Quarterly Report (10-q)

Date : 05/22/2019 @ 9:03PM
Source : Edgar (US Regulatory)
Stock : Advance Auto Parts (AAP)
Quote : 162.005  -1.745 (-1.07%) @ 4:21PM

Quarterly Report (10-q)


 
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 April 20, 2019

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
________________________

AAPLOGOCOLORNOTAGA37.JPG
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
________________________

  Delaware
(State or other jurisdiction of
incorporation or organization)
   54-2049910
(I.R.S. Employer
Identification No.)
  2635 East Millbrook Road
  Raleigh, North Carolina
(Address of principal executive offices)
    27604
(Zip Code)


 
(540) 362-4911
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act
Title of each class
 
Trading symbol
 
Name of each exchange on which registered
Common Stock, $0.0001 par value
 
AAP
 
New York Stock Exchange
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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.

Large accelerated filer x
Accelerated filer o
Non-accelerated filer o  
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 May 20, 2019 , the number of shares of the registrant’s common stock outstanding was 71,736,870 shares.
 




 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I.  FINANCIAL INFORMATION
 
ITEM 1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share data) (Unaudited)
 
April 20, 2019
 
December 29, 2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
537,330

 
$
896,527

Receivables, net
684,419

 
624,972

Inventories
4,433,981

 
4,362,547

Other current assets
126,108

 
198,408

Total current assets
5,781,838

 
6,082,454

Property and equipment, net of accumulated depreciation of $1,951,225 and $1,918,502
1,363,128

 
1,368,985

Operating lease right-of-use assets
2,371,362

 

Goodwill
991,240

 
990,237

Intangible assets, net
527,702

 
550,593

Other assets
46,241

 
48,379

 
$
11,081,511

 
$
9,040,648

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
3,276,955

 
$
3,172,790

Accrued expenses
530,277

 
623,141

Other current liabilities
491,645

 
90,019

Total current liabilities
4,298,877

 
3,885,950

Long-term debt
746,767

 
1,045,720

Noncurrent operating lease liabilities
2,054,173

 

Deferred income taxes
310,404

 
318,353

Other long-term liabilities
124,067

 
239,812

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
706,360

 
694,797

Treasury stock, at cost
(560,245
)
 
(425,954
)
Accumulated other comprehensive loss
(40,038
)
 
(44,193
)
Retained earnings
3,441,138

 
3,326,155

Total stockholders’ equity
3,547,223

 
3,550,813

 
$
11,081,511

 
$
9,040,648




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

1


Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
 
Sixteen Weeks Ended
 
April 20, 2019
 
April 21, 2018
Net sales
$
2,952,036

 
$
2,873,848

Cost of sales,  including purchasing and warehousing costs
1,647,424

 
1,601,564

Gross profit
1,304,612

 
1,272,284

Selling, general and administrative expenses
1,096,672

 
1,074,043

Operating income
207,940

 
198,241

Other, net:
 
 
 
Interest expense
(14,944
)
 
(17,682
)
Other (expense) income, net
(2,238
)
 
458

Total other, net
(17,182
)
 
(17,224
)
Income before provision for income taxes
190,758

 
181,017

Provision for income taxes
48,258

 
44,290

Net income
$
142,500

 
$
136,727

 
 
 
 
Basic earnings per common share
$
1.99

 
$
1.85

Weighted average common shares outstanding
71,787

 
73,979

Diluted earnings per common share
$
1.98

 
$
1.84

Weighted average common shares outstanding
72,103

 
74,205



Condensed Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
 
Sixteen Weeks Ended
 
April 20, 2019
 
April 21, 2018
Net income
$
142,500

 
$
136,727

Other comprehensive income (loss):
 
 
 
Changes in net unrecognized other postretirement benefit income (costs), net of tax of $17 and $32
95

 
(91
)
Currency translation adjustments
4,060

 
(3,767
)
Total other comprehensive income (loss)
4,155

 
(3,858
)
Comprehensive income
$
146,655

 
$
132,869




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

2


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 20, 2019
 
Common Stock
 
Additional
Paid-in Capital
 
Treasury Stock, at Cost
 
Accumulated Other
Comprehensive Loss
 
Retained Earnings
 
Total
Stockholders’ Equity
 
Shares
 
Amount
 
 
 
 
Balance, December 29, 2018
72,460

 
$
8

 
$
694,797

 
$
(425,954
)
 
$
(44,193
)
 
$
3,326,155

 
$
3,550,813

Net income

 

 

 

 

 
142,500

 
142,500

Cumulative effect of accounting change from adoption of ASU 2016-02, net of tax

 

 

 

 

 
(23,165
)
 
(23,165
)
Total other comprehensive income

 

 

 

 
4,155

 

 
4,155

Issuance of shares upon the exercise of stock appreciation rights
1

 

 

 

 

 

 

Tax withholdings related to the exercise of stock appreciation rights

 

 
(99
)
 

 

 

 
(99
)
Restricted stock units and deferred stock units vested
111

 
 
 

 

 

 

 

Share-based compensation

 

 
10,984

 

 

 

 
10,984

Stock issued under employee stock purchase plan
5

 

 
678

 

 

 

 
678

Repurchases of common stock
(840
)
 

 

 
(134,291
)
 

 

 
(134,291
)
Cash dividends declared ($0.06 per common share)

 

 

 

 

 
(4,352
)
 
(4,352
)
Balance, April 20, 2019
71,737

 
$
8

 
$
706,360

 
$
(560,245
)
 
$
(40,038
)
 
$
3,441,138

 
$
3,547,223

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sixteen Weeks Ended April 21, 2018
 
Common Stock
 
Additional
Paid-in Capital
 
Treasury Stock, at Cost
 
Accumulated Other
Comprehensive Loss
 
Retained Earnings
 
Total
Stockholders’ Equity
 
Shares
 
Amount
 
 
 
 
Balance, December 30, 2017
73,936

 
$
8

 
$
664,646

 
$
(144,600
)
 
$
(24,954
)
 
$
2,920,096

 
$
3,415,196

Net income

 

 

 

 

 
136,727

 
136,727

Total other comprehensive loss

 

 

 

 
(3,858
)
 

 
(3,858
)
Issuance of shares upon the exercise of stock appreciation rights
2

 

 

 

 

 

 

Tax withholdings related to the exercise of stock appreciation rights

 

 
(93
)
 

 

 

 
(93
)
Restricted stock units and deferred stock units vested
119

 

 

 

 

 

 

Share-based compensation

 
 
 
7,642

 

 

 

 
7,642

Stock issued under employee stock purchase plan
18

 

 
754

 

 

 

 
754

Repurchases of common stock
(45
)
 

 

 
(5,224
)
 

 

 
(5,224
)
Cash dividends declared ($0.06 per common share)

 

 

 

 

 
(4,487
)
 
(4,487
)
Other

 

 
(36
)
 

 

 

 
(36
)
Balance, April 21, 2018
74,030

 
$
8

 
$
672,913

 
$
(149,824
)
 
$
(28,812
)
 
$
3,052,336

 
$
3,546,621




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



3


Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
Sixteen Weeks Ended
 
April 20, 2019
 
April 21, 2018
Cash flows from operating activities:
 
 
 
Net income
$
142,500

 
$
136,727

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
69,885

 
71,692

Share-based compensation
10,984

 
7,642

Loss on disposal and impairment of long-lived assets
125

 
3,208

(Benefit) provision for deferred income taxes
(250
)
 
7,340

Other
11,348

 
672

Net change in:
 
 
 
Receivables, net
(58,757
)
 
(14,012
)
Inventories
(68,742
)
 
(64,369
)
Accounts payable
102,941

 
(2,948
)
Accrued expenses
(62,751
)
 
20,765

Other assets and liabilities, net
57,259

 
(12,747
)
Net cash provided by operating activities
204,542

 
153,970

Cash flows from investing activities:
 

 
 

Purchases of property and equipment
(61,312
)
 
(34,474
)
Proceeds from sales of property and equipment
553

 
530

Net cash used in investing activities
(60,759
)
 
(33,944
)
Cash flows from financing activities:
 

 
 

Decrease in bank overdrafts
(50,578
)
 
(12,101
)
Redemption of senior unsecured notes
(310,047
)
 

Dividends paid
(8,723
)
 
(8,930
)
Proceeds from the issuance of common stock
678

 
754

Tax withholdings related to the exercise of stock appreciation rights
(99
)
 
(93
)
Repurchases of common stock
(134,291
)
 
(5,224
)
Other, net
(116
)
 
(1,163
)
Net cash used in financing activities
(503,176
)
 
(26,757
)
Effect of exchange rate changes on cash
196

 
(1,063
)
Net (decrease) increase in cash and cash equivalents
(359,197
)
 
92,206

Cash and cash equivalents , beginning of period
896,527

 
546,937

Cash and cash equivalents , end of period
$
537,330

 
$
639,143

 
 
 
 
Non-cash transactions:
 
 
 
Accrued purchases of property and equipment
$
14,194

 
$
8,591



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

4

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



1.
Nature of Operations and Basis of Presentation:

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

As of April 20, 2019 , we operated a total of 4,931 stores and 146 Worldpac branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 20, 2019 , we served 1,238 independently owned Carquest branded stores across the same geographic locations served by our stores in addition to Mexico, the Bahamas, Turks and Caicos and the British Virgin 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 2018 as filed with the SEC on February 19, 2019 .

During the sixteen weeks ended April 20, 2019 , we made an out-of-period correction, which increased Accounts payable and Cost of sales by $13.0 million , related to received not invoiced inventory.

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.

2.
Significant Accounting Policies:

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group:
 
 
Sixteen Weeks Ended
 
 
April 20, 2019
 
April 21, 2018
Percentage of Net sales, by product group:
 
 
 
 
Parts and batteries
 
66
%
 
65
%
Accessories and chemicals
 
21

 
20

Engine maintenance
 
12

 
14

Other
 
1

 
1

Total
 
100
%
 
100
%

We had no material contract assets, contract liabilities or costs to obtain and fulfill contracts recorded on the Condensed Consolidated Balance Sheet as of April 20, 2019 and December 29, 2018 . For the sixteen weeks ended April 20, 2019 , revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price) was insignificant.


5

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


Recently Issued Accounting Pronouncements

We adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”), as of December 30, 2018, using the alternative transition method provided in ASU 2018-11, Leases (Topic 842): Targeted Improvements . Using the alternative transition method, we applied the transition requirements at the effective date of ASU 2016-02 with the impact of initially applying ASU 2016-02 recognized as a cumulative-effect adjustment to retained earnings in the first quarter of 2019. Consequently, the comparative periods presented continue to be in accordance with ASC 840, Leases (Topic 840) (“ASC 840”), including the disclosure requirements of ASC 840.

We elected the package of practical expedients permitted under the transition guidance within the new standard. In addition, as a practical expedient relating to our facility and vehicle leases, we elected not to separate lease components from nonlease components.

The adoption of ASU 2016-02 resulted in the recording of lease assets and lease liabilities of $2.4 billion as of December 30, 2018. At the date of adoption, there was a difference between the operating lease right-of-use assets and lease liabilities recorded that included an adjustment to retained earnings, net of a $7.9 million deferred tax impact, which primarily resulted from the impairment of select operating lease right-of-use assets. For the sixteen weeks ended April 20, 2019 , the adoption of the new standard did not have a material impact on our condensed consolidated statements of operations and condensed consolidated statements of cash flows as substantially all of our leases remained operating in nature.

3.
Inventories

Inventories are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately 88% and 89% of inventories as of April 20, 2019 and December 29, 2018 . Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the sixteen weeks ended April 20, 2019 and prior years. We recorded an increase to Cost of sales of $26.4 million for the sixteen weeks ended April 20, 2019 and a decrease to Cost of sales of $20.0 million for the sixteen weeks ended April 21, 2018 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:
(in thousands)
April 20, 2019
 
December 29, 2018
Inventories at first in, first out (“FIFO”)
$
4,217,495

 
$
4,119,617

Adjustments to state inventories at LIFO
216,486

 
242,930

Inventories at LIFO
$
4,433,981

 
$
4,362,547


4.
Exit Activities

As of December 29, 2018 , and in accordance with ASC 420, Exit or Disposal Cost Obligations , the closed facility lease obligation, which comprised of sublease assets and lease liabilities for closed facilities, was $42.3 million recorded in connection with the initiatives and liabilities associated with facility closures that occurred as part of our normal market evaluation process as described in our 2018 Form 10-K. As a result of our transition to ASU 2016-02, Leases (Topic 842), our lease liabilities for closed facilities are included within Other current liabilities and Noncurrent operating lease liabilities and our sublease assets are included within Operating lease right-of-use assets in the accompanying condensed consolidated balance sheet as of April 20, 2019 .

5.
Intangible Assets

Our definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $9.7 million and $13.4 million for the sixteen weeks ended April 20, 2019 and April 21, 2018 .

6

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



6.
Receivables, net

Receivables consist of the following:
(in thousands)
April 20, 2019
 
December 29, 2018
Trade
$
465,085

 
$
397,909

Vendor
225,845

 
228,024

Other
12,264

 
17,081

Total receivables
703,194

 
643,014

Less: allowance for doubtful accounts
(18,775
)
 
(18,042
)
Receivables, net
$
684,419

 
$
624,972


7.
Long-term Debt and Fair Value of Financial Instruments

Long-term debt consists of the following:
(in thousands)
April 20, 2019
 
December 29, 2018
Total long-term debt
$
746,830

 
$
1,045,930

Less: current portion of long-term debt
(63
)
 
(210
)
Long-term debt, excluding current portion
$
746,767

 
$
1,045,720

 
 
 
 
Fair value of long-term debt
$
781,000

 
$
1,074,000


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 April 20, 2019 and December 29, 2018 we had no outstanding borrowings under the revolver and borrowing availability was $998.5 million and $998.0 million based on our leverage ratio. As of April 20, 2019 and December 29, 2018 , we had letters of credit outstanding of $1.5 million and $100.5 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 April 20, 2019 .

Senior Unsecured Notes

Our 5.75% senior unsecured notes were issued in April 2010 at 99.587% of the principal amount of $300.0 million and are due May 1, 2020 (the “2020 Notes”). On February 28, 2019, we redeemed all $300.0 million aggregate principal amount of our outstanding 2020 Notes. We incurred charges relating to a make-whole provision and debt issuance costs of $10.1 million and $0.7 million resulting from the early redemption of our 2020 Notes.


7

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


Debt Guarantees

We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are our customers totaling $24.0 million and $24.3 million as of April 20, 2019 and December 29, 2018 . These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements is $51.8 million and $53.9 million as of April 20, 2019 and December 29, 2018 . We believe that the likelihood of performance under these guarantees is remote.

8.
Leases

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

Operating lease liabilities consist of the following:
(in thousands)
April 20, 2019
Total operating lease liabilities
$
2,503,875

Less: Current portion of operating lease liabilities
(449,702
)
Noncurrent operating lease liabilities
$
2,054,173


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

Total lease cost is included in Cost of sales and 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:
(in thousands)
April 20, 2019
Operating lease cost
$
160,046

Variable lease cost
49,690

Total lease cost
$
209,736


The future maturity of lease liabilities are as follows:
(in thousands)
April 20, 2019
Remainder of 2019
$
386,478

2020
540,813

2021
441,696

2022
347,796

2023
293,444

Thereafter
924,022

Total lease payments
$
2,934,249

Less: Imputed interest
(430,374
)
Total operating lease liabilities
$
2,503,875


Operating lease payments include $139.8 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $28.1 million of legally binding minimum lease payments for leases signed but not yet commenced.


8

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


The weighted-average remaining lease term and weighted-average discount rate for our operating leases are 7.2 years and 4.2% as of April 20, 2019. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Other information relating to our lease liabilities is as follows:
(in thousands)
April 20, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
143,450

Right-of-use assets obtained in exchange for lease obligations:


Operating leases
$
108,881


As previously disclosed in our 2018 Annual Report on Form 10-K and under the previous lease accounting standard, future minimum lease payments due under non-cancelable operating leases would have been as follows:
Year
 
December 29, 2018
(in thousands)
 
 
2019

 
$
520,541

2020

 
481,812

2021

 
416,895

2022

 
349,470

2023

 
270,116

Thereafter

 
837,441

 
 
$
2,876,275


9.
Warranty Liabilities

The following table presents changes in our warranty reserves:
 
Sixteen Weeks Ended
 
Fifty-Two Weeks Ended
(in thousands)
April 20, 2019
 
December 29, 2018
Warranty reserve, beginning of period
$
45,280

 
$
49,024

Additions to warranty reserves
12,724

 
43,200

Reserves utilized
(12,929
)
 
(46,944
)
Warranty reserve, end of period
$
45,075

 
$
45,280

  
10.
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 program.

During the sixteen weeks ended April 20, 2019 , we repurchased 0.8 million shares of our common stock at an aggregate cost of $127.2 million , or an average price of $159.65 per share, in connection with our share repurchase program. We had $200.0 million remaining under our share repurchase program as of April 20, 2019 . During the sixteen weeks ended April 21, 2018 , we repurchased no shares of our common stock in connection with our prior share repurchase program.

9

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



11.
Earnings per Share

The computation of basic and diluted earnings per share are as follows:   
 
Sixteen Weeks Ended
(in thousands, except per share data)
April 20, 2019
 
April 21, 2018
Numerator
 
 
 
Net income applicable to common shares
$
142,500

 
$
136,727

Denominator
 

 
 
Basic weighted average common shares
71,787

 
73,979

Dilutive impact of share-based awards
316

 
226

Diluted weighted average common shares
72,103

 
74,205

 
 

 
 
Basic earnings per common share
$
1.99

 
$
1.85

Diluted earnings per common share
$
1.98

 
$
1.84


12.
Share-Based Compensation

During the sixteen weeks ended April 20, 2019 , we granted 190 thousand time-based restricted stock units (“RSUs”), 54 thousand performance-based RSUs and 27 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 sixteen weeks ended April 20, 2019 were $160.21 , $159.93 and $165.84 per share. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our stock on the date of grant adjusted for expected dividends during the vesting period, as applicable. The fair value of each market-based RSU was determined using a Monte Carlo simulation model.

Total income tax benefit related to share-based compensation expense for the sixteen weeks ended April 20, 2019 and April 21, 2018 was $2.7 million and $1.8 million . As of April 20, 2019 , there was $83.5 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.9 years .

13.
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”).

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.


10

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


Condensed Consolidating Balance Sheet
As of April 20, 2019
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
4

 
$
485,512

 
$
51,818

 
$
(4
)
 
$
537,330

Receivables, net

 
644,983

 
39,436

 

 
684,419

Inventories

 
4,245,643

 
188,338

 

 
4,433,981

Other current assets
1,421

 
120,529

 
4,158

 

 
126,108

Total current assets
1,425

 
5,496,667

 
283,750

 
(4
)
 
5,781,838

Property and equipment, net of accumulated depreciation
72

 
1,354,398

 
8,658

 

 
1,363,128

Operating lease right-of-use assets

 
2,328,974

 
42,388

 

 
2,371,362

Goodwill

 
943,502

 
47,738

 

 
991,240

Intangible assets, net

 
487,802

 
39,900

 

 
527,702

Other assets, net
2,294

 
45,664

 
577

 
(2,294
)
 
46,241

Investment in subsidiaries
4,077,071

 
495,756

 

 
(4,572,827
)
 

Intercompany note receivable
749,248

 

 

 
(749,248
)
 

Due from intercompany, net

 
179,333

 
354,702

 
(534,035
)
 

 
$
4,830,110

 
$
11,332,096

 
$
777,713

 
$
(5,858,408
)
 
$
11,081,511

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
3,076,126

 
$
200,829

 
$

 
$
3,276,955

Accrued expenses
2,085

 
503,766

 
24,426

 

 
530,277

Other current liabilities

 
483,144

 
8,505

 
(4
)
 
491,645

Total current liabilities
2,085

 
4,063,036

 
233,760

 
(4
)
 
4,298,877

Long-term debt
746,767

 

 

 

 
746,767

Noncurrent operating lease liabilities

 
2,021,182

 
32,991

 

 
2,054,173

Deferred income taxes

 
297,743

 
14,955

 
(2,294
)
 
310,404

Other long-term liabilities

 
123,816

 
251

 

 
124,067

Intercompany note payable

 
749,248

 

 
(749,248
)
 

Due to intercompany, net
534,035

 

 

 
(534,035
)
 

Commitments and contingencies

 

 

 

 

Stockholders' equity
3,547,223

 
4,077,071

 
495,756

 
(4,572,827
)
 
3,547,223

 
$
4,830,110

 
$
11,332,096

 
$
777,713

 
$
(5,858,408
)
 
$
11,081,511



11

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


Condensed Consolidating Balance Sheet
As of December 29, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
785,605

 
$
110,922

 
$

 
$
896,527

Receivables, net

 
590,269

 
34,703

 

 
624,972

Inventories

 
4,182,973

 
179,574

 

 
4,362,547

Other current assets
3,103

 
191,318

 
3,987

 

 
198,408

Total current assets
3,103

 
5,750,165

 
329,186

 

 
6,082,454

Property and equipment, net of accumulated depreciation
77

 
1,359,980

 
8,928

 

 
1,368,985

Goodwill

 
943,364

 
46,873

 

 
990,237

Intangible assets, net

 
510,586

 
40,007

 

 
550,593

Other assets, net
2,408

 
47,815

 
564

 
(2,408
)
 
48,379

Investment in subsidiaries
3,945,862

 
474,772

 

 
(4,420,634
)
 

Intercompany note receivable
1,048,993

 

 

 
(1,048,993
)
 

Due from intercompany, net

 
102,886

 
297,580

 
(400,466
)
 

 
$
5,000,443

 
$
9,189,568

 
$
723,138

 
$
(5,872,501
)
 
$
9,040,648

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
2,954,632

 
$
218,158

 
$

 
$
3,172,790

Accrued expenses
3,444

 
603,460

 
16,237

 

 
623,141

Other current liabilities

 
91,994

 
(1,975
)
 

 
90,019

Total current liabilities
3,444

 
3,650,086

 
232,420

 

 
3,885,950

Long-term debt
1,045,720

 

 

 

 
1,045,720

Deferred income taxes

 
306,127

 
14,634

 
(2,408
)
 
318,353

Other long-term liabilities

 
238,500

 
1,312

 

 
239,812

Intercompany note payable

 
1,048,993

 

 
(1,048,993
)
 

Due to intercompany, net
400,466

 

 

 
(400,466
)
 

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Stockholders' equity
3,550,813

 
3,945,862

 
474,772

 
(4,420,634
)
 
3,550,813

 
$
5,000,443

 
$
9,189,568

 
$
723,138

 
$
(5,872,501
)
 
$
9,040,648



12

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


Condensed Consolidating Statement of Operations
For the Sixteen Weeks Ended April 20, 2019
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
2,852,700

 
$
147,290

 
$
(47,954
)
 
$
2,952,036

Cost of sales,  including purchasing and warehousing costs

 
1,598,539

 
96,839

 
(47,954
)
 
1,647,424

Gross profit

 
1,254,161

 
50,451

 

 
1,304,612

Selling, general and administrative expenses
12,119

 
1,077,144

 
31,409

 
(24,000
)
 
1,096,672

Operating (loss) income
(12,119
)
 
177,017

 
19,042

 
24,000

 
207,940

Other, net:
 
 
 
 
 
 
 
 
 
Interest expense
(13,512
)
 
(1,406
)
 
(26
)
 

 
(14,944
)
Other income (expense), net
26,211

 
(6,891
)
 
2,442

 
(24,000
)
 
(2,238
)
Total other, net
12,699

 
(8,297
)
 
2,416

 
(24,000
)
 
(17,182
)
Income before provision for income taxes
580

 
168,720

 
21,458

 

 
190,758

Provision for income taxes
1,300

 
42,294

 
4,664

 

 
48,258

(Loss) income before equity in earnings of subsidiaries
(720
)
 
126,426

 
16,794

 

 
142,500

Equity in earnings of subsidiaries
143,220

 
16,794

 

 
(160,014
)
 

Net income
$
142,500

 
$
143,220

 
$
16,794

 
$
(160,014
)
 
$
142,500


Condensed Consolidating Statement of Operations
For the Sixteen Weeks Ended April 21, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
2,775,903

 
$
152,119

 
$
(54,174
)
 
$
2,873,848

Cost of sales,  including purchasing and warehousing costs

 
1,551,041

 
104,697

 
(54,174
)
 
1,601,564

Gross profit

 
1,224,862

 
47,422

 

 
1,272,284

Selling, general and administrative expenses
4,811

 
1,054,389

 
30,582

 
(15,739
)
 
1,074,043

Operating (loss) income
(4,811
)
 
170,473

 
16,840

 
15,739

 
198,241

Other, net:
 
 
 
 
 
 
 
 
 
Interest expense
(16,078
)
 
(1,604
)
 

 

 
(17,682
)
Other income (expense), net
21,257

 
(2,993
)
 
(2,067
)
 
(15,739
)
 
458

Total other, net
5,179

 
(4,597
)
 
(2,067
)
 
(15,739
)
 
(17,224
)
Income before provision for income taxes
368

 
165,876

 
14,773

 

 
181,017

Provision for income taxes
1,263

 
40,452

 
2,575

 

 
44,290

(Loss) income before equity in earnings of subsidiaries
(895
)
 
125,424

 
12,198

 

 
136,727

Equity in earnings of subsidiaries
137,622

 
12,198

 

 
(149,820
)
 

Net income
$
136,727

 
$
137,622

 
$
12,198

 
$
(149,820
)
 
$
136,727



13

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


Condensed Consolidating Statement of Comprehensive Income
For the Sixteen Weeks Ended April 20, 2019
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
142,500

 
$
143,220

 
$
16,794

 
$
(160,014
)
 
$
142,500

Other comprehensive income
4,155

 
4,155

 
4,060

 
(8,215
)
 
4,155

Comprehensive income
$
146,655

 
$
147,375

 
$
20,854

 
$
(168,229
)

$
146,655



Condensed Consolidating Statement of Comprehensive Income
For the Sixteen Weeks Ended April 21, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
136,727

 
$
137,622

 
$
12,198

 
$
(149,820
)
 
$
136,727

Other comprehensive loss
(3,858
)
 
(3,858
)
 
(3,767
)
 
7,625

 
(3,858
)
Comprehensive income
$
132,869

 
$
133,764

 
$
8,431

 
$
(142,195
)
 
$
132,869




14

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


Condensed Consolidating Statement of Cash Flows
For the Sixteen Weeks Ended April 20, 2019
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by (used in) operating activities
$

 
$
264,504

 
$
(59,962
)
 
$

 
$
204,542

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment

 
(60,966
)
 
(346
)
 

 
(61,312
)
Proceeds from sales of property and equipment

 
552

 
1

 

 
553

Net cash used in investing activities

 
(60,414
)
 
(345
)
 

 
(60,759
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
(Decrease) increase in bank overdrafts

 
(51,585
)
 
1,007

 

 
(50,578
)
Redemption of senior unsecured notes

 
(310,047
)
 

 

 
(310,047
)
Dividends paid

 
(8,723
)
 

 

 
(8,723
)
Proceeds from the issuance of common stock

 
678

 

 

 
678

Tax withholdings related to the exercise of stock appreciation rights

 
(99
)
 

 

 
(99
)
Repurchases of common stock

 
(134,291
)
 

 

 
(134,291
)
Other, net
4

 
(116
)
 

 
(4
)
 
(116
)
Net cash provided by (used in) financing activities
4

 
(504,183
)
 
1,007

 
(4
)
 
(503,176
)
Effect of exchange rate changes on cash

 

 
196

 

 
196

Net increase (decrease) in cash and cash equivalents
4

 
(300,093
)
 
(59,104
)
 
(4
)
 
(359,197
)
Cash and cash equivalents , beginning of period

 
785,605

 
110,922

 

 
896,527

Cash and cash equivalents , end of period
$
4

 
$
485,512

 
$
51,818

 
$
(4
)
 
$
537,330



15

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


Condensed Consolidating Statement of Cash Flows
For the Sixteen Weeks Ended April 21, 2018
(In thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by operating activities
$

 
$
142,408

 
$
11,562

 
$

 
$
153,970

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment

 
(34,153
)
 
(321
)
 

 
(34,474
)
Proceeds from sales of property and equipment

 
486

 
44

 

 
530

Net cash used in investing activities

 
(33,667
)
 
(277
)
 

 
(33,944
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Decrease in bank overdrafts

 
(9,790
)
 
(2,311
)
 

 
(12,101
)
Dividends paid

 
(8,930
)
 

 

 
(8,930
)
Proceeds from the issuance of common stock

 
754

 

 

 
754

Tax withholdings related to the exercise of stock appreciation rights

 
(93
)
 

 

 
(93
)
Repurchases of common stock

 
(5,224
)
 

 

 
(5,224
)
Other, net

&#