Long-term Debt

During the second quarter of fiscal 2026, the Company entered into a Rule 10b5-1 Repurchase Plan (the "Repurchase Plan") to effect repurchases of outstanding principal amounts of the Company's 1.75% Senior Unsecured Notes due October 1, 2027 (the "2027 Notes") and the 5.95% Senior Unsecured Notes due March 9, 2028 (the "2028 Notes"), subject to certain price and market conditions. During the second quarter ended July 18, 2026, the Company repurchased an aggregate $0.1 million and $29 million of outstanding principal related to the 2027 Notes and 2028 Notes under the Repurchase Plan, respectively, which was reflected in the carrying value of long-term debt on the condensed consolidated balance sheets. The plan was terminated upon completion of the repurchases.

Fair Value of Financial Assets and Liabilities

As of July 18, 2026 and January 3, 2026, the fair value of the Company’s long-term debt, which includes the current portion of long-term debt, was approximately $3.4 billion. The fair value of the Company’s long-term debt was determined using Level 2 inputs based on quoted market prices. The carrying amounts of the Company’s cash and cash equivalents, receivables, net, accounts payable and accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.

Credit Facilities

As of July 18, 2026 and January 3, 2026, the Company had no outstanding borrowings under its asset-based loan revolving credit facility (the "ABL Facility"). As of July 18, 2026 and January 3, 2026 the Company had $894 million and $896 million of borrowing availability, respectively, and $106 million and $104 million letters of credit outstanding, respectively, under the ABL Facility.

In accordance with the ABL Facility, the Company is required to hold cash and cash equivalents in designated accounts with lenders, referred to as Qualified Cash Accounts as defined in the ABL Facility. As of July 18, 2026 and January 3, 2026, $2.3 billion was designated as Qualified Cash. These amounts are unrestricted and the Company is able to direct, and have sole control over, the manner of disposition of funds in such accounts, subject to: 1) maintaining a minimum availability under the ABL facility of at least the greater of (i) 12.5% of the Line Cap (as defined in the ABL Facility) and (ii) $125 million; and 2) maintaining excess availability under the ABL Facility of at least $400 million. The Qualified Cash Accounts are subject to springing control agreements pursuant to which the cash deposited therein will become restricted in the event of default or a breach of such covenants. The Company was in compliance with its covenants related to the ABL Facility in all periods presented.

Debt Guarantees

The Company is a guarantor of loans made by banks to various independently-owned Carquest-branded stores that are or, prior to the Company’s restructuring and asset optimization plan approved in November 2024 ("2024 Restructuring Plan"), were customers of the Company, totaling $64 million and $69 million as of July 18, 2026 and January 3, 2026, respectively. This obligation represents a financial guarantee with two aspects: a contingent liability accounted for under ASC 326 related to our contingent obligation to purchase loans, and a non-contingent liability accounted for under ASC 460, Guarantees, related to our obligation to stand-ready to perform under the obligation. The Company continuously assesses the likelihood of performance under these guarantees and records liabilities established related to these financial guarantees within other current liabilities in the condensed consolidated balance sheets. 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 was $151 million and $152 million as of July 18, 2026 and January 3, 2026, respectively.