<DOCUMENT>
<TYPE>11-K
<SEQUENCE>1
<FILENAME>r11k03f.txt
<TEXT>
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, 2003
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:
Carole Pietak
Chairman of Administrative Committee
The Pep Boys - Manny, Moe & Jack
3111 West Allegheny Avenue
Philadelphia, PA 19132
<PAGE>2
THE PEP BOYS SAVINGS PLAN
-------------------------
TABLE OF CONTENTS
----------------------------------------------------------------------------
PAGE
----
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 3
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
As of December 31, 2003 and December 31, 2002 4
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 2003
and December 31, 2002 5
Notes to Financial Statements 6 - 9
SUPPLEMENTAL SCHEDULES:
Schedule H, Item 4i - Schedule of Assets Held for Investment
Purposes as of December 31, 2003 10
Schedule H, Item 4j - Schedule of Reportable Transactions for
the Year Ended December 31, 2003 11
SIGNATURE PAGE 12
EXHIBIT INDEX 13
<PAGE>3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2003 and
2002, 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2003 and 2002, 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 schedule of assets
held for investment purposes as of December 31, 2003 is presented for the
purpose of additional analysis and is not a required part of the basic
financial statements, but is 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
schedule is the responsibility of the Plan's management. Such supplemental
schedule has been subjected to the auditing procedures applied in our audits
of the basic financial statements and, in our opinion, is fairly stated in all
material respects when considered in relation to the basic financial statements
taken as a whole.
/s/Deloitte & Touche, LLP
Philadelphia, Pennsylvania
June 22, 2004
<PAGE>4
<TABLE>
THE PEP BOYS SAVINGS PLAN
-------------------------
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 2003 AND DECEMBER 31, 2002
------------------------------------------------------------------------------
<S> <C> <C>
2003 2002
ASSETS
------
CASH $ 463,182 $ 696,856
--------------- -------------
INVESTMENTS:
AET Stable Capital Fund II 34,533,386 30,698,622
AET Equity Index Fund II 22,167,259 15,886,695
Pep Boys Stock Fund 73,243,529 43,452,011
Invesco Total Return Fund (Investor Class) 7,299,994 5,512,752
AXP Bond Fund (Class Y) 3,098,444 2,211,313
AXP Small Company Index Fund (Class Y) 5,458,304 2,451,674
Templeton Foreign Fund (Class A) 2,264,763 1,119,542
Loans to participants 11,090,376 10,578,443
------------- -------------
Total investments 159,156,055 111,911,052
------------- --------------
CONTRIBUTIONS RECEIVABLE:
Participant contributions 10,263 10,467
Employer contribution 8,105 8,807
------------- -------------
Total contributions receivable 18,368 19,274
------------- -------------
Total Assets 159,637,605 112,627,182
------------- -------------
LIABILITIES
-----------
Refundable Contributions and Earnings 337,105 -
------------- -------------
Total Liabilities 337,105 -
------------- -------------
NET ASSETS AVAILABLE FOR BENEFITS $ 159,300,500 $112,627,182
=============== =============
See notes to financial statements.
</TABLE>
<PAGE>5
<TABLE>
THE PEP BOYS SAVINGS PLAN
-------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE
YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
-------------------------------------------------------------------------------
<S> <C> <C>
2003 2002
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income:
Dividend and interest income $ 1,200,468 $ 1,381,954
Interest on loans 584,834 662,457
Net realized and unrealized gain
(loss) in fair value of
investments 46,482,865 (25,422,087)
------------- -------------
Total investment income (loss) 48,268,167 (23,377,676)
------------- -------------
Contributions:
Participants 10,134,102 12,050,856
Employer 3,759,369 3,946,366
------------- -------------
Total contributions 13,893,471 15,997,222
------------- -------------
Earnings refund (95,756) -
------------- -------------
Total Additions (Reductions) 62,065,882 (7,380,454)
DEDUCTIONS TO NET ASSETS ATTRIBUTED TO:
Distributions paid to participants (15,392,564) (15,111,213)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
AVAILABLE FOR BENEFITS 46,673,318 (22,491,667)
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 112,627,182 135,118,849
------------- -------------
End of year $159,300,500 $112,627,182
============= =============
See notes to financial statements.
</TABLE>
<PAGE>6
THE PEP BOYS SAVINGS PLAN
-------------------------
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
----------------------------------------------------
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 accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits at the date of the financial
statements and the reported amounts of changes in net assets available for
benefits during the reporting period. Actual results may differ from
those estimates and assumptions.
Risks and Uncertainties
-----------------------
The Plan provides for investment options in mutual funds and common stock
of the Plan sponsor. Investment securities are exposed to various risks,
such as interest rate, market and credit. Due to the level of risk
associated with certain investment securities and the level of uncertainty
related to changes in the value of investment securities, it is at least
reasonably possible that changes in risks in the near term would
materially affect participants' account balances and the amounts reported
in the statements of net assets available for benefits and the statements
of changes in net assets available for benefits.
Investments
-----------
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 plan year.
2. DESCRIPTION OF THE PLAN
-----------------------
The information in these notes regarding The Pep Boys Savings Plan
(the "Plan") is provided for general purposes 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.
<PAGE>7
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 50% 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. The Plan was amended to allow Participants to contribute in
half-percent increments effective January 16, 2004.
Participant contributions to the Plan, up to $12,000 and $11,000 during
2003 and 2002 respectively, 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. The Plan
was amended to allow active Plan participants who have attained the age of
50 to exceed the maximum allowable contribution in effect for the tax year
in which the contributions are to be made up to certain limits as defined
by IRS regulations. This amendment is effective January 16, 2004.
Through August 30, 2002, company contributions were invested in the Pep
Boys Stock Fund. Effective September 1, 2002, company contributions are
invested in same fund(s) and in the same proportion chosen by the
participant for their contributions. Through August 30, 2002, participants
age 55 or over had the option to transfer all of the Company's
contributions into any of the other funds. Also effective
September 1, 2002, any participant has the ability to transfer all or a
portion of the balance from the Pep Boys Stock Fund into one or more of
the other investment 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 up to 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 a primary residence. In
such a case, the loan term is permitted for up to a 30 year duration. The
interest rate is commensurate with current fixed rates charged by
institutions in the business of lending money for similar types of loans.
Participants may have up to two loans at one time and prepay loans in full
at any time.
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
Section 401(a) 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.
<PAGE>8
Administration
--------------
All costs associated with administering the Plan are borne by the
Company, except the loan administration fees. The Plan is administered by
a Plan Committee of three employees of the Company. At December 31, 2003,
the members of the Plan Committee and their positions with the Company
were:
Carole Pietak Vice President - Human Resources
Harry Yanowitz Senior Vice President -
Strategy & Business Development
Bernard K. McElroy Vice President - Chief Accounting Officer &
Treasurer
At December 31, 2003, 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, via the Internet or 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 Plan was amended to allow Participants
to contribute in half-percent increments effective January 16, 2004.
The prospectuses for these investment programs describe the funds as
follows:
AET STABLE CAPITAL FUND II
--------------------------
The American Express 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 American Express 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, 2003 and 2002, the Pep Boys Stock Fund
held 3,151,855 shares ($22.87 per share) and 3,703,159 shares ($11.60 per
share), respectively, of The Pep Boys - Manny, Moe & Jack common stock.
<PAGE>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 participant 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 in 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.
INVESTMENT OPTION CHANGES
-------------------------
As of February 1, 2004, the Plan's Administrative Committee determined the
following investment funds would be closed to further investment and
participation by Plan participants:
Invesco Total Return Fund (Investor Class)
AXP Bond Fund (Class Y)
Participants with contributions in these funds could elect to direct their
future contributions and participant balances in these funds into the
other funds offered by the Plan. If no election was made, the Plan
transferred the participants' contributions and balances as follows:
From To
---------- ----------
Invesco Total Fidelity Freedom 2010 Fund
Return Fund (Investor Class)
AXP Bond Fund (Class Y) PIMCO Total Return Fund
(Institutional Class)
Effective February 1, 2004, additional investment fund options are offered
by the Plan as follows:
Fidelity Freedom 2010 Fund
Fidelity Freedom 2020 Fund
Fidelity Freedom 2030 Fund
Fidelity Freedom 2040 Fund
PIMCO Total Return Fund (Institutional Class)
<PAGE>10
<TABLE>
THE PEP BOYS SAVINGS PLAN
-------------------------
SCHEDULE H
ITEM 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 2003
----------------------------------------------------------------------------------------------------------------------
<CAPTION>
CURRENT
IDENTITY DESCRIPTION COST VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AET Stable Capital Fund II* Mutual Fund, $31,480,832 $34,533,386
1,983,765 shares
Invesco Total Return Fund (Investor Class) Mutual Fund, 7,205,871 7,299,994
304,929 shares
AET Equity Index Fund II* Mutual Fund, 22,132,023 22,167,259
698,732 shares
PEP BOYS STOCK FUND
The Pep Boys - Manny, Moe & Jack Common Stock* 3,151,855 shares 24,561,853 72,082,924
AET Money Market I* 1,160,605 shares 1,160,605 1,160,605
AXP Bond Fund (Class Y)* Mutual Fund, 3,072,970 3,098,444
637,540 shares
AXP Small Company Index Fund (Class Y)* Mutual Fund, 4,665,517 5,458,304
735,620 shares
Templeton Foreign Fund (Class A) Mutual Fund, 1,979,883 2,264,763
212,854 shares
LOANS TO PARTICIPANTS* 5.00%-10.50% 2003-2033 11,090,376 11,090,376
------------ ------------
$107,349,930 $159,156,055
============ ============
* Indicates party-in-interest to the plan.
</TABLE>
<PAGE>11
<TABLE>
THE PEP BOYS SAVINGS PLAN
-------------------------
SCHEDULE H
ITEM 4j - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
----------------------------------------------
Aggregate of transactions involving the same security exceeding 5% of net
assets at January 1, 2003
<CAPTION>
Number of Aggregate
Identity of Party Transactions Description Change
------------------------------- ------------ --------------------- -----------
<S> <C> <C> <C>
NO TRANSACTIONS QUALIFIED FOR THIS SECTION
</TABLE>
Individual transactions in 2003 involving the same security exceeding 5% of
net assets at January 1, 2003:
<TABLE>
<CAPTION>
Identity of Party Description Sale Purchase
------------------------------- --------------------- ----------- ------------
<S> <C> <C> <C>
NO TRANSACTIONS QUALIFIED FOR THIS SECTION
</TABLE>
<PAGE>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 25, 2004 BY: /s/Carole Pietak
------------- -----------------------------
Carole Pietak
Chairman of Administrative
Committee
<PAGE>13
EXHIBIT INDEX
=============
Exhibit No. Item
----------- ----
23 Consent of Deloitte & Touche LLP
</TEXT>
</DOCUMENT>