SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One):
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
- -- SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1997
OR
- -- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934. [No Fee Required]
For the transition from to
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Commission file number 1-3381
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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)229-9000
Notices and Communications from the Securities and Exchange
Commission relating to this Report should be forwarded to:
<PAGE>
Michael J. Holden Jack H. Nusbaum
Executive Vice President & Chief Willkie Farr & Gallagher
Financial Officer One Citicorp Center
The Pep Boys - Manny, Moe & Jack 153 East 53rd Street
3111 West Allegheny Avenue New York, NY 10022-4669
Philadelphia, PA 19132
<PAGE>
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
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TABLE OF CONTENTS
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PAGE
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INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS:
Statement of Net Assets Available for Benefits
As of December 31, 1997 4
Statement of Net Assets Available for Benefits
As of March 31, 1997 5
Statement of Changes in Net Assets Available for
Benefits for the Nine Months Ended
December 31, 1997 and Year Ended March 31, 1997 6
Notes to Financial Statements 7 - 11
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997 12
Item 27d - Schedule of Reportable Transactions for
the Nine Months Ended December 31, 1997 13
<PAGE>
<PAGE>3
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
The Pep Boys Savings Plan - Puerto Rico
Philadelphia, Pennsylvania
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, 1997 and March 31, 1997, and the related statements of changes in
net assets available for benefits for the nine months in the period ended
December 31, 1997 and the year ended March 31, 1997 respectively. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statement based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. 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 -
Puerto Rico as of December 31, 1997 and March 31, 1997, and the changes in net
assets available for benefits for the nine months in the period ended December
31, 1997 and the year ended March 31, 1997 respectively, in conformity with
generally accepted accounting principles.
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, 1997, and reportable
transactions for the nine months in the period then ended, 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. The supplemental
information by fund in the statement of net assets available for benefits and
the statement of changes in net assets available for benefits is presented for
the purpose of additional analysis rather than to present the net assets
available for benefits and changes in net assets available for benefits of the
individual funds. Such supplemental schedules and supplemental information by
fund are the responsibility of the Plan's management. Such supplemental
schedules and supplemental information by fund have been subjected to the
auditing procedures applied in our audit 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.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
April 29, 1998
<PAGE>
<PAGE>4
<TABLE>
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
- ----------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1997
- ----------------------------------------------
SUPPLEMENTAL INFORMATION
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INVESTMENT FUNDS
-------------------------------------------------------------
<CAPTION>
STABLE INDEX THE PEP BOYS
VALUE EQUITY STOCK BALANCED LOAN
FUND FUND FUND FUND FUND TOTAL
---------- ---------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
- ------
INVESTMENTS:
Stable Value Fund - Invesco Trust $41,460 $41,460
Index Equity Fund - Vanguard Index Trust $32,599 32,599
The Pep Boys Stock Fund - at market (Cost
$237,106 consisting of 8,922 shares) $213,019 213,019
Balanced Fund - SSGA Series $28,018 28,018
Loans to participants $4,594 4,594
---------- ---------- ------------ ---------- --------- ----------
Total investments 41,460 32,599 213,019 28,018 4,594 319,690
EMPLOYER AND PARTICIPANT CONTRIBUTIONS RECEIVABLE:
Stable Value Fund - Invesco Trust 846 846
Index Equity Fund - Vanguard Index Trust 1,072 1,072
The Pep Boys Stock Fund - at market
(Cost $8,263 consisting of 355 Shares) 8,302 8,302
Transfers 12,577 162 506 13,245
---------- ---------- ------------ ---------- --------- ----------
TOTAL $42,306 $46,248 $221,483 $28,524 $4,594 $343,155
========== ========== ============ ========== ========= ==========
LIABILITIES AND NET ASSETS AVAILABLE FOR BENEFITS
- -------------------------------------------------
LIABILITIES:
Transfers $ 13,245 $13,245
------------ ----------
Total liabilities 13,245 13,245
NET ASSETS AVAILABLE FOR BENEFITS 42,306 46,248 208,238 28,524 4,594 329,910
---------- ---------- ------------ ---------- --------- ----------
TOTAL $42,306 $46,248 $221,483 $28,524 $4,594 $343,155
========== ========== ============ ========== ========= ==========
See notes to financial statements.
</TABLE>
<PAGE>5
<TABLE>
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
- ----------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
March 31, 1997
- ----------------------------------------------
SUPPLEMENTAL INFORMATION
--------------------------------------------------------------
INVESTMENT FUNDS
--------------------------------------------------------------
<CAPTION>
STABLE INDEX THE PEP BOYS
VALUE EQUITY STOCK BALANCED
FUND FUND FUND FUND TOTAL
---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------
INVESTMENTS:
Stable Value Fund - Invesco Trust $22,348 $22,348
Index Equity Fund - Vanguard Index Trust $10,806 10,806
The Pep Boys Stock Fund - at market
(Cost $73,615 consisting of 2,223 shares) $66,708 66,708
Balanced Fund - SSGA Series $14,083 14,083
---------- ---------- ------------ ---------- ----------
Total investments 22,348 10,806 66,708 14,083 113,945
EMPLOYER RECEIVABLE:
984 shares of The Pep Boys - Manny,
Moe & Jack common stock, cost $31,223
and Employer Match Accrual 50,090 50,090
Transfers 7 805 (812) 0
---------- ---------- ------------ ---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $22,355 $10,806 $117,603 $13,271 $164,035
========== ========== ============ ========== ==========
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>6
<TABLE>
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
- ---------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Nine Months Ended December 31, 1997 and Year Ended March 31, 1997
- ---------------------------------------------------------------------
SUPPLEMENTAL INFORMATION
-----------------------------------------------------------
INVESTMENT FUNDS
<CAPTION> -----------------------------------------------------------
STABLE INDEX THE PEP BOYS
VALUE EQUITY STOCK BALANCED LOAN
FUND FUND FUND FUND FUND TOTAL
----------- ---------- ------------ -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
April 1, 1996 $0 $0 $0 $0 $0
Dividend and interest income 373 93 20 319 805
----------- ---------- ------------ -------- ----------
NET INVESTMENT INCOME 373 93 20 319 805
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 46 (8,599) 99 (8,454)
CONTRIBUTIONS:
Participants 21,982 10,667 76,403 12,853 121,905
Pep Boys - Manny, Moe & Jack of
Puerto Rico, Inc. 49,779 49,779
----------- ---------- ------------ -------- ----------
NET ASSETS AVAILABLE FOR BENEFITS,
March 31, 1997 $22,355 $10,806 $117,603 $13,271 $164,035
Dividend and interest income 1,513 545 553 785 3,396
Interest on loans 9 2 74 4 89
----------- ---------- ------------ -------- ----------
NET INVESTMENT INCOME 1,522 547 627 789 3,485
NET APPRECIATION (DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 4,498 (24,367) 2,042 (17,827)
CONTRIBUTIONS:
Participants 22,745 33,007 68,299 13,186 137,237
Pep Boys - Manny, Moe & Jack of
Puerto Rico, Inc. 54,731 54,731
DISTRIBUTIONS (3,859) (2,217) (5,168) (506) (1) (11,751)
LOANS:
New loans (511) (409) (3,978) (292) 5,190
Principal repayments 54 16 491 34 (595)
----------- ---------- ------------ -------- ------- ----------
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1997 $42,306 $46,248 $208,238 $28,524 $4,594 $329,910
=========== ========== ============ ======== ======= ==========
See notes to financial statements.
</TABLE>
<PAGE>
<PAGE>7
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
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NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED December 31, 1997 AND YEAR ENDED March 31, 1997
- -----------------------------------------------------------------
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
-----------
Investments in The Pep Boys - Manny, Moe & Jack common stock, Index Equity
Fund and Balanced Fund are stated at fair value based on quoted
market prices as reported on the last business day of the plan year.
Investments in the Stable Value Fund are stated at cost plus accrued
interest. (See Note 3.)
2. DESCRIPTION OF THE PLAN
-----------------------
The following description of The Pep Boys Savings Plan - Puerto Rico
(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 April 1, 1995. No transactions
occurred in the Plan prior to April 1, 1996. The Plan was amended
to provide for a short plan year in 1997 and to change the plan's year end
from March 31 to December 31. 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
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All Company employees who have attained both the age of 21 and completed
one year of service as defined by the Plan, are eligible to participate in
the Plan and may join the Plan on any January 1, April 1, July 1, or
October 1.
Funding
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Contributions to the Plan are made by participants and the Company.
Participant's 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.
<PAGE>
<PAGE>8
Participant contributions to the Plan, up to $7,500 during 1996 and 1997,
are not subject to income tax until their withdrawal from the Plan. This
limit will increase to $8,000 for 1998. 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.
Company contributions are deposited in The Pep Boys Stock Fund.
Participants age 55 or over have the option to make an irrevocable election
to have 100% of the Company's contribution deposited into the Stable Value
Fund.
Vesting
-------
Participant's contributions are fully vested when made. The Company's
contribution for a particular year is made 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.
The Company's contributions are fully vested when made.
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. 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 Puerto Rico Department of Treasury has issued a determination letter
(March 26, 1996) indicating that the Plan meets the requirements of
Sections 1165(a) and 1165(e) 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.
<PAGE>
<PAGE>9
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, 1997, the members of the Plan Committee
and their positions with the Company were:
Michael J. Holden Executive Vice President and Chief
Financial Officer
Roger A. Rendin Vice President - Human Resources
Bernard K. McElroy Assistant Vice President - Finance &
Assistant Secretary
At March 31, 1997, the Plan trustees and their positions with the
Company were:
Mitchell G. Leibovitz Chairman of the Board, Chief Executive
Officer & President
Michael J. Holden Executive Vice President and Chief
Financial Officer
Oriental Trust Oriental Bank & Trust (Co-Trustee)
Effective November 13, 1997, the trust agreement was modified to
substitute the above trustees solely with Oriental Bank & Trust.
Under the provisions of ERISA, all of the above are "parties-in-interest."
3. INVESTMENT PROGRAMS
-------------------
Participant contributions - Upon enrollment or re-enrollment, each
participant shall direct that his/her contributions be invested in one or
more of the following investment programs in increments of 10%.
Stable Value Fund (Formally; Fixed Income Fund)
-----------------------------------------------
Contributions to the Stable Value Fund are invested with Invesco Trust
Company ("ITC"). The ITC - Stable Value Fund invests primarily in
fully benefit-responsive general insurance contracts, insurance
company separate account products and synthetic products. The Fund
seeks to provide a positive consistent return over time while
preserving principal, however, the Fund does not guarantee interest
or a return of principal. The average yield on the Stable Value
Fund for the nine months ended December 31, 1997 was 6.32%. The
average yield on the Stable Value Fund at December 31, 1997 and
March 31, 1997 was 6.27% and 6.14% respectively.
<PAGE>
<PAGE>10
Balanced Fund
-------------
The Balanced Fund is managed by SSGA Funds and invests 50% in stocks
and 50% in bonds. SSGA S&P 500 Index Fund seeks to duplicate the
capital growth and dividend income of the Standard and Poor's 500
Composite Stock Price Index. The SSGA Intermediate Bond Market Fund
is intended to perform similar to the Lehman Brothers Intermediate
Bond Index.
Index Equity Fund
-----------------
The Index Equity Fund has invested in the Vanguard Index Trust which
seeks to provide investment results that correspond to the price and
yield performance of publicly traded common stocks in the aggregate.
The Vanguard Index Trust uses the Standard and Poor's 500 Composite
Stock Price Index as the standard comparison and attempts to
duplicate the capital growth and dividend income of that Index.
The Pep Boys Stock Fund
-----------------------
This fund is invested in the common stock of The Pep Boys -
Manny, Moe & Jack.
Prior to November 17, 1997, the shares in The Pep Boys Stock Fund were
not registered with the U.S. Securities and Exchange Commission.
Accordingly, all participant contributions used to purchase shares in
this fund prior to the effective date of the Form S-8 Registration
Statement had the right to rescind their transaction. Management
states that the right to rescind had no material impact on the
financial statements.
<PAGE>
<PAGE>11
<TABLE>
Investments that represent 5% or more of the net assets
available for benefits at December 31, 1997 and March 31, 1997
are as follows:
<CAPTION>
12/31/97 03/31/97
-------- --------
<S> <C> <C>
FIXED INCOME FUND - ITC Stable Value Fund $41,460 $22,348
======== ========
INDEX EQUITY FUND - Vanguard Index Trust $32,599 $10,806
======== ========
BALANCED FUND - SSGA S&P500 INDEX and
SSGA INTERMEDIATE BOND FUND $28,018 $14,083
======== ========
THE PEP BOYS STOCK FUND - The Pep Boys -
Manny, Moe & Jack common stock $213,019 $66,708
======== ========
</TABLE>
<PAGE>
<PAGE>12
<TABLE>
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
- ---------------------------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
- --------------------------------------------------------------------------------
<CAPTION>
CURRENT
IDENTITY/DESCRIPTION COST VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
STABLE VALUE FUND - ITC Stable Value Fund $41,460 $41,460
INDEX EQUITY FUND - Vanguard Index Trust 28,328 32,599
THE PEP BOYS STOCK FUND - The Pep Boys -
Manny, Moe & Jack * Common Stock 237,106 213,019
BALANCED FUND - SSGA
S&P 500 Index Fund and Intermediate Bond Fund 25,980 28,018
LOANS TO PARTICIPANTS - 9.50% 1998-2000 4,594 4,594
----------- -----------
$337,468 $319,690
=========== ===========
* Indicates party-in-interest to the Plan
</TABLE>
<PAGE>
<PAGE>13
<TABLE>
THE PEP BOYS SAVINGS PLAN - PUERTO RICO
- ---------------------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
NINE MONTHS ENDED December 31, 1997
- ----------------------------------------------
Aggregate of transactions involving the same security exceeding 5% of net
assets at April 1, 1997:
Number of Purchase
Identity of Party Description Transactions Price
- ------------------------ --------------------- ------------ ----------
<S> <C> <C> <C>
Invesco Trust ITC-Stable Value Fund 31 $23,541
The Vanguard Group Vanguard Index Trust 24 20,121
SSGA Funds SSGA S&P500 Index and
SSGA Intermediate Bond 25 13,391
The Pep Boys -
Manny, Moe & Jack Common Stock 8 176,901
</TABLE>
<PAGE>
<PAGE>14
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 23,1998 BY: /s/Bernard K. McElroy
------------ ----------------------------
Bernard K. McElroy
Member of the Administrative
Committee
<PAGE>
<PAGE>15
EXHIBIT INDEX
=============
Exhibit No. Item Page
----------- ---- ----
23 Consent of Deloitte & Touche LLP 15
<PAGE>16
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the incorporation by reference in Registration Statement
No. 333-40363 of The Pep Boys - Manny, Moe & Jack on Form S-8 of our report
dated April 29, 1998 appearing in the Annual Report on Form 11-K of The Pep Boys
Savings Plan-Puerto Rico for the nine months in the period ended December 31,
1997.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
June 23, 1998
