Pep Boys 2014 Annual Report Download - page 36

Other Contractual Obligations
We have a trade payable program which is funded by various bank participants who have the
ability, but not the obligation, to purchase account receivables owed by us directly from our suppliers.
In fiscal 2013, we increased the total availability under the program from $175.0 million to
$200.0 million. There was an outstanding balance of $140.9 million and $129.8 million under this
program as of January 31, 2015 and February 1, 2014, respectively.
We have letter of credit arrangements in connection with our risk management and import
merchandising programs. We had $8.1 million and $13.9 million of outstanding commercial letters of
credit as of February 1, 2014 and February 2, 2013, respectively. We were contingently liable for
$27.0 million and $30.9 million in outstanding standby letters of credit as of January 31, 2015 and
February 1, 2014, respectively.
We are also contingently liable for surety bonds in the amount of approximately $12.8 million and
$10.6 million as of January 31, 2015 and February 1, 2014, respectively. The surety bonds guarantee
certain of our payments (for example utilities, easement repairs, licensing requirements and customs
fees).
Off-balance Sheet Arrangements
We lease certain property and equipment under operating leases and lease financings which
contain renewal and escalation clauses, step rent provisions, capital improvements funding and other
lease concessions. These provisions are considered in the calculation of our minimum lease payments
which are recognized as expense on a straight-line basis over the applicable lease term. Any lease
payments that are based upon an existing index or rate are included in our minimum lease payment
calculations. Total operating lease commitments as of January 31, 2015 were $746.2 million.
Pension and Retirement Plans
On January 31, 2014, we amended our non-qualified Supplemental Executive Retirement Plan (the
Account Plan’’) to eliminate the retirement plan contributions that have historically been made by the
Company effective for calendar year 2015. We did not make any contributions to the Account Plan in
fiscal 2014 and our contribution expense for fiscal 2013 and 2012 was $0.8 million and $0.1 million,
respectively.
We have a qualified 401(k) savings plan and a separate savings plan for employees residing in
Puerto Rico, which cover all full-time employees who are at least 18 years of age and have completed
the lesser of (i) six consecutive months of employment and having a minimum of 500 hours of service
and (ii) 12 consecutive months and having a minimum of 1,000 hours of service. We contribute the
lesser of 50% of the first 6% of a participant’s contributions or 3% of the participant’s compensation
under both savings plans. For fiscal 2012, our contributions were conditional upon the achievement of
certain pre-established financial performance goals which were not met in fiscal 2012. Employer
contributions for fiscal 2013 and fiscal 2014 were not conditional on any financial performance goals.
Our savings plans’ contribution expense was $3.2 million and $3.5 million in fiscal 2014 and fiscal 2013
respectively. There was no contribution expense for fiscal 2012.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses
our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation of these financial
statements requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated
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