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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 March 29,
    2003                                           
|     |  | 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

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

Number of common shares outstanding at
May 13, 2003: 5,086,917



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TABLE OF CONTENTS

|         |         |                       |                                                                                              |                                                                                                                        |    |      |   |  | 
|-------- | ------- | --------------------- | -------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | -- | ---- | - |  | 
|         |         |                       |                                                                                              |                                                                                                                        |    | Page
|         |         |                       |                                                                                              |                                                                                                                        |    |     
|PART I.  |         | FINANCIAL INFORMATION |                                                                                              |                                                                                                                        |    |     
|        
|         | ITEM 1. |                       | Financial Statements                                                                         |                                                                                                                        |    |      |  
|         |         |                       |                                                                                              | Condensed Consolidated Balance Sheets 
    March 29, 2003 (unaudited) and December 28, 2002                           |    |      | 1 | 
|         |         |                       |                                                                                              | Condensed Consolidated Statements of Operations
    (unaudited)  Quarters Ended March 29, 2003 and
    March 30, 2002 |    |      | 2 | 
|         |         |                       |                                                                                              | Condensed Consolidated Statements of Cash Flows
    (unaudited)  Quarters Ended March 29, 2003 and
    March 30, 2002 |    |      | 3 | 
|         |         |                       |                                                                                              | Notes to Condensed Consolidated Financial
    Statements                                                               |    |      | 4 | 
|        
|         | ITEM 2. |                       | Managements Discussion and Analysis of
    Financial Condition and Results of    Operations |                                                                                                                        |    | 15   |  
|        
|         | ITEM 3. |                       | Quantitative and Qualitative Disclosures about
    Market Risk                               |                                                                                                                        |    | 19   |  
|        
|         | ITEM 4. |                       | Controls and Procedures                                                                      |                                                                                                                        |    | 19   |  
|        
|PART II. |         | OTHER INFORMATION     |                                                                                              |                                                                                                                        |    |     
|        
|         | ITEM 1. |                       | Legal Proceedings                                                                            |                                                                                                                        |    | 19   |  
|        
|         | ITEM 6. |                       | Exhibits and Reports on Form 8-K                                                             |                                                                                                                        |    | 19   |  
|        
|         |         | Signatures            |                                                                                              |                                                                                                                        | 20 |     
|        
|         |         | Certifications        |                                                                                              |                                                                                                                        | 21 |     



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##### 



PART I.     FINANCIAL
INFORMATION



Item 1.     Financial
Statements.


American Tire Distributors, Inc.

Condensed Consolidated Balance
Sheets  March 29, 2003 and December 28,
2002

(in thousands, except share amounts)


|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------- | ----------------- | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                       | March 29, 2003                 |                                                    | December 28, 2002
|                                                   |                                                                                                                       |                                |                                                    |                  
|                                                   |                                                                                                                       | (Unaudited)                    |                                                    |                  
|Assets                                             |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|Current assets:                                    |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   | Cash and cash equivalents                                                                                             |                                | $                                                  | 2,700             |         |         | $       | 2,693   |        
|                                                   | Accounts receivable, net of allowances of $1,348
    and $1,231                                                       |                                |                                                    | 104,735           |         |         |         | 94,674  |        
|                                                   | Inventories                                                                                                           |                                |                                                    | 165,219           |         |         |         | 156,722 |        
|                                                   | Deferred income taxes                                                                                                 |                                |                                                    | 3,127             |         |         |         | 3,785   |        
|                                                   | Other current assets                                                                                                  |                                |                                                    | 11,846            |         |         |         | 11,899  |        
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                       | Total current assets           |                                                    |                   | 287,627 |         |         |         | 269,773 |        
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|Property and equipment, net                        |                                                                                                                       |                                | 19,680                                             |                   |         |         | 20,634  |        
|Goodwill, net                                      |                                                                                                                       |                                | 93,940                                             |                   |         |         | 93,940  |        
|Other intangible assets, net                       |                                                                                                                       |                                | 3,062                                              |                   |         |         | 3,572   |        
|Deferred income taxes                              |                                                                                                                       |                                | 18,442                                             |                   |         |         | 18,440  |        
|Other assets                                       |                                                                                                                       |                                | 4,690                                              |                   |         |         | 4,911   |        
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                       |                                | Total assets                                       |                   | $       | 427,441 |         |         | $       | 411,270 | 
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|Liabilities and Stockholders
    Investment       |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|Current liabilities:                               |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   | Accounts payable                                                                                                      |                                | $                                                  | 182,754           |         |         | $       | 165,409 |        
|                                                   | Accrued expenses                                                                                                      |                                |                                                    | 17,709            |         |         |         | 18,549  |        
|                                                   | Current maturities of long-term debt                                                                                  |                                |                                                    | 2,521             |         |         |         | 2,742   |        
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                       | Total current liabilities      |                                                    |                   | 202,984 |         |         |         | 186,700 |        
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|Revolving credit facility and other long-term debt |                                                                                                                       |                                | 148,841                                            |                   |         |         | 149,793 |        
|Series D Senior Notes                              |                                                                                                                       |                                | 28,600                                             |                   |         |         | 28,600  |        
|Capital lease obligations                          |                                                                                                                       |                                | 14,564                                             |                   |         |         | 14,709  |        
|Other liabilities                                  |                                                                                                                       |                                | 3,942                                              |                   |         |         | 3,944   |        
|Commitments and contingencies                      |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|Redeemable preferred stock (Note 10)               |                                                                                                                       |                                | 11,035                                             |                   |         |         | 11,035  |        
|Stockholders investment:                          |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   | Preferred stock (Note 11)                                                                                             |                                |                                                    | 47,262            |         |         |         | 46,035  |        
|                                                   | 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                                                                                                              |                                |                                                    | 1,782             |         |         |         | 1,782   |        
|                                                   | Notes receivable from sale of stock                                                                                   |                                |                                                    | (17               | )       |         |         | (17     | )      
|                                                   | Accumulated deficit                                                                                                   |                                |                                                    | (53,991           | )       |         |         | (53,750 | )      
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                       | Total stockholders investment |                                                    |                   | 17,475  |         |         |         | 16,489  |        
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        
|                                                   |                                                                                                                       |                                | Total liabilities and stockholders
    investment |                   | $       | 427,441 |         |         | $       | 411,270 | 
|                                                   |                                                                                                                       |                                |                                                    |                   |         |         |         |        

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

1



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American Tire Distributors, Inc.



Condensed Consolidated Statements of
Operations


(Unaudited)


(in thousands)


|                                                                                         |                                             |                |         |           |   |   |         |        |  
|---------------------------------------------------------------------------------------- | ------------------------------------------- | -------------- | ------- | --------- | - | - | ------- | ------ | -
|                                                                                         |                                             |               
|                                                                                         |                                             | Quarters Ended
|                                                                                         |                                             |               
|                                                                                         |                                             | March 29,      |         | March 30,
|                                                                                         |                                             | 2003           |         | 2002     
|                                                                                         |                                             |                |         |          
|Net sales                                                                                |                                             | $              | 257,676 |           |   | $ | 251,564 |       
|Cost of goods sold                                                                       |                                             |                | 211,979 |           |   |   | 203,904 |       
|                                                                                         |                                             |                |         |           |   |   |         |       
|                                                                                         | Gross profit                                |                |         | 45,697    |   |   |         | 47,660 |  
|Selling, general and administrative expenses                                             |                                             |                | 40,525  |           |   |   | 42,527  |       
|                                                                                         |                                             |                |         |           |   |   |         |       
|                                                                                         | Operating income                            |                |         | 5,172     |   |   |         | 5,133  |  
|Other income (expense):                                                                  |                                             |                |         |           |   |   |         |       
|                                                                                         | Interest expense                            |                |         | (3,756    | ) |   |         | (6,329 | )
|                                                                                         | Gain on repurchase of Series D Senior Notes |                |         |          |   |   |         | 49,965 |  
|                                                                                         | Other income, net                           |                |         | 228       |   |   |         | 160    |  
|                                                                                         |                                             |                |         |           |   |   |         |       
|Income from continuing operations before income
    taxes                                |                                             |                | 1,644   |           |   |   | 48,929  |       
|Provision for income taxes                                                               |                                             |                | 658     |           |   |   | 19,576  |       
|                                                                                         |                                             |                |         |           |   |   |         |       
|Income from continuing operations                                                        |                                             |                | 986     |           |   |   | 29,353  |       
|Loss on disposal of discontinued operations, net
    of income tax benefit of $0 and $89 |                                             |                |        |           |   |   | (134    | )     
|                                                                                         |                                             |                |         |           |   |   |         |       
|Net income                                                                               |                                             | $              | 986     |           |   | $ | 29,219  |       
|                                                                                         |                                             |                |         |           |   |   |         |       

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

2



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American Tire Distributors, Inc.



Condensed Consolidated Statements of Cash
Flows


(Unaudited)


(in thousands)


|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |         |         |        |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------------------------------ | --------- | ------- | ------ | ----- | ------- | ------- | ------ | -
|                                                         |                                                                                                 |                                                   
|                                                         |                                                                                                 | Quarters Ended                                    
|                                                         |                                                                                                 |                                                   
|                                                         |                                                                                                 | March 29,                                          |                                                                    | March 30,
|                                                         |                                                                                                 | 2003                                               |                                                                    | 2002     
|                                                         |                                                                                                 |                                                    |                                                                    |          
|Cash flows from operating
    activities:                |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         | Net income                                                                                      |                                                    | $                                                                  | 986       |         |        | $     | 29,219  |        
|                                                         | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                    |                                                                    |           |         |        |       |         |        
|                                                         |                                                                                                 | Loss on disposal of discontinued operations        |                                                                    |           |        |        |       |         | 134     |       
|                                                         |                                                                                                 | Gain on repurchase of Series D Senior Notes        |                                                                    |           |        |        |       |         | (49,965 | )     
|                                                         |                                                                                                 | Depreciation and amortization of other intangibles |                                                                    |           | 1,759   |        |       |         | 2,093   |       
|                                                         |                                                                                                 | Amortization of other assets                       |                                                                    |           | 302     |        |       |         | 374     |       
|                                                         |                                                                                                 | Deferred taxes                                     |                                                                    |           | 656     |        |       |         | 16,897  |       
|                                                         |                                                                                                 | Other, net                                         |                                                                    |           | (8      | )      |       |         | 93      |       
|                                                         | Change in operating assets and liabilities:                                                     |                                                    |                                                                    |           |         |        |       |         |        
|                                                         |                                                                                                 | Accounts receivable, net                           |                                                                    |           | (10,061 | )      |       |         | (8,933  | )     
|                                                         |                                                                                                 | Inventories                                        |                                                                    |           | (8,497  | )      |       |         | (5,026  | )     
|                                                         |                                                                                                 | Other current assets                               |                                                                    |           | 53      |        |       |         | 2,428   |       
|                                                         |                                                                                                 | Accounts payable and accrued expenses              |                                                                    |           | 16,505  |        |       |         | 4,450   |       
|                                                         |                                                                                                 | Other, net                                         |                                                                    |           | (230    | )      |       |         | (752    | )     
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         |                                                                                                 |                                                    | Net cash provided by (used in) continuing
    operating activities |           |         | 1,465  |       |         |         | (8,988 | )
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|Cash flows from investing
    activities:                |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         | Purchase of property and equipment                                                              |                                                    |                                                                    | (674      | )       |        |       | (277    | )      
|                                                         | Proceeds from sale of property and equipment                                                    |                                                    |                                                                    | 496       |         |        |       | 536     |        
|                                                         | Other, net                                                                                      |                                                    |                                                                    | (50       | )       |        |       | (92     | )      
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         |                                                                                                 |                                                    | Net cash provided by (used in) investing
    activities            |           |         | (228   | )     |         |         | 167    |  
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|Cash flows from financing
    activities:                |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         | Net proceeds (repayments) from revolving
    credit facility and other long-term debt           |                                                    |                                                                    | (626      | )       |        |       | 32,325  |        
|                                                         | 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  |        
|                                                         | Principal payments on other long-term debt                                                      |                                                    |                                                                    | (604      | )       |        |       | (1,246  | )      
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         |                                                                                                 |                                                    | Net cash provided by (used in) financing
    activities            |           |         | (1,230 | )     |         |         | 8,318  |  
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|Net increase (decrease) in cash and cash
    equivalents |                                                                                                 |                                                    | 7                                                                  |           |         |        | (503  | )      
|Cash and cash equivalents, beginning of period           |                                                                                                 |                                                    | 2,693                                                              |           |         |        | 4,131 |        
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|Cash and cash equivalents, end of period                 |                                                                                                 | $                                                  | 2,700                                                              |           |         | $      | 3,628 |        
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|Supplemental disclosures of cash flow
    information   |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         | Cash payments for interest                                                                      |                                                    | $                                                                  | 2,794     |         |        | $     | 6,632   |        
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        
|                                                         | Cash payments for taxes, net                                                                    |                                                    | $                                                                  | 525       |         |        | $     | 13      |        
|                                                         |                                                                                                 |                                                    |                                                                    |           |         |        |       |        

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

3



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American Tire Distributors, Inc.



Notes to Condensed Consolidated Financial
Statements


March 29, 2003


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.

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 annual
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 28, 2002.
The results of the operations for the quarter ended
March 29, 2003 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 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 were previously required under SFAS 4. The provisions
of this statement related to the rescission of Statement 4
apply in fiscal years beginning after May 15, 2002. The
Company adopted the provisions of SFAS No. 145 effective
December 29, 2002, which required reclassification of the
Companys 2002 extraordinary gain (Note 9).

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). 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, was recognized at the
date of an entitys commitment to an exit plan. The
provisions of SFAS No. 146 are effective for exit or
disposal activities that are initiated after December 31,
2002, with early application encouraged. The Company adopted the
provisions of SFAS No. 146 effective December 29,
2002. The adoption of this statement had no material impact on
the Companys financial position or results of operations.

In November 2002, the FASB issued FASB
Interpretation No. (FIN) 45,
Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others  an interpretation of FASB Statements
No. 5, 57, and 107 and a recission of FASB Interpretation
No. 34. FIN 45 elaborates on the disclosures to
be made regarding obligations under certain guarantees in
interim and annual financial statements. It also clarifies the
requirement of a guarantor to recognize a liability at the
inception of the guarantee based on the fair value of the
obligation. The provisions relating to the initial recognition
and measurement of a liability are applicable on a prospective
basis for guarantees issued or modified subsequent to
December 31, 2002. The disclosure requirements of FIN 45
are effective for interim and annual financials statements for
periods ending after December 15, 2002. The Company adopted
the

4



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American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

disclosure provisions of this statement effective
December 15, 2002. The liability recognition provisions of
this statement were adopted effective December 29, 2002 and
had no material impact on the Companys financial position
or results of operations.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an
amendment of SFAS No. 123, Accounting for Stock-Based
Compensation. The transition guidance and annual
disclosure provisions are effective for fiscal years ending
after December 15, 2002 and the interim disclosure
provisions are effective for interim periods beginning after
December 15, 2002. This statement provides alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require more prominent
disclosures in both annual and interim financial statements
regarding the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. At this time, the Company has not voluntarily adopted
the fair value method of accounting under SFAS No. 123, but
is required to provide certain pro forma disclosures, which are
presented below.

The Company will continue to account for stock
option grants in accordance with Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to
Employees (APB No. 25). Pursuant to APB
No. 25, compensation expense is recognized for financial
reporting purposes using the intrinsic value method over the
vesting period. The amount of compensation expense to be
recognized is determined by the excess of the fair value of
common stock over the exercise price of the related option at
the date of grant. Accordingly, no compensation expense has been
recorded in the consolidated statements of operations, as the
exercise price of all stock options was equal to fair value of
the underlying common stock at the date of grant.

The following information is presented as if the
Company had accounted for its employee stock options under the
fair value method prescribed by SFAS No. 123 (in thousands):

|                                                                                                                                        |  |                       |      |           |  |   |        |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------- | ---- | --------- |  | - | ------ | -
|                                                                                                                                        |  |                      
|                                                                                                                                        |  | For the Quarter Ended
|                                                                                                                                        |  |                      
|                                                                                                                                        |  | March 29,             |      | March 30,
|                                                                                                                                        |  | 2003                  |      | 2002     
|                                                                                                                                        |  |                       |      |          
|Net income                                                                                                                              |  | $                     | 986  |           |  | $ | 29,219 |  
|Deduct: Total stock-based employee compensation
    expense determined under the fair value based method for all
    awards, net of tax |  |                       | (181 | )         |  |   | (86    | )
|                                                                                                                                        |  |                       |      |           |  |   |        |  
|Pro forma net income                                                                                                                    |  | $                     | 805  |           |  | $ | 29,133 |  
|                                                                                                                                        |  |                       |      |           |  |   |        |  

The weighted average fair value of options
granted during the first quarter 2003 estimated on the date of
grant using the Black-Scholes option pricing model was $1.00.
The fair value of options granted in the first quarter 2003 was
determined using the following assumptions: a risk-free interest
rate of 4.05%, no dividend yield, expected life of 10 years
which equals the terms of the options, and no expected
volatility. There were no options granted in the first quarter
2002.

In 2002, the EITF reached a consensus on Issue
No. 02-16, Accounting by a Customer (Including a
Reseller) for Cash Considerations Received from a Vendor.
Issue No. 02-16 provides guidance on how cash
considerations received by a customer or reseller should be
classified in the customers statement of earnings. Issue
No. 02-16 is effective for all transactions with vendors
after December 31, 2002. The adoption of Issue
No. 02-16 did not have a material impact on the
Companys consolidated financial position or results of
operations.

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

5



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##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

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 $16.5 million and
$15.7 million for the quarters ended March 29, 2003
and March 30, 2002, respectively.

6.     Deferred
Income Taxes:

The Company has deferred tax assets of
$21.6 million and $22.2 million at March 29, 2003
and December 28, 2002, respectively. The decrease in net
deferred tax assets is primarily attributable to net income
generated from continuing operations through March 29,
2003. 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) for which a valuation allowance of
$1.0 million is recorded as of March 29, 2003,
unchanged from December 28, 2002. This evaluation
considered the historical and long-term expected profitability
of the Companys continuing operations. Given the timing of
the reversal of its temporary differences and the expiration
date of its NOLs, 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 and adjustments to the valuation allowance
may be required in the future.

7.     Financing
Arrangements:

Revolving
Credit Facility

At March 29, 2003, the Companys
revolving credit facility (Revolver), as amended,
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 plus 50%-65% of eligible inventories.

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
(1.75% as of March 29, 2003) or (ii) the Eurodollar
Rate, as defined, plus the applicable margin (3.25% as of
March 29, 2003). 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. As of
May 13, 2003, the Companys financial measures were in
excess of the minimums required, as amended, and management
expects that such amounts will remain above the

6



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

minimums for the foreseeable future. The
Companys obligations under the Revolver are secured by all
inventories and accounts receivable.

Aggregate annual maturities of long-term debt
(excluding capital lease obligations) at March 29, 2003,
are as follows (in thousands):

|                 |  |   |         | 
|---------------- |  | - | ------- | 
|Year Ending      |  |  
|December:        |  |  
|                 |  |  
|2003 (remainder) |  | $ | 2,197   | 
|2004             |  |   | 1,752   | 
|2005             |  |   | 12,621  | 
|2006             |  |   | 169     | 
|2007             |  |   | 52      | 
|Thereafter       |  |   | 163,171 | 
|                 |  |   |         | 
|                 |  | $ | 179,962 | 
|                 |  |   |         | 

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. In
connection therewith, the Company recorded a $14.0 million
capital lease obligation during the first quarter of 2002. All
cash paid to the lessor is recorded as interest expense and 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 (paid quarterly) and is adjusted
for CPI changes every two years. In addition, the purchaser
received warrants to purchase 153,597 shares of the
Companys 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), the Companys retail segment, to
Performance Management, Inc. for a purchase price of
approximately $10.0 million. As of May 13, 2003 $2.8
million remains outstanding and a valuation allowance is
maintained for the full amount. This segment has been reflected
as a discontinued operation in the accompanying consolidated
financial statements.

The Company remains liable as a guarantor on
certain of Winstons leases. As of March 29, 2003,
total obligations of the Company, as guarantor on these leases
is approximately $15.2 million extending over
16 years. However, the Company has secured assignments or
sublease agreements for the vast majority of these commitments
with contractual assigned or subleased rental of approximately
$12.4 million. A provision has been made for the estimated
shortfall.



|   |                                                 
|-- | ------------------------------------------------
|9. | Gain on Repurchase of Series D Senior
    Notes:

On March 27, 2002, the Company repurchased
$121.4 million in outstanding principal amount of the
Series D Senior Notes (Senior Notes) 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 Revolver 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

7



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

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.

In connection with the Restructuring
Transactions, the Company issued warrants to several vendors,
which permit the holders to acquire up to 307,193 shares of the
Companys common stock at $.01 per share. The warrants
expire on March 27, 2005. The Company recorded these
warrants at fair value and has presented them as a component of
stockholders investment.

In first quarter 2002, the Company recorded a
$30.0 million extraordinary gain, net of income tax
provision of $20.0 million relating to the repurchase and
extinguishment of the Senior Notes. Effective December 29,
2002, the Company adopted the provisions of SFAS No. 145
which eliminates the extraordinary item classification of debt
extinguishments that was previously required under SFAS 4 (Note
3). Accordingly, the Company has reclassified the pre-tax gain
of $50.0 million on repurchase of Senior Notes in 2002 from
an extraordinary gain to a separate line item before income from
continuing operations and the related income tax effect of
$20.0 million has been reclassified to provision for income
taxes.



|    |                            
|--- | ---------------------------
|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):

|                                                                                                                        |                                  |                |       |                   |  |   |       |        | 
|----------------------------------------------------------------------------------------------------------------------- | -------------------------------- | -------------- | ----- | ----------------- |  | - | ----- | ------ | 
|                                                                                                                        |                                  | March 29, 2003 |       | December 28, 2002
|                                                                                                                        |                                  |                |       |                  
|                                                                                                                        |                                  | (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 |       
|                                                                                                                        |                                  |                |       |                   |  |   |       |       
|                                                                                                                        | Total redeemable preferred stock |                | $     | 11,035            |  |   | $     | 11,035 | 
|                                                                                                                        |                                  |                |       |                   |  |   |       |       

The stated value of Series A preferred stock
is $1,000 per share. Holders of Series A preferred stock
are entitled to receive, when and if declared by the Board of
Directors, cumulative cash dividends at an annual rate of 4%,
subject to adjustment based on the volume of purchases from the
supplier. Additional dividends will accrue, when and if declared
by the Board of Directors, and are payable on the last business
day of January.

The stated value of Series B preferred stock
is initially $1,000 per share, to be adjusted based on tire
purchase credits as determined by the number of units purchased
under a purchase agreement with a supplier entered into in May
1997. Dividends on Series B preferred stock are payable,
when and if declared by the Board of Directors, at the prime
rate if the Company does not meet certain tire purchase
requirements. The remaining value of Series B preferred
stock shall be redeemed by the Company on the last business day
of June 2007 at a price equal to the adjusted stated value plus
all accrued and unpaid dividends.



|    |                          
|--- | -------------------------
|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

8



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

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):

|                                                                                                   |                       |             |        |              |  |   |        |        | 
|-------------------------------------------------------------------------------------------------- | --------------------- | ----------- | ------ | ------------ |  | - | ------ | ------ | 
|                                                                                                   |                       | March 29,   |        | December 28,
|                                                                                                   |                       | 2003        |        | 2002        
|                                                                                                   |                       |             |        |             
|                                                                                                   |                       | (Unaudited) |        |             
|Preferred stock Series C  12%
    cumulative; 1,333,334 shares authorized, issued and outstanding |                       | $           | 14,880 |              |  | $ | 14,520 |       
|Preferred stock Series D  12%
    cumulative; 9,637,592 shares authorized, issued and outstanding |                       |             | 32,382 |              |  |   | 31,515 |       
|                                                                                                   |                       |             |        |              |  |   |        |       
|                                                                                                   | Total preferred stock |             | $      | 47,262       |  |   | $      | 46,035 | 
|                                                                                                   |                       |             |        |              |  |   |        |       

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 at the option of the Company 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 shall redemption
occur. No dividends have been declared or paid to date on the
Series C or Series D preferred stock. 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
March 29, 2003 and December 28, 2002, are as follows:

|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------- | ---------- | ------- | ------------ | ------ | ------------ | ------ | ------- | ------- | ------- | ------- | -------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | As of March 29, 2003          
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | Parent                         |                                                    | Subsidiary |         |             
|                                                   |                                                                                                                       | Company                        |                                                    | Guarantors |         | Eliminations |        | Consolidated
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |             
|Assets                                             |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Current assets:                                    |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Cash and cash equivalents                                                                                             |                                | $                                                  | 2,642      |         |              | $      | 58           |        |         | $       |        |         |          | $       | 2,700   |        
|                                                   | Accounts receivable, net                                                                                              |                                |                                                    | 77,906     |         |              |        | 26,829       |        |         |         |        |         |          |         | 104,735 |        
|                                                   | Inventories                                                                                                           |                                |                                                    | 113,657    |         |              |        | 51,562       |        |         |         |        |         |          |         | 165,219 |        
|                                                   | Other current assets                                                                                                  |                                |                                                    | 14,375     |         |              |        | 598          |        |         |         |        |         |          |         | 14,973  |        
|                                                   | Intercompany receivables                                                                                              |                                |                                                    | 56,491     |         |              |        |             |        |         |         | (56,491 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total current assets                               |            |         | 265,071      |        |              |        | 79,047  |         |         |         | (56,491  | )       |         |         | 287,627 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Property and equipment, net                        |                                                                                                                       |                                | 14,924                                             |            |         |              | 4,756  |              |        |         |        |         |         |          | 19,680  |        
|Goodwill and other intangible assets, net          |                                                                                                                       |                                | 51,790                                             |            |         |              | 45,212 |              |        |         |        |         |         |          | 97,002  |        
|Investment in subsidiaries                         |                                                                                                                       |                                | 69,716                                             |            |         |              |       |              |        |         | (69,716 | )       |         |          |        |        
|Other assets                                       |                                                                                                                       |                                | 22,612                                             |            |         |              | 520    |              |        |         |        |         |         |          | 23,132  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total assets                                       |            | $       | 424,113      |        |              | $      | 129,535 |         |         | $       | (126,207 | )       |         | $       | 427,441 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Liabilities and Stockholders
    Investment       |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Current liabilities:                               |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Accounts payable                                                                                                      |                                | $                                                  | 182,674    |         |              | $      | 80           |        |         | $       |        |         |          | $       | 182,754 |        
|                                                   | Accrued expenses                                                                                                      |                                |                                                    | 15,460     |         |              |        | 2,249        |        |         |         |        |         |          |         | 17,709  |        
|                                                   | Current maturities of long-term debt                                                                                  |                                |                                                    | 2,499      |         |              |        | 22           |        |         |         |        |         |          |         | 2,521   |        
|                                                   | Intercompany payables                                                                                                 |                                |                                                    |           |         |              |        | 56,491       |        |         |         | (56,491 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current liabilities      |                                                    |            | 200,633 |              |        |              | 58,842 |         |         |         | (56,491 | )        |         |         | 202,984 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|Revolving credit facility and other long-term debt |                                                                                                                       |                                | 148,841                                            |            |         |              |       |              |        |         |        |         |         |          | 148,841 |        
|Series D Senior Notes                              |                                                                                                                       |                                | 28,600                                             |            |         |              |       |              |        |         |        |         |         |          | 28,600  |        
|Capital lease obligations                          |                                                                                                                       |                                | 14,564                                             |            |         |              |       |              |        |         |        |         |         |          | 14,564  |        
|Other liabilities                                  |                                                                                                                       |                                | 2,965                                              |            |         |              | 977    |              |        |         |        |         |         |          | 3,942   |        
|Redeemable preferred stock                         |                                                                                                                       |                                | 11,035                                             |            |         |              |       |              |        |         |        |         |         |          | 11,035  |        
|Stockholders investment:                          |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Intercompany investment                                                                                               |                                |                                                    |           |         |              |        | 76,633       |        |         |         | (76,633 | )       |          |         |        |        
|                                                   | Preferred stock                                                                                                       |                                |                                                    | 47,262     |         |              |        |             |        |         |         |        |         |          |         | 47,262  |        
|                                                   | 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                                                                                                              |                                |                                                    | 1,782      |         |              |        |             |        |         |         |        |         |          |         | 1,782   |        
|                                                   | Notes receivable from sale of stock                                                                                   |                                |                                                    | (17        | )       |              |        |             |        |         |         |        |         |          |         | (17     | )      
|                                                   | Accumulated deficit                                                                                                   |                                |                                                    | (53,991    | )       |              |        | (6,917       | )      |         |         | 6,917   |         |          |         | (53,991 | )      
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total stockholders investment |                                                    |            | 17,475  |              |        |              | 69,716 |         |         |         | (69,716 | )        |         |         | 17,475  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total liabilities and stockholders
    investment |            | $       | 424,113      |        |              | $      | 129,535 |         |         | $       | (126,207 | )       |         | $       | 427,441 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |              |        |              |        |         |         |         |         |          |         |        

10



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ------------------------------ | -------------------------------------------------- | ---------- | ------- | ----------- | ------ | ------------ | ------ | ------- | ------- | ------- | ------- | -------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | As of December 28, 2002       
|                                                   |                                                                                                                       |                               
|                                                   |                                                                                                                       | Parent                         |                                                    | Subsidiary |         |            
|                                                   |                                                                                                                       | Company                        |                                                    | Guarantors |         | Elimination |        | Consolidated
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |             
|Assets                                             |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Current assets:                                    |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   | Cash and cash equivalents                                                                                             |                                | $                                                  | 2,538      |         |             | $      | 155          |        |         | $       |        |         |          | $       | 2,693   |        
|                                                   | Accounts receivable, net                                                                                              |                                |                                                    | 67,514     |         |             |        | 27,160       |        |         |         |        |         |          |         | 94,674  |        
|                                                   | Inventories                                                                                                           |                                |                                                    | 109,143    |         |             |        | 47,579       |        |         |         |        |         |          |         | 156,722 |        
|                                                   | Other current assets                                                                                                  |                                |                                                    | 14,727     |         |             |        | 957          |        |         |         |        |         |          |         | 15,684  |        
|                                                   | Intercompany receivables                                                                                              |                                |                                                    | 54,577     |         |             |        |             |        |         |         | (54,577 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current assets           |                                                    |            | 248,499 |             |        |              | 75,851 |         |         |         | (54,577 | )        |         |         | 269,773 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Property and equipment, net                        |                                                                                                                       |                                | 15,742                                             |            |         |             | 4,892  |              |        |         |        |         |         |          | 20,634  |        
|Goodwill and other intangible assets, net          |                                                                                                                       |                                | 51,856                                             |            |         |             | 45,656 |              |        |         |        |         |         |          | 97,512  |        
|Investment in subsidiaries                         |                                                                                                                       |                                | 69,142                                             |            |         |             |       |              |        |         | (69,142 | )       |         |          |        |        
|Other assets                                       |                                                                                                                       |                                | 22,812                                             |            |         |             | 539    |              |        |         |        |         |         |          | 23,351  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total assets                                       |            | $       | 408,051     |        |              | $      | 126,938 |         |         | $       | (123,719 | )       |         | $       | 411,270 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Liabilities and Stockholders
    Investment       |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Current liabilities:                               |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   | Accounts payable                                                                                                      |                                | $                                                  | 165,206    |         |             | $      | 203          |        |         | $       |        |         |          | $       | 165,409 |        
|                                                   | Accrued expenses                                                                                                      |                                |                                                    | 16,550     |         |             |        | 1,999        |        |         |         |        |         |          |         | 18,549  |        
|                                                   | Current maturities of long-term debt                                                                                  |                                |                                                    | 2,742      |         |             |        |             |        |         |         |        |         |          |         | 2,742   |        
|                                                   | Intercompany payables                                                                                                 |                                |                                                    |           |         |             |        | 54,577       |        |         |         | (54,577 | )       |          |         |        |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current liabilities      |                                                    |            | 184,498 |             |        |              | 56,779 |         |         |         | (54,577 | )        |         |         | 186,700 |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|Revolving credit facility and other long-term debt |                                                                                                                       |                                | 149,793                                            |            |         |             |       |              |        |         |        |         |         |          | 149,793 |        
|Series D Senior Notes                              |                                                                                                                       |                                | 28,600                                             |            |         |             |       |              |        |         |        |         |         |          | 28,600  |        
|Capital lease obligations                          |                                                                                                                       |                                | 14,709                                             |            |         |             |       |              |        |         |        |         |         |          | 14,709  |        
|Other liabilities                                  |                                                                                                                       |                                | 2,927                                              |            |         |             | 1,017  |              |        |         |        |         |         |          | 3,944   |        
|Redeemable preferred stock                         |                                                                                                                       |                                | 11,035                                             |            |         |             |       |              |        |         |        |         |         |          | 11,035  |        
|Stockholders investment:                          |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   | Intercompany investment                                                                                               |                                |                                                    |           |         |             |        | 76,633       |        |         |         | (76,633 | )       |          |         |        |        
|                                                   | Preferred stock                                                                                                       |                                |                                                    | 46,035     |         |             |        |             |        |         |         |        |         |          |         | 46,035  |        
|                                                   | 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                                                                                                              |                                |                                                    | 1,782      |         |             |        |             |        |         |         |        |         |          |         | 1,782   |        
|                                                   | Notes receivable from sale of stock                                                                                   |                                |                                                    | (17        | )       |             |        |             |        |         |         |        |         |          |         | (17     | )      
|                                                   | Accumulated deficit                                                                                                   |                                |                                                    | (53,750    | )       |             |        | (7,491       | )      |         |         | 7,491   |         |          |         | (53,750 | )      
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total stockholders investment |                                                    |            | 16,489  |             |        |              | 69,142 |         |         |         | (69,142 | )        |         |         | 16,489  |        
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                                | Total liabilities and stockholders
    investment |            | $       | 408,051     |        |              | $      | 126,938 |         |         | $       | (123,719 | )       |         | $       | 411,270 | 
|                                                   |                                                                                                                       |                                |                                                    |            |         |             |        |              |        |         |         |         |         |          |         |        

11



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

Condensed consolidated statements of operations
for the quarters ended March 29, 2003 and March 30, 2002
are as follows:

|                                                          |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |        |  
|--------------------------------------------------------- | ------------------------------------ | ------------------------------------ | ------- | ---------- | - | ----------- | ------ | ------------ |  | - | ---- | ---- | - | - | ------- | ------ | -
|                                                          |                                      |                                     
|                                                          |                                      | For the Quarter Ended March 29, 2003
|                                                          |                                      |                                     
|                                                          |                                      | Parent                               |         | Subsidiary |   |            
|                                                          |                                      | Company                              |         | Guarantors |   | Elimination |        | Consolidated
|                                                          |                                      |                                      |         |            |   |             |        |             
|Net sales                                                 |                                      | $                                    | 187,033 |            |   | $           | 70,643 |              |  | $ |     |      |   | $ | 257,676 |       
|Cost of goods sold                                        |                                      |                                      | 152,837 |            |   |             | 59,142 |              |  |   |     |      |   |   | 211,979 |       
|                                                          |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |       
|                                                          | Gross profit                         |                                      |         | 34,196     |   |             |        | 11,501       |  |   |      |     |   |   |         | 45,697 |  
|Selling, general and administrative expenses              |                                      |                                      | 29,901  |            |   |             | 10,624 |              |  |   |     |      |   |   | 40,525  |       
|                                                          |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |       
|                                                          | Operating income                     |                                      |         | 4,295      |   |             |        | 877          |  |   |      |     |   |   |         | 5,172  |  
|Other income (expense):                                   |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |       
|                                                          | Interest expense                     |                                      |         | (3,756     | ) |             |        |             |  |   |      |     |   |   |         | (3,756 | )
|                                                          | Other income, net                    |                                      |         | 148        |   |             |        | 80           |  |   |      |     |   |   |         | 228    |  
|                                                          | Equity in net income of subsidiaries |                                      |         | 574        |   |             |        |             |  |   |      | (574 | ) |   |         |       |  
|                                                          |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |       
|Income from continuing operations before income
    taxes |                                      |                                      | 1,261   |            |   |             | 957    |              |  |   | (574 | )    |   |   | 1,644   |       
|Provision for income taxes                                |                                      |                                      | 275     |            |   |             | 383    |              |  |   |     |      |   |   | 658     |       
|                                                          |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |       
|Net income                                                |                                      | $                                    | 986     |            |   | $           | 574    |              |  | $ | (574 | )    |   | $ | 986     |       
|                                                          |                                      |                                      |         |            |   |             |        |              |  |   |      |      |   |   |         |       

|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |        |  
|---------------------------------------------------------------- | ------------------------------------------- | ------------------------------------ | ------- | ---------- | - | ----------- | ------ | ------------ | - | - | --- | --- |  | - | ------- | ------ | -
|                                                                 |                                             |                                     
|                                                                 |                                             | For the Quarter Ended March 30, 2002
|                                                                 |                                             |                                     
|                                                                 |                                             | Parent                               |         | Subsidiary |   |            
|                                                                 |                                             | Company                              |         | Guarantors |   | Elimination |        | Consolidated
|                                                                 |                                             |                                      |         |            |   |             |        |             
|Net sales                                                        |                                             | $                                    | 181,478 |            |   | $           | 70,086 |              |   | $ |    |     |  | $ | 251,564 |       
|Cost of goods sold                                               |                                             |                                      | 146,151 |            |   |             | 57,753 |              |   |   |    |     |  |   | 203,904 |       
|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       
|                                                                 | Gross profit                                |                                      |         | 35,327     |   |             |        | 12,333       |   |   |     |    |  |   |         | 47,660 |  
|Selling, general and administrative expenses                     |                                             |                                      | 29,197  |            |   |             | 13,330 |              |   |   |    |     |  |   | 42,527  |       
|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       
|                                                                 | Operating income (loss)                     |                                      |         | 6,130      |   |             |        | (997         | ) |   |     |    |  |   |         | 5,133  |  
|Other income (expense):                                          |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       
|                                                                 | Interest expense                            |                                      |         | (6,294     | ) |             |        | (35          | ) |   |     |    |  |   |         | (6,329 | )
|                                                                 | Gain on repurchase of Series D Senior Notes |                                      |         | 49,965     |   |             |        |             |   |   |     |    |  |   |         | 49,965 |  
|                                                                 | Other income, net                           |                                      |         | 134        |   |             |        | 26           |   |   |     |    |  |   |         | 160    |  
|                                                                 | Equity in net loss of subsidiaries          |                                      |         | (566       | ) |             |        |             |   |   |     | 566 |  |   |         |       |  
|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       
|Income (loss) from continuing operations
    before income taxes |                                             |                                      | 49,369  |            |   |             | (1,006 | )            |   |   | 566 |     |  |   | 48,929  |       
|Provision (benefit) for income taxes                             |                                             |                                      | 20,016  |            |   |             | (440   | )            |   |   |    |     |  |   | 19,576  |       
|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       
|Income (loss) from continuing operations                         |                                             |                                      | 29,353  |            |   |             | (566   | )            |   |   | 566 |     |  |   | 29,353  |       
|Loss on disposal of discontinued operations                      |                                             |                                      | (134    | )          |   |             |       |              |   |   |    |     |  |   | (134    | )     
|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       
|Net income (loss)                                                |                                             | $                                    | 29,219  |            |   | $           | (566   | )            |   | $ | 566 |     |  | $ | 29,219  |       
|                                                                 |                                             |                                      |         |            |   |             |        |              |   |   |     |     |  |   |         |       

12



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

Condensed consolidated statements of cash flows
for the quarters ended March 29, 2003 and March 30, 2002
are as follows:

|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |         |        |  
|----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------------------------------------- | ------ | ---------- | ------ | ----------- | ----- | ------------ | ------ | - | ---- | --- | - | - | ----- | ------- | ------ | -
|                                                                                                |                                                                         |                                                         
|                                                                                                |                                                                         | For the Quarter Ended March 29, 2003                    
|                                                                                                |                                                                         |                                                         
|                                                                                                |                                                                         | Parent                                                   |        | Subsidiary |        |            
|                                                                                                |                                                                         | Company                                                  |        | Guarantors |        | Elimination |       | Consolidated
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |             
|Cash flows from operating
    activities:                                                       |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Net income                                                                                      |                                                                         | $                                                        | 986    |            |        | $           | 574   |              |        | $ | (574 | )   |   | $ | 986   |        
|Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|                                                                                                | Depreciation and amortization of other
    intangibles and other assets |                                                          |        | 1,190      |        |             |       | 871          |        |   |      |    |   |   |       | 2,061   |       
|                                                                                                | Other, net                                                              |                                                          |        | 649        |        |             |       | (1           | )      |   |      |    |   |   |       | 648     |       
|                                                                                                | Equity in net income of subsidiary                                      |                                                          |        | (574       | )      |             |       |             |        |   |      | 574 |   |   |       |        |       
|Change in operating assets and liabilities:                                                     |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|                                                                                                | Accounts receivable, net                                                |                                                          |        | (10,392    | )      |             |       | 331          |        |   |      |    |   |   |       | (10,061 | )     
|                                                                                                | Inventories                                                             |                                                          |        | (4,514     | )      |             |       | (3,983       | )      |   |      |    |   |   |       | (8,497  | )     
|                                                                                                | Other current assets                                                    |                                                          |        | (306       | )      |             |       | 359          |        |   |      |    |   |   |       | 53      |       
|                                                                                                | Accounts payable and accrued expenses                                   |                                                          |        | 16,378     |        |             |       | 127          |        |   |      |    |   |   |       | 16,505  |       
|                                                                                                | Other, net                                                              |                                                          |        | (207       | )      |             |       | (23          | )      |   |      |    |   |   |       | (230    | )     
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|                                                                                                |                                                                         | Net cash provided by (used in) continuing
    operations |        |            | 3,210  |             |       |              | (1,745 | ) |      |     |  |   |       |         | 1,465  |  
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Cash flows from investing
    activities:                                                       |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Purchase of property and equipment                                                              |                                                                         |                                                          | (358   | )          |        |             | (316  | )            |        |   |     |     |   |   | (674  | )      
|Proceeds from sale of property and equipment                                                    |                                                                         |                                                          | 460    |            |        |             | 36    |              |        |   |     |     |   |   | 496   |        
|Other, net                                                                                      |                                                                         |                                                          | (50    | )          |        |             |      |              |        |   |     |     |   |   | (50   | )      
|Intercompany                                                                                    |                                                                         |                                                          | (1,928 | )          |        |             | 1,928 |              |        |   |     |     |   |   |      |        
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|                                                                                                |                                                                         | Net cash provided by (used in) investing
    activities  |        |            | (1,876 | )           |       |              | 1,648  |   |      |     |  |   |       |         | (228   | )
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Cash flows from financing
    activities:                                                       |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Net repayments from revolving credit facility and
    other long-term debt                      |                                                                         |                                                          | (626   | )          |        |             |      |              |        |   |     |     |   |   | (626  | )      
|Principal payments on other long-term debt                                                      |                                                                         |                                                          | (604   | )          |        |             |      |              |        |   |     |     |   |   | (604  | )      
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|                                                                                                |                                                                         | Net cash used in financing activities                    |        |            | (1,230 | )           |       |              |       |   |      |     |  |   |       |         | (1,230 | )
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Net increase (decrease) in cash and cash
    equivalents                                        |                                                                         |                                                          | 104    |            |        |             | (97   | )            |        |   |     |     |   |   | 7     |        
|Cash and cash equivalents, beginning of period                                                  |                                                                         |                                                          | 2,538  |            |        |             | 155   |              |        |   |     |     |   |   | 2,693 |        
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        
|Cash and cash equivalents, end of period                                                        |                                                                         | $                                                        | 2,642  |            |        | $           | 58    |              |        | $ |     |     |   | $ | 2,700 |        
|                                                                                                |                                                                         |                                                          |        |            |        |             |       |              |        |   |      |     |   |   |       |        

13



---



##### 



American Tire Distributors, Inc.


Notes to Condensed Consolidated Financial
Statements  (Continued)

|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |         |        |  
|---------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------------------------------------- | ------- | ---------- | ------- | ----------- | ------ | ------------ | ------ | - | --- | ---- | - | - | ------- | ------- | ------ | -
|                                                                                                           |                                                                         |                                                         
|                                                                                                           |                                                                         | For the Quarter Ended March 30, 2002                    
|                                                                                                           |                                                                         |                                                         
|                                                                                                           |                                                                         | Parent                                                   |         | Subsidiary |         |            
|                                                                                                           |                                                                         | Company                                                  |         | Guarantors |         | Elimination |        | Consolidated
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |             
|Cash flows from operating
    activities:                                                                  |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Net income (loss)                                                                                          |                                                                         | $                                                        | 29,219  |            |         | $           | (566   | )            |        | $ | 566 |      |   | $ | 29,219  |        
|Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating
    activities: |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|                                                                                                           | Loss on disposal of discontinued operations                             |                                                          |         | 134        |         |             |        |             |        |   |     |     |   |   |         | 134     |       
|                                                                                                           | Gain on repurchase of Series D Senior Notes                             |                                                          |         | (49,965    | )       |             |        |             |        |   |     |     |   |   |         | (49,965 | )     
|                                                                                                           | Depreciation and amortization of other
    intangibles and other assets |                                                          |         | 1,346      |         |             |        | 1,121        |        |   |     |     |   |   |         | 2,467   |       
|                                                                                                           | Other, net                                                              |                                                          |         | 13,210     |         |             |        | 3,780        |        |   |     |     |   |   |         | 16,990  |       
|                                                                                                           | Equity in net loss of subsidiary                                        |                                                          |         | 566        |         |             |        |             |        |   |     | (566 | ) |   |         |        |       
|Change in operating assets and liabilities:                                                                |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|                                                                                                           | Accounts receivable, net                                                |                                                          |         | (8,310     | )       |             |        | (623         | )      |   |     |     |   |   |         | (8,933  | )     
|                                                                                                           | Inventories                                                             |                                                          |         | (5,296     | )       |             |        | 270          |        |   |     |     |   |   |         | (5,026  | )     
|                                                                                                           | Other current assets                                                    |                                                          |         | 1,700      |         |             |        | 728          |        |   |     |     |   |   |         | 2,428   |       
|                                                                                                           | Accounts payable and accrued expenses                                   |                                                          |         | 4,301      |         |             |        | 149          |        |   |     |     |   |   |         | 4,450   |       
|                                                                                                           | Other, net                                                              |                                                          |         | (547       | )       |             |        | (205         | )      |   |     |     |   |   |         | (752    | )     
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|                                                                                                           |                                                                         | Net cash provided by (used in) continuing
    operations |         |            | (13,642 | )           |        |              | 4,654  |   |     |      |  |   |         |         | (8,988 | )
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Cash flows from investing
    activities:                                                                  |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Purchase of property and equipment                                                                         |                                                                         |                                                          | (219    | )          |         |             | (58    | )            |        |   |    |      |   |   | (277    | )      
|Proceeds from sale of property and equipment                                                               |                                                                         |                                                          | 10      |            |         |             | 526    |              |        |   |    |      |   |   | 536     |        
|Other, net                                                                                                 |                                                                         |                                                          | (92     | )          |         |             |       |              |        |   |    |      |   |   | (92     | )      
|Intercompany                                                                                               |                                                                         |                                                          | 5,002   |            |         |             | (5,002 | )            |        |   |    |      |   |   |        |        
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|                                                                                                           |                                                                         | Net cash provided by (used in) investing
    activities  |         |            | 4,701   |             |        |              | (4,534 | ) |     |      |  |   |         |         | 167    |  
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Cash flows from financing
    activities:                                                                  |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Net proceeds from revolving credit facility and
    other long-term debt                                   |                                                                         |                                                          | 32,325  |            |         |             |       |              |        |   |    |      |   |   | 32,325  |        
|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                                                                 |                                                                         |                                                          | (1,022  | )          |         |             | (224   | )            |        |   |    |      |   |   | (1,246  | )      
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|                                                                                                           |                                                                         | Net cash provided by (used in) financing
    activities  |         |            | 8,542   |             |        |              | (224   | ) |     |      |  |   |         |         | 8,318  |  
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Net decrease in cash and cash equivalents                                                                  |                                                                         |                                                          | (399    | )          |         |             | (104   | )            |        |   |    |      |   |   | (503    | )      
|Cash and cash equivalents, beginning of period                                                             |                                                                         |                                                          | 3,423   |            |         |             | 708    |              |        |   |    |      |   |   | 4,131   |        
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        
|Cash and cash equivalents, end of period                                                                   |                                                                         | $                                                        | 3,024   |            |         | $           | 604    |              |        | $ |    |      |   | $ | 3,628   |        
|                                                                                                           |                                                                         |                                                          |         |            |         |             |        |              |        |   |     |      |   |   |         |        

14



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##### 





|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|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 March 29, 2003 Compared
to Quarter Ended March 30, 2002

Consolidated net sales in the first quarter of
2003 increased by $6.1 million or 2.4% to $257.7 million
compared to $251.6 million in the first quarter 2002. While
sales in first quarter 2003 were up, they were still impacted by
continued weakness in the replacement tire market. Units of
passenger and light truck tires shipped for the tire
distribution industry were down approximately 6.2% in the first
quarter of 2003 with shipments of 49.8 million units compared to
shipments of 53.1 million units in the first quarter of
2002. First quarter 2003 industry unit shipments represent
shipments to tire dealers and distributors and do not
necessarily reflect sell out to retail customers.

Gross profit decreased by $2.0 million or
4.1% to $45.7 million in the first quarter 2003 compared to
$47.7 million in the first quarter 2002. Gross profit as a
percentage of sales decreased 1.2% to 17.7% in the first quarter
2003 compared to 18.9% in the first quarter 2002. The decrease
in gross profit is primarily attributed to an increase in
marketing discounts associated with a first quarter sales
program.

Selling, general and administrative expenses
decreased by $2.0 million in the first quarter 2003
representing 15.7% as a percentage of sales compared to 16.9% in
2002. The decrease in operating expenses is primarily due to
headcount reductions throughout the Company.

Interest expense decreased $2.6 million in
the first quarter of 2003 to $3.8 million compared to
$6.3 million in 2002. 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 first quarter 2003 was
$1.6 million resulting in an income tax provision of
$0.7 million compared to pre-tax income of $48.9 million in
first quarter 2002 resulting in a tax provision of
$19.6 million. First quarter 2002 included the
$50.0 million gain on repurchase of Series D Senior
Notes and the related tax provision of $20.0 million.

Liquidity and Capital Resources

At March 29, 2003, the combined net
indebtedness (net of cash) of the Company was
$177.3 million compared to $178.4 million at
December 28, 2002. Total commitments by the lenders under
the Companys revolving credit facility
(Revolver) were $180.0 million at
March 29, 2003. Available borrowings under the Revolver at
March 29, 2003 were $23.2 million.

EBITDA from continuing operations decreased
$0.2 million to $7.2 million in the first quarter of
2003 compared to $7.4 million in the first quarter of 2002.
EBITDA includes earnings from continuing operations before
interest, taxes, depreciation and amortization and gain on
repurchase of Series D Senior Notes 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. This decrease is primarily
attributed to lower gross profit margins in the first quarter
that were partially offset by lower operating costs.

15



---



##### 



Reconciliation of income from continuing
operations to EBITDA:

|                                                |  |                       |       |           |  |   |         |  
|----------------------------------------------- |  | --------------------- | ----- | --------- |  | - | ------- | -
|                                                |  |                      
|                                                |  | For the Quarter Ended
|                                                |  |                      
|                                                |  | March 29,             |       | March 30,
|                                                |  | 2003                  |       | 2002     
|                                                |  |                       |       |          
|                                                |  |                      
|                                                |  | (In thousands)       
|Income from continuing operations               |  | $                     | 986   |           |  | $ | 29,353  |  
|Interest expense, net                           |  |                       | 3,756 |           |  |   | 6,329   |  
|Provision for income taxes                      |  |                       | 658   |           |  |   | 19,576  |  
|Depreciation and amortization other intangibles |  |                       | 1,759 |           |  |   | 2,093   |  
|Gain on repurchase of Series D Senior Notes     |  |                       |      |           |  |   | (49,965 | )
|                                                |  |                       |       |           |  |   |         |  
|EBITDA                                          |  | $                     | 7,159 |           |  | $ | 7,386   |  
|                                                |  |                       |       |           |  |   |         |  

The Companys principal sources of cash
during the first quarter of 2003 came from operations and were
offset by cash used to make capital expenditures and payments on
long-term debt. Net working capital at March 29, 2003
totaled $84.6 million, compared to $83.1 million at
December 28, 2002, an increase of $1.6 million. The
increase in working capital is due to increased business
activity during the quarter resulting in higher receivable and
inventory balances partially offset by an increase in accounts
payable.

Capital expenditures during the first quarter of
2003 and 2002 amounted to $0.7 million and
$0.3 million, respectively. Capital expenditures in 2003
were primarily for warehouse racking and leasehold improvements.

At March 29, 2003, the Companys
Revolver, as amended, 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 plus 50%  65%
of eligible inventories.

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
(1.75% as of March 29, 2003) or (ii) the Eurodollar
Rate, as defined, plus the applicable margin (3.25% as of
March 29, 2003). 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. As of
May 13, 2003, 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 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
Series D Senior Notes (Senior Notes) 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 Revolver 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.

16



---



##### 



In first quarter 2002, the Company recorded a
$30.0 million extraordinary gain, net of income tax
provision of $20.0 million relating to the repurchase and
extinguishment of the Senior Notes. Effective December 29,
2002, the Company adopted the provisions of SFAS No. 145
which eliminates the extraordinary item classification of debt
extinguishments that was previously required under SFAS 4 (Note
3). Accordingly, the Company has reclassified the pre-tax gain
of $50.0 million on repurchase of Senior Notes in 2002 from an
extraordinary gain to a separate line item before income from
continuing operations and the related income tax effect of $20.0
million has been reclassified to provision for income taxes.

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. 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.

Income Taxes

The Company has deferred tax assets of
$21.6 million and $22.2 million at March 29, 2003
and December 28, 2002, respectively. The decrease in net
deferred tax assets is primarily attributable to net income
generated from continuing operations through March 29,
2003. 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) for which a valuation allowance of
$1.0 million is recorded as of March 29, 2003,
unchanged from December 28, 2002. This evaluation
considered the historical and long-term expected profitability
of the Companys continuing operations. Given the timing of
the reversal of its temporary differences and the expiration
date of its NOLs, 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 and adjustments to the valuation allowance
may be required in the future.

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 were previously required under SFAS 4. The provisions of
this statement related to the rescission of Statement 4 apply in
fiscal years beginning after May 15, 2002. The Company
adopted the provisions of SFAS No. 145 effective
December 29, 2002, which required reclassification of the
Companys 2002 extraordinary gain (Note 9).

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). 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, was recognized at the
date of an entitys commitment to an exit plan. The
provisions of SFAS No. 146 are effective for exit or
disposal activities that are initiated after December 31,
2002, with early application encouraged. The Company adopted the
provisions of SFAS No. 146 effective December 29, 2002.

17



---



##### 



The adoption of this statement had no material
impact on the Companys financial position or results of
operations.


In November 2002, the FASB issued FASB
Interpretation No. (FIN) 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others  an
interpretation of FASB Statements No. 5, 57, and 107 and a
recission of FASB Interpretation No. 34. FIN 45
elaborates on the disclosures to be made regarding obligations
under certain guarantees in interim and annual financial
statements. It also clarifies the requirement of a guarantor to
recognize a liability at the inception of the guarantee based on
the fair value of the obligation. The provisions relating to the
initial recognition and measurement of a liability are
applicable on a prospective basis for guarantees issued or
modified subsequent to December 31, 2002. The disclosure
requirements of FIN 45 are effective for interim and annual
financials statements for periods ending after December 15,
2002. The Company adopted the disclosure provisions of this
statement effective December 15, 2002. The liability
recognition provisions of this statement were adopted effective
December 29, 2002 and had no material impact on the
Companys financial position or results of operations.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, an
amendment of SFAS No. 123, Accounting for Stock-Based
Compensation. The transition guidance and annual
disclosure provisions are effective for fiscal years ending
after December 15, 2002 and the interim disclosure
provisions are effective for interim periods beginning after
December 15, 2002. This statement provides alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to require more prominent
disclosures in both annual and interim financial statements
regarding the method of accounting for stock-based employee
compensation and the effect of the method used on reported
results. At this time, the Company has not voluntarily adopted
the fair value method of accounting under SFAS No. 123.

In 2002, the EITF reached a consensus on Issue
No. 02-16, Accounting by a Customer (Including a
Reseller) for Cash Considerations Received from a Vendor.
Issue No. 02-16 provides guidance on how cash
considerations received by a customer or reseller should be
classified in the customers statement of earnings. Issue
No. 02-16 is effective for all transactions with vendors
after December 31, 2002. The adoption of Issue
No. 02-16 did not have a material impact on the
Companys consolidated financial position or results of
operations.

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.

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.

18



---



##### 



Item 3.     Quantitative
and Qualitative Disclosure about Market Risk.

For the period ended March 29, 2003, 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 28, 2002.

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 28, 2002.

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

(a) Exhibits



| |      |                                                                                                            
| | ---- | -----------------------------------------------------------------------------------------------------------
| | 99.1 | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.    
|
| | 99.2 | Certification of Principal 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 March 29, 2003.

19



---



##### 



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: May 13, 2003

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



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

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

20



---



##### 



CERTIFICATIONS

I, Richard P. Johnson, Chairman 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: May 13, 2003



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

21



---



##### 



CERTIFICATIONS

I, William E. Berry, President and Chief
Operating 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: May 13, 2003



| |                                      
| | -------------------------------------
| | /s/ WILLIAM E. BERRY                 
| |                                      
| | William E. Berry                     
| | President and Chief Operating Officer

22