v2.3.0.11
CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands
Oct. 29, 2011
Jan. 29, 2011
Current assets:    
Cash and cash equivalents $ 80,716 $ 90,240
Accounts receivable, less allowance for uncollectible accounts of $1,257 and $1,551 23,524 19,540
Merchandise inventories 606,254 564,402
Prepaid expenses 15,571 28,542
Other current assets 47,550 60,812
Total current assets 773,615 763,536
Property and equipment - net 693,779 700,981
Goodwill 46,219 2,549
Deferred income taxes 66,674 66,019
Other long-term assets 30,821 23,587
Total assets 1,611,108 1,556,672
Current liabilities:    
Accounts payable 238,599 210,440
Trade payable program liability 68,320 56,287
Accrued expenses 221,976 236,028
Deferred income taxes 58,898 56,335
Current maturities of long-term debt 1,079 1,079
Total current liabilities 588,872 560,169
Long-term debt less current maturities 294,313 295,122
Other long-term liabilities 72,257 70,046
Deferred gain from asset sales 143,424 152,875
Commitments and contingencies    
Stockholders' equity:    
Common stock, par value $1 per share: authorized 500,000,000 shares; issued 68,557,041 shares 68,557 68,557
Additional paid-in capital 295,813 295,361
Retained earnings 429,935 402,600
Accumulated other comprehensive loss (14,727) (17,028)
Treasury stock, at cost - 15,835,096 shares and 15,971,910 shares (267,336) (271,030)
Total stockholders' equity 512,242 478,460
Total liabilities and stockholders' equity $ 1,611,108 $ 1,556,672
v2.3.0.11
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Thousands, except Share data
Oct. 29, 2011
Jan. 29, 2011
CONSOLIDATED BALANCE SHEETS    
Accounts receivable, allowance for uncollectible accounts (in dollars) $ 1,257 $ 1,551
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, authorized shares 500,000,000 500,000,000
Common stock, issued shares 68,557,041 68,557,041
Treasury stock, shares 15,835,096 15,971,910
v2.3.0.11
CONSOLIDATED STATEMENTS OF OPERATIONS AND CHANGES IN RETAINED EARNINGS (USD $)
In Thousands, except Per Share data
3 Months Ended 9 Months Ended
Oct. 29, 2011
Oct. 30, 2010
Oct. 29, 2011
Oct. 30, 2010
Merchandise sales $ 414,530 $ 398,368 $ 1,238,424 $ 1,213,736
Service revenue 107,643 97,996 319,884 297,516
Total revenues 522,173 496,364 1,558,308 1,511,252
Costs of merchandise sales 292,397 279,690 865,446 845,848
Costs of service revenue 102,855 90,818 295,607 267,452
Total costs of revenues 395,252 370,508 1,161,053 1,113,300
Gross profit from merchandise sales 122,133 118,678 372,978 367,888
Gross profit from service revenue 4,788 7,178 24,277 30,064
Total gross profit 126,921 125,856 397,255 397,952
Selling, general and administrative expenses 109,549 110,840 331,717 335,580
Net (loss) gain from dispositions of assets (25) 109 61 2,603
Operating profit 17,347 15,125 65,599 64,975
Non-operating income 627 650 1,783 1,855
Interest expense 6,889 6,630 19,831 19,881
Earnings from continuing operations before income taxes and discontinued operations 11,085 9,145 47,551 46,949
Income tax expense 4,063 3,471 14,232 18,316
Earnings from continuing operations before discontinued operations 7,022 5,674 33,319 28,633
(Loss) income from discontinued operations, net of tax (11) 44 3 (367)
Net earnings 7,011 5,718 33,322 28,266
Increase (Decrease) in Retained Earnings        
Retained earnings, beginning of period 424,923 393,245 402,600 374,836
Cash dividends (1,586) (1,581) (4,757) (4,741)
Shares issued and other (413) (282) (1,230) (1,261)
Retained earnings, end of period $ 429,935 $ 397,100 $ 429,935 $ 397,100
Basic earnings per share:        
Earnings from continuing operations (in dollars per share) $ 0.13 $ 0.11 $ 0.63 $ 0.54
Discontinued operations, net of tax (in dollars per share)       $ (0.01)
Basic earnings per share (in dollars per share) $ 0.13 $ 0.11 $ 0.63 $ 0.53
Diluted earnings per share:        
Earnings from continuing operations (in dollars per share) $ 0.13 $ 0.11 $ 0.62 $ 0.54
Discontinued operations, net of tax (in dollars per share)       $ (0.01)
Diluted earnings per share (in dollars per share) $ 0.13 $ 0.11 $ 0.62 $ 0.53
Cash dividends per share (in dollars per share) $ 0.03 $ 0.03 $ 0.09 $ 0.09
v2.3.0.11
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands
9 Months Ended
Oct. 29, 2011
Oct. 30, 2010
Cash flows from operating activities:    
Net earnings $ 33,322 $ 28,266
Adjustments to reconcile net earnings to net cash provided by continuing operations:    
(Income) loss from discontinued operations, net of tax (3) 367
Depreciation and amortization 59,779 55,260
Amortization of deferred gain from asset sales (9,451) (9,451)
Stock compensation expense 2,539 2,748
Deferred income taxes 8,021 11,795
Net gain from disposition of assets (61) (2,603)
Loss from asset impairment 389 970
Other   52
Changes in assets and liabilities, net of the effects of acquisitions:    
Decrease in accounts receivable, prepaid expenses and other 27,767 29,382
Increase in merchandise inventories (34,874) (9,474)
Increase in accounts payable 19,758 4,864
Decrease in accrued expenses (18,693) (17,993)
Decrease in other long-term liabilities (3,483) (2,122)
Net cash provided by continuing operations 85,010 92,061
Net cash provided by (used in) discontinued operations 40 (1,263)
Net cash provided by operating activities 85,050 90,798
Cash flows from investing activities:    
Capital expenditures (50,793) (42,976)
Proceeds from dispositions of assets 89 6,713
Collateral investment (4,763) (5,000)
Acquisitions, net of cash acquired (42,901) (144)
Other (837)  
Net cash used in continuing operations (99,205) (41,407)
Net cash provided by discontinued operations   569
Net cash used in investing activities (99,205) (40,838)
Cash flows from financing activities:    
Borrowings under line of credit agreements 5,181 20,482
Payments under line of credit agreements (5,181) (20,482)
Borrowings on trade payable program liability 97,400 89,913
Payments on trade payable program liability (85,367) (66,995)
Payment for finance issuance cost (2,441)  
Debt payments (809) (809)
Dividends paid (4,757) (4,741)
Other 605 599
Net cash provided by financing activities 4,631 17,967
Net (decrease) increase in cash and cash equivalents (9,524) 67,927
Cash and cash equivalents at beginning of period 90,240 39,326
Cash and cash equivalents at end of period 80,716 107,253
Supplemental disclosure of cash flow information:    
Cash paid for income taxes 1,015 882
Cash paid for interest 14,577 14,412
Non-cash investing activities:    
Accrued purchases of property and equipment $ 1,486 $ 1,280
v2.3.0.11
BASIS OF PRESENTATION
9 Months Ended
Oct. 29, 2011
BASIS OF PRESENTATION  
BASIS OF PRESENTATION

NOTE 1BASIS OF PRESENTATION

 

The Pep Boys — Manny, Moe & Jack and subsidiaries (the “Company”) consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of the Company’s financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, costs and expenses, as well as the disclosure of contingent assets and liabilities and other related disclosures. The Company bases its estimates on historical experience and on various other assumptions that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of the Company’s assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates, and the Company includes any revisions to its estimates in the results for the period in which the actual amounts become known.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted, as permitted by Rule 10-01 of the Securities and Exchange Commission’s Regulation S-X, “Interim Financial Statements.” It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 29, 2011. The results of operations for the thirty-nine weeks ended October 29, 2011 are not necessarily indicative of the operating results for the full fiscal year.

 

The consolidated financial statements presented herein are unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations and cash flows as of October 29, 2011 and for all periods presented have been made.

 

The Company’s fiscal year ends on the Saturday nearest January 31. Accordingly, references to fiscal years 2011 and 2010 refer to the fiscal year ending January 28, 2012 and the fiscal year ended January 29, 2011, respectively.

 

The Company operated 729 store locations at October 29, 2011, of which 232 were owned and 497 were leased.

 

The Company maintains a trade payable program that is funded by various bank participants who have the ability, but not the obligation, to purchase account receivables owed by the Company from its vendors. The Company, in turn, makes the regularly scheduled full vendor payments to the bank participants. In the first quarter of fiscal 2011 as a result of the Company’s review, the Company determined that the gross amount of borrowings and payments on the trade payable program shown on the statement of cash flows under “Cash flows from financing activities” included certain vendors that had not participated in the trade payable program. As such, the Company made an equal and offsetting adjustment to reduce the trade payables borrowings and payments line items within financing activities by $157.0 million for the thirty-nine weeks ended October 30, 2010. The full year impact of this adjustment is to reduce the line items by $225.2 million and $90.3 million for the years ended January 29, 2011 and January 30, 2010, respectively. These adjustments have no net impact on net cash used in financing activities or on any other cash flow line items.

v2.3.0.11
NEW ACCOUNTING STANDARDS
9 Months Ended
Oct. 29, 2011
NEW ACCOUNTING STANDARDS  
NEW ACCOUNTING STANDARDS

NOTE 2NEW ACCOUNTING STANDARDS

 

In December 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2010-29 “Business Combinations (Topic 805) — Disclosure of Supplementary Pro Forma Information for Business Combinations” (“ASU 2010-29”). This accounting standard update clarifies that SEC registrants presenting comparative financial statements should disclose in their pro forma information revenue and earnings of the combined entity as though the current period business combinations had occurred as of the beginning of the comparable prior annual reporting period only. The update also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for material business combinations entered into in fiscal years beginning on or after December 15, 2010 with early adoption permitted. The Company adopted ASU 2010-29 during the first quarter of the current fiscal year.

 

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820) — Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. The Company is currently evaluating ASU 2011-04 and has not yet determined the impact the adoption will have on the consolidated financial statements.

 

In June of 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 was issued to improve the comparability of financial reporting between U.S. GAAP and IFRS, and eliminates previous U.S. GAAP guidance that allowed an entity to present components of other comprehensive income (“OCI”) as part of its statement of changes in shareholders’ equity. With the issuance of ASU 2011-05, companies are now required to report all components of OCI either in a single continuous statement of total comprehensive income, which includes components of both OCI and net income, or in a separate statement appearing consecutively with the statement of income. ASU 2011-05 does not affect current guidance for the accounting of the components of OCI, or which items are included within total comprehensive income, and is effective for periods beginning after December 15, 2011, with early adoption permitted. The application of this guidance affects presentation only and therefore is not expected to have an impact on the Company’s consolidated financial condition, results of operations or cash flows.

 

In September 2011, the FASB issued ASU 2011-08, “Intangibles — Goodwill and Other (Topic 350) —Testing Goodwill for Impairment” (“ASU 2011-08”). The new guidance provides entities with the option to perform a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before applying the quantitative two-step goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the quantitative two-step goodwill impairment test. Entities also have the option to bypass the assessment of qualitative factors for any reporting unit in any period and proceed directly to performing the first step of the quantitative two-step goodwill impairment test, as was required prior to the issuance of this new guidance. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted.  The Company is evaluating which method it will use for impairment testing at the end of the current fiscal year.

v2.3.0.11
ACQUISITIONS
9 Months Ended
Oct. 29, 2011
ACQUISITIONS  
ACQUISITIONS

NOTE 3ACQUISITIONS

 

During the current fiscal year, the Company made three separate acquisitions. The Company acquired the assets related to seven service and tire centers located in the Seattle-Tacoma area, the assets related to seven service and tire centers located in the Houston, Texas area and all outstanding shares of capital stock of Tire Stores Group Holding Corporation which operated an 85-store chain in Florida, Georgia and Alabama under the name Big 10. Collectively, the acquired stores produced approximately $94.7 million in sales annually based on audited and unaudited pre-acquisition historical information. The total purchase price of these stores was approximately $42.6 million in cash and the assumption of certain liabilities. The acquisitions were financed through cash flows provided by operations. The results of operations of these acquired stores are included in the Company’s results from their respective acquisition dates.

 

The Company has recorded its initial accounting for these acquisitions in accordance with accounting guidance on business combinations. The acquisitions resulted in goodwill related to, among other things, growth opportunities and assembled workforces. A portion of the goodwill is expected to be deductible for tax purposes. The Company has recorded finite-lived intangible assets at their estimated fair value related to trade name, favorable and unfavorable leases.

 

The Company expensed all costs related to these acquisitions during fiscal 2011. The total costs related to these acquisitions were $1.5 million and are included in the consolidated statement of operations within selling, general and administrative expenses.

 

The purchase price of the acquisitions have been preliminarily allocated to the net tangible and intangible assets acquired, with the remainder recorded as goodwill on the basis of estimated fair values. We have revised our estimates in the current quarter, which resulted in a decrease in goodwill of $2.4 million from our initial allocation of purchase price. The change related primarily to the elimination of reserves for uncertain tax positions related to federal and state net operating losses which are included within other non-current assets. The preliminary allocation is a follows:

 

 

 

As of

 

 

 

Acquisition

 

(dollar amounts in thousands)

 

Dates

 

Current assets

 

$

11,642

 

Intangible assets

 

950

 

Other non-current assets

 

9,627

 

Current liabilities

 

(13,817

)

Long-term liabilities

 

(9,458

)

Total net identifiable assets acquired

 

$

(1,056

)

 

 

 

 

Total consideration transferred, net of cash acquired

 

$

42,614

 

Less: total net identifiable assets acquired

 

(1,056

)

Goodwill

 

$

43,670

 

 

Intangible assets consist of trade names ($0.6 million) and favorable leases ($0.3 million). Long-term liabilities includes unfavorable leases ($9.1 million). The trade names are being amortized over their estimated useful life of 3 years. The favorable and unfavorable lease intangible assets and liabilities are being amortized to rent expense over their respective lease terms, ranging from 2 to 16 years. In connection with the acquisitions, the Company assumed additional lease obligations totaling $122.0 million over an average of 14 years.

 

Sales for the fiscal 2011 acquired stores totaled $43.6 million. Net earnings for the acquired stores for the period from acquisition date through October 29, 2011 were break-even, excluding transition related expenses.

 

The purchase price allocation remains preliminary for some of the acquired stores due to the finalization of certain valuation adjustments. The Company believes that this will be finalized by the fourth quarter of fiscal 2011 and that any adjustments to the purchase price allocation will not be material.

 

As the acquisitions (including Big 10) were immaterial to the operating results both individually and in aggregate for the thirteen and thirty-nine week periods ended October 29, 2011 and October 30, 2010, pro forma results of operations are not presented.

 

In the third quarter of 2011, the Company recorded a reduction to the contingent consideration of $0.7 million related to one of the Company’s acquisitions. The reversal of contingent consideration was recorded to selling, general and administrative expenses in the consolidated statements of operations.

v2.3.0.11
MERCHANDISE INVENTORIES
9 Months Ended
Oct. 29, 2011
MERCHANDISE INVENTORIES  
MERCHANDISE INVENTORIES

NOTE 4MERCHANDISE INVENTORIES

 

Merchandise inventories are valued at the lower of cost or market. Cost is determined by using the last-in, first-out (“LIFO”) method. An actual valuation of inventory under the LIFO method can be made only at the end of each fiscal year based on inventory and costs at that time. Accordingly, interim LIFO calculations must be based on management’s estimates of expected fiscal year-end inventory levels and costs. If the first-in, first-out (“FIFO”) method of costing inventory had been used by the Company, inventory would have been $545.7 million and $486.0 million as of October 29, 2011 and January 29, 2011, respectively.

 

The Company’s inventory, consisting primarily of auto parts and accessories, is used on vehicles typically having long lives. Because of this, and combined with the Company’s historical experience of returning excess inventory to the Company’s vendors for full credit, the risk of obsolescence is minimal. The Company establishes a reserve for excess inventory for instances where less than full credit will be received for such returns or where the Company anticipates items will be sold at retail prices that are less than recorded costs. The reserve is based on management’s judgment, including estimates and assumptions regarding marketability of products, the market value of inventory to be sold in future periods and on historical experiences where the Company received less than full credit from vendors for product returns. The Company also provides for estimated inventory shrinkage based upon historical levels and the results of its cycle counting program. The Company’s inventory adjustments for these matters were approximately $5.6 million at October 29, 2011 and $6.0 million at January 29, 2011.

v2.3.0.11
PROPERTY AND EQUIPMENT
9 Months Ended
Oct. 29, 2011
PROPERTY AND EQUIPMENT  
PROPERTY AND EQUIPMENT

NOTE 5PROPERTY AND EQUIPMENT

 

The Company’s property and equipment as of October 29, 2011 and January 29, 2011 was as follows:

 

(dollar amounts in thousands)

 

October 29, 2011

 

January 29, 2011

 

 

 

 

 

 

 

Property and equipment

 

 

 

 

 

Land

 

$

204,023

 

$

204,023

 

Buildings and improvements

 

865,251

 

848,268

 

Furniture, fixtures and equipment

 

710,719

 

685,481

 

Construction in progress

 

5,180

 

8,781

 

Accumulated depreciation and amortization

 

(1,091,394

)

(1,045,572

)

Property and equipment — net

 

$

693,779

 

$

700,981

 

v2.3.0.11
WARRANTY RESERVE
9 Months Ended
Oct. 29, 2011
WARRANTY RESERVE  
WARRANTY RESERVE

NOTE 6WARRANTY RESERVE

 

The Company provides warranties for both its merchandise sales and service labor. Warranties for merchandise are generally covered by the respective vendors, with the Company covering any costs above the vendor’s stipulated allowance. Service labor is warranted in full by the Company for a limited specific time period. The Company establishes its warranty reserves based on historical experiences. These costs are included in either costs of merchandise sales or costs of service revenues in the consolidated statements of operations.

 

The reserve for warranty cost activity for the thirty-nine weeks ended October 29, 2011 and the fifty-two weeks ended January 29, 2011 is as follows:

 

(dollar amounts in thousands)

 

October 29, 2011

 

January 29, 2011

 

Beginning balance

 

$

673

 

$

694

 

 

 

 

 

 

 

Additions related to current period sales

 

9,790

 

12,261

 

 

 

 

 

 

 

Warranty costs incurred in current period

 

(9,790

)

(12,282

)

 

 

 

 

 

 

Ending balance

 

$

673

 

$

673

 

v2.3.0.11
DEBT AND FINANCING ARRANGEMENTS
9 Months Ended
Oct. 29, 2011
DEBT AND FINANCING ARRANGEMENTS  
DEBT AND FINANCING ARRANGEMENTS

NOTE 7DEBT AND FINANCING ARRANGEMENTS

 

The following are the components of debt and financing arrangements:

 

(dollar amounts in thousands)

 

October 29, 2011

 

January 29, 2011

 

7.50% Senior Subordinated Notes, due December 2014

 

$

147,565

 

$

147,565

 

Senior Secured Term Loan, due October 2013

 

147,827

 

148,636

 

Revolving Credit Agreement, expiring July 2016

 

 

 

Long-term debt

 

295,392

 

296,201

 

Current maturities

 

(1,079

)

(1,079

)

Long-term debt less current maturities

 

$

294,313

 

$

295,122

 

 

As of October 29, 2011, 126 stores collateralized the Senior Secured Term Loan.

 

On July 26, 2011, the Company amended and restated its Revolving Credit Agreement. The Company’s ability to borrow under the Revolving Credit Agreement is based on a specific borrowing base consisting of inventory and accounts receivable up to a maximum availability of $300.0 million. The amendment reduced the interest rate applicable to borrowings by 75 basis points to a rate between London Interbank Offered Rate (LIBOR) plus 2.00% to 2.50% and extended the maturity date of the Revolving Credit Agreement to July 26, 2016. The related refinancing fees of $2.4 million are being amortized over the new five year life. As of October 29, 2011, there were no outstanding borrowings under the Revolving Credit Agreement and $30.0 million of availability was utilized to support outstanding letters of credit. Taking this into account and the borrowing base requirements, as of October 29, 2011, there was $210.1 million of availability remaining.

 

Several of the Company’s debt agreements require compliance with covenants. The most restrictive of these covenants, an earnings before interest, taxes, depreciation and amortization (“EBITDA”) requirement, is triggered if the Company’s availability under its Revolving Credit Agreement drops below $50.0 million. As of October 29, 2011, the Company was in compliance with all financial covenants contained in its debt agreements.

 

Interest rates that are currently available to the Company for issuance of debt with similar terms and remaining maturities are used to estimate fair value for debt issues that are not quoted on an exchange. The estimated fair value of long-term debt including current maturities was $292.4 million and $298.3 million as of October 29, 2011 and January 29, 2011, respectively.

v2.3.0.11
INCOME TAXES
9 Months Ended
Oct. 29, 2011
INCOME TAXES  
INCOME TAXES

NOTE 8INCOME TAXES

 

The Company recognizes taxes payable for the current year, as well as deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. The Company must assess the likelihood that any recorded deferred tax assets will be recovered against future taxable income. To the extent the Company believes it is more likely than not that the asset will not be recoverable, a valuation allowance must be established. All available evidence, both positive and negative, is considered to determine whether based on the weight of that evidence a valuation allowance is needed. To establish this positive evidence, the Company considers future projections of income and various tax planning strategies for generating income sufficient to utilize the deferred tax assets. Due to an organizational restructuring of its subsidiaries and the Company’s improved profitability and projected future income, the Company released $3.6 million (net of federal tax) of valuation allowance relating to state net operating loss carryforwards and credits during the thirty-nine weeks ended October 29, 2011.

 

For income tax benefits related to uncertain tax positions to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. During the thirteen and thirty-nine weeks ended October 29, 2011, the Company did not have a material change to its uncertain tax position liabilities.

v2.3.0.11
ACCUMULATED OTHER COMPREHENSIVE LOSS
9 Months Ended
Oct. 29, 2011
ACCUMULATED OTHER COMPREHENSIVE LOSS.  
ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 9ACCUMULATED OTHER COMPREHENSIVE LOSS

 

The following are the components of other comprehensive income:

 

 

 

Thirteen Weeks Ended

 

Thirty-nine Weeks Ended

 

(dollar amounts in thousands)

 

October 29,
2011

 

October 30,
2010

 

October 29,
2011

 

October 30,
2010

 

Net earnings

 

$

7,011

 

$

5,718

 

$

33,322

 

$

28,266

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

Defined benefit plan adjustment

 

236

 

264

 

709

 

794

 

Derivative financial instrument adjustment

 

907

 

(226

)

1,592

 

(1,823

)

Comprehensive income

 

$

8,154

 

$

5,756

 

$

35,623

 

$

27,237

 

 

The components of accumulated other comprehensive loss are:

 

(dollar amounts in thousands)

 

October 29, 2011

 

January 29, 2011

 

 

 

 

 

 

 

Defined benefit plan adjustment, net of tax

 

$

(5,867

)

$

(6,576

)

Derivative financial instrument adjustment, net of tax

 

(8,860

)

(10,452

)

Accumulated other comprehensive loss

 

$

(14,727

)

$

(17,028

)

v2.3.0.11
IMPAIRMENTS AND ASSETS HELD FOR SALE
9 Months Ended
Oct. 29, 2011
IMPAIRMENTS AND ASSETS HELD FOR SALE  
IMPAIRMENTS AND ASSETS HELD FOR SALE

NOTE 10IMPAIRMENTS AND ASSETS HELD FOR SALE

 

During the second quarter of fiscal 2011 and 2010, the Company recorded a $0.4 million and a $0.8 million impairment charge, respectively, related to stores classified as held and used. The Company used a probability-weighted approach and estimates of expected future cash flows to determine the fair value of the stores. Discount and growth rate assumptions were derived from current economic conditions, management’s expectations and projected trends of current operating results. The fair market value estimate is classified as a Level 3 measure within the fair value hierarchy. Of the $0.4 million impairment charge in fiscal 2011, $0.1 million was charged to costs of merchandise sales, and $0.3 million was charged to costs of service revenues. Of the $0.8 million impairment charge in fiscal 2010, $0.6 million was charged to costs of merchandise sales, and $0.2 million was charged to costs of service revenue.

 

During the second quarter of fiscal 2010, the Company also recorded a $0.2 million impairment charge related to a store classified as held for disposal. The Company lowered its selling price reflecting declines in the commercial real estate market. The fair market value of the store is classified as a Level 2 measure within the fair value hierarchy. Substantially all of this impairment was charged to costs of merchandise sales.

 

During the thirteen week period ended October 30, 2010, the Company sold one store classified as held for disposal for net proceeds of $0.6 million and recognized a net gain of $0.2 million. During the thirty-nine week period ended October 30, 2010, the Company sold five stores classified as held for disposal for net proceeds of $3.5 million and recognized a net gain of $0.5 million.

 

Assets held for sale were $0.4 million as of October 29, 2011 and $0.5 million as of January 29, 2011 and are recorded within other current assets. Subsequent to the end of the third quarter of fiscal 2011, the Company sold the last remaining store classified as an asset held for sale at the property’s carrying value.

v2.3.0.11
EARNINGS PER SHARE
9 Months Ended
Oct. 29, 2011
EARNINGS PER SHARE  
EARNINGS PER SHARE

NOTE 11EARNINGS PER SHARE

 

The following table presents the calculation of basic and diluted earnings per share for earnings from continuing operations and net earnings:

 

 

 

Thirteen Weeks Ended

 

Thirty-nine Weeks Ended

 

(in thousands, except per share amounts)

 

October 29,
2011

 

October 30,
2010

 

October 29,
2011

 

October 30,
2010

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Earnings from continuing operations

 

$

7,022

 

$

5,674

 

$

33,319

 

$

28,633

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from discontinued operations, net of tax

 

(11

)

44

 

3

 

(367

)

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

7,011

 

$

5,718

 

$

33,322

 

$

28,266

 

 

 

 

 

 

 

 

 

 

 

 

(b)

Basic average number of common shares outstanding during period

 

52,998

 

52,717

 

52,933

 

52,637

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares assumed issued upon exercise of dilutive stock options, net of assumed repurchase, at the average market price

 

600

 

447

 

661

 

434

 

 

 

 

 

 

 

 

 

 

 

 

(c)

Diluted average number of common shares assumed outstanding during period

 

53,598

 

53,164

 

53,594

 

53,071

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share:

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations (a/b)

 

$

0.13

 

$

0.11

 

$

0.63

 

$

0.54

 

 

Discontinued operations, net of tax

 

 

 

 

(0.01

)

 

Basic earnings per share

 

$

0.13

 

$

0.11

 

$

0.63

 

$

0.53

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

Net earnings from continuing operations (a/c)

 

$

0.13

 

$

0.11

 

$

0.62

 

$

0.54

 

 

Discontinued operations, net of tax

 

 

 

 

(0.01

)

 

Diluted earnings per share

 

$

0.13

 

$

0.11

 

$

0.62

 

$

0.53

 

 

At October 29, 2011 and October 30, 2010, respectively, there were 2,640,000 and 2,321,000 outstanding options and restricted stock units. Certain stock options were excluded from the calculation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares for the periods then ended and therefore would be anti-dilutive. The total numbers of such shares excluded from the diluted earnings per share calculation are 904,000 and 1,078,000 for the thirty-nine weeks ended October 29, 2011 and October 30, 2010, respectively. The total numbers of such shares excluded from the diluted earnings per share calculation are 1,050,000 and 1,059,000 for the thirteen weeks ended October 29, 2011 and October 30, 2010, respectively.

v2.3.0.11
BENEFIT PLANS
9 Months Ended
Oct. 29, 2011
BENEFIT PLANS  
BENEFIT PLANS

NOTE 12BENEFIT PLANS

 

The Company has a qualified 401(k) savings plan and a separate plan for employees residing in Puerto Rico, which cover all full-time employees who are at least 21 years of age with one or more years of service. The Company also maintains a non-qualified defined contribution Supplemental Executive Retirement Plan (the “Account Plan”) for key employees designated by the Board of Directors. The Company’s contribution to these plans for fiscal 2011 is contingent upon meeting certain performance metrics. The Company has not recorded any contribution expense for these plans in the first nine months of 2011. The Company’s expense related to the savings plans and the Account Plan for the thirteen weeks ended October 30, 2010 was approximately $0.9 million and $0.3 million, respectively, and for the thirty-nine weeks ended October 30, 2010, approximately $2.5 million and $1.0 million, respectively.

 

The Company also has a frozen defined benefit pension plan (the “Plan”) covering the Company’s full-time employees hired on or before February 1, 1992. The Company’s expense for its pension plan follows:

 

 

 

Thirteen Weeks Ended

 

Thirty-nine Weeks Ended

 

(dollar amounts in thousands)

 

October 29, 2011

 

October 30, 2010

 

October 29, 2011

 

October 30, 2010

 

 

 

 

 

 

 

 

 

 

 

Interest cost

 

640

 

640

 

1,918

 

1,920

 

Expected return on plan assets

 

(686

)

(538

)

(2,058

)

(1,613

)

Amortization of net loss

 

378

 

421

 

1,134

 

1,264

 

Net periodic benefit cost

 

$

332

 

$

523

 

$

994

 

$

1,571

 

 

The Plan is subject to minimum funding requirements of the Employee Retirement Income Security Act of 1974 as amended. While the Company has no minimum funding requirement during fiscal 2011, it made a $3.0 million discretionary contribution to the defined benefit pension plan on April 28, 2011.

 

During the third quarter of fiscal 2011, the Company began the process of terminating the Plan. The termination of the Plan is expected to be completed by the end of fiscal 2012. In order to terminate the Plan, in accordance with Internal Revenue Service and Pension Benefit Guaranty Corporation requirements, the Company is required to fully fund the Plan on a termination basis and will commit to contribute the additional assets necessary to do so. Plan participants will not be adversely affected by the Plan termination, but rather will have their benefits either converted into a lump sum cash payment or an annuity contract placed with an insurance carrier.

v2.3.0.11
EQUITY COMPENSATION PLANS
9 Months Ended
Oct. 29, 2011
EQUITY COMPENSATION PLANS  
EQUITY COMPENSATION PLANS

NOTE 13EQUITY COMPENSATION PLANS

 

The Company has stock-based compensation plans, under which it grants stock options and restricted stock units to key employees and members of its Board of Directors. The Company generally recognizes compensation expense on a straight-line basis over the vesting period.

 

The following table summarizes the options under the Company’s plan:

 

 

 

Number of Shares

 

Outstanding — January 29, 2011

 

1,831,802

 

Granted

 

265,139

 

Exercised

 

(44,144

)

Forfeited

 

(10,341

)

Expired

 

(31,683

)

Outstanding — October 29, 2011

 

2,010,773

 

 

In the first nine months of fiscal year 2011, the Company granted approximately 265,000 stock options with a weighted average grant date fair value of $5.38. These options have a seven year term and vest over a three year period with a third vesting on each of the three grant date anniversaries. The compensation expense recorded during the thirteen weeks and thirty-nine weeks ended October 29, 2011, for the options granted was immaterial.

 

In the first nine months of fiscal year 2010, the Company granted approximately 303,500 stock options with a weighted average grant date fair value of $4.26. These options have a seven year term and vest over a three year period with a third vesting on each of the three grant date anniversaries. The compensation expense recorded during the thirteen and thirty-nine weeks ended October 30, 2010, for the options granted was immaterial.

 

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility is based on historical volatilities for a time period similar to that of the expected term blended with market based implied volatility at the time of the grant. The risk-free rate is based on the U.S. treasury yield curve for issues with a remaining term equal to the expected term.

 

The following are the weighted-average assumptions:

 

 

 

October 29, 2011

 

October 30, 2010

 

Dividend yield

 

1.0

%

1.4

%

Expected volatility

 

58.2

%

55.7

%

Risk-free interest rate range:

 

 

 

 

 

High

 

1.9

%

2.0

%

Low

 

1.6

%

1.7

%

Ranges of expected lives in years

 

4 - 5

 

4 - 5

 

 

RESTRICTED STOCK UNITS

 

Performance Based Awards

 

In the first quarter of fiscal 2011, the Company granted approximately 95,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal year 2013. The number of underlying shares that may be issued upon vesting will range from 0% to 150%, depending upon the Company achieving the financial targets in fiscal year 2013. The fair value for these awards was $12.48 per unit at the date of the grant. The compensation expense recorded for these restricted stock units was immaterial during the thirteen weeks and thirty-nine weeks ended October 29, 2011.

 

In the first quarter of fiscal 2010, the Company granted approximately 105,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and the Company achieves a return on invested capital target for fiscal year 2012. The number of underlying shares that may be issued upon vesting will range from 0% to 150%, depending upon the Company achieving the financial targets in fiscal year 2012. The fair value for these awards was $10.34 per unit at the date of the grant. The compensation expense recorded for these restricted stock units during the thirteen weeks and thirty-nine weeks ended October 29, 2011 and October 30, 2010, was immaterial.

 

Market Based Awards

 

In the first quarter of fiscal 2011, the Company granted approximately 48,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target in fiscal 2013. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $14.73 per unit grant date fair value. The compensation expense recorded for these restricted stock units during the thirteen weeks and thirty-nine weeks ended October 29, 2011, was immaterial.

 

In the first quarter of fiscal 2010, the Company granted approximately 52,000 restricted stock units that will vest if the employees remain continuously employed through the third anniversary date of the grant and will become exercisable if the Company satisfies a total shareholder return target in fiscal 2012. The number of underlying shares that may become exercisable will range from 0% to 175% depending upon whether the market condition is achieved. The Company used a Monte Carlo simulation to estimate a $12.99 per unit grant date fair value. The compensation expense recorded for these restricted stock units during the thirteen weeks and thirty-nine weeks ended October 29, 2011 and October 30, 2010, was immaterial.

 

Other Awards

 

In the first quarter of fiscal 2011 and 2010, the Company granted approximately 50,000 and 61,000 restricted stock units, respectively, related to officers’ deferred bonus matches under the Company’s non-qualified deferred compensation plan, which vest over a three year period. The fair value of these awards was $13.68 and $12.53, respectively, and the compensation expense recorded for these awards during the thirteen weeks and thirty-nine weeks ended October 29, 2011 and October 30, 2010, was immaterial.

 

In the second quarter of fiscal 2011, the Company granted approximately 42,000 restricted stock units to its non-employee directors of the board that vested immediately. The fair value was $10.67 per unit and the Company recognized compensation expense of approximately $0.4 million for these restricted stock units.

 

In the second quarter of fiscal 2010, the Company granted approximately 52,000 restricted stock units to its non-employee directors of the board that vested immediately. The fair value was $9.55 per unit and the Company recognized compensation expense of approximately $0.5 million for these restricted stock units.

 

The following table summarizes the units under the Company’s plan, assuming maximum vesting of underlying shares for the performance and market based awards described above:

 

 

 

Number of RSUs

 

Nonvested — January 29, 2011

 

432,331

 

Granted

 

321,314

 

Forfeited

 

(3,051

)

Vested

 

(121,712

)

Nonvested — October 29, 2011

 

628,882

 

 

EMPLOYEE STOCK PURCHASE PLAN

 

During the third quarter of fiscal 2011, the Company began an employee stock purchase plan which provides eligible employees the opportunity to purchase shares of the Company’s stock at a stated discount through regular payroll deductions. The aggregate number of shares of common stock that may be issued or transferred under the plan is 2,000,000 shares. All shares purchased by employees under this plan will be issued through treasury stock. The Company’s expense for the discount during the third quarter of fiscal 2011 was immaterial.

v2.3.0.11
FAIR VALUE MEASUREMENTS AND DERIVATIVES
9 Months Ended
Oct. 29, 2011
FAIR VALUE MEASUREMENTS AND DERIVATIVES  
FAIR VALUE MEASUREMENTS AND DERIVATIVES

NOTE 14FAIR VALUE MEASUREMENTS AND DERIVATIVES

 

The Company’s fair value measurements consist of (a) non-financial assets and liabilities that are recognized or disclosed at fair value in the Company’s financial statements on a recurring basis (at least annually) and (b) all financial assets and liabilities.

 

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. There is a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The hierarchy is broken down into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

The following table provides information by level for assets and liabilities that are measured at fair value, on a recurring basis:

 

(dollar amounts in thousands)

 

Fair Value
at

 

Fair Value Measurements
Using Inputs Considered as

 

Description

 

October 29, 2011

 

Level 1

 

Level 2

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

80,716

 

$

80,716

 

$

 

$

 

Collateral investments (1)

 

14,400

 

14,400

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Other liabilities

 

 

 

 

 

 

 

 

 

Derivative liability (3)

 

13,963

 

 

13,963

 

 

 

(dollar amounts in thousands)

 

Fair Value
at

 

Fair Value Measurements
Using Inputs Considered as

 

Description

 

January 29, 2011

 

Level 1

 

Level 2

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

90,240

 

$

90,240

 

$

 

$

 

Collateral investments (1)

 

9,638

 

9,638

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

Contingent consideration (2)

 

288

 

 

 

288

 

Other liabilities

 

 

 

 

 

 

 

 

 

Derivative liability (3)

 

16,424

 

 

16,424

 

 

Contingent consideration (3)

 

1,224

 

 

 

1,224

 

 

(1) included in other long-term assets

(2) included in accrued liabilities

(3) included in other long-term liabilities

 

During fiscal 2010, the Company invested $9.6 million in restricted accounts as collateral for its retained liabilities included within existing insurance programs in lieu of previously outstanding letters of credit. During the thirty-nine weeks of fiscal 2011, the company invested an additional $4.8 million. The collateral investment is included in other long-term assets on the consolidated balance sheet.

 

The Company has one interest rate swap designated as a cash flow hedge on $145.0 million of the Company’s Senior Secured Term Loan that is due in October 2013. The swap is used to minimize interest rate exposure and overall interest costs by converting the variable component of the total interest rate to a fixed rate of 5.036%. Since February 1, 2008, this swap was deemed to be fully effective and all adjustments in the interest rate swap’s fair value have been recorded to accumulated other comprehensive loss.

 

The table below shows the effect of the Company’s interest rate swap on the consolidated financial statements for the periods indicated:

 

(dollar amounts in thousands)

 

Amount of Gain in
Other Comprehensive
Income/ (Loss)
(Effective Portion)

 

Earnings Statement
Classification

 

Amount of Loss
Recognized in Earnings
(Effective Portion) (a)

 

Thirteen weeks ended October 29, 2011

 

$

890

 

Interest expense

 

$

(1,751

)

Thirteen weeks ended October 30, 2010

 

$

(256

)

Interest expense

 

$

(1,721

)

Thirty-nine weeks ended October 29, 2011

 

$

1,538

 

Interest expense

 

$

(5,242

)

Thirty-nine weeks ended October 30, 2010

 

$

(1,877

)

Interest expense

 

$

(5,169

)

 

 

(a) represents the effective portion of the loss reclassified from accumulated other comprehensive loss

 

The fair value of the derivative was $14.0 million and $16.4 million payable at October 29, 2011 and January 29, 2011, respectively. Of the $2.4 million decrease in the fair value during the thirty-nine weeks ended October 29, 2011, $1.5 million net of tax was recorded to accumulated other comprehensive loss on the consolidated balance sheet.

 

Non-financial assets measured at fair value on a non-recurring basis:

 

Certain assets, such as goodwill and long-lived assets, are measured at fair value on a non-recurring basis, that is, the assets are subject to fair value adjustments in certain circumstances such as when there is evidence of impairment. These measures of fair value, and related inputs, are considered level 2 or level 3 measures under the fair value hierarchy.

v2.3.0.11
LEGAL MATTERS
9 Months Ended
Oct. 29, 2011
LEGAL MATTERS  
LEGAL MATTERS

NOTE 15LEGAL MATTERS

 

The Company is party to various actions and claims arising in the normal course of business. The Company believes that amounts accrued for awards or assessments in connection with all such matters are adequate and that the ultimate resolution of these matters will not have a material adverse effect on the Company’s financial position. However, there exists a reasonable possibility of loss in excess of the amounts accrued, the amount of which cannot currently be estimated. While the Company does not believe that the amount of such excess loss could be material to the Company’s financial position, any such loss could have a material adverse effect on the Company’s results of operations in the period(s) during which the underlying matters are resolved.

v2.3.0.11
SUPPLEMENTAL GUARANTOR INFORMATION
9 Months Ended
Oct. 29, 2011
SUPPLEMENTAL GUARANTOR INFORMATION  
SUPPLEMENTAL GUARANTOR INFORMATION

NOTE 16SUPPLEMENTAL GUARANTOR INFORMATION

 

The Company’s Notes are fully and unconditionally and joint and severally guaranteed by certain of the Company’s direct and indirectly wholly-owned subsidiaries—namely, The Pep Boys Manny Moe & Jack of California, The Pep Boys—Manny Moe & Jack of Delaware, Inc. (the “Pep Boys of Delaware”); Pep Boys—Manny Moe & Jack of Puerto Rico, Inc.; Tire Stores Group Holding Corporation (on and after May 5, 2011); Big 10 Tire Stores, LLC (on and after May 5, 2011) and PBY Corporation (at and prior to January 29, 2011), (collectively, the “Subsidiary Guarantors”). The Notes are not guaranteed by the Company’s wholly owned subsidiary, Colchester Insurance Company.

 

The following consolidating information presents, in separate columns, the condensed consolidating balance sheets as of October 29, 2011 and January 29, 2011 and the related condensed consolidating statements of operations for the thirty-nine weeks ended October 29, 2011 and October 30, 2010 and condensed consolidating statements of cash flows for the thirty-nine weeks ended October 29, 2011 and October 30, 2010 for (i) the Company (“Pep Boys”) on a parent only basis, with its investment in subsidiaries recorded under the equity method, (ii) the Subsidiary Guarantors on a combined basis, (iii) the subsidiary of the Company that does not guarantee the Notes, and (iv) the Company on a consolidated basis. The Company made an immaterial adjustment to the January 29, 2011 amounts reported for cash, intercompany receivables and intercompany liabilities to account for certain intercompany borrowing activity between Pep Boys and a subsidiary guarantor.

 

On January 29, 2011, The Pep Boys—Manny, Moe & Jack of Pennsylvania made a capital contribution of $264.0 million to Pep Boys of Delaware consisting of intercompany receivables due from the latter. This contribution resulted in an increase in the Pep Boys’ investment in subsidiaries and the Subsidiary Guarantors’ stockholders’ equity. On January 30, 2011, the Company merged PBY Corporation into Pep Boys of Delaware and accordingly, The Pep Boys Manny Moe & Jack of California became the wholly owned subsidiary of Pep Boys of Delaware. This merger did not affect the presentation of the following condensed consolidating information.

 

On May 5, 2011, The Pep Boys — Manny, Moe & Jack acquired Tire Store Group Holdings Corporation and its subsidiary Big 10 Tire Stores, LLC. As a result of this acquisition, The Pep Boys—Manny, Moe & Jack of Pennsylvania increased its investment in subsidiaries by $9.4 million (see Note 3 — Acquisitions).

 

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

 

As of October 29, 2011

 

Pep Boys

 

Subsidiary
Guarantors

 

Subsidiary Non-
Guarantors

 

Consolidation/
Elimination

 

Consolidated

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

25,536

 

$

43,136

 

$

12,044

 

$

 

$

80,716

 

Accounts receivable, net

 

10,073

 

13,451

 

 

 

23,524

 

Merchandise inventories

 

203,450

 

402,804

 

 

 

606,254

 

Prepaid expenses

 

5,976

 

6,868

 

2,752

 

(25

)

15,571

 

Other current assets

 

915

 

428

 

51,060

 

(4,853

)

47,550

 

Total current assets

 

245,950

 

466,687

 

65,856

 

(4,878

)

773,615

 

Property and equipment—net

 

240,440

 

441,672

 

30,351

 

(18,684

)

693,779

 

Investment in subsidiaries

 

2,167,471

 

 

 

(2,167,471

)

 

Intercompany receivables

 

 

1,378,385

 

59,551

 

(1,437,936

)

 

Goodwill

 

2,549

 

43,670

 

 

 

46,219

 

Deferred income taxes

 

16,395

 

50,279

 

 

 

66,674

 

Other long-term assets

 

28,837

 

1,984

 

 

 

30,821

 

Total assets

 

$

2,701,642

 

$

2,382,677

 

$

155,758

 

$

(3,628,969

)

$

1,611,608

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

238,599

 

$

 

$

 

$

 

$

238,599

 

Trade payable program liability

 

68,320