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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2008, February 3, 2007 and January 28, 2006
(dollar amounts in thousands, except share data)
aggregates all of its stores and reports one operating and reporting segment. Sales by major product
categories are as follows:
Feb. 2, Feb. 3, Jan. 28,
Year ended 2008 2007 2006
Parts and Accessories ......................... $1,423,891 $1,537,076 $1,531,409
Tires ..................................... 325,687 316,001 299,222
Total Merchandise Sales ....................... 1,749,578 1,853,077 1,830,631
Service Labor ............................... 388,497 390,778 378,343
Total Revenues .............................. $2,138,075 $2,243,855 $2,208,974
SIGNIFICANT SUPPLIERS During fiscal 2007, the Company’s ten largest suppliers accounted
for approximately 43% of the merchandise purchased by the Company. No single supplier accounted
for more than 19% of the Company’s purchases. The Company has no long-term contracts under which
the Company is required to purchase merchandise except for a contract to purchase bulk oil for use in
the Company’s service bays, which expires in 2011. Management believes that the relationships the
Company has established with its suppliers are generally good.
SELF INSURANCE The Company has risk participation arrangements with respect to workers’
compensation, general liability, automobile liability, and other casualty coverages. The Company has a
wholly owned captive insurance subsidiary through which it reinsures this retained exposure. This
subsidiary uses both risk sharing pools and third party insurance to manage this exposure. In addition,
the Company self insures certain employee-related health care benefit liabilities. The Company
maintains stop loss coverage with third party insurers through which it reinsures certain of its casualty
and health care benefit liabilities. The Company records both liabilities and reinsurance receivables
using actuarial methods utilized in the insurance industry based upon our historical claims experience.
RECENT ACCOUNTING STANDARDS
In February 2006, the FASB issued SFAS No. 155, ‘‘Accounting for Certain Hybrid Financial
Instruments—an amendment of FASB Statements No. 133 and 140’’ (SFAS No. 155). SFAS No. 155
simplifies accounting for certain hybrid instruments currently governed by SFAS No. 133, ‘‘Accounting
for Derivative Instruments and Hedging Activities,’’ or SFAS No. 133, by allowing fair value
remeasurement of hybrid instruments that contain an embedded derivative that otherwise would
require bifurcation. SFAS No. 155 is effective for all financial instruments acquired or issued in fiscal
years beginning after September 15, 2006. The Company adopted this standard on February 4, 2007,
which did not affect our consolidated financial statements.
In March 2006, the FASB issued SFAS No. 156, ‘‘Accounting for Servicing of Financial Assets—an
amendment of FASB Statement No. 140’’ (SFAS No. 156). SFAS No. 156 amends SFAS No. 140,
‘‘Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,’’ with
respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS
No. 156 was effective for fiscal years beginning after September 15, 2006. The Company adopted this
standard on February 4, 2007, which did not affect our consolidated financial statements.
46
10-K