ATDITable is the issuer of $250.0 million in aggregate principal amount of Senior Secured Notes and $200.0 million in aggregate principal amount of Senior Subordinated Notes. The Senior Secured Notes and the Senior Subordinated Notes (collectively, the “Notes”) are fully and unconditionally guaranteed, jointly and severally, by Holdings, Am-Pac and Tire Wholesalers, Inc. (“Tire Wholesalers”). ATDI is a direct 100% owned subsidiary of Holdings and Am-Pac and Tire Wholesalers are indirect 100% owned subsidiaries of Holdings. None of the Company’s other subsidiaries guarantees the Notes. The guarantees provided by Holdings, Am-Pac and Tire Wholesalers can be released in certain customary circumstances. Contents

ItemTable 1A.of Risk Factors.Contents

None.Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 28~~July 5, ~~2013~~2014

¨	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 333-124878

American Tire Distributors Holdings, Inc.

(Exact name of registrant as specified in its charter)

A Delaware Corporation

59-3796143

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12200 Herbert Wayne Court

Suite 150

Huntersville, North Carolina 28078

(Address of principal executive office)

(704) 992-2000

(Registrant’s telephone number, including area code)

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 ¨ No x *

The registrant is a voluntary filer of reports required to be filed by certain companies under Section 13 or 15(d) of the Securities and Exchange Act of 1934 and has filed all reports that would have been required to have been filed by the registrant during the preceding 12 months had it been subject to such filing requirements during the entirety of such period.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Number of common shares outstanding at ~~November~~August 411, ~~2013~~2014: 1,000

Cautionary Statements on Forward-Looking Information

This Form 10-Q, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements relating to our business and financial outlook that are based on our current expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or other comparable terminology.

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, estimates and assumptions. Actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and is expressly qualified in its entirety by the cautionary statements included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 2928, ~~2012~~2013, particularly under the caption “Risk Factors”. We undertake no obligation to update any such statement to reflect new information, or the occurrence of future events or changes in circumstances, after we distribute this Form 10-Q, except as required by the federal securities laws. Many factors could cause actual results to differ materially from those indicated by the forward-looking statements or could contribute to such differences including:

•

general business and economic conditions in the United States, Canada and other countries, including uncertainty as to changes and trends;

•

our ability to execute key strategies, including pursuing acquisitions and successfully integrating and operating acquired companies;

•

our ability to develop and implement the operational and financial systems needed to manage our operations;

•

the ability of our customers and suppliers to obtain financing related to funding their operations in the current economic market;

•

the financial condition of our customers, many of which are small businesses with limited financial resources;

•

changing relationships with customers, suppliers and strategic partners;

•

changes in laws or regulations affecting the tire industry;

• changes in capital and credit market conditions, including availability of funding sources and fluctuations in currency exchange rates;

•

impacts of competitive products and changes to the competitive environment;

•

acceptance of new products in the market; and

•

unanticipated expenditures.

Some of the significant risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described more fully in the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 2928, ~~2012~~2013. These risks are not the only risks and uncertainties facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Where You Can Find More Information

We file reports and other information with the Securities and Exchange Commission (“SEC”). You can inspect, read and copy these reports and other information at the SEC’s Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information regarding the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that makes available reports, proxy statements and other information regarding issuers that file electronically.

We make available free of charge at www.atd-us.com (in the “Investor Relations” section) copies of materials we file with, or furnish to, the SEC. By referring to our corporate website, www.atd-us.com, we do not incorporate such website or its contents into this Quarterly Report on Form 10-Q.

AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.

FORM 10-Q

INDEX

				Page
PART I	FINANCIAL INFORMATION
	Item 1	-	Financial Statements (unaudited):
			Condensed Consolidated Balance Sheets - As of September 28, 2013 and December 29, 2012		4
			Condensed Consolidated Balance Sheets - As of July 5, 2014 and December 28, 2013		4
			Condensed Consolidated Statements of Comprehensive Income (Loss) - For the quarters and nine months ended September 28, 2013 and September 29, 2012		5
			Condensed Consolidated Statements of Comprehensive Income (Loss) - For the quarters and six months ended July 5, 2014 and June 29, 2013		5
			Condensed Consolidated Statement of Stockholders’ Equity - For the nine months ended September 28, 2013		6
			Condensed Consolidated Statement of Stockholder’s Equity - For the six months ended July 5, 2014		6
			Condensed Consolidated Statements of Cash Flows - For the nine months ended September 28, 2013 and September 29, 2012		7
			Condensed Consolidated Statements of Cash Flows - For the six months ended July 5, 2014 and June 29, 2013		7
			Notes to Condensed Consolidated Financial Statements		8
	Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3134
	Item 3	-	Quantitative and Qualitative Disclosures about Market Risk		4450
	Item 4	-	Controls and Procedures		4450
PART II	OTHER INFORMATION
	Item 1	-	Legal Proceedings		4551
	Item 1A	-	Risk Factors		4551
	Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds		4551
	Item 3	-	Defaults Upon Senior Securities		4551
	Item 4	-	Mine Safety Disclosures		4551
	Item 5	-	Other Information		4551
	Item 6	-	Exhibits		4551
	SIGNATURES				4653

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

American Tire Distributors Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

In thousands, except share amounts	~~September~~July 285,~~2013~~2014			December 2928,~~2012~~2013
ASSETS
Current assets:
Cash and cash equivalents	$	27,~~321~~533		$	2535,~~951~~760
Accounts receivable, net		~~323~~457,~~877~~560			~~301~~305,~~303~~247
Inventories		~~759~~1,~~649~~109,606			~~721~~772,~~672~~733
Income tax receivable		~~369~~24,608			369
Deferred income taxes		1518,~~957~~923			1615,~~458~~719
Assets held for sale		35,~~369~~529			~~7,151~~910
Other current assets		1635,~~794~~110			2019,~~695~~684
Total current assets		1,~~147~~678,~~336~~869			1,~~093~~150,~~599~~422
Property and equipment, net		~~143~~202,~~242~~756			~~129~~147,~~882~~856
Goodwill		~~504~~706,~~045~~134			~~483~~504,~~143~~333
Other intangible assets, net		~~731~~1,~~298~~122,374			~~738~~713,~~698~~294
Other assets		52,~~232~~999			5843,~~680~~421
Total assets	$	23,~~578~~763,~~153~~132		$	2,~~504~~559,~~002~~326
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	~~514~~739,~~042~~706		$	~~502~~563,~~221~~691
Accrued expenses		6471,~~671~~793			4447,~~916~~723
Current maturities of long-term debt		533			493
Liabilities held for sale		426			—
Total current liabilities		579,246			547,630
Current maturities of long-term debt		10,120			564
Long-term debt		1,020,820			950,711
Total current liabilities		822,045			611,978
Deferred income taxes		277,987			285,345
Long-term debt		1,934,177			966,436
Other liabilities		17,358			14,662
Deferred income taxes		321,272			270,576
Other liabilities		23,659			17,362
Commitments and contingencies
Stockholders’ equity:
Stockholder’s equity:
Common stock, par value $.01 per share; 1,000 shares authorized, issued and outstanding		—			—
Additional paid-in capital		~~758~~810,~~385~~959			~~756~~758,~~338~~972
Accumulated earnings (deficit)		(71140,~~445~~458	)		(5056,~~541~~898	)
Accumulated other comprehensive income (loss)		(48,~~198~~522	)		(~~143~~9,100	)
Total stockholders’ equity		682,742			705,654
Total stockholder’s equity		661,979			692,974
Total liabilities and stockholders’ equity	$	2,578,153		$	2,504,002
Total liabilities and stockholder’s equity	$	3,763,132		$	2,559,326

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

In thousands	~~QuarterEndedSeptember~~QuarterEndedJuly 285,~~2013~~2014			~~QuarterEndedSeptember~~QuarterEndedJune 29,~~2012~~2013			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJuly 285,~~2013~~2014			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJune 29,~~2012~~2013
Net sales	$	~~987~~1,~~894~~267,582		$	~~915~~955,~~340~~075		$	2,~~782~~343,~~947~~051		$	21,~~583~~795,~~837~~053
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		~~817~~1,~~544~~063,376			~~765~~802,~~768~~492			21,~~328~~980,~~192~~690			21,~~166~~510,~~865~~648
Selling, general and administrative expenses		~~146~~204,~~353~~003			~~129~~137,~~159~~312			~~421~~381,~~424~~313			~~377~~272,~~939~~825
Transaction expenses		1,015			799			4,304			2,060
Management fees		14,967			1,255			15,575			2,246
Operating income (loss)		22,982			19,614			29,027			36,973
Transaction expenses		15,490			2,266			20,176			3,289
Operating income (loss)		(30,254	)		11,750			(54,703	)		6,045
Other income (expense):
Interest expense		(2032,~~625~~223	)		(1817,~~744~~387	)		(5556,~~252~~622	)		(5234,~~475~~627	)
Other, net		(648	)		(1,418	)		(3,556	)		(2,802	)
Loss on extinguishment of debt		(17,113	)		—			(17,113	)		—
Income (loss) from operations before income taxes		1,709			(548	)		(29,781	)		(18,304	)
Other, net		3,752			(1,935	)		1,950			(2,908	)
Income tax provision (benefit)		485			10,054			(8,877	)		(5,754	)
Income (loss) from continuing operations before income taxes		(75,838	)		(7,572	)		(126,488	)		(31,490	)
Net income (loss)	$	1,224		$	(10,602	)	$	(20,904	)	$	(12,550	)
Income tax provision (benefit)		(26,370	)		(1,735	)		(42,976	)		(9,362	)
Income (loss) from continuing operations		(49,468	)		(5,837	)		(83,512	)		(22,128	)
Income (loss) from discontinued operations, net of tax		(48	)		—			(48	)		—
Net income (loss)	$	(49,516	)	$	(5,837	)	$	(83,560	)	$	(22,128	)
Other comprehensive income (loss):
Unrealized gain (loss) on rabbi trust assets, net of tax		68			58			187			113
Unrealized gain (loss) on rabbi trust assets, net of tax of $40, $34, $37, $77, respectively	$	45		$	52		$	57		$	119
Foreign currency translation		35,~~000~~762			—(5,431	)		~~(4,242~~521	)		—(7,242	)
Other comprehensive income (loss)		35,~~068~~807			58(5,379	)		~~(4,055~~578	)		~~113~~(7,123	)
Comprehensive income (loss)	$	4(43,~~292~~709	)	$	(1011,~~544~~216	)	$	(2482,~~959~~982	)	$	(1229,~~437~~251	)

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Condensed Consolidated Statement of ~~Stockholders~~Stockholder’s Equity

(Unaudited)

													Accumulated
In thousands, except share amounts	TotalStockholder’sEquity			Common Stock				AdditionalPaid-InCapital		AccumulatedEarnings(Deficit)			AccumulatedOtherComprehensive(Loss) Income
	Total							Additional		Accumulated			Other
				Shares		Amount
	Stockholders’			Common Stock				Paid-In		Earnings			Comprehensive
Balance, December 28, 2013	$	692,974			1,000	$	—	$	758,972	$	(56,898	)	$	(9,100	)
In thousands, except share amounts	Equity			Shares		Amount		Capital		(Deficit)			(Loss) Income
Net income (loss)		(83,560	)		—		—		—		(83,560	)		—
Balance, December 29, 2012	$	705,654			1,000	$	—	$	756,338	$	(50,541	)	$	(143	)
Unrealized gain (loss) on rabbi trust assets, net of tax		57			—		—		—		—			57
Net income (loss)		(20,904	)		—		—		—		(20,904	)		—
Foreign currency translation		521			—		—		—		—			521
Unrealized gain (loss) on rabbi trust assets, net of tax		187			—		—		—		—			187
Equity contribution		50,000							50,000
Foreign currency translation		(4,242	)		—		—		—		—			(4,242	)
Stock-based compensation expense		1,987			—		—		1,987		—			—
Stock-based compensation expense		2,047			—		—		2,047		—			—
Balance, July 5, 2014	$	661,979			1,000	$	—	$	810,959	$	(140,458	)	$	(8,522	)
Balance, September 28, 2013	$	682,742			1,000	$	—	$	758,385	$	(71,445	)	$	(4,198	)

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

In thousands	~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJuly 285,~~2013~~2014			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJune 29,~~2012~~2013
Cash flows from operating activities:
Net income (loss)	$	(2083,~~904~~560	)	$	(1222,~~550~~128	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		78,456			65,656
Income (loss) from discontinued operations, net of tax		48			—
Amortization of other assets		3,294			3,648
Loss on extinguishment of debt		17,113			—
Benefit for deferred income taxes		(17,864	)		(11,897	)
Call premium and interest paid on redemption of Senior Secured Notes		(16,303	)		—
Inventory step-up amortization		5,007			—
Depreciation and amortization		66,013			51,140
Provision for doubtful accounts		1,673			1,546
Amortization of other assets		2,959			2,131
Stock-based compensation		2,047			2,761
Provision (benefit) for deferred income taxes		(12,451	)		(12,632	)
Other, net		2,317			2,679
Non-cash inventory step-up amortization		31,640			4,907
Change in operating assets and liabilities:
Provision for doubtful accounts		1,207			1,223
Accounts receivable		(13,549	)		(28,809	)
Stock-based compensation		1,987			1,452
Inventories		(18,031	)		(53,836	)
Other, net		1,500			(868	)
Income tax receivable		644			1,232
Change in operating assets and liabilities (excluding impact from acquisitions):
Other current assets		4,005			(4,410	)
Accounts receivable		(38,303	)		4,976
Accounts payable and accrued expenses		12,965			9,632
Inventories		(100,057	)		(11,127	)
Other, net		(913	)		(1,179	)
Income tax receivable		(24,147	)		644
Net cash provided by (used in) operating activities		39,147			(25,527	)
Other current assets		(8,141	)		2,931
Accounts payable and accrued expenses		(11,385	)		6,364
Other, net		4,335			20
Net cash provided by (used in) continuing operating activities		(167,545	)		29,033
Net cash provided by (used in) discontinued operations		350			—
Net cash provided by (used in) operating activities		(167,195	)		29,033
Cash flows from investing activities:
Acquisitions, net of cash acquired		(70822,~~566~~166	)		(1964,~~224~~844	)
Purchase of property and equipment		(34,~~924~~241	)		(4223,~~177~~848	)
Purchase of assets held for sale		(~~1,924~~28	)		(~~3,281~~875	)
Proceeds from sale of property and equipment		88228			8464
Proceeds from sale of assets held for sale		~~5,389~~784			~~3,078~~971
Net cash provided by (used in) investing activities		(101,937	)		(61,520	)
Net cash provided by (used in) continuing investing activities		(855,423	)		(88,532	)
Net cash provided by (used in) discontinued investing activities		—			—
Net cash provided by (used in) investing activities		(855,423	)		(88,532	)
Cash flows from financing activities:
Borrowings from revolving credit facility		2,~~239~~532,~~558~~401			21,~~513~~476,~~600~~178
Repayments of revolving credit facility		(2,~~168~~252,~~837~~811	)		(21,~~423~~404,~~995~~157	)
Outstanding checks		(39,~~582~~208	)		(~~928~~7,765	)
Payments of deferred financing costs		(115,~~106~~796	)		—(1,067	)
Payments of other long-term debt		(~~292~~3,057	)		(~~1,807~~189	)
Net cash provided by (used in) financing activities		65,741			86,870
Payment for Senior Secured Notes redemption		(246,900	)		—
Effect of exchange rate changes on cash		(1,581	)		—
Proceeds from issuance of long-term debt		940,313			—
Net increase (decrease) in cash and cash equivalents		1,370			(177	)
Equity contribution		50,000			—
Cash and cash equivalents - beginning of period		25,951			14,979
Net cash provided by (used in) continuing financing activities		1,013,358			63,000
Cash and cash equivalents - end of period	$	27,321		$	14,802
Net cash provided by (used in) discontinued financing activities		—			—
Net cash provided by (used in) financing activities		1,013,358			63,000
Effect of exchange rate changes on cash		1,033			(2,548	)
Net increase (decrease) in cash and cash equivalents		(8,227	)		953
Cash and cash equivalents - beginning of period		35,760			25,951
Cash and cash equivalents - end of period	$	27,533		$	26,904
Supplemental disclosures of cash flow information:
Cash payments for interest	$	3858,~~535~~025		$	3433,~~913~~036
Cash payments (receipts) for taxes, net	$	123,~~876~~817		$	62,~~197~~464
Supplemental disclosures of noncash activities:
Capital expenditures financed by debt	$	—		$	515

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.	Nature of Business:

American Tire Distributors Holdings, Inc. (“Holdings”) is a Delaware corporation that owns 100% of the issued and outstanding capital stock of American Tire Distributors, Inc. (“ATDI”), a Delaware corporation. Holdings has no significant assets or operations other than its ownership of ATDI. The operations of ATDI and its subsidiaries constitute the operations of Holdings presented under accounting principles generally accepted in the United States. ATDI is primarily engaged in the wholesale distribution of tires, custom wheels and accessories, and related tire supplies and tools. Its customer base is comprised primarily of independent tire dealers with the remainder of other customers representing various national and corporate accounts. ATDI serves a majority of the contiguous United States, as well as Canada, through one operating and reportable segment. Unless the context otherwise requires, “Company” herein refers to Holdings and its consolidated subsidiaries.

2.	Basis of Presentation:

The accompanying condensed consolidated financial statements reflect the consolidated operations of the Company and have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) as defined by the Financial Accounting Standards Board (“FASB”) within the FASB Accounting Standards Codification (“FASB ASC”). In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, which include normal recurring adjustments, necessary to present fairly the consolidated unaudited results for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in ~~the American Tire Distributors~~ Holdings, ~~Inc.,~~ Annual Report on Form 10-K for the fiscal year ended December 2928, ~~2012. Certain changes in classification of amounts reported in prior years have been made to conform to the~~ 2013 ~~classification~~.

The Company’s fiscal year is based on either a 52- or 53-week period ending on the Saturday closest to each December 31. Therefore, the financial results of 53-week fiscal years, and the associated 14-week quarter, will not be comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended ~~September~~July 285, ~~2013 and~~2014 ~~September~~and June 29, ~~2012~~2013 each contain operating results for 13 weeks. The ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 ~~and~~contains ~~September 29,~~27 ~~2012~~weeks ~~each~~while ~~contain~~the ~~operating~~six ~~results~~months ~~for~~ended 39June 29, 2013 contains 26 weeks. It should be noted that the Company and its recently ~~acquired~~ acquired subsidiaries, ~~TriCan~~Hercules, Terry’s Tire, ~~Distributors~~Trail ~~(“TriCan”)~~Tire, ~~and~~Extreme ~~Regional~~Wheel, Kirks Tire, ~~Distributors~~RTD ~~Inc.~~Edmonton (“and RTD”) Calgary, ~~have~~all ~~different~~as ~~year-end~~defined ~~and~~below, have different quarter-end reporting dates. ~~Both~~Each ~~TriCan~~of ~~and~~these ~~RTD~~acquired ~~have~~subsidiaries has a ~~calendar~~June 30 ~~year~~quarter-end ~~and quarterly reporting~~ reporting date. ~~The~~There ~~impact~~were ~~from~~no ~~this~~significant ~~difference~~changes to the business subsequent to their fiscal period ends that would have a material impact on the condensed consolidated ~~financial~~balance ~~statements~~sheet isor ~~not~~condensed ~~material~~consolidated statement of comprehensive income (loss) as of and for the quarter and six months ended July 5, 2014.

On May 28, 2010, pursuant to an Agreement and Plan of Merger, dated as of April 20, 2010, the Company was acquired by TPG Capital, L.P. and certain co-investors ~~for an aggregate purchase price valued at $1,287.5 million~~ (the “TPG Merger”). ~~The~~Under ~~Merger~~the ~~was~~guidance ~~financed~~provided by ~~$635~~ ~~million~~the inSEC ~~aggregate~~Staff ~~principal~~Accounting ~~amount~~Bulletin ofTopic ~~debt~~5J, ~~financing~~“New asBasis ~~well~~of asAccounting ~~common~~Required in ~~equity~~Certain ~~capital. In connection with the Merger~~Circumstances,” ~~the~~push-down ~~Company~~accounting ~~conducted~~is ~~cash~~required ~~tender~~when ~~offers~~such ~~for~~transactions ~~its~~result ~~existing~~in ~~outstanding~~an ~~debt~~entity ~~securities,~~being ~~all~~substantially ~~of which were subsequently purchased and retired~~wholly-owned. ~~Although~~Under ~~the~~push-down ~~Company~~accounting, ~~continues~~certain totransactions ~~operate~~incurred asby the ~~same legal entity subsequent to the Merger and related change in control~~buyer, awhich ~~new~~would ~~entity~~otherwise ~~was~~be ~~created~~ accounted for ~~accounting~~in ~~purposes~~the asaccounts of ~~May 28,~~the ~~2010. As a result~~parent, ~~the~~are ~~purchase price~~“pushed ~~was~~down” ~~allocated to assets acquired~~ and ~~liabilities~~recorded ~~assumed based~~ on ~~their estimated fair market values at~~ the ~~date~~financial ofstatements ~~acquisition. As well, under the guidance~~ of the ~~SEC, push-down accounting is required when such transactions result in an entity being substantially wholly-owned~~subsidiary. Therefore, the basis in shares of the Company’s common stock ~~have~~has been pushed down from the ~~accounts~~buyer ofto the ~~parent and recorded on the financial statements of the subsidiary~~Company.

3. Recent Accounting Pronouncements:

In July ~~2012~~2013, the FASB issued ASU ~~No. 2012~~2013-0211, “~~Testing~~Presentation ~~Indefinite-Lived Intangible Assets for Impairment” which amended the guidance on the annual impairment testing~~ of ~~indefinite-lived~~an ~~intangible~~Unrecognized ~~assets~~Tax ~~other~~Benefit ~~than~~When ~~goodwill.~~a ~~The~~Net ~~amended~~Operating ~~guidance~~Loss Carryforward, ~~will allow~~ a ~~company~~Similar ~~the~~Tax ~~option~~Loss, toor ~~first~~a ~~assess~~Tax ~~qualitative~~Credit ~~factors~~Carryforward toExists.” ~~determine~~ASU ~~whether it is more~~2013-~~likely-than-not~~11 ~~that~~clarifies ~~the~~guidance ~~fair~~and ~~value~~eliminates ofdiversity anin ~~indefinite-lived~~practice ~~intangible asset is less than its carrying amount. If, based~~ on the ~~qualitative~~presentation ~~assessment, it is more-likely-than-not that the fair value~~ of anunrecognized ~~indefinite-lived~~tax ~~intangible~~benefits ~~asset~~when ~~is less~~a ~~than~~net ~~its~~operating ~~carrying~~loss ~~amount~~carryforward, ~~quantitative~~a ~~impairment~~similar ~~testing is required. However~~tax loss, ifor a ~~company~~tax ~~concludes~~credit ~~otherwise,~~carryforward ~~quantitative~~exists ~~impairment~~at ~~testing~~the isreporting ~~not required~~date. This new guidance ~~will~~is be effective for ~~fiscal~~annual ~~years~~reporting periods beginning on or after ~~September~~ December 15, ~~2012,~~2013 ~~with~~and ~~early~~subsequent ~~adoption~~interim ~~permitted~~periods. The Company adopted this guidance on December 3029, ~~2012~~2013 (the first day of ~~the~~its ~~Company’s~~2014 ~~2013~~ fiscal year;) ~~the~~and ~~Company performs~~ its ~~annual~~adoption ~~impairment~~did ~~test in the fourth quarter and does~~ not ~~expect the impact of adopting this standard to~~ have a material ~~effect~~impact on the Company’s consolidated financial statements.

In ~~February~~April ~~2013~~2014, the FASB issued ASU ~~No. 2013~~2014-0208, “Reporting ofDiscontinued ~~Amounts~~Operations ~~Reclassified~~and ~~Out~~Disclosures of ~~Accumulated~~Disposals ~~Other~~of ~~Comprehensive~~Components ~~Income~~of an Entity,” ~~which~~(“ASU ~~amended~~2014-08”). Under ASU 2014-08, only disposals representing a strategic shift in operations that have a major effect on the ~~guidance~~company’s operations and financial results should be presented as discontinued operations. Additionally, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in ASU 2014-08 are effective for ~~reporting~~fiscal ~~reclassifications~~years, ~~out~~and interim periods within those years, beginning after December 15, 2014. However, ASU 2014-08 should not be applied to a component that is classified as held for sale before the effective date even if the component is disposed of ~~accumulated~~after ~~other~~the ~~comprehensive~~effective date. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statement previously issued. The Company is currently assessing the impact, if any, on its consolidated financial statements.

~~income~~In May 2014, the FASB issued ASU No. 2014-09, ~~The~~“Revenue ~~amended~~from Contracts with Customers” (“ASU 2014-09”), which provides guidance ~~will~~for ~~require~~revenue anrecognition. ASU 2014-09 affects any entity that either enters into contracts with customers to ~~report~~transfer goods or services or enters into contracts for the ~~effect~~transfer of nonfinancial ~~significant~~assets ~~reclassifications~~and ~~out~~supersedes ofthe ~~accumulated~~revenue ~~other~~recognition ~~comprehensive~~requirements ~~income~~in onTopic ~~the~~605, ~~respective~~“Revenue ~~line~~Recognition,” ~~items~~and most industry-specific guidance. This ASU also supersedes some cost guidance included in ~~net~~Subtopic ~~income~~605-35, “Revenue ifRecognition-Construction-Type ~~the~~and ~~amount~~Production-Type ~~being~~Contracts.” ~~reclassified~~The standard’s core principle is ~~entirely~~that ~~reclassified~~a tocompany ~~net~~should ~~income,~~recognize asrevenue ~~required~~when byit ~~U.S.~~transfers ~~GAAP.~~promised ~~For~~goods ~~other~~or ~~amounts,~~services to customers in an amount that ~~are~~reflects ~~not~~the ~~required~~consideration to bywhich ~~U.S.~~a ~~GAAP~~company expects to be ~~entirely~~entitled ~~reclassified~~in exchange for those goods or services. In doing so, companies will need to ~~net~~use ~~income~~more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, anestimating ~~entity~~the isamount ~~required~~of variable consideration to ~~cross-reference~~include ~~other disclosures~~in ~~that~~the ~~will~~transaction ~~provide~~price ~~additional~~and ~~detail~~allocating ~~concerning~~the ~~these~~transaction ~~amounts~~price to each separate performance obligation. ~~The~~ASU ~~amendments~~2014-09 ~~are~~is effective for ~~reporting~~the ~~periods~~Company beginning ~~after~~in ~~December 15~~fiscal year 2017 and, ~~2012~~at that time the Company may adopt the new standard under the full retrospective method or the modified retrospective method. Early adoption is not permitted. The Company ~~adopted~~is ~~this~~currently ~~guidance~~evaluating onthe ~~December 30,~~method ~~2012~~ and ~~its~~impact the adoption ~~did~~of ~~not~~ASU 2014-08 will have ~~an effect~~ on the Company’s consolidated financial statements and disclosures.

In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013 and subsequent interim periods. The Company is currently assessing the impact, if any, on the condensed consolidated financial statements.

4.	Acquisitions:

On2014 ~~August 30,~~Acquisitions 2013, the Company entered into a Stock Purchase Agreement with Tire Distributors, Inc. (“TDI”) to acquire 100% of the outstanding capital stock of TDI. TDI owned and operated one distribution center serving over 1,700 customers across Maryland and northeastern Virginia. The acquisition was completed on August 30, 2013 and was funded through the Company’s ABL Facility. The Company does not believe the acquisition of TDI is a material transaction subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

~~The~~On ~~acquisition~~June 27, of2014, ~~TDI~~TriCan ~~was~~Tire ~~recorded~~Distributors ~~using~~Inc. ~~the~~(“TriCan”), ~~acquisition~~an ~~method~~indirect ofwholly-owned ~~accounting~~subsidiary inof ~~accordance with~~Holdings, ~~the~~entered ~~accounting~~into ~~guidance~~and closed ~~for~~an ~~business~~Asset ~~combinations~~Purchase ~~and~~Agreement ~~non-controlling~~(the ~~interest.~~“Trail ~~The~~Tire ~~purchase~~Purchase ~~price~~Agreement”) ~~has~~with ~~been~~Trail ~~preliminarily~~Tire ~~allocated~~Distributors toLtd., ~~assets~~a ~~acquired~~corporation ~~and~~formed ~~liabilities~~under ~~assumed~~the ~~based~~laws onof the ~~estimated~~Province ~~fair market value~~ of ~~such~~Alberta ~~assets~~(“Trail Tire”) and ~~liabilities~~ at the ~~date~~shareholders ofand ~~acquisition.~~principals ~~A majority~~ of Trail ~~the~~Tire, ~~net~~pursuant ~~assets acquired relate~~ to awhich ~~customer~~TriCan ~~list~~agreed ~~intangible~~to ~~asset,~~acquire ~~which~~the ~~had~~wholesale andistribution ~~acquisition~~business ~~date fair value~~ of ~~$3.4~~Trail ~~million~~Tire. ~~The~~Trail ~~excess~~Tire ofis ~~the~~a ~~purchase~~wholesale ~~price~~distributor ~~over~~of ~~the~~tires, ~~amounts~~tire ~~allocated~~parts, ~~to identifiable~~tire ~~assets~~accessories and ~~liabilities~~related isequipment ~~included~~ in ~~goodwill, and amounted to $1~~Canada.7 ~~million.~~ The ~~premium in the purchase price paid for the~~ acquisition of ~~TDI~~Trail ~~reflects the anticipated realization of operational and cost synergies. As additional~~Tire ~~information~~will isfurther ~~obtained~~strengthen ~~about~~TriCan’s ~~these~~presence ~~assets~~in ~~and liabilities within~~ the ~~measurement~~Alberta ~~period,~~Province ~~the Company expects to refine its estimates~~ of ~~fair~~Canada ~~value~~and tocomplements ~~allocate~~TriCan’s ~~the~~current ~~purchase~~operations ~~price~~in ~~more accurately~~Canada.

OnThe ~~March 22,~~Trail ~~2013,~~Tire ~~TriCan~~acquisition ~~and~~closed ~~ATDI~~for ~~entered~~aggregate ~~into~~cash aconsideration ~~Share~~of ~~Purchase~~approximately ~~Agreement with Regional Tire Holdings Inc~~$20.,8 amillion ~~corporation formed under~~ (the ~~laws~~“Trail ofTire ~~the~~Purchase ~~Province of Ontario (“Holdco~~Price”),. The ~~RTD,~~aggregate acash ~~corporation~~consideration ~~formed~~was ~~under~~funded ~~the~~through ~~laws~~borrowings ofunder the ~~Province~~Company’s ofexisting ~~Ontario~~ABL ~~and~~credit a 100% owned subsidiary of Holdco, and the shareholders of Holdco, pursuant to which TriCan agreed to acquire from the shareholders of Holdco all of the issued and outstanding shares of Holdco for a purchase price of $62facility.5 ~~million. Holdco has no significant assets or operations other than its ownership of RTD.~~ The ~~operations~~Trail ofTire ~~RTD~~Purchase ~~constitute~~Price ~~the operations of Holdco. RTD~~ is asubject ~~wholesale~~to ~~distributor~~certain ofpost-closing ~~tires~~adjustments, ~~tire parts~~including, ~~tire~~but ~~accessories~~not ~~and~~limited ~~related~~to, ~~equipment~~working ~~in the Ontario and Atlantic provinces of Canada. The acquisition of RTD significantly expands the Company’s presence in the Ontario and Atlantic~~capital ~~Provinces of Canada and complements the Company’s current operations in Canada~~adjustments.

~~The~~On ~~acquisition of RTD was completed on April~~June 3027, ~~2013~~2014, ~~for~~TriCan ~~aggregate~~entered ~~cash~~into ~~consideration~~and ofclosed ~~approximately~~an ~~$64.9~~Asset ~~million~~Purchase Agreement (the “~~Adjusted~~Extreme Purchase ~~Price~~ Agreement”) ~~which~~with ~~includes~~Extreme ~~initial~~Wheel ~~working~~Distributors ~~capital adjustments~~Ltd., ~~The~~a ~~acquisition~~corporation offormed ~~RTD~~under ~~was~~the ~~funded~~laws byof ~~borrowings under~~ the ~~Company’s~~ ~~ABL~~Province ~~Facility~~of ~~and~~Alberta ~~FILO Facility~~(“Extreme”), asand ~~more~~the ~~fully~~shareholder ~~described~~and inprincipal ~~Note~~of 9.Extreme, ~~The~~pursuant ~~Adjusted Purchase Price was subject~~ to ~~certain~~which ~~post-closing~~TriCan ~~adjustments,~~agreed ~~including, but not limited~~ to, ~~the~~acquire ~~finalization of working capital adjustments. Of~~ the wholesale ~~$64.9~~distribution ~~million~~business ~~Adjusted~~of ~~Purchase Price, $6~~Extreme.3 ~~million~~Extreme is ~~held~~a inwholesale ~~escrow~~distributor ~~pending the resolution~~ of ~~the~~wheels ~~post-closing adjustments~~ and ~~other~~related ~~escrow~~accessories ~~release conditions~~ in ~~accordance with the terms of the purchase agreement and escrow agreement~~Canada. ~~During third~~The ~~quarter~~acquisition ~~2013, the Company and the shareholders~~ of ~~Holdco~~Extreme ~~agreed~~will onfurther ~~the~~strengthen ~~post-closing~~TriCan’s ~~working~~presence ~~capital adjustments~~ in ~~accordance with~~ the ~~purchase~~Alberta ~~agreement.~~Province ~~This~~of ~~adjustment~~Canada ~~increased~~and ~~the Adjusted Purchase Price by $1.0 million to $65.9 million~~complements ~~with~~TriCan’s acurrent ~~corresponding~~operations ~~increase~~in ~~to goodwill of $1~~Canada.0 ~~million.~~

The Extreme acquisition closed for aggregate cash consideration of approximately $6.5 million (the “Extreme Purchase Price”). The aggregate cash consideration was funded through borrowings under the Company’s existing ABL credit facility. The Extreme Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “Kirks Tire Purchase Agreement”) with Kirks Tire Ltd., a corporation formed under the laws of the Province of Alberta (“Kirks Tire”), and the shareholders and principals of Kirks Tire, pursuant to which TriCan agreed to acquire the wholesale distribution business of Kirks Tire. Kirks Tire is engaged in (i) the wholesale distribution of tires, tire parts, tire accessories and related equipment and (ii) the retail sale and installation of tires, tire parts, and tire accessories and the manufacturing and sale of retread tires. Kirks Tire’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. The acquisition of the wholesale distribution business of Kirks Tire will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The Kirks Tire acquisition closed for aggregate cash consideration of approximately $73.0 million (the “Kirks Tire Purchase Price”). The Kirks Tire Purchase Price was funded through borrowings under the Company’s existing ABL credit facility. The Kirks Tire Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “RTD Edmonton Purchase Agreement”) with Regional Tire Distributors (Edmonton) Inc. (“RTD Edmonton”), a corporation formed under the laws of the Province of Alberta, and the shareholders and principals of RTD Edmonton, pursuant to which TriCan agreed to acquire the wholesale distribution business of RTD Edmonton. RTD Edmonton is a wholesale distributor of tires, tire parts, tire accessories and related equipment. The acquisition of RTD Edmonton will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The RTD Edmonton acquisition closed for aggregate cash consideration of approximately $31.9 million (the “RTD Edmonton Purchase Price”). The RTD Edmonton Purchase Price was funded through borrowings under the Company’s existing ABL credit facility. The RTD Edmonton Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “RTD Calgary Purchase Agreement”) with Regional Tire Distributors (Calgary) Inc. (“RTD Calgary”), a corporation formed under the laws of the Province of Alberta, and the shareholders and principals of RTD Calgary, pursuant to which TriCan agreed to acquire the wholesale distribution business of RTD Calgary. RTD Calgary is a wholesale distributor of tires, tire parts, tire accessories and related equipment. The acquisition of RTD Calgary will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The RTD Calgary acquisition closed for aggregate cash consideration of approximately $20.7 million (the “RTD Calgary Purchase Price”). The RTD Calgary Purchase Price was funded by borrowings under the Company’s existing ABL credit facility. The RTD Calgary Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On March 28, 2014, ATDI completed its acquisition of Terry’s Tire Town Holdings, Inc., an Ohio corporation (“Terry’s Tire” and such acquisition, the “Terry’s Tire Acquisition”). The Terry’s Tire Acquisition was completed pursuant to a Stock Purchase Agreement (the “Stock Purchase Agreement”) entered into on February 17, 2014 between ATDI and TTT Holdings, Inc., a Delaware corporation. Terry’s Tire and its subsidiaries are engaged in the business of purchasing, marketing, distributing and selling tires, wheels and related tire and wheel accessories on a wholesale basis to tire dealers, wholesale distributors, retail chains, automotive dealers and others, retreading tires and selling retread and other commercial tires through commercial outlets to end users and selling tires directly to consumers via the internet. Terry’s Tire operated 10 distribution centers spanning from Virginia to Maine and in Ohio. The acquisition of Terry’s Tire will enhance the Company’s market position in these areas and aligns very well with their distribution centers, especially the new distribution centers opened by the Company over the past two years in the Northeast and Ohio.

The Terry’s Tire acquisition closed for an aggregate purchase price of approximately $372.7 million (the “Terry’s Tire Purchase Price”), consisting of cash consideration of approximately $358.0 million, contingent consideration of $12.5 million and non-cash consideration for debt assumed of $2.2 million. The cash consideration paid for the Terry’s Tire Acquisition included estimated working capital adjustments and a portion of consideration contingent on certain events achieved prior to closing. During second quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment decreased the Terry’s Tire Purchase Price by $5.4 million to $372.7 million with a corresponding decrease to goodwill of $5.4 million. The Terry’s Tire Purchase Price was funded by a combination of borrowings under a new senior secured term loan facility, as more fully described in Note 9, and borrowings of approximately $72.5 million under Holdings’ existing U.S. ABL Facility. The Terry’s Tire Purchase Price is subject to certain post-closing adjustments, including but not limited to, working capital adjustments. Of the $358.0 million in cash consideration, $41.4 million is held in escrow pending the resolution of the post-closing adjustments and other escrow release conditions in accordance with the terms of the Stock Purchase Agreement and escrow agreement.

On January 31, 2014, pursuant to an Agreement and Plan of Merger, dated January 24, 2014 (the “Merger Agreement”), among ATD Merger Sub II LLC (“Merger Sub”), an indirect wholly-owned subsidiary of Holdings, ATDI, Hercules Tire Holdings LLC, a Delaware limited liability company (“Hercules Holdings”), the equityholders of Hercules Holdings (each a “Seller” and, collectively the “Sellers”) and the Sellers’ Representative, Merger Sub merged with and into Hercules Holdings, with Hercules Holdings being the surviving entity (the “Merger”). As a result of the Merger, Hercules Holdings became an indirect 100% owned subsidiary of Holdings. Hercules Holdings owns all of the capital stock of The Hercules Tire & Rubber Company, a Connecticut corporation (“Hercules”). Hercules Holdings has no material assets or operations other than its ownership of Hercules. Hercules is engaged in the business of purchasing, marketing, distributing and selling after-market replacement tires for passenger cars, trucks, and certain off road vehicles to tire dealers, wholesale distributors, retail distributors and others in the United States, Canada and internationally. Hercules operated 15 distribution centers in the United States, 6 distribution centers in Canada and one warehouse in northern China. Hercules also markets the Hercules brand, which is one of the most sought-after proprietary tire brands in the industry. The acquisition of Hercules will strengthen the Company’s presence in major markets such as California, Texas and Florida in addition to increasing its presence in Canada. Additionally, Hercules’ strong logistics and sourcing capabilities, including a long-standing presence in China, will also allow the Company to capitalize on the growing import market, as well as, providing the ability to expand the international sales of the Hercules brand. Finally, this acquisition, will allow the Company to be a brand marketer of the Hercules brand which today has a 2% market share of the passenger and light truck market in North America and a 3% share of highway truck tires in North America.

The Merger closed for an aggregate purchase price of approximately $318.9 million (the “Hercules Closing Purchase Price”), consisting of net cash consideration of $310.0 million, contingent consideration of $3.5 million and non-cash consideration for debt assumed of $5.4 million. The Hercules Closing Purchase Price includes an estimate for initial working capital adjustments. During second quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the Merger

Agreement. This adjustment decreased the Hercules Closing Purchase Price by $0.4 million to $318.9 million with a corresponding decrease to goodwill of $0.4 million. The Merger Agreement provides for the payment of up to $6.5 million in additional consideration contingent upon the occurrence of certain post-closing events (to the extent payable, the “Hercules Additional Purchase Price” and, collectively with the Hercules Closing Purchase Price, the “Hercules Purchase Price”). The cash consideration paid for the Merger was funded by a combination of the issuance of additional Senior Subordinated Notes, as more fully described in Note 9, an equity contribution of $50.0 million from Holdings’ indirect parent, as more fully described in Note 14 and borrowings under Holdings’ credit agreement, as more fully described in Note 9. The Hercules Closing Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On January 17, 2014, TriCan entered into an Asset Purchase Agreement with Kipling Tire Co. LTD., a corporation governed by the laws of the Province of Ontario (“Kipling”), pursuant to which TriCan agreed to acquire the wholesale distribution business of Kipling. Kipling has operated as a retail-wholesale business since 1982. Kipling’s wholesale business distributes tires from its Etobicoke facilities to approximately 400 retail customers in Southern Ontario. Kipling’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. This acquisition will further strengthen TriCan’s presence in the Southern Ontario region of Canada. The acquisition was completed on January 17, 2014 and was funded through the Company’s Canadian ABL Facility. The Company does not believe the acquisition of Kipling is a material transaction subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Terry’s Tire and Hercules (collectively the “2014 Acquisitions”) were recorded using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As of the date of these financial statements, the Company is in the process of finalizing intangible asset valuations as well as continuing to evaluate the initial purchase price allocation for each of the 2014 Acquisitions with the exception of Hercules. Accordingly, management has used its best estimates in the allocation of the purchase price to assets acquired and liabilities assumed based on the estimated preliminary fair market value of such assets and liabilities at the date of each acquisition. As additional information is obtained about these assets and liabilities within the measurement period, the Company expects to refine its estimates of fair value to allocate the purchase price for the 2014 Acquisitions, with the exception of Hercules, more accurately. As of July 5, 2014, the purchase price allocation for Hercules is final. The preliminary allocation of the purchase price for each of the 2014 Acquisitions is as follows:


In thousands	Terry’s Tire		Hercules		Trail Tire		Extreme		Kirks Tire		RTD Edmonton		RTD Calgary		Total
Cash	$	7,431	$	12,187	$	—	$	—	$	—	$	—	$	—	$	19,618
Accounts receivable		39,772		61,193		5,571		987		5,315		1,164		1,924		115,926
Inventory		92,445		153,644		6,587		1,320		5,929		2,622		5,911		268,458
Assets held for sale		5,819		—		—		—		—		—		—		5,819
Other current assets		2,222		5,064		—		—		—		—		—		7,286
Deferred income taxes		4,947		—		124		—		—		—		—		5,071
Property and equipment		7,072		29,970		323		32		—		6		556		37,959
Intangible assets		186,161		155,704		14,703		4,369		52,818		23,286		13,556		450,597
Other assets		289		—		—		—		—		—		—		289

Total assets acquired		346,158		417,762		27,308		6,708		64,062		27,078		21,947		911,023
Accounts payable		80,771		95,616		7,025		891		—		1,549		1,802		186,532
Accrued and other liabilities		3,904		6,154		—		—		—		—		—		11,180
Liabilities held for sale		319		—		—		—		—		—		—		319
Deferred income taxes		—		68,516		—		—		—		—		—		68,516
Other liabilities		—		2,325		468		—		47		—		—		2,840

Total liabilities assumed		84,994		172,611		7,493		891		47		1,549		1,802		269,387
Net assets acquired		261,164		245,151		19,815		5,817		64,015		25,529		20,145		641,636
Goodwill		111,492		73,708		948		685		8,975		6,382		526		202,716

Purchase price	$	372,656	$	318,859	$	20,763	$	6,502	$	72,990	$	31,911	$	20,671	$	844,352

The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill. The premium in the purchase price paid for the 2014 Acquisitions primarily reflects growth opportunities from expanding the Company’s distribution footprint into Western Canada and through the anticipated realization of operational and cost synergies. In addition, growth opportunities associated with the Hercules® brand also contributed to the premium in the purchase price paid for the Hercules acquisition.

Cash and cash equivalents, accounts receivable and accounts payable were stated at their historical carrying values, which approximate their fair value, given the short-term nature of these assets and liabilities. Inventory was recorded at fair value, based on computations which considered many factors including the estimated selling price of the inventory, the cost to dispose the inventory as well as the replacement cost of the inventory, where applicable.

The Company recorded intangible assets based on their estimated fair value which consisted of the following:


In thousands	Terry’s Tire		Hercules		Trail Tire		Extreme		Kirks Tire		RTD Edmonton		RTD Calgary		Total
Customer list (1)	$	185,776	$	147,216	$	14,703	$	4,369	$	52,818	$	23,286	$	13,556	$	441,724
Tradenames (2)		—		8,488		—		—		—		—		—		8,488
Favorable leases (3)		385		—		—		—		—		—		—		385

Total	$	186,161	$	155,704	$	14,703	$	4,369	$	52,818	$	23,286	$	13,556	$	450,597

(1)	Estimated useful lives range from sixteen to eighteen years.

(2)	Estimated useful life is fifteen years

(3)	Estimated useful lives range from four to five years.

The Company utilized the excess earnings method, a derivation of the income approach, as well as the review of an independent third-party valuation report for certain acquisitions, to determine the fair value of the customer list intangible assets. The excess earnings method estimates the discounted net earnings attributable to the customer relationships that were acquired after considering items such as possible customer attrition. Based on the length and trend of projected cash flows, an estimated useful life of eighteen years was determined. The length of the projected cash flow period was determined by how quickly the customer relationships attrit based on the Company’s historical experience in renewing and extending similar customer relationships. As of the date of this report, the Company is in the process of obtaining third-party valuations for the fair value of the intangible assets acquired from Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary. Accordingly, the preliminary allocation for these acquisitions reflects management’s best estimate of fair value using the excess earnings method.

As part of the acquisition of Terry’s Tire, the Company acquired Terry’s Tire’s commercial and retread businesses. As the Company’s core business does not include commercial and retread operations, the Company decided that it would divest of these businesses. As it is management’s intention to divest the commercial and retread businesses during fiscal 2014 and as all held for sale criteria has been met, the related assets, including the allocation of purchase price, and the related liabilities of the commercial and retread businesses are classified as held for sale within the accompanying condensed consolidated balance sheet. As part of the preliminary purchase price allocation, the estimated fair value of the assets held for sale was $5.8 million, including $4.5 million in current assets, net property and equipment of $0.8 million and goodwill of $0.5 million. The estimated fair value of the liabilities held for sale was $0.3 million of which the entire amount related to current liabilities. As additional information is obtained about these assets and liabilities within the measurement period, the Company expects to refine its estimate of the fair values related to these assets and liabilities.

The 2014 Acquisitions contributed net sales of approximately $265.5 million to the Company for the six months ended July 5, 2014. Net loss contributed by the 2014 Acquisitions during the six months ended July 5, 2014 was approximately $25.9 million which included non-cash amortization of the inventory step-up of $31.6 million and non-cash amortization expense on acquired intangible assets of $11.5 million.

2013 Acquisitions

On December 13, 2013, TriCan entered into a Share Purchase Agreement with Wholesale Tire Distributors Inc., a corporation formed under the laws of the Province of Ontario (“WTD”), Allan Bishop, an individual resident in the Province of Ontario (“Allan”) and The Bishop Company Inc., a corporation formed under the laws of the Province of Ontario (“BishopCo”) (Allan and BishopCo each, a “Seller” and collectively, the “Sellers”), pursuant to which TriCan agreed to acquire from the Sellers all of the issued and outstanding shares of WTD. WTD operated two distribution centers serving over 2,300 customers. The acquisition of WTD strengthened the Company’s market presence in the Southern Ontario region of Canada. The acquisition was completed on December 13, 2013 and was funded through cash on hand. The Company does not believe the acquisition of WTD is a material transaction, individually or when aggregated with the other non-material acquisitions discussed herein, subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisition of WTD was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. A majority of the net

assets acquired relate to a customer list intangible asset, which had an acquisition date fair value of $4.4 million. The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $1.2 million. The premium in the purchase price paid for the acquisition of WTD reflects the anticipated realization of operational and cost synergies.

On August 30, 2013, the Company entered into a Stock Purchase Agreement with Tire Distributors, Inc. (“TDI”) to acquire 100% of the outstanding capital stock of TDI. TDI operated one distribution center serving over 1,700 customers across Maryland and northeastern Virginia. The acquisition was completed on August 30, 2013 and was funded through the Company’s ABL Facility. The Company does not believe the acquisition of TDI is a material transaction, individually or when aggregated with the other non-material acquisitions discussed herein, subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisition of TDI was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. A majority of the net assets acquired relate to a customer list intangible asset, which had an acquisition date fair value of $3.4 million. The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $2.4 million. The premium in the purchase price paid for the acquisition of TDI reflects the anticipated realization of operational and cost synergies.

On March 22, 2013, TriCan and ATDI entered into a Share Purchase Agreement with Regional Tire Holdings Inc., a corporation formed under the laws of the Province of Ontario (“Holdco”), Regional Tire Distributors Inc. (“RTD”), a corporation formed under the laws of the Province of Ontario and a 100% owned subsidiary of Holdco, and the shareholders of Holdco, pursuant to which TriCan agreed to acquire from the shareholders of Holdco all of the issued and outstanding shares of Holdco for a purchase price of $62.5 million. Holdco has no significant assets or operations other than its ownership of RTD. The operations of RTD constitute the operations of Holdco. RTD is a wholesale distributor of tires, tire parts, tire accessories and related equipment in the Ontario and Atlantic provinces of Canada. The acquisition of RTD significantly expanded the Company’s presence in the Ontario and Atlantic Provinces of Canada and complemented the Company’s current operations in Canada.

The acquisition of RTD was completed on April 30, 2013 for aggregate cash consideration of approximately $64.9 million (the “Adjusted Purchase Price”) which includes initial working capital adjustments. The acquisition of RTD was funded by borrowings under the Company’s ABL Facility and FILO Facility, as more fully described in Note 9. The Adjusted Purchase Price was subject to certain post-closing adjustments, including, but not limited to, the finalization of working capital adjustments. Of the $64.9 million Adjusted Purchase Price, $6.3 million is held in escrow pending the resolution of the post-closing adjustments and other escrow release conditions in accordance with the terms of the purchase agreement and escrow agreement. During third quarter 2013, the Company and the shareholders of Holdco agreed on the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment increased the Adjusted Purchase Price by $1.0 million to $65.9 million with a corresponding increase to goodwill of $1.0 million.

The acquisition of RTD was recorded using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As a result, the Adjusted Purchase Price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. The allocation of the Adjusted Purchase Price is as follows:


In thousands
Cash	$	904
Accounts receivable		10,093
Inventory		21,685
Other current assets		998
Property and equipment		1,050
Intangible assets		42,990
Other assets		52

Total assets acquired		77,772
Debt		—
Accounts payable		7,817
Accrued and other liabilities		12,740
Deferred income taxes		11,692

Total liabilities assumed		32,249
Net assets acquired		45,523
Goodwill		20,375

Purchase price	$	65,898

The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $20.4 million. The premium in the purchase price paid for the acquisition of RTD primarily relates to growth opportunities from expanding the Company’s distribution footprint into Eastern Canada and through operating synergies available via the consolidation of certain distribution centers in Eastern Canada.

Cash and cash equivalents, accounts receivable and accounts payable were stated at their historical carrying values, which approximate their fair value, given the short-term nature of these assets and liabilities. Inventory was recorded at fair value, based on computation which considered many factors including the estimated selling price of the inventory, the cost to dispose the inventory as well as the replacement cost of the inventory, where applicable.

The Company recorded intangible assets based on their estimated fair value which consisted of the following:


In thousands	Estimated Useful Life	Estimated Fair Value
Customer list	16 years	$	40,720
Tradenames	5 years		1,900
Favorable leases	4 years		370

Total		$	42,990

~~RTD~~The ~~contributed~~following ~~net~~unaudited ~~sales~~pro offorma ~~approximately~~supplementary ~~$60.6~~data ~~million~~gives effect to the ~~Company~~2014 ~~for~~Acquisitions ~~the~~as ~~period~~if ~~from~~these transactions ~~May 1,~~had ~~2013 to~~occurred ~~September~~on December 2830, 2012 (the first day of the Company’s 2013. ~~Net~~fiscal ~~loss~~year) ~~contributed~~and bygives ~~RTD~~effect ~~since~~to the acquisition ~~date~~of ~~was~~RTD ~~approximately~~as $if this transaction had occurred on January 1, 2012 (the first day of the Company’s 2012 fiscal year).0 ~~million~~The ~~which~~pro ~~included~~forma ~~non-cash~~supplementary ~~amortization~~data is provided for informational purposes only and should not be construed to be indicative of the ~~inventory~~Company’s ~~step-up~~results of ~~$2.7~~operations ~~million~~had the 2014 Acquisitions and ~~non-cash~~the ~~amortization~~RTD ~~expense~~acquisition been consummated on ~~acquired~~the ~~intangible assets~~date assumed or of ~~$3.1~~the ~~million~~Company’s results of operations for any future date.

On November 30, 2012, ATDI and ATD Acquisition Co. V Inc. (“Canada Acquisition”), a newly-formed direct 100% owned Canadian subsidiary of ATDI, entered into a Share Purchase Agreement with 1278104 Alberta Inc. (“Seller”), Triwest Trading (Canada) Ltd., a 100% owned subsidiary of Seller (“Triwest”) and certain shareholders of Seller pursuant to which Canada Acquisition agreed to acquire from Seller all of the issued and outstanding common shares of Triwest along with an outstanding loan owed to Seller by Triwest for approximately $97.5 million, subject to certain post-closing adjustments, including, but not limited to, working capital adjustments. Of the $97.5 million purchase price, $15.0 million is held in escrow pending the resolution of the post-closing adjustments and other escrow release conditions in accordance with the terms of the purchase agreement and escrow agreement. As a result of the acquisition, Triwest became a direct 100% owned subsidiary of Canada Acquisition. Triwest (dba: TriCan Tire Distributors, or “TriCan”) is a wholesale distributor of tires, tire parts, tire accessories and related equipment in Canada with 15 distribution centers stretching across the country. The acquisition of TriCan expanded the


	Pro Forma
In thousands	Quarter Ended July 5, 2014			Quarter Ended June 29, 2013			Six Months Ended July 5, 2014			Six Months Ended June 29, 2013
Net sales	$	1,304,618		$	1,283,844		$	2,552,328		$	2,433,185
Income (loss) from continuing operations		(35,532	)		(18,707	)		(78,948	)		(49,666	)

1014

The pro forma supplementary data for the quarters ended July 5, 2014 and June 29, 2013 ~~Company’s~~includes ~~footprint~~$3.9 million and ~~distribution~~$11.1 ~~services~~million, ~~into~~respectively, ~~Canada~~as ~~for~~an increase to historical amortization expense as a result of acquired intangible assets while the ~~first~~six ~~time.~~months ~~During~~ended ~~second~~July 5, ~~quarter~~2014 and June 29, 2013 includes $13.1 million and $22.6 million, respectively. In addition, the ~~Company~~pro forma supplementary data for the quarters ended July 5, 2014 and June 29, 2013 includes $1.3 million and $9.6 million, respectively, as an increase to historical interest expense as a result of the ~~Seller~~issuance ~~agreed~~of onthe additional Senior Subordinated Notes and the ~~post-closing~~new ~~working~~senior ~~capital~~secured ~~adjustment~~term loan facility, as more fully described in ~~accordance~~ ~~with~~Note 9, while the ~~purchase~~six ~~agreement~~months ended July 5, 2014 and June 29, 2013 includes $6.9 ~~This~~million ~~adjustment~~and ~~reduced~~$19.7 million, respectively. For the ~~purchase~~quarter ~~price~~and bysix months ended July 5, 2014, the Company has included a reduction in non-recurring historical transaction expenses of $310.47 million toand $9442.19 million, ~~with~~respectively. aThese ~~corresponding~~transaction ~~decrease~~expenses were incurred prior to ~~goodwill~~the acquisition of Hercules and Terry’s Tire and they are directly related to the acquisitions and are non-recurring. Additionally, for the quarter and six months ended July 5, 2014, the Company has included a reduction in historical cost of goods sold of $312.45 million and $31.5 million, respectively. The reduction in cost of goods sold relates to the elimination of the non-cash amortization of the inventory step-up recorded in connection with the Hercules and Terry’s Tire acquisitions as this amortization is directly related to the acquisitions and non-recurring.

The acquisition of TriCan was completed on November 30, 2012 and funded through the Company’s ABL Facility. The acquisition of TriCan was recorded using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As a result, the total purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. The allocation of the purchase price is as follows:

In thousands
Cash	$	1,344
Accounts receivable		35,518
Inventory		45,445
Other current assets		495
Property and equipment		1,191
Intangible assets		49,940
Other assets		755
Total assets acquired		134,688
Debt		—
Accounts payable		37,576
Accrued and other liabilities		14,609
Deferred income taxes		13,003
Other liabilities		475
Total liabilities assumed		65,663
Net assets acquired		69,025
Goodwill		25,044
Purchase price	$	94,069

The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $25.0 million. The premium in the purchase price paid for the acquisition of TriCan primarily relates to growth opportunities from expanding the Company’s distribution footprint into Canada.

Cash, and cash equivalents, accounts receivable and accounts payable were stated at their historical carrying values, which approximate their fair value, given the short-term nature of these assets and liabilities. Inventory was recorded at fair value, based on computations which considered many factors including the estimated selling price of the inventory, the cost to dispose the inventory as well as the replacement cost of the inventory, where applicable.

The Company recorded intangible assets based on their estimated fair value which consisted of the following:

In thousands	EstimatedUsefulLife	EstimatedFairValue
Customer list	16 years	$	44,621
Tradenames	7 years		4,958
Favorable leases	6 years		361
Total		$	49,940

The following unaudited pro forma supplementary data gives effect to the acquisitions of TriCan and RTD as if these transactions had occurred on January 1, 2012 (the first day of the Company’s 2012 fiscal year). The pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the TriCan and RTD acquisitions been consummated on the date assumed or of the Company’s results of operations for any future date.

	Pro Forma
In thousands	QuarterEndedSeptember 29,2012			Nine MonthsEndedSeptember 28,2013			Nine MonthsEndedSeptember 29,2012
Net sales	$	994,312		$	2,817,147		$	2,777,157
Net income (loss)		(9,410	)		(23,840	)		(13,065	)

The pro forma supplementary data for the quarter and nine months ended September 29, 2012 and for the nine months ended September 28, 2013 includes $3.3 million, $10.2 million and $2.3 million, respectively, as an adjustment to historical amortization expense as a result of acquired intangible assets.

On May 24, 2012, the Company entered into a Stock Purchase Agreement with Firestone of Denham Springs, Inc. d/b/a Consolidated Tire & Oil (“CTO”) to acquire 100% of the outstanding capital stock of CTO. CTO owned and operated three distribution centers in Baton Rouge, Slidell and Lafayette, Louisiana serving over 500 customers. The acquisition was completed on May 24, 2012 and was funded through the Company’s ABL Facility. The Company does not believe the acquisition of CTO is a material transaction subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisition of CTO was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. A majority of the net assets acquired relate to a customer list intangible asset, which had an acquisition date fair value of $15.9 million. The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $10.1 million. The premium in the purchase price paid for the acquisition of CTO reflects the anticipated realization of operational and cost synergies.

5.	Inventories:

Inventories consist primarily of automotive tires, custom wheels and accessories and tire supplies and tools. Reported amounts are valued at the lower of cost, determined on the first-in, first-out (“FIFO”) method, or fair market value. The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to net realizable value. A majority of the Company’s tire vendors allow for the return of tire products, subject to certain limitations, specified in supply arrangements with the vendors. In addition, the Company’s inventory is collateral under the ABL Facility and the FILO Facility. See Note 9 for further information.

As a result of the TriCan acquisition in November 2012, the RTD, TDI and ~~TDI~~WTD acquisitions, in fiscal 2013 and the 2014 Acquisitions, the carrying value of the acquired inventory was increased by $6.3 million, $2.7 million ~~and~~, $0.2 million, $0.5 million, and $34.4 million, respectively, to adjust to estimated fair value in accordance with the accounting guidance for business combinations. The step-up in inventory value for each acquisition was amortized into cost of goods sold over the period of the Company’s normal inventory turns, which approximates two months. Amortization of the inventory step-up included in cost of goods sold in the accompanying condensed consolidated statements of comprehensive income (loss) for the quarter and ~~nine~~six months ended July 5, 2014 was $12.5 million and $31.6 million, respectively, while amortization for the quarter and six months ended ~~September~~June 2829, 2013 was $02.17 million and $54.09 million, respectively.

6.	Assets Held for Sale:

In accordance with current accounting standards, the Company classifies assets as held for sale in the period in which all held for sale criteria is met. Assets held for sale are reported at the lower of their carrying amount or fair value less cost to sell and are no longer depreciated. AtDuring ~~September 28,~~third quarter 2013, ~~assets~~the ~~held~~Company ~~for~~classified ~~sale~~a ~~totaled~~facility ~~$3.4~~located ~~million,~~in ofGeorgia ~~which~~as ~~$1.1~~held ~~million~~for ~~were~~sale. ~~residential~~The ~~properties~~facility ~~that~~was ~~were~~previously ~~acquired~~used as ~~part~~a ofdistribution ~~employee~~center ~~relocation~~within ~~packages.~~the ~~The~~ Company’s isoperations ~~actively~~until ~~marketing~~its ~~these~~activities ~~properties~~were ~~and~~relocated ~~anticipates~~to ~~that~~an ~~they~~expanded ~~will~~facility. beDuring ~~sold~~the ~~within~~quarter aended ~~twelve-month~~July 5, ~~period~~2014, ~~from~~ the ~~date~~Company inreceived ~~which~~$0.4 ~~they~~million ~~are~~in ~~classified~~cash ~~as held~~ for the sale of this facility.

As part of the ~~Am-Pac~~Terry’s Tire ~~Dist., Inc (“Am-Pac”)~~ acquisition ~~in 2008~~, the Company acquired aTerry’s Tire’s ~~distribution~~commercial ~~center~~and inretread ~~California~~businesses. ~~which~~See ~~contained~~Note ~~office~~4 ~~space~~for ~~that~~additional ~~served~~information asregarding ~~Am-Pac’s~~this ~~headquarters~~acquisition. ~~The~~As ~~facility~~it ~~was~~is ~~used~~management’s asintention ato ~~warehouse~~divest ~~within~~ the ~~Company’s~~commercial ~~distribution~~and ~~operations~~retread ~~until~~businesses ~~its~~during ~~activities~~fiscal ~~were~~2014 ~~absorbed~~and ~~into~~as ~~nearby~~all ~~existing locations~~held ~~during~~for ~~2011.~~sale ~~During~~criteria ~~the~~has ~~first quarter of 2013~~been met, the ~~Company~~related ~~determined~~assets ~~that~~and ~~the~~liabilities ~~carrying value~~ of the ~~facility~~commercial ~~exceeded~~and ~~its~~retread ~~fair~~businesses ~~value~~are ~~due~~classified toas ~~the~~held ~~current~~for ~~market~~sale ~~conditions.~~within ~~As a result,~~ the ~~Company~~accompanying ~~recorded~~condensed aconsolidated $0balance sheet.5 ~~million~~As ~~adjustment related to the fair value~~ of ~~this~~July 5, ~~facility.~~2014, ~~During~~ the ~~third~~carrying ~~quarter~~value of ~~2013,~~ the ~~Company~~assets ~~received~~held ~~$3.9 million in cash~~ for ~~the~~ sale for ofthese ~~this~~businesses ~~facility. The carrying value of the facility~~ was $45.05 million~~. Accordingly~~, ~~the~~including ~~Company~~$4.2 ~~has~~million ~~recognized~~in acurrent ~~pre-tax loss~~assets, onnet ~~the~~property ~~sales~~and ofequipment ~~this facility~~ of $0.18 million ~~within~~and ~~the~~goodwill ~~accompanying condensed consolidated statement~~ of ~~comprehensive~~$0.5 ~~income (loss)~~million.

On February 1, 2012, the Company reacquired one of three facilities originally included in a sale-leaseback transaction completed in 2002 that had an initial lease term of 20 years, followed by two 10 year renewal options. The facility was used as a distribution center within the Company’s operations until its activities were relocated to an expanded location during the second quarter of 2012. As a result, the Company classified the facility as held for sale during the third quarter of 2012 when the appropriate criteria was met. During the third quarter of 2013, the Company determined that the carrying value of this facility exceeded its fair value due to current market conditions. As a result, the Company recorded a $0.3 million adjustment related to the fair value of this facility. At September 28, 2013, the carrying value of the facility was $1.5 million. See Note 15 for information on the sale of this facility subsequent to the quarter end.

During the quarter ended September 28, 2013, the Company classified a facility located in Georgia as held for sale. The facility was previously used as a distribution center within the Company’s operations until its activities were relocated to an expanded facility. The Company is actively marketing this property and anticipates that it will be sold within a twelve-month period. As of September 28, 2013, the carrying value of the facility was $0.8 million.

7.	Goodwill:

The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired. Once the final valuation has been performed for each acquisition, adjustments may be recorded. Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset.

~~The~~15 ~~changes in the carrying amount of goodwill are as follows:~~

In thousands
Balance, December 29, 2012	$	483,143
Purchase accounting adjustments		(1,348	)
Acquisitions		23,652
Currency translation		(1,402	)
Balance, September 28, 2013	$	504,045

At September 28, 2013, the Company has recorded goodwill of $504.0 million, of which approximately $26.4 million of net goodwill is deductible for income tax purposes in future periods. The balance primarily relates to the Merger on May 28, 2010, in which $418.6 million was recorded as goodwill. The Company does not have any accumulated goodwill impairment losses.

On August 30, 2013, the Company entered into a Stock Purchase Agreement to acquire 100% of the outstanding capital stock of TDI. The acquisition was completed on August 30, 2013 and was funded through the Company’s ABL Facility. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. As a result, the Company recorded $1.7 million as goodwill. See Note 4 for additional information.

On April 30, 2013, TriCan completed the acquisition of RTD pursuant to a Share Purchase Agreement entered into on March 22, 2013. The acquisition was funded through the Company’s ABL Facility and FILO Facility. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During third quarter 2013, the Company finalized the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment increased goodwill by $1.0 million to $20.4 million at September 28, 2013. See Note 4 for additional information.

In addition, the Company acquired the inventory and accounts receivable of a small Canadian distributor in February 2013. The purchase price was allocated to the assets acquired based on their estimated fair market value, which resulted in an increase to goodwill of $1.6 million.

On November 30, 2012, ATDI and Canada Acquisition entered into a Share Purchase Agreement to acquire all of the issued and outstanding common shares of TriCan. The acquisition was completed on November 30, 2012 and was funded through the Company’s ABL Facility. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During the nine months ended September 28, 2013, the Company adjusted the fair market value of certain working capital items. These adjustments increased goodwill by $1.4 million to $25.0 million at September 28, 2013. See Note 4 for additional information.

On May 24, 2012, the Company entered into a Stock Purchase Agreement to acquire 100% of the outstanding capital stock of CTO. The acquisition was completed on May 24, 2012 and was funded through the Company’s ABL Facility. The purchase price

~~has~~The ~~been~~changes ~~allocated~~in ~~to assets acquired and liabilities assumed based on~~ the ~~estimated~~carrying ~~fair~~amount ~~market value~~ of such assets and liabilities at the date of acquisition. During second quarter 2013, the Company finalized the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment increased goodwill byare ~~$0.6~~as ~~million~~follows: ~~to $10.1 million at September 28, 2013. See Note 4 for additional information.~~


In thousands
Balance, December 28, 2013	$	504,333
Purchase accounting adjustments		128
Acquisitions		202,716
Currency translation		(1,043	)

Balance, July 5, 2014	$	706,134

At July 5, 2014, the Company has recorded goodwill of $706.1 million, of which approximately $125.7 million of net goodwill is deductible for income tax purposes in future periods. The balance primarily relates to the TPG Merger on May 28, 2010, in which $418.6 million was recorded as goodwill. The Company does not have any accumulated goodwill impairment losses.

On June 27, 2014, TriCan completed its acquisition of the wholesale distribution businesses of Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. As a result, the Company recorded $0.9 million, $0.7 million, $9.0 million, $6.4 million and $0.5 million, respectively, as goodwill. See Note 4 for additional information.

On March 28, 2014, ATDI completed its acquisition of Terry’s Tire pursuant to a Stock Purchase Agreement entered into on February 17, 2014. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. As a result, the Company recorded $111.5 million as goodwill. See Note 4 for additional information.

On January 31, 2014, the Company completed its acquisition of Hercules pursuant to an Agreement and Plan of Merger dated January 24, 2014. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During second quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the Merger Agreement. This adjustment decreased goodwill by $0.4 million to $73.7 million at July 5, 2014. See Note 4 for additional information.

On December 13, 2013, TriCan entered into a share Purchase Agreement to acquire all of the issued and outstanding common shares of WTD. The acquisition was funded through cash on hand. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During first quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the purchase agreement. This increased goodwill by $0.1 million to a total of $1.2 million at July 5, 2014. See Note 4 for additional information.

8.	Intangible Assets:

Indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite lives are being amortized on a straight-line or accelerated basis over periods ranging from one to nineteen years.

~~The~~16 ~~following table sets forth the gross amount and accumulated amortization of the Company’s intangible assets at September 28, 2013 and December 29, 2012:~~

	September 28, 2013				December 29, 2012
In thousands	GrossAmount		AccumulatedAmortization		GrossAmount		AccumulatedAmortization
Customer lists	$	675,221	$	208,526	$	632,589	$	156,249
Noncompete agreements		12,110		5,467		7,898		2,841
Favorable leases		712		86		360		5
Tradenames		10,746		3,305		9,043		1,990
Total finite-lived intangible assets		698,789		217,384		649,890		161,085
Tradenames (indefinite-lived)		249,893		—		249,893		—
Total intangible assets	$	948,682	$	217,384	$	899,783	$	161,085

As part of the preliminary purchase price allocation of TDI, the Company allocated $3.4 million to a finite-lived customer list intangible asset with a useful life of sixteen years. As part of the purchase price allocation of RTD, the Company allocated $40.7 million to a finite-lived customer list intangible asset with a useful life of sixteen years, $1.9 million to a finite-lived tradename with a useful life of five years and $0.4 million to a finite-lived favorable leases intangible asset with a useful life of four years. As part of the purchase price allocation of TriCan, the Company allocated $44.6 million to a finite-lived customer list intangible asset with a useful life of sixteen years, $4.9 million to a finite-lived tradename with a useful life of seven years and $0.4 million to a finite-lived favorable leases intangible asset with a useful life of six years. In addition, the Company allocated $15.9 million to a finite-lived customer list intangible asset with a useful life of sixteen years as part of the purchase price allocation for CTO. See Note 4 for additional information.

Intangible asset amortization expense was $19.7 million and $16.7 million for the quarters ended September 28, 2013 and September 29, 2012 respectively. For the nine months ended September 28, 2013 and September 29, 2012, intangible asset amortization expense was $56.3 million and $48.9 million, respectively. Estimated amortization expense on existing intangible assets is expected to approximate $19.8 million for the remaining three months of 2013 and approximately $72.7 million in 2014, $62.4 million in 2015, $52.6 million in 2016 and $46.0 million in 2017.

The following table sets forth the gross amount and accumulated amortization of the Company’s intangible assets at July 5, 2014 and December 28, 2013:


	July 5, 2014				December 28, 2013
In thousands	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Customer lists	$	1,124,662	$	272,779	$	677,062	$	226,614
Noncompete agreements		13,878		8,235		12,007		6,400
Favorable leases		1,074		210		688		119
Tradenames		19,026		4,935		10,531		3,754

Total finite-lived intangible assets		1,158,640		286,159		700,288		236,887
Tradenames (indefinite-lived)		249,893		—		249,893		—

Total intangible assets	$	1,408,533	$	286,159	$	950,181	$	236,887

At July 5, 2014, the Company had $1,122.4 million of intangible assets. The balance primarily relates to the TPG Merger on May 28, 2010, in which $781.3 million was recorded as intangible assets. As part of the preliminary purchase price allocation of Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary, the Company allocated $14.7 million, $4.4 million, $52.8 million, $23.3 million and $13.6 million, respectively, to a finite-lived customer list intangible asset with a useful life of sixteen years. As part of the preliminary purchase price allocation of Terry’s Tire, the Company allocated $185.8 million to a finite-lived customer list intangible asset with a useful life of eighteen years and $0.4 million to a favorable leases intangible asset with a useful life of five years. As part of the preliminary purchase price allocation of Hercules, the Company allocated $147.2 million to a finite-lived customer list intangible asset with a useful life of eighteen years and $8.5 million to a finite-lived tradename with a useful life of fifteen years. As part of the purchase price allocation of WTD, the Company allocated $4.4 million to a finite-lived customer list intangible asset with a useful life of sixteen years. As part of the purchase price allocation of TDI, the Company allocated $3.4 million to a finite-lived customer list intangible asset with a useful life of sixteen years. As part of the purchase price allocation of RTD, the Company allocated $40.7 million to a finite-lived customer list intangible asset with a useful life of sixteen years, $1.9 million to a finite-lived tradename with a useful life of five years and $0.4 million to a finite-lived favorable leases intangible asset with a useful life of four years.

Intangible asset amortization expense was $27.7 million and $19.0 million for the quarters ended July 5, 2014 and June 29, 2013 respectively. For the six months ended July 5, 2014 and June 29, 2013, intangible asset amortization expense was $49.0 million and $36.6 million, respectively. Estimated amortization expense on existing intangible assets is expected to approximate $59.5 million for the remaining six months of 2014 and approximately $126.2 million in 2015, $107.8 million in 2016, $93.2 million in 2017 and $79.9 million in 2018.

9.	Long-term Debt:

The following table presents the Company’s long-term debt at ~~September~~July 285, ~~2013~~2014 and at December 2928, ~~2012~~2013:

In thousands	~~September~~July 285,~~2013~~2014			December 2928,~~2012~~2013
U.S. ABL Facility	$	~~457~~641,~~515~~639		$	~~478~~417,~~616~~066
Canadian ABL Facility		53,~~062~~165			1036,~~976~~424
FILO Facility		49,152			—
U.S. FILO Facility		80,000			51,863
Senior Secured Notes		248,111			247,802
Canadian FILO Facility		10,266			—
Senior Subordinated Notes		200,000			200,000
Term Loan		717,693			—
Capital lease obligations		12,277			12,469
Senior Secured Notes		—			248,219
Other		1,236			1,341
Senior Subordinated Notes		421,361			200,000
Total debt		1,021,353			951,204
Capital lease obligations		12,577			12,330
Less - Current maturities		(533	)		(493	)
Other		7,596			1,098
Long-term debt	$	1,020,820		$	950,711
Total debt		1,944,297			967,000
Less - Current maturities		(10,120	)		(564	)
Long-term debt	$	1,934,177		$	966,436

The fair value of the ~~Company’s~~Senior ~~long-term~~Subordinated ~~senior~~Notes ~~notes~~ was $~~473~~431.65 million at ~~September~~July 285, ~~2013~~2014 and $~~477~~212.0 million at December 2928, ~~2012.~~2013 ~~The~~and ~~fair~~was ~~value~~estimated ofusing ~~the~~a ~~Senior~~discounted ~~Secured~~cash ~~Notes~~flow isanalysis ~~based~~with ~~upon~~significant ~~quoted~~inputs ~~market~~that ~~values~~are ~~(Level~~not ~~1).~~observable ~~However, the Company uses quoted prices for similar liabilities~~ (Level 23) inas ~~order~~there toare ~~fair~~no ~~value the Senior Subordinated Notes.~~

quoted prices in active markets for these notes. The fair value of the Term Loan was $718.1 million at July 5, 2014 and was estimated using a discounted cash flow analysis with significant inputs that are not observable (Level 3). The discount rate used in the fair value analysis for the Term Loan was based on borrowing rates available to the Company for debt with the same remaining maturity.

ABL Facility

InOn January 31, 2014, in connection with the ~~acquisition~~Hercules ~~of TriCan on November 30~~acquisition, ~~2012,~~ the Company ~~amended~~entered ~~and~~into ~~restated~~the ~~its~~Second ~~Fifth~~Amendment to Sixth Amended and Restated Credit Agreement ~~in order to provide for borrowings under the agreement by TriCan and make certain other amendments~~ (~~as so amended and restated, the~~ “~~Sixth Amended and Restated~~ Credit Agreement”)., ~~The~~which ~~Sixth Amended and Restated Credit Agreement~~ provides for (i) U.S. revolving credit commitments of $850.0 million (of which up to $50.0 million can be utilized in the form of commercial and standby letters of credit), subject to U.S. borrowing base availability (the “U.S. ABL Facility”) and (ii) Canadian revolving credit commitments of $60125.0 million (of which up to $10.0 million can be utilized in the form of commercial and standby letters of credit), subject to Canadian borrowing base availability (the “Canadian ABL Facility” and, collectively with the U.S. ABL Facility, the “ABL Facility”). ~~The~~In addition, the Credit Agreement provides (i) the U.S. ~~ABL~~borrowers under the agreement with a first-in last-out facility (the “U.S. FILO Facility”) in the aggregate principal amount of up to $80.0 million, subject to a borrowing base specific thereto and (ii) the Canadian borrowers under the agreement with a first-in last-out facility (the “Canadian FILO Facility” ~~provides~~and ~~for~~collectively ~~revolving~~with ~~loans~~the ~~available~~U.S. FILO Facility, the “FILO Facility”) in an aggregate principal amount of up to ~~ATDI~~$15.0 million, ~~its~~subject ~~100%~~to ~~owned~~a ~~subsidiary~~borrowing base specific thereto. The U.S. ABL Facility is available to ATDI, Am-Pac Tire Dist. Inc., Hercules and any other U.S. subsidiary that the Company designates in the future in accordance with the terms of the agreement. The Canadian ABL Facility ~~provides~~is ~~for revolving loans~~ available to TriCan and any other Canadian subsidiaries that the Company designates in the future in accordance with the terms of the agreement. Provided that no default or event of default then exists or would arise therefrom, the Company has the option to request that the ABL Facility be increased by an amount not to exceed $~~200~~175.0 million (up to $5025.0 million of which may be allocated to the Canadian ABL Facility), subject to certain rights of the administrative agent, swingline lender and issuing banks ~~with respect to the lenders~~ providing commitments for such increase. The maturity date for the ~~Sixth~~ABL ~~Amended~~Facility ~~and Restated Credit Agreement~~ is November 16, 2017~~, provided that if on March 1, 2017, either (i) more than $50~~.0 ~~million~~The inmaturity ~~aggregate~~date ~~principal amount of ATDI’s Senior Secured Notes remains outstanding or (ii) any principal amount of ATDI’s Senior Secured Notes remains outstanding with a~~for ~~scheduled~~the ~~maturity~~FILO ~~date~~Facility ~~which~~ is ~~earlier than 91 days after November~~January 1631, 2017. ~~and~~During ~~excess~~the ~~availability~~six ~~under~~months ~~the~~ended ~~ABL~~July 5, ~~Facility~~2014, isthe ~~less~~Company ~~than~~paid 12$0.5%7 ofmillion ~~the~~in ~~aggregate~~debt ~~revolving~~issuance ~~commitments,~~costs ~~then~~related to the ~~maturity~~ABL ~~date~~Facility ~~will~~and beFILO ~~March 1, 2017~~Facility.

InAs ~~connection with the acquisition~~ of ~~RTD, on March~~July 225, ~~2013~~2014, the Company ~~entered~~had ~~into~~$641.6 ~~the~~million ~~First~~outstanding ~~Amendment~~under ~~to Sixth Amended and Restated Credit Agreement, which provides for~~ the ~~Company’s~~U.S. ABL Facility ~~and FILO Facility (the “First Amendment”)~~. ~~The~~In ~~First~~addition, ~~Amendment (1) provided~~ the ~~U.S.~~Company ~~Borrowers~~had ~~under~~certain ~~the~~letters of ~~agreement~~credit ~~with~~outstanding ~~a new first-~~in ~~last-out facility (~~the ~~“FILO~~ ~~Facility”) in an~~ aggregate ~~principal~~ amount of ~~up to~~ $6010.0 million, ~~subject~~leaving ~~to a borrowing base specific thereto, and (2) increased the aggregate principal amount available under the Canadian ABL Facility from~~ $60198.04 million ~~to $100.0~~available ~~million,~~for ~~subject to the Canadian borrowing base. The~~ additional borrowings ~~provided for~~ under the ~~First~~U.S. ~~Amendment~~ABL ~~were contingent upon, among other things, the closing of the RTD acquisition on or before May 31, 2013~~Facility. The ~~closing~~outstanding balance of the ~~RTD~~ ~~acquisition~~Canadian ~~occurred,~~ABL ~~and the borrowings under the FILO~~ Facility ~~became~~at ~~available~~July 5, on2014 ~~April 30,~~was ~~2013~~$53.1 ~~The First Amendment also made certain other changes to the Sixth Amended and Restated Credit Agreement and added RTD as a party upon the~~million, ~~closing~~leaving ~~of the acquisition~~$70.8 ~~The~~million ~~maturity~~available ~~date~~ for ~~the~~additional ~~FILO~~borrowings. ~~Facility~~As isof ~~18 months from April~~July 305, ~~2013.~~2014, ~~The First Amendment did not change~~ the ~~maturity~~outstanding ~~dates~~balance of the U.S. ~~ABL~~FILO Facility orwas ~~the~~$80.0 ~~Canadian~~million ~~ABL~~and ~~Facility or~~ the ~~material~~outstanding ~~terms~~balance ~~under~~of ~~which either facility may be accelerated or~~ the ~~U.S.~~Canadian ~~ABL~~FILO Facility ~~may~~was ~~be increased. Immediately following the closing of the RTD acquisition,~~ $5010.13 million ~~was drawn on the FILO Facility~~.

AsBorrowings ~~of September 28, 2013, the Company had $457.5 million outstanding~~ under the U.S. ABL Facility. Inbear ~~addition~~interest at a rate per annum equal to, at the Company’s ~~had~~option, ~~certain~~either (a) 200 basis ~~letters~~points ofover ~~credit~~an ~~outstanding~~adjusted inLIBOR ~~the~~rate ~~aggregate~~or ~~amount~~(b) 100 ofbasis ~~$8.2~~points ~~million,~~over ~~leaving~~an ~~$158.9~~alternative ~~million~~base ~~available~~rate ~~for~~(the ~~additional~~higher ~~borrowings~~of ~~under~~the prime rate, the ~~U.S.~~federal ~~ABL~~funds ~~Facility.~~rate ~~The~~plus ~~outstanding~~50 ~~balance~~basis ofpoints ~~the~~and ~~Canadian~~one ~~ABL~~month-adjusted ~~Facility~~LIBOR asrate ofplus ~~September 28,~~100 ~~2013~~basis ~~was $53~~points).1 ~~million,~~The ~~leaving~~applicable ~~$24~~margins under the U.9S. ~~million~~ABL ~~available~~Facility ~~for~~are ~~additional~~subject ~~borrowings.~~to ~~The~~step ~~outstanding~~ups ~~balance~~and ofstep ~~the~~downs ~~FILO~~based ~~facility~~on asaverage ofexcess ~~September 28,~~borrowing ~~2013~~availability ~~was~~under ~~$49.2~~the ~~million~~ABL Facility.

15Borrowings under the Canadian ABL Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 100 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 100 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 200 basis points over a rate determined by reference to the average rate applicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 200 basis points over an adjusted LIBOR rate. The applicable margins under the Canadian ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the U.S. FILO Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 350 basis points over an adjusted LIBOR rate or (b) 250 basis points over an alternative base rate (the higher of the prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR plus 100 basis points. The applicable margins under the U.S. FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the Canadian FILO Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 250 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 250 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 350 basis points over a rate determined by reference to the average rate applicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 350 basis points over an adjusted LIBOR rate. The applicable margins under the Canadian FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the U.S. ABL Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) an Adjusted LIBOR rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus an applicable margin of 2.0% as of September 28, 2013 or (b) a base rate determined by reference to the highest of (1) the prime commercial lending rate published by the Bank of America, N.A. as its “prime rate” for commercial loans, (2) the federal funds effective rate plus 1⁄2 of 1% and (3) the one month-Adjusted LIBOR rate plus 1.0% per annum, plus an applicable margin of 1.0% as of September 28, 2013. The applicable margins under the U.S. ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the Canadian ABL Facility bear interest at a rate per annum equal to either (a) a Canadian base rate determined by reference to the highest of (1) the base rate as published by Bank of America, N.A. (acting through its Canada branch) as its “base rate”, (2) the federal funds rate effective plus 1⁄2 of 1% per annum and (3) the one month-LIBOR rate plus 1.0% per annum, plus an applicable margin of 1.0% as of September 28, 2013 or (b) a Canadian prime rate determined by reference to the highest of (1) the prime rate as published by Bank of America, N.A. (acting through its Canada branch) as its “prime rate”, (2) the sum of 1⁄2 of 1% plus the Canadian overnight rate and (3) the sum of 1% plus the rate of interest per annum equal to the average rate applicable to Canadian Dollar bankers’ acceptances as published by Reuters Monitor Money Rates Service for a 30 day interest period, plus an applicable margin of 1.0% as of September 28, 2013. The applicable margins under the Canadian ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the FILO Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) an Adjusted LIBOR rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus an applicable margin of 3.5% as of September 28, 2013 or (b) a base rate determined by reference to the highest of (1) the prime commercial lending rate published by the Bank of America, N.A. as its “prime rate” for commercial loans, (2) the federal funds effective rate plus 1⁄2 of 1% and (3) the one month-Adjusted LIBOR rate plus 1.0% per annum, plus an applicable margin of 2.5% as of September 28, 2013. The applicable margins under the FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

The U.S. and Canadian borrowing base at any time equals the sum (subject to certain reserves and other adjustments) of:

•

85% of eligible accounts receivable of the U.S. or Canadian loan parties, as applicable; plus

•

The lesser of (a) 70% of the lesser of cost or market value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable and (b) 85% of the net orderly liquidation value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable; plus

•

The lesser of (a) 50% of the lower of cost or market value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable and (b) 85% of the net orderly liquidation value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable.

The U.S. FILO and the Canadian FILO borrowing base at any time equals the sum (subject to certain reserves and other adjustments) of:

• 5% of eligible accounts receivable of the U.S. or Canadian loan parties, as applicable; plus

• ~~7.5~~10% of the net orderly liquidation value of the eligible tire and non-tire inventory of the U.S. or Canadian loan parties, as applicable.

All obligations under the U.S. ABL Facility and the U.S. FILO Facility are unconditionally guaranteed by Holdings and substantially all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material restricted subsidiaries, other than Tire Pros Francorp ~~and TDI~~. The Canadian ABL Facility isand the Canadian FILO Facility are unconditionally guaranteed by the U.S. loan parties, TriCan, ~~RTD~~ and any future, direct and indirect, wholly-owned, material restricted Canadian subsidiaries. Obligations under the U.S. ABL Facility and the U.S. FILO Facility are secured by a first-priority lien on inventory, accounts receivable and related assets and a second-priority lien on substantially all other assets of the U.S. loan parties, subject to certain exceptions. Obligations under the Canadian ABL Facility and the Canadian FILO Facility are secured by a first-priority lien on inventory, accounts receivable and related assets of the U.S. loan parties and the Canadian loan parties and a second-priority lien on substantially all other assets of the U.S. loan parties and the Canadian loan parties, subject to certain exceptions.

The ABL Facility and FILO Facility contain customary covenants, including covenants that restricts the Company’s ability to incur additional debt, grant liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates or change the Company’s fiscal year. The terms of the ABL Facility and FILO Facility generally restrict distributions or the payment of dividends in respect of the Company’s stock subject to certain exceptions requiring compliance with certain availability levels and fixed charge coverage ratios under the ABL Facility and other customary negotiated exceptions. As of July 5, 2014, the Company was in compliance with these covenants. If the amount available for additional borrowings under the ABL Facility is less than the greater of (a) 10.0% of the lesser of (x) the aggregate commitments under the ABL Facility and (y) the aggregate borrowing base and (b) $25.0 million, then the Company would be subject to an additional covenant requiring them to meet a fixed charge coverage ratio of 1.0 to 1.0. As of ~~September~~July 285, ~~2013~~2014, the Company’s additional borrowing availability under the ABL Facility was above the required amount and the Company was therefore not subject to the additional covenants.

16Senior Secured Term Loan

In connection with the acquisition of Terry’s Tire, on March 28, 2014, ATDI entered into a credit agreement that provided for a senior secured term loan facility in the aggregate principal amount of $300.0 million (the “Initial Term Loan”). The Initial Term Loan was issued at a discount of 0.25% which, combined with certain debt issuance costs paid at closing, resulted in net proceeds of approximately $290.9 million. The Initial Term Loan will accrete based on an effective interest rate of 6% to an aggregate accreted value of $300.0 million, the full principal amount at maturity. The net proceeds from the Initial Term Loan were used to finance a portion of the Terry’s Tire Purchase Price.

On June 16, 2014, ATDI amended the Initial Term Loan (the “Incremental Amendment”) to borrow an additional $340.0 million (the “Incremental Term Loan”) on the same terms as the Initial Term Loan. Pursuant to the Incremental Amendment, until August 15, 2014 ATDI also has the right to borrow up to an additional $80.0 million (the “Delayed Draw Term Loan” and collectively with the Initial Term Loan and the Incremental Term Loan, the “Term Loan”) on the same terms as the Initial Term Loan. The proceeds from the Incremental Term Loan, net of related debt issuance costs paid at closing, amounted to approximately $335.7 million, and were used, in part, to redeem all $250.0 million aggregate principal amounts of notes outstanding under ATDI’s Senior Secured Notes and related fees and expenses as more fully described below, and the remaining proceeds will be used for working capital requirements and other general corporate purposes, including the financing of potential future acquisitions. The Company received the proceeds from the Delayed Draw Term Loan at the end of the second quarter of 2014. The maturity date for the Term Loan is June 1, 2018. During the six months ended July 5, 2014, the Company paid $13.8 million in debt issuance cost related to the Term Loan.

Borrowings under the Term Loan bear interest at a rate per annum equal to, at the Company’s option, either (a) a Eurodollar rate determined by reference to LIBOR, plus an applicable margin of 475 basis points or (b) 375 basis points over an alternative

base rate determined by reference of the higher of the federal funds rate plus 50 basis points, the prime rate and 100 basis points over the one month Eurodollar rate. The Eurodollar rate is subject to an interest rate floor of 100 basis points. The applicable margins under the Term Loan are subject to a step down based on a consolidated net leverage ratio, as defined in the agreement.

All obligations under the Term Loan are unconditionally guaranteed by Holdings and, subject to certain customary exceptions, all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material subsidiaries. Obligations under the Term Loan are secured by a first-priority lien on substantially all property, assets and capital stock of ATDI except accounts receivable, inventory and related intangible assets and a second-priority lien on all accounts receivable and related intangible assets.

The Term Loan contains customary covenants, including covenants that restrict the Company’s ability to incur additional debt, create liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates, change the nature of the Company’s business or change the Company’s fiscal year. The terms of the Term Loan generally restrict distributions or the payment of dividends in respect to the Company’s stock subject to certain exceptions such as the amount of 50% of net income (reduced by 100% of net losses) for the period beginning January 1, 2014 and other customary negotiated exceptions. As of July 5, 2014, the Company was in compliance with these covenants.

The Company is required to make principal payments equal to 0.25% of the aggregate principal amount outstanding under the Term Loan on the last business day of each March, June, September and December, commencing with the last business day of June 2014. In addition, subject to certain exceptions, the Company is required to repay the Term Loan in certain circumstances, including with 50% (which percentage will be reduced to 25% and 0%, as applicable, subject to attaining certain senior secured net leverage ratios) of its annual excess cash flow, as defined in the Term Loan agreement. The Term Loan also contains repayments provision related to non-ordinary course asset or property sales when certain conditions are met, and related to the incurrence of debt that is not permitted under the agreement.

Senior Secured Notes

On May 2816, ~~2010~~2014, ATDI ~~issued~~delivered ~~Senior~~a ~~Secured~~Notice ~~Notes~~of ~~(“Senior~~Full ~~Secured Notes”) due June 1~~Redemption, ~~2017~~providing infor anthe ~~aggregate~~redemption ~~principal amount at maturity~~ of all $250.0 million. ~~The~~aggregate ~~Senior Secured Notes were issued at a discount from their~~ principal amount ~~at maturity and generated net proceeds~~ of ~~approximately~~the ~~$240.7 million after debt issuance costs (which represents a non-cash financing activity of $~~9.~~3 million). The Senior Secured Notes will accrete based on an effective interest rate of 10~~75% ~~to an aggregate accreted value of $250.0 million, the full principal amount at maturity. The~~ Senior Secured Notes ~~bear interest at a fixed rate of 9.75% per annum. Interest on the~~ (“Senior Secured Notes”) ~~is payable semi-annually in arrears~~ on June ~~1 and December 1 of each year~~16, ~~commencing~~2014 ~~on December 1, 2010. The Senior Secured Notes may be redeemed at any time~~(the at“Redemption ~~the~~Date”) ~~option of ATDI, in whole or in part, upon not less than 30 nor more than 60 days notice~~ at a ~~redemption~~ price ofequal ~~107~~to 104.~~313~~875% of the principal amount ifof the ~~redemption~~Senior ~~date~~Secured ~~occurs~~Notes ~~between~~redeemed ~~June 1,~~plus ~~2013~~accrued and ~~May 31,~~unpaid ~~2014~~interest, ~~104.875%~~if ofany, ~~the principal~~to, ~~amount~~but ifexcluding the ~~redemption~~Redemption ~~date~~Date ~~occurs~~(the ~~between~~“Redemption Price”). On June 116, 2014 ~~and May 31~~, ~~2015,~~using ~~102.438%~~proceeds offrom the ~~principal~~Incremental ~~amount~~Term ifLoan, the ~~redemption~~Senior ~~date~~Secured ~~occurs~~Notes ~~between~~were ~~June 1,~~redeemed ~~2015~~for ~~and~~a ~~May 31,~~Redemption ~~2016~~Price ~~and~~of ~~100~~$263.0%2 ~~of the principal amount if the redemption date occurs between June 1, 2016 and May 31, 2017~~million.

The Senior Secured Notes are unconditionally guaranteed by Holdings and substantially all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material restricted subsidiaries, other than Tire Pros Francorp and TDI, subject to certain exceptions. The Senior Secured Notes are also collateralized by a second-priority lien on accounts receivable and related assets and a first-priority lien on substantially all other assets (other than inventory), in each case of Holdings, ATDI and the guarantor subsidiaries, subject to certain exceptions.

The indenture governing the Senior Secured Notes contains covenants that, among other things, limits ATDI’s ability and the ability of its restricted subsidiaries to incur additional debt or issue preferred stock; pay certain dividends or make certain distributions in respect of ATDI’s or repurchase or redeem ATDI’s capital stock; make certain loans, investments or other restricted payments; place restrictions on the ability of ATDI’s subsidiaries to pay dividends or make other payments to ATDI; engage in transactions with stockholders or affiliates; transfer or sell certain assets; guarantee indebtedness or incur other contingent obligations; incur certain liens; consolidate, merge or sell all or substantially all of ATDI’s assets; enter into certain transactions with ATDI’s affiliates; and designate ATDI’s subsidiaries as unrestricted subsidiaries.

Senior Subordinated Notes

On May 28, 2010, ATDI issued ~~Senior~~$200.0 ~~Subordinated~~million ~~Notes due June 1, 2018 (“Senior Subordinated Notes”)~~ in an aggregate principal amount of ~~$200.0~~its ~~million~~11.50% ~~The~~ Senior Subordinated Notes ~~bear~~due ~~interest~~2018 at(the “Initial aSubordinated ~~fixed rate of 11~~Notes”).~~50% per~~ ~~annum.~~ Interest on the ~~Senior~~Initial Subordinated Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2010. The Senior Subordinated Notes may be redeemed at any time at the option of ATDI, in whole or in part, upon not less than 30 nor more than 60 days notice at a redemption price of 104.0% of the principal amount if the redemption date occurs between June 1, 2013 and May 31, 2014, 102.0% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015 and 100.0% of the principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016.

~~The~~In connection with the consummation of the Hercules acquisition, on January 31, 2014, ATDI completed the sale to certain purchasers of an additional $225.0 million in aggregate principal amount of its 11.50% Senior Subordinated Notes ~~are~~due ~~unconditionally~~2018 ~~guaranteed~~(the by“Additional ~~Holdings~~Subordinated Notes” and ~~substantially~~, ~~all~~collectively ofwith ~~ATDI’s~~the ~~existing~~Initial ~~and~~Subordinated ~~future~~Notes, ~~direct~~the “Senior Subordinated Notes”). The Additional Subordinated Notes were issued at a discount from their principal amount at maturity and ~~indirect,~~generated ~~wholly-owned~~net ~~domestic~~proceeds ~~material~~of ~~restricted~~approximately ~~subsidiaries~~$221.1 million. The Additional Subordinated Notes will accrete based on an effective interest rate of 12% to an aggregate accreted value of $225.0 million, ~~other~~the ~~than~~full ~~Tire~~principal ~~Pros~~amount ~~Francorp~~at ~~and~~maturity. ~~TDI~~During the six months ended July 5, ~~subject~~2014, the Company paid $1.2 million in debt issuance cost related to ~~certain~~the ~~exceptions~~Additional Subordinated Notes.

The ~~indenture~~Additional ~~governing the Senior~~ Subordinated Notes ~~contains~~have ~~covenants~~identical ~~that,~~terms ~~among~~to ~~other~~the ~~things,~~Initial ~~limits~~Subordinated ~~ATDI’s~~Notes ~~ability~~except ~~and~~ the ~~ability of~~Additional ~~its~~Subordinated ~~restricted~~Notes will ~~subsidiaries~~accrue tointerest ~~incur~~from ~~additional debt or issue preferred stock; pay certain dividends or make certain distributions in respect of ATDI’s or repurchase or redeem ATDI’s capital stock; make certain loans~~January 31, ~~investments~~2014. ~~or other~~The ~~restricted~~Additional ~~payments;~~Subordinated ~~place~~Notes ~~restrictions~~and on the ~~ability~~Initial ofSubordinated ~~ATDI’s~~Notes ~~subsidiaries~~are totreated ~~pay~~as ~~dividends~~a orsingle ~~make~~class ~~other~~of ~~payments~~securities tofor ~~ATDI;~~all ~~engage~~purposes inunder ~~transactions~~the ~~with~~indenture. ~~stockholders~~The ~~or affiliates; transfer or sell certain assets; guarantee indebtedness or incur other contingent obligations; incur certain liens without securing the~~ Senior Subordinated Notes; ~~consolidate,~~will ~~merge~~mature ~~or sell all or substantially all of ATDI’s assets; enter into certain transactions with ATDI’s affiliates; and~~on ~~designate~~June 1, ~~ATDI’s subsidiaries as unrestricted subsidiaries~~2018.

~~Capital~~The ~~Lease~~Senior ~~Obligations~~Subordinated Notes may be redeemed at any time at the option of ATDI, in whole or in part, upon not less than 30 nor more than 60 days notice at a redemption price of 102.0% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015 and 100.0% of the principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016.

AtThe ~~December 31,~~Senior ~~2011,~~Subordinated ~~the~~Notes ~~Company~~are ~~had~~unconditionally aguaranteed ~~capital~~by ~~lease~~Holdings ~~obligation of $14.1 million which related to the 2002 sale~~ and ~~subsequent~~substantially ~~leaseback~~all of ~~three~~ATDI’s ofexisting ~~its~~and ~~owned facilities. Due to continuing involvement with the properties~~future, ~~the Company accounted for the transaction as a~~ direct ~~financing lease~~ and ~~recorded~~indirect, ~~the~~wholly-owned ~~cash~~domestic ~~received~~material asrestricted asubsidiaries, ~~financing~~other ~~obligation.~~than ~~The~~Tire ~~transaction~~Pros ~~had an initial lease term of 20 years~~Francorp, ~~followed~~subject byto ~~two~~certain ~~10 year renewal options~~exceptions. ~~No gain or loss was recognized as a result of the initial sales transaction.~~

OnThe ~~February 1,~~indenture ~~2012,~~governing the ~~Company~~Senior ~~reacquired~~Subordinated ~~one~~Notes ofcontains ~~the~~covenants ~~three~~that, ~~facilities~~among ~~included~~other inthings, ~~the~~limits ~~2002~~ATDI’s ~~sale-leaseback~~ability ~~transaction~~and ~~for~~the ~~$1.5 million.~~ability ~~Accordingly,~~of ~~the~~its ~~original~~restricted ~~lease~~subsidiaries ~~was amended~~ to ~~extend~~incur ~~the~~additional ~~lease~~debt ~~term~~or onissue ~~the~~preferred ~~two~~stock; ~~remaining~~pay ~~facilities~~certain bydividends 5or ~~years~~make ascertain

1720

~~well~~distributions asin torespect ~~adjust~~of ~~the~~ATDI’s ~~future~~or ~~lease~~repurchase or redeem ATDI’s capital stock; make certain loans, investments or other restricted payments; ~~over~~place restrictions on the ~~remaining~~ability 15of ATDI’s ~~years.~~subsidiaries ~~Per~~to ~~ASC~~pay ~~470~~dividends -or ~~Debt,~~make ~~the~~other ~~change~~payments into ~~the~~ATDI; ~~debt~~engage ~~terms~~in ~~was~~transactions ~~not~~with ~~considered~~stockholders ~~substantial.~~or Asaffiliates; atransfer ~~result,~~or ~~the~~sell ~~Company~~certain ~~treated the~~assets; ~~amendment~~guarantee asindebtedness aor ~~debt~~incur ~~modification~~other ~~for~~contingent ~~accounting~~obligations; ~~purposes~~incur ~~and~~certain ~~therefore,~~liens without ~~reduced~~securing the ~~financing~~Senior ~~obligation~~Subordinated byNotes; ~~the~~consolidate, ~~purchase~~merge ~~price.~~or ~~Cash~~sell ~~payments~~all toor ~~the~~substantially ~~lessor~~all ~~are~~of ~~allocated~~ATDI’s ~~between~~assets; ~~interest~~enter ~~expense~~into certain transactions with ATDI’s affiliates; and ~~amortization~~designate ofATDI’s ~~the~~subsidiaries ~~financing~~as ~~obligation~~unrestricted subsidiaries. ~~At the~~The ~~end~~terms of the ~~lease~~Senior ~~term,~~Subordinated ~~the~~Notes ~~Company~~generally ~~will~~restrict ~~recognize~~distributions or the ~~sale~~payment of ~~the~~dividends ~~remaining~~in ~~facilities;~~respect ~~however,~~of nothe ~~gain~~Company’s orstock ~~loss~~subject ~~will~~to becertain ~~recognized~~exceptions such as the ~~financing~~amount ~~obligation~~of ~~will~~50% ~~equal~~of ~~the~~net ~~expected~~income ~~carrying~~(reduced ~~value~~by 100% of net losses) for the ~~facilities.~~period Atbeginning ~~September~~April 284, ~~2013, the~~2010 ~~outstanding~~and ~~balance~~other customary negotiated exceptions. As of ~~the~~July 5, ~~financing~~2014, ~~obligation~~the Company was ~~$12.3~~in ~~million~~compliance with these covenants.

10.

Derivative Instruments:

In the normal course of business, the Company is exposed to the risk associated with exposure to fluctuations in interest rates on our variable rate debt. These fluctuations can increase the cost of financing, investing and operating the business. The Company has used derivative financial instruments to help manage this risk and reduce the impacts of these exposures and not for trading or other speculative purposes. All derivatives are recognized on the condensed consolidated balance sheet at their fair value as either assets or liabilities. Changes in the fair value of contracts that qualify for hedge accounting treatment are recorded in accumulated other comprehensive income (loss), net of taxes, and are recognized in the statement of comprehensive income (loss) at the time earnings are affected by the hedged transaction. For other derivatives, changes in the fair value of the contract are recognized immediately in net income (loss) in the statement of comprehensive income (loss).

On September 4, 2013, the Company entered into a spot interest rate swap and two forward-starting interest rate swaps (collectively the “3Q 2013 Swaps”) each of which are used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The spot interest rate swap in place covers a notional amount of $100.0 million at a fixed interest rate of 1.145% and expires in September 2016. The forward-starting interest rate swaps in place cover an aggregate notional amount of $100.0 million, of which $50.0 million becomes effective in September 2014 at a fixed interest rate of 1.464% and will expire in September 2016 and $50.0 million becomes effective in September 2015 at a fixed interest rate of 1.942% and will expire in September 2016. The counterparty to each swap is a major financial institution. The 3Q 2013 Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract is recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

On August 1, 2012, the Company entered into two interest rate swap agreements (“3Q 2012 Swaps”) used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The swaps in place cover an aggregate notional amount of $100.0 million, with each $50.0 million contract having a fixed rate of 0.655% and expiring in June 2016. The counterparty to each swap is a major financial institution. The 3Q 2012 Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract is recognized in ~~the~~net income (loss) in the condensed consolidated statement of comprehensive income (loss).

On September 23, 2011, the Company entered into two interest rate swap agreements (“3Q 2011 Swaps”) used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The swaps in place cover an aggregate notional amount of $100.0 million, of which $50.0 million is at a fixed rate of 0.74% and will expire in September 2014 and $50.0 million is at a fixed rate of 1.0% and will expire in September 2015. The counterparty to each swap is a major financial institution. The 3Q 2011 Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract is recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

On February 24, 2011, the Company entered into two interest rate swap agreements (“1Q 2011 Swaps”) used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The swaps in place covered an aggregate notional amount of $75.0 million, of which $25.0 million was at a fixed interest rate of 0.585% and expired in February 2012. The remaining swap covered an aggregate notional amount of $50.0 million at a fixed interest rate of 1.105% and expired in February 2013. The counterparty to each swap was a major financial institution. Neither swap met the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract were recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

1821

The following tables present the fair values of the Company’s derivative instruments included within the condensed consolidated balance sheets as of ~~September~~July 285, ~~2013~~2014 and December 2928, ~~2012~~2013:

		Liability Derivatives
In thousands	Balance SheetLocation	~~September~~July 285,~~2013~~2014		December 2928,~~2012~~2013
Derivatives not designated as hedges:
1Q 2011 swap - $50 million notional	Accrued expenses	$	—	$	149
3Q 2011 swaps - $100 million notional	Accrued expenses	$	547	$	792
3Q 2011 swaps - $100 million notional	Accrued expenses		903		1,314
3Q 2012 swaps - $100 million notional	Accrued expenses		310		280
3Q 2012 swaps - $100 million notional	Accrued expenses		265		750
3Q 2013 swaps - $200 million notional	Accrued expenses		1,941		1,880
3Q 2013 swaps - $200 million notional	Accrued expenses		1,787		—
Total		$	2,798	$	2,952
Total		$	2,955	$	2,213

The pre-tax effect of the Company’s derivative instruments on the condensed consolidated statement of comprehensive income (loss) was as follows:

		(Gain) Loss Recognized
In thousands	Location of(Gain) LossRecognized	~~QuarterEndedSeptember~~QuarterEndedJuly 285,~~2013~~2014			~~QuarterEndedSeptember~~QuarterEndedJune 29,~~2012~~2013			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJuly 285,~~2013~~2014			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJune 29,~~2012~~2013
Derivatives not designated as hedges:
1Q 2011 swap - $50 million notional	Interest Expense	$	—		$	~~(34~~—	)	$	~~(149~~—	)	$	(78149	)
1Q 2011 swap - $25 million notional	Interest Expense		—			—			—			(12	)
3Q 2011 swaps - $100 million notional	Interest Expense		(158	)		(246	)		(245	)		(402	)
3Q 2011 swaps - $100 million notional	Interest Expense		(10	)		266			(412	)		912
3Q 2012 swaps - $100 million notional	Interest Expense		(18	)		(670	)		30			(801	)
3Q 2012 swaps - $100 million notional	Interest Expense		316			810			(484	)		810
3Q 2013 swaps - $200 million notional	Interest Expense		26			—			61			—
3Q 2013 swaps - $200 million notional	Interest Expense		1,787			—			1,787			—
Total		$	(150	)	$	(916	)	$	(154	)	$	(1,352	)
Total		$	2,093		$	1,042		$	742		$	1,632

11.

Fair Value of Financial Instruments:

The accounting standard for fair value measurements establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is comprised of three levels that are described below:

•

Level 1 Inputs - Inputs based on quoted prices in active markets for identical assets or liabilities.

•

Level 2 Inputs - Inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

•

Level 3 Inputs - Unobservable inputs based on little or no market activity and that are significant to the fair value of the assets and liabilities, therefore requiring an entity to develop its own assumptions.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

1922

The following table presents the fair value and hierarchy levels for the Company’s assets and liabilities, which are measured at fair value on a recurring basis as of ~~September~~July 285, ~~2013~~2014:

	Fair Value Measurements
In thousands	Total		Level 1		Level 2		Level 3
Assets:
Benefit trust assets	$	3,~~135~~530	$	3,~~135~~530	$	—	$	—
Total	$	3,~~135~~530	$	3,~~135~~530	$	—	$	—
Liabilities:
Derivative instruments	$	2,955	$	—	$	2,955	$	—
Contingent consideration	$	16,000	$	—	$	—	$	16,000
Total	$	2,955	$	—	$	2,955	$	—
Derivative instruments		2,798		—		2,798		—
Total	$	18,798	$	—	$	2,798	$	16,000

ASC 820 – Fair Value Measurements and Disclosures defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines fair value of its financial assets and liabilities using the following methodologies:

• Benefit trust assets -– These assets include money market and mutual funds that are the underlying for deferred compensation plan assets, held in a rabbi trust. The fair value of the assets is based on observable market prices quoted in readily accessible and observable markets.

•

Contingent consideration - As part of the preliminary purchase price allocation of Terry’s Tire and Hercules, the Company recorded $12.5 million and $3.5 million, respectively, in contingent consideration. The fair value was estimated using a discounted cash flow technique with significant inputs that are not observable, including discount rates and probability-weighted cash flows and represents management’s best estimate of the amounts to be paid. The contingent consideration includes $12.3 million related to the retention of certain key members of management as employees of the Company and $3.7 million related to securing the rights to continue to distribute certain tire brands previously distributed by Terry’s Tire and Hercules. The Company believes the probable outcome could range from approximately $8.0 million to $16.0 million. The recorded contingent consideration is included in Accrued Expenses in the condensed consolidated balance sheet as of July 5, 2014.

•

Derivative instruments - These instruments consist of interest rate swaps. The fair value is based upon quoted prices for similar instruments from a financial institution that is counterparty to the transaction.

The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these instruments. The methodologies used by the Company to determine the fair value of its financial assets and liabilities at ~~September~~July 285, ~~2013~~2014 are the same as those used at December 2928, ~~2012~~2013. As a result, there have been no transfers between Level 1 and Level 2 categories.

As discussed in Note 6, the Company determined that the carrying of the facility reacquired in 2012, and which is classified as held for sale at September 28, 2013, exceeded its fair value due to current market conditions. As a result, the Company recorded a $0.3 million adjustment during the third quarter of 2013 related to the fair value of this facility. As of September 28, 2013, the fair value of the facility was $1.5 million and was based upon an agreement for the sale of the facility (Level 1). See Note 15 for additional information.

12.

Stock-Based Compensation:

The Company accounts for stock-based compensation awards in accordance with ASC 718 - Compensation, which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s stock-based compensation plans include programs for stock options and restricted stock ~~units~~awards.

Stock Options

In August 2010, the Company’s indirect parent company adopted a Management Equity Incentive Plan (the “2010 Plan”), pursuant to which the indirect parent company will grant options to selected employees and directors of the Company. The 2010 Plan, which includes both time-based and performance-based awards, was amended on ~~February~~April 1528, ~~2013~~2014 by the board of directors of of the Company’s indirect parent, ~~Accelerate~~ATD ~~Parent Corp.~~Corporation, to increase the maximum number of shares of common stock for which stock options may be granted under the 2010 Plan, from 4852.61 million to 5254.14 million. In addition to the increase in the maximum number of shares, on ~~February~~April 1528, ~~2013~~2014, the board of directors of ~~Accelerate~~ATD ~~Parent~~Corporation ~~Corp.~~ approved the issuance of stock options to certain members of management. The approved options are for the purchase of up to 34.5 million shares of common stock, have an exercise price of $1.2050 per share, and vest over a ~~three to five~~two-year vesting period. As of ~~September~~July 285, ~~2013~~2014, the Company has 10.93 million shares available for future incentive awards.

2023

Changes in options outstanding under the 2010 Plan are as follows:

	Numberof Shares			WeightedAverageExercise Price
Outstanding - December 29, 2012		46,681,600		$	1.01
Outstanding - December 28, 2013		49,516,503		$	1.02
Granted		34,~~500~~528,~~002~~833			1.2050
Exercised		—			—
Cancelled		~~(66,666~~—	)		~~1.00~~—
Outstanding - September 28, 2013		50,114,936		$	1.02
Outstanding - July 5, 2014		54,045,336		$	1.06
Exercisable - September 28, 2013		27,998,413		$	1.01
Exercisable - July 5, 2014		34,080,079		$	1.03

~~Options~~As ~~granted under the 2010 Plan expire no later than 10 years from the date~~ of ~~grant~~July 5, ~~and~~2014, ~~vest based on~~ the ~~passage~~ ofaggregate ~~time~~intrinsic ~~and/or~~value ~~the achievement~~ of ~~certain performance targets in equal installments over three or five years. The weighted-average remaining contractual term for~~ options outstanding and options exercisable ~~at September 28, 2013~~ was 7 $23.27 ~~years~~ million and 7$16.10 ~~years~~million, respectively. The ~~fair~~aggregate intrinsic value ofis ~~each of the Company’s time-~~based ~~stock option awards is expensed~~ on ~~a straight-line basis over~~ the ~~requisite~~estimated ~~service~~fair ~~period,~~value ~~which~~of ~~is generally~~ the ~~three~~Company’s orcommon ~~five-year~~stock ~~vesting period~~ of ~~the options~~$1. ~~However,~~50 ~~for~~as ~~options~~of ~~granted with performance target requirements~~July 5, ~~compensation~~2014. ~~expense~~The istotal ~~recognized~~fair ~~when~~value itof isshares ~~probable~~vested ~~that~~during ~~both~~ the ~~performance~~six ~~target~~months ~~will be achieved and the requisite service period is satisfied. At September~~ended July 285, ~~2013, unrecognized~~2014 ~~compensation~~was ~~expense related to non-vested options granted under the 2010 Plan totaled~~ $86.23 million. ~~and~~No ~~the~~options ~~weighted-average~~were ~~period~~exercised ~~over~~during ~~which~~the ~~this~~six ~~expense~~months ~~will~~ended beJuly 5, ~~recognized is 1~~2014.6 ~~years.~~

~~The~~Options ~~weighted~~granted ~~average~~under ~~fair~~the 2010 ~~value~~Plan expire no later than 10 years from the date of ~~stock~~grant ~~options~~and ~~granted~~vest ~~during~~based on the ~~nine~~passage ~~months~~of ~~ended~~time ~~September 28~~and/or the achievement of certain performance targets in equal installments over two, ~~2013~~three or five years. The weighted-average remaining contractual term for options outstanding and ~~September~~exercisable at July 295, ~~2012~~2014 was $0 6.547 years and $06.505 years, respectively,. ~~using~~The fair value of each of the ~~Black~~Company’s time-~~Scholes~~based stock option ~~pricing~~awards ~~model~~is expensed on a straight-line basis over the requisite service period, which is generally the two, three or five-year vesting period of the options. ~~The~~However, ~~following~~for ~~weighted~~options granted with performance target requirements, compensation expense is recognized when it is probable that both the performance target will be achieved and the requisite service period is satisfied. At July 5, 2014, unrecognized compensation expense related to non-vested options granted under the 2010 Plan totaled $8.7 million and the weighted-average ~~assumptions~~period over ~~were~~which ~~used:~~this expense will be recognized is 0.9 years.

	Nine MonthsEndedSeptember 28,2013			Nine MonthsEndedSeptember 29,2012
Risk-free interest rate		1.38	%		1.48	%
Dividend yield		—			—
Expected life		6.0 years			6.5 years
Volatility		45.39	%		42.81	%

The weighted average fair value of stock options granted during the six months ended July 5, 2014 and June 29, 2013 was $0.68 and $0.54 using the Black-Scholes option pricing model. The following weighted average assumptions were used:


	Six Months Ended July 5, 2014			Six Months Ended June 29, 2013
Risk-free interest rate		1.73	%		1.38	%
Dividend yield		—			—
Expected life		5.8 years			6.0 years
Volatility		46.49	%		45.39	%

As the Company does not have sufficient historical volatility data for the Company’s own common stock, the stock price volatility utilized in the fair value calculation is based on the Company’s peer group in the industry in which it does business. The risk-free interest rate is based on the yield-curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. Because the Company does not have relevant data available regarding the expected life of the award, the expected life is derived from the Simplified Method as allowed under SAB Topic 14.

Restricted Stock ~~Units (RSUs)~~

In October 2010, the Company’s indirect parent company adopted the Non-Employee Director Restricted Stock Plan (the “2010 ~~RSU~~Restricted Stock Plan”), pursuant to which the indirect parent company will grant restricted stock ~~units~~ to non-employee directors of the Company. ~~Upon~~These ~~vesting, these~~ awards entitle the holder to receive one share of common stock for each restricted stock ~~unit~~ award granted. The 2010 ~~RSU~~Restricted Stock Plan provides that a maximum of 0.8 million shares of common stock of the indirect parent may be granted to non-employee directors of the Company, of which 0.32 million remain available at ~~September~~July 285, ~~2013~~2014 for ~~future~~ future incentive awards. On April 28, 2014, the board of directors of ATD Corporation approved the issuance of restricted stock to the non-employee directors of the Company. The approved restricted stock awards were for the issuance of up to 0.1 million shares of common stock, have a grant date fair value of $1.50 per share and vest over a two-year vesting period.

2124

The following table summarizes ~~RSU~~restricted stock activity under the 2010 ~~RSU~~Restricted Stock Plan for the ~~nine~~six months ended ~~September~~ July 285, ~~2013~~2014:

	Numberof Shares			WeightedAverageExercise Price
Outstanding and unvested at December 29, 2012		269,298		$	1.11
Outstanding and unvested at December 28, 2013		87,719		$	1.14
Granted		—133,333			—1.50
Vested		(~~159~~87,~~649~~719	)		1.1014
Cancelled		~~(21,930~~—	)		~~1.14~~—
Outstanding and unvested at September 28, 2013		87,719		$	1.14
Outstanding and unvested at July 5, 2014		133,333		$	1.50

The fair value of each of the ~~RSU~~restricted stock awards is measured as the grant-date price of the common stock and is expensed on a straight-line basis over the requisite service period, which is generally the two-year vesting period. At ~~September~~July 285, ~~2013~~2014, unrecognized compensation expense related to non-vested ~~RSUs~~restricted stock awards granted under the 2010 Restricted ~~RSU~~Stock Plan totaled $0.1 2 million and the weighted-average period over which this expense will be recognized is 01.35 years.

Compensation Expense

Stock-based compensation expense is included in selling, general and administrative expenses within the condensed consolidated statement of comprehensive income (loss). The amount of compensation expense recognized during a period is based on the portion of the granted awards that are expected to vest. Ultimately, the total expense recognized over the vesting period will equal the fair value of the awards as of the grant date that actually vest. The following table summarizes the compensation expense recognized:

In thousands	~~QuarterEndedSeptember~~QuarterEndedJuly 285,~~2013~~2014		~~QuarterEndedSeptember~~QuarterEndedJune 29,~~2012~~2013		~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJuly 285,~~2013~~2014		~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJune 29,~~2012~~2013
Stock Options	$	~~584~~1,394	$	~~1,534~~753	$	1,962	$	21,~~584~~379
Restricted Stock Units		12		73		85		177
Restricted Stock		25		31		25		73
Total	$	~~596~~1,419	$	~~1,607~~784	$	21,~~047~~987	$	21,~~761~~452

13.

Income Taxes:

The tax provision for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014, was calculated on a national jurisdiction basis. The Company accounts for its provision for income taxes in accordance with ASC 740 – Income Taxes, which requires an estimate of the annual effective tax rate for the full year to be applied to the respective interim period. However, the authoritative guidance allows the use of the discrete method when, in certain situations, the actual interim period effective tax rate provides a better estimate of the income tax provision. For the ~~nine~~six months ended ~~September~~ July 285, ~~2013~~2014, the discrete method was used to calculate the Company’s U.S. and Canadian interim tax expense as management determined that it provided a more reliable estimate of year-to-date income tax expense.

Based on the reported loss before income taxes for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014, the Company had an income tax benefit of $843.9 0 million, consisting of a $741.20 million U.S. tax benefit and a $12.70 million foreign tax benefit, and an effective tax benefit rate under the discrete method of 2934.80%. For the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013, the Company had an income tax benefit of $59.84 million, ~~which~~consisting ~~was~~of ~~based~~a on$7.4 amillion ~~pre-~~U.S. tax ~~loss~~benefit ofand a $182.30 million foreign tax benefit, and an effective tax benefit rate of 3129.47%. The effective rate of the year-to-date tax benefit is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower than the statutory U.S. federal rate and ~~the impact of several~~ non-deductible ~~tax~~transaction ~~items~~costs aswhich ~~well~~lowered as the ~~Company’s state~~ effective tax rate, aby ~~result~~0.5% ~~based on the Company’s legal entity tax structure~~ and ~~individual~~ ~~state~~0.5%, ~~tax filing requirements~~respectively.

At ~~September~~July 285, ~~2013~~2014, the Company has a net deferred tax liability of $~~262~~302.04 million, of which, $1618.09 million was recorded as a current deferred tax asset and $~~278~~321.03 million was recorded as a non-current deferred tax liability. The net deferred tax liability primarily relates to the expected future tax liability associated with the non-deductible, identified, intangible assets that were recorded during the TPG Merger, assuming an effective tax rate of 39.6%. It is the Company’s intention to indefinitely reinvest all undistributed earnings of non-U.S. subsidiaries. As these earnings are considered permanently reinvested, no provisions for U.S. federal or state income taxes are required under ASC 740-30. Determination of the amount of unrecognized U.S. federal and state deferred tax liabilities on these unremitted earnings is not practicable.

2225

At ~~September~~July 285, ~~2013~~2014, the Company had unrecognized tax benefits of $20.16 million, of which $0.9 6 million is included within ~~accrued expenses and $1.2 million is included within~~ other liabilities within the accompanying condensed consolidated balance sheet. The total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $10.21 million as of ~~September~~ July 285, ~~2013~~2014. In addition, $0.95 million is related to temporary timing differences. During the next 12 months, management does not believe that it is reasonably possible that any of the unrecognized tax benefits will be recognized.

While the Company believes that it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position. Accordingly, additional provisions of federal and state-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. The Company files federal income tax returns, as well as multiple state jurisdiction tax returns. The tax years 2010 – 2012 remain open to examination by the Internal Revenue Service. The tax years 2009 – 2012 remain open to examination by other major taxing jurisdictions to which the Company is subject (primarily Canada and other state and local jurisdictions).

In September 2013, the Internal Revenue Service released final Tangible Property Regulations (the “Final Regulations”). The Final Regulations provide guidance on applying Section 263(a) of the Code to amounts paid to acquire, produce or improve tangible property, as well as rules for materials and supplies (Code Section 162). These regulations contain certain changes from the temporary and proposed tangible property regulations that were issued on December 27, 2011. The Final Regulations are generally effective for taxable years beginning on or after January 1, 2014. InDuring ~~addition~~2012, ~~taxpayers are permitted to early adopt~~ the ~~Final~~Company ~~Regulations~~filed ~~for~~a ~~taxable~~change ~~years~~in ~~beginning~~tax onmethodology orrelated ~~after~~to ~~January 1,~~a ~~2012.~~section ~~The~~of ~~Company does not expect~~ the Final Regulations, tospecifically ~~have~~the amethodology ~~material~~for ~~effect~~repairs onand ~~its results of operations~~maintenance deductions. The Company isdoes ~~currently evaluating~~not ~~the~~expect ~~impact~~any onadditional ~~its~~adjustments ~~financial~~related ~~condition~~to the Final Regulations.

14. ~~Commitments~~Stockholder’s ~~and Contingencies~~Equity:

On January 31, 2014, TPG and certain co-investors contributed $50.0 million through the purchase of 33.3 million shares of common stock in Holdings indirect parent company, ATD Corporation. The proceeds from this equity contribution were used to fund a portion of the Hercules Closing Purchase Price. Accordingly, the Company recorded the basis in these shares in additional paid-in capital.

15.

Commitments and Contingencies:

The Company is involved from time to time in various lawsuits, including class action lawsuits as well as various audits and reviews regarding its federal, state and local tax filings, arising out of the ordinary conduct of its business. Management does not expect that any of these matters will have a material adverse effect on the Company’s business or financial condition. As to tax filings, the Company believes that the various tax filings have been made in a timely fashion and in accordance with applicable federal, state and local tax code requirements. Additionally, the Company believes that it has adequately provided for any reasonably foreseeable resolution of any tax disputes, but will adjust its reserves if events so dictate in accordance with FASB authoritative guidance. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in accordance with the accounting standards for income taxes.

Guaranteed Lease Obligations

The Company remains liable as a guarantor on certain leases related to the Winston Tire Company, which was sold in 2001. As of ~~September~~ July 285, ~~2013~~ 2014, the Company’s total obligations are $21.26 million extending over ~~six~~five years. However, the Company has secured assignments or sublease agreements for the vast majority of these commitments with contractual assigned or subleased rentals of $21.04 million. A provision has been made for the net present value of the estimated shortfall.

1516. ~~Subsequent~~Discontinued ~~Event~~Operations:

OnAs ~~October 11~~part of the acquisition of Terry’s Tire, ~~2013~~the Company acquired Terry’s Tire’s commercial and retread businesses. As the Company’s core business does not include commercial and retread operations, the Company ~~completed~~decided that it would divest of these businesses. As it is management’s intention to divest the commercial and retread businesses during fiscal 2014 and as all held for sale criteria has been met, the related assets and liabilities of athe ~~facility~~commercial ~~that~~and ~~was~~retread businesses are classified as held for sale within the accompanying condensed consolidated balance sheet. ~~The~~As ~~Company~~of ~~received~~July 5, ~~cash~~2014, ~~proceeds~~the amount classified as assets held for sale was $5.5 million, consisting of $14.2 million in current assets, net property and equipment of $0.8 million and goodwill of $0.5 million. ~~which~~The ~~approximated~~amount ~~the~~classified ~~carrying~~as ~~value~~liabilities held for sale was $0.4 million as of July 5, 2014 of which the ~~facility~~entire amount related to current liabilities.

~~16.~~26 ~~Subsidiary Guarantor Financial Information:~~

The Company has reflected the results of Terry’s Tire’s commercial and retread businesses as discontinued operations in the accompanying condensed consolidated statement of comprehensive income (loss) for the quarter and six months ended July 5, 2014. The components of income (loss) from discontinued operations, net of tax for the quarter and six months ended July 5, 2014 were as follows:


In thousands	Quarter Ended July 5, 2014			Six Months Ended July 5, 2014
Net sales	$	5,418		$	5,418


Income (loss) from operations before income taxes	$	(74	)	$	(74	)
Income tax provision (benefit)		(26	)		(26	)

Income (loss) from discontinued operations, net of tax	$	(48	)	$	(48	)

17.

Subsequent Event:

On July 31, 2014, the Company completed a transaction to sell the commercial and retread businesses acquired as part of the Terry’s Tire acquisition for a purchase price of approximately $3.9 million.

18.

Subsidiary Guarantor Financial Information:

ATDI is the issuer of $425.0 million in aggregate principal amount of Senior Subordinated Notes. The Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by Holdings, Am-Pac, Tire Wholesalers, Inc. (“Tire Wholesalers”), Terry’s Tire and by the U.S. operations of Hercules. ATDI is a direct 100% owned subsidiary of Holdings and Am-Pac, Tire Wholesales, Terry’s Tire and Hercules are indirect 100% owned subsidiaries of Holdings. None of the Company’s other subsidiaries guarantees the Senior Subordinated Notes. The guarantees can be released in certain customary circumstances.

In accordance with Rule 3-10 of Regulation S-X, the following presents condensed consolidating financial information for:

•

Holdings, under the column heading “Parent Company”;

•

ATDI, under the column heading “Subsidiary Issuer”;

• Am-Pac, ~~and~~ Tire Wholesalers, Terry’s Tire and Hercules’ U.S. subsidiary, on a combined basis, under the column heading “Guarantor Subsidiaries”; and

•

The Company’s other subsidiaries, on a combined basis, under the column heading “Non-Guarantor Subsidiaries”;

•

Consolidating entries and eliminations, under the column heading “Eliminations”; and

•

Holdings, ATDI and their subsidiaries on a consolidated basis, under the column heading “Consolidated.”

23At the beginning of fiscal 2014, the Company merged a subsidiary that previously was a non-guarantor of the Senior Subordinated Notes, Tire Distributors, Inc., into ATDI. As a result of this merger, the consolidating balance sheet as of December 28, 2013 has been retroactively adjusted to reflect the post-merger legal entity structure. Terry’s Tire and Hercules’ U.S. subsidiary became guarantors of the Senior Subordinated Notes in the first quarter of 2014.

At the beginning of 2013, the Company merged a subsidiary that previously guaranteed the Notes, Firestone of Denham Springs, Inc. d/b/a Consolidated Tire & Oil, into ATDI.

The condensed consolidating financial information for the Company is as follows:

	As of September 28, 2013
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	19,874		$	—		$	7,447		$	—		$	27,321
Accounts receivable, net		—			290,277			—			33,970			(370	)		323,877
Inventories		—			657,172			—			102,469			8			759,649
Assets held for sale		—			3,369			—			—			—			3,369
Income tax receivable		—			369			—			—			—			369
Intercompany receivables		36,322			—			60,169			32,027			(128,518	)		—
Other current assets		—			23,359			4,899			4,493			—			32,751
Total current assets		36,322			994,420			65,068			180,406			(128,880	)		1,147,336
Property and equipment, net		—			137,664			367			5,211			—			143,242
Goodwill and other intangible assets, net		418,592			678,448			1,496			136,807			—			1,235,343
Investment in subsidiaries		219,099			201,569			—			—			(420,668	)		—
Other assets		8,729			42,485			308			710			—			52,232
Total assets	$	682,742		$	2,054,586		$	67,239		$	323,134		$	(549,548	)	$	2,578,153
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	—		$	467,779		$	2,255		$	44,378		$	(370	)	$	514,042
Accrued expenses		—			55,095			53			9,523			—			64,671
Current maturities of long-term debt		—			527			6			—			—			533
Intercompany payables		—			77,436			1,155			49,927			(128,518	)		—
Total current liabilities		—			600,837			3,469			103,828			(128,888	)		579,246
Long-term debt		—			967,754			4			53,062			—			1,020,820
Deferred income taxes		—			253,648			587			23,752			—			277,987
Other liabilities		—			13,256			28			4,074			—			17,358
Stockholders’ equity:
Intercompany investment		—			280,622			64,935			165,503			(511,060	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		758,385			14,120			—			—			(14,120	)		758,385
Accumulated earnings (deficit)		(71,445	)		(71,453	)		(1,784	)		(22,501	)		95,738			(71,445	)
Accumulated other comprehensive income (loss)		(4,198	)		(4,198	)		—			(4,584	)		8,782			(4,198	)
Total stockholders’ equity		682,742			219,091			63,151			138,418			(420,660	)		682,742
Total liabilities and stockholders’ equity	$	682,742		$	2,054,586		$	67,239		$	323,134		$	(549,548	)	$	2,578,153

	As of December 29, 2012
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	12,346		$	—		$	13,605		$	—		$	25,951
Accounts receivable, net		—			278,557			38			22,708			—			301,303
Inventories		—			682,159			—			39,513			—			721,672
Assets held for sale		—			7,151			—			—			—			7,151
Income tax receivable		—			369			—			—			—			369
Intercompany receivables		36,323			—			60,616			—			(96,939	)		—
Other current assets		—			28,299			4,899			3,955			—			37,153
Total current assets		36,323			1,008,881			65,553			79,781			(96,939	)		1,093,599
Property and equipment, net		—			128,259			455			1,168			—			129,882
Goodwill and other intangible assets, net		418,592			724,681			1,636			76,932			—			1,221,841
Investment in subsidiaries		242,010			146,615			—			—			(388,625	)		—
Other assets		8,729			48,430			317			1,204			—			58,680
Total assets	$	705,654		$	2,056,866		$	67,961		$	159,085		$	(485,564	)	$	2,504,002
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	—		$	469,717		$	2,255		$	30,249		$	—		$	502,221
Accrued expenses		—			38,524			126			6,266			—			44,916
Current maturities of long-term debt		—			487			6			—			—			493
Intercompany payables		—			82,420			1,290			13,229			(96,939	)		—
Total current liabilities		—			591,148			3,677			49,744			(96,939	)		547,630
Long-term debt		—			939,719			9			10,983			—			950,711
Deferred income taxes		—			269,857			587			14,901			—			285,345
Other liabilities		—			14,132			46			484			—			14,662
Stockholders’ equity:
Intercompany investment		—			280,622			64,935			97,454			(443,011	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		756,338			12,072			—			—			(12,072	)		756,338
Accumulated earnings (deficit)		(50,541	)		(50,541	)		(1,293	)		(14,137	)		65,971			(50,541	)
Accumulated other comprehensive income (loss)		(143	)		(143	)		—			(344	)		487			(143	)
Total stockholders’ equity		705,654			242,010			63,642			82,973			(388,625	)		705,654
Total liabilities and stockholders’ equity	$	705,654		$	2,056,866		$	67,961		$	159,085		$	(485,564	)	$	2,504,002

Condensed consolidating statements of comprehensive income (loss) for the quarters ended September 28, 2013 and September 29, 2012 are as follows:

	For the Quarter Ended September 28, 2013
In thousands	ParentCompany		SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
Net sales	$	—	$	900,737		$	—		$	87,441		$	(284	)	$	987,894
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—		747,953			—			69,883			(292	)		817,544
Selling, general and administrative expenses		—		128,907			76			17,370			—			146,353
Transaction expenses		—		980			—			35			—			1,015
Operating income (loss)		—		22,897			(76	)		153			8			22,982
Other (expense) income:
Interest expense		—		(20,092	)		—			(533	)		—			(20,625	)
Other, net		—		(849	)		—			201			—			(648	)
Equity earnings of subsidiaries		1,224		(157	)		—			—			(1,067	)		—
Income (loss) from operations before income taxes		1,224		1,799			(76	)		(179	)		(1,059	)		1,709
Income tax provision (benefit)		—		583			(21	)		(77	)		—			485
Net income (loss)	$	1,224	$	1,216		$	(55	)	$	(102	)	$	(1,059	)	$	1,224
Comprehensive income (loss)	$	4,292	$	4,284		$	(55	)	$	2,898		$	(7,127	)	$	4,292

	For the Quarter Ended September 29, 2012
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Net sales	$	—		$	915,663		$	—		$	(323	)	$	—	$	915,340
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			765,728			—			40			—		765,768
Selling, general and administrative expenses		—			126,937			162			2,060			—		129,159
Transaction expenses		—			799			—			—			—		799
Operating income (loss)		—			22,199			(162	)		(2,423	)		—		19,614
Other (expense) income:
Interest expense		—			(18,744	)		—			—			—		(18,744	)
Other, net		—			(1,420	)		4			(2	)		—		(1,418	)
Equity earnings of subsidiaries		(10,602	)		(6,037	)		—			—			16,639		—
Income (loss) from operations before income taxes		(10,602	)		(4,002	)		(158	)		(2,425	)		16,639		(548	)
Income tax provision (benefit)		—			6,600			299			3,155			—		10,054
Net income (loss)	$	(10,602	)	$	(10,602	)	$	(457	)	$	(5,580	)	$	16,639	$	(10,602	)
Comprehensive income (loss)	$	(10,544	)	$	(10,544	)	$	(457	)	$	(5,580	)	$	16,581	$	(10,544	)

~~Condensed~~The condensed consolidating ~~statements~~financial ofinformation ~~comprehensive income (loss)~~ for the ~~nine~~Company ~~months~~is ~~ended September 28, 2013 and September 29, 2012 are~~ as follows:

	For the Nine Months Ended September 28, 2013
	As of July 5, 2014
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
Net sales	$	—		$	2,597,488		$	3		$	185,740		$	(284	)	$	2,782,947
Assets
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			2,172,886			—			155,598			(292	)		2,328,192
Current assets:
Selling, general and administrative expenses		—			381,305			678			39,441			—			421,424
Cash and cash equivalents	$	—		$	16,129		$	9,153		$	2,251		$	—		$	27,533
Transaction expenses		—			3,821			—			483			—			4,304
Accounts receivable, net		—			333,561			56,555			67,444			—			457,560
Operating income (loss)		—			39,476			(675	)		(9,782	)		8			29,027
Inventories		—			825,677			123,181			160,748			—			1,109,606
Other (expense) income:
Assets held for sale		—			—			4,637			892			—			5,529
Interest expense		—			(54,077	)		(33	)		(1,142	)		—			(55,252	)
Income tax receivable		—			20,344			441			3,823			—			24,608
Other, net		—			(2,873	)		2			(685	)		—			(3,556	)
Intercompany receivables		95,051			—			184,796			—			(279,847	)		—
Equity earnings of subsidiaries		(20,904	)		(8,855	)		—			—			29,759			—
Other current assets		—			35,424			15,215			3,394			—			54,033
Income (loss) from operations before income taxes		(20,904	)		(26,329	)		(706	)		(11,609	)		29,767			(29,781	)
Total current assets		95,051			1,231,135			393,978			238,552			(279,847	)		1,678,869
Income tax provision (benefit)		—			(5,417	)		(215	)		(3,245	)		—			(8,877	)
Property and equipment, net		—			156,141			33,460			13,155			—			202,756
Net income (loss)	$	(20,904	)	$	(20,912	)	$	(491	)	$	(8,364	)	$	29,767		$	(20,904	)
Goodwill and other intangible assets, net		418,592			639,201			510,512			260,203			—			1,828,508
Comprehensive income (loss)	$	(24,959	)	$	(24,967	)	$	(491	)	$	(12,606	)	$	38,064		$	(24,959	)
Investment in subsidiaries		148,336			997,559			56,926			—			(1,202,821	)		—
Other assets		—			51,781			423			795			—			52,999
Total assets	$	661,979		$	3,075,817		$	995,299		$	512,705		$	(1,482,668	)	$	3,763,132
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	—		$	544,326		$	130,764		$	64,616		$	—		$	739,706
Accrued expenses		—			50,290			14,897			6,606			—			71,793
Liabilities held for sale		—			—			—			426			—			426
Current maturities of long-term debt		—			7,735			2,385			—			—			10,120
Intercompany payables		—			209,653			—			70,194			(279,847	)		—
Total current liabilities		—			812,004			148,046			141,842			(279,847	)		822,045
Long-term debt		—			1,866,089			4,657			63,431			—			1,934,177
Deferred income taxes		—			235,085			65,032			21,155			—			321,272
Other liabilities		—			14,303			4,211			5,145			—			23,659
Stockholder’s equity:
Intercompany investment		—			280,622			803,373			316,771			(1,400,766	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		810,959			16,694			—			—			(16,694	)		810,959
Accumulated earnings (deficit)		(140,458	)		(140,458	)		(30,091	)		(26,687	)		197,236			(140,458	)
Accumulated other comprehensive income (loss)		(8,522	)		(8,522	)		71			(8,952	)		17,403			(8,522	)
Total stockholder’s equity		661,979			148,336			773,353			281,132			(1,202,821	)		661,979
Total liabilities and stockholder’s equity	$	661,979		$	3,075,817		$	995,299		$	512,705		$	(1,482,668	)	$	3,763,132

	For the Nine Months Ended September 29, 2012
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Net sales	$	—		$	2,585,097		$	—		$	(1,260	)	$	—	$	2,583,837
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			2,166,770			—			95			—		2,166,865
Selling, general and administrative expenses		—			369,175			779			7,985			—		377,939
Transaction expenses		—			2,060			—			—			—		2,060
Operating income (loss)		—			47,092			(779	)		(9,340	)		—		36,973
Other (expense) income:
Interest expense		—			(52,475	)		—			—			—		(52,475	)
Other, net		—			(2,806	)		6			(2	)		—		(2,802	)
Equity earnings of subsidiaries		(12,550	)		(6,863	)		—			—			19,413		—
Income (loss) from operations before income taxes		(12,550	)		(15,052	)		(773	)		(9,342	)		19,413		(18,304	)
Income tax provision (benefit)		—			(2,502	)		(249	)		(3,003	)		—		(5,754	)
Net income (loss)	$	(12,550	)	$	(12,550	)	$	(524	)	$	(6,339	)	$	19,413	$	(12,550	)
Comprehensive income (loss)	$	(12,437	)	$	(12,437	)	$	(524	)	$	(6,339	)	$	19,300	$	(12,437	)

Condensed consolidating statements of cash flows for the nine months ended September 28, 2013 and September 29, 2012 are as follows:


	As of December 28, 2013
In thousands	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	22,352		$	—		$	13,408		$	—		$	35,760
Accounts receivable, net		—			265,551			—			39,696			—			305,247
Inventories		—			714,235			—			58,498			—			772,733
Assets held for sale		—			910			—			—			—			910
Income tax receivable		—			369			—			—			—			369
Intercompany receivables		45,052			—			60,188			12,086			(117,326	)		—
Other current assets		—			24,495			4,877			6,031			—			35,403

Total current assets		45,052			1,027,912			65,065			129,719			(117,326	)		1,150,422

Property and equipment, net		—			140,712			343			6,801			—			147,856
Goodwill and other intangible assets, net		418,592			667,996			1,450			129,589			—			1,217,627
Investment in subsidiaries		229,330			196,624			—			—			(425,954	)		—
Other assets		—			42,468			308			645			—			43,421

Total assets	$	692,974		$	2,075,712		$	67,166		$	266,754		$	(543,280	)	$	2,559,326


Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	—		$	527,080		$	2,255		$	34,356		$	—		$	563,691
Accrued expenses		—			43,375			48			4,300			—			47,723
Current maturities of long-term debt		—			558			6			—			—			564
Intercompany payables		—			85,172			1,110			31,044			(117,326	)		—

Total current liabilities		—			656,185			3,419			69,700			(117,326	)		611,978

Long-term debt		—			930,012			3			36,421			—			966,436
Deferred income taxes		—			246,897			587			23,092			—			270,576
Other liabilities		—			13,288			18			4,056			—			17,362
Stockholder’s equity:
Intercompany investment		—			280,622			64,935			160,253			(505,810	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		758,972			14,706			—			—			(14,706	)		758,972
Accumulated earnings (deficit)		(56,898	)		(56,898	)		(1,796	)		(17,294	)		75,988			(56,898	)
Accumulated other comprehensive income (loss)		(9,100	)		(9,100	)		—			(9,474	)		18,574			(9,100	)

Total stockholder’s equity		692,974			229,330			63,139			133,485			(425,954	)		692,974

Total liabilities and stockholder’s equity	$	692,974		$	2,075,712		$	67,166		$	266,754		$	(543,280	)	$	2,559,326

In thousands	For the Nine Months Ended September 28, 2013
	ParentCompany		SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operations	$	—	$	13,852		$	5		$	25,290		$	—	$	39,147
Cash flows from investing activities:
Acquisitions, net of cash acquired		—		(1,866	)		—			(68,700	)		—		(70,566	)
Purchase of property and equipment		—		(31,577	)		—			(3,347	)		—		(34,924	)
Purchase of assets held for sale		—		(1,924	)		—			—			—		(1,924	)
Proceeds from sale of property and equipment		—		70			—			18			—		88
Proceeds from disposal of assets held for sale		—		5,389			—			—			—		5,389
Net cash provided by (used in) investing activities		—		(29,908	)		—			(72,029	)		—		(101,937	)
Cash flows from financing activities:
Borrowings from revolving credit facility		—		2,146,992			—			92,566			—		2,239,558
Repayments of revolving credit facility		—		(2,118,942	)		—			(49,895	)		—		(2,168,837	)
Outstanding checks		—		(3,582	)		—			—			—		(3,582	)
Payments of other long-term debt		—		(287	)		(5	)		—			—		(292	)
Payments of deferred financing costs		—		(597	)		—			(509	)		—		(1,106	)
Net cash provided by (used in) financing activities		—		23,584			(5	)		42,162			—		65,741
Effect of exchange rate changes on cash		—		—			—			(1,581	)				(1,581	)
Net increase (decrease) in cash and cash equivalents		—		7,528			—			(6,158	)		—		1,370
Cash and cash equivalents - beginning of period		—		12,346			—			13,605			—		25,951
Cash and cash equivalents - end of period	$	—	$	19,874		$	—		$	7,447		$	—	$	27,321

In thousands	For the Nine Months Ended September 29, 2012
	ParentCompany		SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operations	$	—	$	(25,498	)	$	14		$	(43	)	$	—	$	(25,527	)
Cash flows from investing activities:
Acquisitions, net of cash acquired		—		(19,224	)		—			—			—		(19,224	)
Purchase of property and equipment		—		(42,177	)		—			—			—		(42,177	)
Purchase of assets held for sale		—		(3,281	)		—			—			—		(3,281	)
Proceeds from sale of property and equipment		—		84			—			—			—		84
Proceeds from disposal of assets held for sale		—		3,078			—			—			—		3,078
Net cash provided by (used in) investing activities		—		(61,520	)		—			—			—		(61,520	)
Cash flows from financing activities:
Borrowings from revolving credit facility		—		2,513,600			—			—			—		2,513,600
Repayments of revolving credit facility		—		(2,423,995	)		—			—			—		(2,423,995	)
Outstanding checks		—		(928	)		—			—			—		(928	)
Payments of other long-term debt		—		(1,793	)		(14	)		—			—		(1,807	)
Net cash provided by (used in) financing activities		—		86,884			(14	)		—			—		86,870
Net increase (decrease) in cash and cash equivalents		—		(134	)		—			(43	)		—		(177	)
Cash and cash equivalents - beginning of period		—		14,118			—			861			—		14,979
Cash and cash equivalents - end of period	$	—	$	13,984		$	—		$	818		$	—	$	14,802

Condensed consolidating statements of comprehensive income (loss) for the quarters ended July 5, 2014 and June 29, 2013 are as follows:


	For the Quarter Ended July 5, 2014
In thousands	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	979,873		$	156,512		$	131,197		$	—	$	1,267,582
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			817,104			140,615			105,657			—		1,063,376
Selling, general and administrative expenses		—			144,810			34,284			24,909			—		204,003
Management fees		—			14,967			—			—			—		14,967
Transaction expenses		—			4,502			7,766			3,222			—		15,490

Operating income (loss)		—			(1,510	)		(26,153	)		(2,591	)		—		(30,254	)
Other (expense) income:
Interest expense		—			(30,752	)		(642	)		(829	)		—		(32,223	)
Loss on extinguishment of debt		—			(17,113	)		—			—			—		(17,113	)
Other, net		—			39			512			3,201			—		3,752
Equity earnings of subsidiaries		(49,516	)		(17,243	)		2,480			—			64,279		—

Income (loss) from continuing operations before income taxes		(49,516	)		(66,579	)		(23,803	)		(219	)		64,279		(75,838	)
Income tax provision (benefit)		—			(17,063	)		(9,127	)		(180	)		—		(26,370	)

Income (loss) from continuing operations		(49,516	)		(49,516	)		(14,676	)		(39	)		64,279		(49,468	)
Income (loss) from discontinued operations		—			—			142			(190	)		—		(48	)

Net income (loss)	$	(49,516	)	$	(49,516	)	$	(14,534	)	$	(229	)	$	64,279	$	(49,516	)

Comprehensive income (loss)	$	(43,709	)	$	(49,471	)	$	(14,464	)	$	5,534		$	58,401	$	(43,709	)


	For the Quarter Ended June 29, 2013
In thousands	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	883,742		$	3		$	71,330		$	—	$	955,075
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			741,707			—			60,785			—		802,492
Selling, general and administrative expenses		—			122,869			366			14,077			—		137,312
Management fees		—			1,255			—			—			—		1,255
Transaction expenses		—			1,853			—			413			—		2,266

Operating income (loss)		—			16,058			(363	)		(3,945	)		—		11,750
Other (expense) income:
Interest expense		—			(16,982	)		(33	)		(372	)		—		(17,387	)
Other, net		—			(1,314	)		2			(623	)		—		(1,935	)
Equity earnings of subsidiaries		(5,837	)		(3,864	)		—			—			9,701		—

Income (loss) from operations before income taxes		(5,837	)		(6,102	)		(394	)		(4,940	)		9,701		(7,572	)
Income tax provision (benefit)		—			(265	)		(116	)		(1,354	)		—		(1,735	)

Net income (loss)	$	(5,837	)	$	(5,837	)	$	(278	)	$	(3,586	)	$	9,701	$	(5,837	)

Comprehensive income (loss)	$	(11,216	)	$	(11,216	)	$	(278	)	$	(9,017	)	$	20,511	$	(11,216	)

Condensed consolidating statements of comprehensive income (loss) for the six months ended July 5, 2014 and June 29, 2013 are as follows:


	For the Six Months Ended July 5, 2014
In thousands	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	1,908,499		$	228,303		$	206,249		$	—	$	2,343,051
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			1,593,999			219,598			167,093			—		1,980,690
Selling, general and administrative expenses		—			284,817			47,482			49,014			—		381,313
Management fees		—			15,575			—			—			—		15,575
Transaction expenses		—			8,100			7,766			4,310			—		20,176

Operating income (loss)		—			6,008			(46,543	)		(14,168	)		—		(54,703	)
Other (expense) income:
Interest expense		—			(54,326	)		(867	)		(1,429	)		—		(56,622	)
Loss on extinguishment of debt					(17,113	)		—			—			—		(17,113	)
Other, net		—			(975	)		414			2,511			—		1,950
Equity earnings of subsidiaries		(83,560	)		(40,045	)		2,357			—			121,248		—

Income (loss) from continuing operations before income taxes		(83,560	)		(106,451	)		(44,639	)		(13,086	)		121,248		(126,488	)
Income tax provision (benefit)		—			(22,891	)		(16,202	)		(3,883	)		—		(42,976	)

Income (loss) from continuing operations		(83,560	)		(83,560	)		(28,437	)		(9,203	)		121,248		(83,512	)
Income (loss) from discontinued operations		—			—			142			(190	)		—		(48	)

Net income (loss)	$	(83,560	)	$	(83,560	)	$	(28,295	)	$	(9,393	)	$	121,248	$	(83,560	)

Comprehensive income (loss)	$	(82,982	)	$	(88,744	)	$	(28,224	)	$	(8,942	)	$	125,910	$	(82,982	)


	For the Six Months Ended June 29, 2013
In thousands	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	1,696,751		$	3		$	98,299		$	—	$	1,795,053
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			1,424,933			—			85,715			—		1,510,648
Selling, general and administrative expenses		—			250,152			602			22,071			—		272,825
Management fees		—			2,246			—			—			—		2,246
Transaction expenses		—			2,841			—			448			—		3,289

Operating income (loss)		—			16,579			(599	)		(9,935	)		—		6,045
Other (expense) income:
Interest expense		—			(33,985	)		(33	)		(609	)		—		(34,627	)
Other, net		—			(2,024	)		2			(886	)		—		(2,908	)
Equity earnings of subsidiaries		(22,128	)		(8,698	)		—			—			30,826		—

Income (loss) from operations before income taxes		(22,128	)		(28,128	)		(630	)		(11,430	)		30,826		(31,490	)
Income tax provision (benefit)		—			(6,000	)		(194	)		(3,168	)		—		(9,362	)

Net income (loss)	$	(22,128	)	$	(22,128	)	$	(436	)	$	(8,262	)	$	30,826	$	(22,128	)

Comprehensive income (loss)	$	(29,251	)	$	(29,251	)	$	(436	)	$	(15,504	)	$	45,191	$	(29,251	)

Condensed consolidating statements of cash flows for the six months ended July 5, 2014 and June 29, 2013 are as follows:


*In thousands*	For the Six Months Ended July 5, 2014
	Parent Company			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) continuing operations	$	(50,000	)	$	(232,032	)	$	(2,371	)	$	116,858		$	—	$	(167,545	)

Net cash provided by (used in) discontinued operations		—			—			161			189			—		350

Net cash provided by (used in) operations		(50,000	)		(232,032	)		(2,210	)		117,047			—		(167,195	)


Cash flows from investing activities:
Acquisitions, net of cash acquired		—			(683,938	)		13,647			(151,875	)		—		(822,166	)
Purchase of property and equipment		—			(29,015	)		(1,206	)		(4,020	)		—		(34,241	)
Purchase of assets held for sale		—			(28	)		—			—			—		(28	)
Proceeds from sale of property and equipment		—			71			89			68			—		228
Proceeds from disposal of assets held for sale		—			784			—			—			—		784

Net cash provided by (used in) continuing investing activities		—			(712,126	)		12,530			(155,827	)		—		(855,423	)

Net cash provided by (used in) discontinued investing activities		—			—			—			—			—		—

Net cash provided by (used in) investing activities		—			(712,126	)		12,530			(155,827	)		—		(855,423	)


Cash flows from financing activities:
Borrowings from revolving credit facility		—			2,482,364			—			50,037			—		2,532,401
Repayments of revolving credit facility		—			(2,229,654	)		—			(23,157	)		—		(2,252,811	)
Outstanding checks		—			9,208			—			—			—		9,208
Payments of other long-term debt		—			(1,890	)		(1,167	)		—			—		(3,057	)
Payments of deferred financing costs		—			(15,506	)		—			(290	)		—		(15,796	)
Payment for Senior Secured Notes redemption		—			(246,900	)		—			—			—		(246,900	)
Proceeds from issuance of long-term debt		—			940,313			—			—			—		940,313
Equity contribution		50,000			—			—			—			—		50,000

Net cash provided by (used in) continuing financing activities		50,000			937,935			(1,167	)		26,590			—		1,013,358

Net cash provided by (used in) discontinued financing activities		—			—			—			—			—		—

Net cash provided by (used in) financing activities		50,000			937,935			(1,167	)		26,590			—		1,013,358

Effect of exchange rate changes on cash		—			—			—			1,033					1,033

Net increase (decrease) in cash and cash equivalents		—			(6,223	)		9,153			(11,157	)		—		(8,227	)
Cash and cash equivalents - beginning of period		—			22,352			—			13,408			—		35,760

Cash and cash equivalents - end of period	$	—		$	16,129		$	9,153		$	2,251		$	—	$	27,533


*In thousands*	For the Six Months Ended June 29, 2013
	Parent Company		Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operations	$	—	$	(24,411	)	$	4		$	53,440		$	—	$	29,033

Cash flows from investing activities:
Acquisitions, net of cash acquired		—		3,384			—			(68,228	)		—		(64,844	)
Purchase of property and equipment		—		(22,834	)		—			(1,014	)		—		(23,848	)
Purchase of assets held for sale		—		(875	)		—			—			—		(875	)
Proceeds from sale of property and equipment		—		46			—			18			—		64
Proceeds from disposal of assets held for sale		—		971			—			—			—		971

Net cash provided by (used in) investing activities		—		(19,308	)		—			(69,224	)		—		(88,532	)

Cash flows from financing activities:
Borrowings from revolving credit facility		—		1,441,136			—			35,042			—		1,476,178
Repayments of revolving credit facility		—		(1,384,162	)		—			(19,995	)		—		(1,404,157	)
Outstanding checks		—		(7,765	)		—			—			—		(7,765	)
Payments of other long-term debt		—		(185	)		(4	)		—			—		(189	)
Payments of deferred financing costs		—		(597	)		—			(470	)		—		(1,067	)

Net cash provided by (used in) financing activities		—		48,427			(4	)		14,577			—		63,000

Effect of exchange rate changes on cash		—		—			—			(2,548	)				(2,548	)

Net increase (decrease) in cash and cash equivalents		—		4,708			—			(3,755	)		—		953
Cash and cash equivalents - beginning of period		—		12,346			—			13,605			—		25,951

Cash and cash equivalents - end of period	$	—	$	17,054		$	—		$	9,850		$	—	$	26,904

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

Unless the context otherwise requires, the terms “American Tire Distributors,” “ATD,” “the Company,” “we,” “us,” “our” and similar terms in this report refer to American Tire Distributors Holdings, Inc. and its consolidated subsidiaries, the term “Holdings” refers only to American Tire Distributors Holdings, Inc., a Delaware Corporation, and the term “ATDI” refers only to American Tire Distributors, Inc., a Delaware corporation. The terms “TPG” and “Sponsor” relate to TPG Capital, L.P. and/or certain funds affiliated with TPG Capital, L.P.

The following discussion and analysis of our consolidated results of operations, financial condition and liquidity should be read in conjunction with our consolidated financial statements and the related notes included in Item 1 of this report. The following discussion contains forward-looking statements that reflect our current expectations, estimates, forecasts and projections. These forward-looking statements are not guarantees of future performance, and actual outcomes and results may differ materially from those expressed in these forward-looking statements. See “Cautionary Statements on Forward-Looking Information.”

Company Overview

We are the ~~leading~~largest ~~replacement~~distributor ~~tire~~of ~~distributor~~replacement tires in North America, ~~providing~~based on dollar amount of wholesale sales and number of warehouses. We provide a ~~critical~~wide range of products and value-added services to customers in each of the key market channels to enable tire retailers to more effectively service and grow sales to consumers. Through our network of ~~131~~more than 140 distribution centers in the United States ~~(U.S.)~~ and Canada, we offer access to an extensive breadth and depth of inventory, representing ~~approximately~~more than 40,000 ~~stock-keeping units (~~SKUs) to approximately 7280,000 customers (approximately 6273,000 in the UUnites States.S. and 107,000 in Canada). ~~The~~We ~~critical~~estimate ~~range~~that ~~of services we provide includes frequent and timely delivery of inventory~~ as ~~well as business support services such as credit,~~ ~~training, access to consumer market data and the administration~~ of ~~tire~~our ~~manufacturer~~year-ending ~~affiliate~~December 28, ~~programs. In addition~~2013, our U.S. customers have access to a leading online ordering and reporting system as well as a website that enables our tire retailer customers to participate in the Internet marketing of tires to consumers. We estimate that our share of the replacement passenger and light truck tire market in the U.S. is approximately 10%, up from approximately 1% in 1996~~, with our largest customer and top ten customers accounting for less than 3~~.0% ~~and 11.3%, respectively, of our net sales in fiscal 2012.~~ Our estimated share of the replacement passenger and light truck tire market in Canada as of our year-ending December 28, 2013, is approximately 912%.

We ~~believe~~serve wea ~~distribute~~highly ~~the~~diversified ~~broadest~~customer ~~product~~base ~~offering~~across multiple ~~in our industry~~channels, ~~supplying~~comprised ~~our~~of ~~customers~~local, ~~with~~regional ~~the top ten leading passenger~~ and ~~light truck~~national ~~tire~~independent ~~brands. We carry the flagship brands from each of the four largest~~ tire ~~manufacturers —Bridgestone~~retailers, ~~Continental~~mass merchandisers, ~~Goodyear~~warehouse ~~and~~clubs, ~~Michelin~~tire —manufacturer-owned ~~as well as the Hankook~~stores, ~~Kumho,~~automotive ~~Nexen,~~dealerships ~~Nitto~~ and ~~Pirelli brands~~web-based marketers. We ~~also~~have ~~sell~~a ~~lower~~significant ~~price~~market ~~point~~presence ~~associate~~in ~~and~~a number ~~proprietary brands~~ of these ~~and~~key ~~many~~market ~~other~~channels ~~tire~~and ~~manufacturers.~~we Inbelieve ~~addition,~~that we ~~sell~~are ~~custom~~the ~~wheels~~only ~~and~~replacement ~~accessories and related~~ tire ~~supplies~~distributor ~~and~~in ~~tools.~~North ~~Our~~America ~~revenues~~that ~~are~~services ~~primarily~~each ~~generated from sales~~ of ~~passenger~~these ~~car~~key ~~and~~market ~~light truck tires, which represent 80~~channels.1% ofDuring ~~our~~fiscal ~~net sales for the quarter ended September 28~~2013, ~~2013.~~our ~~The~~largest ~~remainder~~customer ofand ~~net~~top ~~sales~~ten iscustomers ~~derived~~accounted ~~from~~for ~~other tire sales (17~~3.41%), and ~~custom wheels (1~~11.83%~~) and~~, ~~tire supplies~~respectively, ~~tools~~ ~~and~~of ~~other~~our ~~products~~net (0sales.~~7%).~~ We believe ~~our~~we ~~large,~~are ~~diverse~~a ~~product~~top ~~offering~~supplier ~~allows~~to usmany toof ~~better~~our ~~penetrate~~customers ~~the~~and ~~replacement~~have ~~tire~~maintained ~~market~~relationships ~~across~~with aour ~~broad~~top ~~range~~20 ofcustomers ~~price~~that ~~points~~exceed a decade on average.

We believe we distribute one of the broadest product offering in our industry, supplying our customers with nine of the top ten leading passenger and light truck tire brands. We carry the flagship brands from each of the four largest tire manufacturers —Bridgestone, Continental, Goodyear and Michelin — as well as the Cooper, Hankook, Kumho, Nexen, Nitto and Pirelli brands. We also sell lower price point associate and proprietary brands of these and many other tire manufacturers, and through our acquisition of The Hercules Tire & Rubber Company we also own and market our proprietary Hercules® brand, the number one private brand in North America in 2013 based on unit sales. In addition, we sell custom wheels and accessories and related tire supplies and tools. Our revenues are primarily generated from sales of passenger car and light truck tires, which represented 81.6% of our net sales for the six months ended July 5, 2014. The remainder of our net sales is derived from other tire sales (15.9%), custom wheels (1.7%) and tire supplies, tools and other products (0.8%). We believe that our large and diverse product offering allows us to penetrate the replacement tire market across a broad range of price points.

Industry Overview

The U.S. and Canadian replacement tire markets have historically experienced stable growth and favorable pricing dynamics. However, these markets are subject to changes in consumer confidence and ~~the~~ economic conditions ~~that impact its customers~~. As a result, ~~our customers~~tire consumers may opt to temporarily defer replacement tire purchases or purchase less costly brand tires during challenging economic periods ~~where~~when ~~macro-economic~~macroeconomic factors such as unemployment, ~~persistently~~ high fuel costs and weakness in the housing market impact their financial health.

From 1955 through ~~2012~~2013, U.S. replacement tire unit shipments increased by an average of approximately ~~2.6~~ 3% per year. ~~The~~We ~~impact~~believe ofthat we are experiencing the ~~recent~~beginning ~~recession~~of ~~led~~a torecovery ~~negative~~after ~~growth~~a ~~during~~prolonged downturn, which began in 2008 ~~and~~for ~~2009~~the replacement tire market. ~~The~~Replacement ~~economic~~tire ~~environment~~unit ~~showed~~shipments ~~signs~~were ofup ~~stabilization~~4.4% ~~during~~in ~~2010~~the United States and ~~2011,~~0.7% ~~although~~in ~~slow~~Canada ~~economic~~in ~~growth,~~2013 ~~persistently~~as ~~high~~compared ~~fuel~~to ~~cost~~2012, ~~and~~as a ~~decrease~~ rebound in ~~miles~~the ~~driven~~housing ~~continued~~market, toa ~~impact~~decline ~~the~~in ~~market.~~unemployment ~~Despite~~rates anand ~~increase~~increases in vehicle sales and vehicle miles driven ~~during~~impacted ~~2012,~~ the U.S. and Canadian replacement tire ~~markets~~market ~~continued~~favorably. ~~the~~The ~~negative~~Rubber ~~growth~~Manufacturers ~~trend~~Association as(“RMA”) projects that replacement tire ~~unit~~ shipments ~~were~~will ~~down~~increase ~~1.8%~~by ~~and~~approximately ~~5.5~~2%~~, respectively,~~ asin ~~compared~~the toUnited ~~2011.~~States ~~Our~~in ~~outlook~~2014 ~~for~~as ~~2013~~compared ~~reflects~~to ~~little or no market improvement~~2013, ~~however,~~as wedemand ~~expect~~drivers to continue to ~~follow our historic trend and outperform expectations of the market~~strengthen.

~~Despite~~Going ~~these recent market declines~~forward, we believe that, ~~going~~long-term ~~forward,~~ growth in the U.S. and Canadian replacement tire markets will continue to be driven by favorable underlying dynamics, including:

•

increases in the number and average age of passenger cars and light trucks;

•34 ~~increases in the number of miles driven;~~

• increases in the number of licensed drivers as the U.S. population continues to grow;

• increases in the number of replacement tire SKUs;

•

increases in the number of miles driven;

•

increases in the number of licensed drivers as the U.S. and Canadian population continues to grow;

•

increases in the number of replacement tire SKUs;

•

growth of the high performance tire segment; and

•

shortening tire replacement cycles due to changes in product mix that increasingly favor high performance tires, which have shorter average lives.

Despite the current market environment, we have a solid infrastructure, an extensive and efficient distribution network and a broad product offering. Our growth strategy, coupled with our access to capital and our scalable platform, enables us to continue to expand in existing markets as well as in new geographic areas. In addition, we are investing in technology and new sales channels which will help fuel our future growth. As a result, we believe that we are well positioned to continue to achieve above market results in both contracting and expanding market demand cycles.

Recent Developments

AsAcquisitions ~~part of our ongoing business strategy, we intend to expand in existing markets as well as enter into previously underserved markets~~ and ~~new geographic areas. From the second half of 2010 through December 2012, we opened new distribution centers in 17 locations~~Expansion throughout the contiguous United States. During the first nine months of 2013, we continued to execute our plan of expansion by opening new distribution centers in Chattanooga, TN, Manchester, NH, Missouri City, TX and Albany, NY.

OnAs ~~September 4,~~part ~~2013,~~of weour ~~entered~~ongoing ~~into~~business ~~a spot interest rate swap and two forward-starting interest rate swaps (collectively the “3Q 2013 Swaps”)~~strategy, ~~each~~we ofintend ~~which are used~~ to ~~hedge~~expand ~~a portion of our exposure to changes~~ in ~~our~~existing ~~variable~~markets ~~interest~~as ~~rate~~well ~~debt.~~as ~~The~~enter ~~spot~~into ~~interest~~previously ~~rate~~underserved markets ~~swap covers a notional amount of $100.0 million at a fixed interest rate of 1.145%~~ and ~~expires~~new ~~in September~~geographic ~~2016~~areas. ~~The~~Since ~~forward-starting~~the ~~interest~~second ~~rate~~half ~~swaps cover an aggregate notional amount~~ of ~~$100.0 million~~2010, ofwe ~~which~~opened ~~$50.0~~new ~~million~~distribution ~~becomes~~centers ~~effective~~ in ~~September~~23 ~~2014~~locations atthroughout athe ~~fixed~~contiguous ~~interest~~United ~~rate of 1~~States.~~464%~~ ~~and~~We ~~will~~expect ~~expire~~to incontinue ~~September 2016 and $50.0 million becomes effective in September 2015 at a fixed interest rate of 1.942% and will expire in September 2016. The 3Q 2013 Swaps do not meet the criteria~~ to ~~qualify~~evaluate ~~for~~additional ~~hedge~~geographic ~~accounting~~markets ~~treatment;~~during ~~therefore, changes in~~ the ~~fair~~remainder ~~value~~ of ~~each~~2014 ~~contract~~and ~~is recognized in the condensed consolidated statement of comprehensive income (loss)~~beyond.

On ~~August~~June 3027, ~~2013~~2014, weTriCan ~~completed~~Tire ~~the purchase~~Distributors ofInc. ~~100%~~(“TriCan”) ofentered into and closed an Asset Purchase Agreement (the ~~outstanding~~“Trail ~~capital~~Tire ~~stock~~Purchase ofAgreement”) with Trail Tire Distributors, ~~Inc~~Ltd. ~~(“TDI”).~~and ~~TDI~~the ~~owned~~shareholders and ~~operated~~principals ~~one~~of Trail Tire, pursuant to which TriCan agreed to acquire the wholesale distribution ~~center~~business ~~serving~~of ~~over~~Trail 1Tire. Trail Tire is a wholesale distributor of tires,~~700~~ ~~customers.~~tire ~~The~~parts, ~~acquisition~~tire ~~was~~accessories ~~funded~~and ~~through~~related ~~our~~equipment ~~ABL~~in ~~Facility~~Canada. The acquisition of ~~TDI expanded~~Trail ~~our~~Tire ~~market~~will ~~position~~further strengthen TriCan’s presence in ~~Maryland~~the Alberta Province of Canada and ~~northeastern~~complements ~~Virginia~~TriCan’s current operations in Canada.

OnThe ~~April 30,~~Trail ~~2013,~~Tire ~~we completed the~~ acquisition ofclosed ~~Regional~~for ~~Tire Holdings,~~aggregate ~~Inc.~~cash ~~(“Holdco”)~~consideration ~~pursuant to a Share Purchase Agreement dated as~~ of ~~March 22,~~approximately ~~2013,~~$20.8 ~~among~~million ~~TriCan~~(the “Trail Tire ~~Distributors,~~Purchase ~~ATDI, Holdco and Regional Tire Distributors Inc., a 100% owned subsidiary of Holdco (“RTD~~Price”). ~~Holdco has~~The noaggregate ~~significant~~cash ~~assets~~consideration orwas ~~operations~~funded ~~other~~through ~~than~~borrowings ~~its~~under ~~ownership~~our ofexisting ~~RTD~~ABL credit facility. The ~~operations~~Trail ofTire ~~RTD~~Purchase ~~constitute~~Price ~~the operations of Holdco. RTD~~ is asubject ~~wholesale~~to ~~distributor~~certain ofpost-closing ~~tires~~adjustments, ~~tire parts~~including, ~~tire~~but ~~accessories~~not ~~and~~limited ~~related~~to, ~~equipment in the Ontario and~~working ~~Atlantic~~capital ~~provinces of Canada~~adjustments. ~~The acquisition of RTD was funded by borrowings under our ABL Facility and FILO Facility, as more fully described below.~~

InOn ~~connection with the acquisition of RTD, on March~~June 2227, ~~2013~~2014, ~~Holdings~~TriCan entered into ~~the~~and ~~First~~closed ~~Amendment~~an toAsset ~~the~~Purchase ~~Sixth Amended and Restated Credit~~ Agreement, ~~which provides for our ABL Facility and our FILO Facility~~ (the “~~First~~Extreme ~~Amendment~~Purchase Agreement”). ~~The~~with ~~First~~Extreme ~~Amendment~~Wheel ~~(1) provided~~Distributors ~~the U~~Ltd.S. ~~Borrowers under the agreement with a new first-in last-out facility~~ (~~the~~ “~~FILO Facility~~Extreme”) ~~in an aggregate principal amount of up to $60.0 million to be used to fund the acquisition~~ and, to the ~~extent~~shareholder ~~not so used, for general corporate purposes, subject to a borrowing base specific thereto,~~ and ~~(2) increased the aggregate~~ principal ~~amount~~of ~~available~~Extreme, ~~under~~pursuant ~~the Canadian ABL Facility from $60.0 million~~ to ~~$100.0~~which ~~million,~~TriCan ~~subject~~agreed to acquire the ~~Canadian~~wholesale ~~borrowing~~distribution ~~base.~~business ~~The~~of ~~First Amendment became effective, on April 30, 2013~~Extreme. ~~The~~Extreme ~~First~~is ~~Amendment~~a ~~also~~wholesale ~~made certain~~distributor ~~other~~of ~~changes~~wheels ~~to the Sixth Amended~~ and ~~Restated~~related ~~Credit~~accessories ~~Agreement~~in ~~and added RTD as a party upon the closing of the acquisition~~Canada. The ~~maturity~~acquisition ~~date for the FILO Facility is 18 months from April 30, 2013. The First Amendment did not change the maturity dates~~ of ~~the~~Extreme ~~U.S.~~will ~~ABL~~further ~~Facility~~strengthen orTriCan’s ~~the~~presence ~~Canadian~~in ~~ABL Facility. Immediately following~~ the ~~closing~~Alberta ofProvince ~~the acquisition~~ of ~~RTD,~~Canada ~~$50.1~~and ~~million~~complements ~~was~~TriCan’s ~~drawn~~current onoperations ~~the~~in ~~FILO Facility~~Canada.

32The Extreme acquisition closed for aggregate cash consideration of approximately $6.5 million (the “Extreme Purchase Price”). The aggregate cash consideration was funded through borrowings under our existing ABL credit facility. The Extreme Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “Kirks Tire Purchase Agreement”) with Kirks Tire Ltd. (“Kirks Tire”), and the shareholders and principals of Kirks Tire, pursuant to which TriCan agreed to acquire the wholesale distribution business of Kirks Tire. Kirks Tire is engaged in (i) the wholesale distribution of tires, tire parts, tire accessories and related equipment and (ii) the retail sale and installation of tires, tire parts, and tire accessories and the manufacturing and sale of retread tires. Kirks Tire’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. The acquisition of Kirks Tire will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The Kirks Tire acquisition closed for aggregate cash consideration of approximately $73.0 million (the “Kirks Tire Purchase Price”). The Kirks Tire Purchase Price was funded through borrowings under our existing ABL credit facility. The Kirks Tire Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “RTD Edmonton Purchase Agreement”) with Regional Tire Distributors (Edmonton) Inc. (“RTD Edmonton”) and the shareholders and principals of RTD Edmonton, pursuant to which TriCan agreed to acquire the wholesale distribution business of RTD Edmonton. RTD Edmonton is a wholesale distributor of tires, tire parts, tire accessories and related equipment. The acquisition of RTD Edmonton will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The RTD Edmonton acquisition closed for aggregate cash consideration of approximately $31.9 million (the “RTD Edmonton Purchase Price”). The RTD Edmonton Purchase Price was funded through borrowings under our existing ABL credit facility. The RTD Edmonton Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

which TriCan agreed to acquire the wholesale distribution business of RTD Calgary. RTD Calgary is a wholesale distributor of tires, tire parts, tire accessories and related equipment. The acquisition of RTD Calgary will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The RTD Calgary acquisition closed for aggregate cash consideration of approximately $20.7 million (the “RTD Calgary Purchase Price”). The RTD Calgary Purchase Price was funded by borrowings under our existing ABL credit facility. The RTD Calgary Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On March 28, 2014, we completed the acquisition of Terry’s Tire Town Holdings, Inc., an Ohio corporation (“Terry’s Tire” and such acquisition, the “Terry’s Tire Acquisition”). Terry’s Tire and its subsidiaries are engaged in the business of purchasing, marketing, distributing and selling tires, wheels and related tire and wheel accessories on a wholesale basis to tire dealers, wholesale distributors, retail chains, automotive dealers and others, retreading tires and selling retread and other commercial tires through commercial outlets to end users and selling tires directly to consumers via the internet. Terry’s Tire operated 10 distribution centers spanning from Virginia to Maine and in Ohio. We believe the acquisition of Terry’s Tire will enhance our market position in these areas and aligns very well with our distribution centers, especially our new distribution centers that we opened over the past two years in the Northeast and Ohio.

The Terry’s Tire acquisition closed for an aggregate purchase price of approximately $372.7 million (the “Terry’s Tire Purchase Price”), consisting of cash consideration of approximately $358.0 million, contingent consideration of $12.5 million and non-cash consideration for debt assumed of $2.2 million. The cash consideration paid for the Terry’s Tire Acquisition included estimated working capital adjustments and a portion of consideration contingent on certain events achieved prior to closing. During second quarter 2014, we finalized the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment decreased the Terry’s Tire Purchase Price by $5.4 million to $372.7 million. The Terry’s Tire Purchase Price was funded by a combination of borrowings under a new senior secured term loan facility, as more fully described under Liquidity and Capital Resources, and borrowings of approximately $72.5 million under Holdings’ existing U.S. ABL Facility. The Terry’s Tire Purchase Price is subject to certain post-closing adjustments, including but not limited to, working capital adjustments.

On January 31, 2014, we completed the acquisition of Hercules Tire Holdings LLC (“Hercules Holdings”) pursuant to an Agreement and Plan of Merger, dated January 24, 2014 (the “Merger Agreement”). Hercules Holdings owns all of the capital stock of The Hercules Tire & Rubber Company (“Hercules”). Hercules is engaged in the business of purchasing, marketing, distributing, and selling replacement tires for passenger cars, trucks, and certain off road vehicles to tire dealers, wholesale distributors, retail distributors and others in the United States, Canada and internationally. Hercules operated 15 distribution centers in the United States., six distribution centers in Canada and one warehouse in northern China. Hercules also markets the Hercules® brand, which is one of the most sought-after proprietary tire brands in the industry. We believe the acquisition of Hercules will strengthen our presence in major markets such as California, Texas and Florida in addition to increasing our presence in Canada. Additionally, Hercules’ strong logistics and sourcing capabilities, including a long-standing presence in China, will also allow us to capitalize on the growing import market, as well as, provide the ability to expand the international sales of the Hercules® brand, which in 2013 had a 2% market share of the passenger and light truck market in North America and a 3% market share of highway truck tires in North America.

The Hercules acquisition closed for an aggregate purchase price of approximately $318.9 million (the “Hercules Closing Purchase Price”), consisting of net cash consideration of $310.0 million, contingent consideration of $3.5 million and non-cash consideration for debt assumed of $5.4 million. The Hercules Closing Purchase Price also includes an estimate for initial working capital adjustments. During second quarter 2014, we finalized the post-closing working capital adjustments in accordance with the Merger Agreement. This adjustment decreased the Hercules Closing Purchase Price by $0.4 million to $318.9 million. The Merger Agreement provides for the payment of up to $6.5 million in additional consideration contingent upon the occurrence of certain post-closing events (to the extent payable, the “Hercules Additional Purchase Price” and, collectively with the Hercules Closing Purchase Price, the “Hercules Purchase Price”). The cash consideration paid for the Hercules acquisition was funded by a combination of the issuance of additional Senior Subordinated Notes, as more fully described under Liquidity and Capital Resources, an equity contribution of $50.0 million from Holdings’ indirect parent and borrowings under Holdings’ credit agreement, as more fully described under Liquidity and Capital Resources The Hercules Closing Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

On January 17, 2014, TriCan entered into an Asset Purchase Agreement with Kipling Tire Co. LTD (“Kipling”) pursuant to which TriCan agreed to acquire the wholesale distribution business of Kipling. Kipling has operated as a retail-wholesale business since 1982. Kipling’s wholesale business distributes tires from its Etobicoke facilities to approximately 400 retail customers in Southern Ontario. Kipling’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. This acquisition further strengthened TriCan’s presence in the Southern Ontario region of Canada.

Credit Agreement Amendment

In addition, on June 16, 2014, we amended our credit agreement relating to our senior secured term loan facility to borrow an additional $340 million on the same terms as our existing Term Loan (as defined below). Pursuant to the amendment, until August 15, 2014, we also have the right to borrow up to an additional $80 million on the same terms as our existing Term Loan. The proceeds from these additional borrowings were or will be used to redeem all amounts outstanding under our Senior Secured Notes (as defined below) and pay related fees and expenses, as well as for working capital requirements and other general corporate purposes, including the financing of potential future acquisitions.

Results of Operations

Our fiscal year is based on either a 52- or 53-week period ending on the Saturday closest to each December 31. Therefore, the financial results of 53-week fiscal years, and the associated 14-week quarter, will not be comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended ~~September~~July 285, ~~2013~~2014 and ~~September~~June 29, ~~2012~~2013 each contain operating results for 13 weeks. The ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 ~~and~~contains ~~September 29,~~27 ~~2012~~weeks ~~each~~while ~~contain~~the ~~operating~~six ~~results~~months ~~for~~ended 39June 29, 2013 contains 26 weeks. It should be noted that our ~~year-end and~~ quarter-end reporting dates are different from our recently acquired subsidiaries. Hercules, ~~TriCan~~Terry’s ~~and~~Tire, ~~RTD.~~Trail ~~Both~~Tire, ~~TriCan~~Extreme Wheel, Kirks Tire, RTD Edmonton and RTD ~~have~~Calgary aall have calendar ~~year~~quarter-end ~~and~~reporting ~~quarterly~~dates ~~reporting~~with ~~date~~their second quarter of 2014 ending on June 30. ~~The~~There ~~impact~~were ~~from~~no ~~this~~significant ~~difference~~changes to the business subsequent to their fiscal period ends that would have a material impact on the condensed consolidated ~~financial~~balance ~~statements~~sheet isor ~~not~~condensed consolidated statement of comprehensive income (loss) ~~material~~as of and for the quarter ended July 5, 2014.

Quarter Ended ~~September~~July 285, ~~2013~~2014 Compared to the Quarter Ended ~~September~~June 29, ~~2012~~ 2013

The following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales:

	QuarterEnded			QuarterEnded			Period OverPeriodChange			Period OverPeriod% Change			Percentage of Net SalesFor the RespectivePeriod Ended
In thousands	~~September~~July 285,~~2013~~2014			~~September~~June 29,~~2012~~2013			Favorable(unfavorable)			Favorable(unfavorable)			~~September~~July 285,~~2013~~2014			~~September~~June 29,~~2012~~2013
Net sales	$	~~987~~1,~~894~~267,582		$	~~915~~955,~~340~~075		$	72312,~~554~~507			732.97	%		100.0	%		100.0	%
Cost of goods sold		~~817~~1,~~544~~063,376			~~765~~802,~~768~~492			(51260,~~776~~884	)		(632.85	%)		8283.89	%		8384.70	%
Selling, general and administrative expenses		~~146~~204,~~353~~003			~~129~~137,~~159~~312			(1766,~~194~~691	)		(1348.36	%)		1416.81	%		14.14	%
Transaction expenses		1,015			799			(216	)		(27.0	%)		0.1	%		0.1	%
Management fees		14,967			1,255			(13,712	)		(1,092.6	%)		1.2	%		0.1	%
Operating income (loss)		22,982			19,614			3,368			17.2	%		2.3	%		2.1	%
Transaction expenses		15,490			2,266			(13,224	)		(583.6	%)		1.2	%		0.2	%
Operating income (loss)		(30,254	)		11,750			(42,004	)		357.5	%		(2.4	%)		1.2	%
Other income (expense):
Interest expense		(2032,~~625~~223	)		(1817,~~744~~387	)		(114,~~881~~836	)		(1085.03	%)		(2.15	%)		(21.08	%)
Other, net		(648	)		(1,418	)		770			54.3	%		(0.1	%)		(0.2	%)
Loss on extinguishment of debt		(17,113	)		—			(17,113	)		100.0	%		(1.4	%)		0.0	%
Income (loss) from operations before income taxes		1,709			(548	)		2,257			411.9	%		0.2	%		(0.1	%)
Other, net		3,752			(1,935	)		5,687			293.9	%		0.3	%		(0.2	%)
Provision (benefit) for income taxes		485			10,054			9,569			95.2	%		0.0	%		1.1	%
Income (loss) from continuing operations before income taxes		(75,838	)		(7,572	)		(68,266	)		(901.6	%)		(6.0	%)		(0.8	%)
Net income (loss)	$	1,224		$	(10,602	)	$	11,826			111.5	%		0.1	%		(1.2	%)
Provision (benefit) for income taxes		(26,370	)		(1,735	)		(24,635	)		(1,419.9	%)		(2.1	%)		(0.2	%)
Income (loss) from continuing operations		(49,468	)		(5,837	)		(43,631	)		(747.5	%)		(3.9	%)		(0.6	%)
Income (loss) from discontinued operations, net of tax		(48	)		—			(48	)		100.0	%		(0.0	%)		0.0	%
Net income (loss)	$	(49,516	)	$	(5,837	)	$	(43,679	)		(748.3	%)		(3.9	%)		(0.6	%)

Net Sales

Net sales for the quarter ended ~~September~~July 285, ~~2013~~2014 were $~~987~~1,267.96 million, a $72312.65 million, or 732.97%, increase, as compared with the quarter ended ~~September~~June 29, ~~2012~~2013. The increase in net sales was primarily driven by the combined results of new distribution centers as well as the ~~acquisition~~acquisitions of ~~TriCan,~~Hercules ~~RTD~~and Terry’s Tire and our 2013 acquisitions of Wholesale Tire Distributors (“WTD”), Tire Distributors, Inc. (“TDI”) and Regional Tire Distributors Inc. (“RTD”). These growth initiatives added $~~108~~296.8 million of incremental sales in the ~~third~~second quarter of ~~2013~~2014. ~~However~~In addition, ~~this~~we experienced an increase ~~was~~in comparable tire unit sales of $35.5 million primarily driven by an overall stronger sales unit environment. However, these increases were partially offset by lower net tire pricing of $2716.98 million, primarily driven by manufacturer marketing ~~price~~specials, ~~repositioning~~competitive ~~and~~pricing anpositions ~~overall~~in ~~softer~~certain ~~sales~~U.S. ~~unit~~markets, ~~environment~~as well as a shift in product mix in our lower priced point offerings.

~~Cost~~38 ~~of Goods Sold~~

Cost of goods sold for the quarter ended September 28, 2013 were $817.5 million, a $51.8 million, or 6.8%, increase, as compared with the quarter ended September 29, 2012. The increase in cost of goods sold was primarily driven by the combined results of new distribution centers as well as the acquisition of TriCan, RTD and TDI. These growth initiatives added $87.6 million of incremental costs in the third quarter of 2013. Cost of goods sold for the quarter ended September 28, 2013 also includes $0.1 million related to the non-cash amortization of the inventory step-up recorded in connection with the acquisition of TDI. These increases were partially offset by lower net tire pricing and an overall softer sales unit environment.

Cost of ~~goods~~Goods ~~sold~~Sold as a percentage of net sales was 82.8% for the quarter ended September 28, 2013, a decrease compared with 83.7% during the quarter ended September 29, 2012. The decrease in cost of goods sold as a percentage of net sales was primarily driven by a higher level of manufacturer price repositioning in the prior year as compared to the current period, as well as, a higher level of manufacturer program benefits in the current period.

Cost of goods sold for the quarter ended July 5, 2014 were $1,063.4 million, a $260.9 million, or 32.5%, increase, as compared with the quarter ended June 29, 2013. The increase in cost of goods sold was primarily driven by the combined results of new distribution centers as well as the acquisitions of Hercules, Terry’s Tire, RTD, WTD and TDI. These growth initiatives added $263.6 million of incremental costs in the second quarter of 2014. Cost of goods sold for the quarter ended July 5, 2014 also includes $12.5 million related to the non-cash amortization of the inventory step-up recorded in connection with the acquisition of Terry’s Tire as compared to $2.7 million during the quarter ended June 29, 2013. In addition, an overall stronger sales unit environment increased cost of goods sold by $12.0 million. These increases were partially offset by lower net tire pricing of $15.1 million.

Cost of goods sold as a percentage of net sales was 83.9% for the quarter ended July 5, 2014, a slight decrease compared with 84.0% for the quarter ended June 29, 2013. The decrease in cost of goods sold as a percentage of net sales was primarily driven by the margin contribution of the Hercules brand, a lower level of manufacturer price repositioning this year as compared to the prior year, and an incremental benefit from manufacturer programs during the current year. This decrease was partially offset by the non-cash amortization of the $12.5 million inventory step-up recorded in connection with the Terry’s Tire acquisition, which had a 1.0% impact on cost of goods sold as a percentage of net sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the quarter ended ~~September~~July 285, ~~2013~~2014 were $~~146~~204.4 0 million, a $1766.27 million, or 1348.36%, increase as compared with the quarter ended ~~September~~June 29, ~~2012~~2013. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our new distribution centers as well as the ~~acquisition~~acquisitions of ~~TriCan~~Hercules, Terry’s Tire, RTD, WTD and TDI. Combined, these factors added $1852.70 million of incremental costs to the ~~third~~second quarter of ~~2013~~2014. In addition, we also experienced a $19.42 million increase toin ~~depreciation~~salaries ~~expense~~and aswage ~~we increased~~expense ~~our~~primarily ~~capital~~related ~~expenditure~~to ~~costs~~higher sales ~~primarily~~volume ~~for~~and ~~information~~related ~~system~~headcount ~~technologies.~~as ~~These~~well ~~increases~~as ~~were~~higher ~~partially~~incentive ~~offset~~and bycommission acompensation. ~~decrease~~Additionally, inoccupancy & ~~salaries~~vehicle ~~and wage~~ expense ofincreased $21.83 million, ~~which~~due ~~related~~ to ~~improved~~higher ~~operating~~cost ~~efficiencies~~as ~~and~~we ~~headcount leverage~~expanded inseveral ~~most~~ of our distribution centers to better service our existing customers.

Selling, general and administrative expenses as a percentage of net sales ~~was~~were 1416.81% for the ~~quarter~~ quarter ended ~~September~~July 285, ~~2013~~2014; an increase compared with 14.14% ~~during~~for the quarter ended ~~September~~June 29, ~~2012~~2013. The increase in selling, general and administrative expenses as a percentage of net sales were primarily driven by an increase in costs associated with our growth expansion of recently opened and acquired distribution centers, as ~~well~~our asconsolidation anof ~~increase~~the inHercules ~~non-cash~~distribution centers will not be finalized until the latter part of the third quarter and the consolidation of the Terry’s Tire’s distribution centers did not commence until the latter part of second quarter and will extend thru the latter part of the third quarter. In addition, higher depreciation and amortization expense between periods resulted in a 0.2% increase in selling, general and administrative expenses as a percentage of net sales.

Management fees

Management fees for the quarter ended July 5, 2014 of $15.0 million represents a monitoring fee paid to our Sponsor, TPG, for certain management, consulting and financial services as well as fees paid to our outside board of directors. In addition, the quarter ended July 5, 2014 includes a $13.5 million fee paid to TPG in connection with the acquisition of Terry’s Tire and Hercules.

Transaction Expenses

Transaction expenses for the quarter ended ~~September~~July 285, ~~2013~~2014 were $115.05 million and were primarily related to costs associated with our acquisitions of ~~TDI~~Hercules and ~~RTD~~Terry’s Tire, as well as with expenses related to potential future acquisitions and other corporate initiatives. During the quarter ended ~~September~~June 29, ~~2012~~2013, transaction expenses of $02.83 million primarily related to costs associated with our acquisition of ~~CTO~~RTD in ~~May~~April 2013 and TriCan Tire Distributors (“TriCan”) in November 2012, as well as with expenses related to potential future acquisitions and other corporate initiatives.

Interest Expense

Interest expense for the quarter ended ~~September~~July 285, ~~2013~~2014 was $2032.62 million, a $114.98 million, or 1085.03%, increase, compared with the quarter ended ~~September~~June 29, ~~2012~~2013. This increase was due to higher debt levels associated with our ABL Facility, ~~and~~ FILO Facility Additional Subordinated Notes and Term Loan, ~~which~~all ~~were~~as ~~driven~~defined byunder ~~our~~Liquidity ~~acquisitions~~and ofCapital ~~TriCan~~Resources, ~~RTD~~which ~~and~~were ~~TDI.~~driven ~~Included~~by inour ~~interest~~2014 ~~expense~~acquisitions ~~for~~and the ~~quarter~~redemption ~~ended September 28,~~of ~~2013~~our ~~was~~Senior aSecured $2Notes.1 ~~million~~In ~~loss~~addition, ~~associated~~changes ~~with~~in the fair value ~~changes~~ of our interest rate swaps, resulted ~~compared~~in to a $1.0.8 million ~~loss~~increase ~~for~~in ~~the~~interest ~~quarter ended September 29, 2012~~expense.

Loss on Extinguishment of Debt

Loss on extinguishment of debt for the quarter ended July 5, 2014 of $17.1 million related to the early redemption of all $250.0 million aggregate principal amount of our 9.75% Senior Secured Notes on June 16, 2014 at a redemption price of 104.875% of the principal amount. Additionally, the loss on extinguishment of debt includes approximately $4.9 million related to the write-off of the unamortized original issuance discount and unamortized deferred financing fees associated with the Senior Secured Notes.

Provision (Benefit) for Income Taxes

Our income tax ~~provision~~benefit for the quarter ended ~~September~~July 285, ~~2013~~2014 was $026.54 million, based on pre-tax ~~income~~loss of $175.78 million; our effective tax rate under the discrete method was 2834.48%. For the quarter ended ~~September~~June 29, ~~2012~~2013, our income tax ~~provision~~benefit was $~~10.~~1.7 million, ~~a result~~ based on ~~the~~a ~~change in interim methodology from the effective~~ pre-tax ~~rate method to the discrete method. The combination of our income tax provision and our recorded~~ loss ~~from operations before income taxes~~ of $07.56 million; ~~resulted~~our ~~in a negative~~ effective tax rate ~~for~~was ~~the quarter ended September 29, 2012~~22. ~~The effective rate of the year-to-date tax provision is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower from the statutory U~~9%.S. ~~federal rate and the impact of several non-deductable tax items as well as our state effective tax rate, a result based on our legal entity tax structure and individual state tax filing requirements.~~

3440

~~Nine~~Six Months Ended ~~September 28~~July 5, ~~2013~~2014 Compared to the ~~Nine~~Six Months Ended ~~September~~ June 29, ~~2012~~ 2013

The following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales:

	Nine MonthsEnded			Nine MonthsEnded			Period OverPeriodChange			Period OverPeriod% Change			Percentage of Net SalesFor the RespectivePeriod Ended
	Six MonthsEnded			Six MonthsEnded			Period OverPeriodChange			Period OverPeriod% Change			Percentage of Net SalesFor the RespectivePeriod Ended
In thousands	~~September~~July 285,~~2013~~2014			~~September~~June 29,~~2012~~2013			Favorable(unfavorable)			Favorable(unfavorable)			~~September~~July 285,~~2013~~2014			~~September~~June 29,~~2012~~2013
Net sales	$	2,~~782~~343,~~947~~051		$	21,~~583~~795,~~837~~053		$	~~199~~547,~~110~~998			730.75	%		100.0	%		100.0	%
Cost of goods sold		21,~~328~~980,~~192~~690			21,~~166~~510,~~865~~648			(~~161~~470,~~327~~042	)		(731.41	%)		8384.75	%		8384.92	%
Selling, general and administrative expenses		~~421~~381,~~424~~313			~~377~~272,~~939~~825			(43108,~~485~~488	)		(1139.58	%)		1516.13	%		1415.62	%
Transaction expenses		4,304			2,060			(2,244	)		(108.9	%)		0.2	%		0.1	%
Management fees		15,575			2,246			(13,329	)		(593.5	%)		0.7	%		0.1	%
Operating income (loss)		29,027			36,973			(7,946	)		(21.5	%)		1.0	%		1.4	%
Transaction expenses		20,176			3,289			(16,887	)		(513.4	%)		0.9	%		0.2	%
Operating income (loss)		(54,703	)		6,045			(60,748	)		(1,004.9	%)		-2.3	%		0.3	%
Other income (expense):
Interest expense		(5556,~~252~~622	)		(5234,~~475~~627	)		(221,~~777~~995	)		(563.35	%)		-2.04	%		-21.09	%
Other, net		(3,556	)		(2,802	)		(754	)		(26.9	%)		-0.1	%		-0.1	%
Loss on extinguishment of debt		(17,113	)		—			(17,113	)		100.0	%		-0.7	%		0.0	%
Income (loss) from operations before income taxes		(29,781	)		(18,304	)		(11,477	)		(62.7	%)		-1.1	%		-0.7	%
Other, net		1,950			(2,908	)		4,858			167.1	%		0.1	%		-0.2	%
Provision (benefit) for income taxes		(8,877	)		(5,754	)		3,123			54.3	%		-0.3	%		-0.2	%
Income (loss) from continuing operations before income taxes		(126,488	)		(31,490	)		(94,998	)		(301.7	%)		-5.4	%		-1.8	%
Net income (loss)	$	(20,904	)	$	(12,550	)	$	(8,354	)		(66.6	%)		-0.8	%		-0.5	%
Provision (benefit) for income taxes		(42,976	)		(9,362	)		33,614			359.0	%		-1.8	%		-0.5	%
Income (loss) from continuing operations		(83,512	)		(22,128	)		61,384			277.4	%		-3.6	%		-1.2	%
Income (loss) from discontinued operations, net of tax		(48	)		—			(48	)		100.0	%		0.0	%		0.0	%
Net income (loss)	$	(83,560	)	$	(22,128	)	$	61,432			277.6	%		-3.6	%		-1.2	%

Net Sales

Net sales for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 were $2,~~782~~343.91 million, a $~~199~~548.10 million, or 730.75%, increase, as compared with the ~~nine~~ six months ended ~~September~~June 29, ~~2012~~2013. The increase in net sales was primarily driven by the combined results of new distribution centers as well as the ~~acquisition~~acquisitions of ~~CTO,~~Hercules ~~TriCan,~~and ~~RTD~~Terry’s Tire and our 2013 acquisitions of WTD, TDI and RTD. These growth initiatives added $~~287~~464.23 million of incremental sales during the ~~nine~~six ~~months~~month ~~ended~~period ~~September 28~~of 2014. In addition, ~~2013~~we experienced an increase in comparable tire unit sales of $134.3 million primarily driven by an overall stronger sales unit environment and the inclusion of five additional selling days in our first quarter of 2014 which contributed approximately $47.0 million to the unit increase. However, ~~this~~these ~~increase~~increases ~~was~~were partially offset by lower net tire pricing of $6247.40 million, primarily driven by manufacturer ~~price~~marketing ~~repositioning~~specials, ~~one~~competitive ~~less~~pricing ~~selling~~positions ~~day~~ in ~~2013~~certain U.S. markets, as ~~compared~~ towell ~~2012,~~as ~~and~~a anshift ~~overall~~in ~~softer~~product ~~sales~~mix ~~unit~~in ~~environment~~our lower priced point offerings.

Cost of Goods Sold

Cost of goods sold for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 were $21,~~328~~980.27 million, a $~~161~~470.30 million, or 731.41%, increase, as compared with the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013. The increase in cost of goods sold was primarily driven by the combined results of new distribution centers as well as the ~~acquisition~~acquisitions of ~~CTO~~Hercules, ~~TriCan~~Terry’s Tire, RTD, WTD and TDI. These growth initiatives added $~~235~~402.2 million of incremental costs during the ~~nine~~six ~~months~~month ~~ended~~period ~~September 28,~~of ~~2013~~2014. Cost of goods sold for the ~~nine~~six months ended ~~September~~ July 285, ~~2013~~2014 also includes $531.06 million related to the non-cash amortization of the inventory step-up recorded in connection with the acquisitions of ~~TriCan~~Terry’s Tire, ~~RTD~~Hercules and ~~TDI.~~WTD ~~These~~as ~~increases~~compared ~~were~~to ~~partially~~$4.9 ~~offset~~million byduring ~~lower~~the ~~net~~six ~~tire~~months ~~pricing~~ended June 29, ~~one~~2013. ~~less~~In addition, the inclusion of five additional selling ~~day~~days in ~~2013~~our asfirst ~~compared~~quarter toof ~~2012,~~2014 and an overall ~~softer~~stronger sales unit environment increased cost of goods sold by $95.8 million (of which approximately $41.0 million was due to the five additional selling days). These increases were partially offset by lower net tire pricing of $42.5 million.

Cost of goods sold as a percentage of net sales was 8384.75% for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014, aan ~~slight~~increase ~~decrease~~ compared with 83 84.92% ~~during~~for the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013. The ~~decrease~~increase in cost of goods sold as a percentage of net sales was primarily driven ~~by a higher level of manufacturer program benefits in the current year. This decrease was partially~~ offset by the impact of the non-cash amortization of the inventory step-up recorded in connection with the acquisitions of TriCan, RTD and TDI, which increased cost of goods sold as a percentage of net sales by 20 basis points.

~~Selling,~~41 ~~General and Administrative Expenses~~

Selling, general and administrative expenses for the nine months ended September 28, 2013 were $421.4 million, a $43.5 million, or 11.5%, increase as compared with the nine months ended September 29, 2012. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our new distribution centers as well as the acquisition of CTO, TriCan, RTD and TDI. Combined, these factors added $46.3 million of incremental costs to the nine months ended September 28, 2013. In addition, we also experienced a $5.0 million increase to vehicle and occupancy expenses due to a higher overall consumption of fuel and other vehicle related expenses as well as increases in occupancy costs as we expanded

~~several~~by ofthe ~~our~~$31.6 ~~distribution~~million ~~centers~~non-cash toamortization ~~better~~of ~~service~~the ~~our~~inventory ~~existing~~step-up ~~customers.~~recorded ~~Depreciation~~in ~~and~~connection ~~amortization~~with ~~expense~~the ~~added~~Terry’s anTire, ~~additional~~Hercules $2and WTD acquisitions.6 ~~million~~This ofincrease ~~costs~~had toa ~~the~~1.5% ~~nine~~impact ~~months~~on ~~ended~~cost of ~~September 28,~~goods ~~2013~~sold as wea ~~increased~~percentage ~~our~~of ~~capital~~net ~~expenditure~~sales. ~~costs~~Excluding ~~for~~the ~~information~~non-cash ~~system~~amortization ~~technologies.~~of ~~These~~the ~~increases~~inventory ~~were~~step-up, ~~partially~~the ~~offset~~decrease byin cost of goods sold as a ~~decrease~~percentage inof ~~salaries~~net ~~and~~sales ~~wage~~was ~~expense~~primarily driven by the margin contribution of ~~$8.8~~the ~~million~~Hercules brand, ~~which~~a ~~related~~lower level toof ~~lower~~manufacturer ~~incentive~~price ~~and commission~~repositioning ~~compensation,~~this year as ~~well~~compared ~~as,~~to ~~improved~~the ~~operating~~prior ~~efficiencies~~year, and ~~headcount~~an ~~leverage~~incremental inbenefit ~~most~~from ofmanufacturer ~~our~~programs ~~distribution~~during ~~centers~~the current year.

Selling, ~~general~~ ~~and~~General administrative expenses as a percentage of net sales was 15.1% for the nine months ended September 28, 2013; an increase compared with 14.6% during the nine months ended September 29, 2012. The increase in selling, general and ~~administrative~~ ~~expenses~~Administrative asExpenses a percentage of net sales were primarily driven by an increase in costs associated with our growth expansion of recently opened and acquired distribution centers as well as an increase in non-cash depreciation and amortization expense.

Selling, general and administrative expenses for the six months ended July 5, 2014 were $381.3 million, a $108.5 million, or 39.8%, increase as compared with the six months ended June 29, 2013. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our new distribution centers as well as the acquisitions of Hercules, Terry’s Tire, RTD, WTD and TDI. Combined, these factors added $84.8 million of incremental costs to the six month period of 2014. In addition, we also experienced a $17.3 million increase in salaries and wage expense primarily due to higher sales volume and related headcount, higher incentive and commission compensation and the inclusion of five additional selling days in our first quarter of 2014, which contributed approximately $3.8 million to the year-over-year increase. Additionally, occupancy and vehicle expense increased $2.4 million due to higher cost as we expanded several of our distribution centers to better service our existing customers.

Selling, general and administrative expenses as a percentage of net sales were 16.3% for the six months ended July 5, 2014; an increase compared with 15.2% for the six months ended June 29, 2013. The increase in selling, general and administrative expenses as a percentage of net sales was primarily driven by an increase in costs associated with our growth expansion of recently opened and acquired distribution centers, as our consolidation of the Hercules distribution centers will not be finalized until the latter part of the third quarter and the consolidation of the Terry’s Tire’s distribution centers did not commence until the latter part of the second quarter and will extend thru the latter part of the third quarter.

Management fees

Management fees for the six months ended July 5, 2014 of $15.6 million represents a monitoring fee paid to our Sponsor, TPG, for certain management, consulting and financial services as well as fees paid to our outside board of directors. In addition, the six months ended July 5, 2014 includes a $13.5 million fee paid to TPG in connection with the acquisitions of Terry’s Tire and Hercules.

Transaction Expenses

Transaction expenses for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 were $420.32 million and were primarily related to costs associated with ~~our~~ our acquisitions of ~~TDI,~~Hercules ~~RTD~~ and ~~TriCan~~Terry’s Tire, as well as with expenses related to potential future acquisitions and other corporate initiatives. During the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013, transaction expenses of $23.13 million primarily related to ~~acquisition~~ costs associated with our ~~acquisition~~acquisitions of ~~CTO~~RTD in ~~May~~April 2013 and TriCan in November 2012, as well as with expenses related to potential future acquisitions and other corporate initiatives.

Interest Expense

Interest expense for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 was $5556.36 million, a $222.80 million, or 563.35%, increase, compared with the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013. This increase was due to higher debt levels associated with our ABL Facility, ~~and~~ FILO Facility, Additional ~~which~~Subordinated ~~were~~Notes ~~driven~~and byTerm ~~our~~Loan, ~~acquisitions~~all ofas ~~CTO,~~defined ~~TriCan,~~under ~~RTD~~Liquidity and ~~TDI.~~Capital ~~Included~~Resources, inwhich ~~interest~~were ~~expense~~driven ~~for~~by ~~the~~our ~~nine~~2014 ~~months~~acquisitions ~~ended~~and ~~September 28,~~the ~~2013~~redemption ~~was~~of aour $0Senior Secured Notes.7 ~~million~~In ~~loss~~addition, ~~associated~~changes ~~with~~in the fair value ~~changes~~ of our interest rate ~~swaps,~~ ~~compared~~swaps toresulted in a $1.62 million ~~loss~~increase ~~for~~in ~~the~~interest ~~nine months ended September 29, 2012~~expense.

Loss on Extinguishment of Debt

Loss on extinguishment of debt for the six months ended July 5, 2014 of $17.1 million related to the early redemption of all $250.0 million aggregate principal amount of our 9.75% Senior Secured Notes on June 16, 2014 at a redemption price of 104.875% of the principal amount. Additionally, the loss on extinguishment of debt includes approximately $4.9 million related to the write-off the of unamortized original issuance discount and unamortized deferred financing fees associated with the Senior Secured Notes.

Provision (Benefit) for Income Taxes

Our income tax benefit for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 was $843.90 million, based on a pre-tax loss of $29126.8 5 million; our effective tax rate under the discrete method was 2934.80%. For the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013, our income tax benefit was $59.84 million, ~~which was~~ based on a pre-tax loss of $1831.35 million; our effective tax rate was 3129.47% ~~a result based on the change in interim methodology from the effective tax rate method to the discrete method~~. The effective rate of the year-to-date tax ~~benefit~~provision is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower ~~from~~than the statutory U.S. federal rate and ~~the impact of several~~ non-~~deductable~~deductible ~~tax~~transaction ~~items~~costs, aswhich ~~well~~lowered ~~as our state~~ the effective tax rate, aby ~~result~~0.5% ~~based on our legal entity tax structure~~ and ~~individual~~0.5%, ~~state tax filing requirements~~respectively.

3642

Liquidity and Capital Resources

Overview

The following table contains several key measures tothat ~~gauge~~we think are relevant to our financial condition and liquidity:

In thousands	~~September~~July 285,~~2013~~2014			December 2928,~~2012~~2013
Cash and cash equivalents	$	27,~~321~~533		$	2535,~~951~~760
Working capital		~~568~~856,~~090~~824			~~545~~538,~~969~~444
Total debt		1,~~021~~944,~~353~~297			~~951~~967,~~204~~000
Total stockholders’ equity		682,742			705,654
Total stockholder’s equity		661,979			692,974
Debt-to-capital ratio		5974.96	%		5758.43	%

Debt-to-capital ratio = total debt / (total debt plus total ~~stockholders~~stockholder’s equity)

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and income tax rates. Our cash requirements consist primarily of the following:

•

Debt service requirements

•

Funding of working capital

•

Funding of capital expenditures

Our primary sources of liquidity include cash flows from operations and ~~our~~ availability under our ABL Facility and FILO Facility. We currently do not intend nor foresee a need to repatriate funds from our Canadian subsidiaries to the ~~U.S.~~United States, and no provision for U.S. income taxes has been made with respect to such earnings. We expect our cash flow from U.S. operations, combined with availability under our U.S. ABL Facility, to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending in the ~~U.S.~~United Stated during the next twelve month period. ~~In addition, we expect our cash flow from U.S. operations~~ and ~~our~~for availability under our U.S. ABL Facility to continue to provide sufficient liquidity to fund our ongoing obligations, projected working capital requirements, restructuring obligations and capital spending in the ~~U.S. during the~~ foreseeable future. We expect cash flows from our Canadian operations, combined with availability under our Canadian ABL Facility, to provide sufficient liquidity to fund ~~our~~ our current obligations, projected working capital requirements and capital spending in Canada during the next twelve month period and thereafter for the foreseeable future.

We are significantly leveraged. Accordingly, our liquidity requirements are significant, primarily due to our debt service requirements. As of ~~September~~July 285, ~~2013~~2014, our total indebtedness iswas $1,~~021~~944.43 million with a debt-to-capital ratio of 5974.96%. ~~Cash interest payments for the nine months ended September 28, 2013 and September 29, 2012 amounted to $38.5 million and $34.9 million, respectively.~~ As of ~~September~~July 285, ~~2013~~2014, we have an additional $~~158~~198.94 million of availability under our U.S. ABL Facility and an additional $2470.98 million of availability under our Canadian ABL Facility. The availability under our U.S. and Canadian ABL Facilities is determined in accordance with aour borrowing base ~~which can decline due to various factors~~. ~~Therefore, amounts under our ABL Facilities may not be available when we need them.~~

Our liquidity and our ability to fund our capital requirements is dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control, many of which are described under “Item 1A—Risk Factors” in our most recently filed Annual Report on Form 10-K. If those factors significantly change or other unexpected factors adversely affect us, our business may not generate sufficient cash flow from operations or we may not be able to obtain future financings to meet our liquidity needs. We anticipate that, to the extent additional liquidity is necessary to fund our operations, it would be funded through borrowings under our ABL Facility, the incurrence of other indebtedness, additional equity financings or a combination of these potential sources of liquidity. We may not be able to obtain this additional liquidity on terms acceptable to us or at all.

3743

Cash Flows

The following table sets forth the major categories of cash flows:

In thousands	~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJuly 285,~~2013~~2014			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJune 29,~~2012~~2013
Cash provided by (used in) operating activities	$	39,147		$	(25,527	)
Cash provided by (used in) continuing operating activities	$	(167,545	)	$	29,033
Cash provided by (used in) investing activities		(101,937	)		(61,520	)
Cash provided by (used in) discontinued operations		350			—
Cash provided by (used in) financing activities		65,741			86,870
Cash provided by (used in) investing activities		(855,423	)		(88,532	)
Effect of exchange rate changes on cash		(1,581	)		—
Cash provided by (used in) financing activities		1,013,358			63,000
Net increase (decrease) in cash and cash equivalents		1,370			(177	)
Effect of exchange rate changes on cash		1,033			(2,548	)
Cash and cash equivalents - beginning of period		25,951			14,979
Net increase (decrease) in cash and cash equivalents		(8,227	)		953
Cash and cash equivalents - end of period	$	27,321		$	14,802
Cash and cash equivalents - beginning of period		35,760			25,951
Cash payments for interest	$	38,535		$	34,913
Cash and cash equivalents - end of period	$	27,533		$	26,904
Cash payments (receipts) for taxes, net	$	12,876		$	6,197
Cash payments for interest	$	58,025		$	33,036
Capital expenditures financed by debt	$	—		$	515
Cash payments (receipts) for taxes, net	$	3,817		$	2,464

Operating Activities

Net cash ~~provided~~used byin continuing operating activities for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 was $39167.15 million compared with cash ~~used~~provided inby continuing operating activities of $2529.50 million during the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013. During the current period, working capital requirements resulted in a cash outflow of $14177.97 million, primarily driven by an increase in customer ~~accounts~~ accounts receivable of $38.3 million and an increase in inventory levels of $100.1 million as a result of stocking new distribution centers opened ~~during~~and ~~the~~as ~~year,~~a ~~seasonal~~result ~~changes~~of inbuilding ~~inventory~~out ~~stocking levels (including~~ the ~~Canadian~~product ~~winter~~offering ~~business),~~provided ~~and~~through ~~our~~the ~~recent~~Hercules ~~acquisitions.~~acquisition ~~These amounts were partially offset by changes in accounts payable~~ and ~~accrued~~to a ~~expenses~~lesser ~~associated~~extent, ~~with~~ the ~~timing~~build of ~~vendor~~inventory ~~payments~~levels ~~and~~for ~~accrued~~the ~~interest~~achievement onof ~~our~~certain ~~senior~~manufacturer ~~notes.~~first ~~This~~half ~~cash~~program ~~outflow is being more than offset by cash earnings during the current period~~incentives.

Net cash provided ~~used~~by in operating activities for the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013 was $2529.50 million,. ofDuring ~~which~~the ~~$77.4~~current ~~million related~~period, to working capital requirements. ~~Inventory~~resulted ~~increased~~in a cash inflow of $533.8 million, asprimarily adriven ~~result~~by ofan ~~seasonal~~increase ~~build~~ in ~~our~~accounts ~~inventory~~payable associated aswith ~~well as~~ the ~~need~~timing toof ~~stock~~vendor ~~four~~payments ~~new~~and ~~distribution~~a ~~centers~~decrease ~~that~~in wecustomer ~~opened~~accounts ~~during~~receivable. ~~the~~These ~~year.~~amounts Inwere ~~addition,~~partially ~~higher~~offset ~~sales~~by ~~volume~~changes ~~led to~~in ainventory ~~$28.8~~levels ~~million~~which ~~increase~~resulted in ~~accounts~~a ~~receivable.~~cash ~~However,~~outflow ~~these~~during ~~amounts~~the ~~were~~current ~~partially~~period ~~offset~~as by a ~~$9.6~~result ~~million~~of ~~increase~~stocking innew distribution ~~accounts~~centers ~~payable~~opened ~~and~~during ~~accrued~~the ~~expenses~~year, ~~primarily~~seasonal ~~associated~~changes ~~with~~in ~~the~~inventory ~~timing~~stocking oflevels, ~~vendor purchases~~ and ~~accrued interest on~~ our ~~senior~~ ~~notes~~recent acquisitions.

Investing Activities

Net cash used in investing activities for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 was $~~101~~855.94 million, compared with $6188.5 million ~~during~~ during the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013. The change was primarily associated with cash paid for acquisitions, which resulted in a $51757.3 million increase in the current period. In addition, we invested $34.92 million and $4223.28 million in property and equipment purchases during the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 and ~~September~~June 29, ~~2012~~2013, respectively, which included information technology upgrades, information technology application development and warehouse racking.

Financing Activities

Net ~~cash~~ cash provided by financing activities for the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 was $651,013.74 million, compared with $8663.90 million during the ~~nine~~six months ended ~~September~~June 29, ~~2012~~2013. The change was primarily related to ~~lower~~proceeds received from the issuance of our Additional Subordinated Notes and Term Loan during the six months ended July 5, 2014. These proceeds were used to finance a portion of the Hercules and Terry’s Tire acquisitions as well to redeem all amounts outstanding under our Senior Secured Notes (as defined below). In addition, higher net borrowings from our ABL Facility and FILO Facility, specifically our U.S. ABL ~~facility~~Facility, contributed to the period-over-period increase. The higher net borrowings under our ABL Facility and FILO Facility were due to the ~~reduction~~increase in cash outflow for working capital requirements between periods and ~~favorable~~ cash ~~earnings~~paid ~~partially~~for ~~offset~~acquisitions. byAdditionally, ~~cash~~the ~~paid~~Company ~~for~~received ~~acquisitions~~an equity contribution of $50.0 million from TPG and certain co-investors during the six months ended July 5, 2014.

Supplemental Disclosures of Cash Flow Information

Cash payments for interest during the ~~nine~~six months ended ~~September~~July 285, ~~2013~~2014 were $3858.50 million, compared with $3433.90 million paid during the ~~nine~~ six months ended ~~September~~June 29, ~~2012~~2013. The increase is primarily ~~related~~due to ~~higher~~the ~~average~~timing ~~debt~~of ~~levels~~our period end on July 5, 2014, and ~~slightly~~as ~~higher~~such, ~~average~~included an additional quarterly interest ~~rates~~payment on ~~the~~our ~~outstanding~~ABL ~~debt~~Facility ~~during~~and ~~the~~FILO ~~nine~~Facility ~~months~~as ~~ended~~compared ~~September 28,~~to ~~2013.~~the Inprior ~~addition~~year. Additionally, wehigher ~~paid an~~levels ~~additional~~of ~~$0.3~~indebtedness ~~million~~incurred ~~during~~in connection with the ~~nine~~issuance ~~months~~of ~~ended~~our ~~September 28,~~Additional ~~2013~~Subordinated ~~related~~Notes toand our ~~interest~~Term ~~rate~~Loan ~~swaps~~also contributed to the year-over-year increase.

~~Net~~44 cash payments for taxes during the nine months ended September 28, 2013 were $12.9 million, compared with $6.2 million during the nine months ended September 29, 2012. The difference between the periods primarily relates to the balance and timing of income tax extension payments and income tax payments due with returns.

Net cash payments for taxes during the six months ended July 5, 2014 were $3.8 million, compared with $2.5 million during the six months ended June 29, 2013. The difference between the periods primarily relates to the balance and timing of income tax extension payments and income tax payments due with returns.

Indebtedness

The following table summarizes our outstanding debt at ~~September~~July 285, ~~2013~~2014:

In thousands	Matures	~~InterestRate~~Interest Rate(1)	OutstandingBalance
U.S. ABL Facility	2017	3.34%	$	~~457~~641,~~515~~639
Canadian ABL Facility	2017	4.05		53,~~062~~165
FILO Facility	2014	5.8		49,152
U.S. FILO Facility	2017	5.8		80,000
Senior Secured Notes	2017	9.75		248,111
Canadian FILO Facility	2017	6.0		10,266
Senior Subordinated Notes	2018	11.50		200,000
Term Loan	2018	5.8		717,693
Capital lease obligations	2013 - 2027	7.1 - 12.3		12,277
Senior Subordinated Notes	2018	11.50		421,361
Other	2014 - 2021	8.0 - 10.6		1,236
Capital lease obligations	2015 - 2027	2.7 - 13.9		12,577
Total debt				1,021,353
Other	2014 - 2021	2.3 - 10.6		7,596
Less - Current maturities				(533	)
Total debt				1,944,297
Long-term debt			$	1,020,820
Less - Current maturities				(10,120	)
Long-term debt			$	1,934,177

(1) Interest rates for each of the U.S. ABL Facility and the Canadian ABL Facility are the weighted average interest rates at ~~September~~July 285, ~~2013~~2014.

ABL Facility

InOn ~~connection with the acquisition of TriCan on November~~January 3031, ~~2012~~2014, ~~we amended and restated our Fifth Amended and Restated Credit Agreement~~ in ~~order~~connection towith ~~provide for borrowings under~~ the ~~agreement~~Hercules byacquisition, ~~TriCan~~we ~~and~~entered ~~make~~into ~~certain~~the ~~other~~Second ~~amendments~~Amendment ~~(as~~to ~~so amended and restated, the “~~Sixth Amended and Restated Credit Agreement~~”).~~ ~~The Sixth Amended and Restated~~ (“Credit Agreement”), which provides for (i) U.S. revolving credit commitments of $850.0 million (of which up to $50.0 million can be utilized in the form of commercial and standby letters of credit), subject to U.S. borrowing base availability (the “U.S. ABL Facility”) and (ii) Canadian revolving credit commitments of $60125.0 million (of which up to $10.0 million can be utilized in the form of commercial and standby letters of credit), subject to Canadian borrowing base availability (the “Canadian ABL Facility” and, collectively with the U.S. ABL Facility, the “ABL Facility”). ~~The~~In addition, the Credit Agreement provides (i) the U.S. ~~ABL~~borrowers under the agreement with a first-in last-out facility (the “U.S. FILO Facility”) ~~provides~~in ~~for~~the aggregate principal amount of up to $80.0 million, ~~revolving~~subject ~~loans~~to ~~available~~a borrowing base specific thereto and (ii) the Canadian borrowers under the agreement with a first-in last-out facility (the “Canadian FILO Facility” and collectively with the U.S. FILO Facility, the “FILO Facility”) in an aggregate principal amount of up to ~~ATDI~~$15.0 million, ~~its~~subject ~~100%~~to ~~owned~~a ~~subsidiary~~borrowing base specific thereto. The U.S. ABL Facility is available to ATDI, Am-Pac Tire Dist. Inc., Hercules and any other U.S. subsidiary that we designate in the future in accordance with the terms of the agreement. The Canadian ABL Facility ~~provides~~is ~~for revolving loans~~ available to TriCan and any other Canadian subsidiaries that we designate in the future in accordance with the terms of the agreement. Provided that no default or event of default then exists or would arise therefrom, we have the option to request that the ABL Facility be increased by an amount not to exceed $~~200~~175.0 million (up to $5025.0 million of which may be allocated to the Canadian ABL Facility), subject to certain rights of the administrative agent, swingline lender and issuing banks ~~with respect to the lenders~~ providing commitments for such increase. The maturity date for the ~~Sixth~~ABL ~~Amended~~Facility ~~and Restated Credit Agreement~~ is November 16, 2017~~, provided that if on March 1, 2017, either (i) more than $50~~.0 ~~million~~The ~~in aggregate principal amount of ATDI’s Senior Secured Notes remains outstanding or (ii) any principal amount of ATDI’s Senior Secured Notes remains outstanding with a scheduled~~ maturity date ~~which~~for ~~is earlier than 91 days after November 16, 2017 and excess availability under~~ the ~~ABL~~FILO Facility is ~~less than 12.5% of the aggregate revolving commitments, then the maturity date will be March~~January 131, 2017.

InAs ~~connection with the acquisition~~ of ~~RTD, on March~~July 225, ~~2013~~2014, we ~~entered~~had ~~into the First Amendment to Sixth Amended and Restated Credit Agreement (the “First Amendment”)~~$641.6 ~~The~~million ~~First~~outstanding ~~Amendment~~under ~~(1) provides~~ the U.S. ~~Borrowers~~ABL ~~under~~Facility. ~~the~~In ~~agreement~~addition, ~~with~~we ahad ~~new~~certain ~~first-in~~letters ~~last-out~~of credit ~~facility~~outstanding ~~(the “FILO Facility”)~~ in anthe aggregate ~~principal~~ amount of ~~up to~~ $6010.0 million, ~~subject~~ toleaving ~~a borrowing base specific thereto, and (2) increases the aggregate principal amount available under the Canadian ABL Facility from~~ $60198.04 million toavailable ~~$100.0~~for ~~million, subject to the Canadian borrowing base. The~~ additional borrowings ~~provided~~ ~~for~~ under the ~~First~~U.S. ~~Amendment~~ABL ~~were~~Facility. ~~contingent~~The ~~upon,~~outstanding ~~among~~balance ~~other things, the closing~~ of the ~~RTD~~Canadian ~~acquisition~~ABL onFacility orat ~~before May~~July 315, ~~2013.~~2014 ~~The~~was ~~closing~~$53.1 ~~of the RTD acquisition occurred~~million, ~~and~~leaving $70.8 ~~the~~million ~~borrowings under the FILO Facility became~~ available, onfor ~~April 30,~~additional ~~2013~~borrowings. ~~The~~As ~~First Amendment also made certain other changes to the Sixth Amended and Restated Credit Agreement and added RTD as a party upon the closing~~ of ~~the acquisition. The maturity date for the FILO Facility is 18 months from April~~July 305, ~~2013.~~2014, ~~The First Amendment did not change~~ the ~~maturity~~outstanding ~~dates~~balance of the U.S. ~~ABL~~FILO Facility orwas ~~the~~$80.0 ~~Canadian~~million ~~ABL~~and ~~Facility or~~ the ~~material~~outstanding ~~terms~~balance ~~under~~of ~~which either facility may be accelerated or~~ the ~~U.S.~~Canadian ~~ABL~~FILO Facility ~~may~~was ~~be increased. Immediately following the closing of the RTD acquisition,~~ $5010.13 million ~~was drawn on the FILO Facility~~.

AsBorrowings ~~of September 28, 2013, we had $457.5 million outstanding~~ under the U.S. ABL Facility. Inbear ~~addition,~~interest weat ~~had~~a ~~certain~~rate ~~letters~~per ofannum ~~credit~~equal ~~outstanding~~to, inat ~~the~~our ~~aggregate~~option, ~~amount~~either of(a) 200 ~~$8.2~~basis ~~million,~~points ~~leaving~~over ~~$158.9~~an adjusted ~~million~~LIBOR ~~available~~rate ~~for~~or ~~additional~~(b) 100 ~~borrowings under~~basis ~~the~~points ~~U.S.~~over ~~ABL~~an ~~Facility.~~alternative ~~The~~base ~~outstanding~~rate ~~balance~~(the higher of the ~~Canadian~~prime ~~ABL~~rate, ~~Facility~~the atfederal ~~September 28,~~funds ~~2013~~rate ~~was~~plus ~~$53.1~~50 ~~million,~~basis ~~leaving~~points ~~$24.9~~and ~~million~~one ~~available~~month-adjusted ~~for~~LIBOR ~~additional~~rate ~~borrowings~~plus 100 basis points). The ~~outstanding~~applicable ~~balance~~margins ofunder the ~~FILO~~U.S. ABL Facility asare ~~of September 28,~~subject ~~2013~~to ~~was~~step ~~$49.2~~ups ~~million~~and step downs based on average excess borrowing availability under the ABL Facility.

39Borrowings under the Canadian ABL Facility bear interest at a rate per annum equal to, at our option, either (a) 100 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 100 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 200 basis points over a rate determined by

~~Borrowings~~ reference ~~under~~to the ~~U.S.~~average ~~ABL Facility bear interest at a~~ rate ~~per~~applicable ~~annum equal~~ to, atCanadian ~~our option,~~Dollar ~~either~~bankers’ ~~(a) an~~acceptances ~~Adjusted~~having ~~LIBOR rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus~~ an ~~applicable~~identical ~~margin~~or ofcomparable ~~2.0%~~term as ofthe ~~September 28,~~proposed ~~2013~~loan amount or (bd) a200 ~~base~~basis ~~rate~~points ~~determined~~over ~~by reference to the~~an ~~highest~~adjusted of (1) the prime commercial lending rate published by the Bank of America, N.A. as its “prime rate” for commercial loans, (2) the federal funds effective rate plus 1⁄2 of 1% and (3) the one month-Adjusted LIBOR rate ~~plus 1~~.~~0% per~~ ~~annum, plus an applicable margin of 1.0% as of September 28, 2013.~~ The applicable margins under the ~~U.S.~~Canadian ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the ~~Canadian~~U.S. ~~ABL~~ FILO Facility bear interest at a rate per annum equal to ~~either (a) a Canadian base rate determined by reference to the highest of (1) the base rate as published by Bank of America~~, ~~N.A.~~at ~~(acting~~our ~~through its Canada branch) as its “base rate”~~option, ~~(2) the~~either ~~federal funds rate effective plus 1⁄2 of 1% per annum and~~ (3a) ~~the~~350 ~~one~~basis ~~month-LIBOR~~points ~~rate~~over ~~plus 1.0% per annum, plus~~ an ~~applicable~~adjusted ~~margin~~LIBOR ofrate ~~1.0% as of September 28, 2013~~ or (b) a250 ~~Canadian~~basis ~~prime~~points ~~rate~~over ~~determined~~an byalternative ~~reference~~base torate (the ~~highest~~higher of ~~(1)~~ the prime rate ~~as published by Bank of America~~, ~~N.A.~~the ~~(acting~~federal ~~through~~funds ~~its Canada branch) as its “prime~~ rate”, ~~(2) the sum of 1⁄2 of 1%~~ plus ~~the~~50 ~~Canadian~~basis ~~overnight~~points ~~rate~~ and ~~(3) the~~one ~~sum~~month-adjusted ofLIBOR 1% plus ~~the~~100 ~~rate~~basis of interest per annum equal to the average rate applicable to Canadian Dollar bankers’ acceptances as published by Reuters Monitor Money Rates Service for a 30 day interest period, plus an applicable margin of 1points.0% ~~as of September 28, 2013.~~ The applicable margins under the ~~Canadian ABL~~U.S. FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings ~~under~~ under the Canadian FILO Facility bear interest at a rate per annum equal to, at our option, either (a) 250 basis points over an ~~Adjusted~~alternative ~~LIBOR~~Canadian base rate ~~determined~~(the higher of the base rate as published by ~~reference~~Bank toof ~~LIBOR~~America, ~~adjusted~~N.A., ~~for~~acting ~~statutory~~through ~~reserve~~its Canada ~~requirements~~branch, the federal funds rate plus an50 ~~applicable~~basis ~~margin~~points ofand ~~3.5%~~one asmonth-LIBOR ~~of September 28,~~plus ~~2013~~100 orbasis points), (b) 250 basis points over a ~~base~~Canadian prime rate determined byin ~~reference~~accordance towith the ~~highest~~Canadian ofABL Facility, (1c) ~~the~~350 ~~prime~~basis ~~commercial~~points ~~lending~~over a rate ~~published~~determined by ~~the~~reference ~~Bank~~to ofthe ~~America,~~average ~~N.A.~~rate asapplicable ~~its~~to ~~“prime~~Canadian ~~rate”~~Dollar ~~for~~bankers’ ~~commercial~~acceptances ~~loans,~~having ~~(2) the~~an ~~federal funds~~identical ~~effective~~or ~~rate~~comparable ~~plus 1⁄2~~term ofas ~~1% and (3)~~ the ~~one~~proposed ~~month-Adjusted~~loan ~~LIBOR~~amount ~~rate~~or ~~plus 1.0%~~(d) ~~per~~350 ~~annum,~~basis ~~plus~~points over an ~~applicable~~adjusted ~~margin~~LIBOR ~~of 2~~rate.5% ~~as of September 28, 2013.~~ The applicable margins under the Canadian FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

The U.S. and Canadian borrowing base at any time equals the sum (subject to certain reserves and other adjustments) of:

•

85% of eligible accounts receivable of the U.S. or Canadian loan parties, as applicable; plus

• The lesser of (a) 70% of the lesser of cost or market value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable, and (b) 85% of the net orderly liquidation value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable; plus

• The lesser of (a) 50% of the lower of cost or market value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable, and (b) 85% of the net orderly liquidation value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable.

The U.S. FILO and the Canadian FILO borrowing base at any time equals the sum (subject to certain reserves and other adjustments) of:

• 5% of eligible accounts receivable of the U.S. or Canadian loan parties, as applicable; plus

• ~~7.5~~10% of the net orderly liquidation value of the eligible tire and non-tire inventory of the U.S. or Canadian loan parties, as applicable.

The ABL Facility and ~~the~~ FILO Facility contain customary covenants, including covenants that ~~restrict~~restricts our ability to incur additional debt, grant liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates or change our fiscal year. The terms of the ABL Facility and FILO Facility generally restrict distributions or the payment of dividends in respect of our stock subject to certain exceptions requiring compliance with certain availability levels and fixed charge coverage ratios under the ABL Facility and other customary negotiated exceptions. If the amount available for additional borrowings under the ABL Facility is less than the greater of (a) 10.0% of the lesser of (x) the aggregate commitments under the ABL Facility and (y) the aggregate borrowing base and (b) $25.0 million, then we would be subject to an additional covenant requiring us to meet a fixed charge coverage ratio of 1.0 to 1.0. As of ~~September~~July 285, ~~2013~~2014, our additional borrowing availability under the ABL Facility was above the required amount and we were therefore not subject to the additional covenants.

40Senior Secured Term Loan

On June 16, 2014, ATDI amended the Initial Term Loan (the “Incremental Amendment”) to borrow an additional $340.0 million (the “Incremental Term Loan”) on the same terms as the Initial Term Loan. Pursuant to the Incremental Amendment, until August 15, 2014 ATDI also has the right to borrow up to an additional $80.0 million (the “Delayed Draw Term Loan” and collectively with the Initial Term Loan and the Incremental Term Loan, the “Term Loan”) on the same terms as the Initial Term Loan. The proceeds from the Incremental Term Loan, net of related debt issuance costs paid at closing, amounted to approximately $335.7 million, and were used, in part, to redeem all $250.0 million aggregate principal amounts of notes outstanding under ATDI’s Senior Secured Notes and related fees and expenses as more fully described below, and the remaining proceeds will be used for working capital requirements and other general corporate purposes, including the financing of potential future acquisitions. We received the proceeds from the Delayed Draw Term Loan at the end of the second quarter of 2014. The maturity date for the Term Loan is June 1, 2018.

Borrowings under the Term Loan bear interest at a rate per annum equal to, at our option, either (a) a Eurodollar rate determined by reference to LIBOR, plus an applicable margin of 475 basis points or (b) 375 basis points over an alternative base rate determined by reference of the higher of the federal funds rate plus 50 basis points, the prime rate and 100 basis points over the one month Eurodollar rate. The Eurodollar rate is subject to an interest rate floor of 100 basis points. The applicable margins under the Term Loan are subject to a step down based on a consolidated net leverage ratio, as defined in the agreement.

The Term Loan contains customary covenants, including covenants that restrict our ability to incur additional debt, create liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates, change the nature of our business or change our fiscal year. The terms of the Term Loan generally restrict distributions or the payment of dividends in respect of our stock subject to certain exceptions such as the amount of 50% of net income (reduced by 100% of net losses) for the period beginning January 1, 2014 and other customary negotiated exceptions.

We are required to make principal payments equal to 0.25% of the aggregate principal amount outstanding under the Term Loan on the last business day of each March, June, September and December, commencing with the last business day of June 2014. In addition, subject to certain exceptions, we are required to repay the Term Loan in certain circumstances, including with 50% (which percentage will be reduced to 25% and 0%, as applicable, subject to attaining certain senior secured net leverage ratios) of its annual excess cash flow, as defined in the Term Loan agreement. The Term Loan also contains repayments provision related to non-ordinary course asset or property sales when certain conditions are met, and related to the incurrence of debt that is not permitted under the agreement.

Senior Secured Notes

On May 2816, ~~2010~~2014, ATDI ~~issued~~delivered ~~Senior~~a ~~Secured~~Notice ~~Notes~~of ~~(“Senior~~Full ~~Secured Notes”) due June 1~~Redemption, ~~2017~~providing infor anthe ~~aggregate~~redemption ~~principal amount at maturity~~ of all $250.0 million. ~~The~~aggregate ~~Senior Secured Notes were issued at a discount from their~~ principal amount ~~at maturity and generated net proceeds of approximately $240.7 million after debt issuance costs (which represents a non-cash~~ ~~financing activity~~ of $the 9.~~3 million). The Senior Secured Notes will accrete based on an effective interest rate of 10~~75% ~~to an aggregate accreted value of $250.0 million, the full principal amount at maturity. The~~ Senior Secured Notes ~~bear interest at a fixed rate of 9.75%. Interest on the~~ (“Senior Secured Notes”) ~~is payable semi-annually in arrears~~ on June ~~1 and December 1 of each year~~16, ~~commencing~~2014 ~~on December 1, 2010. The Senior Secured Notes may be redeemed at any time at~~ (the ~~option of~~“Redemption ~~ATDI,~~Date”) ~~in whole or in part, upon not less than 30 nor more than 60 days notice~~ at a ~~redemption~~ price ofequal ~~107~~to 104.~~313~~875% of the principal amount ifof the ~~redemption~~Senior ~~date~~Secured ~~occurs~~Notes ~~between~~redeemed ~~June 1,~~plus ~~2013~~accrued and ~~May 31~~unpaid interest, if ~~2014~~any, ~~104.875%~~to, ofbut excluding the ~~principal amount~~Redemption ifDate (the ~~redemption~~“Redemption ~~date~~Price”). ~~occurs~~On ~~between~~ June 116, 2014 ~~and May 31~~, ~~2015,~~using ~~102.438%~~proceeds offrom the ~~principal~~Incremental ~~amount~~Term ifLoan, the ~~redemption~~Senior ~~date~~Secured ~~occurs~~Notes ~~between~~were ~~June 1,~~redeemed ~~2015~~for ~~and~~a ~~May 31,~~Redemption ~~2016~~Price ~~and~~of ~~100~~$263.0%2 ~~of the principal amount if the redemption date occurs between June 1, 2016 and May 31, 2017~~million.

Senior Subordinated Notes

On May 28, 2010, ATDI issued $200.0 million in aggregate principal amount of its 11.50% Senior Subordinated Notes due ~~June 1,~~ 2018~~, which~~ ~~we refer to as~~ (the “Initial ~~Senior~~ Subordinated Notes”). Interest on the ~~Senior~~Initial Subordinated Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2010. The Senior Subordinated Notes may be redeemed at any time at the option of ATDI, in whole or in part, upon not less than 30 nor more than 60 days’ notice at a redemption price of 104.0% of the principal amount if the redemption date occurs between June 1, 2013 and May 31, 2014, 102.0% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015 and 100.0% of the principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016.

~~The~~In connection with the consummation of the Hercules acquisition, on January 31, 2014, ATDI completed the sale to certain purchasers of an additional $225.0 million in aggregate principal amount of its 11.50% Senior Subordinated Notes ~~are~~due ~~unconditionally~~2018 ~~guaranteed~~(the by“Additional ~~Holdings~~Subordinated Notes” and, ~~substantially~~collectively ~~all~~with ofthe ~~ATDI’s~~Initial ~~existing~~Subordinated ~~and future~~Notes, ~~direct~~the ~~and~~“Senior Subordinated ~~indirect,~~Notes”). ~~wholly-owned~~The ~~domestic~~Additional ~~material~~Subordinated ~~restricted~~Notes ~~subsidiaries,~~were ~~other~~issued ~~than~~at ~~Tire~~a ~~Pros~~discount ~~Francorp~~from their principal amount at maturity and ~~TDI,~~generated ~~subject~~net proceeds of approximately $221.1 million. The Additional Subordinated Notes will accrete based on an effective interest rate of 12% to ~~certain~~an ~~exceptions~~aggregate accreted value of $225.0 million, the full principal amount at maturity.

~~The~~47 indenture governing the Senior Subordinated Notes contains covenants that, among other things, limits ATDI’s ability and the ability of its restricted subsidiaries to incur additional debt or issue preferred stock; pay certain dividends or make certain distributions in respect of ATDI’s or repurchase or redeem ATDI’s capital stock; make certain loans, investments or other restricted payments; place restrictions on the ability of ATDI’s subsidiaries to pay dividends or make other payments to ATDI; engage in transactions with stockholders or affiliates; transfer or sell certain assets; guarantee indebtedness or incur other contingent obligations; incur certain liens without securing the Senior Subordinated Notes; consolidate, merge or sell all or substantially all of ATDI’s assets; enter into certain transactions with ATDI’s affiliates; and designate ATDI’s subsidiaries as unrestricted subsidiaries.

Adjusted EBITDA

~~business~~The ~~trends~~Additional ~~used~~Subordinated inNotes ~~assessing~~have ~~our~~identical ~~financial~~terms ~~condition.~~to Asthe aInitial ~~result,~~Subordinated ~~one~~Notes ~~should~~except the ~~not~~Additional ~~consider~~Subordinated ~~Adjusted~~Notes ~~EBITDA~~accrues ininterest ~~isolation~~from orJanuary 31, ~~as a substitute for our results reported under GAAP~~2014. WeThe ~~compensate for~~Additional ~~these~~Subordinated ~~limitations~~Notes byand ~~analyzing~~the ~~results~~Initial onSubordinated aNotes ~~GAAP~~are ~~basis~~treated as ~~well~~a assingle onclass aof ~~non-GAAP~~securities ~~basis,~~for ~~predominantly~~all ~~disclosing~~purposes ~~GAAP~~under ~~results~~the ~~and~~indenture. ~~providing~~The ~~reconciliations~~Senior Subordinated ~~from~~Notes ~~GAAP~~will ~~results~~mature toon ~~non-GAAP~~June 1, ~~results~~2018.

The Senior Subordinated Notes may be redeemed at any time at the option of ATDI, in whole or in part, upon not less than 30 nor more than 60 days notice at a redemption price of 102.0% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015 and 100.0% of the principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016.

The Senior Subordinated Notes are unconditionally guaranteed by Holdings and substantially all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material restricted subsidiaries, other than Tire Pros Francorp, subject to certain exceptions.

The indenture governing the Senior Subordinated Notes contains covenants that, among other things, limits ATDI’s ability and the ability of its restricted subsidiaries to incur additional debt or issue preferred stock; pay certain dividends or make certain distributions in respect of ATDI’s or repurchase or redeem ATDI’s capital stock; make certain loans, investments or other restricted payments; place restrictions on the ability of ATDI’s subsidiaries to pay dividends or make other payments to ATDI; engage in transactions with stockholders or affiliates; transfer or sell certain assets; guarantee indebtedness or incur other contingent obligations; incur certain liens without securing the Senior Subordinated Notes; consolidate, merge or sell all or substantially all of ATDI’s assets; enter into certain transactions with ATDI’s affiliates; and designate ATDI’s subsidiaries as unrestricted subsidiaries. The terms of the Senior Subordinated Notes generally restrict distributions or the payment of dividends in respect of our stock subject to certain exceptions such as the amount of 50% of net income (reduced by 100% of net losses) for the period beginning April 4, 2010 and other customary negotiated exceptions.

Adjusted EBITDA

We report our financial results in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”). In addition, we present Adjusted EBITDA as a supplemental financial measure in order to provide a more complete understanding of the factors and trends affecting our business. Adjusted EBITDA is a non-GAAP financial measure that should be considered supplemental to, not a substitute for or superior to, the financial measure calculated in accordance with GAAP. It has limitations in that it does not reflect all of the costs associated with the operations of our business as determined in accordance with GAAP. In addition, this measure may not be comparable to non-GAAP financial measures reported by other companies. We believe that Adjusted EBITDA provides important supplemental information to both management and investors regarding financial and business trends used in assessing our financial condition. As a result, one should not consider Adjusted EBITDA in isolation or as a substitute for our results reported under GAAP. We compensate for these limitations by analyzing results on a GAAP basis as well as on a non-GAAP basis, predominantly disclosing GAAP results and providing reconciliations from GAAP results to non-GAAP results.

The following table shows a reconciliation of Adjusted EBITDA from the most directly comparable GAAP measure, net income (loss) in order to show the differences in these measures of operating performance:

In thousands	~~QuarterEndedSeptember~~QuarterEndedJuly 285,~~2013~~2014			~~QuarterEndedSeptember~~QuarterEndedJune 29,~~2012~~2013			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJuly 285,~~2013~~2014			~~Nine~~Six ~~MonthsEndedSeptember~~MonthsEndedJune 29,~~2012~~2013
Net income (loss)	$	1,224		$	(10,602	)	$	(20,904	)	$	(12,550	)
Income (loss) from continuing operations	$	(49,468	)	$	(5,837	)	$	(83,512	)	$	(22,128	)
Depreciation and amortization		2736,~~316~~689			2226,~~416~~109			7866,~~456~~013			6551,~~656~~140
Interest expense		2032,~~625~~223			1817,~~744~~387			5556,~~252~~622			5234,~~475~~627
Income tax provision (benefit)		~~485~~(26,370	)		10(1,~~054~~735	)		(842,~~877~~976	)		(59,~~754~~362	)
Management fee		114,~~587~~967			1,~~299~~255			315,~~833~~575			32,~~599~~246
Stock-based compensation		~~596~~1,419			~~1,607~~784			21,~~047~~987			21,~~761~~452
Transaction fees		115,~~015~~490			~~799~~2,266			420,~~304~~176			23,~~060~~289
Inventory step up		100			—			5,007			—
Non-cash inventory step up		12,457			2,713			31,640			4,907
Other		1,391			685			3,378			1,677
Early debt extinguishment		17,113			—			17,113			—
Adjusted EBITDA	$	54,339		$	45,002		$	122,496		$	109,924
Other		(883	)		1,303			11			1,985
Adjusted EBITDA	$	53,637		$	44,245		$	82,649		$	68,156

Off-Balance Sheet Arrangements

We have no significant off balance sheet arrangements, other than liabilities related to leases of Winston Tire Company (“Winston Tire”) that we guaranteed when we sold Winston Tire in 2001. As of ~~September~~July 285, ~~2013~~2014, our total obligations as guarantor on these leases are approximately $21.26 million extending over ~~six~~five years. However, we have secured assignments or ~~sublease~~ sublease agreements for the vast majority of these commitments with contractually assigned or subleased rentals of approximately $21.04 million as of ~~September~~July 285, ~~2013~~2014. A provision has been made for the net present value of the estimated shortfall. The accrual for lease liabilities could be materially affected by factors such as the credit worthiness of lessors, assignees and sublessees and our success at negotiating early termination agreements with lessors. These factors are significantly dependent on general economic conditions. While we believe that our current estimates of these liabilities are adequate, it is possible that future events could require significant adjustments to those estimates.

Critical Accounting Polices and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with those accounting principles requires management to use judgments in making estimates and assumptions based on the relevant information available at the end of each period. These estimates and assumptions have a significant effect on reported amounts of assets and liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities because they result primarily from the need to make estimates and assumptions on matters that are inherently uncertain. Actual results may differ from estimates.

Management believes there have been no significant changes during the ~~nine~~quarter ~~months~~ ended ~~September~~July 285, ~~2013~~2014, to the items that we disclosed as our critical accounting policies and estimates in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 2928, ~~2012~~2013.

Recent Accounting Pronouncements

In July ~~2012~~2013, the FASB issued ASU ~~No. 2012~~2013-0211, “~~Testing~~Presentation ~~Indefinite-Lived Intangible Assets for Impairment” which amended the guidance on the annual impairment testing~~ of ~~indefinite-lived~~an ~~intangible~~Unrecognized ~~assets~~Tax ~~other~~Benefit ~~than~~When ~~goodwill.~~a ~~The~~Net ~~amended~~Operating ~~guidance~~Loss ~~will~~Carryforward, ~~allow~~ a ~~company~~Similar Tax ~~the~~Loss, ~~option~~or toa ~~first~~Tax ~~assess~~Credit ~~qualitative~~Carryforward ~~factors~~Exists.” toASU ~~determine whether it is more~~2013-~~likely-than-not~~11 ~~that~~clarifies ~~the fair~~guidance ~~value~~and ofeliminates andiversity ~~indefinite-lived~~in ~~intangible~~practice ~~asset is less than its carrying amount. If, based~~ on the ~~qualitative~~presentation ~~assessment, it is more-likely-than-not that the fair value~~ of anunrecognized ~~indefinite-lived~~tax ~~intangible~~benefits ~~asset~~when isa ~~less~~net ~~than~~operating ~~its~~loss ~~carrying amount~~carryforward, ~~quantitative~~ ~~impairment~~a ~~testing~~similar istax ~~required. However~~loss, ifor a ~~company~~tax ~~concludes~~credit carryforward ~~otherwise,~~exists ~~quantitative~~at ~~impairment~~the ~~testing~~reporting ~~is not required~~date. This new guidance ~~will~~is be effective for ~~fiscal~~annual ~~years~~reporting periods beginning on or after ~~September~~December 15, ~~2012,~~2013 ~~with~~and ~~early adoption~~subsequent ~~permitted~~interim periods. We adopted this guidance on December 3029, ~~2012~~2013 (the first day of our ~~2013~~2014 fiscal year;) weand ~~perform our annual impairment test in~~ the ~~fourth~~adoption ~~quarter~~did ~~and does~~ not ~~expect the impact of adopting this standard to~~ have a material ~~effect~~ impact on ~~the~~our consolidated financial statements.

42In April 2014, the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” (“ASU 2014-08”). Under ASU 2014-08, only disposals representing a strategic shift in operations that have a major effect on a company’s operations and financial results should be presented as discontinued operations. Additionally, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in ASU 2014-08 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. However, ASU 2014-08 should not be applied to a component that is classified as held for sale before the effective date even if the component is disposed of after the effective date. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statement previously issued. We are currently assessing the impact, if any on our consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us beginning in fiscal year 2017 and, at that time we may adopt the new standard under the full retrospective method or the modified retrospective method. Early adoption is not permitted. We are currently evaluating the method and impact the adoption of ASU 2014-08 will have on our consolidated financial statements and disclosures.

InItem ~~February 2013, the FASB issued ASU No~~3. ~~2013-02,~~ ~~“Reporting~~Quantitative of Amounts Reclassified Out of Accumulated Other Comprehensive Income” which amended the guidance for reporting reclassifications out of accumulated other comprehensive income. The amended guidance will require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is entirely reclassified to net income, as required by U.S. GAAP. For other amounts, that are not required by U.S. GAAP to be entirely reclassified to net income, an entity is required to cross-reference other disclosures that will provide additional detail concerning these amounts. The amendments are effective for reporting periods beginning after December 15, 2012. We adopted this guidance on December 30, 2012 and ~~its~~Qualitative ~~adoption~~Disclosures ~~did~~about ~~not~~Market ~~impact our consolidated financial statements~~Risk.

InInterest ~~July~~Rate ~~2013,~~Risk the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013 and subsequent interim periods. We are currently assessing the impact, if any, on the condensed consolidated financial statements.

43Our ABL Facility, FILO Facility and Term Loan are exposed to fluctuations in interest rates which could impact our results of operations and financial condition. Interest on the ABL Facility, FILO Facility and Term Loan are tied to, at our option, either a base rate, or a prime rate, or LIBOR. At July 5, 2014, the total amount outstanding under our ABL Facility, FILO Facility and Term Loan that was subject to interest rate changes was $1,502.8 million.

To manage this exposure, we use interest rate swap agreements in order to hedge the changes in our variable interest rate debt. Interest rate swap agreements utilized by us in our hedging programs are viewed as risk management tools, involve little complexity and are not used for trading or speculative purposes. To minimize the risk of counterparty non-performance, interest rate swap agreements are made only through major financial institutions with significant experience in such instruments.

At July 5, 2014, $1,102.8 million of the total outstanding balance of our ABL Facility, FILO Facility and Term Loan that was not hedged by an interest rate swap agreement and thus subject to interest rate changes. Based on this amount, a hypothetical increase of 1% in such interest rate percentages would result in an increase to our annual interest expense by $11.0 million.

Foreign Currency Exchange Rate Risk

The financial position and results of operations for TriCan, our 100% owned subsidiary acquired during 2012 are impacted by movements in the exchange rates between the Canadian dollar and the U.S. dollar. As of July 5, 2014, we did not have any foreign currency derivatives in place. We assess the market risk of changes in foreign currency exchange rates utilizing a sensitivity analysis that measures the potential impact on our earnings. During the six months ended July 5, 2014, a hypothetical 10% fluctuation in the U.S. dollar to Canadian dollar exchange rate would have affected our net income (loss) by $0.7 million, respectively.

Item 4.

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

(a)

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission. Such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

(b)

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

During the quarter ended July 5, 2014, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~Item~~PART 3II. ~~Quantitative~~OTHER ~~and Qualitative Disclosures about Market Risk.~~INFORMATION

~~Our~~Item U1.S. ~~ABL~~Legal ~~Facility, Canadian ABL Facility and FILO Facility are exposed to fluctuations in interest rates which could impact our results of operations and financial condition~~Proceedings. Interest on the U.S. ABL Facility and the FILO Facility are tied to Base Rate, as defined, or LIBOR. Interest on the Canadian ABL Facility is tied to Base Rate, as defined, or Prime Rate, as defined. At September 28, 2013, the total amount outstanding under our U.S. ABL Facility, Canadian ABL Facility and FILO facility that was subject to interest rate changes was $559.7 million.

ToWe ~~manage~~are ~~this~~involved ~~exposure,~~from wetime ~~use~~to ~~interest~~time ~~rate~~in ~~swap~~various lawsuits, ~~agreements~~including inalleged ~~order~~class toaction ~~hedge~~lawsuits arising out of the ~~changes~~ordinary inconduct of our ~~variable~~business. ~~interest~~Although ~~rate~~no ~~debt.~~assurances ~~Interest~~can ~~rate swap~~be ~~agreements~~given, ~~utilized~~we bydo usnot inexpect ~~our~~that ~~hedging~~any ~~programs~~of ~~are~~these ~~viewed~~matters aswill ~~risk~~have ~~management~~a ~~tools,~~material ~~involve~~adverse ~~little~~effect ~~complexity~~on ~~and~~our ~~are~~business ~~not~~or ~~used~~financial condition. ~~for~~We ~~trading~~are oralso ~~speculative~~involved ~~purposes.~~in Tovarious ~~minimize~~litigation proceedings incidental to the ~~risk~~ordinary course of ~~counterparty~~our ~~non-performance~~business. We believe, ~~interest~~based ~~rate~~on ~~swap agreements~~consultation ~~are~~with ~~made~~legal ~~only~~counsel, ~~through~~that ~~major~~none ~~financial~~of ~~institutions~~these ~~with~~will ~~significant~~have ~~experience~~a inmaterial ~~such~~adverse ~~instruments~~effect on our financial condition or results of operations.

AtItem ~~September 28, 2013, $159~~1A.7 ~~million~~Risk ~~of the total outstanding balance of our U~~Factors.S. and Canadian ABL Facilities and our FILO Facility is not hedged by an interest rate swap agreement and thus subject to interest rate changes. Based on this amount, a hypothetical increase of 1% in such interest rate percentages would result in an increase to our annual interest expense by $1.6 million.

~~The financial~~There ~~position~~have ~~and~~been ~~results~~no ofmaterial ~~operations~~changes ~~for~~to ~~TriCan,~~ our ~~100%~~risk factors ~~owned~~contained ~~subsidiary~~in ~~acquired during 2012, and RTD,~~ our ~~100%~~Annual ~~owned~~Report ~~subsidiary acquired~~ on ~~April 30,~~Form ~~2013,~~10-K ~~are~~for ~~impacted by movements in~~ the ~~exchange~~fiscal ~~rates~~year ~~between~~ended ~~the Canadian dollar and the U.S. dollar. As of September~~December 28, 2013~~, we did not have any foreign currency derivatives in place~~.

Item 42. ~~Controls~~Unregistered Sales of Equity Securities and ~~Procedures~~Use of Proceeds.

~~Evaluation of Disclosure Controls and Procedures~~ None.

~~(a)~~Item We3. ~~maintain~~Defaults ~~disclosure~~Upon ~~controls~~Senior ~~and procedures that are designed to provide reasonable assurance that information required to be disclosed in our filings under the~~ Securities ~~Exchange Act of 1934 is recorded, processed, summarized and reported within the periods specified in the rules and forms of the Securities and Exchange Commission~~. Such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Our management, including the Chief Executive Officer and the Chief Financial Officer, recognizes that any set of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

(b) As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and proceduresNone. ~~Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level.~~

~~Changes~~Item in4. ~~Internal~~Mine ~~Control~~Safety ~~Over Financial Reporting~~ Disclosures.

~~During~~Not the quarter ended September 28, 2013, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reportingapplicable. We are, however, currently implementing a conversion of our legacy computer system to Oracle. We believe we are maintaining and monitoring appropriate internal controls during the implementation period.

44Item 5. Other Information.

~~Table~~None. ~~of Contents~~

~~PART~~Item II6. ~~OTHER INFORMATION~~ Exhibits.

Item 1. Legal Proceedings.


2.1		Asset Purchase Agreement, dated as of June 27, 2014, by and among Trican Tire Distributors Inc., Extreme Wheel Distributors Ltd. and the shareholder and principal of Extreme Wheel Distributors Ltd.

2.2		Asset Purchase Agreement, dated as of June 27, 2014, by and among Trican Tire Distributors Inc., Kirks Tire Ltd. and the shareholders and principals of Kirks Tire Ltd.

2.3		Asset Purchase Agreement, dated as of June 27, 2014, by and among Trican Tire Distributors Inc., Regional Tire Distributors (Calgary) Inc. and the shareholders and principals of Regional Tire Distributors (Calgary).

2.4		Asset Purchase Agreement, dated as of June 27, 2014, by and among Trican Tire Distributors Inc., Regional Tire Distributors (Edmonton) Inc. and the shareholders and principals of Regional Tire Distributors (Edmonton) Inc.

2.5		Asset Purchase Agreement, dated as of June 27, 2014, by and among Trican Tire Distributors Inc., Trail Tire Distributors Ltd. and the shareholders and principals of Trail Tire Distributors Ltd.

10.1		Security Agreement, dated as of March 28, 2014, among American Tire Distributors Holdings, Inc., American Tire Distributors, Inc., the subsidiary guarantors from time to time party thereto and Bank of America, N.A. as collateral agent.

10.2		First Amendment to Credit Agreement, dated as of June 16, 2014, among American Tire Distributors Holdings, Inc., American Tire Distributors, Inc., the guarantors from time to time party thereto, Bank of America, N.A., as administrative agent, and each lender form time to time party thereto.

10.3		Second Amendment to Sixth Amended and Restated Credit Agreement, dated as of January 31, 2014, among American Tire Distributors, Inc., Am-Pac Tire Dist. Inc., Trican Tire Distributors Inc., American Tire Distributors Holdings, Inc., Tire Wholesalers, Inc., Lenders party thereto and Bank of America, N.A. as Administrative and Collateral Agent and Lender.

We51 are involved from time to time in various lawsuits, including alleged class action lawsuits arising out of the ordinary conduct of our business. Although no assurances can be given, we do not expect that any of these matters will have a material adverse effect on our business or financial condition. We are also involved in various litigation proceedings incidental to the ordinary course of our business. We believe, based on consultation with legal counsel, that none of these will have a material adverse effect on our financial condition or results of operations.

There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the fiscal year ended December 29, 2012.


31.1		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certifications of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended July 5, 2014, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Statement of Stockholder’s Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

~~Item 2.~~52 ~~Unregistered Sales of Equity Securities and Use of Proceeds.~~

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

~~Item 3.~~SIGNATURES ~~Defaults Upon Senior Securities.~~

~~None~~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.

Item 4. Mine Safety Disclosures.


Date: August 15, 2014	AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.

	By:	/s/ JASON T. YAUDES
		Jason T. Yaudes
		Executive Vice President and
		Chief Financial Officer
		(On behalf of the registrant and as Principal Financial Officer)

~~Not~~53 ~~applicable.~~

Item 5. Other Information.

None.

Item 6. Exhibits.

		31.1		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		32.1		Certifications of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 28, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) the Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Filing Compare · American Tire Distributors Holdings, Inc.