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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549

 
  
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) May 21, 2015
 
 
 
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
001-16797
54-2049910
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
5008 Airport Road, Roanoke, Virginia
24012
(Address of Principal Executive Offices)
(Zip Code)
 
Registrant's telephone number, including area code (540) 362-4911
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


 





oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 






INFORMATION TO BE INCLUDED IN THE REPORT

Item 2.02 Results of Operations and Financial Condition.

On May 21, 2015, Advance Auto Parts, Inc. (the "Company") issued a press release setting forth its financial results for its first quarter ended April 25, 2015. This release includes forward looking statements including, but are not limited to, statements related to the Company's 2015 fiscal year.

The Company's financial results for the first quarter ended April 25, 2015 and April 19, 2014 include General Parts International, Inc. ("GPI") integration costs, store consolidation costs, and amortization of GPI acquired intangible assets. As a result of these expenses, the Company’s financial results for these periods are not comparable with prior periods. Thus, the Company’s financial results have been presented in this press release on both a generally accepted accounting principles ("GAAP") basis and on a comparable basis to exclude the integration costs, store consolidation costs and amortization recognized in the respective periods. The Company has provided the required reconciliation of the financial results reported on a comparable basis to the most directly comparable GAAP basis and has provided an explanation as to why the financial results presented on a non-GAAP basis are useful to investors.

The press release is attached as Exhibit 99.1 and incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.
 
Exhibit Number
 
 
 
 
 
99.1
Press Release, dated May 21, 2015, issued by Advance Auto Parts, Inc.

Note: The information contained in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
ADVANCE AUTO PARTS, INC.
 
 
(Registrant)
 
 
 
Date: May 21, 2015
 
/s/ Michael A. Norona
 
 
(Signature)*
 
 
Michael A. Norona
 
 
Executive Vice President and Chief Financial Officer
* Print name and title of the signing officer under his signature.







EXHIBIT INDEX
Exhibit Number
 
99.1
Press Release, dated May 21, 2015, issued by Advance Auto Parts, Inc.








Exhibit 99.1
News Release
Advance Auto Parts
5008 Airport Road
 
Roanoke, VA 24012
 
 
 
Laurie Stacy
 
Media Contact
 
t: 540-561-8452
 
e: laurie.stacy@advanceautoparts.com
 
 
 
Zaheed Mawani
 
Investor Contact
 
t: 919-573-3848
 
e: zaheed.mawani@advanceautoparts.com

ADVANCE AUTO PARTS REPORTS FIRST QUARTER FISCAL 2015 COMPARABLE CASH EPS GROWTH OF 6.2% TO $2.39

ROANOKE, Va., May 21, 2015 - Advance Auto Parts, Inc. (NYSE: AAP), the largest automotive aftermarket parts provider in North America, serving both professional installer and do-it-yourself customers, today announced its financial results for the first quarter ended April 25, 2015. First quarter comparable cash earnings per diluted share (Comparable Cash EPS) were $2.39, an increase of 6.2% versus the first quarter last year. These first quarter comparable results exclude $0.11 of amortization of acquired intangible assets and integration costs of $0.28 primarily associated with the acquisition of General Parts International, Inc. (General Parts).

Comparable First Quarter Performance Summary (1,2)
 
 
 
 
 
 
 
Sixteen Weeks Ended
 
 
April 25,
2015
 
April 19,
2014
 
 
 
 
 
Sales (in millions)
 
$
3,038.2

 
$
2,969.5

 
 
 
 
 
Comp Store Sales %
 
0.7
%
 
2.4
%
 
 
 
 
 
Gross Profit (in millions)
 
$
1,393.9

 
$
1,353.1

 
 
 
 
 
Comparable SG&A (in millions)
 
$
1,085.6

 
$
1,068.7

 
 
 
 
 
Comparable Operating Income (in millions)
 
$
308.3

 
$
284.4

 
 
 
 
 
Comparable Cash EPS
 
$
2.39

 
$
2.25

 
 
 
 
 
Avg Diluted Shares (in thousands)
 
73,653

 
73,355


(1) 
Fiscal 2015 and 2014 include certain non-comparable expenses. The Comparable SG&A, Comparable Operating Income and Comparable Cash EPS for the sixteen weeks ended April 25, 2015 and April 19, 2014, respectively, have been reported on a comparable basis to exclude General Parts integration and store consolidation costs of $32.7 million and $15.5 million, respectively, and General Parts amortization of acquired intangible assets of $13.0 million and $13.1 million, respectively. For a better understanding of the Company's comparable results, refer to the presentation of the respective financial measures on a GAAP basis and reconciliation of the financial results reported on a comparable basis to the GAAP basis in the accompanying financial tables in this press release.
(2) 
Consistent with its comparable store sales policy, the Company has included the sales from the Carquest stores and Worldpac branches in its comparable store sales beginning with the Company's second fiscal period of 2015.








“I would like to thank all our Team Members for their hard work during the first quarter of 2015,” said Darren R. Jackson, Chief Executive Officer. “As we enter our second year of the General Parts integration, we remain very confident with the growth, service and earnings potential of the combined companies. We have undertaken the industry’s largest acquisition and just completed our heaviest quarter of integration activities to-date. Our first quarter comparable store sales increased 0.7% and Comparable Cash EPS grew 6.2% to $2.39. While these results did not meet our high expectations, we remain confident in our integration plan and are focused on executing the foundational work necessary to deliver the full potential of the combination.

First Quarter 2015 Highlights

Total sales for the first quarter increased 2.3% to $3.04 billion, as compared with total sales during the first quarter of fiscal 2014 of $2.97 billion. The sales increase was driven by the addition of new stores over the past 12 months and a comparable store sales increase of 0.7%. Our sales were unfavorably impacted primarily from integration activities and unfavorable weather.

The Company's Gross Profit rate was 45.9% of sales during the first quarter as compared to 45.6% during the first quarter last year. The 31 basis-point increase in gross profit rate was primarily due to achieved merchandise cost synergies partially offset by the costs from our new Hartford, CT distribution center, which opened in late 2014.

The Company's Comparable SG&A rate was 35.7% of sales during the first quarter as compared to 36.0% during the same period last year. The 26 basis-point decrease was primarily the result of achieved cost synergies and lower incentive compensation partially offset by slightly higher advertising expenses. On a GAAP basis, the Company's SG&A rate was 37.2% of sales during the first quarter as compared to 37.0% during the same period last year.

The Company's Comparable Operating Income was $308.3 million during the first quarter, an increase of 8.4% versus the first quarter of fiscal 2014. As a percentage of sales, Comparable Operating Income in the first quarter was 10.1% compared to 9.6% during the first quarter of fiscal 2014. On a GAAP basis, the Company's operating income during the first quarter of $262.5 million increased 2.6% versus the first quarter of fiscal 2014. On a GAAP basis, the Operating Income rate was 8.6% during the first quarter as compared to 8.6% during the first quarter of fiscal 2014.

Operating cash flow increased approximately 26.0% to $102.2 million in the first quarter of fiscal 2015 from $81.1 million in the first quarter of fiscal 2014. Free cash flow increased to $45.2 million in the first quarter of fiscal 2015 from $20.6 million in the first quarter of fiscal 2014. Capital expenditures in the first quarter of fiscal 2015 were $57.0 million as compared to $60.5 million for the first quarter of fiscal 2014.

“Our first quarter results were softer than we expected primarily driven by the change impacts of our integration activities,” said Mike Norona, Executive Vice President and Chief Financial Officer. "Despite the softness, we were pleased that we delivered our synergy expectations and grew our Comparable Operating Income 8.4%."















2015 Full-Year Outlook

The Company’s integration activities have progressed to the operational phase of aligning the Company’s people, processes, systems and capabilities to a common foundation. These integration activities are an integral and necessary next step for the Company to leverage the full potential of the acquisition. In the first quarter of 2015, the Company executed a number of simultaneous customer-facing organizational changes including product and price alignment, integrating field organizational structures, aligning compensation programs and changing aspects of its customer processes. These activities were more taxing on the Company and impacted the first quarter results.

 
"Turning to the balance of the year, we do expect to see some continued short term business volatility from our integration activities, given that these changes were sequenced throughout the first quarter and our teams were still working through the changes as we exited the quarter," said Mike Norona, Executive Vice President and Chief Financial Officer. "It is prudent to build in the earnings miss we experienced in our first quarter and also factor in some continued integration headwinds into our results, primarily impacting commercial sales. We now expect our annual comparable store sales to be at the low end of the previously communicated range. As part of this outlook, we expect our share count to be 73.7 million shares, our tax rate to be in the range of 37.5% - 38% and our full-year interest expense to be approximately $64 million. As a result, we are revising our full year comparable cash EPS outlook down to $8.10 to $8.30. We are confident in our team’s ability to execute and our revised full year outlook reflects our best view of the short term change impacts from the integration. Our 2015 synergy estimates remain unchanged at $45M to $55M for the full year."


Store Information
    
As of April 25, 2015, the Company operated 5,235 stores and 115 Worldpac branches and served approximately 1,300 independently-owned Carquest stores. The below table summarizes the changes in the number of the company-operated stores and branches during the sixteen weeks ended April 25, 2015.

 
 
AAP
 
AI
 
BWP
 
CARQUEST
 
WORLDPAC
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
January 3, 2015
 
3,888

 
210

 
38

 
1,125

 
111

 
5,372

New
 
20

 

 

 
1

 
4

 
25

Closed
 
(6
)
 

 

 
(1
)
 

 
(7
)
Consolidated
 
(1
)
 
(25
)
 
(2
)
 
(12
)
 

 
(40
)
Converted
 
7

 
(4
)
 

 
(3
)
 

 

April 25, 2015
 
3,908

 
181

 
36

 
1,110

 
115

 
5,350


Dividend

On May 20, 2015, the Company's Board of Directors declared a regular quarterly cash dividend of $0.06 per
share to be paid on July 2, 2015 to stockholders of record as of June 19, 2015.










Annual Stockholders' Meeting Announcements

The Company held its annual meeting of stockholders on May 20, 2015. During the meeting, the following
individuals were elected to serve on the Company's Board of Directors for the next year: John F. Bergstrom, John C.
Brouillard, Fiona P. Dias, John F. Ferraro, Darren R. Jackson, Adriana Karaboutis, William S. Oglesby, J. Paul Raines, Gilbert T. Ray, Carlos A. Saladrigas, O. Temple Sloan III, and Jimmie L. Wade.

The Company's stockholders voted to approve the compensation of the Company's named executive officers. The stockholders also ratified the appointment by the Company's Audit Committee of Deloitte & Touche LLP as its independent registered public accounting firm for 2015. A majority of the shares voted were cast against an advisory proposal regarding the ability of stockholders to act by written consent.

Investor Conference Call
The Company will host a conference call on Thursday, May 21, 2015, at 10:00 a.m. Eastern Time to discuss its quarterly results. To listen to the live call, please log on to the Company's website, www.AdvanceAutoParts.com, or dial (866) 908-1AAP. The call will be archived on the Company's website until May 21, 2016.

About Advance Auto Parts

Headquartered in Roanoke, Va., Advance Auto Parts, Inc., the largest automotive aftermarket parts provider in North America, serves both the professional installer and do-it-yourself customers. As of April 25, 2015 Advance operated 5,235 stores and 115 Worldpac branches and served approximately 1,300 independently-owned Carquest branded stores in the United States, Puerto Rico, the U.S. Virgin Islands and Canada.  Advance employs approximately 74,000 Team Members. Additional information about the Company, employment opportunities, customer services, and on-line shopping for parts, accessories and other offerings can be found on the Company's website at www.AdvanceAutoParts.com.
























Forward Looking Statements

Certain statements contained in this release are forward-looking statements, as that term is used in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements address future events or developments, and typically use words such
as believe, anticipate, expect, intend, plan, forecast, outlook or estimate. These forward looking statements include, but are not
limited to, guidance for 2015 financial performance, statements regarding the benefits and other effects of the acquisition of General Parts; the combined companys plans, objectives and expectations; expected growth and future performance of AAP, including store growth, capital expenditures, comparable store sales, gross profit rate, SG&A, operating income, free cash flow, income tax rate, General Parts integration costs and store consolidation costs, synergies, expenses to achieve synergies, comparable cash earnings per diluted share for fiscal year 2015 and other statements that are not historical facts. These forward-looking statements are subject to significant risks, uncertainties and assumptions, and actual future events or results may differ materially from such forward-looking statements. Such differences may result from, among other things, the risk that the benefits of the General Parts acquisition, including synergies, may not be fully realized or may take longer to realize than expected; the possibility that the General Parts acquisition may not advance AAPs business strategy; the risk that AAP may experience difficulty integrating General Parts employees, business systems and technology; the potential diversion of AAPs managements attention from AAPs other businesses resulting from the General Parts acquisition; the impact of the General Parts acquisition on third-party relationships, including customers, wholesalers, independently owned and jobber stores and suppliers; changes in regulatory, social and political conditions, as well as general economic conditions; competitive pressures; demand for AAPs and General Parts' products; the market for auto parts; the economy in general; inflation; consumer debt levels; the weather; business interruptions; information technology security; availability of suitable real estate; dependence on foreign suppliers; and other factors disclosed in AAPs 10-K for the fiscal year ended January 3, 2015 and other filings made by AAP with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements. AAP intends these forward-looking statements to speak only as of the time of this communication and does not undertake to update or revise them as more information becomes available.









Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
 
 
 
 
 
 
 
 
April 25,
2015
 
January 3,
2015
 
April 19,
2014
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
123,821

 
$
104,671

 
$
83,358

Receivables, net
 
631,926

 
579,825

 
574,998

Inventories, net
 
4,104,777

 
3,936,955

 
3,912,038

Other current assets
 
76,341

 
119,589

 
70,515

Total current assets
 
4,936,865

 
4,741,040

 
4,640,909

 
 
 
 
 
 
 
Property and equipment, net
 
1,397,950

 
1,432,030

 
1,425,923

Assets held for sale
 
615

 
615

 
615

Goodwill
 
993,276

 
995,426

 
1,025,239

Intangible assets, net
 
729,765

 
748,125

 
789,825

Other assets, net
 
88,224

 
45,122

 
44,434

 
 
$
8,146,695

 
$
7,962,358

 
$
7,926,945

 
 
 
 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Current portion of long-term debt
 
$
587

 
$
582

 
$
70,865

Accounts payable
 
3,138,574

 
3,095,365

 
2,967,861

Accrued expenses
 
536,931

 
520,673

 
551,642

Other current liabilities
 
148,386

 
126,446

 
82,415

Total current liabilities
 
3,824,478

 
3,743,066

 
3,672,783

 
 
 
 
 
 
 
Long-term debt
 
1,609,687

 
1,636,311

 
2,001,740

Other long-term liabilities
 
565,942

 
580,069

 
585,791

Total stockholders' equity
 
2,146,588

 
2,002,912

 
1,666,631

 
 
$
8,146,695

 
$
7,962,358

 
$
7,926,945

 
 
 
 
 
 
 

NOTE: These preliminary condensed consolidated balance sheets have been prepared on a basis consistent with our previously prepared balance sheets filed with the Securities and Exchange Commission for our prior quarter and annual report, but do not include the footnotes required by generally accepted accounting principles, or GAAP, for complete financial statements. Certain balance sheet lines as of April 19, 2014 have been adjusted for opening balance sheet entries made subsequent to our first quarter ended April 19, 2014.




Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Sixteen Week Periods Ended
April 25, 2015 and April 19, 2014
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2015
 
Q1 2014
 
 
As Reported
 
Comparable Adjustments (a)
 
Comparable
 
As Reported
 
Comparable Adjustments (a)
 
Comparable
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
3,038,233

 
$

 
$
3,038,233

 
$
2,969,499

 
$

 
$
2,969,499

Cost of sales
 
1,644,309

 

 
1,644,309

 
1,616,377

 

 
1,616,377

Gross profit
 
1,393,924

 

 
1,393,924

 
1,353,122

 

 
1,353,122

Selling, general and administrative expenses
 
1,131,396

 
(45,751
)
 
1,085,645

 
1,097,320

 
(28,579
)
 
1,068,741

Operating income
 
262,528

 
45,751

 
308,279

 
255,802

 
28,579

 
284,381

Other, net:
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(21,777
)
 

 
(21,777
)
 
(23,642
)
 

 
(23,642
)
Other income, net
 
(1,908
)
 

 
(1,908
)
 
603

 

 
603

Total other, net
 
(23,685
)
 

 
(23,685
)
 
(23,039
)
 

 
(23,039
)
Income before provision for income taxes
 
238,843

 
45,751

 
284,594

 
232,763

 
28,579

 
261,342

Provision for income taxes
 
90,731

 
17,385

 
108,116

 
85,037

 
10,860

 
95,897

Net income
 
$
148,112

 
$
28,366

 
$
176,478

 
$
147,726

 
$
17,719

 
$
165,445

 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share (b)
 
$
2.02

 
$
0.38

 
$
2.40

 
$
2.02

 
$
0.24

 
$
2.26

Diluted earnings per share (b)
 
$
2.00

 
$
0.39

 
$
2.39

 
$
2.01

 
$
0.24

 
$
2.25

 
 
 
 
 
 
 
 
 
 
 
 
 
Average common shares outstanding (b)
 
73,122

 
73,122

 
73,122

 
72,869

 
72,869

 
72,869

Average diluted common shares outstanding (b)
 
73,653

 
73,653

 
73,653

 
73,355

 
73,355

 
73,355



(a)
The comparable adjustments to Selling, general and administrative expenses for Q1 2015 include General Parts integration and store consolidation costs of $32.7 million and General Parts amortization of acquired intangible assets of $13.0 million. The comparable adjustments to Selling, general and administrative expenses for Q1 2014 include General Parts integration and store consolidation costs of $15.5 million and General Parts amortization of acquired intangible assets of $13.1 million.

(b)
Average common shares outstanding is calculated based on the weighted average number of shares outstanding during the quarter. At April 25, 2015 and April 19, 2014, we had 73,168 and 72,947 shares outstanding, respectively.


NOTE: These preliminary condensed consolidated statements of operations have been prepared on a basis consistent with our previously prepared statements of operations filed with the Securities and Exchange Commission for our prior quarter and annual report, with the exception of the footnotes required by GAAP for complete financial statements and inclusion of certain non-GAAP adjustments and measures as described in footnote (a) above. Management believes the reporting of comparable results is important in assessing the overall performance of the business and is therefore useful for investors and prospective investors.









Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Sixteen Week Periods Ended
April 25, 2015 and April 19, 2014
(in thousands)
(unaudited)
 
 
 
 
 
 
 
April 25,
2015
 
April 19,
2014
 
 
 
 
 
Cash flows from operating activities:
 
 
 
 
Net income
 
$
148,112

 
$
147,726

Depreciation and amortization
 
83,247

 
88,205

Share-based compensation
 
8,945

 
7,133

(Benefit) provision for deferred income taxes
 
(5,206
)
 
5,202

Excess tax benefit from share-based compensation
 
(6,498
)
 
(4,165
)
Other non-cash adjustments to net income
 
6,189

 
1,247

Increase in:
 
 
 
 
Receivables, net
 
(53,526
)
 
(45,507
)
Inventories, net
 
(171,865
)
 
(196,062
)
Other assets
 
(845
)
 
(16,458
)
Increase (decrease) in:
 
 
 
 
Accounts payable
 
45,678

 
101,381

Accrued expenses
 
39,494

 
(10,739
)
Other liabilities
 
8,486

 
3,168

Net cash provided by operating activities
 
102,211

 
81,131

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment
 
(57,038
)
 
(60,529
)
Business acquisitions, net of cash acquired
 
(433
)
 
(2,056,937
)
Proceeds from sales of property and equipment
 
295

 
33

Net cash used in investing activities
 
(57,176
)
 
(2,117,433
)
Cash flows from financing activities:
 
 
 
 
Increase (decrease) in bank overdrafts
 
11,628

 
(5,796
)
Net (payments) borrowings on credit facilities
 
(26,700
)
 
1,019,000

Dividends paid
 
(8,813
)
 
(8,781
)
Proceeds from the issuance of common stock, primarily exercise of stock options
 
1,352

 
2,979

Tax withholdings related to the exercise of stock appreciation rights
 
(7,572
)
 
(3,118
)
Excess tax benefit from share-based compensation
 
6,506

 
4,165

Repurchase of common stock
 
(1,590
)
 
(615
)
Other
 
(118
)
 
(232
)
Net cash (used in) provided by financing activities
 
(25,307
)
 
1,007,602

 
 
 
 
 
Effect of exchange rate changes on cash
 
(578
)
 
(413
)
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents
 
19,150

 
(1,029,113
)
Cash and cash equivalents, beginning of period
 
104,671

 
1,112,471

Cash and cash equivalents, end of period
 
$
123,821

 
$
83,358

 
 
 
 
 
NOTE: These preliminary condensed consolidated statements of cash flows have been prepared on a consistent basis with previously prepared statements of cash flows filed with the Securities and Exchange Commission for our prior quarter and annual report, but do not include the footnotes required by GAAP for complete financial statements.





Advance Auto Parts, Inc. and Subsidiaries
Supplemental Financial Schedules
Sixteen Week Periods Ended
April 25, 2015 and April 19, 2014
(in thousands)
(unaudited)
 
 
 
 
 
Reconciliation of Free Cash Flow:
 
 
 
 
 
 
 
 
 
 
 
April 25,
2015
 
April 19,
2014
 
 
 
 
 
Cash flows from operating activities
 
$
102,211

 
$
81,131

Purchases of property and equipment
 
(57,038
)
 
(60,529
)
Free cash flow
 
$
45,173

 
$
20,602


NOTE: Management uses free cash flow as a measure of our liquidity and believes it is a useful indicator to stockholders of our ability to implement our growth strategies and service our debt. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in our condensed consolidated statement of cash flows.

Adjusted Debt to EBITDAR:
 
 
 
 
(In thousands, except adjusted debt to EBITDAR ratio)
 
Four Quarters Ended
 
 
April 25,
2015
 
January 3,
2015
 
 
(Four Quarters Ended)
 
(53 weeks)
Total debt
 
$
1,610,274

 
$
1,636,893

Add: Capitalized lease obligation (rent expense * 6)
 
3,127,428

 
3,038,904

Adjusted debt
 
4,737,702

 
4,675,797

 
 
 
 
 
Operating income
 
858,436

 
851,710

Add: Comparable adjustments (a)
 
99,417

 
82,234

 Depreciation and amortization
 
280,351

 
284,693

EBITDA
 
1,238,204

 
1,218,637

Rent expense (less favorable lease amortization of $4,923 and $4,972, respectively)
 
521,238

 
506,484

EBITDAR
 
$
1,759,442

 
$
1,725,121

 
 
 
 
 
Adjusted Debt to EBITDAR
 
2.7

 
2.7


(a)
The comparable adjustments to the four quarters ended April 25, 2015 include General Parts integration and store consolidation costs of $99.4 million. The comparable adjustments to Fiscal 2014 include General Parts integration and store consolidation costs of $82.2 million.

NOTE: Management believes its Adjusted Debt to EBITDAR ratio (“leverage ratio”) is a key financial metric and believes its debt levels are best analyzed using this measure. The Company’s goal is to quickly pay down debt resulting from the GPI acquisition, get back to a 2.5 times leverage ratio and to maintain an investment grade rating. The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for debt to net earnings, net earnings or debt as determined in accordance with GAAP. The Company’s calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures by other companies.






First Quarter Performance Summary on a GAAP Basis(a):
 
 
 
 
 
 
 
 
 
 
Sixteen Weeks Ended
 
 
April 25,
2015
 
April 19,
2014
 
 
 
 
 
Sales (in millions)
 
$
3,038.2

 
$
2,969.5

 
 
 
 
 
Comp Store Sales %
 
0.7
%
 
2.4
%
 
 
 
 
 
Gross Profit (in millions)
 
$
1,393.9

 
$
1,353.1

 
 
 
 
 
SG&A (in millions)
 
$
1,131.4

 
$
1,097.3

 
 
 
 
 
Operating Income (in millions)
 
$
262.5

 
$
255.8

 
 
 
 
 
Diluted EPS
 
$
2.00

 
$
2.01

 
 
 
 
 
Avg Diluted Shares (in thousands)
 
73,653

 
73,355


(a) These financial measures for the sixteen weeks ended April 25, 2015 have been reported on a GAAP basis which includes the impact of General Parts integration and store consolidation costs of $32.7 million and General Parts amortization of acquired intangible assets of $13.0 million. These financial measures for the sixteen weeks ended April 19, 2014 have been reported on a GAAP basis which includes the impact of General Parts integration and store consolidation costs of $15.5 million and General Parts amortization of acquired intangible assets of $13.1 million. These financial measures should be read in conjunction with our financial measures presented on a comparable basis earlier in this press release. Management believes the reporting of financial results on a non-GAAP basis to remain comparable is important in assessing the overall performance of our base business and is therefore useful for investors and prospective investors.



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