Company Quick10K Filing
Advance Auto Parts
Price159.54 EPS13
Shares0 P/E13
MCap11 P/FCF13
Net Debt0 EBIT1
TEV11 TEV/EBIT11
TTM 2019-12-28, in MM, except price, ratios
10-Q 2020-04-18 Filed 2020-05-19
10-K 2019-12-28 Filed 2020-02-18
10-Q 2019-10-05 Filed 2019-11-12
10-Q 2019-07-13 Filed 2019-08-13
10-Q 2019-04-20 Filed 2019-05-22
10-K 2018-12-29 Filed 2019-02-19
10-Q 2018-10-06 Filed 2018-11-13
10-Q 2018-07-14 Filed 2018-08-14
10-Q 2018-04-21 Filed 2018-05-22
10-K 2017-12-30 Filed 2018-02-21
10-Q 2017-10-07 Filed 2017-11-14
10-Q 2017-07-15 Filed 2017-08-15
10-Q 2017-04-22 Filed 2017-05-24
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-10-08 Filed 2016-11-15
10-Q 2016-07-16 Filed 2016-08-25
10-Q 2016-04-23 Filed 2016-05-31
10-K 2016-01-02 Filed 2016-03-01
10-Q 2015-10-10 Filed 2015-11-17
10-Q 2015-07-18 Filed 2015-08-25
10-Q 2015-04-25 Filed 2015-06-02
10-K 2015-01-03 Filed 2015-03-03
10-Q 2014-10-04 Filed 2014-11-12
10-Q 2014-07-12 Filed 2014-08-20
10-Q 2014-04-19 Filed 2014-05-28
10-K 2013-12-28 Filed 2014-02-25
10-Q 2013-10-05 Filed 2013-11-12
10-Q 2013-07-13 Filed 2013-08-19
10-Q 2013-04-20 Filed 2013-05-28
10-K 2012-12-29 Filed 2013-02-25
10-Q 2012-10-06 Filed 2012-11-13
10-Q 2012-07-14 Filed 2012-08-20
10-Q 2012-04-21 Filed 2012-05-29
10-K 2011-12-31 Filed 2012-02-28
10-Q 2011-10-08 Filed 2011-11-16
10-Q 2011-07-16 Filed 2011-08-24
10-Q 2011-04-23 Filed 2011-06-01
10-K 2011-01-01 Filed 2011-03-01
10-Q 2010-10-09 Filed 2010-11-17
10-Q 2010-07-17 Filed 2010-08-25
10-Q 2010-04-24 Filed 2010-06-02
10-K 2010-01-02 Filed 2010-03-02
8-K 2020-06-01
8-K 2020-05-19
8-K 2020-05-15
8-K 2020-04-16
8-K 2020-04-13
8-K 2020-04-09
8-K 2020-03-17
8-K 2020-02-28
8-K 2020-02-18
8-K 2019-11-12
8-K 2019-08-13
8-K 2019-05-22
8-K 2019-05-14
8-K 2019-05-08
8-K 2019-02-19
8-K 2019-02-11
8-K 2019-01-29
8-K 2019-01-10
8-K 2018-11-06
8-K 2018-08-14
8-K 2018-08-07
8-K 2018-05-22
8-K 2018-05-16
8-K 2018-03-29
8-K 2018-02-21
8-K 2018-01-31

AAP 10Q Quarterly Report

Part I. Financial Information
Item 1.Condensed Consolidated Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II. Other Information
Item 1.Legal Proceedings
Item 1A. Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.Exhibits
EX-31.1 aapexhibit3114182020.htm
EX-31.2 aapexhibit3124182020.htm
EX-32.1 aapexhibit3214182020.htm

Advance Auto Parts Earnings 2020-04-18

Balance SheetIncome StatementCash Flow
151296302011201420172021
Assets, Equity
3.83.02.31.50.80.02011201420172021
Rev, G Profit, Net Income
1.10.4-0.2-0.9-1.5-2.22011201420172021
Ops, Inv, Fin

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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-Q
________________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 18, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.

Commission file number 001-16797
________________________

aap-20200418_g1.jpg
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
________________________

Delaware54-2049910
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)

2635 East Millbrook Road, Raleigh, North Carolina 27604
(Address of principal executive offices) (Zip Code)
 
(540) 362-4911
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $0.0001 par valueAAPNew York Stock Exchange
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 15, 2020, the number of shares of the registrant’s common stock outstanding was 69,101,221 shares.



Table of Contents

   
 
Page
    
    
 
    
  
   
  
   
  
   
  
   
 
   
 
   
 
    
   
 
   
 



Table of Contents
NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about our strategic initiatives, operational plans and objectives, and future business and financial performance, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect our views based on historical results, current information and assumptions related to future developments. Except as may be required by law, we undertake no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, factors related to the timing and implementation of strategic initiatives, the highly competitive nature of our industry, demand for our products and services, complexities in our inventory and supply chain, challenges with transforming and growing our business and factors related to the current global pandemic. Please refer to “Item 1A. Risk Factors.” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as updated by our subsequent filings with the Commission, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.
1

Table of Contents
PART I.  FINANCIAL INFORMATION
 
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data) (Unaudited)
 April 18, 2020December 28, 2019
Assets
Current assets:  
Cash and cash equivalents$1,279,838  $418,665  
Receivables, net627,405  689,469  
Inventories4,526,003  4,432,168  
Other current assets138,749  155,241  
Total current assets6,571,995  5,695,543  
Property and equipment, net of accumulated depreciation of $2,081,478 and $2,037,8491,444,478  1,433,213  
Operating lease right-of-use assets2,319,511  2,365,325  
Goodwill989,112  992,240  
Intangible assets, net698,032  709,756  
Other assets49,444  52,448  
 $12,072,572  $11,248,525  
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable$3,304,207  $3,421,987  
Accrued expenses528,156  535,863  
Short-term borrowings on revolving credit facility500,000    
Other current liabilities498,686  519,852  
Total current liabilities4,831,049  4,477,702  
Long-term debt1,241,094  747,320  
Noncurrent operating lease liabilities1,996,156  2,017,159  
Deferred income taxes333,265  334,013  
Other long-term liabilities133,979  123,250  
Commitments and contingencies
Stockholders’ equity:  
Preferred stock, nonvoting, $0.0001 par value    
Common stock, voting, $0.0001 par value8  8  
Additional paid-in capital749,723  735,183  
Treasury stock, at cost(960,150) (924,389) 
Accumulated other comprehensive loss(51,535) (34,569) 
Retained earnings3,798,983  3,772,848  
Total stockholders’ equity3,537,029  3,549,081  
 $12,072,572  $11,248,525  


The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
2

Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
 Sixteen Weeks Ended
April 18, 2020April 20, 2019
Net sales$2,697,882  $2,952,036  
Cost of sales, including purchasing and warehousing costs
1,525,149  1,647,424  
Gross profit1,172,733  1,304,612  
Selling, general and administrative expenses
1,094,308  1,096,672  
Operating income78,425  207,940  
Other, net:
Interest expense(12,243) (14,944) 
Other expense, net(5,989) (2,238) 
Total other, net(18,232) (17,182) 
Income before provision for income taxes
60,193  190,758  
Provision for income taxes16,605  48,258  
Net income$43,588  $142,500  
Basic earnings per common share$0.63  $1.99  
Weighted average common shares outstanding69,181  71,787  
Diluted earnings per common share$0.63  $1.98  
Weighted average common shares outstanding
69,392  72,103  


Condensed Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
 Sixteen Weeks Ended
April 18, 2020April 20, 2019
Net income$43,588  $142,500  
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement costs, net of tax of $23 and $1766  95  
Currency translation adjustments(17,032) 4,060  
Total other comprehensive (loss) income(16,966) 4,155  
Comprehensive income$26,622  $146,655  



The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
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Table of Contents

Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(In thousands, except per share data) (Unaudited)
Sixteen Weeks Ended April 18, 2020
 Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
 SharesAmount
Balance, December 28, 201969,232  $8  $735,183  $(924,389) $(34,569) $3,772,848  $3,549,081  
Net income
—  —  —  —  —  43,588  43,588  
Total other comprehensive loss
—  —  —  —  (16,966) —  (16,966) 
Restricted stock units and deferred stock units vested
137  —  —  —  —  —    
Share-based compensation
—  —  13,809  —  —  —  13,809  
Stock issued under employee stock purchase plan
9  —  735  —  —  —  735  
Repurchases of common stock
(277) —  —  (35,761) —  —  (35,761) 
Cash dividends declared ($0.25 per common share)
—  —  —  —  —  (17,453) (17,453) 
Other
—  —  (4) —  —  —  (4) 
Balance, April 18, 202069,101  $8  $749,723  $(960,150) $(51,535) $3,798,983  $3,537,029  
Sixteen Weeks Ended April 20, 2019
 Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
 SharesAmount
Balance, December 29, 201872,460  $8  $694,797  $(425,954) $(44,193) $3,326,155  $3,550,813  
Net income
—  —  —  —  —  142,500  142,500  
Cumulative effect of accounting change from adoption of ASU 2016-02, net of tax(23,165) (23,165) 
Total other comprehensive loss
—  —  —  —  4,155  4,155  
Restricted stock units and deferred stock units vested
111  —  —  —  —  —    
Share-based compensation
—  —  10,984  —  —  —  10,984  
Stock issued under employee stock purchase plan
5  —  678  —  —  —  678  
Repurchases of common stock
(840) —  —  (134,291) —  —  (134,291) 
Cash dividends declared ($0.06 per common share)
—  —  —  —  —  (4,352) (4,352) 
Other
1  —  (99) —  —  —  (99) 
Balance, April 20, 201971,737  $8  $706,360  $(560,245) $(40,038) $3,441,138  $3,547,223  


The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 Sixteen Weeks Ended
April 18, 2020April 20, 2019
Cash flows from operating activities:  
Net income$43,588  $142,500  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization78,579  69,885  
Share-based compensation13,809  10,984  
Loss and impairment of long-lived assets981  125  
Provision (benefit) for deferred income taxes146  (250) 
Other434  11,348  
Net change in:
Receivables, net59,303  (58,757) 
Inventories(104,899) (68,742) 
Accounts payable(112,459) 102,941  
Accrued expenses(1,824) (62,751) 
Other assets and liabilities, net33,250  57,259  
Net cash provided by operating activities10,908  204,542  
Cash flows from investing activities:  
Purchases of property and equipment(82,973) (61,312) 
Purchase of an indefinite-lived intangible asset(230)   
Proceeds from sales of property and equipment71  553  
Net cash used in investing activities(83,132) (60,759) 
Cash flows from financing activities:  
Decrease in bank overdrafts  (50,578) 
Proceeds from borrowings on revolving credit facility500,000    
Proceeds from issuance of senior unsecured notes498,240    
Redemption of senior unsecured notes  (310,047) 
Dividends paid(21,593) (8,723) 
Proceeds from the issuance of common stock
735  678  
Repurchases of common stock(35,761) (134,291) 
Other, net(4,763) (215) 
Net cash provided by (used in) financing activities936,858  (503,176) 
Effect of exchange rate changes on cash(3,461) 196  
Net increase (decrease) in cash and cash equivalents861,173  (359,197) 
Cash and cash equivalents, beginning of period
418,665  896,527  
Cash and cash equivalents, end of period
$1,279,838  $537,330  
Non-cash transactions:
Accrued purchases of property and equipment$25,080  $14,194  



The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
5

Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)


1. Nature of Operations and Basis of Presentation:

Advance Auto Parts, Inc. and subsidiaries is a leading automotive aftermarket parts provider in North America, serving both professional installers (“Professional”), and “do-it-yourself” (“DIY”), customers. The accompanying condensed consolidated financial statements have been prepared by us and include the accounts of Advance Auto Parts, Inc., its wholly owned subsidiaries, Advance Stores Company, Incorporated (“Advance Stores”) and Neuse River Insurance Company, Inc., and their subsidiaries (collectively referred to as “Advance,” “we,” “us” or “our”).

As of April 18, 2020, we operated a total of 4,843 stores and 168 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 18, 2020, we served 1,258 independently owned Carquest branded stores across the same geographic locations served by our stores and branches in addition to Mexico, the Bahamas, Turks and Caicos and the British Virgin Islands.

In March 2020, the World Health Organization categorized the COVID-19 outbreak as a pandemic (“the pandemic”). As a majority of our stores and facilities have remained open, we have taken additional measures to help protect the health and safety of our Team Members and customers. Such measures, among others, include the implementation of incremental pay and other labor-related benefits for Team Members and increased sanitation practices across Advance.

Government imposed restrictions and stay at home orders related to the pandemic occurred during our first quarter of 2020. These contributed to negative impacts to demand for our products and services, primarily during the last six weeks of the sixteen weeks ended April 18, 2020. While the majority of our stores remained opened, we adjusted our store operating hours to better align our variable operating cost, such as labor-related and utility expenses, with the lower demand.

In addition to macroeconomic factors, we considered the changes in our store operations, the increased cost to service our customers and the reduced demand for our product on the carrying value of our assets, including receivables, inventories, property and equipment, goodwill and other intangible assets. Although we have experienced negative financial impacts from the pandemic, they have not significantly affected the assumptions underpinning our long-term revenue and cash flow growth rates, operating models and business strategies and there was no material impairment of our various assets during the sixteen weeks ended April 18, 2020.

The COVID-19 pandemic remains a rapidly evolving situation. If we experience prolonged periods of decreased demand, it may lead to increased asset recovery and valuation risks in the future, such as impairment of goodwill, intangible assets, stores and other assets. We will continue to assess the impact of the pandemic on our financial position. The extent to which the COVID-19 pandemic will impact our operations, liquidity, compliance with debt covenants or financial results in subsequent periods is uncertain, but such impact could be material.

The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted based upon the Securities and Exchange Commission (“SEC”) interim reporting guidance. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for 2019 as filed with the SEC on February 18, 2020.

The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Our first quarter of the year contains sixteen weeks. Our second and third quarter of 2020 consist of twelve weeks, while our fourth quarter of 2020 contains thirteen weeks due to the 53-week fiscal year in 2020.

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Notes to the Condensed Consolidated Financial Statements
(Unaudited)

2. Significant Accounting Policies:

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group:
Sixteen Weeks Ended
April 18, 2020April 20, 2019
Percentage of Net sales, by product group:
Parts and batteries66 %66 %
Accessories and chemicals21  21  
Engine maintenance12  12  
Other1  1  
Total100 %100 %

Recently Issued Accounting Pronouncements

In March 2020, the SEC amended Rule 3-10 of Regulation S-X (“Rule 3-10”) regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. Rule 3-10 is effective January 4, 2021 with earlier adoption permitted. We are currently evaluating the impact of Rule 3-10 on our consolidated financial statements and related disclosures.

During the sixteen weeks ended April 18, 2020, we adopted Financial Accounting Standard Board (“FASB”) Accounting Standards Update 2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which required us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements.

3. Inventories

Inventories are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately 88% and 89% of inventories as of April 18, 2020 and December 28, 2019. Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the sixteen weeks ended April 18, 2020 and prior years. We recorded an increase to Cost of sales of $8.8 million and $26.4 million for the sixteen weeks ended April 18, 2020 and April 20, 2019 to state inventories at LIFO.

An actual valuation of inventory under the LIFO method is performed by us at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.

Inventory balances were as follows:
(in thousands)April 18, 2020December 28, 2019
Inventories at first in, first out (“FIFO”)$4,393,236  $4,290,565  
Adjustments to state inventories at LIFO132,767  141,603  
Inventories at LIFO$4,526,003  $4,432,168  

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Notes to the Condensed Consolidated Financial Statements
(Unaudited)

4. Intangible Assets

Our definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $9.7 million for the sixteen weeks ended April 18, 2020 and April 20, 2019.

5. Receivables, net

Receivables consist of the following:
(in thousands)April 18, 2020December 28, 2019
Trade$406,616  $422,403  
Vendor210,483  249,009  
Other25,182  32,306  
Total receivables642,281  703,718  
Less: allowance for doubtful accounts(14,876) (14,249) 
Receivables, net$627,405  $689,469  

6. Long-term Debt and Fair Value of Financial Instruments

Long-term debt consists of the following:
(in thousands)April 18, 2020December 28, 2019
4.50% Senior Unsecured Notes due January 15, 2022$299,523  $299,441  
4.50% Senior Unsecured Notes due December 1, 2023448,019  447,879  
3.90% Senior Unsecured Notes due April 15, 2030493,552    
Total long-term debt$1,241,094  $747,320  
Fair value of long-term debt$1,283,000  $795,000  

Fair Value of Financial Assets and Liabilities

The fair value of our senior unsecured notes was determined using Level 2 inputs based on quoted market prices. We believe the carrying value of our other long-term debt approximates fair value. The carrying amounts of our cash and cash equivalents, receivables, accounts payable, accrued expenses and borrowings under the unsecured revolving credit facility approximate their fair values due to the relatively short-term nature of these instruments.

Senior Unsecured Notes

Our 4.50% senior unsecured notes due January 15, 2022 (the “2022 Notes”) were issued in January 2012 at 99.97% of the principal amount of $300.0 million. The 2022 Notes bear interest at a rate of 4.50% per year payable semi-annually in arrears on January 15 and July 15 of each year. Our 4.50% senior unsecured notes due December 1, 2023 (the “2023 Notes”) were issued in December 2013 at 99.69% of the principal amount of $450.0 million. The 2023 Notes bear interest at a rate of 4.50% per year payable semi-annually in arrears on June 1 and December 1 of each year.

On April 16, 2020, we issued $500.0 million aggregate principal amount of senior unsecured notes (the “2030 Notes”). The 2030 Notes were issued at 99.65% of the principal amount of $500.0 million, are due April 15, 2030 and bear interest at 3.90% per year payable semi-annually in arrears on April 15 and October 15 of each year (collectively with the 2023 Notes and 2022 Notes, referred to as our “senior unsecured notes”). In connection with the issuance of the 2030 Notes, we incurred $4.7 million of costs.
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)


We may redeem some or all of the 2030 Notes at any time or from time to time, at the redemption price described in the related indenture for the 2030 Notes (the “Indenture”). In addition, in the event of a Change of Control Triggering Event (as defined in the Indenture), we will be required to offer to repurchase the 2030 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. The 2030 Notes are currently fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by each of our Guarantor Subsidiaries, as defined in Note 12, Condensed Consolidating Financial Statements, of the Notes to the Condensed Consolidated Financial Statements.

Bank Debt

As of April 18, 2020, we had $500.0 million of outstanding borrowings, $500.0 million of borrowing availability and no letters of credit outstanding under the unsecured revolving credit facility (the “2017 Credit Agreement”). As of December 28, 2019, we had no outstanding borrowings, $1.0 billion of borrowing availability and no letters of credit outstanding under the unsecured revolving credit facility.

In connection with our bilateral credit facility, we had outstanding letters of credit of $111.6 million as of April 18, 2020 and December 28, 2019, which generally have a term of one year or less and primarily serve as collateral for our self-insurance policies.

We were in compliance with financial covenants required by our debt arrangements as of April 18, 2020.

Debt Guarantees

We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are our customers totaling $52.7 million and $26.4 million as of April 18, 2020 and December 28, 2019. These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements is $51.7 million and $50.3 million as of April 18, 2020 and December 28, 2019. We believe that the likelihood of performance under these guarantees is remote.

7. Leases

Substantially all of our leases are for facilities and vehicles. The initial term for facilities are typically 5 years to 10 years, with renewal options at 5 year intervals, with the exercise of lease renewal options at our sole discretion. Our vehicle and equipment leases are typically 3 years to 5 years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease liabilities consist of the following:
(in thousands)April 18, 2020December 28, 2019
Total operating lease liabilities$2,440,996  $2,495,141  
Less: Current portion of operating lease liabilities(444,840) (477,982) 
Noncurrent operating lease liabilities$1,996,156  $2,017,159  

The current portion of operating lease liabilities is included in Other current liabilities in the accompanying condensed consolidated balance sheet.

Total lease cost is included in Cost of sales and selling, general and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income. Total lease cost is comprised of the following:
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Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Sixteen Weeks Ended
(in thousands)April 18, 2020April 20, 2019
Operating lease cost$161,805  $160,046  
Variable lease cost43,537  49,690  
Total lease cost$205,342  $209,736  

The future maturity of lease liabilities are as follows:
(in thousands)April 18, 2020
Remainder of 2020$402,575  
2021494,579  
2022403,251  
2023364,936  
2024286,731  
Thereafter870,831  
Total lease payments2,822,903  
Less: Imputed interest(381,907) 
Total operating lease liabilities$2,440,996  

Operating lease payments include $110.8 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $154.2 million of legally binding minimum lease payments for leases signed, but not yet commenced.

The weighted-average remaining lease term and weighted-average discount rate for our operating leases are 7.1 years and 4.0% as of April 18, 2020. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Other information relating to our lease liabilities is as follows:
Sixteen Weeks Ended
(in thousands)April 18, 2020April 20, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$167,273  $143,450  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$85,491  $108,881  

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Notes to the Condensed Consolidated Financial Statements
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8. Warranty Liabilities

The following table presents changes in our warranty reserves:
Sixteen Weeks EndedFifty-Two Weeks Ended
(in thousands)April 18, 2020December 28, 2019
Warranty reserve, beginning of period$36,820  $45,280  
Additions to warranty reserves4,830  34,117  
Reduction and utilization of reserve(11,368) (42,577) 
Warranty reserve, end of period$30,282  $36,820  
  
9. Share Repurchase Program

On November 8, 2019, our Board of Directors authorized a $700.0 million share repurchase program. This new authorization was in addition to the $400.0 million share repurchase program that was authorized by our Board of Directors in August 2019. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time.

During the sixteen weeks ended April 18, 2020, we repurchased 0.2 million shares of our common stock at an aggregate cost of $29.0 million, or an average price of $128.36 per share, in connection with our share repurchase program. During the sixteen weeks ended April 20, 2019, we repurchased 0.8 million shares of our common stock at an aggregate cost of $127.2 million, or an average price of $159.65 per share, in connection with our share repurchase program. We had $861.7 million remaining under our share repurchase program as of April 18, 2020.

10. Earnings per Share

The computation of basic and diluted earnings per share are as follows:  
 Sixteen Weeks Ended
(in thousands, except per share data)April 18, 2020April 20, 2019
Numerator
Net income applicable to common shares$43,588  $142,500  
Denominator
Basic weighted average common shares69,181  71,787  
Dilutive impact of share-based awards211  316  
Diluted weighted average common shares (1)
69,392  72,103  
Basic earnings per common share$0.63  $1.99  
Diluted earnings per common share$0.63  $1.98  

(1)For the sixteen weeks ended April 18, 2020, 271 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the sixteen weeks ended April 20,2019, these anti-dilutive RSUs were insignificant.

11. Share-Based Compensation

During the sixteen weeks ended April 18, 2020, we granted 239 thousand time-based RSUs, 74 thousand performance-based RSUs and 37 thousand market-based RSUs. The general terms of the time-based, performance-based and market-based RSUs are similar to awards previously granted by us.

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Notes to the Condensed Consolidated Financial Statements
(Unaudited)

The weighted average fair values of the time-based, performance-based and market-based RSUs granted during the sixteen weeks ended April 18, 2020 were $131.27, $130.03 and $145.04 per share. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our stock on the date of grant adjusted for expected dividends during the vesting period, as applicable. The fair value of each market-based RSU was determined using a Monte Carlo simulation model.

Total income tax benefit related to share-based compensation expense for the sixteen weeks ended April 18, 2020 and April 20, 2019 was $3.5 million and $2.7 million. As of April 18, 2020, there was $92.1 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.8 years.

12. Condensed Consolidating Financial Statements

Certain 100% wholly owned domestic subsidiaries of Advance, including our Material Subsidiaries (as defined in the 2017 Credit Agreement) serve as guarantors (“Guarantor Subsidiaries”) of our senior unsecured notes. The subsidiary guarantees related to our senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of Advance to obtain funds from its Guarantor Subsidiaries. Certain of our wholly owned subsidiaries, including all of our foreign subsidiaries and captive insurance subsidiary, do not serve as guarantors of our senior unsecured notes (“Non-Guarantor Subsidiaries”).

Set forth below are condensed consolidating financial statements presenting the financial position, results of operations, and cash flows of (i) Advance, (ii) the Guarantor Subsidiaries, (iii) the Non-Guarantor Subsidiaries and (iv) the eliminations necessary to arrive at consolidated information for Advance. Investments in subsidiaries of Advance are presented under the equity method. The statement of operations eliminations relate primarily to the sale of inventory from a Non-Guarantor Subsidiary to a Guarantor Subsidiary. The balance sheet eliminations relate primarily to the elimination of intercompany receivables and payables and subsidiary investment accounts.

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Notes to the Condensed Consolidated Financial Statements
(Unaudited)

Condensed Consolidating Balance Sheet
As of April 18, 2020
(in thousands)Advance Auto Parts, Inc.Guarantor SubsidiariesNon-Guarantor SubsidiariesEliminationsConsolidated
Assets
Current assets:
Cash and cash equivalents$  $1,171,456  $108,382  $  $