##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE
COMMISSION

WASHINGTON, D.C. 20549




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FORM 10-K

|           |  |                                                                                                 
|---------- |  | ------------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                                 
|[X]        |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 27,
    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.

(Exact name of registrant as specified in its
charter)


|                                                                           |  |                                                      
|-------------------------------------------------------------------------- |  | -----------------------------------------------------
|Delaware(State or other jurisdiction of
    incorporation or organization) |  | 56-0754594(I.R.S. Employer
    Identification Number)

12200 Herbert Wayne Court,
Suite 150

Huntersville, North Carolina 28078


(Address, including zip code, of principal
executive offices)


(704) 992-2000

(Registrants telephone number, including
area code)


Securities registered pursuant to
Section 12(b) of the Act:

None

Securities registered pursuant to
Section 12(g) of the Act:

None

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 check mark if disclosure of
delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
x

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

The aggregate market value of the voting stock
held by non-affiliates of the registrant: None

Number of common shares outstanding at
March 15, 2004: 5,086,917



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TABLE OF CONTENTS

|                                            |  |                                                                                                                      |  |      |    | 
|------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                            |  |                                                                                                                      |  | Page
|                                            |  |                                                                                                                      |  |     
|PART I                                     
|ITEM 1.                                     |  | Description of Business                                                                                              |  |      | 2  | 
|ITEM 2.                                     |  | Description of Properties                                                                                            |  |      | 5  | 
|ITEM 3.                                     |  | Legal Proceedings                                                                                                    |  |      | 6  | 
|ITEM 4.                                     |  | Submission of Matters to a
    Vote of Security Holders                                                              |  |      | 6  | 
|PART II                                    
|ITEM 5.                                     |  | Market for Registrants
    Common Equity, Related Stockholder Matters and Issuer Purchases
    of Equity Securities |  |      | 6  | 
|ITEM 6.                                     |  | Selected Financial Data                                                                                              |  |      | 6  | 
|ITEM 7.                                     |  | Managements Discussion
    and Analysis of Financial Condition and Results
    of  Operations                       |  |      | 8  | 
|ITEM 7A.                                    |  | Quantitative and Qualitative
    Disclosure About Market Risk                                                        |  |      | 17 | 
|ITEM 8.                                     |  | Financial Statements and
    Supplementary Data                                                                      |  |      | 18 | 
|ITEM 9.                                     |  | Changes in and Disagreements
    with Accountants on Accounting and Financial  Disclosure                            |  |      | 50 | 
|ITEM 9A.                                    |  | Controls and Procedures                                                                                              |  |      | 50 | 
|PART III                                   
|ITEM 10.                                    |  | Directors and Executive
    Officers of the Registrant                                                               |  |      | 50 | 
|ITEM 11.                                    |  | Executive Compensation                                                                                               |  |      | 52 | 
|ITEM 12.                                    |  | Security Ownership of
    Certain Beneficial Owners and Management                                                   |  |      | 57 | 
|ITEM 13.                                    |  | Certain Relationships and
    Related Transactions                                                                   |  |      | 59 | 
|ITEM 14.                                    |  | Principal Accountant Fees
    and Services                                                                           |  |      | 61 | 
|PART IV                                    
|ITEM 15.                                    |  | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                                                  |  |      | 62 | 
|                                            |  | Signatures                                                                                                           |  |      | 70 | 
|3rd Am and Rest Loan and Security Agreement
|Statement of Computation of Ratios         
|Subsidiaries of the Company                
|Section 302 Certification - CEO            
|Section 302 Certification - SVP Finance    





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Cautionary Statements on Forward-Looking
Information

This Annual Report on Form 10-K contains
forward-looking statements relating to the Companys
business and financial outlook, which are based on the
Companys current expectations, estimates, forecast and
projections. In some cases, you can identify forward-looking
statements by terminology such as may,
will, should, expects,
plans, anticipates,
believes, estimates,
predicts, potential,
continue or other comparable terminology. These
forward-looking statements are not guarantees of future
performance and involve risks, uncertainties, estimates and
assumptions that are difficult to predict. Therefore, actual
outcomes and results may differ materially from those expressed
in these forward-looking statements. You should not place undue
reliance on any of these forward-looking statements. Further,
any forward-looking statement speaks only as of the date on
which it is made, and the Company undertakes no obligation to
update any such statement to reflect new information, the
occurrence of future events or circumstances or otherwise.

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

Factors that could cause actual results to differ
materially from those indicated by the forward-looking
statements or that could contribute to such differences include,
but are not limited to, integration of new systems,
unanticipated expenditures, acquisitions and the successful
integration of acquisitions into the business, changing
relationships with customers, suppliers and strategic partners,
changes to governmental regulation of the tire industry, the
impact of competitive products, changes to the competitive
environment, the acceptance of new products in the market, the
economy and world events.

1



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PART I




Item 1.     Description
of Business.

General Development of Business

American Tire Distributors, Inc. (together with
its subsidiaries, the Company) (formerly Heafner
Tire Group, Inc.), is the leading national distributor of tires
to the replacement tire market in the United States. The Company
operates 60 distribution centers servicing all or parts of
35 states. Through this distribution network, the Company
currently serves approximately 35,000 customers each month. In
addition to its tire sales, the Company is a significant
independent distributor of aftermarket wheels, accessories and
automotive service equipment.

Founded in 1935, the Company has grown over the
past five years both by consistent growth in revenues which
exceeded the industry average, and by acquisitions. The Company
acquired Winston Tire Company (formerly Oliver & Winston)
(Winston) in 1997, Speed Merchant, d/b/a Competition
Parts Warehouse (CPW) in 1998 and merged with ITCO
Logistics Corporation (ITCO) in 1998. The Company
acquired California Tire Company (California Tire)
in 1999 and in 2000, the Company acquired certain assets of Tire
Centers, LLC (TCI), the outstanding common stock of
T.O. Haas Tire Company (Haas) and the distribution
operations of Merchants, Inc., known as American Tire
Distributors (ATD).

In May 1999, the majority owners of the
Companys Class A and Class B common stock sold
their shares to Charlesbank Equity Fund IV, L.P. a Massachusetts
limited partnership. On August 20, 1999, the Company
reincorporated in Delaware (previously incorporated in North
Carolina) and simultaneously changed its name from The J.H.
Heafner Company, Inc. to Heafner Tire Group, Inc. Effective
May 30, 2002, the Company changed its name from Heafner
Tire Group, Inc. to American Tire Distributors, Inc. The new
name is part of the Companys transition from a collection
of companies joined through acquisition into a national
organization with an unmatched, coast-to-coast footprint in the
distribution market. The move follows two years of
reorganization during which the Company divested its retail
operations.

Effective January 26, 2001, the
Companys Board of Directors authorized the exit from
retail operations and determined that it was in the
Companys best interest to concentrate solely on wholesale
distribution, its core business. In that regard, effective
May 15, 2001, the Company completed a transaction pursuant
to a Stock Purchase Agreement to sell all the capital stock in
Winston, its retail segment, to Performance Management, Inc. for
a purchase price of approximately $10.0 million.
Accordingly, this segment has been reflected as a discontinued
operation in the accompanying consolidated financial statements.
See Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations for
further discussion.

Industry Overview

Purchasers in the United States spent
approximately $22.5 billion on new replacement tires in
2003. Of that amount, passenger tires accounted for
approximately 60.0% of sales, light truck tires accounted for
approximately 16.0%, truck tires accounted for approximately
20.4% and farm, specialty and other types of tires accounted for
approximately 3.6%. The number of new replacement tires shipped
in the United States for passenger cars and light trucks
increased from 164.6 million tires in 1986 to
228.5 million tires in 2003. The Company believes that
increases in both the number and average age of cars as well as
passenger miles driven in the United States have contributed to
this growth.

Consumers of new replacement tires in the United
States obtain them from several principal sources, including
independent tire dealers, manufacturer-owned retail stores, mass
merchandisers such as Sears and Wal-Mart, auto supply chain
stores and wholesale clubs and discounters. Independent tire
dealers, which represent the largest customer base served by the
Company, are the largest suppliers of new replacement passenger
tires in the United States. Independent tire dealers accounted
for approximately 58.5% of retail sales of domestic replacement
passenger tires in 2003.

2



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Independent tire dealers obtain their inventory
of new replacement tires through three principal sources: tire
manufacturers, independent wholesale distributors like the
Company and dealer-owned warehouses. Other sources include
discount or price clubs and other tire outlet chains. The
Company believes that, in recent years, certain tire
manufacturers have reduced their supply to small independent
tire dealers due to the inefficiencies of supplying small
quantities of product to a large number of locations. At the
same time, manufacturers have increased their supplies to
independent wholesale distributors such as the Company, who are
able to deliver tires to a large number of independent tire
dealers with greater efficiency. The Company is the leading
national distributor to the replacement tire market.

The replacement tire market for passenger cars
and light trucks consists of three primary types of tires:
flag brands, which are premium tires made by the
major tire manufacturers; associate brands, which are primarily
economy brand tires made and marketed by the major tire
manufacturers; and private-label brands, which are brands made
by tire manufacturers exclusively for and marketed by
independent tire wholesale distributors and or retailers. In
2003, flag brands constituted approximately 59% of the United
States passenger and light truck replacement tire markets,
associate brands made up approximately 17% of those markets and
private-label brands constituted approximately 24% of those
markets.

Products

The Company sells a broad selection of tires,
custom wheels, automotive service equipment and related products
manufactured by the leading manufacturers of those products. The
Companys products include flag brand tires manufactured by
Michelin, Bridgestone/ Firestone and Goodyear/ Dunlop as well
as, private-label products such as Regul tires, Winston tires
and Pacer and ICW custom wheels; and associate brand products
such as Monarch tires, manufactured by Goodyear. The Company
also distributes alignment service equipment manufactured by
Hunter Engineering Company and tire changers and balancers built
by Hennessey Industries, Inc. (a division of the Danaher
Corporation), both leading manufacturers in their respective
fields. The Company sells many other products, including tires
for the medium truck, farm and industrial markets, automotive
service equipment, wheel weights and tubes. Sales of tires
accounted for approximately 87.3% of sales from continuing
operations in fiscal 2003, 87.7% in fiscal 2002 and 90.3% in
fiscal 2001. The remainder of the Companys sales includes
wheels, service equipment and other automotive parts.

Suppliers

The Company purchases its products from all major
tire manufacturers as well as other suppliers. Of the
Companys principal private-label brands, Winston tires are
manufactured exclusively by Goodyear and Regul tires are
manufactured exclusively by Michelin.

There are a number of worldwide manufacturers of
wheels and other automotive products and equipment. Most of the
wheels purchased by the Company are private-label custom brands,
namely Pacer and ICW, and are produced by a variety of
manufacturers. The Company purchases equipment and other
products from multiple sources, including industry leaders such
as Hunter Engineering Company and Hennessey Industries, Inc. (a
division of the Danaher Corporation).

With the exception of a long-term contract (the
Winston Private Brand Supply Agreement) with
Kelly-Springfield, a division of Goodyear,
(Goodyear), the Companys supply arrangements
with its major suppliers generally are oral or written
arrangements which are renegotiated annually. Although there can
be no assurance that these arrangements will be renewed, or
renewed on favorable terms, the Company has conducted business
with its major tire suppliers for many years and believes that
it has good relationships with all of its major suppliers.

The Company purchases certain private-label and
associate brand tires, including the Winston and Monarch
products, from Goodyear. Purchases under the Winston Private
Brand Supply Agreement are made at prices as specified from time
to time in the manufacturers pricing schedule. Under the
terms of the Winston Private Brand Supply Agreement, the Company
purchases all of its requirements of Winston brand tires from
Goodyear. The initial term of the Winston Private Brand Supply
Agreement expires on May 7, 2007 and the agreement is
automatically renewable for successive three-year terms
thereafter. The Winston Private

3



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Brand Supply Agreement may be terminated by
either party upon twelve months advance notice. Goodyear
is the sole holder of the Companys Series A preferred
stock and Series B preferred stock.


The Company currently purchases approximately 78%
of its tire products from three tire suppliers. The Company does
not have long-term supply agreements with these vendors for
purchases of the vendors branded products. The operating
results of the Company could be adversely affected if the
Company was unable to purchase tires from these three suppliers.
The Company believes it has a good relationship with these
suppliers and does not anticipate a shortage in the supply of
tires from these vendors.

Customers

The Company distributes tires and related
automotive products principally to independent tire dealers. The
Companys other customers include national retail chains,
service stations, general automotive repair facilities, auto
parts stores, automobile dealers and specialty automotive repair
facilities. The Company generally requires payment from its
customers within 30 days, although it may extend terms for
its larger customers. In fiscal 2003, the Companys
continuing operations served approximately 35,000 customers each
month. The Companys largest customer and its subsidiaries
accounted for less than 2% and its top 25 customers accounted
for less than 9% of net sales from continuing operations in
fiscal 2003.

Competition

The industry in which the Company operates is
highly competitive, and many of the Companys competitors
have resources significantly greater than the Company. Tire
manufacturers distribute tires to the retail market by direct
shipments to independent tire dealers, national retail chains
such as Sears and Wal-Mart and manufacturer-owned retail stores
as well as through shipments to independent wholesale
distributors. A number of independent wholesale tire
distributors also compete in the regions in which the Company
operates.

The Company believes that the principal
competitive factors in its business are reputation, breadth of
product offering, delivery frequency, price and service. The
Company believes that it competes effectively in all aspects of
its business due to its ability to offer a broad selection of
flag and private-label branded products, its competitive prices
and its ability to provide quality services in a timely manner.

Trademarks

The private-label brand names under which the
Company markets its products are trademarks of the Company.
Those private-label brand names are considered to be important
to the Companys business because they develop brand
identification and foster customer loyalty. All of the
Companys trademarks are of perpetual duration as long as
they are periodically renewed. The Company currently intends to
maintain all of them in force. The principal private-label brand
names under which the Company markets its products are:



| |   |                          
| | - | -------------------------
| |  | REGUL® tires,            
|
| |  | WINSTON® tires,          
|
| |  | DYNATRAC® tires,         
|
| |  | PACER® custom wheels,    
|
| |  | ICW® custom wheels, and  
|
| |  | MAGNUM® automotive lifts.

Seasonality and Inventory

The Companys operations typically
experience their highest levels of sales from March through
October of each fiscal year, with the period from November
through February generally experiencing the lowest levels of
sales. The Companys inventories generally fluctuate with
anticipated seasonal sales volumes. The Company believes it
maintains levels of inventory that are adequate to meet its
customers needs on short notice.

4



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Since customers look to the Company to fulfill
their needs on short notice, backlog of orders is not a
meaningful statistic.

Working Capital Practices

The Company must maintain substantial inventories
in connection with its operations. Inventory levels fluctuate
throughout the year with anticipated seasonal sales volume.
Inventories are financed through vendor credit terms and
borrowings under the Companys revolving credit facility
(Revolver). The amount of borrowings under the
Revolver fluctuates throughout the year. The Companys
Revolver, as amended, provides for borrowings in the aggregate
principal amount of up to the lesser of $180.0 million,
less defined reserves, or the Borrowing Base, as defined in the
agreement. The Company had $43.7 million available for
additional borrowings at December 27, 2003.

Both the maintenance of substantial inventories
and the practice of seasonal borrowing are common to the
wholesale tire distribution industry.

Environmental Matters

The Companys operations and properties are
subject to federal, state and local laws, regulations and
ordinances relating to the use, storage, handling, generation,
transportation, treatment, emission, release, discharge and
disposal of certain materials, substances and wastes under which
the Company could be held strictly, jointly and severally liable
for costs associated with the investigation and clean-up of
contaminated properties. The nature of the Companys
existing and historical operations exposes it to the risk of
liabilities or claims with respect to environmental matters,
including off-site disposal matters.

The Company believes that it currently complies
with all relevant environmental regulations and it does not
incur significant costs maintaining compliance with those laws.
However, the Company could incur material costs in connection
with environmental liabilities or claims. In addition, future
events such as changes in existing laws and regulations or in
their interpretation, could give rise to additional compliance
costs or liabilities that could have a material effect on the
Companys business or earnings. Expenditures related to
environmental matters have not had, and are not expected to
have, a material effect on the Companys business or
earnings.

Employees

As of December 27, 2003, the Companys
continuing operations employed approximately 1,894 people. None
of the Companys employees are represented by a union. The
Company believes its employee relations are satisfactory.

Business Subject to Governmental
Contracts

No material portion of the business of the
Company is subject to renegotiation of contracts with, or
termination by, any governmental agency.






|        |                           
|------- | --------------------------
|Item 2. | Description of Properties.

The Companys principal properties are
geographically situated to meet sales and operating
requirements. All of the Companys properties are
considered to be adequate to meet current operating
requirements. As of December 27, 2003, the Company had a
total of 60 warehouse distribution centers located in 20 states,
aggregating approximately 4.5 million square feet. Of these
centers, four are owned and the remainder are leased.

The Company also leases its principal executive
office located in Huntersville, North Carolina.

5



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|        |                   
|------- | ------------------
|Item 3. | Legal Proceedings.

The Company is involved from time to time in
various lawsuits, including alleged class action lawsuits
arising out of the ordinary conduct of its business. Although no
assurances can be given, management does not expect that any of
these matters will have a material adverse effect on the
Companys business or financial condition. The Company is
also involved in various proceedings incidental to the ordinary
course of its business. The Company believes, based on
consultation with legal counsel, that none of these will have a
material adverse effect on its financial condition or results of
operations.






|        |                                                         
|------- | --------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security
    Holders.

Not applicable.




PART II






|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities.

As of March 15, 2004, there were ten holders
of record of the Companys common stock. There is no public
trading market for the Companys common stock.

As of December 27, 2003, the Company has not
declared or paid dividends on its common stock and has no
intention to do so in the foreseeable future. In addition, the
Companys Revolver contains certain covenants, which among
other things, restricts the Companys ability to pay
dividends.

Information regarding securities authorized for
issuance under equity compensation plans is set forth in
Item 12 of this Form 10-K.






|        |                         
|------- | ------------------------
|Item 6. | Selected Financial Data.

The following table sets forth selected
historical consolidated financial data of the Company for the
periods indicated as restated for the presentation of Winston,
its retail segment, as a discontinued operation. The selected
historical financial data as of the end of and for the fiscal
years 1999 through 2003 is derived from the consolidated
financial statements of the Company as of and for those years.
The consolidated financial statements of the Company as of
December 27, 2003 and December 28, 2002 and for each
of the three years in the period ended December 27, 2003
are included in Item 8 of this report. The following
selected historical consolidated financial information should be
read in conjunction with Managements Discussion and

6



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Analysis of Financial Condition and Results of
Operations, included as Item 7, and the consolidated
financial statements of the Company and the related notes,
included as Item 8, in this report.


|                                                                     |  |              |           |      |  |      |           |         |  |         |           |   |  |   |           |   |  |   |         |  
|-------------------------------------------------------------------- |  | ------------ | --------- | ---- |  | ---- | --------- | ------- |  | ------- | --------- | - |  | - | --------- | - |  | - | ------- | -
|                                                                     |  | 2003         |           | 2002 |  | 2001 |           | 2000(b) |  | 1999(c)
|                                                                     |  |              |           |      |  |      |           |         |  |        
|                                                                     |  |             
|                                                                     |  | in thousands
|Statements of Operations Data(a):                                    |  |              |           |      |  |      |           |         |  |         |           |   |  |   |           |   |  |   |         |  
|Net sales(d)                                                         |  | $            | 1,112,512 |      |  | $    | 1,060,394 |         |  | $       | 1,107,894 |   |  | $ | 1,087,260 |   |  | $ | 908,049 |  
|Gross profit                                                         |  |              | 209,893   |      |  |      | 197,873   |         |  |         | 210,422   |   |  |   | 199,956   |   |  |   | 159,178 |  
|Operating income                                                     |  |              | 41,156    |      |  |      | 31,351    |         |  |         | 4,079     |   |  |   | 27,186    |   |  |   | 21,526  |  
|Income (loss) from continuing operations                             |  |              | 16,087    |      |  |      | 37,910    |         |  |         | (17,555   | ) |  |   | (1,555    | ) |  |   | (1,249  | )
|Loss from discontinued operations, net of
    income taxes           |  |              | (82       | )    |  |      | (483      | )       |  |         | (769      | ) |  |   | (39,938   | ) |  |   | (5,339  | )
|Loss on disposal of discontinued operations, net
    of income taxes |  |              |          |      |  |      |          |         |  |         | (12,616   | ) |  |   | (1,200    | ) |  |   |        |  
|Net income (loss)                                                    |  |              | 16,005    |      |  |      | 37,427    |         |  |         | (30,940   | ) |  |   | (42,693   | ) |  |   | (6,588  | )
|Balance Sheet Data:                                                  |  |              |           |      |  |      |           |         |  |         |           |   |  |   |           |   |  |   |         |  
|Working capital for continuing operations                            |  | $            | 98,997    |      |  | $    | 83,073    |         |  | $       | 93,670    |   |  | $ | 91,778    |   |  | $ | 82,592  |  
|Total assets                                                         |  |              | 419,003   |      |  |      | 411,270   |         |  |         | 443,020   |   |  |   | 497,120   |   |  |   | 416,171 |  
|Total debt                                                           |  |              | 182,716   |      |  |      | 196,400   |         |  |         | 283,185   |   |  |   | 292,433   |   |  |   | 235,353 |  
|Total redeemable preferred stock                                     |  |              | 10,535    |      |  |      | 11,035    |         |  |         | 24,115    |   |  |   | 11,035    |   |  |   | 11,094  |  
|Cash Flow Data:                                                      |  |              |           |      |  |      |           |         |  |         |           |   |  |   |           |   |  |   |         |  
|Cash flows from continuing operating activities                      |  | $            | 17,657    |      |  | $    | 13,507    |         |  | $       | (1,766    | ) |  | $ | 40,575    |   |  | $ | (21,599 | )
|Cash flows from investing activities                                 |  |              | (1,929    | )    |  |      | 13,413    |         |  |         | 8,183     |   |  |   | (82,155   | ) |  |   | (20,688 | )
|Cash flows from financing activities                                 |  |              | (15,095   | )    |  |      | (28,358   | )       |  |         | 456       |   |  |   | 53,196    |   |  |   | 44,269  |  
|Other Data:                                                          |  |              |           |      |  |      |           |         |  |         |           |   |  |   |           |   |  |   |         |  
|EBITDA from continuing operations(e)                                 |  | $            | 48,215    |      |  | $    | 40,249    |         |  | $       | 22,373    |   |  | $ | 42,406    |   |  | $ | 35,418  |  
|Depreciation and amortization for continuing
    operations(f)       |  |              | 6,957     |      |  |      | 8,610     |         |  |         | 17,532    |   |  |   | 14,302    |   |  |   | 11,786  |  
|Amortization of other assets(g)                                      |  |              | 1,208     |      |  |      | 1,221     |         |  |         | 1,247     |   |  |   | 1,176     |   |  |   | 949     |  
|Capital expenditures                                                 |  |              | 2,491     |      |  |      | 2,059     |         |  |         | 6,060     |   |  |   | 14,724    |   |  |   | 11,218  |  
|Ratio of earnings to fixed charges(h)                                |  |              | 2.24      |      |  |      | 3.33      |         |  |         | 0.36      |   |  |   | 1.05      |   |  |   | 1.06    |  



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Winston has been treated as a discontinued
    operation in the accompanying selected financial data.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(b) | In April 2000, the Company purchased certain
    assets of TCI. In May 2000, the Company acquired Haas and in
    July 2000, the Company purchased the net assets of ATD. Each
    transaction was accounted for using the purchase method of
    accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(c) | In January 1999, the Company acquired California
    Tire. This transaction was accounted for using the purchase
    method of accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(d) | Net sales include approximately
    $15.8 million, $60.6 million and $55.9 million of
    inter-segment sales from the Company to Winston for 2001, 2000
    and 1999, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(e) | The Company evaluates performance based on
    several factors, of which the primary financial measure is
    earnings from continuing operations before interest, taxes,
    depreciation and amortization and gain on repurchase of
    Series D Senior Notes (EBITDA). EBITDA is
    presented because it is a widely accepted financial indicator of
    a companys ability to generate cash flow and to service or
    incur indebtedness. EBITDA should not be considered an
    alternative to, or more meaningful than, net income as a measure
    of operating results or to cash flows from operations as a
    measure of liquidity in accordance with accounting principles
    generally accepted in the United States. EBITDA as calculated
    and presented here may not be comparable to EBITDA as calculated
    and presented by other companies. See table below for
    reconciliation of income (loss) from continuing operations to
    EBITDA.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f) | The Company adopted the provisions of Statement
    of Financial Accounting Standards (SFAS)
    No. 142, Goodwill and Other Intangible Assets
    effective January 1, 2002 and accordingly goodwill
    amortization was discontinued.                                                                                                                                                        
|(g) | Amount represents amortization of deferred
    financing charges which is included in interest expense.                                                                                                                                                                                                                                                                                             
|(h) | For purposes of these ratios, (i) earnings
    have been calculated by adding interest expense and the
    estimated interest portion of rental expense to earnings before
    income taxes and (ii) fixed charges are comprised of
    interest expense and capitalized interest, if any. In fiscal
    2001, earnings were insufficient to cover fixed charges by
    approximately $23.8 million.

Reconciliation of income (loss) from continuing
operations to EBITDA:

|                                                                    |  |                        |        |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|------------------------------------------------------------------- |  | ---------------------- | ------ | ---- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                                                    |  | 2003                   |        | 2002 |  | 2001 |         | 2000 |  | 1999
|                                                                    |  |                        |        |      |  |      |         |      |  |     
|                                                                    |  |                       
|                                                                    |  | (dollars in thousands)
|Income (loss) from continuing operations                            |  | $                      | 16,087 |      |  | $    | 37,910  |      |  | $    | (17,555 | ) |  | $ | (1,555 | ) |  | $ | (1,249 | )
|Interest expense                                                    |  |                        | 14,082 |      |  |      | 18,705  |      |  |      | 28,639  |   |  |   | 26,447 |   |  |   | 22,000 |  
|Provision (benefit) for income taxes                                |  |                        | 11,089 |      |  |      | 24,783  |      |  |      | (6,243  | ) |  |   | 3,212  |   |  |   | 2,881  |  
|Depreciation and amortization of goodwill and
    other intangibles |  |                        | 6,957  |      |  |      | 8,610   |      |  |      | 17,532  |   |  |   | 14,302 |   |  |   | 11,786 |  
|Gain on repurchase of Series D Senior Notes                         |  |                        |       |      |  |      | (49,759 | )    |  |      |        |   |  |   |       |   |  |   |       |  
|                                                                    |  |                        |        |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  
|EBITDA                                                              |  | $                      | 48,215 |      |  | $    | 40,249  |      |  | $    | 22,373  |   |  | $ | 42,406 |   |  | $ | 35,418 |  
|                                                                    |  |                        |        |      |  |      |         |      |  |      |         |   |  |   |        |   |  |   |        |  






|        |                                                                                           
|------- | ------------------------------------------------------------------------------------------
|Item 7. | 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 consolidated
financial statements and the related notes included in this
report.

Results of Operations

Year Ended December 27, 2003 Compared
to the Year Ended December 28, 2002

Consolidated net sales from continuing operations
for fiscal 2003 increased $52.1 million, or 4.9%, to
$1,112.5 million from $1,060.4 million in fiscal 2002.
The sales increase is primarily due to an industry increase in
the average selling price of passenger and light truck tires in
addition to a continuing trend of selling more high performance,
higher priced tires.

Gross profit increased $12.0 million, or
6.1%, to $209.9 million in fiscal 2003 from
$197.9 million in fiscal 2002 due primarily to an increase
in sales of the Companys higher margin tires and wheels,
partially offset by an aggressive first quarter 2003 marketing
program, which resulted in reduced margins on certain products.
Gross profit as a percentage of sales increased 0.2% to 18.9% in
fiscal 2003 compared to 18.7% in fiscal 2002.

Selling, general, and administrative expenses
increased $2.2 million to $168.7 million in fiscal
2003 compared to $166.5 million in fiscal 2002. The slight
increase in selling, general and administrative expenses is
primarily due to increased costs associated with the
Companys group health plan ($2.3 million), higher
freight costs ($1.1 million) and other net increases
($1.9 million) partially offset by a reduction in
amortization expense ($2.0 million) relating to noncompete
agreements that ended during fiscal 2003 and a reduction in the
provision for doubtful accounts ($1.1 million). As a
percentage of sales, selling, general and administrative
expenses decreased to 15.2% in fiscal 2003 compared to 15.7% in
fiscal 2002.

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Interest expense decreased $4.6 million in
fiscal 2003 to $14.1 million from $18.7 million in
fiscal 2002 due primarily to the Companys repurchase of
the majority of its Series D Senior Notes in 2002 (see
Repurchase of Senior Notes below), as well as a
decline in interest rates on the Companys Revolver.

Pre-tax income for fiscal 2003 was
$27.2 million resulting in an income tax provision of
$11.1 million compared to pre-tax income of
$62.7 million in fiscal 2002 resulting in an income tax
provision of $24.8 million. Pre-tax income for fiscal 2002
includes the $49.8 million gain on repurchase of
Series D Senior Notes and the related income tax provision
of $19.7 million. Excluding the gain on repurchase of
Series D Senior Notes, fiscal 2003 pre-tax income increased
$14.2 million from fiscal 2002. The effective tax rate for
fiscal 2003 is approximately 41% compared to 40% in fiscal 2002.

Loss from discontinued operations for fiscal 2003
was approximately $0.1 million, net of income tax benefits
of $57 thousand, compared to $0.5 million, net of
income tax benefits of $0.3 million, for fiscal 2002. The
2003 loss from discontinued operations is primarily due to
adjustments to estimated liabilities for leases where the
Company is a guarantor.

Year Ended December 28, 2002 Compared
to the Year Ended December 29, 2001

Consolidated net sales from continuing operations
for fiscal 2002 decreased $47.5 million, or 4.3%, to
$1,060.4 million from $1,107.9 million in fiscal 2001.
The sales decrease is due primarily to the sale of the Haas
retail stores in October 2001 ($20.2 million or 1.8%), the
sale of Winston in May 2001 ($15.8 million or 1.4%) and the
exit of the Companys parts line of products in the Western
division in fiscal 2001 ($2.4 million or 0.2%). Other net
sales declined by $9.1 million, or 0.9%, in fiscal 2002
compared to fiscal 2001 due primarily to weaker consumer demand
from an overall slower economy.

Gross profit in fiscal 2002 decreased by
$12.5 million, or 6.0%, to $197.9 million compared to
$210.4 million in fiscal 2001. This decrease is due
primarily to the sale of the Haas retail stores, the sale of
Winston and the exit of the Companys parts line of
products in the Western division. As a percentage of sales,
gross profit decreased to 18.7% in fiscal 2002 compared to 19.0%
in fiscal 2001. This decline in margin is primarily due to
weaker consumer demand creating competitive pricing pressure.
The fiscal 2002 margin decline is offset by a $5.0 million
charge in fiscal 2001 for inventory impairments resulting from a
management decision to exit the majority of the Companys
parts line of products in the Western division.

Selling, general, and administrative expenses
decreased $39.8 million in fiscal 2002 representing 15.7%
of sales, compared to 18.6% of sales in fiscal 2001. The
decrease in selling, general and administrative expenses is
primarily due to the Companys cost reduction initiatives
as well as discontinued amortization of the Companys
goodwill as required by new accounting standards.

During fiscal 2002, the Company recorded charges
of approximately $0.3 million primarily relating to the
closure of certain of its facilities in the Western region as a
result of warehouse consolidations initiated to streamline
operations. The majority of those charges relate to estimated
future rentals of the closed facilities.

Interest expense decreased $9.9 million in
fiscal 2002 to $18.7 million from $28.6 million in
fiscal 2001 due primarily to the Companys repurchase of
the majority of its Series D Senior Notes in 2002 (see
Repurchase of Senior Notes below), as well as a
decline in interest rates on the Companys Revolver.

Pre-tax income for fiscal 2002 was
$62.7 million resulting in an income tax provision of
$24.8 million compared to a pre-tax loss of
$23.8 million in fiscal 2001 resulting in a tax benefit of
$6.2 million. Pre-tax income for fiscal 2002 includes the
$49.8 million gain on repurchase of Series D Senior
Notes and the related income tax provision of
$19.7 million. Excluding the gain on repurchase of the
Series D Senior Notes, fiscal 2002 pre-tax income increased
$36.7 million from fiscal 2001. The effective tax rate in
fiscal 2002 is approximately 40% compared to 26% in fiscal 2001,
which is lower than expected primarily due to non-deductible
goodwill amortization.

Loss from discontinued operations for fiscal 2002
was approximately $0.5 million, net of income tax benefits
of $0.3 million, compared to $0.8 million, net of
income tax benefits of $0.5 million, for fiscal 2001.

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The fiscal 2002 loss from discontinued operations
is primarily due to adjustments to estimated liabilities for
leases where the Company is a guarantor.


EBITDA

The Company evaluates performance based on
several factors, of which the primary financial measure is
earnings from continuing operations before interest, taxes,
depreciation and amortization and gain on repurchase of
Series D Senior Notes (EBITDA). EBITDA should
not be considered an alternative to, or more meaningful than,
net income or cash flow as determined in accordance with
accounting principles generally accepted in the United States.
EBITDA as calculated and presented here may not be comparable to
EBITDA as calculated and presented by other companies. The
following table is a reconciliation of income (loss) from
continuing operations to EBITDA:

|                                                                    |  |                        |        |              |  |              |         |   |  |   |         |  
|------------------------------------------------------------------- |  | ---------------------- | ------ | ------------ |  | ------------ | ------- | - |  | - | ------- | -
|                                                                    |  |                       
|                                                                    |  | Year Ended            
|                                                                    |  |                       
|                                                                    |  | December 27,           |        | December 28, |  | December 29,
|                                                                    |  | 2003                   |        | 2002         |  | 2001        
|                                                                    |  |                        |        |              |  |             
|                                                                    |  |                       
|                                                                    |  | (dollars in thousands)
|Income (loss) from continuing operations                            |  | $                      | 16,087 |              |  | $            | 37,910  |   |  | $ | (17,555 | )
|Interest expense                                                    |  |                        | 14,082 |              |  |              | 18,705  |   |  |   | 28,639  |  
|Provision (benefit) for income taxes                                |  |                        | 11,089 |              |  |              | 24,783  |   |  |   | (6,243  | )
|Depreciation and amortization of goodwill and
    other intangibles |  |                        | 6,957  |              |  |              | 8,610   |   |  |   | 17,532  |  
|Gain on repurchase of Series D Senior Notes                         |  |                        |       |              |  |              | (49,759 | ) |  |   |        |  
|                                                                    |  |                        |        |              |  |              |         |   |  |   |         |  
|EBITDA                                                              |  | $                      | 48,215 |              |  | $            | 40,249  |   |  | $ | 22,373  |  
|                                                                    |  |                        |        |              |  |              |         |   |  |   |         |  

EBITDA from continuing operations increased
$8.0 million to $48.2 million in fiscal 2003 compared
to $40.2 million in fiscal 2002. The increase in EBITDA is
a result of higher gross profit margins partially offset by an
increase in selling, general and administrative expenses.

EBITDA from continuing operations increased
$17.9 million to $40.2 million in fiscal 2002 compared
to $22.4 million in fiscal 2001. This increase in EBITDA is
due primarily to the parts-related charge of $5.0 million
taken in fiscal 2001 and decreased selling, general and
administrative expenses in fiscal 2002 as a result of the
Companys cost reduction initiatives.

Critical Accounting Policies and
Estimates

The consolidated financial statements are
prepared in accordance with accounting principles generally
accepted in the United States, which require the Company to make
estimates and assumptions (see Note 1 in the Notes to
Consolidated Financial Statements included in Item 8 of
this report). The Company considers certain accounting policies,
as described below, to be critical policies due to the high
degree of judgment and complexity involved in each.

Revenue Recognition

The Company recognizes revenue when delivery is
made to the customer. The Company also permits customers from
time to time to return certain products but there is no
contractual right of return. The Company continuously monitors
and tracks such returns and records an estimate of such future
returns, based on historical experience and actual returns
experienced for a specified time following the end of the
period. While such returns have historically been within
managements expectations and the provisions established
have been adequate, the Company cannot guarantee that it will
continue to experience the same return rates that it has in the
past. If future returns increase significantly, operating
results would be adversely affected.

Allowance for Doubtful
Accounts

The allowance for doubtful accounts provides for
losses believed to be inherent within the Companys
accounts receivable balance. Management evaluates both the
creditworthiness of specific customers and the

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overall probability of losses based upon an
analysis of the overall aging of receivables, past collection
trends and general economic conditions. Management believes,
based on its review, that the allowance for doubtful accounts is
adequate to cover potential losses. Actual results may vary as a
result of unforeseen economic events and the impact those events
could have on our customers.


Valuation of Goodwill and Other Intangible
Assets

In July 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible Assets. SFAS
No. 142 revises the accounting for purchased goodwill and
intangible assets. Under SFAS No. 142, goodwill and
intangible assets with indefinite useful lives are no longer
amortized, but are tested for impairment annually and more
frequently in the event of an impairment indicator. SFAS
No. 142 also requires that intangible assets with definite
useful lives be amortized over their respective estimated useful
lives, and reviewed for impairment at least annually. The
Company adopted the provisions of SFAS No. 142 effective
first quarter of fiscal 2002. In accordance with SFAS
No. 142, the Company performed the required annual
impairment test in fiscal 2003 and fiscal 2002 and determined
that no goodwill impairment existed. The Company will continue
to perform goodwill impairment reviews annually or more
frequently if facts or circumstances warrant a review. Future
adverse developments in market conditions or the Companys
current or projected operating results could cause the fair
value of the Companys goodwill to fall below the carrying
value, requiring an impairment charge.

Deferred Taxes

The Company recognizes deferred tax assets and
liabilities based on the differences between the financial
statement carrying amounts and the tax bases of assets and
liabilities. The Company regularly reviews its deferred tax
assets for recoverability and establishes a valuation allowance
based on historical taxable income, projected future taxable
income and the expected timing of the reversals of existing
temporary differences. 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 carry-forwards (NOLs). Accordingly, a
valuation allowance of $1.0 million was provided at
December 27, 2003, unchanged from December 28, 2002.
The valuation allowance relates to certain deferred tax assets
that in managements assessment may not be realized due to
the sale of Winston in May 2001. This evaluation considered the
historical and long-term expected profitability of the
Companys continuing operations, the sale of the
Companys retail segment, the efficiencies gained from
efforts initiated in 2001 to streamline operations and the gain
on repurchase of the Series D Senior Notes as well as the
reduction in interest expense relating to the repurchase of the
Companys Series D Senior Notes (see discussion in
Liquidity and Capital Resources below). The
Companys current year operations result in taxable income
in fiscal 2003 and the Company is forecasting taxable income in
fiscal 2004 and the foreseeable future. The Company believes
that taxable income generated in future years will be sufficient
to utilize the remaining net deferred tax assets. The
Companys ability to generate future taxable income is
dependent on numerous factors including general economic
conditions, the state of the replacement tire market and other
factors beyond managements control. Therefore, there can
be no assurance that the Company will meet its expectation of
future taxable income. Changes in expected future income could
lead to an additional valuation allowance against deferred tax
assets.

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 to Performance
Management, Inc. for a purchase price of approximately
$10.0 million. As of December 27, 2003,
$2.8 million of the purchase price remains outstanding and
a reserve is maintained for the full amount. The Company has
initiated legal proceedings to collect the $2.8 million.
This segment has been reflected as a discontinued operation in
the accompanying consolidated financial statements and
previously reported financial results for all periods have been
restated to reflect this treatment.

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On January 15, 2002, Winston filed for
protection from creditors under Chapter 11 of the United
States Bankruptcy Code. In connection therewith, the Company has
agreed to provide Winston with a $2.0 million trade credit
facility to acquire inventory from the Company and as such, the
Supply and Retail Distribution Agreement dated May 15, 2001
was terminated in its entirety. The Company entered into a
Settlement Agreement with Winston, dated January 16, 2002,
which was approved by the Bankruptcy Court by order dated
February 6, 2002. The Company has assessed the terms of the
settlement and believes that any potential liability has been
adequately considered in prior provisions.

The Companys receivable/ administrative
claim of approximately $2.0 million due from Winston was
fully recovered in the third quarter of 2002 by a return of
merchandise of approximately $0.5 million and the receipt
of certain unencumbered trademark rights for the state of
California as a result of the rejection of licenses by Winston.
The intangible asset recorded for this trademark is being
amortized on a straight-line basis over a period of five years.

On September 12, 2002, the United States
Bankruptcy Court for the Central District of California approved
a sale of substantially all the assets of Winston to the
Goodyear Tire and Rubber Company, Inc., which sale closed in
late December 2002. Thereafter, in January 2003 upon motion, the
Bankruptcy Court converted the Winston bankruptcy case from a
Chapter 11 to a Chapter 7 proceeding.

The only significant remaining liability related
to discontinued operations is the exposure related to leases
that the Company has guaranteed. As of December 27, 2003,
total obligations of the Company, as guarantor on the Winston
leases, is approximately $13.8 million extending over
15 years. However, the Company has secured assignments or
sublease agreements for the vast majority of these commitments
with contractually assigned or subleased rental of approximately
$11.7 million. A provision has been made for the estimated
shortfall of $2.1 million. In January 2004, the Company
executed an agreement to settle any and all claims relating to
one of the Winston guarantee leases resulting in a net reduction
of $1.6 million of that shortfall. The accrual for lease
liabilities could be materially affected by factors such as the
credit worthiness of lessors, assignees and sublessees and the
Companys success at negotiating early termination
agreements with lessors. These factors are significantly
dependent on general economic conditions. While the Company
believes that its current estimates of discontinued operations
liabilities are adequate, it is possible that future events
could require significant adjustments to those estimates.

Liquidity and Capital Resources

At December 27, 2003 the combined net
indebtedness (net of cash) of the Company was
$179.4 million compared to $193.7 million at
December 28, 2002. Total commitments by the lenders under
the Companys Revolver were $180.0 million at
December 27, 2003, of which $43.7 million was
available for additional borrowings. The amount available to
borrow is limited by the Borrowing Base computation, as defined
in the agreement.

Cash Flows from Operating
Activities

The Companys principal source of cash
during fiscal 2003 was provided by operations. Net cash from
operating activities increased to $17.7 million for fiscal
2003, an increase of $4.2 million, compared to
$13.5 million in fiscal 2002. The increase is primarily due
to improvements in the Companys gross profit margins and
an overall increase in the profitability of the Company
(excluding the gain on repurchase of the Series D Senior
Notes in 2002), partially offset by an increase in the
Companys ending inventory balance at December 27,
2003. Net working capital at December 27, 2003 totaled
$99.0 million, compared to $83.1 million at
December 28, 2002, an increase of $15.9 million.

Net cash from operating activities increased to
$13.5 million in fiscal 2002, an increase of
$15.3 million, compared to $(1.8) million in fiscal 2001
due primarily to improvements in the business operations,
reductions in selling, general and administrative expenses and a
decrease in interest expense resulting from the Series D
Senior Note repurchase in 2002.

12



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Cash Flows from Investing
Activities

Net cash from investing activities decreased
$15.3 million from $13.4 million in fiscal 2002 to
$(1.9) million in fiscal 2003 due primarily to proceeds
from the Companys sales leaseback transaction in fiscal
2002 which generated net proceeds of $13.3 million. Capital
expenditures remained consistent from fiscal 2002 to fiscal
2003. Capital expenditures during fiscal 2003 of
$2.5 million were primarily for warehouse racking,
leasehold improvements and information technology upgrades. In
fiscal 2001, the Companys net cash from investing
activities was $8.2 million and was primarily provided by
the total proceeds of $11.5 million received from the sale
of discontinued operations and the Haas distribution outlets.

Cash Flows from Financing
Activities

Net cash from financing activities decreased
$13.3 million in fiscal 2003 due primarily to the
repurchase of Series D Senior Notes in fiscal 2002, offset
by proceeds from the issuance of preferred stock and additional
borrowings on the Revolver, both of which were used in part for
the Series D Senior Note repurchase. Net cash from
financing activities of $0.5 million in fiscal 2001 was
provided by proceeds received from the sale of preferred stock
reduced by payments on the Companys Revolver and long-term
debt.

Revolving Credit Facility

At December 27, 2003, the Companys
Revolver, as amended, provides for borrowings in the aggregate
principal amount of up to the lesser of $180.0 million,
less defined reserves, or the Borrowing Base, as defined in the
agreement, which is based on 85% of eligible accounts receivable
plus 50% - 65% of eligible inventories, less defined
reserves.

Borrowings under the Revolver bear interest at
(i) the Base Rate, as defined, plus the applicable margin
(1.25% as of December 27, 2003) or (ii) the Eurodollar
Rate, as defined, plus the applicable margin (2.50% as of
December 27, 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. At December 27, 2003,
borrowings under the Revolver were at a weighted average
interest rate of 4.2%.

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 as well as 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
December 27, 2003, the Company was in compliance with these
covenants, as amended. The Companys obligations under the
Revolver are guaranteed by all subsidiaries of the Company and
are secured by all inventories and accounts receivable. The
Revolver term expires in March 2005, and is extendable by the
Company and the banks for an additional five years.

On March 19, 2004, the Company executed a
Third Amended and Restated Loan and Security Agreement (the
Amended Revolver). The Borrowers to the Amended
Revolver are the Company, The Speed Merchant, Inc.,
T.O. Haas Holding Co., Inc. and T.O. Haas Tire
Company, Inc. The Amended Revolver provides for borrowings in
the aggregate principal amount of up to the lesser of
$245.0 million, less defined reserves, or the Borrowing
Base, as defined. The Amended Revolver requires the Company to
meet a fixed charge coverage test, as defined, as well as
certain covenants, which among other things, restrict the
ability of the Company to incur additional indebtedness; enter
into guarantees; make loans and investments; make capital
expenditures; declare dividends; engage in mergers,
consolidations and asset sales; enter into transactions with
affiliates; create liens and encumbrances; enter into
sale/leaseback transactions; modify material agreements; and
change the business it conducts. The Companys obligations
under the Amended Revolver are secured by all inventories and
accounts receivable. The Amended Revolver expires
February 15, 2008.

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During the second quarter 2003, the Company
entered into an interest rate swap agreement (Swap)
to manage exposure to fluctuations in interest rates. The Swap
represents a contract to exchange floating rate for fixed
interest payments periodically over the life of the agreement
without exchange of the underlying notional amount. The notional
amount of the Swap is used to measure interest to be paid or
received and does not represent the amount of exposure to credit
loss. At December 27, 2003, the Swap in place covers a
notional amount of $50.0 million of indebtedness at a fixed
interest rate of 2.14% and expires in June 2006. This Swap has
not been designated for hedge accounting treatment. Accordingly,
the Company recognizes the fair value of the Swap in the
accompanying consolidated balance sheets and any changes in the
fair value are recorded as adjustments to interest expense in
the accompanying consolidated statements of operations. The fair
value of the Swap is the estimated amount that the Company would
pay or receive to terminate the agreement at the reporting date.
As of December 27, 2003, the fair value of the Swap was an
asset of $0.2 million, and is included in other assets in
the accompanying consolidated balance sheet. As a result of the
change in fair value, $0.2 million net reductions to
interest expense were recorded for the year ended
December 27, 2003.

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.

Repurchase of Senior Notes

On March 27, 2002, the Company repurchased
$121.4 million in outstanding principal amount of the
Series D Senior Notes (Senior Notes) due in
2008 at a purchase price of $535 per $1,000 in face amount of
Senior Notes, plus accrued and unpaid interest of
$4.5 million. The Company funded the repurchase of the
Senior Notes through several debt restructuring transactions
(Restructuring Transactions). The Restructuring
Transactions consisted of (i) an amendment to the
Companys 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.

14



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##### Table of Contents



Contractual Commitments

As described in Notes 4 and 6 in the
Notes to Consolidated Financial Statements included in
Item 8 of this report, as of December 27, 2003, the
Company had certain cash obligations associated with contractual
commitments. The amounts due under these commitments are as
follows (in millions):

|                                         |                                    |       |       |       |  |      |      |      |  |      |       |       |  |            |      |      |  |   |      |      |  |   |      |      |  |   |      |      | 
|---------------------------------------- | ---------------------------------- | ----- | ----- | ----- |  | ---- | ---- | ---- |  | ---- | ----- | ----- |  | ---------- | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- |  | - | ---- | ---- | 
|                                         |                                    | Total |       | 2004  |  | 2005 |      | 2006 |  | 2007 |       | 2008  |  | Thereafter
|                                         |                                    |       |       |       |  |      |      |      |  |      |       |       |  |           
|Long-term debt (variable rate)           |                                    | $     | 124.1 |       |  | $    |     |      |  | $    | 124.1 |       |  | $          |     |      |  | $ |     |      |  | $ |     |      |  | $ |     |     
|Long-term debt (fixed rate)              |                                    |       | 44.0  |       |  |      | 2.4  |      |  |      | 12.7  |       |  |            | 0.1  |      |  |   | 0.1  |      |  |   | 28.6 |      |  |   | 0.1  |     
|Accrued interest                         |                                    |       | 1.2   |       |  |      | 1.2  |      |  |      |      |       |  |            |     |      |  |   |     |      |  |   |     |      |  |   |     |     
|Operating leases, net of sublease income |                                    |       | 121.5 |       |  |      | 23.2 |      |  |      | 18.9  |       |  |            | 14.8 |      |  |   | 13.5 |      |  |   | 11.3 |      |  |   | 39.8 |     
|Capital leases                           |                                    |       | 14.6  |       |  |      | 0.5  |      |  |      |      |       |  |            |     |      |  |   |     |      |  |   |     |      |  |   | 14.1 |     
|                                         |                                    |       |       |       |  |      |      |      |  |      |       |       |  |            |      |      |  |   |      |      |  |   |      |      |  |   |      |     
|                                         | Total contractual cash obligations |       | $     | 305.4 |  |      | $    | 27.3 |  |      | $     | 155.7 |  |            | $    | 14.9 |  |   | $    | 13.6 |  |   | $    | 39.9 |  |   | $    | 54.0 | 
|                                         |                                    |       |       |       |  |      |      |      |  |      |       |       |  |            |      |      |  |   |      |      |  |   |      |      |  |   |      |     

The Company also has certain letters of credit
outstanding at December 27, 2003 in the aggregate amount of
$5.8 million.

In addition to the above, the Company has
contingent obligations relating to the redemption of its
Series A preferred stock ($6.5 million at
December 27, 2003) and Series B preferred stock
($4.0 million at December 27, 2003). On
October 31, 2003, the Company amended and restated its
articles of incorporation to eliminate the redemption clause of
the Series C and Series D preferred stock (see
Note 11 in the Notes to Consolidated Financial Statements
included in Item 8 of this report). As a result, the
Company has no contingent obligations relating to the redemption
of its Series C preferred stock and Series D preferred
stock. The Series A and B preferred stock each contain a
provision whereby upon the early termination of the Tire Supply
Agreement (see Note 6 in the Notes to Consolidated
Financial Statements included in Item 8 of this report),
the Company shall redeem all shares of preferred stock
outstanding at a price equal to the sum of the stated value and
the applicable premium, as defined, plus all accrued and unpaid
dividends. If at any time a change of control occurs, as
defined, the Supplier may request redemption of all outstanding
shares. Otherwise, the Series A preferred stock and
Series B preferred stock are redeemable beginning in
December 2002 and June 2007, respectively. However, so long as
amounts are outstanding or commitments to lend have not been
terminated under the Revolver, the Senior Notes and other
agreements entered into in connection therewith, including any
replacement agreement which results in a greater principal
amount outstanding, or if any default or event of default has
occurred and is continuing under any such debt agreements or
would result from such payments, the Company may not make any
dividends or redemption payments in respect to the preferred
stock. In addition, as long as any shares of Series A
preferred stock or Series B preferred stock remain
outstanding, no dividends may be paid on Series C preferred
stock and Series D preferred stock. The Series B
stated value is reduced based upon tire purchase credits as
determined by the number of units purchased under the Winston
Private Brand Supply Agreement. See Note 10 in the Notes to
Consolidated Financial Statements included in Item 8 of
this report. In June 2003, the Company redeemed 500 shares of
the Series A preferred stock for $0.5 million.

Recently Issued Accounting
Pronouncements

In April 2002, the FASB issued 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 Generally Accepted Accounting
Principles (GAAP), including the elimination of
extraordinary item classification of most debt extinguishments
that was previously required under SFAS No. 4. The Company
adopted the provisions of SFAS No. 145 in the first quarter
of fiscal 2003, which required reclassification of the
Companys 2002 extraordinary gain (see Note 8 in the
Notes to Consolidated Financial Statements included in
Item 8 of this report).

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##### Table of Contents



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 (other than
employee termination benefits), 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. The Company adopted the provisions of SFAS No. 146 in
the first quarter of fiscal 2003. The adoption of this statement
had no material impact on the Companys consolidated
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 rescission 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 Company adopted the disclosure provisions of this
statement during 2002. The liability recognition provisions of
this statement were adopted in the first quarter of fiscal 2003
and had no material impact on the Companys consolidated
financial position or results of operations.

In November 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
consideration 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 Company adopted Issue
No. 02-16 in the first quarter of fiscal 2003. The adoption
had no material impact on the Companys consolidated
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.
However, appropriate disclosures about the effect on reported
net income of the Companys accounting policy with respect
to stock-based employee compensation are provided (see
Note 1 in the Notes to Consolidated Financial Statements
included in Item 8 of this report).

In April 2003, the FASB issued SFAS No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities. SFAS No. 149 amends and clarifies
financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other
contracts and for hedging activities under SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. The
Company adopted SFAS No. 149 in the third quarter of fiscal
2003. The adoption of SFAS No. 149 did not have a material
impact on the Companys consolidated financial position or
results of operations.

In May 2003, the FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity. SFAS
No. 150 establishes standards for how financial

16



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##### Table of Contents



instruments with characteristics of both
liabilities and equity should be measured and classified and
requires that an issuer classify a financial instrument that is
within its scope as a liability. SFAS No. 150 is effective
for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003,
except for mandatorily redeemable financial instruments of
nonpublic entities. For nonpublic entities, as defined,
mandatorily redeemable financial instruments are subject to the
provisions of SFAS No. 150 for the first fiscal period
beginning after December 15, 2003. Accordingly, the Company
is required to adopt the provisions of SFAS No. 150 in the
first quarter of fiscal 2004 and does not expect the adoption to
have a material impact on the results of operations or financial
position in the foreseeable future.


In November 2003, the EITF reached a consensus on
Issue No. 03-10, Application of EITF Issue
No. 02-16 by Resellers to Sales Incentives Offered to
Consumers by Manufacturers. Issue No. 03-10 provides
guidance on the accounting for consideration received by a
reseller in the form of a reimbursement by the vendor for
honoring the vendors sales incentives offered directly to
consumers. The transition provisions apply prospectively to
arrangements with vendors entered into or modified in fiscal
periods beginning in the Companys first fiscal quarter in
2004. The Company does not expect the adoption of Issue
No. 03-10 to have a material impact on the Companys
consolidated financial position or results of operations.

In December 2003, the Staff of the Securities and
Exchange Commission (SEC) issued Staff Accounting
Bulletin (SAB) No. 104, Revenue
Recognition, which supercedes SAB 101, Revenue
Recognition in Financial Statements. SAB 104s
primary purpose is to rescind accounting guidance contained in
SAB 101 related to multiple element revenue arrangements
and revises the SECs Revenue Recognition in
Financial Statements Frequently Asked Questions and
Answers that have been codified in Topic 13.
SAB 104 was effective immediately and did not have a
material impact on the Companys consolidated financial
reporting and disclosures.






|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7a. | Quantitative and Qualitative Disclosure
    About Market Risk.

The Companys results of operations are
exposed to changes in interest rates primarily with respect to
borrowings under the Revolver, where interest rates are tied to
the Base Rate, as defined in the agreement, or LIBOR. At
December 27, 2003, the Company had $124.1 million
outstanding under the Revolver, of which $74.1 million was
not hedged by an interest rate swap agreement and was thus
subject to exposure to interest rate changes. An increase of 1%
in such interest rate percentages would increase the annual
interest expense by $0.7 million, based on borrowings that
have not been hedged at December 27, 2003. See Note 4
in the Notes to Consolidated Financial Statements included in
Item 8 of this report for more information regarding the
Companys interest rate swap agreement.

17



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##### Table of Contents






Item 8.     Financial
Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS

|                                                                                                                                              |  |      |    | 
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                              |  | Page
|                                                                                                                                              |  |     
|American Tire Distributors, Inc. 
    Consolidated Financial Statements                                                                      |  |      |    | 
|Report of Independent Auditors                                                                                                                |  |      | 19 | 
|Consolidated Balance Sheets as of
    December 27, 2003 and December 28, 2002                                                                 |  |      | 21 | 
|Consolidated Statements of Operations for the
    fiscal years ended December 27, 2003, December 28,
    2002 and December 29, 2001           |  |      | 22 | 
|Consolidated Statements of Stockholders
    Equity for the fiscal years ended December 27, 2003,
    December 28, 2002 and December 29, 2001 |  |      | 23 | 
|Consolidated Statements of Cash Flows for the
    fiscal years ended December 27, 2003, December 28,
    2002 and December 29, 2001           |  |      | 24 | 
|Notes to Consolidated Financial Statements                                                                                                    |  |      | 25 | 

18



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##### Table of Contents



Report of Independent Auditors

To the Board of Directors and Stockholders of

American Tire Distributors, Inc. and Subsidiaries:


In our opinion, the consolidated financial
statements listed in the accompanying index present fairly, in
all material respects, the financial position of American Tire
Distributors, Inc. and subsidiaries (the Company,
formerly Heafner Tire Group, Inc.) at December 27, 2003 and
December 28, 2002, and the results of their operations and
their cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of
the Companys management; our responsibility is to express
an opinion on these financial statements based on our audit. We
conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion. The Companys consolidated financial
statements as of December 29, 2001, and for the year ended
December 29, 2001, prior to the revisions described in
Note 1 to the consolidated financial statements, were
audited by other independent accountants who have ceased
operations. Those independent accountants expressed an
unqualified opinion on those financial statements in their
report dated March 22, 2002.

As discussed in Note 1 to these consolidated
financial statements, the Company changed its accounting for
goodwill and other intangible assets in 2002.

As discussed above, the consolidated financial
statements of the Company as of December 29, 2001, and for
the year ended December 29, 2001, were audited by other
independent accountants who have ceased operations. As described
in Note 1, these financial statements have been revised to
include the transitional disclosures required by Statement of
Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets, which was adopted by the Company
as of December 30, 2001. We audited the transitional
disclosures described in Note 1. In our opinion, the
transitional disclosures for 2001 in Note 1 are
appropriate. However, we were not engaged to audit, review, or
apply any procedures to the 2001 financial statements of the
Company other than with respect to such disclosures and,
accordingly, we do not express an opinion or any other form of
assurance on the 2001 financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

March 5, 2004


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##### Table of Contents



Report of Predecessor Auditor (Arthur Andersen
LLP) on

Consolidated Financial Statements


THE FOLLOWING REPORT IS A COPY OF A REPORT
PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP (ANDERSEN). THIS REPORT
HAS NOT BEEN REISSUED BY ANDERSEN AND ANDERSEN DID NOT CONSENT
TO THE INCORPORATION BY REFERENCE OF THIS REPORT (AS INCLUDED IN
THIS FORM 10-K) INTO ANY OF THE COMPANYS REGISTRATION
STATEMENTS.

AS DISCUSSED IN NOTE 1, THE COMPANY HAS
REVISED ITS FINANCIAL STATEMENTS FOR THE YEAR ENDED
DECEMBER 29, 2001 TO INCLUDE THE TRANSITIONAL DISCLOSURES
REQUIRED BY STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 142, GOODWILL AND OTHER INTANGIBLE ASSETS.
THE ANDERSEN REPORT DOES NOT EXTEND TO THESE CHANGES. THE
REVISIONS TO THE 2001 FINANCIAL STATEMENTS RELATED TO THESE
TRANSITIONAL DISCLOSURES WERE REPORTED ON BY
PRICEWATERHOUSECOOPERS LLP, AS STATED IN THEIR REPORT APPEARING
HEREIN.

REPORT OF INDEPENDENT PUBLIC
ACCOUNTANTS

To Heafner Tire Group, Inc. and Subsidiaries:

We have audited the accompanying consolidated
balance sheets of Heafner Tire Group, Inc. (a Delaware
Corporation) and subsidiaries as of December 29, 2001*, and
the related consolidated statements of operations,
stockholders equity and cash flows for each of the three
years in the period ended December 29, 2001*. These
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial
statements referred to above present fairly, in all material
respects, the financial position of Heafner Tire Group, Inc. and
subsidiaries as of December 29, 2001*, and the results of
their operations and their cash flows for each of the three
years in the period ended December 29, 2001*, in conformity
with accounting principles generally accepted in the United
States.

Arthur Andersen LLP

Charlotte, North Carolina

March 22, 2002




---



|  |                                                                                                                                                                                                                                                                          
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | The Companys consolidated balance sheet as
    of December 29, 2001 and the consolidated statements of
    operations, changes in stockholders equity, and cash flows
    for the year ended December 31, 1999 and December 30,
    2000 are not included in this Form.

20



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##### Table of Contents



American Tire Distributors, Inc.

Consolidated Balance Sheets

(dollars in thousands, except per share
amounts)


|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |         |         |         | 
|-------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ------------ | ------- | ------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                         | December 27,               |                                            | December 28,
|                                                   |                                                                                                                         | 2003                       |                                            | 2002        
|                                                   |                                                                                                                         |                            |                                            |             
|Assets                                             |                                                                                                                         |                            |                                            |              |         |         |         |        
|Current assets:                                    |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   | Cash and cash equivalents                                                                                               |                            | $                                          | 3,326        |         |         | $       | 2,693   |        
|                                                   | Accounts receivable, net of allowance for
    doubtful accounts of $1,112 and $1,231 in 2003 and 2002,
    respectively |                            |                                            | 96,120       |         |         |         | 94,674  |        
|                                                   | Inventories                                                                                                             |                            |                                            | 174,051      |         |         |         | 156,722 |        
|                                                   | Deferred income taxes                                                                                                   |                            |                                            | 6,462        |         |         |         | 3,785   |        
|                                                   | Other current assets                                                                                                    |                            |                                            | 10,625       |         |         |         | 11,899  |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   |                                                                                                                         | Total current assets       |                                            |              | 290,584 |         |         |         | 269,773 |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|Property and equipment, net                        |                                                                                                                         |                            | 17,662                                     |              |         |         | 20,634  |        
|Goodwill, net                                      |                                                                                                                         |                            | 93,940                                     |              |         |         | 93,940  |        
|Other intangible assets, net                       |                                                                                                                         |                            | 2,238                                      |              |         |         | 3,572   |        
|Deferred income taxes                              |                                                                                                                         |                            | 8,849                                      |              |         |         | 18,440  |        
|Other assets                                       |                                                                                                                         |                            | 5,730                                      |              |         |         | 4,911   |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   |                                                                                                                         | Total assets               |                                            | $            | 419,003 |         |         | $       | 411,270 |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|Liabilities and Stockholders
    Equity           |                                                                                                                         |                            |                                            |              |         |         |         |        
|Current liabilities:                               |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   | Accounts payable                                                                                                        |                            | $                                          | 170,716      |         |         | $       | 165,409 |        
|                                                   | Accrued expenses                                                                                                        |                            |                                            | 17,952       |         |         |         | 17,993  |        
|                                                   | Current maturities of long-term debt                                                                                    |                            |                                            | 2,919        |         |         |         | 3,298   |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   |                                                                                                                         | Total current liabilities  |                                            |              | 191,587 |         |         |         | 186,700 |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|Revolving credit facility and other long-term debt |                                                                                                                         |                            | 137,044                                    |              |         |         | 149,793 |        
|Series D Senior Notes                              |                                                                                                                         |                            | 28,600                                     |              |         |         | 28,600  |        
|Capital lease obligations                          |                                                                                                                         |                            | 14,153                                     |              |         |         | 14,709  |        
|Other liabilities                                  |                                                                                                                         |                            | 4,590                                      |              |         |         | 3,944   |        
|Redeemable preferred stock (Note 10)               |                                                                                                                         |                            | 10,535                                     |              |         |         | 11,035  |        
|Commitments and contingencies (Note 6)             |                                                                                                                         |                            |                                            |              |         |         |         |        
|Stockholders equity:                              |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   | Preferred stock (Note 11)                                                                                               |                            |                                            | 50,944       |         |         |         | 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   |        
|                                                   | Note receivable from sale of stock                                                                                      |                            |                                            | (17          | )       |         |         | (17     | )      
|                                                   | Accumulated deficit                                                                                                     |                            |                                            | (42,654      | )       |         |         | (53,750 | )      
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   |                                                                                                                         | Total stockholders equity |                                            |              | 32,494  |         |         |         | 16,489  |        
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        
|                                                   |                                                                                                                         |                            | Total liabilities and stockholders equity |              | $       | 419,003 |         |         | $       | 411,270 | 
|                                                   |                                                                                                                         |                            |                                            |              |         |         |         |        

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

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##### Table of Contents



American Tire Distributors, Inc.

Consolidated Statements of
Operations

(dollars in thousands)


|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |         |  
|-------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------- | --------- | ------------ | - | ------------ | --------- | ------- | - | - | --------- | ------- | -
|                                                                                       |                                             |                          
|                                                                                       |                                             | For the Fiscal Year Ended
|                                                                                       |                                             |                          
|                                                                                       |                                             | December 27,              |           | December 28, |   | December 29,
|                                                                                       |                                             | 2003                      |           | 2002         |   | 2001        
|                                                                                       |                                             |                           |           |              |   |             
|Net sales                                                                              |                                             | $                         | 1,112,512 |              |   | $            | 1,060,394 |         |   | $ | 1,107,894 |        
|Cost of goods sold                                                                     |                                             |                           | 902,619   |              |   |              | 862,521   |         |   |   | 897,472   |        
|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |        
|                                                                                       | Gross profit                                |                           |           | 209,893      |   |              |           | 197,873 |   |   |           | 210,422 |  
|Selling, general and administrative expenses                                           |                                             |                           | 168,737   |              |   |              | 166,522   |         |   |   | 206,343   |        
|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |        
|                                                                                       | Operating income                            |                           |           | 41,156       |   |              |           | 31,351  |   |   |           | 4,079   |  
|Other income (expense):                                                                |                                             |                           |           |              |   |              |           |         |   |   |           |        
|                                                                                       | Interest expense                            |                           |           | (14,082      | ) |              |           | (18,705 | ) |   |           | (28,639 | )
|                                                                                       | Gain on repurchase of Series D Senior Notes |                           |           |             |   |              |           | 49,759  |   |   |           |        |  
|                                                                                       | Other income, net                           |                           |           | 102          |   |              |           | 288     |   |   |           | 762     |  
|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |        
|Income (loss) from continuing operations before
    income taxes                       |                                             |                           | 27,176    |              |   |              | 62,693    |         |   |   | (23,798   | )      
|Provision (benefit) for income taxes                                                   |                                             |                           | 11,089    |              |   |              | 24,783    |         |   |   | (6,243    | )      
|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |        
|Income (loss) from continuing operations                                               |                                             |                           | 16,087    |              |   |              | 37,910    |         |   |   | (17,555   | )      
|Loss from discontinued operations, net of income
    tax benefit of $57, $316 and $514 |                                             |                           | (82       | )            |   |              | (483      | )       |   |   | (769      | )      
|Loss on disposal of discontinued operations, net
    of income tax benefit of $3,606   |                                             |                           |          |              |   |              |          |         |   |   | (12,616   | )      
|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |        
|Net income (loss)                                                                      |                                             | $                         | 16,005    |              |   | $            | 37,427    |         |   | $ | (30,940   | )      
|                                                                                       |                                             |                           |           |              |   |              |           |         |   |   |           |        

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

22



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##### Table of Contents



American Tire Distributors, Inc.

Consolidated Statements of Stockholders
Equity

(dollars in thousands, except share
amounts)


|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |       |        |        |   |   |       |     |  |   |        |     |   |   |         |         |   |   |         |         |  
|-------------------------- | ---------------------------------------------------- | --------------- | ---------- | ------------ |  | ---------- | ------ | ------ |  | ---------- | --------- | ----------- | - | -------- | -- | ------- | - | ----- | ------ | ------ | - | - | ----- | --- |  | - | ------ | --- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                           |                                                      |                 |            |              |  |            |        |        |  | Notes      |           |             |   |         
|                           |                                                      | Preferred Stock |            | Class A      |  |            |        |        |  | Receivable |           |             |   |         
|                           |                                                      | (Note 11)       |            | Common Stock |  | Additional |        |        |  | From       |           |             |   |         
|                           |                                                      |                 |            |              |  | Paid-in    |        |        |  | Sale       |           | Accumulated |   |         
|                           |                                                      | Shares          |            | Amount       |  | Shares     |        | Amount |  | Capital    |           | Warrants    |   | of Stock |    | Deficit |   | Total
|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |      
|Balance, December 30, 2000 |                                                      |                 |           |              |  | $          |       |        |  |            | 5,286,917 |             |   | $        | 53 |         |   | $     | 23,981 |        |   | $ | 1,137 |     |  | $ | (1,046 | )   |   | $ | (55,114 | )       |   | $ | (30,989 | )      
|                           | Net loss                                             |                 |            |             |  |            |        |       |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | (30,940 | ) |   |         | (30,940 | )
|                           | Repurchase of common stock                           |                 |            |             |  |            |        |       |  |            |           | (175,000    | ) |          |    | (2      | ) |       |        | (1,376 | ) |   |       |    |  |   |        | 800 |   |   |         |        |   |   |         | (578    | )
|                           | Dividends on redeemable preferred stock
    Series C |                 |            |             |  |            |        |       |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | (1,081  | ) |   |         | (1,081  | )
|                           | Other                                                |                 |            |             |  |            |        |       |  |            |           | 25,000      |   |          |    |        |   |       |        | 146    |   |   |       |    |  |   |        | (94 | ) |   |         |        |   |   |         | 52      |  
|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |       |        |        |   |   |       |     |  |   |        |     |   |   |         |         |   |   |         |        
|Balance, December 29, 2001 |                                                      |                 |           |              |  |            |       |        |  |            | 5,136,917 |             |   |          | 51 |         |   |       | 22,751 |        |   |   | 1,137 |     |  |   | (340   | )   |   |   | (87,135 | )       |   |   | (63,536 | )      
|                           | Net income                                           |                 |            |             |  |            |        |       |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | 37,427  |   |   |         | 37,427  |  
|                           | Repurchase of common stock                           |                 |            |             |  |            |        |       |  |            |           | (50,000     | ) |          |    |        |   |       |        | (363   | ) |   |       |    |  |   |        | 323 |   |   |         |        |   |   |         | (40     | )
|                           | Issuance of warrants                                 |                 |            |             |  |            |        |       |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       | 645 |  |   |        |    |   |   |         |        |   |   |         | 645     |  
|                           | Preferred stock Series C                             |                 |            | 1,333,334    |  |            |        | 13,080 |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         |        |   |   |         | 13,080  |  
|                           | Preferred stock Series D                             |                 |            | 9,637,592    |  |            |        | 28,913 |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         |        |   |   |         | 28,913  |  
|                           | Dividends on preferred stock Series C                |                 |            |             |  |            |        | 1,440  |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | (1,440  | ) |   |         |        |  
|                           | Dividends on preferred stock Series D                |                 |            |             |  |            |        | 2,602  |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | (2,602  | ) |   |         |        |  
|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |       |        |        |   |   |       |     |  |   |        |     |   |   |         |         |   |   |         |        
|Balance, December 28, 2002 |                                                      |                 | 10,970,926 |              |  |            | 46,035 |        |  |            | 5,086,917 |             |   |          | 51 |         |   |       | 22,388 |        |   |   | 1,782 |     |  |   | (17    | )   |   |   | (53,750 | )       |   |   | 16,489  |        
|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |       |        |        |   |   |       |     |  |   |        |     |   |   |         |         |   |   |         |        
|                           | Net income                                           |                 |            |             |  |            |        |       |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | 16,005  |   |   |         | 16,005  |  
|                           | Dividends on preferred stock Series C                |                 |            |             |  |            |        | 1,440  |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | (1,440  | ) |   |         |        |  
|                           | Dividends on preferred stock Series D                |                 |            |             |  |            |        | 3,469  |  |            |           |            |   |          |    |        |   |       |        |       |   |   |       |    |  |   |        |    |   |   |         | (3,469  | ) |   |         |        |  
|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |       |        |        |   |   |       |     |  |   |        |     |   |   |         |         |   |   |         |        
|Balance, December 27, 2003 |                                                      |                 | 10,970,926 |              |  | $          | 50,944 |        |  |            | 5,086,917 |             |   | $        | 51 |         |   | $     | 22,388 |        |   | $ | 1,782 |     |  | $ | (17    | )   |   | $ | (42,654 | )       |   | $ | 32,494  |        
|                           |                                                      |                 |            |              |  |            |        |        |  |            |           |             |   |          |    |         |   |       |        |        |   |   |       |     |  |   |        |     |   |   |         |         |   |   |         |        

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

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##### Table of Contents



American Tire Distributors, Inc.

Consolidated Statements of Cash
Flows

(dollars in thousands)


|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |         |         |        |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------ | ------- | ------------ | ------ | ------- | ------- | ------- | ----- | ------- | ------- | ------ | -
|                                                         |                                                                                                                   |                                                                     
|                                                         |                                                                                                                   | For the Fiscal Year Ended                                           
|                                                         |                                                                                                                   |                                                                     
|                                                         |                                                                                                                   | December 27,                                                         |                                                                    | December 28, |         | December 29,
|                                                         |                                                                                                                   | 2003                                                                 |                                                                    | 2002         |         | 2001        
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |             
|Cash flows from operating
    activities:                |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         | Net income (loss)                                                                                                 |                                                                      | $                                                                  | 16,005       |         |              | $      | 37,427  |         |         | $     | (30,940 | )      
|                                                         | Adjustments to reconcile net income (loss) to net
    cash provided by (used in) continuing operating activities: |                                                                      |                                                                    |              |         |              |        |         |         |         |       |         |        
|                                                         |                                                                                                                   | Loss from discontinued operations, net of income
    taxes           |                                                                    |              | 82      |              |        |         | 483     |         |       |         | 769     |       
|                                                         |                                                                                                                   | Loss on disposal of discontinued operations, net
    of income taxes |                                                                    |              |        |              |        |         |        |         |       |         | 12,616  |       
|                                                         |                                                                                                                   | Gain on repurchase of Series D Senior Notes                          |                                                                    |              |        |              |        |         | (49,759 | )       |       |         |        |       
|                                                         |                                                                                                                   | Depreciation and amortization of goodwill and
    other intangibles  |                                                                    |              | 6,957   |              |        |         | 8,610   |         |       |         | 17,532  |       
|                                                         |                                                                                                                   | Amortization of other assets                                         |                                                                    |              | 1,208   |              |        |         | 1,221   |         |       |         | 1,247   |       
|                                                         |                                                                                                                   | Deferred income taxes                                                |                                                                    |              | 6,915   |              |        |         | 22,570  |         |       |         | (6,809  | )     
|                                                         | Change in assets and liabilities:                                                                                 |                                                                      |                                                                    |              |         |              |        |         |         |         |       |         |        
|                                                         |                                                                                                                   | Accounts receivable, net                                             |                                                                    |              | (1,446  | )            |        |         | (2,751  | )       |       |         | 7,376   |       
|                                                         |                                                                                                                   | Inventories                                                          |                                                                    |              | (17,329 | )            |        |         | (2,510  | )       |       |         | 28,016  |       
|                                                         |                                                                                                                   | Other current assets                                                 |                                                                    |              | 1,274   |              |        |         | (1,692  | )       |       |         | (3,014  | )     
|                                                         |                                                                                                                   | Accounts payable and accrued expenses                                |                                                                    |              | 5,317   |              |        |         | 5,735   |         |       |         | (30,204 | )     
|                                                         |                                                                                                                   | Other                                                                |                                                                    |              | (1,326  | )            |        |         | (5,827  | )       |       |         | 1,645   |       
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         |                                                                                                                   |                                                                      | Net cash provided by (used in) continuing
    operating activities |              |         | 17,657       |        |         |         | 13,507  |       |         |         | (1,766 | )
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         |                                                                                                                   |                                                                      | Net cash used in discontinued operations                           |              |         |             |        |         |         |        |       |         |         | (6,069 | )
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|Cash flows from investing
    activities:                |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         | Net proceeds from sale of discontinued operations                                                                 |                                                                      |                                                                    |             |         |              |        |        |         |         |       | 9,111   |        
|                                                         | Net proceeds from sale of Haas distribution
    outlets                                                           |                                                                      |                                                                    |             |         |              |        |        |         |         |       | 2,420   |        
|                                                         | Net proceeds from sale-leaseback transaction                                                                      |                                                                      |                                                                    |             |         |              |        | 13,285  |         |         |       |        |        
|                                                         | Purchase of property and equipment                                                                                |                                                                      |                                                                    | (2,491       | )       |              |        | (2,059  | )       |         |       | (6,060  | )      
|                                                         | Proceeds from sale of property and equipment                                                                      |                                                                      |                                                                    | 612          |         |              |        | 2,187   |         |         |       | 2,712   |        
|                                                         | Other                                                                                                             |                                                                      |                                                                    | (50          | )       |              |        |        |         |         |       |        |        
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         |                                                                                                                   |                                                                      | Net cash provided by (used in) investing
    activities            |              |         | (1,929       | )      |         |         | 13,413  |       |         |         | 8,183  |  
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|Cash flows from financing
    activities:                |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         | Net proceeds from (repayments of) revolving
    credit facility and other long-term debt                          |                                                                      |                                                                    | (10,939      | )       |              |        | 13,960  |         |         |       | (8,947  | )      
|                                                         | Repurchase of Series D Senior Notes                                                                               |                                                                      |                                                                    |             |         |              |        | (64,959 | )       |         |       |        |        
|                                                         | Proceeds received from issuance of preferred stock                                                                |                                                                      |                                                                    |             |         |              |        | 28,913  |         |         |       | 12,000  |        
|                                                         | Principal payments on long-term debt                                                                              |                                                                      |                                                                    | (3,656       | )       |              |        | (6,232  | )       |         |       | (1,350  | )      
|                                                         | Common stock repurchase                                                                                           |                                                                      |                                                                    |             |         |              |        | (40     | )       |         |       | (578    | )      
|                                                         | Series A preferred stock redemption                                                                               |                                                                      |                                                                    | (500         | )       |              |        |        |         |         |       |        |        
|                                                         | Other                                                                                                             |                                                                      |                                                                    |             |         |              |        |        |         |         |       | (669    | )      
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         |                                                                                                                   |                                                                      | Net cash provided by (used in) financing
    activities            |              |         | (15,095      | )      |         |         | (28,358 | )     |         |         | 456    |  
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|Net increase (decrease) in cash and cash
    equivalents |                                                                                                                   |                                                                      | 633                                                                |              |         |              | (1,438 | )       |         |         | 804   |        
|Cash and cash equivalents, beginning of year             |                                                                                                                   |                                                                      | 2,693                                                              |              |         |              | 4,131  |         |         |         | 3,327 |        
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|Cash and cash equivalents, end of year                   |                                                                                                                   | $                                                                    | 3,326                                                              |              |         | $            | 2,693  |         |         | $       | 4,131 |        
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|Supplemental disclosures of cash flow
    information:   |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         | Cash payments for interest                                                                                        |                                                                      | $                                                                  | 13,345       |         |              | $      | 18,234  |         |         | $     | 26,551  |        
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        
|                                                         | Cash payments for taxes, net                                                                                      |                                                                      | $                                                                  | 2,592        |         |              | $      | 3,230   |         |         | $     | 498     |        
|                                                         |                                                                                                                   |                                                                      |                                                                    |              |         |              |        |         |         |         |       |        

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

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##### Table of Contents



American Tire Distributors, Inc.

Notes to Consolidated Financial
Statements



|   |                                                            
|-- | -----------------------------------------------------------
|1. | Nature of Business and Significant Accounting
    Policies:

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 24, 1999, Charlesbank Equity Fund IV, L.P.
(Charlesbank), a Massachusetts limited partnership,
purchased approximately 97.8% of the Companys then issued
and outstanding shares of Class A common stock and
approximately 96.8% of its then issued and outstanding shares of
Class B common stock for a purchase price of approximately
$44.7 million. On August 20, 1999, the Company
reincorporated in Delaware (previously incorporated in North
Carolina) and simultaneously changed its name from The J.H.
Heafner Company, Inc. to Heafner Tire Group, Inc. On
May 30, 2002, the Company changed its name from Heafner
Tire Group, Inc. to American Tire Distributors, Inc.

The Company is an independent distributor of
tires, custom wheels, automotive service equipment and related
products to the replacement market. The Companys customer
base is comprised primarily of independent tire dealers with
other customers representing national retail chains, service
stations and other automotive dealer and repair facilities. The
Company operates as one business segment with 60 distribution
centers serving all or parts of 35 states located in the
Southeastern and Mid-Atlantic regions, portions of the
Northeast, Midwest and the West Coast of the United States.

Principles of Consolidation

The accompanying consolidated financial
statements include the accounts of American Tire Distributors,
Inc. and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.

Reclassifications

Certain prior period amounts have been
reclassified to conform to the current period presentation.

Fiscal Year

The Companys fiscal year ends on the
Saturday closest to each December 31. The fiscal years
ended December 27, 2003, December 28, 2002 and
December 29, 2001 each included 52 weeks.

Cash and Cash Equivalents

The Company includes cash, demand deposits and
highly liquid investments with initial maturities of less than
three months in cash and cash equivalents in its consolidated
financial statements.

Revenue Recognition and Concentration of
Credit Risk

The Company recognizes revenue when delivery is
made to the customer. In the normal course of business, the
Company extends credit, on open accounts, to its customers after
performing a credit analysis based on a number of financial and
other criteria. The Company performs ongoing credit evaluations
of its customers financial condition and does not normally
require collateral; however, letters of credit and other
security are occasionally required for certain new and existing
customers. Allowances are maintained for estimated potential
credit losses.

The Company permits customers from time to time
to return certain products but there is no contractual right of
return. The Company continuously monitors and tracks such
returns and records an estimate of such future returns, based on
historical experience and actual returns experienced for a
specified time following the end of the period.

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

Fair Value of Financial
Instruments

Carrying value approximates fair value as it
relates to cash and cash equivalents, accounts receivable and
accounts payable due to the short-term maturity of those
instruments. The fair value of the Companys long-term debt
approximates its carrying value.

Inventories

Inventories consist primarily of automotive
tires, wheels and accessories and are valued at the lower of
cost, determined on the first-in, first-out (FIFO) method, or
market. The Company performs periodic assessments to determine
the existence of obsolete, slow-moving and non-saleable
inventories and records necessary provisions to reduce such
inventories to net realizable value. Terms with a majority of
the Companys tire vendors allow return of tire products,
within limitations, specified in their supply agreements. All of
the Companys inventories are held as collateral under the
revolving credit facility (Revolver).

Property and Equipment

Property and equipment are recorded at cost and
depreciation, which includes the amortization of assets recorded
under capital lease obligations, is determined by using a
combination of the straight-line method and declining-balance
method based on the following estimated useful lives:

|                        |  |  |              | 
|----------------------- |  |  | ------------ | 
|Buildings               |  |  | 20-30  years | 
|Machinery and equipment |  |  | 3-10 years   | 
|Furniture and fixtures  |  |  | 3-7 years    | 
|Vehicles and other      |  |  | 3-5 years    | 

Leasehold improvements are amortized over the
lesser of the lease term or the estimated useful lives of the
improvements. Expenditures for repairs and maintenance are
charged to expense as incurred. Renewals or improvements of
significant items are capitalized. When assets are sold or
otherwise disposed of, the cost and related accumulated
depreciation or amortization is removed from the respective
accounts and any resulting gain or loss is recognized.

Deferred Financing Costs

Costs incurred in connection with financing
activities (Note 4) are capitalized and amortized on a
straight-line basis and charged to interest expense over the
life of the associated debt in the accompanying consolidated
statements of operations. The unamortized balance of these
deferred costs included in the accompanying consolidated balance
sheets was $2.5 million and $3.7 million at
December 27, 2003 and December 28, 2002, respectively.
In connection with the repurchase of $121.4 million in
outstanding principal amount of the Series D Senior Notes
(Note 8), the Company wrote off approximately
$4.0 million of unamortized deferred financing costs
associated with the Series D Senior Notes. The charge has
been included as an offset to the gain on repurchase of
Series D Senior Notes in the accompanying consolidated
statements of operations in fiscal 2002.

Goodwill and Other Intangible
Assets

In July 2001, the Financial Accounting Standards
Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 141
Business Combinations and SFAS No. 142
Goodwill and Other Intangible Assets. SFAS
No. 141 requires that the purchase method of accounting be
used for all business combinations completed after June 30,
2001. This statement also specifies that intangible assets
acquired in a purchase method business combination must meet
certain criteria to be recognized and reported apart from
goodwill. SFAS No. 142 revises the accounting for purchased
goodwill and intangible assets. Under

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

SFAS No. 142, goodwill and intangible assets
with indefinite lives are no longer amortized, but are tested
for impairment annually and more frequently in the event of an
impairment indicator. SFAS No. 142 also requires that
intangible assets with definite useful lives be amortized over
their respective estimated useful lives, and reviewed for
impairment at least annually. The Company adopted the provisions
of SFAS No. 142 in the first quarter of fiscal 2002.

The provisions of SFAS No. 142 require that
a two-step test be performed to assess goodwill for impairment.
First, the fair value of each reporting unit is compared to its
carrying value. If the fair value exceeds the carrying value,
goodwill is not impaired and no further testing is performed.
The second step is performed if the carrying value exceeds the
fair value. The implied fair value of the reporting units
goodwill must be determined and compared to the carrying value
of the goodwill. If the carrying value of a reporting
units goodwill exceeds its implied fair value, an
impairment loss equal to the difference will be recorded. In
accordance with SFAS No. 142, the Company performed the
required annual impairment test in fiscal 2003 and fiscal 2002
and determined that no goodwill impairment existed.

Goodwill represents the excess of the purchase
price over the fair value of the net assets of the acquired
entities. Prior to adopting SFAS No. 142, goodwill was
amortized on a straight-line basis over a period of
15 years. Although no amortization expense was recognized
in fiscal 2003 and 2002, the accompanying consolidated
statements of operations include amortization of goodwill
applicable to continuing operations of $7.5 million in
fiscal 2001. Accumulated amortization of goodwill at
December 27, 2003 and December 28, 2002 was
$22.6 million.

The following table illustrates the comparable
adjusted net income (loss) for the fiscal years ended
December 27, 2003, December 28, 2002 and
December 29, 2001, respectively (in thousands):

|                                                                                  |                            |              |        |              |  |              |        |        |  |   |         |         |  
|--------------------------------------------------------------------------------- | -------------------------- | ------------ | ------ | ------------ |  | ------------ | ------ | ------ |  | - | ------- | ------- | -
|                                                                                  |                            | December 27, |        | December 28, |  | December 29,
|                                                                                  |                            | 2003         |        | 2002         |  | 2001        
|                                                                                  |                            |              |        |              |  |             
|Reported net income (loss)                                                        |                            | $            | 16,005 |              |  | $            | 37,427 |        |  | $ | (30,940 | )      
|Add back: goodwill amortization, net of income
    tax benefit of $0, $0 and $465 |                            |              |       |              |  |              |       |        |  |   | 7,083   |        
|                                                                                  |                            |              |        |              |  |              |        |        |  |   |         |        
|                                                                                  | Adjusted net income (loss) |              | $      | 16,005       |  |              | $      | 37,427 |  |   | $       | (23,857 | )
|                                                                                  |                            |              |        |              |  |              |        |        |  |   |         |        

Other intangible assets, which represent
noncompete agreements and other intangibles, are being amortized
on a straight-line basis over periods ranging from two to seven
years. Amortization of other intangibles applicable to
continuing operations was $1.4 million, $3.2 million
and $3.0 million in fiscal 2003, 2002 and 2001,
respectively. Accumulated amortization at December 27, 2003
and December 28, 2002 was $2.0 million and
$12.9 million, respectively. In fiscal 2003, the Company
wrote off fully amortized balances of $12.2 million
relating to intangible assets.

Shipping and Handling Costs

Outbound shipping and handling costs are
classified as selling, general and administrative expenses in
the accompanying consolidated statements of operations. Such
expenses totaled $67.5 million, $65.0 million and
$62.2 million for the years ended December 27, 2003,
December 28, 2002 and December 29, 2001, respectively.

Vendor Rebates

The Company receives rebates from its vendors
under a number of different programs. These rebates are recorded
as a reduction to cost of goods sold in accordance with Emerging
Issues Task Force (EITF) Issue No. 02-16,
Accounting by a Customer (Including a Reseller) for Cash
Considerations Received from a Vendor.

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

Cooperative Advertising and Marketing
Programs

The Company participates in cooperative
advertising and marketing programs (co-op) with its
vendors. Co-op funds used to offset specific costs in selling
the vendors products are reported as a reduction of
selling, general and administrative expenses at the time the
qualifying advertising and marketing expenses are incurred.
Co-op funds not used to offset specific costs and excess co-op
funds are used to offset cost of goods sold in accordance with
EITF Issue No. 02-16.

Income Taxes

The Company accounts for its income taxes under
the provisions of SFAS No. 109 Accounting for Income
Taxes. This statement requires the use of the asset and
liability method of accounting for deferred income taxes.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax reporting purposes, at the applicable
enacted tax rates.

Derivative Instruments and Hedging
Activities

In first quarter 2001, the Company adopted SFAS
No. 133, Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS No. 137, SFAS
No. 138 and SFAS No. 149. This statement establishes
accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as
either an asset or liability measured at its fair value. This
statement requires that changes in the derivatives fair
value be recognized currently in earnings unless specific hedge
accounting criteria are met and that a company must formally
document, designate and assess the effectiveness of transactions
that receive hedge accounting treatment. The adoption of this
statement had no material impact on the Companys financial
position and results of operations.

Stock Options

As permitted by SFAS No. 123,
Accounting For Stock-Based Compensation, the Company
accounts for stock option grants in accordance with Accounting
Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB No. 25) and its
related interpretations. Pursuant to APB No. 25,
compensation expense is recognized for financial reporting
purposes using the intrinsic value method when it becomes
probable that the options will be exercisable. 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 measurement date. Accordingly, no
compensation expense has been recorded in the consolidated
statements of operations as the exercise price of all stock
options represented fair value of the underlying common stock at
the date of grant.

SFAS No. 123 established an alternative
method of expense recognition for stock-based compensation
awards to employees based on fair values. The Company has
elected not to adopt SFAS No. 123 for expense recognition
purposes, but is required to provide certain pro forma
disclosures, which is presented below.

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

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):

|                                                                                                                                        |  |              |        |              |  |              |        |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------ | ------------ |  | ------------ | ------ | - |  | - | ------- | -
|                                                                                                                                        |  |             
|                                                                                                                                        |  | Year Ended  
|                                                                                                                                        |  |             
|                                                                                                                                        |  | December 27, |        | December 28, |  | December 29,
|                                                                                                                                        |  | 2003         |        | 2002         |  | 2001        
|                                                                                                                                        |  |              |        |              |  |             
|Net income (loss), as reported                                                                                                          |  | $            | 16,005 |              |  | $            | 37,427 |   |  | $ | (30,940 | )
|Deduct: Total stock-based employee compensation
    expense determined under the fair value based method for all
    awards, net of tax |  |              | (371   | )            |  |              | (440   | ) |  |   | (525    | )
|                                                                                                                                        |  |              |        |              |  |              |        |   |  |   |         |  
|Pro forma net income (loss)                                                                                                             |  | $            | 15,634 |              |  | $            | 36,987 |   |  | $ | (31,465 | )
|                                                                                                                                        |  |              |        |              |  |              |        |   |  |   |         |  

The weighted average fair value of options
granted during fiscal 2003, 2002 and 2001 estimated on the date
of grant using the Black-Scholes option pricing model was $1.00,
$0.55 and $4.11, respectively. The fair value of options granted
in fiscal 2003, 2002 and 2001 were determined using the
following assumptions: a risk-free interest rate of 4.05%, 4.93%
and 6.10%, respectively, no dividend yield, expected life of
10 years which equals the lives of the grants, and no
expected volatility.

Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Recently Issued Accounting
Pronouncements

In April 2002, the FASB issued 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 most debt
extinguishments that was previously required under SFAS
No. 4. The Company adopted the provisions of SFAS
No. 145 in the first quarter of fiscal 2003, which required
reclassification of the Companys 2002 extraordinary gain
(Note 8).

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 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 No. 94-3, a liability for an exit cost (other
than employee termination benefits), 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. The Company adopted the provisions of SFAS No. 146 in
the first quarter of fiscal 2003. The adoption of this statement
had no material impact on the Companys consolidated
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 rescission 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

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

recognition and measurement of a liability are
applicable on a prospective basis for guarantees issued or
modified subsequent to December 31, 2002. The Company
adopted the disclosure provisions of this statement during 2002.
The liability recognition provisions of this statement were
adopted in the first quarter of fiscal 2003 and had no material
impact on the Companys consolidated financial position or
results of operations.

In November 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
consideration 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 Company adopted Issue
No. 02-16 in the first quarter of fiscal 2003. The adoption
had no material impact on the Companys consolidated
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. However, appropriate disclosures about
the effect on reported net income of the Companys
accounting policy with respect to stock-based employee
compensation are provided (see Stock Options above).

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities.
SFAS No. 149 amends and clarifies financial accounting
and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003 and
for hedging relationships designated after June 30, 2003.
The Company adopted SFAS No. 149 in the third quarter
of fiscal 2003. The adoption of SFAS No. 149 did not
have a material impact on the Companys consolidated
financial position or results of operations.

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and
Equity. SFAS No. 150 establishes standards for
how financial instruments with characteristics of both
liabilities and equity should be measured and classified and
requires that an issuer classify a financial instrument that is
within its scope as a liability. SFAS No. 150 is
effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after
June 15, 2003, except for mandatorily redeemable financial
instruments of nonpublic entities. For nonpublic entities, as
defined, mandatorily redeemable financial instruments are
subject to the provisions of SFAS No. 150 for the
first fiscal period beginning after December 15, 2003.
Accordingly, the Company is required to adopt the provisions of
SFAS No. 150 in the first quarter of fiscal 2004 and
does not expect the adoption to have a material impact on the
results of operations or financial position in the foreseeable
future.

In November 2003, the EITF reached a consensus on
Issue No. 03-10, Application of EITF Issue
No. 02-16 by Resellers to Sales Incentives Offered to
Consumers by Manufacturers. Issue No. 03-10 provides
guidance on the accounting for consideration received by a
reseller in the form of a reimbursement by the vendor for
honoring the vendors sales incentives offered directly to
consumers. The transition provisions apply prospectively to
arrangements with vendors entered into or modified in fiscal
periods beginning in the

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

Companys first fiscal quarter in 2004. The
Company does not expect the adoption of Issue No. 03-10 to
have a material impact on the Companys consolidated
financial position or results of operations.

In December 2003, the Staff of the Securities and
Exchange Commission (SEC) issued Staff Accounting
Bulletin (SAB) No. 104, Revenue
Recognition, which supercedes SAB 101, Revenue
Recognition in Financial Statements. SAB 104s
primary purpose is to rescind accounting guidance contained in
SAB 101 related to multiple element revenue arrangements
and revises the SECs Revenue Recognition in
Financial Statements Frequently Asked Questions and
Answers that have been codified in Topic 13.
SAB 104 was effective immediately and did not have a
material impact on the Companys consolidated financial
reporting and disclosures.

2.     Income
Taxes:

The following summarizes the components of the
Companys income tax provision (benefit) on income (loss)
from continuing operations for fiscal 2003, 2002 and 2001 (in
thousands):

|          |                              |                           |       |              |        |              |        |        |        |  |        |        |        |  
|--------- | ---------------------------- | ------------------------- | ----- | ------------ | ------ | ------------ | ------ | ------ | ------ |  | ------ | ------ | ------ | -
|          |                              |                          
|          |                              | Year Ended               
|          |                              |                          
|          |                              | December 27,              |       | December 28, |        | December 29,
|          |                              | 2003                      |       | 2002         |        | 2001        
|          |                              |                           |       |              |        |             
|Federal  |                              |                           |       |              |        |              |        |        |        |  |        |       
|          | Current provision (benefit)  |                           | $     | 2,318        |        |              | $      | (40    | )      |  | $      |       |       
|          | Deferred provision (benefit) |                           |       | 6,776        |        |              |        | 21,499 |        |  |        | (5,042 | )     
|          |                              |                           |       |              |        |              |        |        |        |  |        |       
|          |                              |                           | 9,094 |              |        |              | 21,459 |        |        |  | (5,042 | )     
|State    |                              |                           |       |              |        |              |        |        |        |  |        |       
|          | Current provision            |                           |       | 1,821        |        |              |        | 2,778  |        |  |        | 566    |       
|          | Deferred provision (benefit) |                           |       | 174          |        |              |        | 546    |        |  |        | (1,767 | )     
|          |                              |                           |       |              |        |              |        |        |        |  |        |       
|          |                              |                           | 1,995 |              |        |              | 3,324  |        |        |  | (1,201 | )     
|          |                              |                           |       |              |        |              |        |        |        |  |        |       
|          |                              | Total provision (benefit) |       | $            | 11,089 |              |        | $      | 24,783 |  |        | $      | (6,243 | )
|          |                              |                           |       |              |        |              |        |        |        |  |        |       

Actual income tax expense differs from the amount
computed by applying the statutory federal income tax rate of
35% in fiscal 2003, 2002 and 2001 as a result of the following
(in thousands):

|                                                                          |  |              |        |              |  |              |        |  |  |   |        |  
|------------------------------------------------------------------------- |  | ------------ | ------ | ------------ |  | ------------ | ------ |  |  | - | ------ | -
|                                                                          |  |             
|                                                                          |  | Year Ended  
|                                                                          |  |             
|                                                                          |  | December 27, |        | December 28, |  | December 29,
|                                                                          |  | 2003         |        | 2002         |  | 2001        
|                                                                          |  |              |        |              |  |             
|Income tax provision (benefit) computed at the
    federal statutory rate |  | $            | 9,512  |              |  | $            | 21,943 |  |  | $ | (8,329 | )
|Amortization of nondeductible goodwill                                    |  |              |       |              |  |              |       |  |  |   | 2,286  |  
|State income taxes, net of federal income tax
    benefit                 |  |              | 1,297  |              |  |              | 2,636  |  |  |   | (780   | )
|Other                                                                     |  |              | 280    |              |  |              | 204    |  |  |   | 580    |  
|                                                                          |  |              |        |              |  |              |        |  |  |   |        |  
|Income tax provision (benefit)                                            |  | $            | 11,089 |              |  | $            | 24,783 |  |  | $ | (6,243 | )
|                                                                          |  |              |        |              |  |              |        |  |  |   |        |  

Deferred income taxes reflect the net tax effects
of (a) temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and
the amounts used for income tax reporting purposes and
(b) operating loss and tax credit carry-forwards. The tax
effects of the significant temporary

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

differences which comprise deferred tax assets
and liabilities at December 27, 2003 and December 28,
2002, are as follows (in thousands):

|                           |                                                             |                                |                         |              |        |        |   |        |        |        | 
|-------------------------- | ----------------------------------------------------------- | ------------------------------ | ----------------------- | ------------ | ------ | ------ | - | ------ | ------ | ------ | 
|                           |                                                             | December 27,                   |                         | December 28,
|                           |                                                             | 2003                           |                         | 2002        
|                           |                                                             |                                |                         |             
|Deferred tax assets       |                                                             |                                |                         |              |        |        |   |       
|                           | Net operating loss carry-forwards                           |                                | $                       | 2,603        |        |        | $ | 11,134 |       
|                           | Accrued expenses and liabilities                            |                                |                         | 5,392        |        |        |   | 5,160  |       
|                           | Employee benefits                                           |                                |                         | 2,238        |        |        |   | 1,735  |       
|                           | Inventory cost capitalization                               |                                |                         | 2,054        |        |        |   | 1,717  |       
|                           | Depreciation, amortization and write-off of
    intangibles |                                |                         | 1,516        |        |        |   | 1,850  |       
|                           | Other                                                       |                                |                         | 2,909        |        |        |   | 2,456  |       
|                           | Valuation allowance                                         |                                |                         | (1,044       | )      |        |   | (1,044 | )     
|                           |                                                             |                                |                         |              |        |        |   |       
|                           |                                                             | Gross deferred tax assets      |                         |              | 15,668 |        |   |        | 23,008 |       
|                           |                                                             |                                |                         |              |        |        |   |       
|Deferred tax liabilities  |                                                             |                                |                         |              |        |        |   |       
|                           | Other                                                       |                                |                         | (357         | )      |        |   | (783   | )     
|                           |                                                             |                                |                         |              |        |        |   |       
|                           |                                                             | Gross deferred tax liabilities |                         |              | (357   | )      |   |        | (783   | )     
|                           |                                                             |                                |                         |              |        |        |   |       
|                           |                                                             |                                | Net deferred tax assets |              | $      | 15,311 |   |        | $      | 22,225 | 
|                           |                                                             |                                |                         |              |        |        |   |       

The above amounts have been classified in the
accompanying consolidated balance sheets as follows (in
thousands):

|                      |            |              |        |              |  |   |        |        | 
|--------------------- | ---------- | ------------ | ------ | ------------ |  | - | ------ | ------ | 
|                      |            | December 27, |        | December 28,
|                      |            | 2003         |        | 2002        
|                      |            |              |        |             
|Deferred tax assets  |            |              |        |              |  |   |        |       
|                      | Current    |              | $      | 6,462        |  |   | $      | 3,785  | 
|                      | Noncurrent |              |        | 8,849        |  |   |        | 18,440 | 
|                      |            |              |        |              |  |   |        |       
|                      |            | $            | 15,311 |              |  | $ | 22,225 |       
|                      |            |              |        |              |  |   |        |       

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
carry-forwards (NOLs). Accordingly, a valuation
allowance of $1.0 million was provided at December 27,
2003, unchanged from December 28, 2002. The valuation
allowance relates to certain deferred tax assets that in
managements assessment may not be realized due to the sale
of Winston Tire Company (Winston) in May 2001. This
evaluation considered the historical and long-term expected
profitability of the Companys continuing operations, the
sale of the Companys retail segment, the efficiencies
gained from efforts initiated in 2001 to streamline operations
and the gain on repurchase of the Series D Senior Notes as
well as the reduction in interest expense relating to the
repurchase of the Companys Series D Senior Notes. The
Companys current year operations result in taxable income
in fiscal 2003 and the Company is forecasting taxable income in
fiscal 2004 and the foreseeable future. The Company believes
that taxable income generated in future years will be sufficient
to utilize the remaining net deferred tax assets. The
Companys ability to generate future taxable income is
dependent on numerous factors including general economic
conditions, the state of the replacement tire market and other
factors beyond managements control. Therefore, there can
be no assurance that the Company will meet its expectation of
future taxable income. Changes in expected future income could
lead to an additional valuation allowance against deferred tax
assets.

Future sales of common stock by the Company or
its principal stockholders, or changes in the composition of its
principal stockholders, could constitute a change in
control that would result in annual limitations on the
Companys use of its NOLs and unused tax credits.
Management cannot predict whether such a change in
control will occur. If such a change in
control were to occur, the resulting annual

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

limitations on the use of NOLs and tax credits
would depend on the value of the equity of the Company and the
amount of built-in gain or built-in loss
in the Companys assets at the time of the change in
control, which cannot be known at this time.

3.     Property and
Equipment:

The following table represents the Companys
property and equipment at December 27, 2003 and
December 28, 2002 (in thousands):

|                                     |                              |              |         |              |  |   |         |        | 
|------------------------------------ | ---------------------------- | ------------ | ------- | ------------ |  | - | ------- | ------ | 
|                                     |                              | December 27, |         | December 28,
|                                     |                              | 2003         |         | 2002        
|                                     |                              |              |         |             
|Land                                 |                              | $            | 1,553   |              |  | $ | 1,603   |       
|Buildings and leasehold improvements |                              |              | 15,524  |              |  |   | 15,598  |       
|Machinery and equipment              |                              |              | 11,248  |              |  |   | 11,199  |       
|Furniture and fixtures               |                              |              | 10,237  |              |  |   | 10,420  |       
|Vehicles and other                   |                              |              | 1,259   |              |  |   | 1,150   |       
|                                     |                              |              |         |              |  |   |         |       
|                                     | Total property and equipment |              |         | 39,821       |  |   |         | 39,970 | 
|Less  Accumulated depreciation      |                              |              | (22,159 | )            |  |   | (19,336 | )     
|                                     |                              |              |         |              |  |   |         |       
|                                     | Property and equipment, net  |              | $       | 17,662       |  |   | $       | 20,634 | 
|                                     |                              |              |         |              |  |   |         |       

Depreciation expense for the years ended
December 27, 2003, December 28, 2002 and
December 29, 2001 was $5.6 million, $5.4 million
and $7.0 million, respectively.

4.     Long-term Debt
and Other Financing Arrangements:

Long-term Debt

The following table represents the Companys
long-term debt at December 27, 2003 and December 28,
2002 (in thousands):

|                                                   |  |              |         |              |  |   |         |  
|-------------------------------------------------- |  | ------------ | ------- | ------------ |  | - | ------- | -
|                                                   |  | December 27, |         | December 28,
|                                                   |  | 2003         |         | 2002        
|                                                   |  |              |         |             
|Revolving credit facility and other long-term debt |  | $            | 139,406 |              |  | $ | 152,535 |  
|Series D Senior Notes                              |  |              | 28,600  |              |  |   | 28,600  |  
|Capital lease obligations                          |  |              | 14,710  |              |  |   | 15,265  |  
|                                                   |  |              |         |              |  |   |         |  
|                                                   |  |              | 182,716 |              |  |   | 196,400 |  
|Less  Current maturities                          |  |              | (2,919  | )            |  |   | (3,298  | )
|                                                   |  |              |         |              |  |   |         |  
|                                                   |  | $            | 179,797 |              |  | $ | 193,102 |  
|                                                   |  |              |         |              |  |   |         |  

Revolving Credit Facility

At December 27, 2003, the Companys
Revolver, as amended, provides for borrowings in the aggregate
principal amount of up to the lesser of $180.0 million,
less defined reserves, or the Borrowing Base, as defined in the
agreement, which is based on 85% of eligible accounts receivable
plus 50% - 65% of eligible inventories less defined
reserves.

Borrowings under the Revolver bear interest at
(i) the Base Rate, as defined, plus the applicable margin
(1.25% as of December 27, 2003) or (ii) the Eurodollar
Rate, as defined, plus the applicable margin (2.50% as of
December 27, 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. At December 27, 2003,
borrowings under the Revolver were at a weighted average
interest rate of 4.2%.

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

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 as well as 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
December 27, 2003, the Company was in compliance with these
covenants, as amended. The Companys obligations under the
Revolver are guaranteed by all subsidiaries of the Company and
are secured by all inventories and accounts receivable. The
Revolver term expires in March 2005, and is extendable by the
Company and the banks for an additional five years.

On March 19, 2004, the Company executed a
Third Amended and Restated Loan and Security Agreement (see
Note 14).

Derivative Instruments

During the second quarter 2003, the Company
entered into an interest rate swap agreement (Swap)
to manage exposure to fluctuations in interest rates. The Swap
represents a contract to exchange floating rate for fixed
interest payments periodically over the life of the agreement
without exchange of the underlying notional amount. The notional
amount of the Swap is used to measure interest to be paid or
received and does not represent the amount of exposure to credit
loss. At December 27, 2003, the Swap in place covers a
notional amount of $50.0 million of indebtedness at a fixed
interest rate of 2.14% and expires in June 2006. This Swap has
not been designated for hedge accounting treatment. Accordingly,
the Company recognizes the fair value of the Swap in the
accompanying consolidated balance sheets and any changes in the
fair value are recorded as adjustments to interest expense in
the accompanying consolidated statements of operations. The fair
value of the Swap is the estimated amount that the Company would
pay or receive to terminate the agreement at the reporting date.
As of December 27, 2003, the fair value of the Swap was an
asset of $0.2 million, and is included in other assets in
the accompanying consolidated balance sheet. As a result of the
change in fair value, $0.2 million net reductions to
interest expense were recorded for the year ended
December 27, 2003.

Senior Notes

The Series D Senior Notes (Senior
Notes) have an annual coupon of 10% and are redeemable at
the Companys option, in whole or in part, at any time, on
or after May 15, 2003, at certain redemption prices. In
addition, the Company can redeem up to 35% of the original
principal amount of the Senior Notes at 110% of par with one or
more public equity offerings. The Senior Notes are due May 2008
and interest is payable semi-annually on May 15 and
November 15 of each year commencing November 15, 1999.
The Senior Notes contain certain covenants that, among other
things, limits the ability of the Company to incur indebtedness;
make restricted payments; make certain distributions; sell
assets; enter into certain affiliate transactions; sell or issue
capital stock of restricted subsidiaries; incur liens; enter
into sale/leaseback transactions; and engage in mergers and
consolidations.

On March 27, 2002, the Company repurchased
$121.4 million in outstanding principal amount of the
Senior Notes at a purchase price of $535 per $1,000 in face
amount, plus accrued and unpaid interest of $4.5 million.
See Note 8 for more information on the repurchase of the
Senior Notes.

Capital Lease Obligations

On March 27, 2002, the Company completed an
agreement for the sale and leaseback of three of its owned
facilities generating cash proceeds of $13.9 million. The
Company reports this transaction as a capital lease using direct
financing lease accounting. As such, the Company recorded a
$14.0 million capital lease obligation during the first
quarter of 2002. The Company has determined that all cash paid
to the lessor is

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

properly recorded as interest expense and that
the capital lease obligation will be reduced when the Company no
longer has continuing involvement with the properties. The
initial term of the lease is for 20 years, followed by two,
10-year renewal options. The annual rent paid under the terms of
the lease is $1.6 million annually (paid quarterly) and is
adjusted for Consumer Price Index 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. The Company recorded these warrants
at fair value and has presented them as a component of
stockholders equity.

Aggregate Maturities

Aggregate maturities of long-term debt at
December 27, 2003, are as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2004       |  | $ | 2,919   | 
|2005       |  |   | 136,841 | 
|2006       |  |   | 54      | 
|2007       |  |   | 53      | 
|2008       |  |   | 28,657  | 
|Thereafter |  |   | 14,192  | 
|           |  |   |         | 
|           |  | $ | 182,716 | 
|           |  |   |         | 



|   |                   
|-- | ------------------
|5. | Employee Benefits:

401(k) Plans

The Company maintains a qualified profit sharing
and 401(k) plan for eligible employees. All accounts are funded
based on employee contributions to the plan, with the limits of
such contributions determined by the Board of Directors.
Effective January 1, 2002, the benefit formulas for all
divisions were determined to be a match of 50% of participant
contributions, up to 6% of their compensation. In prior years,
depending on the division, the plan either matched 50% of the
participants contributions up to 6% of their compensation
or matched 50% of the first 2% of participant contributions and
6% of the remaining contribution up to a total of 6% of their
compensation. The plan also provides for contributions in such
amounts as the Board of Directors may annually determine for the
profit sharing portion of the plan. Employees vest in the 401(k)
match and profit sharing contribution over a 5-year period. The
amount charged to selling, general and administrative expense
applicable to continuing operations during the fiscal years
ended December 27, 2003, December 28, 2002 and
December 29, 2001, was $1.3 million, $1.1 million
and $1.1 million, respectively.

Stock Option Plans

In 1997, the Company adopted a Stock Option Plan
(the 1997 Plan) in order to attract and retain key
employees of the Company. The 1997 Plan authorizes the issuance
of up to 527,500 shares of voting common stock to be issued to
officers and key employees under terms and conditions to be set
by the Companys Board of Directors, which includes a 1998
amendment that increased the amount of shares by 262,500. All
options expire 10 years from the date of grant. Shares
issued upon exercise of options are subject to the terms and
conditions of a stockholders agreement to be entered into by
each recipient. In connection with the Charlesbank purchase,
which constituted a change in control under the 1997 Plan, all
outstanding options became fully vested.

In the second quarter of 1999, the Company
adopted the 1999 Stock Option Plan (the 1999 Plan)
in order to attract and retain employees (including officers),
directors and independent contractors of the Company. The 1999
Plan, as amended, authorizes the issuance of up to 1,143,550
shares of voting common

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

stock under terms and conditions to be set by the
Companys Board of Directors. The options are divided into
three tiers that vest over varying periods of time or upon the
occurrence of certain events. All options expire 10 years
from the date of grant. Shares issued upon exercise of options
are subject to the terms and conditions of a stockholders
agreement to be entered into by each recipient. Under the 1999
Plan, 51,650 options are vested as of December 27, 2003.

In the second quarter of 2002, the Company
adopted the 2002 Stock Option Plan (the 2002 Plan)
in order to attract and retain employees (including officers),
directors and independent contractors of the Company. The 2002
Plan authorizes the issuance of up to 2,216,389 shares of voting
common stock under terms and conditions to be set by the
Companys Board of Directors. In addition, 185,900
remaining options available for grant under the 1997 Plan and
712,350 remaining options available for grant under the 1999
Plan have been transferred to the 2002 Plan for a total of
3,114,639 options available for grant under the
2002 Plan. All options expire 10 years from the date
of grant. Shares issued upon exercise of options are subject to
the terms and conditions of a stockholders agreement to be
entered into by each recipient. Under the 2002 Plan,
1,183,278 options are vested as of December 27, 2003.

Stock option activity under the plans is as
follows:

|                                                             |           |           |           |           |   |   |      |      | 
|------------------------------------------------------------ | --------- | --------- | --------- | --------- | - | - | ---- | ---- | 
|                                                             |           |           |           | Weighted 
|                                                             |           |           |           | Average  
|                                                             |           | Number of |           | Exercise 
|                                                             |           | Shares    |           | Price    
|                                                             |           |           |           |          
|Outstanding at December 30, 2000 (553,535
    exercisable)   |           |           | 1,359,100 |           |   | $ | 7.67 |     
|                                                             | Granted   |           |           | 45,000    |   |   |      | 9.00 | 
|                                                             | Exercised |           |           | (10,000   | ) |   |      | 1.10 | 
|                                                             | Forfeited |           |           | (142,600  | ) |   |      | 7.96 | 
|                                                             |           |           |           |           |   |   |      |     
|Outstanding at December 29, 2001 (720,906
    exercisable)   |           |           | 1,251,500 |           |   |   | 7.73 |     
|                                                             | Granted   |           |           | 2,462,426 |   |   |      | 1.40 | 
|                                                             | Forfeited |           |           | (566,500  | ) |   |      | 7.69 | 
|                                                             |           |           |           |           |   |   |      |     
|Outstanding at December 28, 2002 (940,739
    exercisable)   |           |           | 3,147,426 |           |   |   | 2.79 |     
|                                                             | Granted   |           |           | 198,308   |   |   |      | 3.00 | 
|                                                             | Forfeited |           |           | (449,200  | ) |   |      | 8.65 | 
|                                                             |           |           |           |           |   |   |      |     
|Outstanding at December 27, 2003 (1,410,428
    exercisable) |           |           | 2,896,534 |           |   | $ | 1.89 |     
|                                                             |           |           |           |           |   |   |      |     

The following is summary information about the
Companys stock options outstanding at December 27,
2003:

|         |      |                |  |              |           |          |  |                |      |          |  |   |      |  |  |  |           |  |  |   |      | 
|-------- | ---- | -------------- |  | ------------ | --------- | -------- |  | -------------- | ---- | -------- |  | - | ---- |  |  |  | --------- |  |  | - | ---- | 
|         |      |                |  | Weighted     |           | Weighted |  |                |      | Weighted
|         |      | Outstanding at |  | Average      |           | Average  |  | Exercisable at |      | Average 
|Exercise |      | December 27,   |  | Remaining    |           | Exercise |  | December 27,   |      | Exercise
|Price    |      | 2003           |  | Term (years) |           | Price    |  | 2003           |      | Price   
|         |      |                |  |              |           |          |  |                |      |         
|$        | 1.10 |                |  |              | 66,000    |          |  |                | 3.43 |          |  | $ | 1.10 |  |  |  | 66,000    |  |  | $ | 1.10 | 
|         | 1.40 |                |  |              | 2,462,426 |          |  |                | 8.46 |          |  |   | 1.40 |  |  |  | 984,970   |  |  |   | 1.40 | 
|         | 3.00 |                |  |              | 198,308   |          |  |                | 9.04 |          |  |   | 3.00 |  |  |  | 198,308   |  |  |   | 3.00 | 
|         | 7.48 |                |  |              | 109,500   |          |  |                | 4.74 |          |  |   | 7.48 |  |  |  | 109,500   |  |  |   | 7.48 | 
|         | 9.00 |                |  |              | 60,300    |          |  |                | 6.21 |          |  |   | 9.00 |  |  |  | 51,650    |  |  |   | 9.00 | 
|         |      |                |  |              |           |          |  |                |      |          |  |   |      |  |  |  |           |  |  |   |      | 
|         |      |                |  |              | 2,896,534 |          |  |                | 8.20 |          |  | $ | 1.89 |  |  |  | 1,410,428 |  |  | $ | 2.36 | 
|         |      |                |  |              |           |          |  |                |      |          |  |   |      |  |  |  |           |  |  |   |      | 

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

Deferred Compensation Plan

The Company has a deferred compensation plan for
its top executives and divisional employees covered by the
executive bonus plan to encourage each participant to promote
the long-term interests of the Company. Each participant is
allowed to defer portions of their annual salary as well as
bonuses received into the plan. In addition to employee
deferrals, the Company makes contributions on behalf of its top
executives and certain of the divisional employees in varying
amounts. The plan provides that an employee who becomes a
participant on or before November 23, 1998, shall be fully
vested in all amounts credited to such participants
account. The plan provides that an employee who becomes a
participant after November 23, 1998 shall be at all times
fully vested in elective deferrals into such participants
account and, as to contributions made by the Company, shall vest
at a rate of twenty percent (20%) per year as long as such
participant is an employee on January 1 of each year. The
deferred compensation plan may be altered and amended by the
Companys Board of Directors. The contributions made by the
Company on behalf of its employees were not significant in
fiscal 2003, 2002 or 2001.

6.     Commitments
and Contingencies:

Leases

The Company leases land, buildings, equipment and
vehicles under various operating leases which expire between
2004 and 2019. Future minimum lease commitments, net of sublease
income, for continuing operations at December 27, 2003 are
as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2004       |  | $ | 23,205  | 
|2005       |  |   | 18,911  | 
|2006       |  |   | 14,849  | 
|2007       |  |   | 13,460  | 
|2008       |  |   | 11,335  | 
|Thereafter |  |   | 39,791  | 
|           |  |   |         | 
|           |  | $ | 121,551 | 
|           |  |   |         | 

Rent expense, net of sublease income, under these
operating leases was $24.2 million in fiscal 2003,
$24.5 million in fiscal 2002 and $25.8 million in
fiscal 2001.

On March 27, 2002, the Company completed an
agreement for the sale and leaseback of three of its owned
facilities generating cash proceeds of $13.9 million. The
Company reports this transaction as a capital lease using direct
financing lease accounting. As such, the Company recorded a
$14.0 million capital lease obligation during the first
quarter of 2002. See Note 4 for more information on this
capital lease. Obligations under the Companys other
capital leases are not significant.

Purchase Commitments

In May 1997, the Company entered into a purchase
agreement with a supplier (the Tire Supply
Agreement  see Note 10), which expires May
2007. Under the terms of the agreement, the Company has agreed
to purchase all requirements of its Winston brand
tires from Goodyear.

Legal Proceedings

The Company is involved from time to time in
various lawsuits, including alleged class action lawsuits
arising out of the ordinary conduct of its business. Although no
assurances can be given, management does not expect that any of
these matters will have a material adverse effect on the
Companys business or financial

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

condition. The Company is also involved in
various proceedings incidental to the ordinary course of its
business. The Company believes, based on consultation with legal
counsel, that none of these will have a material adverse effect
on its financial condition or results of operations.

7.     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, its retail segment, to
Performance Management, Inc. for a purchase price of
approximately $10.0 million. As of December 27, 2003,
$2.8 million of the purchase price remains outstanding and
a reserve is maintained for the full amount. The Company has
initiated legal proceedings to collect the $2.8 million.
This segment has been reflected as a discontinued operation in
the accompanying consolidated financial statements and
previously reported financial results for all periods have been
restated to reflect this treatment. For fiscal 2003, the Company
recorded an additional loss from discontinued operations of
$0.1 million, net of income tax benefit of $57 thousand.

Net sales of discontinued operations in fiscal
2001 were approximately $48.3 million. Net sales from
continuing operations in 2001 included approximately
$15.8 million of inter-segment sales to Winston that have
not been eliminated in the accompanying consolidated statements
of operations.

The Company remains liable as a guarantor on
certain of Winstons leases. As of December 27, 2003,
total obligations of the Company, as guarantor on these leases,
is approximately $13.8 million extending over
15 years. However, the Company has secured assignments or
sublease agreements for the vast majority of these commitments
with contractually assigned or subleased rental of approximately
$11.7 million. A provision has been made for the estimated
shortfall of $2.1 million. In January 2004, the Company
executed an agreement to settle any and all claims relating to
one of the Winston guarantee leases resulting in a net reduction
of $1.6 million of that shortfall.

8.     Gain on
Repurchase of Series D Senior Notes:

On March 27, 2002, the Company repurchased
$121.4 million in outstanding principal amount of the
Senior Notes due in 2008 at a purchase price of $535 per $1,000
in face amount of Senior Notes, plus accrued and unpaid interest
of $4.5 million. The Company funded the repurchase of the
Senior Notes through several debt restructuring transactions
(Restructuring Transactions). The Restructuring
Transactions consisted of (i) an amendment to the
Companys 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.

The Company recorded a pre-tax gain of
$49.8 million on the repurchase of the Senior Notes and a
related income tax provision of $19.7 million for the year
ended December 28, 2002.

9.     Warrants:

In May 1997, in connection with the issuance of
Senior Subordinated Debt (Subordinated Debt), the
Company issued detachable warrants which permit the holder to
acquire up to 1,034,000 shares of the Companys common
stock at $.01 per share. The warrants became exercisable
immediately upon issuance and expire on May 7, 2007. The
warrants may be exercised in whole or in part, but in no event
later than the date of an initial public offering or a sale
transaction. The Company recorded the warrants at fair value,
which

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

resulted in a discount on the Subordinated Debt
in the same amount. The warrants are presented as a component of
stockholders equity.

On March 27, 2002, in connection with the
Restructuring Transactions (Note 8), 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.
In addition, the Company issued warrants to the purchaser of the
sale and leaseback transaction, which permit the purchaser to
acquire 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. The Company recorded these warrants
at fair value and has presented them as a component of
stockholders equity.

10.     Redeemable
Preferred Stock:

On May 2, 1997, the Company issued 11,500
shares of preferred stock with par value of $.01 per share to a
supplier (the Supplier). Of the 11,500 shares,
7,000 shares are designated Series A Cumulative
Redeemable Preferred Stock (the Series A preferred
stock) and 4,500 shares are designated Series B
Cumulative Redeemable Preferred Stock (the Series B
preferred stock).

The Series A and B preferred stock each
contain a provision whereby upon the early termination of the
Tire Supply Agreement (see Note 6), the Company shall
redeem all shares of preferred stock outstanding at a price
equal to the sum of the stated value and the applicable premium,
as defined, plus all accrued and unpaid dividends. If at any
time a change of control occurs, as defined, the Supplier may
request redemption of all outstanding shares. However, so long
as amounts are outstanding or commitments to lend have not been
terminated under the Revolver, the Senior Notes and other
agreements entered into in connection therewith, including any
replacement agreement which results in a greater principal
amount outstanding, or if any default or event of default has
occurred and is continuing under any such debt agreements or
would result from such payments, the Company may not make any
dividend or redemption payments in respect to the Series A
or B preferred stock.

Series A Preferred Stock

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. For the fiscal years 2003, 2002 and 2001, the
Company declared and paid a dividend based on a 4% rate. These
amounts are included in interest expense in the accompanying
consolidated statements of operations. The Series A
preferred stock can be redeemed by the Company, beginning on the
last business day of December 2002 and on the last business day
of each June and December thereafter, through June 2007. In June
2003, the Company redeemed 500 shares of the Series A
preferred stock for $0.5 million.

Series B Preferred Stock

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 the Tire Supply Agreement (see Note 6). 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.

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

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

|                                                                                                                                                      |                                  |              |       |              |  |   |       |        | 
|----------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- | ------------ | ----- | ------------ |  | - | ----- | ------ | 
|                                                                                                                                                      |                                  | December 27, |       | December 28,
|                                                                                                                                                      |                                  | 2003         |       | 2002        
|                                                                                                                                                      |                                  |              |       |             
|Redeemable preferred stock
    Series A  4% cumulative; 7,000 shares
    authorized; 6,500 and 7,000 shares issued and outstanding,
    respectively |                                  | $            | 6,500 |              |  | $ | 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 |              | $     | 10,535       |  |   | $     | 11,035 | 
|                                                                                                                                                      |                                  |              |       |              |  |   |       |       



|    |                 
|--- | ----------------
|11. | Preferred Stock:

In conjunction with the Restructuring
Transactions (see Note 8), the Company amended and restated
its articles of incorporation to increase the number of
authorized shares of $.01 par value preferred stock from
1,344,834 to 10,982,426 shares. Of the 10,982,426 shares of
preferred stock, 7,000 shares are initially designated
Series A preferred stock, 4,500 shares are initially
designated Series B preferred stock, 1,333,334 shares
are initially designated Series C preferred stock and
9,637,592 shares are initially designated Series D
preferred stock. Prior to this amendment, the Company had
authorized and issued 7,000 shares of Series A preferred
stock, 4,500 shares of Series B preferred stock and
1,333,334 shares of Series C preferred stock. On
May 27, 2002, the Company issued 9,637,592 shares of
Series D preferred stock.

On October 31, 2003, the Company amended and
restated its articles of incorporation to eliminate the
redemption clause of the Series C and Series D
preferred stock. No dividends have been declared or paid to date
on the Series C or Series D preferred stock.

Series C Preferred Stock

On April 2, 2001 the Company issued
1,333,334 shares of Series C preferred stock for $9.00 per
share in exchange for $12.0 million in cash contributed by
certain of its principal stockholders. Shares of Series C
preferred stock accrue dividends at an annual rate of 12%.
However, as long as any shares of Series A preferred stock
or Series B preferred stock remain outstanding, no
dividends may be paid. On March 27, 2002, the conversion
price of the Series C preferred stock was reduced to $3.00
per common share.

Series D Preferred Stock

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%. However, as long as any shares of Series A
preferred stock or Series B preferred stock remain
outstanding, no dividends may be paid. In addition, shares of
Series D preferred stock are convertible into common stock
at a conversion price of $3.00 per common share.

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

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

|                                                                                                   |                       |              |        |              |  |   |        |        | 
|-------------------------------------------------------------------------------------------------- | --------------------- | ------------ | ------ | ------------ |  | - | ------ | ------ | 
|                                                                                                   |                       | December 27, |        | December 28,
|                                                                                                   |                       | 2003         |        | 2002        
|                                                                                                   |                       |              |        |             
|Preferred stock Series C  12%
    cumulative; 1,333,334 shares authorized, issued and outstanding |                       | $            | 15,960 |              |  | $ | 14,520 |       
|Preferred stock Series D  12%
    cumulative; 9,637,592 shares authorized, issued and outstanding |                       |              | 34,984 |              |  |   | 31,515 |       
|                                                                                                   |                       |              |        |              |  |   |        |       
|                                                                                                   | Total preferred stock |              | $      | 50,944       |  |   | $      | 46,035 | 
|                                                                                                   |                       |              |        |              |  |   |        |       



|    |              
|--- | -------------
|12. | Common Stock:

On March 27, 2002, the Company amended and
restated its articles of incorporation to authorize 50,000,000
shares of a single class (Class A) of $.01 par value common
stock.

Restricted Stock

The Company has given designated employees,
officers, directors and independent contractors of the Company
the opportunity to acquire restricted shares of Class A
common stock. The Companys Board of Directors administers
the restricted stock arrangements, selects eligible
participants, determines the number of shares to be offered to
each participant and sets other applicable terms and conditions.
As of December 27, 2003, a total of 80,000 restricted
shares of Class A common stock were outstanding.

Shares of restricted stock were issued by the
Company at the fair market value at the date of issuance. Upon
exercise of options granted under the Companys employee
stock option plans, the securities issued are shares of
restricted stock. All shares of restricted stock are subject to
the terms and conditions of a securities purchase and
stockholders agreement entered into by each recipient.



|    |                            
|--- | ---------------------------
|13. | Related Party Transactions:

On May 25, 2000, the Company purchased all
of the outstanding common stock of T.O. Haas Holding Co.,
Inc. and T.O. Haas Tire Company, Inc. (collectively
Haas), a tire wholesaler and distributor, located in
Lincoln, Nebraska, as well as all of the outstanding common
stock of Haas Investment Company (Haas Investment).
In connection with the acquisition, the Company sold certain
parcels of real estate, including substantially all of the
assets of Haas Investment, and leased them back in a
transaction, which closed on August 8, 2000. Total monthly
payments under these leases are approximately $73,000. The
leases expire July 31, 2010. Total rent expense of
approximately $0.9 million, $0.9 million and
$0.8 million is included in the accompanying statements of
operations for fiscal 2003, 2002 and 2001, respectively.

On October 12, 2001, Haas entered into an
Asset Purchase Agreement with T.O. Haas, LLC
(Haas LLC) for the sale of certain assets. The
total purchase price was approximately $5.3 million, of
which the Company received approximately $2.4 million in
cash at closing. Haas LLC was formed by, among others, one of
the executives of Haas. As of May 2002, this executive is no
longer with the Company. A portion of the purchase price for the
Companys acquisition of Haas in second quarter 2000 was
payable to this executive in the form of noncompete and stay put
payments. In connection with the sale, such noncompete payments
in the amount of $2.4 million were accelerated and such
liability was satisfied as a reduction of the purchase price.
Approximately $1.0 million of the purchase price is payable
in the form of a promissory note (the Note) due in
two equal annual installments, with first such payment paid
January 2, 2002. The Note bears interest at 6%. As of
January 3, 2003, the Note was paid in full. Stay put
payments due to the executive

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

of $1.6 million were accelerated to coincide
with the schedule of payments due under the Note. Liabilities
assumed by the buyer totaled $0.7 million, reflecting the
remainder of the purchase price.

In connection with the sale described above, the
Company entered into a Supply and Retail Distribution Agreement
with Haas LLC. Prior to the executive leaving the Company in May
2002, total sales for fiscal 2002 included five months of sales
to Haas LLC of $3.7 million. Total sales for fiscal 2001
included three months of sales to Haas LLC of $2.4 million.

The Company expects to pay an advisory and
monitoring fee not to exceed $200,000 annually to Charlesbank
Capital Partners, LLC. As of December 27, 2003, the Company
has recorded a liability for the 2003 payment, which was
subsequently paid.



|    |                              
|--- | -----------------------------
|14. | Subsequent Event (Unaudited):

On March 19, 2004, the Company executed a
Third Amended and Restated Loan and Security Agreement (the
Amended Revolver). The Borrowers to the Amended
Revolver are the Company, The Speed Merchant, Inc., T.O. Haas
Holding Co., Inc. and T.O. Haas Tire Company, Inc. The Amended
Revolver provides for borrowings in the aggregate principal
amount of up to the lesser of $245.0 million, less defined
reserves, or the Borrowing Base, as defined. The Amended
Revolver requires the Company to meet a fixed charge coverage
test, as defined, as well as certain covenants, which among
other things, restrict the ability of the Company to incur
additional indebtedness; enter into guarantees; make loans and
investments; make capital expenditures; declare dividends;
engage in mergers, consolidations and asset sales; enter into
transactions with affiliates; create liens and encumbrances;
enter into sale/leaseback transactions; modify material
agreements; and change the business it conducts. The
Companys obligations under the Amended Revolver are
secured by all inventories and accounts receivable. The Amended
Revolver expires February 15, 2008.

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)



|    |                                                
|--- | -----------------------------------------------
|15. | Subsidiary Guarantor Financial
    Information:

The 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 (dollars in thousands, except per
share amounts):

Condensed Consolidating Balance Sheets as
of December 27, 2003 and December 28, 2002, are as
follows:

|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |         |         |         | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | ---------- | ------- | ------------ | ------ | ------------ | ------ | ------- | ------- | ------- | ------- | -------- | ------- | ------- | ------- | ------- | 
|                                                   |                                                                                                                       |                           
|                                                   |                                                                                                                       | As of December 27, 2003   
|                                                   |                                                                                                                       |                           
|                                                   |                                                                                                                       | Parent                     |                                            | Subsidiary |         |             
|                                                   |                                                                                                                       | Company                    |                                            | Guarantors |         | Eliminations |        | Consolidated
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |             
|Assets                                             |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|Current assets:                                    |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Cash and cash equivalents                                                                                             |                            | $                                          | 3,295      |         |              | $      | 31           |        |         | $       |        |         |          | $       | 3,326   |        
|                                                   | Accounts receivable, net                                                                                              |                            |                                            | 71,058     |         |              |        | 25,062       |        |         |         |        |         |          |         | 96,120  |        
|                                                   | Inventories                                                                                                           |                            |                                            | 123,126    |         |              |        | 50,925       |        |         |         |        |         |          |         | 174,051 |        
|                                                   | Other current assets                                                                                                  |                            |                                            | 16,548     |         |              |        | 539          |        |         |         |        |         |          |         | 17,087  |        
|                                                   | Intercompany receivables                                                                                              |                            |                                            | 72,159     |         |              |        |             |        |         |         | (72,159 | )       |          |         |        |        
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current assets       |                                            |            | 286,186 |              |        |              | 76,557 |         |         |         | (72,159 | )        |         |         | 290,584 |        
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|Property and equipment, net                        |                                                                                                                       |                            | 14,421                                     |            |         |              | 3,241  |              |        |         |        |         |         |          | 17,662  |        
|Goodwill and other intangible assets, net          |                                                                                                                       |                            | 51,441                                     |            |         |              | 44,737 |              |        |         |        |         |         |          | 96,178  |        
|Investment in subsidiaries                         |                                                                                                                       |                            | 49,967                                     |            |         |              |       |              |        |         | (49,967 | )       |         |          |        |        
|Other assets                                       |                                                                                                                       |                            | 14,142                                     |            |         |              | 437    |              |        |         |        |         |         |          | 14,579  |        
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                            | Total assets                               |            | $       | 416,157      |        |              | $      | 124,972 |         |         | $       | (122,126 | )       |         | $       | 419,003 | 
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|Liabilities and Stockholders
    Equity           |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|Current liabilities:                               |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Accounts payable                                                                                                      |                            | $                                          | 170,716    |         |              | $      |             |        |         | $       |        |         |          | $       | 170,716 |        
|                                                   | Accrued expenses                                                                                                      |                            |                                            | 16,408     |         |              |        | 1,544        |        |         |         |        |         |          |         | 17,952  |        
|                                                   | Current maturities of long-term debt                                                                                  |                            |                                            | 2,915      |         |              |        | 4            |        |         |         |        |         |          |         | 2,919   |        
|                                                   | Intercompany payables                                                                                                 |                            |                                            |           |         |              |        | 72,159       |        |         |         | (72,159 | )       |          |         |        |        
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total current liabilities  |                                            |            | 190,039 |              |        |              | 73,707 |         |         |         | (72,159 | )        |         |         | 191,587 |        
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|Revolving credit facility and other long-term debt |                                                                                                                       |                            | 137,044                                    |            |         |              |       |              |        |         |        |         |         |          | 137,044 |        
|Series D Senior Notes                              |                                                                                                                       |                            | 28,600                                     |            |         |              |       |              |        |         |        |         |         |          | 28,600  |        
|Capital lease obligations                          |                                                                                                                       |                            | 14,153                                     |            |         |              |       |              |        |         |        |         |         |          | 14,153  |        
|Other liabilities                                  |                                                                                                                       |                            | 3,292                                      |            |         |              | 1,298  |              |        |         |        |         |         |          | 4,590   |        
|Redeemable preferred stock                         |                                                                                                                       |                            | 10,535                                     |            |         |              |       |              |        |         |        |         |         |          | 10,535  |        
|Stockholders equity:                              |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   | Intercompany investment                                                                                               |                            |                                            |           |         |              |        | 49,454       |        |         |         | (49,454 | )       |          |         |        |        
|                                                   | Preferred stock                                                                                                       |                            |                                            | 50,944     |         |              |        |             |        |         |         |        |         |          |         | 50,944  |        
|                                                   | 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   |        
|                                                   | Note receivable from sale of stock                                                                                    |                            |                                            | (17        | )       |              |        |             |        |         |         |        |         |          |         | (17     | )      
|                                                   | Accumulated deficit                                                                                                   |                            |                                            | (42,654    | )       |              |        | 513          |        |         |         | (513    | )       |          |         | (42,654 | )      
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       | Total stockholders equity |                                            |            | 32,494  |              |        |              | 49,967 |         |         |         | (49,967 | )        |         |         | 32,494  |        
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        
|                                                   |                                                                                                                       |                            | Total liabilities and stockholders equity |            | $       | 416,157      |        |              | $      | 124,972 |         |         | $       | (122,126 | )       |         | $       | 419,003 | 
|                                                   |                                                                                                                       |                            |                                            |            |         |              |        |              |        |         |         |         |         |          |         |        

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |         |    |         |         | 
|-------------------------------------------------- | --------------------------------------- | ------------------------------------------------------------------------- | -------------------------- | ------------------------------------------ | -- | ------------ | ------- | ------------ | - | ------ | ------- | ------- | - | ------- | -------- | ------- | -- | ------- | ------- | 
|                                                   |                                         |                                                                          
|                                                   |                                         | As of December 28, 2002                                                  
|                                                   |                                         |                                                                          
|                                                   |                                         | Parent                                                                    |                            | Subsidiary                                 |    |             
|                                                   |                                         | Company                                                                   |                            | Guarantors                                 |    | Eliminations |         | 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                |                                                                           |                            | 81,757                                     |    |              |         |             |   |        |         | (81,757 | ) |         |          |        |   
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   |                                         |                                                                           | Total current assets       |                                            |    | 275,679      |         |              |   | 75,851 |         |         |   | (81,757 | )        |         |    | 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                         |                                         |                                                                           | 41,962                     |                                            |    |              |        |              |   |        | (41,962 | )       |   |         |         |        
|Other assets                                       |                                         |                                                                           | 22,812                     |                                            |    |              | 539     |              |   |        |        |         |   |         | 23,351   |        
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   |                                         |                                                                           |                            | Total assets                               |    | $            | 408,051 |              |   | $      | 126,938 |         |   | $       | (123,719 | )       |    | $       | 411,270 | 
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|Liabilities and Stockholders
    Equity           |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|Current liabilities:                               |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   | Accounts payable                        |                                                                           | $                          | 165,206                                    |    |              | $       | 203          |   |        | $       |        |   |         | $        | 165,409 |   
|                                                   | Accrued expenses                        |                                                                           |                            | 15,994                                     |    |              |         | 1,999        |   |        |         |        |   |         |          | 17,993  |   
|                                                   | Current maturities of long-term debt    |                                                                           |                            | 3,298                                      |    |              |         |             |   |        |         |        |   |         |          | 3,298   |   
|                                                   | Intercompany payables                   |                                                                           |                            |                                           |    |              |         | 81,757       |   |        |         | (81,757 | ) |         |          |        |   
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   |                                         |                                                                           | Total current liabilities  |                                            |    | 184,498      |         |              |   | 83,959 |         |         |   | (81,757 | )        |         |    | 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 equity:                              |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   | Intercompany investment                 |                                                                           |                            |                                           |    |              |         | 49,453       |   |        |         | (49,453 | ) |         |          |        |   
|                                                   | 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   |   
|                                                   | Note receivable from sale of stock      |                                                                           |                            | (17                                        | )  |              |         |             |   |        |         |        |   |         |          | (17     | ) 
|                                                   | Accumulated deficit                     |                                                                           |                            | (53,750                                    | )  |              |         | (7,491       | ) |        |         | 7,491   |   |         |          | (53,750 | ) 
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   |                                         |                                                                           | Total stockholders equity |                                            |    | 16,489       |         |              |   | 41,962 |         |         |   | (41,962 | )        |         |    | 16,489  |        
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        
|                                                   |                                         |                                                                           |                            | Total liabilities and stockholders equity |    | $            | 408,051 |              |   | $      | 126,938 |         |   | $       | (123,719 | )       |    | $       | 411,270 | 
|                                                   |                                         |                                                                           |                            |                                            |    |              |         |              |   |        |         |         |   |         |          |        

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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

Condensed Consolidating Statements of
Operations for the fiscal years ended December 27, 2003,
December 28, 2002 and December 29, 2001 are as
follows:

|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |         |  
|--------------------------------------------------------- | ------------------------------------ | ------------------------- | ------- | ---------- | - | ------------ | ------- | ------------ |  | - | ------ | ------ | - | - | --------- | ------- | -
|                                                          |                                      |                          
|                                                          |                                      | For the Fiscal Year Ended
|                                                          |                                      | December 27, 2003        
|                                                          |                                      |                          
|                                                          |                                      | Parent                    |         | Subsidiary |   |             
|                                                          |                                      | Company                   |         | Guarantors |   | Eliminations |         | Consolidated
|                                                          |                                      |                           |         |            |   |              |         |             
|Net sales                                                 |                                      | $                         | 788,475 |            |   | $            | 324,037 |              |  | $ |       |        |   | $ | 1,112,512 |        
|Cost of goods sold                                        |                                      |                           | 635,780 |            |   |              | 266,839 |              |  |   |       |        |   |   | 902,619   |        
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|                                                          | Gross profit                         |                           |         | 152,695    |   |              |         | 57,198       |  |   |        |       |   |   |           | 209,893 |  
|Selling, general and administrative expenses              |                                      |                           | 124,793 |            |   |              | 43,944  |              |  |   |       |        |   |   | 168,737   |        
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|                                                          | Operating income                     |                           |         | 27,902     |   |              |         | 13,254       |  |   |        |       |   |   |           | 41,156  |  
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|Other income (expense):                                   |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|                                                          | Interest expense                     |                           |         | (14,082    | ) |              |         |             |  |   |        |       |   |   |           | (14,082 | )
|                                                          | Other income (expense), net          |                           |         | (166       | ) |              |         | 268          |  |   |        |       |   |   |           | 102     |  
|                                                          | Equity in net income of subsidiaries |                           |         | 8,004      |   |              |         |             |  |   |        | (8,004 | ) |   |           |        |  
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|Income from continuing operations before income
    taxes |                                      |                           | 21,658  |            |   |              | 13,522  |              |  |   | (8,004 | )      |   |   | 27,176    |        
|Provision for income taxes                                |                                      |                           | 5,571   |            |   |              | 5,518   |              |  |   |       |        |   |   | 11,089    |        
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|Income from continuing operations                         |                                      |                           | 16,087  |            |   |              | 8,004   |              |  |   | (8,004 | )      |   |   | 16,087    |        
|Loss from discontinued operations                         |                                      |                           | (82     | )          |   |              |        |              |  |   |       |        |   |   | (82       | )      
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        
|Net income                                                |                                      | $                         | 16,005  |            |   | $            | 8,004   |              |  | $ | (8,004 | )      |   | $ | 16,005    |        
|                                                          |                                      |                           |         |            |   |              |         |              |  |   |        |        |   |   |           |        

|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |         |  
|--------------------------------------------------------- | ------------------------------------------- | ------------------------- | ------- | ---------- | - | ------------ | ------- | ------------ | - | - | ------ | ------ | - | - | --------- | ------- | -
|                                                          |                                             |                          
|                                                          |                                             | For the Fiscal Year Ended
|                                                          |                                             | December 28, 2002        
|                                                          |                                             |                          
|                                                          |                                             | Parent                    |         | Subsidiary |   |             
|                                                          |                                             | Company                   |         | Guarantors |   | Eliminations |         | Consolidated
|                                                          |                                             |                           |         |            |   |              |         |             
|Net sales                                                 |                                             | $                         | 755,065 |            |   | $            | 305,329 |              |   | $ |       |        |   | $ | 1,060,394 |        
|Cost of goods sold                                        |                                             |                           | 609,462 |            |   |              | 253,059 |              |   |   |       |        |   |   | 862,521   |        
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|                                                          | Gross profit                                |                           |         | 145,603    |   |              |         | 52,270       |   |   |        |       |   |   |           | 197,873 |  
|Selling, general and administrative expenses              |                                             |                           | 117,719 |            |   |              | 48,803  |              |   |   |       |        |   |   | 166,522   |        
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|                                                          | Operating income                            |                           |         | 27,884     |   |              |         | 3,467        |   |   |        |       |   |   |           | 31,351  |  
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|Other income (expense):                                   |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|                                                          | Interest expense                            |                           |         | (18,650    | ) |              |         | (55          | ) |   |        |       |   |   |           | (18,705 | )
|                                                          | Gain on repurchase of Series D Senior Notes |                           |         | 49,759     |   |              |         |             |   |   |        |       |   |   |           | 49,759  |  
|                                                          | Other income, net                           |                           |         | 25         |   |              |         | 263          |   |   |        |       |   |   |           | 288     |  
|                                                          | Equity in net income of subsidiaries        |                           |         | 2,313      |   |              |         |             |   |   |        | (2,313 | ) |   |           |        |  
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|Income from continuing operations before income
    taxes |                                             |                           | 61,331  |            |   |              | 3,675   |              |   |   | (2,313 | )      |   |   | 62,693    |        
|Provision for income taxes                                |                                             |                           | 23,421  |            |   |              | 1,362   |              |   |   |       |        |   |   | 24,783    |        
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|Income from continuing operations                         |                                             |                           | 37,910  |            |   |              | 2,313   |              |   |   | (2,313 | )      |   |   | 37,910    |        
|Loss from discontinued operations                         |                                             |                           | (483    | )          |   |              |        |              |   |   |       |        |   |   | (483      | )      
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        
|Net income                                                |                                             | $                         | 37,427  |            |   | $            | 2,313   |              |   | $ | (2,313 | )      |   | $ | 37,427    |        
|                                                          |                                             |                           |         |            |   |              |         |              |   |   |        |        |   |   |           |        

45



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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |         |  
|------------------------------------------------------- | ---------------------------------- | ------------------------- | ------- | ---------- | - | ------------ | ------- | ------------ | - | - | ----- | ----- |  | - | --------- | ------- | -
|                                                        |                                    |                          
|                                                        |                                    | For the Fiscal Year Ended
|                                                        |                                    | December 29, 2001        
|                                                        |                                    |                          
|                                                        |                                    | Parent                    |         | Subsidiary |   |             
|                                                        |                                    | Company                   |         | Guarantors |   | Eliminations |         | Consolidated
|                                                        |                                    |                           |         |            |   |              |         |             
|Net sales                                               |                                    | $                         | 757,094 |            |   | $            | 350,800 |              |   | $ |      |       |  | $ | 1,107,894 |        
|Cost of goods sold                                      |                                    |                           | 611,388 |            |   |              | 286,084 |              |   |   |      |       |  |   | 897,472   |        
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|                                                        | Gross profit                       |                           |         | 145,706    |   |              |         | 64,716       |   |   |       |      |  |   |           | 210,422 |  
|Selling, general and administrative expenses            |                                    |                           | 128,927 |            |   |              | 77,416  |              |   |   |      |       |  |   | 206,343   |        
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|                                                        | Operating income (loss)            |                           |         | 16,779     |   |              |         | (12,700      | ) |   |       |      |  |   |           | 4,079   |  
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|Other income (expense):                                 |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|                                                        | Interest expense                   |                           |         | (28,403    | ) |              |         | (236         | ) |   |       |      |  |   |           | (28,639 | )
|                                                        | Other income, net                  |                           |         | 720        |   |              |         | 42           |   |   |       |      |  |   |           | 762     |  
|                                                        | Equity in net loss of subsidiaries |                           |         | (9,123     | ) |              |         |             |   |   |       | 9,123 |  |   |           |        |  
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|Loss from continuing operations before income
    taxes |                                    |                           | (20,027 | )          |   |              | (12,894 | )            |   |   | 9,123 |       |  |   | (23,798   | )      
|Benefit for income taxes                                |                                    |                           | (2,472  | )          |   |              | (3,771  | )            |   |   |      |       |  |   | (6,243    | )      
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|Loss from continuing operations                         |                                    |                           | (17,555 | )          |   |              | (9,123  | )            |   |   | 9,123 |       |  |   | (17,555   | )      
|Loss from discontinued operations                       |                                    |                           | (769    | )          |   |              |        |              |   |   |      |       |  |   | (769      | )      
|Loss on disposal of discontinued operations             |                                    |                           | (12,616 | )          |   |              |        |              |   |   |      |       |  |   | (12,616   | )      
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        
|Net loss                                                |                                    | $                         | (30,940 | )          |   | $            | (9,123  | )            |   | $ | 9,123 |       |  | $ | (30,940   | )      
|                                                        |                                    |                           |         |            |   |              |         |              |   |   |       |       |  |   |           |        

46



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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

Condensed Consolidating Statements of Cash
Flows for the fiscal years ended December 27, 2003,
December 28, 2002 and December 29, 2001 are as
follows:

|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |         |         |         |  
|------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | ------------------------------------- | ------------------------------------------------------- | ---------- | ------- | ------------ | ----- | ------------ | ------ | ------- | ------ | ----- | - | - | ------ | ------- | ------- | ------- | -
|                                                                                                 |                                                                                          |                                      
|                                                                                                 |                                                                                          | For the Fiscal Year Ended            
|                                                                                                 |                                                                                          | December 27, 2003                    
|                                                                                                 |                                                                                          |                                      
|                                                                                                 |                                                                                          | Parent                                |                                                         | Subsidiary |         |             
|                                                                                                 |                                                                                          | Company                               |                                                         | Guarantors |         | Eliminations |       | Consolidated
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |             
|Cash flows from operating
    activities:                                                        |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|Net income                                                                                       |                                                                                          | $                                     | 16,005                                                  |            |         | $            | 8,004 |              |        | $       | (8,004 | )     |   | $ | 16,005 |        
|Adjustments to reconcile net income to net cash
    provided by continuing operating activities: |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 | Loss from discontinued operations                                                        |                                       |                                                         | 82         |         |              |       |             |        |         |        |      |   |   |        | 82      |        
|                                                                                                 | Depreciation and amortization of other
    intangibles and other assets                  |                                       |                                                         | 4,977      |         |              |       | 3,188        |        |         |        |      |   |   |        | 8,165   |        
|                                                                                                 | Deferred income taxes                                                                    |                                       |                                                         | 6,915      |         |              |       |             |        |         |        |      |   |   |        | 6,915   |        
|                                                                                                 | Equity in net income of subsidiaries                                                     |                                       |                                                         | (8,004     | )       |              |       |             |        |         |        | 8,004 |   |   |        |        |        
|                                                                                                 | Change in assets and liabilities:                                                        |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |         |        
|                                                                                                 |                                                                                          | Accounts receivable, net              |                                                         |            | (3,544  | )            |       |              | 2,098  |         |        |       |  |   |        |         | (1,446  | )      
|                                                                                                 |                                                                                          | Inventories                           |                                                         |            | (13,983 | )            |       |              | (3,346 | )       |        |       |  |   |        |         | (17,329 | )      
|                                                                                                 |                                                                                          | Other current assets                  |                                                         |            | 856     |              |       |              | 418    |         |        |       |  |   |        |         | 1,274   |        
|                                                                                                 |                                                                                          | Accounts payable and accrued expenses |                                                         |            | 5,971   |              |       |              | (654   | )       |        |       |  |   |        |         | 5,317   |        
|                                                                                                 |                                                                                          | Other                                 |                                                         |            | (1,745  | )            |       |              | 419    |         |        |       |  |   |        |         | (1,326  | )      
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 |                                                                                          |                                       | Net cash provided by continuing operations              |            |         | 7,530        |       |              |        | 10,127  |        |       |   |  |        |         |         | 17,657  |  
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|Cash flows from investing
    activities:                                                        |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 | Purchase of property and equipment                                                       |                                       |                                                         | (1,731     | )       |              |       | (760         | )      |         |        |      |   |   |        | (2,491  | )      
|                                                                                                 | Proceeds from sale of property and equipment                                             |                                       |                                                         | 536        |         |              |       | 76           |        |         |        |      |   |   |        | 612     |        
|                                                                                                 | Intercompany                                                                             |                                       |                                                         | 9,571      |         |              |       | (9,571       | )      |         |        |      |   |   |        |        |        
|                                                                                                 | Other                                                                                    |                                       |                                                         | (50        | )       |              |       |             |        |         |        |      |   |   |        | (50     | )      
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 |                                                                                          |                                       | Net cash provided by (used in) investing
    activities |            |         | 8,326        |       |              |        | (10,255 | )      |       |   |  |        |         |         | (1,929  | )
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|Cash flows from financing
    activities:                                                        |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 | Principal payments on long-term debt                                                     |                                       |                                                         | (3,635     | )       |              |       | (21          | )      |         |        |      |   |   |        | (3,656  | )      
|                                                                                                 | Net proceeds from (repayments of) revolving
    credit facility and other long-term debt |                                       |                                                         | (10,964    | )       |              |       | 25           |        |         |        |      |   |   |        | (10,939 | )      
|                                                                                                 | Series A preferred stock redemption                                                      |                                       |                                                         | (500       | )       |              |       |             |        |         |        |      |   |   |        | (500    | )      
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 |                                                                                          |                                       | Net cash provided by (used in) financing
    activities |            |         | (15,099      | )     |              |        | 4       |        |       |   |  |        |         |         | (15,095 | )
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|Net increase (decrease) in cash and cash
    equivalents                                         |                                                                                          |                                       | 757                                                     |            |         |              | (124  | )            |        |         |       |       |   |   | 633    |        
|Cash and cash equivalents, beginning of year                                                     |                                                                                          |                                       | 2,538                                                   |            |         |              | 155   |              |        |         |       |       |   |   | 2,693  |        
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        
|Cash and cash equivalents, end of
    year                                                       |                                                                                          | $                                     | 3,295                                                   |            |         | $            | 31    |              |        | $       |       |       |   | $ | 3,326  |        
|                                                                                                 |                                                                                          |                                       |                                                         |            |         |              |       |              |        |         |        |       |   |   |        |        

47



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##### Table of Contents



American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |         |        |         |  
|------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ------------------------------------- | ------------------------------------------------------- | ---------- | ------ | ------------ | ----- | ------------ | ------ | ------- | ------ | ----- | - | - | ------ | ------- | ------ | ------- | -
|                                                                                                 |                                                                          |                                      
|                                                                                                 |                                                                          | For the Fiscal Year Ended            
|                                                                                                 |                                                                          | December 28, 2002                    
|                                                                                                 |                                                                          |                                      
|                                                                                                 |                                                                          | Parent                                |                                                         | Subsidiary |        |             
|                                                                                                 |                                                                          | Company                               |                                                         | Guarantors |        | Eliminations |       | Consolidated
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |             
|Cash flows from operating
    activities:                                                        |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|Net income                                                                                       |                                                                          | $                                     | 37,427                                                  |            |        | $            | 2,313 |              |        | $       | (2,313 | )     |   | $ | 37,427 |        
|Adjustments to reconcile net income to net cash
    provided by continuing operating activities: |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 | Loss from discontinued operations                                        |                                       |                                                         | 483        |        |              |       |             |        |         |        |      |   |   |        | 483     |       
|                                                                                                 | Gain on repurchase of Series D Senior Notes                              |                                       |                                                         | (49,759    | )      |              |       |             |        |         |        |      |   |   |        | (49,759 | )     
|                                                                                                 | Depreciation and amortization of other
    intangibles and other assets  |                                       |                                                         | 5,166      |        |              |       | 4,665        |        |         |        |      |   |   |        | 9,831   |       
|                                                                                                 | Deferred income taxes                                                    |                                       |                                                         | 18,843     |        |              |       | 3,727        |        |         |        |      |   |   |        | 22,570  |       
|                                                                                                 | Equity in net income of subsidiaries                                     |                                       |                                                         | (2,313     | )      |              |       |             |        |         |        | 2,313 |   |   |        |        |       
|                                                                                                 | Change in assets and liabilities:                                        |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |         |       
|                                                                                                 |                                                                          | Accounts receivable, net              |                                                         |            | (2,782 | )            |       |              | 31     |         |        |       |  |   |        |         | (2,751 | )      
|                                                                                                 |                                                                          | Inventories                           |                                                         |            | (5,575 | )            |       |              | 3,065  |         |        |       |  |   |        |         | (2,510 | )      
|                                                                                                 |                                                                          | Other current assets                  |                                                         |            | (2,547 | )            |       |              | 855    |         |        |       |  |   |        |         | (1,692 | )      
|                                                                                                 |                                                                          | Accounts payable and accrued expenses |                                                         |            | 6,944  |              |       |              | (1,209 | )       |        |       |  |   |        |         | 5,735  |        
|                                                                                                 |                                                                          | Other                                 |                                                         |            | (5,592 | )            |       |              | (235   | )       |        |       |  |   |        |         | (5,827 | )      
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 |                                                                          |                                       | Net cash provided by continuing operations              |            |        | 295          |       |              |        | 13,212  |        |       |   |  |        |         |        | 13,507  |  
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|Cash flows from investing
    activities:                                                        |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 | Net proceeds from sale-leaseback transaction                             |                                       |                                                         | 13,285     |        |              |       |             |        |         |        |      |   |   |        | 13,285  |       
|                                                                                                 | Purchase of property and equipment                                       |                                       |                                                         | (1,364     | )      |              |       | (695         | )      |         |        |      |   |   |        | (2,059  | )     
|                                                                                                 | Proceeds from sale of property and equipment                             |                                       |                                                         | 1,555      |        |              |       | 632          |        |         |        |      |   |   |        | 2,187   |       
|                                                                                                 | Intercompany                                                             |                                       |                                                         | 12,658     |        |              |       | (12,658      | )      |         |        |      |   |   |        |        |       
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 |                                                                          |                                       | Net cash provided by (used in) investing
    activities |            |        | 26,134       |       |              |        | (12,721 | )      |       |   |  |        |         |        | 13,413  |  
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|Cash flows from financing
    activities:                                                        |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 | Principal payments on long-term debt                                     |                                       |                                                         | (5,188     | )      |              |       | (1,044       | )      |         |        |      |   |   |        | (6,232  | )     
|                                                                                                 | Net proceeds from revolving credit facility and
    other long-term debt |                                       |                                                         | 13,960     |        |              |       |             |        |         |        |      |   |   |        | 13,960  |       
|                                                                                                 | Proceeds received from issuance of preferred stock                       |                                       |                                                         | 28,913     |        |              |       |             |        |         |        |      |   |   |        | 28,913  |       
|                                                                                                 | Repurchase of Series D Senior Notes                                      |                                       |                                                         | (64,959    | )      |              |       |             |        |         |        |      |   |   |        | (64,959 | )     
|                                                                                                 | Other                                                                    |                                       |                                                         | (40        | )      |              |       |             |        |         |        |      |   |   |        | (40     | )     
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|                                                                                                 |                                                                          |                                       | Net cash used in financing activities                   |            |        | (27,314      | )     |              |        | (1,044  | )      |       |   |  |        |         |        | (28,358 | )
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|Net decrease in cash and cash equivalents                                                        |                                                                          |                                       | (885                                                    | )          |        |              | (553  | )            |        |         |       |       |   |   | (1,438 | )      
|Cash and cash equivalents, beginning of year                                                     |                                                                          |                                       | 3,423                                                   |            |        |              | 708   |              |        |         |       |       |   |   | 4,131  |        
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        
|Cash and cash equivalents, end of
    year                                                       |                                                                          | $                                     | 2,538                                                   |            |        | $            | 155   |              |        | $       |       |       |   | $ | 2,693  |        
|                                                                                                 |                                                                          |                                       |                                                         |            |        |              |       |              |        |         |        |       |   |   |        |        

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American Tire Distributors, Inc.


Notes to Consolidated Financial
Statements  (Continued)

|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |        |         |        |  
|-------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------- | -------------------------------------------------------- | ---------- | ------- | ------------ | ------ | ------------ | ------ | ------- | ----- | ------ | - | - | ------- | ------ | ------- | ------ | -
|                                                                                                         |                                                                                   |                                      
|                                                                                                         |                                                                                   | For the Fiscal Year Ended            
|                                                                                                         |                                                                                   | December 29, 2001                    
|                                                                                                         |                                                                                   |                                      
|                                                                                                         |                                                                                   | Parent                                |                                                          | Subsidiary |         |             
|                                                                                                         |                                                                                   | Company                               |                                                          | Guarantors |         | Eliminations |        | Consolidated
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |             
|Cash flows from operating
    activities:                                                                |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|Net loss                                                                                                 |                                                                                   | $                                     | (30,940                                                  | )          |         | $            | (9,892 | )            |        | $       | 9,892 |        |   | $ | (30,940 | )     
|Adjustments to reconcile net loss to net cash
    provided by (used in) continuing operating activities: |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         | Loss from discontinued operations                                                 |                                       |                                                          |           |         |              |        | 769          |        |         |       |       |   |   |         | 769    |        
|                                                                                                         | Loss on disposal of discontinued operations                                       |                                       |                                                          | 12,616     |         |              |        |             |        |         |       |       |   |   |         | 12,616 |        
|                                                                                                         | Depreciation and amortization of goodwill, other
    intangibles and other assets |                                       |                                                          | 9,893      |         |              |        | 8,886        |        |         |       |       |   |   |         | 18,779 |        
|                                                                                                         | Deferred income taxes                                                             |                                       |                                                          | (6,809     | )       |              |        |             |        |         |       |       |   |   |         | (6,809 | )      
|                                                                                                         | Equity in net loss of subsidiaries                                                |                                       |                                                          | 9,892      |         |              |        |             |        |         |       | (9,892 | ) |   |         |       |        
|                                                                                                         | Change in assets and liabilities:                                                 |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |        |        
|                                                                                                         |                                                                                   | Accounts receivable, net              |                                                          |            | 5,977   |              |        |              | 1,399  |         |       |        |  |   |         |        | 7,376   |       
|                                                                                                         |                                                                                   | Inventories                           |                                                          |            | 8,310   |              |        |              | 19,706 |         |       |        |  |   |         |        | 28,016  |       
|                                                                                                         |                                                                                   | Other current assets                  |                                                          |            | (5,059  | )            |        |              | 2,045  |         |       |        |  |   |         |        | (3,014  | )     
|                                                                                                         |                                                                                   | Accounts payable and accrued expenses |                                                          |            | (28,071 | )            |        |              | (2,133 | )       |       |        |  |   |         |        | (30,204 | )     
|                                                                                                         |                                                                                   | Other                                 |                                                          |            | 291     |              |        |              | 1,354  |         |       |        |  |   |         |        | 1,645   |       
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         |                                                                                   |                                       | Net cash provided by (used in) continuing
    operations |            |         | (23,900      | )      |              |        | 22,134  |       |        |   |  |         |        |         | (1,766 | )
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         |                                                                                   |                                       | Net cash used in discontinued operations                 |            |         |             |        |              |        | (6,069  | )     |        |   |  |         |        |         | (6,069 | )
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|Cash flows from investing
    activities:                                                                |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         | Net proceeds from sale of discontinued operations                                 |                                       |                                                          | 9,111      |         |              |        |             |        |         |       |       |   |   |         | 9,111  |        
|                                                                                                         | Net proceeds from sale of Haas distribution
    outlets                           |                                       |                                                          |           |         |              |        | 2,420        |        |         |       |       |   |   |         | 2,420  |        
|                                                                                                         | Purchase of property and equipment                                                |                                       |                                                          | (4,077     | )       |              |        | (1,983       | )      |         |       |       |   |   |         | (6,060 | )      
|                                                                                                         | Proceeds from sale of property and equipment                                      |                                       |                                                          | 2,551      |         |              |        | 161          |        |         |       |       |   |   |         | 2,712  |        
|                                                                                                         | Intercompany                                                                      |                                       |                                                          | 14,729     |         |              |        | (14,729      | )      |         |       |       |   |   |         |       |        
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         |                                                                                   |                                       | Net cash provided by (used in) investing
    activities  |            |         | 22,314       |        |              |        | (14,131 | )     |        |   |  |         |        |         | 8,183  |  
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|Cash flows from financing
    activities:                                                                |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         | Principal payments on long-term debt                                              |                                       |                                                          | (315       | )       |              |        | (1,035       | )      |         |       |       |   |   |         | (1,350 | )      
|                                                                                                         | Net repayments of revolving credit facility                                       |                                       |                                                          | (8,947     | )       |              |        |             |        |         |       |       |   |   |         | (8,947 | )      
|                                                                                                         | Proceeds received from issuance of preferred stock                                |                                       |                                                          | 12,000     |         |              |        |             |        |         |       |       |   |   |         | 12,000 |        
|                                                                                                         | Common stock repurchase                                                           |                                       |                                                          | (578       | )       |              |        |             |        |         |       |       |   |   |         | (578   | )      
|                                                                                                         | Other                                                                             |                                       |                                                          | (669       | )       |              |        |             |        |         |       |       |   |   |         | (669   | )      
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|                                                                                                         |                                                                                   |                                       | Net cash provided by (used in) financing
    activities  |            |         | 1,491        |        |              |        | (1,035  | )     |        |   |  |         |        |         | 456    |  
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|Net increase (decrease) in cash and cash
    equivalents                                                 |                                                                                   |                                       | (95                                                      | )          |         |              | 899    |              |        |         |      |        |   |   | 804     |       
|Cash and cash equivalents, beginning of year                                                             |                                                                                   |                                       | 3,518                                                    |            |         |              | (191   | )            |        |         |      |        |   |   | 3,327   |       
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       
|Cash and cash equivalents, end of
    year                                                               |                                                                                   | $                                     | 3,423                                                    |            |         | $            | 708    |              |        | $       |      |        |   | $ | 4,131   |       
|                                                                                                         |                                                                                   |                                       |                                                          |            |         |              |        |              |        |         |       |        |   |   |         |       

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Item 9.     Changes
in and Disagreements with Accountants on Accounting and
Financial Disclosure.

None.




Item 9A.     Controls
and Procedures.

Evaluation of Disclosure Controls and
Procedures

Based on their evaluation as of the end of the
period covered by this annual report on Form 10-K, 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-15(e) and 15d-15(e) 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

During the year ended December 27, 2003,
there was no change in the Companys internal controls over
financial reporting that has materially affected, or is
reasonably likely to materially affect, the Companys
internal control over financial reporting.




PART III




Item 10.     Directors
and Executive Officers of the Registrant.

The following table contains information
regarding the directors and executive officers of the Company.
Directors hold their positions until the annual meeting of the
stockholders at which their term expires or until their
respective successors are elected and qualified. Executive
officers hold their positions until the annual meeting of the
Board of Directors or until their respective successors are
elected and qualified.

|                   |  |     |    |          |  |                                                                      
|------------------ |  | --- | -- | -------- |  | ---------------------------------------------------------------------
|Name               |  | Age |    | Position
|                   |  |     |    |         
|Richard P. Johnson |  |     | 56 |          |  | Chairman, Chief Executive Officer and Director                       
|William E. Berry   |  |     | 49 |          |  | President and Chief Operating Officer                                
|J. Michael Gaither |  |     | 51 |          |  | Executive Vice President, General Counsel and
    Secretary          
|Scott A. Deininger |  |     | 41 |          |  | Senior Vice President of Finance and
    Administration and Treasurer
|Daniel K. Brown    |  |     | 50 |          |  | Senior Vice President  Procurement                                  
|Phillip E. Marrett |  |     | 53 |          |  | Senior Vice President  Sales and
    Marketing                      
|Joseph P. Donlan   |  |     | 57 |          |  | Director                                                             
|Kim G. Davis       |  |     | 50 |          |  | Director                                                             
|Tim R. Palmer      |  |     | 46 |          |  | Director                                                             
|Jon M. Biotti      |  |     | 35 |          |  | Director                                                             
|Todd Krasnow       |  |     | 46 |          |  | Director                                                             
|M. Lenny Pippin    |  |     | 56 |          |  | Director                                                             

Richard P. Johnson  Chairman, Chief
Executive Officer and Director.Mr. Johnson became Chairman and Chief Executive Officer in
May 2003. Mr. Johnson had been the Companys President
and Chief Executive Officer since January 2001 and prior to that
time, served as President of the Companys Southeast

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Division. He joined ITCO as President and Chief
Operating Officer in February 1997. He served as Senior Vice
President of Albert Fisher Distribution from 1991 to 1994, and
as its President and Chief Operating Officer from 1994 to 1996.
Prior to that time, Mr. Johnson held a variety of
management positions with Leprino Foods, Sargento Cheese and
Kraft Foods. He holds an A.A. from Palm Beach College.


William E. Berry  President and
Chief Operating Officer.Mr. Berry became President and Chief Operating Officer in
May 2003. Prior to that time, Mr. Berry had been the
Companys Executive Vice President and Chief Financial
Officer since January 2002. Mr. Berry joined the Company in
May 1998 as a result of the merger with ITCO Tire Company and
served as Senior Vice President of Finance for the Southeast
Division. Prior to that, he joined ITCO Tire Company as
Controller in 1984 and served as its Senior Vice President of
Finance until 1996. From 1996 to the merger with the Company, he
served as ITCOs Executive Vice President in charge of
business development and sales and marketing. Prior to that,
Mr. Berry held a variety of financial management positions
for a subsidiary of the Dr. Pepper Company and also spent
three years in a public accounting firm. He holds a B.S. in
Business Administration from Virginia Tech.

J. Michael Gaither  Executive
Vice President, General Counsel and
Secretary.Mr. Gaither became
Executive Vice President in May 1999, and prior to that time
served as the Companys Senior Vice President, General
Counsel and Secretary since joining the Company in 1991. He
served as Treasurer from February 2001 to June 2003. Prior to
that time, he was a lawyer in private practice for several
years. He holds a B.A. from Duke University and received his
J.D. from the University of North Carolina-Chapel Hill.

Scott A. Deininger  Senior Vice
President of Finance and Administration and
Treasurer.Mr. Deininger joined
the Company in July 2003. Prior to that, Mr. Deininger
served as Vice President and Corporate Controller of
Safety-Kleen Corporation from January 2001 to June 2003. From
April 1998 to January 2001, Mr. Deininger served as Vice
President of Finance and Chief Financial Officer of Carmeuse
North America and held various other financial management
positions within the company. Prior to joining Carmeuse,
Mr. Deininger spent eight years with KPMG.
Mr. Deininger is a Certified Public Accountant and holds a
B.S. in Accounting from York College of Pennsylvania.

Daniel K. Brown  Senior Vice
President  Procurement.Mr. Brown joined the Company in 1975 and held various field
sales assignments before becoming Marketing Manager in 1979. He
advanced to Director of Marketing and to Vice President of
Marketing during the 1980s and was named Vice President of
Sales and Marketing in 1991, assuming responsibility for
distribution center operations. In 1997 he was named Senior Vice
President of Sales and Marketing with responsibility for vendor
relations and program negotiations as well as the sales and
marketing activities for the Company. Mr. Brown holds a
B.A. from Western Carolina University.

Phillip E. Marrett  Senior Vice
President  Sales and
Marketing.Mr. Marrett joined the
Company in 1998 as Regional Vice President in the Southeast
Division. Prior to joining the Company, Mr. Marrett worked
for ITCO Tire (1997-1998) and Dunlop Tire (1976-1996).

Joseph P. Donlan  Director.Mr. Donlan has been a Director
since May 1997. He is Managing Director of Brown Brothers
Harriman & Co. and Co-Manager of its 1818 Mezzanine Fund,
and 1818 Mezzanine Fund II, L.P. Mr. Donlan joined Brown
Brothers Harriman & Co. in 1970 in the firms Trade
Finance Group. Prior to organizing the 1818 Mezzanine Fund,
Mr. Donlan managed Brown Brothers Harriman & Co.s
New York commercial banking activities. Previously,
Mr. Donlan served as the firms Senior Credit Officer
and became a member of the firms Credit Committee on which
he continues to serve. He is a graduate of Georgetown University
and received an M.B.A. from Rutgers University. Mr. Donlan
also serves on the Board of Directors of National Auto
Receivables Liquidation, Inc., One Call Medical, Inc., Wise
Foods, Inc., Fiber Composites Corp., DB Companies, Inc.,
Psychiatric Solutions, Inc., Ranpack Corp. and Caliber Collision
Corp.

Kim G. Davis  Director.Mr. Davis has been a Director
since May 1999. He is a Managing Director and co-founder of
Charlesbank Capital Partners, LLC and serves as a director of
Bell Sports, Inc. and Westinghouse Air Brake Company. Prior to
July 1998, Mr. Davis was a Managing Director of
Charlesbanks predecessor firm, Harvard Private Capital
Group, Inc., the private equity and real estate investment unit
of

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Harvard Management Company. From 1995 through
1997, Mr. Davis was engaged in personal investing
activities. From 1988 through 1994 he was a General Partner at
Kohlberg & Co. Mr. Davis holds both B.A. and M.B.A.
degrees from Harvard University.


Tim R. Palmer  Director.Mr. Palmer has been a Director
since May 1999. He is a Managing Director and co-founder of
Charlesbank Capital Partners, LLC. From 1990 through June 1998,
Mr. Palmer was a Managing Director of Harvard Private
Capital Group, Inc. Mr. Palmer serves as a director of
several private companies. Previously, he was Manager, Business
Development at The Field Corporation, a privately held
investment company. Mr. Palmer holds a B.A. from Purdue
University, a J.D. from the University of Virginia and an M.B.A.
from the University of Chicago.

Jon Biotti  Director.Mr. Biotti has been a Director
since May 1999. He is a Vice President at Charlesbank Capital
Partners, LLC. Prior to joining Charlesbank in July 1998,
Mr. Biotti pursued postgraduate research studies in
principal investing and entrepreneurship as an Entrepreneurial
Studies Research Fellow at the Harvard Graduate School of
Business Administration. Previously, he was affiliated with
Brown Brothers Harriman & Co., Walt Disney Company and
Wasserstein Perella & Co. Mr. Biotti holds a B.A. from
Harvard University, an M.P.A. from the Kennedy School of
Government and an M.B.A. from Harvard University.

Todd Krasnow  Director.Mr. Krasnow is the cofounder and
Chairman of ZOOTS, The Cleaner Cleaner. Prior to becoming
Chairman, Mr. Krasnow was the Chief Executive Officer of
ZOOTS. Prior to ZOOTS, he was Executive Vice President of Sales
and Marketing for Staples. He joined Staples as part of its
original management team in 1986, before it opened its first
office superstore in the country. During his 12 years with
Staples, Mr. Krasnow helped launch the companys
California operations, ran the companys international
joint ventures and started the companys catalog operation.
Mr. Krasnow serves on several local non-profit boards. He
is also a general partner in Orchid Partners, a venture capital
firm. Mr. Krasnow graduated from Cornell University and
from Harvard Business School in 1983.

M. Lenny Pippin 
Director.Mr. Pippin is President
and Chief Executive Officer of Schwans Sales Enterprises,
Inc. He earned his bachelors degree from Florida Atlantic
University in Boca Raton, Florida and currently is a member of
the Board of Directors of Schwans Sales Enterprises, Inc.
and G&K Services. He also serves a number of non-profit
organizations in a similar capacity, including the Tampa Bay
Museum of Science and Industry, Lowry Park Zoo, Childrens
Home of Tampa and the Florida Council of 100, an organization of
the states largest business interest.

Code of Conduct

The Company has adopted a code of conduct that
applies to all of its employees, including its principal
executive officer, principal financial officer and principal
accounting officer. A copy of the Companys code of conduct
is available, free of charge, upon written request sent to the
legal department at the Companys corporate offices located
at 12200 Herbert Wayne Court, Suite 150, Huntersville, NC
28078.

Audit Committee Financial Expert

The Companys Board of Directors has
determined that M. Lenny Pippin, director and member of the
audit committee, is an Audit Committee Financial Expert, as
defined under Item 401 of Regulation S-K.
Mr. Pippin is independent as that term is used in
Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.






|         |                        
|-------- | -----------------------
|Item 11. | Executive Compensation.

Summary Compensation Table

The following table contains information
concerning the compensation for services in all capacities to
the Company for the fiscal years 2003, 2002 and 2001 of the
following Named Executive Officers, who are those
persons who (a) served during the fiscal year ended
December 27, 2003 as the Chief Executive Officer of the

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Company and, (b) were, at December 27,
2003, the other four most highly compensated executive officers
of the Company who earned more than $100,000 in salary and bonus
in 2003.


|                            |                           |             |          |                     |  |              |         |              |  |              |         |              |  |  |   |   |  |  |   |         |  |  |        |        | 
|--------------------------- | ------------------------- | ----------- | -------- | ------------------- |  | ------------ | ------- | ------------ |  | ------------ | ------- | ------------ |  |  | - | - |  |  | - | ------- |  |  | ------ | ------ | 
|                            |                           |             |          |                     |  |              |         |              |  | Long-Term    |         |             
|                            |                           |             |          |                     |  | Compensation |         |             
|                            |                           |             |          | Annual Compensation |  |              |         |             
|                            |                           |             |          |                     |  | Securities   |         |             
|                            |                           |             |          |                     |  | Other Annual |         | Underlying   |  | All Other   
|                            |                           | Fiscal Year |          | Salary              |  | Bonus        |         | Compensation |  | Options/SARs |         | Compensation
|Name and Principal Position |                           | Ended       |          | ($)                 |  | ($)          |         | ($)(a)       |  | (#)(b)       |         | ($)(c)      
|                            |                           |             |          |                     |  |              |         |              |  |              |         |             
|Richard P. Johnson          |                           |             | 12/27/03 |                     |  |              | 500,000 |              |  |              | 145,745 |              |  |  |  |   |  |  |  |         |  |  | 32,885 |       
|                            | Chairman, Chief           |             |          | 12/28/02            |  |              |         | 443,846      |  |              |         | 141,730      |  |  |   |  |  |  |   | 812,601 |  |  |        | 31,300 | 
|                            | Executive Officer         |             |          | 12/29/01            |  |              |         | 400,000      |  |              |         | 141,730      |  |  |   |  |  |  |   |        |  |  |        | 35,325 | 
|William E. Berry            |                           |             | 12/27/03 |                     |  |              | 300,000 |              |  |              | 72,409  |              |  |  |  |   |  |  |  |         |  |  | 22,500 |       
|                            | President and Chief       |             |          | 12/28/02            |  |              |         | 255,192      |  |              |         | 56,291       |  |  |   |  |  |  |   | 615,606 |  |  |        | 21,300 | 
|                            | Operating Officer         |             |          | 12/29/01            |  |              |         | 215,000      |  |              |         | 56,291       |  |  |   |  |  |  |   |        |  |  |        | 27,040 | 
|J. Michael Gaither          |                           |             | 12/27/03 |                     |  |              | 270,000 |              |  |              | 72,409  |              |  |  |  |   |  |  |  |         |  |  | 22,500 |       
|                            | Executive Vice President, |             |          | 12/28/02            |  |              |         | 267,577      |  |              |         | 56,291       |  |  |   |  |  |  |   | 443,237 |  |  |        | 21,300 | 
|                            | General Counsel and       |             |          | 12/29/01            |  |              |         | 261,000      |  |              |         | 56,291       |  |  |   |  |  |  |   |        |  |  |        | 24,890 | 
|                            | Secretary                 |             |          |                     |  |              |         |              |  |              |         |              |  |  |   |   |  |  |   |         |  |  |        |        | 
|Daniel K. Brown             |                           |             | 12/27/03 |                     |  |              | 250,000 |              |  |              | 72,409  |              |  |  |  |   |  |  |  |         |  |  | 22,000 |       
|                            | Senior Vice President    |             |          | 12/28/02            |  |              |         | 247,846      |  |              |         | 56,291       |  |  |   |  |  |  |   | 295,491 |  |  |        | 20,800 | 
|                            | Procurement               |             |          | 12/29/01            |  |              |         | 242,000      |  |              |         | 56,291       |  |  |   |  |  |  |   |        |  |  |        | 27,299 | 
|Phillip E. Marrett          |                           |             | 12/27/03 |                     |  |              | 225,000 |              |  |              | 72,409  |              |  |  |  |   |  |  |  |         |  |  | 15,288 |       
|                            | Senior Vice President    |             |          | 12/28/02            |  |              |         | 198,769      |  |              |         | 56,291       |  |  |   |  |  |  |   | 295,491 |  |  |        | 4,800  | 
|                            | Sales and Marketing       |             |          | 12/29/01            |  |              |         | 190,000      |  |              |         | 56,291       |  |  |   |  |  |  |   |        |  |  |        | 7,013  | 



---



|    |  |                                                                                                                                                                                                                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | This column includes amounts for perquisites and
    other personal benefits that, in the aggregate, did not exceed
    the reporting threshold of $50,000 or 10% of total annual salary
    and bonus.                                                                                                        
|(b) |  | This column includes stock options granted in
    2002 under the Companys stock option plans, which is
    discussed below under  Stock Option Plans.
    984,970 options granted in 2002 vested as of December 27,
    2003. The remaining options vest as described in
     Stock Option Plans, below.
|(c) |  | This column includes amounts of Company
    contributions to qualified 401(k) and deferred compensation
    plans.                                                                                                                                                                                             

Option/SAR Grants in 2003

No stock options or stock appreciation rights
were granted to the Named Executive Officers during fiscal 2003.

No options to purchase common stock were
exercised by the Named Executive Officers during the
12 months ended December 27, 2003.

Stock Option Plans

The Company has adopted three stock option plans,
the Amended and Restated 1997 Stock Option Plan, the 1999 Stock
Option Plan and the 2002 Stock Option Plan, all of which are
designed to motivate designated employees, officers, directors
and independent contractors of the Company by encouraging them
to acquire a proprietary interest in the Company. The
Companys Board of Directors, acting through the
compensation committee, administers the stock option plans,
selects eligible participants, determines the number of shares
subject to each option granted under the stock option plans and
sets other terms and conditions applicable to participants in
the stock option plans. As of December 27, 2003, the
maximum aggregate number of shares which may be issued under the
stock option plans is 3,799,639 shares of Class A common
stock.

The stock option plans provide for the grant to
designated employees, officers, directors and independent
contractors of the Company of options to purchase shares of
Class A common stock. The compensation committee has sole
authority to select those individuals to whom options may be
granted and to determine the number of shares of Class A
common stock that will be issuable upon exercise of the options
granted. The

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purchase price for shares of Class A common
stock issuable upon exercise of the options granted is fixed by
the compensation committee, but cannot be less than the fair
market value of the Class A common stock, as determined in
good faith by the Companys Board of Directors, if the
corresponding option is intended to qualify as an incentive
stock option under the Internal Revenue Code. As of
December 27, 2003, options to purchase an aggregate of
2,896,534 shares of Class A common stock, at prices ranging
from $1.10 to $9.00 per share, were outstanding under the stock
option plans.


All options granted under the stock option plans
are subject to the terms and conditions of a stock option
agreement entered into by each option recipient. The stock
option agreement generally requires each recipient to be bound
by the terms of a stockholder agreement with the Company in the
event the recipient elects to exercise options. Options granted
under the 1997 stock option plan generally would have vested on
the first four anniversaries of the date of grant, in
installments of either (a) 10%, 20%, 30% and 40% or
(b) 20%, 20%, 20% and 40%, of the total number of
underlying shares. Options granted under the 1999 stock option
plan generally vest based on time, performance or the occurrence
of specified events, such as an initial public offering or
company sale. Time based options vest on the first four
anniversaries of the date of grant in installments of 25% per
year. Performance based options vest at the end of each year
based on the achievement of EBITDA targets for the year. Options
that vest on the basis of events such as an initial public
offering or company sale do so only to the extent that
Charlesbank has earned a specified return on its initial
investment in shares of the Company. All time based and
performance based options vest in any event on the seventh
anniversary of the date of grant. Options granted under the 2002
stock option plan generally vest based on installments of 20%
with the first 20% vesting on the date of grant and 20% on
January 1 of each year for the following four years
thereafter. Options granted under the stock option plans are
generally not transferable by the recipient other than by a will
or by the laws of descent and distribution and, during the
recipients lifetime, may only be exercised by the
recipient. Under the terms of the stock option plans, options
expire no later than the tenth anniversary of the date of grant.
Options are also subject to adjustment to avoid dilution in the
event of stock splits, stock dividends, reclassifications or
other similar changes in the capital structure of the Company.

Upon the termination of an option holders
employment the stock option agreement typically provides that
all or a portion of the option lapses unless exercised by the
option holder or his or her personal representative within a
specified period of time after the termination.

In connection with the Charlesbank purchase,
which constituted a change of control under the 1997
stock option plan, all outstanding options under the 1997 option
plan became fully vested and are currently exercisable by the
option holders.

Under the 1999 and 2002 stock option plan, each
of the following events would constitute a change of
control:



| |   |                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | at any time after an initial public offering, a
    person or entity not controlled by the Companys existing
    stockholders acquires more than 30% of the combined voting power
    of the then outstanding shares of the Companys common
    stock,
|
| |  | all or substantially all of the assets of the
    Company are sold,                                                                                                                                                                                     
|
| |  | the majority of the Companys Board of
    Directors no longer comprises persons currently serving on the
    Board or persons designated by the current Board majority,                                                                                
|
| |  | at any time prior to an initial public offering,
    Charlesbank and its affiliates collectively own less than 50% of
    the combined voting power of the then outstanding shares of
    common stock of the Company,                                  
|
| |  | the adoption of a plan relating to the
    liquidation or dissolution of the Company in connection with an
    equity investment or sale or a business combination transaction,
    or                                                                  
|
| |  | any other event or transaction that the Board of
    the Company deems to be a change of control.                                                                                                                                                     

Options outstanding under the stock option plans
would become fully vested and immediately exercisable upon any
change of control to the extent provided in the relevant stock
option agreements.

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Restricted Stock

The Company has given designated employees,
officers, directors and independent contractors of the Company
the opportunity to acquire restricted shares of Class A
common stock. The Companys Board of Directors administers
the restricted stock arrangements, selects eligible
participants, determines the number of shares to be offered to
each participant and sets other applicable terms and conditions.
As of December 27, 2003, a total of 80,000 restricted
shares of Class A common stock were outstanding.

Shares of restricted stock were issued by the
Company at the fair market value at the date of issuance. Upon
exercise of options granted under the Companys employee
stock option plans, the securities issued are shares of
restricted stock. All shares of restricted stock are subject to
the terms and conditions of a securities purchase and
stockholders agreement (the restricted stock
agreement) entered into by each option recipient. The
restricted stock agreement prohibits the transfer of restricted
shares except for transfers:



| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to the Company upon the termination of employment
    of a participating stockholder,                                                                                                                                                                       
|
| |  | to other management employees who have executed
    and delivered agreements substantially similar to the restricted
    stock agreement,                                                                                                                   
|
| |  | by will or by the laws of descent or
    distribution, or                                                                                                                                                                                                   
|
| |  | if and to the extent repurchase rights in favor
    of the Company on termination of employment have not been
    exercised, to third parties, subject to rights of first refusal
    in favor of the Company and the other holders of restricted
    stock.

The Company has the right to repurchase all of a
participating stockholders shares upon the termination of
that stockholders employment by the Company due to cause
or by the stockholder other than for good reason (each as
defined in the restricted stock agreement) or the death of the
participating stockholder. A participating stockholder may
require the Company to repurchase all of such stockholders
shares if that stockholder is terminated by the Company without
cause or terminates his or her employment for good reason (as
defined in the restricted stock agreement). The repurchase price
for shares of stock subject to the restricted stock agreement is
generally their fair market value. The repurchase price for
shares of stock subject to the restricted stock agreement in the
case where a stockholder is terminated for certain specified
cause events or violates his or her confidentiality or
noncompete obligations is either their original purchase price
or a price derived from the Companys Net Equity
Value (as defined in the restricted stock agreement) at
the time of repurchase, whichever is lower. Under the restricted
stock agreements entered into in May 1999, the repurchase rights
described in this paragraph are exercisable by Charlesbank and
other principal stockholders to the extent not exercised by the
Company. The restricted stock agreements terminate on the
earlier to occur of a public offering that meets specified
conditions and the tenth anniversary of the date of the
agreement.

Compensation of Directors

During the year ended December 27, 2003,
directors who were not employees of the Company, nominees of The
1818 Mezzanine Fund, or Charlesbank Capital were paid an annual
fee of $10,000 and a fee of $2,000 for each board meeting
attended.

Compensation Committee Interlocks and Insider
Participation

During 2003, Kim Davis and M. Lenny Pippin served
on a compensation committee of the Companys Board of
Directors, which reviewed and recommended executive compensation
for the Named Executive Officers and other executives of the
Company. All compensation recommendations of the executive
committee were reviewed by and subject to the approval of the
full Board of Directors of the Company.

Board Compensation Committee Report on
Executive Compensation

The compensation committee, at the direction of
the Board of Directors of the Company, recommends the
compensation of the Named Executive Officers and other
executives of the Company. In addition, the compensation
committee administers the Companys compensation and stock
option plans.

55



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The key components of the compensation packages
of the Companys executive officers are annual salary,
bonuses dependent upon the Companys performance, deferred
compensation, and long-term, stock-based incentives. In
addition, the Companys executive officers receive health,
accident, and life insurance, retirement, and other personal
benefits typically offered to executives by other corporations
equivalent in size.

Historically, the Company has entered into
executive severance agreements with its senior executive
officers which fix their minimum annual salaries and bonuses.
The compensation philosophy of the Companys Board of
Directors is that the compensation of the Companys
executives and key managers should be designed to promote
achievement of the Companys business and financial
objectives; to provide pay that is externally competitive and
internally equitable, which will allow the Company to attract,
retain, and motivate the executives and key managers necessary
to accomplish its business objectives; and to reward exceptional
performance. The compensation committee reviews the salaries
provided for in the employment agreements with its senior
executive officers, as well as the salaries of the
Companys other officers, once a year, and recommends
changes to the Board of Directors.

Bonuses are paid on the basis of the
Companys and/or the individual divisions
profitability results versus the pre-established targets. The
compensation committee of the board recommends the
performance-based targets for these bonuses and for each
participant or group of participants in the divisions. The Board
of Directors must approve these targets.

The program consists of specific payment levels
0-IV. Within each level, there are established percentage
payouts, which will not begin until the threshold performance is
met. As the Companys performance increases over the
threshold, the payout percentage also increases until
performance reaches 100% of the plan. Once the Companys
performance reaches 100% of the planned performance, the payout
percentage will continue to increase proportionally until a
maximum is reached.

Bonuses are subject to reduction or cancellation
on the basis of a participants individual performance or
in the event of conduct by a participant detrimental to the
Company. Bonuses are payable in cash.



| |                           
| | --------------------------
| | THE COMPENSATION COMMITTEE
| | Kim G. Davis              
| | M. Lenny Pippin           

Indemnification of Officers and
Directors

The Companys articles of incorporation
provide for the release of any person serving as a director of
the Company from liability to the Company or its stockholders
for damages for breach of fiduciary duty and for the
indemnification by the Company of any person serving as a
director, officer, employee or agent or other authorized person
to the fullest extent permissible under the North Carolina
Business Corporation Act. In addition, the Company has purchased
a directors and officers insurance policy covering
officers and directors of the Company for liabilities that they
may incur as a result of any action, or failure to act, by such
officers and directors in their capacity as officers and
directors.

Employment and Severance Agreements

The Company has entered into executive severance
agreements with each of Messrs. Johnson, Berry, Gaither,
Brown and Marrett, providing for annual base salaries as listed
in the summary compensation table above. The agreements each
provide for additional compensation in the form of participation
in the Companys executive bonus plan and participation in
the Companys deferred compensation program.

The severance agreements may be terminated at any
time by the Company or the employee. Upon termination of
employment for any reason, the employee is entitled to receive a
basic termination payment equal to (a) his base salary
earned through the date of termination and (b) the previous
years bonus if the termination is after December 31
and before bonus has been awarded. If the employee is terminated
by the Company without cause or if the employee leaves for good
reason (each as defined in his severance agreement), he is
entitled to an additional severance payment based on a multiple
of his base salary and plan

56



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bonus. The multiple used for determining the
additional severance payment is increased if termination occurs
in connection with a change of control of the Company (as
defined in his severance agreement).


The severance agreements each contain
confidentiality and noncompete provisions.

Executive Bonus Plan

Bonuses are paid on the basis of the
Companys and/or the individual regional profitability
results versus the pre-established targets. The compensation
committee of the board recommends the performance-based targets
for these bonuses and for each participant or group of
participants in the divisions. The Board of Directors must
approve these targets.

The program consists of specific payment levels
0-IV. Within each level, there are established percentage
payouts, which will not begin until the threshold performance is
met. As the Companys performance increases over the
threshold, the payout percentage also increases until
performance reaches 100% of the plan. Once the Companys
performance reaches 100% of the planned performance, the payout
percentage will continue to increase proportionally until a
maximum is reached.

Deferred Compensation Plan

In 1999, the Company established a deferred
compensation plan for its top executives and regional employees
covered by the executive bonus plan to encourage each
participant to promote the long-term interests of the Company.
Each participant is allowed to defer portions of their annual
salary as well as bonuses received into the plan. In addition to
employee deferrals, the Company makes contributions on behalf of
its top executives and certain of the regional employees in
varying amounts. The plan provides that an employee who becomes
a participant on or before November 23, 1998, shall be
fully vested in all amounts credited to such participants
account. The plan provides that an employee who becomes a
participant after November 23, 1998 shall be at all times
fully vested in elective deferrals into such participants
account and as to contributions made by the Company shall vest
at a rate of twenty percent (20%) per year as long as such
participant is an employee on January 1 of each year. The
deferred compensation plan may be altered and amended by the
Companys Board of Directors.






|         |                                                                                                        
|-------- | -------------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder
    Matters.

The following table sets forth certain
information regarding the beneficial ownership of the
Companys common stock as of March 15, 2004 of:



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | each person known by the Company to own
    beneficially more than 5% of the Class A common stock,
|
| |  | each director,                                                                                    
|
| |  | the Named Executive Officers and                                                                  
|
| |  | all directors and executive officers of the
    Company as a group.                               

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|                                                                                |  |                  |           |                |  |  |      |  
|------------------------------------------------------------------------------- |  | ---------------- | --------- | -------------- |  |  | ---- | -
|                                                                                |  | Number of Shares |           | Percent of    
|                                                                                |  | Beneficially     |           | Class A Common
|Name and Address of Beneficial Owner(a)                                         |  | Owned            |           | Stock(b)      
|                                                                                |  |                  |           |               
|Charlesbank Equity Fund IV, Limited Partnership                                 |  |                  | 4,961,734 | (c)            |  |  | 97.5 | %
|The 1818 Mezzanine Fund, L.P.                                                   |  |                  | 1,034,000 | (d)            |  |  | 16.9 |  
|Joseph P. Donlan                                                                |  |                  | 1,034,000 | (d)            |  |  | 16.9 |  
|Kim G. Davis                                                                    |  |                  | 4,961,734 | (c)            |  |  | 97.5 |  
|Tim R. Palmer                                                                   |  |                  | 4,961,734 | (c)            |  |  | 97.5 |  
|Jon M. Biotti                                                                   |  |                  |          | (e)            |  |  |     |  
|Todd Krasnow                                                                    |  |                  | 20,000    | (f)            |  |  | 0.4  |  
|M. Lenny Pippin                                                                 |  |                  | 20,000    | (f)            |  |  | 0.4  |  
|Richard P. Johnson                                                              |  |                  | 514,671   | (g)            |  |  | 9.2  |  
|William E. Berry                                                                |  |                  | 387,437   | (h)            |  |  | 7.1  |  
|J. Michael Gaither                                                              |  |                  | 315,942   | (i)            |  |  | 5.9  |  
|Daniel K. Brown                                                                 |  |                  | 227,295   | (j)            |  |  | 4.3  |  
|Phillip E. Marrett                                                              |  |                  | 177,295   | (k)            |  |  | 3.4  |  
|All directors and executive officers of the
    Company as a group (11 persons) |  |                  | 7,658,383 |                |  |  | 99.6 |  



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Unless otherwise indicated, the address for each
    person listed in the table is in care of American Tire
    Distributors, Inc., 12200 Herbert Wayne Court, Suite 150,
    Huntersville, North Carolina 28078.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(b) |  | Shares beneficially owned, as recorded in this
    table, are expressed as a percentage of the shares of
    Class A common stock. For purposes of computing the
    percentage of outstanding shares held by each person or group of
    persons named in this table, any securities which that person or
    group of persons has the right to acquire within 60 days of
    March 15, 2004 are deemed to be outstanding for purposes of
    computing the percentage ownership of such person or persons,
    but are not deemed to be outstanding for the purpose of
    computing the percentage ownership of any other person. As of
    March 15, 2004, 5,086,917 shares of Class A common
    were issued and outstanding.                                                                                                                           
|(c) |  | Represents (i) 4,846,179 shares of
    Class A common stock owned by Charlesbank Equity Fund IV,
    Limited Partnership, (ii) 4,444 shares of Class A
    common stock owned by its affiliate, Charlesbank Coinvestment
    Partners, LLC, and (iii) 111,111 shares of Class A
    common stock owned by an affiliate of Bain Capital and voted by
    Charlesbank pursuant to an irrevocable proxy. Messrs. Davis
    and Palmer are Managing Directors of Charlesbank Capital
    Partners, LLC, which has the indirect authority to vote and
    exercise investment power over shares of Class A common
    stock beneficially owned by Charlesbank. Since neither of
    Messrs. Davis and Palmer individually have the power to
    vote and exercise investment power over the shares, each of them
    disclaims beneficial ownership of the shares.
|(d) |  | Represents shares issuable upon the exercise of
    Warrants, as discussed below. Mr. Donlan is the co-manager
    of The 1818 Mezzanine Fund, L.P. and in that capacity will have
    authority to vote and exercise investment power over the shares.
    See Certain Relationships and Related
    Transactions  Warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(e) |  | Mr. Biotti is a Vice President of
    Charlesbank Capital Partners, LLC and has no authority to vote
    or exercise investment power over shares of Class A common
    stock beneficially owned by Charlesbank.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(f) |  | Includes 20,000 shares of Class A common
    stock issuable upon the exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|(g) |  | Includes 487,561 shares of Class A common
    stock issuable upon the exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(h) |  | Includes 369,364 shares of Class A common
    stock issuable upon the exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(i) |  | Includes 290,942 shares of Class A common
    stock issuable upon the exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(j) |  | Includes 202,295 shares of Class A common
    stock issuable upon the exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(k) |  | Includes 177,295 shares of Class A common
    stock issuable upon the exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

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##### Table of Contents



The following table provides information as of
December 27, 2003, with respect to compensation plans under
which the Companys equity securities are authorized for
issuance.

Equity Compensation Plan Information

|                                                           |       |                      |           |                      |  |                      |      |      |  |  |         |         | 
|---------------------------------------------------------- | ----- | -------------------- | --------- | -------------------- |  | -------------------- | ---- | ---- |  |  | ------- | ------- | 
|                                                           |       |                      |           |                      |  | Number of securities
|                                                           |       |                      |           |                      |  | remaining available 
|                                                           |       | Number of securities |           |                      |  | for future issuance 
|                                                           |       | to be issued upon    |           | Weighted-average     |  | under equity        
|                                                           |       | the exercise of      |           | exercise price of    |  | compensation plans  
|                                                           |       | outstanding options, |           | outstanding options, |  | excluding securities
|Plan category                                              |       | warrants and rights  |           | warrants and rights  |  | already issued      
|                                                           |       |                      |           |                      |  |                     
|Equity compensation plans approved by shareholders         |       |                      | 4,391,324 |                      |  | $                    | 1.36 |      |  |  | 903,105 |        
|Equity compensation plans not approved by
    shareholders |       |                      |          |                      |  |                      |     |      |  |  |        |        
|                                                           |       |                      |           |                      |  |                      |      |      |  |  |         |        
|                                                           | Total |                      |           | 4,391,324            |  |                      | $    | 1.36 |  |  |         | 903,105 | 
|                                                           |       |                      |           |                      |  |                      |      |      |  |  |         |        






|         |                                                    
|-------- | ---------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions.

Warrants

In connection with the incurrence of subordinated
debt to finance the acquisition of Winston in May 1997, the
Company issued to The 1818 Mezzanine Fund, L. P. (the 1818
Fund) warrants (the Warrants) to purchase
shares of the Companys common stock. Joseph P. Donlan, a
member of the Companys Board of Directors, is a Managing
Director of Brown Brothers Harriman & Co., the 1818
Funds general partner. Mr. Donlan and Robert R.
Gould, a Partner of Brown Brothers Harriman & Co., are
co-managers of the 1818 Fund, and in that capacity they exercise
voting and investment power over the 1818 Funds shares.
The Warrants are exercisable for 1,034,000 shares of
Class A common stock. The Warrants may be exercised, in
whole or in part, at any time prior to the earliest of:



| |   |                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | May 7, 2007,                                                                                                                                                                                                      
|
| |  | the date of an initial public offering of
    Class A common stock yielding gross proceeds of at least
    $25.0 million or representing at least 20% of the
    Class A common stock on a fully-diluted basis, or
|
| |  | the Companys merger or consolidation with
    or into another entity or the sale of all or substantially all
    of the Companys assets.                                                                        

The number of shares issuable upon the exercise
of the Warrants is subject to adjustment from time to time to
reflect stock dividends, splits, combinations and
reclassifications. The Company has no right to call for the
redemption of the Warrants.

The Company and the 1818 Fund are also parties to
a warrant holder agreement, dated as of May 21, 1999, which
contains provisions restricting the transferability of the
Warrants, including a right of first offer in favor of the
Company, and grants registration rights with respect to shares
of Class A common stock issuable upon exercise of the
Warrants.

Series C Preferred Stock

On April 2, 2001 the Company issued
1,333,334 shares of Series C preferred stock for $9.00 per
share in exchange for $12.0 million in cash contributed by
certain of its principal stockholders. Shares of Series C
preferred stock accrue dividends at an annual rate of 12%.
However, as long as any shares of Series A preferred stock
or Series B preferred stock remain outstanding, no
dividends may be paid. On March 27, 2002, the conversion
price of the Series C preferred stock was reduced to $3.00
per common share. On October 31, 2003, the Company amended
and restated its articles of incorporation to eliminate the
redemption clause of the Series C preferred stock.

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Series D Preferred Stock

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%. However, as long as any shares of Series A
preferred stock or Series B preferred stock remain
outstanding, no dividends may be paid. In addition, shares of
Series D preferred stock are convertible into common stock
at a conversion price of $3.00 per common share. On
October 31, 2003, the Company amended and restated its
articles of incorporation to eliminate the redemption clause of
the Series D preferred stock.

Related Party Transactions

On May 25, 2000, the Company purchased all
of the outstanding common stock of T.O. Haas Holding Co., Inc.
and T.O. Haas Tire Company, Inc. (collectively
Haas), a tire wholesaler and distributor, located in
Lincoln, Nebraska, as well as all of the outstanding common
stock of Haas Investment Company (Haas Investment).
In connection with the acquisition, the Company sold certain
parcels of real estate, including substantially all of the
assets of Haas Investment, and leased them back in a
transaction, which closed on August 8, 2000. Total monthly
payments under these leases are approximately $73,000. The
leases expire July 31, 2010. Total rent expense of
approximately $0.9 million, $0.9 million and
$0.8 million is included in the accompanying statements of
operations for fiscal years 2003, 2002 and 2001, respectively.

On October 12, 2001, Haas entered into an
Asset Purchase Agreement with T.O. Haas, LLC (Haas
LLC) for the sale of certain assets. The total purchase
price was approximately $5.3 million, of which the Company
received approximately $2.4 million in cash at closing.
Haas LLC was formed by, among others, one of the executives of
Haas. As of May 2002, this executive is no longer with the
Company. A portion of the purchase price for the Companys
acquisition of Haas in second quarter 2000 is payable to this
executive in the form of noncompete and stay put payments. In
connection with the sale, such noncompete payments in the amount
of $2.4 million were accelerated and such liability was
satisfied as a reduction of the purchase price. Approximately
$1.0 million of the purchase price is payable in the form
of a promissory note (the Note) due in two
equal annual installments, with first such payment paid
January 2, 2002. The Note bears interest at 6%. As of
January 3, 2003, the Note was paid in full. Stay put
payments due to the executive of $1.6 million were
accelerated to coincide with the schedule of payments due under
the Note. Liabilities assumed by the buyer totaled
$0.7 million, reflecting the remainder of the purchase
price.

In connection with the sale described above, the
Company entered into a Supply and Retail Distribution Agreement
with Haas LLC. Prior to the executive leaving the Company in May
2002, total sales for fiscal 2002 included five months of sales
to Haas LLC of $3.7 million. Total sales for fiscal 2001
included three months of sales to Haas LLC of $2.4 million.

The Company believes that the above transactions
were on terms no less favorable to it than could have been
obtained from an independent third party.

The Company expects to pay an advisory and
monitoring fee not to exceed $200,000 annually to Charlesbank
Capital Partners, LLC. As of December 27, 2003, the Company
has recorded a liability for the 2003 payment, which was
subsequently paid.

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Item 14.     Principal
Accountant Fees and Services.

The following table sets forth the fees billed by
the Companys independent auditor, PricewaterhouseCoopers
LLP during fiscal years ended December 27, 2003 and
December 28, 2002. Fiscal year 2002 also includes fees
billed by Arthur Andersen LLP.

|                      |       |              |     |      |  |   |     |     | 
|--------------------- | ----- | ------------ | --- | ---- |  | - | --- | --- | 
|                      |       | 2003         |     | 2002
|                      |       |              |     |     
|                      |       |             
|                      |       | in thousands
|Audit Fees(a)         |       | $            | 343 |      |  | $ | 482 |    
|Audit-Related Fees(b) |       |              | 64  |      |  |   | 46  |    
|Tax Fees(c)           |       |              | 132 |      |  |   | 200 |    
|All Other Fees        |       |              |    |      |  |   |    |    
|                      |       |              |     |      |  |   |     |    
|                      | Total |              | $   | 539  |  |   | $   | 728 | 
|                      |       |              |     |      |  |   |     |    



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Audit fees relate to professional services
    rendered in connection with the audit of the Companys
    annual financial statements, quarterly review of financial
    statements included in the Companys Forms 10-Q, and
    audit services provided in connection with other statutory and
    regulatory filings. Fiscal 2002 includes $400,000 of audit fees
    billed by Arthur Andersen LLP.
|(b) |  | Audit-related fees include professional services
    related to the audit of the Companys employee benefit
    plans and consultation on accounting standards or transactions.
    Fiscal 2002 includes $32,500 of audit-related fees billed by
    Arthur Andersen LLP.                                                                                                                              
|(c) |  | Tax fees include professional services related to
    tax compliance, tax planning and the preparation of federal and
    state tax returns. Fiscal 2002 includes $199,900 of tax fees
    billed by Arthur Andersen LLP.                                                                                                                                                                              

Audit Committee Pre-Approval Policies and
Procedures

In accordance with policies adopted by the
Companys Audit Committee, the Audit Committee has sole
authority to approve all audit engagement fees and terms of the
Companys independent auditors. The Audit Committee may
delegate authority to pre-approve audit and non-audit services
to any member of the Audit Committee whose decisions should be
reviewed at the next scheduled meeting. The Audit Committee may
not delegate pre-approval authority to management.

61



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##### Table of Contents






PART IV




Item 15.     Exhibits,
Financial Statement Schedules and Reports on
Form 8-K.

(a) Documents filed as part of this Report:



| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | 1. The following items, including
    consolidated financial statements of the Company, are set forth
    at Item 8 of this report:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | Report of Independent Public Accountants                                                                                              
|
| |  | Consolidated Balance Sheets as of
    December 27, 2003 and December 28, 2002                                                         
|
| |  | Consolidated Statements of Operations for the
    years ended December 27, 2003, December 28, 2002 and
    December 29, 2001          
|
| |  | Consolidated Statements of Stockholders
    Equity for the years ended December 27, 2003,
    December 28, 2002 and December 29, 2001
|
| |  | Consolidated Statements of Cash Flows for the
    years ended December 27, 2003, December 28, 2002 and
    December 29, 2001          
|
| |  | Notes to Consolidated Financial Statements                                                                                            

2. Financial Statement Schedules

Report of Independent Public Accountants (set
forth on following page)

62



---



##### Table of Contents



SCHEDULE II  VALUATION AND
QUALIFYING ACCOUNTS

For the Years Ended December 27, 2003,
December 28, 2002 and December 29, 2001


(in thousands)


|                                           |  |           |       |            |  |          |       |            |  |             |   |  |  |   |        |      |  |   |       | 
|------------------------------------------ |  | --------- | ----- | ---------- |  | -------- | ----- | ---------- |  | ----------- | - |  |  | - | ------ | ---- |  | - | ----- | 
|                                           |  |           |       |            |  |          |       |           
|                                           |  |           |       | Additions  |  |          |       |           
|                                           |  |           |       |            |  |          |       |           
|                                           |  | Balance   |       | Charged to |  | Charged  |       |            |  |            
|                                           |  | Beginning |       | Costs and  |  | to Other |       |            |  | Balance    
|                                           |  | of Year   |       | Expenses   |  | Accounts |       | Deductions |  | End of Year
|                                           |  |           |       |            |  |          |       |            |  |            
|2003                                       |  |           |       |            |  |          |       |            |  |             |   |  |  |   |        |      |  |   |       | 
|Allowance for doubtful accounts            |  | $         | 1,231 |            |  | $        | 691   |            |  |             |  |  |  | $ | (810   | )(1) |  | $ | 1,112 | 
|Acquisition exit cost reserves(2)          |  |           | 453   |            |  |          | 13    |            |  |             |  |  |  |   | (188   | )    |  |   | 278   | 
|Valuation allowance on deferred tax assets |  |           | 1,044 |            |  |          |      |            |  |             |  |  |  |   |       |      |  |   | 1,044 | 
|Inventory reserves                         |  |           | 964   |            |  |          | 1,540 |            |  |             |  |  |  |   | (1,552 | )    |  |   | 952   | 
|2002                                       |  |           |       |            |  |          |       |            |  |             |   |  |  |   |        |      |  |   |       | 
|Allowance for doubtful accounts            |  | $         | 3,571 |            |  | $        | 2,036 |            |  |             |  |  |  | $ | (4,376 | )(1) |  | $ | 1,231 | 
|Acquisition exit cost reserves(2)          |  |           | 1,149 |            |  |          | (199  | )          |  |             |  |  |  |   | (497   | )    |  |   | 453   | 
|Valuation allowance on deferred tax assets |  |           | 2,000 |            |  |          |      |            |  |             |  |  |  |   | (956   | )    |  |   | 1,044 | 
|Inventory reserves                         |  |           | 5,796 |            |  |          | 1,108 |            |  |             |  |  |  |   | (5,940 | )(3) |  |   | 964   | 
|2001                                       |  |           |       |            |  |          |       |            |  |             |   |  |  |   |        |      |  |   |       | 
|Allowance for doubtful accounts            |  | $         | 1,877 |            |  | $        | 3,125 |            |  |             |  |  |  | $ | (1,431 | )(1) |  | $ | 3,571 | 
|Acquisition exit cost reserves(2)          |  |           | 1,833 |            |  |          | 245   |            |  |             |  |  |  |   | (929   | )    |  |   | 1,149 | 
|Valuation allowance on deferred tax assets |  |           |      |            |  |          | 2,000 |            |  |             |  |  |  |   |       |      |  |   | 2,000 | 



---



|    |                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Accounts written off during the year, net of
    recoveries.                                                                                                                                                                                              
|   
|(2) | Relates to the acquisition of ITCO, CPW and ATD.
    Amounts represent facilities closing cost of acquired
    distribution centers due to existing distribution centers being
    located in close proximity to the acquired distribution
    facilities.
|   
|(3) | Amount includes inventory reserves relating to
    the exit of the Companys parts product line in the Western
    division in 2002.                                                                                                                      

Schedules not included herein are omitted because
they are not applicable or the required information appears in
the financial statements or notes thereto.

63



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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS ON FINANCIAL
STATEMENT SCHEDULE

To the Board of Directors and Stockholders of

American Tire Distributors, Inc. and Subsidiaries:


Our audits of the consolidated financial
statements referred to in our report dated March 5, 2004
appearing in this Annual Report on Form 10-K of American
Tire Distributors, Inc. (the Company, formerly
Heafner Tire Group, Inc.) also included an audit of the
financial statement schedule information for the years ended
December 27, 2003 and December 28, 2002 listed in
Item 15 of this Form 10-K. In our opinion, the
financial statement schedule information for the years ended
December 27, 2003 and December 28, 2002, presents
fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated
financial statements. The financial statement schedule
information of the Company for the year ended December 29,
2001, was audited by other independent auditors who have ceased
operations. Those independent auditors expressed an unqualified
opinion on that financial statement schedule information in
their report dated March 22, 2002.

/s/ PricewaterhouseCoopers LLP

Charlotte, North Carolina

March 5, 2004


64



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##### Table of Contents



REPORT OF PREDECESSOR AUDITOR (ARTHUR ANDERSEN
LLP)

ON FINANCIAL STATEMENT SCHEDULE


THE FOLLOWING REPORT IS A COPY OF A REPORT
PREVIOUSLY ISSUED BY ARTHUR ANDERSEN LLP AND HAS NOT BEEN
REISSUED BY ARTHUR ANDERSEN LLP. THIS REPORT APPLIES TO
SUPPLEMENTAL SCHEDULE II  VALUATION AND
QUALIFYING ACCOUNTS FOR THE YEARS ENDED DECEMBER 29,
2001.

To Heafner Tire Group, Inc. and Subsidiaries:

We have audited, in accordance with auditing
standards generally accepted in the United States, the
consolidated financial statements of Heafner Tire Group, Inc.
and subsidiaries included in this Form 10-K, and have
issued our report thereon dated March 22, 2002. Our audit
was made for the purpose of forming an opinion on those
financial statements taken as whole. The schedule listed in
Item 14(a)* of this Form 10-K is the responsibility of
the Companys management and is presented for purposes of
complying with the Securities and Exchange Commissions
rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial
data required to be set forth therein in relation to the basic
financial statements taken as a whole.

Arthur Andersen LLP

Charlotte, North Carolina

March 22, 2002




---



|  |                                                                                  
|- | ---------------------------------------------------------------------------------
|* | Such information is presented in Item 15(a)
    in the current year presentation.

65



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##### Table of Contents





| |    |          
| | -- | ---------
| | 3. | Exhibits:

(a) Exhibits:

| |      |  |  |                                                                                                                                                                                                                                                                                                                                                          
| | ---- |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.1  |  |  | Restated Certificate of Incorporation of Heafner
    Tire Group, Inc. (the Company)(diamond)                                                                                                                                                                                                                                                           
| | 3.2  |  |  | Second Restated Certificate of Incorporation of
    Heafner Tire Group,
    Inc.±                                                                                                                                                                                                                                                                        
| | 3.3  |  |  | Certificate of Amendment to the Second Restated
    Certificate of Incorporation of Heafner Tire Group, Inc., as
    filed with the Secretary of State of the State of Delaware on
    May 30, 2002#                                                                                                                                                     
| | 3.4  |  |  | Third Restated Certificate of Incorporation of
    American Tire Distributors, Inc.^                                                                                                                                                                                                                                                                     
| | 3.5  |  |  | Fourth Restated Certificate of Incorporation of
    American Tire Distributors, Inc.                                                                                                                                                                                                                                                                    
| | 3.6  |  |  | Certificate of Correction Filed to Correct a
    Certain Error in the Certificate of American Tire Distributors,
    Inc.**                                                                                                                                                                                                                              
| | 3.7  |  |  | By-laws of the Company*                                                                                                                                                                                                                                                                                                                                  
| | 3.8  |  |  | Articles of Incorporation of The Speed Merchant,
    Inc.*                                                                                                                                                                                                                                                                                               
| | 3.9  |  |  | By-laws of The Speed Merchant, Inc.*                                                                                                                                                                                                                                                                                                                     
| | 3.10 |  |  | Articles of Incorporation of Phoenix Racing, Inc.*                                                                                                                                                                                                                                                                                                       
| | 3.11 |  |  | By-laws of Phoenix Racing, Inc.*                                                                                                                                                                                                                                                                                                                         
| | 3.12 |  |  | Articles of Incorporation of California Tire
    Company                                                                                                                                                                                                                                                                                               
| | 3.13 |  |  | By-laws of California Tire Company                                                                                                                                                                                                                                                                                                                     
| | 3.14 |  |  | Articles of Incorporation of T.O. Haas Holding
    Co., Inc.(diamond)                                                                                                                                                                                                                                                                                    
| | 3.15 |  |  | Amended By-laws of T.O. Haas Holding Co.,
    Inc.(diamond)                                                                                                                                                                                                                                                                                              
| | 3.16 |  |  | Articles of Incorporation of T.O. Haas Tire Co.,
    Inc.(diamond)                                                                                                                                                                                                                                                                                       
| | 3.17 |  |  | By-laws of T.O. Haas Tire Co., Inc.(diamond)                                                                                                                                                                                                                                                                                                             
| | 4.1  |  |  | Indenture, dated as of December 1, 1998,
    among the Company, First Union National Bank, as Trustee (the
    Trustee), and Oliver & Winston, Inc., ITCO
    Logistics Corporation, ITCO Holding Company, Inc., ITCO Tire
    Company, ITCO Tire Company of Georgia, The Speed Merchant, Inc.,
    and Phoenix Racing, Inc. (the Series D Indenture)+
| | 4.2  |  |  | Supplemental Indenture to the Series D
    Indenture, dated as of February 22, 1999, among the
    Company, the Trustee, Oliver & Winston, Inc., The Speed
    Merchant, Inc., Phoenix Racing, Inc. and California Tire
    Company                                                                                                                    
| | 4.3  |  |  | Second Supplemental Indenture to the
    Series D Indenture, dated as of May 14, 1999, among
    the Company, the subsidiary guarantors party thereto and First
    Union National Bank, as Trustee#                                                                                                                                                     
| | 4.4  |  |  | Third Supplemental Indenture to the Series D
    Indenture, dated as of May 25, 2000, among the Company, the
    subsidiary guarantors party thereto and First Union National
    Bank, as Trustee-                                                                                                                                                      
| | 4.5  |  |  | Fourth Supplemental Indenture to the
    Series D Indenture, dated as of March 27, 2002, among
    the Company, the subsidiary guarantors party thereto and First
    Union National Bank, as
    Trustee±                                                                                                                                               
| | 4.6  |  |  | Form of Series C and Series D Note
    (attached as Exhibit A to the Series D Indenture)+                                                                                                                                                                                                                                                                
| | 4.7  |  |  | Share Purchase Agreement, dated as of
    March 30, 2001, among Heafner Tire Group, Inc., a Delaware
    corporation and the parties listed on Schedule I.(diamond)                                                                                                                                                                                      
| | 4.8  |  |  | Share Purchase Agreement, dated as of
    March 27, 2002, among Heafner Tire Group, Inc., a Delaware
    corporation and the Investors named
    therein.±                                                                                                                                                                                               

66



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##### Table of Contents



| |       |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----- |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.9   |  |  | Agreement, dated May 13, 2002, among the
    stockholders of Heafner Tire Group, Inc., a Delaware corporation
    named on the signature pages
    hereto.±±                                                                                                                                                                                                                                                                                                                                                                                      
| | 10.1  |  |  | Second Amended and Restated Loan and Security
    Agreement, dated as of March 6, 2000, among the Company,
    Winston Tire Company, The Speed Merchant, Inc. and California
    Tire Company as Borrowers, and Fleet Capital Corporation, as
    Administrative Agent (the Administrative Agent),
    Bank of America, N.A., as Syndication Agent (the
    Syndication Agent), FleetBoston Robertson Stephens
    Inc., as Arranger (the Arranger) and the financial
    institutions party from time to time party thereto, as Lenders+/- 
| | 10.2  |  |  | Amendment No. 1 to Second Amended and
    Restated Loan and Security Agreement-                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.3  |  |  | Amendment No. 2 to Second Amended and
    Restated Loan and Security Agreement-                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.4  |  |  | Amendment No. 3 to Second Amended and
    Restated Loan and Security Agreement-                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.5  |  |  | Amendment No. 4 and Waiver to Second Amended
    and Restated Loan and Security Agreement(diamond)                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 10.6  |  |  | Amendment No. 5 to Second Amended and
    Restated Loan and Security Agreement-                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.7  |  |  | Amendment No. 6 to Second Amended and
    Restated Loan and Security Agreement=                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.8  |  |  | Amendment No. 7 to Second Amended and
    Restated Loan and Security Agreement-                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | 10.9  |  |  | Amendment No. 8 and Waiver to Second Amended
    and Restated Loan and Security Agreement**                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | 10.10 |  |  | Amendment No. 9 to Second Amended and
    Restated Loan and Security Agreement**                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 10.11 |  |  | Amendment No. 10 to Second Amended and
    Restated Loan and Security
    Agreement▪                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 10.12 |  |  | Third Amended and Restated Loan and Security
    Agreement, dated as of March 19, 2004, among the Company,
    The Speed Merchant, Inc., T.O. Haas Holding Co., Inc. and T.O.
    Haas Tire Company, Inc. as Borrowers, and Fleet Capital
    Corporation as Administrative Agent, Wachovia Bank, National
    Association as Syndication Agent, The CIT Group/ Business
    Credit, Inc. as Documentation Agent, Fleet Securities, Inc. as
    Arranger and the financial institutions party hereto from time
    to time, as Lenders(2 diamonds)
| | 10.13 |  |  | Letter, dated March 6, 2000, from the
    Company to the Administrative Agent+/-                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 10.14 |  |  | Amended and Restated Registration Rights
    Agreement, dated as of May 21, 1999, between and among the
    Company, The 1818 Mezzanine Fund, L.P., and Charlesbank Equity
    Fund IV, Limited Partnership#                                                                                                                                                                                                                                                                                                                                      
| | 10.15 |  |  | Warrantholder Agreement, dated as of May 21,
    1999, between the Company, The 1818 Mezzanine Fund, L.P. and
    Charlesbank Equity Fund IV, Limited Partnership#                                                                                                                                                                                                                                                                                                                                                                                
| | 10.16 |  |  | Amended and Restated Warrant No. 2
    exercisable for 1,034,000 shares of Class A Common Stock in
    the name of The 1818 Mezzanine Fund, L.P.#                                                                                                                                                                                                                                                                                                                                                                                                 
| | 10.17 |  |  | Securities Purchase Agreement, dated as of
    May 7, 1997, between The J. H. Heafner Company, Inc. and
    The Kelly-Springfield Tire and Rubber Company*                                                                                                                                                                                                                                                                                                                                                                                        
| | 10.18 |  |  | Amendment to Securities Purchase Agreement, dated
    as of May 21, 1999, between and among the Company and The
    Kelly-Springfield Tire Company, a division of The Goodyear Tire
    and Rubber Company#                                                                                                                                                                                                                                                                                                                                       
| | 10.19 |  |  | Termination and Release Agreement, dated as of
    May 22, 1999, among the Company and the Class B
    stockholders party thereto#                                                                                                                                                                                                                                                                                                                                                                                                                
| | 10.20 |  |  | The J.H. Heafner Company Amended and Restated
    1997 Stock Option Plan#                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | 10.21 |  |  | Heafner Tire Group 1999 Stock Option Plan+/-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 10.22 |  |  | American Tire Distributors, Inc. 2002 Stock
    Option Plan▪                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

67



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##### Table of Contents



| |       |  |  |                                                                                                                                                                                                                               
| | ----- |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.23 |  |  | Stock Option Agreements, dated as of
    June 12, 2002, between the Company and each of Richard P.
    Johnson, William E. Berry, J. Michael Gaither, Daniel K. Brown
    and Phillip E. Marrett▪                             
| | 10.24 |  |  | The J.H. Heafner Company 1997 Restricted Stock
    Plan*                                                                                                                                                                      
| | 10.25 |  |  | Securities Purchase and Stockholders Agreement,
    dated as of May 28, 1997, among the Company and various
    management stockholders*                                                                                      
| | 10.26 |  |  | Securities Purchase and Stockholders
    Agreement, dated as of May 24, 1999, between the Company
    and each of Donald C. Roof, J. Michael Gaither, Daniel K. Brown
    and Richard P. Johnson#                            
| | 10.27 |  |  | Executive Severance Agreement, dated as of
    May 24,1999, between the Company and Donald C. Roof#                                                                                                                           
| | 10.28 |  |  | Amended and Restated Executive Severance
    Agreement, dated as of December 5, 2001, between the
    Company and J. Michael Gaither-                                                                                         
| | 10.29 |  |  | Amended and Restated Executive Severance
    Agreement, dated as of December 5, 2001, between the
    Company and Richard P. Johnson-                                                                                         
| | 10.30 |  |  | Amended and Restated Executive Severance
    Agreement, dated as of December 5, 2001, between the
    Company and Daniel K. Brown-                                                                                            
| | 10.31 |  |  | Executive Severance Agreement, dated
    December 5, 2001, between the Company and William E. Berry-                                                                                                                          
| | 10.32 |  |  | Executive Severance Agreement dated July 24,
    2000, between the Company and Phillip E. Marrett-                                                                                                                            
| | 10.33 |  |  | Stock Purchase Agreement dated April 14,
    2000, between Heafner Tire Group Inc., T.O. Haas Holding Co.,
    Randall M. Haas and Ricky L. Haas+/-+/-                                                                        
| | 10.34 |  |  | Stock Purchase Agreement, dated May 4, 2001,
    by and among Performance Management, Inc., Heafner Tire Group,
    Inc., as sole shareholder of Winston Tire Company, Winston Tire
    Company and Charles Bryant Kountz##   
| | 12.1  |  |  | Statement re: Computation of Ratios(2 diamonds)                                                                                                                                                                               
| | 21.1  |  |  | Chart of Subsidiaries of the Company(2 diamonds)                                                                                                                                                                              
| | 31.1  |  |  | Certification of Principal Executive Officer
    pursuant to Rules 13a-14(a) and 15d-14(a) under the
    Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(2 diamonds)
| | 31.2  |  |  | Certification of Principal Financial Officer
    pursuant to Rules 13a-14(a) and 15d-14(a) under the
    Securities Exchange Act of 1934, as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002(2 diamonds)
| | 99.3  |  |  | Letter to the Securities and Exchange Commission
    regarding Arthur Andersen LLP audit-                                                                                                                                     



---

|          |  |                                                                                                                
|--------- |  | ---------------------------------------------------------------------------------------------------------------
|*         |  | Incorporated by reference to the Companys
    Registration Statement on Form S-4 filed on August 18,
    1998.
|+         |  | Incorporated by reference to the Companys
    Form 8-K filed on December 15, 1998.                            
|        |  | Incorporated by reference to the Companys
    Registration Statement on Form S-4 filed on March 31,
    1999. 
|#         |  | Incorporated by reference to the Companys
    Registration Statement Form S-4 filed on June 9, 1999.          
|+/-       |  | Incorporated by reference to the Companys
    10-K, filed on March 30, 2000.                                  
|+/- +/-   |  | Incorporated by reference to the Companys
    8-K, filed on November 14, 2000.                                
|(diamond) |  | Incorporated by reference to the Companys
    10-K, filed on April 9, 2001.                                   

68



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##### Table of Contents



|             |  |                                                                                 
|------------ |  | --------------------------------------------------------------------------------
|##           |  | Incorporated by reference to the Companys
    10-Q, filed on May 15, 2001.     
|=            |  | Incorporated by reference to the Companys
    10-Q, filed on November 13, 2001.
|-            |  | Incorporated by reference to the Companys
    10-K, filed on March 26, 2002.   
|±            |  | Incorporated by reference to the Companys
    8-K, filed on April 11, 2002.    
|±±           |  | Incorporated by reference to the Companys
    10-Q, filed on May 14, 2002.     
|ß            |  | Incorporated by reference to the Companys
    8-K, filed on June 18, 2002.     
|^            |  | Incorporated by reference to the Companys
    10-Q, filed on August 12, 2002.  
|**           |  | Incorporated by reference to the Companys
    10-Q, filed on November 12, 2002.
|▪            |  | Incorporated by reference to the Companys
    10-K, filed on March 28, 2003.   
|            |  | Incorporated by reference to the Companys
    10-Q, filed on November 12, 2003.
|(2 diamonds) |  | Filed herewith.                                                                 

(b) Reports on Form 8-K

Report on Form 8-K was filed on May 15,
2003 relating to the press release reporting first quarter 2003
financial results.

Report on Form 8-K was filed on
August 12, 2003 relating to the press release reporting
second quarter 2003 financial results.

Report on Form 8-K was filed on
November 13, 2003 relating to the press release reporting
third quarter 2003 financial results.

69



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##### Table of Contents






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, on
March 26, 2004.



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



| |     |                       
| | --- | ----------------------
| | By: | /s/ RICHARD P. JOHNSON

| |                                            
| | -------------------------------------------
| |                                            
| | Name: Richard P. Johnson                   
| | Title: Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, this report has been signed by
the following persons on behalf of the Registrant and in the
capacities indicated on March 26, 2004.

|                                         |  |                                                                                                                        |  |                |  | 
|---------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|                                         |  |                                                                                                                        |  |               
|Signature                                |  | Title                                                                                                                  |  | Date          
|                                         |  |                                                                                                                        |  |               
|                                        
|/s/ RICHARD P. JOHNSONRichard P. Johnson |  | Director, Chairman and Chief Executive Officer
    (Principal Executive Officer)                                       |  | March 26, 2004
|                                        
|/s/ WILLIAM E. BERRYWilliam E. Berry     |  | President and Chief Operating Officer                                                                                  |  | March 26, 2004
|                                        
|/s/ J. MICHAEL GAITHERJ. Michael Gaither |  | Executive Vice President, General Counsel and
    Secretary                                                            |  | March 26, 2004
|                                        
|/s/ SCOTT A. DEININGERScott A. Deininger |  | Senior Vice President of Finance and
    Administration and Treasurer (Principal Financial and Accounting
    Officer) |  | March 26, 2004
|                                        
|/s/ JOSEPH P. DONLANJoseph P. Donlan     |  | Director                                                                                                               |  | March 26, 2004
|                                        
|/s/ JON M. BIOTTIJon M. Biotti           |  | Director                                                                                                               |  | March 26, 2004
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|/s/ KIM G. DAVISKim G. Davis             |  | Director                                                                                                               |  | March 26, 2004
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|/s/ TIM R. PALMERTim R. Palmer           |  | Director                                                                                                               |  | March 26, 2004
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|/s/ M. LENNY PIPPINM. Lenny Pippin       |  | Director                                                                                                               |  | March 26, 2004
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|/s/ TODD KRASNOWTodd Krasnow             |  | Director                                                                                                               |  | March 26, 2004

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