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Pep Boys Completes Sale Lease Back Transaction


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PHILADELPHIA July 30, 2008; The Pep Boys – Manny, Moe & Jack, the nation's leading automotive aftermarket retail and service chain, announced that it closed the sale of 22 properties for an aggregate purchase price of $77.5 million. Coincident with such sales transaction, the Company entered into agreements to lease such properties back to be operated as Pep Boys stores, for a lease term of 15 years, with four 5-year options.

“We are pleased to have completed this transaction, the proceeds of which, along with cash on hand, satisfied our synthetic lease purchase obligation,” said Pep Boys Chief Financial Officer Ray Arthur. “In addition, the transaction improved our liquidity by freeing up additional availability on our revolving credit facility and further demonstrates the underlying value of our remaining owned real estate.”

Proceeds from the transaction, together with cash on hand, were used to purchase, for $116.3 million, 27 store properties and two distribution centers that had been leased by the Company under a master operating lease scheduled to expire on August 1, 2008. Eight of the store properties purchased were sold in the announced sale lease back transaction. The remaining 19 store properties and two distribution centers were added to the Company’s balance sheet.

Since the fourth quarter of 2007, the Company has completed four sale leaseback transactions on 97 store properties for aggregate proceeds of $376.7 million. The Company still owns 235 of the 562 stores that it operates and four of its five distribution centers.

As a result of the termination of the master operating lease, availability on the Company’s line of credit increased by $73.9 million, raising the Company’s current excess availability thereunder to $233.1 million.

About Pep Boys

Pep Boys has over 560 stores and approximately 6,000 service bays in 35 states and Puerto Rico. Along with its vehicle repair and maintenance capabilities, the Company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the United States. Customers can find the nearest location by calling 1-800 -PEP-BOYS or by visiting www.pepboys.com.