o ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Delaware			54-2049910
(State or other jurisdiction of incorporation or organization)			~~54-2049910~~ (I.R.S. Employer Identification No.)

(Former name, former address and former fiscal year, if changed since last report).

Indicate by check mark whether the ~~registrant:~~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 or an emerging growth company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~


Large accelerated filer			☒	Accelerated filer	☐
Non-accelerated filer			☐	Smaller reporting company	☐

~~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 companyo	☐

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 10, 2017,~~May 20, 2022, the ~~registrant had outstanding 73,898,043~~number of shares of ~~Common Stock, par value $0.0001 per share (the only class of~~the registrant’s common stock ~~of the registrant outstanding).~~outstanding was 60,639,825 shares.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

~~ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES~~ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Inin thousands, except per share data) (Unaudited)


Assets	April 23, 2022		January 1, 2022
Current assets:
Cash and cash equivalents	$	138,733	$	601,428
Receivables, net	957,799		782,785
Inventories	4,778,849		4,659,018
Other current assets	182,399		232,245
Total current assets	6,057,780		6,275,476
Property and equipment, net of accumulated depreciation of $2,471,936 and $2,403,567	1,567,986		1,528,311
Operating lease right-of-use assets	2,687,581		2,671,810
Goodwill	993,820		993,744
Other intangible assets, net	642,120		651,217
Other assets	53,194		73,651
Total assets	$	12,002,481	$	12,194,209
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,942,388	$	3,922,007
Accrued expenses	617,793		777,051
Other current liabilities	492,393		481,249
Total current liabilities	5,052,574		5,180,307
Long-term debt	1,187,170		1,034,320
Noncurrent operating lease liabilities	2,330,532		2,337,651
Deferred income taxes	420,336		410,606
Other long-term liabilities	102,189		103,034
Total liabilities	9,092,801		9,065,918

Commitments and contingencies	0		0

Stockholders’ equity:
Preferred stock, nonvoting, $0.0001 par value	—		—
Common stock, voting, $0.0001 par value	8		8
Additional paid-in capital	862,451		845,407
Treasury stock, at cost	(2,564,757)		(2,300,288)
Accumulated other comprehensive loss	(41,065)		(22,627)
Retained earnings	4,653,043		4,605,791
Total stockholders’ equity	2,909,680		3,128,291
Total liabilities and stockholders’ equity	$	12,002,481	$	12,194,209

October 7,
2017 December 31,
2016
Assets
Current assets:
Cash and cash equivalents $ 363,302
$ 135,178

Receivables, net 679,359
641,252

Inventories 4,219,321
4,325,868

Other current assets 105,970
70,466

Total current assets 5,367,952
5,172,764

Property and equipment, net of accumulated depreciation of $1,755,749 and $1,660,648 1,418,486
1,446,340

Goodwill 994,408
990,877

Intangible assets, net 608,520
640,903

Other assets, net 78,858
64,149

$ 8,468,224
$ 8,315,033

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable 2,921,653
3,086,177

Accrued expenses 572,360
554,397

Other current liabilities 43,396
35,472

Total current liabilities 3,537,409
3,676,046

Long-term debt 1,044,008
1,042,949

Deferred income taxes 429,194
454,282

Other long-term liabilities 226,826
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 656,718
631,052

Treasury stock, at cost (141,482 ) (138,102 )
Accumulated other comprehensive loss (24,503 ) (39,701 )
Retained earnings 2,740,046
2,462,935

Total stockholders’ equity 3,230,787
2,916,192

$ 8,468,224
$ 8,315,033

are an integral part of these statements.

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Inin thousands, except per share data) (Unaudited)


	Sixteen Weeks Ended
	April 23, 2022		April 24, 2021
Net sales	$	3,374,210	$	3,330,370
Cost of sales, including purchasing and warehousing costs	1,867,690		1,845,444
Gross profit	1,506,520		1,484,926
Selling, general and administrative expenses	1,303,250		1,232,797
Operating income	203,270		252,129
Other, net:
Interest expense	(12,868)		(11,191)
Loss on early redemptions of senior unsecured notes	(7,408)		—
Other income, net	136		4,836
Total other, net	(20,140)		(6,355)
Income before provision for income taxes	183,130		245,774
Provision for income taxes	43,339		59,844
Net income	$	139,791	$	185,930

Basic earnings per common share	$	2.28	$	2.83
Weighted-average common shares outstanding	61,261		65,688
Diluted earnings per common share	$	2.26	$	2.81
Weighted-average common shares outstanding	61,732		66,102

Twelve Week Periods Ended Forty Week Periods Ended
October 7,
2017 October 8,
2016 October 7,
2017 October 8,
2016
Net sales $ 2,182,233
$ 2,248,855
$ 7,336,798
$ 7,484,788
Cost of sales, including purchasing and warehousing costs
1,234,525
1,260,650
4,125,318
4,136,437
Gross profit 947,708
988,205
3,211,480
3,348,351
Selling, general and administrative expenses 791,139
794,437
2,728,420
2,666,900
Operating income 156,569
193,768
483,060
681,451
Other, net:

Interest expense (13,314 ) (13,581 ) (45,665 ) (46,545 )
Other income (expense), net 745
(2,349 ) 8,727
7,018
Total other, net (12,569 ) (15,930 ) (36,938 ) (39,527 )
Income before provision for income taxes 144,000
177,838
446,122
641,924
Provision for income taxes 48,004
63,994
155,117
244,667
Net income $ 95,996
$ 113,844
$ 291,005
$ 397,257

Basic earnings per share $ 1.30
$ 1.54
$ 3.94
$ 5.38
Weighted average shares outstanding 73,866
73,638
73,827
73,524

Diluted earnings per share $ 1.30
$ 1.53
$ 3.93
$ 5.36
Weighted average shares outstanding - assuming dilution 74,106
73,860
74,097
73,847

Dividends declared per share $ 0.06
$ 0.06
$ 0.18
$ 0.18

Condensed Consolidated Statements of Comprehensive Income

(Inin thousands) (Unaudited)


	Sixteen Weeks Ended
		April 23, 2022		April 24, 2021
Net income		$	139,791	$	185,930
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement benefit (costs), net of tax of $9 and $19		24		(54)
Currency translation adjustments		(18,462)		5,347
Total other comprehensive (loss) income		(18,438)		5,293
Comprehensive income		$	121,353	$	191,223

Twelve Week Periods Ended Forty Week Periods Ended
October 7,
2017 October 8,
2016 October 7,
2017 October 8,
2016
Net income $ 95,996
$ 113,844
$ 291,005
$ 397,257
Other comprehensive income (loss):
Changes in net unrecognized other postretirement benefit costs, net of tax of $41, $88, $137 and $295 (63 ) (136 ) (211 ) (455 )
Currency translation adjustments 2,225
(4,939 ) 15,409
7,018
Total other comprehensive income (loss) 2,162
(5,075 ) 15,198
6,563
Comprehensive income $ 98,158
$ 108,769
$ 306,203
$ 403,820

are an integral part of these statements.


Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited)

	Sixteen Weeks Ended April 23, 2022
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at January 1, 2022	62,009	$	8	$	845,407	$	(2,300,288)	$	(22,627)	$	4,605,791	$	3,128,291
Net income	—	—		—		—		—		139,791		139,791
Total other comprehensive loss	—	—		—		—		(18,438)		—		(18,438)
Issuance of shares upon the exercise of stock options	1	—		233		—		—		—		233
Restricted stock units and deferred stock units vested	234	—		—		—		—		—		—
Share-based compensation	—	—		16,978		—		—		—		16,978
Stock issued under employee stock purchase plan	10	—		933		—		—		—		933
Repurchases of common stock	(1,156)	—		—		(264,469)		—		—		(264,469)
Cash dividends declared ($1.50 per common share)	—	—		—		—		—		(92,539)		(92,539)
Other	—	—		(1,100)		—		—		—		(1,100)
Balance at April 23, 2022	61,098	$	8	$	862,451	$	(2,564,757)	$	(41,065)	$	4,653,043	$	2,909,680

	Sixteen Weeks Ended April 24, 2021
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at January 2, 2021	66,361	$	8	$	783,709	$	(1,394,080)	$	(26,759)	$	4,196,634	$	3,559,512
Net income	—	—		—		—		—		185,930		185,930
Total other comprehensive income	—	—		—		—		5,293		—		5,293
Restricted stock units and deferred stock units vested	227	—		—		—		—		—		—
Share-based compensation	—	—		16,260		—		—		—		16,260
Stock issued under employee stock purchase plan	13	—		—		—		—		—		—
Repurchases of common stock	(1,162)	—		—		(183,647)		—		—		(183,647)
Cash dividends declared ($1.00 per common share)	—	—		—		—		—		(81,746)		(81,746)
Other	—	—		(35)		—		—		—		(35)
Balance at April 24, 2021	65,439	$	8	$	799,934	$	(1,577,727)	$	(21,466)	$	4,300,818	$	3,501,567

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)
Forty Week Periods Ended
October 7, 2017 October 8, 2016
Cash flows from operating activities:
Net income $ 291,005
$ 397,257
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 192,753
199,262
Share-based compensation 28,156
11,664
Loss on property and equipment, net 4,692
4,602
(Benefit) provision for deferred income taxes (25,712 ) 21,130
Other, net 2,262
(2,657 )
Net change in:
Receivables, net (35,760 ) (87,488 )
Inventories 116,957
(175,678 )
Accounts payable (170,227 ) (9,222 )
Accrued expenses 36,564
84,897
Other assets and liabilities (39,685 ) (16,735 )
Net cash provided by operating activities 401,005
427,032
Cash flows from investing activities:

Purchases of property and equipment (160,960 ) (204,213 )
Proceeds from sales of property and equipment 6,120
1,483
Other, net 20
(2,672 )
Net cash used in investing activities (154,820 ) (205,402 )
Cash flows from financing activities:

Increase in bank overdrafts 4,676
8,765
Borrowings under credit facilities 534,400
686,100
Payments on credit facilities (534,400 ) (846,100 )
Dividends paid (17,828 ) (17,734 )
Proceeds from the issuance of common stock 3,142
3,438
Tax withholdings related to the exercise of stock appreciation rights (6,414 ) (15,764 )
Repurchase of common stock (3,380 ) (12,300 )
Other, net (2,095 ) (323 )
Net cash used in financing activities (21,899 ) (193,918 )
Effect of exchange rate changes on cash 3,838
1,000
Net increase in cash and cash equivalents 228,124
28,712
Cash and cash equivalents, beginning of period
135,178
90,782
Cash and cash equivalents, end of period
$ 363,302
$ 119,494

Non-cash transactions:
Accrued purchases of property and equipment $ 7,860
$ 20,300

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands) (Unaudited)


	Sixteen Weeks Ended
	April 23, 2022		April 24, 2021
Cash flows from operating activities:
Net income	$	139,791	$	185,930
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	85,581		77,253
Share-based compensation	16,978		16,260
Loss and impairment of long-lived assets	1,237		4,732
Loss on early redemptions of senior unsecured notes	7,408		—
Provision for deferred income taxes	9,681		14,660
Other, net	1,020		543
Net change in:
Receivables, net	(174,895)		(53,982)
Inventories	(119,550)		63,883
Accounts payable	20,225		96,094
Accrued expenses	(98,978)		(50,949)
Other assets and liabilities, net	56,562		(24,492)
Net cash (used in) provided by operating activities	(54,940)		329,932
Cash flows from investing activities:
Purchases of property and equipment	(114,854)		(70,884)

Proceeds from sales of property and equipment	828		590
Net cash used in investing activities	(114,026)		(70,294)
Cash flows from financing activities:
Borrowings under credit facilities	275,000		—
Payments on credit facilities	(275,000)		—
Borrowings on senior unsecured notes	348,618		—
Payments on senior unsecured notes	(201,081)		—
Dividends paid	(154,796)		(33,146)

Repurchases of common stock	(264,469)		(183,647)
Other, net	(2,007)		104
Net cash used in financing activities	(273,735)		(216,689)
Effect of exchange rate changes on cash	(19,994)		2,292
Net (decrease) increase in cash and cash equivalents	(462,695)		45,241
Cash and cash equivalents, beginning of period	601,428		834,992
Cash and cash equivalents, end of period	$	138,733	$	880,233




Non-cash transactions:
Accrued purchases of property and equipment	$	15,272	$	3,505

are an integral part of these statements.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

1. ~~Description~~Nature of ~~Business~~Operations 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,~~professional installers (“professional”) and “do-it-yourself”~~, or DIY~~ (“DIY”) customers. The accompanying ~~interim unaudited~~ condensed consolidated financial statements have been prepared by ~~the Company~~us and include the accounts of Advance Auto Parts, Inc. ~~(“Advance”)~~, its wholly owned ~~subsidiary,~~subsidiaries, Advance Stores Company, Incorporated (“Advance Stores”) and Neuse River Insurance Company, Inc., and ~~its~~their subsidiaries (collectively referred to as ~~“Advance”, “we”,~~“Advance,” “we,” “us”, or “our” ~~or “the Company”~~).

As of ~~October 7, 2017, the Company~~April 23, 2022, we operated a total of ~~5,074~~4,687 stores and ~~129 distribution~~311 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. ~~The Company’s~~In addition, as of April 23, 2022, we served 1,318 independently owned Carquest branded stores across the same geographic locations served by our stores and branches in addition to Mexico and various Caribbean islands. Our stores operate primarily under the trade names “Advance Auto ~~Parts,”~~Parts” and “Carquest” and ~~“Autopart International,” and~~ our ~~distribution~~ branches operate under the “Worldpac” and “Autopart International” trade name. In addition, as of October 7, 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.names.

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,~~(“GAAP”), have been condensed or omitted based upon the Securities and Exchange Commission (“SEC”) interim reporting ~~guidance.~~principles. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in ~~the Company’s~~our Annual Report on Form 10-K for ~~2016~~2021 as filed with the SEC on February ~~28, 2017.~~15, 2022.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. 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~~Our first quarter of ~~each of~~ the ~~Company’s fiscal years~~year contains sixteen weeks. ~~The Company’s~~Our remaining three quarters each consist of twelve weeks.

~~Segment and Related Information~~

Effective in the third quarter of 2017, the Company realigned its three geographic divisions, which included the operations of the stores operating under the Advance Auto Parts, Carquest and Autopart International trade names, into two US geographic divisions. As a result of this realignment and change in the operating structure of its Carquest Independent and Carquest Canada businesses, the Company has increased its number of operating segments from four to five. As a result, goodwill was reassigned to the affected reporting units using a relative fair value approach. The Company continues to aggregate its operating segments into one reportable segment.

~~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 $17.6 million for the forty weeks ended October 8, 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 $4.5 million as a reduction in Provision for income taxes during the forty weeks ended October 7, 2017. The impact of excess tax benefits was immaterial during the twelve weeks ended October 7, 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. Currently, 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. Significant Accounting Policies

The following table summarizes disaggregated revenue from contracts with customers by product group:


	Sixteen Weeks Ended
		April 23, 2022		April 24, 2021
Percentage of Sales, by Product Group:
Parts and Batteries		66	%	66	%
Accessories and Chemicals		20		21
Engine Maintenance		13		12
Other		1		1
Total		100	%	100	%

Inventories are stated at the lower of cost or market. ~~The Company~~We used the ~~LIFO~~last in, first out (“LIFO”) method of accounting for approximately ~~88% and 89%~~90.3% of inventories ~~at October 7, 2017~~as of April 23, 2022 and ~~December 31, 2016.~~89.8% of inventories as of January 1, 2022. Under the LIFO method, ~~the Company’s~~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 ~~2017~~the sixteen weeks ended April 23, 2022 and prior years. As a result of changes in the LIFO reserve, ~~the Company~~we recorded ~~a reduction~~an increase to ~~cost~~Cost of sales of ~~$6.5~~$81.5 million and ~~$48.7~~$3.1 million for the ~~forty~~sixteen weeks ended ~~October 7, 2017~~April 23, 2022 and ~~October 8, 2016.~~April 24, 2021 to state inventories at LIFO.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

An actual valuation of inventory under the LIFO method is performed by ~~the Company~~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 ~~management’s~~our estimates of expected ~~year-end~~ inventory levels and ~~costs.~~costs at the end of the year.

Inventory balances were as follows:


	April 23, 2022		January 1, 2022
Inventories at first in, first out (“FIFO”)	$	4,827,206	$	4,625,900
Adjustments to state inventories at LIFO	(48,357)		33,118
Inventories at LIFO	$	4,778,849	$	4,659,018

(in thousands) October 7,
2017 December 31, 2016
Inventories at FIFO $ 4,006,968
$ 4,120,030
Adjustments to state inventories at LIFO 212,353
205,838
Inventories at LIFO $ 4,219,321
$ 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 October 7, 2017, 345 Carquest stores acquired with GPI had been consolidated into existing Advance Auto Parts stores and 414 stores had been converted to the Advance Auto Parts format. During the twelve weeks ended October 7, 2017, a total of three Carquest stores were consolidated and 37 Carquest stores were converted. During the forty weeks ended October 7, 2017, a total of 12 Carquest stores were consolidated and 132 Carquest stores were converted. We expect to consolidate or convert the remaining U.S. Carquest stores over the next few years. As of October 7, 2017, the Company had 463 stores still operating under the Carquest name.

The Company incurred $2.2 million of exit costs related to the consolidations during the twelve weeks ended October 8, 2016, primarily related to closed store lease obligations. Exit costs were immaterial during the twelve weeks ended October 7, 2017. The Company incurred $1.0 million and $17.6 million of exit costs related to the consolidations during the forty weeks ended October 7, 2017 and October 8, 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 October 7, 2017 and resulted in the recognition of $7.7 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. Of the Company’s total exit liabilities as of October 7, 2017, $21.8 million is included in Other long-term liabilities and the remainder is included in Accrued expenses in the accompanying condensed consolidated balance sheets. 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 5,098
7,715
12,813
Change in estimates 177
(156 ) 21
Cash payments (14,723 ) (5,739 ) (20,462 )
Balance, October 7, 2017 $ 34,817
$ 2,779
$ 37,596

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~~Our definite-lived intangible assets include customer relationships ~~favorable leases~~ and non-compete agreements. Amortization expense was ~~$10.7~~$9.5 million and ~~$11.3~~$9.7 million for the ~~twelve~~sixteen weeks ended ~~October 7, 2017~~April 23, 2022 and ~~October 8, 2016 and $36.3 million and $37.1 million for the forty weeks ended October 7, 2017 and October 8, 2016.~~April 24, 2021.

Receivables, ~~consist~~net, consisted of the following:


	April 23, 2022		January 1, 2022
Trade	$	652,625	$	506,725
Vendor	224,216		201,933
Other	93,138		84,289
Total receivables	969,979		792,947
Less: allowance for credit losses	(12,180)		(10,162)
Receivables, net	$	957,799	$	782,785

(in thousands) October 7,
2017 December 31, 2016
Trade $ 444,561
$ 407,301
Vendor 244,322
239,770
Other 13,690
23,345
Total receivables 702,573
670,416
Less: Allowance for doubtful accounts (23,214 ) (29,164 )
Receivables, net $ 679,359
$ 641,252

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

Long-term debt consists of the following:


	April 23, 2022		January 1, 2022
4.50% Senior Unsecured Notes due December 1, 2023	$	—	$	193,220
1.75% Senior Unsecured Notes due October 1, 2027	346,556		346,382
3.90% Senior Unsecured Notes due April 15, 2030	495,157		494,718
3.50% Senior Unsecured Notes due March 15, 2032	345,457		—
Total long-term debt	$	1,187,170	$	1,034,320
Fair value of long-term debt	$	1,104,000	$	1,092,000

(in thousands) October 7,
2017 December 31,
2016
Total long-term debt $ 1,044,358
$ 1,043,255
Less: Current portion of long-term debt (included in Other current liabilities) (350 ) (306 )
Long-term debt, excluding current portion $ 1,044,008
$ 1,042,949

Fair value of long-term debt $ 1,129,000
$ 1,118,000

Fair Value of Financial Assets and Liabilities

The fair value of ~~the Company’s~~our 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~~our Cash and cash equivalents, ~~receivables, accounts~~Receivables, net, Accounts payable and ~~accrued~~Accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

OnAs of April 23, 2022 and January ~~31, 2017, the Company entered into a new~~1, 2022, we had no outstanding borrowings, $1.2 billion of borrowing availability and no letters of credit ~~agreement which provides a $1.0 billion~~outstanding under our unsecured revolving credit facility (the ~~“2017 Credit~~“Credit Agreement”) ~~with Advance Stores, as Borrower, the lenders party thereto,~~.

As of April 23, 2022 and ~~Bank~~January 1, 2022, we had $90.2 million and $92.0 million 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 ofbilateral letters of credit ~~with a sublimit of $200.0 million. The Company may request that~~issued separately from 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~~none of ~~the termination date prior to the first or second anniversary of the closing date.~~

~~As of~~ ~~October 7, 2017~~, the Company had no outstanding borrowings under the revolver and borrowing availability was $576.1 million based on applicable covenant restrictions under the Company’s leverage ratio. As of October 7, 2017, the Company hadwhich were drawn upon. These bilateral letters of credit ~~outstanding of $99.7 million, which~~ generally have a term of one year or less and primarily serve as collateral for ~~the Company’s~~our 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 quarterlyWe were 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 interest rate spread ranges from 1.00% to 1.85% for adjusted LIBOR borrowings and 0.00% to 0.85% for alternate base rate borrowings.

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 complycompliance with financial covenants ~~with respect~~required by our debt arrangements as of April 23, 2022.

Senior Unsecured Notes

Our 4.50% senior unsecured notes due December 1, 2023 (the “2023 Notes”) were issued in December 2013 at 99.69% of the principal amount of $450.0 million. The 2023 Notes bear interest, payable semi-annually in arrears on June 1 and December 1, at a rate of 4.50% per year. Pursuant to a ~~maximum leverage ratio~~cash tender offer that was completed on September 29, 2020, we repurchased $256.3 million of the 2023 Notes with the net proceeds from the 2027 Notes. In connection with this tender offer, we incurred charges related to tender premiums and ~~a minimum coverage ratio. The 2017 Credit Agreement also provides for customary events~~debt issuance costs of ~~default, including non-payment defaults, covenant defaults~~$30.5 million and ~~cross-defaults~~$1.4 million. On April 4, 2022, we redeemed the remaining $193.2 million principal amount of ~~Advance Stores’ other material indebtedness. The Company was in compliance~~our outstanding 2023 Notes with ~~its financial covenants~~the net proceeds from the issuance of the 3.50% senior unsecured notes due March 15, 2032 (the “2032 Notes”). In connection with ~~respect~~this early redemption, we incurred charges related to the ~~2017 Credit Agreement~~make-whole provision and debt issuance costs of $7.0 million and $0.4 million.

Our 3.90% senior unsecured notes due April 15, 2030 (the “Original Notes”) were issued April 16, 2020, at 99.65% of the principal amount of $500.0 million, and were not registered under the Securities Act of 1933, as amended (the “Securities Act”). The Original Notes bear interest, payable semi-annually in arrears on April 15 and October 15, at a rate of 3.90% per year. On July 28, 2020, we completed an exchange offer whereby the Original Notes in the aggregate principal amount of $500.0 million were exchanged for a like principal amount (the “Exchange Notes” or “2030 Notes”), and which have been registered under the Securities Act. The Original Notes were substantially identical to the Exchange Notes, except the Exchange Notes are registered under the Securities Act and are not subject to the transfer restrictions and certain registration rights agreement provisions applicable to the Original Notes.

Our 1.75% senior unsecured notes due October ~~7, 2017.~~1, 2027 (the “2027 Notes”) were issued September 29, 2020, at 99.67% of the principal amount of $350.0 million. The 2027 Notes bear interest, payable semi-annually in arrears on April 1 and October 1, at a rate of 1.75% per year. In connection with the 2027 Notes offering, we incurred $2.9 million of debt issuance costs.

Our 2032 Notes were issued March 4, 2022, at 99.61% of the principal amount of $350.0 million. The 2032 Notes bear interest, payable semi-annually in arrears on March 15 and September 15, at a rate of 3.50% per year. In connection with the 2032 Notes offering, we incurred $3.2 million of debt issuance costs.

We may redeem some or all of the 2032 Notes at any time or from time to time, prior to December 15, 2031, at the redemption price described in the related indenture for the 2032 Notes (the “Indenture”). In addition, in the event of a change of control triggering event, as defined in the Indenture, we will be required to offer to repurchase the 2032 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. Currently, the 2032 Notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by guarantor and subsidiary guarantees, as defined by the Indenture.

~~The Company is~~We are a guarantor of loans made by banks to various independently owned ~~Carquest branded~~Carquest-branded stores that are customers of ~~the Company~~ours totaling ~~$25.7~~$44.5 million and $31.7 million as of ~~October 7, 2017.~~April 23, 2022 and January 1, 2022. 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 ~~$62.0~~$105.8 million and $86.9 million as of ~~October 7, 2017. The Company believes~~April 23, 2022 and January 1, 2022. We believe that the likelihood of performance under these guarantees is remote.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

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

Operating lease liabilities consisted of the following:


	April 23, 2022		January 1, 2022
Total operating lease liabilities	$	2,798,628	$	2,802,772
Less: Current portion of operating lease liabilities	(468,096)		(465,121)
Noncurrent operating lease liabilities	$	2,330,532	$	2,337,651

The current portion of operating lease liabilities is included in Other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

Total lease cost is included in Cost of sales and Selling, general and administrative expenses (“SG&A”) in the accompanying Condensed Consolidated Statements of Operations and is recorded net of immaterial sublease income. Total lease cost is comprised of the following:


	Sixteen Weeks Ended
		April 23, 2022		April 24, 2021
Operating lease cost		$	173,035	$	161,984
Variable lease cost		53,296		43,525
Total lease cost		$	226,331	$	205,509

The future maturity of lease liabilities as of April 23, 2022 were as follows:


Remainder of 2022	$	355,398
2023	543,223
2024	471,972
2025	436,146
2026	330,471
Thereafter	989,142
Total lease payments	3,126,352
Less: Imputed interest	(327,724)
Total operating lease liabilities	$	2,798,628

As of April 23, 2022, our operating lease liabilities included $72.3 million related to options to extend lease terms that are reasonably certain of being exercised and excluded $89.1 million of legally binding minimum lease payments for leases signed but not yet commenced.

The weighted-average remaining lease term and weighted-average discount rate for our operating leases were 7.1 years and 3.0% as of April 23, 2022. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

Other information relating to our lease liabilities is as follows:


	Sixteen Weeks Ended
	April 23, 2022		April 24, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	190,542	$	185,083
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	147,015	$	118,448

On February 8, 2022, our Board of Directors authorized an additional $1.0 billion to the existing share repurchase program. This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time.

During the sixteen weeks ended April 23, 2022, we repurchased 1.1 million shares of our common stock at an aggregate cost of $248.2 million, or an average price of $231.41 per share, in connection with our share repurchase program. During the sixteen weeks ended April 24, 2021, we repurchased 1.1 million shares of our common stock at an aggregate cost of $170.4 million, or an average price of $157.84 per share, in connection with our share repurchase program. We had $1.3 billion remaining under our share repurchase program as of April 23, 2022.

Diluted earnings per share are calculated by including the effect of dilutive securities. Share-based awards to purchase approximately 176 thousand and 22 thousand shares of common stock during the twelve week periods ended October 7, 2017 and October 8, 2016 were not included in the calculation of diluted earnings per share because they were anti-dilutive. Share-based awards to purchase approximately 142 thousand and 22 thousand shares of common stock during the forty week periods ended October 7, 2017 and October 8, 2016 were not included in the calculation of diluted earnings per share because they were anti-dilutive.

The ~~following table illustrates the computation~~computations of basic and diluted earnings per ~~share:~~share are as follows:


	Sixteen Weeks Ended
	April 23, 2022		April 24, 2021
Numerator
Net income applicable to common shares	$	139,791	$	185,930
Denominator
Basic weighted-average common shares	61,261		65,688
Dilutive impact of share-based awards	471		414
Diluted weighted-average common shares (1)	61,732		66,102

Basic earnings per common share	$	2.28	$	2.83
Diluted earnings per common share	$	2.26	$	2.81

Twelve Weeks Ended Forty Weeks Ended
(in thousands, except per share data) October 7,
2017 October 8,
2016 October 7,
2017 October 8,
2016
Numerator
Net income $ 95,996
$ 113,844
$ 291,005
$ 397,257
Denominator

Basic weighted average shares 73,866
73,638
73,827
73,524
Dilutive impact of share-based awards 240
222
270
323
Diluted weighted average shares 74,106
73,860
74,097
73,847

Basic earnings per share $ 1.30
$ 1.54
$ 3.94
$ 5.38

Diluted earnings per share $ 1.30
$ 1.53
$ 3.93
$ 5.36

~~8. Share-Based Compensation~~

~~During~~(1)For the ~~forty week period~~sixteen weeks ended ~~October 7, 2017, the Company granted 228~~April 23, 2022 and April 24, 2021, 21 thousand ~~time-based~~and 43 thousand restricted stock units (“RSUs”)~~, 51~~ were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

10. Share-Based Compensation

During the sixteen weeks ended April 23, 2022, we granted 157 thousand ~~performance-based~~time-based RSUs, 58 thousand market-based RSUs and 25114 thousand ~~market-based RSUs.~~Stock Options. The general terms of the time-based and ~~performance-based~~market-based RSUs are similar to awards previously granted by us. We grant options to purchase common stock to certain employees under our 2014 Long-Term Incentive Plan. The options are granted at an exercise price equal to the ~~Company. The market-based RSUs will vest based~~closing market price of Advance's common stock on the ~~Company’s relative total shareholder return among a designated group~~date of ~~peer companies during a three-year period~~the grant, expire after ten years and ~~will be subject to a one-year holding period~~vest one-third annually over three years after ~~vesting.~~the date of grant. We record compensation expense for the grant date fair value of the option awards evenly over the vesting period.

The ~~weighted average~~weighted-average fair values of the time-based ~~performance-based~~ and market-based RSUs granted during the ~~forty week period~~sixteen weeks ended ~~October 7, 2017~~April 23, 2022 were ~~$97.34, $151.35~~$205.63 and ~~$111.65~~$205.52 per share. The fair value of each market-based RSU was determined using a Monte Carlo simulation model. For time-based ~~and performance-based~~ RSUs, the fair value of each award was determined based on the market price of ~~the Company’s~~our stock on the date of grant adjusted for expected dividends during the vesting period, as applicable.

The weighted-average fair value of stock options granted during the sixteen weeks ended April 23, 2022 was $53.98 per share. The fair value was estimated on the date of ~~each market-based RSU was determined using a Monte Carlo simulation~~grant by applying the Black-Scholes option-pricing valuation model.


	Sixteen Weeks Ended
	April 23, 2022
Risk-free interest rate (1)	1.9	%
Expected term (2)	6 years
Expected volatility (3)	34.0	%
Expected dividend yield (4)	2.6	%

(1) The risk-free interest rate is based on the yield in effect at grant for zero-coupon U.S. Treasury notes with maturities equivalent to the expected term of the stock options.

(2) The expected term represents the period of time options granted are expected to be outstanding. As we do not have sufficient historical data, we utilized the simplified method provided by the SEC to calculate the expected term as the average of the contractual term and vesting period.

(3) Expected volatility is the measure of the amount by which the stock price has fluctuated or is expected to fluctuate. We utilized historical trends and the implied volatility of our publicly traded financial instruments in developing the volatility estimate for our stock options.

(4) The expected dividend yield is calculated based on our expected quarterly dividend and the three month average stock price as of the grant date.

Total income tax benefit related to share-based compensation expense ~~included in the Company’s condensed consolidated statements of operations was $8.2 million~~ for the ~~twelve week period~~sixteen weeks ended ~~October 7, 2017 and the related income tax benefit recognized~~April 23, 2022 was $3.1 million. Total share-based compensation expense included in the Company’s condensed consolidated statements of operations was $28.2 million for the forty week period ended October 7, 2017 and the related income tax benefit recognized was $10.5$4.2 million. As of ~~October 7, 2017,~~April 23, 2022, there was ~~$47.5~~$101.5 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a ~~weighted average~~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.~~

Forty Weeks Ended Fifty-Two Weeks Ended
(in thousands) October 7,
2017 December 31, 2016
Warranty reserve, beginning of period $ 47,243
$ 44,479
Additions to warranty reserves 39,777
46,903
Reserves utilized (37,516 ) (44,139 )
Warranty reserve, end of period $ 49,504
$ 47,243

~~10. Condensed Consolidating Financial Statements~~

~~Certain 100% wholly owned domestic subsidiaries~~Table 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”).

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. Investments in subsidiaries of the Company 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 Sheets~~ ~~(Unaudited)~~

~~As of October 7, 2017~~

(in thousands) Advance Auto Parts, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Assets
Current assets:
Cash and cash equivalents $ 23
$ 312,193
$ 51,109
$ (23 ) $ 363,302
Receivables, net —
635,964
43,395
—
679,359
Inventories —
4,030,391
188,930
—
4,219,321
Other current assets —
105,047
1,057
(134 ) 105,970
Total current assets 23
5,083,595
284,491
(157 ) 5,367,952
Property and equipment, net of accumulated depreciation 108
1,408,580
9,798
—
1,418,486
Goodwill —
943,358
51,050
—
994,408
Intangible assets, net —
561,921
46,599
—
608,520
Other assets, net 4,391
78,248
610
(4,391 ) 78,858
Investment in subsidiaries 3,330,214
439,076
—
(3,769,290 ) —
Intercompany note receivable 1,048,636
—
—
(1,048,636 ) —
Due from intercompany, net —
—
336,163
(336,163 ) —
$ 4,383,372
$ 8,514,778
$ 728,711
$ (5,158,637 ) $ 8,468,224
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ —
$ 2,673,704
$ 247,949
$ —
$ 2,921,653
Accrued expenses 3,026
549,953
19,515
(134 ) 572,360
Other current liabilities —
43,130
289
(23 ) 43,396
Total current liabilities 3,026
3,266,787
267,753
(157 ) 3,537,409
Long-term debt 1,044,008
—
—
—
1,044,008
Deferred income taxes —
413,787
19,797
(4,390 ) 429,194
Other long-term liabilities —
224,741
2,085
—
226,826
Intercompany note payable —
1,048,636
—
(1,048,636 ) —
Due to intercompany, net 105,551
230,612
—
(336,163 ) —
Commitments and contingencies

Stockholders' equity 3,230,787
3,330,215
439,076
(3,769,291 ) 3,230,787
$ 4,383,372
$ 8,514,778
$ 728,711
$ (5,158,637 ) $ 8,468,224

~~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 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
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

~~Condensed Consolidating Statements of Operations~~ (~~Unaudited~~)

~~For the Twelve Weeks ended October 8, 2016~~

(in thousands) Advance Auto Parts, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net sales $ —
$ 2,174,483
$ 112,072
$ (37,700 ) $ 2,248,855
Cost of sales, including purchasing and warehousing costs —
1,219,636
78,714
(37,700 ) 1,260,650
Gross profit —
954,847
33,358
—
988,205
Selling, general and administrative expenses 6,665
778,643
20,807
(11,678 ) 794,437
Operating (loss) income (6,665 ) 176,204
12,551
11,678
193,768
Other, net:
Interest (expense) income (11,932 ) (1,669 ) 20
—
(13,581 )
Other income (expense), net 18,809
(4,791 ) (4,689 ) (11,678 ) (2,349 )
Total other, net 6,877
(6,460 ) (4,669 ) (11,678 ) (15,930 )
Income before provision for income taxes 212
169,744
7,882
—
177,838
Provision for income taxes 361
62,252
1,381
—
63,994
(Loss) income before equity in earnings of subsidiaries (149 ) 107,492
6,501
—
113,844
Equity in earnings of subsidiaries 113,993
6,501
—
(120,494 ) —
Net income $ 113,844
$ 113,993
$ 6,501
$ (120,494 ) $ 113,844

~~Condensed Consolidating Statements of Operations~~ (~~Unaudited~~)

~~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

~~Condensed Consolidating Statements of Operations~~ (~~Unaudited~~)

~~For the Forty Weeks ended October 8, 2016~~

(in thousands) Advance Auto Parts, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net sales $ —
$ 7,240,681
$ 432,170
$ (188,063 ) $ 7,484,788
Cost of sales, including purchasing and warehousing costs —
4,023,979
300,521
(188,063 ) 4,136,437
Gross profit —
3,216,702
131,649
—
3,348,351
Selling, general and administrative expenses 17,965
2,620,217
72,028
(43,310 ) 2,666,900
Operating (loss) income (17,965 ) 596,485
59,621
43,310
681,451
Other, net:
Interest (expense) income (40,148 ) (6,457 ) 60
—
(46,545 )
Other income (expense), net 58,524
(6,315 ) (1,881 ) (43,310 ) 7,018
Total other, net 18,376
(12,772 ) (1,821 ) (43,310 ) (39,527 )
Income before provision for income taxes 411
583,713
57,800
—
641,924
Provision for income taxes 1,008
231,664
11,995
—
244,667
(Loss) income before equity in earnings of subsidiaries (597 ) 352,049
45,805
—
397,257
Equity in earnings of subsidiaries 397,854
45,805
—
(443,659 ) —
Net income $ 397,257
$ 397,854
$ 45,805
$ (443,659 ) $ 397,257

~~Condensed Consolidating Statements of Comprehensive Income~~ (~~Unaudited~~)

~~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 Statements of Comprehensive Income~~ ~~(Unaudited)~~

~~For the Twelve Weeks ended October 8, 2016~~

(in thousands) Advance Auto Parts, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net income $ 113,844
$ 113,993
$ 6,501
$ (120,494 ) $ 113,844
Other comprehensive loss (5,075 ) (5,075 ) (4,939 ) 10,014
(5,075 )
Comprehensive income $ 108,769
$ 108,918
$ 1,562
$ (110,480 ) $ 108,769

~~Condensed Consolidating Statements of Comprehensive Income~~ (~~Unaudited~~)

~~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

~~Condensed Consolidating Statements of Comprehensive Income~~ ~~(Unaudited)~~

~~For the Forty Weeks ended October 8, 2016~~

(in thousands) Advance Auto Parts, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net income $ 397,257
$ 397,854
$ 45,805
$ (443,659 ) $ 397,257
Other comprehensive income 6,563
6,563
7,018
(13,581 ) 6,563
Comprehensive income $ 403,820
$ 404,417
$ 52,823
$ (457,240 ) $ 403,820

~~Condensed Consolidating Statements of Cash Flows~~ ~~(Unaudited)~~

~~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:
(Decrease) 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
—
3,838

Net increase (decrease) in cash and cash equivalents 1
233,650
(5,526 ) (1 ) 228,124
Cash and cash equivalents, beginning of period
22
78,543
56,635
(22 ) 135,178
Cash and cash equivalents, end of period
$ 23
$ 312,193
$ 51,109
$ (23 ) $ 363,302

~~Condensed Consolidating Statements of Cash Flows~~ ~~(Unaudited)~~

~~For the Forty Weeks ended October 8, 2016~~

(In thousands) Advance Auto Parts, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations Consolidated
Net cash provided by operating activities $ 14
$ 415,649
$ 11,369
$ —
$ 427,032

Cash flows from investing activities:
Purchases of property and equipment —
(202,382 ) (1,831 ) —
(204,213 )
Proceeds from sales of property and equipment —
1,481
2
—
1,483
Other, net —
(2,672 ) —
—
(2,672 )
Net cash used in investing activities —
(203,573 ) (1,829 ) —
(205,402 )

Cash flows from financing activities:
Increase in bank overdrafts —
10,006
(1,227 ) (14 ) 8,765
Borrowings under credit facilities —
686,100
—
—
686,100
Payments on credit facilities —
(846,100 ) —
—
(846,100 )
Dividends paid —
(17,734 ) —
—
(17,734 )
Proceeds from the issuance of common stock —
3,438
—
—
3,438
Tax withholdings related to the exercise of stock appreciation rights —
(15,764 ) —
—
(15,764 )
Repurchase of common stock —
(12,300 ) —
—
(12,300 )
Other, net —
(323 ) —
—
(323 )
Net cash used in financing activities —
(192,677 ) (1,227 ) (14 ) (193,918 )

Effect of exchange rate changes on cash —
—
1,000
—
1,000

Net increase in cash and cash equivalents 14
19,399
9,313
(14 ) 28,712
Cash and cash equivalents, beginning of period
8
63,458
27,324
(8 ) 90,782
Cash and cash equivalents, end of period
$ 22
$ 82,857
$ 36,637
$ (22 ) $ 119,494

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in our ~~2016~~Annual Report on Form 10-K for the year ended January 1, 2022 (filed with the SEC on February 15, 2022), which we refer to as our 2021 Form 10-K, and our ~~unaudited~~ condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report.

Certain statements in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking statements are usually identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “projection,” “should,” “strategy,” “will,” or similar expressions. We intend for any forward-looking statements to be covered by, and we claim the protection under, the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based upon assessments and assumptions of management in light of historical results and trends, current conditions and potential future developments that often involve judgments, estimates, assumptions and projections. Forward-looking statements reflect current views about our plans, strategies and prospects, which are based on information currently available.

Although we believe that our plans, intentions and expectations as reflected in or suggested by any forward-looking statements are reasonable, we do not guarantee or give assurance that such plans, intentions or expectations will be achieved. Actual results may differ materially from our anticipated results described or implied in our forward-looking statements, and such differences may be due to a variety of factors. Our business could also be affected by additional factors that are presently unknown to us or that we currently believe to be immaterial to our business.

~~Listed below and discussed in our Annual Report on Form 10-K for the year ended December 31, 2016 (filed with the Securities and Exchange Commission (“SEC”) on~~ ~~February 28, 2017), which we refer to as our~~ ~~2016~~ Form 10-K, are some important risks, uncertainties and contingencies which could cause our actual results, performance or achievements to be materially different from any forward-looking statements made or implied in this report. These include, but are not limited to, the following:

We assume no obligations to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. In evaluating forward-looking statements, you should consider these risks and uncertainties, together with the other risks described from time to time in our other reports and documents filed with the SEC and you should not place undue reliance on those statements.

Net sales increased 1.3% in the first quarter of 2022 compared with the same period in the prior year, primarily driven by growing consumer demand, namely in our professional and independent businesses. Our regional strength in comparable store sales was led by the West and Canada, along with a strong recovery in Florida and the Mid-Atlantic. Category growth was led by motor oil, batteries and brakes.

We generated ~~diluted~~Diluted earnings per share (“Diluted EPS”) of ~~$1.30~~$2.26 during our ~~twelve weeks ended October 7, 2017 (or the third~~first quarter of ~~2017)~~2022 compared ~~to $1.53~~with $2.81 for the comparable period of ~~2016. Comparable store sales were down 3.4% in the third quarter of 2017. The lower than expected sales performance was driven by the following factors:~~

The softness in the industry over the last two quarters has resulted from higher gas prices and a significantly lower number of new cars sold during 2008 and 2009 that has created a temporary trough largely in the maintenance and repair window for those cars. Our analysis shows that short-term volatility is not unusual in the industry. We have completed a number of transformation actions over the last two quarters, including the restructuring and reduction in number of Advance Auto Parts (“AAP”) and Carquest US (“CQUS”) store regions, implementation of more pricing discipline in our stores and reduction in inventory. While we believe these actions are needed for the long term, there were some short-term disruption impacts during the third quarter. Despite stronger performance in our Western and Southern markets, we experienced softness in our cooling parts and chemicals category sales across many of other markets as a result of the milder summer weather. Partially offsetting the softness in our AAP/CQUS business was was the performance of certain aspects of our Professional and Canadian businesses, which grew their sales during the quarter.

As in the past several quarters, our operating profit margin reflects deliberate choices to invest in our business and improve productivity over the long term despite the sales softness. We believe these investments are necessary as we build a foundation for sustainable, long-term performance improvement.

2021. When adjusted for non-operational items outlined in the following ~~non-operational items,~~table, our ~~adjusted~~Adjusted diluted earnings per share (“Adjusted EPS”) for the sixteen weeks ended April 23, 2022 and April 24, 2021 was ~~$1.43 during the third quarter of 2017 compared to $1.73 during the comparable period of 2016:~~$3.57 and $3.34.

Q3 2017 Q3 2016
GPI integration and store consolidation costs $ 0.02
$ 0.12
GPI amortization of acquired intangible assets $ 0.08
$ 0.08
Transformation expenses $ 0.03
$ —


	Sixteen Weeks Ended
	April 23, 2022		April 24, 2021
Last-in, first-out (“LIFO”) impacts	$	0.99	$	0.03
Transformation expenses	0.13		0.40
General Parts International, Inc. (“GPI”) amortization of acquired intangible assets	0.10		0.10
Other adjustments	0.09		—
Total adjustments, net of tax	$	1.31	$	0.53

The GPI integration, store consolidation costs and amortization of acquired intangible assets relate to our acquisition of General Parts International, Inc. (“GPI”) in 2014. Beginning last quarter (second quarter of Fiscal 2017), we recognized transformation expenses which we expect to continue over the next several years as we transition from our integration of our AAP and CQUS businesses to a plan that involves a more holistic and integrated transformation of the entire company across all four banners, including Worldpac (“WP”) and Autopart International (“AI”). Refer to “Reconciliation of Non-GAAP Financial ~~Measures”~~ Measures” for ~~further details~~a definition and reconciliation of ~~our comparable adjustments~~Adjusted EPS and ~~the usefulness of such~~other non-GAAP measures to ~~investors.~~the most directly comparable financial measures calculated and presented in accordance with GAAP.

~~Summary of ThirdQuarter Financial Results~~

A high-level summary of our financial results for the ~~third~~first quarter of ~~2017 is included below:~~2022 includes:

~~Total~~•Net sales during the ~~third~~first quarter of ~~2017 were $2,182.2 million, a decrease~~2022 was $3.4 billion, an increase of ~~3.0% as~~1.3% compared towith the ~~third~~first quarter of ~~2016, which~~2021, primarily driven by our professional and independent businesses. Comparable store sales increased 0.6%.

•Gross profit margin for the first quarter of 2022 was 44.6% of Net sales, flat compared with the first quarter of 2021. Gross profit was impacted favorably due to our ongoing category management initiatives, including strategic pricing and owned brand expansion. These were offset by LIFO expense, inflationary costs and unfavorable channel and product mix.

•SG&A expenses for the first quarter of 2022 was 38.6% of Net sales, an increase of 161 basis points compared with the first quarter of 2021. This unfavorable impact was primarily ~~comprised of a comparable~~driven by inflationary cost increases in store ~~sales decline of 3.4%~~labor, fuel and delivery and start-up costs from new store openings compared with prior year, partially offset by ~~growth in new stores.~~

~~Refer to~~ ~~“Results of Operations”~~ ~~and “Liquidity and Capital Resources”~~ ~~for further details of our income statement and cash flow results.~~

Business and Risks Update

We continue to make progress on the various elements of our strategic business plan, which is focused on improving the customer experience, margin expansion and driving consistent execution for both ~~Professional~~professional and DIY customers. To achieve these improvements, we have undertaken planned ~~transformation actions~~strategic initiatives to help build a foundation for long-term success across the ~~entire company. These transformation actions initiated during the third quarter~~organization, which include:

A continued roll-out of our common catalog across all four banners - Advance Auto Parts, Carquest, Worldpac and Autopart International. This expanded catalog leverages our enterprise-wide assortment to all of our customers and will be fully enabled through each banner’s point-of-sale system. This capability also provides the customer more flexibility in originating orders across banners.

~~Development~~•Continued development of a demand-based assortment, leveraging purchase and search history ~~and look-ups~~ from ~~the~~our common catalog, versus our existing push-down supply approach. ~~This technology is a first step in moving from a supply-driven~~

•Advancement towards optimizing our footprint by market, including consolidating our Worldpac and Autopart International businesses, to ~~a demand-driven assortment.~~drive share, repurpose our in-market store and asset base and streamline our distribution network.

•Continued ~~to make progress~~evolution of our marketing campaigns, which focus on our customers and how we serve them every day with care and speed and the iconic DieHard® brand.

•Progress in the ~~early development~~implementation of a more efficient end-to-end supply chain process to deliver our broad ~~assortment.~~assortment and to help lessen the impact of external constraints.

~~Expanded use~~•Enhancement of ~~Telematics, a fleet management~~Advance Same Day® Curbside Pick Up, Advance Same Day® Home Delivery and ~~tracking platform, that is critical for real-time fleet management~~our mobile application and ~~accurate measurement~~e-commerce performance.

•Actively pursuing new store openings, including through lease acquisition opportunities as available and ~~management of customer order~~appropriate, in existing markets and ~~delivery commitments.~~

•Continued negotiations with vendors on strategic sourcing and ~~eventual launch of a mobile app.~~pricing to help mitigate inflationary pressures.

Operating within the automotive aftermarket industry, we are influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail ~~industry. These factors~~industry, and include but are not limited to:

•Inflationary pressures, including logistics and labor

•Global supply chain disruptions

•Unemployment rates

•Consumer confidence


	Sixteen Weeks Ended								$ Favorable/ (Unfavorable)		Basis Points
($ in millions)	April 23, 2022				April 24, 2021
Net sales	$	3,374.2	100.0	%	$	3,330.4	100.0	%	$	43.8	—
Cost of sales	1,867.7		55.4		1,845.4		55.4		(22.3)		(6)
Gross profit	1,506.5		44.6		1,484.9		44.6		21.5		6
SG&A	1,303.3		38.6		1,232.8		37.0		(70.5)		(161)
Operating income	203.3		6.0		252.1		7.6		(49.0)		(155)
Interest expense	(12.9)		(0.4)		(11.2)		(0.3)		(1.7)		(5)
Loss on early redemptions of senior unsecured notes	(7.4)		(0.2)		0.0		—		(7.4)		(22)
Other income, net	0.1		0.0		4.8		0.1		(4.7)		(14)
Provision for income taxes	43.3		1.3		59.8		1.8		16.5		51
Net income	$	139.8	4.1	%	$	185.9	5.6	%	$	(46.3)	(145)



	Twelve Week Periods Ended										$ Increase/(Decrease)			Basis point Increase/(Decrease)
($ in millions)	October 7, 2017					October 8, 2016					$ Increase/(Decrease)			Basis point Increase/(Decrease)
Net sales	$	2,182.2		100.0	%	$	2,248.9		100.0	%	$	(66.6	)	—
Cost of sales	1,234.5			56.6		1,260.7			56.1		(26.2		)	51
Gross profit	947.7			43.4		988.2			43.9		(40.5		)	(51	)
SG&A expense	791.1			36.3		794.4			35.3		(3.3		)	93
Operating income	156.6			7.2		193.8			8.6		(37.2		)	(144	)
Interest expense	(13.3		)	(0.6	)	(13.6		)	(0.6	)	0.3			(1	)
Other income, net	0.7			0.0		(2.3		)	(0.1	)	3.0			14
Provision for income taxes	48.0			2.2		64.0			2.8		(16.0		)	(65	)
Net income	$	96.0		4.4	%	$	113.8		5.1	%	$	(17.8	)	(66	)



	Forty Week Periods Ended										$ Increase/(Decrease)			Basis point Increase/(Decrease)
($ in millions)	October 7, 2017					October 8, 2016					$ Increase/(Decrease)			Basis point Increase/(Decrease)
Net sales	$	7,336.8		100.0	%	$	7,484.8		100.0	%	$	(148.0	)	—
Cost of sales	4,125.3			56.2		4,136.4			55.3		(11.1		)	96
Gross profit	3,211.5			43.8		3,348.4			44.7		(136.9		)	(96	)
SG&A expense	2,728.4			37.2		2,666.9			35.6		61.5			156
Operating income	483.1			6.6		681.5			9.1		(198.4		)	(252	)
Interest expense	(45.7		)	(0.6	)	(46.5		)	(0.6	)	0.8			—
Other income, net	8.7			0.1		7.0			0.1		1.7			3
Provision for income taxes	155.1			2.1		244.7			3.3		(89.6		)	(115	)
Net income	$	291.0		4.0	%	$	397.3		5.3	%	$	(106.3	)	(134	)


	Sixteen Weeks Ended
(in thousands, except per share data)	April 23, 2022		April 24, 2021
Net income (GAAP)	$	139,791	$	185,930
Cost of sales adjustments:
LIFO impacts	81,475		3,147
Transformation expenses:
Other significant costs	56		2,303
SG&A adjustments:
GPI amortization of acquired intangible assets	8,439		8,547
Transformation expenses:
Restructuring costs	1,491		20,742
Third-party professional services	6,924		8,034
Other significant costs	1,979		3,883
Other income adjustment (1)	7,408		(36)
Provision for income taxes on adjustments (2)	(26,943)		(11,655)
Adjusted net income (Non-GAAP)	$	220,620	$	220,895

Diluted earnings per share (GAAP)	$	2.26	$	2.81
Adjustments, net of tax	1.31		0.53
Adjusted EPS (Non-GAAP)	$	3.57	$	3.34



(in millions, except per share data)	Twelve Week Periods Ended						Forty Week Periods Ended
	October 7, 2017			October 8, 2016			October 7, 2017			October 8, 2016
Net income (GAAP)	$	96.0		$	113.8		$	291.0		$	397.3
SG&A adjustments:
GPI integration and store consolidation costs	3.6			14.4			23.3			62.7
GPI amortization of acquired intangible assets	9.1			9.4			30.5			31.5
Transformation expenses	3.0			—			35.7			—
Other income adjustment ^(a)	—			—			(8.9		)	—
Provision for income taxes on adjustments ^(b)	(5.9		)	(9.1		)	(30.7		)	(35.8		)
Adjusted net income (Non-GAAP)	$	105.7		$	128.6		$	341.0		$	455.7

Diluted earnings per share (GAAP)	$	1.30		$	1.53		$	3.93		$	5.36
Adjustments, net of tax	0.13			0.20			0.67			0.78
Adjusted EPS (Non-GAAP)	$	1.43		$	1.73		$	4.60		$	6.14


~~ITEM 1.~~	~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF~~



	October 7, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	363,302		$	135,178
Receivables, net	679,359			641,252
Inventories	4,219,321			4,325,868
Other current assets	105,970			70,466
Total current assets	5,367,952			5,172,764
Property and equipment, net of accumulated depreciation of $1,755,749 and $1,660,648	1,418,486			1,446,340
Goodwill	994,408			990,877
Intangible assets, net	608,520			640,903
Other assets, net	78,858			64,149
	$	8,468,224		$	8,315,033
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	2,921,653			3,086,177
Accrued expenses	572,360			554,397
Other current liabilities	43,396			35,472
Total current liabilities	3,537,409			3,676,046
Long-term debt	1,044,008			1,042,949
Deferred income taxes	429,194			454,282
Other long-term liabilities	226,826			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	656,718			631,052
Treasury stock, at cost	(141,482		)	(138,102		)
Accumulated other comprehensive loss	(24,503		)	(39,701		)
Retained earnings	2,740,046			2,462,935
Total stockholders’ equity	3,230,787			2,916,192
	$	8,468,224		$	8,315,033



(in thousands)	October 7, 2017		December 31, 2016
Inventories at FIFO	$	4,006,968	$	4,120,030
Adjustments to state inventories at LIFO	212,353		205,838
Inventories at LIFO	$	4,219,321	$	4,325,868



(in thousands)	Closed Facility Lease Obligations			Severance			Total
Balance, December 31, 2016	$	44,265		$	959		$	45,224
Reserves established	5,098			7,715			12,813
Change in estimates	177			(156		)	21
Cash payments	(14,723		)	(5,739		)	(20,462		)
Balance, October 7, 2017	$	34,817		$	2,779		$	37,596

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



	Twelve Weeks Ended				Forty Weeks Ended
(in thousands, except per share data)	October 7, 2017		October 8, 2016		October 7, 2017		October 8, 2016
Numerator
Net income	$	95,996	$	113,844	$	291,005	$	397,257
Denominator
Basic weighted average shares	73,866		73,638		73,827		73,524
Dilutive impact of share-based awards	240		222		270		323
Diluted weighted average shares	74,106		73,860		74,097		73,847

Basic earnings per share	$	1.30	$	1.54	$	3.94	$	5.38

Diluted earnings per share	$	1.30	$	1.53	$	3.93	$	5.36



	Forty Weeks Ended			Fifty-Two Weeks Ended
(in thousands)	October 7, 2017			December 31, 2016
Warranty reserve, beginning of period	$	47,243		$	44,479
Additions to warranty reserves	39,777			46,903
Reserves utilized	(37,516		)	(44,139		)
Warranty reserve, end of period	$	49,504		$	47,243



(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	23	$	312,193	$	51,109	$	(23	)	$	363,302
Receivables, net	—		635,964		43,395		—			679,359
Inventories	—		4,030,391		188,930		—			4,219,321
Other current assets	—		105,047		1,057		(134		)	105,970
Total current assets	23		5,083,595		284,491		(157		)	5,367,952
Property and equipment, net of accumulated depreciation	108		1,408,580		9,798		—			1,418,486
Goodwill	—		943,358		51,050		—			994,408
Intangible assets, net	—		561,921		46,599		—			608,520
Other assets, net	4,391		78,248		610		(4,391		)	78,858
Investment in subsidiaries	3,330,214		439,076		—		(3,769,290		)	—
Intercompany note receivable	1,048,636		—		—		(1,048,636		)	—
Due from intercompany, net	—		—		336,163		(336,163		)	—
	$	4,383,372	$	8,514,778	$	728,711	$	(5,158,637	)	$	8,468,224
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	2,673,704	$	247,949	$	—		$	2,921,653
Accrued expenses	3,026		549,953		19,515		(134		)	572,360
Other current liabilities	—		43,130		289		(23		)	43,396
Total current liabilities	3,026		3,266,787		267,753		(157		)	3,537,409
Long-term debt	1,044,008		—		—		—			1,044,008
Deferred income taxes	—		413,787		19,797		(4,390		)	429,194
Other long-term liabilities	—		224,741		2,085		—			226,826
Intercompany note payable	—		1,048,636		—		(1,048,636		)	—
Due to intercompany, net	105,551		230,612		—		(336,163		)	—
Commitments and contingencies

Stockholders' equity	3,230,787		3,330,215		439,076		(3,769,291		)	3,230,787
	$	4,383,372	$	8,514,778	$	728,711	$	(5,158,637	)	$	8,468,224


~~ITEM 2.~~	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION~~



	Q3 2017		Q3 2016
GPI integration and store consolidation costs	$	0.02	$	0.12
GPI amortization of acquired intangible assets	$	0.08	$	0.08
Transformation expenses	$	0.03	$	—



	AAP		AI		CARQUEST		WP		Total
July 15, 2017	4,381		186		506		131		5,204
New	10		—		1		—		11
Closed	(2	)	(1	)	(4	)	(2	)	(9	)
Consolidated⁽¹⁾	—		—		(3	)	—		(3	)
Converted ⁽²⁾	37		—		(37	)	—		—
October 7, 2017	4,426		185		463		129		5,203

December 31, 2016	4,273		181		608		127		5,189
New	31		5		7		4		47
Closed	(7	)	(1	)	(8	)	(2	)	(18	)
Consolidated⁽¹⁾	(3	)	—		(12	)	—		(15	)
Converted ⁽²⁾	132		—		(132	)	—		—
October 7, 2017	4,426		185		463		129		5,203


^(a)	~~The adjustment to Other income for the forty weeks ended October 7, 2017 relates to income recognized from an indemnification agreement associated with the acquisition of GPI.~~


^(b)	~~The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments.~~



(in millions)	October 7, 2017		December 31, 2016
Cash and cash equivalents	$	363.3	$	135.2
Long-term debt, including current portion	$	1,044.4	$	1,043.3


~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~


	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (in thousands)
January 2, 2022 to January 29, 2022	646,647	$	235.05	646,584	$	1,393,552
January 30, 2022 to February 26, 2022	430,251	$	225.67	425,922	$	1,297,338
February 27, 2022 to March 26, 2022	77,970	$	203.17	—	$	1,297,338
March 27, 2022 to April 23, 2022	1,365	$	202.68	—	$	1,297,338
Total	1,156,233	$	229.37	1,072,506



(in thousands, except per share data)	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid per Share ⁽¹⁾		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ⁽²⁾
July 16, 2017 to August 12, 2017	—	$	—	—	$	415,092
August 13, 2017 to September 9, 2017	750	103.42		—	415,092
September 10, 2017 to October 7, 2017	—	—		—	415,092
Total	750	$	103.42	—	$	415,092


⁽¹⁾	We repurchased 750 shares of our common stock, at an aggregate cost of $0.1 million, or an average purchase price of $103.42 per share, in connection with the net settlement of shares issued as a result of the vesting of restricted stock units during the ~~twelve~~ ~~weeks ended~~ ~~October 7, 2017~~.


⁽²⁾	~~Our~~ ~~$500 million~~ ~~stock repurchase program was authorized by our Board of Directors on May 14, 2012.~~



		Incorporated by Reference			Filed
Exhibit No.	Exhibit Description	Form	Exhibit	Filing Date	Herewith
3.1	Restated Certificate of Incorporation of Advance Auto Parts, Inc. (“Advance Auto”) (as amended effective as of May 24, 2017).	8-K	3.1	5/31/2017
3.2	Amended and Restated Bylaws of Advance Auto, effective May 24, 2017.	8-K	3.2	5/31/2017
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document


				ADVANCE AUTO PARTS, INC.

Date: May 24, 2022			~~ADVANCE AUTO PARTS, INC.~~	/s/ William J. Pellicciotti Jr.

~~November 14, 2017~~	~~By:~~	~~/s/ Jeffrey W. Shepherd~~
		~~Jeffrey W. Shepherd~~ William J. Pellicciotti Jr. Senior Vice President, Controller and Chief Accounting Officer