total gross profit for the first nine months of 2013 increased by $9.1 million, or 2.4%, to $383.4 million from $374.3 million for the first nine months of 2012. Total gross profit margin increased to 24.4% for the first nine months of 2013 from 24.0% for the first nine months of 2012. Excluding impairment charges of $4.9 million and $8.8 million in the first nine months of 2013 and 2012, respectively, total gross profit margin increased by 20 basis points period over period. The increase in total gross profit margin was primarily due to higher product gross margins of 160 basis points, partially offset by higher payroll and related expenses of 110 basis

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points, and higher occupancy costs of 30 basis points.

Gross profit from merchandise sales for the first nine months of 2013 increased by $22.4 million, or 6.2%, to $385.7 million from $363.3 million for the first nine months of 2012. Gross profit margin from merchandise sales increased to 31.5% for the first nine months of 2013 from 29.6% for the prior year period. Excluding the impairment charges of $1.4 million and $4.2 million in the first nine months of 2013 and 2012, respectively, gross profit margin from merchandise sales increased by 170 basis points period over period. The increase in gross profit margin from merchandise sales was due to higher product gross margins in our service business primarily due to the significant improvement in tire margins.

Gross (loss) profit from service revenue for the first nine months of 2013 decreased by $13.3 million to a loss of $2.3 million from a profit of $11.0 million for the first nine months of 2012. Gross margin loss from service revenue for the first nine months of 2013 decreased to a loss of 0.7% from a gross profit of 3.3% for the first nine months of 2012. In accordance with GAAP, service revenue is limited to labor sales (excludes any revenue from installed parts and materials). Costs of service revenues include the fully loaded service center payroll and related employee benefits and service center occupancy costs. Excluding the impairment charges of $3.5 million and $4.6 million in the first nine months of 2013 and 2012, respectively, gross profit margin from service revenue decreased by 430 basis points period over period. The decrease in service revenue gross profit margin was primarily due to the growth of our Service & Tire Centers, which lowered margins by 760 and 710 basis points in the first nine months of 2013 and 2012, respectively. Excluding the impact of Service & Tire Centers and the impairment charges described above, gross profit from service revenue decreased to 8.0% for the first nine months of 2013 from 11.8% for the first nine months of 2012. The decrease in gross profit, exclusive of Service & Tire Centers and impairment charges, was mostly due to increased payroll and related benefit costs combined with higher store occupancy costs (depreciation).

Selling, general and administrative expenses, as a percentage of total revenues for the first nine months of 2013, increased to 22.6% as compared to 22.2% for the first nine months of 2012. Selling, general and administrative expenses increased $8.2 million, or 2.4%, compared to the first nine months of 2012 due to higher short term incentive compensation accruals of $2.4 million, higher store selling expenses due to store growth of $1.5 million, higher legal and professional fees of $1.5 million, higher credit card fees of $1.7 million, increased travel cost of $0.8 million and higher depreciation expense of $1.3 million, partially offset by lower retail store payroll expense of $2.4 million and lower media expense of $1.2 million. In addition, the prior year third quarter included the reversal of $0.9 million of compensation expense related to previously issued performance based stock grants which were not expected to meet performance metrics for vesting.

In the second quarter of 2012, we terminated our proposed merger and recorded the settlement proceeds, net of merger related costs of $42.8 million in the consolidated statement of operations and comprehensive income.

Interest expense for the first nine months of 2013 was $10.9 million, a decrease of $19.1 million compared to the $30.0 million reported for the first nine months of 2012. Excluding the refinancing costs of $11.2 million in the prior year third quarter, interest declined by $7.9 million and reflects a lower interest rate and reduced total debt outstanding. Subsequent to quarter end we further amended our Senior Secured Term Loan by reducing the interest rate by 75 basis points which will result in annual savings of approximately $1.5 million (see Note 6 to the Consolidated Financial Statements).

Our income tax expense for the first nine months of 2013 was $9.1 million, or an effective rate of 46.8%, as compared to an expense of $15.0 million, or an effective rate of 35.4%, for the first nine months of 2012. The annual rate is dependent 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 $10.2 million for the first nine months of 2013 as compared to net earnings of $27.4 million in the prior year period. Our diluted earnings per share were $0.19 per share as compared to $0.51 per share in the prior year period.

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 Service or Retail area of the business. We believe that operation in both the Service and Retail areas of the business positively differentiates us from 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. Our Service Center business competes in the Service area of the industry. We compete in the Retail area of the business through our retail sales floor and commercial sales business.

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

	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	November 2,		October 27,		November 2,		October 27,
(Dollar amounts in thousands)	2013		2012		2013		2012

Service Center Revenue (1)	$	273,944	$	271,370	$	841,827	$	816,730
Retail Sales (2)	233,098		238,238		729,008		743,153
Total revenues	$	507,042	$	509,608	$	1,570,835	$	1,559,883

Gross profit from Service Center Revenue (3)	$	54,016	$	51,974	$	167,751	$	161,729
Gross profit from Retail Sales (3)	68,796		64,066		215,610		212,564
Total gross profit	$	122,812	$	116,040	$	383,361	$	374,293

(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.

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 $62.9 million in the first nine months of 2013, as compared to $116.2 million in the prior year period. The $53.3 million decrease from the prior year period was due to a decline in net earnings, net of non-cash adjustments, of $35.6 million and in operating assets and liabilities of $17.8 million. The decline in net earnings, net of non-cash adjustments, was primarily due to the $42.8 million of net merger termination fees recorded in the second quarter of 2012. The change in operating assets and liabilities was primarily due to an unfavorable change in inventory, net of accounts payable, of $10.3 million and an unfavorable change in accrued expenses and other current assets of $6.5 million.

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 used in accounts payable was $7.3 million in 2013 as compared to cash generated from accounts payable of $55.0 million for 2012. The decline was due to the reduction in inventory purchases in the current year as compared to the prior year. The ratio of accounts payable, including our trade payable program, to inventory was 58.4% as of November 2, 2013, 61.5% as of February 2, 2013, and 60.5% as of October 27, 2012. The $23.7 million increase in inventory from February 2, 2013 was primarily due to investment in our new stores, strategic initiatives like our speed shops and Superhub concepts, and new product offerings.

Cash used in investing activities was $48.1 million in the first nine months of 2013 as compared to $36.7 million in the prior year period. Capital expenditures were $38.3 million and $36.8 million in the first nine months of 2013 and 2012, respectively. In addition, in the third quarter of fiscal 2013 the Company acquired 18 Service & Tire Centers in Southern California for $10.7 million. Capital expenditures for the first nine months of 2013, in addition to our regularly scheduled store and distribution center improvements, and information technology enhancements, included the addition of 14 new Service & Tire Centers and six new Supercenters. Capital expenditures for the first nine months of 2012 included the addition of ten new Service & Tire Centers and two new Supercenters. During the first nine months of 2013, we received the return of $1.0 million of previously posted collateral for retained liabilities related to existing insurance programs.

Our targeted capital expenditures for fiscal 2013 are $65 million, which includes the acquisition of 18 Service & Tire Centers in Southern California in the third quarter of fiscal 2013. Our fiscal 2013 capital expenditures also includes the addition of approximately 29 new locations, the conversion of 11 Supercenters into Superhubs, the addition of 63 Speed Shops to existing Supercenters 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 revolving credit agreement.

In the first nine months of 2013, cash used in financing activities was $18.2 million, as compared to cash used in financing activities of $59.1 million in the prior year period. The cash used in financing activities in the first nine months of 2013 was primarily related to principal payments of $1.5 million on our Term Loan and common stock repurchases of $2.8 million. In addition, we had

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net payments under our trade payable program of $15.0 million in the first nine months of 2013 as compared to net borrowings of $40.5 million in the corresponding period of the prior year. 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. In the second quarter of 2013, we increased the availability under our trade payable program from $175.0 million to $200.0 million. As of November 2, 2013 and February 2, 2013, we had an outstanding balance of $134.7 million and $149.7 million, respectively (classified as trade payable program liability on the consolidated balance sheet). In the prior year third quarter the Company refinanced its debt which resulted in reducing the total debt outstanding by $95.1 million.

We anticipate that cash on hand, cash generated by operating activities, and excess availability under our existing revolving credit agreement will exceed our expected cash requirements in fiscal 2013. As of November 2, 2013, we had zero drawn on our revolving credit agreement and maintained undrawn availability of $152.7 million.

Our working capital was $140.0 million and $126.5 million as of November 2, 2013 and February 2, 2013, respectively. Our total debt, net of cash on hand, as a percentage of our net capitalization, was 20.6% and 20.8% as of November 2, 2013 and February 2, 2013, respectively.

Contractual Obligations

During the current fiscal year, in connection with the acquisitions discussed in Note 3, the Company assumed additional lease obligations totaling $17.4 million over an average of 10 years. There have been no other significant developments with respect to our contractual obligations since February 2, 2013. For further information on 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 February 2, 2013.

NEW ACCOUNTING STANDARDS

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

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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 February 2, 2013.

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,” “targets,” “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 November 2, 2013 we had no borrowings under this facility. Additionally, we have a $200.0 million Term Loan that bears interest at LIBOR, with a floor of 1.25%, plus 3.75%. The Term Loan was subsequently amended on November 12, 2013 to reduce the interest rate payable by the Company from LIBOR, subject to a 1.25% floor, plus 3.75% to LIBOR, subject to a 1.25% floor, plus 3.00%.

We have two interest rate swaps for a notional amount of $50.0 million each, which are designated as a cash flow hedge on the first $100.0 million of our Term Loan. We record the effective portion of the change in fair value through accumulated other comprehensive income (loss).

The fair value of the derivative was a $0.5 million asset and a $1.6 million payable at November 2, 2013 and February 2, 2013, respectively. Of the $2.1 million increase in the fair value during the thirty-nine weeks ended November 2, 2013, $1.3 million, net of tax, was recorded to accumulated other comprehensive income (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.

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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.

PART II - OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

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 February 2, 2013.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On December 12, 2012, the Company’s Board of Directors authorized a program to repurchase up to $50.0 million of the Company’s common stock to be made from time to time in the open market or in privately negotiated transactions, with no expiration date. The following table sets forth information with respect to repurchases of the Company’s common stock from August 4, 2013 through November 2, 2013:

				Total Number of	Maximum Dollar
				Shares Purchased as	Value of Shares that
	Total Number	Average		Part of Publicly	May Yet be
	of Shares	Price Paid		Announced Plans or	Purchased Under the
Period	Purchased	per Share (1)		Program	Plans or Program (2)
August 4, 2013 to September 3, 2013	86,300	$	11.48	86,300	$	47,425,896
September 4, 2013 to October 3, 2013	44,101	11.64		44,101	46,913,608
October 3, 2013 to November 2, 2013	—	—		—	46,913,608
Total	130,401	$	11.51	130,401	$	46,913,608

(1) All repurchases referenced in this table were made on the open market at prevailing market rates plus related expenses under the Company’s stock repurchase program.

(2) Excludes expenses.

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

10.1		The Pep Boys Savings Plan — Amendment 2013-1

10.2		The Pep Boys Savings Plan — Puerto Rico — Amendment 2013-1

10.3		First Amendment to the Second Amended and Restated Credit Agreement

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		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

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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: December 11, 2013	by:	/s/ David R. Stern

	David R. Stern
	Executive Vice President - Chief Financial Officer (Principal Financial Officer)

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INDEX TO EXHIBITS

10.1		The Pep Boys Savings Plan — Amendment 2013-1

10.2		The Pep Boys Savings Plan — Puerto Rico — Amendment 2013-1

10.3		First Amendment to the Second Amended and Restated Credit Agreement

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		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

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Pep Boys Manny Moe & Jack (PBY) Inactive 10-Q2013 Q3 Quarterly report

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