Pep Boys 2010 Annual Report Download - page 117

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 29, 2011, January 30, 2010 and January 31, 2009
NOTE 11—STORE CLOSURES AND ASSET IMPAIRMENTS (Continued)
associated with leased properties and employee severance. The following details the reserve activity for
the three years in the period ended January 29, 2011.
Severance and Lease
(dollar amounts in thousands) other costs Expenses Total
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
Accretion of present value of liabilities ....................... — 111 111
Change in assumptions about future sublease income, lease
termination ......................................... — 1,122 1,122
Cash payments ........................................ — (1,095) (1,095)
Balance, January 30, 2010 ................................ — 2,250 2,250
Accretion of present value of liabilities ....................... — 81 81
Change in assumptions about future sublease income, lease
termination ......................................... — 163 163
Cash payments ........................................ — (1,253) (1,253)
Balance, January 29, 2011 ................................ $ — $1,241 $ 1,241
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 is estimated using market appraisals for comparable properties and is classified as a
Level 2 (as described in Note 16) 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 29, January 30,
(dollar amounts in thousands) 2011 2010
Land ......................................... $190 $ 2,980
Buildings and improvements ........................ 285 5,453
Accumulated depreciation .......................... — (3,995)
Property and equipment—net ....................... $475 $ 4,438
Number of properties ............................. 1 8
During fiscal 2010, the Company sold seven stores for $4.3 million and recorded a net gain of
$0.5 million in earnings from continuing operations. The Company classifies the one remaining
property as held for disposal as it continues to actively market the property at a price the Company
believes reasonable given current market conditions and expects to sell this property within the next
twelve months. In addition, during fiscal 2010, the Company recorded a $0.2 million impairment charge
related to a store classified as held for disposal. The Company lowered its selling price reflecting
declines in the commercial real estate market. Substantially all of this impairment was charged to
merchandise cost of sales.
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