Pep Boys 2005 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2005 Pep Boys annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 93

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93

36
THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 28, 2006, January 29, 2005 and January 31, 2004
(dollar amounts in thousands, except share data)
The fair value of each option granted during fiscal years 2005, 2004 and 2003 is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average assumptions:
Year ended
January 28,
2006
January 29,
2005
January 31,
2004
Dividend yield 1.77% 1.67% 1.57%
Expected volatility 41% 41% 41%
Risk-free interest rate range:
High 4.6% 4.8% 4.6%
Low 3.5% 2.0% 1.5%
Ranges of expected lives in years 3-8 3-8 4-8
COMPREHENSIVE LOSS Comprehensive loss is reported in accordance with SFAS No. 130, “Reporting
Comprehensive Income.” Other comprehensive loss includes minimum pension liability and fair market value of cash flow
hedge.
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company reports
derivatives and hedging activities in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended by SFAS No. 137, SFAS No. 138 and SFAS No. 149. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those instruments at fair value.
SEGMENT INFORMATION The Company reports segment information in accordance with SFAS No. 131, “Disclosure
about Segments of an Enterprise and Related Information.” The Company operates in one industry, the automotive aftermarket.
In accordance with SFAS No. 131, the Company aggregates all of its stores and reports one operating segment. Sales by major
product categories are as follows:
Year ended
Jan. 28,
2006
Jan. 29,
2005
Jan. 31,
2004
Parts and Accessories $ 1,548,206 $ 1,537,382 $ 1,390,082
Tires 303,861 323,246 335,928
Total Merchandise Sales 1,852,067 1,860,628 1,726,010
Service 383,159 409,346 405,309
Total Revenues $ 2,235,226 $ 2,269,974 $ 2,131,319
The Company’s product lines include: tires (not stocked at PEP BOYS EXPRESS stores); batteries; new and remanufactured
parts for domestic and import vehicles; chemicals and maintenance items; fashion, electronic, and performance accessories;
personal transportation merchandise; and select non-automotive merchandise that appeals to automotive “DIY” customers,
such as generators, power tools and canopies. Service consists of the labor charge for installing merchandise or maintaining
or repairing vehicles.
RECENT ACCOUNTING STANDARDS
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets- an amendment of FASB
Statement No. 140” (SFAS 156). SFAS 156 requires an entity to recognize a servicing asset or servicing liability each time it
undertakes an obligation to service a financial asset by entering into a servicing contract in specific situations. Additionally,
the servicing asset or servicing liability shall be initially measured at fair value, if practicable. SFAS 156 is effective as of an
entity’s first fiscal year beginning after September 15, 2006. Early adoption is permitted as of the beginning of an entity’s
fiscal year, provided the entity has not yet issued financial statements, including interim financial statements, for any period
of that fiscal year. We do not expect the adoption of this statement to have a material impact on our financial condition, results
of operations or cash flows.