<PAGE>
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, 1998
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:
Michael J. Holden Peter Allman
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>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, 1998 4
Statement of Net Assets Available for Benefits
As of December 31, 1997 5
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1998
and 1997 6
Notes to Financial Statements 7 - 11
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1998 12
Item 27d - Schedule of Reportable Transactions for
the Year Ended December 31, 1998 13
<PAGE>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, 1998 and
1997, 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 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
as of December 31, 1998 and 1997, and the changes in net assets available for
benefits for the years then ended 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, 1998, and
reportable transactions for the year 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 statements of the net assets available for benefits
and the statements 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 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.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
June 23, 1999 and July 12, 1999
<PAGE>4
<TABLE>
THE PEP BOYS SAVINGS PLAN
- ----------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998
- ----------------------------------------------
SUPPLEMENTAL INFORMATION
------------------------
INVESTMENT FUNDS
----------------
<CAPTION>
STABLE INDEX THE PEP BOYS IDS
VALUE EQUITY STOCK BALANCED BOND
FUND FUND FUND FUND FUND Y
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------
INVESTMENTS:
Stable Value Fund $24,723,993
AET Equity Index II $19,354,727
The Pep Boys Stock Fund- At market $24,063,198
(Cost $33,659,269 consisting of
1,495,403 shares and cash of $609,977)
Balanced Fund $4,957,620
IDS Bond Fund Y $27,069
IDS Small Company Index Fund Y
Templeton Foreign Fund (A)
Loans to participants
----------- ----------- ----------- ------------ ------------
Total investments 24,723,993 19,354,727 24,063,198 4,957,620 27,069
EMPLOYER AND PARTICIPANT CONTRIBUTIONS RECEIVABLE:
Participant Contributions
Employer Contributions
----------- ----------- ----------- ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $24,723,993 $19,354,727 $24,063,198 $4,957,620 $27,069
=========== =========== =========== ============ ============
[RESTUBBED TABLE]
<CAPTION>
IDS SMALL TEMPLETON
CO INDEX FORGEIGN LOAN
FUND Y FUND (A) FUND CASH TOTAL
------------ ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
- ------
INVESTMENTS:
Stable Value Fund $24,723,993
AET Equity Index II 19,354,727
The Pep Boys Stock Fund- At market 24,063,198
(Cost $33,659,269 consisting of
1,495,403 shares and cash of $609,977)
Balanced Fund 4,957,620
IDS Bond Fund Y 27,069
IDS Small Company Index Fund Y $45,022 45,022
Templeton Foreign Fund (A) $18,459 18,459
Loans to participants $6,047,833 6,047,833
------------ ------------ ------------ ------------- -----------
Total investments $45,022 $18,459 $6,047,833 0 79,237,921
EMPLOYER AND PARTICIPANT CONTRIBUTIONS RECEIVABLE:
Participant Contribution $532,687 532,687
Employer Contribution 226,214 226,214
------------ ------------ ------------ ------------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $45,022 $18,459 $6,047,833 $758,901 $79,996,822
============ ============ ============ ============= ===========
See notes to financial statements.
</TABLE>
<PAGE>5
<TABLE>
THE PEP BOYS SAVINGS PLAN
- ----------------------------------------------
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 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>
ASSETS
- ------
INVESTMENTS:
Stable Value Fund $23,838,014 $23,838,014
Index Equity Fund - Vanguard Index Trust $12,767,417 12,767,417
The Pep Boys Stock Fund - at market (Cost
$30,698,376 consisting of 1,038,416 shares) $24,792,194 24,792,194
Balanced Fund - SSGA Series $2,989,057 2,989,057
Loans to participants $4,983,354 4,983,354
----------- ----------- ----------- ----------- ----------- -----------
Total investments 23,838,014 12,767,417 24,792,194 2,989,057 4,983,354 69,370,036
EMPLOYER AND PARTICIPANT CONTRIBUTIONS RECEIVABLE:
Stable Value Fund 22,324 22,324
Index Equity Fund 82,088 82,088
Balanced Fund 848 848
EMPLOYER RECEIVABLE:
39,796 shares of The Pep Boys - Manny,
Moe & Jack common stock, cost $931,665 954,418 954,418
Transfers 132,482 62,660 43,758 238,900
----------- ----------- ----------- ----------- ----------- -----------
TOTAL $23,860,338 $12,981,987 $25,809,272 $3,033,663 $4,983,354 $70,668,614
=========== =========== =========== =========== =========== ===========
LIABILITIES AND NET ASSETS AVAILABLE FOR BENEFITS
- -------------------------------------------------
LIABILITIES:
Employer loan $ 883,843 $ 883,843
Transfers 238,900 238,900
Other 10,256 $15,848 $ 22,574 $ 2,207 $ 0 50,885
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 1,132,999 15,848 22,574 2,207 0 1,173,628
NET ASSETS AVAILABLE FOR BENEFITS 22,727,339 12,966,139 25,786,698 3,031,456 4,983,354 69,494,986
----------- ----------- ----------- ----------- ----------- -----------
TOTAL $23,860,338 $12,981,987 $25,809,272 $3,033,663 $4,983,354 $70,668,614
=========== =========== =========== =========== =========== ===========
See notes to financial statements.
</TABLE>
<PAGE>6
<TABLE>
THE PEP BOYS SAVINGS PLAN
- ----------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- ----------------------------------------------------------
SUPPLEMENTAL INFORMATION
------------------------
INVESTMENT FUNDS
<CAPTION> ----------------
STABLE INDEX THE PEP BOYS IDS
VALUE EQUITY STOCK BALANCED BOND
FUND FUND FUND FUND FUND Y
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1996 $20,073,920 $ 8,132,859 $26,465,066 $1,701,653 $0
Dividend and interest income 1,378,337 257,829 204,491 130,883 0
Interest on loans 176,881 59,319 130,170 15,800 0
----------- ----------- ------------ ------------ ------------
NET INVESTMENT INCOME 1,555,218 317,148 334,661 146,683 0
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 0 2,693,653 (5,878,569) 278,792 0
CONTRIBUTIONS:
Participants 3,586,703 3,306,746 3,644,819 1,306,225 0
The Pep Boys - Manny, Moe & Jack 23,532 4,307,844 0
DISTRIBUTIONS (2,079,838) (1,138,100) (2,724,027) (285,770) 0
LOANS:
New loans (1,285,684) (633,798) (991,921) (195,230) 0
Principal repayments 853,488 287,631 628,825 79,103 0
----------- ----------- ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1997 $22,727,339 $12,966,139 $25,786,698 $3,031,456 $0
Dividend and interest income 1,401,097 1,262,455 4,994,619 418,988 355
Interest on loans 197,760 79,345 136,986 27,187 15
----------- ----------- ------------ ------------ ------------
INVESTMENT INCOME 1,598,857 1,341,800 5,131,605 446,175 370
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 326,888 3,231,071 (13,955,487) 313,679 (62)
CONTRIBUTIONS:
Participants 3,757,576 3,996,287 4,135,244 1,863,271 27,427
The Pep Boys - Manny, Moe & Jack 0 0 5,359,132 0 0
DISTRIBUTIONS (2,792,385) (1,689,744) (2,297,915) (546,638) 0
LOANS:
New loans (1,802,087) (865,528) (734,285) (275,441) (720)
Principal repayments 907,805 374,702 638,206 125,118 54
EMPLOYER AND PARTICIPANT CONTRIBUTIONS RECEIVABLE
Participant Contribution 0 0 0 0 0
Employer Contribution 0 0 0 0 0
----------- ----------- ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1998 $24,723,993 $19,354,727 $24,063,198 $4,957,620 $27,069
=========== =========== =========== ============ ============
[RESTUBBED TABLE]
<CAPTION>
IDS SMALL TEMPLETON
CO INDEX FOREIGN LOAN
FUND Y FUND (A) FUND CASH TOTAL
------------ ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1996 $0 $0 $4,473,214 $0 $60,846,712
Dividend and interest income 0 0 0 0 1,971,540
Interest on loans 0 0 0 0 382,170
------------ ------------ ----------- ---------- -------------
NET INVESTMENT INCOME 0 0 0 0 2,353,710
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 0 0 0 0 (2,906,124)
CONTRIBUTIONS:
Participants 0 0 0 0 11,844,493
The Pep Boys - Manny, Moe & Jack 0 0 0 0 4,331,376
DISTRIBUTIONS 0 0 (747,446) 0 (6,975,181)
LOANS:
New loans 0 0 3,106,633 0 0
Principal repayments 0 0 (1,849,047) 0 0
------------ ------------ ------------ ---------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1997 $0 $0 $4,983,354 $0 $69,494,986
Dividend and interest income 1,590 0 0 0 8,079,104
Interest on loans 106 31 0 0 441,430
------------ ------------ ------------ ---------- -------------
INVESTMENT INCOME 1,696 31 0 0 8,520,534
NET APPRECIATION/(DEPRECIATION)
IN FAIR VALUE OF INVESTMENTS 1,552 (141) 0 0 (10,082,500)
CONTRIBUTIONS:
Participants 42,123 20,423 0 0 13,842,351
The Pep Boys - Manny, Moe & Jack 0 0 0 0 5,359,132
DISTRIBUTIONS 0 0 (569,900) 0 (7,896,582)
LOANS:
New loans (839) (1,997) 3,680,897 0 0
Principal repayments 490 143 (2,046,518) 0 0
EMPLOYER AND PARTICIPANT CONTRIBUTIONS RECEIVABLE
Participant Contribution 0 0 0 532,687 532,687
Employer Contribution 0 0 0 226,214 226,214
----------- ------------- ------------ ---------- -------------
NET ASSETS AVAILABLE FOR BENEFITS,
DECEMBER 31, 1998 $45,022 $18,459 $6,047,833 $758,901 $79,996,822
============ ============ ============ ========== =============
See notes to financial statements.
</TABLE>
<PAGE>7
THE PEP BOYS SAVINGS PLAN
- -------------------------
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 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
-----------
Certain investments in the Stable Value Fund (Group Annuity Contracts) and
all of the loan fund are 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 12% 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>8
Participant contributions to the Plan, up to $10,000 during 1998 and up to
$9,500 during 1997, 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 make an
irrevocable election to have 100% of the Company's contribution
transferred into any of the 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 this
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
(March 24, 1999) 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.
<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, 1998, 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 December 31, 1998, 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
Under the provisions of ERISA, all of the above individuals are
"parties-in-interest."
3. INVESTMENT PROGRAMS
-------------------
Participant contributions - Beginning October 1, 1998, 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%. Prior to that date, the participant was
limited to selecting a contribution distribution in increments of 10%
only during initial enrollment or a re-enrollment period.
STABLE VALUE FUND
-----------------
From Plan inception through September 30, 1998, the Stable Value Fund has
invested in several fully benefit-responsive Group Annuity Contracts
issued by insurance companies with fair values approximating contract
values at December 31, 1997. The contracts seek to provide a fixed rate
of interest for a specific period of time. These investments contractually
stipulate a rate of return and do not guarantee a return of principal.
Contributions for 1997 through September 30, 1998 to the Stable Value Fund
were 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. Effective July 1, 1992, participants'
contributions to this fund are invested in a blended fund comprised of
various Group Annuity Contracts and the ITC - Stable Value Fund.
Individual participants receive a blended rate of interest based upon the
overall rate of return. The average yield on the Stable Value Fund for the
years ended December 31, 1998 and December 31, 1997 was 8.4% and 6.2%.
As of October 1, 1998, the Stable Value Fund transferred the proceeds of
all matured Group Annuity Contracts to the AMEX Trust Stable Value Fund II.
The AMEX Trust Stable Value 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 Value Fund I (a stable
value pooled fund). The remaining Group Annuity Contracts will be
converted to the American Express Trust Stable Value Fund II as the
contracts come to maturity.
INDEX EQUITY FUND
-----------------
The Index Equity Fund was invested in the Vanguard Index Trust during
1997 and through September 30, 1998. The Vanguard Index Trust 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.
As of October 1, 1998, investments in the Index Equity Fund were
converted from the Vanguard Index Trust to the AMEX Trust Equity Index II
Fund. The AMEX Trust Equity Index II Fund 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 IDS Small Company Index Fund or Templeton Foreign Stock Fund.
THE PEP BOYS STOCK FUND
-----------------------
The Pep Boys-Manny Moe & Jack Common Stock Fund is invested primarily in
the Pep Boys-Manny, Moe & Jack Common Stock. This fund gives the
participant the opportunity to acquire an ownership interest in the
Company. The value of the amounts invested in this fund will depend on the
price of the stock at any given time and can go up or down.
<PAGE>10
BALANCED FUND
-------------
During 1997 and through September 30, 1998, the Balanced Fund was
managed by SSGA Funds in Boston, Massachusetts, and invested 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.
On October 1, 1998, investments in the Balanced Fund were converted from
the SSGA Funds to the Invesco Total Return Fund. 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.
THE IDS BOND FUND
-----------------
As of October 1, 1998, the Pep Boys Savings Plan added the IDS Bond
Fund to the investment programs available to eligible participants. The
IDS 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.
THE IDS SMALL COMPANY INDEX FUND
--------------------------------
As of October 1, 1998, the Pep Boys Savings Plan added the IDS Small
Company Index Fund to the investment programs available to eligible
participants. The IDS 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.
THE TEMPLETON FOREIGN STOCK FUND
--------------------------------
As of October 1, 1998, the Pep Boys Savings Plan added the Templeton
Foreign Stock Fund to the investment programs available to eligible
participants. The Templeton Foreign Stock 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.
<PAGE>11
<TABLE>
Investments that represent 5% or more of the net assets
available for benefits at December 31, 1998 and 1997 are as
follows:
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
STABLE VALUE FUND:
Group Annuity Contracts:
Principal Mutual Life Insurance
Company #4-8601 0 $ 3,100,357
Provident Life and Accident
Insurance Company #627-05414 0 0
Metropolitan Life Insurance
Company #GAC-13211 0 0
New York Life Insurance Company
#GA30139 $3,965,986 3,668,813
Invesco Funds Group, Inc.
#8008896-0-87 0 11,710,965
American Express Trust Company
#IM18420 18,392,662 0
Providian Capital Management
#BDA00572FR 1,160,281 2,196,463
Executive Life Insurance Company
#CG01321A3A 0 883,843
John Hancock Mutual Life Insurance
Company #GAC7299 1,205,064 2,277,573
---------- ----------
Total Stable Value Fund $24,723,993 $23,838,014
=========== ===========
INDEX EQUITY FUND* $19,354,727 $12,767,417
=========== ===========
THE PEP BOYS STOCK FUND - The Pep Boys -
Manny, Moe & Jack Common Stock $24,063,198 $24,792,194
=========== ===========
BALANCED FUND $ 4,957,620 0
=========== ===========
LOANS $ 6,047,833 $ 4,983,354
=========== ===========
* Amounts in the Index Equity Fund were invested in a Vanguard Index Trust in 1997
and were invested in American Express Index Equity Fund in 1998.
</TABLE>
<PAGE>12
<TABLE>
THE PEP BOYS SAVINGS PLAN
- -------------------------
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
CURRENT
IDENTITY DESCRIPTION COST VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York Life Insurance Company 8.10% 12/31/99 $3,965,987 $3,965,986
American Express Trust Company N/A N/A 18,161,487 18,392,662
Invesco Funds Group, Inc. N/A N/A 4,648,673 4,957,620
Providian Capital Management 5.65% 06/30/99 1,160,281 1,160,281
John Hancock Mutual Life Insurance Company 5.82% 12/31/98 1,200,441 1,205,064
AET Equity Index II 15,640,872 19,354,727
THE PEP BOYS STOCK FUND - The Pep Boys -
Manny, Moe & Jack Common Stock * N/A N/A 33,659,269 24,063,198
IDS Bond Fund Y 27,136 27,069
IDS Small Company Index Fund Y 43,463 45,022
Templeton Foreign Fund (A) 18,561 18,459
LOANS TO PARTICIPANTS 7.00%-10.00% 1999-2003 6,047,833 6,047,833
----------- -----------
$84,574,003 $79,237,921
=========== ===========
* Indicates party-in-interest to the plan.
</TABLE>
<PAGE>13
<TABLE>
THE PEP BOYS SAVINGS PLAN
- -------------------------
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
- ----------------------------------------------
Aggregate of transactions involving the same security exceeding 5% of net
assets at January 1, 1998
<CAPTION>
Number of Aggregate
Identity of Party Transactions Description Change
- ------------------------------- ------------ --------------------- -----------
<S> <C> <C> <C>
The Pep Boys - Manny, Moe & Jack 818 Common Stock $ 7,461,924
Invesco Retirement Trust Funds 172 Stable Value Fund (4,375,502)
AMEX Stable Capital II Fund 429 Stable Value Fund 4,519,414
Vanguard Group 173 Equity Index Fund (13,448,551)
AMEX Trust Equity Index 631 Equity Index Fund 15,556,046
SSGA Fund 134 Balanced Fund (3,211,611)
Invesco Total Return 455 Balanced Fund 4,117,911
</TABLE>
Individual transactions in 1998 involving the same security exceeding 5% of
net assets at January 1, 1998:
<TABLE>
<CAPTION>
Identity of Party Description Sale Purchase
- ------------------------------- --------------------- ----------- ------------
<S> <C> <C> <C>
Invesco Retirement Trust Funds (1) Stable Value Fund $12,473,000
AMEX Stable Capital II Fund Stable Value Fund $12,473,000
Vanguard Group (1) Equity Index Fund 15,068,199
AMEX Trust Equity Index Equity Index Fund 15,068,199
SSGA Fund (1) Balanced Fund 4,154,850
Invesco Total Return Balanced Fund 4,154,850
The Pep Boys- Manny, Moe,
and Jack Common Stock 3,999,437
(1) Cost not determinable
</TABLE>
<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
-------------------------
DATE: July 12, 1999 BY: /s/Bernard K. McElroy
------------- -----------------------------
Bernard K. McElroy
Member of the Administrative
Committee
<PAGE>15
EXHIBIT INDEX
=============
Exhibit No. Item Page
----------- ---- ----
23 Consent of Deloitte & Touche LLP 16
<PAGE>16
INDEPENDENT AUDITORS' CONSENT
- -----------------------------
We consent to the incorporation by reference in Registration Statement
No. 33-31765, and No. 333-51585 of The Pep Boys - Manny, Moe and Jack on
Form S-8 of our report dated June 23, 1999 appearing in the Annual
Report on Form 11-K of The Pep Boys Savings Plan for the year ended
December 31, 1998.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
July 12, 1999
