0001158449-18-000160.txt : 20180814 0001158449-18-000160.hdr.sgml : 20180814 20180814160350 ACCESSION NUMBER: 0001158449-18-000160 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 60 CONFORMED PERIOD OF REPORT: 20180714 FILED AS OF DATE: 20180814 DATE AS OF CHANGE: 20180814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCE AUTO PARTS INC CENTRAL INDEX KEY: 0001158449 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO & HOME SUPPLY STORES [5531] IRS NUMBER: 542049910 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16797 FILM NUMBER: 181017306 BUSINESS ADDRESS: STREET 1: 5008 AIRPORT RD CITY: ROANOKE STATE: VA ZIP: 24012 BUSINESS PHONE: 5403624911 MAIL ADDRESS: STREET 1: 5008 AIRPORT RD CITY: ROANOKE STATE: VA ZIP: 24012 10-Q 1 aap_10q7142018.htm 10-Q Document

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 14, 2018
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.

Commission file number 001-16797
________________________

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

 Delaware
(State or other jurisdiction of
incorporation or organization)
   54-2049910
(I.R.S. Employer
Identification No.)
 5008 Airport Road
Roanoke, VA
(Address of Principal Executive Offices)
    24012
(Zip Code)


 
(540) 362-4911
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x
Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)
Smaller reporting company o
 
Emerging growth company o

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

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

As of August 10, 2018, the number of shares of the registrant’s common stock outstanding was 74,081,258 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)
 
July 14, 2018
 
December 30, 2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
902,249

 
$
546,937

Receivables, net
664,149

 
606,357

Inventories
4,159,756

 
4,168,492

Other current assets
151,662

 
105,106

Total current assets
5,877,816

 
5,426,892

Property and equipment, net of accumulated depreciation of $1,874,396 and $1,783,383
1,338,931

 
1,394,138

Goodwill
991,934

 
994,293

Intangible assets, net
571,953

 
597,674

Other assets
54,922

 
69,304

 
$
8,835,556

 
$
8,482,301

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
2,909,990

 
$
2,894,582

Accrued expenses
635,896

 
533,548

Other current liabilities
52,331

 
51,967

Total current liabilities
3,598,217

 
3,480,097

Long-term debt
1,045,077

 
1,044,327

Deferred income taxes
314,091

 
303,620

Other long-term liabilities
220,222

 
239,061

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
678,416

 
664,646

Treasury stock, at cost
(150,257
)
 
(144,600
)
Accumulated other comprehensive loss
(35,914
)
 
(24,954
)
Retained earnings
3,165,696

 
2,920,096

Total stockholders’ equity
3,657,949

 
3,415,196

 
$
8,835,556

 
$
8,482,301




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)
 
Twelve Weeks Ended
 
Twenty-Eight Weeks Ended
 
July 14, 2018
 
July 15, 2017
 
July 14, 2018
 
July 15, 2017
Net sales
$
2,326,652

 
$
2,263,727

 
$
5,200,500

 
$
5,154,565

Cost of sales, including purchasing and warehousing costs
1,315,093

 
1,270,639

 
2,916,658

 
2,890,793

Gross profit
1,011,559

 
993,088

 
2,283,842

 
2,263,772

Selling, general and administrative expenses
844,018

 
846,377

 
1,918,061

 
1,937,281

Operating income
167,541

 
146,711

 
365,781

 
326,491

Other, net:
 

 
 

 
 
 
 
Interest expense
(12,855
)
 
(13,921
)
 
(30,537
)
 
(32,351
)
Other income, net
2,785

 
3,169

 
3,243

 
7,982

Total other, net
(10,070
)
 
(10,752
)
 
(27,294
)
 
(24,369
)
Income before provision for income taxes
157,471

 
135,959

 
338,487

 
302,122

Provision for income taxes
39,635

 
48,910

 
83,925

 
107,113

Net income
$
117,836

 
$
87,049

 
$
254,562

 
$
195,009

 
 
 
 
 
 
 
 
Basic earnings per common share
$
1.59

 
$
1.18

 
$
3.44

 
$
2.64

Weighted average common shares outstanding
74,054

 
73,848

 
74,011

 
73,810

Diluted earnings per common share
$
1.59

 
$
1.17

 
$
3.43

 
$
2.63

Weighted average common shares outstanding
74,244

 
74,093

 
74,222

 
74,093

Dividends declared per common share
$
0.06

 
$
0.06

 
$
0.12

 
$
0.12



Condensed Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
 
Twelve Weeks Ended
 
Twenty-Eight Weeks Ended
 
July 14, 2018
 
July 15, 2017
 
July 14, 2018
 
July 15, 2017
Net income
$
117,836

 
$
87,049

 
$
254,562

 
$
195,009

Other comprehensive (loss) income:
 
 
 
 
 
 
 
Changes in net unrecognized other postretirement benefit costs, net of tax of $24, $41, $56 and $95
(67
)
 
(63
)
 
(158
)
 
(148
)
Currency translation adjustments
(7,035
)
 
13,973

 
(10,802
)
 
13,185

Total other comprehensive (loss) income
(7,102
)
 
13,910

 
(10,960
)
 
13,037

Comprehensive income
$
110,734

 
$
100,959

 
$
243,602

 
$
208,046





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 Cash Flows
(In thousands) (Unaudited)
 
Twenty-Eight Weeks Ended
 
July 14, 2018
 
July 15, 2017
Cash flows from operating activities:
 
 
 
Net income
$
254,562

 
$
195,009

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
128,244

 
135,200

Share-based compensation
12,413

 
19,938

Loss on disposal and impairment of property and equipment
4,757

 
4,361

Provision (benefit) for deferred income taxes
11,195

 
(16,006
)
Other
1,180

 
1,851

Net change in:
 
 
 
Receivables, net
(59,995
)
 
(37,012
)
Inventories
2,140

 
41,923

Accounts payable
19,083

 
(153,750
)
Accrued expenses
112,214

 
91,333

Other assets and liabilities, net
(41,825
)
 
(15,498
)
Net cash provided by operating activities
443,968

 
267,349

Cash flows from investing activities:
 

 
 

Purchases of property and equipment
(61,815
)
 
(122,364
)
Proceeds from sales of property and equipment
578

 
1,311

Other, net

 
20

Net cash used in investing activities
(61,237
)
 
(121,033
)
Cash flows from financing activities:
 

 
 

Decrease in bank overdrafts
(8,362
)
 
(4,202
)
Borrowings under credit facilities

 
534,400

Payments on credit facilities

 
(534,400
)
Dividends paid
(13,398
)
 
(13,363
)
Proceeds from the issuance of common stock
1,697

 
2,281

Tax withholdings related to the exercise of stock appreciation rights
(304
)
 
(6,230
)
Repurchase of common stock
(5,657
)
 
(3,303
)
Other, net
784

 
(2,027
)
Net cash used in financing activities
(25,240
)
 
(26,844
)
Effect of exchange rate changes on cash
(2,179
)
 
2,580

Net increase in cash and cash equivalents
355,312

 
122,052

Cash and cash equivalents, beginning of period
546,937

 
135,178

Cash and cash equivalents, end of period
$
902,249

 
$
257,230

 
 
 
 
Non-cash transactions:
 
 
 
Accrued purchases of property and equipment
$
9,075

 
$
10,205



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

3


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




1.
Nature of Operations and Basis of Presentation:

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

As of July 14, 2018, we operated a total of 5,026 stores and 133 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of July 14, 2018, we served 1,219 independently owned Carquest branded stores (“independent stores”) across the same geographic locations served by our stores in addition to Mexico, the Bahamas, Turks and Caicos, the British Virgin Islands and the Pacific Islands.

The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted based upon the Securities and Exchange Commission (“SEC”) interim reporting guidance. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for 2017 as filed with the SEC on February 21, 2018.

The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Our first quarter of the year contains sixteen weeks. Our remaining three quarters consist of twelve weeks.

2.
Significant Accounting Policies:

Revenues

Revenue for periods through December 30, 2017 was reported under Accounting Standards Codification (“ASC”) 605, Revenue Recognition (Topic 605), as described in our accounting policies in our 2017 Form 10-K. Effective December 31, 2017, we adopted ASC 606, Revenue From Contracts With Customers (Topic 606) (“ASC 606”). The results of applying Topic 606 using the modified retrospective approach were insignificant and did not have a material impact on our consolidated financial condition, results of operations, cash flows, business process, controls or systems. We expect the impact of the adoption of the new standard to be immaterial to our net income on an ongoing basis.

In accordance with ASC 606 revenue is recognized at the time the sale is made, at which time our walk-in customers take immediate possession of the merchandise or same-day delivery is made to our Professional delivery customers, which include certain independently-owned store locations. Payment terms are established for our Professional delivery customers based on pre-established credit requirements. Payment terms vary depending on the customer and generally range from 1 to 30 days. Based on the nature of receivables no significant financing components exist. For e-commerce sales, revenue is recognized either at the time of pick-up at one of our store locations or at the time of shipment depending on the customer's order designation. Sales are recorded net of discounts, sales incentives and rebates, sales taxes and estimated returns and allowances. We estimate the reduction to Net sales and Cost of sales for returns based on current sales levels and our historical return experience.

We provide assurance type warranty coverage primarily on batteries, brakes and struts whereby we are required to provide replacement product at no cost or a reduced cost for a set period of time.

ASC 606 defines a performance obligation as a promise in a contract to transfer a distinct good or service to the customer and is considered the unit of account. The majority of our contracts have one single performance obligation as the promise to transfer the individual goods is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Discounts and incentives are treated as separate performance obligations. We allocate the contract’s transaction price to each of these performance obligations separately using explicitly stated amounts or our best estimate using historical data. Additionally, we estimate and record gift card breakage as redemptions occur.

4


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



We had no material contract assets, contract liabilities or costs to obtain and fulfill contracts recorded on the Condensed Consolidated Balance Sheet as of July 14, 2018. For the twelve and twenty-eight weeks ended July 14, 2018, revenue recognized from performance obligations related to prior periods (for example, due to changes in transaction price), was insignificant. Revenue expected to be recognized in future periods related to remaining performance obligations is insignificant.

The following table summarizes disaggregated revenue from contracts with customers by product group:
 
Twelve Weeks Ended
 
Twenty-Eight Weeks Ended
 
July 14, 2018
 
July 15, 2017
 
July 14, 2018
 
July 15, 2017
Percentage of Sales, by Product Group
 
 
 
 
 
 
 
Parts and Batteries
66
%
 
64
%
 
65
%
 
65
%
Accessories and Chemicals
20

 
21

 
20

 
20

Engine Maintenance
13

 
14

 
14

 
14

Other
1

 
1

 
1

 
1

Total
100
%
 
100
%
 
100
%
 
100
%

Recently Issued Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). This ASU is a comprehensive new accounting standard with respect to leases that amends various aspects of existing guidance for leases and requires additional disclosures about leasing arrangements. It will require lessees to recognize lease assets and lease liabilities for most leases, including those leases previously classified as operating leases under current GAAP. ASU 2016-02 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in previous lease guidance. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, including interim periods within those years; earlier adoption is permitted.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides clarifications and improvements to ASU 2016-02 including allowing entities to elect an additional transition method with which to adopt ASU 2016-02. The approved transition method enables entities to apply the transition requirements in this ASU at the effective date of ASU 2016-02 (rather than at the beginning of the earliest comparative period presented as currently required) with the effect of initially applying ASU 2016-02 recognized as a cumulative-effect adjustment to retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with ASC 840, Leases (Topic 840) (“ASC 840”), including the disclosure requirements of ASC 840. We plan to adopt ASU 2016-02 effective at the beginning of 2019 using the modified retrospective approach. Practical expedients are available for election as a package and if applied consistently to all leases.

We have selected our leasing software solution and are in the process of identifying changes to our business processes, systems and controls to support adoption of the new standard in 2019. We are evaluating the impact that the new standard will have on the condensed consolidated financial statements. While we are unable to quantify the impact at this time, we expect the adoption of the new standard to result in a material increase in the assets and liabilities in the condensed consolidated financial statements. At this time, we do not expect adoption of ASU 2016-02 to have a material impact on our condensed consolidated statements of operations as the majority of our leases will remain operating in nature. As such, the expense recognition will be similar to previously required straight-line expense treatment.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. ASU 2018-05 provides guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act (the “Act”) pursuant to the Staff Accounting Bulletin No. 118, which allows companies to complete the accounting under ASC 740, Income Taxes (Topic 740) within a one-year measurement period from the Act enactment date, which occurred in the financial statements for the year ended December 30, 2017. Until the completion of our 2017 U.S. income tax return in the third quarter of 2018, we may identify additional remeasurement adjustments to amounts previously recorded for the nonrecurring repatriation tax on accumulated earnings of foreign subsidiaries and remeasurement of the net deferred tax liability. We will continue to assess our provision for income taxes as future guidance is issued.

5


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




In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718) to expand the scope of ASC 718, Compensation - Stock Compensation (Topic 718) (“ASU 2018-07”), to include share-based payment transactions for acquiring goods and services from nonemployees. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. We elected to early adopt ASU 2018-07 in the second quarter of 2018. The results of applying ASU 2018-07 were insignificant and did not have a material impact on our consolidated financial condition, results of operations, cash flows, business process, controls or systems.

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% of inventories as of July 14, 2018 and December 30, 2017. Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the twenty-eight weeks ended July 14, 2018 and prior years. We recorded a reduction to Cost of sales of $12.3 million and an increase of $12.5 million for the twelve weeks ended July 14, 2018 and July 15, 2017 and reductions to Cost of sales of $32.3 million and $5.5 million for the twenty-eight weeks ended July 14, 2018 and July 15, 2017 to state inventories at LIFO.

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

Inventory balances were as follows:
(in thousands)
July 14, 2018
 
December 30, 2017
Inventories at first in, first out (“FIFO”)
$
3,924,331

 
$
3,965,370

Adjustments to state inventories at LIFO
235,425

 
203,122

Inventories at LIFO
$
4,159,756

 
$
4,168,492


4.
Exit Activities and Other Initiatives

Integration of Carquest stores

We are in the process of a multi-year integration, which includes the consolidation and conversion of certain Carquest stores acquired with General Parts International, Inc. (“GPI”) in 2014. As of July 14, 2018, 352 Carquest stores acquired with GPI had been consolidated into existing Advance Auto Parts stores and 423 stores had been converted to the Advance Auto Parts format. During the twelve weeks ended July 14, 2018, a total of 4 Carquest stores were consolidated and no Carquest stores were converted. During the twenty-eight weeks ended July 14, 2018, a total of 6 Carquest stores were consolidated and 1 Carquest store was converted. As of July 14, 2018, we had 419 stores still operating under the Carquest name.

We generated $0.5 million of income related to the consolidations and conversions during the twelve weeks ended July 14, 2018. No exit costs related to the consolidations and conversions were incurred during the twelve weeks ended July 15, 2017. We generated $0.1 million of income and incurred $1.1 million of exit costs related to the consolidations and conversions during the twenty-eight weeks ended July 14, 2018 and July 15, 2017, primarily related to closed store lease obligations. These costs are included in Selling, general and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations.

6


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




Store and Supply Chain Rationalization

During the fourth quarter of 2017, the Board of Directors approved a plan to close certain underperforming stores and begin to rationalize our supply chain costs as part of our strategy to transform the enterprise. As of July 14, 2018, we expect these actions to result in estimated charges of up to $70.0 million in 2018, which consist of $35.0 million relating to the early termination of lease obligations, $15.0 million of inventory and supply chain asset impairment charges, $15.0 million of other facility closure costs and $5.0 million of severance.

During the twelve weeks ended July 14, 2018, we incurred $3.9 million of early termination of lease obligations charges, $5.3 million of inventory and supply chain asset impairment charges, $2.1 million of facility closure costs and $1.1 million of severance relating to the store and supply chain rationalization. Of these costs, $7.1 million are included in SG&A and $5.3 million are included in Cost of sales in the accompanying condensed consolidated statements of operations.

During the twenty-eight weeks ended July 14, 2018, we incurred $5.0 million of early termination of lease obligation charges, $6.8 million of inventory and supply chain asset impairment charges, $2.4 million of facility closure costs and $1.4 million of severance relating to the store and supply chain rationalization. Of these costs, $10.3 million are included in SG&A and $5.3 million are included in Cost of sales in the accompanying condensed consolidated statements of operations.

Total Exit Liabilities

Our total exit liabilities include liabilities recorded in connection with the consolidation of Carquest stores and other initiatives 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 2018. Of our total exit liabilities as of July 14, 2018 and December 30, 2017, $17.7 million and $19.8 million is included in Other long-term liabilities and the remainder is included in Accrued expenses in the accompanying condensed consolidated balance sheet. A summary of our exit liabilities is presented in the following table:

(in thousands)
 
Closed Facility Lease Obligations
 
Severance
 
Total
Balance, December 30, 2017
 
$
31,570

 
$
1,645

 
$
33,215

Reserves established
 
5,453

 
3,523

 
8,976

Change in estimates
 
766

 
(381
)
 
385

Cash payments
 
(8,142
)
 
(2,184
)
 
(10,326
)
Balance, July 14, 2018
 
$
29,647

 
$
2,603

 
$
32,250

 
 
 
 
 
 
 
Balance, December 31, 2016
 
$
44,265

 
$
959

 
$
45,224

Reserves established
 
7,940

 
7,927

 
15,867

Change in estimates
 
(1,116
)
 
(699
)
 
(1,815
)
Cash payments
 
(19,519
)
 
(6,542
)
 
(26,061
)
Balance, December 30, 2017
 
$
31,570

 
$
1,645

 
$
33,215


5.
Intangible Assets

Our definite-lived intangible assets include customer relationships, favorable leases and non-compete agreements. Amortization expense was $8.5 million and $11.0 million for the twelve weeks ended July 14, 2018 and July 15, 2017 and $21.9 million and $25.6 million for the twenty-eight weeks ended July 14, 2018 and July 15, 2017.


7


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



6.
Receivables, net

Receivables consist of the following:
(in thousands)
July 14, 2018
 
December 30, 2017
Trade
$
466,957

 
$
389,963

Vendor
203,912

 
220,510

Other
14,556

 
14,103

Total receivables
685,425

 
624,576

Less: Allowance for doubtful accounts
(21,276
)
 
(18,219
)
Receivables, net
$
664,149

 
$
606,357


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

Long-term debt consists of the following:
(in thousands)
July 14, 2018
 
December 30, 2017
Total long-term debt
$
1,045,258

 
$
1,044,677

Less: Current portion of long-term debt
(181
)
 
(350
)
Long-term debt, excluding current portion
$
1,045,077

 
$
1,044,327

 
 
 
 
Fair value of long-term debt
$
1,080,000

 
$
1,109,000


Fair Value of Financial Assets and Liabilities

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

Bank Debt

As of July 14, 2018 and December 30, 2017 we had no outstanding borrowings under the revolver and borrowing availability was $897.5 million and $517.6 million based on our leverage ratio. As of July 14, 2018 and December 30, 2017, we had letters of credit outstanding of $102.5 million and $111.7 million, which generally have a term of one year or less and primarily serve as collateral for our self-insurance policies. We were in compliance with all financial covenants required by our debt arrangements as of July 14, 2018.

Debt Guarantees

We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are our customers totaling $28.7 million and $24.8 million as of July 14, 2018 and December 30, 2017. These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements is $63.4 million and $62.8 million as of July 14, 2018 and December 30, 2017. We believe that the likelihood of performance under these guarantees is remote.


8


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



8.
Warranty Liabilities

The following table presents changes in our warranty reserves:
 
Twenty-Eight Weeks Ended
 
Fifty-Two Weeks Ended
(in thousands)
July 14, 2018
 
December 30, 2017
Warranty reserve, beginning of period
$
49,024

 
$
47,243

Additions to warranty reserves
20,005

 
50,895

Reserves utilized
(22,491
)
 
(49,114
)
Warranty reserve, end of period
$
46,538

 
$
49,024

  
9.
Share Repurchase Program

Our share repurchase program permits the repurchase of our common stock on the open market or in privately negotiated transactions from time to time. The $500.0 million share repurchase program in place as of July 14, 2018 was authorized by our Board of Directors on May 14, 2012. During the twenty-eight weeks ended July 14, 2018 and July 15, 2017, we repurchased no shares of our common stock under the share repurchase program. We had $415.1 million remaining under its share repurchase program as of July 14, 2018.

On August 8, 2018, our Board of Directors authorized a $600.0 million share repurchase program. This new authorization replaced the remaining portion of the $500.0 million share repurchase program.

10.
Earnings per Share

The computation of basic and diluted earnings per share are as follows:  
 
Twelve Weeks Ended
 
Twenty-Eight Weeks Ended
(in thousands, except per share data)
July 14, 2018
 
July 15, 2017
 
July 14, 2018
 
July 15, 2017
Numerator
 
 
 
 
 
 
 
Net income applicable to common shares
$
117,836

 
$
87,049

 
$
254,562

 
$
195,009

Denominator
 
 
 
 
 

 
 
Basic weighted average common shares
74,054

 
73,848

 
74,011

 
73,810

Dilutive impact of share-based awards
190

 
245

 
211

 
283

Diluted weighted average common shares
74,244

 
74,093

 
74,222

 
74,093

 
 

 
 

 
 

 
 
Basic earnings per common share
$
1.59

 
$
1.18

 
$
3.44

 
$
2.64

Diluted earnings per common share
$
1.59

 
$
1.17

 
$
3.43

 
$
2.63


11.
Share-Based Compensation

During the twenty-eight weeks ended July 14, 2018, we granted 200 thousand time-based restricted stock units (“RSUs”), 69 thousand performance-based RSUs and 36 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 twenty-eight weeks ended July 14, 2018 were $119.29, $116.82 and $130.88 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.

9


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




Total income tax benefit related to share-based compensation expense for the twelve and twenty-eight weeks ended July 14, 2018 was $1.2 million and $3.0 million. Total income tax benefit related to share-based compensation expense for the twelve and twenty-eight weeks ended July 15, 2017 was $2.8 million and $7.5 million. As of July 14, 2018, there was $54.7 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.8 years.

12.
Condensed Consolidating Financial Statements

Certain 100% wholly owned domestic subsidiaries of Advance, including our Material Subsidiaries (as defined in the 2017 Credit Agreement) serve as guarantors (“Guarantor Subsidiaries”) of our senior unsecured notes. The subsidiary guarantees related to our senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of Advance to obtain funds from its Guarantor Subsidiaries. Certain of our wholly owned subsidiaries, including all of 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 July 14, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
23

 
$
834,069

 
$
68,180

 
$
(23
)
 
$
902,249

Receivables, net

 
617,483

 
46,666

 

 
664,149

Inventories

 
3,999,663

 
160,093

 

 
4,159,756

Other current assets
16,977

 
148,469

 
3,313

 
(17,097
)
 
151,662

Total current assets
17,000

 
5,599,684

 
278,252

 
(17,120
)
 
5,877,816

Property and equipment, net of accumulated depreciation
89

 
1,329,863

 
8,979

 

 
1,338,931

Goodwill

 
943,359

 
48,575

 

 
991,934

Intangible assets, net

 
529,429

 
42,524

 

 
571,953

Other assets, net
2,152

 
54,300

 
622

 
(2,152
)
 
54,922

Investment in subsidiaries
3,774,360

 
465,487

 

 
(4,239,847
)
 

Intercompany note receivable
1,048,856

 

 

 
(1,048,856
)
 

Due from intercompany, net

 

 
310,933

 
(310,933
)
 

 
$
4,842,457

 
$
8,922,122

 
$
689,885

 
$
(5,618,908
)
 
$
8,835,556

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
2,719,226

 
$
190,764

 
$

 
$
2,909,990

Accrued expenses

 
636,949

 
16,045

 
(17,098
)
 
635,896

Other current liabilities

 
52,767

 
(412
)
 
(24
)
 
52,331

Total current liabilities

 
3,408,942

 
206,397

 
(17,122
)
 
3,598,217

Long-term debt
1,045,077

 

 

 

 
1,045,077

Deferred income taxes

 
299,516

 
16,725

 
(2,150
)
 
314,091

Other long-term liabilities

 
218,946

 
1,276

 

 
220,222

Intercompany note payable

 
1,048,856

 

 
(1,048,856
)
 

Due to intercompany, net
139,431

 
171,502

 

 
(310,933
)
 

Commitments and contingencies

 

 

 

 

Stockholders' equity
3,657,949

 
3,774,360

 
465,487

 
(4,239,847
)
 
3,657,949

 
$
4,842,457

 
$
8,922,122

 
$
689,885

 
$
(5,618,908
)
 
$
8,835,556



11


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



Condensed Consolidating Balance Sheet
As of December 30, 2017
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
23

 
$
482,620

 
$
64,317

 
$
(23
)
 
$
546,937

Receivables, net

 
567,460

 
38,897

 

 
606,357

Inventories

 
3,986,724

 
181,768

 

 
4,168,492

Other current assets

 
103,118

 
2,063

 
(75
)
 
105,106

Total current assets
23

 
5,139,922

 
287,045

 
(98
)
 
5,426,892

Property and equipment, net of accumulated depreciation
103

 
1,384,115

 
9,920

 

 
1,394,138

Goodwill

 
943,359

 
50,934

 

 
994,293

Intangible assets, net

 
551,781

 
45,893

 

 
597,674

Other assets, net
3,224

 
68,749

 
554

 
(3,223
)
 
69,304

Investment in subsidiaries
3,521,330

 
448,462

 

 
(3,969,792
)
 

Intercompany note receivable
1,048,700

 

 

 
(1,048,700
)
 

Due from intercompany, net

 

 
332,467

 
(332,467
)
 

 
$
4,573,380

 
$
8,536,388

 
$
726,813

 
$
(5,354,280
)
 
$
8,482,301

Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$
2,657,792

 
$
236,790

 
$

 
$
2,894,582

Accrued expenses
1,134

 
511,841

 
20,648

 
(75
)
 
533,548

Other current liabilities

 
50,963

 
1,027

 
(23
)
 
51,967

Total current liabilities
1,134

 
3,220,596

 
258,465

 
(98
)
 
3,480,097

Long-term debt
1,044,327

 

 

 

 
1,044,327

Deferred income taxes

 
288,999

 
17,844

 
(3,223
)
 
303,620

Other long-term liabilities

 
237,019

 
2,042

 

 
239,061

Intercompany note payable

 
1,048,700

 

 
(1,048,700
)
 

Due to intercompany, net
112,723

 
219,744

 

 
(332,467
)
 

Commitments and contingencies
 
 
 
 
 
 
 
 
 
Stockholders' equity
3,415,196

 
3,521,330

 
448,462

 
(3,969,792
)
 
3,415,196

 
$
4,573,380

 
$
8,536,388

 
$
726,813

 
$
(5,354,280
)
 
$
8,482,301





12


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



Condensed Consolidating Statement of Operations
For the Twelve Weeks ended July 14, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
2,231,229

 
$
138,070

 
$
(42,647
)
 
$
2,326,652

Cost of sales, including purchasing and warehousing costs

 
1,263,912

 
93,828

 
(42,647
)
 
1,315,093

Gross profit

 
967,317

 
44,242

 

 
1,011,559

Selling, general and administrative expenses
4,848

 
827,733

 
23,241

 
(11,804
)
 
844,018

Operating (loss) income
(4,848
)
 
139,584

 
21,001

 
11,804

 
167,541

Other, net:
 
 
 
 
 
 
 
 
 
Interest expense
(12,059
)
 
(796
)
 

 

 
(12,855
)
Other income (expense), net
16,991

 
(1,211
)
 
(1,191
)
 
(11,804
)
 
2,785

Total other, net
4,932

 
(2,007
)
 
(1,191
)
 
(11,804
)
 
(10,070
)
Income before provision for income taxes
84

 
137,577

 
19,810

 

 
157,471

(Benefit) provision for income taxes
(204
)
 
35,512

 
4,327

 

 
39,635

Income before equity in earnings of subsidiaries
288

 
102,065

 
15,483

 

 
117,836

Equity in earnings of subsidiaries
117,548

 
15,483

 

 
(133,031
)
 

Net income
$
117,836

 
$
117,548

 
$
15,483

 
$
(133,031
)
 
$
117,836


Condensed Consolidating Statement of Operations
For the Twelve Weeks ended July 15, 2017
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
2,175,274

 
$
138,291

 
$
(49,838
)
 
$
2,263,727

Cost of sales, including purchasing and warehousing costs

 
1,224,648

 
95,829

 
(49,838
)
 
1,270,639

Gross profit

 
950,626

 
42,462

 

 
993,088

Selling, general and administrative expenses
5,370

 
833,966

 
18,864

 
(11,823
)
 
846,377

Operating (loss) income
(5,370
)
 
116,660

 
23,598

 
11,823

 
146,711

Other, net:
 
 
 
 
 
 
 
 
 
Interest (expense) income
(12,076
)
 
(1,863
)
 
18

 

 
(13,921
)
Other income (expense), net
17,567

 
(5,413
)
 
2,838

 
(11,823
)
 
3,169

Total other, net
5,491

 
(7,276
)
 
2,856

 
(11,823
)
 
(10,752
)
Income before provision for income taxes
121

 
109,384

 
26,454

 

 
135,959

Provision for income taxes
128

 
42,850

 
5,932

 

 
48,910

(Loss) income before equity in earnings of subsidiaries
(7
)
 
66,534

 
20,522

 

 
87,049

Equity in earnings of subsidiaries
87,056

 
20,522

 

 
(107,578
)
 

Net income
$
87,049

 
$
87,056

 
$
20,522

 
$
(107,578
)
 
$
87,049




13


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



Condensed Consolidating Statement of Operations
For the Twenty-eight Weeks Ended July 14, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
5,007,131

 
$
290,190

 
$
(96,821
)
 
$
5,200,500

Cost of sales, including purchasing and warehousing costs

 
2,814,953

 
198,526

 
(96,821
)
 
2,916,658

Gross profit

 
2,192,178

 
91,664

 

 
2,283,842

Selling, general and administrative expenses
9,658

 
1,882,123

 
53,823

 
(27,543
)
 
1,918,061

Operating (loss) income
(9,658
)
 
310,055

 
37,841

 
27,543

 
365,781

Other, net:
 
 
 
 
 
 
 
 
 
Interest expense
(28,137
)
 
(2,400
)
 

 

 
(30,537
)
Other income (expense), net
38,248

 
(4,204
)
 
(3,258
)
 
(27,543
)
 
3,243

Total other, net
10,111

 
(6,604
)
 
(3,258
)
 
(27,543
)
 
(27,294
)
Income before provision for income taxes
453

 
303,451

 
34,583

 

 
338,487

Provision for income taxes
1,059

 
75,964

 
6,902

 

 
83,925

(Loss) income before equity in earnings of subsidiaries
(606
)
 
227,487

 
27,681

 

 
254,562

Equity in earnings of subsidiaries
255,168

 
27,681

 

 
(282,849
)
 

Net income
$
254,562

 
$
255,168

 
$
27,681

 
$
(282,849
)
 
$
254,562


Condensed Consolidating Statement of Operations
For the Twenty-eight Weeks Ended July 15, 2017
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$

 
$
4,977,128

 
$
310,295

 
$
(132,858
)
 
$
5,154,565

Cost of sales, including purchasing and warehousing costs

 
2,801,921

 
221,730

 
(132,858
)
 
2,890,793

Gross profit

 
2,175,207

 
88,565

 

 
2,263,772

Selling, general and administrative expenses
20,167

 
1,901,621

 
43,266

 
(27,773
)
 
1,937,281

Operating (loss) income
(20,167
)
 
273,586

 
45,299

 
27,773

 
326,491

Other, net:
 
 
 
 
 
 
 
 
 
Interest (expense) income
(28,366
)
 
(4,023
)
 
38

 

 
(32,351
)
Other income (expense), net
49,351

 
(12,766
)
 
(830
)
 
(27,773
)
 
7,982

Total other, net
20,985

 
(16,789
)
 
(792
)
 
(27,773
)
 
(24,369
)
Income before provision for income taxes
818

 
256,797

 
44,507

 

 
302,122

(Benefit) provision for income taxes
(1,616
)
 
100,296

 
8,433

 

 
107,113

Income before equity in earnings of subsidiaries
2,434

 
156,501

 
36,074

 

 
195,009

Equity in earnings of subsidiaries
192,572

 
36,074

 

 
(228,646
)
 

Net income
$
195,006

 
$
192,575

 
$
36,074

 
$
(228,646
)
 
$
195,009


14


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



Condensed Consolidating Statement of Comprehensive Income
For the Twelve Weeks ended July 14, 2018

(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
117,836

 
$
117,548

 
$
15,483

 
$
(133,031
)
 
$
117,836

Other comprehensive loss
(7,102
)
 
(7,102
)
 
(7,035
)
 
14,137

 
(7,102
)
Comprehensive income
$
110,734

 
$
110,446

 
$
8,448

 
$
(118,894
)
 
$
110,734



Condensed Consolidating Statement of Comprehensive Income
For the Twelve Weeks ended July 15, 2017
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
87,049

 
$
87,056

 
$
20,522

 
$
(107,578
)
 
$
87,049

Other comprehensive income
13,910

 
13,910

 
13,973

 
(27,883
)
 
13,910

Comprehensive income
$
100,959

 
$
100,966

 
$
34,495

 
$
(135,461
)
 
$
100,959



Condensed Consolidating Statement of Comprehensive Income
For the Twenty-eight Weeks Ended July 14, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
254,562

 
$
255,168

 
$
27,681

 
$
(282,849
)
 
$
254,562

Other comprehensive loss
(10,960
)
 
(10,960
)
 
(10,802
)
 
21,762

 
(10,960
)
Comprehensive income
$
243,602

 
$
244,208

 
$
16,879

 
$
(261,087
)

$
243,602



Condensed Consolidating Statement of Comprehensive Income
For the Twenty-eight Weeks Ended July 15, 2017
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net income
$
195,006

 
$
192,575

 
$
36,074

 
$
(228,646
)
 
$
195,009

Other comprehensive income
13,037

 
13,037

 
13,185

 
(26,222
)
 
13,037

Comprehensive income
$
208,043

 
$
205,612

 
$
49,259

 
$
(254,868
)
 
$
208,046




15


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



Condensed Consolidating Statement of Cash Flows
For the Twenty-eight Weeks Ended July 14, 2018
(in thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by operating activities
$

 
$
435,890

 
$
8,078

 
$

 
$
443,968

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment

 
(61,337
)
 
(478
)
 

 
(61,815
)
Proceeds from sales of property and equipment

 
534

 
44

 

 
578

Net cash used in investing activities

 
(60,803
)
 
(434
)
 

 
(61,237
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Decrease in bank overdrafts

 
(6,760
)
 
(1,602
)
 

 
(8,362
)
Dividends paid

 
(13,398
)
 

 

 
(13,398
)
Proceeds from the issuance of common stock

 
1,697

 

 

 
1,697

Tax withholdings related to the exercise of stock appreciation rights

 
(304
)
 

 

 
(304
)
Repurchase of common stock

 
(5,657
)
 

 

 
(5,657
)
Other, net

 
784

 

 

 
784

Net cash used in financing activities

 
(23,638
)
 
(1,602
)
 

 
(25,240
)
Effect of exchange rate changes on cash

 

 
(2,179
)
 

 
(2,179
)
Net increase in cash and cash equivalents

 
351,449

 
3,863

 

 
355,312

Cash and cash equivalents, beginning of period
23

 
482,620

 
64,317

 
(23
)
 
546,937

Cash and cash equivalents, end of period
$
23

 
$
834,069

 
$
68,180

 
$
(23
)
 
$
902,249



16


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



Condensed Consolidating Statement of Cash Flows
For the Twenty-eight Weeks Ended July 15, 2017
(In thousands)
Advance Auto Parts, Inc.
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
Consolidated
Net cash provided by (used in) operating activities
$

 
$
285,164

 
$
(17,815
)
 
$

 
$
267,349

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Purchases of property and equipment

 
(121,615
)
 
(749
)
 

 
(122,364
)
Proceeds from sales of property and equipment

 
1,311

 

 

 
1,311

Other, net

 
480

 
(460
)
 

 
20

Net cash used in investing activities

 
(119,824
)
 
(1,209
)
 

 
(121,033
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Increase in bank overdrafts

 
(5,488
)
 
1,286

 

 
(4,202
)
Borrowings under credit facilities

 
534,400

 

 

 
534,400

Payments on credit facilities

 
(534,400
)
 

 

 
(534,400
)
Dividends paid

 
(13,363
)
 

 

 
(13,363
)
Proceeds from the issuance of common stock

 
2,281

 

 

 
2,281

Tax withholdings related to the exercise of stock appreciation rights

 
(6,230
)
 

 

 
(6,230
)
Repurchase of common stock

 
(3,303
)
 

 

 
(3,303
)
Other, net

 
(2,027
)
 

 

 
(2,027
)
Net cash (used in) provided by financing activities

 
(28,130
)
 
1,286

 

 
(26,844
)
Effect of exchange rate changes on cash