Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-Q
________________________________________________
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 6, 2018
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)
________________________
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Delaware (State or other jurisdiction of incorporation or organization) | 54-2049910 (I.R.S. Employer Identification No.) |
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5008 Airport Road Roanoke, VA (Address of principal executive offices) | 24012 (Zip Code)
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(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 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 x No o
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.
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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 November 9, 2018, the number of shares of the registrant’s common stock outstanding was 72,893,719 shares.
PART I. FINANCIAL INFORMATION
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ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data) (Unaudited)
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| | | | | | | |
| October 6, 2018 | | December 30, 2017 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 970,006 |
| | $ | 546,937 |
|
Receivables, net | 698,617 |
| | 606,357 |
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Inventories | 4,187,082 |
| | 4,168,492 |
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Other current assets | 168,578 |
| | 105,106 |
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Total current assets | 6,024,283 |
| | 5,426,892 |
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Property and equipment, net of accumulated depreciation of $1,914,153 and $1,783,383 | 1,335,769 |
| | 1,394,138 |
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Goodwill | 992,764 |
| | 994,293 |
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Intangible assets, net | 562,698 |
| | 597,674 |
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Other assets | 56,839 |
| | 69,304 |
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| $ | 8,972,353 |
| | $ | 8,482,301 |
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Liabilities and Stockholders’ Equity | |
| | |
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Current liabilities: | |
| | |
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Accounts payable | $ | 3,023,660 |
| | $ | 2,894,582 |
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Accrued expenses | 648,817 |
| | 533,548 |
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Other current liabilities | 48,755 |
| | 51,967 |
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Total current liabilities | 3,721,232 |
| | 3,480,097 |
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Long-term debt | 1,045,398 |
| | 1,044,327 |
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Deferred income taxes | 320,160 |
| | 303,620 |
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Other long-term liabilities | 225,927 |
| | 239,061 |
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Commitments and contingencies |
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| |
|
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Stockholders’ equity: | |
| | |
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Preferred stock, nonvoting, $0.0001 par value | — |
| | — |
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Common stock, voting, $0.0001 par value | 8 |
| | 8 |
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Additional paid-in capital | 685,675 |
| | 664,646 |
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Treasury stock, at cost | (271,082 | ) | | (144,600 | ) |
Accumulated other comprehensive loss | (32,083 | ) | | (24,954 | ) |
Retained earnings | 3,277,118 |
| | 2,920,096 |
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Total stockholders’ equity | 3,659,636 |
| | 3,415,196 |
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| $ | 8,972,353 |
| | $ | 8,482,301 |
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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)
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| | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
| October 6, 2018 | | October 7, 2017 | | October 6, 2018 | | October 7, 2017 |
Net sales | $ | 2,274,982 |
| | $ | 2,182,233 |
| | $ | 7,475,482 |
| | $ | 7,336,798 |
|
Cost of sales, including purchasing and warehousing costs | 1,268,055 |
| | 1,234,525 |
| | 4,184,713 |
| | 4,125,318 |
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Gross profit | 1,006,927 |
| | 947,708 |
| | 3,290,769 |
| | 3,211,480 |
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Selling, general and administrative expenses | 852,686 |
| | 791,139 |
| | 2,770,747 |
| | 2,728,420 |
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Operating income | 154,241 |
| | 156,569 |
| | 520,022 |
| | 483,060 |
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Other, net: | |
| | |
| | | | |
Interest expense | (13,076 | ) | | (13,314 | ) | | (43,613 | ) | | (45,665 | ) |
Other income, net | 5,755 |
| | 745 |
| | 8,998 |
| | 8,727 |
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Total other, net | (7,321 | ) | | (12,569 | ) | | (34,615 | ) | | (36,938 | ) |
Income before provision for income taxes | 146,920 |
| | 144,000 |
| | 485,407 |
| | 446,122 |
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Provision for income taxes | 31,077 |
| | 48,004 |
| | 115,002 |
| | 155,117 |
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Net income | $ | 115,843 |
| | $ | 95,996 |
| | $ | 370,405 |
| | $ | 291,005 |
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| | | | | | | |
Basic earnings per common share | $ | 1.57 |
| | $ | 1.30 |
| | $ | 5.01 |
| | $ | 3.94 |
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Weighted average common shares outstanding | 73,888 |
| | 73,866 |
| | 73,974 |
| | 73,827 |
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Diluted earnings per common share | $ | 1.56 |
| | $ | 1.30 |
| | $ | 4.99 |
| | $ | 3.93 |
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Weighted average common shares outstanding | 74,190 |
| | 74,106 |
| | 74,212 |
| | 74,097 |
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Dividends declared per common share | $ | 0.06 |
| | $ | 0.06 |
| | $ | 0.18 |
| | $ | 0.18 |
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Condensed Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
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| | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
| October 6, 2018 | | October 7, 2017 | | October 6, 2018 | | October 7, 2017 |
Net income | $ | 115,843 |
| | $ | 95,996 |
| | $ | 370,405 |
| | $ | 291,005 |
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Other comprehensive (loss) income: | | | | | | | |
Changes in net unrecognized other postretirement benefit costs, net of tax of $24, $41, $80 and $137 | (69 | ) | | (63 | ) | | (227 | ) | | (211 | ) |
Currency translation adjustments | 3,900 |
| | 2,225 |
| | (6,902 | ) | | 15,409 |
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Total other comprehensive income (loss) | 3,831 |
| | 2,162 |
| | (7,129 | ) | | 15,198 |
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Comprehensive income | $ | 119,674 |
| | $ | 98,158 |
| | $ | 363,276 |
| | $ | 306,203 |
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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)
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| | | | | | | |
| Forty Weeks Ended |
| October 6, 2018 | | October 7, 2017 |
Cash flows from operating activities: | | | |
Net income | $ | 370,405 |
| | $ | 291,005 |
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Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 183,584 |
| | 192,753 |
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Share-based compensation | 19,265 |
| | 28,156 |
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Loss on disposal and impairment of long-lived assets | 6,267 |
| | 4,692 |
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Provision (benefit) for deferred income taxes | 17,029 |
| | (25,712 | ) |
Other | 1,686 |
| | 2,262 |
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Net change in: | | | |
Receivables, net | (93,595 | ) | | (35,760 | ) |
Inventories | (22,862 | ) | | 116,957 |
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Accounts payable | 131,572 |
| | (170,227 | ) |
Accrued expenses | 122,779 |
| | 36,564 |
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Other assets and liabilities, net | (54,627 | ) | | (39,685 | ) |
Net cash provided by operating activities | 681,503 |
| | 401,005 |
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Cash flows from investing activities: | |
| | |
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Purchases of property and equipment | (105,132 | ) | | (160,960 | ) |
Proceeds from sales of property and equipment | 1,450 |
| | 6,120 |
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Other, net | — |
| | 20 |
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Net cash used in investing activities | (103,682 | ) | | (154,820 | ) |
Cash flows from financing activities: | |
| | |
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(Decrease) increase in bank overdrafts | (11,973 | ) | | 4,676 |
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Borrowings under credit facilities | — |
| | 534,400 |
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Payments on credit facilities | — |
| | (534,400 | ) |
Dividends paid | (17,819 | ) | | (17,828 | ) |
Proceeds from the issuance of common stock | 2,290 |
| | 3,142 |
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Tax withholdings related to the exercise of stock appreciation rights | (490 | ) | | (6,414 | ) |
Repurchase of common stock | (126,482 | ) | | (3,380 | ) |
Other, net | 814 |
| | (2,095 | ) |
Net cash used in financing activities | (153,660 | ) | | (21,899 | ) |
Effect of exchange rate changes on cash | (1,092 | ) | | 3,838 |
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Net increase in cash and cash equivalents | 423,069 |
| | 228,124 |
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Cash and cash equivalents, beginning of period | 546,937 |
| | 135,178 |
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Cash and cash equivalents, end of period | $ | 970,006 |
| | $ | 363,302 |
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| | | |
Non-cash transactions: | | | |
Accrued purchases of property and equipment | $ | 11,066 |
| | $ | 7,860 |
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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)
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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 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”) and have been prepared by the Company.
As of October 6, 2018, we operated a total of 4,981 stores and 139 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of October 6, 2018, we served 1,229 independently owned Carquest branded stores (“independent stores”) across the same geographic locations served by our 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. 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 2017 as filed with the SEC on February 21, 2018.
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 remaining three quarters consist of twelve weeks.
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2. | Significant Accounting Policies: |
Revenues
Revenue for periods through December 30, 2017 was reported under Accounting Standards Codification (“ASC”) 605, Revenue Recognition (Topic 605), as described in our accounting policies in our 2017 Form 10-K. Effective December 31, 2017, we adopted ASC 606, Revenue From Contracts With Customers (Topic 606) (“ASC 606”). The results of applying Topic 606 using the modified retrospective approach were insignificant and did not have a material impact on our consolidated financial condition, results of operations, cash flows, business process, controls or systems.
ASC 606 defines a performance obligation as a promise in a contract to transfer a distinct good or service to the customer and is considered the unit of account. The majority of our contracts have one single performance obligation as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Discounts and incentives are treated as separate performance obligations. We allocate the contract’s transaction price to each of these performance obligations separately using explicitly stated amounts or our best estimate using historical data. Additionally, we estimate and record gift card breakage as redemptions occur.
In accordance with ASC 606 revenue is recognized at the time the sale is made, at which time our walk-in customers take immediate possession of the merchandise or same-day delivery is made to our Professional delivery customers, which include certain independently-owned store locations. Payment terms are established for our Professional delivery customers based on pre-established credit requirements. Payment terms vary depending on the customer and generally range from 1 to 30 days. Based on the nature of receivables, no significant financing components exist. For e-commerce sales, revenue is recognized either at the time of pick-up at one of our store locations or at the time of shipment depending on the customer's order designation. Sales are recorded net of discounts, sales incentives and rebates, sales taxes and estimated returns and allowances. We estimate the reduction to Net sales and Cost of sales for returns based on current sales levels and our historical return experience.
We provide assurance type warranty coverage primarily on batteries, brakes and struts whereby we are required to provide replacement product at no cost or a reduced cost for a set period of time.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
We had no material contract assets, contract liabilities or costs to obtain and fulfill contracts recorded on the Condensed Consolidated Balance Sheet as of October 6, 2018. For the twelve and forty weeks ended October 6, 2018, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price) was insignificant. Revenue expected to be recognized in future periods related to remaining performance obligations is insignificant.
The following table summarizes disaggregated revenue from contracts with customers by product group:
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| | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
| October 6, 2018 | | October 7, 2017 | | October 6, 2018 | | October 7, 2017 |
Percentage of Net sales, by product group: | | | | | | | |
Parts and batteries | 67 | % | | 67 | % | | 66 | % | | 66 | % |
Accessories and chemicals | 19 |
| | 19 |
| | 20 |
| | 19 |
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Engine maintenance | 13 |
| | 13 |
| | 13 |
| | 14 |
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Other | 1 |
| | 1 |
| | 1 |
| | 1 |
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Total | 100 | % | | 100 | % | | 100 | % | | 100 | % |
Recently Issued Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). This ASU is a comprehensive new accounting standard with respect to leases 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 most leases, including those leases previously classified as operating leases under current GAAP. ASU 2016-02 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in previous lease guidance. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those years; earlier adoption is permitted.
In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides clarifications and improvements to ASU 2016-02 including allowing entities to elect an additional transition method with which to adopt ASU 2016-02. The approved transition method enables entities to apply the transition requirements in this ASU at the effective date of ASU 2016-02 (rather than at the beginning of the earliest comparative period presented as currently required) with the effect of initially applying ASU 2016-02 recognized as a cumulative-effect adjustment to retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with ASC 840, Leases (Topic 840) (“ASC 840”), including the disclosure requirements of ASC 840. Using this transition method, we plan to adopt ASU 2016-02 at the beginning of 2019.
We are in process of implementing our leasing software solution and are continuing to identify changes to our business processes, systems and controls to support adoption of the new standard in 2019. We are evaluating the impact that the new standard will have on the condensed consolidated financial statements. While we are unable to quantify the impact at this time, we expect the adoption of the new standard to result in a material increase in the assets and liabilities in the condensed consolidated financial statements. We do not expect adoption of ASU 2016-02 to have a material impact on our condensed consolidated statements of operations as the majority of our leases will remain operating in nature. As such, the expense recognition will be similar to previously required straight-line expense treatment.
In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“SAB 118”). ASU 2018-05 provides guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act (the “Act”) pursuant to the Staff Accounting Bulletin No. 118, which allows companies to complete the accounting under ASC 740, Income Taxes (Topic 740) within a one-year measurement period from the Act enactment date, which occurred in the financial statements for the year ended December 30, 2017. During the third quarter of 2018, and in conjunction with the completion of our 2017 U.S. income tax return, we identified certain adjustments to amounts previously recorded for the remeasurement of the net deferred tax liability and nonrecurring repatriation tax on accumulated earnings of foreign subsidiaries that resulted in a net tax benefit of $5.7 million. Our analysis under SAB 118 is complete.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718) to expand the scope of ASC 718, Compensation - Stock Compensation (Topic 718) (“ASU 2018-07”), to include share-based payment transactions for acquiring goods and services from nonemployees. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We elected to early adopt ASU 2018-07 in the second quarter of 2018. The results of applying ASU 2018-07 were insignificant and did not have a material impact on our consolidated financial condition, results of operations, cash flows, business process, controls or systems.
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The pronouncement is effective for years, and for interim periods within those years, beginning after December 15, 2019, with early adoption permitted. We elected to early adopt ASU 2018-15 in the third quarter of 2018 on a prospective basis. The results of applying ASU 2018-15 were insignificant and did not have a material impact on our consolidated financial condition, results of operations, cash flows, business process, controls or systems.
Inventories are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately 88% of inventories as of October 6, 2018 and December 30, 2017. 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 forty weeks ended October 6, 2018 and prior years. We recorded a reduction to Cost of sales of $22.0 million and of $1.0 million for the twelve weeks ended October 6, 2018 and October 7, 2017 and reductions to Cost of sales of $54.3 million and $6.5 million for the forty weeks ended October 6, 2018 and October 7, 2017 to state inventories at LIFO.
An actual valuation of inventory under the LIFO method is performed by us at the end of each fiscal year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected year-end inventory levels and costs.
Inventory balances were as follows:
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| | | | | | | |
(in thousands) | October 6, 2018 | | December 30, 2017 |
Inventories at first in, first out (“FIFO”) | $ | 3,929,650 |
| | $ | 3,965,370 |
|
Adjustments to state inventories at LIFO | 257,432 |
| | 203,122 |
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Inventories at LIFO | $ | 4,187,082 |
| | $ | 4,168,492 |
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4. | Exit Activities and Other Initiatives |
Store and Supply Chain Rationalization
During the fourth quarter of 2017, the Board of Directors approved a plan to close certain underperforming stores and begin to rationalize our supply chain costs as part of our strategy to transform the enterprise. As of October 6, 2018, total charges related to these actions are expected to total up to $70.0 million, which consist of $35.0 million relating to the early termination of lease obligations, $15.0 million of inventory and supply chain asset impairment charges, $15.0 million of other facility closure costs and $5.0 million of severance.
During the twelve weeks ended October 6, 2018, we incurred $13.9 million of early termination of lease obligations charges, $1.1 million of inventory and supply chain asset impairment charges, $5.4 million of facility closure costs and $0.8 million of severance relating to the store and supply chain rationalization. Of these costs, $20.7 million are included in SG&A and $0.5 million are included in Cost of sales in the accompanying condensed consolidated statements of operations.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
During the forty weeks ended October 6, 2018, we incurred $18.9 million of early termination of lease obligation charges, $7.9 million of inventory and supply chain asset impairment charges, $7.8 million of facility closure costs and $2.2 million of severance relating to the store and supply chain rationalization. Of these costs, $31.0 million are included in SG&A and $5.8 million are included in Cost of sales in the accompanying condensed consolidated statements of operations.
Total Exit Liabilities
Our total exit liabilities include liabilities recorded in connection with the initiative 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 2019. Of our total exit liabilities as of October 6, 2018 and December 30, 2017, $25.7 million and $19.8 million is included in Other long-term liabilities and the remainder is included in Accrued expenses in the accompanying condensed consolidated balance sheet. A summary of our exit liabilities is presented in the following table:
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| | | | | | | | | | | | |
(in thousands) | | Closed Facility Lease Obligations | | Severance | | Total |
Balance, December 30, 2017 | | $ | 31,570 |
| | $ | 1,645 |
| | $ | 33,215 |
|
Reserves established | | 20,365 |
| | 5,018 |
| | 25,383 |
|
Change in estimates | | 95 |
| | (251 | ) | | (156 | ) |
Cash payments | | (11,933 | ) | | (3,149 | ) | | (15,082 | ) |
Balance, October 6, 2018 | | $ | 40,097 |
| | $ | 3,263 |
| | $ | 43,360 |
|
| | | | | | |
Balance, December 31, 2016 | | $ | 44,265 |
| | $ | 959 |
| | $ | 45,224 |
|
Reserves established | | 7,940 |
| | 7,927 |
| | 15,867 |
|
Change in estimates | | (1,116 | ) | | (699 | ) | | (1,815 | ) |
Cash payments | | (19,519 | ) | | (6,542 | ) | | (26,061 | ) |
Balance, December 30, 2017 | | $ | 31,570 |
| | $ | 1,645 |
| | $ | 33,215 |
|
Our definite-lived intangible assets include customer relationships, favorable leases and non-compete agreements. Amortization expense was $9.4 million and $10.7 million for the twelve weeks ended October 6, 2018 and October 7, 2017 and $31.3 million and $36.3 million for the forty weeks ended October 6, 2018 and October 7, 2017.
Receivables consist of the following:
|
| | | | | | | |
(in thousands) | October 6, 2018 | | December 30, 2017 |
Trade | $ | 470,246 |
| | $ | 389,963 |
|
Vendor | 230,422 |
| | 220,510 |
|
Other | 16,642 |
| | 14,103 |
|
Total receivables | 717,310 |
| | 624,576 |
|
Less: allowance for doubtful accounts | (18,693 | ) | | (18,219 | ) |
Receivables, net | $ | 698,617 |
| | $ | 606,357 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
| |
7. | Long-term Debt and Fair Value of Financial Instruments |
Long-term debt consists of the following:
|
| | | | | | | |
(in thousands) | October 6, 2018 | | December 30, 2017 |
Total long-term debt | $ | 1,045,609 |
| | $ | 1,044,677 |
|
Less: current portion of long-term debt | (211 | ) | | (350 | ) |
Long-term debt, excluding current portion | $ | 1,045,398 |
| | $ | 1,044,327 |
|
| | | |
Fair value of long-term debt | $ | 1,071,000 |
| | $ | 1,109,000 |
|
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 and accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.
Bank Debt
As of October 6, 2018 and December 30, 2017 we had no outstanding borrowings under the revolver and borrowing availability was $896.0 million and $517.6 million based on our leverage ratio. As of October 6, 2018 and December 30, 2017, we had letters of credit outstanding of $104.0 million and $111.7 million, 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 all financial covenants required by our debt arrangements as of October 6, 2018.
Debt Guarantees
We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are our customers totaling $23.7 million and $24.8 million as of October 6, 2018 and December 30, 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 $55.8 million and $62.8 million as of October 6, 2018 and December 30, 2017. We believe that the likelihood of performance under these guarantees is remote.
The following table presents changes in our warranty reserves:
|
| | | | | | | |
| Forty Weeks Ended | | Fifty-Two Weeks Ended |
(in thousands) | October 6, 2018 | | December 30, 2017 |
Warranty reserve, beginning of period | $ | 49,024 |
| | $ | 47,243 |
|
Additions to warranty reserves | 32,274 |
| | 50,895 |
|
Reserves utilized | (35,573 | ) | | (49,114 | ) |
Warranty reserve, end of period | $ | 45,725 |
| | $ | 49,024 |
|
| |
9. | Share Repurchase Program |
Our share repurchase program permits the repurchase of our common stock on the open market or in privately negotiated transactions from time to time. On August 8, 2018, our Board of Directors authorized a $600.0 million share repurchase
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
program. This new authorization replaced the previous $500.0 million share repurchase program that was authorized by our Board of Directors on May 14, 2012.
During the twelve and forty weeks ended October 6, 2018, we repurchased 720 thousand shares of our common stock at an aggregate cost of $119.9 million, or an average price of $166.57 per share, in connection with our share repurchase program. We had $480.1 million remaining under our share repurchase program as of October 6, 2018. During the twelve and forty weeks ended October 7, 2017, we repurchased no shares of our common stock in connection with our prior share repurchase program.
The computation of basic and diluted earnings per share are as follows:
|
| | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
(in thousands, except per share data) | October 6, 2018 | | October 7, 2017 | | October 6, 2018 | | October 7, 2017 |
Numerator | | | | | | | |
Net income applicable to common shares | $ | 115,843 |
| | $ | 95,996 |
| | $ | 370,405 |
| | $ | 291,005 |
|
Denominator | | | | | |
| | |
Basic weighted average common shares | 73,888 |
| | 73,866 |
| | 73,974 |
| | 73,827 |
|
Dilutive impact of share-based awards | 302 |
| | 240 |
| | 238 |
| | 270 |
|
Diluted weighted average common shares | 74,190 |
| | 74,106 |
| | 74,212 |
| | 74,097 |
|
| |
| | |
| | |
| | |
Basic earnings per common share | $ | 1.57 |
| | $ | 1.30 |
| | $ | 5.01 |
| | $ | 3.94 |
|
Diluted earnings per common share | $ | 1.56 |
| | $ | 1.30 |
| | $ | 4.99 |
| | $ | 3.93 |
|
| |
11. | Share-Based Compensation |
During the forty weeks ended October 6, 2018, we granted 230 thousand time-based restricted stock units (“RSUs”), 72 thousand performance-based RSUs and 38 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.
The weighted average fair values of the time-based, performance-based and market-based RSUs granted during the forty weeks ended October 6, 2018 were $126.32, $117.84 and $131.96 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 twelve and forty weeks ended October 6, 2018 was $1.7 million and $4.7 million. Total income tax benefit related to share-based compensation expense for the twelve and forty weeks ended October 7, 2017 was $3.1 million and $10.5 million. As of October 6, 2018, there was $52.5 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.
| |
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 its foreign subsidiaries, do not serve as guarantors of our senior unsecured notes (“Non-Guarantor Subsidiaries”).
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
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.
Condensed Consolidating Balance Sheet
As of October 6, 2018
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | $ | — |
| | $ | 886,608 |
| | $ | 83,398 |
| | $ | — |
| | $ | 970,006 |
|
Receivables, net | — |
| | 654,001 |
| | 44,616 |
| | — |
| | 698,617 |
|
Inventories | — |
| | 4,018,991 |
| | 168,091 |
| | — |
| | 4,187,082 |
|
Other current assets | 24,809 |
| | 163,333 |
| | 3,732 |
| | (23,296 | ) | | 168,578 |
|
Total current assets | 24,809 |
| | 5,722,933 |
| | 299,837 |
| | (23,296 | ) | | 6,024,283 |
|
Property and equipment, net of accumulated depreciation | 83 |
| | 1,326,422 |
| | 9,264 |
| | — |
| | 1,335,769 |
|
Goodwill | — |
| | 943,358 |
| | 49,406 |
| | — |
| | 992,764 |
|
Intangible assets, net | — |
| | 519,989 |
| | 42,709 |
| | — |
| | 562,698 |
|
Other assets, net | 2,384 |
| | 56,223 |
| | 616 |
| | (2,384 | ) | | 56,839 |
|
Investment in subsidiaries | 3,898,615 |
| | 481,256 |
| | — |
| | (4,379,871 | ) | | — |
|
Intercompany note receivable | 1,048,924 |
| | — |
| | — |
| | (1,048,924 | ) | | — |
|
Due from intercompany, net | — |
| | — |
| | 312,726 |
| | (312,726 | ) | | — |
|
| $ | 4,974,815 |
| | $ | 9,050,181 |
| | $ | 714,558 |
| | $ | (5,767,201 | ) | | $ | 8,972,353 |
|
Liabilities and Stockholders' Equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | $ | — |
| | $ | 2,823,263 |
| | $ | 200,397 |
| | $ | — |
| | $ | 3,023,660 |
|
Accrued expenses | — |
| | 654,607 |
| | 17,506 |
| | (23,296 | ) | | 648,817 |
|
Other current liabilities | — |
| | 50,887 |
| | (2,132 | ) | | — |
| | 48,755 |
|
Total current liabilities | — |
| | 3,528,757 |
| | 215,771 |
| | (23,296 | ) | | 3,721,232 |
|
Long-term debt | 1,045,398 |
| | — |
| | — |
| | — |
| | 1,045,398 |
|
Deferred income taxes | — |
| | 306,327 |
| | 16,217 |
| | (2,384 | ) | | 320,160 |
|
Other long-term liabilities | — |
| | 224,613 |
| | 1,314 |
| | — |
| | 225,927 |
|
Intercompany note payable | — |
| | 1,048,924 |
| | — |
| | (1,048,924 | ) | | — |
|
Due to intercompany, net | 269,781 |
| | 42,945 |
| | — |
| | (312,726 | ) | | — |
|
Commitments and contingencies |
| |
| |
| |
| |
|
Stockholders' equity | 3,659,636 |
| | 3,898,615 |
| | 481,256 |
| | (4,379,871 | ) | | 3,659,636 |
|
| $ | 4,974,815 |
| | $ | 9,050,181 |
| | $ | 714,558 |
| | $ | (5,767,201 | ) | | $ | 8,972,353 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Balance Sheet
As of December 30, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | $ | 23 |
| | $ | 482,620 |
| | $ | 64,317 |
| | $ | (23 | ) | | $ | 546,937 |
|
Receivables, net | — |
| | 567,460 |
| | 38,897 |
| | — |
| | 606,357 |
|
Inventories | — |
| | 3,986,724 |
| | 181,768 |
| | — |
| | 4,168,492 |
|
Other current assets | — |
| | 103,118 |
| | 2,063 |
| | (75 | ) | | 105,106 |
|
Total current assets | 23 |
| | 5,139,922 |
| | 287,045 |
| | (98 | ) | | 5,426,892 |
|
Property and equipment, net of accumulated depreciation | 103 |
| | 1,384,115 |
| | 9,920 |
| | — |
| | 1,394,138 |
|
Goodwill | — |
| | 943,359 |
| | 50,934 |
| | — |
| | 994,293 |
|
Intangible assets, net | — |
| | 551,781 |
| | 45,893 |
| | — |
| | 597,674 |
|
Other assets, net | 3,224 |
| | 68,749 |
| | 554 |
| | (3,223 | ) | | 69,304 |
|
Investment in subsidiaries | 3,521,330 |
| | 448,462 |
| | — |
| | (3,969,792 | ) | | — |
|
Intercompany note receivable | 1,048,700 |
| | — |
| | — |
| | (1,048,700 | ) | | — |
|
Due from intercompany, net | — |
| | — |
| | 332,467 |
| | (332,467 | ) | | — |
|
| $ | 4,573,380 |
| | $ | 8,536,388 |
| | $ | 726,813 |
| | $ | (5,354,280 | ) | | $ | 8,482,301 |
|
Liabilities and Stockholders' Equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | $ | — |
| | $ | 2,657,792 |
| | $ | 236,790 |
| | $ | — |
| | $ | 2,894,582 |
|
Accrued expenses | 1,134 |
| | 511,841 |
| | 20,648 |
| | (75 | ) | | 533,548 |
|
Other current liabilities | — |
| | 50,963 |
| | 1,027 |
| | (23 | ) | | 51,967 |
|
Total current liabilities | 1,134 |
| | 3,220,596 |
| | 258,465 |
| | (98 | ) | | 3,480,097 |
|
Long-term debt | 1,044,327 |
| | — |
| | — |
| | — |
| | 1,044,327 |
|
Deferred income taxes | — |
| | 288,999 |
| | 17,844 |
| | (3,223 | ) | | 303,620 |
|
Other long-term liabilities | — |
| | 237,019 |
| | 2,042 |
| | — |
| | 239,061 |
|
Intercompany note payable | — |
| | 1,048,700 |
| | — |
| | (1,048,700 | ) | | — |
|
Due to intercompany, net | 112,723 |
| | 219,744 |
| | — |
| | (332,467 | ) | | — |
|
Commitments and contingencies | | | | | | | | | |
Stockholders' equity | 3,415,196 |
| | 3,521,330 |
| | 448,462 |
| | (3,969,792 | ) | | 3,415,196 |
|
| $ | 4,573,380 |
| | $ | 8,536,388 |
| | $ | 726,813 |
| | $ | (5,354,280 | ) | | $ | 8,482,301 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Operations
For the Twelve Weeks ended October 6, 2018
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 2,190,822 |
| | $ | 115,675 |
| | $ | (31,515 | ) | | $ | 2,274,982 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 1,220,367 |
| | 79,203 |
| | (31,515 | ) | | 1,268,055 |
|
Gross profit | — |
| | 970,455 |
| | 36,472 |
| | — |
| | 1,006,927 |
|
Selling, general and administrative expenses | 4,631 |
| | 837,047 |
| | 22,812 |
| | (11,804 | ) | | 852,686 |
|
Operating (loss) income | (4,631 | ) | | 133,408 |
| | 13,660 |
| | 11,804 |
| | 154,241 |
|
Other, net: | | | | | | | | | |
Interest expense | (12,059 | ) | | (1,018 | ) | | 1 |
| | — |
| | (13,076 | ) |
Other income (expense), net | 16,759 |
| | (564 | ) | | 1,364 |
| | (11,804 | ) | | 5,755 |
|
Total other, net | 4,700 |
| | (1,582 | ) | | 1,365 |
| | (11,804 | ) | | (7,321 | ) |
Income before provision for income taxes | 69 |
| | 131,826 |
| | 15,025 |
| | — |
| | 146,920 |
|
Provision for income taxes | 229 |
| | 27,624 |
| | 3,224 |
| | — |
| | 31,077 |
|
(Loss) income before equity in earnings of subsidiaries | (160 | ) | | 104,202 |
| | 11,801 |
| | — |
| | 115,843 |
|
Equity in earnings of subsidiaries | 116,003 |
| | 11,801 |
| | — |
| | (127,804 | ) | | — |
|
Net income | $ | 115,843 |
| | $ | 116,003 |
| | $ | 11,801 |
| | $ | (127,804 | ) | | $ | 115,843 |
|
Condensed Consolidating Statement of Operations
For the Twelve Weeks ended October 7, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 2,098,475 |
| | $ | 122,495 |
| | $ | (38,737 | ) | | $ | 2,182,233 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 1,185,654 |
| | 87,608 |
| | (38,737 | ) | | 1,234,525 |
|
Gross profit | — |
| | 912,821 |
| | 34,887 |
| | — |
| | 947,708 |
|
Selling, general and administrative expenses | 5,806 |
| | 777,201 |
| | 19,751 |
| | (11,619 | ) | | 791,139 |
|
Operating (loss) income | (5,806 | ) | | 135,620 |
| | 15,136 |
| | 11,619 |
| | 156,569 |
|
Other, net: | | | | | | | | | |
Interest (expense) income | (11,874 | ) | | (1,401 | ) | | (39 | ) | | — |
| | (13,314 | ) |
Other income (expense), net | 17,832 |
| | (4,665 | ) | | (803 | ) | | (11,619 | ) | | 745 |
|
Total other, net | 5,958 |
| | (6,066 | ) | | (842 | ) | | (11,619 | ) | | (12,569 | ) |
Income before provision for income taxes | 152 |
| | 129,554 |
| | 14,294 |
| | — |
| | 144,000 |
|
(Benefit) provision for income taxes | (136 | ) | | 45,626 |
| | 2,514 |
| | — |
| | 48,004 |
|
Income before equity in earnings of subsidiaries | 288 |
| | 83,928 |
| | 11,780 |
| | — |
| | 95,996 |
|
Equity in earnings of subsidiaries | 95,708 |
| | 11,781 |
| | — |
| | (107,489 | ) | | — |
|
Net income | $ | 95,996 |
| | $ | 95,709 |
| | $ | 11,780 |
| | $ | (107,489 | ) | | $ | 95,996 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Operations
For the Forty Weeks Ended October 6, 2018
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 7,197,953 |
| | $ | 405,864 |
| | $ | (128,335 | ) | | $ | 7,475,482 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 4,035,319 |
| | 277,729 |
| | (128,335 | ) | | 4,184,713 |
|
Gross profit | — |
| | 3,162,634 |
| | 128,135 |
| | — |
| | 3,290,769 |
|
Selling, general and administrative expenses | 14,290 |
| | 2,719,172 |
| | 76,634 |
| | (39,349 | ) | | 2,770,747 |
|
Operating (loss) income | (14,290 | ) | | 443,462 |
| | 51,501 |
| | 39,349 |
| | 520,022 |
|
Other, net: | | | | | | | | | |
Interest expense | (40,194 | ) | | (3,419 | ) | | — |
| | — |
| | (43,613 | ) |
Other income (expense), net | 55,007 |
| | (4,766 | ) | | (1,894 | ) | | (39,349 | ) | | 8,998 |
|
Total other, net | 14,813 |
| | (8,185 | ) | | (1,894 | ) | | (39,349 | ) | | (34,615 | ) |
Income before provision for income taxes | 523 |
| | 435,277 |
| | 49,607 |
| | — |
| | 485,407 |
|
Provision for income taxes | 1,287 |
| | 103,589 |
| | 10,126 |
| | — |
| | 115,002 |
|
(Loss) income before equity in earnings of subsidiaries | (764 | ) | | 331,688 |
| | 39,481 |
| | — |
| | 370,405 |
|
Equity in earnings of subsidiaries | 371,169 |
| | 39,481 |
| | — |
| | (410,650 | ) | | — |
|
Net income | $ | 370,405 |
| | $ | 371,169 |
| | $ | 39,481 |
| | $ | (410,650 | ) | | $ | 370,405 |
|
Condensed Consolidating Statement of Operations
For the Forty Weeks Ended October 7, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net sales | $ | — |
| | $ | 7,075,603 |
| | $ | 432,790 |
| | $ | (171,595 | ) | | $ | 7,336,798 |
|
Cost of sales, including purchasing and warehousing costs | — |
| | 3,987,575 |
| | 309,338 |
| | (171,595 | ) | | 4,125,318 |
|
Gross profit | — |
| | 3,088,028 |
| | 123,452 |
| | — |
| | 3,211,480 |
|
Selling, general and administrative expenses | 25,973 |
| | 2,678,822 |
| | 63,017 |
| | (39,392 | ) | | 2,728,420 |
|
Operating (loss) income | (25,973 | ) | | 409,206 |
| | 60,435 |
| | 39,392 |
| | 483,060 |
|
Other, net: | | | | | | | | | |
Interest (expense) income | (40,240 | ) | | (5,424 | ) | | (1 | ) | | — |
| | (45,665 | ) |
Other income (expense), net | 67,183 |
| | (17,430 | ) | | (1,634 | ) | | (39,392 | ) | | 8,727 |
|
Total other, net | 26,943 |
| | (22,854 | ) | | (1,635 | ) | | (39,392 | ) | | (36,938 | ) |
Income before provision for income taxes | 970 |
| | 386,352 |
| | 58,800 |
| | — |
| | 446,122 |
|
(Benefit) provision for income taxes | (1,752 | ) | | 145,923 |
| | 10,946 |
| | — |
| | 155,117 |
|
Income before equity in earnings of subsidiaries | 2,722 |
| | 240,429 |
| | 47,854 |
| | — |
| | 291,005 |
|
Equity in earnings of subsidiaries | 288,283 |
| | 47,855 |
| | — |
| | (336,138 | ) | | — |
|
Net income | $ | 291,005 |
| | $ | 288,284 |
| | $ | 47,854 |
| | $ | (336,138 | ) | | $ | 291,005 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Comprehensive Income
For the Twelve Weeks ended October 6, 2018
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 115,843 |
| | $ | 116,003 |
| | $ | 11,801 |
| | $ | (127,804 | ) | | $ | 115,843 |
|
Other comprehensive income | 3,831 |
| | 3,831 |
| | 3,900 |
| | (7,731 | ) | | 3,831 |
|
Comprehensive income | $ | 119,674 |
| | $ | 119,834 |
| | $ | 15,701 |
| | $ | (135,535 | ) | | $ | 119,674 |
|
Condensed Consolidating Statement of Comprehensive Income
For the Twelve Weeks ended October 7, 2017 |
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 95,996 |
| | $ | 95,709 |
| | $ | 11,780 |
| | $ | (107,489 | ) | | $ | 95,996 |
|
Other comprehensive income | 2,162 |
| | 2,162 |
| | 2,225 |
| | (4,387 | ) | | 2,162 |
|
Comprehensive income | $ | 98,158 |
| | $ | 97,871 |
| | $ | 14,005 |
| | $ | (111,876 | ) | | $ | 98,158 |
|
Condensed Consolidating Statement of Comprehensive Income
For the Forty Weeks Ended October 6, 2018
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 370,405 |
| | $ | 371,169 |
| | $ | 39,481 |
| | $ | (410,650 | ) | | $ | 370,405 |
|
Other comprehensive loss | (7,129 | ) | | (7,129 | ) | | (6,902 | ) | | 14,031 |
| | (7,129 | ) |
Comprehensive income | $ | 363,276 |
| | $ | 364,040 |
| | $ | 32,579 |
| | $ | (396,619 | ) |
| $ | 363,276 |
|
Condensed Consolidating Statement of Comprehensive Income
For the Forty Weeks Ended October 7, 2017
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net income | $ | 291,005 |
| | $ | 288,284 |
| | $ | 47,854 |
| | $ | (336,138 | ) | | $ | 291,005 |
|
Other comprehensive income | 15,198 |
| | 15,198 |
| | 15,409 |
| | (30,607 | ) | | 15,198 |
|
Comprehensive income | $ | 306,203 |
| | $ | 303,482 |
| | $ | 63,263 |
| | $ | (366,745 | ) | | $ | 306,203 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Forty Weeks Ended October 6, 2018
|
| | | | | | | | | | | | | | | | | | | |
(in thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net cash provided by operating activities | $ | — |
| | $ | 656,847 |
| | $ | 24,656 |
| | $ | — |
| | $ | 681,503 |
|
Cash flows from investing activities: | | | | | | | | | |
Purchases of property and equipment | — |
| | (104,065 | ) | | (1,067 | ) | | — |
| | (105,132 | ) |
Proceeds from sales of property and equipment | — |
| | 1,406 |
| | 44 |
| | — |
| | 1,450 |
|
Net cash used in investing activities | — |
| | (102,659 | ) | | (1,023 | ) | | — |
| | (103,682 | ) |
Cash flows from financing activities: | | | | | | | | | |
Decrease in bank overdrafts | — |
| | (8,513 | ) | | (3,460 | ) | | — |
| | (11,973 | ) |
Dividends paid | — |
| | (17,819 | ) | | — |
| | — |
| | (17,819 | ) |
Proceeds from the issuance of common stock | — |
| | 2,290 |
| | — |
| | — |
| | 2,290 |
|
Tax withholdings related to the exercise of stock appreciation rights | — |
| | (490 | ) | | — |
| | — |
| | (490 | ) |
Repurchase of common stock | — |
| | (126,482 | ) | | — |
| | — |
| | (126,482 | ) |
Other, net | (23 | ) | | 814 |
| | — |
| | 23 |
| | 814 |
|
Net cash used in financing activities | (23 | ) | | (150,200 | ) | | (3,460 | ) | | 23 |
| | (153,660 | ) |
Effect of exchange rate changes on cash | — |
| | — |
| | (1,092 | ) | | — |
| | (1,092 | ) |
Net (decrease) increase in cash and cash equivalents | (23 | ) | | 403,988 |
| | 19,081 |
| | 23 |
| | 423,069 |
|
Cash and cash equivalents, beginning of period | 23 |
| | 482,620 |
| | 64,317 |
| | (23 | ) | | 546,937 |
|
Cash and cash equivalents, end of period | $ | — |
| | $ | 886,608 |
| | $ | 83,398 |
| | $ | — |
| | $ | 970,006 |
|
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Forty Weeks Ended October 7, 2017
|
| | | | | | | | | | | | | | | | | | | |
(In thousands) | Advance Auto Parts, Inc. | | Guarantor Subsidiaries | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated |
Net cash provided by (used in) operating activities | $ | — |
| | $ | 406,032 |
| | $ | (5,027 | ) | | $ | — |
| | $ | 401,005 |
|
Cash flows from investing activities: | | | | | | | | | |
Purchases of property and equipment | — |
| | (159,769 | ) | | (1,191 | ) | | — |
| | (160,960 | ) |
Proceeds from sales of property and equipment | — |
| | 6,108 |
| | 12 |
| | — |
| | 6,120 |
|
Other, net | — |
| | 480 |
| | (460 | ) | | — |
| | 20 |
|
Net cash used in investing activities | — |
| | (153,181 | ) | | (1,639 | ) | | — |
| | (154,820 | ) |
Cash flows from financing activities: | | | | | | | | | |
Increase in bank overdrafts | — |
| | 7,374 |
| | (2,698 | ) | | — |
| | 4,676 |
|
Borrowings under credit facilities | — |
| | 534,400 |
| | — |
| | — |
| | 534,400 |
|
Payments on credit facilities | — |
| | (534,400 | ) | | — |
| | — |
| | (534,400 | ) |
Dividends paid | — |
| | (17,828 | ) | | — |
| | — |
| | (17,828 | ) |
Proceeds from the issuance of common stock | — |
| | 3,142 |
| | — |
| | — |
| | 3,142 |
|
Tax withholdings related to the exercise of stock appreciation rights | — |
| | (6,414 | ) | | — |
| | — |
| | (6,414 | ) |
Repurchase of common stock | — |
| | (3,380 | ) | | — |
| | — |
| | (3,380 | ) |
Other, net | 1 |
| | (2,095 | ) | | — |
| | (1 | ) | | (2,095 | ) |
Net cash provided by (used in) financing activities | 1 |
| | (19,201 | ) | | (2,698 | ) | | (1 | ) | | (21,899 | ) |
Effect of exchange rate changes on cash | — |
| | — |
| | 3,838 |
| | (1 | ) | | |