Pep Boys 2011 Annual Report Download - page 120

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 19—SUBSEQUENT EVENT (Continued)
record a charge for the then unrecognized pre-tax compensation cost (see Note 14, ‘‘Equity
Compensation Plans’’).
Consummation of the merger is subject to customary conditions, including without limitation (i) the
adoption of the Merger Agreement by the Company’s shareholders, (ii) the expiration or early
termination of the waiting period applicable to the consummation of the Merger under the Hart-Scott-
Rodino Antitrust Improvements Act of 1974, as amended (which has been received), (iii) the absence of
any law or order that is in effect and restrains, enjoins or otherwise prohibits the merger and (iv) the
accuracy of the representations and warranties of the parties and compliance by the parties with their
respective obligations under the Merger Agreement (subject to customary materiality qualifiers).
The Merger Agreement contains certain termination rights. Upon termination of the Merger
Agreement by the Company under specified circumstances, the Company will be required to pay the
purchaser a termination fee of $25.0 million. If the Purchaser fails to consummate the transactions
contemplated by the Merger Agreement on or prior to the date that is five business days after the
satisfaction or waiver of all the conditions to the closing specified in the Merger Agreement, the
purchaser will be required to pay the Company a reverse termination fee of $50.0 million. The merger
is expected to close during the second quarter of fiscal year 2012.
NOTE 20—SUPPLEMENTAL GUARANTOR INFORMATION
The Company’s Notes are fully and unconditionally and joint and severally guaranteed by certain
of the Company’s direct and indirectly wholly-owned subsidiaries—namely, The Pep Boys Manny
Moe & Jack of California, The Pep Boys—Manny Moe & Jack of Delaware, Inc. (the ‘‘Pep Boys of
Delaware’’); Pep Boys—Manny Moe & Jack of Puerto Rico, Inc.; Tire Stores Group Holding
Corporation (on and after May 5, 2011); Big 10 Tire Stores, LLC (on and after May 5, 2011) and PBY
Corporation (at and prior to January 29, 2011), (collectively, the ‘‘Subsidiary Guarantors’’). The Notes
are not guaranteed by the Company’s wholly owned subsidiary, Colchester Insurance Company.
The following condensed consolidating information presents, in separate columns, the condensed
consolidating balance sheets as of January 28, 2012 and January 29, 2011 and the related condensed
consolidating statements of operations and condensed consolidating statements of cash flows for fiscal
2011, 2010 and 2009 for (i) the Company (‘‘Pep Boys’’) on a parent only basis, with its investment in
subsidiaries recorded under the equity method, (ii) the Subsidiary Guarantors on a combined basis,
(iii) the subsidiary of the Company that does not guarantee the Notes, and (iv) the Company on a
consolidated basis. The Company made an immaterial adjustment to the January 29, 2011 amounts
reported for cash, intercompany receivables and intercompany liabilities to account for certain
intercompany borrowing activity between Pep Boys and a subsidiary guarantor.
On January 29, 2011, The Pep Boys—Manny, Moe & Jack of Pennsylvania made a capital
contribution of $264.0 million to Pep Boys of Delaware consisting of intercompany receivables due
from the latter. This contribution resulted in an increase in the Pep Boys’ investment in subsidiaries
and the Subsidiary Guarantors’ stockholders’ equity. On January 30, 2011, the Company merged PBY
Corporation into Pep Boys of Delaware and accordingly, The Pep Boys Manny Moe & Jack of
California became the wholly owned subsidiary of Pep Boys of Delaware. This merger did not affect
the presentation of the following condensed consolidating information.
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