Pep Boys Announces Sale of 4.25% Convertible Senior Notes due 2007

    PHILADELPHIA--May 16, 2002--The Pep Boys - Manny, Moe & Jack announced today that it has agreed to sell 4.25% Convertible Senior Notes due June 1, 2007 in a private offering resulting in gross proceeds of approximately $125 million.
    Pep Boys has also granted the initial purchasers an overallotment option to purchase up to an additional $25 million aggregate principal amount of notes. Pep Boys stated that it intends to use the net proceeds of the sale of the notes to repay debt and for general corporate purposes, including working capital and capital expenditures.
    The notes will bear interest at a rate of 4.25% per annum and will mature on June 1, 2007.
    The notes will be convertible into shares of Pep Boys' common stock, at the option of the holder, at a conversion rate of 44.6484 shares per each $1,000 principal amount of notes, subject to adjustment in certain circumstances.
    This is equivalent to a conversion price of $22.40 per share, which represents a 33% premium over the last reported sale price of Pep Boys' common stock on May 15, 2002.
    The offering is being made only to qualified institutional buyers.
    The securities to be offered have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
    This press release does not constitute an offer to sell or the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.

    Cautionary Statement: Pep Boys' statements in this press release that are not historical facts, and that relate to future plans or events, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include Pep Boys' intention to consummate the sale of the notes and its intended use of proceeds. The closing of the sale of the notes is subject to customary conditions. There can be no assurance that Pep Boys will complete the sale of the notes. In addition, Pep Boys' business is subject to the risks described in Pep Boys' filings with the Securities and Exchange Commission.

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