Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 15, 2017
OR
o 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
________________________
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
________________________
|
| |
Delaware (State or other jurisdiction of incorporation or organization) | 54-2049910 (I.R.S. Employer Identification No.) |
5008 Airport Road, Roanoke, Virginia 24012
(Address of Principal Executive Offices)
(Zip Code)
(540) 362-4911
(Registrant’s telephone number, including area code)
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 x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
|
| |
Large accelerated filer x | Accelerated filer o |
Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o |
| Emerging growth company o |
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 11, 2017, the registrant had outstanding 73,862,588 shares of Common Stock, par value $0.0001 per share (the only class of common stock of the registrant outstanding).
PART I. FINANCIAL INFORMATION
| |
ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF |
ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data) (Unaudited)
|
| | | | | | | | |
| July 15, 2017 | | December 31, 2016 | |
Assets | | | | |
Current assets: | | | | |
Cash and cash equivalents | $ | 257,230 |
| | $ | 135,178 |
| |
Receivables, net | 680,503 |
| | 641,252 |
| |
Inventories | 4,293,367 |
| | 4,325,868 |
| |
Other current assets | 95,115 |
| | 70,466 |
| |
Total current assets | 5,326,215 |
| | 5,172,764 |
| |
Property and equipment, net of accumulated depreciation of $1,743,671 and $1,660,648 | 1,431,294 |
| | 1,446,340 |
| |
Goodwill | 993,916 |
| | 990,877 |
| |
Intangible assets, net | 618,879 |
| | 640,903 |
| |
Other assets, net | 67,109 |
| | 64,149 |
| |
| $ | 8,437,413 |
| | $ | 8,315,033 |
| |
Liabilities and Stockholders' Equity | |
| | |
| |
Current liabilities: | |
| | |
| |
Accounts payable | 2,937,096 |
| | 3,086,177 |
| |
Accrued expenses | 629,088 |
| | 554,397 |
| |
Other current liabilities | 32,143 |
| | 35,472 |
| |
Total current liabilities | 3,598,327 |
| | 3,676,046 |
| |
Long-term debt | 1,043,690 |
| | 1,042,949 |
| |
Deferred income taxes | 438,782 |
| | 454,282 |
| |
Other long-term liabilities | 228,337 |
| | 225,564 |
| |
Commitments and contingencies |
|
| |
|
| |
Stockholders' equity: | |
| | |
| |
Preferred stock, nonvoting, $0.0001 par value | — |
| | — |
| |
Common stock, voting, $0.0001 par value | 8 |
| | 8 |
| |
Additional paid-in capital | 647,823 |
| | 631,052 |
| |
Treasury stock, at cost | (141,405 | ) | | (138,102 | ) | |
Accumulated other comprehensive loss | (26,664 | ) | | (39,701 | ) | |
Retained earnings | 2,648,515 |
| | 2,462,935 |
| |
Total stockholders' equity | 3,128,277 |
| | 2,916,192 |
| |
| $ | 8,437,413 |
| | $ | 8,315,033 |
| |
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
|
| | | | | | | | | | | | | | | |
| Twelve Week Periods Ended | | Twenty-Eight Week Periods Ended |
| July 15, 2017 | | July 16, 2016 | | July 15, 2017 | | July 16, 2016 |
Net sales | $ | 2,263,727 |
| | $ | 2,256,155 |
| | $ | 5,154,565 |
| | $ | 5,235,933 |
|
Cost of sales, including purchasing and warehousing costs | 1,270,639 |
| | 1,245,898 |
| | 2,890,793 |
| | 2,875,787 |
|
Gross profit | 993,088 |
| | 1,010,257 |
| | 2,263,772 |
| | 2,360,146 |
|
Selling, general and administrative expenses | 846,377 |
| | 793,573 |
| | 1,937,281 |
| | 1,872,463 |
|
Operating income | 146,711 |
| | 216,684 |
| | 326,491 |
| | 487,683 |
|
Other, net: | |
| | |
| | | | |
Interest expense | (13,921 | ) | | (14,021 | ) | | (32,351 | ) | | (32,964 | ) |
Other income, net | 3,169 |
| | 6,244 |
| | 7,982 |
| | 9,367 |
|
Total other, net | (10,752 | ) | | (7,777 | ) | | (24,369 | ) | | (23,597 | ) |
Income before provision for income taxes | 135,959 |
| | 208,907 |
| | 302,122 |
| | 464,086 |
|
Provision for income taxes | 48,910 |
| | 84,307 |
| | 107,113 |
| | 180,673 |
|
Net income | $ | 87,049 |
| | $ | 124,600 |
| | $ | 195,009 |
| | $ | 283,413 |
|
| | | | | | | |
Basic earnings per share | $ | 1.18 |
| | $ | 1.69 |
| | $ | 2.64 |
| | $ | 3.84 |
|
Weighted average shares outstanding | 73,848 |
| | 73,576 |
| | 73,810 |
| | 73,476 |
|
| | | | | | | |
Diluted earnings per share | $ | 1.17 |
| | $ | 1.68 |
| | $ | 2.63 |
| | $ | 3.82 |
|
Weighted average shares outstanding - assuming dilution | 74,093 |
| | 73,835 |
| | 74,093 |
| | 73,842 |
|
| | | | | | | |
Dividends declared per share | $ | 0.06 |
| | $ | 0.06 |
| | $ | 0.12 |
| | $ | 0.12 |
|
Condensed Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
|
| | | | | | | | | | | | | | | |
| Twelve Week Periods Ended | | Twenty-Eight Week Periods Ended |
| July 15, 2017 | | July 16, 2016 | | July 15, 2017 | | July 16, 2016 |
Net income | $ | 87,049 |
| | $ | 124,600 |
| | $ | 195,009 |
| | $ | 283,413 |
|
Other comprehensive (loss) income: | | | | | | | |
Changes in net unrecognized other postretirement benefit costs, net of tax of $41, $88, $95 and $206 | (63 | ) | | (137 | ) | | (148 | ) | | (319 | ) |
Currency translation adjustments | 13,973 |
| | (4,468 | ) | | 13,185 |
| | 11,957 |
|
Total other comprehensive income (loss) | 13,910 |
| | (4,605 | ) | | 13,037 |
| | 11,638 |
|
Comprehensive income | $ | 100,959 |
| | $ | 119,995 |
| | $ | 208,046 |
| | $ | 295,051 |
|
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
|
| | | | | | | |
Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
| Twenty-Eight Week Periods Ended |
| July 15, 2017 | | July 16, 2016 |
Cash flows from operating activities: | | | |
Net income | $ | 195,009 |
| | $ | 283,413 |
|
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 135,200 |
| | 139,265 |
|
Share-based compensation | 19,938 |
| | 9,142 |
|
Loss on property and equipment, net | 4,361 |
| | 2,402 |
|
(Benefit) provision for deferred income taxes | (16,006 | ) | | 11,454 |
|
Other, net | 1,851 |
| | (1,390 | ) |
Net change in: | | | |
Receivables, net | (37,012 | ) | | (57,241 | ) |
Inventories | 41,923 |
| | (236,403 | ) |
Accounts payable | (153,750 | ) | | 11,611 |
|
Accrued expenses | 91,333 |
| | 51,488 |
|
Other assets and liabilities | (15,498 | ) | | (5,301 | ) |
Net cash provided by operating activities | 267,349 |
| | 208,440 |
|
Cash flows from investing activities: | |
| | |
|
Purchases of property and equipment | (122,364 | ) | | (137,920 | ) |
Proceeds from sales of property and equipment | 1,311 |
| | 1,293 |
|
Other, net | 20 |
| | (2,430 | ) |
Net cash used in investing activities | (121,033 | ) | | (139,057 | ) |
Cash flows from financing activities: | |
| | |
|
(Decrease) increase in bank overdrafts | (4,202 | ) | | 13,656 |
|
Borrowings under credit facilities | 534,400 |
| | 576,600 |
|
Payments on credit facilities | (534,400 | ) | | (611,100 | ) |
Dividends paid | (13,363 | ) | | (13,291 | ) |
Proceeds from the issuance of common stock | 2,281 |
| | 2,222 |
|
Tax withholdings related to the exercise of stock appreciation rights | (6,230 | ) | | (12,489 | ) |
Repurchase of common stock | (3,303 | ) | | (12,179 | ) |
Other, net | (2,027 | ) | | (224 | ) |
Net cash used in financing activities | (26,844 | ) | | (56,805 | ) |
Effect of exchange rate changes on cash | 2,580 |
| | 1,467 |
|
Net increase in cash and cash equivalents | 122,052 |
| | 14,045 |
|
Cash and cash equivalents, beginning of period | 135,178 |
| | 90,782 |
|
Cash and cash equivalents, end of period | $ | 257,230 |
| | $ | 104,827 |
|
| | | |
Non-cash transactions: | | | |
Accrued purchases of property and equipment | $ | 10,205 |
| | $ | 22,523 |
|
The accompanying notes to the condensed consolidated financial statements
are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1. Description of Business and Basis of Presentation
Advance Auto Parts, Inc. and subsidiaries is a leading automotive aftermarket parts provider in North America, serving both "do-it-for-me", or Professional, and "do-it-yourself", or DIY customers. The accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company and include the accounts of Advance Auto Parts, Inc. ("Advance"), its wholly owned subsidiary, Advance Stores Company, Incorporated ("Advance Stores"), and its subsidiaries (collectively referred to as "Advance", "we", "us", "our" or "the Company").
As of July 15, 2017, the Company operated a total of 5,073 stores and 131 distribution branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company's stores operate primarily under the trade names "Advance Auto Parts," "Carquest" and "Autopart International," and our distribution branches operate under the "Worldpac" trade name. In addition, as of July 15, 2017, the Company served approximately 1,250 independently-owned Carquest branded stores ("independent stores") across the same geographic locations served by the Company's stores in addition to Mexico, the Bahamas, Turks and Caicos, the British Virgin Islands and the Pacific Islands.
The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the financial position of the Company, the results of its operations and cash flows have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, have been condensed or omitted based upon the Securities and Exchange Commission ("SEC") interim reporting guidance. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for 2016 as filed with the SEC on February 28, 2017.
The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full fiscal year. The first quarter of each of the Company's fiscal years contains sixteen weeks. The Company's remaining three quarters consist of twelve weeks.
Recently Adopted Accounting Pronouncements
In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" aimed at simplifying certain aspects of accounting for share-based payment transactions. The areas for simplification include the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted ASU 2016-09 in the first quarter of 2017 and recorded a cumulative effect reduction to beginning retained earnings of $490 thousand related to the Company's election to record forfeitures as they occur. In addition, the Company elected to retrospectively adopt the provision regarding the presentation of excess tax benefits in the statement of cash flows, which resulted in an increase in our net cash provided by operating activities and a decrease in our net cash provided by financing activities of $15.5 million for the twenty-eight weeks ended July 16, 2016. The provision requiring the inclusion of excess tax benefits (deficits) as a component of the provision for income taxes in the consolidated results of operations is being applied prospectively. The Company recorded excess tax benefits of $372 thousand and $4.5 million as a reduction in Provision for income taxes during the twelve and twenty-eight weeks ended July 15, 2017.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)." This ASU is a comprehensive new leases standard that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require lessees to recognize lease assets and lease liabilities for all leases, including those leases previously classified as operating leases under current GAAP. The ASU is effective for annual periods beginning after December 15, 2018 with early adoption permitted. From a balance sheet perspective, the Company expects adoption of the new standard to have a material effect on its Total assets and Total liabilities as a result of recording the required right of use asset and associated lease liability. However, the Company has not completed its analysis and is unable to quantify the impact at this time. At this time the
Company does not expect adoption of ASU 2016-02 to have a material impact on its consolidated statements of operations as the majority of its leases will remain operating in nature. As such, the expense recognition will be similar to previously required straight-line expense treatment. The Company is also in the process of identifying changes to its business processes, systems and controls to support adoption of the new standard in 2019.
In May 2014, the FASB issued ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)." This ASU, along with subsequent ASU's issued to clarify certain provisions of ASU 2014-09, is a comprehensive new revenue recognition model that expands disclosure requirements and requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017 with early adoption permitted. The Company plans to adopt the new standard effective December 31, 2017 and will apply the modified retrospective method. The Company has analyzed the impact of ASU 2014-09, as amended, on its revenue contracts, comparing the Company's current accounting policies and practices to the requirements of the new standard and identified differences that would result from applying the new standard to its contracts. The Company has determined the adoption of the new standard will not have a material impact on its consolidated financial condition, results of operations or cash flows. Additionally, the Company does not anticipate any significant changes to business processes, controls or systems as a result of adopting the new standard.
2. Inventories
Inventories are stated at the lower of cost or market. The Company used the LIFO method of accounting for approximately 88% and 89% of inventories at July 15, 2017 and December 31, 2016. Under the LIFO method, the Company’s cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in 2017 and prior years. As a result of changes in the LIFO reserve, the Company recorded a reduction to cost of sales of $5.5 million and $42.7 million for the twenty-eight weeks ended July 15, 2017 and July 16, 2016.
An actual valuation of inventory under the LIFO method is performed by the Company at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs.
Inventory balances were as follows:
|
| | | | | | | |
(in thousands) | July 15, 2017 | | December 31, 2016 |
Inventories at FIFO | $ | 4,082,051 |
| | $ | 4,120,030 |
|
Adjustments to state inventories at LIFO | 211,316 |
| | 205,838 |
|
Inventories at LIFO | $ | 4,293,367 |
| | $ | 4,325,868 |
|
3. Exit Activities
Integration of Carquest stores
The Company is in the process of a multi-year integration, which includes the consolidation and conversion of its Carquest stores acquired with General Parts International, Inc. (“GPI”) on January 2, 2014. As of July 15, 2017, 342 Carquest stores acquired with GPI had been consolidated into existing Advance Auto Parts stores and 377 stores had been converted to the Advance Auto Parts format. During the twelve weeks ended July 15, 2017, a total of three Carquest stores were consolidated and 57 Carquest stores were converted. During the twenty-eight weeks ended July 15, 2017, a total of nine Carquest stores were consolidated and 95 Carquest stores were converted. We expect to consolidate or convert the remaining U.S. Carquest stores over the next few years. As of July 15, 2017, the Company had 506 stores still operating under the Carquest name.
The Company incurred $3.2 million of exit costs related to the consolidations during the twelve weeks ended July 16, 2016, primarily related to closed store lease obligations. The Company incurred $1.1 million and $15.4 million of exit costs related to the consolidations during the twenty-eight weeks ended July 15, 2017 and July 16, 2016, primarily related to closed store lease obligations. These costs are included in Selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
2017 Field and Support Center Restructuring
In June 2017, the Company restructured its field organization and streamlined its operating structure. The restructuring activity was substantially complete as of July 15, 2017 and resulted in the recognition of $7.2 million of expenses related to severance. These costs are included in Selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
Total Exit Liabilities
The Company's total exit liabilities include liabilities recorded in connection with the consolidation of Carquest stores and restructuring activities described above, along with liabilities associated with facility closures that have occurred as part of our normal market evaluation process. Cash payments on the closed facility lease obligations are expected to be made through 2028 and the remaining severance payments are expected to be made in 2017. A summary of the Company’s exit liabilities are presented in the following table:
|
| | | | | | | | | | | | |
(in thousands) | | Closed Facility Lease Obligations | | Severance | | Total |
Balance, December 31, 2016 | | $ | 44,265 |
| | $ | 959 |
| | $ | 45,224 |
|
Reserves established | | 3,400 |
| | 7,282 |
| | 10,682 |
|
Change in estimates | | 1,705 |
| | (156 | ) | | 1,549 |
|
Cash payments | | (9,483 | ) | | (4,331 | ) | | (13,814 | ) |
Balance, July 15, 2017 | | $ | 39,887 |
| | $ | 3,754 |
| | $ | 43,641 |
|
| | | | | | |
Balance, January 2, 2016 | | $ | 42,490 |
| | $ | 6,255 |
| | $ | 48,745 |
|
Reserves established | | 23,252 |
| | 988 |
| | 24,240 |
|
Change in estimates | | (3,073 | ) | | (410 | ) | | (3,483 | ) |
Cash payments | | (18,404 | ) | | (5,874 | ) | | (24,278 | ) |
Balance, December 31, 2016 | | $ | 44,265 |
| | $ | 959 |
| | $ | 45,224 |
|
4. Intangible Assets
The Company's definite-lived intangible assets include customer relationships, favorable leases and non-compete agreements. Amortization expense was $11.0 million and $10.8 million for the twelve weeks ended July 15, 2017 and July 16, 2016 and $25.6 million and $25.8 million for the twenty-eight weeks ended July 15, 2017 and July 16, 2016.
5. Receivables, net
Receivables consist of the following:
|
| | | | | | | | |
(in thousands) | | July 15, 2017 | | December 31, 2016 |
Trade | | $ | 457,513 |
| | $ | 407,301 |
|
Vendor | | 241,822 |
| | 239,770 |
|
Other | | 14,331 |
| | 23,345 |
|
Total receivables | | 713,666 |
| | 670,416 |
|
Less: Allowance for doubtful accounts | | (33,163 | ) | | (29,164 | ) |
Receivables, net | | $ | 680,503 |
| | $ | 641,252 |
|
6. Long-term Debt and Fair Value of Financial Instruments
Long-term debt consists of the following:
|
| | | | | | | |
(in thousands) | July 15, 2017 | | December 31, 2016 |
Total long-term debt | 1,044,108 |
| | 1,043,255 |
|
Less: Current portion of long-term debt (included in Other current liabilities) | (418 | ) | | (306 | ) |
Long-term debt, excluding current portion | $ | 1,043,690 |
| | $ | 1,042,949 |
|
| | | |
Fair value of long-term debt | $ | 1,125,000 |
| | $ | 1,118,000 |
|
Fair Value of Financial Assets and Liabilities
The fair value of the Company's senior unsecured notes was determined using Level 2 inputs based on quoted market prices. The Company believes the carrying value of its other long-term debt approximates fair value. The carrying amounts of the Company's cash and cash equivalents, receivables, accounts payable and accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.
Bank Debt
On January 31, 2017, the Company entered into a new credit agreement which provides a $1.0 billion unsecured revolving credit facility (the “2017 Credit Agreement”) with Advance Stores, as Borrower, the lenders party thereto, and Bank of America, N.A., as the administrative agent. This new revolver under the 2017 Credit Agreement replaced the revolver under the 2013 Credit Agreement. The 2017 Credit Agreement provides for the issuance of letters of credit with a sublimit of $200.0 million. The Company may request that the total revolving commitment be increased by an amount not exceeding $250.0 million during the term of the 2017 Credit Agreement. Voluntary prepayments and voluntary reductions of the revolving loan balance, if any, are permitted in whole or in part, at the Company’s option, in minimum principal amounts as specified in the 2017 Credit Agreement. The 2017 Credit Agreement terminates in January 2022; however, the Company may request one or two one-year extensions of the termination date prior to the first or second anniversary of the closing date.
As of July 15, 2017, under the 2017 Credit Agreement, the Company had no outstanding borrowings under the revolver. As of July 15, 2017, the Company had letters of credit outstanding of $100.7 million, which in conjunction with certain covenant restrictions reduced the availability under the revolver to $591.1 million. The letters of credit generally have a term of one year or less and primarily serve as collateral for the Company’s self-insurance policies.
The interest rates on outstanding amounts, if any, on the revolving facility under the 2017 Credit Agreement will be based, at the Company’s option, on an adjusted LIBOR, plus a margin, or an alternate base rate, plus a margin. After an initial interest period, the Company may elect to convert a particular borrowing to a different type. The initial margins per annum for the revolving loan are 1.10% for the adjusted LIBOR and 0.10% for alternate base rate borrowings. A facility fee of 0.15% per annum will be charged on the total revolving facility commitment, payable quarterly in arrears. Under the terms of the 2017 Credit Agreement, the interest rate spread, facility fee and commitment fee will be based on the Company’s credit rating.
The 2017 Credit Agreement contains customary covenants restricting the ability of: (a) Advance Stores and its subsidiaries to, among other things, (i) create, incur or assume additional debt (only with respect to subsidiaries of Advance Stores), (ii) incur liens, (iii) guarantee obligations, and (iv) change the nature of its business conducted by itself and its subsidiaries; (b) Advance, Advance Stores and their subsidiaries to, among other things (i) enter into certain hedging arrangements, (ii) enter into restrictive agreements limiting their ability to incur liens on any of their property or assets, pay distributions, repay loans, or guarantee indebtedness of their subsidiaries; and (c) Advance, among other things, to change the holding company status of Advance. Advance Stores is required to comply with financial covenants with respect to a maximum leverage ratio and a minimum coverage ratio. The 2017 Credit Agreement also provides for customary events of default, including non-payment defaults, covenant defaults and cross-defaults of Advance Stores’ other material indebtedness. The Company was in compliance with its financial covenants with respect to the 2017 Credit Agreement as of July 15, 2017.
Debt Guarantees
The Company is a guarantor of loans made by banks to various independently-owned Carquest branded stores that are customers of the Company totaling $25.0 million as of July 15, 2017. 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 $67.3 million as of July 15, 2017. The Company believes that the likelihood of performance under these guarantees is remote.
7. Earnings per Share
Diluted earnings per share are calculated by including the effect of dilutive securities. Share-based awards to purchase approximately 168 thousand and 29 thousand shares of common stock during the twelve week periods ended July 15, 2017 and July 16, 2016 were not included in the calculation of diluted earnings per share because they were anti-dilutive. Share-based awards to purchase approximately 123 thousand and 28 thousand shares of common stock during the twenty-eight week periods ended July 15, 2017 and July 16, 2016 were not included in the calculation of diluted earnings per share because they were anti-dilutive.
The following table illustrates the computation of basic and diluted earnings per share:
|
| | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Twenty-Eight Weeks Ended |
(in thousands, except per share data) | July 15, 2017 | | July 16, 2016 | | July 15, 2017 | | July 16, 2016 |
Numerator | | | | | | | |
Net income | $ | 87,049 |
| | $ | 124,600 |
| | $ | 195,009 |
| | $ | 283,413 |
|
Denominator | | | | | |
| | |
Basic weighted average shares | 73,848 |
| | 73,576 |
| | 73,810 |
| | 73,476 |
|
Dilutive impact of share-based awards | 245 |
| | 259 |
| | 283 |
| | 366 |
|
Diluted weighted average shares | 74,093 |
| | 73,835 |
| | 74,093 |
| | 73,842 |
|
| |
| | |
| | | | |
Basic earnings per share | $ | 1.18 |
| | $ | 1.69 |
| | $ | 2.64 |
| | $ | 3.84 |
|
| |
| | |
| | | | |
Diluted earnings per share | $ | 1.17 |
| | $ | 1.68 |
| | $ | 2.63 |
| | $ | 3.82 |
|
8. Share-Based Compensation
During the twenty-eight week period ended July 15, 2017, the Company granted 170 thousand time-based restricted stock units ("RSUs"), 47 thousand performance-based RSUs and 23 thousand market-based RSUs. The general terms of the time-based and performance-based RSUs are similar to awards previously granted by the Company. The market-based RSUs will vest based on the Company's relative total shareholder return among a designated group of peer companies during a three-year period and will be subject to a one-year holding period after vesting.
The weighted average fair values of the time-based, performance-based and market-based RSUs granted during the twenty-eight week period ended July 15, 2017 were $156.07, $155.58 and $147.75 per share. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of the Company’s 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 share-based compensation expense included in the Company’s condensed consolidated statements of operations was $7.6 million for the twelve week period ended July 15, 2017 and the related income tax benefit recognized was $2.8 million. Total share-based compensation expense included in the Company’s condensed consolidated statements of operations was $19.9 million for the twenty-eight week period ended July 15, 2017 and the related income tax benefit recognized was $7.5 million. As of July 15, 2017, there was $51.6 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.7 years.
9. Warranty Liabilities
The following table presents changes in the Company’s warranty reserves, which are included in Accrued expenses in its condensed consolidated balance sheets.
|
| | | | | | | |
| Twenty-Eight Weeks Ended | | Fifty-Two Weeks Ended |
(in thousands) | July 15, 2017 | | December 31, 2016 |
Warranty reserve, beginning of period | $ | 47,243 |
| | $ | 44,479 |
|
Additions to warranty reserves | 28,011 |
| | 46,903 |
|
Reserves utilized | (25,071 | ) | | (44,139 | ) |
Warranty reserve, end of period | $ | 50,183 |
| | $ | 47,243 |
|
10. Condensed Consolidating Financial Statements
Certain 100% wholly-owned domestic subsidiaries of Advance, including its Material Subsidiaries (as defined in the 2017 Credit Agreement) serve as guarantors of Advance's senior unsecured notes ("Guarantor Subsidiaries"). The subsidiary guarantees related to Advance's 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 Advance's wholly-owned subsidiaries, including all of its foreign subsidiaries, do not serve as guarantors of Advance's senior unsecured notes ("Non-Guarantor Subsidiaries"). The Company presents below the condensed consolidating financial information for the Guarantor Subsidiaries and Non-Guarantor Subsidiaries. Investments in subsidiaries of the Company are presented under the equity method in the condensed consolidating financial statements.
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 the Company. 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.
Condensed Consolidating Balance Sheets (Unaudited)
As of July 15, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | $ | 22 |
| | $ | 215,753 |
| | $ | 41,477 |
| | $ | (22 | ) | | $ | 257,230 |
|
Receivables, net | — |
| | 640,204 |
| | 40,299 |
| | — |
| | 680,503 |
|
Inventories | — |
| | 4,090,863 |
| | 202,504 |
| | — |
| | 4,293,367 |
|
Other current assets | 137 |
| | 94,769 |
| | 456 |
| | (247 | ) | | 95,115 |
|
Total current assets | 159 |
| | 5,041,589 |
| | 284,736 |
| | (269 | ) | | 5,326,215 |
|
Property and equipment, net of accumulated depreciation | 114 |
| | 1,421,231 |
| | 9,949 |
| | — |
| | 1,431,294 |
|
Goodwill | — |
| | 943,359 |
| | 50,557 |
| | — |
| | 993,916 |
|
Intangible assets, net | — |
| | 572,134 |
| | 46,745 |
| | — |
| | 618,879 |
|
Other assets, net | 4,928 |
| | 66,396 |
| | 712 |
| | (4,927 | ) | | 67,109 |
|
Investment in subsidiaries | 3,227,142 |
| | 424,917 |
| | — |
| | (3,652,059 | ) | | — |
|
Intercompany note receivable | 1,048,572 |
| | — |
| | — |
| | (1,048,572 | ) | | — |
|
Due from intercompany, net | — |
| | — |
| | 324,631 |
| | (324,631 | ) | | — |
|
| $ | 4,280,915 |
| | $ | 8,469,626 |
| | $ | 717,330 |
| | $ | (5,030,458 | ) | | $ | 8,437,413 |
|
Liabilities and Stockholders' Equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | $ | — |
| | $ | 2,694,002 |
| | $ | 243,094 |
| | $ | — |
| | $ | 2,937,096 |
|
Accrued expenses | 2,600 |
| | 603,599 |
| | 23,136 |
| | (247 | ) | | 629,088 |
|
Other current liabilities | — |
| | 27,893 |
| | 4,272 |
| | (22 | ) | | 32,143 |
|
Total current liabilities | 2,600 |
| | 3,325,494 |
| | 270,502 |
| | (269 | ) | | 3,598,327 |
|
Long-term debt | 1,043,690 |
| | — |
| | — |
| | — |
| | 1,043,690 |
|
Deferred income taxes | — |
| | 423,933 |
| | 19,777 |
| | (4,928 | ) | | 438,782 |
|
Other long-term liabilities | — |
| | 226,203 |
| | 2,134 |
| | — |
| | 228,337 |
|
Intercompany note payable | — |
| | 1,048,572 |
| |
| | (1,048,572 | ) | | — |
|
Due to intercompany, net | 106,349 |
| | 218,282 |
| | — |
| | (324,631 | ) | | — |
|
Commitments and contingencies |
| |
| |
| |
| |
|
| | | | | | | | | |
Stockholders' equity | 3,128,276 |
| | 3,227,142 |
| | 424,917 |
| | (3,652,058 | ) | | 3,128,277 |
|
| $ | 4,280,915 |
| | $ | 8,469,626 |
| | $ | 717,330 |
| | $ | (5,030,458 | ) | | $ | 8,437,413 |
|
Condensed Consolidating Balance Sheets (Unaudited)
As of December 31, 2016
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | $ | 22 |
| | $ | 78,543 |
| | $ | 56,635 |
| | $ | (22 | ) | | $ | 135,178 |
|
Receivables, net | — |
| | 619,229 |
| | 22,023 |
| | — |
| | 641,252 |
|
Inventories | — |
| | 4,126,465 |
| | 199,403 |
| | — |
| | 4,325,868 |
|
Other current assets | — |
| | 69,385 |
| | 1,153 |
| | (72 | ) | | 70,466 |
|
Total current assets | 22 |
| | 4,893,622 |
| | 279,214 |
| | (94 | ) | | 5,172,764 |
|
Property and equipment, net of accumulated depreciation | 128 |
| | 1,436,459 |
| | 9,753 |
| | — |
| | 1,446,340 |
|
Goodwill | — |
| | 943,359 |
| | 47,518 |
| | — |
| | 990,877 |
|
Intangible assets, net | — |
| | 595,596 |
| | 45,307 |
| | — |
| | 640,903 |
|
Other assets, net | 4,634 |
| | 63,376 |
| | 773 |
| | (4,634 | ) | | 64,149 |
|
Investment in subsidiaries | 3,008,856 |
| | 375,420 |
| | — |
| | (3,384,276 | ) | | — |
|
Intercompany note receivable | 1,048,424 |
| | — |
| | — |
| | (1,048,424 | ) | | — |
|
Due from intercompany, net | — |
| | — |
| | 316,109 |
| | (316,109 | ) | | — |
|
| $ | 4,062,064 |
| | $ | 8,307,832 |
| | $ | 698,674 |
| | $ | (4,753,537 | ) | | $ | 8,315,033 |
|
Liabilities and Stockholders' Equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | $ | — |
| | $ | 2,813,937 |
| | $ | 272,240 |
| | $ | — |
| | $ | 3,086,177 |
|
Accrued expenses | 1,505 |
| | 526,652 |
| | 26,312 |
| | (72 | ) | | 554,397 |
|
Other current liabilities | — |
| | 32,508 |
| | 2,986 |
| | (22 | ) | | 35,472 |
|
Total current liabilities | 1,505 |
| | 3,373,097 |
| | 301,538 |
| | (94 | ) | | 3,676,046 |
|
Long-term debt | 1,042,949 |
| | — |
| | — |
| | — |
| | 1,042,949 |
|
Deferred income taxes | — |
| | 439,283 |
| | 19,633 |
| | (4,634 | ) | | 454,282 |
|
Other long-term liabilities | — |
| | 223,481 |
| | 2,083 |
| | — |
| | 225,564 |
|
Intercompany note payable | — |
| | 1,048,424 |
| | — |
| | (1,048,424 | ) | | — |
|
Due to intercompany, net | 101,418 |
| | 214,691 |
| | — |
| | (316,109 | ) | | — |
|
Commitments and contingencies | | | | | | | | | |
| | | | | | | | | |
Stockholders' equity | 2,916,192 |
| | 3,008,856 |
| | 375,420 |
| | (3,384,276 | ) | | 2,916,192 |
|
| $ | 4,062,064 |
| | $ | 8,307,832 |
| | $ | 698,674 |
| | $ | (4,753,537 | ) | | $ | 8,315,033 |
|
Condensed Consolidating Statements of Operations (Unaudited)
For the Twelve weeks ended July 15, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 2,175,274 |
| | $ | 138,291 |
| | $ | (49,838 | ) | | $ | 2,263,727 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 1,224,648 |
| | 95,829 |
| | (49,838 | ) | | 1,270,639 |
|
Gross profit | — |
| | 950,626 |
| | 42,462 |
| | — |
| | 993,088 |
|
Selling, general and administrative expenses | 5,370 |
| | 833,966 |
| | 18,864 |
| | (11,823 | ) | | 846,377 |
|
Operating (loss) income | (5,370 | ) | | 116,660 |
| | 23,598 |
| | 11,823 |
| | 146,711 |
|
Other, net: | | | | | | | | | |
Interest (expense) income | (12,076 | ) | | (1,863 | ) | | 18 |
| | — |
| | (13,921 | ) |
Other income (expense), net | 17,567 |
| | (5,413 | ) | | 2,838 |
| | (11,823 | ) | | 3,169 |
|
Total other, net | 5,491 |
| | (7,276 | ) | | 2,856 |
| | (11,823 | ) | | (10,752 | ) |
Income before provision for income taxes | 121 |
| | 109,384 |
| | 26,454 |
| | — |
| | 135,959 |
|
Provision for income taxes | 128 |
| | 42,850 |
| | 5,932 |
| | — |
| | 48,910 |
|
(Loss) income before equity in earnings of subsidiaries | (7 | ) | | 66,534 |
| | 20,522 |
| | — |
| | 87,049 |
|
Equity in earnings of subsidiaries | 87,056 |
| | 20,522 |
| | — |
| | (107,578 | ) | | — |
|
Net income | $ | 87,049 |
| | $ | 87,056 |
| | $ | 20,522 |
| | $ | (107,578 | ) | | $ | 87,049 |
|
Condensed Consolidating Statements of Operations (Unaudited)
For the Twelve weeks ended July 16, 2016
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 2,173,812 |
| | $ | 131,123 |
| | $ | (48,780 | ) | | $ | 2,256,155 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 1,205,526 |
| | 89,152 |
| | (48,780 | ) | | 1,245,898 |
|
Gross profit | — |
| | 968,286 |
| | 41,971 |
| | — |
| | 1,010,257 |
|
Selling, general and administrative expenses | 3,389 |
| | 780,808 |
| | 22,863 |
| | (13,487 | ) | | 793,573 |
|
Operating (loss) income | (3,389 | ) | | 187,478 |
| | 19,108 |
| | 13,487 |
| | 216,684 |
|
Other, net: | | | | | | | | | |
Interest (expense) income | (12,072 | ) | | (1,966 | ) | | 17 |
| | — |
| | (14,021 | ) |
Other income (expense), net | 16,172 |
| | 4,754 |
| | (1,195 | ) | | (13,487 | ) | | 6,244 |
|
Total other, net | 4,100 |
| | 2,788 |
| | (1,178 | ) | | (13,487 | ) | | (7,777 | ) |
Income before provision for income taxes | 711 |
| | 190,266 |
| | 17,930 |
| | — |
| | 208,907 |
|
Provision for income taxes | 2,078 |
| | 78,136 |
| | 4,093 |
| | — |
| | 84,307 |
|
(Loss) income before equity in earnings of subsidiaries | (1,367 | ) | | 112,130 |
| | 13,837 |
| | — |
| | 124,600 |
|
Equity in earnings of subsidiaries | 125,967 |
| | 13,837 |
| | — |
| | (139,804 | ) | | — |
|
Net income | $ | 124,600 |
| | $ | 125,967 |
| | $ | 13,837 |
| | $ | (139,804 | ) | | $ | 124,600 |
|
Condensed Consolidating Statements of Operations (Unaudited)
For the Twenty-Eight weeks ended July 15, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 4,977,128 |
| | $ | 310,295 |
| | $ | (132,858 | ) | | $ | 5,154,565 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 2,801,921 |
| | 221,730 |
| | (132,858 | ) | | 2,890,793 |
|
Gross profit | — |
| | 2,175,207 |
| | 88,565 |
| | — |
| | 2,263,772 |
|
Selling, general and administrative expenses | 20,167 |
| | 1,901,621 |
| | 43,266 |
| | (27,773 | ) | | 1,937,281 |
|
Operating (loss) income | (20,167 | ) | | 273,586 |
| | 45,299 |
| | 27,773 |
| | 326,491 |
|
Other, net: | | | | | | | | | |
Interest (expense) income | (28,366 | ) | | (4,023 | ) | | 38 |
| | — |
| | (32,351 | ) |
Other income (expense), net | 49,351 |
| | (12,766 | ) | | (830 | ) | | (27,773 | ) | | 7,982 |
|
Total other, net | 20,985 |
| | (16,789 | ) | | (792 | ) | | (27,773 | ) | | (24,369 | ) |
Income before provision for income taxes | 818 |
| | 256,797 |
| | 44,507 |
| | — |
| | 302,122 |
|
(Benefit) provision for income taxes | (1,616 | ) | | 100,296 |
| | 8,433 |
| | — |
| | 107,113 |
|
Income before equity in earnings of subsidiaries | 2,434 |
| | 156,501 |
| | 36,074 |
| | — |
| | 195,009 |
|
Equity in earnings of subsidiaries | 192,572 |
| | 36,074 |
| | — |
| | (228,646 | ) | | — |
|
Net income | $ | 195,006 |
| | $ | 192,575 |
| | $ | 36,074 |
| | $ | (228,646 | ) | | $ | 195,009 |
|
Condensed Consolidating Statements of Operations (Unaudited)
For the Twenty-Eight weeks ended July 16, 2016
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 5,066,198 |
| | $ | 320,098 |
| | $ | (150,363 | ) | | $ | 5,235,933 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 2,804,343 |
| | 221,807 |
| | (150,363 | ) | | 2,875,787 |
|
Gross profit | — |
| | 2,261,855 |
| | 98,291 |
| | — |
| | 2,360,146 |
|
Selling, general and administrative expenses | 11,300 |
| | 1,841,576 |
| | 51,221 |
| | (31,634 | ) | | 1,872,463 |
|
Operating (loss) income | (11,300 | ) | | 420,279 |
| | 47,070 |
| | 31,634 |
| | 487,683 |
|
Other, net: | | | | | | | | | |
Interest (expense) income | (28,216 | ) | | (4,788 | ) | | 40 |
| | — |
| | (32,964 | ) |
Other income (expense), net | 39,715 |
| | (1,522 | ) | | 2,808 |
| | (31,634 | ) | | 9,367 |
|
Total other, net | 11,499 |
| | (6,310 | ) | | 2,848 |
| | (31,634 | ) | | (23,597 | ) |
Income before provision for income taxes | 199 |
| | 413,969 |
| | 49,918 |
| | — |
| | 464,086 |
|
Provision for income taxes | 647 |
| | 169,412 |
| | 10,614 |
| | — |
| | 180,673 |
|
(Loss) income before equity in earnings of subsidiaries | (448 | ) | | 244,557 |
| | 39,304 |
| | — |
| | 283,413 |
|
Equity in earnings of subsidiaries | 283,861 |
| | 39,304 |
| | — |
| | (323,165 | ) | | — |
|
Net income | $ | 283,413 |
| | $ | 283,861 |
| | $ | 39,304 |
| | $ | (323,165 | ) | | $ | 283,413 |
|
Condensed Consolidating Statements of Comprehensive Income (Unaudited)
For the Twelve Weeks ended July 15, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 87,049 |
| | $ | 87,056 |
| | $ | 20,522 |
| | $ | (107,578 | ) | | $ | 87,049 |
|
Other comprehensive income | 13,910 |
| | 13,910 |
| | 13,973 |
| | (27,883 | ) | | 13,910 |
|
Comprehensive income | $ | 100,959 |
| | $ | 100,966 |
| | $ | 34,495 |
| | $ | (135,461 | ) | | $ | 100,959 |
|
Condensed Consolidating Statements of Comprehensive Income (Unaudited)
For the Twelve Weeks ended July 16, 2016
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 124,600 |
| | $ | 125,967 |
| | $ | 13,837 |
| | $ | (139,804 | ) | | $ | 124,600 |
|
Other comprehensive loss | (4,605 | ) | | (4,605 | ) | | (4,468 | ) | | 9,073 |
| | (4,605 | ) |
Comprehensive income | $ | 119,995 |
| | $ | 121,362 |
| | $ | 9,369 |
| | $ | (130,731 | ) | | $ | 119,995 |
|
Condensed Consolidating Statements of Comprehensive Income (Unaudited)
For the Twenty-Eight Weeks ended July 15, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 195,006 |
| | $ | 192,575 |
| | $ | 36,074 |
| | $ | (228,646 | ) | | $ | 195,009 |
|
Other comprehensive income | 13,037 |
| | 13,037 |
| | 13,185 |
| | (26,222 | ) | | 13,037 |
|
Comprehensive income | $ | 208,043 |
| | $ | 205,612 |
| | $ | 49,259 |
| | $ | (254,868 | ) | | $ | 208,046 |
|
Condensed Consolidating Statements of Comprehensive Income (Unaudited)
For the Twenty-Eight Weeks ended July 16, 2016
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 283,413 |
| | $ | 283,861 |
| | $ | 39,304 |
| | $ | (323,165 | ) | | $ | 283,413 |
|
Other comprehensive income | 11,638 |
| | 11,638 |
| | 11,957 |
| | (23,595 | ) | | 11,638 |
|
Comprehensive income | $ | 295,051 |
| | $ | 295,499 |
| | $ | 51,261 |
| | $ | (346,760 | ) | | $ | 295,051 |
|
Condensed Consolidating Statements of Cash Flows (Unaudited)
For the Twenty-Eight weeks ended July 15, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net cash provided by (used in) operating activities | $ | — |
| | $ | 285,164 |
| | $ | (17,815 | ) | | $ | — |
| | $ | 267,349 |
|
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Purchases of property and equipment | — |
| | (121,615 | ) | | (749 | ) | | — |
| | (122,364 | ) |
Proceeds from sales of property and equipment | — |
| | 1,311 |
| | — |
| | — |
| | 1,311 |
|
Other, net | — |
| | 480 |
| | (460 | ) | | — |
| | 20 |
|
Net cash used in investing activities | — |
| | (119,824 | ) | | (1,209 | ) | | — |
| | (121,033 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
(Decrease) increase in bank overdrafts | — |
| | (5,488 | ) | | 1,286 |
| | — |
| | (4,202 | ) |
Borrowings under credit facilities | — |
| | 534,400 |
| | — |
| | — |
| | 534,400 |
|
Payments on credit facilities | — |
| | (534,400 | ) | | — |
| | — |
| | (534,400 | ) |
Dividends paid | — |
| | (13,363 | ) | | — |
| | — |
| | (13,363 | ) |
Proceeds from the issuance of common stock | — |
| | 2,281 |
| | — |
| | — |
| | 2,281 |
|
Tax withholdings related to the exercise of stock appreciation rights | — |
| | (6,230 | ) | | — |
| | — |
| | (6,230 | ) |
Repurchase of common stock | — |
| | (3,303 | ) | | — |
| | — |
| | (3,303 | ) |
Other, net | — |
| | (2,027 | ) | | — |
| | — |
| | (2,027 | ) |
Net cash (used in) provided by financing activities | — |
| | (28,130 | ) | | 1,286 |
| | — |
| | (26,844 | ) |
| | | | | | | | | |
Effect of exchange rate changes on cash | — |
| | — |
| | 2,580 |
| | — |
| | 2,580 |
|
| | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | — |
| | 137,210 |
| | (15,158 | ) | | — |
| | 122,052 |
|
Cash and cash equivalents, beginning of period | 22 |
| | 78,543 |
| | 56,635 |
| | (22 | ) | | 135,178 |
|
Cash and cash equivalents, end of period | $ | 22 |
| | $ | 215,753 |
| | $ | 41,477 |
| | $ | (22 | ) | | $ | 257,230 |
|
Condensed Consolidating Statements of Cash Flows (Unaudited)
For the Twenty-Eight weeks ended July 16, 2016
|
| | | | | | | | | | | | | | | | | | | |
(In thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net cash provided by (used in) operating activities | $ | — |
| | $ | 216,139 |
| | $ | (7,699 | ) | | $ | — |
| | $ | 208,440 |
|
| | | | | | | | | |
Cash flows from investing activities: | | | | | | | | | |
Purchases of property and equipment | — |
| | (136,502 | ) | | (1,418 | ) | | — |
| | (137,920 | ) |
Proceeds from sales of property and equipment | — |
| | 1,291 |
| | 2 |
| | — |
| | 1,293 |
|
Other, net | — |
| | (2,430 | ) | | — |
| | — |
| | (2,430 | ) |
Net cash used in investing activities | — |
| | (137,641 | ) | | (1,416 | ) | | — |
| | (139,057 | ) |
| | | | | | | | | |
Cash flows from financing activities: | | | | | | | | | |
Increase in bank overdrafts | — |
| | 11,376 |
| | 2,280 |
| | — |
| | 13,656 |
|
Borrowings under credit facilities | — |
| | 576,600 |
| | — |
| | — |
| | 576,600 |
|
Payments on credit facilities | — |
| | (611,100 | ) | | — |
| | — |
| | (611,100 | ) |
Dividends paid | — |
| | (13,291 | ) | | — |
| | — |
| | (13,291 | ) |
Proceeds from the issuance of common stock | — |
| | 2,222 |
| | — |
| | — |
| | 2,222 |
|
Tax withholdings related to the exercise of stock appreciation rights | — |
| | (12,489 | ) | | — |
| | — |
| | (12,489 | ) |
Repurchase of common stock | — |
| | (12,179 | ) | | — |
| | — |
| | (12,179 | ) |
Other, net | — |
| | (224 | ) | | — |
| | — |
| | (224 | ) |
Net cash (used in) provided by financing activities | — |
| | (59,085 | ) | | 2,280 |
| | — |
| | (56,805 | ) |
| | | | | | | | | |
Effect of exchange rate changes on cash | — |
| | — |
| | 1,467 |
| | — |
| | 1,467 |
|
| |