Pep Boys 2013 Annual Report Download - page 126

Download and view the complete annual report

Please find page 126 of the 2013 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 164

  • 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
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 1, 2014, February 2, 2013 and January 28, 2012
NOTE 6—LEASE AND OTHER COMMITMENTS
In fiscal 2013, in connection with the acquisitions discussed in Note 2, the Company assumed
additional lease obligations totaling $17.4 million over an average of 10 years. 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
2014 ................................................... $111,025
2015 ................................................... 103,824
2016 ................................................... 95,989
2017 ................................................... 88,129
2018 ................................................... 77,120
Thereafter ............................................... 294,535
Aggregate minimum lease payments ............................ $770,622
Rental expense incurred for operating leases in fiscal 2013, 2012, and 2011 was $102.3 million,
$97.9 million and $91.6 million, respectively, and are recorded primarily in cost of revenues. The
deferred gain for all sale leaseback transactions is being recognized as a reduction of 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
54