##### 









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




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FORM 10-Q

|     |  |                                                                                             
|---- |  | --------------------------------------------------------------------------------------------
|[X]  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|     |  | For the quarterly period ended September 28,
    2002                                       
|     |  | 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 333-61713

American Tire Distributors, Inc.

|                       |  |                                               
|---------------------- |  | ----------------------------------------------
|                      
|A Delaware Corporation |  | IRS Employer Identification No.
    56-0754594

12200 Herbert Wayne Court

Suite 150


Huntersville, North Carolina 28078


(704) 992-2000

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 o

Number of common shares outstanding at
November 12, 2002: 5,086,917



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TABLE OF CONTENTS

|         |         |                       |                                                                                           |                                                                                                                                                |    |      |   |  | 
|-------- | ------- | --------------------- | ----------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | - |  | 
|         |         |                       |                                                                                           |                                                                                                                                                |    | Page
|         |         |                       |                                                                                           |                                                                                                                                                |    |     
|PART I.  |         | FINANCIAL INFORMATION |                                                                                           |                                                                                                                                                |    |     
|        
|         | ITEM 1. |                       | Financial Statements                                                                      |                                                                                                                                                |    |      |  
|         |         |                       |                                                                                           | Condensed Consolidated Balance Sheets 
    September 28, 2002 (unaudited) and December 29,
    2001                                           |    |      | 1 | 
|         |         |                       |                                                                                           | Condensed Consolidated Statements of Operations
    (unaudited)  Quarters and Nine Months Ended
    September 28, 2002 and September 29, 2001 |    |      | 2 | 
|         |         |                       |                                                                                           | Condensed Consolidated Statements of Cash Flows
    (unaudited)  Nine Months Ended September 28,
    2002 and September 29, 2001              |    |      | 3 | 
|         |         |                       |                                                                                           | Notes to Condensed Consolidated Financial
    Statements                                                                                       |    |      | 4 | 
|        
|         | ITEM 2. |                       | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |                                                                                                                                                |    | 16   |  
|        
|         | ITEM 3. |                       | Quantitative and Qualitative Disclosures about
    Market Risk                            |                                                                                                                                                |    | 20   |  
|        
|         | ITEM 4. |                       | Controls and Procedures                                                                   |                                                                                                                                                |    | 20   |  
|        
|PART II. |         | OTHER INFORMATION     |                                                                                           |                                                                                                                                                |    |     
|        
|         | ITEM 1. |                       | Legal Proceedings                                                                         |                                                                                                                                                |    | 20   |  
|        
|         | ITEM 6. |                       | Exhibits and Reports on Form 8-K                                                          |                                                                                                                                                |    | 20   |  
|         |         | Signatures            |                                                                                           |                                                                                                                                                | 21 |     
|         |         | Certifications        |                                                                                           |                                                                                                                                                | 22 |     



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##### 



PART I.     FINANCIAL
INFORMATION



Item 1.     Financial
Statements.


American Tire Distributors, Inc.



Condensed Consolidated Balance
Sheets  September 28, 2002 and December 29,
2001


(in thousands, except share amounts)


|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |         |         |         | 
|-------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------- | ----------------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                                                    | September 28, 2002             |                                                    | December 29, 2001
|                                                   |                                                                                                                                                    |                                |                                                    |                  
|                                                   |                                                                                                                                                    | (Unaudited)                    |                                                    |                  
|Assets                                             |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|Current assets:                                    |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   | Cash and cash equivalents                                                                                                                          |                                | $                                                  | 5,322             |         |         | $       | 4,131   |        
|                                                   | Accounts receivable, net of allowances of $1,595
    and $3,571                                                                                    |                                |                                                    | 107,976           |         |         |         | 93,621  |        
|                                                   | Inventories                                                                                                                                        |                                |                                                    | 152,342           |         |         |         | 154,212 |        
|                                                   | Deferred income taxes                                                                                                                              |                                |                                                    | 9,014             |         |         |         | 27,364  |        
|                                                   | Other current assets                                                                                                                               |                                |                                                    | 6,860             |         |         |         | 10,851  |        
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                                                    | Total current assets           |                                                    |                   | 281,514 |         |         |         | 290,179 |        
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|Property and equipment, net                        |                                                                                                                                                    |                                | 20,919                                             |                   |         |         | 27,486  |        
|Goodwill, net                                      |                                                                                                                                                    |                                | 93,940                                             |                   |         |         | 93,940  |        
|Other intangible assets, net                       |                                                                                                                                                    |                                | 4,581                                              |                   |         |         | 5,171   |        
|Deferred income taxes                              |                                                                                                                                                    |                                | 12,004                                             |                   |         |         | 16,626  |        
|Other assets                                       |                                                                                                                                                    |                                | 5,653                                              |                   |         |         | 9,618   |        
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                                                    |                                | Total assets                                       |                   | $       | 418,611 |         |         | $       | 443,020 | 
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|Liabilities and Stockholders
    Investment       |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|Current liabilities:                               |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   | Accounts payable                                                                                                                                   |                                | $                                                  | 170,149           |         |         | $       | 170,571 |        
|                                                   | Accrued expenses                                                                                                                                   |                                |                                                    | 17,858            |         |         |         | 20,643  |        
|                                                   | Current maturities of long-term debt                                                                                                               |                                |                                                    | 3,734             |         |         |         | 5,295   |        
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                                                    | Total current liabilities      |                                                    |                   | 191,741 |         |         |         | 196,509 |        
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|Revolving credit facility and other long-term debt |                                                                                                                                                    |                                | 154,163                                            |                   |         |         | 126,544 |        
|Series D Senior Notes                              |                                                                                                                                                    |                                | 28,600                                             |                   |         |         | 150,000 |        
|Capital lease obligations                          |                                                                                                                                                    |                                | 14,877                                             |                   |         |         | 1,346   |        
|Other liabilities                                  |                                                                                                                                                    |                                | 4,702                                              |                   |         |         | 8,042   |        
|Commitments and contingencies                      |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|Redeemable preferred stock (Note 10)               |                                                                                                                                                    |                                | 11,035                                             |                   |         |         | 24,115  |        
|Stockholders investment:                          |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   | Preferred stock (Note 11)                                                                                                                          |                                |                                                    | 44,807            |         |         |         |        |        
|                                                   | Common stock, par value $.01 per share;
    50,000,000 and 15,000,000 shares authorized; 5,086,917 and
    5,136,917 shares issued and outstanding |                                |                                                    | 51                |         |         |         | 51      |        
|                                                   | Additional paid-in capital                                                                                                                         |                                |                                                    | 22,388            |         |         |         | 22,751  |        
|                                                   | Warrants                                                                                                                                           |                                |                                                    | 1,759             |         |         |         | 1,137   |        
|                                                   | Notes receivable from sale of stock                                                                                                                |                                |                                                    | (17               | )       |         |         | (340    | )      
|                                                   | Accumulated deficit                                                                                                                                |                                |                                                    | (55,495           | )       |         |         | (87,135 | )      
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                                                    | Total stockholders investment |                                                    |                   | 13,493  |         |         |         | (63,536 | )      
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                                                    |                                | Total liabilities and stockholders
    investment |                   | $       | 418,611 |         |         | $       | 443,020 | 
|                                                   |                                                                                                                                                    |                                |                                                    |                   |         |         |         |        

The accompanying notes to condensed consolidated
financial statements

are an integral part of these balance sheets.


1



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##### 



American Tire Distributors, Inc.



Condensed Consolidated Statements of
Operations


(Unaudited)


(in thousands)


|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |         |  
|-------------------------------------------------------------------------------------------------------- | ----------------------- | -------------- | ------- | ----------------- | - | ------------- | ------- | ------------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                                                         |                         |                |         |                  
|                                                                                                         |                         | Quarters Ended |         | Nine Months Ended
|                                                                                                         |                         |                |         |                  
|                                                                                                         |                         | September 28,  |         | September 29,     |   | September 28, |         | September 29,
|                                                                                                         |                         | 2002           |         | 2001              |   | 2002          |         | 2001         
|                                                                                                         |                         |                |         |                   |   |               |         |              
|Net sales                                                                                                |                         | $              | 280,059 |                   |   | $             | 293,173 |               |   | $ | 809,205 |         |   | $ | 862,805 |        
|Cost of goods sold                                                                                       |                         |                | 228,663 |                   |   |               | 241,985 |               |   |   | 660,669 |         |   |   | 701,819 |        
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|                                                                                                         | Gross profit            |                |         | 51,396            |   |               |         | 51,188        |   |   |         | 148,536 |   |   |         | 160,986 |  
|Selling, general and administrative expenses                                                             |                         |                | 41,794  |                   |   |               | 52,693  |               |   |   | 125,815 |         |   |   | 158,330 |        
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|                                                                                                         | Operating income (loss) |                |         | 9,602             |   |               |         | (1,505        | ) |   |         | 22,721  |   |   |         | 2,656   |  
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|Other income (expense):                                                                                  |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|                                                                                                         | Interest expense, net   |                |         | (4,153            | ) |               |         | (6,922        | ) |   |         | (14,761 | ) |   |         | (21,905 | )
|                                                                                                         | Other income, net       |                |         | 155               |   |               |         | 303           |   |   |         | 312     |   |   |         | 1,006   |  
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|Income (loss) from continuing operations
    before income taxes                                         |                         |                | 5,604   |                   |   |               | (8,124  | )             |   |   | 8,272   |         |   |   | (18,243 | )      
|Provision (benefit) for income taxes                                                                     |                         |                | 2,241   |                   |   |               | (4,633  | )             |   |   | 3,309   |         |   |   | (5,436  | )      
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|Income (loss) from continuing operations
    before extraordinary item                                   |                         |                | 3,363   |                   |   |               | (3,491  | )             |   |   | 4,963   |         |   |   | (12,807 | )      
|Loss from discontinued operations, net of income
    tax benefit of $514                                 |                         |                |        |                   |   |               |        |               |   |   |        |         |   |   | (769    | )      
|Loss on disposal of discontinued operations, net
    of income tax benefit of $24, $838, $243 and $3,774 |                         |                | (36     | )                 |   |               | (1,261  | )             |   |   | (364    | )       |   |   | (12,427 | )      
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|Income (loss) before extraordinary item                                                                  |                         |                | 3,327   |                   |   |               | (4,752  | )             |   |   | 4,599   |         |   |   | (26,003 | )      
|Extraordinary gain on repurchase of Series D
    Senior Notes, net of income tax provision of $19,904    |                         |                |        |                   |   |               |        |               |   |   | 29,855  |         |   |   |        |        
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        
|Net income (loss)                                                                                        |                         | $              | 3,327   |                   |   | $             | (4,752  | )             |   | $ | 34,454  |         |   | $ | (26,003 | )      
|                                                                                                         |                         |                |         |                   |   |               |         |               |   |   |         |         |   |   |         |        

The accompanying notes to condensed consolidated
financial statements

are an integral part of these statements.


2



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##### 



American Tire Distributors, Inc.



Condensed Consolidated Statements of Cash
Flows


(Unaudited)


(in thousands)


|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |         |         |        |  
|------------------------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------------------------ | ------------- | ------- | ------ | ----- | ------- | ------- | ------ | -
|                                                        |                                                                                          |                                                                    
|                                                        |                                                                                          | Nine Months Ended                                                  
|                                                        |                                                                                          |                                                                    
|                                                        |                                                                                          | September 28,                                                       |                                                  | September 29,
|                                                        |                                                                                          | 2002                                                                |                                                  | 2001         
|                                                        |                                                                                          |                                                                     |                                                  |              
|Cash flows from operating
    activities:               |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        | Net income (loss)                                                                        |                                                                     | $                                                | 34,454        |         |        | $     | (26,003 | )      
|                                                        | Adjustments to reconcile net income
    (loss) to net cash used in operating activities: |                                                                     |                                                  |               |         |        |       |         |        
|                                                        |                                                                                          | Loss on disposal of discontinued operations                         |                                                  |               | 364     |        |       |         | 12,427  |       
|                                                        |                                                                                          | Loss from discontinued operations                                   |                                                  |               |        |        |       |         | 769     |       
|                                                        |                                                                                          | Extraordinary gain                                                  |                                                  |               | (29,855 | )      |       |         |        |       
|                                                        |                                                                                          | Depreciation and amortization of goodwill and
    other intangibles |                                                  |               | 6,228   |        |       |         | 12,999  |       
|                                                        |                                                                                          | Amortization of other assets                                        |                                                  |               | 995     |        |       |         | 906     |       
|                                                        |                                                                                          | Other, net                                                          |                                                  |               | 1,304   |        |       |         | (3,806  | )     
|                                                        | Change in operating assets and liabilities:                                              |                                                                     |                                                  |               |         |        |       |         |        
|                                                        |                                                                                          | Accounts receivable, net                                            |                                                  |               | (16,053 | )      |       |         | (15,550 | )     
|                                                        |                                                                                          | Inventories                                                         |                                                  |               | 1,870   |        |       |         | 30,936  |       
|                                                        |                                                                                          | Other current assets                                                |                                                  |               | 3,347   |        |       |         | 3,067   |       
|                                                        |                                                                                          | Accounts payable and accrued expenses                               |                                                  |               | (4,003  | )      |       |         | (18,353 | )     
|                                                        |                                                                                          | Other, net                                                          |                                                  |               | (3,910  | )      |       |         | (505    | )     
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        |                                                                                          |                                                                     | Net cash used in continuing operating activities |               |         | (5,259 | )     |         |         | (3,113 | )
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        |                                                                                          |                                                                     | Net cash used in discontinued operations         |               |         |       |       |         |         | (4,920 | )
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|Cash flows from investing
    activities:               |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        | Net proceeds from sale of discontinued operations                                        |                                                                     |                                                  |              |         |        |       | 9,285   |        
|                                                        | Acquisitions, net of cash acquired                                                       |                                                                     |                                                  |              |         |        |       | (885    | )      
|                                                        | Payments on deferred purchase price of acquired
    businesses                           |                                                                     |                                                  |              |         |        |       | (2,495  | )      
|                                                        | Purchase of property and equipment                                                       |                                                                     |                                                  | (874          | )       |        |       | (5,029  | )      
|                                                        | Proceeds from sale of property and equipment                                             |                                                                     |                                                  | 2,080         |         |        |       | 1,939   |        
|                                                        | Other, net                                                                               |                                                                     |                                                  | (92           | )       |        |       | 253     |        
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        |                                                                                          |                                                                     | Net cash provided by investing activities        |               |         | 1,114  |       |         |         | 3,068  |  
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|Cash flows from financing
    activities:               |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        | Net proceeds (repayments) from revolving
    credit facility and other long-term debt    |                                                                     |                                                  | 32,749        |         |        |       | (3,655  | )      
|                                                        | Repurchase of Series D Senior Notes                                                      |                                                                     |                                                  | (64,959       | )       |        |       |        |        
|                                                        | Net proceeds from sale-leaseback transaction                                             |                                                                     |                                                  | 13,285        |         |        |       |        |        
|                                                        | Proceeds received from issuance of preferred stock                                       |                                                                     |                                                  | 28,913        |         |        |       | 12,000  |        
|                                                        | Principal payments on other long-term debt                                               |                                                                     |                                                  | (4,612        | )       |        |       | (880    | )      
|                                                        | Other, net                                                                               |                                                                     |                                                  | (40           | )       |        |       | 16      |        
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        |                                                                                          |                                                                     | Net cash provided by financing activities        |               |         | 5,336  |       |         |         | 7,481  |  
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|Net increase in cash and cash equivalents               |                                                                                          |                                                                     | 1,191                                            |               |         |        | 2,516 |        
|Cash and cash equivalents, beginning of period          |                                                                                          |                                                                     | 4,131                                            |               |         |        | 3,327 |        
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|Cash and cash equivalents, end of period                |                                                                                          | $                                                                   | 5,322                                            |               |         | $      | 5,843 |        
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|Supplemental disclosures of cash flow
    information  |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        | Cash payments for interest                                                               |                                                                     | $                                                | 13,942        |         |        | $     | 17,097  |        
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        
|                                                        | Cash payments for income taxes                                                           |                                                                     | $                                                | 2,178         |         |        | $     | 437     |        
|                                                        |                                                                                          |                                                                     |                                                  |               |         |        |       |        

The accompanying notes to condensed consolidated
financial statements

are an integral part of these statements.


3



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American Tire Distributors, Inc.



Notes to Condensed Consolidated Financial
Statements


September 28, 2002


1.     Nature of
Business:

American Tire Distributors, Inc. (together with
its subsidiaries, the Company) (formerly Heafner
Tire Group, Inc.), is a Delaware corporation primarily engaged
in the wholesale distribution of tires and tire accessories. On
May 30, 2002, the Company changed its name from Heafner
Tire Group, Inc. to American Tire Distributors, Inc. The new
name is part of the Companys transition from a collection
of companies joined through acquisition into a single-minded
organization with an unmatched, coast-to-coast footprint in the
distribution market. The move follows two years of
reorganization during which the Company discontinued its venture
into tire retailing.

2.     Basis of
Presentation:

The unaudited condensed consolidated financial
statements have been prepared by the Company and have not been
audited. In the opinion of management, all adjustments,
consisting of only normal recurring adjustments, necessary for a
fair presentation of the financial position of the Company, the
results of its operations and cash flows have been made. Certain
information and footnote disclosure normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
These financial statements should be read in conjunction with
the financial statements and notes thereto included in the
Companys consolidated financial statements reported on
Form 10-K for the fiscal year ended December 29, 2001. The
results of the operations for the quarter and nine months ended
September 28, 2002 are not necessarily indicative of the
operating results for the full fiscal year. Certain prior period
amounts have been reclassified to conform to the current period
presentation.

3.     New Accounting
Pronouncements:

In July 2001, the FASB issued Statement
No. 141 Business Combinations (SFAS
141) and Statement No. 142 Goodwill and Other
Intangible Assets (SFAS 142). SFAS 141
requires that the purchase method of accounting be used for all
business combinations completed after June 30, 2001. This
statement also specifies that intangible assets acquired in a
purchase method business combination must meet certain criteria
to be recognized and reported apart from goodwill. SFAS 142
revises the accounting for purchased goodwill and intangible
assets. Under SFAS 142, goodwill and intangible assets with
indefinite lives will no longer be amortized, but will be tested
for impairment annually and in the event of an impairment
indicator adjustments will be made to comply with the standard.
SFAS 142 also requires that intangible assets with definite
useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for
impairment in accordance with Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of (SFAS
121). The Company adopted the provisions of SFAS 142
effective January 1, 2002. The Company has completed the
initial analysis effective as of the beginning of 2002 and has
determined that there is no goodwill impairment. The following

4



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##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

table illustrates the comparable adjusted income
(loss) before extraordinary item and adjusted net income
(loss) for the quarters and nine months ended
September 28, 2002 and September 29, 2001,
respectively:

|                                                                                         |                                                      |                        |       |                           |  |               |        |               |   |   |        |        |  |   |         |         |  
|---------------------------------------------------------------------------------------- | ---------------------------------------------------- | ---------------------- | ----- | ------------------------- |  | ------------- | ------ | ------------- | - | - | ------ | ------ |  | - | ------- | ------- | -
|                                                                                         |                                                      |                        |       |                          
|                                                                                         |                                                      | For the Quarters Ended |       | For the Nine Months Ended
|                                                                                         |                                                      |                        |       |                          
|                                                                                         |                                                      | September 28,          |       | September 29,             |  | September 28, |        | September 29,
|                                                                                         |                                                      | 2002                   |       | 2001                      |  | 2002          |        | 2001         
|                                                                                         |                                                      |                        |       |                           |  |               |        |              
|Reported income (loss) before extraordinary
    item                                     |                                                      | $                      | 3,327 |                           |  | $             | (4,752 | )             |   | $ | 4,599  |        |  | $ | (26,003 | )      
|Add back: goodwill amortization, net of income
    tax benefit of $0, $117, $0 and $350. |                                                      |                        |      |                           |  |               | 1,826  |               |   |   |       |        |  |   | 5,254   |        
|                                                                                         |                                                      |                        |       |                           |  |               |        |               |   |   |        |        |  |   |         |        
|                                                                                         | Adjusted income (loss) before extraordinary
    item |                        | $     | 3,327                     |  |               | $      | (2,926        | ) |   | $      | 4,599  |  |   | $       | (20,749 | )
|                                                                                         |                                                      |                        |       |                           |  |               |        |               |   |   |        |        |  |   |         |        
|                                                                                        
|Reported net income (loss)                                                               |                                                      | $                      | 3,327 |                           |  | $             | (4,752 | )             |   | $ | 34,454 |        |  | $ | (26,003 | )      
|Add back: goodwill amortization, net of income
    tax benefit of $0, $117, $0 and $350. |                                                      |                        |      |                           |  |               | 1,826  |               |   |   |       |        |  |   | 5,254   |        
|                                                                                         |                                                      |                        |       |                           |  |               |        |               |   |   |        |        |  |   |         |        
|                                                                                         | Adjusted net income (loss)                           |                        | $     | 3,327                     |  |               | $      | (2,926        | ) |   | $      | 34,454 |  |   | $       | (20,749 | )
|                                                                                         |                                                      |                        |       |                           |  |               |        |               |   |   |        |        |  |   |         |        

In August 2001, the FASB issued Statement
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS 144). This Statement
addresses financial accounting and reporting for the impairment
or disposal of long-lived assets. This Statement supersedes SFAS
121. However, this Statement retains the fundamental provisions
of SFAS 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used and
(b) measurement of long-lived assets to be disposed of by
sale. This Statement supersedes the accounting and reporting
provisions of APB Opinion No. 30, Reporting the
Results of Operations  Reporting the Effects of Disposal
of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions (APB
30), for the disposal of a segment of a business. However,
this Statement retains the requirement of APB 30 to report
discontinued operations separately from continuing operations
and extends that reporting to a component of an entity that
either has been disposed of (by sale, by abandonment, or in a
distribution to owners) or is classified as held for sale. This
Statement also amends ARB No. 51, Consolidated
Financial Statements, to eliminate the exception to
consolidation for a temporarily controlled subsidiary. The
provisions of SFAS 144 are effective for financial statements
issued for fiscal years beginning after December 15, 2001,
and interim periods within those fiscal years. The Company has
adopted the provisions effective January 1, 2002 and the
effect of the adoption was not material.

In April 2002, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections as of April 2002. This statement contains a
number of changes under existing GAAP, including the elimination
of extraordinary item classification of debt extinguishments
that was previously required under SFAS 4. The provisions of
this Statement related to the rescission of Statement 4 shall be
applied in fiscal years beginning after May 15, 2002 with
early adoption encouraged. The Company expects to adopt SFAS
No. 145 in fiscal 2003.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring). The principal difference between this
Statement and Issue 94-3 relates to its requirements for
recognition of a liability for a cost associated with an exit or
disposal activity. This Statement

5



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##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

requires that a liability for a cost associated
with an exit or disposal activity be recognized when the
liability is incurred. Under Issue 94-3, a liability for an exit
cost as defined in Issue 94-3 was recognized at the date of an
entitys commitment to an exit plan. The provisions of this
Statement are effective for exit or disposal activities that are
initiated after December 31, 2002, with early application
encouraged. The Company does not expect that adoption of this
statement will have a material impact on the results of
operations or financial position in the foreseeable future.

4.     Inventories:

Inventories consist primarily of automotive
tires, wheels and accessories and are valued at the lower of
cost, determined on the first-in, first-out (FIFO) method
or market. 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. Terms with a
majority of the Companys tire vendors allow return of tire
products, within limitations, specified in their supply
agreements.

5.     Shipping and
Handling Costs:

Outbound shipping and handling costs are
classified as selling, general and administrative expenses in
the accompanying condensed consolidated statements of
operations. Such expenses totaled $16.4 million and $17.8
million for the quarters ended September 28, 2002 and
September 29, 2001, respectively and $48.3 million and
$54.2 million for the nine months ended September 28,
2002 and September 29, 2001, respectively.

6.     Deferred
Income Taxes:

The Company has deferred tax assets of
$21.0 million and $44.0 million at September 28,
2002 and December 29, 2001, respectively. The decrease in
net deferred tax assets is primarily attributable to the
utilization of net operating loss carryforwards as it relates to
the extraordinary gain on retirement of the Series D Senior
Notes and from net income generated from continuing operations
through September 28, 2002. Management has evaluated the
Companys deferred tax assets and has concluded that the
realizability of the deferred tax assets is more likely than
not, except as it relates to certain state net operating loss
carryforwards (NOLs). Accordingly, a valuation
allowance of $2.0 million was provided in fiscal 2001. This
evaluation considered the historical and long-term expected
profitability of the Companys continuing operations and
the expected efficiencies to be gained from efforts initiated in
2001 to streamline operations. Given the timing of the reversal
of its temporary differences and the expiration date of its net
operating loss carryovers, the Company believes that taxable
income generated in current and future years will be sufficient
to utilize the remaining net deferred tax assets. The
Companys ability to generate future taxable income is
dependent on numerous factors including general economic
conditions, the state of the replacement tire market and other
factors beyond managements control. Therefore, there can
be no assurance that the Company will meet its expectation of
future taxable income. Changes in expected future income could
lead to an additional valuation allowance against deferred tax
assets.

7.     Financing
Arrangements:

Revolving Credit
Facility

On March 18, 2002, the Company and its
lenders executed an amendment to the revolving credit facility
(Revolver) to, among other things, amend the
financial covenants contained therein, change the rate at which
borrowings thereunder bear interest and amend certain
definitions contained therein. In addition, the amended facility
provides for additional availability due in part to a reduction
in the minimum availability reserve (as defined in the
agreement). The minimum availability reserve will begin to
increase by $0.5 million in August 2002 and will increase each
month until the reserve reaches the original amount in August
2003. As

6



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

a result of the amendment, the applicable margins
as of April 1, 2002 for Eurodollar Rate loans were
increased to 3.5%. A nonrefundable fee of approximately
$0.5 million was charged in connection with this amendment.

Effective August 22, 2002, the Company and
its lenders executed a waiver and amendment to the Revolver to
waive the effects of a failure to meet the minimum fixed charge
coverage covenant, as defined in the credit agreement, as of
June 29, 2002 and to amend certain definitions contained
therein.

On September 25, 2002, the Company and its
lenders executed an amendment to the Revolver to, among other
things, amend the financial covenants contained therein and
revise certain components of the definitions of Borrowing Base.
The amended agreement provides for borrowings in the aggregate
principal amount of up to the lesser of $180.0 million or
the Borrowing Base, as defined in the agreement, which is based
on 85% of eligible accounts receivable, the lesser of 65% of
eligible tire inventory plus 60% of certain secured tire
inventory (within limitations as defined in the agreement) or
$100 million and the lesser of 50% of all other eligible
inventory or $25 million less defined reserves. A
nonrefundable fee of approximately $0.2 million was charged
in connection with this amendment. As of November 12, 2002,
the Companys financial measures were in excess of the
minimums required, as amended, and management expects that such
amounts will remain above the minimums for the foreseeable
future.

The Revolver term expires in March 2005,
extendable by the Company and the banks for an additional five
years. Borrowings under the Revolver bear interest, at
(i) the Base Rate, as defined, plus the applicable margin
(2.0% as of September 28, 2002) or (ii) the Eurodollar
Rate, as defined, plus the applicable margin (3.5% as of
September 28, 2002). These margins are subject to
performance-based step-downs resulting in margins ranging from
0.75% to 2.0% for Base Rate loans and 2.0% to 3.5% for
Eurodollar Rate loans, respectively.

The Revolver, as amended, requires the Company to
meet certain financial requirements, including minimum EBITDA,
fixed charge coverage and tangible capital funds, all as
defined, and minimum loan availability and certain covenants
which, among other things, restrict the ability of the Company
to incur additional indebtedness; enter into guarantees; make
loans and investments; make capital expenditures; declare
dividends; engage in mergers, consolidations and asset sales;
enter into transactions with affiliates; create liens and
encumbrances; enter into sale/leaseback transactions; modify
material agreements; and change the business it conducts. The
Companys obligations under the Revolver are secured by all
inventories and accounts receivable.

Aggregate annual maturities of long-term debt,
reflecting the debt restructuring discussed in Note 9,
(excluding capital lease obligations) at September 28,
2002, are as follows (in thousands):

|                 |  |   |         | 
|---------------- |  | - | ------- | 
|Year Ending      |  |  
|December:        |  |  
|                 |  |  
|2002 (remainder) |  | $ | 1,575   | 
|2003             |  |   | 2,741   | 
|2004             |  |   | 1,752   | 
|2005             |  |   | 151,443 | 
|2006             |  |   | 169     | 
|Thereafter       |  |   | 28,817  | 
|                 |  |   |         | 
|                 |  | $ | 186,497 | 
|                 |  |   |         | 

Capital Lease
Obligations

On March 27, 2002, the Company completed an
agreement for the sale and leaseback of three of its owned
facilities generating cash proceeds of $13.9 million. The
Company reports this transaction as a capital

7



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

lease using direct financing lease accounting. As
such, the Company recorded a $14.0 million capital lease
obligation during first quarter 2002. The Company has determined
that all cash paid to the lessor is properly recorded as
interest expense and that the capital lease obligation will be
reduced when the Company no longer has continuing involvement
with the properties. The initial term of the lease is for
20 years, followed by two, 10-year renewal options. The
annual rent paid under the terms of the lease is
$1.6 million annually (paid quarterly) and is adjusted for
CPI changes every two years. In addition, the purchaser received
warrants to purchase 0.75% of the Companys fully diluted
common stock. The warrants have a term of 10 years with a
stated exercise price of $3.00 per warrant.

8.     Discontinued
Operations:

Effective May 15, 2001, the Company
completed a transaction pursuant to a Stock Purchase Agreement
to sell all the capital stock in Winston Tire Company
(Winston), its retail segment, to Performance
Management, Inc. for a purchase price of approximately
$10.0 million, of which $2.8 million was payable
May 15, 2002 for which the Company has previously
established an appropriate reserve. As of November 12, 2002
this balance remains outstanding and the Company is currently
pursuing collection from Performance Management, Inc. In the
nine months ended September 28, 2002, the Company recorded
an additional loss on disposal of discontinued operations of
approximately $0.4 million, net of income tax benefit of
$0.2 million, for a cumulative net loss on sale of $14.2
million, of which $12.6 million was recognized in 2001.
There have been no material changes in the Companys
guarantee of certain Winston leases since those reported in the
Companys Report on Form 10-K for the fiscal year
ended December 29, 2001. The Companys
receivable/administrative claim of approximately
$2.0 million due from Winston was fully recovered in the
third quarter of 2002 by a return of merchandise of
approximately $0.5 million and the receipt of certain
unencumbered trademark rights for the state of California as a
result of the proposed rejection of licenses by Winston. The
intangible asset recorded for this trademark is being amortized
on a straight-line basis over a period of five years.

9.     Extraordinary
Item:

On March 27, 2002, the Company repurchased
$121.4 million in outstanding principal amount of the 10%
Series D Senior Notes (Senior Notes) due in
2008 at a purchase price of $535 per $1,000 in face amount of
Senior Notes, plus accrued and unpaid interest of
$4.5 million. The Company funded the repurchase of the
Senior Notes through several debt restructuring transactions
(Restructuring Transactions). The Restructuring
Transactions consisted of (i) an amendment to the
Companys revolving credit facility to provide additional
availability, (ii) a sale and leaseback of three of the
Companys tire distribution warehouses generating cash
proceeds of $13.9 million and (iii) an equity
investment of $28.9 million from the issuance of 9,637,592
shares of Series D preferred stock to the Companys
existing stockholders. Concurrently with the repurchase of the
Senior Notes, the Company, the Subsidiary Guarantors and the
Trustee executed the Fourth Supplemental Indenture to the
Indenture. The amendments to the Indenture were effected
primarily to permit the Restructuring Transactions and make
other required modifications.

The Company has accounted for the repurchase and
extinguishment of the Senior Notes as an extraordinary item. In
the nine months ended September 28, 2002, the Company has
recorded approximately $29.9 million to extraordinary gain,
net of income tax provision of $19.9 million. No additional
charges were made against the extraordinary gain in third
quarter 2002.

8



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

10.     Redeemable
Preferred Stock:

The following represents the Companys
issued and outstanding redeemable preferred stock, reflecting
the amendment and modifications discussed in Note 11 below (in
thousands, except share amounts):

|                                                                                                                                       |                                  |               |       |              |  |   |        |        | 
|-------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ------------- | ----- | ------------ |  | - | ------ | ------ | 
|                                                                                                                                       |                                  | September 28, |       | December 29,
|                                                                                                                                       |                                  | 2002          |       | 2001        
|                                                                                                                                       |                                  |               |       |             
|                                                                                                                                       |                                  | (Unaudited)   |       |             
|Redeemable preferred stock Series A 
    4% cumulative; 7,000 shares authorized, issued and outstanding                               |                                  | $             | 7,000 |              |  | $ | 7,000  |       
|Redeemable preferred stock Series B 
    variable rate cumulative; 4,500 shares authorized, issued and
    outstanding                |                                  |               | 4,035 |              |  |   | 4,035  |       
|Redeemable preferred stock Series C 
    12% cumulative; 1,333,334 shares authorized, issued and
    outstanding at December 29, 2001 |                                  |               |      |              |  |   | 13,080 |       
|                                                                                                                                       |                                  |               |       |              |  |   |        |       
|                                                                                                                                       | Total redeemable preferred stock |               | $     | 11,035       |  |   | $      | 24,115 | 
|                                                                                                                                       |                                  |               |       |              |  |   |        |       

11.     Stockholders
Investment:

Amendment to
Articles of Incorporation

In conjunction with the Restructuring
Transactions, the Company amended and restated its articles of
incorporation to authorize 50,000,000 shares of a single class
of $.01 par value common stock and 10,982,426 shares of $.01 par
value preferred stock. Of the 10,982,426 shares of preferred
stock, 7,000 shares are initially designated Series A
preferred stock, 4,500 shares are initially designated
Series B preferred stock, 1,333,334 shares are initially
designated Series C preferred stock and 9,637,592 shares
are initially designated Series D preferred stock. The
conversion price of the Series C preferred stock was
reduced to $3.00 per common share and the holders
redemption rights were eliminated.

Preferred
Stock

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

|                                                                                                                              |                       |               |        |              |  |   |   |   | 
|----------------------------------------------------------------------------------------------------------------------------- | --------------------- | ------------- | ------ | ------------ |  | - | - | - | 
|                                                                                                                              |                       | September 28, |        | December 29,
|                                                                                                                              |                       | 2002          |        | 2001        
|                                                                                                                              |                       |               |        |             
|                                                                                                                              |                       | (Unaudited)   |        |             
|Preferred stock Series C  12%
    cumulative; 1,333,334 shares authorized; 1,333,334 and 0 shares
    issued and outstanding |                       | $             | 14,160 |              |  | $ |  |  
|Preferred stock Series D  12%
    cumulative; 9,637,592 shares authorized; 9,637,592 and 0 shares
    issued and outstanding |                       |               | 30,647 |              |  |   |  |  
|                                                                                                                              |                       |               |        |              |  |   |   |  
|                                                                                                                              | Total preferred stock |               | $      | 44,807       |  |   | $ |  | 
|                                                                                                                              |                       |               |        |              |  |   |   |  

On March 27, 2002, the Company issued
9,637,592 shares of Series D preferred stock for $3.00 per
share in exchange for $28.9 million in cash contributed by
certain of its principal stockholders. The proceeds were used to
repurchase certain of the Companys Senior Notes. Shares of
Series D preferred stock accrue dividends at an annual rate
of 12% and are redeemable by the Company, but not the holder, at
the initial price plus any cumulative unpaid dividends as of the
redemption date. However, as long as any shares of Series A
preferred stock or Series B preferred stock remain
outstanding, no dividends may be paid, nor can redemption occur.
In addition, shares of Series D preferred stock are convertible
into common stock at a conversion price of $3.00 per common
share.

12.     Commitments
and Contingencies:

See PART II  OTHER INFORMATION,
Item 1. Legal Proceedings.

The Company is party to various lawsuits and
claims, including purported class actions, arising in the normal
course of business. In the opinion of management, these lawsuits
and claims are not, singularly or in the aggregate, material to
the Companys financial position or results of operations.

9



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

13.     Subsidiary
Guarantor Financial Information:

The Companys Senior Notes are guaranteed on
a full, unconditional and joint and several basis by all of the
Companys direct subsidiaries, each of which is
wholly-owned. The condensed consolidating financial information
for the Company is as follows (in thousands):

Condensed consolidated balance sheets as of
September 28, 2002 and December 29, 2001, are as
follows:

|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------- | ---------- | ------- | ------------ | ------ | ------------ | ------ | ------- | ------- | ------- | ------- | -------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | As of September 28, 2002      
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | Parent                         |                                                    | Subsidiary |         |             
|                                                   |                                                                                                                       | Company                        |                                                    | Guarantors |         | Eliminations |        | Consolidated
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |             
|Assets                                             |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Current assets:                                    |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Cash and cash equivalents                                                                                             |                                | $                                                  | 4,643      |         |              | $      | 679          |        |         | $       |        |         |          | $       | 5,322   |        
|                                                   | Accounts receivable, net                                                                                              |                                |                                                    | 79,888     |         |              |        | 28,088       |        |         |         |        |         |          |         | 107,976 |        
|                                                   | Inventories                                                                                                           |                                |                                                    | 105,720    |         |              |        | 46,622       |        |         |         |        |         |          |         | 152,342 |        
|                                                   | Other current assets                                                                                                  |                                |                                                    | 14,127     |         |              |        | 1,747        |        |         |         |        |         |          |         | 15,874  |        
|                                                   | Intercompany receivables                                                                                              |                                |                                                    | 56,354     |         |              |        |             |        |         |         | (56,354 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current assets           |                                                    |            | 260,732 |              |        |              | 77,136 |         |         |         | (56,354 | )        |         |         | 281,514 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Property and equipment, net                        |                                                                                                                       |                                | 16,000                                             |            |         |              | 4,919  |              |        |         |        |         |         |          | 20,919  |        
|Goodwill and other intangible assets, net          |                                                                                                                       |                                | 51,973                                             |            |         |              | 46,548 |              |        |         |        |         |         |          | 98,521  |        
|Investment in subsidiaries                         |                                                                                                                       |                                | 67,831                                             |            |         |              |       |              |        |         | (67,831 | )       |         |          |        |        
|Other assets                                       |                                                                                                                       |                                | 17,009                                             |            |         |              | 648    |              |        |         |        |         |         |          | 17,657  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total assets                                       |            | $       | 413,545      |        |              | $      | 129,251 |         |         | $       | (124,185 | )       |         | $       | 418,611 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Liabilities and Stockholders
    Investment       |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Current liabilities:                               |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Accounts payable                                                                                                      |                                | $                                                  | 169,981    |         |              | $      | 168          |        |         | $       |        |         |          | $       | 170,149 |        
|                                                   | Accrued expenses                                                                                                      |                                |                                                    | 14,093     |         |              |        | 3,765        |        |         |         |        |         |          |         | 17,858  |        
|                                                   | Current maturities of long-term debt                                                                                  |                                |                                                    | 3,574      |         |              |        | 160          |        |         |         |        |         |          |         | 3,734   |        
|                                                   | Intercompany payables                                                                                                 |                                |                                                    |           |         |              |        | 56,354       |        |         |         | (56,354 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current liabilities      |                                                    |            | 187,648 |              |        |              | 60,447 |         |         |         | (56,354 | )        |         |         | 191,741 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Revolving credit facility and other long-term debt |                                                                                                                       |                                | 154,163                                            |            |         |              |       |              |        |         |        |         |         |          | 154,163 |        
|Series D Senior Notes                              |                                                                                                                       |                                | 28,600                                             |            |         |              |       |              |        |         |        |         |         |          | 28,600  |        
|Capital lease obligations                          |                                                                                                                       |                                | 14,877                                             |            |         |              |       |              |        |         |        |         |         |          | 14,877  |        
|Other liabilities                                  |                                                                                                                       |                                | 3,729                                              |            |         |              | 973    |              |        |         |        |         |         |          | 4,702   |        
|Redeemable preferred stock                         |                                                                                                                       |                                | 11,035                                             |            |         |              |       |              |        |         |        |         |         |          | 11,035  |        
|Stockholders investment:                          |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Intercompany investment                                                                                               |                                |                                                    |           |         |              |        | 76,633       |        |         |         | (76,633 | )       |          |         |        |        
|                                                   | Preferred stock                                                                                                       |                                |                                                    | 44,807     |         |              |        |             |        |         |         |        |         |          |         | 44,807  |        
|                                                   | Common stock, par value $.01 per share;
    50,000,000 shares authorized; 5,086,917 shares issued and
    outstanding |                                |                                                    | 51         |         |              |        |             |        |         |         |        |         |          |         | 51      |        
|                                                   | Additional paid-in capital                                                                                            |                                |                                                    | 22,388     |         |              |        |             |        |         |         |        |         |          |         | 22,388  |        
|                                                   | Warrants                                                                                                              |                                |                                                    | 1,759      |         |              |        |             |        |         |         |        |         |          |         | 1,759   |        
|                                                   | Notes receivable from sale of stock                                                                                   |                                |                                                    | (17        | )       |              |        |             |        |         |         |        |         |          |         | (17     | )      
|                                                   | Accumulated deficit                                                                                                   |                                |                                                    | (55,495    | )       |              |        | (8,802       | )      |         |         | 8,802   |         |          |         | (55,495 | )      
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total stockholders investment |                                                    |            | 13,493  |              |        |              | 67,831 |         |         |         | (67,831 | )        |         |         | 13,493  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total liabilities and stockholders
    investment |            | $       | 413,545      |        |              | $      | 129,251 |         |         | $       | (124,185 | )       |         | $       | 418,611 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        

10



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------- | ---------- | ------- | ----------- | ------ | ------------ | ------ | ------- | ------- | ------- | ------- | -------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | As of December 29, 2001       
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | Parent                         |                                                    | Subsidiary |         |            
|                                                   |                                                                                                                       | Company                        |                                                    | Guarantors |         | Elimination |        | Consolidated
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |             
|Assets                                             |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Current assets:                                    |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   | Cash and cash equivalents                                                                                             |                                | $                                                  | 3,423      |         |             | $      | 708          |        |         | $       |        |         |          | $       | 4,131   |        
|                                                   | Accounts receivable, net                                                                                              |                                |                                                    | 67,368     |         |             |        | 26,253       |        |         |         |        |         |          |         | 93,621  |        
|                                                   | Inventories                                                                                                           |                                |                                                    | 105,296    |         |             |        | 48,916       |        |         |         |        |         |          |         | 154,212 |        
|                                                   | Other current assets                                                                                                  |                                |                                                    | 33,835     |         |             |        | 4,380        |        |         |         |        |         |          |         | 38,215  |        
|                                                   | Intercompany receivables                                                                                              |                                |                                                    | 65,072     |         |             |        |             |        |         |         | (65,072 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current assets           |                                                    |            | 274,994 |             |        |              | 80,257 |         |         |         | (65,072 | )        |         |         | 290,179 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Property and equipment, net                        |                                                                                                                       |                                | 19,628                                             |            |         |             | 7,858  |              |        |         |        |         |         |          | 27,486  |        
|Goodwill and other intangible assets, net          |                                                                                                                       |                                | 50,543                                             |            |         |             | 48,568 |              |        |         |        |         |         |          | 99,111  |        
|Investment in subsidiaries                         |                                                                                                                       |                                | 66,350                                             |            |         |             |       |              |        |         | (66,350 | )       |         |          |        |        
|Other assets                                       |                                                                                                                       |                                | 24,032                                             |            |         |             | 2,212  |              |        |         |        |         |         |          | 26,244  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total assets                                       |            | $       | 435,547     |        |              | $      | 138,895 |         |         | $       | (131,422 | )       |         | $       | 443,020 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Liabilities and Stockholders
    Investment       |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Current liabilities:                               |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   | Accounts payable                                                                                                      |                                | $                                                  | 170,170    |         |             | $      | 401          |        |         | $       |        |         |          | $       | 170,571 |        
|                                                   | Accrued expenses                                                                                                      |                                |                                                    | 17,628     |         |             |        | 3,015        |        |         |         |        |         |          |         | 20,643  |        
|                                                   | Current maturities of long-term debt                                                                                  |                                |                                                    | 3,568      |         |             |        | 1,727        |        |         |         |        |         |          |         | 5,295   |        
|                                                   | Intercompany payables                                                                                                 |                                |                                                    |           |         |             |        | 65,072       |        |         |         | (65,072 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current liabilities      |                                                    |            | 191,366 |             |        |              | 70,215 |         |         |         | (65,072 | )        |         |         | 196,509 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Revolving credit facility and other long-term debt |                                                                                                                       |                                | 126,036                                            |            |         |             | 508    |              |        |         |        |         |         |          | 126,544 |        
|Series D Senior Notes                              |                                                                                                                       |                                | 150,000                                            |            |         |             |       |              |        |         |        |         |         |          | 150,000 |        
|Capital lease obligations                          |                                                                                                                       |                                | 1,163                                              |            |         |             | 183    |              |        |         |        |         |         |          | 1,346   |        
|Other liabilities                                  |                                                                                                                       |                                | 6,403                                              |            |         |             | 1,639  |              |        |         |        |         |         |          | 8,042   |        
|Redeemable preferred stock                         |                                                                                                                       |                                | 24,115                                             |            |         |             |       |              |        |         |        |         |         |          | 24,115  |        
|Stockholders investment:                          |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   | Intercompany investment                                                                                               |                                |                                                    |           |         |             |        | 76,634       |        |         |         | (76,634 | )       |          |         |        |        
|                                                   | Common stock, par value $.01 per share;
    15,000,000 shares authorized; 5,136,917 shares issued and
    outstanding |                                |                                                    | 51         |         |             |        |             |        |         |         |        |         |          |         | 51      |        
|                                                   | Additional paid-in capital                                                                                            |                                |                                                    | 22,751     |         |             |        |             |        |         |         |        |         |          |         | 22,751  |        
|                                                   | Warrants                                                                                                              |                                |                                                    | 1,137      |         |             |        |             |        |         |         |        |         |          |         | 1,137   |        
|                                                   | Notes receivable from sale of stock                                                                                   |                                |                                                    | (340       | )       |             |        |             |        |         |         |        |         |          |         | (340    | )      
|                                                   | Accumulated deficit                                                                                                   |                                |                                                    | (87,135    | )       |             |        | (10,284      | )      |         |         | 10,284  |         |          |         | (87,135 | )      
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total stockholders investment |                                                    |            | (63,536 | )           |        |              | 66,350 |         |         |         | (66,350 | )        |         |         | (63,536 | )      
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total liabilities and stockholders
    investment |            | $       | 435,547     |        |              | $      | 138,895 |         |         | $       | (131,422 | )       |         | $       | 443,020 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        

11



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

Condensed consolidated statements of operations
for the quarters ended September 28, 2002 and
September 29, 2001 are as follows:

|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |        |  
|--------------------------------------------------------- | ------------------------------------ | ---------------------------------------- | ------- | ---------- | - | ----------- | ------ | ------------ |  | - | ------ | ------ | - | - | ------- | ------ | -
|                                                          |                                      |                                         
|                                                          |                                      | For the Quarter Ended September 28, 2002
|                                                          |                                      |                                         
|                                                          |                                      | Parent                                   |         | Subsidiary |   |            
|                                                          |                                      | Company                                  |         | Guarantors |   | Elimination |        | Consolidated
|                                                          |                                      |                                          |         |            |   |             |        |             
|Net sales                                                 |                                      | $                                        | 201,940 |            |   | $           | 78,119 |              |  | $ |       |        |   | $ | 280,059 |       
|Cost of goods sold                                        |                                      |                                          | 164,171 |            |   |             | 64,492 |              |  |   |       |        |   |   | 228,663 |       
|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       
|                                                          | Gross profit                         |                                          |         | 37,769     |   |             |        | 13,627       |  |   |        |       |   |   |         | 51,396 |  
|Selling, general and administrative expenses              |                                      |                                          | 30,136  |            |   |             | 11,658 |              |  |   |       |        |   |   | 41,794  |       
|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       
|                                                          | Operating income                     |                                          |         | 7,633      |   |             |        | 1,969        |  |   |        |       |   |   |         | 9,602  |  
|Other income (expense):                                   |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       
|                                                          | Interest income (expense), net       |                                          |         | (4,155     | ) |             |        | 2            |  |   |        |       |   |   |         | (4,153 | )
|                                                          | Other income, net                    |                                          |         | 58         |   |             |        | 97           |  |   |        |       |   |   |         | 155    |  
|                                                          | Equity in net income of subsidiaries |                                          |         | 1,241      |   |             |        |             |  |   |        | (1,241 | ) |   |         |       |  
|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       
|Income from continuing operations before income
    taxes |                                      |                                          | 4,777   |            |   |             | 2,068  |              |  |   | (1,241 | )      |   |   | 5,604   |       
|Provision for income taxes                                |                                      |                                          | 1,414   |            |   |             | 827    |              |  |   |       |        |   |   | 2,241   |       
|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       
|Income from continuing operations                         |                                      |                                          | 3,363   |            |   |             | 1,241  |              |  |   | (1,241 | )      |   |   | 3,363   |       
|Loss on disposal of discontinued operations               |                                      |                                          | (36     | )          |   |             |       |              |  |   |       |        |   |   | (36     | )     
|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       
|Net income                                                |                                      | $                                        | 3,327   |            |   | $           | 1,241  |              |  | $ | (1,241 | )      |   | $ | 3,327   |       
|                                                          |                                      |                                          |         |            |   |             |        |              |  |   |        |        |   |   |         |       

|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |        |  
|------------------------------------------------------- | ---------------------------------- | ---------------------------------------- | ------- | ---------- | - | ----------- | ------ | ------------ | - | - | ----- | ----- |  | - | ------- | ------ | -
|                                                        |                                    |                                         
|                                                        |                                    | For the Quarter Ended September 29, 2001
|                                                        |                                    |                                         
|                                                        |                                    | Parent                                   |         | Subsidiary |   |            
|                                                        |                                    | Company                                  |         | Guarantors |   | Elimination |        | Consolidated
|                                                        |                                    |                                          |         |            |   |             |        |             
|Net sales                                               |                                    | $                                        | 202,413 |            |   | $           | 90,760 |              |   | $ |      |       |  | $ | 293,173 |       
|Cost of goods sold                                      |                                    |                                          | 163,123 |            |   |             | 78,862 |              |   |   |      |       |  |   | 241,985 |       
|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       
|                                                        | Gross profit                       |                                          |         | 39,290     |   |             |        | 11,898       |   |   |       |      |  |   |         | 51,188 |  
|Selling, general and administrative expenses            |                                    |                                          | 32,089  |            |   |             | 20,604 |              |   |   |      |       |  |   | 52,693  |       
|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       
|                                                        | Operating income (loss)            |                                          |         | 7,201      |   |             |        | (8,706       | ) |   |       |      |  |   |         | (1,505 | )
|Other income (expense):                                 |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       
|                                                        | Interest expense, net              |                                          |         | (6,860     | ) |             |        | (62          | ) |   |       |      |  |   |         | (6,922 | )
|                                                        | Other income, net                  |                                          |         | 22         |   |             |        | 281          |   |   |       |      |  |   |         | 303    |  
|                                                        | Equity in net loss of subsidiaries |                                          |         | (5,558     | ) |             |        |             |   |   |       | 5,558 |  |   |         |       |  
|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       
|Loss from continuing operations before income
    taxes |                                    |                                          | (5,195  | )          |   |             | (8,487 | )            |   |   | 5,558 |       |  |   | (8,124  | )     
|Benefit for income taxes                                |                                    |                                          | (1,704  | )          |   |             | (2,929 | )            |   |   |      |       |  |   | (4,633  | )     
|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       
|Loss from continuing operations                         |                                    |                                          | (3,491  | )          |   |             | (5,558 | )            |   |   | 5,558 |       |  |   | (3,491  | )     
|Loss from disposal of discontinued operations           |                                    |                                          | (1,261  | )          |   |             |       |              |   |   |      |       |  |   | (1,261  | )     
|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       
|Net loss                                                |                                    | $                                        | (4,752  | )          |   | $           | (5,558 | )            |   | $ | 5,558 |       |  | $ | (4,752  | )     
|                                                        |                                    |                                          |         |            |   |             |        |              |   |   |       |       |  |   |         |       

12



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

Condensed consolidated statements of operations
for the nine months ended September 28, 2002 and
September 29, 2001 are as follows:

|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |         |  
|--------------------------------------------------------------- | ------------------------------------ | -------------------------------------------- | ------- | ---------- | - | ----------- | ------- | ------------ | - | - | ------ | ------ | - | - | ------- | ------- | -
|                                                                |                                      |                                             
|                                                                |                                      | For the Nine Months Ended September 28, 2002
|                                                                |                                      |                                             
|                                                                |                                      | Parent                                       |         | Subsidiary |   |            
|                                                                |                                      | Company                                      |         | Guarantors |   | Elimination |         | Consolidated
|                                                                |                                      |                                              |         |            |   |             |         |             
|Net sales                                                       |                                      | $                                            | 587,866 |            |   | $           | 221,339 |              |   | $ |       |        |   | $ | 809,205 |        
|Cost of goods sold                                              |                                      |                                              | 477,543 |            |   |             | 183,126 |              |   |   |       |        |   |   | 660,669 |        
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|                                                                | Gross profit                         |                                              |         | 110,323    |   |             |         | 38,213       |   |   |        |       |   |   |         | 148,536 |  
|Selling, general and administrative expenses                    |                                      |                                              | 89,909  |            |   |             | 35,906  |              |   |   |       |        |   |   | 125,815 |        
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|                                                                | Operating income                     |                                              |         | 20,414     |   |             |         | 2,307        |   |   |        |       |   |   |         | 22,721  |  
|Other income (expense):                                         |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|                                                                | Interest expense, net                |                                              |         | (14,701    | ) |             |         | (60          | ) |   |        |       |   |   |         | (14,761 | )
|                                                                | Other income, net                    |                                              |         | 90         |   |             |         | 222          |   |   |        |       |   |   |         | 312     |  
|                                                                | Equity in net income of subsidiaries |                                              |         | 1,481      |   |             |         |             |   |   |        | (1,481 | ) |   |         |        |  
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|Income from continuing operations before income
    taxes       |                                      |                                              | 7,284   |            |   |             | 2,469   |              |   |   | (1,481 | )      |   |   | 8,272   |        
|Provision for income taxes                                      |                                      |                                              | 2,321   |            |   |             | 988     |              |   |   |       |        |   |   | 3,309   |        
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|Income from continuing operations before
    extraordinary item |                                      |                                              | 4,963   |            |   |             | 1,481   |              |   |   | (1,481 | )      |   |   | 4,963   |        
|Loss on disposal of discontinued operations                     |                                      |                                              | (364    | )          |   |             |        |              |   |   |       |        |   |   | (364    | )      
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|Income before extraordinary item                                |                                      |                                              | 4,599   |            |   |             | 1,481   |              |   |   | (1,481 | )      |   |   | 4,599   |        
|Extraordinary gain on repurchase of Senior Notes                |                                      |                                              | 29,855  |            |   |             |        |              |   |   |       |        |   |   | 29,855  |        
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        
|Net income                                                      |                                      | $                                            | 34,454  |            |   | $           | 1,481   |              |   | $ | (1,481 | )      |   | $ | 34,454  |        
|                                                                |                                      |                                              |         |            |   |             |         |              |   |   |        |        |   |   |         |        

|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |         |  
|------------------------------------------------------- | ---------------------------------- | -------------------------------------------- | ------- | ---------- | - | ----------- | ------- | ------------ | - | - | ----- | ----- |  | - | ------- | ------- | -
|                                                        |                                    |                                             
|                                                        |                                    | For the Nine Months Ended September 29, 2001
|                                                        |                                    |                                             
|                                                        |                                    | Parent                                       |         | Subsidiary |   |            
|                                                        |                                    | Company                                      |         | Guarantors |   | Elimination |         | Consolidated
|                                                        |                                    |                                              |         |            |   |             |         |             
|Net sales                                               |                                    | $                                            | 592,657 |            |   | $           | 270,148 |              |   | $ |      |       |  | $ | 862,805 |        
|Cost of goods sold                                      |                                    |                                              | 480,394 |            |   |             | 221,425 |              |   |   |      |       |  |   | 701,819 |        
|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        
|                                                        | Gross profit                       |                                              |         | 112,263    |   |             |         | 48,723       |   |   |       |      |  |   |         | 160,986 |  
|Selling, general and administrative expenses            |                                    |                                              | 98,148  |            |   |             | 60,182  |              |   |   |      |       |  |   | 158,330 |        
|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        
|                                                        | Operating income (loss)            |                                              |         | 14,115     |   |             |         | (11,459      | ) |   |       |      |  |   |         | 2,656   |  
|Other income (expense):                                 |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        
|                                                        | Interest expense, net              |                                              |         | (21,752    | ) |             |         | (153         | ) |   |       |      |  |   |         | (21,905 | )
|                                                        | Other income, net                  |                                              |         | 409        |   |             |         | 597          |   |   |       |      |  |   |         | 1,006   |  
|                                                        | Equity in net loss of subsidiaries |                                              |         | (8,502     | ) |             |         |             |   |   |       | 8,502 |  |   |         |        |  
|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        
|Loss from continuing operations before income
    taxes |                                    |                                              | (15,730 | )          |   |             | (11,015 | )            |   |   | 8,502 |       |  |   | (18,243 | )      
|Benefit for income taxes                                |                                    |                                              | (2,154  | )          |   |             | (3,282  | )            |   |   |      |       |  |   | (5,436  | )      
|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        
|Loss from continuing operations                         |                                    |                                              | (13,576 | )          |   |             | (7,733  | )            |   |   | 8,502 |       |  |   | (12,807 | )      
|Loss from discontinued operations                       |                                    |                                              |        |            |   |             | (769    | )            |   |   |      |       |  |   | (769    | )      
|Loss from disposal of discontinued operations           |                                    |                                              | (12,427 | )          |   |             |        |              |   |   |      |       |  |   | (12,427 | )      
|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        
|Net loss                                                |                                    | $                                            | (26,003 | )          |   | $           | (8,502  | )            |   | $ | 8,502 |       |  | $ | (26,003 | )      
|                                                        |                                    |                                              |         |            |   |             |         |              |   |   |       |       |  |   |         |        

13



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

Condensed consolidated statements of cash flows
for the nine months ended September 28, 2002 and
September 29, 2001 are as follows:

|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |        |         |        |  
|------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------------------------------------- | ---------- | ------- | ----------- | ------ | ------------ | ------ | ------ | - | ------ | ----- | - | ------- | ------ | ------- | ------ | -
|                                                                         |                                                                                                 |                                                                        
|                                                                         |                                                                                                 | For the Nine Months Ended September 28, 2002                           
|                                                                         |                                                                                                 |                                                                        
|                                                                         |                                                                                                 | Parent                                                                  |                                                          | Subsidiary |         |            
|                                                                         |                                                                                                 | Company                                                                 |                                                          | Guarantors |         | Elimination |        | Consolidated
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |             
|Cash flows from operating
    activities:                                |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|                                                                         | Net income                                                                                      |                                                                         | $                                                        | 34,454     |         |             | $      | 1,481        |        |        | $ | (1,481 | )     |   | $       | 34,454 |        
|                                                                         | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |        |        
|                                                                         |                                                                                                 | Loss on disposal of discontinued operations                             |                                                          |            | 364     |             |        |              |       |        |   |        |      |   |         |        | 364     |       
|                                                                         |                                                                                                 | Extraordinary gain                                                      |                                                          |            | (29,855 | )           |        |              |       |        |   |        |      |   |         |        | (29,855 | )     
|                                                                         |                                                                                                 | Depreciation and amortization of other
    intangibles and other assets |                                                          |            | 3,881   |             |        |              | 3,342  |        |   |        |      |   |         |        | 7,223   |       
|                                                                         |                                                                                                 | Other, net                                                              |                                                          |            | (2,482  | )           |        |              | 3,786  |        |   |        |      |   |         |        | 1,304   |       
|                                                                         |                                                                                                 | Equity in net income of subsidiary                                      |                                                          |            | (1,481  | )           |        |              |       |        |   |        | 1,481 |   |         |        |        |       
|                                                                         | Change in operating assets and liabilities:                                                     |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |        |        
|                                                                         |                                                                                                 | Accounts receivable, net                                                |                                                          |            | (14,218 | )           |        |              | (1,835 | )      |   |        |      |   |         |        | (16,053 | )     
|                                                                         |                                                                                                 | Inventories                                                             |                                                          |            | (424    | )           |        |              | 2,294  |        |   |        |      |   |         |        | 1,870   |       
|                                                                         |                                                                                                 | Other current assets                                                    |                                                          |            | 3,290   |             |        |              | 57     |        |   |        |      |   |         |        | 3,347   |       
|                                                                         |                                                                                                 | Accounts payable and accrued expenses                                   |                                                          |            | (4,453  | )           |        |              | 450    |        |   |        |      |   |         |        | (4,003  | )     
|                                                                         |                                                                                                 | Other, net                                                              |                                                          |            | (3,478  | )           |        |              | (432   | )      |   |        |      |   |         |        | (3,910  | )     
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|                                                                         |                                                                                                 |                                                                         | Net cash provided by (used in) continuing
    operations |            |         | (14,402     | )      |              |        | 9,143  |   |        |       |  |         |        |         | (5,259 | )
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|Cash flows from investing
    activities:                                |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|Purchase of property and equipment                                       |                                                                                                 |                                                                         | (674                                                     | )          |         |             | (200   | )            |        |        |  |        |       |   | (874    | )     
|Proceeds from sale of property and equipment                             |                                                                                                 |                                                                         | 1,471                                                    |            |         |             | 609    |              |        |        |  |        |       |   | 2,080   |       
|Other, net                                                               |                                                                                                 |                                                                         | (92                                                      | )          |         |             |       |              |        |        |  |        |       |   | (92     | )     
|Intercompany                                                             |                                                                                                 |                                                                         | 8,697                                                    |            |         |             | (8,697 | )            |        |        |  |        |       |   |        |       
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|                                                                         |                                                                                                 |                                                                         | Net cash provided by (used in) investing
    activities  |            |         | 9,402       |        |              |        | (8,288 | ) |        |       |  |         |        |         | 1,114  |  
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|Cash flows from financing
    activities:                                |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|Net proceeds from revolving credit facility and
    other long-term debt |                                                                                                 |                                                                         | 32,749                                                   |            |         |             |       |              |        |        |  |        |       |   | 32,749  |       
|Repurchase of Series D Senior Notes                                      |                                                                                                 |                                                                         | (64,959                                                  | )          |         |             |       |              |        |        |  |        |       |   | (64,959 | )     
|Net proceeds from sale-leaseback transaction                             |                                                                                                 |                                                                         | 13,285                                                   |            |         |             |       |              |        |        |  |        |       |   | 13,285  |       
|Proceeds received from issuance of preferred stock                       |                                                                                                 |                                                                         | 28,913                                                   |            |         |             |       |              |        |        |  |        |       |   | 28,913  |       
|Principal payments on other long-term debt                               |                                                                                                 |                                                                         | (3,728                                                   | )          |         |             | (884   | )            |        |        |  |        |       |   | (4,612  | )     
|Other                                                                    |                                                                                                 |                                                                         | (40                                                      | )          |         |             |       |              |        |        |  |        |       |   | (40     | )     
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|                                                                         |                                                                                                 |                                                                         | Net cash provided by (used in) financing
    activities  |            |         | 6,220       |        |              |        | (884   | ) |        |       |  |         |        |         | 5,336  |  
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|Net increase (decrease) in cash and cash
    equivalents                 |                                                                                                 |                                                                         | 1,220                                                    |            |         |             | (29    | )            |        |        |  |        |       |   | 1,191   |       
|Cash and cash equivalents, beginning of period                           |                                                                                                 |                                                                         | 3,423                                                    |            |         |             | 708    |              |        |        |  |        |       |   | 4,131   |       
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       
|Cash and cash equivalents, end of period                                 |                                                                                                 | $                                                                       | 4,643                                                    |            |         | $           | 679    |              |        | $      |  |        |       | $ | 5,322   |       
|                                                                         |                                                                                                 |                                                                         |                                                          |            |         |             |        |              |        |        |   |        |       |   |         |       

14



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |         |         |        |  
|-------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------- | ------- | ----------- | ------ | ------------ | ------ | ------ | - | ----- | ------ | - | ------ | ------- | ------- | ------ | -
|                                                               |                                                                                               |                                                                                  
|                                                               |                                                                                               | For the Nine Months Ended September 29, 2001                                     
|                                                               |                                                                                               |                                                                                  
|                                                               |                                                                                               | Parent                                                                            |                                                          | Subsidiary |         |            
|                                                               |                                                                                               | Company                                                                           |                                                          | Guarantors |         | Elimination |        | Consolidated
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |             
|Cash flows from operating
    activities:                      |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|                                                               | Net loss                                                                                      |                                                                                   | $                                                        | (26,003    | )       |             | $      | (8,502       | )      |        | $ | 8,502 |        |   | $      | (26,003 | )      
|                                                               | Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities: |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |         |        
|                                                               |                                                                                               | Loss on disposal of discontinued operations                                       |                                                          |            | 12,427  |             |        |              |       |        |   |       |       |   |        |         | 12,427  |       
|                                                               |                                                                                               | Loss from discontinued operations                                                 |                                                          |            |        |             |        |              | 769    |        |   |       |       |   |        |         | 769     |       
|                                                               |                                                                                               | Depreciation and amortization of goodwill, other
    intangibles and other assets |                                                          |            | 7,434   |             |        |              | 6,471  |        |   |       |       |   |        |         | 13,905  |       
|                                                               |                                                                                               | Other, net                                                                        |                                                          |            | (4,914  | )           |        |              | 1,108  |        |   |       |       |   |        |         | (3,806  | )     
|                                                               |                                                                                               | Equity in net loss of subsidiaries                                                |                                                          |            | 8,502   |             |        |              |       |        |   |       | (8,502 | ) |        |         |        |       
|                                                               | Change in operating assets and liabilities:                                                   |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |         |        
|                                                               |                                                                                               | Accounts receivable, net                                                          |                                                          |            | (6,032  | )           |        |              | (9,518 | )      |   |       |       |   |        |         | (15,550 | )     
|                                                               |                                                                                               | Inventories                                                                       |                                                          |            | 19,232  |             |        |              | 11,704 |        |   |       |       |   |        |         | 30,936  |       
|                                                               |                                                                                               | Other current assets                                                              |                                                          |            | 2,268   |             |        |              | 799    |        |   |       |       |   |        |         | 3,067   |       
|                                                               |                                                                                               | Accounts payable and accrued expenses                                             |                                                          |            | (30,268 | )           |        |              | 11,915 |        |   |       |       |   |        |         | (18,353 | )     
|                                                               |                                                                                               | Other, net                                                                        |                                                          |            | (395    | )           |        |              | (110   | )      |   |       |       |   |        |         | (505    | )     
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|                                                               |                                                                                               |                                                                                   | Net cash provided by (used in) continuing
    operations |            |         | (17,749     | )      |              |        | 14,636 |   |       |        |  |        |         |         | (3,113 | )
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|                                                               |                                                                                               |                                                                                   | Net cash used in discontinued operations                 |            |         |            |        |              |        | (4,920 | ) |       |        |  |        |         |         | (4,920 | )
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|Cash flows from investing
    activities:                      |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|Net proceeds from sale of discontinued operations              |                                                                                               |                                                                                   | 9,285                                                    |            |         |             |       |              |        |        |  |       |        |   | 9,285  |        
|Acquisitions, net of cash acquired                             |                                                                                               |                                                                                   | (885                                                     | )          |         |             |       |              |        |        |  |       |        |   | (885   | )      
|Payments on deferred purchase price of acquired
    businesses |                                                                                               |                                                                                   | (2,495                                                   | )          |         |             |       |              |        |        |  |       |        |   | (2,495 | )      
|Purchase of property and equipment                             |                                                                                               |                                                                                   | (3,229                                                   | )          |         |             | (1,800 | )            |        |        |  |       |        |   | (5,029 | )      
|Proceeds from sale of property and equipment                   |                                                                                               |                                                                                   | 1,805                                                    |            |         |             | 134    |              |        |        |  |       |        |   | 1,939  |        
|Other, net                                                     |                                                                                               |                                                                                   | 253                                                      |            |         |             |       |              |        |        |  |       |        |   | 253    |        
|Intercompany                                                   |                                                                                               |                                                                                   | 5,392                                                    |            |         |             | (5,392 | )            |        |        |  |       |        |   |       |        
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|                                                               |                                                                                               |                                                                                   | Net cash provided by (used in) investing
    activities  |            |         | 10,126      |        |              |        | (7,058 | ) |       |        |  |        |         |         | 3,068  |  
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|Cash flows from financing
    activities:                      |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|Net repayments of revolving credit facility                    |                                                                                               |                                                                                   | (3,655                                                   | )          |         |             |       |              |        |        |  |       |        |   | (3,655 | )      
|Proceeds received from issuance of preferred stock             |                                                                                               |                                                                                   | 12,000                                                   |            |         |             |       |              |        |        |  |       |        |   | 12,000 |        
|Principal payments on other long-term debt                     |                                                                                               |                                                                                   | (250                                                     | )          |         |             | (630   | )            |        |        |  |       |        |   | (880   | )      
|Other                                                          |                                                                                               |                                                                                   | 15                                                       |            |         |             | 1      |              |        |        |  |       |        |   | 16     |        
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|                                                               |                                                                                               |                                                                                   | Net cash provided by (used in) financing
    activities  |            |         | 8,110       |        |              |        | (629   | ) |       |        |  |        |         |         | 7,481  |  
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|Net increase in cash and cash equivalents                      |                                                                                               |                                                                                   | 487                                                      |            |         |             | 2,029  |              |        |        |  |       |        |   | 2,516  |        
|Cash and cash equivalents, beginning of period                 |                                                                                               |                                                                                   | 3,518                                                    |            |         |             | (191   | )            |        |        |  |       |        |   | 3,327  |        
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        
|Cash and cash equivalents, end of period                       |                                                                                               | $                                                                                 | 4,005                                                    |            |         | $           | 1,838  |              |        | $      |  |       |        | $ | 5,843  |        
|                                                               |                                                                                               |                                                                                   |                                                          |            |         |             |        |              |        |        |   |       |        |   |        |        

15



---



##### 





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

The following discussion and analysis of the
results of operations, financial condition and liquidity of the
Company should be read in conjunction with the financial
statements and related notes included in this report.

Results of Operations

Quarter Ended September 28, 2002
Compared to Quarter Ended September 29, 2001

Consolidated net sales in the third quarter 2002
decreased by $13.1 million, or 4.5%, to $280.1 million
versus $293.2 million in the third quarter 2001. The
decrease is attributable primarily to weaker consumer demand in
2002 versus 2001. Weaker consumer demand in the current quarter
is attributable to a slower economy creating a more competitive
environment. Units of replacement passenger and light truck
tires shipped for the industry were down approximately 7% for
the third quarter 2002 versus third quarter 2001.

Gross profit in the third quarter 2002 increased
by $0.2 million, or 0.4%, to $51.4 million versus
$51.2 million in the third quarter 2001 due to an increase
in gross profit as a percentage of sales to 18.4% in the third
quarter 2002 compared to 17.5% in the third quarter 2001. Margin
for the third quarter 2001 included a $5.0 million charge
for inventory impairments primarily resulting from a management
decision to exit the majority of the Companys parts
product lines in the Western division. Excluding this charge,
margin as a percentage of sales for the third quarter 2002
decreased by 0.8% from third quarter 2001. Margin decreases are
primarily attributable to an increase in competitive activity.

Selling, general and administrative expenses
decreased by $10.9 million in the third quarter 2002
representing 14.9% as a percentage of sales compared to 18.0% in
the third quarter 2001. The decrease in operating expenses is
primarily due to a headcount reduction throughout the Company as
well as discontinued amortization of the Companys goodwill
as required by new accounting standards.

Interest expense decreased $2.8 million in
the third quarter of 2002 to $4.1 million versus
$6.9 million in the third quarter of 2001. The decrease is
primarily attributable to reduced interest cost on the
Companys outstanding Series D Senior Notes as well as
a decline in interest rates.

Pre-tax income for the third quarter 2002 was
$5.6 million resulting in an income tax provision of
$2.2 million compared to a pre-tax loss of
$8.1 million in the third quarter 2001 resulting in a tax
benefit of $4.6 million.

EBITDA from continuing operations increased from
$3.1 million for the third quarter 2001 to
$11.8 million for third quarter 2002. EBITDA includes
earnings from continuing operations before interest, taxes,
depreciation and amortization and should not be considered an
alternative to, or more meaningful than, net income or cash flow
as determined in accordance with generally accepted accounting
principles. The increase is primarily due to the parts-related
charge of $5.0 million taken in third quarter 2001 and
decreased operating expenses as a percentage of sales in third
quarter 2002.

Nine Months Ended September 28, 2002
Compared to Nine Months Ended September 29, 2001

Consolidated net sales for the nine-month period
2002 decreased by $53.6 million, or 6.2%, to $809.2 million
versus $862.8 million in the nine-month period 2001. The
sales decrease is partially attributable to a decline in sales
to Winston due to the sale of Winston on May 15, 2001.
Sales for the nine-month period 2001 included $15.8 million
of such sales. The remainder of the decrease is attributable to
a decline in sales in the third quarter as discussed above.
Units of replacement passenger and light truck tires shipped for
the industry were down approximately 4% in the nine-month period
2002 compared to the nine-month period 2001.

Gross profit for the nine-month period 2002
decreased by $12.5 million, or 7.7%, to $148.5 million
versus $161.0 million in the nine-month period 2001.
Excluding the impact of the $5.0 million charge taken in
third quarter 2001 as discussed above, gross profit as a
percentage of sales decreased to 18.4% in the nine-month period
2002 compared to 19.2% in the nine-month period of 2001. Margin
decreases are primarily attributed to an increase in competitive
activity.

16



---



##### 



Selling, general and administrative expenses
decreased by $32.5 million in the nine-month period 2002
representing 15.5% as a percentage of sales compared to 18.4% in
2001. Decreased operating expenses were primarily a direct
result of a headcount reduction and the consolidation of all
back office operations at the Companys headquarters in
Huntersville, NC as well as discontinued amortization of the
Companys goodwill as required by new accounting standards.
Operating expenses in 2001 included one-time severance payments
of $1.8 million.

Interest expense decreased in the nine-month
period ending September 28, 2002 by $7.1 million to
$14.8 million versus $ 21.9 million in the nine-month
period 2001. The decrease is primarily due to lower interest
costs related to the Companys Series D Senior Notes
as well as a decline in interest rates.

Pre-tax income for the nine-month period ending
September 28, 2002 was $8.3 million resulting in an
income tax provision of $3.3 million compared to a pre-tax
loss of $18.2 million in the nine-month period 2001
resulting in a tax benefit of $5.4 million. The difference
between the statutory tax rate and the effective tax rate in the
nine-month period 2001 was primarily due to non-deductible
goodwill amortization.

In the nine-month period ending
September 28, 2002, the Company recorded an additional loss
on disposal of discontinued operations of approximately $0.4
million, net of income tax benefit of $0.2 million, for a
cumulative net loss on sale of $14.2 million of which
$12.6 million was recognized in 2001. The majority of the
2002 charges relate to the settlement of issues surrounding
leases guaranteed by the Company.

EBITDA from continuing operations increased
$12.6 million to $29.3 million in the nine-month
period 2002 compared to $16.7 million in the nine-month
period 2001. This increase is primarily due to the
$5.0 million parts-related charge taken in the third
quarter 2001 and decreased operating expenses as a percentage of
sales.

Liquidity and Capital Resources

At September 28, 2002, the combined net
indebtedness (net of cash) of the Company was
$181.2 million compared to $277.7 million at
December 29, 2001. Total commitments by the lenders under
the Companys revolving credit facility
(Revolver) were $180.0 million at
September 28, 2002, of which $16.7 million was
available for additional borrowings.

Net working capital at September 28, 2002
totaled $89.8 million as compared to $93.7 million at
December 29, 2001, a decrease of $3.9 million. The
decrease in working capital is primarily attributable to a
decrease in deferred tax assets as a result of the extraordinary
gain on the repurchase of the Series D Senior Notes
partially offset by an increase in accounts receivable.

The Company used $5.3 million of cash in
operating activities for the nine months ended
September 28, 2002 compared to $3.1 million for the
comparable period in the prior year. The cash used in 2002
related principally to an increase in accounts receivable and a
decrease in accounts payable, which were partially offset by a
decrease in inventory. Cash used in 2001 related principally to
the loss from continuing operations and an increase in accounts
receivable partially offset by a decrease in inventories.

Capital expenditures for the nine months ended
September 28, 2002 and September 29, 2001 amounted to
$0.9 million and $5.0 million, respectively. Capital
expenditures in 2001 included warehouse racking and computer
system upgrades.

On March 18, 2002, the Company and its
lenders executed an amendment to the Revolver to, among other
things, amend the financial covenants contained therein, change
the rate at which borrowings thereunder bear interest and amend
certain definitions contained therein. In addition, the amended
facility provides for additional availability due in part to a
reduction in the minimum availability reserve (as defined in the
agreement). The minimum availability reserve will begin to
increase by $0.5 million in August 2002 and will increase
each month until the reserve reaches the original amount in
August 2003. As a result of the

17



---



##### 



amendment, the applicable margins as of
April 1, 2002 for Eurodollar Rate loans were increased to
3.5%. A nonrefundable fee of approximately $0.5 million was
charged in connection with this amendment.


Effective August 22, 2002, the Company and
its lenders executed a waiver and amendment to the Revolver to
waive the effects of a failure to meet the minimum fixed charge
coverage covenant, as defined in the credit agreement, as of
June 29, 2002 and to amend certain definitions contained
therein.

On September 25, 2002, the Company and its
lenders executed an amendment to the Revolver to, among other
things, amend the financial covenants contained therein and
revise certain components of the definitions of Borrowing Base.
The amended agreement provides for borrowings in the aggregate
principal amount of up to the lesser of $180.0 million or
the Borrowing Base, as defined in the agreement, which is based
on 85% of eligible accounts receivable, the lesser of 65% of
eligible tire inventory plus 60% of certain secured tire
inventory (within limitations as defined in the agreement) or
$100 million and the lesser of 50% of all other eligible
inventory or $25 million less defined reserves. A
nonrefundable fee of approximately $0.2 million was charged
in connection with this amendment. As of November 12, 2002,
the Companys financial measures were in excess of the
minimums required, as amended, and management expects that such
amounts will remain above the minimums for the foreseeable
future.

The Revolver term expires in March 2005,
extendable by the Company and the banks for an additional five
years. Borrowings under the Revolver bear interest, at
(i) the Base Rate, as defined, plus the applicable margin
(2.0% as of September 28, 2002) or (ii) the Eurodollar
Rate, as defined, plus the applicable margin (3.5% as of
September 28, 2002). These margins are subject to
performance-based step-downs resulting in margins ranging from
0.75% to 2.0% for Base Rate loans and 2.0% to 3.5% for
Eurodollar Rate loans, respectively.

The Revolver, as amended, requires the Company to
meet certain financial requirements, including minimum EBITDA,
fixed charge coverage and tangible capital funds, all as
defined, and minimum loan availability and certain covenants
which, among other things, restrict the ability of the Company
to incur additional indebtedness; enter into guarantees; make
loans and investments; make capital expenditures; declare
dividends; engage in mergers, consolidations and asset sales;
enter into transactions with affiliates; create liens and
encumbrances; enter into sale/leaseback transactions; modify
material agreements; and change the business it conducts. The
Companys obligations under the Revolver are secured by all
inventories and accounts receivable.

On March 27, 2002, the Company repurchased
$121.4 million in outstanding principal amount of the 10%
Series D Senior Notes (Senior Notes) due in
2008 at a purchase price of $535 per $1,000 in face amount of
Senior Notes, plus accrued and unpaid interest of
$4.5 million. The Company funded the repurchase of the
Senior Notes through several debt restructuring transactions
(Restructuring Transactions). The Restructuring
Transactions consisted of (i) an amendment to the
Companys revolving credit facility to provide additional
availability, (ii) a sale and leaseback of three of the
Companys tire distribution warehouses generating cash
proceeds of $13.9 million and (iii) an equity
investment of $28.9 million from the issuance of 9,637,592
shares of Series D preferred stock to the Companys
existing stockholders. Concurrently with the repurchase of the
Senior Notes, the Company, the Subsidiary Guarantors and the
Trustee executed the Fourth Supplemental Indenture to the
Indenture. The amendments to the Indenture were effected
primarily to permit the Restructuring Transactions and make
other required modifications.

The Company anticipates that its principal use of
cash going forward will be to meet working capital and debt
service requirements and to make capital expenditures (expected
to be approximately $0.6 million for the remainder of the
year). Based upon current and anticipated levels of operations,
the Company believes that its cash flow from operations,
together with amounts available under the Revolver, will be
adequate to meet its anticipated requirements. There can be no
assurance, however, that the Companys business will
continue to generate sufficient cash flow from operations in the
future to meet these requirements or to service its debt, and
the Company may be required to refinance all or a portion of its
existing debt, or to obtain additional financing. These
increased borrowings may result in higher interest payments. In
addition, there can be no assurance that any such refinancing
would be possible or that any additional financing could be
obtained. The inability to obtain additional financing could
have a material adverse effect on the Company.

18



---



##### 



Income Taxes

The Company has deferred tax assets of
$21.0 million and $44.0 million at September 28,
2002 and December 29, 2001, respectively. The decrease in
net deferred tax assets is primarily attributable to the
utilization of net operating loss carryforwards as it relates to
the extraordinary gain on retirement of the Series D Senior
Notes and from net income generated from continuing operations
through September 28, 2002. Management has evaluated the
Companys deferred tax assets and has concluded that the
realizability of the deferred tax assets is more likely than
not, except as it relates to certain state net operating loss
carryforwards. Accordingly, a valuation allowance of
$2.0 million was provided in fiscal 2001. This evaluation
considered the historical and long-term expected profitability
of the Companys continuing operations and the efficiencies
realized in the Companys operating cost structure over the
past year. The Companys ability to generate future taxable
income is dependent on numerous factors including general
economic conditions, the state of the replacement tire market
and other factors beyond managements control. Therefore,
there can be no assurance that the Company will meet its
expectation of future taxable income. Changes in expected future
income could lead to an additional valuation allowance against
deferred tax assets.

New Accounting Pronouncements

In April 2002, the FASB issued Statement of
Financial Accounting Standards (SFAS) No. 145,
Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical
Corrections as of April 2002. This statement contains a
number of changes under existing GAAP, including the elimination
of extraordinary item classification of debt extinguishments
that was previously required under SFAS 4. The provisions of
this Statement related to the rescission of Statement 4 shall be
applied in fiscal years beginning after May 15, 2002 with
early adoption encouraged. The Company expects to adopt SFAS
No. 145 in fiscal 2003.

In June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. This Statement addresses financial accounting
and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force
(EITF) Issue No. 94-3, Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a
Restructuring). The principal difference between this
Statement and Issue 94-3 relates to its requirements for
recognition of a liability for a cost associated with an exit or
disposal activity. This Statement requires that a liability for
a cost associated with an exit or disposal activity be
recognized when the liability is incurred. Under Issue 94-3, a
liability for an exit cost as defined in Issue 94-3 was
recognized at the date of an entitys commitment to an exit
plan. The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31,
2002, with early application encouraged. The Company does not
expect that adoption of this statement will have a material
impact on the results of operations or financial position in the
foreseeable future.

Cautionary Statement on Forward-Looking
Information

This report contains forward-looking
statements, which are statements other than statements of
historical facts. These forward-looking statements use phrases
such as expects or anticipates. The
forward-looking statements include, among other things, the
Companys expectations and estimates about its business
operations, strategy, and its expectations and estimates about
its future financial performance, including its financial
position, cash flows from operations, capital expenditures and
ability to refinance indebtedness. The forward-looking
statements in this Form 10-Q are intended to be subject to
the safe harbor protection provided by the federal securities
laws.

The forward-looking statements are subject to
risks, uncertainties and assumptions about the Company and about
the future, and could prove not to be correct. Cautionary
statements describing factors that could cause actual results to
differ materially from the Companys expectations are
discussed in this report, including in conjunction with the
forward-looking statements included in this report. All
subsequent written or oral forward-looking statements
attributable to the Company or to persons acting on behalf of
the Company are expressly qualified in their entirety by those
cautionary statements.

19



---



##### 



The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. In light
of these risks, uncertainties and assumptions, the
forward-looking events discussed in this report may not occur.

Item 3.     Quantitative
and Qualitative Disclosure about Market Risk.

For the period ended September 28, 2002, the
Company did not experience any material changes from the
quantitative and qualitative disclosures about market risk
presented in the Companys Report on Form 10-K for the
fiscal year ended December 29, 2001.

Item 4.     Controls
and Procedures.

Evaluation of
Disclosure Controls and Procedures

Based on their evaluation as of a date within
90 days of the filing date of this report on
Form 10-Q, the Companys principal executive officer
and principal financial officer have concluded that the
Companys disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange
Act of 1934 (the Exchange Act)) are effective to
ensure that information required to be disclosed by the Company
in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules
and forms.

Changes in
Internal Controls

There were no significant changes in the
Companys internal controls or in other factors that could
significantly affect these controls subsequent to the date of
their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

PART II.     OTHER
INFORMATION

Item 1.     Legal
Proceedings.

There have been no material developments in legal
proceedings involving the Company since those reported in the
Companys Report on Form 10-K for the fiscal year
ended December 29, 2001.

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

(a) Exhibits

|     |  |                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Certificate of Correction Filed to Correct a
    Certain Error in the Certificate of American Tire Distributors,
    Inc.
|10.1 |  | Amendment No. 8 and Waiver to Second Amended
    and Restated Loan and Security Agreement.                               
|10.2 |  | Amendment No. 9 to Second Amended and
    Restated Loan and Security Agreement.                                          
|99.1 |  | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.                  
|99.2 |  | Certification of Chief Financial Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.                  



| |     |                    
| | --- | -------------------
| | (b) | Reports on Form 8-K

No report on Form 8-K was filed during the
quarter ended September 28, 2002.

20



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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 12, 2002

| |                                 
| | --------------------------------
| | AMERICAN TIRE DISTRIBUTORS, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ WILLIAM E. BERRY

| |                                 
| | --------------------------------
| |                                 
| | William E. Berry                
| | Executive Vice President and    
| | Chief Financial Officer         
| | (On behalf of the Registrant and
| | as Principal Financial Officer) 

21



---



##### 



CERTIFICATIONS

I, Richard P. Johnson, President and Chief
Executive Officer of American Tire Distributors, Inc., certify
that:



|   |                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this quarterly report on
    Form 10-Q of American Tire Distributors, Inc.;                                                                                                                                                                                                                                                       
|  
|2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|  
|3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|  
|4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                             



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;



| |    |                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and



| |    |                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;



|   |                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and



| |    |                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and



|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The registrants other certifying officers
    and I have indicated in this quarterly report whether or not
    there were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.

Date: November 12, 2002



| |                                      
| | -------------------------------------
| | /s/ RICHARD P. JOHNSON               
| |                                      
| | Richard P. Johnson                   
| | President and Chief Executive Officer

22



---



##### 



CERTIFICATIONS

I, William E. Berry, Executive Vice President and
Chief Financial Officer of American Tire Distributors, Inc.,
certify that:



|   |                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | I have reviewed this quarterly report on
    Form 10-Q of American Tire Distributors, Inc.;                                                                                                                                                                                                                                                       
|  
|2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|  
|3. | Based on my knowledge, the financial statement,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                    
|  
|4. | The registrants other certifying officers
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                             



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;



| |    |                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and



| |    |                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | c. | presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;



|   |                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. | The registrants other certifying officers
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent function):



| |    |                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a. | all significant deficiencies in the design or
    operation of internal controls which could adversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and



| |    |                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and



|   |                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. | The registrants other certifying officers
    and I have indicated in this quarterly report whether or not
    there were significant changes in internal controls or in other
    factors that could significantly affect internal controls
    subsequent to the date of our most recent evaluation, including
    any corrective actions with regard to significant deficiencies
    and material weaknesses.

Date: November 12, 2002



| |                                                         
| | --------------------------------------------------------
| | /s/ WILLIAM E. BERRY                                    
| |                                                         
| | William E. Berry                                        
| | Executive Vice President and Chief Financial
    Officer

23