11-K 1 pr11k04.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, 2004 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 - PUERTO RICO --------------------------------------- (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 THE PEP BOYS SAVINGS PLAN - PUERTO RICO ---------------------------------------- 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, 2004 and December 31, 2003 4 Statements of Changes in Net Assets Available for Benefits for Years Ended December 31, 2004 and December 31, 2003 5 Notes to Financial Statements 6 - 11 SUPPLEMENTAL SCHEDULE: Schedule H, Item 4i - Schedule of Assets Held for Investment Purposes as of December 31, 2004 12 SIGNATURES 13 EXHIBIT INDEX 14 All other schedules required by Section 2520.103-10 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable. 2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Administrative Committee The Pep Boys Savings Plan - Puerto Rico Philadelphia, PA We have audited the accompanying statements of net assets available for benefits of The Pep Boys Savings Plan - Puerto Rico (the "Plan") as of December 31, 2004 and 2003, 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. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 - Puerto Rico as of December 31, 2004 and 2003, 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, 2004 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 schedule has been subjected to the auditing procedures applied in our audit of the basic 2004 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 28, 2005 3 THE PEP BOYS SAVINGS PLAN - PUERTO RICO ---------------------------------------------- STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 2004 AND DECEMBER 31, 2003 ----------------------------------------------------------------------------- 2004 2003 ------------ ----------- ASSETS ------ CASH $ 14,452 $ - ------------ ----------- INVESTMENTS: AET Stable Capital Fund II 335,608 299,715 AET Equity Index Fund II 334,373 215,076 Pep Boys Stock Fund - Puerto Rico 1,300,708 1,875,511 Fidelity Freedom 2010 Fund 152,096 - Fidelity Freedom 2040 Fund 181 - Pimco Total Return Fund (Institutional Class) 26,690 - Invesco Total Return Fund (Investor Class) - 114,204 AXP Bond Fund (Class Y) - 31,249 AXP Small Company Index Fund (Class Y) 51,727 42,719 Templeton Foreign Fund (Class A) 48,190 32,196 Loans to participants 378,991 320,393 ------------ ----------- Total investments 2,628,564 2,931,063 ------------ ----------- CONTRIBUTIONS RECEIVABLE: Participant contributions 6,460 16,786 Employer contribution 1,833 6,804 ------------ ----------- Total contributions receivable 8,293 23,590 ------------ ----------- NET ASSETS AVAILABLE FOR BENEFITS $ 2,651,309 $ 2,954,653 ============== =========== See notes to financial statements. 4
THE PEP BOYS SAVINGS PLAN - PUERTO RICO --------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR YEARS ENDED DECEMBER 31, 2004 AND DECEMBER 31, 2003 -------------------------------------------------------------------------------- 2004 2003 ----------- ------------ ADDITIONS TO NET ASSETS ATTRIBUTED TO: Investment income: Dividend and interest income $ 32,016 $ 25,365 Interest on loans 17,057 14,048 Net realized and unrealized gain in fair value of mutual fund investments 53,489 83,628 Net realized and unrealized gain in fair value of The Pep Boys - Manny, Moe & Jack common stock - 931,394 ---------- ------------ Total investment income 102,562 1,054,435 ---------- ------------ Contributions: Participants 224,821 226,417 Employer 93,989 98,630 ----------- ------------ Total contributions 318,810 325,047 ----------- ------------ Total Additions 421,372 1,379,482 ----------- ------------ DEDUCTIONS TO NET ASSETS ATTRIBUTED TO: Net realized and unrealized loss in fair value of The Pep Boys - Manny, Moe & Jack common stock (461,991) - Distributions paid to participants (261,425) (165,068) Administrative Expenses (1,300) - ------------ ------------- Total Deductions (724,716) (165,068) ------------ ------------- NET (DECREASE) INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS (303,344) 1,214,414 ------------ ------------- NET ASSETS AVAILABLE FOR BENEFITS: Beginning of year 2,954,653 1,740,239 ------------ ------------- End of year $ 2,651,309 $ 2,954,653 ============= ============= See notes to financial statements.
5 THE PEP BOYS SAVINGS PLAN - PUERTO RICO ----------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS Years Ended December 31, 2004 And December 31, 2003 ----------------------------------------------------------------- 1. DESCRIPTION OF THE PLAN ----------------------- The information in these notes regarding The Pep Boys Savings Plan - Puerto Rico (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 April 1, 1995. The Plan provides a vehicle for participating employees of Pep Boys - Manny, Moe & Jack of Puerto Rico, Inc. (the "Company") 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 Company who have attained the age of 21, are a bona fide resident of Puerto Rico 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 immediately following 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. Participants' contributions, made through salary deduction, may be any whole percentage from 1% to 10% 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. Participant contributions to the Plan, up to 10% of their compensation with a maximum limit of $8,000 in 2004 and 2003, 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. 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 the last business day of the Plan year (which ends December 31) or if the participant's employment is terminated due to death, disability or retirement prior to December 31. 6 Loan Provisions --------------- Loans are made available to all Plan participants whose account value is $1,000 or more.Participants may borrow up to 50% of their account balance subject to a minimum of $500 and a maximum of $50,000. The $50,000 maximum may be reduced if the participant has another loan within one year of the date that such participant takes out the loan. 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 30 years. 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 interests 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 Puerto Rico Department of Treasury has issued a determination letter (December 22, 1998) indicating that the Plan meets the requirements of Section 1165(a) of the Puerto Rico Internal Revenue Code of 1994, (the "Code"). Accordingly, the Plan's related trust is exempt from taxation under Section 1165(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. Administration -------------- All costs associated with administering the Plan are borne by the Company, except the loan administration fees and certain investment-related expenses. The Plan is administered by a Plan Committee of three employees of the Company. At December 31, 2004, the members of the Plan Committee and their positions with the Company were: Carole L. Pietak Vice President - Human Resources Harry F. Yanowitz Senior Vice President - Chief Financial Officer Bernard K. McElroy Vice President - Chief Accounting Officer & Treasurer At December 31, 2004, the Plan trustee was: Oriental Bank & Trust Under the provisions of ERISA, all of the above are "parties-in-interest." 7 2. 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 Pep Boys - Manny, Moe & Jack (the "Parent"). 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. Investment Valuation -------------------- 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. 8 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 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 eight 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 Fund 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 - PUERTO RICO --------------------------------- The Pep Boys Stock Fund - Puerto Rico is invested primarily in The Parent's common stock and a small amount of short-term investments. This fund gives the participant the opportunity to acquire an ownership interest in the Parent. The value of the amounts 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, 2004 and 2003, the Pep Boys Stock Fund - Puerto Rico held 74,538 shares ($17.07 per share) and 81,265 shares ($22.87 per share), respectively, of the Parent's common stock. 9 FIDELITY FREEDOM 2010 FUND ------------------------------------------ Fidelity Freedom 2010 Fund invests in a combination of Fidelity equity, fixed-income, and money market funds (underlying Fidelity funds) and allocates its assets among these funds according to an asset allocation strategy that becomes more conservative over time. This fund is less aggressive than the Freedom 2040 Fund. FIDELITY FREEDOM 2040 FUND ----------------------- Fidelity Freedom 2040 Fund invests in a combination of Fidelity equity, fixed-income, and money market funds (underlying Fidelity funds) and allocates its assets among these funds according to an asset allocation strategy that becomes more conservative over time. This fund is more aggressive than the Freedom 2010 Fund. PIMCO TOTAL RETURN FUND (Institutional Class) ----------------------- PIMCO Total Return Fund is a portfolio of intermediate maturity bonds and fixed income securities, typically with a majority in treasury and mortgage-backed bonds. The PIMCO Total Return Fund is of relatively low risk when compared to the other investment funds offered by the Plan. 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 SmallCap 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. 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 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 2040 Fund PIMCO Total Return Fund (Institutional Class) 10 4. FORM 5500 --------- Certain items in the Plan's financial statements are treated differently for tax purposes and reporting under the Plan's Annual Return/Report of Employee Benefit Plan ("Form 5500"), filed with the Department of the Treasury. At December 31, 2004, the following differences exist between financial and tax reporting: Plan Plan Financial Statements Form 5500 ----------------------- -------------- Dividend and interest income $ 32,016 $ 21,394 Net realized and unrealized loss (408,502) (397,880)
11 THE PEP BOYS SAVINGS PLAN - PUERTO RICO --------------------------------------------- SCHEDULE H ITEM 4i - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES As of December 31, 2004 ---------------------------------------------------------------------------------------------------
CURRENT IDENTITY DESCRIPTION COST VALUE --------------------------------------------------------------------------------------------------- AET STABLE CAPITAL FUND II* Mutual Fund, $326,963 $335,608 18,609 shares AET EQUITY INDEX FUND II* Mutual Fund, 280,615 334,373 9,539 shares PEP BOYS STOCK FUND - PUERTO RICO The Pep Boys - Manny, Moe & Jack Common Stock* 74,538 shares 770,751 1,272,364 AET Money Market I* 28,344 shares 28,344 28,344 FIDELITY FREEDOM 2010 FUND Mutual Fund, 145,841 152,096 11,167 shares FIDELITY FREEDOM 2040 FUND Mutual Fund, 175 181 22 shares PIMCO TOTAL RETURN FUND (Institutional Class) Mutual Fund, 26,764 26,690 2,501 shares AXP SMALL COMPANY INDEX FUND (Class Y)* Mutual Fund, 42,682 51,727 6,071 shares TEMPLETON FOREIGN FUND (Class A) Mutual Fund, 43,697 48,190 3,918 shares LOANS TO PARTICIPANTS* - 5.00% - 10.50% 2005-2023 378,991 378,991 ----------- ----------- $2,044,823 $2,628,564 =========== =========== * Indicates party-in-interest to the Plan
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 - PUERTO RICO --------------------------------------- DATE: June 29, 2005 BY: /s/Carole L. Pietak ------------- ---------------------------- Carole L. Pietak Chairman of Administrative Committee 13 EXHIBIT INDEX ============= Exhibit No. Item ----------- ---- 23 Consent of Deloitte & Touche LLP 14