Pep Boys 2009 Annual Report Download - page 121

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 30, 2010, January 31, 2009 and February 2, 2008
(dollar amounts in thousands, except share and per share data)
NOTE 11—STORE CLOSURES AND ASSET IMPAIRMENTS (Continued)
merchandise cost of sales, $673 was charged to service cost of sales and $226 (pretax) was charged to
discontinued operations. For fiscal 2008, $2,779 was charged to merchandise cost of sales, $648 was
charged to service cost of sales and $1,926 (pretax) was charged to discontinued operations
The following details the reserve activity for the three years in the period ended January 30, 2010.
The ending reserve balance includes remaining rent on leases net of sublease income, other contractual
obligations associated with leased properties and employee severance.
Severance and Lease
other costs Expenses Total
Balance, February 3, 2007 ................................ $109 $ 690 $ 799
Store closure charge .................................... 155 2,906 3,061
Accretion of present value of liabilities ....................... — 641 641
Change in assumptions about future sublease income, lease
termination, contractual obligations and severance ............. — (627) (627)
Cash payments ........................................ (97) (36) (133)
Balance, February 2, 2008 ................................ 167 3,574 3,741
Accretion of present value of liabilities ....................... — 300 300
Change in assumptions about future sublease income, lease
termination, contractual obligations and severance ............. (109) 102 (7)
Cash payments ........................................ (58) (1,864) (1,922)
Balance, January 31, 2009 ................................ — 2,112 2,112
Store closure charge .................................... — — —
Accretion of present value of liabilities ....................... — 111 111
Change in assumptions about future sublease income and lease
termination ......................................... — 1,122 1,122
Cash payments ........................................ — (1,095) (1,095)
Balance, January 30, 2010 ................................ $ — $2,250 $ 2,250
A store is classified as ‘‘held for disposal’’ when (i) the Company has committed to a plan to sell,
(ii) the building is vacant and the property is available for sale, (iii) the Company is actively marketing
the property for sale, (iv) the sale price is reasonable in relation to its current fair value and (v) the
Company expects to complete the sale within one year. Assets held for disposal have been valued at
the lower of their carrying amount or their estimated fair value, net of disposal costs. The fair value of
these assets are estimated using market appraisals for comparable properties and are classified as a
Level 2 measure within the fair value hierarchy. No depreciation expense is recognized during the
period the asset is held for disposal. Assets held for disposal follows:
January 30, January 31,
2010 2009
Land ......................................... $2,980 $ 7,332
Buildings and improvements ........................ 5,453 11,265
Accumulated depreciation .......................... (3,995) (5,944)
Property and equipment—net ....................... $4,438 $12,653
Number of properties ............................. 8 13
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