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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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

For the quarterly period ended September 29, 2007

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



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American Tire Distributors
Holdings, Inc.



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|                       |  |                            
|---------------------- |  | ---------------------------
|A Delaware Corporation |  | IRS Employer Identification
|                       |  | No. 59-3796143             

12200 Herbert Wayne Court

Suite 150

Huntersville, North Carolina 28078

(704) 992-2000



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Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer  x

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

Number of common shares outstanding at November 9, 2007: 999,527



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##### Table of Contents

TABLE OF CONTENTS



|         |  |                                                                                                                                                         |  |     
|-------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                                                                         |  | Page
|         |  |                                                                                                                                                        
|PART I.  |  | FINANCIAL INFORMATION                                                                                                                                   |  |     
|         |  |                                                                                                                                                        
|ITEM 1.  |  | Financial Statements                                                                                                                                    |  |     
|         |  | Condensed Consolidated Balance Sheets (unaudited)As of September 29, 2007 and December 30, 2006                                                        |  | 4   
|         |  | Condensed Consolidated Statements of Operations (unaudited)For the Quarters and Nine Months Ended September 29, 2007 and September 30, 2006            |  | 5   
|         |  | Condensed Consolidated Statement of Stockholders Equity and Other Comprehensive Income (Loss) (unaudited)For the Nine Months Ended September 29, 2007 |  | 6   
|         |  | Condensed Consolidated Statements of Cash Flows (unaudited)For the Nine Months Ended September 29, 2007 and September 30, 2006                         |  | 7   
|         |  | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                        |  | 8   
|         |  |                                                                                                                                                        
|ITEM 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                                   |  | 23  
|         |  |                                                                                                                                                        
|ITEM 3.  |  | Quantitative and Qualitative Disclosure about Market Risk                                                                                               |  | 32  
|         |  |                                                                                                                                                        
|ITEM 4.  |  | Controls and Procedures                                                                                                                                 |  | 32  
|         |  |                                                                                                                                                        
|PART II. |  | OTHER INFORMATION                                                                                                                                       |  |     
|         |  |                                                                                                                                                        
|ITEM 1.  |  | Legal Proceedings                                                                                                                                       |  | 34  
|         |  |                                                                                                                                                        
|ITEM 1A. |  | Risk Factors                                                                                                                                            |  | 34  
|         |  |                                                                                                                                                        
|ITEM 6.  |  | Exhibits                                                                                                                                                |  | 34  
|         |  |                                                                                                                                                        
|         |  | Signatures                                                                                                                                              |  | 35  

As used in this report on Form 10-Q, the terms Holdings, Company,
we, us, our, and similar terms refer to American Tire Distributors Holdings, Inc., and its subsidiaries, unless the context indicates otherwise. The term ATD refers to American Tire Distributors, Inc.
and its subsidiaries.



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Cautionary Statements on Forward-Looking Information

This Form 10-Q contains forward-looking statements relating to our business and financial outlook, which are based on our current expectations, estimates,
forecast and projections. In some cases, you can identify forward-looking statements by terminology such as may, will, 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 that are difficult to predict. Therefore, 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.
Further, 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, the occurrence of future events or circumstances or otherwise.

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements to encourage companies to
provide prospective information about their companies without fear of litigation. We would like to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act in connection with the forward-looking
statements included in this document.

Factors that could cause actual results to differ materially from those indicated by the
forward-looking statements or that could contribute to such differences include, but are not limited to, integration of new systems, unanticipated expenditures, acquisitions and the successful integration of acquisitions into the business, changing
relationships with customers, suppliers and strategic partners, changes to governmental regulation of the tire industry, the impact of competitive products, changes to the competitive environment, the acceptance of new products in the market, the
economy and world events, as well as those items identified under the heading Risk Factors as reported in our Annual Report on Form 10-K filed on March 30, 2007.



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PART I. FINANCIAL INFORMATION



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

American Tire Distributors Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands, except per
share amounts)



|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                   |  | September 29, 2007 |           |   | December 30,2006 |  
|Assets                                                                                                                             |  |                    |           |   |                  |   |           |  
|Current assets:                                                                                                                    |  |                    |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                          |  | $                  | 6,548     |   |                  | $ | 3,600     |  
|Accounts receivable, net of allowance for doubtful accounts of $1,745 and $1,051                                                   |  |                    | 171,759   |   |                  |   | 131,104   |  
|Inventories                                                                                                                        |  |                    | 334,622   |   |                  |   | 297,664   |  
|Assets held for sale                                                                                                               |  |                    | 2,111     |   |                  |   | 1,199     |  
|Deferred income taxes                                                                                                              |  |                    | 11,986    |   |                  |   | 10,136    |  
|Other current assets                                                                                                               |  |                    | 8,231     |   |                  |   | 6,926     |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Total current assets                                                                                                               |  |                    | 535,257   |   |                  |   | 450,629   |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Property and equipment, net                                                                                                        |  |                    | 42,372    |   |                  |   | 44,571    |  
|Goodwill                                                                                                                           |  |                    | 362,932   |   |                  |   | 355,743   |  
|Other intangible assets, net                                                                                                       |  |                    | 241,087   |   |                  |   | 238,849   |  
|Other assets                                                                                                                       |  |                    | 30,246    |   |                  |   | 33,714    |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Total assets                                                                                                                       |  | $                  | 1,211,894 |   |                  | $ | 1,123,506 |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Liabilities and Stockholders Equity                                                                                               |  |                    |           |   |                  |   |           |  
|Current liabilities:                                                                                                               |  |                    |           |   |                  |   |           |  
|Accounts payable                                                                                                                   |  | $                  | 304,347   |   |                  | $ | 245,415   |  
|Accrued expenses                                                                                                                   |  |                    | 48,797    |   |                  |   | 28,734    |  
|Current maturities of long-term debt                                                                                               |  |                    | 3,350     |   |                  |   | 3,853     |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Total current liabilities                                                                                                          |  |                    | 356,494   |   |                  |   | 278,002   |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Long-term debt                                                                                                                     |  |                    | 524,405   |   |                  |   | 517,154   |  
|Deferred income taxes                                                                                                              |  |                    | 79,108    |   |                  |   | 82,963    |  
|Other liabilities                                                                                                                  |  |                    | 13,797    |   |                  |   | 8,807     |  
|Redeemable preferred stock                                                                                                         |  |                    | 20,852    |   |                  |   | 19,822    |  
|Commitments and contingencies (see Note 12)                                                                                        |  |                    |           |   |                  |   |           |  
|Stockholders equity:                                                                                                              |  |                    |           |   |                  |   |           |  
|Series A Common Stock, par value $.01 per share; 1,500,000 shares authorized; 691,173 shares issued and 690,700 shares
outstanding |  |                    | 7         |   |                  |   | 7         |  
|Series B Common Stock, par value $.01 per share; 315,000 shares authorized; 307,327 shares issued and outstanding                  |  |                    | 3         |   |                  |   | 3         |  
|Series D Common Stock, par value $.01 per share; 1,500 shares authorized, issued and outstanding                                   |  |                    |          |   |                  |   |          |  
|Common Stock, par value $.01 per share; 1,816,500 shares authorized, no shares have been issued                                    |  |                    |          |   |                  |   |          |  
|Additional paid-in capital                                                                                                         |  |                    | 217,990   |   |                  |   | 217,990   |  
|Warrants                                                                                                                           |  |                    | 4,631     |   |                  |   | 4,631     |  
|Accumulated deficit                                                                                                                |  |                    | (5,085    | ) |                  |   | (6,208    | )
|Accumulated other comprehensive (loss) income                                                                                      |  |                    | (208      | ) |                  |   | 435       |  
|Treasury stock, at cost, 473 shares of Series A Common Stock                                                                       |  |                    | (100      | ) |                  |   | (100      | )
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Total stockholders equity                                                                                                         |  |                    | 217,238   |   |                  |   | 216,758   |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  
|Total liabilities and stockholders equity                                                                                         |  | $                  | 1,211,894 |   |                  | $ | 1,123,506 |  
|                                                                                                                                   |  |                    |           |   |                  |   |           |  

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



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American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(amounts in thousands)



|                                                                                                          |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  
|--------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------------------- | - | ------- | --------------------------------- |  | - | --------------------------------- | - |  | - | --------- | -
|                                                                                                          |  | QuarterEndedSeptember 29,2007 |         |   | QuarterEndedSeptember 30,2006 |   |         | Nine MonthsEndedSeptember 29,2007 |  |   | Nine MonthsEndedSeptember 30,2006 |  
|Net sales                                                                                                 |  |                               | 504,890 |   |                               | $ | 414,142 |                                   |  | $ | 1,399,321                         |   |  | $ | 1,173,340 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                               | 418,845 |   |                               |   | 342,392 |                                   |  |   | 1,161,239                         |   |  |   | 965,049   |  
|                                                                                                          |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  
|Gross profit                                                                                              |  |                               | 86,045  |   |                               |   | 71,750  |                                   |  |   | 238,082                           |   |  |   | 208,291   |  
|Selling, general and administrative expenses                                                              |  |                               | 66,061  |   |                               |   | 54,676  |                                   |  |   | 188,220                           |   |  |   | 168,746   |  
|Impairment of intangible asset                                                                            |  |                               |        |   |                               |   | 2,640   |                                   |  |   |                                  |   |  |   | 2,640     |  
|                                                                                                          |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  
|Operating income                                                                                          |  |                               | 19,984  |   |                               |   | 14,434  |                                   |  |   | 49,862                            |   |  |   | 36,905    |  
|Other expense:                                                                                            |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  
|Interest expense                                                                                          |  |                               | (15,615 | ) |                               |   | (15,039 | )                                 |  |   | (46,389                           | ) |  |   | (44,802   | )
|Other, net                                                                                                |  |                               | 6       |   |                               |   | (200    | )                                 |  |   | (256                              | ) |  |   | (116      | )
|                                                                                                          |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  
|Income (loss) from operations before income taxes                                                         |  |                               | 4,375   |   |                               |   | (805    | )                                 |  |   | 3,217                             |   |  |   | (8,013    | )
|Income tax provision (benefit)                                                                            |  |                               | 2,771   |   |                               |   | (118    | )                                 |  |   | 2,094                             |   |  |   | (2,595    | )
|                                                                                                          |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  
|Net income (loss)                                                                                         |  | $                             | 1,604   |   |                               | $ | (687    | )                                 |  | $ | 1,123                             |   |  | $ | (5,418    | )
|                                                                                                          |  |                               |         |   |                               |   |         |                                   |  |   |                                   |   |  |   |           |  



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



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American Tire Distributors Holdings, Inc.

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

(Unaudited)

(amounts in thousands, except share amounts)



|                                                                              |  |                        |  |                            |    |          |   |                     |  |   |                                               |  |   |                        |   |  |       |      |   |  |   |      |   |  |   |         |  
|----------------------------------------------------------------------------- |  | ---------------------- |  | -------------------------- | -- | -------- | - | ------------------- |  | - | --------------------------------------------- |  | - | ---------------------- | - |  | ----- | ---- | - |  | - | ---- | - |  | - | ------- | -
|                                                                              |  | Common Stock (Note 11) |  | Additional Paid-In Capital |    | Warrants |   | Accumulated Deficit |  |   | Accumulated Other Comprehensive Income (Loss) |  |   | Treasury Stock at Cost |   |  | Total |     
|                                                                              |  | Shares                 |  | Amount                     |    |          |   |                     |  |  
|Balance, December 30, 2006                                                    |  | 999,527                |  | $                          | 10 |          | $ | 217,990             |  | $ | 4,631                                         |  | $ | (6,208                 | ) |  | $     | 435  |   |  | $ | (100 | ) |  | $ | 216,758 |  
|Comprehensive income:                                                         |  |                        |  |                            |    |          |   |                     |  |   |                                               |  |   |                        |   |  |       |      |   |  |   |      |   |  |   |         |  
|Net income                                                                    |  |                       |  |                            |   |          |   |                    |  |   |                                              |  |   | 1,123                  |   |  |       |     |   |  |   |     |   |  |   | 1,123   |  
|Change in value of derivative instrument, net of income taxes of $0.4 million |  |                       |  |                            |   |          |   |                    |  |   |                                              |  |   |                       |   |  |       | (643 | ) |  |   |     |   |  |   | (643    | )
|                                                                              |  |                        |  |                            |    |          |   |                     |  |   |                                               |  |   |                        |   |  |       |      |   |  |   |      |   |  |   |         |  
|Total comprehensive income                                                    |  |                       |  |                            |   |          |   |                    |  |   |                                              |  |   |                       |   |  |       |     |   |  |   |     |   |  |   | 480     |  
|                                                                              |  |                        |  |                            |    |          |   |                     |  |   |                                               |  |   |                        |   |  |       |      |   |  |   |      |   |  |   |         |  
|Balance, September 29, 2007                                                   |  | 999,527                |  | $                          | 10 |          | $ | 217,990             |  | $ | 4,631                                         |  | $ | (5,085                 | ) |  | $     | (208 | ) |  | $ | (100 | ) |  | $ | 217,238 |  
|                                                                              |  |                        |  |                            |    |          |   |                     |  |   |                                               |  |   |                        |   |  |       |      |   |  |   |      |   |  |   |         |  



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



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American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)



|                                                                                         |  |                                   |            |   |                                   |   |            |  
|---------------------------------------------------------------------------------------- |  | --------------------------------- | ---------- | - | --------------------------------- | - | ---------- | -
|                                                                                         |  | Nine MonthsEndedSeptember 29,2007 |            |   | Nine MonthsEndedSeptember 30,2006 |  
|Cash flows from operating activities:                                                    |  |                                   |            |   |                                   |   |            |  
|Net income (loss)                                                                        |  | $                                 | 1,123      |   |                                   | $ | (5,418     | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                   |            |   |                                   |   |            |  
|Depreciation and amortization                                                            |  |                                   | 20,934     |   |                                   |   | 18,327     |  
|Amortization of other assets                                                             |  |                                   | 3,847      |   |                                   |   | 4,080      |  
|Benefit for deferred income taxes                                                        |  |                                   | (5,578     | ) |                                   |   | (4,842     | )
|Accretion of 8% cumulative preferred stock and Senior Discount Notes                     |  |                                   | 1,902      |   |                                   |   | 4,666      |  
|Impairment of intangible asset                                                           |  |                                   |           |   |                                   |   | 2,640      |  
|Provision for (recovery of) doubtful accounts                                            |  |                                   | 265        |   |                                   |   | (473       | )
|Other, net                                                                               |  |                                   | 869        |   |                                   |   | 128        |  
|Change in operating assets and liabilities:                                              |  |                                   |            |   |                                   |   |            |  
|Accounts receivable                                                                      |  |                                   | (31,692    | ) |                                   |   | (13,191    | )
|Inventories                                                                              |  |                                   | (28,559    | ) |                                   |   | 20,853     |  
|Other current assets                                                                     |  |                                   | (851       | ) |                                   |   | 9,600      |  
|Income tax receivable                                                                    |  |                                   |           |   |                                   |   | 13,605     |  
|Accounts payable and accrued expenses                                                    |  |                                   | 59,115     |   |                                   |   | 27,630     |  
|Other, net                                                                               |  |                                   | 2,073      |   |                                   |   | 62         |  
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Net cash provided by operating activities                                                |  |                                   | 23,448     |   |                                   |   | 77,667     |  
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Cash flows from investing activities:                                                    |  |                                   |            |   |                                   |   |            |  
|Acquisitions, net of cash acquired                                                       |  |                                   | (15,482    | ) |                                   |   | (19,300    | )
|Purchase of property and equipment                                                       |  |                                   | (4,862     | ) |                                   |   | (5,866     | )
|Purchase of assets held for sale                                                         |  |                                   | (1,693     | ) |                                   |   | (319       | )
|Proceeds from sale of assets held for sale                                               |  |                                   | 704        |   |                                   |   | 1,790      |  
|Proceeds from sale of property and equipment                                             |  |                                   | 193        |   |                                   |   | 387        |  
|Cash held in escrow                                                                      |  |                                   |           |   |                                   |   | (1,480     | )
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Net cash used in investing activities                                                    |  |                                   | (21,140    | ) |                                   |   | (24,788    | )
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Cash flows from financing activities:                                                    |  |                                   |            |   |                                   |   |            |  
|Borrowings from revolving credit facility                                                |  |                                   | 1,222,680  |   |                                   |   | 1,019,752  |  
|Repayments of revolving credit facility                                                  |  |                                   | (1,216,907 | ) |                                   |   | (1,069,593 | )
|Payments of other long-term debt                                                         |  |                                   | (4,048     | ) |                                   |   | (4,282     | )
|Payments of deferred financing costs                                                     |  |                                   | (1,085     | ) |                                   |   | (234       | )
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Net cash provided by (used in) financing activities                                      |  |                                   | 640        |   |                                   |   | (54,357    | )
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                                   | 2,948      |   |                                   |   | (1,478     | )
|Cash and cash equivalents, beginning of period                                           |  |                                   | 3,600      |   |                                   |   | 5,545      |  
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Cash and cash equivalents, end of period                                                 |  | $                                 | 6,548      |   |                                   | $ | 4,067      |  
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Supplemental disclosures of cash flow information                                       |  |                                   |            |   |                                   |   |            |  
|Cash payments for interest                                                               |  | $                                 | 32,030     |   |                                   | $ | 30,563     |  
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Cash payments (receipts) for taxes, net                                                  |  | $                                 | 2,039      |   |                                   | $ | (13,363    | )
|                                                                                         |  |                                   |            |   |                                   |   |            |  
|Supplemental disclosures of noncash activities                                          |  |                                   |            |   |                                   |   |            |  
|Capital expenditures financed by debt                                                    |  | $                                 | 2,822      |   |                                   | $ | 2,360      |  
|                                                                                         |  |                                   |            |   |                                   |   |            |  



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



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##### Table of Contents

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, or the Company) is a
Delaware corporation which owns 100% of the issued and outstanding capital stock of American Tire Distributors, Inc. a Delaware corporation (ATD). Holdings has no significant assets or operations other than its ownership of ATD. ATD is
primarily engaged in the wholesale distribution of tires, custom wheels, and related automotive service equipment and has one reportable segment consisting of 78 economically similar distribution centers, including two mixing warehouses, across the
United States.

2. Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) for reporting on Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and changes in financial position in conformity with accounting principles generally accepted in the United States. In the
opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position of the Company, the results of its operations and cash flows have been made. These financial
statements should be read in conjunction with the financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December 30, 2006. The consolidated results of operations and cash
flows for the quarter and nine months ended September 29, 2007 are not necessarily indicative of the operating results and cash flows, which will be reported for the full fiscal year. The year-end condensed consolidated balance sheet data was
derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

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
quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended September 29, 2007 and September 30, 2006 each contain operating results for 13
weeks. The nine months ended September 29, 2007 and September 30, 2006 each contain operating results for 39 weeks.

3. Inventories:

Inventories consist primarily of automotive tires, custom wheels, automotive service equipment and related products 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. All of the Companys
inventories are held as collateral under the revolving credit facility.

4. Assets Held for Sale:

As of September 29, 2007, the Companys Tallahassee, Florida owned distribution center, with an aggregate carrying value of $0.8 million, has
been classified as an asset held for sale. The warehouse and distribution operation in this distribution center was relocated to a larger facility that is being leased. The Company is actively marketing this property and anticipates that the
property will be sold within a twelve-month period.



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In addition to the above property, the Company has four residential properties, with an aggregate
carrying value of $1.3 million, classified as assets held for sale at September 29, 2007. The Company acquired these properties 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.

5. Acquisitions

On July 2, 2007, the Company completed the purchase of certain assets and the assumption of certain liabilities related to Martino Tire Company (Martino Tire) pursuant to the terms of an Asset
Purchase Agreement dated as of July 2, 2007. The aggregate purchase price of this acquisition was $9.4 million, consisting of $9.2 million in cash and $0.2 million in direct acquisition costs. This acquisition expands ATDs service across
the state of Florida and will complement the Companys existing distribution centers currently located within the state of Florida. The results of operations for the acquired business have been included in the accompanying condensed
consolidated statement of operations from the date of acquisition. The preliminary purchase price allocation has been recorded in the accompanying condensed consolidated financial statements based on estimated fair values for the assets acquired and
liabilities assumed and resulted in goodwill of $5.1 million and a customer relationship intangible asset of $8.4 million. In addition, based upon managements facility consolidation strategy, a lease reserve of $3.1 million has been
established in accordance with Emerging Issues Task Force (EITF) 95-3 Recognition of Liabilities in Connection with a Purchase Business Combination. The Martino Tire acquisition was financed through borrowings under
ATDs revolving credit facility. In connection with the acquisition, the Company has entered into lease agreements with the sellers for four facilities. This acquisition does not rise to the level of being a material business combination.

On May 31, 2007, the Company completed the purchase of all the outstanding stock of Jim Paris Tire City of Montbello, Inc.
(Paris Tire) pursuant to the terms of a Stock Purchase Agreement dated as of May 31, 2007. The aggregate purchase price of this acquisition was $6.2 million, consisting of $6.0 million in cash and $0.2 million in direct acquisition
costs. This acquisition expanded ATDs service across the state of Colorado and the Mid-West. The results of operations for the acquired business have been included in the accompanying condensed consolidated statement of operations from the
date of acquisition. The preliminary purchase price allocation has been recorded in the accompanying condensed consolidated financial statements based on estimated fair values for the assets acquired and liabilities assumed and resulted in goodwill
of $2.0 million, a customer relationship intangible asset of $3.9 million and a related deferred tax liability of $1.5 million. The Paris Tire acquisition was financed through borrowings under ATDs revolving credit facility. In connection with
the acquisition, the Company leased two facilities from the sellers. This acquisition does not rise to the level of being a material business combination.

On July 28, 2006, the Company completed the purchase of all the outstanding stock of Samaritan Wholesale Tire Company (Samaritan Tire) pursuant to the terms of a Stock Purchase Agreement dated as of
July 28, 2006. This acquisition expanded ATDs service across the state of Minnesota and into Western Wisconsin.

On
January 27, 2006, the Company completed the purchase of all the outstanding stock of Silver State Tire Company and Golden State Tire Distributors (collectively Silver State) pursuant to the terms of a Stock Purchase Agreement dated
December 23, 2005. This acquisition established a distribution footprint for the Company across the state of Nevada.

The Samaritan
Tire and Silver State acquisitions were financed through borrowings under ATDs revolving credit facility. The results of operations for the acquired businesses have been included in the accompanying condensed consolidated statements of
operations from the date of acquisition. The aggregate purchase price of these acquisitions was $21.0 million, consisting of $20.7 million in cash and $0.3 million in direct acquisition costs. The purchase price allocations have been recorded in the
accompanying condensed consolidated financial statements based on estimated fair values for the assets acquired and liabilities assumed and resulted in goodwill



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of $3.3 million and a customer relationship intangible asset of $5.9 million for Samaritan Tire, both of which are deductible for income tax purposes, and
goodwill of $5.3 million, a customer relationship intangible asset of $4.6 million and a related deferred tax liability of $1.8 million for Silver State.

6. Goodwill and Other Intangible Assets:

The Company has recorded, at September 29, 2007, goodwill of $362.9 million,
including $5.1 million and $2.0 million in connection with the purchases of Martino Tire and Paris Tire, respectively, (see Note 5). Approximately $34.4 million of goodwill is deductible for income tax purposes.

Other intangible assets represent customer relationships, tradenames, noncompete agreements and software. Intangible assets with indefinite lives are not
amortized. Intangible assets with finite lives are being amortized on a straight-line basis over their estimated useful lives as shown in the table below. The following tables set forth the gross amount and accumulated amortization of the
amortizable intangible assets at September 29, 2007 and December 30, 2006 (in thousands):



|                                    |  |                            |  |                          |         |                   |   |                          |  |   |         |  |   |       
|----------------------------------- |  | -------------------------- |  | ------------------------ | ------- | ----------------- | - | ------------------------ |  | - | ------- |  | - | ------
|                                    |  | EstimatedUsefulLife(years) |  | September 29, 2007       |         | December 30, 2006
|                                    |  | Gross Amount               |  | Accumulated Amortization |         | Gross Amount      |   | Accumulated Amortization
|Customer relationships              |  | 17                         |  | $                        | 229,733 |                   | $ | 31,454                   |  | $ | 217,518 |  | $ | 21,638
|Noncompete agreements               |  | 3-5                        |  |                          | 613     |                   |   | 564                      |  |   | 613     |  |   | 453   
|Software                            |  | 1                          |  |                          | 77      |                   |   | 61                       |  |   | 77      |  |   | 13    
|                                    |  |                            |  |                          |         |                   |   |                          |  |   |         |  |   |       
|Total amortizable intangible assets |  |                            |  | $                        | 230,423 |                   | $ | 32,079                   |  | $ | 218,208 |  | $ | 22,104
|                                    |  |                            |  |                          |         |                   |   |                          |  |   |         |  |   |       

In addition, the Company had $42.7 million of indefinite lived intangible assets, consisting of
tradenames, at September 29, 2007 and December 30, 2006.

Estimated intangible asset amortization expense for each of the next
five fiscal years is expected to be $3.4 million for the remaining three months in 2007 and $13.5 million in each of fiscal years 2008 through 2011.

7.
Long-term Debt and Other Financing Arrangements:

The following table presents the Companys long-term debt at September 29,
2007 and December 30, 2006 (in thousands):



|                           |  |                    |         |   |                   |   |         |  
|-------------------------- |  | ------------------ | ------- | - | ----------------- | - | ------- | -
|                           |  | September 29, 2007 |         |   | December 30, 2006 |  
|Revolving credit facility  |  | $                  | 160,789 |   |                   | $ | 155,016 |  
|Senior Notes               |  |                    | 150,000 |   |                   |   | 150,000 |  
|Senior Floating Rate Notes |  |                    | 140,000 |   |                   |   | 140,000 |  
|Senior Discount Notes      |  |                    | 51,480  |   |                   |   | 49,909  |  
|Capital lease obligations  |  |                    | 14,825  |   |                   |   | 14,459  |  
|Other                      |  |                    | 10,661  |   |                   |   | 11,623  |  
|                           |  |                    |         |   |                   |   |         |  
|                           |  |                    | 527,755 |   |                   |   | 521,007 |  
|LessCurrent maturities    |  |                    | (3,350  | ) |                   |   | (3,853  | )
|                           |  |                    |         |   |                   |   |         |  
|                           |  | $                  | 524,405 |   |                   | $ | 517,154 |  
|                           |  |                    |         |   |                   |   |         |  



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Revolving Credit Facility

On May 9, 2007, ATD entered into the Fifth Amendment to the Fourth Amended and Restated Loan and Security Agreement (the Amended Revolver). The Borrowers under the Amended Revolver are ATD and its
subsidiaries. The Amended Revolver provides for a senior secured revolving credit facility of up to $400.0 million (of which up to $25.0 million may be utilized in the form of commercial and standby letters of credit), subject to a borrowing base
formula. The Amended Revolver is collateralized primarily by ATDs inventories and accounts receivable. Fees incurred in connection with the amendment of $1.1 million and the unamortized portion of deferred financing fees under the previously
existing revolver are being deferred and amortized over the life of the new agreement. As of September 29, 2007, the outstanding Amended Revolver balance was $160.8 million. In addition, ATD had certain letters of credit outstanding at
September 29, 2007 in the aggregate amount of $8.4 million and $148.7 million was available for additional borrowings.

Borrowings
under the Amended Revolver bear interest, at ATDs option, at either (i) the Base Rate, as defined, plus the applicable margin (0.0% as of September 29, 2007) or (ii) the Eurodollar Rate, as defined, plus the applicable margin
(1.25% as of September 29, 2007). At September 29, 2007 and December 30, 2006, borrowings under the Amended Revolver were at a weighted average interest rate of 7.0% and 7.4%, respectively. The applicable margin for the loans varies
based upon a performance grid, as defined in the agreement.

All obligations under the Amended Revolver are guaranteed by Holdings and each
of ATDs existing and future direct and indirect domestic subsidiaries that are not direct obligors thereunder. Obligations under the Amended Revolver are also collateralized by a pledge of substantially all assets of the obligors, including
all shares of ATDs capital stock and that of ATDs subsidiaries, subject to certain limitations.

The Amended Revolver contains
covenants which, among other things, require ATD to meet a fixed charge coverage ratio if ATD does not have at least $25.0 million available to be drawn under the Amended Revolver (subject to a cure), increasing to $35.0 million upon the occurrence
of certain events (subject to a cure); restrict ATDs ability to incur additional debt; enter into guarantees; make loans and investments; declare dividends; modify certain material agreements or constitutive documents relating to preferred
stock; and change the business it conducts, as well as other customary covenants. As of September 29, 2007 and December 30, 2006, ATD was in compliance with these covenants. The Amended Revolver is set to expire on December 31, 2011.

Senior Discount Notes

On March 31, 2005, Holdings issued Senior Discount Notes with a maturity date of October 1, 2013 at an aggregate principal amount at maturity of $51.5 million. The Senior Discount Notes were issued at a substantial discount from
their principal amount at maturity and generated net proceeds of approximately $40.0 million. Prior to April 1, 2007, no interest accrued on the Senior Discount Notes. Instead, the accreted value of the Senior Discount Notes accreted at a rate
of 13% compounded semi-annually to an aggregate accreted value of $51.5 million, the full principal amount at maturity. Subsequent to April 1, 2007, interest on the Senior Discount Notes accrues at a rate of 13% per annum and is payable,
in cash, semi-annually in arrears on April 1 and October 1 of each year, commencing on October 1, 2007. Interest on the Senior Discount Notes will accrue from April 1, 2007.

The Senior Discount Notes are subject to redemption at any time at the option of Holdings, in whole or in part, upon not less than 30 nor more than 60
days notice, at certain redemption prices plus accrued and unpaid interest. On April 1, 2010, if any Senior Discount Notes are outstanding, Holdings will be required to redeem 12.165% of each of the then outstanding Senior Discount Notes
aggregate accreted value at a redemption price of 100% of the accreted value of the portion of the Senior Discount Notes so redeemed.



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Senior Notes

On March 31, 2005, ATD issued Senior Notes in the aggregate principal amount of $150.0 million, resulting in net proceeds of approximately $144.2 million after debt issuance costs. The Senior Notes have an annual
coupon rate of 10.75% and will mature on April 1, 2013. Except as described below, the Senior Notes are not redeemable at the option of ATD prior to April 1, 2009. Thereafter, the Senior Notes will be subject to redemption at any time at
the option of ATD, in whole or in part, upon not less than 30 nor more than 60 days notice, at certain redemption prices plus accrued and unpaid interest. Interest on the Senior Notes is payable semi-annually in arrears on April 1 and
October 1 of each year, commencing on October 1, 2005.

In addition, at any time and from time to time, prior to April 1,
2008, ATD may redeem up to 35% of the original aggregate principal amount of the Senior Notes at a redemption price of 110.75% of the principal amount thereof, plus accrued and unpaid interest, with the net cash proceeds of a public offering of
common stock of ATD or a public offering of common stock of Holdings, the proceeds of which are contributed as common equity capital to ATD; provided that (1) at least 65% of the sum of (a) the original aggregate principal amount of the
Senior Notes issued and (b) the original aggregate principal amount of any additional Senior Notes, if any, issued under the related indenture, if any, remains outstanding immediately after the occurrence of any such redemption; and
(2) such redemption shall occur within 90 days of the date of the closing of such public offering. ATD may also, at any time prior to April 1, 2009, upon a change of control, redeem all of the Senior Notes at a price equal to 100% of the
principal amount plus accrued and unpaid interest plus a make whole premium.

Senior Floating Rate Notes

On March 31, 2005, ATD issued Senior Floating Rate Notes in the aggregate principal amount of $140.0 million, resulting in net proceeds of
approximately $134.5 million after debt issuance costs. The Senior Floating Rate Notes will mature on April 1, 2012. Interest on the Senior Floating Rate Notes is payable quarterly in arrears at a rate equal to the three-month LIBOR, reset
quarterly, plus 6.25%, on January 1, April 1, July 1 and October 1 of each year, beginning on July 1, 2005. The interest rate on the Senior Floating Rate Notes was 11.61% for the nine months ended
September 29, 2007 and ranged between 10.78% and 11.75% for the nine months ended September 30, 2006. The Senior Floating Rate Notes are subject to redemption at any time at the option of ATD, in whole or in part, upon not less than 30 nor
more than 60 days notice, at certain redemption prices plus accrued and unpaid interest.

The indentures governing the Senior Notes, Senior
Floating Rate Notes, and the Senior Discount Notes contain specified restrictions with respect to the conduct of the Companys business and specified restrictive covenants limiting, among other things, the Companys ability to pay
dividends on or repurchase capital stock, repurchase or make early payments on subordinated debt, make investments, incur additional indebtedness, incur or assume liens on the Companys assets to secure debt, merge or consolidate with another
company, transfer or sell assets, and enter into transactions with affiliates.

Debt Maturities

Aggregate annual maturities of long-term debt at September 29, 2007, are as follows (in thousands):



|                      |  |   |        
|--------------------- |  | - | -------
|Year Ending December: |  |  
|2007 (remainder)      |  | $ | 626    
|2008                  |  |   | 2,872  
|2009                  |  |   | 1,484  
|2010                  |  |   | 6,131  
|2011                  |  |   | 160,812
|Thereafter            |  |   | 355,830
|                      |  |   |        
|                      |  | $ | 527,755
|                      |  |   |        



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##### Table of Contents

Derivative Instruments

On October 11, 2005, the Company entered into an interest rate swap agreement (the Swap) to manage exposure to fluctuations in interest
rates. The Swap represents a contract to exchange floating rate for fixed interest payments periodically over the life of the agreement without exchange of the underlying notional amount. The notional amount of the Swap is used to measure interest
to be paid or received and does not represent the amount of exposure to credit loss. At September 29, 2007, the Swap in place covers a notional amount of $85.0 million of the $140.0 million of Senior Floating Rate Notes at a fixed interest rate
of 4.79% and expires on September 30, 2010. This Swap has been designated for hedge accounting treatment. Accordingly, the Company recognizes the fair value of the Swap in the accompanying condensed consolidated balance sheets and any changes
in the fair value are recorded as adjustments to other comprehensive income (loss), net of tax. The fair value of the Swap is the estimated amount that the Company would pay or receive to terminate the agreement at the reporting date. The fair value
of the Swap was a liability of $0.3 million at September 29, 2007 and is included in other liabilities in the accompanying condensed consolidated balance sheet. At December 30, 2006, the fair value of the Swap was an asset of $0.7 million
and is included in other assets in the accompanying condensed consolidated balance sheet.

8. Income Taxes:

The income tax provision (benefit) recognized in the accompanying condensed consolidated statements of operations was based on an effective tax rate of
63.3% for the quarter ended September 29, 2007, 14.7% for the quarter ended September 30, 2006, 65.1% for the nine months ended September 29, 2007 and 32.4% for the nine months ended September 30, 2006. The income tax provision
recorded for the quarter and nine months ended September 29, 2007 has been estimated based on year-to-date income and projected results for the full year. The final effective tax rate to be applied to 2007 will depend on the actual amount of
pre-tax income (loss) generated by the Company by tax jurisdiction for the full year.

The estimated effective tax rate differs from the
federal statutory tax rate as follows:



|                                                      |  |                               |   |  |                               |   |  |                                   |   |  |                                   |  
|----------------------------------------------------- |  | ----------------------------- | - |  | ----------------------------- | - |  | --------------------------------- | - |  | --------------------------------- | -
|                                                      |  | QuarterEndedSeptember 29,2007 |   |  | QuarterEndedSeptember 30,2006 |   |  | Nine MonthsEndedSeptember 29,2007 |   |  | Nine MonthsEndedSeptember 30,2006 |  
|Income taxes at the federal statutory rate            |  | 35.0                          | % |  | 35.0                          | % |  | 35.0                              | % |  | 35.0                              | %
|Increase (decrease) in tax rate resulting from:       |  |                               |   |  |                               |   |  |                                   |   |  |                                   |  
|State income taxes, net of federal income tax benefit |  | 2.2                           |   |  | 1.3                           |   |  | 7.6                               |   |  | 3.5                               |  
|Interest expense related to FIN 48 liabilities        |  | 1.8                           |   |  |                              |   |  | 6.2                               |   |  |                                  |  
|Non-deductible preferred stock dividends              |  | 19.5                          |   |  | (21.6                         | ) |  | 13.2                              |   |  | (6.1                              | )
|Other permanent differences                           |  | 4.8                           |   |  | 0.0                           |   |  | 3.1                               |   |  | 0.0                               |  
|                                                      |  |                               |   |  |                               |   |  |                                   |   |  |                                   |  
|Effective income tax rate                             |  | 63.3                          | % |  | 14.7                          | % |  | 65.1                              | % |  | 32.4                              | %
|                                                      |  |                               |   |  |                               |   |  |                                   |   |  |                                   |  

The Company adopted the provisions of Financial Accounting Standards Board (FASB)
Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, on December 31, 2006 (the first day of its 2007 fiscal year). FIN 48 specifies the way
public companies are to account for uncertainty in income tax reporting, and prescribes a methodology for recognizing, reversing, and measuring the tax benefits of a tax position taken, or expected to be taken, in a tax return. The cumulative effect
of applying this interpretation did not result in any adjustment to retained earnings as of December 31, 2006. At the adoption date of December 31, 2006, the Company had $4.8 million of unrecognized tax benefits, of which $1.9 million
related to temporary timing differences and $0.2 million related to accrued interest and penalties.

During the nine month period ended
September 29, 2007, the Company accrued an additional $0.2 million of interest and penalties related to its uncertain tax positions, all of which is recorded as a component of the Companys income tax provision in the accompanying
condensed consolidated statement of operations. At



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September 29, 2007, the Company had unrecognized tax benefits of $5.0 million, of which $3.1 million is included within accrued liabilities and $1.9
million is included within other liabilities within the accompanying condensed consolidated balance sheet. Of the Companys $5.0 million unrecognized tax benefits as of September 29, 2007, only $0.3 million is anticipated to have an affect
on the Companys effective tax rate if recognized. The residual amount, excluding temporary timing differences, relates to the Companys previous acquisitions and would be recognized as an offset to goodwill, in accordance with EITF
No. 93-7, Uncertainties Related to Income Taxes in a Purchase Business Combination. In addition, of the Companys $3.1 million current liability for uncertain tax positions, approximately $1.9 million relates to temporary
timing differences and approximately $0.9 million relates to certain stock compensation deductions.

While the Company believes that it has
adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than the Companys accrued position. Accordingly, additional provisions of federal and state-related matters could be recorded in the future as
revised estimates are made or the underlying matters are settled or otherwise resolved.

The Company files federal income tax returns, as
well as multiple state jurisdiction tax returns. The tax years 20032006 remain open to examination by the taxing jurisdictions to which the Company is subject.

9. Warrants

In March 2005, Holdings issued warrants to The 1818 Mezzanine Fund II, L.P. (The
1818 Fund) in exchange for $4.6 million in cash less related transaction costs of $0.1 million. The warrants permit the holders to acquire up to 21,895 shares of Holdings Series A Common Stock at $0.01 per share. The warrants expire on
September 30, 2015. The Company has recorded these warrants at fair value and has presented them as a component of stockholders equity in the accompanying condensed consolidated balance sheets.

10. Redeemable Preferred Stock:

The following table
presents the Companys issued and outstanding redeemable preferred stock (amounts in thousands, except share data):



|                                                                                                              |  |                    |        |                   |   |       
|------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------
|                                                                                                              |  | September 29, 2007 |        | December 30, 2006
|Redeemable preferred stock Series Bvariable rate cumulative; 4,500 shares authorized, issued and outstanding |  | $                  |       |                   | $ | 707   
|Redeemable preferred stock8% cumulative; 20,000 shares authorized, issued and outstanding                    |  |                    | 20,852 |                   |   | 19,115
|                                                                                                              |  |                    |        |                   |   |       
|Total redeemable preferred stock                                                                              |  | $                  | 20,852 |                   | $ | 19,822
|                                                                                                              |  |                    |        |                   |   |       

In connection with the acquisition of ATD, Holdings issued 4,500 shares of Series B preferred
stock with a fair value of $2.7 million in exchange for ATDs existing Series B preferred stock, which was subsequently canceled. The stated value of the Series B preferred stock was initially $1,000 per share, and was adjusted based on tire
purchase credits as determined by the number of units purchased under a purchase agreement with a supplier entered into by ATD in May 1997. If the Company did not meet certain tire purchase requirements, holders of the Series B preferred stock were
entitled to receive dividend payments, when and if declared by the Board of Directors, at the prime rate. To date, the Company has met the purchase requirements, thus no dividends have been declared or paid and the remaining liability has been
eliminated. Additionally, an agreement has been reached with the holders of the Series B preferred stock for the redemption and cancellation of these shares. The stated redemption value of the Series B preferred stock as of December 30, 2006 is
included in other liabilities in the accompanying condensed consolidated balance sheet.



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##### Table of Contents

In connection with the acquisition of ATD, Holdings issued 20,000 shares of 8% cumulative mandatorily
redeemable preferred stock to The 1818 Fund in exchange for $15.4 million in cash less related transaction costs of $0.5 million. The cumulative preferred stock has a stated value of $1,000 per share and holders will be entitled to receive, when and
if declared by the Board of Directors, cumulative dividends, payable in cash, at an annual rate of 8.0%. The dividends and accretion of the carrying amount to the redemption amount is recorded as interest expense in the accompanying condensed
consolidated statements of operations. Holdings Board of Directors is not obligated to declare dividends and the preferred stock provides no monetary penalties for a failure to declare dividends. The cumulative preferred stock may be redeemed
by Holdings at any time beginning on the first anniversary of the issuance of the stock and will be required to be redeemed upon a change of control of Holdings or at its maturity in 2015. The 8% cumulative mandatorily redeemable preferred stock is
classified as a noncurrent liability in the accompanying condensed consolidated balance sheets in accordance with Statement of Financial Accounting Standards (SFAS) No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity.

11. Common Stock:

Holdings is authorized to issue shares of four series of common stock, each with a par value of $0.01 per share, including Series A Common Stock, Series B
Common Stock, Series D Common Stock and Common Stock. Only holders of Series B Common Stock, Series D Common Stock and Common Stock have the right to vote. Holders of Series A Common Stock do not have any voting rights, except that the holders of
such series of common stock will have the right to vote as a series to the extent required under the laws of the State of Delaware.

Holders of Series D Common Stock are entitled to 468 votes per share on all matters submitted to the Companys stockholders to be voted upon by the stockholders entitled to vote. Holders of Series B Common Stock and Common Stock are
entitled to one vote per share on all matters submitted to the Companys stockholders to be voted upon by the stockholders entitled to vote.

12.
Commitments and Contingencies:

Guaranteed Lease Obligations

The Company remains liable as a guarantor on certain leases of Winston Tire Company (Winston), its discontinued retail segment. As of
September 29, 2007, total obligations of the Company as guarantor on these leases is approximately $8.2 million extending over 12 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 $7.7 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. Although no assurances can be given, 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. The Company is also involved in various proceedings incidental to the ordinary course of its business. The Company believes, based on consultation with legal counsel, that none of these will have a
material adverse effect on its financial condition, results of operations or cash flows. 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 FIN 48. 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 FIN 48 and EITF No. 93-7. See Note 8 for
further description of FIN 48 and the related impacts.



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##### Table of Contents

13. Shipping and Handling Costs:

Certain Company shipping, handling and other distribution costs are classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Such expenses totaled
$23.5 million and $20.1 million for the quarters ended September 29, 2007 and September 30, 2006, respectively, and $65.8 million and $58.7 million for the nine months ended September 29, 2007 and September 30, 2006,
respectively. Shipping revenue is classified within net sales in accordance with EITF Issue No. 00-10, Accounting for Shipping and Handling Fees and Costs.

14. Recently Issued Accounting Pronouncements:

In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and
certain other items at fair value. This statement is effective for fiscal years beginning after November 15, 2007. The Company does not expect the adoption of SFAS No. 159 to have a material impact on the Companys consolidated
financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. This
statement does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after
November 15, 2007. The Company is currently evaluating the impact, if any, of SFAS No. 157 on its results of operations and financial position.

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 Company.

The
financial information is presented under the following column headings: Parent Company (Holdings), Subsidiary Issuer (ATD), Subsidiary Guarantors (ATDs subsidiaries). The Subsidiary Issuer and all of the Subsidiary Guarantors are wholly-owned
subsidiaries of Holdings. The following describes the guarantor relationships of the Companys senior notes:



| |  |  | Senior Discount Notes in an aggregate principal amount of $51.5 million at maturity were issued by Holdings. Such notes are not guaranteed by the Subsidiary Issuer
or the Subsidiary Guarantors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior Floating Rate Notes and Senior Notes in an aggregate principal amount of $290.0 million were issued by ATD and are unconditionally guaranteed on a joint and
several basis by the Companys non-issuing, wholly-owned subsidiaries on a senior basis and unconditionally guaranteed on a joint and several basis by Holdings on a subordinated basis.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Condensed consolidating balance sheets as of September 29, 2007 and December 30, 2006 are as
follows:



|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|------------------------------------------ |  | ------------------------ | ------- | - | ----------------- | - | --------- | --------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | --------- | -
|                                           |  | As of September 29, 2007 |        
|                                           |  | Parent Company           |         |   | Subsidiary Issuer |   |           | Subsidiary Guarantors |  | Eliminations |         |  | Consolidated |         
|Assets                                     |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Current assets:                            |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Cash and cash equivalents                  |  | $                        | 73      |   |                   | $ | 6,211     |                       |  | $            | 264     |  | $            |         |   |  | $ | 6,548     |  
|Accounts receivable, net                   |  |                          |        |   |                   |   | 107,588   |                       |  |              | 64,171  |  |              |         |   |  |   | 171,759   |  
|Inventories                                |  |                          |        |   |                   |   | 203,673   |                       |  |              | 130,949 |  |              |         |   |  |   | 334,622   |  
|Other current assets                       |  |                          | 4       |   |                   |   | 21,284    |                       |  |              | 1,040   |  |              |         |   |  |   | 22,328    |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total current assets                       |  |                          | 77      |   |                   |   | 338,756   |                       |  |              | 196,424 |  |              |         |   |  |   | 535,257   |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Property and equipment, net                |  |                          |        |   |                   |   | 36,795    |                       |  |              | 5,577   |  |              |         |   |  |   | 42,372    |  
|Goodwill and other intangible assets, net  |  |                          |        |   |                   |   | 577,149   |                       |  |              | 26,870  |  |              |         |   |  |   | 604,019   |  
|Investment in subsidiaries                 |  |                          | 288,155 |   |                   |   | 172,866   |                       |  |              |        |  |              | (461,021 | ) |  |   |          |  
|                                           |  |                          |         |   |                  
|Other assets                               |  |                          | 2,279   |   |                   |   | 26,926    |                       |  |              | 1,041   |  |              |         |   |  |   | 30,246    |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total assets                               |  | $                        | 290,511 |   |                   | $ | 1,152,492 |                       |  | $            | 229,912 |  | $            | (461,021 | ) |  | $ | 1,211,894 |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Liabilities and Stockholders Equity       |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Current liabilities:                       |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Accounts payable                           |  | $                        |        |   |                   | $ | 304,145   |                       |  | $            | 202     |  | $            |         |   |  | $ | 304,347   |  
|Accrued expenses                           |  |                          | 3,389   |   |                   |   | 42,768    |                       |  |              | 2,640   |  |              |         |   |  |   | 48,797    |  
|Current maturities of long-term debt       |  |                          |        |   |                   |   | 3,350     |                       |  |              |        |  |              |         |   |  |   | 3,350     |  
|Intercompany (receivables) payables        |  |                          | (2,448  | ) |                   |   | (46,180   | )                     |  |              | 48,628  |  |              |         |   |  |   |          |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total current liabilities                  |  |                          | 941     |   |                   |   | 304,083   |                       |  |              | 51,470  |  |              |         |   |  |   | 356,494   |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Long-term debt                             |  |                          | 51,480  |   |                   |   | 472,925   |                       |  |              |        |  |              |         |   |  |   | 524,405   |  
|Deferred income taxes                      |  |                          |        |   |                   |   | 77,626    |                       |  |              | 1,482   |  |              |         |   |  |   | 79,108    |  
|Other liabilities                          |  |                          |        |   |                   |   | 9,703     |                       |  |              | 4,094   |  |              |         |   |  |   | 13,797    |  
|Redeemable preferred stock                 |  |                          | 20,852  |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 20,852    |  
|Stockholders equity:                      |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Intercompany investment                    |  |                          |        |   |                   |   | 280,623   |                       |  |              | 140,426 |  |              | (421,049 | ) |  |   |          |  
|Common stock                               |  |                          | 10      |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 10        |  
|Additional paid-in capital                 |  |                          | 217,990 |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 217,990   |  
|Warrants                                   |  |                          | 4,631   |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 4,631     |  
|Accumulated (deficit) earnings             |  |                          | (5,085  | ) |                   |   | 7,740     |                       |  |              | 32,440  |  |              | (40,180  | ) |  |   | (5,085    | )
|Accumulated other comprehensive loss       |  |                          | (208    | ) |                   |   | (208      | )                     |  |              |        |  |              | 208      |   |  |   | (208      | )
|Treasury stock, at cost                    |  |                          | (100    | ) |                   |   |          |                       |  |              |        |  |              |         |   |  |   | (100      | )
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total stockholders equity                 |  |                          | 217,238 |   |                   |   | 288,155   |                       |  |              | 172,866 |  |              | (461,021 | ) |  |   | 217,238   |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total liabilities and stockholders equity |  | $                        | 290,511 |   |                   | $ | 1,152,492 |                       |  | $            | 229,912 |  | $            | (461,021 | ) |  | $ | 1,211,894 |  
|                                           |  |                          |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  



17



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##### Table of Contents

|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|------------------------------------------ |  | ----------------------- | ------- | - | ----------------- | - | --------- | --------------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | --------- | -
|                                           |  | As of December 30, 2006 |        
|                                           |  | Parent Company          |         |   | Subsidiary Issuer |   |           | Subsidiary Guarantors |  | Eliminations |         |  | Consolidated |         
|Assets                                     |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Current assets:                            |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Cash and cash equivalents                  |  | $                       | 73      |   |                   | $ | 3,304     |                       |  | $            | 223     |  | $            |         |   |  | $ | 3,600     |  
|Accounts receivable, net                   |  |                         |        |   |                   |   | 79,809    |                       |  |              | 51,295  |  |              |         |   |  |   | 131,104   |  
|Inventories                                |  |                         |        |   |                   |   | 180,131   |                       |  |              | 117,533 |  |              |         |   |  |   | 297,664   |  
|Other current assets                       |  |                         | 2       |   |                   |   | 17,249    |                       |  |              | 1,010   |  |              |         |   |  |   | 18,261    |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total current assets                       |  |                         | 75      |   |                   |   | 280,493   |                       |  |              | 170,061 |  |              |         |   |  |   | 450,629   |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Property and equipment, net                |  |                         |        |   |                   |   | 38,295    |                       |  |              | 6,276   |  |              |         |   |  |   | 44,571    |  
|Goodwill and other intangible assets, net  |  |                         |        |   |                   |   | 572,859   |                       |  |              | 21,733  |  |              |         |   |  |   | 594,592   |  
|Investment in subsidiaries                 |  |                         | 285,253 |   |                   |   | 156,814   |                       |  |              |        |  |              | (442,067 | ) |  |   |          |  
|Other assets                               |  |                         | 2,543   |   |                   |   | 30,542    |                       |  |              | 629     |  |              |         |   |  |   | 33,714    |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total assets                               |  | $                       | 287,871 |   |                   | $ | 1,079,003 |                       |  | $            | 198,699 |  | $            | (442,067 | ) |  | $ | 1,123,506 |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Liabilities and Stockholders Equity       |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Current liabilities:                       |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Accounts payable                           |  | $                       |        |   |                   | $ | 245,415   |                       |  | $            |        |  | $            |         |   |  | $ | 245,415   |  
|Accrued expenses                           |  |                         | 25      |   |                   |   | 26,881    |                       |  |              | 1,828   |  |              |         |   |  |   | 28,734    |  
|Current maturities of long-term debt       |  |                         |        |   |                   |   | 3,853     |                       |  |              |        |  |              |         |   |  |   | 3,853     |  
|Intercompany payables (receivables)        |  |                         | 1,357   |   |                   |   | (37,037   | )                     |  |              | 35,680  |  |              |         |   |  |   |          |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total current liabilities                  |  |                         | 1,382   |   |                   |   | 239,112   |                       |  |              | 37,508  |  |              |         |   |  |   | 278,002   |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Long-term debt                             |  |                         | 49,909  |   |                   |   | 467,245   |                       |  |              |        |  |              |         |   |  |   | 517,154   |  
|Deferred income taxes                      |  |                         |        |   |                   |   | 82,963    |                       |  |              |        |  |              |         |   |  |   | 82,963    |  
|Other liabilities                          |  |                         |        |   |                   |   | 4,430     |                       |  |              | 4,377   |  |              |         |   |  |   | 8,807     |  
|Redeemable preferred stock                 |  |                         | 19,822  |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 19,822    |  
|Stockholders equity:                      |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Intercompany investment                    |  |                         |        |   |                   |   | 280,622   |                       |  |              | 134,270 |  |              | (414,892 | ) |  |   |          |  
|Common stock                               |  |                         | 10      |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 10        |  
|Additional paid-in capital                 |  |                         | 217,990 |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 217,990   |  
|Warrants                                   |  |                         | 4,631   |   |                   |   |          |                       |  |              |        |  |              |         |   |  |   | 4,631     |  
|Accumulated (deficit) earnings             |  |                         | (6,208  | ) |                   |   | 4,196     |                       |  |              | 22,544  |  |              | (26,740  | ) |  |   | (6,208    | )
|Accumulated other comprehensive income     |  |                         | 435     |   |                   |   | 435       |                       |  |              |        |  |              | (435     | ) |  |   | 435       |  
|Treasury stock, at cost                    |  |                         | (100    | ) |                   |   |          |                       |  |              |        |  |              |         |   |  |   | (100      | )
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total stockholders equity                 |  |                         | 216,758 |   |                   |   | 285,253   |                       |  |              | 156,814 |  |              | (442,067 | ) |  |   | 216,758   |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  
|Total liabilities and stockholders equity |  | $                       | 287,871 |   |                   | $ | 1,079,003 |                       |  | $            | 198,699 |  | $            | (442,067 | ) |  | $ | 1,123,506 |  
|                                           |  |                         |         |   |                   |   |           |                       |  |              |         |  |              |          |   |  |   |           |  



18



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##### Table of Contents

Condensed consolidating statements of operations for the quarters ended September 29, 2007 and
September 30, 2006 are as follows:



|                                                                                                          |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | - | ---------------- | - | ------- | -------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                                                          |  | For the Quarter Ended September 29, 2007 |       
|                                                                                                          |  | ParentCompany                            |        |   | SubsidiaryIssuer |   |         | SubsidiaryGuarantors |  |   | Eliminations |   |  | Consolidated |       
|Net sales                                                                                                 |  | $                                        |       |   |                  | $ | 302,555 |                      |  | $ | 202,335      |   |  | $            |       |   |  | $ | 504,890 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                                          |       |   |                  |   | 249,127 |                      |  |   | 169,718      |   |  |              |       |   |  |   | 418,845 |  
|                                                                                                          |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  
|Gross profit                                                                                              |  |                                          |       |   |                  |   | 53,428  |                      |  |   | 32,617       |   |  |              |       |   |  |   | 86,045  |  
|Selling, general and administrative expenses                                                              |  |                                          | 11     |   |                  |   | 44,787  |                      |  |   | 21,263       |   |  |              |       |   |  |   | 66,061  |  
|                                                                                                          |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  
|Operating (loss) income                                                                                   |  |                                          | (11    | ) |                  |   | 8,641   |                      |  |   | 11,354       |   |  |              |       |   |  |   | 19,984  |  
|Other (expense) income:                                                                                   |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  
|Interest expense                                                                                          |  |                                          | (2,349 | ) |                  |   | (13,257 | )                    |  |   | (9           | ) |  |              |       |   |  |   | (15,615 | )
|Other, net                                                                                                |  |                                          |       |   |                  |   | (40     | )                    |  |   | 46           |   |  |              |       |   |  |   | 6       |  
|Equity earnings of subsidiaries                                                                           |  |                                          | 2,119  |   |                  |   | 2,827   |                      |  |   |             |   |  |              | (4,946 | ) |  |   |        |  
|                                                                                                          |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  
|(Loss) income from operations before income taxes                                                         |  |                                          | (241   | ) |                  |   | (1,829  | )                    |  |   | 11,391       |   |  |              | (4,946 | ) |  |   | 4,375   |  
|Income tax (benefit) provision                                                                            |  |                                          | (1,845 | ) |                  |   | (3,948  | )                    |  |   | 8,564        |   |  |              |       |   |  |   | 2,771   |  
|                                                                                                          |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  
|Net income                                                                                                |  | $                                        | 1,604  |   |                  | $ | 2,119   |                      |  | $ | 2,827        |   |  | $            | (4,946 | ) |  | $ | 1,604   |  
|                                                                                                          |  |                                          |        |   |                  |   |         |                      |  |   |              |   |  |              |        |   |  |   |         |  



|                                                                                                          |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | - | ----------------- | - | ------- | --------------------- |  | - | ------------ | - |  | ------------ | ------ | - |  | - | ------- | -
|                                                                                                          |  | For the Quarter Ended September 30, 2006 |       
|                                                                                                          |  | Parent Company                           |        |   | Subsidiary Issuer |   |         | Subsidiary Guarantors |  |   | Eliminations |   |  | Consolidated |       
|Net sales                                                                                                 |  | $                                        |       |   |                   | $ | 255,704 |                       |  | $ | 158,438      |   |  | $            |       |   |  | $ | 414,142 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                                          |       |   |                   |   | 209,007 |                       |  |   | 133,385      |   |  |              |       |   |  |   | 342,392 |  
|                                                                                                          |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  
|Gross profit                                                                                              |  |                                          |       |   |                   |   | 46,697  |                       |  |   | 25,053       |   |  |              |       |   |  |   | 71,750  |  
|Selling, general and administrative expenses                                                              |  |                                          | 9      |   |                   |   | 31,798  |                       |  |   | 22,869       |   |  |              |       |   |  |   | 54,676  |  
|Impairment of intangible asset                                                                            |  |                                          |       |   |                   |   | 2,640   |                       |  |   |             |   |  |              |       |   |  |   | 2,640   |  
|                                                                                                          |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  
|Operating (loss) income                                                                                   |  |                                          | (9     | ) |                   |   | 12,259  |                       |  |   | 2,184        |   |  |              |       |   |  |   | 14,434  |  
|Other (expense) income:                                                                                   |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  
|Interest expense                                                                                          |  |                                          | (2,113 | ) |                   |   | (11,519 | )                     |  |   | (1,407       | ) |  |              |       |   |  |   | (15,039 | )
|Other, net                                                                                                |  |                                          |       |   |                   |   | (153    | )                     |  |   | (47          | ) |  |              |       |   |  |   | (200    | )
|Equity earnings of subsidiaries                                                                           |  |                                          | 829    |   |                   |   | 533     |                       |  |   |             |   |  |              | (1,362 | ) |  |   |        |  
|                                                                                                          |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  
|(Loss) income from operations before income taxes                                                         |  |                                          | (1,293 | ) |                   |   | 1,120   |                       |  |   | 730          |   |  |              | (1,362 | ) |  |   | (805    | )
|Income tax (benefit) provision                                                                            |  |                                          | (606   | ) |                   |   | 291     |                       |  |   | 197          |   |  |              |       |   |  |   | (118    | )
|                                                                                                          |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  
|Net (loss) income                                                                                         |  | $                                        | (687   | ) |                   | $ | 829     |                       |  | $ | 533          |   |  | $            | (1,362 | ) |  | $ | (687    | )
|                                                                                                          |  |                                          |        |   |                   |   |         |                       |  |   |              |   |  |              |        |   |  |   |         |  



19



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##### Table of Contents

Condensed consolidating statements of operations for the nine months ended September 29, 2007 and
September 30, 2006 are as follows:



|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|--------------------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | ----------------- | - | ------- | --------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | --------- | -
|                                                                                                          |  | For the Nine Months Ended September 29, 2007 |       
|                                                                                                          |  | Parent Company                               |        |   | Subsidiary Issuer |   |         | Subsidiary Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                                                                                 |  | $                                            |       |   |                   | $ | 854,319 |                       |  | $ | 545,002      |   |  | $            |        |   |  | $ | 1,399,321 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                                              |       |   |                   |   | 703,451 |                       |  |   | 457,788      |   |  |              |        |   |  |   | 1,161,239 |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Gross profit                                                                                              |  |                                              |       |   |                   |   | 150,868 |                       |  |   | 87,214       |   |  |              |        |   |  |   | 238,082   |  
|Selling, general and administrative expenses                                                              |  |                                              | 30     |   |                   |   | 129,257 |                       |  |   | 58,933       |   |  |              |        |   |  |   | 188,220   |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Operating (loss) income                                                                                   |  |                                              | (30    | ) |                   |   | 21,611  |                       |  |   | 28,281       |   |  |              |        |   |  |   | 49,862    |  
|Other (expense) income:                                                                                   |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Interest (expense) income                                                                                 |  |                                              | (6,918 | ) |                   |   | (39,482 | )                     |  |   | 11           |   |  |              |        |   |  |   | (46,389   | )
|Other, net                                                                                                |  |                                              |       |   |                   |   | (346    | )                     |  |   | 90           |   |  |              |        |   |  |   | (256      | )
|Equity earnings of subsidiaries                                                                           |  |                                              | 3,544  |   |                   |   | 9,896   |                       |  |   |             |   |  |              | (13,440 | ) |  |   |          |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|(Loss) income from operations before income taxes                                                         |  |                                              | (3,404 | ) |                   |   | (8,321  | )                     |  |   | 28,382       |   |  |              | (13,440 | ) |  |   | 3,217     |  
|Income tax (benefit) provision                                                                            |  |                                              | (4,527 | ) |                   |   | (11,865 | )                     |  |   | 18,486       |   |  |              |        |   |  |   | 2,094     |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Net income                                                                                                |  | $                                            | 1,123  |   |                   | $ | 3,544   |                       |  | $ | 9,896        |   |  | $            | (13,440 | ) |  | $ | 1,123     |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|                                                                                                          | 
|                                                                                                          |  | For the Nine Months Ended September 30, 2006 |       
|                                                                                                          |  | Parent Company                               |        |   | Subsidiary Issuer |   |         | Subsidiary Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                                                                                 |  | $                                            |       |   |                   | $ | 743,730 |                       |  | $ | 429,610      |   |  | $            |        |   |  | $ | 1,173,340 |  
|Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below |  |                                              |       |   |                   |   | 607,905 |                       |  |   | 357,144      |   |  |              |        |   |  |   | 965,049   |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Gross profit                                                                                              |  |                                              |       |   |                   |   | 135,825 |                       |  |   | 72,466       |   |  |              |        |   |  |   | 208,291   |  
|Selling, general and administrative expenses                                                              |  |                                              | 27     |   |                   |   | 103,013 |                       |  |   | 65,706       |   |  |              |        |   |  |   | 168,746   |  
|Impairment of intangible asset                                                                            |  |                                              |       |   |                   |   | 2,640   |                       |  |   |             |   |  |              |        |   |  |   | 2,640     |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Operating (loss) income                                                                                   |  |                                              | (27    | ) |                   |   | 30,172  |                       |  |   | 6,760        |   |  |              |        |   |  |   | 36,905    |  
|Other (expense) income:                                                                                   |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Interest expense                                                                                          |  |                                              | (6,226 | ) |                   |   | (34,362 | )                     |  |   | (4,214       | ) |  |              |        |   |  |   | (44,802   | )
|Other, net                                                                                                |  |                                              |       |   |                   |   | (216    | )                     |  |   | 100          |   |  |              |        |   |  |   | (116      | )
|Equity (loss) earnings of subsidiaries                                                                    |  |                                              | (1,192 | ) |                   |   | 1,787   |                       |  |   |             |   |  |              | (595    | ) |  |   |          |  
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|(Loss) income from operations before income taxes                                                         |  |                                              | (7,445 | ) |                   |   | (2,619  | )                     |  |   | 2,646        |   |  |              | (595    | ) |  |   | (8,013    | )
|Income tax (benefit) provision                                                                            |  |                                              | (2,027 | ) |                   |   | (1,427  | )                     |  |   | 859          |   |  |              |        |   |  |   | (2,595    | )
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  
|Net (loss) income                                                                                         |  | $                                            | (5,418 | ) |                   | $ | (1,192  | )                     |  | $ | 1,787        |   |  | $            | (595    | ) |  | $ | (5,418    | )
|                                                                                                          |  |                                              |        |   |                   |   |         |                       |  |   |              |   |  |              |         |   |  |   |           |  



20



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Condensed consolidating statements of cash flows for the nine months ended September 29, 2007 and
September 30, 2006 are as follows:



|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|--------------------------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | ----------------- | - | ---------- | --------------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | ---------- | -
|                                                                                  |  | For the Nine Months Ended September 29, 2007 |       
|                                                                                  |  | Parent Company                               |        |   | Subsidiary Issuer |   |            | Subsidiary Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Cash flows from operating activities:                                             |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Net income                                                                        |  | $                                            | 1,123  |   |                   | $ | 3,544      |                       |  | $ | 9,896        |   |  | $            | (13,440 | ) |  | $ | 1,123      |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Depreciation and amortization of intangibles and other assets                     |  |                                              | 264    |   |                   |   | 21,486     |                       |  |   | 3,031        |   |  |              |        |   |  |   | 24,781     |  
|Provision for doubtful accounts                                                   |  |                                              |       |   |                   |   | 162        |                       |  |   | 103          |   |  |              |        |   |  |   | 265        |  
|Accretion of 8% cumulative preferred stock and Senior Discount Notes              |  |                                              | 1,902  |   |                   |   |           |                       |  |   |             |   |  |              |        |   |  |   | 1,902      |  
|Benefit for deferred income taxes                                                 |  |                                              |       |   |                   |   | (5,578     | )                     |  |   |             |   |  |              |        |   |  |   | (5,578     | )
|Other, net                                                                        |  |                                              | 1,407  |   |                   |   | (604       | )                     |  |   | 66           |   |  |              |        |   |  |   | 869        |  
|Equity earnings of subsidiaries                                                   |  |                                              | (3,544 | ) |                   |   | (9,896     | )                     |  |   |             |   |  |              | 13,440  |   |  |   |           |  
|Change in assets and liabilities:                                                 |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Accounts receivable                                                               |  |                                              |       |   |                   |   | (21,653    | )                     |  |   | (10,039      | ) |  |              |        |   |  |   | (31,692    | )
|Inventories                                                                       |  |                                              |       |   |                   |   | (19,110    | )                     |  |   | (9,449       | ) |  |              |        |   |  |   | (28,559    | )
|Other current assets                                                              |  |                                              | (2     | ) |                   |   | (818       | )                     |  |   | (31          | ) |  |              |        |   |  |   | (851       | )
|Accounts payable and accrued expenses                                             |  |                                              | 3,362  |   |                   |   | 60,673     |                       |  |   | (4,920       | ) |  |              |        |   |  |   | 59,115     |  
|Other, net                                                                        |  |                                              |       |   |                   |   | 2,514      |                       |  |   | (441         | ) |  |              |        |   |  |   | 2,073      |  
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Net cash provided by (used in) operations                                         |  |                                              | 4,512  |   |                   |   | 30,720     |                       |  |   | (11,784      | ) |  |              |        |   |  |   | 23,448     |  
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|                                                                                  |  |                                              |        |   |                  
|Cash flows from investing activities:                                             |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Acquisitions, net of cash acquired                                                |  |                                              |       |   |                   |   | (15,561    | )                     |  |   | 79           |   |  |              |        |   |  |   | (15,482    | )
|Purchase of property and equipment                                                |  |                                              |       |   |                   |   | (3,485     | )                     |  |   | (1,377       | ) |  |              |        |   |  |   | (4,862     | )
|Proceeds from sale of property and equipment                                      |  |                                              |       |   |                   |   | 43         |                       |  |   | 150          |   |  |              |        |   |  |   | 193        |  
|Intercompany                                                                      |  |                                              | (4,512 | ) |                   |   | (8,461     | )                     |  |   | 12,973       |   |  |              |        |   |  |   |           |  
|Other, net                                                                        |  |                                              |       |   |                   |   | (989       | )                     |  |   |             |   |  |              |        |   |  |   | (989       | )
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Net cash (used in) provided by investing activities                               |  |                                              | (4,512 | ) |                   |   | (28,453    | )                     |  |   | 11,825       |   |  |              |        |   |  |   | (21,140    | )
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|                                                                                  |  |                                              |        |   |                  
|Cash flows from financing activities:                                             |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Borrowings from revolving credit facility                                         |  |                                              |       |   |                   |   | 1,222,680  |                       |  |   |             |   |  |              |        |   |  |   | 1,222,680  |  
|Repayments of revolving credit facility                                           |  |                                              |       |   |                   |   | (1,216,907 | )                     |  |   |             |   |  |              |        |   |  |   | (1,216,907 | )
|Payments of other long-term debt                                                  |  |                                              |       |   |                   |   | (4,048     | )                     |  |   |             |   |  |              |        |   |  |   | (4,048     | )
|Payments of deferred financing costs                                              |  |                                              |       |   |                   |   | (1,085     | )                     |  |   |             |   |  |              |        |   |  |   | (1,085     | )
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Net cash provided by financing activities                                         |  |                                              |       |   |                   |   | 640        |                       |  |   |             |   |  |              |        |   |  |   | 640        |  
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Net increase in cash and cash equivalents                                         |  |                                              |       |   |                   |   | 2,907      |                       |  |   | 41           |   |  |              |        |   |  |   | 2,948      |  
|Cash and cash equivalents, beginning of period                                    |  |                                              | 73     |   |                   |   | 3,304      |                       |  |   | 223          |   |  |              |        |   |  |   | 3,600      |  
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  
|Cash and cash equivalents, end of period                                          |  | $                                            | 73     |   |                   | $ | 6,211      |                       |  | $ | 264          |   |  | $            |        |   |  | $ | 6,548      |  
|                                                                                  |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |         |   |  |   |            |  



21



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|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|---------------------------------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | ----------------- | - | ---------- | --------------------- |  | - | ------------ | - |  | ------------ | ---- | - |  | - | ---------- | -
|                                                                                         |  | For the Nine Months Ended September 30, 2006 |       
|                                                                                         |  | Parent Company                               |        |   | Subsidiary Issuer |   |            | Subsidiary Guarantors |  |   | Eliminations |   |  | Consolidated |     
|                                                                                         |  | (Unaudited)                                  |       
|Cash flows from operating activities:                                                    |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Net (loss) income                                                                        |  | $                                            | (5,418 | ) |                   | $ | (1,192     | )                     |  | $ | 1,787        |   |  | $            | (595 | ) |  | $ | (5,418     | )
|Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Depreciation and amortization of intangibles and other assets                            |  |                                              | 263    |   |                   |   | 19,555     |                       |  |   | 2,589        |   |  |              |     |   |  |   | 22,407     |  
|Impairment of intangible asset                                                           |  |                                              |       |   |                   |   | 2,640      |                       |  |   |             |   |  |              |     |   |  |   | 2,640      |  
|Recovery of doubtful accounts                                                            |  |                                              |       |   |                   |   | (206       | )                     |  |   | (267         | ) |  |              |     |   |  |   | (473       | )
|Accretion of 8% cumulative preferred stock and Senior Discount Notes                     |  |                                              | 4,666  |   |                   |   |           |                       |  |   |             |   |  |              |     |   |  |   | 4,666      |  
|Benefit for deferred income taxes                                                        |  |                                              |       |   |                   |   | (4,842     | )                     |  |   |             |   |  |              |     |   |  |   | (4,842     | )
|Other, net                                                                               |  |                                              | 761    |   |                   |   | (217       | )                     |  |   | (416         | ) |  |              |     |   |  |   | 128        |  
|Equity earnings of subsidiaries                                                          |  |                                              | 1,192  |   |                   |   | (1,787     | )                     |  |   |             |   |  |              | 595  |   |  |   |           |  
|Change in assets and liabilities:                                                        |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Accounts receivable                                                                      |  |                                              |       |   |                   |   | (5,791     | )                     |  |   | (7,400       | ) |  |              |     |   |  |   | (13,191    | )
|Inventories                                                                              |  |                                              |       |   |                   |   | 4,389      |                       |  |   | 16,464       |   |  |              |     |   |  |   | 20,853     |  
|Other current assets                                                                     |  |                                              |       |   |                   |   | 9,920      |                       |  |   | (320         | ) |  |              |     |   |  |   | 9,600      |  
|Income tax receivable                                                                    |  |                                              |       |   |                   |   | 13,605     |                       |  |   |             |   |  |              |     |   |  |   | 13,605     |  
|Accounts payable and accrued expenses                                                    |  |                                              | 18     |   |                   |   | 35,922     |                       |  |   | (8,310       | ) |  |              |     |   |  |   | 27,630     |  
|Other, net                                                                               |  |                                              | (26    | ) |                   |   | (114       | )                     |  |   | 202          |   |  |              |     |   |  |   | 62         |  
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Net cash provided by operations                                                          |  |                                              | 1,456  |   |                   |   | 71,882     |                       |  |   | 4,329        |   |  |              |     |   |  |   | 77,667     |  
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Cash flows from investing activities:                                                    |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Acquisitions, net of cash acquired                                                       |  |                                              |       |   |                   |   | (19,932    | )                     |  |   | 632          |   |  |              |     |   |  |   | (19,300    | )
|Purchase of property and equipment                                                       |  |                                              |       |   |                   |   | (5,553     | )                     |  |   | (313         | ) |  |              |     |   |  |   | (5,866     | )
|Purchase of other assets                                                                 |  |                                              |       |   |                   |   | (319       | )                     |  |   |             |   |  |              |     |   |  |   | (319       | )
|Proceeds from sale of property and equipment                                             |  |                                              |       |   |                   |   | 48         |                       |  |   | 339          |   |  |              |     |   |  |   | 387        |  
|Proceeds from disposal of assets held for sale                                           |  |                                              |       |   |                   |   | 1,790      |                       |  |   |             |   |  |              |     |   |  |   | 1,790      |  
|Cash held in escrow                                                                      |  |                                              |       |   |                   |   | (1,480     | )                     |  |   |             |   |  |              |     |   |  |   | (1,480     | )
|Intercompany                                                                             |  |                                              | (1,453 | ) |                   |   | 7,982      |                       |  |   | (6,529       | ) |  |              |     |   |  |   |           |  
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Net cash used in investing activities                                                    |  |                                              | (1,453 | ) |                   |   | (17,464    | )                     |  |   | (5,871       | ) |  |              |     |   |  |   | (24,788    | )
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Cash flows from financing activities:                                                    |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Borrowings from revolving credit facility                                                |  |                                              |       |   |                   |   | 1,019,752  |                       |  |   |             |   |  |              |     |   |  |   | 1,019,752  |  
|Repayments of revolving credit facility                                                  |  |                                              |       |   |                   |   | (1,069,593 | )                     |  |   |             |   |  |              |     |   |  |   | (1,069,593 | )
|Payments of other long-term debt                                                         |  |                                              |       |   |                   |   | (4,282     | )                     |  |   |             |   |  |              |     |   |  |   | (4,282     | )
|Payments of deferred financing costs                                                     |  |                                              | (3     | ) |                   |   | (231       | )                     |  |   |             |   |  |              |     |   |  |   | (234       | )
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Net cash used in financing activities                                                    |  |                                              | (3     | ) |                   |   | (54,354    | )                     |  |   |             |   |  |              |     |   |  |   | (54,357    | )
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Net increase (decrease) in cash and cash equivalents                                     |  |                                              |       |   |                   |   | 64         |                       |  |   | (1,542       | ) |  |              |     |   |  |   | (1,478     | )
|Cash and cash equivalents, beginning of period                                           |  |                                              | 73     |   |                   |   | 3,726      |                       |  |   | 1,746        |   |  |              |     |   |  |   | 5,545      |  
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  
|Cash and cash equivalents, end of period                                                 |  | $                                            | 73     |   |                   | $ | 3,790      |                       |  | $ | 204          |   |  | $            |     |   |  | $ | 4,067      |  
|                                                                                         |  |                                              |        |   |                   |   |            |                       |  |   |              |   |  |              |      |   |  |   |            |  



22



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

As used in this report on Form 10-Q, the terms Holdings, Company, we, us, our, and
similar terms refer to American Tire Distributors Holdings, Inc., and its subsidiaries, unless the context indicates otherwise. The term ATD refers to American Tire Distributors, Inc. and its subsidiaries. The following discussion and
analysis of our consolidated results of operations, financial condition and liquidity should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended December 30, 2006 and our condensed consolidated financial
statements and notes thereto contained in Part I of this report on Form 10-Q.

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 quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the
associated quarters having only 13 weeks. The quarters ended September 29, 2007 and September 30, 2006 each contain operating results for 13 weeks. The nine months ended September 29, 2007 and September 30, 2006 each contain
operating results for 39 weeks.

Overview

According to Modern Tire Dealer magazine, we are the largest distributor of tires to the U.S. replacement tire market, a $27.2 billion industry in 2006. The U.S. replacement market had experienced stable historic growth primarily driven by
several positive industry trends such as an increase in the number of vehicles on the road, an increase in the number of licensed drivers, an increase in the number of miles driven, and an increase in the average age of vehicles. Additionally, price
increases, resulting from rising raw materials costs, have traditionally provided for overall growth in this market. Unit replacement tire demand softened in 2006 and into early 2007. According to the Rubber Manufacturers Association
(RMA) replacement tire units have rebounded modestly in the later part of 2007, up 2.0% from third quarter 2006, while we have achieved a quarter-over-quarter increase of 19.8%, including 5.8% from acquisitions. Unit replacement tire
demand for the nine-month period ended September 30, 2007 is up 1.8% from the same period in 2006, as reported by the RMA, while we have achieved a 19.3% increase during this same period, including 3.8% from acquisitions. Our above market
growth resulted, in part, from actions taken by us during 2006 intended to competitively reposition our entry level and higher performance products. We believe the weakened industry demand in 2006 and into 2007 was due, in part, to concerns from
consumers over rising interest rates, higher minimum credit card payments and increased fuel costs, all of which contributed to the deferral of tire purchases.

Dynamics affecting industry growth include an increase in high and ultra-high performance and larger rim diameter tires, proliferation of larger vehicles, such as SUVs, over the last several years, and shorter tire
replacement cycles as related to high performance and ultra-high performance tires. Our ultra-high performance tires are our highest profit products and also have relatively shorter replacement cycles. High and ultra-high performance tires have
shown significant sales growth as compared to the overall market. According to Modern Tire Dealer magazine, industry wide, the number of units sold in this subcategory increased by 4.4% from 2005 to 2006 and according to the RMA, are up 7.7% in the
first nine months of 2007 as compared with 2006. During these same periods and excluding acquisitions, our high and ultra-high performance tire unit sales were up 10.7% and 34.5%, respectively, due, in large part, to our increased breadth and depth
of product offering. We expect the trend of selling more high and ultra-high performance tires, as well as larger auto rim diameter tires, to be an ongoing area of strategic focus for us, and the industry as a whole, and believe that we are well
positioned to benefit from this rising demand.

Our revenues are primarily generated from sales of passenger car and light truck tires,
which represented approximately 77% of our total net sales for the quarter ended September 29, 2007. The remainder of net sales is derived from other tire sales (13%), custom wheels (5%), automotive service equipment (2%), and other products
(3%). We sell our products to a variety of customers and geographic markets. We have continued to expand and geographically diversify our operations in recent years by executing a strategy that includes both organic growth



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and growth through acquisitions. Over the past three years, we have successfully acquired and integrated six businesses representing approximately $329
million in annual net sales. As we continue to expand our market presence, we have been able to effectively leverage our scalable distribution infrastructure to achieve higher growth and increased profit.

On July 2, 2007, we completed the purchase of certain assets and the assumption of certain liabilities of Martino Tire Company (Martino
Tire) pursuant to the terms of an Asset Purchase Agreement dated as of July 2, 2007. The aggregate purchase price of this acquisition was $9.4 million, consisting of $9.2 million in cash and $0.2 million in direct acquisition costs. This
acquisition expands ATDs service across the state of Florida and will complement our existing distribution centers currently located within the state of Florida. The acquisition was financed by ATDs revolving credit facility. The results
of operations for the acquired business have been included in the accompanying condensed consolidated statements of operations from the date of acquisition.

On May 31, 2007, we completed the purchase of all the outstanding stock of Jim Paris Tire City of Montbello, Inc. (Paris Tire) pursuant to the terms of a Stock Purchase Agreement dated as of
May 31, 2007. The aggregate purchase price of this acquisition was $6.2 million, consisting of $6.0 million in cash and $0.2 million in direct acquisition costs. This acquisition expanded our service across the state of Colorado and the
Mid-West. The acquisition was financed by ATDs revolving credit facility. The results of operations for the acquired business have been included in the accompanying condensed consolidated statements of operations from the date of acquisition.

On July 28, 2006, we completed the purchase of all the outstanding stock of Samaritan Wholesale Tire Company (Samaritan
Tire) pursuant to the terms of a Stock Purchase Agreement dated as of July 28, 2006. This acquisition expanded our service across the state of Minnesota and into Western Wisconsin.

On January 27, 2006, we completed the purchase of all the outstanding stock of Silver State Tire Company and Golden State Tire Distributors
(collectively Silver State) pursuant to the terms of a Stock Purchase Agreement dated December 23, 2005. This acquisition established a distribution footprint for us across the state of Nevada.

The Samaritan Tire and Silver State acquisitions were financed through borrowings under ATDs revolving credit facility. The results of operations
for the acquired businesses have been included in the accompanying condensed consolidated statements of operations from the date of acquisition. The aggregate purchase price of these acquisitions was $21.0 million, consisting of $20.7 million in
cash and $0.3 million in direct acquisition costs.



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##### Table of Contents

Results of Operations

Quarter Ended September 29, 2007 Compared to Quarter Ended September 30, 2006

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 (in thousands):



|                                                  |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   
|------------------------------------------------- |  | ----------------------------- | ----------------------- | - | ----------------------------- | ----------------------- | ------- | ------------------------ | ------------------ | - | --------------------------------- | ------------------ |  | --------------------------------------------------------- | - |  | ----- | - |  | ----- | --
|                                                  |  | QuarterEndedSeptember 29,2007 |                         |   | QuarterEndedSeptember 30,2006 |                         |         | Period OverPeriod Change |                    |   | Period OverPeriodPercentageChange |                    |  | Results as a Percentage of NetSales for the Quarter Ended |  
|                                                  |  |                               | Favorable (unfavorable) |   |                               | Favorable (unfavorable) |         |                          | September 29, 2007 |   |                                   | September 30, 2006 | 
|                                                  |  | (Unaudited)                   |                         |   | (Unaudited)                   |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |  
|Net sales                                         |  | $                             | 504,890                 |   |                               | $                       | 414,142 |                          |                    | $ | 90,748                            |                    |  | 21.9                                                      | % |  | 100.0 | % |  | 100.0 | % 
|Cost of goods sold                                |  |                               | 418,845                 |   |                               |                         | 342,392 |                          |                    |   | (76,453                           | )                  |  | (22.3                                                     | ) |  | 83.0  |   |  | 82.7  |   
|                                                  |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   
|Gross profit                                      |  |                               | 86,045                  |   |                               |                         | 71,750  |                          |                    |   | 14,295                            |                    |  | 19.9                                                      |   |  | 17.0  |   |  | 17.3  |   
|Selling, general and administrative expenses      |  |                               | 66,061                  |   |                               |                         | 54,676  |                          |                    |   | (11,385                           | )                  |  | (20.8                                                     | ) |  | 13.1  |   |  | 13.2  |   
|Impairment of intangible asset                    |  |                               |                        |   |                               |                         | 2,640   |                          |                    |   | 2,640                             |                    |  | 100.0                                                     |   |  | 0.0   |   |  | 0.6   |   
|                                                  |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   
|Operating income                                  |  |                               | 19,984                  |   |                               |                         | 14,434  |                          |                    |   | 5,550                             |                    |  | 38.5                                                      |   |  | 4.0   |   |  | 3.5   |   
|Other expense:                                    |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   
|Interest expense                                  |  |                               | (15,615                 | ) |                               |                         | (15,039 | )                        |                    |   | (576                              | )                  |  | (3.8                                                      | ) |  | (3.1  | ) |  | (3.6  | ) 
|Other, net                                        |  |                               | 6                       |   |                               |                         | (200    | )                        |                    |   | 206                               |                    |  | 103.0                                                     |   |  | 0.0   |   |  | 0.0   |   
|                                                  |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   
|Income (loss) from operations before income taxes |  |                               | 4,375                   |   |                               |                         | (805    | )                        |                    |   | 5,180                             |                    |  | 643.5                                                     |   |  | 0.9   |   |  | (0.2  | ) 
|Income tax provision (benefit)                    |  |                               | 2,771                   |   |                               |                         | (118    | )                        |                    |   | (2,889                            | )                  |  | (2,448.3                                                  | ) |  | 0.5   |   |  | (0.0  | ) 
|                                                  |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   
|Net income (loss)                                 |  | $                             | 1,604                   |   |                               | $                       | (687    | )                        |                    | $ | 2,291                             |                    |  | 333.5                                                     | % |  | 0.4   | % |  | (0.2  | )%
|                                                  |  |                               |                         |   |                               |                         |         |                          |                    |   |                                   |                    |  |                                                           |   |  |       |   |  |       |   

Net Sales

Sales increased $90.7 million in third quarter 2007 primarily driven by growth in unit sales of passenger and light truck tires, collectively contributing $48.1 million to sales. Pricing, net of select promotional
activity, provided for an additional $20.0 million, as we have passed-through manufacturer price increases during 2006 and into 2007 that are due to increased raw material costs. The acquisitions of Martino Tire in July 2007, Paris Tire in May 2007
and Samaritan Tire in July 2006 resulted in additional sales growth of $22.4 million. Medium truck tire sales declined during the third quarter as this market softened, but were offset by growth in other tire sales, including industrial, farm and
boat trailer tires.

Gross Profit

Gross profit in third quarter 2007 increased $14.3 million primarily due to increased tire unit sales, acquisitions, and favorable pricing. Overall contribution from high performance tire sales accounted for approximately 35% of the gross
profit increase.



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##### Table of Contents

Selling, General and Administrative Expenses

The increase in selling, general and administrative expenses is due, in part, to the inclusion of our recently acquired operations which accounted for
approximately $4.0 million of the increase. Other increases were primarily due to higher employee related expenses, related to incentive compensation, including sales commissions, incurred to support increased sales volume and higher lease and
depreciation expense related to our continued expansions, and enhancements, to our infrastructure, which collectively amounted to $7.4 million.

Selling, general and administrative costs remained steady as a percentage of net sales, declining 0.1% to 13.1% in third quarter 2007 from 13.2% in third quarter 2006. This decrease was primarily a result of higher sales unit volumes
combined with increased operating efficiencies.

Impairment of Long-Lived Assets

In September 2006, we were informed by one of our suppliers that it was going to cease the manufacturing of one of our tire brands for which we maintained
a trade name intangible asset. As a result of this decision and due to our inability to place other sourcing regarding this tire brand, we, in accordance with Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets, evaluated the fair value of the trade name intangible asset, as computed utilizing a discounted cash flow methodology, as compared to the current carrying value. Based on this evaluation, we recorded
a charge of $2.6 million, the full carrying amount of the trade name intangible asset. No impairment charges were recorded during the quarter ended September 29, 2007.

Interest Expense

The increase in interest expense for third quarter 2007 is primarily due to higher
debt levels, quarter-over-quarter resulting from the acquisition of Paris Tire in May 2007 and Martino Tire in July 2007.

Provision for Income Taxes

We recognized an income tax provision of $2.8 million in third quarter 2007 based on pre-tax income of $4.4 million, compared to an
income tax benefit of $0.1 million in third quarter 2006 based on a pre-tax loss of $0.8 million. The effective tax rate in third quarter 2007 was 63.3% compared with 14.7% in third quarter 2006. The increase in the effective tax rate is due
primarily to the impact of certain permanent timing differences, primarily related to our redeemable preferred stock, and, to a lesser extent, the impact of interest expense on our uncertain tax positions in accordance with Financial Accounting
Standards Board (FASB) Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109 (see Note 8 in Notes to Condensed Consolidated Financial Statements
included in Item 1 of this report for further information). The income tax provision recorded for third quarter 2007 has been computed based on year-to-date income and projected results for the full year. The final effective tax rate to be
applied to 2007 will depend on the actual amount of pre-tax income (loss) generated by us for the full year.

Net Income

The increase in net income is largely due to higher unit volumes and improvements in gross profit, partially offset by an increase in selling, general and
administrative expenses, as discussed above, and the fluctuation in the income tax provision (benefit) between periods.



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##### Table of Contents

Nine Months Ended September 29, 2007 Compared to the Nine Months Ended September 30, 2006

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 (in thousands):



|                                                  |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   
|------------------------------------------------- |  | --------------------------------- | ----------------------- | - | --------------------------------- | ----------------------- | --------- | ------------------------ | ------------------ | - | --------------------------------- | ------------------ |  | ------------------------------------------------------------- | - |  | ----- | - |  | ----- | --
|                                                  |  | Nine MonthsEndedSeptember 29,2007 |                         |   | Nine MonthsEndedSeptember 30,2006 |                         |           | Period OverPeriod Change |                    |   | Period OverPeriodPercentageChange |                    |  | Results as a Percentage of NetSales for the Nine Months Ended |  
|                                                  |  |                                   | Favorable (unfavorable) |   |                                   | Favorable (unfavorable) |           |                          | September 29, 2007 |   |                                   | September 30, 2006 | 
|                                                  |  | (Unaudited)                       |                         |   | (Unaudited)                       |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |  
|Net sales                                         |  | $                                 | 1,399,321               |   |                                   | $                       | 1,173,340 |                          |                    | $ | 225,981                           |                    |  | 19.3                                                          | % |  | 100.0 | % |  | 100.0 | % 
|Cost of goods sold                                |  |                                   | 1,161,239               |   |                                   |                         | 965,049   |                          |                    |   | (196,190                          | )                  |  | (20.3                                                         | ) |  | 83.0  |   |  | 82.2  |   
|                                                  |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   
|Gross profit                                      |  |                                   | 238,082                 |   |                                   |                         | 208,291   |                          |                    |   | 29,791                            |                    |  | 14.3                                                          |   |  | 17.0  |   |  | 17.8  |   
|Selling, general and administrative expenses      |  |                                   | 188,220                 |   |                                   |                         | 168,746   |                          |                    |   | (19,474                           | )                  |  | (11.5                                                         | ) |  | 13.5  |   |  | 14.4  |   
|Impairment of intangible asset                    |  |                                   |                        |   |                                   |                         | 2,640     |                          |                    |   | 2,640                             |                    |  | 100.0                                                         |   |  | 0.0   |   |  | 0.2   |   
|                                                  |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   
|Operating income                                  |  |                                   | 49,862                  |   |                                   |                         | 36,905    |                          |                    |   | 12,957                            |                    |  | 35.1                                                          |   |  | 3.6   |   |  | 3.1   |   
|Other expense:                                    |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   
|Interest expense                                  |  |                                   | (46,389                 | ) |                                   |                         | (44,802   | )                        |                    |   | (1,587                            | )                  |  | (3.5                                                          | ) |  | (3.3  | ) |  | (3.8  | ) 
|Other, net                                        |  |                                   | (256                    | ) |                                   |                         | (116      | )                        |                    |   | (140                              | )                  |  | (120.7                                                        | ) |  | 0.0   |   |  | 0.0   |   
|                                                  |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   
|Income (loss) from operations before income taxes |  |                                   | 3,217                   |   |                                   |                         | (8,013    | )                        |                    |   | 11,230                            |                    |  | 140.1                                                         |   |  | 0.2   |   |  | (0.7  | ) 
|Income tax benefit                                |  |                                   | 2,094                   |   |                                   |                         | (2,595    | )                        |                    |   | (4,689                            | )                  |  | (180.7                                                        | ) |  | 0.1   |   |  | (0.2  | ) 
|                                                  |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   
|Net income (loss)                                 |  | $                                 | 1,123                   |   |                                   | $                       | (5,418    | )                        |                    | $ | 6,541                             |                    |  | 120.7                                                         | % |  | 0.1   | % |  | (0.5  | )%
|                                                  |  |                                   |                         |   |                                   |                         |           |                          |                    |   |                                   |                    |  |                                                               |   |  |       |   |  |       |   

Net Sales

The increase in net sales for the nine-month period ended September 29, 2007 was primarily the result of an increase in passenger and light truck tire unit sales of $143.5 million. Unit sales of high and
ultra-high performance tires accounted for over half of this increase. Our acquisitions of Samaritan Tire, Paris Tire and Martino Tire contributed sales of $41.7 million. In addition, we experienced an increase in unit sales of farm, industrial and
other specialty tire sales, collectively contributing $10.9 million which were partially offset by a decline of $3.1 million in medium truck tire unit sales. Pricing, net of select promotional activity, was up $36.5 million primarily as a result of
manufacturer price increases that we have passed along to our customers. A decline in wheel and equipment/supply sales of $5.4 million, collectively, partially offset these increases.

Gross Profit

Gross profit increased $29.8 million primarily due to increased unit sales (up $24.3
million), the acquisitions of Samaritan Tire, Paris Tire and Martino Tire (collectively $7.0 million) and slightly favorable pricing. These increases were partially offset by the non-repeat of a favorable inventory cost layer (i.e. the benefit from
the sale of inventory in 2006 that was purchased prior to manufacturer price increases) that was experienced during the first nine months of 2006 ($4.6 million) and soft wheel sales.



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Selling, General and Administrative Expenses

The increase in selling, general and administrative expenses is due, in part, to the inclusion of acquired operations. The acquisitions of Samaritan Tire,
Paris Tire and Martino Tire collectively accounted for approximately $6.6 million of the increase, $3.5 million of which was employee related. The remaining increase primarily resulted from higher employee related expenses, mostly related to higher
incentive compensation, including sales commissions, to support increased sales volume, increased depreciation expense primarily relating to our warehousing infrastructure and information technology additions, higher facility and equipment expense
and an increase in advertising and travel expense (collectively $13.4 million). These expenses were partially offset by a reduction in the amortization of prepaid management advisory fees that were paid in connection with the acquisition of ATD by
Holdings in March 2005 ($1.4 million).

As a percentage of net sales, selling, general and administrative expenses were 13.5% in the first
nine months of 2007, down from 14.4% for the same period of 2006. The decrease was primarily a result of higher sales unit volumes and an increase in employee productivity.

Impairment of Long-Lived Assets

In September 2006, we were informed by one of our suppliers that it
was going to cease the manufacturing of one of our tire brands for which we maintained a trade name intangible asset. As a result of this decision and due to our inability to place other sourcing regarding this tire brand, we, in accordance with
SFAS No. 142, Goodwill and Other Intangible Assets, evaluated the fair value of the trade name intangible asset, as computed utilizing a discounted cash flow methodology, as compared to the current carrying value. Based on this
evaluation, we recorded a charge of $2.6 million, the full carrying amount of the trade name intangible asset. No impairment charges were recorded during the nine-month period ended September 29, 2007.

Interest Expense

The $1.6 million increase in
interest expense for the nine-month period ended September 29, 2007 was due primarily to higher debt levels period over period, in part due to acquisitions.

Provision for Income Taxes

We recognized an income tax provision of $2.1 million in the nine-month period of 2007 based on
pre-tax income of $3.2 million, compared to an income tax benefit of $2.6 million in the nine-month period of 2006 based on a pre-tax loss of $8.0 million. The effective tax rate for the first nine months of 2007 was 65.1% compared with 32.4% for
the corresponding period in 2006. The increase in the effective tax rate is due primarily to the impact of certain permanent timing differences, primarily related to our redeemable preferred stock, and, to a lesser extent, the impact of interest
expense on our uncertain tax positions in accordance with FIN 48 (see Note 8 in Notes to Condensed Consolidated Financial Statements included in Item 1 of this report for further information). The income tax provision recorded for the first
nine months of 2007 has been computed based on year-to-date income and projected results for the full year. The final effective tax rate to be applied to 2007 will depend on the actual amount of pre-tax income (loss) generated by us for the full
year.

Net Income

Net income for the
nine-month period of 2007 increased $6.5 million from a loss of $5.4 million in the nine-month period of 2006 due primarily to increased gross profit driven by increased sales volumes and non-repeat of an impairment charge in 2006 partially offset
by higher selling, general and administrative expenses and fluctuations in the income tax provision (benefit) between the nine-month periods.



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##### Table of Contents

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. Except for the new critical accounting policy
described below related to FIN 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109, there have been no material changes to our critical accounting policies during the quarter or nine-month
periods ended September 29, 2007.

We account for uncertain tax positions in accordance with FIN 48. The application of income tax law
is inherently complex. As such, we are required to make certain assumptions and judgments regarding our income tax positions and the likelihood whether such tax positions would be sustained if challenged. Interpretations and guidance surrounding
income tax laws and regulations change over time. As such, changes in our assumptions and judgments can materially affect amounts recognized in our consolidated balance sheets and statements of operations.

Liquidity and Capital Resources

At
September 29, 2007 our total debt, including capital leases, was $527.8 million compared to $521.0 million at December 30, 2006, an increase of $6.8 million. Total commitments by the lenders under our revolving credit facility were $400.0
million at September 29, 2007, of which $148.7 million was available for additional borrowings. The amount available to borrow under the revolving credit facility is limited by the borrowing base computation, as defined in the agreement.

The following table summarizes the cash flows for nine months ended September 29, 2007 and September 30, 2006 (in thousands):



|                                                     |  |                                   |         |   |                                   |   |         |  
|---------------------------------------------------- |  | --------------------------------- | ------- | - | --------------------------------- | - | ------- | -
|                                                     |  | Nine MonthsEndedSeptember 29,2007 |         |   | Nine MonthsEndedSeptember 30,2006 |  
|Cash provided by operating activities                |  | $                                 | 23,448  |   |                                   | $ | 77,667  |  
|Cash used in investing activities                    |  |                                   | (21,140 | ) |                                   |   | (24,788 | )
|Cash provided by (used in) financing activities      |  |                                   | 640     |   |                                   |   | (54,357 | )
|                                                     |  |                                   |         |   |                                   |   |         |  
|Net increase (decrease) in cash and cash equivalents |  |                                   | 2,948   |   |                                   |   | (1,478  | )
|Cash and cash equivalents, beginning of period       |  |                                   | 3,600   |   |                                   |   | 5,545   |  
|                                                     |  |                                   |         |   |                                   |   |         |  
|Cash and cash equivalents, end of period             |  | $                                 | 6,548   |   |                                   | $ | 4,067   |  
|                                                     |  |                                   |         |   |                                   |   |         |  
|Cash payments for interest                           |  | $                                 | 32,030  |   |                                   | $ | 30,563  |  
|Cash payments (receipts) for taxes, net              |  | $                                 | 2,039   |   |                                   | $ | (13,363 | )
|Capital expenditures financed by debt                |  | $                                 | 2,822   |   |                                   | $ | 2,360   |  

Operating Activities

Cash provided by operating activities decreased $54.3 million to $23.4 million in the nine months ended September 29, 2007 compared to $77.7 million in the nine months ended September 30, 2006. The decrease
in cash provided by operating activities was primarily due to receipt of a federal income tax refund ($13.6 million) in first quarter 2006 that did not repeat in 2007. In addition, a reduction in our net working capital requirements in the first
nine months of 2006 did not repeat during the first nine months of 2007 due to our overall growth during the 2007 period. For the nine-month period ended September 29, 2007, our change in operating assets and liabilities generated a cash inflow
of approximately $0.1 million, primarily driven by increases in accounts receivables and inventories that were essentially offset by increases in accounts payable.



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##### Table of Contents

During the same period of 2006, excluding the income tax refund discussed above, our change in operating assets and liabilities generated a cash inflow of
$44.9 million, primarily driven by reductions in inventories and an increase in accounts payable, only partially offset by an increase in accounts receivable.

Investing Activities

Net cash used in investing activities decreased $3.7 million to $21.1 million in the nine
months ended September 29, 2007 compared to $24.8 million in the nine months ended September 30, 2006. The decrease in cash used in investing activities was primarily due to a reduction in cash paid for acquisitions, which declined $3.8
million and a slight reduction in purchase levels of property and equipment, which declined $1.0 million. Capital expenditures for the nine-months ended September 29, 2007 of $4.9 million were primarily for information technology upgrades and
warehouse racking.

Financing Activities

Net cash provided by financing activities increased $55.0 million to $0.6 million in the nine months ended September 29, 2007 compared to net cash used of $54.4 million in 2006. The increase was primarily due to a reduction in net
payments on our revolving credit facility, including the receipt of a federal income tax refund ($13.6 million) in first quarter 2006 that was used to pay down our revolving credit facility.

Revolving Credit Facility

On May 9,
2007, ATD entered into the Fifth Amendment to the Fourth Amended and Restated Loan and Security Agreement (the Amended Revolver). The Borrowers to the Amended Revolver are ATD and its subsidiaries. The Amended Revolver provides for a
senior secured revolving credit facility of up to $400.0 million (of which up to $25.0 million may be utilized in the form of commercial and standby letters of credit), subject to a borrowing base formula. The Amended Revolver is collateralized
primarily by ATDs inventories and accounts receivable. As of September 29, 2007, the outstanding Amended Revolver balance was $160.8 million. In addition, ATD had certain letters of credit outstanding at September 29, 2007 in the
aggregate amount of $8.4 million and $148.7 million was available for additional borrowings.

Borrowings under the Amended Revolver bear
interest, at ATDs option, at either (i) the Base Rate, as defined, plus the applicable margin (0.0% as of September 29, 2007) or (ii) the Eurodollar Rate, as defined, plus the applicable margin (1.25% as of September 29,
2007). At September 29, 2007 and December 30, 2006, borrowings under the Amended Revolver were at a weighted average interest rate of 7.0% and 7.4%, respectively. The applicable margin for the loans varies based upon a performance grid, as
defined in the agreement.

All obligations under the Amended Revolver are guaranteed by Holdings and each of ATDs existing and future
direct and indirect domestic subsidiaries that are not direct obligors thereunder. Obligations under the Amended Revolver are collateralized by a pledge of substantially all assets of the obligors, including all shares of ATDs capital stock
and that of ATDs subsidiaries, subject to certain limitations.

The Amended Revolver contains covenants which, among other things,
require ATD to meet a fixed charge coverage ratio if ATD does not have at least $25.0 million available to be drawn under the Amended Revolver (subject to a cure), increasing to $35.0 million upon the occurrence of certain events (subject to a
cure); restrict ATDs ability to incur additional debt; enter into guarantees; make loans and investments; declare dividends; modify certain material agreements or constitutive documents relating to preferred stock; and change the business it
conducts, as well as other customary covenants. As of September 29, 2007 and December 30, 2006, ATD was in compliance with these covenants. The Amended Revolver is set to expire on December 31, 2011.



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Senior Discount Notes

As of April 1, 2007, the Senior Discount Notes began accruing interest. Such interest will accrue at a rate of 13% per annum and will be payable in cash, semi-annually in arrears on April 1 and
October 1 of each year, commencing on October 1, 2007.

Indenture EBITDA

We evaluate liquidity based on several factors, of which the primary financial measure is Indenture EBITDA. The presentation of Indenture EBITDA, a
non-GAAP financial measure, and ratios based thereon, do not comply with accounting principles generally accepted in the United States because they are adjusted to exclude certain cash expenses, as defined in the indentures. We present Indenture
EBITDA as it is used to determine our compliance with covenants contained in the related indentures governing our notes. The covenants are tied to ratios based on Indenture EBITDA, referred to as Consolidated Cash Flows in the indenture agreement,
and restrict our ability to incur additional indebtedness and to issue preferred stock. Indenture EBITDA as used herein represents earnings before interest, taxes, depreciation and amortization, and other adjustments permitted in calculating
covenant compliance under the indentures. We believe that the inclusion of this supplementary information is necessary for investors to understand our ability to comply with the financial covenants and debt service of the notes. Indenture EBITDA
should not be considered an alternative to, or more meaningful than, cash flows as determined in accordance with accounting principles generally accepted in the United States. The following table is a reconciliation of the most directly comparable
GAAP measure, net cash provided by operating activities, to Indenture EBITDA (in thousands):



|                                                                     |  |                                   |        |   |                                   |   |         |  
|-------------------------------------------------------------------- |  | --------------------------------- | ------ | - | --------------------------------- | - | ------- | -
|                                                                     |  | Nine MonthsEndedSeptember 29,2007 |        |   | Nine MonthsEndedSeptember 30,2006 |  
|Net cash provided by operating activities                            |  | $                                 | 23,448 |   |                                   | $ | 77,667  |  
|Changes in assets and liabilities                                    |  |                                   | (86    | ) |                                   |   | (58,559 | )
|Benefit for deferred income taxes                                    |  |                                   | 5,578  |   |                                   |   | 4,842   |  
|Interest expense                                                     |  |                                   | 46,389 |   |                                   |   | 44,802  |  
|Provision (benefit) for income taxes                                 |  |                                   | 2,094  |   |                                   |   | (2,595  | )
|(Provision for) recovery of doubtful accounts                        |  |                                   | (265   | ) |                                   |   | 473     |  
|Amortization of other assets                                         |  |                                   | (3,847 | ) |                                   |   | (4,080  | )
|Accretion of 8% cumulative preferred stock and Senior Discount Notes |  |                                   | (1,902 | ) |                                   |   | (4,666  | )
|Other                                                                |  |                                   | (382   | ) |                                   |   | 1,685   |  
|                                                                     |  |                                   |        |   |                                   |   |         |  
|Indenture EBITDA                                                     |  | $                                 | 71,027 |   |                                   | $ | 59,569  |  
|                                                                     |  |                                   |        |   |                                   |   |         |  

Total Indenture EBITDA for the nine months ended September 29, 2007 increased $11.4 million
to $71.0 million compared to $59.6 million in the nine months ended September 30, 2006 due primarily to changes in assets and liabilities from higher volumes and acquisitions, partially offset by the benefit of sales associated with a favorable
inventory cost layer in first quarter 2006 that did not repeat during the nine-months of 2007.

We anticipate that our principal use of
cash going forward will be to meet working capital and debt service requirements, to make capital expenditures, and to fund acquisitions. Based upon current and anticipated levels of operations, we believe that our cash flow from operations,
together with amounts available under ATDs Revolver, will be adequate to meet our anticipated requirements for at least the next twelve months.



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Recently Issued Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159
expands opportunities to use fair value measurement in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. This statement is effective for fiscal years beginning after
November 15, 2007. We do not expect the adoption of SFAS No. 159 to have a material impact on our consolidated financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework
for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements. This statement does not require any new fair value measurements; rather, it applies
under other accounting pronouncements that require or permit fair value measurements. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. We are currently evaluating the impact, if any, of SFAS
No. 157 on our results of operations and financial position.



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

For the period ended September 29, 2007, we did not experience any material changes from the quantitative and qualitative disclosures about market risk presented in our 2006 Annual Report on Form 10-K.

On October 11, 2005, the Company entered into an interest rate swap agreement (the Swap) to manage exposure to
fluctuations in interest rates. The Swap represents a contract to exchange floating rate for fixed interest payments periodically over the life of the agreement without exchange of the underlying notional amount. The notional amount of the Swap is
used to measure interest to be paid or received and does not represent the amount of exposure to credit loss. At September 29, 2007, the Swap in place covers a notional amount of $85.0 million of the $140.0 million of Senior Floating Rate Notes
at a fixed interest rate of 4.79% and expires on September 30, 2010. This Swap has been designated for hedge accounting treatment. Accordingly, the Company recognizes the fair value of the Swap in the accompanying condensed consolidated balance
sheets and any changes in the fair value are recorded as adjustments to other comprehensive income (loss). The fair value of the Swap is the estimated amount that the Company would pay or receive to terminate the agreement at the reporting date. The
fair value of the Swap was a liability of $0.3 million at September 29, 2007 and is included in other liabilities in the accompanying condensed consolidated balance sheet. At December 30, 2006, the fair value of the Swap was an asset of
$0.7 million and is included in other assets in the accompanying condensed consolidated balance sheet.



|Item 4. | Controls and Procedures.
|------- | ------------------------

Evaluation of Disclosure Controls and Procedures



| | (a) | We maintain disclosure controls and procedures that are designed to ensure 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.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Changes in Internal Controls Over Financial Reporting

During the quarter ended September 29, 2007, 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 computer system to Oracle. We have already implemented the general ledger as well as the accounts
payable and inventory 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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##### Table of Contents

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 Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                        |  |                                           |  |                                                                 
|----------------------- |  | ----------------------------------------- |  | ----------------------------------------------------------------
|Date: November 13, 2007 |  | AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.
|                        |  |                                          
|                        |  | By:                                       |  | /s/    DAVID L.
DYCKMAN                                         
|                        |  |                                           |  | David L. Dyckman                                                
|                        |  |                                           |  | Executive Vice President and Chief Financial Officer            
|                        |  |                                           |  | (On behalf of the Registrant and as Principal Financial Officer)



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