<PAGE>

--------------------------------------------------------------------------------
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                                  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 17, 1999
                                 OR
[_] 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 - 333-56031

                                  -----------

                          ADVANCE HOLDING CORPORATION
             (Exact name of registrant as specified in its charter)

                                  -----------

              Virginia
   (State or other jurisdiction of                    54-1622754
   incorporation or organization)                  (I.R.S. Employer
                                                  Identification No.)

          5673 Airport Road
          Roanoke, Virginia                             24012
 (Address of Principal Executive Offices)             (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 [_]

     As of August 31, 1999, the registrant had outstanding 28,301,050 shares of
Class A Common Stock, par value $0.01 per share (the only class of common stock
of the registrant outstanding).  The registrant's Class A Common Stock is not
traded in a public market.

--------------------------------------------------------------------------------
<PAGE>

                 ADVANCE HOLDING CORPORATION AND SUBSIDIARIES

                       Twelve Weeks Ended July 17, 1999

                               TABLE OF CONTENTS



<TABLE>
<CAPTION>


                                                                                                        Page
                                                                                                        ----
<S>                                                                                                      <C>
PART I.  FINANCIAL INFORMATION

        Item 1.   Condensed Consolidated Financial Statements of Advance Holding Corporation
                  and Subsidiaries (Unaudited)

                  Condensed Consolidated Balance Sheets as of July 17, 1999 and
                  January 2, 1999....................................................................     1

                  Condensed Consolidated Statements of Operations for the Twelve
                  and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998................     2

                  Condensed Consolidated Statements of Cash Flows for the
                  Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998....................     3

                  Notes to Unaudited Condensed Consolidated Financial Statements.....................     4

         Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations..............................................................    10

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings..................................................................    19

         Item 2.  Changes in Securities and Use of Proceeds..........................................    19

         Item 6.  Exhibits and Reports on Form 8-K...................................................    19

SIGNATURE............................................................................................   S-1
</TABLE>

                                       i
<PAGE>

                  Advance Holding Corporation and Subsidiaries
                     Condensed Consolidated Balance Sheets
                       July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)


<TABLE>
<CAPTION>
                                                               July 17,                  January 2,
                                     Assets                     1999                       1999
                                     ------                -------------             --------------
                                                            (unaudited)

<S>                                                         <C>                      <C>
Current assets:
  Cash and cash equivalents                                 $   26,630               $   36,115
  Receivables, net                                             123,759                   92,199
  Inventories                                                  772,137                  726,172
  Other current assets                                          27,399                    9,477
                                                            ----------               ----------
         Total current assets                                  949,925                  863,963
Property and equipment, net                                    408,463                  377,761
Other assets, net                                               23,833                   23,631
                                                            ----------               ----------
                                                            $1,382,221               $1,265,355
                                                            ==========               ==========

                   Liabilities and Stockholders' Equity
                   ------------------------------------

Current liabilities:
  Bank overdrafts                                           $   15,448               $   20,403
  Current portion of long-term debt                              2,148                    1,026
  Accounts payable                                             379,706                  364,758
  Accrued expenses                                             141,600                  154,614
  Other current liabilities                                     32,264                   13,049
                                                            ----------               ----------
         Total current liabilities                             571,166                  553,850
                                                            ----------               ----------
Long-term debt                                                 608,427                  500,162
                                                            ----------               ----------
Deferred revenue                                                16,455                    1,389
                                                            ----------               ----------
Other long-term liabilities                                     48,563                   50,863
                                                            ----------               ----------
Commitments and contingencies
Stockholders' equity:
     Common stock, Class A, voting, $.01 par value,
       62,500,000 shares authorized; 28,301,050 and
       28,261,900 issued and outstanding                           283                      283
     Additional paid-in capital                                370,964                  370,306
     Other                                                        (796)                  (1,532)
     Accumulated deficit                                      (232,841)                (209,966)
                                                            ----------               ----------
         Total stockholders' equity                            137,610                  159,091
                                                            ----------               ----------
                                                            $1,382,221               $1,265,355
                                                            ==========               ==========
</TABLE>







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

                                       1
<PAGE>

                  Advance Holding Corporation and Subsidiaries
                Condensed Consolidated Statements of Operations
              For the Twelve and Twenty-Eight Week Periods Ended
                        July 17, 1999 and July 18, 1998
                            (dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                             Twelve Week Periods Ended    Twenty-Eight Week Periods Ended
                                                             -------------------------    -------------------------------
                                                                July 17,     July 18,        July 17,          July 18,
                                                                 1999         1998             1999              1998
                                                             -----------   -----------    ------------       ------------
<S>                                                          <C>           <C>            <C>                <C>
Net sales                                                      $541,760      $255,037      $1,211,488           $544,000
Cost of sales                                                   341,431       156,448         779,415            332,825
                                                             -----------   -----------    ------------       ------------
         Gross profit                                           200,329        98,589         432,073            211,175
Selling, general, and administrative expenses                   186,261        79,632         434,802            178,812
Expenses associated with Recapitalization                             -             -               -             14,005
                                                             -----------   -----------    ------------       ------------
         Operating income (loss)                                 14,068        18,957          (2,729)            18,358
                                                             -----------   -----------    ------------       ------------
Other (expense) income:
     Interest expense                                           (14,658)      (10,112)        (33,217)           (13,559)
     Other, net                                                     158           321             213                317
                                                             -----------   -----------    ------------       ------------
         Total other expense, net                               (14,500)       (9,791)        (33,004)           (13,242)
                                                             -----------   -----------    ------------       ------------
(Loss) income before (benefit) provision for income taxes          (432)        9,166         (35,733)             5,116
(Benefit) provision for income taxes                             (2,499)        4,241         (12,858)             2,543
                                                             -----------   -----------    ------------       ------------
Net income (loss)                                              $  2,067      $  4,925      $  (22,875)          $  2,573
                                                             ===========   ===========    ============       ============
</TABLE>

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



                                       2
<PAGE>

                 Advance Holding Corporation and Subsidiaries
                Condensed Consolidated Statements of Cash Flows
                       Twenty-Eight Week Periods Ended
                       July 17, 1999 and July 18, 1998
                            (dollars in thousands)
                                 (unaudited)


<TABLE>
<CAPTION>
                                                                                   Twenty-Eight Week Periods Ended
                                                                            ----------------------------------------------
                                                                             July 17, 1999                  July 18, 1998
                                                                            ---------------                ---------------
<S>                                                                         <C>                            <C>
Cash flows (used in) provided by operating activities:
 Net (loss) income                                                                $(22,875)                     $   2,573
 Adjustments to reconcile net (loss) income to net cash (used in)
   provided by operating activities:
   Depreciation                                                                     29,391                         13,508
   Amortization of stock option compensation                                         1,009                              -
   Amortization of deferred debt issuance costs                                      1,954                            761
   Amortization of bond discount                                                     4,568                          2,005
   Sales of marketable securities                                                        -                          2,025
   (Benefit) provision for deferred income taxes                                    (6,142)                            82
   Net (gain) loss on sales of property and equipment                                   (4)                            85
   Other cash flows from operating activities                                      (66,079)                         9,409
                                                                            ---------------                ---------------
      Net cash (used in) provided by operating activities                          (58,178)                        30,448
                                                                            ---------------                ---------------
Cash used in investing activities:
 Purchases of property and equipment                                               (53,538)                       (26,028)
 Proceeds from sale of property and equipment                                        1,262                          4,155
 Western Merger, net of cash acquired                                                 (341)                             -
 Other                                                                               1,091                            553
                                                                            ---------------                ---------------
      Net cash used in investing activities                                        (51,526)                       (21,320)
                                                                            ---------------                ---------------
Cash flows from financing activities:
 Decrease in bank overdrafts                                                        (4,955)                        (6,970)
 Net repayments under notes payable                                                      -                         (2,959)
 Proceeds from issuance of long-term debt                                                -                         11,500
 Payments on long-term debt                                                              -                       (102,667)
 Borrowings under credit facilities                                                252,500                        385,017
 Payments on credit facilities                                                    (150,500)                             -
 Payment of debt issuance costs                                                       (919)                       (19,821)
 Proceeds from issuance of Class A Common Stock                                        385                        105,148
 Payment for redemption of preferred and common stock                                    -                       (351,000)
 Other                                                                               3,708                          1,951
                                                                            ---------------                ---------------
      Net cash provided by financing activities                                    100,219                         20,199
                                                                            ---------------                ---------------
Net (decrease) increase in cash and cash equivalents                                (9,485)                        29,327
Cash and cash equivalents at beginning of period                                    36,115                         15,463
                                                                            ---------------                ---------------
Cash and cash equivalents at end of period                                        $ 26,630                      $  44,790
                                                                            ===============                ===============
Supplemental cash flow information:
  Interest paid                                                                   $ 22,922                      $   4,315
  Income taxes paid, net of refunds received                                         2,603                          1,997
Noncash transactions:
  Obligations under capital lease                                                    3,345                              -
  Debt issuance costs and acquisition costs accrued                                    290                            330
  Loans receivable related to issuance of common stock                                 302                          2,615
  Stock options issued for redemption of common stock                                    -                            300
</TABLE>

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

                                       3
<PAGE>

                 Advance Holding Corporation and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements
  Twelve and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)
                                  (unaudited)

1.   Basis of Presentation:

     The accompanying unaudited condensed consolidated financial statements
include the accounts of Advance Holding Corporation and its wholly owned
subsidiaries (the Company).  All significant intercompany balances and
transactions have been eliminated in consolidation.

     The condensed consolidated balance sheet as of July 17, 1999, the condensed
consolidated statements of operations for the 12-week and 28-week periods ended
July 17, 1999 and July 18, 1998 and the statements of cash flows for the 28-week
periods ended July 17, 1999 and July 18, 1998, have been prepared by the Company
and have not been audited. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of the financial position of the Company, the results of its
operations and cash flows have been made.

     Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted.  These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's consolidated financial statements for the fiscal year ended January 2,
1999.

     The results of operations for the 12-week and 28-week periods are not
necessarily indicative of the operating results to be expected for the full
fiscal year.

     Recent Accounting Pronouncements

     Effective January 3, 1999, the Company adopted the American Institute of
Certified Public Accountant's Statement of Position (SOP) 98-1, "Accounting for
the Cost of Computer Software Developed or Obtained for Internal Use".  The SOP
requires companies to capitalize certain expenditures related to development of
or obtaining computer software for internal use. The SOP was issued in March of
1998, and is effective for fiscal years beginning after December 15, 1998. The
adoption of the SOP did not have a material effect on the Company's financial
position or results of operations.

     Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ from those
estimates.

     Reclassifications

     Certain 1998 amounts have been reclassified to conform with their 1999
presentation.

                                       4
<PAGE>

                 Advance Holding Corporation and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements
  Twelve and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)
                                  (unaudited)


2.   Receivables:

     Receivables consist of the following:

<TABLE>
<CAPTION>
                                              July 17,     January 2,
                                                1999         1999
                                            ------------  ------------
<S>                                         <C>           <C>
Trade:
   Wholesale                                  $ 29,372      $ 26,463
   Retail                                        9,340         6,470
Vendor                                          67,474        38,142
Installment                                     12,405        11,311
Related parties                                  4,871         6,236
Employees                                          627           555
Other                                            2,891         6,802
                                            ------------  ------------
Total receivables                              126,980        95,979
Less - allowance for doubtful accounts          (3,221)       (3,780)
                                            ------------  ------------
Receivables, net                              $123,759      $ 92,199
                                            ============   ===========

</TABLE>

3.   Inventories:

     Inventories are stated at the lower of cost or market using the last-in,
first-out (LIFO) method.  An actual valuation of inventory under the LIFO method
can be made only at the end of each year based on the inventory levels and costs
at that time.  Accordingly, interim LIFO calculations must be based on
management's estimates of expected year-end inventory levels and costs.  The
Company capitalizes certain purchasing and warehousing costs into inventory.
Purchasing and warehousing costs included in inventory at July 17, 1999, and
January 2, 1999, were $43,113 and $41,168, respectively.  Inventories consist of
the following:

<TABLE>
<CAPTION>
                                              July 17,     January 2,
                                                1999          1999
                                             -----------   -----------
<S>                                         <C>           <C>
Inventories at FIFO                            $761,770      $718,909
Reserve to state inventories at LIFO             13,726        10,622
                                             -----------   -----------
Inventories at LIFO                             775,496       729,531
Other reserves                                   (3,359)       (3,359)
                                             -----------   -----------
                                               $772,137      $726,172
                                             ===========   ===========
</TABLE>


                                       5
<PAGE>


                 Advance Holding Corporation and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements
  Twelve and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)
                                  (unaudited)

4.   Western Merger:

     On November 2, 1998, the Company consummated a Plan of Merger (the Western
Merger) with Sears, Roebuck and Co. (Sears) to acquire Western Auto Supply
Company (Western) for $175,000 in cash and 11,474,606 shares of the Company's
common stock.  Additionally, the Company agreed to share losses incurred by
Sears as a result of the sale, or as a result of continuing the private label
credit card programs up to a maximum of $10,000. Based on the sale of the
private label credit card program to date, the Company has recorded the $10,000
as additional purchase price.

     The Western Merger has been accounted for under the purchase method of
accounting. The purchase price has been allocated to the assets acquired and the
liabilities assumed upon preliminary estimates of fair values. In continuation
of management's plan related to the Western Merger (Note 5), the Company
recognized additional net liabilities of $4,467 during the second quarter of
fiscal 1999. The charges represent estimated costs of closing additional
facilities and terminating certain contractual obligations associated with
management's plan. During the second quarter of fiscal 1999, the Company also
recognized $362 of acquisition costs associated with the Western Merger. The
above items resulted in a reduction of negative goodwill of approximately
$4,800, which resulted in an increase to property and equipment on the condensed
consolidated balance sheet as of July 17, 1999.

5.   Restructuring Liabilities:

     Expenses associated with restructuring include estimated exit costs and
write-offs of related leasehold improvements associated with the decision to
close Advance Auto Parts stores that were in overlapping markets with certain
Parts America Stores obtained in the Western Merger.   As of July 17, 1999, the
Company has closed 27 of these stores.

     In connection with the Western Merger, the Company assumed the
restructuring accrual related to Western's restructuring activities prior to the
Western Merger.  As of July 17, 1999, this restructuring accrual relates
primarily to ongoing lease obligations on closed facilities and estimated
severance payments.

     A reconciliation of activity with respect to these restructuring accruals
is as follows:

<TABLE>
<CAPTION>



                                                     Other Exit
                                       Severance       Costs
                                      ------------  ------------
<S>                                  <C>            <C>
Balance, January 2, 1999                  $   682      $ 14,773
Reserves utilized                            (556)       (2,662)
                                      ------------  ------------
Balance, July 17, 1999                    $   126      $ 12,111
                                      ============  ============

</TABLE>

     As of the date of the Western Merger, management began to assess and
formulate a plan to close certain Parts America stores in overlapping markets or
stores not meeting the Company's profitability objectives, to exit certain other
facilities, to relocate certain Western administrative functions to the
Company's headquarters and to terminate certain management, administrative and
support employees of Western. During the second quarter of fiscal 1999, the
Company continued its plan by closing a Western distribution center, terminating
certain staff at the location and terminating additional Western support staff.
As of July 17, 1999, 181 employees have been

                                       6
<PAGE>

                 Advance Holding Corporation and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements
  Twelve and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)
                                  (unaudited)

terminated and substantially all Parts America stores to be closed have
been identified. The Company expects to finalize its plan for termination of
employees and closure of any additional Parts America stores within one year
from the Western Merger date. Additional liabilities for severance, relocation,
store and other facility exit costs may result in an adjustment to purchase
accounting.

     A reconciliation of activity with respect to these liabilities, which are
included in accrued expenses and other long-term liabilities on the condensed
consolidated balance sheets is as follows:

<TABLE>
<CAPTION>
                                                             Other Exit
                                    Severance   Relocation      Costs
                                    ---------   ----------   -----------
<S>                               <C>         <C>          <C>
Balance, January 2, 1999              $7,738         $838       $13,732
Purchase accounting adjustments        3,893            -          (694)
Reserves utilized                     (3,104)        (318)       (2,697)
                                    --------    ---------     ---------
Balance, July 17, 1999                $8,527         $520       $10,341
                                    ========    =========     =========

</TABLE>

6.   Contingencies:

     In November 1997, a plaintiff, on behalf of himself and others similarly
situated, filed a class action complaint and motion of class certification
against the Company in the circuit court for Jefferson County, Tennessee,
alleging misconduct in the sale of automobile batteries.  The complaint seeks
compensatory and punitive damages.  The case is in the discovery stage and
management plans a vigorous defense.  In addition, three lawsuits were filed
against the Company in July 1998, for a wrongful death relating to an automobile
accident involving an employee of the Company.  Management believes the
financial exposure, related to the automobile accident, is covered by insurance.

     On August 16, 1999, the United States District Court of Appeals for the
Sixth District affirmed the decisions of the United States District Court for
the Western District of Kentucky. Those decisions held that the Company was
entitled to exclusive use of the name "Advance Auto Parts" throughout the United
States, except in Jefferson County, Kentucky, and that the Company was entitled
to summary judgment in connection with various infringement and unfair
competition claims brought by the appellant.

     In January 1999, the Company was notified by the United States
Environmental Protection Agency (EPA) that Western Auto may have potential
liability under the Comprehensive Environmental Response Compensation and
Liability Act relating to two battery salvage and recycling sites that were in
operation in the 1970's and 1980's. The EPA has indicated that the total cleanup
costs for the site will be approximately $1.6 million. Management has begun
investigating the EPA notification. An estimate of the range of the Company's
liability is not reasonably possible until technical studies are sufficiently
completed and the amount of potential indemnification from Sears, if any, is
further investigated. The ultimate exposure will also depend upon the
participation of other parties named in the notification who are believed to
share in responsibility.

     The Company is also involved in various other claims and lawsuits arising
in the normal course of business.  Although the final outcome of these legal
matters cannot be determined, based on the facts presently known, it is
management's opinion that the final outcome of such claims and lawsuits will not
have a material adverse effect on the Company's financial position or results of
operations.

                                       7
<PAGE>

                 Advance Holding Corporation and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements
  Twelve and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)
                                  (unaudited)

7.   Related Parties:


     The following table presents the related party transactions with Sears as
of July 17, 1999 and for the period from January 2, 1999 to July 17, 1999:

<TABLE>
     <S>                                  <C>

      Net sales to Sears                 $   2,311
      Shared services revenue                1,711
      Shared services expense                 (842)
      Credit card fee expense               (1,459)
      Receivables from Sears                 4,671
      Payables to Sears                     (4,753)
</TABLE>

8.   Stock Options:

     During the second quarter of fiscal 1999, the Company granted 228,000
non-qualified options to purchase shares of the Company's Class A common stock
to officers and key employees at an exercise price of $16.82 per share. The
fixed price service options will vest equally over a three-year period from the
grant date and terminate on the seventh anniversary of the grant.

9.   Segment and Related Information:

     SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information" requires entities to report financial and descriptive information
related to segments within the organization.

     The Company has the following reportable segments: Advance Holding, Advance
Stores and Western.  Advance Holding has no operations.  Advance Stores consist
of the retail operations of the company including the converted and non-
converted Parts America stores.  Western consists of wholesale operations,
including distribution services to independent dealers and three franchisees,
and 41 retail stores all operating under the "Western Auto" name.

     As of July 17, 1999, the Company continues to formulate an appropriate
management reporting approach for the Western operations.  For the period from
January 2, 1999 to July 17, 1999, management continued to receive and use
financial information aggregated at the Western level in evaluating the
performance of the acquired operations.

     The Company is in the process of converting all Parts America stores to
Advance Auto Parts stores and expects to complete the conversion during fiscal
1999.

                                       8
<PAGE>

                 Advance Holding Corporation and Subsidiaries
        Notes to Unaudited Condensed Consolidated Financial Statements
  Twelve and Twenty-Eight Week Periods Ended July 17, 1999 and July 18, 1998
                 (dollars in thousands, except per share data)
                                  (unaudited)

<TABLE>
<CAPTION>

                                      July 17, 1999                                        July 18, 1998
                    -----------------------------------------------------    --------------------------------------------
                                  (Loss) Income Before                                 (Loss) Income Before
                                       Income                                                Income
                        Net         Tax (Benefit)       Segment               Net         Tax (Benefit)       Segment
Twelve Weeks Ended     Sales        Provision ( c )   Assets ( c )           Sales        Provision ( c )   Assets ( c )
-------------------------------------------------------------------------------------------------------------------------
<S>                 <C>             <C>             <C>                   <C>             <C>               <C>
Advance Holding     $        -      $  (2,002)     $    1,543             $       -       $ (1,729)         $   1,696
Advance Stores (a)     448,969          1,426       1,174,350               255,037         10,895            593,221
Western (b)             92,791            144         206,328                     -              -                  -
                    ----------      ---------      ----------             ---------       --------          ---------
Consolidated        $  541,760      $    (432)     $1,382,221             $ 255,037       $  9,166          $ 594,917
                    ==========      =========      ==========             =========       ========          =========

<CAPTION>
Twenty-Eight Weeks Ended
-------------------------------------------------------------------------------------------------------------------------
<S>                 <C>             <C>             <C>                   <C>             <C>               <C>
Advance Holding     $        -      $  (4,579)     $    1,543             $       -       $ (1,652)         $   1,696
Advance Stores (a)     978,435        (26,668)      1,174,350               544,000          6,768            593,221
Western (b)            233,053         (4,486)        206,328                     -              -                  -
                    ----------      ---------      ----------             ---------       --------          ---------
Consolidated        $1,211,488      $ (35,733)     $1,382,221             $ 544,000       $  5,116          $ 594,917
                    ==========      ==========     ==========             =========       ========          =========

</TABLE>

(a)  At July 17, 1999 and July 18, 1998, total revenues include approximately
     $52,888 and $34,143 for the twelve week periods ended and $102,357 and
     $68,149 for the twenty-eight week periods ended, respectively, related to
     revenues derived from commercial sales including existing Advance Auto
     Parts stores and Parts America stores after store level management
     information system conversion.

(b)  During fiscal 1999, certain accounts and the corresponding activity related
     to the Parts America store operations were transferred to Advance Stores
     through a dividend to and the assumption of liabilities by Advance Stores.

(c)  Excludes investment in and equity in net earnings or losses of
     subsidiaries.

                                       9
<PAGE>

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

     Advance Holding Corporation ("Holding") conducts all its operations through
its wholly owned subsidiary, Advance Stores Company, Incorporated (the
"Company").  The Company is the second largest retailer of automotive parts and
accessories in the United States.  As of July 17, 1999, the Company had 1,590
stores in 39 states, Puerto Rico and the U.S. Virgin Islands operating under the
"Advance Auto Parts," "Parts America" and "Western Auto" names.  In addition,
the Company supplies approximately 715 stores in 48 states through the wholesale
dealer network.

     The Company was formed in 1929.  In the 1980s, the Company sharpened its
marketing focus to target sales of automotive parts and accessories to "do-it-
yourself" ("DIY") customers and accelerated its growth strategy.  From the 1980s
through the present, the Company has grown significantly through new store
openings and strategic acquisitions.  In 1996, the Company began to aggressively
expand its sales to "do-it-for-me" ("DIFM") customers by implementing a
commercial delivery program which supplies parts and accessories to third party
automotive service and repair providers.

     The following discussion of the consolidated historical results of
operations and financial condition of Holding should be read in conjunction with
the unaudited condensed consolidated financial statements of Holding and the
notes thereto included elsewhere in this Form 10-Q.  The following discussion
and analysis covers periods before completion of the Recapitalization, as
described below.  Holding's first quarter consists of 16 weeks and its other
three quarters consist of 12 weeks.

Forward-Looking Statements

     This Management's Discussion and Analysis of Financial Condition and
Results of Operations and other sections of this quarterly report contain
certain "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995.  These statements include without limitation the
words "believes," "anticipates," "estimates," "intends," "expects," and words of
similar import.  Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of Holding and the Company or the retail industry to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.

     These potential risks and uncertainties include, among others, the
following: general economic and business conditions; Holding's and the Company's
substantial leverage and debt service obligations; restrictions on Holding's and
the Company's ability to pursue its business strategies imposed by restrictive
loan covenants; changes in business strategy or development plans; competition;
weather conditions; integration of the Western Merger (as defined below); extent
of the market demand for auto parts; availability of inventory supply; adequacy
and perception of customer service, product quality and defect experience;
availability of and ability to take advantage of vendor pricing programs and
incentives; rate of new store openings; cannibalization of store sites; mix and
types of merchandise sold; governmental regulation of products; new store
development; performance of information systems; effectiveness of deliveries
from distribution centers; ability to hire, train and retain qualified
employees; and environmental risks.  Forward-looking statements regarding
revenues, expenses, cash flows and liquidity are particularly subject to a
variety of assumptions, some or all of which may not be realized.  Given these
uncertainties, prospective investors are cautioned not to place undue reliance
on such forward-looking statements.  The Company disclaims any obligation to
update any such factors or to publicly announce the results of any revisions to
any of the forward-looking statements contained herein to reflect future events
or developments.

General

     During the first quarter of 1998, Holding consummated a recapitalization
through the sale of common stock, the issuance of debt, the redemption of common
and preferred stock and the repayments of notes payable and long-term debt (the
"Recapitalization").  Additionally, on November 2, 1998, Western Auto Supply
Company merged into a subsidiary of the Company (the "Western Merger").  As a
result of the Western Merger, the Company issued to WA Holding Co., a wholly
owned subsidiary of Sears, Roebuck and Co. ("Sears"), 11,474,606 shares of
Common Stock of Holding (the "Holding Common Stock") representing approximately
40.6% of the outstanding Holding Common Stock, in addition to cash and
assumption of certain liabilities.

                                       10
<PAGE>

     As a result of the Western Merger, the Company added 612 auto parts stores
in the United States.  The Parts America stores are similar to the Advance Auto
Parts stores in terms of size, format and product offerings.  In addition,
Western Auto Supply Company operated 38 auto parts and service stores in Puerto
Rico and the U.S. Virgin Islands and one store in each of California and Hawaii
under the "Western Auto" name (the "Service Stores").  The Service Stores offer
automotive parts and accessories as well as service, repairs, tires and certain
non-automotive goods.  Western Auto Supply Company also supplied a wholesale
dealer network in 48 states.

     As of the date of the Western Merger, management began to assess and
formulate a plan to close certain Parts America and Advance Auto Parts stores in
overlapping markets or stores not meeting the Company's profitability
objectives, to exit certain other facility leases, to relocate certain
administrative functions supporting the Parts America stores to the Company's
headquarters and to terminate certain management, administrative and support
employees of the Service Stores and wholesale dealer network. As of July 17,
1999, 181 employees have been terminated, 58 Parts America stores and 27 Advance
Auto Parts stores have been closed and the integration of the administrative
functions associated with the Parts America stores is substantially complete.
During the second quarter of fiscal 1999, the Company continued its plan by
closing a distribution center, terminating certain staff at the location and
terminating additional administrative staff supporting the Service Stores and
wholesale dealer network. As a result of closing additional facilities and
recording contractual obligations associated with management's plan, the Company
recognized additional net liabilities of approximately $4.5 million in the
second quarter of fiscal 1999. The Company plans to integrate the Service Stores
and wholesale dealer network functions into its corporate headquarters and
existing logistics functions by the end of fiscal 1999. The Company expects to
finalize its plan related to the Western Merger within one year from the date of
the Western Merger. Additional liabilities for severance, relocation, store
closing and other facility exit costs may result in further adjustments to
purchase accounting.

     Since the fourth quarter of 1998, the Company has been in the process of
converting the remaining Parts America stores to Advance Auto Parts stores (the
"Parts America Conversion"). The Parts America Conversion changes certain
merchandise lines (the "Merchandise Conversion"), store level management
information systems (the "MIS Conversion"), and the format and name of the Parts
America stores to conform with the Advance Auto Parts stores (the "Physical
Conversion"). As of July 17, 1999, Holding had completed all Merchandise
Conversions and MIS Conversions as well as 280 Physical Conversions. Holding
expects to complete the Physical Conversions by the end of fiscal 1999. The
Company does not plan to convert the Service Stores as part of the Parts America
Conversion.

     The Company expects to achieve benefits from the Western Merger through
improved product pricing and terms from vendors, consolidated advertising,
distribution and corporate support efficiencies, and the closure of certain
overlapping locations.  However, due to the Western Merger, the Company has
incurred and expects to incur additional store closing, store conversion,
distribution center conversion and system conversion expenses, other exit costs
as part of the Parts America Conversion and other integration costs.  In
addition, the Company, as part of its plan, will continue to liquidate at
reduced prices certain SKUs carried in the Parts America and Service Store
inventory.

                                       11
<PAGE>

Results of Operations

     The following tables set forth the statement of operations data for Holding
expressed in dollars and as a percentage of net sales for the periods indicated.

<TABLE>
<CAPTION>

                                                   Twelve Weeks Ended                  Twenty-Eight Weeks Ended
                                                       (unaudited)                            (unaudited)
                                               ---------------------------           ------------------------------
                                                July 18,          July 17,            July 18,             July 17,
                                                  1998             1999                 1998                1999
                                               ----------       ----------           ----------        ------------
                                                 (dollars in thousands)                  (dollars in thousands)
<S>                                            <C>              <C>                  <C>               <C>
Net Sales                                       $255,037         $541,760             $544,000          $1,211,488
Cost of sales                                    156,448          341,431              332,825             779,415
                                               ----------       ----------           ----------        ------------
Gross profit                                      98,589          200,329              211,175             432,073
Selling, general and administrative expenses      79,632          177,574              177,967             408,640
Expenses associated with Recapitalization             -                -                14,005                  -
Expenses associated with merger integration           -             8,235                   -               25,153
Expenses associated with private company              -                -                   845                  -
Expenses associated with non-cash compensation        -               452                   -                1,009
                                               ----------       ----------           ----------        ------------
Operating income (loss)                           18,957           14,068               18,358              (2,729)
                                               ----------       ----------           ----------        ------------
Interest expense                                  10,112           14,658               13,559              33,217
Other, net                                          (321)            (158)                (317)               (213)
Provision (benefit) for income taxes               4,241           (2,499)               2,543             (12,858)
                                               ----------       ----------           ----------        ------------
Net income (loss)                               $  4,925         $  2,067             $  2,573          $  (22,875)
                                               ==========       ==========           ==========        ============

<CAPTION>

                                                   Twelve Weeks Ended                  Twenty-Eight Weeks Ended
                                                       (unaudited)                            (unaudited)
                                               ---------------------------           ------------------------------
                                                July 18,          July 17,            July 18,             July 17,
                                                  1998             1999                 1998                1999
                                               ----------       ----------           ----------        ------------
                                                 (dollars in thousands)                  (dollars in thousands)
<S>                                            <C>              <C>                  <C>               <C>
Net Sales                                          100.0%           100.0%               100.0%              100.0%
Cost of sales                                       61.3             63.0                 61.2                64.3
                                               ----------       ----------           ----------        ------------
Gross profit                                        38.7             37.0                 38.8                35.7
Selling, general and administrative expenses        31.2             32.8                 32.7                33.7
Expenses associated with Recapitalization             -                -                   2.6                  -
Expenses associated with merger integration           -               1.5                   -                  2.1
Expenses associated with private company              -                -                   0.2                  -
Expenses associated with non-cash compensation        -               0.1                   -                  0.1
                                               ----------       ----------           ----------        ------------
Operating income (loss)                              7.5              2.6                  3.3                (0.2)
                                               ----------       ----------           ----------        ------------
Interest expense                                     4.0              2.7                  2.5                 2.8
Other, net                                          (0.1)               -                 (0.2)                  -
Provision (benefit) for income taxes                 1.7             (0.5)                 0.5                (1.1)
                                               ----------       ----------           ----------        ------------
Net income (loss)                                    1.9%             0.4%                 0.5%               (1.9%)
                                               ==========       ==========           ==========        ============
</TABLE>

                                       12
<PAGE>

     Net sales consist primarily of comparable store net sales, new store net
sales and, for the twelve and twenty-eight weeks ended July 17, 1999, sales
resulting from the Western Merger.  Comparable store net sales is calculated
based on the change in net sales starting once a store has been opened for
thirteen complete accounting periods (each period represents four weeks).
Relocations are included in comparable store net sales from the date of opening.
Additionally, each converted Parts America store will be included in the
comparable store net sales calculation after thirteen complete accounting
periods following its physical conversion to an Advance Auto Parts store.
Holding has not included and currently does not plan to include Service Stores
in its comparable store net sales calculation.

     Holding's cost of goods sold includes merchandise costs and warehouse and
distribution expenses.  Gross profit as a percentage of net sales may be
affected by variations in Holding's product mix, price changes in response to
competitive factors and fluctuations in merchandise costs and vendor programs.

     Selling, general and administrative expenses are comprised of store
payroll, store occupancy, net advertising expenses, depreciation and
amortization, other store expenses and general and administrative expenses,
including salaries and related benefits of corporate employees, administrative
office expenses, data processing, professional expenses and other related
expenses.

Twelve Weeks Ended July 17, 1999 Compared to Twelve Weeks Ended July 18, 1998

     Net sales for the twelve weeks ended July 17, 1999 were $541.8 million, an
increase of $286.7 million over net sales for the twelve weeks ended July 18,
1998. The net sales increase was a result of the Western Merger, comparable
store sales increase of 11.4% and new stores opened within the last year. The
comparable sales increase was due to the maturation of stores opened in 1997 and
1998, increased product availability, continued growth in the commercial sales
program and the closure of certain Parts America stores in overlapping markets.
Comparable store sales increased 10.3% for the twelve weeks ended July 18, 1998.

     During the twelve weeks ended July 17, 1999, Holding opened 24 new stores,
relocated three stores, and closed nine stores in addition to the stores closed
due to relocations (one of which was in connection with the Western Merger store
closure program). Also, Holding added 193 stores to its commercial delivery
program, bringing the total to 985 stores. As of July 17, 1999, Holding operated
1,590 stores in 39 states, Puerto Rico and the U.S. Virgin Islands and supplied
approximately 715 independent dealers through the wholesale dealer network.

     Gross profit for the twelve weeks ended July 17, 1999 was $200.3 million,
or 37.0% of net sales, compared with $98.6 million, or 38.7% of net sales, in
the twelve weeks ended July 18, 1998. The decrease in the gross profit
percentage resulted from the lower margins associated with the wholesale dealer
network, the liquidation of certain product lines related to the Merchandise
Conversion and shrinkage associated with the Parts America Conversion. Excluding
the impact of the Service Stores and wholesale dealer network, Holding's gross
profit percentage on Advance Auto Parts and Parts America stores increased to
39.2% from 38.7% despite the negative impact from the product liquidation and
shrinkage. This increase is attributable to the Company realizing additional
vendor support and price reductions from purchasing synergies as a result of the
Western Merger.

     Selling, general, and administrative expenses, before expenses associated
with the merger integration and non-cash compensation, increased to $177.6
million, or 32.8% of net sales, in the twelve weeks ended July 17, 1999 from
$79.6 million, or 31.2% of net sales, in the twelve weeks ended July 18, 1998.
The increase as a percentage of sales was due primarily to higher store labor
and advertising costs. This increase was partially offset by a decrease in
occupancy expense due to a higher percentage of owned locations. Holding
recorded $8.2 million in merger integration and transition expenses and $0.5
million of non-cash compensation for the twelve weeks ended July 17, 1999.
Merger integration and transition expenses consist primarily of store and
merchandise conversions, professional services, travel, training and project
incentives.

     Operating income, as adjusted for expenses associated with the merger
integration and non-cash compensation, in the twelve weeks ended July 17, 1999
was $22.8 million, or 4.2% of net sales, as compared to $19.0 million, or 7.5%
of net sales, in the twelve weeks ended July 18, 1998.

                                       13
<PAGE>

     EBITDA (operating income plus depreciation and amortization), as adjusted
for expenses associated with the merger integration and non-cash compensation
was $34.9 million in the twelve weeks ended July 17, 1999, or 6.4% of net sales,
as compared to $25.0 million, or 9.8% of net sales, in the twelve weeks ended
July 18, 1998.  EBITDA is not intended to represent cash flow from operations as
defined by GAAP and should not be considered as a substitute for net income as
an indicator of operating performance or as an alternative to cash flow (as
measured by GAAP) as a measure of liquidity.  Holding's method for calculating
EBITDA may differ from similarly titled measures reported by other companies.
Management believes certain one time expenses, expenses associated with the
merger integration and non-cash compensation, should be eliminated from the
EBITDA calculation to evaluate the operating performance of the Company.

     Interest expense in the twelve weeks ended July 17, 1999 was $14.7 million,
or 2.7% of net sales, compared to $10.1 million, or 4.0% of net sales, in the
twelve weeks ended July 18, 1998. The increase in interest expense in the
twelve weeks ended July 17, 1999 was primarily due to the additional debt
incurred in the Western Merger, increased borrowings under the Company's
revolver and delayed draw facilities and higher interest rates.

     Income tax benefit for the twelve weeks ended July 17, 1999 was $2.5
million compared to an expense of $4.2 million in the twelve weeks ended July
18, 1998. The benefit in the second quarter of fiscal 1999 results largely from
adjustments to management's estimate of the Company's annual effective income
tax rate. The Company believes it will realize these tax benefits because of
loss carrybacks to prior periods, reversal of temporary differences, tax
planning strategies and anticipated future earnings.

     As a result of the above factors, Holding recorded net income of $2.1
million in the twelve weeks ended July 17, 1999 as compared to $4.9 million in
the twelve weeks ended July 18, 1998.  As a percentage of net sales, net income
for the twelve weeks ended July 17, 1999 was 0.4% as compared to 1.9% for the
twelve weeks ended July 18, 1998.

Twenty-Eight Weeks Ended July 17, 1999 Compared to Twenty-Eight Weeks Ended July
18, 1998

     Net sales for the twenty-eight weeks ended July 17, 1999 were $1,211.5
million, an increase of $667.5 million over net sales for the twenty-eight weeks
ended July 18, 1998. The net sales increase was a result of the Western Merger,
comparable store sales increase of 12.7% and new stores opened within the last
year. The comparable sales increase was due to the maturation of stores opened
in 1997 and 1998, increased product availability, continued growth in the
commercial sales program and closure of certain Parts America stores in
overlapping markets. Comparable store sales increased 6.9% for the twenty-eight
weeks ended July 18, 1998.

     During the twenty-eight weeks ended July 17, 1999, Holding opened 55 new
stores, reopened one closed location, relocated five stores, and closed 29
stores in addition to the stores closed due to relocations (19 of which were in
connection with the Western Merger store closure program).  Also, Holding added
453 stores to its commercial delivery program, bringing the total to 985 stores.
As of July 17, 1999, Holding operated 1,590 stores in 39 states, Puerto Rico and
the U.S. Virgin Islands and supplied approximately 715 independent dealers
through the wholesale dealer network.

     Gross profit for the twenty-eight weeks ended July 17, 1999 was $432.1
million, or 35.7% of net sales, compared with $211.2 million, or 38.8% of net
sales, in the twenty-eight weeks ended July 18, 1998.  The decrease in the gross
profit percentage resulted largely from the lower margins associated with the
wholesale dealer network, the liquidation of certain product lines related to
the Merchandise Conversion and shrinkage associated with the Parts America
Conversion.  Excluding the impact of the above, Holding's gross profit
percentage on Advance Auto Parts and Parts America stores would have increased
as a result of generally better pricing and more favorable terms from its
vendors as well as the increased vendor support in the twenty-eight weeks ended
July 17, 1999 compared to the twenty-eight weeks ended July 18, 1998.  This
increase in vendor support from long-term vendor agreements renegotiated as a
result of the Western Merger, which will provide for price reductions on future
purchases, has also resulted in deferred revenue for amounts from vendors that
have not yet been earned.

     Selling, general, and administrative expenses, before expenses associated
with the Recapitalization, merger integration, private company and non-cash
compensation, increased to $408.6 million, or 33.7% of net sales, in the twenty-
eight weeks ended July 17, 1999 from $178.0 million, or 32.7% of net sales, in
the twenty-eight weeks ended July 18, 1998. The increase as a percentage of
sales was due primarily to higher store labor costs, the increase

                                       14
<PAGE>

in advertising costs and cost associated with the Company's national managers'
conference. This increase was partially offset by a decrease in occupancy
expense due to a higher percentage of owned locations. Holding recorded $25.2
million in merger integration and transition expenses and $1.0 million of non-
cash compensation for the twenty-eight weeks ended July 17, 1999 and $14.0
million of Recapitalization expenses and $0.8 million in private company
expenses for the twenty-eight weeks ended July 18, 1998. Merger integration and
transition expenses consist primarily of store and merchandise conversions,
professional services, travel, training and project incentives.

     Operating income, as adjusted for expenses associated with the
Recapitalization, merger integration, private company and non-cash compensation
in the twenty-eight weeks ended July 17, 1999 was $23.5 million, or 1.9% of net
sales, as compared to $33.2 million, or 6.1% of net sales, in the twenty-eight
weeks ended July 18, 1998.

     EBITDA (operating income plus depreciation and amortization), as adjusted
for expenses associated with the Recapitalization, merger integration, private
company and non-cash compensation was $52.8 million in the twenty-eight weeks
ended July 17, 1999, or 4.4% of net sales, as compared to $46.7 million, or 8.6%
of net sales, in the twenty-eight weeks ended July 18, 1998.  EBITDA is not
intended to represent cash flow from operations as defined by GAAP and should
not be considered as a substitute for net income as an indicator of operating
performance or as an alternative to cash flow (as measured by GAAP) as a measure
of liquidity.  Holding's method for calculating EBITDA may differ from similarly
titled measures reported by other companies.  Management believes certain one
time expenses, expenses associated with the Recapitalization, merger
integration, private company and non-cash compensation should be eliminated from
the EBITDA calculation to evaluate the operating performance of the Company.

     Interest expense in the twenty-eight weeks ended July 17, 1999 was $33.2
million, or 2.8% of net sales, compared to $13.6 million, or 2.5% of net sales,
in the twenty-eight weeks ended July 18, 1998. The increase in interest expense
in the twenty-eight weeks ended July 17, 1999 was primarily due to the increase
in debt related to the Recapitalization, the additional debt incurred in the
Western Merger, increased borrowings under the Company's revolver and delayed
draw facilities and higher interest rates.

     Income tax benefit for the twenty-eight weeks ended July 17, 1999 was $12.9
million compared to an expense of $2.5 million in the twenty-eight weeks ended
July 18, 1998.  This decrease was primarily due to the decrease in income before
income taxes.  The Company believes it will realize these tax benefits because
of loss carrybacks to prior periods, reversal of temporary differences, tax
planning strategies and anticipated future earnings.

     As a result of the above factors, Holding recorded a net loss of $22.9
million in the twenty-eight weeks ended July 17, 1999 as compared to net income
of $2.6 million in the twenty-eight weeks ended July 18, 1998. As a percentage
of net sales, net loss for the twenty-eight weeks ended July 17, 1999 was 1.9%
as compared to net income of 0.5% for the twenty-eight weeks ended July 18,
1998.

Liquidity and Capital Resources

     Holding's primary capital requirements have been the funding of its
continued store expansion program, store relocations and remodels, inventory
requirements, the construction and upgrading of distribution centers, the
development and implementation of proprietary information systems and the
Western Merger.  Holding has financed its growth through a combination of
internally generated funds, borrowings and issuances of equity.

     Holding's new stores require capital expenditures of approximately $120,000
per store and an inventory investment of approximately $400,000 per store.  A
substantial portion of these inventories are financed through vendor payables.
Pre-opening expenses, consisting primarily of store set-up costs and training of
new store employees, average approximately $25,000 per store and are expensed
when incurred.  The Company expects to open between 80 and 100 new stores during
fiscal year 1999.  Additionally, the Parts America Conversion will require
capital expenditures of approximately $65,000 and conversion expense of
approximately $30,000 per store.  Generally, Parts America stores carried
approximately $100,000 more inventory (including support inventory in the
distribution centers) than Advance Auto Parts stores.  Holding expects to reduce
the inventory levels in the Parts America stores to Holding's average over the
next 6-12 months.

                                       15
<PAGE>

     For the twenty-eight weeks ended July 17, 1999, net cash used in operating
activities was $58.2 million. Of this amount, $22.9 million was due to a net
loss. Depreciation provided an additional $29.4 million of funds, amortization
of deferred debt issuance costs and bond discount provided an additional $6.5
million and $71.2 million was used in working capital and other purposes,
consisting primarily of increases in inventory and receivables. Net cash used
for investing activities was $51.5 million and was comprised primarily of net
capital expenditures of approximately $51.2 million. Net cash provided by
financing activities was $100.2 million and was comprised primarily of net
borrowings.

     Holding believes it will have sufficient liquidity to fund its debt service
obligations and implement its growth strategy over the next twelve months.  As
of July 17, 1999, Holding and the Company had outstanding indebtedness
consisting of $70.2 million of Senior Discount Debentures (the "Debentures"),
$200.0 million of Senior Subordinated Notes (the "Senior Subordinated Notes"),
borrowings of $327.0 million under the bank credit facility (the "Bank Credit
Facility"), $10.0 million of indebtedness under the McDuffie County Development
Authority Taxable Industrial Bonds ("IRB") and $3.3 million of obligation under
a capital lease.

     The Debentures accrete at a rate of 12.875%, compounded semiannually, to an
aggregate principal amount of $112.0 million by April 15, 2003.  Commencing
April 15, 2003, cash interest on the Debentures will accrue and be payable
semiannually at a rate of 12.875% per annum.  The Indenture governing the
Debentures contains certain covenants that, among other things, limit the
ability of Holding and its restricted subsidiaries to incur indebtedness and
issue preferred stock, repurchase stock and certain indebtedness, engage in
transactions with affiliates, create or incur certain liens, pay dividends or
certain other distributions, make certain investments, enter into new
businesses, sell stock of restricted subsidiaries, sell assets and engage in
certain mergers and consolidations.

     The Senior Subordinated Notes bear interest at a rate of 10.25%, payable
semiannually, and require no principal payments until maturity.  The Indenture
governing the Senior Subordinated Notes contains certain covenants that limit,
among other things, the ability of the Company and its restricted subsidiaries
to incur additional indebtedness and issue preferred stock, pay dividends or
certain other distributions, issue stock of subsidiaries, make certain
investments, repurchase stock and certain indebtedness, create or incur liens,
engage in transactions with affiliates, enter into new businesses, sell stock of
restricted subsidiaries and restrict the Company from engaging in certain
mergers or consolidations and sell assets. The $10.0 million principal amount
IRB bears interest at a variable rate and will require no principal payments
until maturity in November 2002.

     The Company has access to a total of $465.0 million through the Bank Credit
Facility in addition to its operating cash flow.  The Bank Credit Facility
provides for (i) a $125.0 million Tranche B term loan, which was made at the
closing of the Recapitalization; (ii) a revolver with maximum borrowings
including letters of credit of approximately $125.0 million, of which $50.8
million was available as of July 17, 1999, (iii) a $125.0 million delayed draw
term loan of which $50.0 million was drawn during the second quarter of fiscal
1999 and $75.0 million is available to the Company through April 15, 2001, and
(iv) a $90.0 million deferred term loan facility, which was drawn at the closing
of the Western Merger.  Subsequent to July 17, 1999, the Company drew an
additional $20.0 million of the delayed draw term loan to reduce the outstanding
revolver balance.  The term loan facilities, other than the Tranche B term loan,
will mature on the sixth anniversary of initial borrowing, and the Tranche B
term loan will mature on the eighth anniversary of initial borrowing.  Annual
principal payments on the term loan facilities prior to the sixth anniversary of
initial borrowing will be nominal; thereafter, required principal payments will
be approximately $236.5 million in 2004, $60.0 million in 2005 and $30.0 million
in 2006, assuming the term loan facilities have been fully borrowed.  The
revolving loan facility will mature on the sixth anniversary of initial
borrowing.  Until the delivery to the lenders of the Company's consolidated
financial statements for the first four fiscal quarters after the closing of the
Recapitalization, the interest rates under the delayed draw facilities and the
revolver are based, at the option of the Company, on either a Eurodollar rate
plus 2.25% per annum or a base rate plus 1.25% per annum.  From and after the
delivery of such consolidated financial statements, the interest rates under the
delayed draw facilities and the revolver will be determined by reference to a
pricing grid that will provide for reductions in the applicable interest rate
margins based on the Company's trailing total debt to EBITDA ratio (as defined
in the Bank Credit Facility).  The initial margins will be 2.25% and 1.25% for
Eurodollar and base rate borrowings, respectively, and can step down to 1.75%
and 0.75%, respectively, if the Company's total debt to EBITDA ratio is less
than or equal to 4.00 to 1.00.  The interest rate under the Tranche B term loan
and the deferred term loan facility is based, at the option of the Company, on a
Eurodollar rate plus 2.50% or a base rate plus 1.50%.

                                       16
<PAGE>

     The Bank Credit Facility contains covenants restricting the ability of the
Company and its subsidiaries to, among others things, (i) pay dividends on any
class of capital stock or make any payment to purchase, redeem, retire, acquire,
cancel or terminate capital stock, (ii) prepay, redeem, retire, acquire, cancel
or terminate debt, (iii) incur liens or engage in sale-leaseback transactions,
(iv) make loans, investments, advances or guarantees, (v) incur additional debt
(including hedging arrangements), (vi) make capital expenditures, (vii) engage
in mergers, acquisitions and asset sales, (viii) engage in transactions with
affiliates, (ix) enter into any agreement which restricts the ability to create
liens on property or assets or the ability of subsidiaries to pay dividends or
make payments on advances or loans to the Company or other subsidiaries; (x)
change the nature of the business conducted by the Company and its subsidiaries,
(xi) change the passive holding company status of Holding, and (xii) amend
existing debt agreements or the Company's or Holding's certificate of
incorporation, by-laws or other organizational documents.  The Company is also
required to comply with financial covenants in the Bank Credit Facility with
respect to (a) limits on annual aggregate capital expenditures,(b) a maximum
leverage ratio, (c) a minimum interest coverage ratio, and (d) a minimum
retained cash earnings test.  The Company is generally prohibited from paying
dividends (including to Holding) except that as long as no defined event of
default under the Bank Credit Facility then exists, the Company will be
permitted to pay dividends to Holding in an amount sufficient to cover the cash
interest due on the Debentures commencing October 15, 2003.  The Company
believes it is in compliance with the above covenants under the Bank Credit
Facility as of July 17, 1999.

     The loans under the Bank Credit Facility are secured by a first priority
security interest in all tangible and intangible assets of the Company. In the
second quarter of fiscal 1999, the Company amended the Bank Credit Facility to
add Advance Trucking Corporation as a subsidiary guarantor. Amounts available to
the Company under the revolver and delayed draw term loans are subject to a
borrowing base formula, which is based on certain percentages of the Company's
inventories. As of July 17, 1999, $237.8 million was available under these
facilities, net of $12.2 million outstanding for letters of credit. The Company
intends to use borrowings under the revolver and delayed draw term loans for
store expansion, the Parts America Conversion and funding of working capital.
Borrowings under the Bank Credit Facility are required to be prepaid, subject to
certain exceptions, with (a) 50% of defined excess cash flow, (b) 100% of the
net cash proceeds of all asset sales or other dispositions of property by the
Company and its subsidiaries (including certain insurance and condemnation
proceeds), subject to certain exceptions (including exceptions for (i)
reinvestment of certain asset sale proceeds within 360 days of such sale and
(ii) certain sale-leaseback transactions), (c) 100% of the net proceeds of
issuances of debt obligations of the Company and its subsidiaries, and (d) 100%
of the net proceeds of issuance of equity of the Company and its subsidiaries.
Because increases in net working capital, capital expenditures and debt
repayments are deducted in calculating excess cash flow, the Company does not
anticipate that the prepayment obligation under the Bank Credit Facility in
respect thereof will have a material effect on its operating strategy. With
respect to growth through acquisitions, the operation of this covenant may
result in the application of cash resources for prepayments which would require
the Company to secure additional equity or debt financing to fund an
acquisition, but while no assurance can be given, the Company does not
anticipate that this would have a material effect on its ability to finance
acquisitions in the future.

     As a holding company, Holding relies on dividends from the Company as its
primary source of liquidity.  Holding does not have and in the future may not
have any assets other than the capital stock of the Company.  The ability of the
Company to pay cash dividends to Holding when required is restricted by law and
the terms of the Company's debt instruments, including the Credit Facility and
the Senior Subordinated Notes.  No assurance can be made that the Company will
be able to pay cash dividends to Holding when required on the Debentures.

Seasonality

     The Company's business is somewhat seasonal in nature, with the highest
sales occurring in the spring and summer months.  In addition, the Company's
business is affected by weather conditions.  While unusually heavy precipitation
tends to soften sales as elective maintenance is deferred during such periods,
extremely hot and cold weather tends to enhance sales by causing parts to fail.

                                       17
<PAGE>

Year 2000 Conversion

     The following discussion about the implementation of the Company's Year
2000 program, the costs expected to be associated with the program and the
results the Company expects to achieve constitute forward-looking information.
As noted below, there are many uncertainties involved in the Year 2000 issue,
including the extent to which the Company will be able to adequately provide for
contingencies that may arise, as well as the broader scope of the Year 2000
issue as it may affect third parties and the Company's business partners.
Accordingly, the costs and results of the Company's Year 2000 program and the
extent of any impact on the Company's results of operations could vary
materially from that stated herein.

     A significant percentage of the software that runs most computers relies on
two-digit date codes to perform computations and decision-making functions.
Commencing on January 1, 2000, these computer programs may fail from an
inability to interpret date codes properly, misinterpreting "00" as the year
1900 rather than 2000.  The Company believes it has completed the identification
of all necessary internal software changes required due to the Year 2000 issue.
The Company has appointed an internal Year 2000 project manager and remediation
team and has adopted a four phase approach of assessment, remediation, testing,
and contingency planning.  The scope of the project includes all internal
software, hardware, operating systems, and assessment of risk to the business
from vendors and other partners' Year 2000 issues.  The assessment of all
internal systems, the remediation and testing phases are complete.  Contingency
planning for certain information technology systems and business processes has
begun.

     The Company is utilizing internal and external resources to correct,
replace, and test its software and equipment for Year 2000 compliance. As of
August 31, 1999, the Company has completed substantially all reprogramming
required to permit the proper functioning of all internal computer systems and
equipment, including the testing of such systems and equipment, that will be
operational on December 31, 1999. The total cost of the Year 2000 project is
estimated at $5.2 million. Of that cost, approximately $2.5 million represents
the purchase of new software and hardware, which will be capitalized. The
remaining costs were or will be expensed as incurred during fiscal 1998 and
1999. As July 17, 1999, the Company has spent approximately $4.3 million on the
Year 2000 project.

     The Company's Year 2000 program is designed to minimize the possibility of
serious Year 2000 interruptions.  Possible Year 2000 worst case scenarios
include the interruption of significant parts of the Company's business as a
result of critical information systems failure or the failure of vendors,
distributors or service providers. Since these possibilities cannot be
eliminated, ongoing communications have been established with almost all vendors
and other partners to monitor their progress in resolving Year 2000 issues, most
of which the Company believes are making substantial progress.  However, the
Company cannot guarantee that Year 2000 related systems issues of its business
partners will be corrected in a timely manner or that the failure of its
business partners to correct these issues would not have a material adverse
effect.

     The Company has developed contingency plans in the event a business
interruption caused by Year 2000 problems should occur.  For certain information
technology systems and business functions, contingency plans are in place.
Elements of the Company's contingency plans include: switching of vendors, back-
up systems that do not rely on computers, and the stockpiling of certain
products in the months before the Year 2000.

     The cost and time estimated for the Year 2000 project are based on the
Company's best estimates.  There can be no guarantee that these estimates will
be achieved or that planned results will be achieved.  Risks factors include,
but are not limited to, the retention of internal and external resources
dedicated to the project, the timely delivery of software corrections from
external vendors, and the successful completion of key business partners' Year
2000 projects.

                                       18
<PAGE>

                          PART II.  OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

     On August 16, 1999, the United States District Court of Appeals for the
Sixth District affirmed the November 1996, October 1997 and January 1998
decisions of the United States District Court for the Western District of
Kentucky. Those decisions held that the Company was entitled to exclusive use of
the name "Advance Auto Parts" throughout the United States, except in Jefferson
County, Kentucky, and that the Company was entitled to summary judgment in
connection with various infringement and unfair competition claims brought by
the appellant.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     On May 23, 1999 and June 24, 1999, Holding issued and sold an aggregate of
39,150 shares of its Class A common stock, $0.01 par value per share (the
"Shares"), at a price per share of $ 16.82 or an aggregate purchase price of
$658,503 to certain employees of the Company other than the Company's officers
or directors (the "Purchasers"). Holding offered and sold the Shares pursuant to
the Advance Holding Corporation 1998 Employee Stock Subscription Plan, as
amended (the "Plan"), which the Company filed as an exhibit to its Registration
Statement on Form S-4, effective October 30, 1998 (Registration No. 333-56013).
As consideration for the Shares, Holding received $356,810 in cash, and $301,693
in the form of secured promissory notes, the payment of which are secured by
individual stock pledge agreements with each borrowing Purchaser.

     The issuance of the Shares was exempt from the registration requirements of
the Securities Act of 1933, as amended, pursuant to Rule 701 promulgated
thereunder, which exempts certain offers and sales of securities pursuant to
certain compensatory benefit plans.  The Plan is a compensatory benefit plan
within the meaning of Rule 701 and the aggregate amount of securities
sold by Holding in reliance on Rule 701 during the applicable period has not
exceeded 15% of the outstanding amount of Class A common stock.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          Exhibit
          Number   Description
          ------   -----------

          10.1(1)  First Amendment dated as of June 30, 1999, to the Credit
                   Agreement dated as of April 15, 1998 as amended and restated
                   as of October 19, 1998, among Holding, the Company, the
                   lenders party thereto and The Chase Manhattan Bank ("Chase"),
                   as administrative agent.

          10.2(1)  Supplement No. 1 dated as of June 30, 1999, to the Guarantee
                   Agreement dated as of April 15, 1998 as amended and restated
                   as of November 2, 1998, among Holding, the Subsidiary
                   Guarantors listed therein and Chase, as collateral agent.

          10.3(1)  Supplement No. 1 dated as of June 30, 1999, to the Pledge
                   Agreement dated as of April 5, 1998 as amended and restated
                   as of November 2, 1998, among the Company, Holding, the
                   Subsidiary Pledgors listed therein and Chase, as collateral
                   agent.

          10.4(1)  Supplement No. 1 dated as of June 30, 1999, to the Security
                   Agreement dated as of April 15, 1998 as amended and restated
                   as of November 2, 1998, among the Company, Holding, the
                   Subsidiary Guarantors listed therein and Chase, as collateral
                   agent.

                                       19
<PAGE>

          10.5(1)  Supplement No. 1 dated as of June 30, 1999, to the Indemnity,
                   Subrogation and Contribution Agreement dated as of April 15,
                   1998 as amended and restated as of November 2, 1998 among the
                   Company, Holding, the Guarantors listed therein and Chase, as
                   collateral agent.

          27.1     Financial Data Schedule.

          (1)      Incorporated by reference to the exhibit designated by the
                   same number in the Form 10-Q filed by the Company for the
                   period ended July 17, 1999 (File No. 333-56013).

     (b)  Reports on Form 8-K

          None

                                       20
<PAGE>

                                   SIGNATURE

     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 thereunto duly  authorized.

                                ADVANCE HOLDING CORPORATION,
                                a Virginia corporation


August 31, 1999                 By: /s/ J. O'Neil Leftwich
                                    --------------------------------------------
                                          J. O'Neil Leftwich
                                          Chief Financial Officer
                                          (Duly Authorized Officer and Principal
                                          Financial Officer)




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