11-K 1 r11k01f.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 11-K (Mark One): X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE -- SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 OR -- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition from to ----------- ----------- Commission file number 1-3381 ------ THE PEP BOYS SAVINGS PLAN ------------------------- (Full title of the plan) The Pep Boys - Manny, Moe & Jack 3111 W. Allegheny Avenue Philadelphia, PA 19132 -------------------------------- (Name of issuer of the securities held pursuant to the plan and the address of its principal executive offices) Registrant's telephone number, including area code (215)430-9000 Notices and communications from the Securities and Exchange Commission relating to this Report should be forwarded to: George Babich President & Chief Financial Officer The Pep Boys - Manny, Moe & Jack 3111 West Allegheny Avenue Philadelphia, PA 19132 2 THE PEP BOYS SAVINGS PLAN ------------------------- TABLE OF CONTENTS ---------------------------------------------------------------------------- PAGE ---- INDEPENDENT AUDITORS' REPORT 3 FINANCIAL STATEMENTS: Statement of Net Assets Available for Benefits As of December 31, 2001 and December 31, 2000 4 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 2001 and December 31, 2000 5 Notes to Financial Statements 6 - 9 SUPPLEMENTAL SCHEDULES: Schedule H, Item 4i - Schedule of Assets Held for Investment Purposes as of December 31, 2001 10 Schedule H, Item 4j - Schedule of Reportable Transactions for the Year Ended December 31, 2001 11 SIGNATURE PAGE 12 EXHIBIT INDEX 13 3 INDEPENDENT AUDITORS' REPORT The Administrative Committee The Pep Boys Savings Plan Philadelphia, Pennsylvania We have audited the accompanying statements of net assets available for benefits of The Pep Boys Savings Plan (the "Plan") as of December 31, 2001 and 2000, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of The Pep Boys Savings Plan as of December 31, 2001 and 2000, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes as of December 31, 2001, and reportable transactions for the year ended December 31, 2001, are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such supplemental schedules are the responsibility of the Plan's management. Such supplemental schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. Philadelphia, Pennsylvania June 24, 2002 4 THE PEP BOYS SAVINGS PLAN ------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000 ------------------------------------------------------------------------------ 2001 2000 ASSETS ------ CASH $ 20,678 $ 17,854 -------------- ----------- INVESTMENTS: AET Stable Capital Fund II 28,379,266 26,318,683 AET Equity Index Fund II 19,797,527 22,849,687 Pep Boys Stock Fund 67,331,818 13,330,772 Invesco Total Return Fund (Investor Class) 5,916,808 5,727,130 AXP Bond Fund (Class Y) 1,461,647 634,260 AXP Small Company Index Fund (Class Y) 2,106,046 1,611,372 Templeton Foreign Fund (Class A) 929,814 1,016,133 Loans to participants 8,993,830 7,659,950 ------------ ----------- Total investments 134,916,756 79,147,987 ------------ ----------- CONTRIBUTIONS RECEIVABLE: Participant contribution 119,284 464,842 Employer contribution 62,131 6,672 ------------ ----------- Total contributions receivable 181,415 471,514 ------------ ----------- NET ASSETS AVAILABLE FOR BENEFITS $ 135,118,849 $79,637,355 ============== =========== See notes to financial statements.
5 THE PEP BOYS SAVINGS PLAN ------------------------- STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000 ------------------------------------------------------------------------------- 2001 2000 ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Dividend and interest income $ 1,455,802 $ 1,253,428 Interest on loans 568,123 608,898 Net realized and unrealized gain (loss) in fair value of investments 50,624,480 (15,821,636) ------------- ------------- Total investment income (loss) 52,648,405 (13,959,310) ------------- ------------- Contributions: Participants 12,410,079 14,505,065 Employer 4,533,003 5,670,237 ------------- ------------- Total contributions 16,943,082 20,175,302 ------------- ------------- Earnings refund (252,467) - ------------- ------------- Total Additions 69,339,020 6,215,992 DEDUCTIONS TO NET ASSETS ATTRIBUTED TO: Distributions paid to participants (13,857,526) (11,072,985) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS AVAILABLE FOR BENEFITS 55,481,494 (4,856,993) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 79,637,355 84,494,348 ------------- ------------- End of year $135,118,849 $ 79,637,355 ============= ============= See notes to financial statements.
6 THE PEP BOYS SAVINGS PLAN ------------------------- NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000 ---------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation --------------------- The accompanying financial statements have been prepared on the accrual basis of accounting. Use of Estimates ---------------- The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates and assumptions. Investments ----------- As of June 2000, all Stable Value Funds were converted to the AMEX Trust Stable Capital II Fund. This fund is stated at the fair market value based on the quoted market prices as reported on the last day of the calendar year. All of the loan fund is stated at cost plus accrued interest (see note 3). Investments in all other funds are stated at fair value based on quoted market prices as reported on the last business day of the calendar year. 2. DESCRIPTION OF THE PLAN ----------------------- The following description of The Pep Boys Savings Plan (the "Plan"), provides general information only. The participant should refer to the Plan document for a more complete description of the Plan provisions. The Plan was established on September 1, 1987. The Plan provides a vehicle for participating Company employees to increase savings. The Plan was structured to comply with the requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). Participation ------------- All employees of The Pep Boys - Manny, Moe & Jack and subsidiaries (the "Company") who have attained both the age of 21 and completed one year of service as defined by the Plan, other than those employees whose terms and conditions of employment are determined by a collective bargaining agreement unless such collective bargaining agreement provides to the contrary, may join the Plan any time on or after the start of the quarter, which immediately follows the employee's anniversary date. These quarter dates are January 1, April 1, July 1, or October 1. Funding ------- Contributions to the Plan are made by participants and the Company. Participant's contributions, made through salary reduction, may be any whole percentage from 1% to 15% of their compensation as defined by the Plan. The Company contributes the lesser of 50% of the first 6% of the participant's pre-tax contributions or a maximum 3% of the participant's compensation. 7 Participant contributions to the Plan, up to $10,500 during 2001 and 2000, are not subject to income tax until their withdrawal from the Plan. Additionally, participants are not subject to tax on the Company's contributions to the Plan, appreciation in Plan assets or income earned thereon until withdrawn from the Plan. Effective January 1, 1993, company contributions are deposited in the Pep Boys Stock Fund. Participants age 55 or over have the option to transfer all of the Company's contributions into any of the other funds. Vesting ------- The Plan provides that the participant's contributions are fully vested when made. The Company's contribution for a particular year becomes vested if the participant is actively employed on December 31 of that year or if the participant's employment terminated due to death, disability or retirement prior to December 31. Loan Provisions --------------- Participants may borrow 50% of their account balance subject to a minimum of $500 and a maximum of $50,000. The maximum duration of a loan is five years unless the loan is used to purchase your primary residence. In such a case, the loan term is permitted for up to a 30 year duration (effective October 1, 1998). The interest rate is commensurate with current fixed rates charged by institutions in the business of lending money for similar types of loans. Plan Termination ---------------- Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of termination of the Plan, the interest of the participants or their beneficiaries will remain fully vested and not be subject to forfeiture in whole or in part and distributions shall be made to them in cash and/or stock as applicable. Income Tax Status ----------------- The Internal Revenue Service has issued a determination letter (April 30, 2002) indicating that the Plan meets the requirements of Sections 401(a) and 401(k) of the Internal Revenue Code (the "Code"). Accordingly, the Plan's related trust is exempt from federal taxation under Section 501(a) of the Code. The Plan Committee believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code. Therefore, no provision for income taxes has been included in the Plan's financial statements. 8 Administration -------------- All costs associated with administering the Plan are borne by the Company. The Plan is administered by a Plan Committee of three employees of the Company. At December 31, 2001, the members of the Plan Committee and their positions with the Company were: George Babich Executive Vice President and Chief Financial Officer Fred Stampone Senior Vice President & Secretary Bernard K. McElroy Vice President - Finance & Treasurer At December 31, 2001, the Plan trustee was: American Express Trust Company Under the provisions of ERISA, all of the above are "parties-in-interest." 3. INVESTMENT PROGRAMS ------------------- Participant contributions - Each participant, through an interactive voice response system, may direct that his/her contributions be invested in one or more of the following investment programs in increments of 1%. The prospectuses for these investment programs describe the funds as follows: AET STABLE CAPITAL FUND II -------------------------- The AMEX Trust Stable Capital Fund II is designed to provide the lowest risk of all seven investment funds. This fund's goal is to preserve principal and income while maximizing current income. To meet this goal, the fund invests primarily in stable value contracts, as well as short-term investments and the American Express Trust Stable Capital I (a stable value pooled fund). AET EQUITY INDEX FUND II ------------------------ The AMEX Trust Equity Index Fund II seeks to achieve a rate of return as close as possible to the return of the Standard & Poor's 500 Stock Index (S&P 500). To mirror this return, the fund invests primarily in some or all of the securities that make up the S&P 500. Because the S&P 500 contains many large, well-established companies, representing most major industries, this type of fund is less volatile than a growth fund like the AXP Small Company Index Fund or Templeton Foreign Fund. PEP BOYS STOCK FUND ------------------- The Pep Boys Stock Fund is invested primarily in The Pep Boys-Manny, Moe & Jack common stock and a small amount of short-term investments. This fund gives the participant the opportunity to acquire an ownership interest in the Company. The value of the amount invested in this fund will depend on the price of the stock at any given time and will tend to be more volatile. At December 31, 2001 and 2000, the Pep Boys Stock Fund held 3,856,000 shares ($17.15 per share) and 3,606,991 shares ($3.63 per share), respectively, of The Pep Boys - Manny, Moe & Jack common stock. 9 INVESCO TOTAL RETURN FUND (Investor Class) ------------------------------------------ The Invesco Total Return Fund seeks to provide long-term growth of capital, as well as current income. To meet this objective, the fund invests in common stocks of companies generally listed on major exchanges. Although the fund manager looks for stocks that perform well over a variety of market cycles, the value of the contributions to the plan may go up or down as stock market values change. AXP BOND FUND (Class Y) ------------------------ The AXP Bond Fund invests in a diversified portfolio of high-quality corporate bonds. To increase its return, the fund may also invest in lower-quality bonds and foreign bonds. The primary goal of this fund is to earn a high level of interest income; a secondary consideration is long-term bond appreciation. This fund offers low to moderate risk and moderate returns. AXP SMALL COMPANY INDEX FUND (Class Y) -------------------------------------- The AXP Small Company Index Fund attempts to mirror the return of the Standard & Poor's Small Capitalization Stock Index (S&P SmallCap 600). To achieve this, the fund invests primarily in some or all of the securities that make up the S&P 600. Because this fund invests in stocks of small companies, it is generally one of the most volatile of the Plan's funds. At the same time, the potential for growth over the long term is one of the highest. TEMPLETON FOREIGN FUND (Class A) -------------------------------- The Templeton Foreign Fund seeks long-term capital growth. To achieve this goal, the fund invests primarily in stocks and debt obligations of companies and governments outside the United States. Because this fund invests in foreign companies, it is one of the most volatile of the Plan's funds. However, it should normally have higher returns over longer periods of time. THE LOAN FUND ------------- The Loan Fund is the cumulative balance of all employee loans outstanding. This fund is not a fund available to participants for investing purposes, but instead is a result of a participant utilizing the loan provision previously defined an earlier section. The interest rate is commensurate with current fixed rates charged by institutions in the business of lending money for similar types of loans. 10 THE PEP BOYS SAVINGS PLAN ------------------------- SCHEDULE H ITEM 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 2001 ----------------------------------------------------------------------------------------------------------------------
CURRENT IDENTITY DESCRIPTION COST VALUE ---------------------------------------------------------------------------------------------------------------------- AET Stable Capital Fund II* Mutual Fund, $26,667,934 $28,379,266 1,783,129 shares Invesco Total Return Fund (Investor Class) Mutual Fund, 6,630,574 5,916,808 237,745 shares AET Equity Index Fund II* Mutual Fund, 20,505,623 19,797,527 623,042 shares PEP BOYS STOCK FUND The Pep Boys - Manny, Moe & Jack Common Stock* 3,856,000 shares 41,970,799 66,130,317 AET Money Market I* 1,201,501 shares 1,201,501 1,201,501 AXP Bond Fund (Class Y)* Mutual Fund, 1,460,639 1,461,647 309,318 shares AXP Small Company Index Fund (Class Y)* Mutual Fund, 2,133,308 2,106,046 334,390 shares Templeton Foreign Fund (Class A) Mutual Fund, 992,400 929,814 100,520 shares LOANS TO PARTICIPANTS 6.00%-10.50% 2002-2031 8,993,830 8,993,830 ------------ ------------ $110,556,608 $134,916,756 ============ ============ * Indicates party-in-interest to the plan.
11 THE PEP BOYS SAVINGS PLAN ------------------------- SCHEDULE H ITEM 4j - SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 2001 ---------------------------------------------- Aggregate of transactions involving the same security exceeding 5% of net assets at January 1, 2001
Number of Aggregate Identity of Party Transactions Description Change ------------------------------- ------------ --------------------- ----------- Pep Boys Stock Fund The Pep Boys - Manny, Moe & Jack Common Stock 116 Common Stock $6,449,657 AET Money Market I 329 Money Market Fund 20,698,993
Individual transactions in 2001 involving the same security exceeding 5% of net assets at January 1, 2001:
Identity of Party Description Sale Purchase ------------------------------- --------------------- ----------- ------------ NO TRANSACTIONS QUALIFIED FOR THIS SECTION
12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Trustees (or other persons who administer the Plan) have duly caused this Annual Report to be signed by the undersigned hereunto duly authorized. THE PEP BOYS SAVINGS PLAN ------------------------- DATE: June 26, 2001 BY: /s/Bernard K. McElroy ------------- ----------------------------- Bernard K. McElroy Member of the Administrative Committee 13 EXHIBIT INDEX ============= Exhibit No. Item ----------- ---- 23 Consent of Deloitte & Touche LLP