Pep Boys 2012 Annual Report Download - page 93

Download and view the complete annual report

Please find page 93 of the 2012 Pep Boys annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 131

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2013, January 28, 2012 and January 29, 2011
NOTE 6—LEASE AND OTHER COMMITMENTS (Continued)
Rental expenses incurred for operating leases in fiscal 2012, 2011, and 2010 were $97.9 million,
$91.6 million and $79.7 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 29, 2011 through February 2, 2013 is as follows:
(dollar amounts in thousands)
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
Additions ................................................. 89
Change in assumptions ....................................... (288)
Settlements ............................................... (11)
Accretion expense ........................................... 298
Asset retirement obligation at February 2, 2013 ..................... $5,963
54