<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 October 6, 2001

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


           5673 Airport Road                                     24012
           Roanoke, Virginia                                   (Zip Code)
(Address of Principal Executive Offices)


                                 (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 November 8, 2001, the registrant had outstanding 28,320,150 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 and Forty Week Periods Ended October 6, 2001

                                TABLE OF CONTENTS

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

         Item 1.  Condensed Consolidated Financial Statements of Advance Holding
                  Corporation and Subsidiaries:

                  Condensed Consolidated Balance Sheets as of October 6, 2001 and
                  December 30, 2000.................................................................      1

                  Condensed Consolidated Statements of Operations for the Twelve and
                  Forty Week Periods Ended October 6, 2001 and October 7, 2000 .....................      2

                  Condensed Consolidated Statements of Cash Flows for the
                  Forty Week Periods Ended October 6, 2001 and October 7, 2000 .....................      3

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

         Item 2.  Management's Discussion and Analysis of Financial Condition and
                  Results of Operations ............................................................     11

         Item 3.  Quantitative and Qualitative Disclosures About Market Risks ......................     18

PART II. OTHER INFORMATION

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

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

                                       i

<PAGE>

                  Advance Holding Corporation and Subsidiaries
                     Condensed Consolidated Balance Sheets
                     October 6, 2001 and December 30, 2000
                 (dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                    October 6,       December 30,
                                      Assets                                           2001              2000
                                      ------                                      ---------------   -------------
                                                                                    (unaudited)
<S>                                                                               <C>               <C>
Current assets:
  Cash and cash equivalents                                                       $        11,918   $      18,009
  Receivables, net                                                                         89,632          80,578
  Inventories                                                                             805,392         788,914
  Other current assets                                                                     18,462          10,274
                                                                                  ---------------   -------------
            Total current assets                                                          925,404         897,775
Property and equipment, net of accumulated depreciation of
  $226,167 and $191,897                                                                   406,531         410,960
Assets held for sale                                                                       22,388          25,077
Other assets, net                                                                          21,069          22,548
                                                                                  ---------------   -------------
                                                                                  $     1,375,392   $   1,356,360
                                                                                  ===============   =============
                       Liabilities and Stockholders' Equity
                       ------------------------------------
Current liabilities:
  Bank overdrafts                                                                 $        10,546        $ 13,599
  Current portion of long-term debt                                                             -           9,985
  Accounts payable                                                                        403,668         387,852
  Accrued expenses                                                                        142,310         124,962
  Other current liabilities                                                                50,802          42,794
                                                                                  ---------------   -------------
            Total current liabilities                                                     607,326         579,192
                                                                                  ---------------   -------------
Long-term debt                                                                            532,382         576,964
                                                                                  ---------------   -------------
Other long-term liabilities                                                                39,311          43,933
                                                                                  ---------------   -------------
Commitments and contingencies
Stockholders' equity:
  Preferred stock, 8% noncumulative, nonvoting, $10 par value,
     redeemable by the Company at par; liquidation value at par;
     100,000 shares authorized; no shares issued or outstanding                                 -               -
  Common stock, Class A, voting, $.01 par value, 62,500,000
     shares authorized; 28,320,150 and 28,288,550 issued
     and outstanding                                                                          283             283
  Common stock, Class B, nonvoting, $.01 par value,
     21,875,000 shares authorized; no shares issued
     or outstanding                                                                             -               -
  Additional paid-in capital                                                              372,954         372,169
  Other                                                                                     2,925             396
  Accumulated deficit                                                                    (179,789)       (216,577)
                                                                                  ---------------   -------------
            Total stockholders' equity                                                    196,373         156,271
                                                                                  ---------------   -------------
                                                                                  $     1,375,392   $   1,356,360
                                                                                  ===============   =============
</TABLE>


The accompanying notes to the 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 Forty Week Periods Ended
                      October 6, 2001 and October 7, 2000
                             (dollars in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                       Twelve Week Periods Ended      Forty Week Periods Ended
                                                                    ------------------------------  -----------------------------
                                                                      October 6,      October 7,     October 6,      October 7,
                                                                         2001            2000           2001            2000
                                                                    --------------   -------------  -------------   -------------
<S>                                                                 <C>              <C>            <C>             <C>
Net sales                                                            $     598,793   $     552,138  $   1,935,630   $   1,787,370
Cost of sales, including purchasing and warehousing costs                  354,730         328,235      1,151,287       1,087,959
                                                                    --------------   -------------  -------------   -------------
         Gross profit                                                      244,063         223,903        784,343         699,411
Selling, general and administrative expenses                               206,478         193,792        678,839         617,867
                                                                    --------------   -------------  -------------   -------------
         Operating income                                                   37,585          30,111        105,504          81,544
                                                                    --------------   -------------  -------------   -------------
Other (expense) income:
     Interest expense                                                      (12,121)        (15,183)       (45,195)        (51,784)
     Other                                                                     310             527            879           1,059
                                                                    --------------   -------------  -------------   -------------
         Total other expense, net                                          (11,811)        (14,656)       (44,316)        (50,725)
                                                                    --------------   -------------  -------------   -------------
Income before provision for income taxes
     and extraordinary item                                                 25,774          15,455         61,188          30,819
Provision for income taxes                                                 (10,269)         (5,948)       (24,279)        (11,887)
                                                                    --------------   -------------  -------------   -------------
Income before extraordinary item                                            15,505           9,507         36,909          18,932
Extraordinary item, gain on debt extinguishment,
     net of $1,759 income taxes                                                  -           2,933              -           2,933
                                                                    --------------   -------------  -------------   -------------
Net income                                                           $      15,505   $      12,440  $      36,909   $      21,865
                                                                    ==============   =============  =============   =============
</TABLE>


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

                                        2

<PAGE>
                   Advance Holding Corporaton and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                        For the Forty Week Periods Ended
                       October 6, 2001 and October 7, 2000
                             (dollars in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                   Forty Week Periods Ended
                                                                                              -----------------------------------
                                                                                                 October 6,        October 7,
                                                                                                    2001               2000
                                                                                              ----------------- -----------------
<S>                                                                                           <C>               <C>
Cash flows from operating activities:
   Net income                                                                                      $     36,909     $      21,865
   Adjustments to reconcile net income to net cash provided by
   operating activities:
   Depreciation and amortization                                                                         53,629            50,614
   Amortization of stock option compensation                                                              2,862               533
   Amortization of deferred debt issuance costs                                                           2,452             2,542
   Amortization of bond discount                                                                          8,417             7,432
   Amortization of interest on capital lease obligation                                                       -                42
   Losses on sales of property and equipment, net                                                         1,336               368
   Impairment of assets held for sale                                                                     1,600                 -
   Provision for deferred income taxes                                                                   15,265            14,987
   Extraordinary gain on extinguishment of debt, net of tax                                                   -            (2,933)
   Net (increase) decrease in:
    Receivables, net                                                                                     (8,446)            7,832
    Inventories                                                                                             732           (53,660)
    Other assets                                                                                        (10,702)           (3,148)
   Net increase (decrease) in:
    Accounts payable                                                                                     15,816            74,670
    Accrued expenses                                                                                     16,834           (17,845)
    Other liabilities                                                                                   (10,410)           (2,499)
                                                                                              ----------------- -----------------
     Net cash provided by operating activities                                                          126,294           100,800
                                                                                              ----------------- -----------------
Cash flows from investing activities:
   Purchases of property and equipment                                                                  (49,550)          (46,883)
   Acquisition, net of cash acquired                                                                    (21,472)                -
   Proceeds from sales of property and equipment                                                          2,317             4,777
                                                                                              ----------------- -----------------
     Net cash used in investing activities                                                              (68,705)          (42,106)
                                                                                              ----------------- -----------------
Cash flows from financing activities:
   Decrease in bank overdrafts                                                                           (3,053)           (7,328)
   (Payment) borrowing of note payable                                                                     (784)            1,555
   Early extinguishment of debt                                                                               -           (24,990)
   Borrowings under credit facilities                                                                   171,400           191,200
   Payments on credit facilities                                                                       (233,601)         (233,200)
   (Repurchases of) proceeds from Class A common stock under
    the stockholder subscription plan                                                                      (502)            1,602
   Other                                                                                                  2,860             6,243
                                                                                              ----------------- -----------------
     Net cash used in financing activities                                                              (63,680)          (64,918)
                                                                                              ----------------- -----------------
Net decrease in cash and cash equivalents                                                                (6,091)           (6,224)
Cash and cash equivalents, beginning of period                                                           18,009            22,577
                                                                                              ----------------- -----------------
Cash and cash equivalents, end of period                                                           $     11,918     $      16,353
                                                                                              ================= =================
Supplemental cash flow information:
   Interest paid                                                                                   $     27,872     $      36,089
   Income tax (payments) refunds, net                                                                    (4,600)            6,700
Non-cash transactions:
   Accrued purchases of property and equipment                                                            8,527             8,630
   Equity transactions under the stockholder subscription and
    employee stock option plans                                                                             426             1,281
   Conversion of capital lease obligation                                                                     -             3,509
                                                                                              ================= =================
</TABLE>

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

                                        3

<PAGE>

                   Advance Holding Corporaton and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
 For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)


1.   Basis of Presentation:

     The accompanying 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 October 6, 2001, the
condensed consolidated statements of operations for the twelve and forty week
periods ended October 6, 2001 and October 7, 2000 and the condensed consolidated
statements of cash flows for the forty week periods ended October 6, 2001 and
October 7, 2000, 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 disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States 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 December 30, 2000.

     The results of operations for the forty week period are not necessarily
indicative of the operating results to be expected for the full fiscal year.

     Recent Accounting Pronouncements

     In September 2000, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for
Transfers and Servicing Financial Assets and Extinguishment of Liabilities".
This statement replaces SFAS No. 125, but carries over most of the provisions of
SFAS No. 125 without reconsideration. The Company implemented SFAS No. 140
during the first quarter of fiscal 2001. The implementation had no impact on the
Company's financial position or the results of its operations.

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and No.
142, "Goodwill and Other Intangible Assets". SFAS No. 141 addresses accounting
and reporting for all business combinations and requires the use of the purchase
method for business combinations. SFAS No. 141 also requires recognition of
intangible assets apart from goodwill if they meet certain criteria. SFAS No.
142 establishes accounting and reporting standards for acquired goodwill and
other intangible assets. Under SFAS No. 142, goodwill and intangibles with
indefinite useful lives are no longer amortized but are instead subject to at
least an annual assessment for impairment by applying a fair-value based test.
SFAS No. 141 applies to all business combinations initiated after June 30, 2001.
SFAS No. 142 is effective for existing goodwill and intangible assets beginning
on December 31, 2001. SFAS No. 142 is effective immediately for goodwill and
intangibles acquired after June 30, 2001. Although the Company is currently
evaluating the impact of SFAS Nos. 141 and 142, management does not expect that
the adoption of these statements will have a material impact on existing
goodwill or intangibles. For the twelve and forty week periods ended October 6,
2001, the Company had amortization expense of approximately $146 and $296,
respectively related to existing goodwill. Such amortization will be eliminated
upon adoption of SFAS No. 142.

     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". SFAS No. 143 establishes accounting standards for
recognition and measurement of an asset retirement obligation and an associated
asset retirement cost and is effective for fiscal years beginning after June 15,
2002. The Company does not expect SFAS No. 143 to have a material impact on its
financial statements.


                                       4

<PAGE>

                   Advance Holding Corporaton and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
 For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)

     In August 2001, the FASB also issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This statement replaces both SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" and Accounting Principles Board (APB) Opinion No. 30,
"Reporting the Results of Operations -- Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions". SFAS 144 retains the basic provisions from both SFAS
121 and APB 30 but includes changes to improve financial reporting and
comparability among entities. The provisions of SFAS 144 are effective for
fiscal years beginning after December 15, 2001. The Company has not yet
determined the impact SFAS No. 144 will have on its financial position or the
results of its 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 2000 amounts have been reclassified to conform with their 2001
presentation.

     2. Accounts Receivable:

     Receivables consist of the following:

                                                   October 6,     December 30,
                                                      2001            2000
                                                ---------------  --------------
                                                 (unaudited)
    Trade:
      Wholesale                                 $         9,714   $      12,202
      Retail                                             18,526          15,666
    Vendor                                               48,014          36,260
    Installment                                          14,915          14,197
    Related parties                                       1,089           3,540
    Employees                                               660             607
    Other                                                 2,754           3,127
                                                ---------------  --------------
    Total receivables                                    95,672          85,599
    Less - Allowance for doubtful accounts               (6,040)         (5,021)
                                                ---------------  --------------
    Receivables, net                            $        89,632  $       80,578
                                                ===============  ==============


                                       5

<PAGE>

                   Advance Holding Corporaton and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
 For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)

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 fiscal year based on the
inventory levels and costs at that time. Accordingly, interim LIFO calculations
must be based on management's estimates of expected fiscal year-end inventory
levels and costs. The Company capitalizes certain purchasing and warehousing
costs into inventory. Purchasing and warehousing costs included in inventory at
October 6, 2001 and December 30, 2000 were $56,039 and $56,305, respectively.
Inventories consist of the following:

                                                  October 6,      December 30,
                                                     2001             2000
                                               ---------------  ---------------
                                                 (unaudited)
Inventories at FIFO                            $       790,118  $       779,376
Adjustments to state inventories at LIFO                15,274            9,538
                                               ---------------  ---------------
Inventories at LIFO                            $       805,392  $       788,914
                                               ===============  ===============



4.       Restructuring Liabilities:

         The Company's restructuring activities primarily relate to the ongoing
analysis of the profitability of store locations and the settlement of
restructuring activities undertaken as a result of the fiscal 1998 merger with
Western Auto Supply Company ("Western") ("Western Merger"). Additionally, the
Company assumed a portion of the pre-acquisition reserves related to the
restructuring activities of the recently acquired Carport Auto Parts, Inc. (the
"Carport Acquisition" ) (See Note 5). During the first three quarters of fiscal
2001, the Company closed three stores included in the fiscal 2000 restructuring
activities and made the decision to close or relocate 33 additional stores not
meeting profitability objectives, of which 25 had been closed or relocated as of
October 6, 2001. As of October 6, 2001, this liability represents the current
value required for certain facility exit costs, which will be settled over the
remaining terms of the underlying lease agreements.

         On July 27, 2001, the Company made the decision to close a duplicative
distribution facility located in Jeffersonville, Ohio. This 382,000 square foot
owned facility opened in 1996 and served stores operating in the retail segment
throughout the mid-west portion of the United States. The Company has operated
two distribution facilities in overlapping markets since the Western Merger, in
which the Company assumed the operation of a Western distribution facility in
Ohio. The decision to close this facility allows the Company to utilize the
operating resource requirements more productively in other areas of the
business. The Company has established restructuring reserves for the termination
of certain employees and exit costs in connection with the decision to close
this facility. Expenses associated with restructuring are included in selling,
general and administrative expenses in the accompanying condensed consolidated
statements of operations.


                                       6

<PAGE>

                  Advance Holding Corporation and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)

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

                                                            Other Exit
                                              Severance       Costs
                                              ---------     ----------
     Balance, December 30, 2000               $       -     $    6,788
     New provisions                                 475          3,953
     Change in estimates                              -            121
     Reserves utilized                             (186)        (3,928)
                                              ---------     ----------
     Balance, October 6, 2001 (unaudited)     $     289     $    6,934
                                              =========     ==========

     As a result of the Western Merger, the Company established restructuring
reserves in connection with the decision to close certain Parts America stores,
to relocate certain Western administrative functions, to exit certain facility
leases and to terminate certain employees of Western. Additionally, the Carport
Acquisition resulted in restructuring reserves for closing 21 acquired stores
not expected to meet long-term profitability objectives and the termination of
certain administrative employees of the acquired company. As of October 6, 2001,
the other exit costs represent the current value required for certain facility
exit costs, which will be settled over the remaining terms of the underlying
lease agreements.

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

                                                            Other Exit
                                              Severance       Costs
                                              ---------     ----------
     Balance, December 30, 2000               $       -     $    3,797
     Purchase accounting adjustments                837          1,422
     Reserves utilized                             (837)        (2,295)
                                              ---------     ----------
     Balance, October 6, 2001 (unaudited)     $       -     $    2,924
                                              =========     ==========

5    Carport Acquisition:

     On April 23, 2001, the Company completed its acquisition of Carport Auto
Parts, Inc. ("Carport"). The acquisition included a net 30 retail stores located
in Alabama and Mississippi, and substantially all of the assets used in
Carport's operations. The acquisition has been accounted for under the purchase
method of accounting and, accordingly, Carport's results of operations have been
included in the Company's statement of operations since the acquisition date.

     The purchase price, of $21,533, has been allocated to the assets acquired
and the liabilities assumed based on a preliminary estimate of their fair values
at the date of acquisition. This allocation resulted in the recognition of
$3,239 in goodwill.

6.   Assets Held for Sale:

     During the first quarter of fiscal 2001, the Company recorded an impairment
charge of $1,600 reducing the carrying value of a facility included in assets
held for sale to $6,000. The facility, which is held in the Wholesale segment,
consists of excess space not required for the Company's current needs.


                                       7

<PAGE>

                  Advance Holding Corporation and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)


7.      Related Parties:

        In September 2001, the Company loaned a member of the Board of Directors
$1,300. This loan is evidenced by a full recourse promissory note bearing
interest at prime rate, payable annually, and due in full in five years from its
inception. Payment of the promissory note is secured by a stock pledge agreement
that grants the Company a security interest in all shares of Holding common
stock owned by the board member under Holding's stock subscription plan.

     The following table presents the related party transactions with Sears,
Roebuck & Co. ("Sears") included in the condensed consolidated statements of
operations for the twelve and forty week periods ended October 6, 2001 and
October 7, 2000 and the condensed consolidated balance sheets as of October 6,
2001 and December 30, 2000:

<TABLE>
<CAPTION>
                                              Twelve Week Periods Ended        Forty Week Periods Ended
                                            ----------------------------------------------------------------
                                                October 6,      October 7,       October 6,      October 7,
                                                   2001            2000             2001            2000
                                            --------------  --------------      -----------     ------------
                                             (unaudited)      (unaudited)       (unaudited)     (unaudited)
<S>                                           <C>              <C>               <C>             <C>
        Net sales to Sears                    $   2,050        $   1,929         $   5,929       $   5,905
        Credit card fees expense                     77               97               271             325


                                                                                 October 6,     December 30,
                                                                                    2001            2000
                                                                                -----------     ------------
                                                                                (unaudited)
        Receivables from Sears                                                   $     771       $   3,160
        Payables to Sears                                                            1,220           1,321
</TABLE>

8.      Segment and Related Information:

        The Company has the following operating segments: Holding, Retail and
Wholesale. Holding has no operations but holds certain assets and liabilities.
Retail consists of the retail operations of the Company, operating under the
trade names "Advance Auto Parts " and "Western Auto" in the United States and
"Western Auto" in Puerto Rico and the Virgin Islands. Wholesale consists of the
wholesale operations, including distribution services to independent dealers and
franchisees all operating under the "Western Auto" trade name.

        During the first quarter of fiscal 2001, the Company realigned its
retail operations to include the Company-owned store operating under the
"Western Auto" trade name in California, which was previously included in the
Wholesale segment. Therefore, the following segment disclosures for the twelve
and forty weeks ended October 7, 2000 have been restated to reflect this new
structure.


                                       8

<PAGE>

                  Advance Holding Corporation and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)

         The accounting policies of the consolidated company have been
consistently applied to the reportable segments listed below.

<TABLE>
<CAPTION>
                                                                              Twelve Week Periods Ended
                                                        ----------------------------------------------------------------------------
     October 6, 2001 (unaudited)                          Holding       Retail         Wholesale   Eliminations       Totals
     -------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>         <C>              <C>         <C>              <C>
     Net sales                                            $      -    $  580,105       $  18,688   $          -     $  598,793
     (Loss) income before benefit
         (provision) for income taxes                       (2,573)       28,455            (108)             -         25,774
     Segment assets (a)                                     13,517     1,342,463          39,854        (20,442)     1,375,392



     October 7, 2000 (unaudited)                          Holding       Retail         Wholesale   Eliminations       Totals
     -------------------------------------------------------------------------------------------------------------------------------
     Net sales                                            $      -    $  527,377       $  24,761   $          -     $  552,138
     (Loss) income before benefit
         (provision) for income taxes                       (2,272)       16,464           1,263              -         15,455
     Segment assets (a)                                     14,625     1,331,834          63,477        (27,991)     1,381,945

                                                                               Forty Week Periods Ended
                                                        ----------------------------------------------------------------------------
     October 6, 2001 (unaudited)                          Holding       Retail         Wholesale   Eliminations       Totals
     -------------------------------------------------------------------------------------------------------------------------------
     Net sales                                            $      -    $1,855,687       $  79,943   $          -     $1,935,630
     (Loss) income before benefit
         (provision) for income taxes                       (8,481)       71,685          (2,016)             -         61,188
     Segment assets (a)                                     13,517     1,342,463          39,854        (20,442)     1,375,392



     October 7, 2000 (unaudited)                          Holding       Retail         Wholesale   Eliminations       Totals
     -------------------------------------------------------------------------------------------------------------------------------
     Net sales                                            $      -    $1,687,687       $  99,683   $          -     $1,787,370
     (Loss) income before benefit
         (provision) for income taxes                       (7,421)       40,055          (1,815)             -         30,819
     Segment assets (a)                                     14,625     1,331,834          63,477        (27,991)     1,381,945
</TABLE>

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


9.        Contingencies:

          During the first quarter of fiscal 2001, the Company recorded a net
gain of $8,300 as a result of a settlement reached with a vendor, in which the
vendor repudiated a long-term supply agreement. This gain was recognized as a
reduction to cost of sales in the accompanying statement of operations.

          The Company received notification from Sears during the first quarter
of fiscal 2001 that certain environmental matters of Western, existing as of the
merger date and fully indemnified by Sears, have been settled. Accordingly, the
Company reversed a $2,500 receivable due from Sears and reduced the
corresponding environmental liability.

                                       9

<PAGE>

                  Advance Holding Corporation and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements
For the Twelve and Forty Week Periods Ended October 6, 2001 and October 7, 2000
                             (dollars in thousands)


10.  Discount Merger:

     On August 7, 2001, the Company signed a definitive agreement to acquire
Discount Auto Parts, Inc. ("Discount") in a merger transaction. Discount
shareholders will receive $7.50 per share in cash plus 0.2577 shares of common
stock in the combined company, collectively Advance Auto Parts, Inc.
("Advance"), for each share of Discount stock. Accordingly, upon consummation of
the merger, Discount shareholders will own approximately 13% of the total shares
outstanding of Advance. On August 31, 2001, the Company filed a registration
statement on behalf of Advance covering the shares to be issued to Discount
shareholders, which will result in Advance Auto Parts, Inc. becoming a publicly
traded company. As of August 28, 2001, Discount operated approximately 668
retail auto parts stores in Florida, Georgia, South Carolina, Alabama, Louisiana
and Mississippi. The merger will be accounted for under the purchase method of
accounting.

     In connection with this merger, the Company has obtained financing
commitments to fund the cash portion of consideration to be paid to Discount
shareholders and in-the-money option holders, refinance its existing senior
credit facility ($260,299 at October 6, 2001), repay Discount's indebtedness and
premiums ($210,800 at August 28, 2001 plus repayment premiums of $6,300),
purchase Discount's Gallman distribution facility from the lessor (approximately
$34,000) and pay approximately $35,000 in related transaction fees and expenses.
The financing has been secured in the form of senior subordinated notes and the
refinancing of the senior credit facility, which is described below.

     On October 31, 2001, the Company finalized its offering of $200,000 in
Senior Subordinated Notes (the "Notes") offered at an issue price of 92.802%,
yielding gross proceeds of approximately $185,600. The Notes mature on April 15,
2008 and bear interest at 10.25% payable semi-annually on April 15 and October
15. The Notes will be fully and unconditionally guaranteed on a unsecured senior
subordinated basis by each of the Company's existing and future restricted
subsidiaries that guarantees any indebtedness of the Company or any other
restricted subsidiary. The Notes are redeemable at the Company's option, in
whole or in part, at any time on or after April 15, 2003, in cash at the
redemption prices described in the offering plus accrued and unpaid interest and
liquidating damages, if any, at the redemption date. The Notes also contain
certain covenants that will limit, among other things, the Company and its
subsidiaries ability to incur additional indebtedness and issue preferred stock,
pay dividends or certain other distributions, 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, redeem subordinated debt, sell assets, enter into any
agreements that restrict dividends from restricted subsidiaries and enter into
certain mergers or consolidations.

     Additionally, the Company has received a binding commitment, subject to
customary conditions, for a new senior credit facility (the "Facility")
consisting of (1) a $180,000 tranche A term loan facility due 2006 and a
$305,000 tranche B term loan facility due 2007 and (2) a $160,000 revolving
credit facility (including a letter of credit subfacility). The Facility will be
jointly and severally guaranteed by all of the Company's domestic subsidiaries
(including Discount and its subsidiaries) and Advance and will be secured by
substantially all of the Company's assets, the assets of existing and future
domestic subsidiaries (including Discount and its subsidiaries), as well as the
assets of Advance.

                                       10

<PAGE>


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

     Advance Holding Corporation ("Holding") conducts all of its operations
through its wholly owned subsidiary, Advance Stores Company, Incorporated and
its subsidiaries (the "Company"). The Company was formed in 1929. In the 1980's,
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 1980's through the present, the Company has grown
significantly through new store openings, strategic acquisitions and a merger
with Western Auto Supply Company (the "Western Merger"). Additionally, in 1996,
the Company began to aggressively expand its sales to "do-it-for-me" ("DIFM")
customers by implementing a commercial delivery program that supplies parts and
accessories to third party automotive service and repair providers.

     As of October 6, 2001, the Company had 1,791 stores in 38 states, Puerto
Rico and the Virgin Islands operating under the "Advance Auto Parts" and
"Western Auto" trade names (the "Retail" segment). Advance Auto Parts is the
second largest retailer of automotive parts and accessories in the United States
and, based on store count, the Company believes it is the largest retailer in a
majority of its markets. The Western Auto stores (the "Service Stores") included
in the Retail segment offer home and garden merchandise in addition to
automotive parts, accessories and service. The Company also operates a wholesale
distribution network which includes distribution services of automotive parts
and accessories and home and garden merchandise to approximately 430
independently owned dealer stores in 45 states operating under the "Western
Auto" trade name (the "Wholesale" segment).

     On April 23, 2001, the Company completed its acquisition of Carport Auto
Parts, Inc. ("Carport"). The acquisition included a net 30 retail stores located
in Alabama and Mississippi, and substantially all of the assets used in
Carport's operation. This acquisition makes the Company the largest retailer of
automotive parts in the Alabama and Mississippi markets. The Carport locations
have been converted to the Advance Auto Parts store format, which included a
physical conversion, merchandise conversion and information systems conversion.
The acquisition has been accounted for under the purchase method of accounting.

     On August 7, 2001, the Company signed a definitive agreement to acquire
Discount Auto Parts, Inc. ("Discount") in a merger transaction (the "Discount
Merger"). Discount shareholders will receive $7.50 per share in cash plus 0.2577
shares of common stock in the combined company, collectively Advance Auto Parts,
Inc. ("Advance"), for each share of Discount stock. Accordingly, upon
consummation of the merger, Discount shareholders will own approximately 13% of
the total shares outstanding of Advance. On August 31, 2001, the Company filed
a registration statement on behalf of Advance covering the shares to be issued
to Discount shareholders, which will result in Advance Auto Parts, Inc. becoming
a publicly traded company.

     As of August 28, 2001, Discount operated approximately 668 retail auto
parts stores in Florida, Georgia, South Carolina, Alabama, Louisiana and
Mississippi. Together, the combined company will operate over 2,400 stores and
anticipates generating over $3.0 billion in revenues. Additionally, the combined
company's EBITDA would have been approximately $248.0 million, not including
approximately $30.0 million in anticipated purchasing, distribution and other
expense synergies. The merger will be accounted for under the purchase method of
accounting.

     Additionally through its restructuring program, the Company continually
monitors store performance, which results in closing certain store locations not
meeting profitability objectives. During the forty weeks ended October 6, 2001
the Company closed three stores included in the fiscal 2000 restructuring
activities and made the decision to close or relocate 33 additional stores not
meeting profitability objectives, 25 of which were closed or relocated as of
October 6, 2001.

     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. Holding's first quarter
consists of 16 weeks and its other three quarters consist of 12 weeks each.

                                       11

<PAGE>

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; restrictive loan covenants on
Holding's and the Company's ability to pursue its business strategies; changes
in business strategy or development plans; competition; weather conditions;
extent of the market demand for auto parts; availability of inventory supply;
unexpected fluctuation in merchandise costs; 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.
Holding 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.

                                       12

<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 Week Periods Ended            Forty Week Periods Ended
                                                            (dollars in thousands)               (dollars in thousands)
                                                                  (unaudited)                          (unaudited)
                                                         ------------------------------   ---------------------------------
                                                           October 6,        October 7,        October 6,        October 7,
                                                              2001              2000              2001              2000
                                                         ------------   ---------------   ----------------  ---------------
<S>                                                        <C>               <C>              <C>              <C>
Net sales                                                  $ 598,793         $ 552,138        $ 1,935,630      $ 1,787,370
Cost of sales                                                354,730           328,235          1,151,287        1,087,959
                                                         ------------   ---------------   ----------------  ---------------
Gross profit                                                 244,063           223,903            784,343          699,411
Selling, general and administrative expenses                 204,593           193,505            674,758          616,155
Non-cash and other employee compensation                       1,885               287              4,081            1,712
                                                         ------------   ---------------   ----------------  ---------------
Operating income                                              37,585            30,111            105,504           81,544
Interest expense                                             (12,121)          (15,183)           (45,195)         (51,784)
Other income, net                                                310               527                879            1,059
Provision for income taxes                                   (10,269)           (5,948)           (24,279)         (11,887)
                                                         ------------   ---------------   ----------------  ---------------
Income before extraordinary item                              15,505             9,507             36,909           18,932
Extraordinary item, gain on debt extinguishment,
     net of $1,759 income taxes                                    -             2,933                  -            2,933
                                                         ------------   ---------------   ----------------  ---------------
Net income                                                  $ 15,505          $ 12,440           $ 36,909         $ 21,865
                                                         ============   ===============   ================  ==============

<CAPTION>
                                                           Twelve Week Periods Ended            Forty Week Periods Ended
                                                                  (unaudited)                          (unaudited)
                                                         ------------------------------   ---------------------------------
                                                           October 6,        October 7,        October 6,        October 7,
                                                              2001              2000              2001              2000
                                                         ------------   ---------------   ----------------  ---------------
<S>                                                            <C>               <C>                <C>              <C>
Net sales                                                      100.0 %           100.0 %            100.0 %          100.0 %
Cost of sales                                                   59.2              59.4               59.5             60.9
                                                         ------------   ---------------   ----------------  ---------------
Gross profit                                                    40.8              40.6               40.5             39.1
Selling, general and administrative expenses                    34.2              35.0               34.9             34.5
Non-cash and other employee compensation                         0.3               0.1                0.2              0.1
                                                         ------------   ---------------   ----------------  ---------------
Operating income                                                 6.3               5.5                5.4              4.5
Interest expense                                                (2.0)             (2.7)              (2.3)            (2.9)
Other income, net                                                0.0               0.1                0.1              0.1
Provision for income taxes                                      (1.7)             (1.1)              (1.3)            (0.7)
                                                         ------------   ---------------   ----------------  ---------------
Income before extraordinary item                                 2.6               1.8                1.9              1.0
Extraordinary item, gain on debt extinguishment,
     net of $1,759 income taxes                                    -               0.5                  -              0.2
                                                         ------------   ---------------   ----------------  ---------------
Net income                                                       2.6 %             2.3 %              1.9 %            1.2 %
                                                         ============   ===============   ================  ===============
</TABLE>


     Net sales consist primarily of comparable store net sales, new store net
sales, Service Store net sales, net sales for Wholesale and finance charges on
installment sales. 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 original date of opening. Holding does
not include the Service Stores in the comparable store net sales calculation.

                                       13

<PAGE>

     Holding's cost of sales includes net merchandise costs and warehouse and
distribution expenses as well as service labor costs for the Service Stores.
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. The Company seeks to
avoid fluctuation in merchandise costs by entering into long-term purchasing
agreements with vendors in exchange for pricing certainty, but there can be no
assurance such measures will in fact mitigate the effect of fluctuations in
merchandise costs on gross profits.

     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 October 6, 2001 Compared to Twelve Weeks Ended October 7,
2000

     Net sales for the twelve weeks ended October 6, 2001 were $598.8 million,
an increase of $46.7 million or 8.4% over net sales for the twelve weeks ended
October 7, 2000. Net sales for the Retail segment increased $52.7 million or
10.0%. The net sales increase for the Retail segment was due to an increase in
the comparable store sales and contributions from new stores opened within the
last year. The comparable store sales increase of 7.1% was primarily a result of
growth in both the DIY and DIFM market segments. Comparable store sales
increased 4.0% for the twelve weeks ended October 7, 2000 as compared to the
comparable period of fiscal 1999. Net sales for the Wholesale segment decreased
$6.0 million or 24.5%, reflecting the continued decline of this segment due to
increased competition coupled with a decline in the number of independently
owned dealer stores.

     During the twelve weeks ended October 6, 2001, the Company opened 30 new
stores, relocated six stores and closed four stores, bringing the total retail
stores to 1,791. During the third quarter of fiscal 2001, the Company had 1,195
stores participating in its commercial delivery program, as a result of
consolidating five stores during the twelve week period ended October 6, 2001.

     Gross profit for the twelve weeks ended October 6, 2001 was $244.1 million
or 40.8% of net sales, as compared to $223.9 million or 40.6% of net sales in
the twelve weeks ended October 7, 2000. The increase in gross profit percentage
is reflective of a positive shift in product mix partially offset by higher
inventory shrinkage. The gross profit for the Retail segment was $241.0 million
or 41.5% of net sales for the twelve week period ended October 6, 2001, as
compared to $219.7 million or 41.7% of net sales for the twelve week period
ended October 7, 2000.

     Selling, general and administrative expenses, before non-cash and other
employee compensation, increased to $204.6 million or 34.2% of net sales for the
twelve week period ended October 6, 2001, from $193.5 million or 35.0% of net
sales for the twelve week period ended October 7, 2000. The decrease in selling,
general and administrative expenses as a percentage of sales is attributable to
decreased medical claims and lower depreciation as a percentage of sales
compared to the prior year quarter.

     EBITDA (operating income plus depreciation and amortization), as adjusted
for non-cash and other employee compensation, was $56.0 million in the twelve
week period ended October 6, 2001 or 9.4% of net sales, as compared to $46.6
million or 8.4% of net sales in the twelve week period ended October 7, 2000.
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 merger integration and
non-cash and other employee compensation should be eliminated from the EBITDA
calculation to evaluate the operating performance of the Company.

     Interest expense for the twelve week period ended October 6, 2001 was $12.1
million or 2.0% of net sales, as compared to $15.2 million or 2.7% of net sales
for the twelve week period ended October 7, 2000. Interest expense decreased as
a result of an overall reduction in average borrowings and a decrease in
interest rates for the twelve week period ended October 6, 2001 as compared to
the twelve week period ended October 7, 2000.

                                       14

<PAGE>

     Income tax expense for the twelve weeks ended October 6, 2001 was $10.3
million compared to $5.9 million in the twelve weeks ended October 7, 2000. This
increase was primarily due to the increase in income before taxes for the twelve
weeks ended October 6, 2001 as compared to the twelve weeks ended October 7,
2000.

     Holding recorded net income of $15.5 million for the twelve week period
ended October 6, 2001, as compared to $12.4 million for the twelve week period
ended October 7, 2000. As a percentage of sales, net income for the twelve week
period ended October 6, 2001 was 2.6% as compared to 2.3% for the twelve week
period ended October 7, 2000.

Forty Weeks Ended October 6, 2001 Compared to Forty Weeks Ended October 7, 2000

     Net sales for the forty weeks ended October 6, 2001 were $1,935.6 million,
an increase of $148.3 million or 8.3% over net sales for the forty weeks ended
October 7, 2000. Net sales for the Retail segment increased $168.0 million or
10.0%. The net sales increase for the Retail segment was due to an increase in
the comparable store sales of 6.5% and contributions from new stores opened
within the last year. The comparable store sales increase of 6.5% was primarily
a result of growth in both the DIY and DIFM customer base, as well as the
continued maturation of new stores. Comparable store sales increased 3.8% for
the forty weeks ended October 7, 2000 as compared to the comparable period of
fiscal 1999. Net sales for the Wholesale segment decreased $19.7 million or
19.8%, reflecting the continued decline of this segment due to increased
competition coupled with a decline in the number of independently owned dealer
stores.

     During the forty weeks ended October 6, 2001, the Company opened 83 new
stores, relocated 15 stores and closed 21 stores, bringing the total retail
stores to 1,791. The Company has 1,195 stores participating in its commercial
delivery program, as a result of consolidating 15 stores during the forty weeks
ended October 6, 2001.

     Gross profit for the forty weeks ended October 6, 2001 was $784.3 million
or 40.5% of net sales, as compared to $699.4 million or 39.1% of net sales in
the forty weeks ended October 7, 2000. The increase in the gross profit
percentage is reflective of an $8.3 million net gain recorded as a reduction to
cost of sales during the first quarter of fiscal 2001 as a result of a vendor
settlement. The remaining increase in the gross profit percentage is reflective
of a positive shift in product mix. The gross profit for the Retail segment was
$773.6 million or 41.7% of net sales for the forty week period ended October 6,
2001, as compared to $687.6 million or 40.7% of net sales for the forty week
period ended October 7, 2000.

     Selling, general and administrative expenses, before non-cash and other
employee compensation, increased to $674.8 million or 34.9% of net sales for the
forty week period ended October 6, 2001, from $616.2 million or 34.5% of net
sales for the forty week period ended October 7, 2000. Selling, general and
administrative expenses have increased due to closed store expenses associated
with the decision to close certain store locations not meeting profitability
objectives and the write down of an administrative facility obtained in the
Western Merger totaling $5.1 million. Additionally, as a percentage of sales,
the increase in selling, general and administrative expenses is attributable to
the investment in store personnel since the prior year comparable period.

     EBITDA (operating income plus depreciation and amortization), as adjusted
for non-cash and other employee compensation, was $163.2 million in the forty
week period ended October 6, 2001 or 8.4% of net sales, as compared to $133.9
million or 7.5% of net sales in the forty week period ended October 7, 2000.
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 merger integration and
non-cash and other employee compensation should be eliminated from the EBITDA
calculation to evaluate the operating performance of the Company.

     Interest expense for the forty week period ended October 6, 2001 was $45.2
million or 2.3% of net sales, as compared to $51.8 million or 2.9% of net sales
for the forty week period ended October 7, 2000. The decrease in interest
expense is a result of the reduction in net outstanding borrowings as well as a
decrease in interest rates over the similar period of fiscal year 2000.

                                       15

<PAGE>

     Income tax expense for the forty weeks ended October 6, 2001 was $24.3
million compared to $11.9 million in the forty weeks ended October 7, 2000. This
increase was primarily due to an increase in income before taxes for the forty
week period ended October 6, 2001 as compared to the forty week period ended
October 7, 2000.

     As a result of the above factors, Holding recorded net income of $36.9
million for the forty week period ended October 6, 2001, as compared to $21.9
million for the forty week period ended October 7, 2000. As a percentage of
sales, net income for the forty week period ended October 6, 2001 was 1.9% as
compared to 1.2% for the forty week period ended October 7, 2000.

Liquidity and Capital Resources

     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 (see below). No assurance can be made that the
Company will be able to pay cash dividends to Holding when required to redeem
the Debentures (see below).

     Holding and the Company believe they will have sufficient liquidity to fund
their debt service obligations and implement their growth strategy over the next
twelve months. As of October 6, 2001, Holding and the Company had outstanding
indebtedness consisting of $92.6 million of Senior Discount Debentures (the
"Debentures"), $169.5 million of Senior Subordinated Notes (the "Senior
Subordinated Notes"), borrowings of $260.3 million under the bank credit
facility (the "Credit Facility") and $10.0 million of indebtedness under the
McDuffie County Development Authority Taxable Industrial Bonds ("IRB").

     The loans under the Credit Facility are secured by a first priority
security interest in substantially all tangible and intangible assets of the
Company. Amounts available to the Company under portions of the Credit Facility
are subject to a borrowing base formula, which is based on certain percentages
of the Company's inventories, and certain debt covenants. The Company was in
compliance with the above covenants under the Credit Facility as of October 6,
2001. As of October 6, 2001, $108.6 million was available under these
facilities. The Company intends to use borrowings under the Credit Facility, as
well as internally generated funds, for store expansion and funding of working
capital, including funding of the restructuring program.

     The Company'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, the Western
Merger and the Carport acquisition. The Company has financed its growth through
a combination of internally generated funds, borrowings under the Credit
Facility and issuances of equity.

     In connection with the Discount Merger, the Company has obtained financing
commitments to fund the cash portion of consideration to be paid to Discount
shareholders and in-the-money option holders, refinance its existing Credit
Facility, repay Discount's indebtedness and premiums ($210.8 million at August
28, 2001 plus repayment premiums of $6.3 million), purchase Discount's Gallman
distribution facility from the lessor (approximately $34.0 million) and pay
approximately $35.0 million in related transaction fees and expenses. The
financing has been secured in the form of senior subordinated notes and the
refinancing of the Credit Facility, which is described below.

     On October 31, 2001, the Company finalized its offering of $200.0 million
in senior subordinated notes (the "Notes") offered at an issue price of 92.802%,
yielding gross proceeds of approximately $185.6 million. The Notes mature on
April 15, 2008 and bear interest at 10.25% payable semi-annually on April 15 and
October 15. The Notes will be fully and unconditionally guaranteed on a
unsecured senior subordinated basis by each of the Company's existing and future
restricted subsidiaries that guarantees any indebtedness of the Company or any
other restricted subsidiary. The Notes are redeemable at the Company's option,
in whole or in part, at any time on or after April 15, 2003, in cash at the
redemption prices described in the offering plus accrued and unpaid interest and
liquidating damages, if any, at the redemption date. The Notes also contain
certain covenants that will limit, among other things, the Company and its
subsidiaries ability to incur additional indebtedness and issue preferred stock,
pay dividends or certain other distributions, 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, redeem subordinated debt, sell assets, enter

                                       16

<PAGE>

into any agreements that restrict dividends from restricted subsidiaries and
enter into certain mergers or consolidations.

     Additionally, the Company has received a binding commitment, subject to
customary conditions, for a new senior credit facility (the "Facility")
consisting of (1) a $180.0 million tranche A term loan facility due 2006 and a
$305.0 million tranche B term loan facility due 2007 and (2) a $160.0 million
revolving credit facility (including a letter of credit subfacility). The
Facility will be jointly and severally guaranteed by all of the Company's
domestic subsidiaries (including Discount and its subsidiaries) and Advance and
will be secured by substantially all of the Company's assets, the assets of our
existing and future domestic subsidiaries (including Discount and its
subsidiaries), as well as the assets of Advance. Upon the closing of the
Discount Merger, the Company expects to borrow the $485.0 million under the
tranche A and tranche B term loan facilities and also anticipates borrowing
approximately $10.0 million under the revolving credit facility to fund the
merger. In addition, we expect to have approximately $18.0 million in letters of
credit outstanding at the closing, which will reduce availability under the
revolving credit facility to approximately $132.0 million.

     The Company's new Advance Auto Parts stores require capital expenditures of
approximately $120,000 per store and an inventory investment of approximately
$150,000 per store, net of vendor payables. A portion of the inventory
investment is held at a distribution facility. 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 approximately 110 new stores through internal growth or
strategic acquisitions during fiscal 2001, of which 83 have been opened or
acquired as of October 6, 2001.

     Historically, the Company has negotiated extended payment terms from
suppliers to help finance inventory growth, and the Company believes that it
will be able to continue financing much of its inventory growth through such
extended payment terms. The Company anticipates that inventory levels will
continue to increase primarily as a result of new store openings.

     As a result of the Western Merger and the Carport acquisition, the Company
closed certain Advance Auto Parts stores in overlapping markets or stores not
meeting profitability objectives. As part of normal operations, the Company will
continue to review store performance and close additional stores not meeting
profitability objectives. The Western Merger and Carport acquisition also
resulted in restructuring reserves recorded in purchase accounting for the
closure of certain stores, severance and relocation costs and other facility
exit costs. As of October 6, 2001, these reserves had a remaining balance of
$9.6 million. In addition, the Company assumed certain restructuring and
deferred compensation liabilities previously recorded by Western. At October 6,
2001, the total liability for the restructuring and deferred compensation plans
was $1.8 million and $4.3 million, respectively, of which $0.9 million and $1.2
million, respectively, is recorded as a current liability. The classification
for deferred compensation is determined by payment terms elected by plan
participants, primarily former Western employees, which can be changed upon 12
months' notice.

     For the forty weeks ended October 6, 2001, net cash provided by operating
activities was $126.3 million. Of this amount, $36.9 million was provided by net
income. Depreciation and amortization provided an additional $53.6 million,
amortization of deferred debt issuance costs and bond discount provided $10.9
million and $24.9 million was provided as a result of a net decrease in working
capital and other. Net cash used for investing activities was $68.7 million and
was comprised primarily of capital expenditures and the purchase of net assets
related to the Carport acquisition. Net cash used in financing activities was
$63.7 million and was comprised primarily of payments on the Credit Facility.

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>

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     Holding currently utilizes no material derivative financial instruments
that expose it to significant market risk. Holding is exposed to cash flow and
fair value risk due to changes in interest rates with respect to its long-term
debt. While Holding cannot predict the impact that interest rate movements will
have on its debt, exposure to rate changes is managed through the use of fixed
and variable rate debt. Holding's exposure to interest rate risk decreased
during the first three quarters of fiscal 2001 due to decreased interest rates
and reduced variable rate debt.

     Holding's fixed rate debt consists primarily of outstanding balances on the
Debentures and Senior Subordinated Notes. Holding's variable rate debt relates
to borrowings under the Credit Facility and the IRB. Holding's variable rate
debt is primarily vulnerable to movements in the LIBOR, Prime, Federal Funds and
Base CD rates.

     The table below presents principal cash flows and related weighted average
interest rates on Holding's long-term debt at October 6, 2001 by expected
maturity dates. Expected maturity dates approximate contract terms. Fair values
included herein have been determined based on quoted market prices. Weighted
average variable rates are based on implied forward rates in the yield curve at
October 6, 2001. Implied forward rates should not be considered a predictor of
actual future interest rates.

<TABLE>
<CAPTION>
                                                                                                                  Fair
                           Fiscal    Fiscal      Fiscal      Fiscal        Fiscal                                Market
                            2001      2002        2003        2004          2005     Thereafter      Total       Value
                           -------   -------    -------    ---------     --------    ----------     --------    --------
Long-term debt:                                            (dollars in thousands)
<S>                        <C>       <C>        <C>        <C>           <C>         <C>            <C>         <C>
 Fixed rate.............    $     -   $     -    $     -    $       -     $      -    $ 281,450     $281,450    $238,516
Weighted average
    interest rate ......          -         -          -            -            -         11.3%        11.3%
Variable rate ..........    $     -   $12,000    $ 4,000    $ 191,267     $ 60,000    $   3,032     $270,299    $270,299
Weighted average
    interest rate ......        4.6%      5.0%       6.3%         7.4%         8.1%         8.3%         5.9%
</TABLE>

                                       18

<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     Coalition for a Level Playing Field, et. al. v. AutoZone, Inc. et. al, Case
No.00-0953 in and for the United District Court, Eastern District of New York.
In February 2000, the Coalition for a Level Playing Field and over one hundred
independent automotive parts and accessories aftermarket warehouse distributors
and jobbers filed a lawsuit in the United States District for the Eastern
District of New York against various automotive retailers. In March 2000,
Advance was notified that it had been named in the lawsuit. The plaintiffs claim
that the defendants have knowingly received volume discounts, rebates, slotting
and other allowances, fees, free inventory, sham advertising and promotional
payments, a share in the manufacturers' profits, and excessive payments for
services purportedly performed for the manufacturers in violation of the
Robinson-Patman Act. The complaint seeks injunctive and declaratory relief,
unspecified treble damages on behalf of each of the plaintiffs, as well as
attorneys' fees and costs. The defendants, including Advance, led a motion to
dismiss in late October 2000. The plaintiffs filed their response to such motion
to dismiss in January 2001 and the defendants have filed a response to the
plaintiffs' responsive pleadings. Any discovery would follow after disposition
by the court of such motion to dismiss. Advance believes these claims are
without merit and intends to defend them vigorously; however, the ultimate
outcome of this matter can not be ascertained at this time.

     The Company is also involved in various other claims, lawsuits and
environmental issues arising in the normal course of business. The damages
claimed against the Company in some of these proceedings are substantial.
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 future results of operations.

                                       19

<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

     November 8, 2001                   By: /s/ Jimmie L. Wade
                                           ________________________________
                                           Jimmie L. Wade
                                           President and Chief Financial
                                           Officer (as principal executive
                                           and accounting officer)

                                      S-1