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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 April 2, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from              to

Commission File Number 333-124878





American Tire Distributors Holdings, Inc.

(Exact name of registrant as specified in its charter)







|                                                                                     |  |                                               
|------------------------------------------------------------------------------------ |  | ----------------------------------------------
|A Delaware Corporation (State or other jurisdiction ofincorporation or organization) |  | 59-3796143 (I.R.S. EmployerIdentification 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

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   ̈    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):

Large accelerated filer   ̈  Accelerated filer   ̈  Non-accelerated filer  x  Smaller reporting company   ̈

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 May 2, 2011: 1,000









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AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.

FORM 10-Q

INDEX



|           |  |  |                       |  |  |                                                                                                                                                                    |      |  |    | 
|---------- |  |  | --------------------- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---- |  | -- | 
|           |  |  |                       |  |  |                                                                                                                                                                    | Page | 
|PART I     |  |  | FINANCIAL INFORMATION |  |  |                                                                                                                                                                    |     
|           |  |  |                      
|Item 1     |  |  |                      |  |  | Financial Statements                                                                                                                                               |      |  |    | 
|           |  |  |                       |  |  | Condensed Consolidated Balance SheetsAs of April 2, 2011 and January 1, 2011 for the
Successor                                                                    |      |  | 3  | 
|           |  |  |                       |  |  | Condensed Consolidated Statements of OperationsFor the quarter ended April 2, 2011 for the Successor
 and the quarter ended April 3, 2010 for the Predecessor     |      |  | 4  | 
|           |  |  |                       |  |  | Condensed Consolidated Statement of Stockholders Equity and Other Comprehensive Income (Loss)For
 the quarter ended April 2, 2011 for the Successor              |      |  | 5  | 
|           |  |  |                       |  |  | Condensed Consolidated Statements of Cash FlowsFor the quarter ended April 2, 2011 for the Successor
 and for the quarter ended April 3, 2010 for the Predecessor |      |  | 6  | 
|           |  |  |                       |  |  | Notes to Condensed Consolidated Financial Statements                                                                                                               |      |  | 7  | 
|           |  |  |                      
|Item 2     |  |  |                      |  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                                                                              |      |  | 25 | 
|           |  |  |                      
|Item 3     |  |  |                      |  |  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                         |      |  | 35 | 
|           |  |  |                      
|Item 4     |  |  |                      |  |  | Controls and Procedures                                                                                                                                            |      |  | 36 | 
|           |  | 
|PART II    |  |  | OTHER INFORMATION     |  |  |                                                                                                                                                                    |     
|           |  |  |                      
|Item 1     |  |  |                      |  |  | Legal Proceedings                                                                                                                                                  |      |  | 37 | 
|           |  |  |                      
|Item 1A    |  |  |                      |  |  | Risk Factors                                                                                                                                                       |      |  | 37 | 
|           |  |  |                      
|Item 6     |  |  |                      |  |  | Exhibits                                                                                                                                                           |      |  | 37 | 
|           | 
|SIGNATURES |  |  | 38                    | 



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PART IFINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

American Tire Distributors Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



|                                                                                        |  |              |           |   |                |   |           |  
|--------------------------------------------------------------------------------------- |  | ------------ | --------- | - | -------------- | - | --------- | -
|                                                                                        |  | Successor    |          
|In thousands, except share amounts                                                      |  | April 2,2011 |           |   | January 1,2011 |  
|ASSETS                                                                                  |  |              |           |   |                |   |           |  
|Current assets:                                                                         |  |              |           |   |                |   |           |  
|Cash and cash equivalents                                                               |  | $            | 11,364    |   |                | $ | 11,971    |  
|Restricted cash                                                                         |  |              | 250       |   |                |   | 250       |  
|Accounts receivable, net                                                                |  |              | 232,978   |   |                |   | 213,928   |  
|Inventories                                                                             |  |              | 559,878   |   |                |   | 466,433   |  
|Deferred income taxes                                                                   |  |              | 13,959    |   |                |   | 13,839    |  
|Income tax receivable                                                                   |  |              | 9,646     |   |                |   | 9,646     |  
|Assets held for sale                                                                    |  |              | 5,711     |   |                |   | 203       |  
|Other current assets                                                                    |  |              | 10,588    |   |                |   | 11,488    |  
|                                                                                        |  |              |           |   |                |   |           |  
|Total current assets                                                                    |  |              | 844,374   |   |                |   | 727,758   |  
|                                                                                        |  |              |           |   |                |   |           |  
|Property and equipment, net                                                             |  |              | 85,438    |   |                |   | 89,553    |  
|Goodwill                                                                                |  |              | 431,191   |   |                |   | 431,065   |  
|Other intangible assets, net                                                            |  |              | 739,681   |   |                |   | 754,387   |  
|Other assets                                                                            |  |              | 54,055    |   |                |   | 54,585    |  
|                                                                                        |  |              |           |   |                |   |           |  
|Total assets                                                                            |  | $            | 2,154,739 |   |                | $ | 2,057,348 |  
|                                                                                        |  |              |           |   |                |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                    |  |              |           |   |                |   |           |  
|Current liabilities:                                                                    |  |              |           |   |                |   |           |  
|Accounts payable                                                                        |  | $            | 464,514   |   |                | $ | 430,979   |  
|Accrued expenses                                                                        |  |              | 38,219    |   |                |   | 25,791    |  
|Current maturities of long-term debt                                                    |  |              | 407       |   |                |   | 656       |  
|                                                                                        |  |              |           |   |                |   |           |  
|Total current liabilities                                                               |  |              | 503,140   |   |                |   | 457,426   |  
|                                                                                        |  |              |           |   |                |   |           |  
|Long-term debt                                                                          |  |              | 714,748   |   |                |   | 651,888   |  
|Deferred income taxes                                                                   |  |              | 277,356   |   |                |   | 283,169   |  
|Other liabilities                                                                       |  |              | 12,501    |   |                |   | 13,419    |  
|Commitments and contingencies                                                           |  |              |           |   |                |   |           |  
|Stockholders equity:                                                                   |  |              |           |   |                |   |           |  
|Common stock, par value $.01 per share; 1,000 shares authorized, issued and outstanding |  |              |          |   |                |   |          |  
|Additional paid-in capital                                                              |  |              | 688,652   |   |                |   | 687,537   |  
|Accumulated (deficit) earnings                                                          |  |              | (41,848   | ) |                |   | (36,312   | )
|Accumulated other comprehensive income (loss)                                           |  |              | 190       |   |                |   | 221       |  
|                                                                                        |  |              |           |   |                |   |           |  
|Total stockholders equity                                                              |  |              | 646,994   |   |                |   | 651,446   |  
|                                                                                        |  |              |           |   |                |   |           |  
|Total liabilities and stockholders equity                                              |  | $            | 2,154,739 |   |                | $ | 2,057,348 |  
|                                                                                        |  |              |           |   |                |   |           |  

See accompanying notes to condensed consolidated financial statements.



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American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                                                                          |  |                           |         |   |                           |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ------------------------- | - | ------- | -
|                                                                                                          |  | Successor                 |         |   | Predecessor               |  
|In thousands                                                                                              |  | QuarterEndedApril 
2,2011 |         |   | QuarterEndedApril 
3,2010 |  
|Net sales                                                                                                 |  | $                         | 640,822 |   |                           | $ | 559,622 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                           | 532,957 |   |                           |   | 465,106 |  
|Selling, general and administrative expenses                                                              |  |                           | 99,543  |   |                           |   | 82,599  |  
|Transaction expenses                                                                                      |  |                           | 1,062   |   |                           |   | 2,082   |  
|                                                                                                          |  |                           |         |   |                           |   |         |  
|Operating income (loss)                                                                                   |  |                           | 7,260   |   |                           |   | 9,835   |  
|Other income (expense):                                                                                   |  |                           |         |   |                           |   |         |  
|Interest expense                                                                                          |  |                           | (16,527 | ) |                           |   | (13,030 | )
|Other, net                                                                                                |  |                           | (275    | ) |                           |   | (229    | )
|                                                                                                          |  |                           |         |   |                           |   |         |  
|Income (loss) from operations before income taxes                                                         |  |                           | (9,542  | ) |                           |   | (3,424  | )
|Income tax provision (benefit)                                                                            |  |                           | (4,006  | ) |                           |   | (1,539  | )
|                                                                                                          |  |                           |         |   |                           |   |         |  
|Net income (loss)                                                                                         |  | $                         | (5,536  | ) |                           | $ | (1,885  | )
|                                                                                                          |  |                           |         |   |                           |   |         |  





See accompanying notes to condensed consolidated financial statements.



4



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American Tire Distributors Holdings, Inc.

Condensed Consolidated Statement of Stockholders Equity and Other Comprehensive Income (Loss)

(Unaudited)



|                                                                         |  |                           |         |   |              |  |       |                          |  |   |                              |  |  |                                            |         |  |                            |   |         |   |  |   |     |   |  |   |        |  
|------------------------------------------------------------------------ |  | ------------------------- | ------- | - | ------------ |  | ----- | ------------------------ |  | - | ---------------------------- |  |  | ------------------------------------------ | ------- |  | -------------------------- | - | ------- | - |  | - | --- | - |  | - | ------ | -
|In thousands, except share amounts                                       |  | TotalStockholders
Equity |         |   | Common Stock |  |       | AdditionalPaid-InCapital |  |   | AccumulatedEarnings(Deficit) |  |  | AccumulatedOtherComprehensive(Loss) Income |         |  | ComprehensiveIncome
(Loss) |  
|                                                                         |  | Shares                    |         |   | Amount       |  |       |                          |  |  
|Successor balance, January 1, 2011                                       |  | $                         | 651,446 |   |              |  | 1,000 |                          |  | $ |                             |  |  | $                                          | 687,537 |  |                            | $ | (36,312 | ) |  | $ | 221 |   |  |   |        |  
|Net income (loss)                                                        |  |                           | (5,536  | ) |              |  |      |                          |  |   |                             |  |  |                                            |        |  |                            |   | (5,536  | ) |  |   |    |   |  | $ | (5,536 | )
|Unrealized gain (loss) on rabbi trust assets, net of tax of $0.1 million |  |                           | (31     | ) |              |  |      |                          |  |   |                             |  |  |                                            |        |  |                            |   |        |   |  |   | (31 | ) |  |   | (31    | )
|                                                                         |  |                           |         |   |              |  |       |                          |  |   |                              |  |  |                                            |         |  |                            |   |         |   |  |   |     |   |  |   |        |  
|Total comprehensive income (loss)                                        |  |                           |         |   |              |  |       |                          |  |   |                              |  |  |                                            |         |  |                            |   |         |   |  |   |     |   |  | $ | (5,567 | )
|                                                                         |  |                           |         |   |              |  |       |                          |  |   |                              |  |  |                                            |         |  |                            |   |         |   |  |   |     |   |  |   |        |  
|Equity contributions                                                     |  |                           | 500     |   |              |  |      |                          |  |   |                             |  |  |                                            | 500     |  |                            |   |        |   |  |   |    |   |  |   |        |  
|Stock-based compensation expense                                         |  |                           | 615     |   |              |  |      |                          |  |   |                             |  |  |                                            | 615     |  |                            |   |        |   |  |   |    |   |  |   |        |  
|                                                                         |  |                           |         |   |              |  |       |                          |  |   |                              |  |  |                                            |         |  |                            |   |         |   |  |   |     |   |  |   |        |  
|Successor balance, April 2, 2011                                         |  | $                         | 646,994 |   |              |  | 1,000 |                          |  | $ |                             |  |  | $                                          | 688,652 |  |                            | $ | (41,848 | ) |  | $ | 190 |   |  |   |        |  
|                                                                         |  |                           |         |   |              |  |       |                          |  |   |                              |  |  |                                            |         |  |                            |   |         |   |  |   |     |   |  |   |        |  





See accompanying notes to condensed consolidated financial statements.



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American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                                   |  |                          |          |   |                          |   |          |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------ | -------- | - | ------------------------ | - | -------- | -
|                                                                                                   |  | Successor                |          |   | Predecessor              |  
|In thousands                                                                                       |  | QuarterEndedApril 2,2011 |          |   | QuarterEndedApril 3,2010 |  
|Cash flows from operating activities:                                                              |  |                          |          |   |                          |   |          |  
|Net income (loss)                                                                                  |  | $                        | (5,536   | ) |                          | $ | (1,885   | )
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                          |          |   |                          |   |          |  
|Depreciation and amortization of intangibles                                                       |  |                          | 18,517   |   |                          |   | 8,793    |  
|Amortization of other assets                                                                       |  |                          | 1,291    |   |                          |   | 1,211    |  
|Benefit for deferred income taxes                                                                  |  |                          | (5,812   | ) |                          |   | (3,846   | )
|Accretion of 8% cumulative preferred stock                                                         |  |                          |         |   |                          |   | 111      |  
|Accrued dividends on 8% cumulative preferred stock                                                 |  |                          |         |   |                          |   | 583      |  
|Provision for doubtful accounts                                                                    |  |                          | 576      |   |                          |   | 512      |  
|Stock-based compensation                                                                           |  |                          | 615      |   |                          |   | 5,874    |  
|Other, net                                                                                         |  |                          | 334      |   |                          |   | 710      |  
|Change in operating assets and liabilities:                                                        |  |                          |          |   |                          |   |          |  
|Accounts receivable                                                                                |  |                          | (19,626  | ) |                          |   | (23,486  | )
|Inventories                                                                                        |  |                          | (93,569  | ) |                          |   | 5,404    |  
|Other current assets                                                                               |  |                          | 900      |   |                          |   | 1,913    |  
|Accounts payable and accrued expenses                                                              |  |                          | 56,516   |   |                          |   | (23,934  | )
|Other, net                                                                                         |  |                          | (1,121   | ) |                          |   | (517     | )
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Net cash provided by (used in) operating activities                                                |  |                          | (46,915  | ) |                          |   | (28,557  | )
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Cash flows from investing activities:                                                              |  |                          |          |   |                          |   |          |  
|Purchase of property and equipment                                                                 |  |                          | (4,878   | ) |                          |   | (2,304   | )
|Purchase of assets held for sale                                                                   |  |                          | (1,053   | ) |                          |   | (735     | )
|Proceeds from sale of property and equipment                                                       |  |                          | 28       |   |                          |   | 78       |  
|Proceeds from sale of assets held for sale                                                         |  |                          | 385      |   |                          |   |         |  
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Net cash provided by (used in) investing activities                                                |  |                          | (5,518   | ) |                          |   | (2,961   | )
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Cash flows from financing activities:                                                              |  |                          |          |   |                          |   |          |  
|Borrowings from revolving credit facility                                                          |  |                          | 601,255  |   |                          |   | 519,583  |  
|Repayments of revolving credit facility                                                            |  |                          | (538,315 | ) |                          |   | (472,817 | )
|Outstanding checks                                                                                 |  |                          | (10,703  | ) |                          |   | (8,169   | )
|Payments of other long-term debt                                                                   |  |                          | (411     | ) |                          |   | (476     | )
|Payments of Predecessor senior notes                                                               |  |                          |         |   |                          |   | (6,263   | )
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Net cash provided by (used in) financing activities                                                |  |                          | 51,826   |   |                          |   | 31,858   |  
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Net increase (decrease) in cash and cash equivalents                                               |  |                          | (607     | ) |                          |   | 340      |  
|Cash and cash equivalentsbeginning of period                                                      |  |                          | 11,971   |   |                          |   | 7,290    |  
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Cash and cash equivalentsend of period                                                            |  | $                        | 11,364   |   |                          | $ | 7,630    |  
|                                                                                                   |  |                          |          |   |                          |   |          |  
|Supplemental disclosures of cash flow information:                                                 |  |                          |          |   |                          |   |          |  
|Cash payments for interest                                                                         |  | $                        | 3,578    |   |                          | $ | 20,049   |  
|Cash payments for taxes, net                                                                       |  | $                        | 847      |   |                          | $ | 480      |  

See accompanying
notes to condensed consolidated financial statements.



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American Tire Distributors Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business:

American Tire Distributors Holdings, Inc. (also referred to herein as 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 has one operating and reportable segment, and is primarily engaged in the wholesale distribution of tires, custom wheels and
accessories, and related tire supplies and tools. 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 year ended January 1, 2011. Certain reclassifications of amounts reported in prior years have been made to conform to the 2011 classification.

On May 28, 2010, pursuant to an Agreement and Plan of Merger, dated as of April 20, 2010, the Company was acquired
by affiliates of TPG Capital, L.P. (TPG) for an aggregate purchase price valued at $1,287.5 million. As a result, the Company became a wholly-owned subsidiary of TPG (the Merger). Although the Company continues to operate as
the same legal entity subsequent to the acquisition, periods prior to May 28, 2010 reflect the financial position, results of operations, and changes in financial position of the Company prior to the Merger (the Predecessor) and
periods after May 28, 2010 reflect the financial position, results of operations, and changes in financial position of the Company after the Merger (the Successor).

Under the guidance provided by the Securities and Exchange Commission (SEC) Staff Accounting Bulletin Topic 5J, New
Basis of Accounting Required in Certain Circumstances, push-down accounting is required when such transactions result in an entity becoming substantially wholly-owned. Under push-down accounting, certain transactions incurred by the acquirer,
which would otherwise be accounted for in the accounts of the parent, are pushed down and recorded on the financial statements of the subsidiary. Therefore, the basis in shares of common stock of the Company has been pushed down from TPG
to the Company. In addition, the Merger was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The guidance prescribes that the purchase price be
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, periods prior to the Merger are not comparable to subsequent periods due to the
difference in the basis of presentation of purchase accounting as compared to historical cost.

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 quarter ended April 2, 2011 for the Successor and the quarter ended April 3, 2010 for the Predecessor each contain operating results for 13 weeks.



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##### Table of Contents

3. Acquisition of Holdings:

On May 28, 2010, pursuant to an Agreement and Plan of Merger, dated as of April 20, 2010, the Company was acquired by affiliates of TPG for an aggregate purchase price of $1,287.5 million in
cash, less the amount of the Companys funded indebtedness, transaction expenses, aggregate redemption payments with respect to the Companys outstanding preferred stock, certain holdback amounts plus the amount of estimated cash, plus or
minus certain working capital adjustments. The Merger was financed by $635.0 million in aggregate principle of debt financing as well as common equity capital. In addition, the Company tendered its existing outstanding debt which was subsequently
purchased and retired.

The fair value of consideration transferred was as follows:



|                                       |  |             |           |  
|-------------------------------------- |  | ----------- | --------- | -
|In thousands                           |  | May 28,2010 |          
|Aggregate purchase price               |  | $           | 1,287,500 |  
|Redemption of Funded Indebtedness      |  |             | (529,176  | )
|Redemption of Preferred Stock          |  |             | (30,102   | )
|Termination of Interest Rate Swaps     |  |             | (2,804    | )
|Transaction fees                       |  |             | (66,234   | )
|Holdback amount                        |  |             | (13,000   | )
|Cash on hand                           |  |             | 7,273     |  
|Working capital adjustments            |  |             | (7,000    | )
|                                       |  |             |           |  
|Total fair value of consideration paid |  | $           | 646,457   |  
|                                       |  |             |           |  

The Merger 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 merger. The
allocation of the purchase price is as follows:



|                              |  |             |           | 
|----------------------------- |  | ----------- | --------- | 
|In thousands                  |  | May 28,2010 |          
|Cash                          |  | $           | 12,242    | 
|Restricted cash               |  |             | 9,750     | 
|Accounts receivable           |  |             | 207,561   | 
|Inventory                     |  |             | 485,448   | 
|Other current assets          |  |             | 20,489    | 
|Property and equipment        |  |             | 91,150    | 
|Intangible assets             |  |             | 781,324   | 
|Other assets                  |  |             | 48,100    | 
|                              |  |             |           | 
|Total assets acquired         |  |             | 1,656,064 | 
|Debt                          |  |             | 612,638   | 
|Accounts payable              |  |             | 422,245   | 
|Accrued and other liabilities |  |             | 108,456   | 
|Deferred income taxes         |  |             | 296,549   | 
|                              |  |             |           | 
|Total liabilities assumed     |  |             | 1,439,888 | 
|Net assets acquired           |  |             | 216,176   | 
|Goodwill                      |  |             | 430,281   | 
|                              |  |             |           | 
|Purchase price allocation     |  | $           | 646,457   | 
|                              |  |             |           | 



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##### Table of Contents

The following unaudited pro forma supplementary data for the quarter ended April 3,
2010 gives effect to the Merger as if it had occurred on January 3, 2010 (the first day of the Companys 2010 fiscal year).



|                  |  |                            |         |  
|----------------- |  | -------------------------- | ------- | -
|                  |  | Pro Forma                  |        
|In thousands      |  | Quarter EndedApril 3, 2010 |        
|Net sales         |  | $                          | 559,622 |  
|Net (loss) income |  |                            | (8,768  | )

The pro forma
supplementary data for the quarter ended April 3, 2010 includes $9.5 million as an adjustment to historical amortization expense as a result of the valuation of $531.4 million allocated to amortizable intangible assets acquired in the Merger,
primarily associated with a customer relationship intangible asset. In addition, the Company has included $2.5 million as an increase to interest expense to reflect the impact of the new debt structure and the additional expense of the deferred
financing fees.

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 Merger been consummated on the date assumed and does not project the Companys results of operations for any future date.

4. Inventories:

Inventories consist primarily of automotive tires, custom wheels, tire supplies and tools and 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. See Note 8 for further information.

5. Assets Held for Sale:

As of April 2, 2011, the Company classified a distribution center and former headquarters for Am-Pac Tire Dist., Inc. located in Simi
Valley, CA as held for sale. The building has a fair value of $5.0 million and was previously used as a warehouse within the Companys distribution operations. The distribution operations have been consolidated into other ATDI facilities that
are currently being leased. The Company is actively marketing this property and anticipates that the property will be sold within a twelve-month period.

In addition, the Company has several residential properties classified as held for sale. These properties have a fair value of $0.7 million and were acquired as part of employee relocation packages. The
Company is actively marketing these properties and anticipates that they will be sold within a twelve-month period.

6. Goodwill:

As of April 2, 2011, the change in the carrying amount of goodwill is as follows:



|                                |  |   |         | 
|------------------------------- |  | - | ------- | 
|In thousands                    |  |   |        
|Balance, January 1, 2011        |  | $ | 431,065 | 
|Purchase accounting adjustments |  |   | 126     | 
|                                |  |   |         | 
|Balance, April 2, 2011          |  | $ | 431,191 | 
|                                |  |   |         | 



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##### Table of Contents

The Company records as goodwill the excess of the purchase price over the fair value of the
net assets acquired. 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.

As of April 2, 2011, the Company has recorded goodwill of $431.2 million, of which approximately
$21 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 $430.3 million was recorded as goodwill. On December 10, 2010, the Company completed
the purchase of substantially all of the assets of Lisacs of Washington, Inc and 100% of the capital stock of Tire Wholesalers, Inc. As a result, the Company recorded $0.9 million as goodwill.

7. Intangible Assets:

The following table sets forth the gross amount and accumulated amortization of the Companys intangible assets at April 2, 2011
and January 1, 2011:



|                                           |  |              |         |   |                |   |         |  
|------------------------------------------ |  | ------------ | ------- | - | -------------- | - | ------- | -
|In thousands                               |  | April 2,2011 |         |   | January 1,2011 |  
|Customer list                              |  | $            | 533,998 |   |                | $ | 533,998 |  
|Noncompete agreement                       |  |              | 365     |   |                |   | 365     |  
|Tradenames                                 |  |              | 3,168   |   |                |   | 3,168   |  
|                                           |  |              |         |   |                |   |         |  
|Total gross finite-lived intangible assets |  |              | 537,531 |   |                |   | 537,531 |  
|Accumulated amortization                   |  |              | (47,743 | ) |                |   | (33,037 | )
|                                           |  |              |         |   |                |   |         |  
|Total net finite-lived intangible assets   |  |              | 489,788 |   |                |   | 504,494 |  
|Tradenames (indefinite-lived)              |  |              | 249,893 |   |                |   | 249,893 |  
|                                           |  |              |         |   |                |   |         |  
|Total                                      |  | $            | 739,681 |   |                | $ | 754,387 |  
|                                           |  |              |         |   |                |   |         |  

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.

Intangible asset amortization expense was
$14.7 million for the quarter ended April 2, 2011. Estimated amortization expense on existing intangible assets is expected to approximate $44 million for the remaining nine months in 2011 and approximately $57 million in 2012, $55 million in
2013, $52 million in 2014 and $44 million in 2015. The Predecessor recorded $4.7 million of intangible asset amortization expense for the quarter ended April 3, 2010.



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##### Table of Contents

8. Long-term Debt:

The following table presents the Companys long-term debt at April 2, 2011 and at January 1, 2011:



|                          |  |              |         |   |                |   |         |  
|------------------------- |  | ------------ | ------- | - | -------------- | - | ------- | -
|In thousands              |  | April 2,2011 |         |   | January 1,2011 |  
|ABL Facility              |  | $            | 253,211 |   |                | $ | 190,271 |  
|Senior Subordinated Notes |  |              | 200,000 |   |                |   | 200,000 |  
|Senior Secured Notes      |  |              | 247,166 |   |                |   | 247,084 |  
|Capital lease obligations |  |              | 14,159  |   |                |   | 14,290  |  
|Other                     |  |              | 619     |   |                |   | 899     |  
|                          |  |              |         |   |                |   |         |  
|Total debt                |  |              | 715,155 |   |                |   | 652,544 |  
|LessCurrent maturities   |  |              | (407    | ) |                |   | (656    | )
|                          |  |              |         |   |                |   |         |  
|Long-term debt            |  | $            | 714,748 |   |                | $ | 651,888 |  
|                          |  |              |         |   |                |   |         |  

The fair value of the Successors long-term senior notes was $492.8 million at April 2, 2011 and
$470.6 million at January 1, 2011. The fair value of the long-term senior notes was primarily based upon quoted market values.

ABL Facility

The Companys senior secured asset-backed
revolving credit facility (ABL Facility) provides for a senior secured revolving credit facility of up to $450.0 million (of which up to $50.0 million may be utilized in the form of commercial and standby letters of credit), subject to
borrowing base availability. As of April 2, 2011, the Company had $253.2 million outstanding under the facility. In addition, the Company had certain letters of credit outstanding in the aggregate amount of $8.1 million, leaving $188.7 million
available for additional borrowings. Provided that no default or event of default is then existing or would arise therefrom, the Company has the option to request that the ABL Facility be increased by an amount not to exceed $200.0 million, subject
to certain rights of the administrative agent, swingline linder and issuing banks with respect to the lenders providing commitments for such increase. The facility matures on November 28, 2014.

Borrowings under the 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 3.0% 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 1/2of 1% and (3) the one month-Adjusted LIBOR rate plus 1.0% per annum, plus an applicable margin of 2.0%. The applicable margins under the ABL
Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

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



| |  |  | 85% of eligible accounts receivable; plus
| | - |  | -----------------------------------------



| |  |  | The lesser of (a) 70% of the lesser of cost or fair market value of eligible tire inventory and (b) 85% of the net orderly liquidation value
of eligible tire inventory; plus
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The lesser of (a) 50% of the lower of cost or market value of eligible non-tire inventory and (b) 85% of the net orderly liquidation value of
eligible non-tire inventory.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All obligations under the ABL 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. Obligations under the ABL Facility are also secured by a first-priority
lien on inventory, accounts receivable and related assets and a second-priority lien on substantially all other assets, in each case of Holdings, ATDI and the guarantor subsidiaries, subject to certain exceptions.



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The ABL Facility contains 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. If the amount available for additional borrowing under the ABL Facility is less than the greater of (a) 12.5% of the lesser of (x) the aggregate commitments under
the ABL Facility and (y) the 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 April 2, 2011, 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.

Senior Subordinated Notes

On May 28, 2010, ATDI issued Senior
Subordinated Notes due June 1, 2018 (Senior Subordinated Notes) in an aggregate principal amount of $200.0 million. The Senior Subordinated Notes bear interest at a fixed rate of 11.50% per annum. Interest on the Senior
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 are not redeemable, except as described below, at the option of ATDI prior to
June 1, 2013. Thereafter, 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.

Prior to June 1, 2013, ATDI may, at its option, on one or more
occasions, redeem up to 35% of the aggregate principal amount of the Senior Subordinated Notes issued at a redemption price equal to 111.5% of the aggregate principal amount thereof, plus accrued and unpaid interest, to, but not including, the
redemption date, with the net cash proceeds of one or more equity offerings; provided that:



| | (1) | at least 50% of the aggregate principal amount of the Senior Subordinated Notes remains outstanding immediately after the occurrence of such redemption; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | each such redemption occurs within 120 days of the date of the closing of the related equity offering.
| | --- | ------------------------------------------------------------------------------------------------------

In addition, at any time prior to June 1, 2013, ATDI may redeem all or a part of the Senior Subordinated Notes upon not less than 30
or more than 60 days notice at a redemption price equal to 100.0% of the principal amount of notes to be redeemed, plus the applicable premium (an amount intended to approximate a make-whole price based on the price of a U.S. treasury
security plus 50 basis points) as of, and accrued and unpaid interest, to, but not including, the redemption date, subject to the rights of holders on the relevant record date to receive interest due on the relevant interest payment date.

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.



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##### Table of Contents

Senior Secured Notes

On May 28, 2010, ATDI issued Senior Secured Notes (Senior Secured Notes) due June 1, 2017 in an aggregate principal
amount at maturity of $250.0 million. The 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 $9.3 million). The Senior Secured Notes will accrete based on an effective interest rate of 10% 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, commencing on December 1, 2010. The Senior Secured Notes are not redeemable, except
as described below, at the option of ATDI prior to June 1, 2013. Thereafter, the Senior Secured 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 107.313% of the principal amount if the redemption date occurs between June 1, 2013 and May 31, 2014, 104.875% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015, 102.438% of the
principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016 and 100.0% of the principal amount if the redemption date occurs between June 1, 2016 and May 31, 2017.

Until June 1, 2013, ATDI may, at its option, on one or more occasions, redeem up to 35% of the aggregate principal amount of the
Senior Secured Notes issued at a redemption price equal to 109.75% of the aggregate principal amount thereof, plus accrued and unpaid interest, to, but not including, the redemption date, with the net cash proceeds from one or more equity offerings
to the extent that such net cash proceeds are received by or contributed to ATDI; provided that:



| | (1) | at least 50% of the sum of the aggregate principal amount of the Senior Secured Notes remains outstanding immediately after the occurrence of such redemption; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | each such redemption occurs within 120 days of the date of the closing of the related equity offering.
| | --- | ------------------------------------------------------------------------------------------------------

In addition, at any time prior to June 1, 2013, ATDI may redeem all or a part of the Senior Secured Notes upon not less than 30 or
more than 60 days notice at a redemption price equal to 100.0% of the principal amount of notes to be redeemed, plus the applicable premium (an amount intended to approximate a make-whole price based on the price of a U.S. treasury
security plus 50 basis points) as of, plus accrued and unpaid interest, to, but not including, the redemption date, subject to the rights of holders on the relevant record date to receive interest due on the relevant interest payment date.

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, 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.



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9. 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.

On February 24, 2011, the Company entered into two interest rate swap agreements (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 $75.0 million, of which $25.0 million is at a fixed interest rate of 0.585% and will expire in February 2012 and
$50.0 million is at a fixed interest rate of 1.105% and will expire in February 2013. The counterparty to the 2011 Swaps is a major financial institution. The Company recognizes all derivatives on the condensed consolidated balance sheet at their
fair value as either assets or liabilities. The Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of the Swaps are recognized in the condensed consolidated statement of operations.

At April 2, 2011, the fair value of the Companys derivative instruments was recorded as follows:



|                                      |  |                       |                  |  |                       |   |     |                |  |   |   | 
|------------------------------------- |  | --------------------- | ---------------- |  | --------------------- | - | --- | -------------- |  | - | - | 
|                                      |  |                       |                  |  | Liability Derivatives |  
|In thousands                          |  | Balance SheetLocation |                  |  | April 2,2011          |   |     | January 1,2011 | 
|Derivatives not designated as hedges: |  |                       |                  |  |                       |   |     |                |  |   |   | 
|2011 swap$25 million notional        |  |                       | Accrued expenses |  |                       | $ | 23  |                |  | $ |  | 
|2011 swap$50 million notional        |  |                       | Accrued expenses |  |                       |   | 128 |                |  |   |  | 
|                                      |  |                       |                  |  |                       |   |     |                |  |   |   | 
|Total                                 |  |                       |                  |  |                       | $ | 151 |                |  | $ |  | 
|                                      |  |                       |                  |  |                       |   |     |                |  |   |   | 

The pre-tax effect of the Companys derivative instruments on the condensed consolidated statement of
operations for the Successor quarter ended April 2, 2011 and the Predecessor quarter ended April 3, 2010 was as follows:



|                                      |  |                                             |                  |  |                                  |               |      |   |  |   |      |  
|------------------------------------- |  | ------------------------------------------- | ---------------- |  | -------------------------------- | ------------- | ---- | - |  | - | ---- | -
|                                      |  | Location of 
Gain(Loss) Recognized inIncome |                  |  | Gain (Loss) Recognized in Income |              
|                                      |  |                                             | Quarter Ended    |  |                                  | Quarter Ended |     
|In thousands                          |  |                                             | April 2, 2011    |  |                                  | April 3, 2010 |     
|Derivatives not designated as hedges: |  |                                             |                  |  |                                  |               |      |   |  |   |      |  
|2011 swap$25 million notional        |  |                                             | Interest expense |  |                                  | $             | (23  | ) |  | $ |     |  
|2011 swap$50 million notional        |  |                                             | Interest expense |  |                                  |               | (128 | ) |  |   |     |  
|2009 swap$100 million notional       |  |                                             | Interest expense |  |                                  |               |     |   |  |   | (262 | )
|                                      |  |                                             |                  |  |                                  |               |      |   |  |   |      |  
|Total                                 |  |                                             |                  |  |                                  | $             | (151 | ) |  | $ | (262 | )
|                                      |  |                                             |                  |  |                                  |               |      |   |  |   |      |  

On June 4, 2009, the Predecessor entered into an interest rate swap agreement (the 2009
Swap) to hedge a portion of the Companys exposure to changes in its variable interest rate debt. The 2009 Swap covered a notional amount of $100.0 million of the Predecessors variable rate indebtedness at a fixed interest rate of
1.45% and was set to expire on June 8, 2011. The counterparty to the 2009 Swap was a major financial institution. The 2009 Swap did not meet the criteria to qualify for hedge accounting treatment; therefore, changes in fair value were
recognized in the condensed consolidated statement of operations. On May 28, 2010, in connection with the Merger, the Company terminated the 2009 Swap agreement for $0.9 million.



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##### Table of Contents

10. 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------

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.

The following table presents the fair value and hierarchy levels for the Successors assets and
liabilities, which are measured at fair value on a recurring basis as of April 2, 2011:



|                       |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|---------------------- |  | ----------------------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | - | - | 
|                       |  | Fair Value Measurements |      
|In thousands           |  | Total                   |       |  | Level 1 |   |       | Level 2 |  |   | Level 3 | 
|Assets:                |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Benefit trust assets   |  | $                       | 2,482 |  |         | $ | 2,482 |         |  | $ |        |  |  | $ |  | 
|                       |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Total                  |  | $                       | 2,482 |  |         | $ | 2,482 |         |  | $ |        |  |  | $ |  | 
|                       |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Liabilities:           |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Derivative instruments |  | $                       | 151   |  |         | $ |      |         |  | $ | 151     |  |  | $ |  | 
|                       |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Total                  |  | $                       | 151   |  |         | $ |      |         |  | $ | 151     |  |  | $ |  | 
|                       |  |                         |       |  |         |   |       |         |  |   |         |  |  |   |   | 

ASC 820 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.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 methodologies used by the Company
to determine the fair value of its financial assets and liabilities at April 2, 2011 are the same as those used at January 1, 2011. As a result, there have been no transfers between Level 1 and Level 2 categories.



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##### Table of Contents

11. Stock-Based Compensation:

The Company accounts for stock-based compensation awards in accordance with ASC Topic 718, 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.

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 provides that a maximum of 48.6 million shares of common stock of the indirect parent company are issuable pursuant to the exercise of options. During 2010, the Companys
indirect parent company granted options under the 2010 Plan to certain eligible participants to purchase 44.5 million shares of common stock of the indirect parent company.

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



|                |  |                    |            |  |                               |   |      |                    |  |  |                               |  |  |   |     | 
|--------------- |  | ------------------ | ---------- |  | ----------------------------- | - | ---- | ------------------ |  |  | ----------------------------- |  |  | - | --- | 
|                |  | OptionsOutstanding |            |  | WeightedAverageExercise Price |   |      | OptionsExercisable |  |  | WeightedAverageExercise Price | 
|January 1, 2011 |  |                    | 44,448,000 |  |                               | $ | 1.00 |                    |  |  |                              |  |  | $ |    | 
|Granted         |  |                    | 400,000    |  |                               |   | 1.00 |                    |  |  | n/a                           |  |  |   | n/a | 
|Forfeited       |  |                    |           |  |                               |   |     |                    |  |  | n/a                           |  |  |   | n/a | 
|                |  |                    |            |  |                               |   |      |                    |  |  |                               |  |  |   |     | 
|April 2, 2011   |  |                    | 44,848,000 |  |                               | $ | 1.00 |                    |  |  |                              |  |  | $ |    | 
|                |  |                    |            |  |                               |   |      |                    |  |  |                               |  |  |   |     | 

Options granted under the 2010 Plan expire no later than 10 years from the date of grant and vest based on
the passage of time and/or the achievement of certain performance targets in equal installments over three or five years. The fair value of each of the Companys time-based stock option awards is expensed on a straight-line basis over the
required service period, which is generally the three or five-year vesting period of the options. However, for options granted with performance target requirements, compensation expense is recognized when it is probable that the performance target
will be achieved.

The weighted average fair value of the stock options granted during the quarter ending April 2, 2011
was $0.43 using the Black-Scholes option pricing model. The following weighted average assumptions were used:



|                        |  |  |         |  
|----------------------- |  |  | ------- | -
|Risk-free interest rate |  |  | 2.84    | %
|Dividend yield          |  |  |        |  
|Expected life           |  |  | 6 years |  
|Volatility              |  |  | 40.75   | %

As the Company does not
have sufficient historical volatility data for Holdings 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 of the award 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 Plan), pursuant to which the indirect parent company will grant restricted stock units to non-employee directors of the Company. The 2010 RSU Plan provides that a maximum of 0.8 million



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shares of common stock of the indirect parent may be granted to non-employee directors of the Company. During 2010, the Companys indirect parent company granted RSUs under the 2010 RSU Plan
to certain board members of the Company to purchase 150,000 shares of common stock of the indirect parent company.

The
following table summarizes RSU activity under the 2010 RSU Plan for the quarter ending April 2, 2011:



|                                            |  |                         |         |  |                                |   |      | 
|------------------------------------------- |  | ----------------------- | ------- |  | ------------------------------ | - | ---- | 
|                                            |  | Shares Subjectto Option |         |  | Weighted AverageExercise Price |  
|Outstanding and unvested at January 1, 2011 |  |                         | 150,000 |  |                                | $ | 1.00 | 
|Granted                                     |  |                         | 100,000 |  |                                |   | 1.00 | 
|Forfeited                                   |  |                         |        |  |                                |   |     | 
|                                            |  |                         |         |  |                                |   |      | 
|Outstanding and unvested at April 2, 2011   |  |                         | 250,000 |  |                                | $ | 1.00 | 
|                                            |  |                         |         |  |                                |   |      | 

The fair value of each of the RSU awards is measured as the grant-date price of the common stock and is
expensed on a straight-line basis over a two year vesting period.

Compensation Expense

Stock-based compensation expense is included in selling, general and administrative expenses within the condensed consolidated statement
of operations. The following table summarizes the expense recognized:



|                       |  |                            |     |  |  |  |  |                            |  |   |       | 
|---------------------- |  | -------------------------- | --- |  |  |  |  | -------------------------- |  | - | ----- | 
|                       |  | Successor                  |     |  |  |  |  | Predecessor                | 
|In thousands           |  | Quarter EndedApril 2, 2011 |     |  |  |  |  | Quarter EndedApril 3, 2010 | 
|Stock Options          |  | $                          | 594 |  |  |  |  |                            |  | $ | 5,874 | 
|Restricted Stock Units |  |                            | 21  |  |  |  |  |                            |  |   |      | 
|                       |  |                            |     |  |  |  |  |                            |  |   |       | 
|Total                  |  | $                          | 615 |  |  |  |  |                            |  | $ | 5,874 | 
|                       |  |                            |     |  |  |  |  |                            |  |   |       | 

During 2005, the Predecessor adopted the 2005 Management Stock Incentive Plan, which authorized the issuance
of up to 190,857 shares of voting common stock. Options granted under the plan generally vested based on performance targets or the occurrence of specified events, such as an initial public offering or company sale. At January 2, 2010, the
Company had 149,015 options outstanding and 67,468 exercisable.

In March 2010, the Board of Directors of the Company approved
the discretionary vesting of certain previously unvested stock options. The discretionary vesting was evaluated in conjunction with the accounting standard for modification of stock options and resulted in a non-cash charge to compensation expense
of $5.9 million in the first quarter of 2010. No additional options were granted during this period. At May 28, 2010, prior to the Merger, the Company had 144,719 options outstanding and 108,785 exercisable.

As a result of the merger, all of the Companys stock options that were already vested under the 2005 Management Stock Incentive
Plan were converted into the right to receive the excess of $596.65 per share over the exercise price of each of the options. As a consequence, subsequent to the May 28, 2010 transaction date, all options to purchase previously existing common
stock ceased to exist and the existing stock option plan was terminated.

12. Income Taxes:

The effective tax rate for the quarter ended April 2, 2011 for the Successor and the quarter ended April 3, 2010 for the
Predecessor are based on an annual estimated effective tax rate which takes into account year-to-date amounts and projected results for the full year. The effective tax rate of 42.0% for the quarter ended



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April 2, 2011 for the Successor is higher than the Companys statutory tax rate primarily due to higher state income taxes, a result based on the Companys legal entity tax
structure. The final effective tax rate for fiscal 2011 will depend on the actual amount of pre-tax income (loss) generated by the Company by tax jurisdiction for the full year.

At April 2, 2011, the Company has a net deferred tax liability of $263.4 million, of which, $14.0 million was recorded as a current
deferred tax asset. As part of the Merger, the Predecessor generated substantial tax deductions relating to the exercise of stock options and payments made for transaction bonuses and transaction expenses. These included an acquired non-current
deferred tax asset of $11.7 million, which represents the anticipated tax benefits that the Company expects to achieve in future years from such deductions. The remaining 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 purchase price allocation less existing tax deductible intangibles, assuming an effective tax rate of 39.3%. In addition, the Company also has
an income tax receivable of $9.6 million at April 2, 2011, which primarily relates to deductions that can be carried back two years for federal and state income tax purposes.

At April 2, 2011, the Successor had unrecognized tax benefits of $2.1 million, of which $0.7 million is included within accrued
expenses and $1.4 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 Successors effective tax rate is
$1.7 million as of April 2, 2011. In addition, $0.4 million related to temporary timing differences. During the quarter ended April 2, 2011, the Company reduced its tax positions by $0.1 million related to the current year.

The Company files federal income tax returns, as well as multiple state jurisdiction tax returns. The tax years 20072009 remain
open to examination by the taxing jurisdictions to which the Company is subject. The Company records interest and penalties associated with the uncertain tax positions as a component of its income tax provision. During the next 12 months, management
does not believe that it is reasonably possible that any of the unrecognized tax benefits may significantly decrease.

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.

13. Commitments
and Contingencies:

Guaranteed Lease Obligations

The Company remains liable as a guarantor on certain leases related to Winston Tire Company. As of April 2, 2011, the Companys
total obligations, as guarantor on these leases, are approximately $4.3 million extending over eight years. However, the Company has secured assignments or sublease agreements for the vast majority of these commitments with contractual assigned or
subleased rentals of approximately $4.0 million. A provision has been made for the net present value of the estimated shortfall.

Legal and Tax Proceedings

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



18



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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. See Note 12 for further description of the accounting standards for income taxes and the related impacts.

14.
Subsequent Event:

On April 15, 2011, the Company entered into a Stock Purchase Agreement with the Bowlus Service
Company d/b/a North Central Tire (NCT) to acquire 100% of the outstanding capital stock of NCT. NCT owned and operated three distribution centers in Canton, Ohio, Cincinnati, Ohio and Rochester, New York, serving over 2,700 customers.
The acquisition was completed on April 29, 2011, subject to customary closing conditions, and was funded through the Companys ABL Facility. The purchase of NCT will significantly strengthen the Companys market position in Ohio and
Western New York.

15. Subsidiary Guarantor Financial Information:

The following condensed consolidating financial statements are presented pursuant to Rule 310 of Regulation SX and reflect the
financial position, results of operations, and cash flows of the Predecessor for periods prior to May 28, 2010 and the financial position, results of operations, and cash flows of the Successor for periods after May 28, 2010.

As a result of the Merger on May 28, 2010, the Company repurchased and cancelled all of the Predecessors outstanding 10.75%
Senior Notes, Floating Rate Notes, and 13% Senior Discount Notes. In addition, ATDI issued $250.0 million in aggregate principal amount of its Senior Secured Notes and $200.0 million in aggregate principal amount of its Senior Subordinated Notes.
The Senior Secured Notes and the Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by Holdings, Am-Pac Tire Dist., Inc. (Am-Pac) and Tire Wholesalers. ATDI, Am-Pac, and Tire Wholesalers are also
borrowers and primary obligors under the ABL Facility, which is guaranteed by Holdings. Tire Pros Francorp is not a guarantor of the Senior Secured Notes, the Senior Subordinated Notes or the ABL Facility.

Accordingly, the Company updated the guarantor structure as of May 28, 2010 which resulted in the following column headings:



| |  |  | Parent Company (Holdings),
| | - |  | --------------------------



| |  |  | Subsidiary Issuer (ATDI),
| | - |  | -------------------------



| |  |  | Subsidiary Guarantor (Am-Pac and Tire Wholesalers) and
| | - |  | ------------------------------------------------------



| |  |  | Non-Guarantor Subsidiary (Tire Pros FranCorp).
| | - |  | ----------------------------------------------

ATDI is a direct wholly-owned subsidiary of Holdings and Am-Pac, Tire Wholesalers and Tire Pros FranCorp are indirect wholly-owned subsidiaries of Holdings. As a result of the Merger, all periods
presented have been retroactively adjusted to reflect the post-merger guarantor structure.



19



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



|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|--------------------------------------------- |  | ------------------- | ------- | - | ---------------- | - | --------- | ------------------- |  | - | ----------------------- | - |  | ------------ | ------ | - | ------------ | - | -------- | - |  | - | --------- | -
|                                              |  | Successor           |        
|In thousands                                  |  | As of April 2, 2011 |        
|                                              |  | ParentCompany       |         |   | SubsidiaryIssuer |   |           | SubsidiaryGuarantor |  |   | Non-GuarantorSubsidiary |   |  | Eliminations |        |   | Consolidated |  
|Assets                                        |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Current assets:                               |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Cash and cash equivalents                     |  | $                   |        |   |                  | $ | 10,717    |                     |  | $ | 54                      |   |  | $            | 593    |   |              | $ |         |   |  | $ | 11,364    |  
|Restricted cash                               |  |                     |        |   |                  |   | 250       |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 250       |  
|Accounts receivable, net                      |  |                     |        |   |                  |   | 232,964   |                     |  |   | 2                       |   |  |              | 12     |   |              |   |         |   |  |   | 232,978   |  
|Inventories                                   |  |                     |        |   |                  |   | 559,878   |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 559,878   |  
|Assets held for sale                          |  |                     |        |   |                  |   | 5,711     |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 5,711     |  
|Income tax receivable                         |  |                     |        |   |                  |   | 9,646     |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 9,646     |  
|Intercompany receivables                      |  |                     |        |   |                  |   |          |                     |  |   | 61,029                  |   |  |              |       |   |              |   | (61,029  | ) |  |   |          |  
|Other current assets                          |  |                     |        |   |                  |   | 19,081    |                     |  |   | 5,098                   |   |  |              | 368    |   |              |   |         |   |  |   | 24,547    |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total current assets                          |  |                     |        |   |                  |   | 838,247   |                     |  |   | 66,183                  |   |  |              | 973    |   |              |   | (61,029  | ) |  |   | 844,374   |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Property and equipment, net                   |  |                     |        |   |                  |   | 84,830    |                     |  |   | 589                     |   |  |              | 19     |   |              |   |         |   |  |   | 85,438    |  
|Goodwill and other intangible assets, net     |  |                     | 448,080 |   |                  |   | 719,486   |                     |  |   | 2,035                   |   |  |              | 1,271  |   |              |   |         |   |  |   | 1,170,872 |  
|Investment in subsidiaries                    |  |                     | 243,188 |   |                  |   | 59,685    |                     |  |   |                        |   |  |              |       |   |              |   | (302,873 | ) |  |   |          |  
|Other assets                                  |  |                     | 8,891   |   |                  |   | 45,191    |                     |  |   | (27                     | ) |  |              |       |   |              |   |         |   |  |   | 54,055    |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total assets                                  |  | $                   | 700,159 |   |                  | $ | 1,747,439 |                     |  | $ | 68,780                  |   |  | $            | 2,263  |   |              | $ | (363,902 | ) |  | $ | 2,154,739 |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Liabilities and Stockholders Equity          |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Current liabilities:                          |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Accounts payable                              |  | $                   |        |   |                  | $ | 464,312   |                     |  | $ | 2,255                   |   |  | $            | (2,053 | ) |              | $ |         |   |  | $ | 464,514   |  
|Accrued expenses                              |  |                     |        |   |                  |   | 37,231    |                     |  |   | 988                     |   |  |              |       |   |              |   |         |   |  |   | 38,219    |  
|Current maturities of long-term debt          |  |                     |        |   |                  |   | 386       |                     |  |   | 21                      |   |  |              |       |   |              |   |         |   |  |   | 407       |  
|Intercompany payables                         |  |                     | 53,165  |   |                  |   | 809       |                     |  |   |                        |   |  |              | 7,055  |   |              |   | (61,029  | ) |  |   |          |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total current liabilities                     |  |                     | 53,165  |   |                  |   | 502,738   |                     |  |   | 3,264                   |   |  |              | 5,002  |   |              |   | (61,029  | ) |  |   | 503,140   |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Long-term debt                                |  |                     |        |   |                  |   | 714,721   |                     |  |   | 27                      |   |  |              |       |   |              |   |         |   |  |   | 714,748   |  
|Deferred income taxes                         |  |                     |        |   |                  |   | 274,688   |                     |  |   | 587                     |   |  |              | 2,081  |   |              |   |         |   |  |   | 277,356   |  
|Other liabilities                             |  |                     |        |   |                  |   | 12,104    |                     |  |   | 397                     |   |  |              |       |   |              |   |         |   |  |   | 12,501    |  
|Stockholders equity:                         |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Intercompany investment                       |  |                     |        |   |                  |   | 280,622   |                     |  |   | 64,935                  |   |  |              |       |   |              |   | (345,557 | ) |  |   |          |  
|Common stock                                  |  |                     |        |   |                  |   |          |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   |          |  
|Additional paid-in capital                    |  |                     | 688,652 |   |                  |   | 4,224     |                     |  |   |                        |   |  |              |       |   |              |   | (4,224   | ) |  |   | 688,652   |  
|Accumulated deficit                           |  |                     | (41,848 | ) |                  |   | (41,848   | )                   |  |   | (430                    | ) |  |              | (4,820 | ) |              |   | 47,098   |   |  |   | (41,848   | )
|Accumulated other comprehensive income (loss) |  |                     | 190     |   |                  |   | 190       |                     |  |   |                        |   |  |              |       |   |              |   | (190     | ) |  |   | 190       |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total stockholders equity                    |  |                     | 646,994 |   |                  |   | 243,188   |                     |  |   | 64,505                  |   |  |              | (4,820 | ) |              |   | (302,873 | ) |  |   | 646,994   |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total liabilities and stockholders equity    |  | $                   | 700,159 |   |                  | $ | 1,747,439 |                     |  | $ | 68,780                  |   |  | $            | 2,263  |   |              | $ | (363,902 | ) |  | $ | 2,154,739 |  
|                                              |  |                     |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  



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|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|--------------------------------------------- |  | --------------------- | ------- | - | ---------------- | - | --------- | ------------------- |  | - | ----------------------- | - |  | ------------ | ------ | - | ------------ | - | -------- | - |  | - | --------- | -
|                                              |  | Successor             |        
|In thousands                                  |  | As of January 1, 2011 |        
|                                              |  | ParentCompany         |         |   | SubsidiaryIssuer |   |           | SubsidiaryGuarantor |  |   | Non-GuarantorSubsidiary |   |  | Eliminations |        |   | Consolidated |  
|Assets                                        |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Current assets:                               |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Cash and cash equivalents                     |  | $                     |        |   |                  | $ | 11,304    |                     |  | $ | 132                     |   |  | $            | 535    |   |              | $ |         |   |  | $ | 11,971    |  
|Restricted cash                               |  |                       |        |   |                  |   | 250       |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 250       |  
|Accounts receivable, net                      |  |                       |        |   |                  |   | 214,547   |                     |  |   | 673                     |   |  |              | (1,292 | ) |              |   |         |   |  |   | 213,928   |  
|Inventories                                   |  |                       |        |   |                  |   | 465,350   |                     |  |   | 1,083                   |   |  |              |       |   |              |   |         |   |  |   | 466,433   |  
|Assets held for sale                          |  |                       |        |   |                  |   | 203       |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 203       |  
|Income tax receivable                         |  |                       |        |   |                  |   | 9,646     |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   | 9,646     |  
|Intercompany receivables                      |  |                       |        |   |                  |   | 942       |                     |  |   | 56,490                  |   |  |              |       |   |              |   | (57,432  | ) |  |   |          |  
|Other current assets                          |  |                       |        |   |                  |   | 19,427    |                     |  |   | 5,132                   |   |  |              | 768    |   |              |   |         |   |  |   | 25,327    |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total current assets                          |  |                       |        |   |                  |   | 721,669   |                     |  |   | 63,510                  |   |  |              | 11     |   |              |   | (57,432  | ) |  |   | 727,758   |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Property and equipment, net                   |  |                       |        |   |                  |   | 83,743    |                     |  |   | 5,790                   |   |  |              | 20     |   |              |   |         |   |  |   | 89,553    |  
|Goodwill and other intangible assets, net     |  |                       | 448,080 |   |                  |   | 733,933   |                     |  |   | 2,099                   |   |  |              | 1,340  |   |              |   |         |   |  |   | 1,185,452 |  
|Investment in subsidiaries                    |  |                       | 248,140 |   |                  |   | 61,053    |                     |  |   |                        |   |  |              |       |   |              |   | (309,193 | ) |  |   |          |  
|Other assets                                  |  |                       | 8,391   |   |                  |   | 46,192    |                     |  |   | 2                       |   |  |              |       |   |              |   |         |   |  |   | 54,585    |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total assets                                  |  | $                     | 704,611 |   |                  | $ | 1,646,590 |                     |  | $ | 71,401                  |   |  | $            | 1,371  |   |              | $ | (366,625 | ) |  | $ | 2,057,348 |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Liabilities and Stockholders Equity          |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Current liabilities:                          |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Accounts payable                              |  | $                     |        |   |                  | $ | 428,686   |                     |  | $ | 3,979                   |   |  | $            | (1,686 | ) |              | $ |         |   |  | $ | 430,979   |  
|Accrued expenses                              |  |                       |        |   |                  |   | 24,351    |                     |  |   | 1,440                   |   |  |              |       |   |              |   |         |   |  |   | 25,791    |  
|Current maturities of long-term debt          |  |                       |        |   |                  |   | 641       |                     |  |   | 15                      |   |  |              |       |   |              |   |         |   |  |   | 656       |  
|Intercompany payables                         |  |                       | 53,165  |   |                  |   |          |                     |  |   |                        |   |  |              | 4,267  |   |              |   | (57,432  | ) |  |   |          |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total current liabilities                     |  |                       | 53,165  |   |                  |   | 453,678   |                     |  |   | 5,434                   |   |  |              | 2,581  |   |              |   | (57,432  | ) |  |   | 457,426   |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Long-term debt                                |  |                       |        |   |                  |   | 651,849   |                     |  |   | 39                      |   |  |              |       |   |              |   |         |   |  |   | 651,888   |  
|Deferred income taxes                         |  |                       |        |   |                  |   | 280,501   |                     |  |   | 587                     |   |  |              | 2,081  |   |              |   |         |   |  |   | 283,169   |  
|Other liabilities                             |  |                       |        |   |                  |   | 12,422    |                     |  |   | 997                     |   |  |              |       |   |              |   |         |   |  |   | 13,419    |  
|Stockholders equity:                         |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Intercompany investment                       |  |                       |        |   |                  |   | 280,622   |                     |  |   | 64,935                  |   |  |              |       |   |              |   | (345,557 | ) |  |   |          |  
|Common stock                                  |  |                       |        |   |                  |   |          |                     |  |   |                        |   |  |              |       |   |              |   |         |   |  |   |          |  
|Additional paid-in capital                    |  |                       | 687,537 |   |                  |   | 3,609     |                     |  |   |                        |   |  |              |       |   |              |   | (3,609   | ) |  |   | 687,537   |  
|Accumulated deficit                           |  |                       | (36,312 | ) |                  |   | (36,312   | )                   |  |   | (591                    | ) |  |              | (3,291 | ) |              |   | 40,194   |   |  |   | (36,312   | )
|Accumulated other comprehensive income (loss) |  |                       | 221     |   |                  |   | 221       |                     |  |   |                        |   |  |              |       |   |              |   | (221     | ) |  |   | 221       |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total stockholders equity                    |  |                       | 651,446 |   |                  |   | 248,140   |                     |  |   | 64,344                  |   |  |              | (3,291 | ) |              |   | (309,193 | ) |  |   | 651,446   |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  
|Total liabilities and stockholders equity    |  | $                     | 704,611 |   |                  | $ | 1,646,590 |                     |  | $ | 71,401                  |   |  | $            | 1,371  |   |              | $ | (366,625 | ) |  | $ | 2,057,348 |  
|                                              |  |                       |         |   |                  |   |           |                     |  |   |                         |   |  |              |        |   |              |   |          |   |  |   |           |  



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Condensed consolidating statements of operations for the quarter ended April 2, 2011
for the Successor and quarter ended April 3, 2010 for the Predecessor are as follows:



|                                                                                                          |  |                                     |        |   |                  |   |         |                      |  |   |                         |   |  |              |        |   |              |   |       |  |  |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------ | - | ---------------- | - | ------- | -------------------- |  | - | ----------------------- | - |  | ------------ | ------ | - | ------------ | - | ----- |  |  | - | ------- | -
|                                                                                                          |  | Successor                           |       
|In thousands                                                                                              |  | For the Quarter Ended April 2, 2011 |       
|                                                                                                          |  | ParentCompany                       |        |   | SubsidiaryIssuer |   |         | SubsidiaryGuarantors |  |   | Non-GuarantorSubsidiary |   |  | Eliminations |        |   | Consolidated |  
|Net sales                                                                                                 |  | $                                   |       |   |                  | $ | 640,649 |                      |  | $ | 486                     |   |  | $            | (313   | ) |              | $ |      |  |  | $ | 640,822 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                                     |       |   |                  |   | 532,668 |                      |  |   | 283                     |   |  |              | 6      |   |              |   |      |  |  |   | 532,957 |  
|Selling, general and administrative expenses                                                              |  |                                     |       |   |                  |   | 97,299  |                      |  |   | (74                     | ) |  |              | 2,318  |   |              |   |      |  |  |   | 99,543  |  
|Transaction expenses                                                                                      |  |                                     |       |   |                  |   | 1,062   |                      |  |   |                        |   |  |              |       |   |              |   |      |  |  |   | 1,062   |  
|                                                                                                          |  |                                     |        |   |                  |   |         |                      |  |   |                         |   |  |              |        |   |              |   |       |  |  |   |         |  
|Operating income (loss)                                                                                   |  |                                     |       |   |                  |   | 9,620   |                      |  |   | 277                     |   |  |              | (2,637 | ) |              |   |      |  |  |   | 7,260   |  
|Other (expense) income:                                                                                   |  |                                     |        |   |                  |   |         |                      |  |   |                         |   |  |              |        |   |              |   |       |  |  |   |         |  
|Interest expense                                                                                          |  |                                     |       |   |                  |   | (16,527 | )                    |  |   |                        |   |  |              |       |   |              |   |      |  |  |   | (16,527 | )
|Other, net                                                                                                |  |                                     |       |   |                  |   | (277    | )                    |  |   |                        |   |  |              | 2      |   |              |   |      |  |  |   | (275    | )
|Equity earnings of subsidiaries                                                                           |  |                                     | (5,536 | ) |                  |   | (1,368  | )                    |  |   |                        |   |  |              |       |   |              |   | 6,904 |  |  |   |        |  
|                                                                                                          |  |                                     |        |   |                  |   |         |                      |  |   |                         |   |  |              |        |   |              |   |       |  |  |   |         |  
|Income (loss) from operations before income taxes                                                         |  |                                     | (5,536 | ) |                  |   | (8,552  | )                    |  |   | 277                     |   |  |              | (2,635 | ) |              |   | 6,904 |  |  |   | (9,542  | )
|Income tax provision (benefit)                                                                            |  |                                     |       |   |                  |   | (3,016  | )                    |  |   | 116                     |   |  |              | (1,106 | ) |              |   |      |  |  |   | (4,006  | )
|                                                                                                          |  |                                     |        |   |                  |   |         |                      |  |   |                         |   |  |              |        |   |              |   |       |  |  |   |         |  
|Net income (loss)                                                                                         |  | $                                   | (5,536 | ) |                  | $ | (5,536  | )                    |  | $ | 161                     |   |  | $            | (1,529 | ) |              | $ | 6,904 |  |  | $ | (5,536  | )
|                                                                                                          |  |                                     |        |   |                  |   |         |                      |  |   |                         |   |  |              |        |   |              |   |       |  |  |   |         |  



|                                                                                                          |  |                                     |        |   |            |   |         |            |  |   |               |   |  |              |        |   |              |   |      |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------ | - | ---------- | - | ------- | ---------- |  | - | ------------- | - |  | ------------ | ------ | - | ------------ | - | ---- | - |  | - | ------- | -
|                                                                                                          |  | Predecessor                         |       
|In thousands                                                                                              |  | For the Quarter Ended April 3, 2010 |       
|                                                                                                          |  | Parent                              |        |   | Subsidiary |   |         | Subsidiary |  |   | Non-Guarantor |   |  |              |        |   |              |  
|                                                                                                          |  | Company                             |        |   | Issuer     |   |         | Guarantors |  |   | Subsidiary    |   |  | Eliminations |        |   | Consolidated |  
|Net sales                                                                                                 |  | $                                   |       |   |            | $ | 559,934 |            |  | $ | 48            |   |  | $            | (360   | ) |              | $ |     |   |  | $ | 559,622 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                                     |       |   |            |   | 465,105 |            |  |   | (1            | ) |  |              | 2      |   |              |   |     |   |  |   | 465,106 |  
|Selling, general and administrative expenses                                                              |  |                                     | 5,875  |   |            |   | 73,397  |            |  |   | 1,548         |   |  |              | 1,779  |   |              |   |     |   |  |   | 82,599  |  
|Transaction expenses                                                                                      |  |                                     |       |   |            |   | 2,082   |            |  |   |              |   |  |              |       |   |              |   |     |   |  |   | 2,082   |  
|                                                                                                          |  |                                     |        |   |            |   |         |            |  |   |               |   |  |              |        |   |              |   |      |   |  |   |         |  
|Operating income (loss)                                                                                   |  |                                     | (5,875 | ) |            |   | 19,350  |            |  |   | (1,499        | ) |  |              | (2,141 | ) |              |   |     |   |  |   | 9,835   |  
|Other (expense) income:                                                                                   |  |                                     |        |   |            |   |         |            |  |   |               |   |  |              |        |   |              |   |      |   |  |   |         |  
|Interest expense                                                                                          |  |                                     | (2,454 | ) |            |   | (10,576 | )          |  |   |              |   |  |              |       |   |              |   |     |   |  |   | (13,030 | )
|Other, net                                                                                                |  |                                     |       |   |            |   | (210    | )          |  |   | (32           | ) |  |              | 13     |   |              |   |     |   |  |   | (229    | )
|Equity earnings of subsidiaries                                                                           |  |                                     | 2,700  |   |            |   | (2,014  | )          |  |   |              |   |  |              |       |   |              |   | (686 | ) |  |   |        |  
|                                                                                                          |  |                                     |        |   |            |   |         |            |  |   |               |   |  |              |        |   |              |   |      |   |  |   |         |  
|Income (loss) from operations before income taxes                                                         |  |                                     | (5,629 | ) |            |   | 6,550   |            |  |   | (1,531        | ) |  |              | (2,128 | ) |              |   | (686 | ) |  |   | (3,424  | )
|Income tax provision (benefit)                                                                            |  |                                     | (3,744 | ) |            |   | 3,850   |            |  |   | (685          | ) |  |              | (960   | ) |              |   |     |   |  |   | (1,539  | )
|                                                                                                          |  |                                     |        |   |            |   |         |            |  |   |               |   |  |              |        |   |              |   |      |   |  |   |         |  
|Net income (loss)                                                                                         |  | $                                   | (1,885 | ) |            | $ | 2,700   |            |  | $ | (846          | ) |  | $            | (1,168 | ) |              | $ | (686 | ) |  | $ | (1,885  | )
|                                                                                                          |  |                                     |        |   |            |   |         |            |  |   |               |   |  |              |        |   |              |   |      |   |  |   |         |  



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Condensed consolidating statements of cash flows for the quarter ended April 2, 2011
for the Successor and the quarter ended April 3, 2010 for the Predecessor are as follows:



|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|---------------------------------------------------- |  | ----------------------------------- | - |  | ---------------- | - | -------- | -------------------- |  | - | ----------------------- | - |  | ------------ | --- |  | ------------ | - | - |  |  | - | -------- | -
|                                                     |  | Successor                           |  
|In thousands                                         |  | For the Quarter Ended April 2, 2011 |  
|                                                     |  | ParentCompany                       |   |  | SubsidiaryIssuer |   |          | SubsidiaryGuarantors |  |   | Non-GuarantorSubsidiary |   |  | Eliminations |     |  | Consolidated |  
|Cash flows from operating activities:                |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net cash provided by (used in) operations            |  | $                                   |  |  |                  | $ | (46,896  | )                    |  | $ | (77                     | ) |  | $            | 58  |  |              | $ |  |  |  | $ | (46,915  | )
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Cash flows from investing activities:                |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Purchase of property and equipment                   |  |                                     |  |  |                  |   | (4,878   | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (4,878   | )
|Purchase of assets held for sale                     |  |                                     |  |  |                  |   | (1,053   | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (1,053   | )
|Proceeds from sale of property and equipment         |  |                                     |  |  |                  |   | 23       |                      |  |   | 5                       |   |  |              |    |  |              |   |  |  |  |   | 28       |  
|Proceeds from disposal of assets held for sale       |  |                                     |  |  |                  |   | 385      |                      |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | 385      |  
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net cash provided by (used in) investing activities  |  |                                     |  |  |                  |   | (5,523   | )                    |  |   | 5                       |   |  |              |    |  |              |   |  |  |  |   | (5,518   | )
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Cash flows from financing activities:                |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Borrowings from revolving credit facility            |  |                                     |  |  |                  |   | 601,255  |                      |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | 601,255  |  
|Repayments of revolving credit facility              |  |                                     |  |  |                  |   | (538,315 | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (538,315 | )
|Outstanding checks                                   |  |                                     |  |  |                  |   | (10,703  | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (10,703  | )
|Payments of other long-term debt                     |  |                                     |  |  |                  |   | (405     | )                    |  |   | (6                      | ) |  |              |    |  |              |   |  |  |  |   | (411     | )
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net cash provided by (used in) financing activities  |  |                                     |  |  |                  |   | 51,832   |                      |  |   | (6                      | ) |  |              |    |  |              |   |  |  |  |   | 51,826   |  
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net increase (decrease) in cash and cash equivalents |  |                                     |  |  |                  |   | (587     | )                    |  |   | (78                     | ) |  |              | 58  |  |              |   |  |  |  |   | (607     | )
|Cash and cash equivalentsbeginning of period        |  |                                     |  |  |                  |   | 11,304   |                      |  |   | 132                     |   |  |              | 535 |  |              |   |  |  |  |   | 11,971   |  
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Cash and cash equivalentsend of period              |  | $                                   |  |  |                  | $ | 10,717   |                      |  | $ | 54                      |   |  | $            | 593 |  |              | $ |  |  |  | $ | 11,364   |  
|                                                     |  |                                     |   |  |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  



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|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|---------------------------------------------------- |  | ----------------------------------- | ------ | - | ---------------- | - | -------- | -------------------- |  | - | ----------------------- | - |  | ------------ | --- |  | ------------ | - | - |  |  | - | -------- | -
|                                                     |  | Predecessor                         |       
|In thousands                                         |  | For the Quarter Ended April 3, 2010 |       
|                                                     |  | ParentCompany                       |        |   | SubsidiaryIssuer |   |          | SubsidiaryGuarantors |  |   | Non-GuarantorSubsidiary |   |  | Eliminations |     |  | Consolidated |  
|Cash flows from operating activities:                |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net cash provided by (used in) operations            |  | $                                   | 6,263  |   |                  | $ | (34,775  | )                    |  | $ | (119                    | ) |  | $            | 74  |  |              | $ |  |  |  | $ | (28,557  | )
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Cash flows from investing activities:                |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Purchase of property and equipment                   |  |                                     |       |   |                  |   | (2,304   | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (2,304   | )
|Purchase of assets held for sale                     |  |                                     |       |   |                  |   | (735     | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (735     | )
|Proceeds from sale of property and equipment         |  |                                     |       |   |                  |   | 58       |                      |  |   | 20                      |   |  |              |    |  |              |   |  |  |  |   | 78       |  
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net cash (used in) provided by investing activities  |  |                                     |       |   |                  |   | (2,981   | )                    |  |   | 20                      |   |  |              |    |  |              |   |  |  |  |   | (2,961   | )
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Cash flows from financing activities:                |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Borrowings from revolving credit facility            |  |                                     |       |   |                  |   | 519,583  |                      |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | 519,583  |  
|Repayments of revolving credit facility              |  |                                     |       |   |                  |   | (472,817 | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (472,817 | )
|Outstanding checks                                   |  |                                     |       |   |                  |   | (8,169   | )                    |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (8,169   | )
|Payment of Discount Notes                            |  |                                     | (6,263 | ) |                  |   |         |                      |  |   |                        |   |  |              |    |  |              |   |  |  |  |   | (6,263   | )
|Payments of other long-term debt                     |  |                                     |       |   |                  |   | (473     | )                    |  |   | (3                      | ) |  |              |    |  |              |   |  |  |  |   | (476     | )
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net cash provided by (used in) financing activities  |  |                                     | (6,263 | ) |                  |   | 38,124   |                      |  |   | (3                      | ) |  |              |    |  |              |   |  |  |  |   | 31,858   |  
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Net increase (decrease) in cash and cash equivalents |  |                                     |       |   |                  |   | 368      |                      |  |   | (102                    | ) |  |              | 74  |  |              |   |  |  |  |   | 340      |  
|Cash and cash equivalentsbeginning of period        |  |                                     |       |   |                  |   | 6,566    |                      |  |   | 474                     |   |  |              | 250 |  |              |   |  |  |  |   | 7,290    |  
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  
|Cash and cash equivalentsend of period              |  | $                                   |       |   |                  | $ | 6,934    |                      |  | $ | 372                     |   |  | $            | 324 |  |              | $ |  |  |  | $ | 7,630    |  
|                                                     |  |                                     |        |   |                  |   |          |                      |  |   |                         |   |  |              |     |  |              |   |   |  |  |   |          |  



24



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|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 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, forecast 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 replacement tire distributor in the United States, providing a critical range of services to enable tire retailers to effectively service and grow sales to consumers. Through our network of 91 distribution centers, we offer access to an
extensive breadth and depth of inventory, representing approximately 40,000 stock-keeping units (SKUs), to approximately 50,000 customers. The critical range 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 manufacturer affiliate programs. In addition, our 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 United States (U.S.) is approximately 9%, up
from approximately 1% in 1996, with our largest customer and top ten customers accounting for less than 1.9% and 8.0%, respectively, of our net sales in fiscal 2010.

We believe we distribute the broadest product offering in our industry, supplying our customers with the top ten leading passenger and light truck tire brands. We carry the flag brands from each of the
four largest tire manufacturersBridgestone, Continental, Goodyear, and Michelinas well as Hankook, Kumho, Nexen, Nitto and Pirellibrands. In addition to flag brands, we also sell
lower price point associate brands of these and many other tire manufacturers, as well as proprietary brand tires, 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 represent approximately 85.1% of our total net sales for the quarter ended April 2, 2011. The remainder of net sales is primarily derived from other tire sales (11.0%), custom wheels (2.6%), and tire supplies, tools
and other products (1.3%). We believe our large, diverse product offering allows us to better penetrate the replacement tire market across a broad range of price points.

Trends and Economic Events

The U.S. replacement tire market has
historically experienced stable growth and favorable pricing dynamics. From 1955 through 2010, U.S. replacement tire unit shipments increased by an average of approximately 2.8% per year. However, during challenging economic periods, consumers
may opt to defer replacement tire purchases or purchase less costly brand tires. Since the onset of the economic downturn in 2008, we have seen increased economic uncertainty, increased unemployment and rising fuel prices. These factors have
impacted the availability of consumer credit and have changed consumer spending of disposable income, thus impacting our business and the industry as a whole.

The economic environment has been showing signs of stabilization. We experienced modest year-over-year unit volume growth in 2010 and modest quarter-over-quarter unit volume growth in 2011, which reflects
an



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economy slowly reemerging from the severe economic downturn. The return to established driving habits and longer vehicle life has led to moderate growth in the U.S. replacement tire market
compared with prior years. However, the price of oil and related fuel prices continues to be volatile and high, potentially affecting miles driven.

Going forward, we believe growth in the U.S. replacement tire market will continue to be driven by favorable underlying dynamics, including:



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



| |  |  | increases in the number of miles driven;
| | - |  | ----------------------------------------



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



| |  |  | increase 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.

Acquisition of Holdings

On May 28, 2010, pursuant to an Agreement and Plan of Merger, dated as of April 20, 2010, we were acquired by affiliates of TPG Capital, L.P. (TPG) for an aggregate purchase price
valued at $1,287.5 million. As a result, we became a wholly-owned subsidiary of TPG (the Merger). Although we continue to operate as the same legal entity subsequent to the acquisition, periods prior to May 28, 2010 reflect the
financial position, results of operations, and changes in financial position of us prior to the Merger (the Predecessor) and periods after May 28, 2010 reflect the financial position, results of operations, and changes in financial
position of us after the Merger (the Successor).

Under the guidance provided by the Securities and Exchange
Commission (SEC) Staff Accounting Bulletin Topic 5J, New Basis of Accounting Required in Certain Circumstances, push-down accounting is required when such transactions result in an entity becoming substantially wholly-owned.
Under push-down accounting, certain transactions incurred by the acquirer, which would otherwise be accounted for in the accounts of the parent, are pushed down and recorded on the financial statements of the subsidiary. Therefore, the
basis in shares of our common stock has been pushed down from TPG to us. In addition, the Merger was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling
interest. The guidance prescribes that the purchase price be 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, periods prior to the
Merger are not comparable to subsequent periods due to the difference in the basis of presentation of purchase accounting as compared to historical cost.

Recent Developments

On December 10, 2010, we completed the purchase
of substantially all the assets of Lisacs of Washington, Inc. (Lisacs) pursuant to the terms of an Asset Purchase Agreement dated as of December 10, 2010 and 100% of the capital stock of Tire Wholesalers, Inc.
(Tire Wholesalers) pursuant to a Stock Purchase Agreement dated



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as of December 10, 2010. Tire Wholesalers operated one distribution center in Kent, Washington, which serviced over 750 customers in the area and Lisacs operated tire distribution
centers in Portland, Oregon and Spokane, Washington, serving over 1,400 customers in the area. The aggregate purchase price of these acquisitions was approximately $11 million, which was funded through our ABL Facility. The purchase of Lisacs
and Tire Wholesalers significantly expanded our position in the Northwestern United States.

On February 24, 2011, ATDI
entered into two interest rate swap agreements (Swaps) used to hedge our exposure to changes in our variable interest rate debt. The aggregate notional amount of the Swaps is $75.0 million, of which $25.0 million will expire in
February 2012 and $50.0 million will expire in February 2013. The counterparty to the Swaps is a major financial institution. We recognize all derivatives on the consolidated balance sheet at their fair value as either assets or liabilities. The
Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of the Swaps are recorded as adjustments to interest expense in the condensed consolidated statement of operations.

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 quarter ended April 2, 2011 for the Successor and the quarter ended April 3, 2010 for the Predecessor
each contain operating results for 13 weeks.

Successor Quarter Ended April 2, 2011 Compared to Predecessor Quarter Ended
April 3, 2010

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:



|                                                  |  |              |   |         |   |              |  |                         |  |                           |  |                                                       |   |              |   |  |  |   |         |   |  |  |  |        |   |  |  |  |       |   |  |  |  |       |  
|------------------------------------------------- |  | ------------ | - | ------- | - | ------------ |  | ----------------------- |  | ------------------------- |  | ----------------------------------------------------- | - | ------------ | - |  |  | - | ------- | - |  |  |  | ------ | - |  |  |  | ----- | - |  |  |  | ----- | -
|                                                  |  | Successor    |   |         |   | Predecessor  |  | Period
OverPeriodChange |  | Period
OverPeriod% Change |  | Percentage of Net SalesFor the RespectivePeriod Ended
|                                                  |  | QuarterEnded |   |         |   | QuarterEnded |  |                         | 
|In thousands                                      |  | April 2,2011 |   |         |   | April 3,2010 |  | Favorable(unfavorable)  |  | Favorable(unfavorable)    |  | April 2,2011                                          |   | April 3,2010
|Net sales                                         |  |              | $ | 640,822 |   |              |  |                         |  |                           |  |                                                       | $ | 559,622      |   |  |  | $ | 81,200  |   |  |  |  | 14.5   | % |  |  |  | 100.0 | % |  |  |  | 100.0 | %
|Cost of goods sold                                |  |              |   | 532,957 |   |              |  |                         |  |                           |  |                                                       |   | 465,106      |   |  |  |   | (67,851 | ) |  |  |  | -14.6  | % |  |  |  | 83.2  | % |  |  |  | 83.1  | %
|Selling, general and administrative expenses      |  |              |   | 99,543  |   |              |  |                         |  |                           |  |                                                       |   | 82,599       |   |  |  |   | (16,944 | ) |  |  |  | -20.5  | % |  |  |  | 15.5  | % |  |  |  | 14.8  | %
|Transaction expenses                              |  |              |   | 1,062   |   |              |  |                         |  |                           |  |                                                       |   | 2,082        |   |  |  |   | 1,020   |   |  |  |  | 49.0   | % |  |  |  | 0.2   | % |  |  |  | 0.4   | %
|                                                  |  |              |   |         |   |              |  |                         |  |                           |  |                                                       |   |              |   |  |  |   |         |   |  |  |  |        |   |  |  |  |       |   |  |  |  |       |  
|Operating income (loss)                           |  |              |   | 7,260   |   |              |  |                         |  |                           |  |                                                       |   | 9,835        |   |  |  |   | (2,575  | ) |  |  |  | -26.2  | % |  |  |  | 1.1   | % |  |  |  | 1.8   | %
|Other income (expense):                           |  |              |   |         |   |              |  |                         |  |                           |  |                                                       |   |              |   |  |  |   |         |   |  |  |  |        |   |  |  |  |       |   |  |  |  |       |  
|Interest expense                                  |  |              |   | (16,527 | ) |              |  |                         |  |                           |  |                                                       |   | (13,030      | ) |  |  |   | (3,497  | ) |  |  |  | -26.8  | % |  |  |  | -2.6  | % |  |  |  | -2.3  | %
|Other, net                                        |  |              |   | (275    | ) |              |  |                         |  |                           |  |                                                       |   | (229         | ) |  |  |   | (46     | ) |  |  |  | -20.1  | % |  |  |  | 0.0   | % |  |  |  | 0.0   | %
|                                                  |  |              |   |         |   |              |  |                         |  |                           |  |                                                       |   |              |   |  |  |   |         |   |  |  |  |        |   |  |  |  |       |   |  |  |  |       |  
|Income (loss) from operations before income taxes |  |              |   | (9,542  | ) |              |  |                         |  |                           |  |                                                       |   | (3,424       | ) |  |  |   | (6,118  | ) |  |  |  | -178.7 | % |  |  |  | -1.5  | % |  |  |  | -0.6  | %
|Provision (benefit) for income taxes              |  |              |   | (4,006  | ) |              |  |                         |  |                           |  |                                                       |   | (1,539       | ) |  |  |   | 2,467   |   |  |  |  | 160.3  | % |  |  |  | -0.6  | % |  |  |  | -0.3  | %
|                                                  |  |              |   |         |   |              |  |                         |  |                           |  |                                                       |   |              |   |  |  |   |         |   |  |  |  |        |   |  |  |  |       |   |  |  |  |       |  
|Net income (loss)                                 |  |              | $ | (5,536  | ) |              |  |                         |  |                           |  |                                                       | $ | (1,885       | ) |  |  | $ | (3,651  | ) |  |  |  | -193.7 | % |  |  |  | -0.9  | % |  |  |  | -0.3  | %
|                                                  |  |              |   |         |   |              |  |                         |  |                           |  |                                                       |   |              |   |  |  |   |         |   |  |  |  |        |   |  |  |  |       |   |  |  |  |       |  

Net Sales

Net sales for the quarter ended April 2, 2011 for the Successor increased 14.5%, or $81.2 million compared with the quarter ended April 3, 2010 for the Predecessor. The increase in net sales was
primarily driven by higher



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net tire pricing of $56.1 million. This increase, which included $46.2 million related to passenger and light truck net tire pricing and $5.3 million related to medium truck net tire pricing,
resulted from our passing through tire manufacturer price increases. In addition, higher quarter-over-quarter tire unit sales across all tire categories contributed $19.8 million. Also, the combined results of opening new distribution centers during
the second half of 2010 as well as the integration of our fourth quarter 2010 acquisitions, contributed $11.2 million during the first quarter of 2011. These increases, however, were partially offset by lower equipment sales of $8.4 million during
the first quarter of 2011 as a result of our 2010 decision to discontinue selling certain products within our equipment product offering.

Cost of Goods Sold

Cost
of goods sold for the quarter ended April 2, 2011 for the Successor increased 14.6%, or $67.9 million compared with the quarter ended April 3, 2010 for the Predecessor. The increase in cost of goods sold was primarily driven by higher net
tire pricing of $48.7 million. This increase, which included $38.3 million related to passenger and light truck net tire pricing and $4.4 million related to medium truck net tire pricing, resulted from manufacturer price increases. As well, the
increase in quarter-over-quarter tire unit sales coupled with the incremental tire units sold through our new distribution centers opened during the second half of 2010 and the integration of our fourth quarter 2010 acquisitions, contributed $26.4
million to the increase. These increases, however, were partially offset by the reduction in net sales within our equipment product offering as a result of our discontinuation of certain products.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the quarter ended April 2, 2011 for the Successor increased 20.5%, or $16.9 million compared with the quarter ended April 3, 2010 for the
Predecessor. The increase in selling, general and administrative expenses was primarily related to increased amortization expense of $9.9 million due to the revaluation of the customer list intangible asset established as part of the Merger.
Other factors that contributed to the increase were salaries and wages of $7.2 million, of which $2.3 million related to increased incentive compensation that has resulted through improved operating performance and $2.2 million related to the
opening of new or acquired distribution centers, rents and utilities of $1.5 million, of which $1.1 million related to the opening of new or acquired distribution centers, and advertising expense of $1.0 million, of which $0.2 million
related to increased advertising expense for our internet sales channel, TireBuyer.com. In addition, a higher price per gallon for fuel increased our fuel costs by $1.0 million. These increases were partially offset by lower stock based compensation
expense of $5.3 million during the quarter ended April 2, 2011 due to the discretionary vesting of certain previously unvested stock options during the quarter ended April 3, 2010 that did not repeat.

Transaction Expenses

Transaction expenses for the quarter ended April 2, 2011 for the Successor were $1.1 million, which were primarily related to the
registration of our Senior Secured Notes with the Securities and Exchange Commission as well as acquisition related fees. During the quarter ended April 3, 2010, transaction fees for the Predecessor of $2.1 million related to our suspended
public offering of our common stock.

Interest Expense

Interest expense for the quarter ended April 2, 2011 for the Successor increased 26.8% or $3.5 million compared with the quarter ended April 3, 2010 for the Predecessor. The increase is
primarily due to higher debt levels as well as slightly higher interest rates associated with the Successors senior debt obligations as compared with the Predecessors senior debt obligations. In addition, amounts recorded in association
with the 2011 Swap partially offset amounts recorded in association with the 2009 Swap.



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Provision (Benefit) for Income Taxes

Our income tax benefit for the quarter ended April 2, 2011 for the Successor was $4.0 million, which was based on a pre-tax loss of
$9.5 million. Our income tax benefit for the quarter ended April 3, 2010 for the Predecessor was $1.5 million, which was based on a pre-tax loss of $3.4 million. Our effective tax rate for the quarter ended April 2, 2011 and the quarter
ended April 3, 2010 were 42.0% and 44.9%, respectively. The decrease in the effective tax rate primarily relates to reductions in permanent timing differences in 2011 compared with 2010, including non-deductible PIK preferred stock dividends
which were extinguished in conjunction with the Merger. The income tax benefit recorded for the first quarter of 2011 has been computed based on year-to-date amounts and projected results for the full year. The final effective tax rate to be applied
to fiscal 2011 will depend on the actual amount of pre-tax income (loss) generated by us for the full year.

Liquidity and
Capital Resources

Overview

The following table contains several key measures to gauge our financial condition and liquidity:



|                           |  |              |         |   |                |   |         |  
|-------------------------- |  | ------------ | ------- | - | -------------- | - | ------- | -
|In thousands               |  | April 2,2011 |         |   | January 1,2011 |  
|Cash and cash equivalents  |  | $            | 11,364  |   |                | $ | 11,971  |  
|Working capital            |  |              | 341,234 |   |                |   | 270,332 |  
|Total debt                 |  |              | 715,155 |   |                |   | 652,544 |  
|Total stockholders equity |  |              | 646,994 |   |                |   | 651,446 |  
|Debt-to-capital ratio      |  |              | 52.5    | % |                |   | 50.0    | %



Debt-to-capital ratio = total debt / (total debt plus total stockholders 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 expenditures 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. We expect our cash flow from operations, combined with availability under our ABL Facility,
to provide sufficient liquidity to fund our current obligations, projected working capital requirements, restructuring obligations and capital spending during the next twelve month period. In addition, we expect our cash flow from operations and our
availability under our ABL Facility, which matures on November 28, 2014, to continue to provide sufficient liquidity to fund our ongoing obligations, projected working capital requirements, restructuring obligations and capital spending during
the foreseeable future.

As a result of the Merger, we are significantly leveraged. Accordingly, our liquidity requirements
are significant, primarily due to our debt service requirements. As of April 2, 2011, our total indebtedness is $715.2 million. Our cash interest payments for the quarter ended April 2, 2011 for the Successor and the quarter ended
April 3, 2010 for the Predecessor was $3.6 million and $20.0 million, respectively. As of April 2, 2011, we have an additional $188.7 million of availability under our ABL Facility. The availability under our ABL Facility is determined in
accordance with a borrowing base which can decline due to various factors. Therefore, amounts under our ABL Facility may not be available when we need them.



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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 and 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.

Cash Flows

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



|                                                     |  |                          |   |         |   |                          |  |  |  |  |  |  |   |         |  
|---------------------------------------------------- |  | ------------------------ | - | ------- | - | ------------------------ |  |  |  |  |  |  | - | ------- | -
|                                                     |  | Successor                |   |         |   | Predecessor             
|In thousands                                         |  | QuarterEndedApril 2,2011 |   |         |   | QuarterEndedApril 3,2010
|Cash provided by (used in) operating activities      |  |                          | $ | (46,915 | ) |                          |  |  |  |  |  |  | $ | (28,557 | )
|Cash provided by (used in) investing activities      |  |                          |   | (5,518  | ) |                          |  |  |  |  |  |  |   | (2,961  | )
|Cash provided by (used in) financing activities      |  |                          |   | 51,826  |   |                          |  |  |  |  |  |  |   | 31,858  |  
|                                                     |  |                          |   |         |   |                          |  |  |  |  |  |  |   |         |  
|Net increase (decrease) in cash and cash equivalents |  |                          |   | (607    | ) |                          |  |  |  |  |  |  |   | 340     |  
|Cash and cash equivalentsbeginning of period        |  |                          |   | 11,971  |   |                          |  |  |  |  |  |  |   | 7,290   |  
|                                                     |  |                          |   |         |   |                          |  |  |  |  |  |  |   |         |  
|Cash and cash equivalentsend of period              |  |                          | $ | 11,364  |   |                          |  |  |  |  |  |  | $ | 7,630   |  
|                                                     |  |                          |   |         |   |                          |  |  |  |  |  |  |   |         |  
|Cash payments for interest                           |  |                          | $ | 3,578   |   |                          |  |  |  |  |  |  | $ | 20,049  |  
|Cash payments for taxes, net                         |  |                          | $ | 847     |   |                          |  |  |  |  |  |  | $ | 480     |  

Operating Activities

Net cash used in operating activities for the quarter ended April 2, 2011 for the Successor was $46.9 million,
compared with $28.6 million during the Predecessors comparable period of 2010. The change was primarily related to an increase in our net working capital requirements. During the quarter ended April 2, 2011, our change in operating assets
and liabilities generated a cash outflow of $56.9 million, primarily driven by an increase in inventory of $93.6 million associated with our decision to increase manufacturer safety stock levels as a result of tight supply levels with most
manufacturers, as well as the impact of opening our new and recently acquired distribution centers. In addition, the increase in accounts receivables reflected higher sales volume during the quarter ended April 2, 2011 as compared with the
quarter ended April 3, 2010. These amounts, however, were partially offset by an increase in accounts payable and accrued expenses associated with the timing of vendor payments and accrued interest on our senior notes, respectively.
Comparatively, during the quarter ended April 3, 2010 for the Predecessor, our change in operating assets and liabilities generated a cash outflow of $40.6 million, primarily driven by an increase in account receivable due to higher sales
volumes as well as a decrease in accounts payable and accrued expenses. The decrease in accounts payable resulted from the timing of vendor payments while the decrease in accrued expenses is primarily related to interest payments on the
Predecessors senior notes in addition to incentive compensation payments that were made during first quarter 2010 that related to fiscal 2009.

Investing Activities

Net cash used in investing activities for the
quarter ended April 2, 2011 for the Successor was $5.5 million, compared with $3.0 million during the Predecessors comparable period in 2010. The change was primarily



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related to an increase in property and equipment purchases. Capital expenditures during first quarter 2011 included information technology upgrades, IT application development and warehouse
racking.

Financing Activities

Net cash provided by financing activities for the quarter ended April 2, 2011 for the Successor was $51.8 million, compared with $31.9 million during the Predecessors comparable period in 2010.
The change was primarily related to an increase in net borrowings from our ABL facility due to the increase in working capital requirements. In addition, the quarter ended April 3, 2010 included $6.3 million related to payments on the
Predecessors senior notes that did not repeat in first quarter 2011.

Supplemental Disclosures of Cash Flow Information

Cash payments for interest during the quarter ended April 2, 2011 for the Successor were $3.6 million, compared
with $20.0 million paid during the quarter ended April 3, 2010 for the Predecessor. The decrease is primarily due to the repurchase and cancellation of the Predecessors senior notes in connection with the Merger which resulted in lower
interest payments of $16.0 million.

Cash payments for taxes during the quarter ended April 2, 2011 for the Successor
were $0.8 million, compared with $0.5 million paid during the quarter ended April 3, 2010 for the Predecessor. The increase primarily relates to the balance and timing of income tax extension payments for fiscal 2009, made in 2010, as compared
to payments for fiscal 2010, made in 2011.

Indebtedness

The following table summarizes the Successors outstanding debt at April 2, 2011:



|                          |  |         |             |  |                  |  |            |                    |  |   |         |  
|------------------------- |  | ------- | ----------- |  | ---------------- |  | ---------- | ------------------ |  | - | ------- | -
|In thousands              |  | Matures |             |  | Interest Rate(1) |  |            | OutstandingBalance | 
|ABL Facility              |  |         | 2014        |  |                  |  | 3.6        | %                  |  | $ | 253,211 |  
|Senior Secured Notes      |  |         | 2017        |  |                  |  | 9.75       |                    |  |   | 247,166 |  
|Senior Subordinated Notes |  |         | 2018        |  |                  |  | 11.50      |                    |  |   | 200,000 |  
|Capital lease obligations |  |         | 2012  2022 |  |                  |  | 7.1  14.0 |                    |  |   | 14,159  |  
|Other                     |  |         | 2011  2020 |  |                  |  | 6.6  10.6 |                    |  |   | 619     |  
|                          |  |         |             |  |                  |  |            |                    |  |   |         |  
|Total debt                |  |         |             |  |                  |  |            |                    |  |   | 715,155 |  
|LessCurrent maturities   |  |         |             |  |                  |  |            |                    |  |   | (407    | )
|                          |  |         |             |  |                  |  |            |                    |  |   |         |  
|Long-term debt            |  |         |             |  |                  |  |            |                    |  | $ | 714,748 |  
|                          |  |         |             |  |                  |  |            |                    |  |   |         |  



|(1) | Interest rate for the ABL Facility is the weighted average interest rate at April 2, 2011.
|--- | ------------------------------------------------------------------------------------------

ABL Facility

Our senior secured asset-backed revolving credit
facility (ABL Facility) provides for a senior secured revolving credit facility of up to $450.0 million (of which up to $50.0 million may be utilized in the form of commercial and standby letters of credit), subject to borrowing base
availability. As of April 2, 2011, we had $253.2 million outstanding under the facility. In addition, we had certain letters of credit outstanding in the aggregate amount of $8.1 million, leaving $188.7 million available for additional
borrowings. Provided that no default or event of default is then existing or would arise therefrom, we have the option to request that the ABL Facility be increased by an amount not to exceed $200.0 million, subject to certain rights of the
administrative agent, swingline linder and issuing banks with respect to the lenders providing commitments for such increase. The facility matures on November 28, 2014.



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Borrowings under the ABL Facility bear interest at a rate per annum
equal to, at our option, either (a) an Adjusted LIBOR rate determined by reference to LIBOR, adjusted for statutory reserve requirements, plus an applicable margin of 3.0% 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 1/2of 1% and (3) the one month-Adjusted LIBOR rate plus
1.0% per annum, plus an applicable margin of 2.0%. The applicable margins under the ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

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



| |  |  | 85% of eligible accounts receivable; plus
| | - |  | -----------------------------------------



| |  |  | The lesser of (a) 70% of the lesser of cost or fair market value of eligible tire inventory and (b) 85% of the net orderly liquidation value
of eligible tire inventory; plus
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The lesser of (a) 50% of the lower of cost or market value of eligible non-tire inventory and (b) 85% of the net orderly liquidation value of
eligible non-tire inventory.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All obligations under the ABL 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. Obligations under the ABL Facility are also secured by a first-priority
lien on inventory, accounts receivable and related assets and a second-priority lien on substantially all other assets, in each case of Holdings, ATDI and the guarantor subsidiaries, subject to certain exceptions.

The ABL Facility contains customary covenants, including covenants that 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.
If the amount available for additional borrowing under the ABL Facility is less than the greater of (a) 12.5% of the lesser of (x) the aggregate commitments under the ABL Facility and (y) the 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 April 2, 2011, our additional borrowing availability under the ABL Facility was above the required amount and we were
therefore not subject to the additional covenants.

Senior Secured Notes

On May 28, 2010, ATDI issued Senior Secured Notes (Senior Secured Notes) due June 1, 2017 in an aggregate principal
amount at maturity of $250.0 million. The 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 $9.3 million). The Senior Secured Notes will accrete based on an effective interest rate of 10% 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, commencing on December 1, 2010. The Senior Secured Notes are not redeemable, except as described
below, at the option of ATDI prior to June 1, 2013. Thereafter, the Senior Secured 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
107.313% of the principal amount if the redemption date occurs between June 1, 2013 and May 31, 2014, 104.875% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015, 102.438% of the
principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016 and 100.0% of the principal amount if the redemption date occurs between June 1, 2016 and May 31, 2017.



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Until June 1, 2013, ATDI may, at its option, on one or more occasions, redeem up to 35%
of the aggregate principal amount of the Senior Secured Notes issued at a redemption price equal to 109.75% of the aggregate principal amount thereof, plus accrued and unpaid interest, to, but not including, the redemption date, with the net cash
proceeds from one or more equity offerings to the extent that such net cash proceeds are received by or contributed to ATDI; provided that:



| | (1) | at least 50% of the sum of the aggregate principal amount of the Senior Secured Notes remains outstanding immediately after the occurrence of such redemption; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | each such redemption occurs within 120 days of the date of the closing of the related equity offering.
| | --- | ------------------------------------------------------------------------------------------------------

In addition, at any time prior to June 1, 2013, ATDI may redeem all or a part of the Senior Secured Notes upon not less than 30 or
more than 60 days notice at a redemption price equal to 100.0% of the principal amount of notes to be redeemed, plus the applicable premium (an amount intended to approximate a make-whole price based on the price of a U.S. treasury
security plus 50 basis points) as of, plus accrued and unpaid interest, to, but not including, the redemption date, subject to the rights of holders on the relevant record date to receive interest due on the relevant interest payment date.

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, 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 Subordinated Notes due June 1, 2018 (Senior Subordinated Notes) in an aggregate principal amount of $200.0 million. The Senior Subordinated Notes
bear interest at a fixed rate of 11.50% per annum. Interest on the Senior 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
are not redeemable, except as described below, at the option of ATDI prior to June 1, 2013. Thereafter, 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.

Prior to June 1, 2013, ATDI may, at its option, on one or more occasions, redeem up to 35% of the aggregate principal amount of the Senior Subordinated Notes issued at a redemption price equal to
111.5% of the aggregate principal amount thereof, plus accrued and unpaid interest, to, but not including, the redemption date, with the net cash proceeds of one or more equity offerings; provided that:



| | (1) | at least 50% of the aggregate principal amount of the Senior Subordinated Notes remains outstanding immediately after the occurrence of such redemption; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | (2) | each such redemption occurs within 120 days of the date of the closing of the related equity offering.
| | --- | ------------------------------------------------------------------------------------------------------

In addition, at any time prior to June 1, 2013, ATDI may redeem all or a part of the Senior Subordinated Notes upon not less than 30
or more than 60 days notice at a redemption price equal to 100.0% of the principal amount of notes to be redeemed, plus the applicable premium (an amount intended to approximate a make-whole price based on the price of a U.S. treasury
security plus 50 basis points) as of, and accrued and unpaid interest, to, but not including, the redemption date, subject to the rights of holders on the relevant record date to receive interest due on the relevant interest payment date.

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.

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 April 2, 2011, our total obligations as guarantor on these leases are approximately $4.3 million extending over eight years. However, we have secured assignments or sublease agreements for the vast majority of these commitments with
contractually assigned or subleased rentals of approximately $4.0 million as of April 2, 2011. 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

The preparation of financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions and estimates that affect the amounts reported. Please see the discussion of
critical accounting policies and estimates in our Annual Report on Form 10-K. During the quarter ended April 2, 2011, there have been no material changes to our critical accounting policies.

Recently Issued Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements an amendment to Accounting
Standards Codification Topic 820, Fair Value Measurements and Disclosures. This amendment requires an entity to: (i) disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements
and describe the reasons for the transfers, (ii) disclose separately the reasons for any transfers in and out of Level 3, and (iii) present separate information for Level 3 activity pertaining to gross purchases, sales, issuances, and



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settlements. ASU No. 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, with one new disclosure effective after December 15, 2010. We
adopted this guidance in full beginning with the interim period ended April 3, 2010, except for the gross presentation of Level 3 rollforward information which we adopted in the interim period ended April 2, 2011.

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 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 and other countries, including uncertainty as to changes and trends;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



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



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



| |  |  | 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 state or federal laws or regulations affecting the tire industry;
| | - |  | ----------------------------------------------------------------------------



| |  |  | impacts of competitive products and changes to the competitive environment;
| | - |  | ---------------------------------------------------------------------------



| |  |  | acceptance of new products in the market; and
| | - |  | ---------------------------------------------



| |  |  | unanticipated expenditures.
| | - |  | ---------------------------



|Item 3. | Quantitative and Qualitative Disclosures about Market Risk.
|------- | -----------------------------------------------------------

Our results of operations are exposed to changes in interest rates primarily with respect to our ABL Facility. Interest on the ABL
Facility is tied to Base Rate, as defined, or LIBOR. At April 2, 2011, we had $253.2 million outstanding under our ABL Facility, of which $178.2 million was not hedged by an interest rate swap agreement and was thus subject to interest rate
changes. An increase of 1% in such interest rate percentages would increase our annual interest expense by $1.8 million, based on the outstanding balance of the ABL Facility that has not been hedged at April 2, 2011.



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On February 24, 2011, ATDI entered into two interest rate swap agreements
(Swaps) used to hedge our exposure to changes in our variable interest rate debt. The aggregate notional amount of the Swaps is $75.0 million, of which $25.0 million will expire in February 2012 and $50.0 million will expire in February
2013. The counterparty to the Swaps is a major financial institution. We recognize all derivatives on the condensed consolidated balance sheet at their fair value as either assets or liabilities. The Swaps do not meet the criteria to qualify for
hedge accounting treatment; therefore, changes in the fair value of the Swaps are recognized in interest expense within the condensed consolidated statement of operations. The fair value of the Swaps was a liability of $0.2 million at April 2,
2011 and is included in accrued expenses in the accompanying condensed consolidated balance sheets. See Note 9 in the Notes to the Condensed Consolidated Financial Statements for more information.



|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 April 2, 2011, 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. We are, however, currently implementing a conversion of our legacy computer system to Oracle.
We have already implemented the general ledger as well as the accounts payable, inventory and accounts receivable functions on Oracle but still must transition other key functions. We cannot be sure that the transition will be fully implemented on a
timely basis, if at all. If we do not successfully implement this project, our controls over financial reporting may be disrupted and our operations adversely affected.



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PART II. OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

We 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.



|Item 1A. | Risk Factors.
|-------- | -------------

There have been no material changes to any of the risk factors disclosed in our most recently filed Annual Report on Form 10-K.



|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.      



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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.



|                   |  |                                           |  |                                                                                                                                                 
|------------------ |  | ----------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|Date: May 11, 2011 |  | AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.
|                   |  |                                          
|                   |  | By:                                       |  | /S/    DAVID L.
DYCKMAN                                                                                                                         
|                   |  |                                           |  | David L. Dyckman Director, Executive Vice President and Chief Financial
Officer (On behalf of the registrant and as Principal Financial Officer)



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