Pep Boys 2011 Annual Report Download - page 100

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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 6—LEASE AND OTHER COMMITMENTS (Continued)
The aggregate minimum rental payments for all leases having initial terms of more than one year
are as follows:
(dollar amounts in thousands) Operating
Fiscal Year Leases
2012 ................................................... $ 98,479
2013 ................................................... 94,176
2014 ................................................... 89,753
2015 ................................................... 82,831
2016 ................................................... 75,626
Thereafter ............................................... 372,123
Aggregate minimum lease payments ............................ $812,988
Rental expenses incurred for operating leases in fiscal 2011, 2010, and 2009 were $91.6 million,
$79.7 million and $75.3 million, respectively, and are recorded primarily in cost of revenues. The
deferred gain for all sale leaseback transactions is being recognized in costs of merchandise sales and
costs of service revenues over the minimum term of these leases.
NOTE 7—ASSET RETIREMENT OBLIGATIONS
The Company records asset retirement obligations as incurred and when reasonably estimable,
including obligations for which the timing and/or method of settlement are conditional on a future
event that may or may not be within the control of the Company. The obligation principally represents
the removal of leasehold improvements from stores upon termination of store leases. The obligations
are recorded as liabilities at fair value using discounted cash flows and are accreted over the lease
term. Costs associated with the obligations are capitalized and amortized over the estimated remaining
useful life of the asset.
The Company has recorded a liability pertaining to the asset retirement obligation in other
long-term liabilities on its consolidated balance sheet. Changes in assumptions reflect favorable
experience with the rate of occurrence of obligations and expected settlement dates. The liability for
asset retirement obligations activity from January 30, 2010 through January 28, 2012 is as follows:
(dollar amounts in thousands)
Asset retirement obligation at January 30, 2010 ..................... $6,724
Change in assumptions ...................................... (1,192)
Settlements ............................................... (120)
Accretion expense.......................................... 194
Asset retirement obligation at January 29, 2011 ..................... 5,606
Additions ................................................ 206
Change in assumptions ...................................... (199)
Settlements............................................... (61)
Accretion expense.......................................... 323
Asset retirement obligation at January 28, 2012 ..................... $5,875
56