TheTable following discussion and analysis of our consolidated results of operations, financial condition and liquidity should be read in conjunction with our consolidated financial statements and the related notes included in Item 1 of this report. The following discussion contains forward-looking statements that reflect our current expectations, estimates, forecasts and projections. These forward-looking statements are not guarantees of future performance, and actual outcomes and results may differ materially from those expressed in these forward-looking statements. See “Cautionary Statements on Forward-Looking Information.” Contents

•Table increases in the number of replacement tire SKUs;Contents

whichTable TriCan agreed to acquire the wholesale distribution business of RTD Calgary. RTD Calgary is a wholesale distributor of tires, tire parts, tire accessories and related equipment. The acquisition of RTD Calgary will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada. Contents

InTable addition, on June 16, 2014, we amended our credit agreement relating to our senior secured term loan facility to borrow an additional $340 million on the same terms as our existing Term Loan (as defined below). Pursuant to the amendment, until August 15, 2014, we also have the right to borrow up to an additional $80 million on the same terms as our existing Term Loan. The proceeds from these additional borrowings were or will be used to redeem all amounts outstanding under our Senior Secured Notes (as defined below) and pay related fees and expenses, as well as for working capital requirements and other general corporate purposes, including the financing of potential future acquisitions. Contents

TheTable following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales: Contents

Selling,Table Generalof and Administrative Expenses Contents

NetTable Salesof Contents

Selling,Table general and administrative expenses for the six months ended July 5, 2014 were $381.3 million, a $108.5 million, or 39.8%, increase as compared with the six months ended June 29, 2013. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our new distribution centers as well as the acquisitions of Hercules, Terry’s Tire, RTD, WTD and TDI. Combined, these factors added $84.8 million of incremental costs to the six month period of 2014. In addition, we also experienced a $17.3 million increase in salaries and wage expense primarily due to higher sales volume and related headcount, higher incentive and commission compensation and the inclusion of five additional selling days in our first quarter of 2014, which contributed approximately $3.8 million to the year-over-year increase. Additionally, occupancy and vehicle expense increased $2.4 million due to higher cost as we expanded several of our distribution centers to better service our existing customers. Contents

LiquidityTable andof Capital Resources Contents

TheTable followingof table summarizes our outstanding debt at July 5, 2014: Contents

BorrowingsTable under the Canadian FILO Facility bear interest at a rate per annum equal to, at our option, either (a) 250 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 250 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 350 basis points over a rate determined by reference to the average rate applicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 350 basis points over an adjusted LIBOR rate. The applicable margins under the Canadian FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility. Contents

OnTable June 16, 2014, ATDI amended the Initial Term Loan (the “Incremental Amendment”) to borrow an additional $340.0 million (the “Incremental Term Loan”) on the same terms as the Initial Term Loan. Pursuant to the Incremental Amendment, until August 15, 2014 ATDI also has the right to borrow up to an additional $80.0 million (the “Delayed Draw Term Loan” and collectively with the Initial Term Loan and the Incremental Term Loan, the “Term Loan”) on the same terms as the Initial Term Loan. The proceeds from the Incremental Term Loan, net of related debt issuance costs paid at closing, amounted to approximately $335.7 million, and were used, in part, to redeem all $250.0 million aggregate principal amounts of notes outstanding under ATDI’s Senior Secured Notes and related fees and expenses as more fully described below, and the remaining proceeds will be used for working capital requirements and other general corporate purposes, including the financing of potential future acquisitions. We received the proceeds from the Delayed Draw Term Loan at the end of the second quarter of 2014. The maturity date for the Term Loan is June 1, 2018. Contents

Table of Contents

Table of Contents

•Table increases in the number of replacement tire SKUs;Contents

TheTable following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales: Contents

Table of Contents

Selling,Table Generalof and Administrative Expenses Contents

NetTable Salesof Contents

LiquidityTable andof Capital Resources Contents

TheTable followingof table summarizes our outstanding debt at July 5, 2014: Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~July 5~~October 4, 2014

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

For the transition period from to

Commission File Number 333-124878

American Tire Distributors Holdings, Inc.

(Exact name of registrant as specified in its charter)

A Delaware Corporation

59-3796143

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12200 Herbert Wayne Court

Suite 150

Huntersville, North Carolina 28078

(Address of principal executive office)

(704) 992-2000

(Registrant’s telephone number, including area code)

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

The registrant is a voluntary filer of reports required to be filed by certain companies under Section 13 or 15(d) of the Securities and Exchange Act of 1934 and has filed all reports that would have been required to have been filed by the registrant during the preceding 12 months had it been subject to such filing requirements during the entirety of such period.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ~~(§232.405 of this chapter)~~ during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

Number of common shares outstanding at ~~August~~November 1110, 2014: 1,000

Cautionary Statements on Forward-Looking Information

This Form 10-Q, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements relating to our business and financial outlook that are based on our current expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or other comparable terminology.

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties, estimates and assumptions. Actual outcomes and results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and is expressly qualified in its entirety by the cautionary statements included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 28, 2013, particularly under the caption “Risk Factors”. We undertake no obligation to update any such statement to reflect new information, or the occurrence of future events or changes in circumstances, after we distribute this Form 10-Q, except as required by the federal securities laws. Many factors could cause actual results to differ materially from those indicated by the forward-looking statements or could contribute to such differences including:

•

general business and economic conditions in the United States, Canada and other countries, including uncertainty as to changes and trends;

•

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

•

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

•

the ability of our customers and suppliers to obtain financing related to funding their operations in the current economic market;

•

the financial condition of our customers, many of which are small businesses with limited financial resources;

•

changing relationships with customers, suppliers and strategic partners;

•

changes in laws or regulations affecting the tire industry;

•

changes in capital and credit market conditions, including availability of funding sources and fluctuations in currency exchange rates;

•

impacts of competitive products and changes to the competitive environment;

•

acceptance of new products in the market; and

•

unanticipated expenditures.

Some of the significant risks and uncertainties that could cause actual results to differ materially from our expectations and projections are described more fully in the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 28, 2013. These risks are not the only risks and uncertainties facing our ~~Company~~company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Where You Can Find More Information

We file reports and other information with the Securities and Exchange Commission (“SEC”). You can inspect, read and copy these reports and other information at the SEC’s Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information regarding the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that makes available reports, proxy statements and other information regarding issuers that file electronically.

We make available free of charge at www.atd-us.com (in the “Investor Relations” section) copies of materials we file with, or furnish to, the SEC. By referring to our corporate website, www.atd-us.com, we do not incorporate such website or its contents into this Quarterly Report on Form 10-Q.

AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC.

FORM 10-Q

INDEX

				Page
PART I	FINANCIAL INFORMATION
PART I FINANCIAL INFORMATION
	Item 1	-	Financial Statements (unaudited):
			Condensed Consolidated Balance Sheets - As of July 5, 2014 and December 28, 2013		4
			Condensed Consolidated Balance Sheets - As of October 4, 2014 and December 28, 2013		4
			Condensed Consolidated Statements of Comprehensive Income (Loss) - For the quarters and six months ended July 5, 2014 and June 29, 2013		5
			Condensed Consolidated Statements of Comprehensive Income (Loss) - For the quarters and nine months ended October 4, 2014 and September 28, 2013		5
			Condensed Consolidated Statement of Stockholder’s Equity - For the six months ended July 5, 2014		6
			Condensed Consolidated Statement of Stockholder’s Equity - For the nine months ended October 4, 2014		6
			Condensed Consolidated Statements of Cash Flows - For the six months ended July 5, 2014 and June 29, 2013		7
			Condensed Consolidated Statements of Cash Flows - For the nine months ended October 4, 2014 and September 28, 2013		7
			Notes to Condensed Consolidated Financial Statements		8
	Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3435
	Item 3	-	Quantitative and Qualitative Disclosures about Market Risk		5052
	Item 4	-	Controls and Procedures		5052
PART II	OTHER INFORMATION
PART II OTHER INFORMATION
	Item 1	-	Legal Proceedings		5153
	Item 1A	-	Risk Factors		5153
	Item 2	-	Unregistered Sales of Equity Securities and Use of Proceeds		5153
	Item 3	-	Defaults Upon Senior Securities		5153
	Item 4	-	Mine Safety Disclosures		5153
	Item 5	-	Other Information		5153
	Item 6	-	Exhibits		5153
	SIGNATURES				5354

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

American Tire Distributors Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

In thousands, except share amounts	July 5,2014			December 28,2013
	October 4,			December 28,
In thousands, except share amounts	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	2723,~~533~~759		$	35,760
Accounts receivable, net		~~457~~485,~~560~~068			305,247
Inventories		1,~~109~~122,~~606~~416			772,733
Income tax receivable		2430,~~608~~828			369
Deferred income taxes		1821,~~923~~197			15,719
Assets held for sale		~~5,529~~—			910
Other current assets		3523,~~110~~174			19,684
Total current assets		1,~~678~~706,~~869~~442			1,150,422
Property and equipment, net		~~202~~210,~~756~~416			147,856
Goodwill		~~706~~735,~~134~~013			504,333
Other intangible assets, net		1,~~122~~068,~~374~~615			713,294
Other assets		5254,~~999~~626			43,421
Total assets	$	3,~~763~~775,~~132~~112		$	2,559,326
LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable	$	~~739~~770,~~706~~598		$	563,691
Accrued expenses		7199,~~793~~736			47,723
Liabilities held for sale		426			—
Current maturities of long-term debt		9,839			564
Current maturities of long-term debt		10,120			564
Total current liabilities		880,173			611,978
Total current liabilities		822,045			611,978
Long-term debt		1,926,664			966,436
Long-term debt		1,934,177			966,436
Deferred income taxes		311,523			270,576
Deferred income taxes		321,272			270,576
Other liabilities		25,401			17,362
Other liabilities		23,659			17,362
Commitments and contingencies
Stockholder’s equity:
Common stock, par value $.01 per share; 1,000 shares authorized, issued and outstanding		—			—
Additional paid-in capital		~~810~~811,~~959~~750			758,972
Accumulated earnings (deficit)		(~~140~~155,~~458~~141	)		(56,898	)
Accumulated other comprehensive income (loss)		(825,~~522~~258	)		(9,100	)
Total stockholder’s equity		~~661~~631,~~979~~351			692,974
Total liabilities and stockholder’s equity	$	3,~~763~~775,~~132~~112		$	2,559,326

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

In thousands	QuarterEndedJuly 5,2014			QuarterEndedJune 29,2013			Six MonthsEndedJuly 5,2014			Six MonthsEndedJune 29,2013
	Quarter			Quarter			Nine Months			Nine Months
Net sales	$	1,267,582		$	955,075		$	2,343,051		$	1,795,053
	Ended			Ended			Ended			Ended
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		1,063,376			802,492			1,980,690			1,510,648
	October 4,			September 28,			October 4,			September 28,
Selling, general and administrative expenses		204,003			137,312			381,313			272,825
In thousands	2014			2013			2014			2013
Management fees		14,967			1,255			15,575			2,246
Net sales	$	1,324,429		$	987,894		$	3,667,480		$	2,782,947
Transaction expenses		15,490			2,266			20,176			3,289
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		1,100,913			817,544			3,081,603			2,328,192
Operating income (loss)		(30,254	)		11,750			(54,703	)		6,045
Selling, general and administrative expenses		187,665			144,766			568,978			417,591
Management fees		1,810			1,587			17,385			3,833
Transaction expenses		20,134			1,015			40,310			4,304
Operating income (loss)		13,907			22,982			(40,796	)		29,027
Other income (expense):
Interest expense		(32,~~223~~148	)		(1720,~~387~~625	)		(5688,~~622~~770	)		(3455,~~627~~252	)
Loss on extinguishment of debt		(~~17,113~~82	)		—			(17,~~113~~195	)		—
Other, net		(3,~~752~~726	)		(~~1,935~~648	)		(1,~~950~~776	)		(23,~~908~~556	)
Income (loss) from continuing operations before income taxes		(7522,~~838~~049	)		(71,~~572~~709	)		(~~126~~148,~~488~~537	)		(3129,~~490~~781	)
Income tax provision (benefit)		(267,~~370~~649	)		~~(1,735~~485	)		(4250,~~976~~625	)		(98,~~362~~877	)
Income (loss) from continuing operations		(4914,~~468~~400	)		(51,~~837~~224	)		(8397,~~512~~912	)		(2220,~~128~~904	)
Income (loss) from discontinued operations, net of tax		(48283	)		—			(48331	)		—
Net income (loss)	$	(4914,~~516~~683	)	$	(51,~~837~~224	)	$	(8398,~~560~~243	)	$	(2220,~~128~~904	)
Other comprehensive income (loss):
Unrealized gain (loss) on rabbi trust assets, net of tax of $40, $34, $37, $77, respectively	$	45		$	52		$	57		$	119
Unrealized gain (loss) on rabbi trust assets, net of income tax provision (benefit) of $(43), $44, $(6), $122, respectively	$	(66	)	$	68		$	(9	)	$	187
Foreign currency translation		5(16,~~762~~670	)		(53,~~431~~000	)		~~521~~(16,149	)		(74,242	)
Other comprehensive income (loss)		5(16,~~807~~736	)		(53,~~379~~068	)		~~578~~(16,158	)		(74,~~123~~055	)
Comprehensive income (loss)	$	(4331,~~709~~419	)	$	~~(11~~4,~~216~~292	)	$	(82114,~~982~~401	)	$	(2924,~~251~~959	)

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Condensed Consolidated Statement of Stockholder’s Equity

(Unaudited)

In thousands, except share amounts	TotalStockholder’sEquity			Common Stock				AdditionalPaid-InCapital		AccumulatedEarnings(Deficit)			AccumulatedOtherComprehensive(Loss) Income
													Accumulated
				Shares		Amount
	Total							Additional		Accumulated			Other
	Stockholder’s			Common Stock				Paid-In		Earnings			Comprehensive
In thousands, except share amounts	Equity			Shares		Amount		Capital		(Deficit)			Income (Loss)
Balance, December 28, 2013	$	692,974			1,000	$	—	$	758,972	$	(56,898	)	$	(9,100	)
Net income (loss)		(8398,~~560~~243	)		—		—		—		(8398,~~560~~243	)		—
Unrealized gain (loss) on rabbi trust assets, net of tax		57(9	)		—		—		—		—			57(9	)
Foreign currency translation		~~521~~(16,149	)		—		—		—		—			~~521~~(16,149	)
Equity contribution		50,000							50,000
Stock-based compensation expense		12,~~987~~778			—		—		12,~~987~~778		—			—
Balance, July 5, 2014	$	661,979			1,000	$	—	$	810,959	$	(140,458	)	$	(8,522	)
Balance, October 4, 2014	$	631,351			1,000	$	—	$	811,750	$	(155,141	)	$	(25,258	)

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

In thousands	Six MonthsEndedJuly 5,2014			Six MonthsEndedJune 29,2013
	Nine Months			Nine Months
	Ended			Ended
	October 4,			September 28,
In thousands	2014			2013
Cash flows from operating activities:
Net income (loss)	$	(8398,~~560~~243	)	$	(2220,~~128~~904	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operating activities:
Income (loss) from discontinued operations, net of tax		48107			—
Loss on extinguishment of debt		17,113			—
Loss on disposal of discontinued operations, net of tax		224			—
Loss on extinguishment of debt		17,195			—
Call premium and interest paid on redemption of Senior Secured Notes		(16,303	)		—
Depreciation and amortization		66107,~~013~~738			5178,~~140~~456
Amortization of other assets		24,~~959~~743			23,~~131~~294
Provision (benefit) for deferred income taxes		(1223,~~451~~620	)		(1217,~~632~~864	)
Non-cash inventory step-up amortization		3134,~~640~~513			45,~~907~~007
Provision for doubtful accounts		1,~~207~~437			1,~~223~~673
Stock-based compensation		12,~~987~~778			12,~~452~~047
Other, net		1,500			(868	)
Non-cash changes in the fair value of contingent consideration liabilities		(2,550	)		—
Other, net		1,014			2,317
Change in operating assets and liabilities (excluding impact from acquisitions):
Accounts receivable		(3865,~~303~~197	)		4(13,~~976~~549	)
Inventories		(~~100~~112,~~057~~041	)		(1118,~~127~~031	)
Income tax receivable		(2430,~~147~~546	)		644
Other current assets		(83,~~141~~921	)		24,~~931~~005
Accounts payable and accrued expenses		~~(11~~58,~~385~~131	)		612,~~364~~965
Other, net		42,~~335~~900			20(913	)
Net cash provided by (used in) continuing operating activities		(~~167~~113,~~545~~799	)		2939,~~033~~147
Net cash provided by (used in) discontinued operations		~~350~~1,562			—
Net cash provided by (used in) operating activities		(~~167~~112,~~195~~237	)		2939,~~033~~147
Cash flows from investing activities:
Acquisitions, net of cash acquired		(~~822~~843,~~166~~293	)		(6470,~~844~~566	)
Purchase of property and equipment		(3451,~~241~~910	)		(2334,~~848~~924	)
Purchase of assets held for sale		(28	)		(~~875~~1,924	)
Proceeds from sale of property and equipment		228			64
Proceeds from disposal of discontinued operations		3,854			—
Proceeds from sale of assets held for sale		784			971
Proceeds from sale of property and equipment		383			88
Net cash provided by (used in) continuing investing activities		(855,423	)		(88,532	)
Proceeds from sale of assets held for sale		784			5,389
Net cash provided by (used in) continuing investing activities		(890,210	)		(101,937	)
Net cash provided by (used in) discontinued investing activities		—			—
Net cash provided by (used in) investing activities		(~~855~~890,~~423~~210	)		(88101,~~532~~937	)
Cash flows from financing activities:
Borrowings from revolving credit facility		23,~~532~~412,~~401~~965			12,~~476~~239,~~178~~558
Repayments of revolving credit facility		(23,~~252~~137,~~811~~675	)		(12,~~404~~168,~~157~~837	)
Outstanding checks		9(3,~~208~~710	)		(73,~~765~~582	)
Payments of deferred financing costs		(15,~~796~~951	)		(1,~~067~~106	)
Payments of other long-term debt		(35,~~057~~820	)		(~~189~~292	)
Payment for Senior Secured Notes redemption		(246,900	)		—
Proceeds from issuance of long-term debt		940,313			—
Equity contribution		50,000			—
Net cash provided by (used in) continuing financing activities		1993,~~013,358~~222			6365,~~000~~741
Net cash provided by (used in) discontinued financing activities		—			—
Net cash provided by (used in) financing activities		1993,~~013,358~~222			6365,~~000~~741
Effect of exchange rate changes on cash		1(2,~~033~~776	)		(21,~~548~~581	)
Net increase (decrease) in cash and cash equivalents		(812,~~227~~001	)		~~953~~1,370
Cash and cash equivalents - beginning of period		35,760			25,951
Cash and cash equivalents - end of period	$	2723,~~533~~759		$	2627,~~904~~321
Supplemental disclosures of cash flow information:
Cash payments for interest	$	5877,~~025~~185		$	3338,~~036~~535
Cash payments (receipts) for taxes, net	$	312,~~817~~185		$	212,~~464~~876

See accompanying notes to condensed consolidated financial statements.

American Tire Distributors Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.	Nature of Business:

American Tire Distributors Holdings, Inc. (“Holdings”) is a Delaware corporation that owns 100% of the issued and outstanding capital stock of American Tire Distributors, Inc. (“ATDI”), a Delaware corporation. Holdings has no significant assets or operations other than its ownership of ATDI. The operations of ATDI and its subsidiaries constitute the operations of Holdings presented under ~~accounting~~U.S. ~~principles~~Generally ~~generally~~Accepted ~~accepted~~Accounting inPrinciples ~~the United States~~(“GAAP”). ATDI is primarily engaged in the wholesale distribution of tires, custom wheels and accessories, and related tire supplies and tools. Its customer base is comprised primarily of independent tire dealers with the remainder of other customers representing various national and corporate accounts. ATDI serves a majority of the contiguous United States, as well as Canada, through one operating and reportable segment. Unless the context otherwise requires, “Company” herein refers to Holdings and its consolidated subsidiaries.

2.	Basis of Presentation:

The accompanying condensed consolidated financial statements reflect the consolidated operations of the Company and have been prepared in accordance with ~~U.S. Generally Accepted Accounting Principles (“~~GAAP”) as defined by the Financial Accounting Standards Board (“FASB”) within the FASB Accounting Standards Codification (“FASB ASC”). In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, which include normal recurring adjustments, necessary to present fairly the consolidated unaudited results for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in Holdings Annual Report on Form 10-K for the fiscal year ended December 28, 2013.

The Company’s fiscal year is based on either a 52- or 53-week period ending on the Saturday closest to each December 31. Therefore, the financial results of 53-week fiscal years, and the associated 14-week quarter, will not be comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended ~~July~~October 54, 2014 and ~~June~~September 2928, 2013 each contain operating results for 13 weeks. The ~~six~~nine months ended ~~July~~October 54, 2014 contains 27operating results for 40 weeks while the ~~six~~nine months ended ~~June~~September 2928, 2013 contains 26operating results for 39 weeks. It should be noted that the Company and its recently acquired ~~subsidiaries,~~ Hercules, ~~Terry’s Tire~~subsidiary, ~~Trail Tire, Extreme Wheel, Kirks Tire, RTD Edmonton and RTD Calgary, all~~ as defined below, have different quarter-end reporting dates. ~~Each~~Hercules ~~of these acquired subsidiaries~~ has a ~~June~~September 30 quarter-end reporting date. There were no significant changes to the business subsequent to ~~their~~Hercules’ fiscal period ~~ends~~end that would have a material impact on the condensed consolidated balance sheet or condensed consolidated statement of comprehensive income (loss) as of and for the quarter and ~~six~~nine months ended October 4, ~~July~~2014. Terry’s Tire, Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary each converted to the company’s quarter-end reporting date during the quarter ended October 54, 2014.

On May 28, 2010, pursuant to an Agreement and Plan of Merger, dated as of April 20, 2010, the Company was acquired by TPG Capital, L.P. and certain co-investors (the “TPG Merger”). Under the guidance provided by the SEC Staff Accounting Bulletin Topic 5J, “New Basis of Accounting Required in Certain Circumstances,” push-down accounting is required when such transactions result in an entity being substantially wholly-owned. Under push-down accounting, certain transactions incurred by the buyer, which would otherwise be accounted for in the accounts of the parent, are “pushed down” and recorded on the financial statements of the subsidiary. Therefore, the basis in shares of the Company’s common stock has been pushed down from the buyer to the Company.

3.	Recent Accounting Pronouncements:

In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” ASU 2013-11 clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013 and subsequent interim periods. The Company adopted this guidance on December 29, 2013 (the first day of its 2014 fiscal year) and its adoption did not have a material impact on the Company’s consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” (“ASU 2014-08”). Under ASU 2014-08, only disposals representing a strategic shift in operations that have a major effect on the company’s operations and financial results should be presented as discontinued operations. Additionally, ASU 2014-08 requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in ASU 2014-08 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. However, ASU 2014-08 should not be applied to a component that is classified as held for sale before the effective date even if the component is disposed of after the effective date. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statement previously issued. The Company is currently assessing the impact, if any, on its consolidated financial statements.

In May 2014, the FASB issued ASU ~~No.~~ 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of ~~nonfinancial~~ nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company beginning in fiscal year 2017 and, at that time the Company may adopt the new standard under the full retrospective method or the modified retrospective method. Early adoption is not permitted. The Company is currently evaluating the method and impact the adoption of ASU 2014-0809 will have on the Company’s consolidated financial statements and disclosures.

4.	Acquisitions:

2014 Acquisitions

On June 27, 2014, TriCan Tire Distributors Inc. (“TriCan”), an indirect wholly-owned subsidiary of Holdings, entered into and closed an Asset Purchase Agreement (the “Trail Tire Purchase Agreement”) with Trail Tire Distributors Ltd., a corporation formed under the laws of the Province of Alberta (“Trail Tire”), and the shareholders and principals of Trail Tire, pursuant to which TriCan ~~agreed~~acquired ~~to acquire~~ the wholesale distribution business of Trail Tire. Trail Tire is a wholesale distributor of tires, tire parts, tire accessories and related equipment in Canada. The ~~acquisition~~Company believes that the acquisition of Trail Tire will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The Trail Tire acquisition closed for aggregate cash consideration of approximately $20.8 million (the “Trail Tire Purchase Price”). The aggregate cash consideration was funded through borrowings under the Company’s existing ABL credit facility. The Trail Tire Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments. During the quarter ended October 4, 2014, the Company finalized the post-closing working capital adjustments in accordance with the Trail Tire Purchase Agreement. This adjustment increased the Trail Tire Purchase Price by $1.5 million to $22.3 million with a corresponding increase to goodwill of $1.5 million.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “Extreme Purchase Agreement”) with Extreme Wheel Distributors Ltd., a corporation formed under the laws of the Province of Alberta (“Extreme”), and the shareholder and principal of Extreme, pursuant to which TriCan agreed to acquire the wholesale distribution business of Extreme. Extreme is a wholesale distributor of wheels and related accessories in Canada. The Company believes that the acquisition of Extreme will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The Extreme acquisition closed for aggregate cash consideration of approximately $6.5 million (the “Extreme Purchase Price”). The aggregate cash consideration was funded through borrowings under the Company’s existing ABL credit facility. The Extreme Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments. During the quarter ended October 4, 2014, the Company finalized the post-closing working capital adjustments in accordance with the Extreme Purchase Agreement. This adjustment increased the Extreme Purchase Price by $0.7 million to $7.2 million with a corresponding increase to goodwill of $0.7 million.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “Kirks Tire Purchase Agreement”) with Kirks Tire Ltd., a corporation formed under the laws of the Province of Alberta (“Kirks Tire”), and the shareholders and principals of Kirks Tire, pursuant to which TriCan agreed to acquire the wholesale distribution business of Kirks Tire. Kirks Tire is engaged in (i) the wholesale distribution of tires, tire parts, tire accessories and related equipment and (ii) the retail sale and installation of tires, tire parts, and tire accessories and the manufacturing and sale of retread tires. Kirks Tire’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. The Company believes that the acquisition of the wholesale distribution business of Kirks Tire will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

The Kirks Tire acquisition closed for aggregate cash consideration of approximately $73.0 million (the “Kirks Tire Purchase Price”). The Kirks Tire Purchase Price was funded through borrowings under the Company’s existing ABL credit facility. The Kirks Tire Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments. During the quarter ended October 4, 2014, the Company finalized the post-closing working capital adjustments in accordance with the Kirks Tire Purchase Agreement. This adjustment increased the Kirks Tire Purchase Price by $4.7 million to $77.7 million with a corresponding increase to goodwill of $4.7 million.

On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “RTD Edmonton Purchase Agreement”) with Regional Tire Distributors (Edmonton) Inc. (“RTD Edmonton”), a corporation formed under the laws of the Province of Alberta, and the shareholders and principals of RTD Edmonton, pursuant to which TriCan agreed to acquire the wholesale distribution business of RTD Edmonton. RTD Edmonton is a wholesale distributor of tires, tire parts, tire accessories and related equipment. The acquisition of RTD Edmonton will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

~~The~~On ~~RTD~~June 27, ~~Edmonton~~2014, ~~acquisition~~TriCan ~~closed~~entered ~~for~~into ~~aggregate~~and ~~cash~~closed ~~consideration~~an ofAsset ~~approximately~~Purchase ~~$31.9 million~~Agreement (the “RTD Edmonton Purchase ~~Price~~Agreement”). ~~The~~with ~~RTD~~Regional Tire Distributors (Edmonton) ~~Purchase~~Inc. ~~Price~~(“RTD ~~was~~Edmonton”), ~~funded~~a ~~through~~corporation ~~borrowings~~formed under the ~~Company’s~~laws ~~existing~~of ~~ABL~~the ~~credit~~Province ~~facility.~~of ~~The~~Alberta, and the shareholders and principals of RTD Edmonton, ~~Purchase~~pursuant ~~Price~~to iswhich TriCan ~~subject~~agreed to ~~certain~~acquire ~~post-closing adjustments~~the wholesale distribution business of RTD Edmonton. RTD Edmonton is a wholesale distributor of tires, ~~including~~tire parts, ~~but~~tire ~~not~~accessories ~~limited~~and ~~to,~~related ~~working~~equipment. ~~capital~~The ~~adjustments~~Company believes that the acquisition of RTD Edmonton will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

OnThe ~~June 27,~~RTD ~~2014,~~Edmonton ~~TriCan~~acquisition ~~entered~~closed ~~into~~for ~~and~~aggregate ~~closed~~cash anconsideration ~~Asset Purchase~~of ~~Agreement~~approximately $31.9 million (the “RTD ~~Calgary~~Edmonton Purchase ~~Agreement~~ Price”). ~~with~~The ~~Regional~~RTD ~~Tire~~Edmonton ~~Distributors~~Purchase ~~(Calgary)~~Price ~~Inc.~~was ~~(“RTD~~funded ~~Calgary”),~~through aborrowings ~~corporation formed~~ under the ~~laws~~Company’s ofexisting ~~the~~ABL ~~Province~~credit offacility. ~~Alberta,~~The ~~and~~RTD ~~the~~Edmonton ~~shareholders~~Purchase ~~and~~Price ~~principals~~is ofsubject ~~RTD Calgary,~~to ~~pursuant~~certain topost-closing ~~which~~adjustments, ~~TriCan~~including, ~~agreed~~but not limited to, ~~acquire~~working capital ~~the~~adjustments. ~~wholesale~~During ~~distribution~~the ~~business~~quarter ofended ~~RTD~~October 4, ~~Calgary.~~2014, ~~RTD~~the ~~Calgary~~Company isfinalized athe ~~wholesale~~post-closing ~~distributor~~working ofcapital ~~tires,~~adjustments ~~tire~~in ~~parts,~~accordance ~~tire~~with ~~accessories~~the ~~and~~RTD ~~related~~Edmonton ~~equipment~~Purchase Agreement. ~~The~~This ~~acquisition~~adjustment ofincreased the RTD ~~Calgary~~Edmonton ~~will~~Purchase ~~further~~Price ~~strengthen~~by ~~TriCan’s~~$0.5 ~~presence~~million into ~~the~~$32.4 ~~Alberta~~million ~~Province~~with ofa ~~Canada~~corresponding ~~and~~increase ~~complements~~to ~~TriCan’s~~goodwill ~~current~~of ~~operations~~$0.5 ~~in Canada~~million.

~~The~~On ~~RTD Calgary~~June 27, ~~acquisition~~2014, ~~closed~~TriCan ~~for~~entered ~~aggregate~~into and ~~cash~~closed ~~consideration~~an ofAsset ~~approximately~~Purchase ~~$20.7~~Agreement ~~million~~ (the “RTD Calgary Purchase ~~Price~~Agreement”). ~~The~~with ~~RTD~~Regional Tire Distributors (Calgary) ~~Purchase~~Inc. ~~Price~~(“RTD ~~was~~Calgary”), ~~funded~~a bycorporation ~~borrowings~~formed under the ~~Company’s~~laws ~~existing~~of ~~ABL~~the ~~credit~~Province ~~facility.~~of Alberta, and the shareholders ~~The~~and principals of RTD Calgary, ~~Purchase~~pursuant ~~Price~~to iswhich ~~subject~~TriCan agreed to ~~certain~~acquire ~~post-closing~~the ~~adjustments~~wholesale distribution business of RTD Calgary. RTD Calgary is a wholesale distributor of tires, ~~including~~tire parts, ~~but~~tire ~~not~~accessories ~~limited~~and ~~to,~~related ~~working~~equipment. ~~capital~~The ~~adjustments~~Company believes that the acquisition of RTD Calgary will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

OnThe ~~March 28,~~RTD ~~2014,~~Calgary ~~ATDI~~acquisition ~~completed~~closed ~~its~~for ~~acquisition~~aggregate ofcash ~~Terry’s~~consideration ~~Tire~~of ~~Town~~approximately ~~Holdings, Inc~~$20.,7 anmillion ~~Ohio corporation~~ (~~“Terry’s Tire” and such acquisition,~~ the “~~Terry’s~~RTD ~~Tire~~Calgary ~~Acquisition~~Purchase Price”). The ~~Terry’s~~RTD ~~Tire~~Calgary ~~Acquisition~~Purchase Price was ~~completed~~funded ~~pursuant~~by toborrowings aunder ~~Stock Purchase Agreement (~~the ~~“Stock~~Company’s ~~Purchase~~existing ~~Agreement”)~~ABL ~~entered~~credit ~~into on February 17, 2014 between ATDI and TTT Holdings, Inc~~facility., aThe ~~Delaware~~RTD ~~corporation.~~Calgary ~~Terry’s~~Purchase ~~Tire~~Price ~~and~~is ~~its~~subject ~~subsidiaries~~to ~~are~~certain ~~engaged~~post-closing ~~in the business of purchasing~~adjustments, ~~marketing~~including, ~~distributing~~but ~~and~~not ~~selling~~limited ~~tires~~to, ~~wheels and related tire and wheel accessories on a wholesale~~working ~~basis~~capital toadjustments. ~~tire~~During ~~dealers,~~the ~~wholesale~~quarter ~~distributors,~~ended ~~retail chains~~October 4, ~~automotive dealers and others~~2014, ~~retreading~~the ~~tires~~Company ~~and~~finalized ~~selling retread and other commercial tires through commercial outlets to end users and selling tires directly to consumers via~~ the ~~internet.~~ ~~Terry’s~~post-closing ~~Tire~~working ~~operated~~capital 10adjustments ~~distribution centers spanning from Virginia to Maine and~~ in ~~Ohio.~~accordance ~~The~~with ~~acquisition of Terry’s Tire will enhance~~ the ~~Company’s~~RTD ~~market~~Calgary ~~position~~Purchase inAgreement. ~~these~~This ~~areas~~adjustment ~~and~~increased ~~aligns very well with their distribution centers, especially~~ the ~~new~~RTD ~~distribution~~Calgary ~~centers~~Purchase ~~opened~~Price by $3.6 ~~the~~million ~~Company~~to ~~over~~$24.3 ~~the~~million ~~past~~with ~~two~~a ~~years~~corresponding inincrease ~~the~~to ~~Northeast~~goodwill ~~and~~of ~~Ohio~~$3.6 million.

~~The~~On March 28, 2014, ATDI completed its acquisition of Terry’s Tire ~~acquisition~~Town ~~closed~~Holdings, ~~for~~Inc., an ~~aggregate~~Ohio ~~purchase~~corporation ~~price~~(“Terry’s ofTire” ~~approximately~~and ~~$372.7~~such ~~million~~acquisition, (the “Terry’s Tire ~~Purchase Price~~Acquisition”),. ~~consisting~~The ofTerry’s ~~cash~~Tire ~~consideration~~Acquisition ofwas ~~approximately~~completed ~~$358.0~~pursuant ~~million,~~to ~~contingent~~a ~~consideration~~Stock Purchase ofAgreement ~~$12.5~~(the ~~million~~“Stock ~~and~~Purchase ~~non-cash~~Agreement”) ~~consideration~~entered ~~for~~into ~~debt~~on ~~assumed~~February 17, of2014 ~~$2.2~~between ~~million.~~ATDI ~~The~~and ~~cash~~TTT ~~consideration~~Holdings, ~~paid~~Inc., ~~for~~a ~~the~~Delaware corporation. Terry’s Tire ~~Acquisition included~~and ~~estimated~~its ~~working~~subsidiaries ~~capital~~are ~~adjustments~~engaged ~~and~~in athe ~~portion~~business of ~~consideration~~purchasing, marketing, ~~contingent~~distributing onand ~~certain~~selling ~~events~~tires, ~~achieved~~wheels ~~prior~~and torelated ~~closing.~~tire ~~During~~and ~~second~~wheel ~~quarter~~accessories ~~2014,~~on ~~the~~a ~~Company~~wholesale ~~finalized~~basis ~~the~~to ~~post-closing~~tire ~~working~~dealers, ~~capital~~wholesale ~~adjustments~~distributors, inretail ~~accordance~~chains, ~~with the~~automotive ~~purchase~~dealers ~~agreement.~~and ~~This~~others, ~~adjustment~~retreading ~~decreased~~tires ~~the~~and ~~Terry’s~~selling ~~Tire~~retread ~~Purchase~~and ~~Price~~other commercial bytires ~~$5.4~~through ~~million~~commercial outlets to ~~$372.7~~end ~~million~~users ~~with~~and aselling ~~corresponding~~tires ~~decrease~~directly to ~~goodwill~~consumers ofvia ~~$5.4~~the ~~million~~internet. ~~The~~ Terry’s Tire ~~Purchase~~operated ~~Price~~10 ~~was~~distribution ~~funded~~centers byspanning afrom ~~combination~~Virginia ~~of borrowings~~to ~~under~~Maine aand ~~new senior secured term loan facility, as more fully described~~ in ~~Note 9, and borrowings of approximately $72~~Ohio.5 ~~million~~The ~~under~~Company ~~Holdings’~~believes ~~existing~~that ~~U.S.~~the acquisition ~~ABL~~of ~~Facility. The~~ Terry’s Tire ~~Purchase~~will ~~Price~~enhance isits ~~subject~~market toposition ~~certain post-closing~~in ~~adjustments,~~these ~~including~~areas ~~but~~and ~~not~~aligns ~~limited~~with ~~to,~~their ~~working~~distribution ~~capital~~centers, ~~adjustments.~~especially Of the ~~$358.0~~new ~~million~~distribution incenters ~~cash~~opened ~~consideration,~~by ~~$41.4 million is held in escrow pending~~ the ~~resolution~~Company ofover the ~~post-closing~~past ~~adjustments~~two ~~and~~years ~~other escrow release conditions~~ in ~~accordance with~~ the ~~terms~~Northeast ~~of the Stock Purchase Agreement~~ and ~~escrow agreement~~Ohio.

OnThe ~~January 31,~~Terry’s ~~2014,~~Tire ~~pursuant~~acquisition toclosed for an ~~Agreement~~ ~~and~~aggregate ~~Plan~~purchase price of ~~Merger,~~approximately ~~dated~~$372.7 ~~January 24,~~million ~~2014~~ (the “~~Merger~~Terry’s ~~Agreement”), among ATD Merger Sub II LLC (“Merger Sub”), an indirect wholly-owned subsidiary of Holdings, ATDI, Hercules~~ Tire ~~Holdings LLC, a Delaware limited~~Purchase ~~liability company (“Hercules Holdings~~Price”), ~~the~~consisting ~~equityholders~~ of ~~Hercules~~cash ~~Holdings~~consideration ~~(each~~of aapproximately ~~“Seller”~~$358.0 ~~and~~million, ~~collectively~~contingent ~~the~~consideration ~~“Sellers”)~~of ~~and~~$12.5 ~~the~~million ~~Sellers’ Representative, Merger Sub merged with~~ and ~~into~~non-cash ~~Hercules~~consideration ~~Holdings, with~~for ~~Hercules~~debt ~~Holdings~~assumed ~~being~~of ~~the surviving entity (the “Merger”)~~$2.2 ~~As a result of the Merger, Hercules Holdings became an indirect 100% owned subsidiary of Holdings~~million. ~~Hercules~~The ~~Holdings~~cash ~~owns~~consideration ~~all~~paid offor the ~~capital~~Terry’s ~~stock~~Tire ~~of The Hercules~~Acquisition ~~Tire &~~included ~~Rubber~~estimated ~~Company,~~working acapital ~~Connecticut~~adjustments ~~corporation~~and ~~(“Hercules”).~~a ~~Hercules~~portion ~~Holdings has no material assets or operations other than its ownership~~ of ~~Hercules.~~consideration ~~Hercules~~contingent ison ~~engaged in the business of purchasing, marketing, distributing and selling after-market replacement tires for passenger cars, trucks, and~~ certain ~~off~~events ~~road~~achieved ~~vehicles~~prior to ~~tire dealers, wholesale distributors, retail distributors and others in the United States, Canada and internationally~~closing. ~~Hercules~~During ~~operated~~second ~~15 distribution~~quarter ~~centers in the United States~~2014, ~~6 distribution centers in Canada and one warehouse in northern China. Hercules also markets~~ the ~~Hercules~~Company ~~brand,~~finalized ~~which is one of~~ the ~~most sought~~post-~~after~~closing ~~proprietary~~working ~~tire~~capital ~~brands~~adjustments in accordance with the ~~industry~~purchase agreement. ~~The~~This ~~acquisition of~~adjustment ~~Hercules~~decreased ~~will strengthen~~ the ~~Company~~Terry’s ~~presence~~Tire inPurchase ~~major~~Price ~~markets~~by ~~such~~$5.4 asmillion ~~California, Texas and Florida in addition~~ to ~~increasing its presence in Canada~~$372.7 ~~Additionally,~~million ~~Hercules’~~with ~~strong logistics and sourcing capabilities, including~~ a ~~long-standing~~ ~~presence~~corresponding indecrease ~~China, will also allow the Company~~ to ~~capitalize~~goodwill ~~on the growing import market, as well as, providing the ability to expand the international sales~~ of ~~the~~$5.4 ~~Hercules brand~~million. ~~Finally,~~The ~~this~~Terry’s ~~acquisition,~~Tire ~~will~~Purchase ~~allow~~Price ~~the~~was ~~Company~~funded ~~to be~~by a ~~brand~~combination ~~marketer~~ of borrowings ~~the~~under ~~Hercules brand which today has~~ a 2%new ~~market~~senior ~~share~~secured ofterm ~~the~~loan ~~passenger~~facility, ~~and~~as ~~light~~more ~~truck~~fully ~~market~~described in ~~North~~Note ~~America~~9, and aborrowings 3%of ~~share~~approximately of$72.5 ~~highway~~million ~~truck~~under ~~tires~~Holdings’ inexisting ~~North~~U.S. ~~America~~ABL Facility.

~~The~~On ~~Merger~~January 31, ~~closed~~2014, ~~for~~pursuant to an ~~aggregate~~Agreement ~~purchase~~and ~~price~~Plan of ~~approximately~~Merger, ~~$318.9~~dated ~~million~~January 24, 2014 (the “Merger Agreement”), among ATD Merger Sub II LLC (“Merger Sub”), an indirect wholly-owned subsidiary of Holdings, ATDI, Hercules ~~Closing~~Tire ~~Purchase~~Holdings ~~Price~~LLC, a Delaware limited liability company (“Hercules Holdings”), the equityholders of Hercules Holdings (each a ~~consisting~~“Seller” and, collectively the “Sellers”) and the Sellers’ Representative, Merger Sub merged with and into Hercules Holdings, with Hercules Holdings being the surviving entity (the “Merger”). As a result of ~~net~~the Merger, ~~cash~~Hercules ~~consideration~~Holdings became an indirect 100% owned subsidiary of ~~$310~~Holdings.0 ~~million~~Hercules Holdings owns all of the capital stock of The Hercules Tire & Rubber Company, ~~contingent~~a ~~consideration~~Connecticut corporation (“Hercules”). Hercules Holdings has no material assets or operations other than its ownership of $3Hercules.5 ~~million~~Hercules is engaged in the business of purchasing, marketing, distributing and ~~non~~selling after-~~cash~~market ~~consideration~~replacement tires for ~~debt~~passenger ~~assumed~~cars, oftrucks, ~~$5.4~~and ~~million.~~certain ~~The~~off road vehicles to tire dealers, wholesale distributors, retail distributors and others in the United States, Canada and internationally. Hercules ~~Closing~~operated ~~Purchase~~15 ~~Price~~distribution ~~includes~~centers anin ~~estimate~~the ~~for~~United ~~initial~~States, ~~working~~6 ~~capital~~distribution centers in Canada and one warehouse in northern ~~adjustments~~China. ~~During~~Hercules ~~second~~also ~~quarter~~markets ~~2014~~the Hercules® brand, ~~the~~which ~~Company~~is ~~finalized~~one of the ~~post~~most sought-~~closing~~after ~~working~~proprietary ~~capital~~tire ~~adjustments~~brands in ~~accordance~~the ~~with~~industry. The acquisition of Hercules is expected to strengthen the Company’s ~~Merger~~presence in major markets such as

~~Agreement.~~California, ~~This~~Texas ~~adjustment~~and ~~decreased~~Florida ~~the~~in ~~Hercules~~addition ~~Closing~~to ~~Purchase~~increasing ~~Price~~its bypresence ~~$0.4~~in ~~million to $318~~Canada.9 ~~million~~Additionally, ~~with~~the aCompany ~~corresponding~~believes ~~decrease~~that toHercules’ ~~goodwill~~strong oflogistics ~~$0.4~~and ~~million.~~sourcing ~~The~~capabilities, ~~Merger~~including ~~Agreement provides~~a ~~for~~long-standing ~~the~~presence ~~payment of up to $6.5 million~~ in ~~additional~~China, ~~consideration~~will ~~contingent~~also ~~upon~~allow the ~~occurrence~~Company ofto ~~certain~~capitalize ~~post-closing~~on ~~events (to~~ the ~~extent~~growing ~~payable~~import market, ~~the~~as ~~“Hercules~~well ~~Additional~~as, ~~Purchase~~providing ~~Price”~~the ~~and,~~ability ~~collectively~~to ~~with~~expand the ~~Hercules~~international ~~Closing Purchase~~sales ~~Price,~~of the “ Hercules® ~~Purchase Price”)~~brand. ~~The~~Finally, ~~cash~~this ~~consideration~~acquisition ~~paid~~will ~~for~~allow the ~~Merger~~Company ~~was~~to ~~funded~~be by a ~~combination~~brand marketer of the ~~issuance~~Hercules® ofbrand ~~additional~~which ~~Senior Subordinated Notes, as more fully described~~ in 2013 ~~Note~~had 9,a an2% ~~equity~~market ~~contribution~~share of ~~$50.0~~ ~~million~~the ~~from~~passenger ~~Holdings’~~and ~~indirect~~light ~~parent,~~truck asmarket ~~more fully described~~ in ~~Note~~North 14America and ~~borrowings~~a ~~under~~3% ~~Holdings’~~share ~~credit~~of ~~agreement,~~highway astruck ~~more~~tires ~~fully described~~ in ~~Note~~North 9America. ~~The Hercules Closing Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.~~

The Merger closed for an aggregate purchase price of approximately $318.9 million (the “Hercules Closing Purchase Price”), consisting of net cash consideration of $310.0 million, contingent consideration of $3.5 million and non-cash consideration for debt assumed of $5.4 million. The Hercules Closing Purchase Price includes an estimate for initial working capital adjustments. During second quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the Merger Agreement. This adjustment decreased the Hercules Closing Purchase Price by $0.4 million from $319.3 million to $318.9 million with a corresponding decrease to goodwill of $0.4 million. The Merger Agreement provides for the payment of up to $6.5 million in additional consideration contingent upon the occurrence of certain post-closing events (to the extent payable, the “Hercules Additional Purchase Price” and, collectively with the Hercules Closing Purchase Price, the “Hercules Purchase Price”). The cash consideration paid for the Merger was funded by a combination of the issuance of additional Senior Subordinated Notes, as more fully described in Note 9, an equity contribution of $50.0 million from Holdings’ indirect parent, as more fully described in Note 14 and borrowings under Holdings’ credit agreement, as more fully described in Note 9.

On January 17, 2014, TriCan entered into an Asset Purchase Agreement with Kipling Tire Co. LTD., a corporation governed by the laws of the Province of Ontario (“Kipling”), pursuant to which TriCan agreed to acquire the wholesale distribution business of Kipling. Kipling has operated as a retail-wholesale business since 1982. Kipling’s wholesale business distributes tires from its Etobicoke facilities to approximately 400 retail customers in Southern Ontario. Kipling’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. This acquisition will further strengthen TriCan’s presence in the Southern Ontario region of Canada. The acquisition was completed on January 17, 2014 and was funded through the Company’s Canadian ABL Facility. The Company does not believe the acquisition of Kipling is a material transaction subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Terry’s Tire and Hercules (collectively the “2014 Acquisitions”) were recorded using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As of the date of these financial statements, the Company is in the process of finalizing intangible asset valuations as well as continuing to evaluate the initial purchase price allocation for each of the 2014 Acquisitions with the exception of Hercules. Accordingly, management has used its best estimates in the allocation of the purchase price to assets acquired and liabilities assumed based on the estimated preliminary fair market value of such assets and liabilities at the date of each acquisition. As additional information is obtained about these assets and liabilities within the measurement period, the Company expects to refine its estimates of fair value to allocate the purchase price for the 2014 Acquisitions, with the exception of Hercules, more accurately. As of July 5, 2014, the purchase price allocation for Hercules is final. The preliminary allocation of the purchase price for each of the 2014 Acquisitions is as follows:

In thousands	Terry’sTire		Hercules		TrailTire		Extreme		KirksTire		RTDEdmonton		RTDCalgary		Total
Cash	$	7,431	$	12,187	$	—	$	—	$	—	$	—	$	—	$	19,618
Accounts receivable		39,772		61,193		5,571		987		5,315		1,164		1,924		115,926
Inventory		92,445		153,644		6,587		1,320		5,929		2,622		5,911		268,458
Assets held for sale		5,819		—		—		—		—		—		—		5,819
Other current assets		2,222		5,064		—		—		—		—		—		7,286
Deferred income taxes		4,947		—		124		—		—		—		—		5,071
Property and equipment		7,072		29,970		323		32		—		6		556		37,959
Intangible assets		186,161		155,704		14,703		4,369		52,818		23,286		13,556		450,597
Other assets		289		—		—		—		—		—		—		289
Total assets acquired		346,158		417,762		27,308		6,708		64,062		27,078		21,947		911,023
Accounts payable		80,771		95,616		7,025		891		—		1,549		1,802		186,532
Accrued and other liabilities		3,904		6,154		—		—		—		—		—		11,180
Liabilities held for sale		319		—		—		—		—		—		—		319
Deferred income taxes		—		68,516		—		—		—		—		—		68,516
Other liabilities		—		2,325		468		—		47		—		—		2,840
Total liabilities assumed		84,994		172,611		7,493		891		47		1,549		1,802		269,387
Net assets acquired		261,164		245,151		19,815		5,817		64,015		25,529		20,145		641,636
Goodwill		111,492		73,708		948		685		8,975		6,382		526		202,716
Purchase price	$	372,656	$	318,859	$	20,763	$	6,502	$	72,990	$	31,911	$	20,671	$	844,352

The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill. The premium in the purchase price paid for the 2014 Acquisitions primarily reflects growth opportunities from expanding the Company’s distribution footprint into Western Canada and through the anticipated realization of operational and cost synergies. In addition, growth opportunities associated with the Hercules® brand also contributed to the premium in the purchase price paid for the Hercules acquisition.

The acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Terry’s Tire and Hercules (collectively the “2014 Acquisitions”) were recorded using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As of the date of these financial statements, the Company is continuing to evaluate the initial purchase price allocation for the Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary acquisitions. Accordingly, management has used its best estimates in the allocation of the purchase price to assets acquired and liabilities assumed based on the estimated preliminary fair market value of such assets and liabilities at the date of each acquisition. As additional information is obtained about these assets and liabilities within the measurement period, the Company expects to refine its estimates of fair value to allocate the purchase price for the Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary acquisitions more accurately. As of the date of these financial statements, the purchase price allocation for Hercules is final and the purchase price allocation for Terry’s Tire is final except for the evaluation and conversion of certain Terry’s Tire inventory, which the Company anticipates finalizing by fiscal year end. The allocation of the purchase price for each of the 2014 Acquisitions is as follows:


In thousands	Terry’s Tire		Hercules		Trail Tire		Extreme		Kirks Tire		RTD Edmonton		RTD Calgary		Total
Cash	$	7,431	$	12,187	$	—	$	—	$	—	$	—	$	—	$	19,618
Accounts receivable		39,772		61,193		4,899		884		5,175		1,056		2,618		115,597
Inventory		92,445		153,644		6,308		1,380		5,927		2,525		6,047		268,276
Assets held for sale		5,819		—		—		—		—		—		—		5,819
Other current assets		2,222		5,064		—		—		—		—		—		7,286
Deferred income taxes		4,947		—		124		—		—		—		—		5,071
Property and equipment		7,072		29,970		298		29		—		6		508		37,883
Intangible assets		186,161		155,704		10,922		3,985		43,971		21,549		9,707		431,999
Other assets		289		—		—		—		—		—		—		289

Total assets acquired		346,158		417,762		22,551		6,278		55,073		25,136		18,880		891,838
Accounts payable		80,771		95,616		6,017		449		—		1,432		1,907		186,192
Accrued and other liabilities		3,904		6,154		368		131		2,997		183		1,464		15,201
Liabilities held for sale		319		—		—		—		—		—		—		319
Deferred income taxes		—		68,516		—		—		—		—		—		68,516
Other liabilities		—		2,325		468		—		47		—		—		2,840

Total liabilities assumed		84,994		172,611		6,853		580		3,044		1,615		3,371		273,068
Net assets acquired		261,164		245,151		15,698		5,698		52,029		23,521		15,509		618,770
Goodwill		111,492		73,708		6,624		1,469		25,627		8,832		8,769		236,521

Purchase price	$	372,656	$	318,859	$	22,322	$	7,167	$	77,656	$	32,353	$	24,278	$	855,291

The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill. The premium in the purchase price paid for the 2014 Acquisitions primarily reflects growth opportunities from expanding the Company’s distribution footprint into Western Canada and through the anticipated realization of operational and cost synergies. In addition, growth opportunities associated with the Hercules^® brand also contributed to the premium in the purchase price paid for the Hercules acquisition.

Cash and cash equivalents, accounts receivable and accounts payable were stated at their historical carrying values, which approximate their fair value, given the short-term nature of these assets and liabilities. Inventory was recorded at fair value, based on computations which considered many factors including the estimated selling price of the inventory, the cost to dispose the inventory as well as the replacement cost of the inventory, where applicable.

The Company recorded intangible assets based on their estimated fair value which consisted of the following:

In thousands	Terry’sTire		Hercules		TrailTire		Extreme		KirksTire		RTDEdmonton		RTDCalgary		Total
Customer list (1)	$	185,776	$	147,216	$	1410,~~703~~922	$	43,~~369~~985	$	5243,~~818~~971	$	2321,~~286~~549	$	139,~~556~~707	$	~~441~~423,~~724~~126
Tradenames (2)		—		8,488		—		—		—		—		—		8,488
Favorable leases (3)		385		—		—		—		—		—		—		385
Total	$	186,161	$	155,704	$	1410,~~703~~922	$	43,~~369~~985	$	5243,~~818~~971	$	2321,~~286~~549	$	139,~~556~~707	$	~~450~~431,~~597~~999

(1) Estimated useful ~~lives~~life ~~range~~is ~~from sixteen to~~ eighteen years.

(2) Estimated useful life is fifteen years.

(3) Estimated useful ~~lives~~life ~~range~~is ~~from four to~~ five years.

The Company utilized the excess earnings method, a derivation of the income approach, as well as the ~~review~~assistance of ana ~~independent~~ third-party valuation report ~~for certain acquisitions~~, to determine the fair value of the customer list intangible assets. The excess earnings method estimates the discounted net earnings attributable to the customer relationships that were acquired after considering items such as possible customer attrition. Based on the length and trend of projected cash flows, an estimated useful life of eighteen years was determined. The length of the projected cash flow period was determined by how quickly the customer relationships attrit based on the Company’s historical experience in renewing and extending similar customer relationships~~. As~~ ofand ~~the~~future ~~date~~expectations offor ~~this~~renewing ~~report,~~and ~~the~~extending ~~Company~~similar isexisting incustomer relationships, and represents the ~~process~~number of ~~obtaining~~years ~~third-party~~over ~~valuations~~which ~~for~~the Company expects the ~~fair~~customer ~~value~~relationships ofto ~~the~~economically ~~intangible~~contribute ~~assets~~to ~~acquired~~the ~~from~~business. ~~Trail~~This ~~Tire,~~estimate ~~Extreme,~~is ~~Kirks~~based ~~Tire,~~on ~~RTD~~the ~~Edmonton~~year ~~and~~in ~~RTD~~which ~~Calgary~~95.0% ~~Accordingly,~~of the ~~preliminary allocation~~annual ~~for~~discounted ~~these~~cash ~~acquisitions~~flows ~~reflects~~were ~~management’s~~captured ~~best~~in ~~estimate~~the ~~of fair~~ value ~~using~~of the ~~excess~~customer ~~earnings~~list ~~method~~intangible asset.

As part of the acquisition of Terry’s Tire, the Company acquired Terry’s Tire’s commercial and retread businesses. As the Company’s core business does not include commercial and retread operations, the Company decided that it would divest of these businesses. As it is management’s intention to divest the commercial and retread businesses during fiscal 2014 and as all held for sale criteria has been met, the related assets, including the allocation of purchase price, and the related liabilities of the commercial and retread businesses are classified as held for sale within the accompanying condensed consolidated balance sheet. As part of the preliminary purchase price allocation, the estimated fair value of the assets held for sale was $5.8 million, including $4.5 million in current assets, net property and equipment of $0.8 million and goodwill of $0.5 million. The estimated fair value of the liabilities held for sale was $0.3 million of which the entire amount related to current liabilities. As additional information is obtained about these assets and liabilities within the measurement period, the Company expects to refine its estimate of the fair values related to these assets and liabilities.

The 2014 Acquisitions contributed net sales of approximately $265.5 million to the Company for the six months ended July 5, 2014. Net loss contributed by the 2014 Acquisitions during the six months ended July 5, 2014 was approximately $25.9 million which included non-cash amortization of the inventory step-up of $31.6 million and non-cash amortization expense on acquired intangible assets of $11.5 million.

2013 Acquisitions

On December 13, 2013, TriCan entered into a Share Purchase Agreement with Wholesale Tire Distributors Inc., a corporation formed under the laws of the Province of Ontario (“WTD”), Allan Bishop, an individual resident in the Province of Ontario (“Allan”) and The Bishop Company Inc., a corporation formed under the laws of the Province of Ontario (“BishopCo”) (Allan and BishopCo each, a “Seller” and collectively, the “Sellers”), pursuant to which TriCan agreed to acquire from the Sellers all of the issued and outstanding shares of WTD. WTD operated two distribution centers serving over 2,300 customers. The acquisition of WTD strengthened the Company’s market presence in the Southern Ontario region of Canada. The acquisition was completed on December 13, 2013 and was funded through cash on hand. The Company does not believe the acquisition of WTD is a material transaction, individually or when aggregated with the other non-material acquisitions discussed herein, subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

~~assets~~As part of the acquisition of Terry’s Tire, the Company acquired ~~relate~~Terry’s toTire’s commercial aand ~~customer~~retread ~~list~~businesses. ~~intangible~~As ~~asset~~the Company’s core business does not include commercial and retread operations, ~~which~~the ~~had~~Company andecided ~~acquisition~~that ~~date~~it ~~fair~~would ~~value~~divest of $4these businesses.4 ~~million~~As it is management’s intention to divest the commercial and retread businesses during fiscal 2014 and as all held for sale criteria has been met, the related assets, including the allocation of purchase price, and the related liabilities of the commercial and retread businesses were classified as held for sale at the acquisition date. ~~The~~As ~~excess~~part of the preliminary purchase price ~~over~~allocation, the ~~amounts~~estimated ~~allocated~~fair tovalue ~~identifiable~~ of the assets ~~and~~held ~~liabilities~~for issale ~~included~~was $5.8 million, including $4.5 million in ~~goodwill~~current assets, net property and ~~amounted~~equipment toof $10.28 million and goodwill of $0.5 million. The ~~premium~~estimated infair ~~the~~value ~~purchase~~of ~~price~~the ~~paid~~liabilities held for ~~the~~sale ~~acquisition~~was $0.3 million of ~~WTD~~which ~~reflects~~the entire amount related to current liabilities. On July 31, 2014, the ~~anticipated~~Company ~~realization~~completed ofa ~~operational~~transaction to sell the commercial and retread ~~cost~~businesses ~~synergies~~acquired as part of the Terry’s Tire acquisition. See Note16 for additional information.

The 2014 Acquisitions contributed net sales of approximately $562.5 million to the Company for the nine months ended October 4, 2014. Net loss contributed by the 2014 Acquisitions during the nine months ended October 4, 2014 was approximately $21.7 million which included non-cash amortization of the inventory step-up of $34.3 million and non-cash amortization expense on acquired intangible assets of $21.7 million.

2013 Acquisitions

On December 13, 2013, TriCan entered into a Share Purchase Agreement with Wholesale Tire Distributors Inc., a corporation formed under the laws of the Province of Ontario (“WTD”), Allan Bishop, an individual resident in the Province of Ontario (“Allan”) and The Bishop Company Inc., a corporation formed under the laws of the Province of Ontario (“BishopCo”) (Allan and BishopCo each, a “Seller” and collectively, the “Sellers”), pursuant to which TriCan agreed to acquire from the Sellers all of the issued and outstanding shares of WTD. WTD operated two distribution centers serving over 2,300 customers. The Company believes that the acquisition of WTD strengthened the Company’s market presence in the Southern Ontario region of Canada. The acquisition was completed on December 13, 2013 and was funded through cash on hand. The Company does not believe the acquisition of WTD is a material transaction, individually or when aggregated with the other non-material acquisitions discussed herein, subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisition of WTD was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. A majority of the net assets acquired relate to a customer list intangible asset, which had an acquisition date fair value of $4.4 million. The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $1.2 million. The premium in the purchase price paid for the acquisition of WTD reflects the anticipated realization of operational and cost synergies.

On August 30, 2013, the Company entered into a Stock Purchase Agreement with Tire Distributors, Inc. (“TDI”) to acquire 100% of the outstanding capital stock of TDI. TDI operated one distribution center serving over 1,700 customers across Maryland and northeastern Virginia. The acquisition was completed on August 30, 2013 and was funded through the Company’s ABL Facility. The Company does not believe the acquisition of TDI is a material transaction, individually or when aggregated with the other non-material acquisitions discussed herein, subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combinations. As a result, the information is not presented.

The acquisition of TDI was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations and non-controlling interest. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. A majority of the net assets acquired relate to a customer list intangible asset, which had an acquisition date fair value of $3.4 million. The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $2.4 million. The premium in the purchase price paid for the acquisition of TDI reflects the anticipated realization of operational and cost synergies.

On March 22, 2013, TriCan and ATDI entered into a Share Purchase Agreement with Regional Tire Holdings Inc., a corporation formed under the laws of the Province of Ontario (“Holdco”), Regional Tire Distributors Inc. (“RTD”), a corporation formed under the laws of the Province of Ontario and a 100% owned subsidiary of Holdco, and the shareholders of Holdco, pursuant to which TriCan agreed to acquire from the shareholders of Holdco all of the issued and outstanding shares of Holdco for a purchase price of $62.5 million. Holdco has no significant assets or operations other than its ownership of RTD. The operations of RTD constitute the operations of Holdco. RTD is a wholesale distributor of tires, tire parts, tire accessories and related equipment in the Ontario and Atlantic provinces of Canada. The Company believes that the acquisition of RTD significantly expanded the Company’s presence in the Ontario and Atlantic Provinces of Canada and complemented the Company’s current operations in Canada.

The acquisition of RTD was completed on April 30, 2013 for aggregate cash consideration of approximately $64.9 million (the “Adjusted Purchase Price”) which includes initial working capital adjustments. The acquisition of RTD was funded by borrowings under the Company’s ABL Facility and FILO Facility, as more fully described in Note 9. The Adjusted Purchase Price was subject to certain post-closing adjustments, including, but not limited to, the finalization of working capital adjustments. Of the $64.9 million Adjusted Purchase Price, $6.3 million is held in escrow pending the resolution of the post-closing adjustments and other escrow release conditions in accordance with the terms of the purchase agreement and escrow agreement. During third quarter 2013, the Company and the shareholders of Holdco agreed on the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment increased the Adjusted Purchase Price by $1.0 million to $65.9 million with a corresponding increase to goodwill of $1.0 million.

under the Company’s ABL Facility and FILO Facility, as more fully described in Note 9. The Adjusted Purchase Price was subject to certain post-closing adjustments, including, but not limited to, the finalization of working capital adjustments. Of the $64.9 million Adjusted Purchase Price, $6.3 million is held in escrow pending the resolution of the post-closing adjustments and other escrow release conditions in accordance with the terms of the purchase agreement and escrow agreement. During third quarter 2013, the Company and the shareholders of Holdco agreed on the post-closing working capital adjustments in accordance with the purchase agreement. This adjustment increased the Adjusted Purchase Price by $1.0 million to $65.9 million with a corresponding increase to goodwill of $1.0 million.

The acquisition of RTD was recorded using the acquisition method of accounting in accordance with current accounting guidance for business combinations and non-controlling interest. As a result, the Adjusted Purchase Price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. The allocation of the Adjusted Purchase Price is as follows:


In thousands
Cash	$	904
Accounts receivable		10,093
Inventory		21,685
Other current assets		998
Property and equipment		1,050
Intangible assets		42,990
Other assets		52

Total assets acquired		77,772
Debt		—
Accounts payable		7,817
Accrued and other liabilities		12,740
Deferred income taxes		11,692

Total liabilities assumed		32,249
Net assets acquired		45,523
Goodwill		20,375

Purchase price	$	65,898

The excess of the purchase price over the amounts allocated to identifiable assets and liabilities is included in goodwill, and amounted to $20.4 million. The premium in the purchase price paid for the acquisition of RTD primarily relates to growth opportunities from expanding the Company’s distribution footprint into Eastern Canada and through operating synergies available via the consolidation of certain distribution centers in Eastern Canada.

Cash and cash equivalents, accounts receivable and accounts payable were stated at their historical carrying values, which approximate their fair value, given the short-term nature of these assets and liabilities. Inventory was recorded at fair value, based on computation which considered many factors including the estimated selling price of the inventory, the cost to dispose the inventory as well as the replacement cost of the inventory, where applicable.

The Company recorded intangible assets based on their estimated fair value which consisted of the following:


In thousands	Estimated Useful Life	Estimated Fair Value
Customer list	16 years	$	40,720
Tradenames	5 years		1,900
Favorable leases	4 years		370

Total		$	42,990

The following unaudited pro forma supplementary data gives effect to the 2014 Acquisitions as if these transactions had occurred on December 30, 2012 (the first day of the Company’s 2013 fiscal year) and gives effect to the acquisition of RTD as if this transaction had occurred on January 1, 2012 (the first day of the Company’s 2012 fiscal year). The pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the 2014 Acquisitions and the RTD acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.

	Pro Forma
In thousands	QuarterEndedJuly 5,2014			QuarterEndedJune 29,2013			Six MonthsEndedJuly 5,2014			Six MonthsEndedJune 29,2013
Net sales	$	1,304,618		$	1,283,844		$	2,552,328		$	2,433,185
Income (loss) from continuing operations		(35,532	)		(18,707	)		(78,948	)		(49,666	)

~~The~~ this ~~pro~~transaction ~~forma~~had ~~supplementary~~occurred ~~data~~on ~~for the quarters ended July~~January ~~5, 2014 and June 29, 2013 includes $3.9 million and $11.~~1 ~~million~~, ~~respectively,~~2012 as(the anfirst ~~increase~~day ~~to historical amortization expense as a result~~ of ~~acquired intangible assets while~~ the ~~six~~Company’s ~~months~~2012 ~~ended~~fiscal ~~July 5, 2014 and June 29, 2013 includes $13~~year).1 ~~million~~The ~~and $22.6 million, respectively. In addition, the~~ pro forma supplementary data ~~for~~is ~~the~~provided ~~quarters~~for ~~ended~~informational ~~July 5,~~purposes ~~2014~~only and should ~~June 29,~~not ~~2013~~be ~~includes~~construed ~~$1.3 million and $9.6 million, respectively, as an increase~~ to ~~historical~~be ~~interest~~indicative ~~expense as a result~~ of ~~the~~ ~~issuance of~~ the additional Senior Subordinated Notes and the new senior secured term loan facility, as more fully described in Note 9, while the six months ended July 5, 2014 and June 29, 2013 includes $6.9 million and $19.7 million, respectively. For the quarter and six months ended July 5, 2014, the Company has included a reduction in non-recurring historical transaction expenses of $10.7 million and $42.9 million, respectively. These transaction expenses were incurred prior to the acquisition of Hercules and Terry’s ~~Tire~~results ~~and~~of ~~they~~operations ~~are~~had ~~directly related to~~ the ~~acquisitions~~2014 ~~and~~Acquisitions ~~are non-recurring. Additionally, for the quarter~~ and ~~six months ended July 5, 2014,~~ the ~~Company~~RTD ~~has~~acquisition ~~included~~been aconsummated ~~reduction~~on ~~in historical cost of goods sold of $12.5 million and $31.5 million, respectively. The reduction in cost of goods sold relates to~~ the ~~elimination~~date ofassumed ~~the~~or ~~non-cash amortization~~ of the ~~inventory step-up recorded in connection with the Hercules and Terry~~Company’s ~~Tire~~results ~~acquisitions~~of asoperations ~~this~~for ~~amortization~~any isfuture ~~directly related to the acquisitions and non-recurring~~date.


	Pro Forma
	Quarter			Nine Months			Nine Months
	Ended			Ended			Ended
	September 28,			October 4,			September 28,
In thousands	2013			2014			2013
Net sales	$	1,325,139		$	3,876,792		$	3,756,785
Income (loss) from continuing operations		(6,266	)		(77,447	)		(51,830	)

The pro forma supplementary data for the quarter ended September 28, 2013 includes $9.5 million as an increase to historical amortization expense as a result of acquired intangible assets while the nine months ended October 4, 2014 and September 28, 2013 includes $12.0 million and $31.3 million, respectively. In addition, the pro forma supplementary data for the quarter ended September 28, 2013 includes $10.3 million as an increase to historical interest expense as a result of the issuance of the additional Senior Subordinated Notes and the new senior secured term loan facility, as more fully described in Note 9, while the nine months ended October 4, 2014 and September 28, 2013 includes $6.5 million and $31.9 million, respectively. For the nine months ended October 4, 2014 and September 28, 2013, the Company has included a reduction in non-recurring historical transaction expenses of $60.6 million and $5.3 million, respectively. These transaction expenses were incurred prior to the acquisition of Hercules, Terry’s Tire and RTD and they are directly related to the acquisitions and are non-recurring. Additionally, for the nine months ended October 4, 2014, the Company has included a reduction in historical cost of goods sold of $34.3 million. The reduction in cost of goods sold relates to the elimination of the non-cash amortization of the inventory step-up recorded in connection with the 2014 Acquisitions as this amortization is directly related to the 2014 Acquisitions and is non-recurring.

5.	Inventories:

Inventories consist primarily of automotive tires, custom wheels and accessories and tire supplies and tools. Reported amounts are valued at the lower of cost, determined on the first-in, first-out (“FIFO”) method, or fair market value. The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to net realizable value. A majority of the Company’s tire vendors allow for the return of tire products, subject to certain limitations, specified in supply arrangements with the vendors. In addition, the Company’s inventory is collateral under the ABL Facility and the FILO Facility. See Note 9 for further information.

As a result of the TriCan acquisition in November 2012, the RTD, TDI and WTD acquisitions in fiscal 2013 and the 2014 Acquisitions, the carrying value of the acquired inventory was increased by $6.3 million, $2.7 million, $0.2 million, $0.5 million, and $34.4 million, respectively, to adjust to estimated fair value in accordance with the accounting guidance for business combinations. The step-up in inventory value for each acquisition was amortized into cost of goods sold over the period of the Company’s normal inventory turns, which approximates two months. Amortization of the inventory step-up included in cost of goods sold in the accompanying condensed consolidated statements of comprehensive income (loss) for the quarter and ~~six~~nine months ended ~~July~~October 54, 2014 was $122.59 million and $3134.65 million, respectively, while amortization for the quarter ~~and~~ ~~six~~and nine months ended ~~June~~September 2928, 2013 was $20.71 million and $45.90 million, respectively.

6.	Assets Held for Sale:

In accordance with current accounting standards, the Company classifies assets as held for sale in the period in which all held for sale criteria is met. Assets held for sale are reported at the lower of their carrying amount or fair value less cost to sell and are no longer depreciated. During third quarter 2013, the Company classified a facility located in Georgia as held for sale. The facility was previously used as a distribution center within the Company’s operations until its activities were relocated to an expanded facility. During the ~~quarter~~nine months ended ~~July~~October 54, 2014, the Company received $0.4 ~~million~~ million in cash for the sale of this facility.

As part of the Terry’s Tire acquisition, the Company acquired Terry’s Tire’s commercial and retread businesses. See Note 4 for additional information regarding this acquisition. As it is management’s intention to divest the commercial and retread businesses during fiscal 2014 and as all held for sale criteria ~~has~~have been met, the related assets and liabilities of the commercial and retread businesses ~~are~~were classified as held for sale ~~within~~at the ~~accompanying~~acquisition ~~condensed consolidated balance sheet~~date. AsOn of July 531, 2014, the ~~carrying~~Company ~~value~~received ~~of the assets held for sale for these businesses was~~ $53.59 million, ~~including~~in ~~$4.2~~cash ~~million~~for inthe ~~current~~sale ~~assets,~~of ~~net~~the commercial ~~property~~ and ~~equipment~~retread ~~of $0~~businesses.8 ~~million~~See ~~and~~Note ~~goodwill~~16 offor ~~$0.5~~additional ~~million~~information.

7. Goodwill:

The Company records as goodwill the excess of the purchase price over the fair value of the net assets acquired. Once the final valuation has been performed for each acquisition, adjustments may be recorded. Goodwill is tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset.

7.	Goodwill:

The changes in the carrying amount of goodwill are as follows:

In thousands
Balance, December 28, 2013	$	504,333
Purchase accounting adjustments		128
Acquisitions		~~202~~236,~~716~~611
Currency translation		(16,~~043~~059	)
Balance, July 5, 2014	$	706,134
Balance, October 4, 2014	$	735,013

At ~~July~~October 54, 2014, the Company has recorded goodwill of $~~706~~735.10 million, of which approximately $~~125~~167.74 million of net goodwill is deductible for income tax purposes in future periods. The balance primarily relates to the TPG Merger on May 28, 2010, in which $418.6 million was recorded as goodwill. The Company does not have any accumulated goodwill impairment losses.

OnDuring ~~June~~the quarter ended October 274, 2014, ~~TriCan~~the ~~completed~~Company ~~its~~acquired ~~acquisition of~~ the ~~wholesale~~assets ~~distribution~~and ~~businesses~~liabilities of ~~Trail~~several ~~Tire,~~small ~~Extreme,~~Canadian ~~Kirks Tire, RTD Edmonton and RTD Calgary~~businesses. The purchase price ~~has~~for ~~been~~each business was preliminarily allocated to the assets acquired and liabilities assumed based on ~~the~~their estimated fair market value ~~of such assets and liabilities~~ at the date of acquisition. As apart ~~result~~of the preliminary purchase price allocation, the Company ~~recorded~~allocated $03.93 million, ~~$0.7~~to ~~million,~~finite-lived ~~$9.0~~intangible ~~million,~~assets ~~$6.4~~related ~~million~~to noncompete agreements with useful lives ranging between two and $0five years.5 ~~million,~~The ~~respectively,~~excess asof ~~goodwill.~~the ~~See~~purchase ~~Note~~price 4over ~~for~~the ~~additional~~amounts ~~information~~allocated to identifiable assets and liabilities is included in goodwill, and amounted to $0.1 million.

On ~~March~~June 2827, 2014, ~~ATDI~~TriCan completed its acquisition of the ~~Terry’s~~wholesale ~~Tire~~distribution ~~pursuant~~businesses toof aTrail ~~Stock~~Tire, ~~Purchase~~Extreme, ~~Agreement~~Kirks ~~entered~~Tire, ~~into~~RTD ~~on February 17,~~Edmonton ~~2014~~and RTD Calgary. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. As a result, the Company recorded $~~111~~6.6 million, $1.5 million, $25.6 million, $8.8 million and $8.8 million, respectively, as goodwill. See Note 4 for additional information.

On ~~January~~March 3128, 2014, ~~the~~ATDI ~~Company~~ completed its acquisition of ~~Hercules~~Terry’s Tire pursuant to ana ~~Agreement~~Stock ~~and~~Purchase ~~Plan~~Agreement ofentered ~~Merger~~into ~~dated January~~on February 2417, 2014. The purchase price has been preliminarily allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During the second quarter of 2014, the Company finalized the post-closing working capital adjustments in accordance with the ~~Merger~~purchase ~~Agreement~~agreement. This adjustment decreased goodwill by $05.4 million to $73111.75 million at ~~July~~October 54, 2014. See Note 4 for additional information.

On ~~December~~January 1331, ~~2013~~2014, ~~TriCan~~the ~~entered~~Company ~~into~~completed aits ~~share~~acquisition ~~Purchase~~of ~~Agreement~~Hercules pursuant to ~~acquire~~ ~~all~~an ofAgreement ~~the issued~~ and ~~outstanding~~Plan ~~common shares~~ of ~~WTD.~~Merger ~~The~~dated January 24, ~~acquisition was funded through cash on hand~~2014. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During ~~first~~second quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the ~~purchase~~Merger ~~agreement~~Agreement. This ~~increased~~adjustment decreased goodwill by $0.14 million to ~~a total of~~ $173.27 million at ~~July~~October 54, 2014. See Note 4 for additional information.

On December 13, 2013, TriCan entered into a share Purchase Agreement to acquire all of the issued and outstanding common shares of WTD. The acquisition was funded through cash on hand. The purchase price has been allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities at the date of acquisition. During first quarter 2014, the Company finalized the post-closing working capital adjustments in accordance with the purchase agreement. This increased goodwill by $0.1 million to a total of $1.2 million. See Note 4 for additional information.

8.	Intangible Assets:

Indefinite-lived intangible assets are tested and reviewed annually for impairment during the fourth quarter or whenever there is a significant change in events or circumstances that indicate that the fair value of the asset may be less than the carrying amount of the asset. All other intangible assets with finite lives are being amortized on a straight-line or accelerated basis over periods ranging from one to nineteen years.

The following table sets forth the gross amount and accumulated amortization of the Company’s intangible assets at ~~July~~October 54, 2014 and December 28, 2013:

	July 5, 2014				December 28, 2013
	October 4, 2014				December 28, 2013
In thousands	GrossAmount		AccumulatedAmortization		GrossAmount		AccumulatedAmortization
	Gross		Accumulated		Gross		Accumulated
Customer lists	$	1,124,662	$	272,779	$	677,062	$	226,614
In thousands	Amount		Amortization		Amount		Amortization
Noncompete agreements		13,878		8,235		12,007		6,400
Customer lists	$	1,096,707	$	300,237	$	677,062	$	226,614
Favorable leases		1,074		210		688		119
Noncompete agreements		17,461		9,252		12,007		6,400
Tradenames		19,026		4,935		10,531		3,754
Favorable leases		1,042		256		688		119
Total finite-lived intangible assets		1,158,640		286,159		700,288		236,887
Tradenames		18,725		5,468		10,531		3,754
Total finite-lived intangible assets		1,133,935		315,213		700,288		236,887
Tradenames (indefinite-lived)		249,893		—		249,893		—
Total intangible assets	$	1,~~408~~383,~~533~~828	$	~~286~~315,~~159~~213	$	950,181	$	236,887

At ~~July~~October 54, 2014, the Company had $1,~~122~~068.46 million of intangible assets. The balance primarily relates to to the TPG Merger on May 28, 2010, in which $781.3 million was recorded as intangible assets. As part of the preliminary purchase price allocation of Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary, the Company allocated $1410.79 million, $4.40 million, $5244.80 million, $2321.35 million and $139.67 million, respectively, to a finite-lived customer list intangible asset with a useful life of ~~sixteen~~eighteen years. As part of the preliminary purchase price allocation of Terry’s Tire, the Company allocated $185.8 million to a finite-lived customer list intangible asset with a useful life of eighteen years and $0.4 million to a favorable leases intangible asset with a useful life of five years. As part of the ~~preliminary~~ purchase price allocation of Hercules, the Company allocated $147.2 million to a finite-lived customer list intangible asset with a useful life of eighteen years and $8.5 million to a finite-lived tradename with a useful life of fifteen years. As part of the purchase price allocation of WTD, the Company allocated $4.4 million to a finite-lived customer list intangible asset with a useful life of sixteen years. As part of the purchase price allocation of TDI, the Company allocated $3.4 million to a finite-lived customer list intangible asset with a useful life of sixteen years. As part of the purchase price allocation of RTD, the Company allocated $40.7 million to a finite-lived customer list intangible asset with a useful life of sixteen years, $1.9 million to a finite-lived tradename with a useful life of five years and $0.4 million to a finite-lived favorable leases intangible asset with a useful life of four years.

Intangible asset amortization expense was $2730.71 million and $19.07 million for the quarters ended ~~July~~October 54, 2014 and ~~June~~September 2928, ~~2013~~ 2013, respectively. For the ~~six~~nine months ended ~~July~~October 54, 2014 and ~~June~~September 2928, 2013, intangible asset amortization expense was $4979.01 million and $3656.63 million, respectively. Estimated amortization expense on existing intangible assets is expected to approximate $5930.59 million for the remaining ~~six~~three months of 2014 and approximately $~~126~~124.2 million in 2015, $~~107~~105.85 million in 2016, $9390.29 million in 2017 and $7977.97 million in 2018.

9.	Long-term Debt:

The following table presents the Company’s long-term debt at ~~July~~October 54, 2014 and at December 28, 2013:

In thousands	July 5,2014			December 28,2013
	October 4,			December 28,
U.S. ABL Facility	$	641,639		$	417,066
In thousands	2014			2013
Canadian ABL Facility		53,165			36,424
U.S. ABL Facility	$	631,401		$	417,066
Canadian ABL Facility		53,861			36,424
U.S. FILO Facility		80,000			51,863
Canadian FILO Facility		1014,~~266~~551			—
Term Loan		~~717~~715,~~693~~934			—
Senior Secured Notes		—			248,219
Senior Subordinated Notes		421,~~361~~545			200,000
Capital lease obligations		12,~~577~~479			12,330
Other		76,~~596~~732			1,098
Total debt		1,~~944~~936,~~297~~503			967,000
Less - Current maturities		(109,~~120~~839	)		(564	)
Long-term debt	$	1,~~934~~926,~~177~~664		$	966,436

The fair value of the Senior Subordinated Notes was $431.5 million at July 5, 2014 and $212.0 million at December 28, 2013 and was estimated using a discounted cash flow analysis with significant inputs that are not observable (Level 3) as there are no

The fair value of the Senior Subordinated Notes was $443.7 million at October 4, 2014 and $212.0 million at December 28, 2013 and was estimated using a discounted cash flow analysis with significant inputs that are not observable (Level 3) as there are no quoted prices in active markets for these notes. The fair value of the Term Loan was $~~718~~721.1 million at ~~July~~October 54, 2014 and was estimated using a discounted cash flow analysis with significant inputs that are not observable (Level 3). The discount rate used in the fair value analysis for the Term Loan was based on borrowing rates available to the Company for debt with the same remaining maturity.

ABL Facility

On January 31, 2014, in connection with the Hercules acquisition, the Company entered into the Second Amendment to Sixth Amended and Restated Credit Agreement (“Credit Agreement”), which provides for (i) U.S. revolving credit commitments of $850.0 million (of which up to $50.0 million can be utilized in the form of commercial and standby letters of credit), subject to U.S. borrowing base availability (the “U.S. ABL Facility”) and (ii) Canadian revolving credit commitments of $125.0 million (of which up to $10.0 million can be utilized in the form of commercial and standby letters of credit), subject to Canadian borrowing base availability (the “Canadian ABL Facility” and, collectively with the U.S. ABL Facility, the “ABL Facility”). In addition, the Credit Agreement provides (i) the U.S. borrowers under the agreement with a first-in last-out facility (the “U.S. FILO Facility”) in the aggregate principal amount of up to $80.0 million, subject to a borrowing base specific thereto and (ii) the Canadian borrowers under the agreement with a first-in last-out facility (the “Canadian FILO Facility” and collectively with the U.S. FILO Facility, the “FILO Facility”) in an aggregate principal amount of up to $15.0 million, subject to a borrowing base specific thereto. The U.S. ABL Facility is available to ATDI, Am-Pac Tire Dist. Inc., Hercules and any other U.S. subsidiary that the Company designates in the future in accordance with the terms of the ~~agreement~~Credit Agreement. The Canadian ABL Facility is available to TriCan and any other Canadian subsidiaries that the Company designates in the future in accordance with the terms of the ~~agreement~~Credit Agreement. Provided that no default or event of default then exists or would arise therefrom, the Company has the option to request that the ABL Facility be increased by an amount not to exceed $175.0 million (up to $25.0 million of which may be allocated to the Canadian ABL Facility), subject to certain rights of the administrative agent, swingline lender and issuing banks providing commitments for such increase. The maturity date for the ABL Facility is November 16, 2017. The maturity date for the FILO Facility is January 31, 2017. During the ~~six~~nine months ended ~~July~~October 54, 2014, the Company paid $0.7 million in debt issuance costs related to the ABL Facility and FILO Facility.

As of ~~July~~October 54, 2014, the Company had $~~641~~631.6 4 million outstanding under the U.S. ABL Facility. In addition, the Company had certain letters of credit outstanding in the aggregate amount of $109.09 million, leaving $~~198~~206.43 million available for additional borrowings under the U.S. ABL Facility. The outstanding balance of the Canadian ABL Facility at ~~July~~October 54, 2014 was $53.19 million, leaving $7071.81 million available for additional borrowings. As of ~~July~~October 54, 2014, the outstanding balance of the U.S. FILO Facility was $80.0 million and the outstanding balance of the Canadian FILO Facility was $1014.36 million.

Borrowings under the U.S. ABL Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 200 basis points over an adjusted LIBOR rate or (b) 100 basis points over an alternative base rate (the higher of the prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR rate plus 100 basis points). The applicable margins under the U.S. ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the Canadian ABL Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 100 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 100 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 200 basis points over a rate determined by reference to the average rate applicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 200 basis points over an adjusted LIBOR rate. The applicable margins under the Canadian ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the U.S. FILO Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 350 basis points over an adjusted LIBOR rate or (b) 250 basis points over an alternative base rate (the higher of the prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR plus 100 basis points). The applicable margins under the U.S. FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

Borrowings under the Canadian FILO Facility bear interest at a rate per annum equal to, at the Company’s option, either (a) 250 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 250 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 350 basis points over a rate determined by reference to the average rate applicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 350 basis points over an adjusted LIBOR rate. The applicable margins under the Canadian FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

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

•

85% of eligible accounts receivable of the U.S. or Canadian loan parties, as applicable; plus

•

The lesser of (a) 70% of the lesser of cost or market value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable and (b) 85% of the net orderly liquidation value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable; plus

•

The lesser of (a) 50% of the lower of cost or market value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable and (b) 85% of the net orderly liquidation value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable.

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

•

5% of eligible accounts receivable of the U.S. or Canadian loan parties, as applicable; plus

•

10% of the net orderly liquidation value of the eligible tire and non-tire inventory of the U.S. or Canadian loan parties, as applicable.

All obligations under the U.S. ABL Facility and the U.S. FILO Facility are unconditionally guaranteed by Holdings and substantially all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material restricted subsidiaries, other than Tire Pros Francorp. The Canadian ABL Facility and the Canadian FILO Facility are unconditionally guaranteed by the U.S. loan parties, TriCan and any future, direct and indirect, wholly-owned, material restricted Canadian subsidiaries. Obligations under the U.S. ABL Facility and the U.S. FILO Facility are secured by a first-priority lien on inventory, accounts receivable and related assets and a second-priority lien on substantially all other assets of the U.S. loan parties, subject to certain exceptions. Obligations under the Canadian ABL Facility and the Canadian FILO Facility are secured by a first-priority lien on inventory, accounts receivable and related assets of the U.S. loan parties and the Canadian loan parties and a second-priority lien on substantially all other assets of the U.S. loan parties and the Canadian loan parties, subject to certain exceptions.

The ABL Facility and FILO Facility contain customary covenants, including covenants that ~~restricts~~restrict the Company’s ability to incur additional debt, grant liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates or change the Company’s fiscal year. The terms of the ABL Facility and FILO Facility generally restrict distributions or the payment of dividends in respect of the Company’s stock subject to certain exceptions requiring compliance with certain availability levels and fixed charge coverage ratios under the ABL Facility and other customary negotiated exceptions. As of ~~July~~October 54, 2014, the Company was in compliance with these covenants. If the amount available ~~for~~ for additional borrowings under the ABL Facility is less than the greater of (a) 10.0% of the lesser of (x) the aggregate commitments under the ABL Facility and (y) the aggregate borrowing base and (b) $25.0 million, then the ~~Company~~ Company would be subject to an additional covenant requiring them to meet a fixed charge coverage ratio of 1.0 to 1.0. As of ~~July~~October 54, 2014, the Company’s additional borrowing availability under the ABL Facility was above the required amount and the Company was therefore not subject to the additional covenants.

Senior Secured Term Loan

In connection with the acquisition of Terry’s Tire, on March 28, 2014, ATDI entered into a credit agreement that provided for a senior secured term loan facility in the aggregate principal amount of $300.0 million (the “Initial Term Loan”). The Initial Term Loan was issued at a discount of 0.25% which, combined with certain debt issuance costs paid at closing, resulted in net proceeds of approximately $290.9 million. The Initial Term Loan will accrete based on an effective interest rate of 6% to an aggregate accreted value of $300.0 million, the full principal amount at maturity. The net proceeds from the Initial Term Loan were used to finance a portion of the Terry’s Tire Purchase Price.

On June 16, 2014, ATDI amended the Initial Term Loan (the “Incremental Amendment”) to borrow an additional $340.0 million (the “Incremental Term Loan”) on the same terms as the Initial Term Loan. Pursuant to the Incremental Amendment, until August 15, 2014 ATDI also ~~has~~had the right to borrow up to an additional $80.0 million (the “Delayed Draw Term Loan” and collectively with the Initial Term Loan and the Incremental Term Loan, the “Term Loan”) on the same terms as the Initial Term Loan. The proceeds from the Incremental Term Loan, net of related debt issuance costs paid at closing, amounted to approximately $335.7 million, and were used, in part, to redeem all $250.0 million aggregate principal amounts of notes outstanding under ATDI’s Senior Secured Notes and related fees and expenses as more fully described below, and the remaining proceeds will be used for working capital requirements and other general corporate purposes, including the financing of potential future acquisitions. The Company received the proceeds from the Delayed Draw Term Loan at the end of the second quarter of 2014. The maturity date for the Term Loan is June 1, 2018. During the ~~six~~nine months ended ~~July~~October 54, 2014, the Company paid $1314.8 0 million in debt issuance cost related to the Term Loan.

Borrowings under the Term Loan bear interest at a rate per annum equal to, at the Company’s option, either (a) a Eurodollar rate determined by reference to LIBOR, plus an applicable margin of 475 basis points or (b) 375 basis points over an alternative base rate determined by reference of the higher of the federal funds rate plus 50 basis points, the prime rate and 100 basis points over the one month Eurodollar rate. The Eurodollar rate is subject to an interest rate floor of 100 basis points. The applicable margins under the Term Loan are subject to a step down based on a consolidated net leverage ratio, as defined in the agreement.

All obligations under the Term Loan are unconditionally guaranteed by Holdings and, subject to certain customary exceptions, all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material subsidiaries. Obligations under the Term Loan are secured by a first-priority lien on substantially all property, assets and capital stock of ATDI except accounts receivable, inventory and related intangible assets and a second-priority lien on all accounts receivable and related intangible assets.

The Term Loan contains customary covenants, including covenants that restrict the Company’s ability to incur additional debt, create liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates, change the nature of the Company’s business or change the Company’s fiscal year. The terms of the Term Loan generally restrict distributions or the payment of dividends in respect to the Company’s stock subject to certain exceptions such as the amount of 50% of net income (reduced by 100% of net losses) for the period beginning January 1, 2014 and other customary negotiated exceptions. As of ~~July~~October 54, 2014, the Company was in compliance with these covenants.

The Company iswas required to make a principal ~~payments~~payment under the Term Loan equal to 0$1.~~25%~~6 ofmillion on the ~~aggregate~~last ~~principal~~business ~~amount~~day ~~outstanding~~of ~~under~~June ~~the~~2014. Commencing ~~Term~~with ~~Loan on~~ the last business day of ~~each~~September ~~March~~2014, ~~June,~~the ~~September~~Company ~~and~~is ~~December,~~required ~~commencing~~to ~~with~~make principal payments equal to $1.8 million on the last business day of each March, June, ~~2014~~September and December. In addition, subject to certain exceptions, the Company is required to repay the Term Loan in certain circumstances, including with 50% (which percentage will be reduced to 25% and 0%, as applicable, subject to attaining certain senior secured net leverage ratios) of its annual excess cash flow, as defined in the Term Loan agreement. The Term Loan also contains repayments provision related to non-ordinary course asset or property sales when certain conditions are met, and related to the incurrence of debt that is not permitted under the agreement.

Senior Secured Notes

On May 16, 2014, ATDI delivered a Notice of Full Redemption, providing for the redemption of all $250.0 million aggregate principal amount of the 9.75% Senior Secured Notes (“Senior Secured Notes”) on June 16, 2014 (the “Redemption Date”) at a price equal to 104.875% of the principal amount of the Senior Secured Notes redeemed plus accrued and unpaid interest, if any, to, but excluding the Redemption Date (the “Redemption Price”). On June 16, 2014, using proceeds from the Incremental Term Loan, the Senior Secured Notes were redeemed for a Redemption Price of $263.2 million.

Senior Subordinated Notes

On May 28, 2010, ATDI issued $200.0 million in aggregate principal amount of its 11.50% Senior Subordinated Notes due 2018 (the “Initial Subordinated Notes”). Interest on the Initial Subordinated Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2010.

In connection with the consummation of the Hercules acquisition, on January 31, 2014, ATDI completed the sale to certain purchasers of an additional $225.0 million in aggregate principal amount of its 11.50% Senior Subordinated Notes due 2018 (the “Additional Subordinated Notes” and, collectively with the Initial Subordinated Notes, the “Senior Subordinated Notes”). The Additional Subordinated Notes were issued at a discount from their principal amount at maturity and generated net proceeds of approximately $221.1 million. The Additional Subordinated Notes will accrete based on an effective interest rate of 12% to an aggregate accreted value of $225.0 million, the full principal amount at maturity. During the ~~six~~nine months ended ~~July~~October 54, 2014, the Company paid $1.2 million in debt issuance cost related to the Additional ~~Subordinated~~ Subordinated Notes.

The Additional Subordinated Notes have identical terms to the Initial Subordinated Notes except the Additional Subordinated Notes ~~will~~ ~~accrue~~accrues interest from January 31, 2014. The Additional Subordinated Notes and the Initial Subordinated Notes are treated as a single class of securities for all purposes under the indenture. The Senior Subordinated Notes will mature on June 1, 2018.

The Senior Subordinated Notes may be redeemed at any time at the option of ATDI, in whole or in part, upon not less than 30 nor more than 60 days notice at a redemption price of 102.0% of the principal amount if the redemption date occurs between June 1, 2014 and May 31, 2015 and 100.0% of the principal amount if the redemption date occurs between June 1, 2015 and May 31, 2016.

The Senior Subordinated Notes are unconditionally guaranteed by Holdings and substantially all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material restricted subsidiaries, other than Tire Pros Francorp, subject to certain exceptions.

The indenture governing the Senior Subordinated Notes contains covenants that, among other things, limits ATDI’s ability and the ability of its restricted subsidiaries to incur additional debt or issue preferred stock; pay certain dividends or make certain distributions in respect of ATDI’s or repurchase or redeem ATDI’s capital stock; make certain loans, investments or other restricted payments; place restrictions on the ability of ATDI’s subsidiaries to pay dividends or make other payments to ATDI; engage in transactions with stockholders or affiliates; transfer or sell certain assets; guarantee indebtedness or incur other contingent obligations; incur certain liens without securing the Senior Subordinated Notes; consolidate, merge or sell all or substantially all of ATDI’s assets; enter into certain transactions with ATDI’s affiliates; and designate ATDI’s subsidiaries as unrestricted subsidiaries. The terms of the Senior Subordinated Notes generally restrict distributions or the payment of dividends in respect of the Company’s stock subject to certain exceptions such as the amount of 50% of net income (reduced by 100% of net losses) for the period beginning April 4, 2010 and other customary negotiated exceptions. As of ~~July~~October 54, 2014, the Company was in compliance with these covenants.

10.

Derivative Instruments:

In the normal course of business, the Company is exposed to the risk associated with ~~exposure to~~ fluctuations in interest rates on ~~our~~its variable rate debt. These fluctuations can increase the cost of financing, investing and operating the business. The Company has used derivative financial instruments to help manage this risk and reduce the impacts of these exposures and not for trading or other speculative purposes. All derivatives are recognized on the condensed consolidated balance sheet at their fair value as either assets or liabilities. Changes in the fair value of contracts that qualify for hedge accounting treatment are recorded in accumulated other comprehensive income (loss), net of taxes, and are recognized in the statement of comprehensive income (loss) at the time earnings are affected by the hedged transaction. For other derivatives, changes in the fair value of the contract are recognized immediately in net income (loss) in the statement of comprehensive income (loss).

On September 4, 2013, the Company entered into a spot interest rate swap and two forward-starting interest rate swaps (collectively the “3Q 2013 Swaps”) each of which are used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The spot interest rate swap in place covers a notional amount of $100.0 million at a fixed interest rate of 1.145% and expires in September 2016. The forward-starting interest rate swaps in place cover an aggregate notional amount of $100.0 million, of which $50.0 million becomes effective in September 2014 at a fixed interest rate of 1.464% and will expire in September 2016 and $50.0 million becomes effective in September 2015 at a fixed interest rate of 1.942% and will expire in September 2016. The counterparty to each swap is a major financial institution. The 3Q 2013 Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract is recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

On August 1, 2012, the Company entered into two interest rate swap agreements (“3Q 2012 Swaps”) used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The swaps in place cover an aggregate notional amount of $100.0 million, with each $50.0 million contract having a fixed rate of 0.655% and expiring in June 2016. The counterparty to each swap is a major financial institution. The 3Q 2012 Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract is recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

On September 23, 2011, the Company entered into two interest rate swap agreements (“3Q 2011 Swaps”) used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The swaps in place cover an aggregate notional amount of $100.0 million, of which $50.0 million iswas at a a fixed rate of 0.74% and ~~will~~expired ~~expire~~ in September 2014 and $50.0 million is at a fixed rate of 1.0% and will expire in September 2015. The counterparty to each swap is a major financial institution. The 3Q 2011 Swaps do not meet the criteria to ~~qualify~~ qualify for hedge accounting treatment; therefore, changes in the fair value of each contract is recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

On February 24, 2011, the Company entered into two interest rate swap agreements (“1Q 2011 Swaps”) used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. The swaps in place covered an aggregate notional amount of $75.0 million, of which $25.0 million was at a fixed interest rate of 0.585% and expired in February 2012. The remaining swap covered an aggregate notional amount of $50.0 million at a fixed interest rate of 1.105% and expired in February 2013. The counterparty to each swap was a major financial institution. Neither swap met the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract were recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss).

The following tables present the fair values of the Company’s derivative instruments included within the condensed consolidated balance sheets as of ~~July~~October 54, 2014 and December 28, 2013:

		Liability Derivatives
In thousands	Balance SheetLocation	July 5,2014		December 28,2013
	Balance Sheet	October 4,		December 28,
In thousands	Location	2014		2013
Derivatives not designated as hedges:
3Q 2011 swaps - $100 million notional	Accrued expenses	$	~~547~~384	$	792
3Q 2012 swaps - $100 million notional	Accrued expenses		~~310~~213		280
3Q 2013 swaps - $200 million notional	Accrued expenses		1,~~941~~687		1,880
Total		$	2,~~798~~284	$	2,952

The pre-tax effect of the Company’s derivative instruments on the condensed consolidated statement of comprehensive income (loss) was as follows:

			(Gain) Loss Recognized
					Gain (Loss) Recognized
In thousands	Location of(Gain) LossRecognized		QuarterEndedJuly 5,2014				QuarterEndedJune 29,2013				Six MonthsEndedJuly 5,2014				Six MonthsEndedJune 29,2013
					Quarter				Quarter				Nine Months				Nine Months
Derivatives not designated as hedges:
	Location of				Ended				Ended				Ended				Ended
1Q 2011 swap - $50 million notional	Interest Expense		$	—			$	—			$	—			$	(149	)
	Gain (Loss)				October 4,				September 28,				October 4,				September 28,
3Q 2011 swaps - $100 million notional	Interest Expense			(158	)			(246	)			(245	)			(402	)
In thousands	Recognized				2014				2013				2014				2013
3Q 2012 swaps - $100 million notional	Interest Expense			(18	)			(670	)			30				(801	)
Derivatives not designated as hedges:
3Q 2013 swaps - $200 million notional	Interest Expense			26				—				61				—
1Q 2011 swap - $50 million notional		Interest Expense			$	—			$	—			$	—			$	149
Total			$	(150	)		$	(916	)		$	(154	)		$	(1,352	)
3Q 2011 swaps - $100 million notional		Interest Expense				164				10				408				412
3Q 2012 swaps - $100 million notional		Interest Expense				96				(316	)			67				484
3Q 2013 swaps - $200 million notional		Interest Expense				254				(1,787	)			193				(1,787	)
Total					$	514			$	(2,093	)		$	668			$	(742	)

11.

Fair Value of Financial Instruments:

The accounting standard for fair value measurements establishes a framework for measuring fair value that is based on the inputs market participants use to determine the fair value of an asset or liability and establishes a fair value hierarchy to prioritize those inputs. The fair value hierarchy is comprised of three levels that are described below:

•

Level 1 Inputs - Inputs based on quoted prices in active markets for identical assets or liabilities.

•

Level 2 Inputs - Inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

•

Level 3 Inputs - Unobservable inputs based on little or no market activity and that are significant to the fair value of the assets and liabilities, therefore requiring an entity to develop its own assumptions.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability based on the best information available under the circumstances. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table presents the fair value and hierarchy levels for the Company’s assets and liabilities, which are measured at fair value on a recurring basis as of ~~July~~October 54, 2014:

Fair Value Measurements

In thousands

Total

Level 1

Level 2

Level 3

Assets:

Benefit trust assets

3,~~530~~531

—

Total

3,~~530~~531

—

Liabilities:

Contingent consideration

1613,~~000~~450

—

1613,~~000~~450

Derivative instruments

2,~~798~~284

—

2,~~798~~284

—

Total

1815,~~798~~734

—

2,~~798~~284

1613,~~000~~450

ASC 820 – Fair Value Measurements and Disclosures defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company determines fair value of its financial assets and liabilities using the following methodologies:

•

Benefit trust assets – These assets include money market and mutual funds that are the underlying for deferred compensation plan assets, held in a rabbi trust. The fair value of the assets is based on observable market prices quoted in readily accessible and observable markets.

• Contingent consideration - As part of the ~~preliminary~~ purchase price allocation of Terry’s Tire and Hercules, the Company recorded $12.5 million and $3.5 million, respectively, in contingent consideration liabilities. The fair value was estimated using a discounted cash flow technique with significant inputs that are not observable, including discount rates and probability-weighted cash flows and represents management’s best estimate of the amounts to be paid. The contingent consideration liabilities includes $12.3 million related to the retention of certain key members of management as employees of the Company and $3.7 million related to securing the rights to continue to distribute certain tire brands previously distributed by Terry’s Tire and Hercules. The Company believes the probable outcome could range from approximately $8.0 million to $1613.05 million. Changes in the fair value of the contingent consideration liabilities subsequent to the acquisition dates, primarily resulting from management’s revision of the assessed probabilities of achieving the defined milestones, are recorded to transaction expenses in the condensed consolidated statements of comprehensive income (loss). During the quarter ended October 4, 2014, the Company revised the assessed probabilities related to the contingent consideration liabilities for securing the rights to continue to distribute certain tire brands previously distributed by Terry’s Tire and Hercules based on current available information which reduced the fair value of the contingent consideration liabilities by $2.6 million with a corresponding decrease to transaction expenses. The recorded contingent consideration isliabilities are included in Accrued Expenses in the condensed consolidated balance sheet as of ~~July~~October 54, 2014.

•

Derivative instruments - These instruments consist of interest rate swaps. The fair value is based upon quoted prices for similar instruments from a financial institution that is counterparty to the transaction.

The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate their carrying values due to the short-term nature of these instruments. The methodologies used by the Company to determine the fair value of its financial assets and liabilities at ~~July~~October 54, 2014 are the same as those used at December 28, 2013. As a result, there have been no transfers between Level 1 and Level 2 categories.

The following table summarizes the changes in the fair value of the Company’s contingent consideration liabilities measured using significant unobservable inputs (Level 3) for the nine months ended October 4, 2014:


	Contingent
In thousands	Consideration
Balance at December 28, 2013	$	—
Contingent consideration liabilities recorded for the Terry’s and Hercules acquisitions		16,000
Changes in the fair value of contingent consideration liabilities		(2,550	)

Balance at October 4, 2014	$	13,450

12.

Stock-Based Compensation:

The Company accounts for stock-based compensation awards in accordance with ASC 718 - Compensation, which requires a fair-value based method for measuring the value of stock-based compensation. Fair value is measured once at the date of grant and is not adjusted for subsequent changes. The Company’s stock-based compensation plans include programs for stock options and restricted stock awards.

Stock Options

In August 2010, the Company’s indirect parent company adopted a Management Equity Incentive Plan (the “2010 Plan”), pursuant to which the indirect parent company will grant options to selected employees and directors of the Company. The 2010 Plan, which includes both time-based and performance-based awards, was amended on April 28, 2014 by the board of directors of the Company’s indirect parent, ATD Corporation, to increase the maximum number of shares of common stock for which stock options may be granted under the 2010 Plan from 52.1 million to 54.4 million. In addition to the increase in the maximum number of shares, on April 28, 2014, the board of directors of ATD Corporation approved the issuance of stock options to certain members of management. The approved options are for the purchase of up to 4.5 million shares of common stock, have an exercise price of $1.50 per share and vest over a two-year vesting period. As of ~~July~~October 54, 2014, the Company has 0.3 million shares available for future incentive awards.

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

	Numberof Shares		WeightedAverageExercise Price
			Weighted
	Number		Average
	of Shares		Exercise Price
Outstanding - December 28, 2013		49,516,503	$	1.02
Granted		4,528,833		1.50
Exercised		—		—
Cancelled		—		—
Outstanding - July 5, 2014		54,045,336	$	1.06
Outstanding - October 4, 2014		54,045,336	$	1.06
Exercisable - July 5, 2014		34,080,079	$	1.03
Exercisable - October 4, 2014		34,080,079	$	1.03

As of ~~July~~October 54, 2014, the aggregate intrinsic value of options outstanding and options exercisable was $23.7 million and $16.0 million, respectively. The aggregate intrinsic value is based on the estimated fair value of the Company’s common stock of $1.50 as of ~~July~~October 54, 2014. The total fair value of shares vested during the ~~six~~nine months ~~ended~~ ~~July~~ended October 54, 2014 was $6.3 million. No options were exercised during the ~~six~~nine months ended ~~July~~October 54, 2014.

Options granted under the 2010 Plan expire no later than 10 years from the date of grant and vest based on the passage of time and/or the achievement of certain performance targets in equal installments over two, three or five years. The weighted-average remaining contractual term for options outstanding and exercisable at ~~July~~October 54, 2014 was 6.75 years and 6.52 years, respectively. The fair value of each of the Company’s time-based stock option awards is expensed on a straight-line basis over the requisite service period, which is generally the two, three or five-year vesting period of the options. However, for options granted with performance target requirements, compensation expense is recognized when it is probable that both the performance target will be achieved and the requisite service period is satisfied. At ~~July~~October 54, 2014, unrecognized compensation expense related to non-vested options granted under the 2010 Plan totaled $8.70 million and the weighted-average ~~period~~ period over which this expense will be recognized is 01.92 years.

The weighted average fair value of stock options granted during the six months ended July 5, 2014 and June 29, 2013 was $0.68 and $0.54 using the Black-Scholes option pricing model. The following weighted average assumptions were used:

	Six MonthsEndedJuly 5,2014			Six MonthsEndedJune 29,2013
Risk-free interest rate		1.73	%		1.38	%
Dividend yield		—			—
Expected life		5.8 years			6.0 years
Volatility		46.49	%		45.39	%

As the Company does not have sufficient historical volatility data for the Company’s own common stock, the stock price volatility utilized in the fair value calculation is based on the Company’s peer group in the industry in which it does business. The risk-free interest rate is based on the yield-curve of a zero-coupon U.S. Treasury bond on the date the award is granted with a maturity equal to the expected term of the award. Because the Company does not have relevant data available regarding the expected life of the award, the expected life is derived from the Simplified Method as allowed under SAB Topic 14.

Restricted Stock

In October 2010, the Company’s indirect parent company adopted the Non-Employee Director Restricted Stock Plan (the “2010 Restricted Stock Plan”), pursuant to which the indirect parent company will grant restricted stock to non-employee directors of the Company. These awards entitle the holder to receive one share of common stock for each restricted stock award granted. The 2010 Restricted Stock Plan provides that a maximum of 0.8 million shares of common stock of the indirect parent may be granted to non-employee directors of the Company, of which 0.2 million remain available at July 5, 2014 for future incentive awards. On April 28, 2014, the board of directors of ATD Corporation approved the issuance of restricted stock to the non-employee directors of the Company. The approved restricted stock awards were for the issuance of up to 0.1 million shares of common stock, have a grant date fair value of $1.50 per share and vest over a two-year vesting period.

The ~~following~~weighted ~~table~~average ~~summarizes~~fair ~~restricted~~value of stock ~~activity~~options ~~under~~granted during the ~~2010~~nine ~~Restricted~~months ~~Stock~~ended October 4, ~~Plan~~2014 ~~for~~ and September 28, 2013 was $0.68 and $0.54 using the ~~six~~Black-Scholes ~~months~~option ~~ended~~pricing ~~July 5,~~model. ~~2014~~The following weighted average assumptions were used:

	Numberof Shares			WeightedAverageExercise Price
	Nine Months			Nine Months
Outstanding and unvested at December 28, 2013		87,719		$	1.14
	Ended			Ended
Granted		133,333			1.50
	October 4,			September 28,
Vested		(87,719	)		1.14
	2014			2013
Cancelled		—			—
Risk-free interest rate		1.73	%		1.38	%
Outstanding and unvested at July 5, 2014		133,333		$	1.50
Dividend yield		—			—
Expected life		5.8 years			6.0 years
Volatility		46.49	%		45.39	%

~~The~~As ~~fair~~the ~~value~~Company ofdoes ~~each~~not ofhave ~~the~~sufficient ~~restricted~~historical ~~stock~~volatility ~~awards~~data isfor ~~measured~~the asCompany’s own common stock, the ~~grant-date~~stock price ofvolatility utilized in the ~~common~~fair ~~stock and~~value calculation is ~~expensed~~based on athe ~~straight-line~~Company’s ~~basis~~peer ~~over~~group in the ~~requisite~~industry ~~service~~in ~~period,~~ which it does business. The risk-free interest rate is ~~generally~~based on the ~~two~~yield-~~year~~curve ~~vesting~~of ~~period~~a zero-coupon U.S. AtTreasury ~~July 5,~~bond ~~2014,~~on ~~unrecognized~~the date ~~compensation~~the ~~expense~~award ~~related~~is granted with a maturity equal to ~~non-vested~~the ~~restricted~~expected ~~stock~~term ~~awards~~of ~~granted~~the ~~under~~award. Because the ~~2010 Restricted~~Company ~~Stock~~does ~~Plan~~not ~~totaled~~have ~~$0.2~~relevant ~~million~~data ~~and~~available regarding the ~~weighted-average~~expected ~~period~~life ~~over~~of ~~which~~the ~~this~~award, ~~expense~~the ~~will~~expected belife ~~recognized~~ is ~~1.5~~derived ~~years~~from the Simplified Method as allowed under SAB Topic 14.

Restricted Stock

In October 2010, the Company’s indirect parent company adopted the Non-Employee Director Restricted Stock Plan (the “2010 Restricted Stock Plan”), pursuant to which the indirect parent company will grant restricted stock to non-employee directors of the Company. These awards entitle the holder to receive one share of common stock for each restricted stock award granted. The 2010 Restricted Stock Plan provides that a maximum of 0.8 million shares of common stock of the indirect parent may be granted to non-employee directors of the Company, of which 0.2 million remain available at October 4, 2014 for future incentive awards. On April 28, 2014, the board of directors of ATD Corporation approved the issuance of restricted stock to the non-employee directors of the Company. The approved restricted stock awards were for the issuance of up to 0.1 million shares of common stock, have a grant date fair value of $1.50 per share and vest over a two-year vesting period.

The following table summarizes restricted stock activity under the 2010 Restricted Stock Plan for the nine months ended October 4, 2014:


				Weighted
	Number			Average
	of Shares			Exercise Price
Outstanding and unvested at December 28, 2013		87,719		$	1.14
Granted		133,333			1.50
Vested		(87,719	)		1.14
Cancelled		—			—

Outstanding and unvested at October 4, 2014		133,333		$	1.50

The fair value of each of the restricted stock awards is measured as the grant-date price of the common stock and is expensed on a straight-line basis over the requisite service period, which is generally the two-year vesting period. At October 4, 2014, unrecognized compensation expense related to non-vested restricted stock awards granted under the 2010 Restricted Stock Plan totaled $0.1 million and the weighted-average period over which this expense will be recognized is 1.2 years.

Compensation Expense

Stock-based compensation expense is included in selling, general and administrative expenses within the condensed consolidated statement of comprehensive income (loss). The amount of compensation expense recognized during a period is based on the portion of the granted awards that are expected to vest. Ultimately, the total expense recognized over the vesting period will equal the fair value of the awards as of the grant date that actually vest. The following table summarizes the compensation expense recognized:

In thousands	QuarterEndedJuly 5,2014		QuarterEndedJune 29,2013		Six MonthsEndedJuly 5,2014		Six MonthsEndedJune 29,2013
	Quarter		Quarter		Nine Months		Nine Months
Stock Options	$	1,394	$	753	$	1,962	$	1,379
	Ended		Ended		Ended		Ended
Restricted Stock		25		31		25		73
	October 4,		September 28,		October 4,		September 28,
Total	$	1,419	$	784	$	1,987	$	1,452
In thousands	2014		2013		2014		2013
Stock Options	$	753	$	584	$	2,715	$	1,962
Restricted Stock		38		12		63		85
Total	$	791	$	596	$	2,778	$	2,047

13. Income Taxes:

The tax provision for the six months ended July 5, 2014, was calculated on a national jurisdiction basis. The Company accounts for its provision for income taxes in accordance with ASC 740 – Income Taxes, which requires an estimate of the annual effective tax rate for the full year to be applied to the respective interim period. However, the authoritative guidance allows the use of the discrete method when, in certain situations, the actual interim period effective tax rate provides a better estimate of the income tax provision. For the six months ended July 5, 2014, the discrete method was used to calculate the Company’s U.S. and Canadian interim tax expense as management determined that it provided a more reliable estimate of year-to-date income tax expense.

Based on the reported loss before income taxes for the six months ended July 5, 2014, the Company had an income tax benefit of $43.0 million, consisting of a $41.0 million U.S. tax benefit and a $2.0 million foreign tax benefit, and an effective tax benefit rate under the discrete method of 34.0%. For the six months ended June 29, 2013, the Company had an income tax benefit of $9.4 million, consisting of a $7.4 million U.S. tax benefit and a $2.0 million foreign tax benefit, and an effective tax benefit rate of 29.7%. The effective rate of the year-to-date tax benefit is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower than the statutory U.S. federal rate and non-deductible transaction costs which lowered the effective tax rate by 0.5% and 0.5%, respectively.

At July 5, 2014, the Company has a net deferred tax liability of $302.4 million, of which, $18.9 million was recorded as a current deferred tax asset and $321.3 million was recorded as a non-current deferred tax liability. The net deferred tax liability primarily relates to the expected future tax liability associated with the non-deductible, identified, intangible assets that were recorded during the TPG Merger, assuming an effective tax rate of 39.6%. It is the Company’s intention to indefinitely reinvest all undistributed earnings of non-U.S. subsidiaries.

~~At July 5, 2014, the Company had unrecognized tax benefits of $0~~13.6 ~~million~~Other, of which $0.6 million is included within other liabilities within the accompanying condensed consolidated balance sheet. The total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $0.1 million as of July 5, 2014. In addition, $0.5 million is related to temporary timing differences. During the next 12 months, management does not believe that it is reasonably possible that any of the unrecognized tax benefits will be recognized. Net:

~~While~~Other, ~~the~~net ~~Company~~is ~~believes~~comprised ~~that~~of itnon-operating ~~has~~income ~~adequately~~and ~~provided~~expenses ~~for~~that ~~all~~primarily ~~tax~~relate ~~positions~~to bank fees, ~~amounts~~gains ~~asserted~~and bylosses ~~taxing~~on ~~authorities~~foreign currency ~~could~~and befinancing ~~greater~~service ~~than the~~fees ~~Company’s~~charged ~~accrued~~to ~~position~~customers. ~~Accordingly,~~Non-operating ~~additional~~income ~~provisions~~for ofthe ~~federal~~quarters ~~and~~ended ~~state-related~~October ~~matters~~4, ~~could~~2014 beand ~~recorded~~September in28, ~~the~~2013 ~~future~~totaled as$1.2 ~~revised~~million ~~estimates~~and ~~are~~$1.1 ~~made~~million, orrespectively while the ~~underlying~~nine ~~matters~~months ~~are~~ended ~~settled~~October or4, ~~otherwise~~2014 ~~resolved. The Company files~~and ~~federal~~September ~~income tax returns~~28, as2013 ~~well~~totaled as$6.1 ~~multiple~~million ~~state~~and ~~jurisdiction~~$2.3 ~~tax~~million, ~~returns~~respectively. ~~The~~Non-operating ~~tax~~expenses ~~years~~for ~~2010~~the –quarters ~~2012~~ended ~~remain~~October ~~open~~4, to2014 ~~examination~~and bySeptember ~~the~~28, ~~Internal~~2013 ~~Revenue~~totaled ~~Service~~$4.9 ~~The~~million ~~tax~~and ~~years~~$1.8 ~~2009~~million, –respectively ~~2012~~while ~~remain~~the ~~open~~nine tomonths ~~examination~~ended byOctober ~~other major~~4, ~~taxing~~2014 ~~jurisdictions~~and toSeptember ~~which~~28, ~~the~~2013 ~~Company~~totaled is$7.9 ~~subject~~million ~~(primarily Canada~~ and ~~other~~$5.9 ~~state~~million, ~~and local jurisdictions)~~respectively.

14.

Income Taxes:

The tax provision for the nine months ended October 4, 2014, was calculated on a national jurisdiction basis. The Company accounts for its provision for income taxes in accordance with ASC 740 – Income Taxes, which requires an estimate of the annual effective tax rate for the full year to be applied to the respective interim period. However, the authoritative guidance allows the use of the discrete method when, in certain situations, the actual interim period effective tax rate provides a better estimate of the income tax provision. For the nine months ended October 4, 2014, the discrete method was used to calculate the Company’s U.S. and Canadian interim tax expense as management determined that it provided a more reliable estimate of year-to-date income tax expense.

Based on the reported loss before income taxes for the nine months ended October 4, 2014, the Company had an income tax benefit of $50.6 million, consisting of a $46.7 million U.S. tax benefit and a $3.9 million foreign tax benefit, and an effective tax benefit rate under the discrete method of 34.1%. For the nine months ended September 28, 2013, the Company had an income tax benefit of $8.9 million, consisting of a $7.2 million U.S. tax benefit and a $1.7 million foreign tax benefit, and an effective tax benefit rate of 29.8%. The effective rate of the year-to-date tax benefit is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower than the statutory U.S. federal rate decreasing the rate by 0.8%.

At October 4, 2014, the Company has a net deferred tax liability of $290.3 million, of which, $21.2 million was recorded as a current deferred tax asset and $311.5 million was recorded as a non-current deferred tax liability. The net deferred tax liability primarily relates to the expected future tax liability associated with the non-deductible, identified, intangible assets that were recorded during the TPG Merger, assuming an effective tax rate of 39.6%. It is the Company’s intention to indefinitely reinvest all undistributed earnings of non-U.S. subsidiaries.

At October 4, 2014, the Company had unrecognized tax benefits of $0.6 million, of which $0.6 million is included within other liabilities within the accompanying condensed consolidated balance sheet. The total amount of unrecognized tax benefits that, if recognized, would affect the Company’s effective tax rate is $0.1 million as of October 4, 2014. In addition, $0.5 million is related to temporary timing differences. During the next 12 months, management does not believe that it is reasonably possible that any of the unrecognized tax benefits will be recognized.

While the Company believes that it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position. Accordingly, additional provisions of federal and state-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. The Company files federal income tax returns, as well as multiple state jurisdiction tax returns. The tax years 2010 – 2013 remain open to examination by the Internal Revenue Service. The tax years 2009 – 2013 remain open to examination by other major taxing jurisdictions to which the Company is subject (primarily Canada and other state and local jurisdictions).

In September 2013, the Internal Revenue Service released final Tangible Property Regulations (the “Final Regulations”). The Final Regulations provide guidance on applying Section 263(a) of the Code to amounts paid to acquire, produce or improve tangible property, as well as rules for materials and supplies (Code Section 162). These regulations contain certain changes from the temporary and proposed tangible property regulations that were issued on December 27, 2011. The Final Regulations are generally effective for taxable years beginning on or after January 1, 2014. During 2012, the Company filed a change in tax methodology related to a section of the Final Regulations, specifically the methodology for repairs and maintenance deductions. The Company does not expect any additional adjustments related to the Final Regulations.

1415. Stockholder’s Equity:

On January 31, 2014, TPG and certain co-investors contributed $50.0 million through the purchase of 33.3 million shares of common stock in Holdings indirect parent company, ATD Corporation. The proceeds from this equity contribution were used to fund a portion of the Hercules Closing Purchase Price. Accordingly, the Company recorded the basis in these shares in additional paid-in capital.

1516. Commitments and Contingencies:

The Company is involved from time to time in various lawsuits, including class action lawsuits as well as various audits and reviews regarding its federal, state and local tax filings, arising out of the ordinary conduct of its business. ~~Management~~While ~~does~~the ultimate outcome cannot be determined, management does not ~~expect~~believe that any of these matters will have a material adverse effect on the Company’s business or financial condition. As to tax filings, the Company believes that the various tax filings have been made in a timely fashion and in accordance with applicable federal, state and local tax code requirements. Additionally, the Company believes that it has adequately provided for any reasonably foreseeable resolution of any tax disputes, but will adjust its reserves if events so dictate in accordance with FASB authoritative guidance. To the extent that the ultimate results differ from the original or adjusted estimates of the Company, the effect will be recorded in accordance with the accounting standards for income taxes.

Guaranteed Lease Obligations

The Company remains liable as a guarantor on certain leases related to the Winston Tire Company, which was sold in 2001. As of ~~July~~October 54, 2014, the Company’s total obligations are $1.64 million extending over five years. However, the Company has secured assignments or sublease agreements for the vast majority of these commitments with contractual assigned or subleased rentals of $1.42 million. A provision has been made for the net present value of the estimated shortfall.

1617. Discontinued Operations:

As part of the acquisition of Terry’s Tire, the Company acquired Terry’s Tire’s commercial and retread businesses. As the Company’s core business does not include commercial and retread operations, the Company decided that it would divest of these businesses. As it iswas management’s intention to divest the commercial and retread businesses during fiscal 2014 and as all held for sale criteria ~~has~~had been met, the related assets and liabilities of the commercial and retread businesses ~~are~~were classified as held for sale within the accompanying condensed consolidated balance sheet. AsOn of July 531, 2014, the ~~amount~~Company ~~classified~~completed asa ~~assets~~transaction ~~held~~to sell the commercial and retread businesses for ~~sale~~cash ~~was~~proceeds of $53.59 million,. ~~consisting~~The carrying value of the commercial and retread businesses was $4.20 million. inDuring ~~current~~the ~~assets~~quarter ended October 4, ~~net~~2014, ~~property~~the ~~and~~Company ~~equipment~~finalized ofthe ~~$0.8~~post-closing ~~million~~working ~~and~~capital ~~goodwill~~adjustments which resulted in a payment due to the buyer of approximately $0.52 million. ~~The~~Accordingly, ~~amount~~the ~~classified~~Company ashas recognized ~~liabilities~~a ~~held~~pre-tax ~~for~~ loss on the sale ~~was~~of discontinued operations of $0.43 million aswithin ofthe ~~July 5,~~accompanying ~~2014~~condensed consolidated statements of ~~which~~comprehensive income (loss) for the ~~entire~~quarter ~~amount~~and ~~related~~nine tomonths ~~current~~ended ~~liabilities~~October 4, 2014.

2627

The Company has reflected the results of Terry’s Tire’s commercial and retread businesses as discontinued operations in the accompanying condensed consolidated statement of comprehensive income (loss) for the quarter and ~~six~~nine months ended ~~July~~October 54, 2014. The components of income (loss) from discontinued operations, net of of tax for the quarter and ~~six~~nine months ended ~~July~~October 54, 2014 were as follows:

In thousands	QuarterEndedJuly 5,2014			Six MonthsEndedJuly 5,2014
	Quarter			Nine Months
Net sales	$	5,418		$	5,418
	Ended			Ended
Income (loss) from operations before income taxes	$	(74	)	$	(74	)
	October 4,			October 4,
Income tax provision (benefit)		(26	)		(26	)
In thousands	2014			2014
Income (loss) from discontinued operations, net of tax	$	(48	)	$	(48	)
Net sales	$	2,084		$	7,502
Income (loss) from operations before income taxes	$	(91	)	$	(165	)
Loss on sale before income taxes		(346	)		(346	)
Income tax provision (benefit)		(154	)		(180	)
Income (loss) from discontinued operations, net of tax	$	(283	)	$	(331	)

1718. Subsequent ~~Event~~Events:

On ~~July~~November 313, 2014, TriCan completed the ~~Company~~acquisition ~~completed~~of athree small ~~transaction~~Canadian towholesale ~~sell~~distributors located in the ~~commercial~~province ~~and~~of ~~retread~~British ~~businesses~~Columbia. ~~acquired~~The asacquisition ~~part~~was of funded through the ~~Terry~~Company’s ~~Tire~~existing ~~acquisition~~ABL ~~for~~credit afacility. ~~purchase~~The ~~price~~Company does not believe the acquisitions of ~~approximately~~these $3three small wholesale distributors are material transactions, individually or when aggregated with the other non-material acquisitions discussed herein, subject to the disclosures and supplemental pro forma information required by ASC 805 – Business Combination.9 ~~million~~As a result, the information is not presented.

18On October 17, 2014, the Company entered into two forward-starting interest rate swaps (collectively the “4Q14 Swaps”) each of which are used to hedge a portion of the Company’s exposure to changes in its variable interest rate debt. ~~Subsidiary~~The ~~Guarantor~~4Q14 ~~Financial~~Swaps ~~Information:~~in place cover an aggregate notional amount of $600.0 million, of which $300.0 million becomes effective in January 2016 at a fixed interest rate of 2.29% and will expire in January 2021 and $300.0 million becomes effective in January 2017 at a fixed interest rate of 2.44% and will expire in January 2020. The counterparty to each swap is a major financial institution. The 4Q14 Swaps do not meet the criteria to qualify for hedge accounting treatment; therefore, changes in the fair value of each contract will be recognized in net income (loss) in the condensed consolidated statement of comprehensive income (loss) beginning in fourth quarter 2014.

19.

Subsidiary Guarantor Financial Information:

ATDI is the issuer of $425.0 million in aggregate principal amount of Senior Subordinated Notes. The Senior Subordinated Notes are fully and unconditionally guaranteed, jointly and severally, by Holdings, Am-Pac, Tire Wholesalers, Inc. (“Tire Wholesalers”), Terry’s Tire and by the U.S. operations of Hercules. ATDI is a direct 100% owned subsidiary of Holdings and Am-Pac, Tire Wholesales, Terry’s Tire and Hercules are indirect 100% owned subsidiaries of Holdings. None of the Company’s other subsidiaries guarantees the Senior Subordinated Notes. The guarantees can be released in certain customary circumstances.

In accordance with Rule 3-10 of Regulation S-X, the following presents condensed consolidating financial information for:

•

Holdings, under the column heading “Parent Company”;

•

ATDI, under the column heading “Subsidiary Issuer”;

•

Am-Pac, Tire Wholesalers, Terry’s Tire and Hercules’ U.S. subsidiary, on a combined basis, under the column heading “Guarantor Subsidiaries”; and

•

The Company’s other subsidiaries, on a combined basis, under the column heading “Non-Guarantor Subsidiaries”;

•

Consolidating entries and eliminations, under the column heading “Eliminations”; and

•

Holdings, ATDI and their subsidiaries on a consolidated basis, under the column heading “Consolidated.”

At the beginning of fiscal 2014, the Company merged a subsidiary that previously was a non-guarantor of the Senior Subordinated Notes, Tire Distributors, Inc., into ATDI. As a result of this merger, the consolidating balance sheet as of December 28, 2013, ~~has~~the consolidating statement of comprehensive income (loss) for the quarter and nine months ended September 28, 2013 and the consolidating cash flow for the nine months ended September 28, 2013 have been retroactively adjusted to reflect the post-merger legal entity structure. Terry’s Tire and Hercules’ U.S. subsidiary became guarantors of the Senior Subordinated Notes in the first quarter of 2014.

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

	As of July 5, 2014
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	16,129		$	9,153		$	2,251		$	—		$	27,533
Accounts receivable, net		—			333,561			56,555			67,444			—			457,560
Inventories		—			825,677			123,181			160,748			—			1,109,606
Assets held for sale		—			—			4,637			892			—			5,529
Income tax receivable		—			20,344			441			3,823			—			24,608
Intercompany receivables		95,051			—			184,796			—			(279,847	)		—
Other current assets		—			35,424			15,215			3,394			—			54,033
Total current assets		95,051			1,231,135			393,978			238,552			(279,847	)		1,678,869
Property and equipment, net		—			156,141			33,460			13,155			—			202,756
Goodwill and other intangible assets, net		418,592			639,201			510,512			260,203			—			1,828,508
Investment in subsidiaries		148,336			997,559			56,926			—			(1,202,821	)		—
Other assets		—			51,781			423			795			—			52,999
Total assets	$	661,979		$	3,075,817		$	995,299		$	512,705		$	(1,482,668	)	$	3,763,132
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	—		$	544,326		$	130,764		$	64,616		$	—		$	739,706
Accrued expenses		—			50,290			14,897			6,606			—			71,793
Liabilities held for sale		—			—			—			426			—			426
Current maturities of long-term debt		—			7,735			2,385			—			—			10,120
Intercompany payables		—			209,653			—			70,194			(279,847	)		—
Total current liabilities		—			812,004			148,046			141,842			(279,847	)		822,045
Long-term debt		—			1,866,089			4,657			63,431			—			1,934,177
Deferred income taxes		—			235,085			65,032			21,155			—			321,272
Other liabilities		—			14,303			4,211			5,145			—			23,659
Stockholder’s equity:
Intercompany investment		—			280,622			803,373			316,771			(1,400,766	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		810,959			16,694			—			—			(16,694	)		810,959
Accumulated earnings (deficit)		(140,458	)		(140,458	)		(30,091	)		(26,687	)		197,236			(140,458	)
Accumulated other comprehensive income (loss)		(8,522	)		(8,522	)		71			(8,952	)		17,403			(8,522	)
Total stockholder’s equity		661,979			148,336			773,353			281,132			(1,202,821	)		661,979
Total liabilities and stockholder’s equity	$	661,979		$	3,075,817		$	995,299		$	512,705		$	(1,482,668	)	$	3,763,132

	As of December 28, 2013
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	22,352		$	—		$	13,408		$	—		$	35,760
Accounts receivable, net		—			265,551			—			39,696			—			305,247
Inventories		—			714,235			—			58,498			—			772,733
Assets held for sale		—			910			—			—			—			910
Income tax receivable		—			369			—			—			—			369
Intercompany receivables		45,052			—			60,188			12,086			(117,326	)		—
Other current assets		—			24,495			4,877			6,031			—			35,403
Total current assets		45,052			1,027,912			65,065			129,719			(117,326	)		1,150,422
Property and equipment, net		—			140,712			343			6,801			—			147,856
Goodwill and other intangible assets, net		418,592			667,996			1,450			129,589			—			1,217,627
Investment in subsidiaries		229,330			196,624			—			—			(425,954	)		—
Other assets		—			42,468			308			645			—			43,421
Total assets	$	692,974		$	2,075,712		$	67,166		$	266,754		$	(543,280	)	$	2,559,326
Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	—		$	527,080		$	2,255		$	34,356		$	—		$	563,691
Accrued expenses		—			43,375			48			4,300			—			47,723
Current maturities of long-term debt		—			558			6			—			—			564
Intercompany payables		—			85,172			1,110			31,044			(117,326	)		—
Total current liabilities		—			656,185			3,419			69,700			(117,326	)		611,978
Long-term debt		—			930,012			3			36,421			—			966,436
Deferred income taxes		—			246,897			587			23,092			—			270,576
Other liabilities		—			13,288			18			4,056			—			17,362
Stockholder’s equity:
Intercompany investment		—			280,622			64,935			160,253			(505,810	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		758,972			14,706			—			—			(14,706	)		758,972
Accumulated earnings (deficit)		(56,898	)		(56,898	)		(1,796	)		(17,294	)		75,988			(56,898	)
Accumulated other comprehensive income (loss)		(9,100	)		(9,100	)		—			(9,474	)		18,574			(9,100	)
Total stockholder’s equity		692,974			229,330			63,139			133,485			(425,954	)		692,974
Total liabilities and stockholder’s equity	$	692,974		$	2,075,712		$	67,166		$	266,754		$	(543,280	)	$	2,559,326

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


	As of October 4, 2014
	Parent			Subsidiary			Guarantor			Non-Guarantor
In thousands	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	16,957		$	1,278		$	5,524		$	—		$	23,759
Accounts receivable, net		—			374,338			24,977			85,753			—			485,068
Inventories		—			819,010			109,489			193,917			—			1,122,416
Assets held for sale		—			—			—			—			—			—
Income tax receivable		—			26,681			441			3,706			—			30,828
Intercompany receivables		95,051			—			175,104			19,880			(290,035	)		—
Other current assets		—			31,478			9,916			2,977			—			44,371

Total current assets		95,051			1,268,464			321,205			311,757			(290,035	)		1,706,442

Property and equipment, net		—			163,016			31,048			16,352			—			210,416
Goodwill and other intangible assets, net		418,592			624,575			478,691			281,770			—			1,803,628
Investment in subsidiaries		117,708			981,991			51,743			—			(1,151,442	)		—
Other assets		—			50,627			3,283			716			—			54,626

Total assets	$	631,351		$	3,088,673		$	885,970		$	610,595		$	(1,441,477	)	$	3,775,112

Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	—		$	571,977		$	94,505		$	104,116		$	—		$	770,598
Accrued expenses		—			60,901			14,885			23,950			—			99,736
Liabilities held for sale		—			—			—			—			—			—
Current maturities of long-term debt		—			7,782			2,057			—			—			9,839
Intercompany payables		—			230,651			—			59,384			(290,035	)		—

Total current liabilities		—			871,311			111,447			187,450			(290,035	)		880,173

Long-term debt		—			1,854,113			4,139			68,412			—			1,926,664
Deferred income taxes		—			230,199			58,304			23,020			—			311,523
Other liabilities		—			15,342			5,027			5,032			—			25,401
Stockholder’s equity:
Intercompany investment		—			280,622			748,873			385,785			(1,415,280	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		811,750			17,485			—			—			(17,485	)		811,750
Accumulated earnings (deficit)		(155,141	)		(155,141	)		(39,259	)		(33,482	)		227,882			(155,141	)
Accumulated other comprehensive income (loss)		(25,258	)		(25,258	)		(2,561	)		(25,622	)		53,441			(25,258	)

Total stockholder’s equity		631,351			117,708			707,053			326,681			(1,151,442	)		631,351

Total liabilities and stockholder’s equity	$	631,351		$	3,088,673		$	885,970		$	610,595		$	(1,441,477	)	$	3,775,112

Condensed consolidating statements of comprehensive income (loss) for the quarters ended July 5, 2014 and June 29, 2013 are as follows:


	As of December 28, 2013
	Parent			Subsidiary			Guarantor			Non-Guarantor
In thousands	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	22,352		$	—		$	13,408		$	—		$	35,760
Accounts receivable, net		—			265,551			—			39,696			—			305,247
Inventories		—			714,235			—			58,498			—			772,733
Assets held for sale		—			910			—			—			—			910
Income tax receivable		—			369			—			—			—			369
Intercompany receivables		45,052			—			60,188			12,086			(117,326	)		—
Other current assets		—			24,495			4,877			6,031			—			35,403

Total current assets		45,052			1,027,912			65,065			129,719			(117,326	)		1,150,422

Property and equipment, net		—			140,712			343			6,801			—			147,856
Goodwill and other intangible assets, net		418,592			667,996			1,450			129,589			—			1,217,627
Investment in subsidiaries		229,330			196,624			—			—			(425,954	)		—
Other assets		—			42,468			308			645			—			43,421

Total assets	$	692,974		$	2,075,712		$	67,166		$	266,754		$	(543,280	)	$	2,559,326

Liabilities and Stockholder’s Equity
Current liabilities:
Accounts payable	$	—		$	527,080		$	2,255		$	34,356		$	—		$	563,691
Accrued expenses		—			43,375			48			4,300			—			47,723
Current maturities of long-term debt		—			558			6			—			—			564
Intercompany payables		—			85,172			1,110			31,044			(117,326	)		—

Total current liabilities		—			656,185			3,419			69,700			(117,326	)		611,978

Long-term debt		—			930,012			3			36,421			—			966,436
Deferred income taxes		—			246,897			587			23,092			—			270,576
Other liabilities		—			13,288			18			4,056			—			17,362
Stockholder’s equity:
Intercompany investment		—			280,622			64,935			160,253			(505,810	)		—
Common stock		—			—			—			—			—			—
Additional paid-in capital		758,972			14,706			—			—			(14,706	)		758,972
Accumulated earnings (deficit)		(56,898	)		(56,898	)		(1,796	)		(17,294	)		75,988			(56,898	)
Accumulated other comprehensive income (loss)		(9,100	)		(9,100	)		—			(9,474	)		18,574			(9,100	)

Total stockholder’s equity		692,974			229,330			63,139			133,485			(425,954	)		692,974

Total liabilities and stockholder’s equity	$	692,974		$	2,075,712		$	67,166		$	266,754		$	(543,280	)	$	2,559,326

	For the Quarter Ended July 5, 2014
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Net sales	$	—		$	979,873		$	156,512		$	131,197		$	—	$	1,267,582
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			817,104			140,615			105,657			—		1,063,376
Selling, general and administrative expenses		—			144,810			34,284			24,909			—		204,003
Management fees		—			14,967			—			—			—		14,967
Transaction expenses		—			4,502			7,766			3,222			—		15,490
Operating income (loss)		—			(1,510	)		(26,153	)		(2,591	)		—		(30,254	)
Other (expense) income:
Interest expense		—			(30,752	)		(642	)		(829	)		—		(32,223	)
Loss on extinguishment of debt		—			(17,113	)		—			—			—		(17,113	)
Other, net		—			39			512			3,201			—		3,752
Equity earnings of subsidiaries		(49,516	)		(17,243	)		2,480			—			64,279		—
Income (loss) from continuing operations before income taxes		(49,516	)		(66,579	)		(23,803	)		(219	)		64,279		(75,838	)
Income tax provision (benefit)		—			(17,063	)		(9,127	)		(180	)		—		(26,370	)
Income (loss) from continuing operations		(49,516	)		(49,516	)		(14,676	)		(39	)		64,279		(49,468	)
Income (loss) from discontinued operations		—			—			142			(190	)		—		(48	)
Net income (loss)	$	(49,516	)	$	(49,516	)	$	(14,534	)	$	(229	)	$	64,279	$	(49,516	)
Comprehensive income (loss)	$	(43,709	)	$	(49,471	)	$	(14,464	)	$	5,534		$	58,401	$	(43,709	)

	For the Quarter Ended June 29, 2013
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Net sales	$	—		$	883,742		$	3		$	71,330		$	—	$	955,075
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			741,707			—			60,785			—		802,492
Selling, general and administrative expenses		—			122,869			366			14,077			—		137,312
Management fees		—			1,255			—			—			—		1,255
Transaction expenses		—			1,853			—			413			—		2,266
Operating income (loss)		—			16,058			(363	)		(3,945	)		—		11,750
Other (expense) income:
Interest expense		—			(16,982	)		(33	)		(372	)		—		(17,387	)
Other, net		—			(1,314	)		2			(623	)		—		(1,935	)
Equity earnings of subsidiaries		(5,837	)		(3,864	)		—			—			9,701		—
Income (loss) from operations before income taxes		(5,837	)		(6,102	)		(394	)		(4,940	)		9,701		(7,572	)
Income tax provision (benefit)		—			(265	)		(116	)		(1,354	)		—		(1,735	)
Net income (loss)	$	(5,837	)	$	(5,837	)	$	(278	)	$	(3,586	)	$	9,701	$	(5,837	)
Comprehensive income (loss)	$	(11,216	)	$	(11,216	)	$	(278	)	$	(9,017	)	$	20,511	$	(11,216	)

Condensed consolidating statements of comprehensive income (loss) for the ~~six~~quarters ~~months~~ ended ~~July~~ 5October 4, 2014 and ~~June 29~~September 28, 2013 are as follows:

	For the Six Months Ended July 5, 2014
	For the Quarter Ended October 4, 2014
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
	Parent			Subsidiary			Guarantor			Non-Guarantor
Net sales	$	—		$	1,908,499		$	228,303		$	206,249		$	—	$	2,343,051
In thousands	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			1,593,999			219,598			167,093			—		1,980,690
Net sales	$	—		$	1,093,114		$	56,875		$	174,440		$	—	$	1,324,429
Selling, general and administrative expenses		—			284,817			47,482			49,014			—		381,313
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			914,749			39,406			146,758			—		1,100,913
Management fees		—			15,575			—			—			—		15,575
Selling, general and administrative expenses		—			138,826			20,590			28,249			—		187,665
Transaction expenses		—			8,100			7,766			4,310			—		20,176
Management fees		—			1,810			—			—			—		1,810
Operating income (loss)		—			6,008			(46,543	)		(14,168	)		—		(54,703	)
Transaction expenses		—			9,704			6,315			4,115			—		20,134
Operating income (loss)		—			28,025			(9,436	)		(4,682	)		—		13,907
Other (expense) income:
Interest expense		—			(5430,~~326~~754	)		(~~867~~397	)		(~~1,429~~997	)		—		(5632,~~622~~148	)
Loss on extinguishment of debt		—			(~~17,113~~82	)		—			—			—		(~~17,113~~82	)
Other, net		—			~~(975~~75	)		~~414~~(232	)		2(3,~~511~~569	)		—		1(3,~~950~~726	)
Equity earnings of subsidiaries		(8314,~~560~~683	)		(4013,~~045~~411	)		(2,~~357~~552	)		—			~~121~~30,~~248~~646		—
Income (loss) from continuing operations before income taxes		(8314,~~560~~683	)		(~~106~~16,~~451~~147	)		(4412,~~639~~617	)		(139,~~086~~248	)		~~121~~30,~~248~~646		(~~126~~22,~~488~~049	)
Income tax provision (benefit)		—			(221,~~891~~464	)		(163,~~202~~732	)		(32,~~883~~453	)		—		(427,~~976~~649	)
Income (loss) from continuing operations		(8314,~~560~~683	)		(8314,~~560~~683	)		(288,~~437~~885	)		(96,~~203~~795	)		~~121~~30,~~248~~646		(8314,~~512~~400	)
Income (loss) from discontinued operations		—			—			~~142~~(283	)		~~(190~~—	)		—		(48283	)
Net income (loss)	$	(8314,~~560~~683	)	$	(8314,~~560~~683	)	$	(289,~~295~~168	)	$	(96,~~393~~795	)	$	~~121~~30,~~248~~646	$	(8314,~~560~~683	)
Comprehensive income (loss)	$	(8231,~~982~~419	)	$	(8831,~~744~~419	)	$	(2811,~~224~~800	)	$	(823,~~942~~486	)	$	~~125~~66,~~910~~705	$	(8231,~~982~~419	)

	For the Six Months Ended June 29, 2013
	For the Quarter Ended September 28, 2013
In thousands	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations			Consolidated
	Parent			Subsidiary			Guarantor			Non-Guarantor
Net sales	$	—		$	1,696,751		$	3		$	98,299		$	—		$	1,795,053
In thousands	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			1,424,933			—			85,715			—			1,510,648
Net sales	$	—		$	901,963		$	—		$	85,931		$	—		$	987,894
Selling, general and administrative expenses		—			250,152			602			22,071			—			272,825
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			748,988			—			68,556			—			817,544
Management fees		—			2,246			—			—			—			2,246
Selling, general and administrative expenses		—			127,603			76			17,087			—			144,766
Transaction expenses		—			2,841			—			448			—			3,289
Management fees		—			1,587			—			—			—			1,587
Operating income (loss)		—			16,579			(599	)		(9,935	)		—			6,045
Transaction expenses		—			980			—			35			—			1,015
Operating income (loss)		—			22,805			(76	)		253			—			22,982
Other (expense) income:
Interest expense		—			(3320,~~985~~092	)		~~(33~~—	)		(~~609~~533	)		—			(3420,~~627~~625	)
Other, net		—			(~~2,024~~848	)		2—			~~(886~~200	)		—			(~~2,908~~648	)
Equity earnings of subsidiaries		~~(22~~1,~~128~~224	)		(~~8,698~~88	)		—			—			30(1,~~826~~136	)		—
Income (loss) from operations before income taxes		~~(22~~1,~~128~~224	)		~~(28~~1,~~128~~777	)		(~~630~~76	)		(~~11,430~~80	)		30(1,~~826~~136	)		~~(31~~1,~~490~~709	)
Income tax provision (benefit)		—			~~(6,000~~553	)		(~~194~~21	)		(~~3,168~~47	)		—			~~(9,362~~485	)
Net income (loss)	$	~~(22~~1,~~128~~224	)	$	~~(22~~1,~~128~~224	)	$	(~~436~~55	)	$	(~~8,262~~33	)	$	30(1,~~826~~136	)	$	~~(22~~1,~~128~~224	)
Comprehensive income (loss)	$	~~(29~~4,~~251~~292	)	$	~~(29~~4,~~251~~292	)	$	(~~436~~55	)	$	~~(15~~2,~~504~~967	)	$	45(7,~~191~~204	)	$	~~(29~~4,~~251~~292	)

Condensed consolidating statements of ~~cash~~comprehensive ~~flows~~income (loss) for the ~~six~~nine months ended ~~July~~October 54, 2014 and ~~June~~September 2928, 2013 are as follows:

In thousands	For the Six Months Ended July 5, 2014
	For the Nine Months Ended October 4, 2014
	ParentCompany			SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
	Parent			Subsidiary			Guarantor			Non-Guarantor
Cash flows from operating activities:
In thousands	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Net cash provided by (used in) continuing operations	$	(50,000	)	$	(232,032	)	$	(2,371	)	$	116,858		$	—	$	(167,545	)
Net sales	$	—		$	3,001,613		$	285,178		$	380,689		$	—	$	3,667,480
Net cash provided by (used in) discontinued operations		—			—			161			189			—		350
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			2,508,748			259,004			313,851			—		3,081,603
Net cash provided by (used in) operations		(50,000	)		(232,032	)		(2,210	)		117,047			—		(167,195	)
Selling, general and administrative expenses		—			423,643			68,072			77,263			—		568,978
Cash flows from investing activities:
Management fees		—			17,385			—			—			—		17,385
Acquisitions, net of cash acquired		—			(683,938	)		13,647			(151,875	)		—		(822,166	)
Transaction expenses		—			17,804			14,081			8,425			—		40,310
Purchase of property and equipment		—			(29,015	)		(1,206	)		(4,020	)		—		(34,241	)
Operating income (loss)		—			34,033			(55,979	)		(18,850	)		—		(40,796	)
Purchase of assets held for sale		—			(28	)		—			—			—		(28	)
Other (expense) income:
Proceeds from sale of property and equipment		—			71			89			68			—		228
Interest expense		—			(85,080	)		(1,264	)		(2,426	)		—		(88,770	)
Proceeds from disposal of assets held for sale		—			784			—			—			—		784
Loss on extinguishment of debt					(17,195	)		—			—			—		(17,195	)
Net cash provided by (used in) continuing investing activities		—			(712,126	)		12,530			(155,827	)		—		(855,423	)
Other, net		—			(900	)		182			(1,058	)		—		(1,776	)
Net cash provided by (used in) discontinued investing activities		—			—			—			—			—		—
Equity earnings of subsidiaries		(98,243	)		(53,456	)		(195	)		—			151,894		—
Net cash provided by (used in) investing activities		—			(712,126	)		12,530			(155,827	)		—		(855,423	)
Income (loss) from continuing operations before income taxes		(98,243	)		(122,598	)		(57,256	)		(22,334	)		151,894		(148,537	)
Cash flows from financing activities:
Income tax provision (benefit)		—			(24,355	)		(19,934	)		(6,336	)		—		(50,625	)
Borrowings from revolving credit facility		—			2,482,364			—			50,037			—		2,532,401
Income (loss) from continuing operations		(98,243	)		(98,243	)		(37,322	)		(15,998	)		151,894		(97,912	)
Repayments of revolving credit facility		—			(2,229,654	)		—			(23,157	)		—		(2,252,811	)
Income (loss) from discontinued operations		—			—			(141	)		(190	)		—		(331	)
Outstanding checks		—			9,208			—			—			—		9,208
Net income (loss)	$	(98,243	)	$	(98,243	)	$	(37,463	)	$	(16,188	)	$	151,894	$	(98,243	)
Payments of other long-term debt		—			(1,890	)		(1,167	)		—			—		(3,057	)
Comprehensive income (loss)	$	(114,401	)	$	(120,163	)	$	(40,024	)	$	(29,796	)	$	189,983	$	(114,401	)
Payments of deferred financing costs		—			(15,506	)		—			(290	)		—		(15,796	)
Payment for Senior Secured Notes redemption		—			(246,900	)		—			—			—		(246,900	)
Proceeds from issuance of long-term debt		—			940,313			—			—			—		940,313
Equity contribution		50,000			—			—			—			—		50,000
Net cash provided by (used in) continuing financing activities		50,000			937,935			(1,167	)		26,590			—		1,013,358
Net cash provided by (used in) discontinued financing activities		—			—			—			—			—		—
Net cash provided by (used in) financing activities		50,000			937,935			(1,167	)		26,590			—		1,013,358
Effect of exchange rate changes on cash		—			—			—			1,033					1,033
Net increase (decrease) in cash and cash equivalents		—			(6,223	)		9,153			(11,157	)		—		(8,227	)
Cash and cash equivalents - beginning of period		—			22,352			—			13,408			—		35,760
Cash and cash equivalents - end of period	$	—		$	16,129		$	9,153		$	2,251		$	—	$	27,533


	For the Nine Months Ended September 28, 2013
	Parent			Subsidiary			Guarantor			Non-Guarantor
In thousands	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Net sales	$	—		$	2,598,714		$	3		$	184,230		$	—	$	2,782,947
Cost of goods sold, excluding depreciation included in selling, general and administrative expenses below		—			2,173,921			—			154,271			—		2,328,192
Selling, general and administrative expenses		—			377,755			678			39,158			—		417,591
Management fees		—			3,833			—			—			—		3,833
Transaction expenses		—			3,821			—			483			—		4,304

Operating income (loss)		—			39,384			(675	)		(9,682	)		—		29,027
Other (expense) income:
Interest expense		—			(54,077	)		(33	)		(1,142	)		—		(55,252	)
Other, net		—			(2,872	)		2			(686	)		—		(3,556	)
Equity earnings of subsidiaries		(20,904	)		(8,786	)		—			—			29,690		—

Income (loss) from operations before income taxes		(20,904	)		(26,351	)		(706	)		(11,510	)		29,690		(29,781	)
Income tax provision (benefit)		—			(5,447	)		(215	)		(3,215	)		—		(8,877	)

Net income (loss)	$	(20,904	)	$	(20,904	)	$	(491	)	$	(8,295	)	$	29,690	$	(20,904	)

Comprehensive income (loss)	$	(24,959	)	$	(24,959	)	$	(491	)	$	(12,537	)	$	37,987	$	(24,959	)

In thousands	For the Six Months Ended June 29, 2013
	ParentCompany		SubsidiaryIssuer			GuarantorSubsidiaries			Non-GuarantorSubsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operations	$	—	$	(24,411	)	$	4		$	53,440		$	—	$	29,033
Cash flows from investing activities:
Acquisitions, net of cash acquired		—		3,384			—			(68,228	)		—		(64,844	)
Purchase of property and equipment		—		(22,834	)		—			(1,014	)		—		(23,848	)
Purchase of assets held for sale		—		(875	)		—			—			—		(875	)
Proceeds from sale of property and equipment		—		46			—			18			—		64
Proceeds from disposal of assets held for sale		—		971			—			—			—		971
Net cash provided by (used in) investing activities		—		(19,308	)		—			(69,224	)		—		(88,532	)
Cash flows from financing activities:
Borrowings from revolving credit facility		—		1,441,136			—			35,042			—		1,476,178
Repayments of revolving credit facility		—		(1,384,162	)		—			(19,995	)		—		(1,404,157	)
Outstanding checks		—		(7,765	)		—			—			—		(7,765	)
Payments of other long-term debt		—		(185	)		(4	)		—			—		(189	)
Payments of deferred financing costs		—		(597	)		—			(470	)		—		(1,067	)
Net cash provided by (used in) financing activities		—		48,427			(4	)		14,577			—		63,000
Effect of exchange rate changes on cash		—		—			—			(2,548	)				(2,548	)
Net increase (decrease) in cash and cash equivalents		—		4,708			—			(3,755	)		—		953
Cash and cash equivalents - beginning of period		—		12,346			—			13,605			—		25,951
Cash and cash equivalents - end of period	$	—	$	17,054		$	—		$	9,850		$	—	$	26,904

Condensed consolidating statements of cash flows for the nine months ended October 4, 2014 and September 28, 2013 are as follows:


*In thousands*	For the Nine Months Ended October 4, 2014
	Parent			Subsidiary			Guarantor			Non-Guarantor
	Company			Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) continuing operations	$	(50,000	)	$	(192,331	)	$	(11,870	)	$	140,402		$	—	$	(113,799	)

Net cash provided by (used in) discontinued operations		—			—			1,422			140			—		1,562

Net cash provided by (used in) operations		(50,000	)		(192,331	)		(10,448	)		140,542			—		(112,237	)

Cash flows from investing activities:
Acquisitions, net of cash acquired		—			(683,938	)		13,647			(173,002	)		—		(843,293	)
Purchase of property and equipment		—			(42,682	)		(3,218	)		(6,010	)		—		(51,910	)
Purchase of assets held for sale		—			(28	)		—			—			—		(28	)
Proceeds from disposal of discontinued operations		—			—			3,104			750					3,854
Proceeds from sale of property and equipment		—			94			206			83			—		383
Proceeds from disposal of assets held for sale		—			784			—			—			—		784

Net cash provided by (used in) continuing investing activities		—			(725,770	)		13,739			(178,179	)		—		(890,210	)

Net cash provided by (used in) discontinued investing activities		—			—			—			—			—		—

Net cash provided by (used in) investing activities		—			(725,770	)		13,739			(178,179	)		—		(890,210	)

Cash flows from financing activities:
Borrowings from revolving credit facility		—			3,335,053			—			77,912			—		3,412,965
Repayments of revolving credit facility		—			(3,092,582	)		—			(45,093	)		—		(3,137,675	)
Outstanding checks		—			(3,710	)		—			—			—		(3,710	)
Payments of other long-term debt		—			(3,807	)		(2,013	)		—			—		(5,820	)
Payments of deferred financing costs		—			(15,661	)		—			(290	)		—		(15,951	)
Payment for Senior Secured Notes redemption		—			(246,900	)		—			—			—		(246,900	)
Proceeds from issuance of long-term debt		—			940,313			—			—			—		940,313
Equity contribution		50,000			—			—			—			—		50,000

Net cash provided by (used in) continuing financing activities		50,000			912,706			(2,013	)		32,529			—		993,222

Net cash provided by (used in) discontinued financing activities		—			—			—			—			—		—

Net cash provided by (used in) financing activities		50,000			912,706			(2,013	)		32,529			—		993,222

Effect of exchange rate changes on cash		—			—			—			(2,776	)				(2,776	)

Net increase (decrease) in cash and cash equivalents		—			(5,395	)		1,278			(7,884	)		—		(12,001	)
Cash and cash equivalents - beginning of period		—			22,352			—			13,408			—		35,760

Cash and cash equivalents - end of period	$	—		$	16,957		$	1,278		$	5,524		$	—	$	23,759

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


*In thousands*	For the Nine Months Ended September 28, 2013
	Parent		Subsidiary			Guarantor			Non-Guarantor
	Company		Issuer			Subsidiaries			Subsidiaries			Eliminations		Consolidated
Cash flows from operating activities:
Net cash provided by (used in) operations	$	—	$	13,642		$	5		$	25,500		$	—	$	39,147

Cash flows from investing activities:
Acquisitions, net of cash acquired		—		(1,347	)		—			(69,219	)		—		(70,566	)
Purchase of property and equipment		—		(31,577	)		—			(3,347	)		—		(34,924	)
Purchase of assets held for sale		—		(1,924	)		—			—			—		(1,924	)
Proceeds from sale of property and equipment		—		70			—			18			—		88
Proceeds from disposal of assets held for sale		—		5,389			—			—			—		5,389

Net cash provided by (used in) investing activities		—		(29,389	)		—			(72,548	)		—		(101,937	)

Cash flows from financing activities:
Borrowings from revolving credit facility		—		2,146,992			—			92,566			—		2,239,558
Repayments of revolving credit facility		—		(2,118,942	)		—			(49,895	)		—		(2,168,837	)
Outstanding checks		—		(3,582	)		—			—			—		(3,582	)
Payments of other long-term debt		—		(287	)		(5	)		—			—		(292	)
Payments of deferred financing costs		—		(597	)		—			(509	)		—		(1,106	)

Net cash provided by (used in) financing activities		—		23,584			(5	)		42,162			—		65,741

Effect of exchange rate changes on cash		—		—			—			(1,581	)				(1,581	)

Net increase (decrease) in cash and cash equivalents		—		7,837			—			(6,467	)		—		1,370
Cash and cash equivalents - beginning of period		—		12,346			—			13,605			—		25,951

Cash and cash equivalents - end of period	$	—	$	20,183		$	—		$	7,138		$	—	$	27,321

~~Unless~~34 the context otherwise requires, the terms “American Tire Distributors,” “ATD,” “the Company,” “we,” “us,” “our” and similar terms in this report refer to American Tire Distributors Holdings, Inc. and its consolidated subsidiaries, the term “Holdings” refers only to American Tire Distributors Holdings, Inc., a Delaware Corporation, and the term “ATDI” refers only to American Tire Distributors, Inc., a Delaware corporation. The terms “TPG” and “Sponsor” relate to TPG Capital, L.P. and/or certain funds affiliated with TPG Capital, L.P.

~~Company~~Item ~~Overview~~2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

WeUnless ~~are~~ the ~~largest~~context ~~distributor~~otherwise ofrequires, ~~replacement~~the ~~tires~~terms in“American ~~North~~Tire ~~America~~Distributors,” ~~based~~“ATD,” on“the ~~dollar amount of wholesale sales and number of warehouses. We~~Company,” ~~provide~~“we,” a“us,” ~~wide~~“our” ~~range of products~~ and ~~value-added~~similar ~~services~~terms ~~to customers~~ in ~~each~~this ofreport ~~the~~refer ~~key market channels~~ to ~~enable~~American ~~tire~~Tire ~~retailers~~Distributors toHoldings, ~~more~~Inc. ~~effectively service~~ and ~~grow~~its ~~sales~~consolidated tosubsidiaries, ~~consumers. Through our network of more than 140 distribution centers in~~ the ~~United~~term ~~States~~“Holdings” ~~and~~refers ~~Canada,~~only ~~we offer access~~ to anAmerican ~~extensive~~Tire ~~breadth~~Distributors ~~and depth of inventory~~Holdings, ~~representing more than 40~~ Inc.,~~000~~ ~~SKUs~~a toDelaware ~~approximately 80~~corporation,~~000~~ ~~customers~~and ~~(approximately 73,000 in~~ the ~~Unites~~term ~~States.~~“ATDI” ~~and~~refers ~~7,000~~only into ~~Canada).~~American WeTire ~~estimate that as of our year-ending December 28~~Distributors, ~~2013~~Inc., ~~our~~a ~~share~~Delaware ofcorporation. ~~the~~The ~~replacement~~terms ~~passenger~~“TPG” and ~~light~~“Sponsor” ~~truck~~relate ~~tire~~to ~~market~~TPG inCapital, ~~the U~~L.SP. ~~is approximately 10%, up from approximately 1% in 1996. Our estimated share of the replacement passenger~~ and/or ~~light~~certain ~~truck~~funds ~~tire~~affiliated with ~~market~~TPG ~~in Canada as of our year-ending December 28~~Capital, ~~2013, is approximately 12%~~L.P.

WeThe ~~serve~~following adiscussion ~~highly~~and ~~diversified~~analysis ~~customer~~of ~~base~~our ~~across multiple~~consolidated ~~channels,~~results ~~comprised~~ of ~~local~~operations, ~~regional~~financial ~~and~~condition ~~national independent tire retailers, mass merchandisers, warehouse clubs, tire manufacturer-owned stores, automotive dealerships~~ and liquidity ~~web-based~~should ~~marketers.~~be Weread ~~have a significant market presence~~ in ~~a number~~conjunction ofwith ~~these~~our ~~key~~consolidated ~~market~~financial ~~channels~~statements and ~~we believe that we are~~ the ~~only~~related ~~replacement~~notes ~~tire~~included ~~distributor~~ in ~~North~~Item 1 ~~America that services each~~ of ~~these~~this ~~key market channels~~report. ~~During~~The ~~fiscal~~following ~~2013,~~discussion ~~our~~contains ~~largest~~forward-looking ~~customer~~statements ~~and~~that ~~top~~reflect ~~ten~~our ~~customers~~current ~~accounted for 3.1%~~expectations, ~~and 11.3%~~estimates, ~~respectively,~~forecasts ofand ~~our net sales~~projections. WeThese ~~believe~~forward-looking westatements are anot ~~top~~guarantees ~~supplier~~of tofuture ~~many~~performance, ofand ~~our~~actual ~~customers~~outcomes and ~~have~~results ~~maintained~~may ~~relationships~~differ ~~with~~materially ~~our~~from ~~top~~those 20expressed ~~customers~~in ~~that~~these ~~exceed~~forward-looking astatements. ~~decade~~See “Cautionary Statements on ~~average~~Forward-Looking Information.”

We believe we distribute one of the broadest product offering in our industry, supplying our customers with nine of the top ten leading passenger and light truck tire brands. We carry the flagship brands from each of the four largest tire manufacturers —Bridgestone, Continental, Goodyear and Michelin — as well as the Cooper, Hankook, Kumho, Nexen, Nitto and Pirelli brands. We also sell lower price point associate and proprietary brands of these and many other tire manufacturers, and through our acquisition of The Hercules Tire & Rubber Company weOverview also own and market our proprietary Hercules® brand, the number one private brand in North America in 2013 based on unit sales. In addition, we sell custom wheels and accessories and related tire supplies and tools. Our revenues are primarily generated from sales of passenger car and light truck tires, which represented 81.6% of our net sales for the six months ended July 5, 2014. The remainder of our net sales is derived from other tire sales (15.9%), custom wheels (1.7%) and tire supplies, tools and other products (0.8%). We believe that our large and diverse product offering allows us to penetrate the replacement tire market across a broad range of price points.

~~Industry~~We ~~Overview~~are the largest distributor of replacement tires in North America based on dollar amount of wholesale sales and number of warehouses. We provide a wide range of products and value-added services to customers in each of the key market channels to enable tire retailers to more effectively service and grow sales to consumers. Through our network of more than 140 distribution centers in the United States and Canada, we offer access to an extensive breadth and depth of inventory, representing more than 40,000 SKUs to approximately 80,000 customers (approximately 73,000 in the Unites States. and 7,000 in Canada). We estimate that our share of the replacement passenger and light truck tire market in 2013, after giving effect to our recently completed acquisitions, would have been approximately 14% in the United States, up from approximately 1% in 1996, and approximately 21% in Canada.

~~The~~We ~~U.S.~~serve a highly diversified customer base across multiple channels, comprised of local, regional and ~~Canadian replacement~~national independent tire retailers, ~~markets~~mass ~~have~~merchandisers, ~~historically~~warehouse ~~experienced~~clubs, ~~stable~~tire ~~growth~~manufacturer-owned ~~and~~stores, ~~favorable~~automotive ~~pricing~~dealerships ~~dynamics~~and web-based marketers. ~~However,~~We have a significant market presence in a number of these ~~markets~~key market channels and we believe that we are ~~subject~~the toonly replacement ~~changes~~tire distributor in ~~consumer~~North ~~confidence~~America ~~and~~that ~~economic~~services ~~conditions~~each of these key market channels. AsDuring afiscal ~~result~~2013, ~~tire~~our ~~consumers~~largest ~~may~~customer ~~opt~~and totop ~~temporarily defer~~ten ~~replacement~~customers ~~tire~~accounted ~~purchases~~for or3.1% ~~purchase~~and ~~less~~11.3%, ~~costly~~respectively, ~~brand~~of ~~tires~~our ~~during~~net ~~challenging~~sales. ~~economic~~We ~~periods~~believe ~~when~~we ~~macroeconomic~~are ~~factors~~a ~~such~~top supplier asto ~~unemployment,~~many ~~high~~of ~~fuel~~our ~~costs~~customers and ~~weakness~~have inmaintained ~~the~~relationships ~~housing~~with ~~market~~our ~~impact~~top ~~their~~20 ~~financial~~customers ~~health~~that exceed a decade on average.

~~From~~We ~~1955~~believe we ~~through~~distribute ~~2013,~~one ~~U.S.~~of ~~replacement~~the ~~tire~~broadest ~~unit~~product ~~shipments~~offering ~~increased~~in byour anindustry, ~~average~~supplying our customers with nine of ~~approximately~~the ~~3% per~~top ~~year~~ten leading passenger and light truck tire brands. We ~~believe~~carry ~~that~~the weflagship ~~are experiencing~~brands ~~the~~from ~~beginning~~each of athe ~~recovery~~four ~~after~~largest atire ~~prolonged~~manufacturers —Bridgestone, ~~downturn~~Continental, ~~which~~Goodyear ~~began~~and inMichelin ~~2008~~— ~~for~~as well as the ~~replacement~~Cooper, ~~tire~~Hankook, ~~market~~Kumho, Nexen, Nitto and Pirelli brands. ~~Replacement~~We ~~tire~~also ~~unit~~sell ~~shipments~~lower ~~were~~price uppoint ~~4.4%~~associate inand ~~the~~proprietary ~~United~~brands ~~States~~of these and ~~0.7%~~many inother ~~Canada~~tire inmanufacturers, ~~2013~~and asthrough ~~compared~~our toacquisition ~~2012,~~of asThe aHercules ~~rebound in~~Tire & ~~the~~Rubber ~~housing~~Company we also own and market our proprietary Hercules® brand, athe ~~decline~~number inone private ~~unemployment~~brand ~~rates~~in ~~and~~North ~~increases~~America in ~~vehicle~~2013 based on unit sales. In addition, we sell custom wheels and ~~vehicle~~accessories ~~miles~~and ~~driven~~related ~~impacted~~tire ~~the~~supplies Uand tools.S. ~~and~~In ~~Canadian~~fiscal ~~replacement~~2013, tire ~~market~~sales ~~favorably~~accounted for 97.4% ~~The~~of ~~Rubber~~our ~~Manufacturers~~net ~~Association~~sales, ~~(“RMA”)~~with ~~projects~~sales ~~that~~of passenger and light ~~replacement~~truck ~~tire~~tires ~~shipments~~accounting ~~will~~for ~~increase~~82.3% byof our net sales. Tire supplies, tools and custom wheels and accessories represented approximately 2.6% inof ~~the~~our ~~United~~net ~~States~~sales. inWe ~~2014~~believe asthat ~~compared~~our tolarge ~~2013,~~and asdiverse ~~demand~~product ~~drivers~~offering ~~continue~~allows us to ~~strengthen~~penetrate the replacement tire market across a broad range of price points.

~~Going~~Industry ~~forward,~~Overview ~~we believe that long-term growth in the U.S. and Canadian replacement tire markets will continue to be driven by favorable underlying dynamics, including:~~

•The ~~increases~~U.S. and Canadian replacement tire markets have historically experienced stable growth and favorable pricing dynamics. However, these markets are subject to changes in ~~the~~consumer ~~number~~confidence and ~~average~~economic ~~age~~conditions. ofAs ~~passenger~~a ~~cars~~result, tire consumers may opt to temporarily defer replacement tire purchases or purchase less costly brand tires during challenging economic periods when macroeconomic factors such as unemployment, high fuel costs and ~~light~~weakness ~~trucks;~~in the housing market impact their financial health.

34From 1955 through 2013, U.S. replacement tire unit shipments increased by an average of approximately 3% per year. We believe that we are experiencing the beginning of a recovery after a prolonged downturn, which began in 2008, for the replacement tire market. Replacement tire unit shipments were up 4.4% in the United States and 0.7% in Canada in 2013 as compared to 2012, as a rebound in the housing market, a decline in unemployment rates and increases in vehicle sales and vehicle miles driven impacted the U.S. and Canadian replacement tire markets favorably. The Rubber Manufacturers Association (“RMA”) projects that replacement tire shipments will increase by approximately 2% in the United States in 2014 as compared to 2013, as demand drivers continue to strengthen.

~~Table~~Going offorward, ~~Contents~~we believe that long-term growth in the U.S. and Canadian replacement tire markets will continue to be driven by favorable underlying dynamics, including:

• increases in the number and average age of ~~miles~~passenger ~~driven~~cars and light trucks;

•35 ~~increases in the number of licensed drivers as the U.S. and Canadian population continues to grow;~~

• ~~growth~~increases ofin the ~~high~~number ~~performance~~of ~~tire~~miles ~~segment~~driven; ~~and~~

• ~~shortening~~increases ~~tire replacement cycles due to changes~~ in ~~product~~the ~~mix~~number ~~that~~of ~~increasingly~~licensed ~~favor~~drivers ~~high~~as ~~performance~~the ~~tires,~~U.S. ~~which~~and ~~have~~Canadian ~~shorter~~population ~~average~~continues ~~lives.~~to grow;

~~Recent~~• ~~Developments~~increases in the number of replacement tire SKUs;

~~Acquisitions~~• ~~and~~growth ~~Expansion~~ of the high performance tire segment; and

As• ~~part~~shortening oftire ~~our~~replacement ~~ongoing~~cycles ~~business~~due ~~strategy, we intend~~ to ~~expand~~changes in ~~existing~~product ~~markets~~mix asthat ~~well~~increasingly asfavor ~~enter~~high ~~into~~performance ~~previously underserved markets and new geographic areas. Since the second half of 2010~~tires, wewhich ~~opened~~have ~~new~~shorter ~~distribution~~average ~~centers in 23 locations throughout the contiguous United States~~lives. ~~We expect to continue to evaluate additional geographic markets during the remainder of 2014 and beyond.~~

OnRecent ~~June 27,~~Developments 2014, TriCan Tire Distributors Inc. (“TriCan”) entered into and closed an Asset Purchase Agreement (the “Trail Tire Purchase Agreement”) with Trail Tire Distributors Ltd. and the shareholders and principals of Trail Tire, pursuant to which TriCan agreed to acquire the wholesale distribution business of Trail Tire. Trail Tire is a wholesale distributor of tires, tire parts, tire accessories and related equipment in Canada. The acquisition of Trail Tire will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

~~The~~Acquisitions ~~Trail~~and ~~Tire acquisition closed for aggregate cash consideration of approximately $20.8 million (the “Trail~~Expansion Tire Purchase Price”). The aggregate cash consideration was funded through borrowings under our existing ABL credit facility. The Trail Tire Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

OnAs ~~June 27,~~part ~~2014,~~of ~~TriCan~~our ~~entered~~ongoing ~~into~~business ~~and~~strategy, ~~closed~~we anintend ~~Asset~~to ~~Purchase~~expand ~~Agreement~~in ~~(the~~existing ~~“Extreme~~markets ~~Purchase Agreement”)~~as ~~with~~well ~~Extreme~~as ~~Wheel~~enter ~~Distributors~~into ~~Ltd.~~previously ~~(“Extreme”)~~underserved markets and ~~the~~new ~~shareholder~~geographic ~~and~~areas. ~~principal~~Since ofthe ~~Extreme,~~second ~~pursuant~~half toof ~~which~~2010, ~~TriCan~~we ~~agreed~~opened tonew ~~acquire the wholesale~~ distribution ~~business~~centers ofin ~~Extreme.~~23 ~~Extreme~~locations isthroughout athe ~~wholesale~~contiguous ~~distributor of~~United ~~wheels and related accessories in Canada~~States. ~~The~~We ~~acquisition~~expect ofto ~~Extreme~~continue ~~will~~to ~~further~~evaluate ~~strengthen~~additional ~~TriCan’s~~geographic ~~presence~~markets induring the ~~Alberta~~remainder ~~Province~~ of ~~Canada~~ 2014 and ~~complements TriCan’s current operations in Canada~~beyond.

~~The~~On ~~Extreme~~June 27, ~~acquisition~~2014, ~~closed~~TriCan ~~for~~entered ~~aggregate~~into ~~cash~~and ~~consideration~~closed ofan ~~approximately~~Asset ~~$6.5~~Purchase ~~million~~Agreement (the “~~Extreme~~Trail ~~Purchase~~Tire ~~Price~~Purchase Agreement”). ~~The aggregate~~with ~~cash~~Trail ~~consideration~~Tire ~~was~~Distributors ~~funded~~Ltd. ~~through~~(“Trail ~~borrowings~~Tire”) ~~under~~and ~~our~~the ~~existing~~shareholders ~~ABL~~and ~~credit~~principals ~~facility.~~of ~~The~~Trail ~~Extreme~~Tire, ~~Purchase~~pursuant ~~Price~~to iswhich ~~subject~~TriCan agreed to ~~certain~~acquire ~~post-closing~~the ~~adjustments~~wholesale distribution business of Trail Tire. Trail Tire is a wholesale distributor of tires, ~~including~~tire parts, ~~but~~tire ~~not~~accessories ~~limited~~and ~~to,~~related ~~working~~equipment ~~capital~~in ~~adjustments~~Canada. We believe the acquisition of Trail Tire will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

OnThe ~~June 27,~~Trail ~~2014,~~Tire ~~TriCan~~acquisition ~~entered~~closed ~~into~~for ~~and~~aggregate ~~closed~~cash anconsideration ~~Asset~~of ~~Purchase~~approximately ~~Agreement~~$20.8 million (the “~~Kirks~~ Trail Tire Purchase ~~Agreement~~Price”) ~~with Kirks Tire Ltd~~. ~~(“Kirks~~The ~~Tire”),~~aggregate ~~and~~cash ~~the~~consideration ~~shareholders~~was ~~and~~funded ~~principals~~through ofborrowings ~~Kirks~~under ~~Tire,~~our ~~pursuant~~existing toABL ~~which~~credit ~~TriCan~~facility. ~~agreed~~The toTrail ~~acquire the wholesale distribution business of Kirks~~ Tire. ~~Kirks~~Purchase ~~Tire~~Price is ~~engaged~~subject into ~~(i) the~~certain ~~wholesale~~post-closing ~~distribution of tires~~adjustments, ~~tire parts~~including, ~~tire~~but ~~accessories~~not ~~and~~limited ~~related~~to, ~~equipment~~working capital ~~and~~adjustments. ~~(ii)~~ During the ~~retail~~quarter ~~sale~~ended ~~and installation of tires~~October 4, ~~tire parts~~2014, ~~and~~we ~~tire~~finalized ~~accessories~~the ~~and~~post-closing ~~the~~working ~~manufacturing~~capital ~~and~~adjustments ~~sale~~in ofaccordance ~~retread~~with ~~tires.~~the ~~Kirks~~Trail Tire’s ~~retail~~Purchase ~~operations~~Agreement. ~~were~~This ~~not acquired~~adjustment byincreased ~~TriCan~~the ~~and~~Trail ~~will~~Tire ~~continue~~Purchase toPrice ~~operate~~by ~~under~~$1.5 million ~~its~~to ~~current ownership~~$22.3 ~~The~~million ~~acquisition~~with ofa ~~Kirks~~corresponding ~~Tire~~increase ~~will~~to ~~further~~goodwill ~~strengthen TriCan’s presence in the Alberta Province~~ of ~~Canada~~$1.5 ~~and complements TriCan’s current operations in Canada~~million.

~~The~~On ~~Kirks~~June 27, ~~Tire~~2014, ~~acquisition~~TriCan ~~closed~~entered ~~for~~into ~~aggregate~~and ~~cash~~closed an ~~consideration~~Asset ofPurchase ~~approximately~~Agreement ~~$73.0 million~~ (the “~~Kirks~~Extreme ~~Tire~~ Purchase ~~Price~~ Agreement”) with Extreme Wheel Distributors Ltd. ~~The~~(“Extreme”) ~~Kirks~~and ~~Tire~~the ~~Purchase~~shareholder ~~Price~~and ~~was~~principal ~~funded~~of ~~through~~Extreme, ~~borrowings~~pursuant ~~under~~to ~~our~~which ~~existing~~TriCan ~~ABL~~agreed ~~credit~~to ~~facility.~~acquire ~~The~~the ~~Kirks~~wholesale ~~Tire~~distribution business ~~Purchase~~of ~~Price~~Extreme. Extreme is ~~subject~~a towholesale ~~certain~~distributor ~~post-closing~~of ~~adjustments,~~wheels ~~including,~~and ~~but~~related ~~not~~accessories ~~limited~~in ~~to,~~Canada. ~~working~~We ~~capital~~believe the acquisition of Extreme will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s ~~adjustments~~current operations in Canada.

OnThe ~~June 27,~~Extreme ~~2014,~~acquisition ~~TriCan~~closed ~~entered~~for ~~into~~aggregate ~~and~~cash ~~closed~~consideration anof ~~Asset~~approximately ~~Purchase~~$6.5 ~~Agreement~~million (the “~~RTD~~Extreme ~~Edmonton~~ Purchase ~~Agreement~~ Price”). ~~with~~The ~~Regional~~aggregate ~~Tire~~cash ~~Distributors~~consideration ~~(Edmonton)~~was ~~Inc.~~funded ~~(“RTD~~through ~~Edmonton”)~~borrowings ~~and~~under ~~the~~our ~~shareholders~~existing ~~and~~ABL ~~principals~~credit offacility. ~~RTD~~The ~~Edmonton,~~Extreme ~~pursuant~~Purchase toPrice ~~which~~is ~~TriCan~~subject ~~agreed~~ to ~~acquire~~certain ~~the~~post-closing ~~wholesale~~adjustments, ~~distribution~~including, ~~business~~but ofnot ~~RTD~~limited ~~Edmonton. RTD~~to, ~~Edmonton~~working iscapital aadjustments. ~~wholesale~~During ~~distributor~~the ofquarter ~~tires~~ended October 4, ~~tire parts~~2014, ~~tire~~we ~~accessories~~finalized ~~and~~the ~~related~~post-closing ~~equipment.~~working ~~The~~capital ~~acquisition~~adjustments ofin ~~RTD~~accordance ~~Edmonton~~with ~~will~~the ~~further~~Extreme ~~strengthen~~Purchase ~~TriCan’s~~Agreement. ~~presence~~This inadjustment increased the ~~Alberta~~Extreme ~~Province~~Purchase ofPrice ~~Canada~~by ~~and~~$0.7 million ~~complements~~to ~~TriCan’s~~$7.2 ~~current operations~~million inwith ~~Canada~~a corresponding increase to goodwill of $0.7 million.

~~The~~On ~~RTD~~June 27, ~~Edmonton~~2014, ~~acquisition~~TriCan ~~closed~~entered ~~for~~into ~~aggregate~~and ~~cash~~closed an ~~consideration~~Asset ofPurchase ~~approximately~~Agreement ~~$31.9 million~~ (the “~~RTD Edmonton~~Kirks Tire Purchase ~~Price~~Agreement”) with Kirks Tire Ltd. ~~The~~(“Kirks ~~RTD~~Tire”), ~~Edmonton~~and ~~Purchase~~the ~~Price~~shareholders ~~was~~and ~~funded~~principals ~~through~~of ~~borrowings~~Kirks ~~under~~Tire, ~~our~~pursuant ~~existing~~to ~~ABL~~which ~~credit~~TriCan ~~facility.~~agreed ~~The~~to ~~RTD~~acquire ~~Edmonton~~the ~~Purchase~~wholesale ~~Price~~distribution business of Kirks Tire. Kirks Tire is ~~subject~~engaged toin ~~certain~~(i) the ~~post-closing~~wholesale ~~adjustments~~distribution of tires, ~~including~~tire parts, ~~but~~tire accessories and related equipment and (ii) the retail sale and installation of tires, tire parts, and tire accessories and the manufacturing and sale of retread tires. Kirks Tire’s retail operations were not ~~limited~~acquired by TriCan and will continue to, operate under its current ownership. We believe the acquisition of Kirks Tire will further strengthen TriCan’s ~~working~~presence ~~capital~~in ~~adjustments~~the Alberta Province of Canada and complements TriCan’s current operations in Canada.

OnThe ~~June 27,~~Kirks ~~2014,~~Tire ~~TriCan~~acquisition ~~entered~~closed for ~~into~~aggregate ~~and~~cash ~~closed~~consideration anof ~~Asset~~approximately ~~Purchase~~$73.0 ~~Agreement~~million (the “~~RTD~~Kirks ~~Calgary~~ Tire Purchase ~~Agreement~~Price”). ~~with~~The ~~Regional~~Kirks Tire ~~Distributors~~Purchase ~~(Calgary)~~Price ~~Inc~~was funded through borrowings under our existing ABL credit facility. ~~(“RTD~~The ~~Calgary”)~~Kirks ~~and~~Tire ~~the~~Purchase ~~shareholders~~Price ~~and~~is ~~principals~~subject to ofcertain ~~RTD~~post-closing ~~Calgary~~adjustments, ~~pursuant~~including, but not limited to, working capital adjustments. During the quarter ended October 4, 2014, we finalized the post-closing working capital adjustments in accordance with the Kirks Tire Purchase Agreement. This adjustment increased the Kirks Tire Purchase Price by $4.7 million to $77.7 million with a corresponding increase to goodwill of $4.7 million.

35On June 27, 2014, TriCan entered into and closed an Asset Purchase Agreement (the “RTD Edmonton Purchase Agreement”) with Regional Tire Distributors (Edmonton) Inc. (“RTD Edmonton”) and the shareholders and principals of RTD Edmonton, pursuant to which TriCan agreed to acquire the wholesale distribution business of RTD Edmonton. RTD Edmonton is a wholesale distributor of tires, tire parts, tire accessories and related equipment. We believe the acquisition of RTD Edmonton will further strengthen TriCan’s presence in the Alberta Province of Canada and complements TriCan’s current operations in Canada.

~~Table~~36 ~~of Contents~~

The RTD ~~Calgary~~Edmonton acquisition closed for aggregate cash consideration of approximately $2031.7 9 million (the “RTD ~~Calgary~~Edmonton Purchase Price”). The RTD ~~Calgary~~Edmonton Purchase Price was funded bythrough borrowings under our existing ABL credit facility. The RTD ~~Calgary~~Edmonton Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments. During the quarter ended October 4, 2014, we finalized the post-closing working capital adjustments in accordance with the RTD Edmonton Purchase Agreement. This adjustment increased the RTD Edmonton Purchase Price by $0.5 million to $32.4 million with a corresponding increase to goodwill of $0.5 million.

On ~~March~~June 2827, 2014, weTriCan ~~completed~~entered ~~the~~into ~~acquisition~~and ofclosed ~~Terry’s Tire Town Holdings, Inc.,~~ an ~~Ohio~~Asset ~~corporation~~Purchase ~~(“Terry’s Tire”~~Agreement ~~and such acquisition,~~ (the “~~Terry’s~~RTD ~~Tire~~Calgary ~~Acquisition~~Purchase Agreement”). ~~Terry’s~~with Regional Tire ~~and~~Distributors ~~its~~(Calgary) ~~subsidiaries~~Inc. ~~are~~(“RTD ~~engaged~~Calgary”) inand the ~~business~~shareholders ofand ~~purchasing,~~principals ~~marketing,~~of ~~distributing~~RTD ~~and selling tires~~Calgary, ~~wheels and related tire and wheel~~pursuant ~~accessories~~to onwhich aTriCan ~~wholesale~~agreed ~~basis~~ to ~~tire~~acquire ~~dealers,~~the wholesale ~~distributors,~~distribution ~~retail~~business ~~chains,~~of ~~automotive~~RTD ~~dealers~~Calgary. ~~and~~RTD ~~others,~~Calgary ~~retreading~~is ~~tires~~a ~~and~~wholesale ~~selling~~distributor ~~retread~~of ~~and other commercial~~ tires, ~~through~~tire ~~commercial~~parts, ~~outlets~~tire toaccessories ~~end users~~ and ~~selling~~related ~~tires directly to consumers via the internet~~equipment. ~~Terry’s Tire operated 10 distribution centers spanning from Virginia to Maine and in Ohio.~~ We believe the acquisition of ~~Terry’s~~RTD ~~Tire~~Calgary will ~~enhance~~further strengthen ~~our~~TriCan’s ~~market~~presence ~~position~~ in ~~these~~the ~~areas~~Alberta ~~and~~Province ~~aligns~~of ~~very well~~Canada ~~with~~and ~~our~~complements ~~distribution~~TriCan’s ~~centers,~~current ~~especially~~operations ~~our new distribution centers that we opened over the past two years~~ in ~~the~~Canada. ~~Northeast and Ohio~~.

The ~~Terry’s~~RTD Calgary ~~Tire~~ acquisition closed for an aggregate ~~purchase~~cash ~~price~~consideration of approximately $~~372~~20.7 million (the “~~Terry’s~~RTD ~~Tire~~Calgary Purchase Price”)~~, consisting of cash consideration of approximately $358~~.0 ~~million,~~The ~~contingent~~RTD ~~consideration~~Calgary ofPurchase ~~$12.5~~Price ~~million~~was ~~and~~funded ~~non-cash~~by ~~consideration~~borrowings ~~for~~under ~~debt~~our ~~assumed~~existing ofABL ~~$2.2~~credit ~~million~~facility. The ~~cash~~RTD ~~consideration~~Calgary Purchase ~~paid~~Price ~~for~~is ~~the~~subject ~~Terry’s~~to ~~Tire~~certain ~~Acquisition included~~post-closing ~~estimated working capital~~ adjustments, ~~and~~including, abut ~~portion~~not oflimited ~~consideration~~to, ~~contingent~~working oncapital ~~certain events achieved prior to closing~~adjustments. During ~~second~~the quarter ended October 4, 2014, we finalized the post-closing working capital adjustments in accordance with ~~the~~ ~~purchase~~the ~~agreement~~RTD Calgary Purchase Agreement. This adjustment ~~decreased~~increased the ~~Terry’s~~RTD ~~Tire~~Calgary Purchase Price by $53.46 million to $~~372~~24.73 million. ~~The~~with ~~Terry’s Tire Purchase Price was funded by~~ a ~~combination~~corresponding ofincrease ~~borrowings~~to ~~under~~goodwill ~~a new senior secured term loan facility, as more fully described under Liquidity and Capital Resources, and borrowings~~ of ~~approximately~~ $723.56 million ~~under Holdings’ existing U~~.S. ~~ABL Facility. The Terry’s Tire Purchase Price is subject to certain post-closing adjustments, including but not limited to, working capital adjustments.~~

On ~~January~~March 3128, 2014, we completed the acquisition of ~~Hercules~~Terry’s Tire ~~Holdings~~Town ~~LLC (“Hercules~~ Holdings”), ~~pursuant~~Inc., to an ~~Agreement~~Ohio ~~and~~corporation ~~Plan~~(“Terry’s Tire” ofand ~~Merger,~~such ~~dated January 24~~acquisition, ~~2014 (~~the “~~Merger~~Terry’s ~~Agreement~~Tire Acquisition”). ~~Hercules~~Terry’s ~~Holdings owns all of the capital stock of The Hercules~~ Tire & ~~Rubber~~and ~~Company (“Hercules”).~~its ~~Hercules~~subsidiaries isare engaged in the business of purchasing, marketing, distributing, and selling ~~replacement~~ tires, ~~for~~wheels ~~passenger~~and ~~cars,~~related ~~trucks,~~tire and ~~certain~~wheel accessories ~~off~~on ~~road~~a ~~vehicles~~wholesale basis to tire dealers, wholesale distributors, retail ~~distributors and~~chains, ~~others~~automotive indealers ~~the~~and ~~United States~~others, ~~Canada~~retreading tires and ~~internationally.~~selling ~~Hercules~~retread ~~operated~~and 15other ~~distribution~~commercial ~~centers~~tires inthrough ~~the~~commercial ~~United~~outlets ~~States.,~~to ~~six~~end ~~distribution~~users ~~centers~~and inselling ~~Canada~~tires directly ~~and~~to ~~one~~consumers ~~warehouse~~via inthe ~~northern China~~internet. ~~Hercules~~Terry’s ~~also~~Tire ~~markets~~operated ~~the~~10 ~~Hercules® brand,~~distribution ~~which~~centers isspanning ~~one~~from ofVirginia ~~the~~to ~~most~~Maine ~~sought-after~~and ~~proprietary tire brands~~ in ~~the industry~~Ohio. We believe the acquisition of ~~Hercules~~Terry’s Tire will ~~strengthen~~enhance our ~~presence~~market position in ~~major~~these ~~markets~~areas ~~such as California, Texas~~ and ~~Florida~~aligns ~~in addition to increasing~~ with our ~~presence in~~distribution ~~Canada. Additionally~~centers, ~~Hercules’~~especially ~~strong~~our ~~logistics~~new ~~and~~distribution ~~sourcing~~centers ~~capabilities,~~that ~~including~~we aopened ~~long-standing~~over ~~presence in China, will also allow us to capitalize on~~ the ~~growing~~past ~~import~~two ~~market,~~years ~~as well as, provide the ability to expand the international sales of the Hercules® brand, which~~ in ~~2013 had a 2% market share of~~ the ~~passenger~~Northeast and ~~light truck market in North America and a 3% market share of highway truck tires in North America~~Ohio.

The Terry’s ~~Hercules~~Tire acquisition closed for an aggregate purchase price of approximately $~~318~~372.97 million (the “~~Hercules~~Terry’s ~~Closing~~Tire Purchase Price”), consisting of ~~net~~ cash consideration of approximately $~~310~~358.0 million, contingent consideration of $312.5 million and non-cash consideration for debt assumed of $52.42 million. The ~~Hercules~~cash ~~Closing~~consideration ~~Purchase~~paid ~~Price~~for ~~also~~the ~~includes~~Terry’s anTire ~~estimate~~Acquisition ~~for~~included ~~initial~~ estimated working capital adjustments and a portion of consideration contingent on certain events achieved prior to closing. During second quarter 2014, we finalized the post-closing working capital adjustments in accordance with the ~~Merger~~purchase ~~Agreement~~agreement. This adjustment decreased the ~~Hercules~~Terry’s ~~Closing~~Tire Purchase Price by $05.4 million to $~~318~~372.97 million. The ~~Merger~~Terry’s ~~Agreement~~Tire ~~provides for the payment of up to $6.5 million in additional consideration contingent upon the occurrence of certain post-closing events (to the extent payable, the “Hercules Additional~~ Purchase Price” ~~and, collectively with the Hercules Closing Purchase Price, the “Hercules Purchase Price”). The cash consideration paid for the Hercules acquisition~~ was funded by a combination of ~~the~~borrowings ~~issuance~~under ofa ~~additional~~new ~~Senior~~senior ~~Subordinated~~secured ~~Notes~~term loan facility, as more fully described under Liquidity and Capital Resources, anand ~~equity~~borrowings ~~contribution~~ of approximately $5072.05 million ~~from Holdings’ indirect parent and borrowings~~ under Holdings’ ~~credit~~existing ~~agreement,~~U.S. asABL ~~more~~Facility. ~~fully described under Liquidity and Capital Resources~~ The ~~Hercules~~Terry’s ~~Closing~~Tire Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

OnAs ~~January 17,~~part ~~2014,~~of ~~TriCan~~the ~~entered~~acquisition ~~into~~of anTerry’s ~~Asset~~Tire, ~~Purchase~~we ~~Agreement~~acquired ~~with~~Terry’s ~~Kipling~~ Tire ~~Co.~~commercial ~~LTD~~and ~~(“Kipling”)~~retread ~~pursuant to which TriCan agreed to acquire the wholesale distribution business of Kipling~~businesses. ~~Kipling~~As ~~has~~our ~~operated~~core ~~as a retail-wholesale~~ business ~~since~~does not ~~1982.~~include ~~Kipling’s~~commercial ~~wholesale~~and ~~business~~retread ~~distributes~~operations, ~~tires~~we ~~from~~decided ~~its Etobicoke facilities~~ to ~~approximately~~divest ~~400~~these ~~retail customers in Southern Ontario~~businesses. ~~Kipling’s~~On ~~retail~~July 31, ~~operations~~2014, ~~were~~we ~~not~~sold ~~acquired~~the bycommercial ~~TriCan~~ and ~~will~~retread ~~continue~~businesses toacquired ~~operate~~as ~~under~~part ~~its~~of ~~current~~the ~~ownership. This acquisition further strengthened TriCan~~Terry’s ~~presence~~Tire inacquisition ~~the~~for ~~Southern~~$3.9 ~~Ontario region of Canada~~million.

36On January 31, 2014, we completed the acquisition of Hercules Tire Holdings LLC (“Hercules Holdings”) pursuant to an Agreement and Plan of Merger, dated January 24, 2014 (the “Merger Agreement”). Hercules Holdings owns all of the capital stock of The Hercules Tire & Rubber Company (“Hercules”). Hercules is engaged in the business of purchasing, marketing, distributing, and selling replacement tires for passenger cars, trucks, and certain off road vehicles to tire dealers, wholesale distributors, retail distributors and others in the United States, Canada and internationally. Hercules operated 15 distribution centers in the United States., six distribution centers in Canada and one warehouse in northern China. Hercules also markets the Hercules® brand, which is one of the most sought-after proprietary tire brands in the industry. We believe the acquisition of Hercules will strengthen our presence in major markets such as California, Texas and Florida in addition to increasing our presence in Canada. Additionally, we believe Hercules’ strong logistics and sourcing capabilities, including a long-standing presence in China, will also allow us to capitalize on the growing import market, as well as, provide the ability to expand the international sales of the Hercules® brand, which in 2013 had a 2% market share of the passenger and light truck market in North America and a 3% market share of highway truck tires in North America.

~~Table~~The Hercules acquisition closed for an aggregate purchase price of ~~Contents~~approximately $318.9 million (the “Hercules Closing Purchase Price”), consisting of net cash consideration of $310.0 million, contingent consideration of $3.5 million and non-cash consideration for debt assumed of $5.4 million. The Hercules Closing Purchase Price also includes an estimate for initial working capital adjustments. During second quarter 2014, we finalized the post-closing working capital adjustments in accordance with the

~~Credit~~37 ~~Agreement Amendment~~

37 Merger Agreement. This adjustment decreased the Hercules Closing Purchase Price by $0.4 million to $318.9 million. The Merger Agreement provides for the payment of up to $6.5 million in additional consideration contingent upon the occurrence of certain post-closing events (to the extent payable, the “Hercules Additional Purchase Price” and, collectively with the Hercules Closing Purchase Price, the “Hercules Purchase Price”). The cash consideration paid for the Hercules acquisition was funded by a combination of the issuance of additional Senior Subordinated Notes, as more fully described under Liquidity and Capital Resources, an equity contribution of $50.0 million from Holdings’ indirect parent and borrowings under Holdings’ credit agreement, as more fully described under Liquidity and Capital Resources The Hercules Closing Purchase Price is subject to certain post-closing adjustments, including, but not limited to, working capital adjustments.

~~Table~~On January 17, 2014, TriCan entered into an Asset Purchase Agreement with Kipling Tire Co. LTD (“Kipling”) pursuant to which TriCan agreed to acquire the wholesale distribution business of ~~Contents~~Kipling. Kipling has operated as a retail-wholesale business since 1982. Kipling’s wholesale business distributes tires from its Etobicoke facilities to approximately 400 retail customers in Southern Ontario. Kipling’s retail operations were not acquired by TriCan and will continue to operate under its current ownership. We believe this acquisition further strengthened TriCan’s presence in the Southern Ontario region of Canada.

~~Results~~Credit ofAgreement ~~Operations~~Amendment

~~Our~~In ~~fiscal~~addition, ~~year~~on isJune 16, ~~based~~2014, onwe ~~either~~amended aour ~~52-~~credit oragreement ~~53-week~~relating ~~period~~to ~~ending~~our onsenior ~~the~~secured ~~Saturday~~term ~~closest~~loan facility to ~~each~~borrow ~~December 31.~~an ~~Therefore, the~~additional ~~financial~~$340 ~~results~~million ofon ~~53-week~~the ~~fiscal~~same ~~years,~~terms ~~and~~as ~~the~~our ~~associated~~existing ~~14-week~~Term ~~quarter,~~Loan ~~will~~(as ~~not~~defined bebelow). ~~comparable~~Pursuant to the ~~prior~~amendment, ~~and~~until ~~subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended July~~August 515, 2014 ~~and June 29~~, ~~2013~~we ~~each~~also ~~contain~~had ~~operating~~the ~~results~~right ~~for~~to 13borrow ~~weeks.~~up ~~The~~to ~~six~~an ~~months~~additional ~~ended~~$80 ~~July 5,~~million ~~2014~~on ~~contains 27 weeks while~~ the ~~six~~same ~~months~~terms ~~ended~~as ~~June 29,~~our ~~2013~~existing ~~contains~~Term ~~26 weeks~~Loan. ItWe borrowed ~~should~~this beadditional ~~noted~~amount ~~that~~at ~~our~~the ~~quarter-~~end ~~reporting~~of ~~dates~~second ~~are different~~quarter ~~from our recently acquired subsidiaries~~2014. ~~Hercules,~~The ~~Terry’s~~proceeds ~~Tire,~~from ~~Trail~~these ~~Tire,~~additional ~~Extreme~~borrowings ~~Wheel,~~were ~~Kirks~~or ~~Tire,~~will ~~RTD~~be ~~Edmonton~~used ~~and~~to ~~RTD~~redeem ~~Calgary~~ all ~~have~~amounts ~~calendar~~outstanding ~~quarter-end~~under ~~reporting~~our ~~dates~~Senior ~~with~~Secured ~~their~~Notes ~~second~~(as ~~quarter~~defined ofbelow) ~~2014~~and ~~ending~~pay ~~on June 30.~~related ~~There~~fees ~~were~~and expenses, noas ~~significant~~well ~~changes~~as tofor ~~the~~working ~~business~~capital ~~subsequent~~requirements toand ~~their~~other ~~fiscal~~general ~~period~~corporate ~~ends~~purposes, ~~that~~including ~~would have a material impact on~~ the ~~condensed~~financing ~~consolidated balance sheet or condensed consolidated statement~~ of ~~comprehensive~~potential ~~income~~future ~~(loss) as of and for the quarter ended July 5, 2014~~acquisitions.

~~Quarter~~38 ~~Ended July 5, 2014 Compared to the Quarter Ended June 29, 2013~~

	QuarterEnded			QuarterEnded			Period OverPeriodChange			Period OverPeriod% Change			Percentage of Net SalesFor the RespectivePeriod Ended
In thousands	July 5,2014			June 29,2013			Favorable(unfavorable)			Favorable(unfavorable)			July 5,2014			June 29,2013
Net sales	$	1,267,582		$	955,075		$	312,507			32.7	%		100.0	%		100.0	%
Cost of goods sold		1,063,376			802,492			(260,884	)		(32.5	%)		83.9	%		84.0	%
Selling, general and administrative expenses		204,003			137,312			(66,691	)		(48.6	%)		16.1	%		14.4	%
Management fees		14,967			1,255			(13,712	)		(1,092.6	%)		1.2	%		0.1	%
Transaction expenses		15,490			2,266			(13,224	)		(583.6	%)		1.2	%		0.2	%
Operating income (loss)		(30,254	)		11,750			(42,004	)		357.5	%		(2.4	%)		1.2	%
Other income (expense):
Interest expense		(32,223	)		(17,387	)		(14,836	)		(85.3	%)		(2.5	%)		(1.8	%)
Loss on extinguishment of debt		(17,113	)		—			(17,113	)		100.0	%		(1.4	%)		0.0	%
Other, net		3,752			(1,935	)		5,687			293.9	%		0.3	%		(0.2	%)
Income (loss) from continuing operations before income taxes		(75,838	)		(7,572	)		(68,266	)		(901.6	%)		(6.0	%)		(0.8	%)
Provision (benefit) for income taxes		(26,370	)		(1,735	)		(24,635	)		(1,419.9	%)		(2.1	%)		(0.2	%)
Income (loss) from continuing operations		(49,468	)		(5,837	)		(43,631	)		(747.5	%)		(3.9	%)		(0.6	%)
Income (loss) from discontinued operations, net of tax		(48	)		—			(48	)		100.0	%		(0.0	%)		0.0	%
Net income (loss)	$	(49,516	)	$	(5,837	)	$	(43,679	)		(748.3	%)		(3.9	%)		(0.6	%)

Results of Operations

~~Net~~Our ~~Sales~~fiscal year is based on either a 52- or 53-week period ending on the Saturday closest to each December 31. Therefore, the financial results of 53-week fiscal years, and the associated 14-week quarter, will not be comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended October 4, 2014 and September 28, 2013 each contain operating results for 13 weeks. The nine months ended October 4, 2014 contains operating results for 40 weeks while the nine months ended September 28, 2013 contains operating results for 39 weeks. It should be noted that our quarter-end reporting dates are different from our recently acquired Hercules subsidiary. Hercules has calendar quarter-end reporting dates with their third quarter of 2014 ending on September 30. There were no significant changes to the business subsequent to Hercules’ fiscal period end that would have a material impact on the condensed consolidated balance sheet or condensed consolidated statement of comprehensive income (loss) as of and for the quarter ended October 4, 2014. Terry’s Tire, Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary each converted to our quarter-end reporting date during the quarter ended October 4, 2014.

~~Net~~Quarter ~~sales~~Ended ~~for the quarter ended July~~October 54, 2014 ~~were~~Compared ~~$1,267.6~~to ~~million, a $312.5 million, or 32.7%, increase, as compared with~~ the ~~quarter ended~~Quarter ~~June~~Ended September 2928, 2013. The increase in net sales was primarily driven by the combined results of new distribution centers as well as the acquisitions of Hercules and Terry’s Tire and our 2013 acquisitions of Wholesale Tire Distributors (“WTD”), Tire Distributors, Inc. (“TDI”) and Regional Tire Distributors Inc. (“RTD”). These growth initiatives added $296.8 million of incremental sales in the second quarter of 2014. In addition, we experienced an increase in comparable tire unit sales of $35.5 million primarily driven by an overall stronger sales unit environment. However, these increases were partially offset by lower net tire pricing of $16.8 million, primarily driven by manufacturer marketing specials, competitive pricing positions in certain U.S. markets, as well as a shift in product mix in our lower priced point offerings.

38The following table sets forth the period change for each category of the statements of operations, as well as each category as a percentage of net sales:


							Period Over			Period Over			Percentage of Net Sales
	Quarter			Quarter			Period			Period			For the Respective
	Ended			Ended			Change			% Change			Period Ended
	October 4,			September 28,			Favorable			Favorable			October 4,			September 28,
In thousands	2014			2013			(unfavorable)			(unfavorable)			2014			2013
Net sales	$	1,324,429		$	987,894		$	336,535			34.1	%		100.0	%		100.0	%
Cost of goods sold		1,100,913			817,544			(283,369	)		(34.7	%)		83.1	%		82.8	%
Selling, general and administrative expenses		187,665			144,766			(42,899	)		(29.6	%)		14.2	%		14.7	%
Management fees		1,810			1,587			(223	)		(14.1	%)		0.1	%		0.2	%
Transaction expenses		20,134			1,015			(19,119	)		(1,883.6	%)		1.5	%		0.1	%

Operating income (loss)		13,907			22,982			(9,075	)		(39.5	%)		1.1	%		2.3	%
Other income (expense):
Interest expense		(32,148	)		(20,625	)		(11,523	)		(55.9	%)		(2.4	%)		(2.1	%)
Loss on extinguishment of debt		(82	)		—			(82	)		(100.0	%)		(0.0	%)		0.0	%
Other, net		(3,726	)		(648	)		(3,078	)		(475.0	%)		(0.3	%)		(0.1	%)

Income (loss) from continuing operations before income taxes		(22,049	)		1,709			(23,758	)		(1,390.2	%)		(1.7	%)		0.2	%
Provision (benefit) for income taxes		(7,649	)		485			(8,134	)		(1,677.1	%)		(0.6	%)		0.0	%

Income (loss) from continuing operations		(14,400	)		1,224			(15,624	)		(1,276.5	%)		(1.1	%)		0.1	%
Income (loss) from discontinued operations , net of tax		(283	)		—			(283	)		(100.0	%)		(0.0	%)		0.0	%

Net income (loss)	$	(14,683	)	$	1,224		$	(15,907	)		(1,299.6	%)		(1.1	%)		0.1	%

~~Cost~~Net ofSales ~~Goods Sold~~

~~Cost~~Net ofsales ~~goods sold~~ for the quarter ended ~~July~~October 54, 2014 were $1,~~063~~324.4 million, a $~~260~~336.95 million, or 3234.51%, increase, as compared with the ~~quarter~~ quarter ended ~~June~~September 2928, 2013. The increase in ~~cost~~net ofsales ~~goods sold~~ was primarily driven by the combined results of new distribution centers as well as the acquisitions of ~~Hercules~~Trail Tire, ~~Terry’s~~Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Hercules and Terry’s Tire in 2014 and our 2013 acquisitions of Wholesale Tire Distributors (“WTD”) and Tire Distributors, Inc. (“TDI”). These growth initiatives added $~~263~~265.6 million of incremental ~~costs~~sales in the ~~second~~third quarter of 2014. ~~Cost~~In ofaddition, ~~goods~~we experienced ~~sold~~an ~~for~~increase ~~the~~in ~~quarter~~comparable ~~ended~~tire ~~July 5,~~unit ~~2014~~sales ~~also~~of ~~includes~~ $1290.52 million ~~related~~primarily todriven ~~the~~by ~~non-cash~~an ~~amortization~~overall ofstronger ~~the~~sales ~~inventory~~unit ~~step-up~~environment. ~~recorded~~However, inthese ~~connection~~increases ~~with the~~were ~~acquisition~~partially ofoffset ~~Terry’s~~by ~~Tire~~lower asnet ~~compared~~tire topricing of $220.73 million ~~during the quarter ended June 29~~, ~~2013.~~primarily Indriven ~~addition,~~by competitive anpricing ~~overall~~positions ~~stronger~~in ~~sales~~certain ~~unit~~U.S. ~~environment~~markets, ~~increased~~as ~~cost~~well ofas ~~goods~~a ~~sold~~shift byin ~~$12.0~~product ~~million.~~mix ~~These~~in ~~increases~~our ~~were partially offset by~~ lower ~~net~~priced ~~tire~~point ~~pricing of $15~~offerings.1 ~~million.~~

~~Cost~~39 of goods sold as a percentage of net sales was 83.9% for the quarter ended July 5, 2014, a slight decrease compared with 84.0% for the quarter ended June 29, 2013. The decrease in cost of goods sold as a percentage of net sales was primarily driven by the margin contribution of the Hercules brand, a lower level of manufacturer price repositioning this year as compared to the prior year, and an incremental benefit from manufacturer programs during the current year. This decrease was partially offset by the non-cash amortization of the $12.5 million inventory step-up recorded in connection with the Terry’s Tire acquisition, which had a 1.0% impact on cost of goods sold as a percentage of net sales.

~~Selling,~~Cost general and administrative expenses for the quarter ended July 5, 2014 were $204.0 million, a $66.7 million, or 48.6%, increase as compared with the quarter ended June 29, 2013. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our new distribution centers as well as the acquisitions of ~~Hercules, Terry’s~~Goods ~~Tire,~~Sold RTD, WTD and TDI. Combined, these factors added $52.0 million of incremental costs to the second quarter of 2014. In addition, we also experienced a $9.2 million increase in salaries and wage expense primarily related to higher sales volume and related headcount as well as higher incentive and commission compensation. Additionally, occupancy & vehicle expense increased $1.3 million due to higher cost as we expanded several of our distribution centers to better service our existing customers.

~~Selling,~~Cost ~~general~~of ~~and~~goods ~~administrative~~sold ~~expenses~~for asthe aquarter ~~percentage~~ended ofOctober 4, ~~net~~2014 ~~sales~~ were ~~16.~~$1%,100.9 ~~for~~million, ~~the~~a ~~quarter ended~~$283.4 ~~July 5~~million, ~~2014;~~or an34.7%, increase, as compared with ~~14.4% for~~ the quarter ended ~~June~~September 2928, 2013. The increase in ~~selling,~~cost ~~general~~of ~~and~~goods ~~administrative~~sold ~~expenses~~was asprimarily adriven ~~percentage~~by the combined results of ~~net~~new ~~sales~~distribution ~~were~~centers ~~primarily~~as ~~driven~~well byas anthe ~~increase~~acquisitions inof ~~costs~~Trail ~~associated with~~Tire, ~~our~~Extreme, ~~growth~~Kirks ~~expansion~~Tire, ofRTD ~~recently~~Edmonton, ~~opened~~RTD Calgary, Hercules and ~~acquired~~Terry’s ~~distribution~~Tire ~~centers,~~in as2014 and our ~~consolidation~~2013 acquisitions of ~~the~~WTD ~~Hercules~~and ~~distribution~~TDI. ~~centers~~These ~~will~~growth ~~not~~initiatives beadded ~~finalized~~$219.9 ~~until~~million ~~the~~of ~~latter~~incremental ~~part~~costs ofin the third quarter ~~and~~of ~~the~~2014. ~~consolidation~~Cost of goods sold for the ~~Terry’s~~quarter ended October 4, 2014 also includes $2.9 ~~Tire’s~~million ~~distribution~~related ~~centers~~to ~~did~~the ~~not~~non-cash ~~commence~~amortization ~~until~~of the ~~latter~~inventory ~~part~~step-up recorded in connection with the acquisitions of ~~second~~Trail ~~quarter~~Tire, Extreme, Kirks Tire, RTD Edmonton and ~~will~~RTD ~~extend~~Calgary ~~thru~~as ~~the~~compared ~~latter~~to ~~part~~$0.1 ofmillion during the ~~third~~ quarter ended September 28, 2013. In addition, ~~higher~~an ~~depreciation~~overall ~~and~~stronger ~~amortization~~sales ~~expense~~unit ~~between~~environment ~~periods~~increased ~~resulted~~cost inof agoods 0sold by $74.~~2% increase~~8 inmillion. ~~selling,~~These ~~general~~increases ~~and~~were ~~administrative~~partially ~~expenses~~offset asby alower ~~percentage~~net tire pricing of ~~net~~$16.9 ~~sales~~million.

~~Management~~Cost ~~fees~~of goods sold as a percentage of net sales was 83.1% for the quarter ended October 4, 2014, an increase compared with 82.8% for the quarter ended September 28, 2013. The increase in cost of goods sold as a percentage of net sales was primarily driven by the $2.9 million non-cash amortization of the inventory step-up recorded in connection with the acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton and RTD Calgary. This increase had a 0.2% impact on cost of goods sold as a percentage of net sales.

~~Management fees for the quarter ended July 5~~Selling, ~~2014 of $15.0 million represents a monitoring fee paid to our Sponsor, TPG, for certain~~ ~~management,~~General ~~consulting~~ and ~~financial~~Administrative ~~services~~Expenses as well as fees paid to our outside board of directors. In addition, the quarter ended July 5, 2014 includes a $13.5 million fee paid to TPG in connection with the acquisition of Terry’s Tire and Hercules.

~~Transaction~~Selling, ~~Expenses~~general and administrative expenses for the quarter ended October 4, 2014 were $187.7 million, a $42.9 million, or 29.6%, increase as compared with the quarter ended September 28, 2013. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our new distribution centers as well as the acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Hercules and Terry’s Tire in 2014 and our 2013 acquisitions of WTD and TDI. Combined, these factors added $41.9 million of incremental costs to the third quarter of 2014. In addition, we also experienced a $2.3 million increase in occupancy & vehicle expense due to higher costs as we expanded several of our distribution centers to better service our existing customers as well as a higher overall consumption of fuel and other vehicle related expenses.

~~Transaction~~Selling, general and administrative expenses as a percentage of net sales were 14.2% for the quarter ended ~~July~~October 54, 2014, ~~were~~a ~~$15.5~~decrease ~~million~~compared ~~and~~with ~~were~~14.7% ~~primarily~~for ~~related~~the toquarter ~~costs~~ended ~~associated~~September 28, ~~with~~2013. ~~our acquisitions~~The ofdecrease ~~Hercules~~in selling, general and ~~Terry’s~~administrative ~~Tire,~~expenses as ~~well~~a aspercentage of ~~with~~net ~~expenses~~sales ~~related~~was toprimarily ~~potential~~driven ~~future~~by ~~acquisitions~~our ~~and~~consolidation ~~other~~of ~~corporate~~the ~~initiatives.~~acquired ~~During~~Hercules ~~the~~and ~~quarter~~Terry’s ~~ended~~Tire ~~June 29,~~distribution ~~2013,~~centers ~~transaction~~predominately ~~expenses~~resulting ofin ~~$2.3~~lower ~~million~~compensation ~~primarily~~and ~~related~~occupancy to costs. ~~associated~~This ~~with~~decrease ~~our~~was ~~acquisition~~partially ofoffset ~~RTD~~by inhigher ~~April~~depreciation and ~~2013~~amortization ~~and~~expense ~~TriCan~~between ~~Tire~~periods ~~Distributors~~which ~~(“TriCan”)~~resulted in ~~November~~a ~~2012,~~0.4% asincrease ~~well~~in asselling, ~~with~~general ~~expenses~~and ~~related~~administrative toexpenses ~~potential~~as ~~future~~a ~~acquisitions~~percentage ~~and~~of ~~other~~net ~~corporate initiatives~~sales.

~~Interest~~Management ~~Expense~~Fees

~~Interest~~Management ~~expense~~fees for ~~the~~ the quarter ended ~~July~~October 54, 2014 ~~was~~of $321.~~2 million, a $14.~~8 million, orrepresents ~~85.3%,~~a ~~increase,~~monitoring ~~compared~~fee ~~with~~paid ~~the quarter ended June 29, 2013. This increase was due~~ to ~~higher debt levels associated with~~ our ~~ABL~~sponsor, ~~Facility~~TPG, ~~FILO~~for ~~Facility~~certain ~~Additional Subordinated~~management, ~~Notes~~consulting and ~~Term~~financial ~~Loan,~~services ~~all~~ as ~~defined~~well ~~under~~as ~~Liquidity~~fees ~~and~~paid ~~Capital~~to ~~Resources, which were driven by~~ our ~~2014~~outside ~~acquisitions~~board ~~and the redemption~~ of ~~our Senior Secured Notes~~directors. ~~In addition, changes in the fair value of our interest rate swaps resulted in a $0.8 million increase in interest expense.~~

~~Loss~~Transaction onExpenses ~~Extinguishment of Debt~~

~~Loss~~Transaction expenses ~~on extinguishment of debt~~ for the quarter ended ~~July~~October 54, 2014 ofwere $1720.1 million and were primarily related to costs associated with the ~~early~~acquisition ~~redemption~~and integration of ~~all~~Trail ~~$250.0~~Tire, ~~million aggregate~~Extreme, ~~principal~~Kirks ~~amount~~Tire, ofRTD ~~our~~Edmonton, ~~9.75%~~RTD ~~Senior~~Calgary, ~~Secured~~Hercules ~~Notes~~and onTerry’s ~~June 16~~Tire, as ~~2014~~well atas awith ~~redemption~~expenses ~~price~~related ofto ~~104.875%~~potential offuture ~~the~~acquisitions ~~principal~~and ~~amount~~other corporate initiatives. ~~Additionally,~~During the ~~loss~~quarter onended ~~extinguishment~~September 28, of2013, ~~debt~~transaction ~~includes~~expenses ~~approximately~~of $41.90 million primarily related to ~~the write-off~~costs associated with our acquisitions of TDI ~~the~~and ~~unamortized~~RTD, ~~original~~as ~~issuance~~well ~~discount~~as ~~and~~with ~~unamortized~~expenses ~~deferred~~related ~~financing~~to ~~fees~~potential ~~associated~~future ~~with~~acquisitions ~~the~~and ~~Senior~~other ~~Secured~~corporate ~~Notes~~initiatives.

39Interest Expense

~~Table~~Interest expense for the quarter ended October 4, 2014 was $32.1 million, a $11.5 million, or 55.9%, increase compared with the quarter ended September 28, 2013. This increase was due to higher debt levels associated with our ABL Facility, FILO Facility, Additional Subordinated Notes and Term Loan, all as defined under Liquidity and Capital Resources, which were driven by our 2014 acquisitions and the redemption of ~~Contents~~our Senior Secured Notes. This increase was partially offset by lower interest expense related to the redemption of our Senior Secured Notes in June 2014 as well as changes in the fair value of our interest rate swaps, which resulted in a $2.6 million decrease in interest expense.

~~Provision~~Loss ~~(Benefit)~~on ~~for~~Extinguishment ~~Income~~of ~~Taxes~~Debt

~~Our~~Loss ~~income~~on ~~tax~~extinguishment ~~benefit~~of debt for the quarter ended ~~July~~October 54, 2014 ~~was $26.4 million, based on pre-tax loss~~ of $750.81 million; ~~our~~related ~~effective~~to ~~tax rate~~legal ~~under~~fees ~~the~~in ~~discrete~~connection ~~method~~with ~~was 34.8%. For~~ the ~~quarter~~early redemption ~~ended~~of ~~June 29,~~all ~~2013, our income tax benefit was~~ $1250.70 million, ~~based~~aggregate onprincipal aamount ~~pre-tax loss~~ of $7our 9.675% ~~million;~~Senior ~~our~~Secured ~~effective~~Notes ~~tax~~on ~~rate~~June 16, ~~was 22~~2014.~~9%.~~

~~Six~~Provision ~~Months~~(Benefit) ~~Ended~~for ~~July~~Income 5,Taxes ~~2014 Compared to the Six Months Ended June 29, 2013~~

~~The~~Our ~~following~~income ~~table~~tax ~~sets~~benefit ~~forth~~for the ~~period~~quarter ~~change~~ended ~~for~~October 4, ~~each~~2014 ~~category~~was $7.6 million, based on pre-tax loss of $22.1 million; our effective tax rate under the ~~statements~~discrete method was 34.5%. For the quarter ended September 28, 2013, we recorded an income tax provision of ~~operations~~$0.5 million, based on a pre-tax income of $1.7 million; our effective tax rate was 28.4%. The effective rate of the quarter-to-date tax benefit is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower than the statutory U.S. federal rate and the impact of several non-deductable tax items as well as ~~each~~our state ~~category~~effective astax rate, a ~~percentage~~result ~~of net~~based ~~sales:~~on our legal entity tax structure and individual state tax filing requirements.

	Six MonthsEnded			Six MonthsEnded			Period OverPeriodChange			Period OverPeriod% Change			Percentage of Net SalesFor the RespectivePeriod Ended
In thousands	July 5,2014			June 29,2013			Favorable(unfavorable)			Favorable(unfavorable)			July 5,2014			June 29,2013
Net sales	$	2,343,051		$	1,795,053		$	547,998			30.5	%		100.0	%		100.0	%
Cost of goods sold		1,980,690			1,510,648			(470,042	)		(31.1	%)		84.5	%		84.2	%
Selling, general and administrative expenses		381,313			272,825			(108,488	)		(39.8	%)		16.3	%		15.2	%
Management fees		15,575			2,246			(13,329	)		(593.5	%)		0.7	%		0.1	%
Transaction expenses		20,176			3,289			(16,887	)		(513.4	%)		0.9	%		0.2	%
Operating income (loss)		(54,703	)		6,045			(60,748	)		(1,004.9	%)		-2.3	%		0.3	%
Other income (expense):
Interest expense		(56,622	)		(34,627	)		(21,995	)		(63.5	%)		-2.4	%		-1.9	%
Loss on extinguishment of debt		(17,113	)		—			(17,113	)		100.0	%		-0.7	%		0.0	%
Other, net		1,950			(2,908	)		4,858			167.1	%		0.1	%		-0.2	%
Income (loss) from continuing operations before income taxes		(126,488	)		(31,490	)		(94,998	)		(301.7	%)		-5.4	%		-1.8	%
Provision (benefit) for income taxes		(42,976	)		(9,362	)		33,614			359.0	%		-1.8	%		-0.5	%
Income (loss) from continuing operations		(83,512	)		(22,128	)		61,384			277.4	%		-3.6	%		-1.2	%
Income (loss) from discontinued operations, net of tax		(48	)		—			(48	)		100.0	%		0.0	%		0.0	%
Net income (loss)	$	(83,560	)	$	(22,128	)	$	61,432			277.6	%		-3.6	%		-1.2	%

~~Net~~Nine ~~sales~~Months ~~for~~Ended ~~the six months ended July~~October 54, 2014 ~~were~~Compared ~~$2,343.1~~to ~~million, a $548.0 million, or 30.5%, increase, as compared with~~ the ~~six months~~Nine ~~ended~~Months ~~June~~Ended September 2928, 2013. The increase in net sales was primarily driven by the combined results of new distribution centers as well as the acquisitions of Hercules and Terry’s Tire and our 2013 acquisitions of WTD, TDI and RTD. These growth initiatives added $464.3 million of incremental sales during the six month period of 2014. In addition, we experienced an increase in comparable tire unit sales of $134.3 million primarily driven by an overall stronger sales unit environment and the inclusion of five additional selling days in our first quarter of 2014 which contributed approximately $47.0 million to the unit increase. However, these increases were partially offset by lower net tire pricing of $47.0 million, primarily driven by manufacturer marketing specials, competitive pricing positions in certain U.S. markets, as well as a shift in product mix in our lower priced point offerings.

~~Cost~~The following table sets forth the period change for each category of ~~Goods~~the ~~Sold~~statements of operations, as well as each category as a percentage of net sales:

Cost of goods sold for the six months ended July 5, 2014 were $1,980.7 million, a $470.0 million, or 31.1%, increase, as compared with the six months ended June 29, 2013. The increase in cost of goods sold was primarily driven by the combined results of new distribution centers as well as the acquisitions of Hercules, Terry’s Tire, RTD, WTD and TDI. These growth initiatives added $402.2 million of incremental costs during the six month period of 2014. Cost of goods sold for the six months ended July 5, 2014 also includes $31.6 million related to the non-cash amortization of the inventory step-up recorded in connection with the acquisitions of Terry’s Tire, Hercules and WTD as compared to $4.9 million during the six months ended June 29, 2013. In addition, the inclusion of five additional selling days in our first quarter of 2014 and an overall stronger sales unit environment increased cost of goods sold by $95.8 million (of which approximately $41.0 million was due to the five additional selling days). These increases were partially offset by lower net tire pricing of $42.5 million.


							Period Over			Period Over			Percentage of Net Sales
	Nine Months			Nine Months			Period			Period			For the Respective
	Ended			Ended			Change			% Change			Period Ended
	October 4,			September 28,			Favorable			Favorable			October 4,			September 28,
In thousands	2014			2013			(unfavorable)			(unfavorable)			2014			2013
Net sales	$	3,667,480		$	2,782,947		$	884,533			31.8	%		100.0	%		100.0	%
Cost of goods sold		3,081,603			2,328,192			(753,411	)		(32.4	%)		84.0	%		83.7	%
Selling, general and administrative expenses		568,978			417,591			(151,387	)		(36.3	%)		15.5	%		15.0	%
Management fees		17,385			3,833			(13,552	)		(353.6	%)		0.5	%		0.1	%
Transaction expenses		40,310			4,304			(36,006	)		(836.6	%)		1.1	%		0.2	%

Operating income (loss)		(40,796	)		29,027			(69,823	)		(240.5	%)		-1.1	%		1.0	%
Other income (expense):
Interest expense		(88,770	)		(55,252	)		(33,518	)		(60.7	%)		-2.4	%		-2.0	%
Loss on extinguishment of debt		(17,195	)		—			(17,195	)		(100.0	%)		-0.5	%		0.0	%
Other, net		(1,776	)		(3,556	)		1,780			50.1	%		0.0	%		-0.1	%

Income (loss) from continuing operations before income taxes		(148,537	)		(29,781	)		(118,756	)		(398.8	%)		-4.1	%		-1.1	%
Provision (benefit) for income taxes		(50,625	)		(8,877	)		41,748			470.3	%		-1.4	%		-0.3	%

Income (loss) from continuing operations		(97,912	)		(20,904	)		(77,008	)		(368.4	%)		-2.7	%		-0.8	%
Income (loss) from discontinued operations, net of tax		(331	)		—			(331	)		(100.0	%)		0.0	%		0.0	%

Net income (loss)	$	(98,243	)	$	(20,904	)	$	(77,339	)		(370.0	%)		-2.7	%		-0.8	%

~~Cost~~Net ofSales goods sold as a percentage of net sales was 84.5% for the six months ended July 5, 2014, an increase compared with 84.2% for the six months ended June 29, 2013. The increase in cost of goods sold as a percentage of net sales was primarily driven

41Net sales for the nine months ended October 4, 2014 were $3,667.5 million, a $884.5 million, or 31.8%, increase, as compared with the nine months ended September 28, 2013. The increase in net sales was primarily driven by the combined results of new distribution centers as well as the acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Hercules and Terry’s Tire and our 2013 acquisitions of WTD, TDI and RTD. These growth initiatives added $729.9 million of incremental sales during the nine month period of 2014. In addition, we experienced an increase in comparable tire unit sales of $224.5 million primarily driven by an overall stronger sales unit environment and the inclusion of five additional selling days in our first quarter of 2014 which contributed approximately $47.0 million to the unit increase. However, these increases were partially offset by lower net tire pricing of $67.4 million, primarily driven by manufacturer marketing specials, competitive pricing positions in certain U.S. markets, as well as a shift in product mix in our lower priced point offerings.

~~Table~~Cost of ~~Contents~~Goods Sold

Cost of goods sold byfor the nine months ended October 4, 2014 were $313,081.6 million, ~~non-cash~~a ~~amortization~~$753.4 ofmillion, or 32.4%, increase, as compared with the ~~inventory~~nine ~~step-up~~months ~~recorded~~ended September 28, 2013. The increase in ~~connection~~cost ~~with~~of goods sold was primarily driven by the combined results of new distribution centers as well as the acquisitions of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Hercules and Terry’s Tire, ~~Hercules~~in 2014 and ~~WTD~~our 2013 acquisitions. ~~This~~of ~~increase~~RTD, ~~had~~WTD aand 1TDI.5% ~~impact~~These ongrowth ~~cost~~initiatives ofadded $604.8 million of incremental costs during the nine month period of 2014. Cost of goods sold asfor athe ~~percentage~~nine ofmonths ~~net~~ended ~~sales~~October 4, 2014 also includes $34.5 ~~Excluding~~million related to the non-cash amortization of the inventory step-up, ~~the~~recorded ~~decrease~~ in connection ~~cost~~with the acquisitions of ~~goods~~Trail ~~sold~~Tire, asExtreme, aKirks ~~percentage~~Tire, ofRTD ~~net~~Edmonton, ~~sales~~RTD ~~was~~Calgary, ~~primarily~~Terry’s ~~driven~~Tire, byHercules ~~the~~and ~~margin~~WTD ~~contribution~~as ofcompared to $5.0 million during the ~~Hercules~~nine ~~brand~~months ended September 28, a2013. ~~lower~~In addition, the inclusion of five ~~level~~additional selling days in our first quarter of ~~manufacturer~~2014 ~~price~~and ~~repositioning~~an ~~this~~overall ~~year~~stronger assales ~~compared~~unit environment increased cost of goods sold by $186.8 million (of which approximately $39.1 million was due to the ~~prior~~five ~~year,~~additional ~~and~~selling andays). ~~incremental~~These ~~benefit~~increases were ~~from~~partially ~~manufacturer~~offset ~~programs~~by ~~during~~lower ~~the~~net ~~current~~tire ~~year~~pricing of $56.1 million.

~~Selling,~~42 ~~General and Administrative Expenses~~

~~Selling,~~Cost ~~general~~of ~~and~~goods ~~administrative~~sold ~~expenses~~ as a percentage of net sales ~~were~~was 1684.30% for the ~~six~~nine months ended ~~July~~ October 54, 2014;, an increase compared with 1583.27% for the ~~six~~nine months ended ~~June~~September 2928, 2013. The increase in ~~selling,~~cost ~~general~~of ~~and~~goods ~~administrative~~sold ~~expenses~~ as a percentage of net sales was primarily driven by anthe ~~increase~~$34.5 inmillion ~~costs~~non-cash ~~associated~~amortization of the inventory step-up recorded in connection with ~~our~~the ~~growth~~Trail ~~expansion~~Tire, ofExtreme, ~~recently opened~~Kirks ~~and~~Tire, ~~acquired~~RTD ~~distribution~~Edmonton, ~~centers~~RTD Calgary, Terry’s Tire, Hercules and WTD acquisitions. This increase had a 0.9% impact on cost of goods sold as ~~our~~a ~~consolidation~~percentage of ~~the~~net ~~Hercules~~sales. ~~distribution~~Excluding ~~centers~~the non-cash ~~will~~amortization ~~not~~of bethe ~~finalized~~inventory ~~until~~step-up, the ~~latter~~decrease ~~part~~in cost of ~~the~~goods ~~third~~sold ~~quarter~~as ~~and~~a percentage of net sales was primarily driven by the ~~consolidation~~margin contribution of the ~~Terry’s~~Hercules ~~Tire’s~~brand, ~~distribution~~a ~~centers~~lower ~~did~~level ~~not commence~~of ~~until~~manufacturer ~~the~~price ~~latter~~repositioning ~~part~~this ofyear as compared to the ~~second~~prior ~~quarter~~year, and ~~will~~an ~~extend~~incremental ~~thru~~benefit ~~the~~from ~~latter~~manufacturer ~~part~~programs ofduring the ~~third~~current ~~quarter~~year.

~~Management~~Selling, ~~fees~~General and Administrative Expenses

~~Management~~Selling, ~~fees~~general and administrative expenses for the ~~six~~nine months ended ~~July~~October 54, 2014 ofwere $15569.60 million, ~~represents~~ a ~~monitoring~~$151.4 million, ~~fee~~or ~~paid~~36.3%, increase as compared with the nine months ended September 28, 2013. The increase in selling, general and administrative expenses was primarily related to incremental costs associated with our ~~Sponsor~~new distribution centers as well as the acquisitions of Trail Tire, ~~TPG~~Extreme, ~~for~~Kirks ~~certain management~~Tire, ~~consulting~~RTD Edmonton, RTD Calgary, Hercules and ~~financial~~Terry’s ~~services~~Tire asin ~~well~~2014 asand ~~fees~~our ~~paid~~2013 acquisitions of RTD, WTD and TDI. Combined, these factors added $126.7 million of incremental costs to ~~our~~the ~~outside~~nine month ~~board~~period of ~~directors~~2014. In addition, ~~the~~we ~~six~~also ~~months~~experienced ~~ended~~a ~~July 5~~$17.7 million increase in salaries and wage expense primarily due to higher sales volume and related headcount, higher incentive and commission compensation and the inclusion of five additional selling days in our first quarter of 2014, ~~includes~~which acontributed approximately $133.58 million ~~fee~~to ~~paid~~the year-over-year increase. Additionally, occupancy and vehicle expense increased $4.6 million due to ~~TPG~~higher incost ~~connection~~as ~~with~~we ~~the~~expanded ~~acquisitions~~several of ~~Terry’s~~our ~~Tire~~distribution centers to better service our existing customers as well as higher overall fuel consumption and ~~Hercules~~other vehicle related expenses.

~~Transaction~~Selling, ~~Expenses~~general and administrative expenses as a percentage of net sales were 15.5% for the nine months ended October 4, 2014, an increase compared with 15.0% for the nine months ended September 28, 2013. The increase in selling, general and administrative expenses as a percentage of net sales was primarily driven by an increase in costs associated with our growth expansion of recently opened and acquired distribution centers, as our consolidation of the Hercules distribution centers was not finalized until the latter part of the third quarter and the consolidation of the Terry’s Tire’s distribution centers did not commence until the latter part of the second quarter and extended through the latter part of the third quarter.

~~Transaction~~Management ~~expenses for the six months ended July 5, 2014 were $20.2 million and were primarily related to costs associated with our~~Fees acquisitions of Hercules and Terry’s Tire, as well as with expenses related to potential future acquisitions and other corporate initiatives. During the six months ended June 29, 2013, transaction expenses of $3.3 million primarily related to costs associated with our acquisitions of RTD in April 2013 and TriCan in November 2012, as well as with expenses related to potential future acquisitions and other corporate initiatives.

~~Interest~~Management ~~Expense~~fees for the nine months ended October 4, 2014 of $17.4 million represents a monitoring fee paid to our sponsor, TPG, for certain management, consulting and financial services as well as fees paid to our outside board of directors. In addition, the nine months ended October 4, 2014 includes a $13.5 million fee paid to TPG in connection with the acquisitions of Terry’s Tire and Hercules.

~~Interest~~Transaction ~~expense~~Expenses for the six months ended July 5, 2014 was $56.6 million, a $22.0 million, or 63.5%, increase compared with the six months ended June 29, 2013. This increase was due to higher debt levels associated with our ABL Facility, FILO Facility Additional Subordinated Notes and Term Loan, all as defined under Liquidity and Capital Resources, which were driven by our 2014 acquisitions and the redemption of our Senior Secured Notes. In addition, changes in the fair value of our interest rate swaps resulted in a $1.2 million increase in interest expense.

~~Loss~~Transaction onexpenses ~~Extinguishment~~for the nine months ended October 4, 2014 were $40.3 million and were primarily related to costs associated with the acquisition and integration of ~~Debt~~Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Hercules and Terry’s Tire, as well as with expenses related to potential future acquisitions and other corporate initiatives. During the nine months ended September 28, 2013, transaction expenses of $4.3 million primarily related to costs associated with our acquisitions of TDI, RTD and TriCan, as well as with expenses related to potential future acquisitions and other corporate initiatives.

~~Loss~~Interest onExpense extinguishment of debt for the six months ended July 5, 2014 of $17.1 million related to the early redemption of all $250.0 million aggregate principal amount of our 9.75% Senior Secured Notes on June 16, 2014 at a redemption price of 104.875% of the principal amount. Additionally, the loss on extinguishment of debt includes approximately $4.9 million related to the write-off the of unamortized original issuance discount and unamortized deferred financing fees associated with the Senior Secured Notes.

~~Provision (Benefit)~~Interest expense for ~~Income~~the ~~Taxes~~nine months ended October 4, 2014 was $88.8 million, a $33.5 million, or 60.7%, increase compared with the nine months ended September 28, 2013. This increase was due to higher debt levels associated with our ABL Facility, FILO Facility, Additional Subordinated Notes and Term Loan, all as defined under Liquidity and Capital Resources, which were driven by our 2014 acquisitions and the redemption of our Senior Secured Notes. This increase was partially offset by lower interest expense related to the redemption of our Senior Secured Notes in June 2014 as well as changes in the fair value of our interest rate swaps, which resulted in a decrease of $1.4 million in interest expense.

~~Our~~Loss ~~income tax benefit for the six months ended July 5, 2014 was $43.0 million, based~~ on ~~pre-tax~~Extinguishment ~~loss~~ of ~~$126.5 million;~~Debt our effective tax rate under the discrete method was 34.0%. For the six months ended June 29, 2013, our income tax benefit was $9.4 million, based on a pre-tax loss of $31.5 million; our effective tax rate was 29.7%. The effective rate of the year-to-date tax provision is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower than the statutory U.S. federal rate and non-deductible transaction costs, which lowered the effective tax rate by 0.5% and 0.5%, respectively.

42Loss on extinguishment of debt for the nine months ended October 4, 2014 of $17.2 million related to the early redemption of all $250.0 million aggregate principal amount of our 9.75% Senior Secured Notes on June 16, 2014 at a redemption price of 104.875% of the principal amount. Additionally, the loss on extinguishment of debt includes approximately $4.9 million related to the write-off of the unamortized original issuance discount and unamortized deferred financing fees associated with the Senior Secured Notes.

~~Table~~43 ~~of Contents~~

~~Overview~~Provision (Benefit) for Income Taxes

~~The~~Our ~~following~~income ~~table~~tax benefit for the nine months ended October 4, 2014 was $50.6 million, based on pre-tax loss of $148.5 million; our effective ~~contains~~tax ~~several~~rate ~~key~~under ~~measures~~the ~~that~~discrete method was 34.1%. For the nine months ended September 28, 2013, we ~~think~~had ~~are~~an ~~relevant~~income totax ~~our~~benefit ~~financial~~of ~~condition~~$8.9 million, consisting of a $7.2 million U.S. tax benefit and ~~liquidity:~~a $1.7 million foreign tax benefit, and an effective tax benefit rate of 29.8%. The effective rate of the year-to-date tax benefit is lower than the statutory income tax rate primarily due to earnings in a foreign jurisdiction taxed at rates lower than the statutory U.S. federal rate decreasing the rate by 0.8%.

In thousands	July 5,2014			December 28,2013
Cash and cash equivalents	$	27,533		$	35,760
Working capital		856,824			538,444
Total debt		1,944,297			967,000
Total stockholder’s equity		661,979			692,974
Debt-to-capital ratio		74.6	%		58.3	%

Liquidity and Capital Resources

~~Debt-to-capital~~Overview ~~ratio = total debt / (total debt plus total stockholder’s equity)~~

WeThe ~~assess~~following ~~our~~table contains ~~liquidity~~several inkey ~~terms~~measures ofthat ~~our~~we ~~ability~~think toare ~~generate~~relevant ~~cash~~ to ~~fund~~ our ~~operating,~~financial ~~investing~~condition and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital expenditure commitments and income tax rates. Our cash requirements consist primarily of the followingliquidity:

• Debt service requirements


	October 4,			December 28,
In thousands	2014			2013
Cash and cash equivalents	$	23,759		$	35,760
Working capital		826,269			538,444
Total debt		1,936,503			967,000
Total stockholder’s equity		631,351			692,974
Debt-to-capital ratio		75.4	%		58.3	%

•Debt-to-capital ~~Funding~~ratio of= ~~working~~total ~~capital~~debt / (total debt plus total stockholder’s equity)

•We ~~Funding~~assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. In doing so, we review and analyze our current cash on hand, the number of days our sales are outstanding, inventory turns, capital ~~expenditures~~expenditure commitments and income tax rates. Our cash requirements consist primarily of the following:

~~Our~~• ~~primary~~Debt ~~sources~~service of liquidity include cash flows from operations and availability under our ABL Facility and FILO Facility. We currently do not intend nor foresee a need to repatriate funds from our Canadian subsidiaries to the United States, and no provision for U.S. income taxes has been made with respect to such earnings. We expect our cash flow from U.S. operations, combined with availability under our U.S. ABL Facility, to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending in the United Stated during the next twelve month period and for the foreseeable future. We expect cash flows from our Canadian operations, combined with availability under our Canadian ABL Facility, to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending in Canada during the next twelve month period and thereafter for the foreseeable future.

We• ~~are~~Funding ~~significantly leveraged. Accordingly, our liquidity requirements are significant, primarily due to our debt service requirements. As~~ of ~~July 5,~~ ~~2014,~~working ~~our total indebtedness was $1,944.3 million with a debt-to-~~capital ratio of 74.6%. As of July 5, 2014, we have an additional $198.4 million of availability under our U.S. ABL Facility and an additional $70.8 million of availability under our Canadian ABL Facility. The availability under our U.S. and Canadian ABL Facilities is determined in accordance with our borrowing base.

~~Our~~• ~~liquidity~~Funding ~~and~~of ~~our ability to fund our~~ capital requirements is dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control, many of which are described under “Item 1A—Risk Factors” in our most recently filed Annual Report on Form 10-K. If those factors significantly change or other unexpected factors adversely affect us, our business may not generate sufficient cash flow from operations or we may not be able to obtain future financings to meet our liquidity needs. We anticipate that, to the extent additional liquidity is necessary to fund our operations, it would be funded through borrowings under our ABL Facility, the incurrence of other indebtedness, additional equity financings or a combination of these potential sources of liquidity. We may not be able to obtain this additional liquidity on terms acceptable to us or at all. expenditures

43Our primary sources of liquidity include cash flows from operations and availability under our ABL Facility and FILO Facility. We currently do not intend nor foresee a need to repatriate funds from our Canadian subsidiaries to the United States, and no provision for U.S. income taxes has been made with respect to such earnings. We expect our cash flow from U.S. operations, combined with availability under our U.S. ABL Facility, to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending in the United Stated during the next twelve month period and for the foreseeable future. We expect cash flows from our Canadian operations, combined with availability under our Canadian ABL Facility, to provide sufficient liquidity to fund our current obligations, projected working capital requirements and capital spending in Canada during the next twelve month period and thereafter for the foreseeable future.

~~Table~~We are significantly leveraged. Accordingly, our liquidity requirements are significant, primarily due to our debt service requirements. As of October 4, ~~Contents~~2014, our total indebtedness was $1,936.5 million with a debt-to-capital ratio of 75.4%. As of October 4, 2014, we have an additional $206.3 million of availability under our U.S. ABL Facility and an additional $71.1 million of availability under our Canadian ABL Facility. The availability under our U.S. and Canadian ABL Facilities is determined in accordance with our borrowing base.

~~Cash~~Our ~~Flows~~liquidity and our ability to fund our capital requirements is dependent on our future financial performance, which is subject to general economic, financial and other factors that are beyond our control, many of which are described under “Item 1A—Risk Factors” in our most recently filed Annual Report on Form 10-K. If those factors significantly change or other unexpected factors adversely affect us, our business may not generate sufficient cash flow from operations or we may not be able to obtain future financings to meet our liquidity needs. We anticipate that, to the extent additional liquidity is necessary to fund our operations, it would be funded through borrowings under our ABL Facility, the incurrence of other indebtedness, additional equity financings or a combination of these potential sources of liquidity. We may not be able to obtain this additional liquidity on terms acceptable to us or at all.

~~The~~44 ~~following table sets forth the major categories of cash flows:~~

In thousands	Six MonthsEndedJuly 5,2014			Six MonthsEndedJune 29,2013
Cash provided by (used in) continuing operating activities	$	(167,545	)	$	29,033
Cash provided by (used in) discontinued operations		350			—
Cash provided by (used in) investing activities		(855,423	)		(88,532	)
Cash provided by (used in) financing activities		1,013,358			63,000
Effect of exchange rate changes on cash		1,033			(2,548	)
Net increase (decrease) in cash and cash equivalents		(8,227	)		953
Cash and cash equivalents - beginning of period		35,760			25,951
Cash and cash equivalents - end of period	$	27,533		$	26,904
Cash payments for interest	$	58,025		$	33,036
Cash payments (receipts) for taxes, net	$	3,817		$	2,464

~~Operating~~Cash ~~Activities~~Flows

~~Net~~The ~~cash~~following ~~used~~table insets ~~continuing~~forth ~~operating activities for~~ the ~~six~~major ~~months~~categories ~~ended July 5, 2014 was $167.5 million compared with cash provided by continuing operating activities~~ of ~~$29.0 million during the six months ended June 29, 2013. During the current period, working capital requirements resulted in a~~ cash ~~outflow~~flows: of $177.7 million, primarily driven by an increase in customer accounts receivable of $38.3 million and an increase in inventory levels of $100.1 million as a result of stocking new distribution centers opened and as a result of building out the product offering provided through the Hercules acquisition and to a lesser extent, the build of inventory levels for the achievement of certain manufacturer first half program incentives.

Net cash provided by operating activities for the six months ended June 29, 2013 was $29.0 million. During the current period, working capital requirements resulted in a cash inflow of $3.8 million, primarily driven by an increase in accounts payable associated with the timing of vendor payments and a decrease in customer accounts receivable. These amounts were partially offset by changes in inventory levels which resulted in a cash outflow during the current period as a result of stocking new distribution centers opened during the year, seasonal changes in inventory stocking levels, and our recent acquisitions.


	Nine Months			Nine Months
	Ended			Ended
	October 4,			September 28,
In thousands	2014			2013
Cash provided by (used in) continuing operating activities	$	(113,799	)	$	39,147
Cash provided by (used in) discontinued operations		1,562			—
Cash provided by (used in) investing activities		(890,210	)		(101,937	)
Cash provided by (used in) financing activities		993,222			65,741
Effect of exchange rate changes on cash		(2,776	)		(1,581	)

Net increase (decrease) in cash and cash equivalents		(12,001	)		1,370
Cash and cash equivalents - beginning of period		35,760			25,951

Cash and cash equivalents - end of period	$	23,759		$	27,321

Cash payments for interest	$	77,185		$	38,535
Cash payments (receipts) for taxes, net	$	12,185		$	12,876

~~Investing~~Operating Activities

Net cash used in ~~investing~~continuing operating activities for the ~~six~~nine months ended ~~July~~October 54, 2014 was $~~855~~113.48 million, compared with cash provided by continuing operating activities of $8839.51 million during the ~~six~~nine months ended ~~June~~September 2928, 2013. ~~The~~During ~~change~~the ~~was~~current ~~primarily~~period, ~~associated~~working ~~with~~capital ~~cash~~requirements ~~paid for acquisitions, which~~ resulted in a cash outflow of $~~757~~143.3 million, ~~increase~~primarily indriven ~~the~~by ~~current~~an ~~period.~~increase Inin customer ~~addition,~~accounts wereceivable ~~invested~~of $3465.2 million and an increase in inventory levels of $23112.80 million ~~in property~~as ~~and~~a ~~equipment~~result ~~purchases~~of ~~during~~building out the ~~six~~product ~~months~~offering ~~ended~~provided ~~July 5,~~through ~~2014~~the Hercules acquisition for a significant portion of our U.S. and ~~June 29~~Canadian distribution centers, ~~2013~~the receipt of winter tires, ~~respectively~~particularly in our Canadian operations, ~~which~~for ~~included~~the ~~information~~winter ~~technology~~selling ~~upgrades~~season, ~~information~~and ~~technology~~to ~~application~~a ~~development~~lesser extent, the build of inventory levels for the achievement of certain manufacturer annual program incentives. These increases to inventories were partially offset by the consolidation of numerous distribution centers related to our various U.S. and ~~warehouse~~Canadian ~~racking~~acquisitions in 2014 and the related inventory rationalization as a part of the consolidation process. These amounts were partially offset by changes in accounts payable and accrued expenses associated with the timing of vendor payments and accrued interest on our senior notes.

~~Financing~~Net ~~Activities~~cash provided by operating activities for the nine months ended September 28, 2013 was $39.1 million. During the nine month period of 2013, working capital requirements resulted in a cash outflow of $14.9 million, primarily driven by an increase in customer accounts receivable and an increase in inventory levels as a result of stocking new distribution centers opened during the year, seasonal changes in inventory stocking levels (including the Canadian winter business) and our recent acquisitions. These amounts were partially offset by changes in accounts payable and accrued expenses associated with the timing of vendor payments and accrued interest on our senior notes. This cash outflow was more than offset by cash earnings during the period.

~~Net~~Investing ~~cash~~Activities provided by financing activities for the six months ended July 5, 2014 was $1,013.4 million, compared with $63.0 million during the six months ended June 29, 2013. The change was primarily related to proceeds received from the issuance of our Additional Subordinated Notes and Term Loan during the six months ended July 5, 2014. These proceeds were used to finance a portion of the Hercules and Terry’s Tire acquisitions as well to redeem all amounts outstanding under our Senior Secured Notes (as defined below). In addition, higher net borrowings from our ABL Facility and FILO Facility, specifically our U.S. ABL Facility, contributed to the period-over-period increase. The higher net borrowings under our ABL Facility and FILO Facility were due to the increase in cash outflow for working capital requirements between periods and cash paid for acquisitions. Additionally, the Company received an equity contribution of $50.0 million from TPG and certain co-investors during the six months ended July 5, 2014.

~~Supplemental~~Net ~~Disclosures~~cash ofused ~~Cash~~in ~~Flow~~investing ~~Information~~activities for the nine months ended October 4, 2014 was $890.2 million, compared with $101.9 million during the nine months ended September 28, 2013. The change was primarily associated with cash paid for acquisitions, which resulted in a $772.7 million increase in the current period. In addition, we invested $51.9 million and $34.9 million in property and equipment purchases during the nine months ended October 4, 2014 and September 28, 2013, respectively, which included information technology upgrades, information technology application development and warehouse racking.

~~Cash~~Financing ~~payments~~Activities for interest during the six months ended July 5, 2014 were $58.0 million, compared with $33.0 million paid during the six months ended June 29, 2013. The increase is primarily due to the timing of our period end on July 5, 2014, and as such, included an additional quarterly interest payment on our ABL Facility and FILO Facility as compared to the prior year. Additionally, higher levels of indebtedness incurred in connection with the issuance of our Additional Subordinated Notes and our Term Loan also contributed to the year-over-year increase.

44Net cash provided by financing activities for the nine months ended October 4, 2014 was $993.2 million, compared with $65.7 million during the nine months ended September 28, 2013. The change was primarily related to proceeds received from the issuance of our Additional Subordinated Notes and Term Loan during the nine months ended October 4, 2014. These proceeds were used to finance a portion of the Hercules and Terry’s Tire acquisitions as well to redeem all amounts outstanding under our Senior Secured Notes (as defined below). In addition, higher net borrowings from our ABL Facility and FILO Facility, specifically our U.S. ABL Facility, contributed to the period-over-period increase. The higher net borrowings under our ABL Facility and FILO Facility were due to the increase in cash outflow for working capital requirements between periods and cash paid for acquisitions. Additionally, the Company received an equity contribution of $50.0 million from TPG and certain co-investors during the nine months ended October 4, 2014.

~~Table~~Supplemental Disclosures of ~~Contents~~Cash Flow Information

~~Net~~Cash ~~cash~~ payments for ~~taxes~~interest during the ~~six~~nine months ended ~~July~~October 54, 2014 were $377.82 million, compared with $238.5 million paid during the nine ~~six~~ months ended ~~June~~September 2928, 2013. The ~~difference~~increase ~~between~~is ~~the periods~~ primarily ~~relates~~due to the ~~balance and~~ timing of ~~income~~our ~~tax~~period ~~extension~~end ~~payments~~on ~~and~~October ~~income~~4, ~~tax~~2014, ~~payments due with returns.~~

~~Indebtedness~~45

In thousands	Matures	Interest Rate(1)	OutstandingBalance
U.S. ABL Facility	2017	3.4%	$	641,639
Canadian ABL Facility	2017	4.5		53,165
U.S. FILO Facility	2017	5.8		80,000
Canadian FILO Facility	2017	6.0		10,266
Term Loan	2018	5.8		717,693
Senior Subordinated Notes	2018	11.50		421,361
Capital lease obligations	2015 - 2027	2.7 - 13.9		12,577
Other	2014 - 2021	2.3 - 10.6		7,596
Total debt				1,944,297
Less - Current maturities				(10,120	)
Long-term debt			$	1,934,177

and as such, included an additional quarterly interest payment on our ABL Facility and FILO Facility as compared to the prior year. Additionally, higher levels of indebtedness incurred in connection with the issuance of our Additional Subordinated Notes and our Term Loan also contributed to the year-over-year increase.

~~(1)~~Net cash ~~Interest~~payments ~~rates~~ for ~~each~~taxes ofduring the Unine months ended October 4, 2014 were $12.S2 million, compared with $12.9 ~~ABL~~million ~~Facility~~during ~~and~~the nine months ended September 28, 2013. The difference between the ~~Canadian~~periods ~~ABL~~primarily ~~Facility~~relates ~~are~~to the ~~weighted~~balance ~~average~~and timing ~~interest~~of ~~rates~~income attax ~~July~~extension 5,payments ~~2014~~and income tax payments due with returns.

~~ABL~~Indebtedness ~~Facility~~

On January 31, 2014, in connection with the Hercules acquisition, we entered into the Second Amendment to Sixth Amended and Restated Credit Agreement (“Credit Agreement”), which provides for (i) U.S. revolving credit commitments of $850.0 million (of which up to $50.0 million can be utilized in the form of commercial and standby letters of credit), subject to U.S. borrowing base availability (the “U.S. ABL Facility”) and (ii) Canadian revolving credit commitments of $125.0 million (of which up to $10.0 million can be utilized in the form of commercial and standby letters of credit), subject to Canadian borrowing base availability (the “Canadian ABL Facility” and, collectively with the U.S. ABL Facility, the “ABL Facility”). In addition, the Credit Agreement provides (i) the U.S. borrowers under the agreement with a first-in last-out facility (the “U.S. FILO Facility”) in the aggregate principal amount of up to $80.0 million, subject to a borrowing base specific thereto and (ii) the Canadian borrowers under the agreement with a first-in last-out facility (the “Canadian FILO Facility” and collectively with the U.S. FILO Facility, the “FILO Facility”) in an aggregate principal amount of up to $15.0 million, subject to a borrowing base specific thereto. The ~~U.S.~~following ~~ABL~~table ~~Facility~~summarizes isour ~~available~~outstanding todebt ~~ATDI,~~at Am-Pac Tire Dist. Inc., Hercules and any other U.S. subsidiary that we designate in the future in accordance with the terms of the agreement. The Canadian ABL Facility is available to TriCan and any other Canadian subsidiaries that we designate in the future in accordance with the terms of the agreement. Provided that no default or event of default then exists or would arise therefrom, we have the option to request that the ABL Facility be increased by an amount not to exceed $175.0 million (up to $25.0 million of which may be allocated to the Canadian ABL Facility), subject to certain rights of the administrative agent, swingline lender and issuing banks providing commitments for such increase. The maturity date for the ABL Facility is NovemberOctober 164, ~~2017.~~2014: ~~The maturity date for the FILO Facility is January 31, 2017.~~

As of July 5, 2014, we had $641.6 million outstanding under the U.S. ABL Facility. In addition, we had certain letters of credit outstanding in the aggregate amount of $10.0 million, leaving $198.4 million available for additional borrowings under the U.S. ABL Facility. The outstanding balance of the Canadian ABL Facility at July 5, 2014 was $53.1 million, leaving $70.8 million available for additional borrowings. As of July 5, 2014, the outstanding balance of the U.S. FILO Facility was $80.0 million and the outstanding balance of the Canadian FILO Facility was $10.3 million.


			Interest Rate			Outstanding
*In thousands*	Matures		(1)			Balance
U.S. ABL Facility		2017		3.0	%	$	631,401
Canadian ABL Facility		2017		4.5			53,861
U.S. FILO Facility		2017		5.8			80,000
Canadian FILO Facility		2017		6.3			14,551
Term Loan		2018		5.8			715,934
Senior Subordinated Notes		2018		11.50			421,545
Capital lease obligations		2015 - 2027		2.7 - 13.9			12,479
Other		2014 - 2021		2.3 - 10.6			6,732

Total debt							1,936,503
Less - Current maturities							(9,839	)

Long-term debt						$	1,926,664

~~Borrowings under the U.S. ABL Facility bear interest at a rate per annum equal to, at our option, either~~ (a1) ~~200~~ ~~basis~~Interest ~~points~~rates ~~over~~for ~~an adjusted~~each ~~LIBOR rate or (b) 100 basis points over an alternative base rate (the higher~~ of the ~~prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR rate plus 100 basis points). The applicable margins under the~~ U.S. ABL Facility ~~are~~and ~~subject~~the toCanadian ~~step~~ABL ~~ups~~Facility ~~and~~are ~~step~~the ~~downs~~weighted ~~based on~~ average ~~excess~~interest ~~borrowing~~rates ~~availability~~at ~~under~~October ~~the~~4, ~~ABL Facility~~2014.

~~Borrowings under the Canadian~~ ABL Facility bear interest at a rate per annum equal to, at our option, either (a) 100 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.A., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 100 basis points over a Canadian prime rate determined in accordance with the Canadian ABL Facility, (c) 200 basis points over a rate determined by

45On January 31, 2014, in connection with the Hercules acquisition, we entered into the Second Amendment to Sixth Amended and Restated Credit Agreement (“Credit Agreement”), which provides for (i) U.S. revolving credit commitments of $850.0 million (of which up to $50.0 million can be utilized in the form of commercial and standby letters of credit), subject to U.S. borrowing base availability (the “U.S. ABL Facility”) and (ii) Canadian revolving credit commitments of $125.0 million (of which up to $10.0 million can be utilized in the form of commercial and standby letters of credit), subject to Canadian borrowing base availability (the “Canadian ABL Facility” and, collectively with the U.S. ABL Facility, the “ABL Facility”). In addition, the Credit Agreement provides (i) the U.S. borrowers under the agreement with a first-in last-out facility (the “U.S. FILO Facility”) in the aggregate principal amount of up to $80.0 million, subject to a borrowing base specific thereto and (ii) the Canadian borrowers under the agreement with a first-in last-out facility (the “Canadian FILO Facility” and collectively with the U.S. FILO Facility, the “FILO Facility”) in an aggregate principal amount of up to $15.0 million, subject to a borrowing base specific thereto. The U.S. ABL Facility is available to ATDI, Am-Pac Tire Dist. Inc., Hercules and any other U.S. subsidiary that we designate in the future in accordance with the terms of the Credit Agreement. The Canadian ABL Facility is available to TriCan and any other Canadian subsidiaries that we designate in the future in accordance with the terms of the Credit Agreement. Provided that no default or event of default then exists or would arise therefrom, we have the option to request that the ABL Facility be increased by an amount not to exceed $175.0 million (up to $25.0 million of which may be allocated to the Canadian ABL Facility), subject to certain rights of the administrative agent, swingline lender and issuing banks providing commitments for such increase. The maturity date for the ABL Facility is November 16, 2017. The maturity date for the FILO Facility is January 31, 2017.

~~Table~~As of ~~Contents~~October 4, 2014, we had $631.4 million outstanding under the U.S. ABL Facility. In addition, we had certain letters of credit outstanding in the aggregate amount of $9.9 million, leaving $206.3 million available for additional borrowings under the U.S. ABL Facility. The outstanding balance of the Canadian ABL Facility at October 4, 2014 was $53.9 million, leaving $71.1 million available for additional borrowings. As of October 4, 2014, the outstanding balance of the U.S. FILO Facility was $80.0 million and the outstanding balance of the Canadian FILO Facility was $14.6 million.

~~reference~~Borrowings tounder the ~~average~~U.S. ~~rate~~ABL ~~applicable~~Facility tobear ~~Canadian~~interest ~~Dollar~~at ~~bankers’~~a ~~acceptances~~rate ~~having~~per anannum ~~identical~~equal orto, ~~comparable~~at ~~term~~our asoption, ~~the~~either ~~proposed~~(a) 200 ~~loan~~basis ~~amount~~points over an adjusted LIBOR rate or (db) ~~200~~100 basis points over an alternative base rate (the higher of the prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR rate plus 100 basis points). The applicable margins under the U.S. ~~Canadian~~ ABL Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

~~Borrowings~~46 under the U.S. FILO Facility bear interest at a rate per annum equal to, at our option, either (a) 350 basis points over an adjusted LIBOR rate or (b) 250 basis points over an alternative base rate (the higher of the prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR plus 100 basis points. The applicable margins under the U.S. FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

~~The~~Borrowings Uunder the Canadian ABL Facility bear interest at a rate per annum equal to, at our option, either (a) 100 basis points over an alternative Canadian base rate (the higher of the base rate as published by Bank of America, N.SA., acting through its Canada branch, the federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 100 basis points over a Canadian ~~borrowing~~prime ~~base~~rate atdetermined ~~any~~in ~~time~~accordance ~~equals~~with the ~~sum~~Canadian ABL Facility, (c) 200 basis points over a rate determined by reference to the average rate applicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 200 basis points over an adjusted LIBOR rate. The applicable margins under the Canadian ABL Facility are subject to ~~certain~~step ~~reserves~~ups and ~~other~~step ~~adjustments)~~downs based ~~of:~~on average excess borrowing availability under the ABL Facility.

•Borrowings ~~85%~~under ofthe ~~eligible~~U.S. ~~accounts~~FILO ~~receivable~~Facility bear interest at a rate per annum equal to, at our option, either (a) 350 basis points over an adjusted LIBOR rate or (b) 250 basis points over an alternative base rate (the higher of the prime rate, the federal funds rate plus 50 basis points and one month-adjusted LIBOR plus 100 basis points). The applicable margins under the U.S. orFILO ~~Canadian~~Facility ~~loan~~are ~~parties,~~subject asto ~~applicable;~~step ~~plus~~ups and step downs based on average excess borrowing availability under the ABL Facility.

•Borrowings ~~The~~under ~~lesser~~the ofCanadian FILO Facility bear interest at a rate per annum equal to, at our option, either (a) 250 ~~70%~~basis ofpoints ~~the~~over an ~~lesser~~alternative ofCanadian ~~cost~~base orrate ~~market~~(the ~~value~~higher of ~~eligible~~the ~~tire~~base ~~inventory~~rate as published by Bank of ~~the~~America, UN.SA., oracting ~~Canadian~~through ~~loan~~its ~~parties~~Canada branch, asthe ~~applicable~~federal funds rate plus 50 basis points and one month-LIBOR plus 100 basis points), (b) 250 ~~85%~~basis ofpoints over a Canadian prime rate determined in accordance with the ~~net~~Canadian ~~orderly~~ABL ~~liquidation~~Facility, ~~value~~(c) 350 ofbasis ~~eligible~~points ~~tire~~over ~~inventory~~a ofrate determined by reference to the ~~U.S.~~average orrate applicable to Canadian ~~loan~~Dollar ~~parties,~~bankers’ acceptances having an identical or comparable term as the proposed loan amount or (d) 350 basis points over an adjusted LIBOR rate. The applicable; ~~plus~~margins under the Canadian FILO Facility are subject to step ups and step downs based on average excess borrowing availability under the ABL Facility.

• The ~~lesser of (a) 50% of the lower of cost or market value of eligible non-tire inventory of the~~ U.S. orand Canadian ~~loan~~borrowing ~~parties,~~base asat ~~applicable~~any ~~and~~time ~~(b)~~equals ~~85% of~~ the ~~net~~sum ~~orderly~~(subject ~~liquidation~~to ~~value~~certain ofreserves ~~eligible~~and ~~non-tire~~other ~~inventory~~adjustments) of ~~the U.S. or Canadian loan parties, as applicable.~~:

~~The~~• ~~U.S.~~85% ~~FILO~~of ~~and~~eligible ~~the~~accounts ~~Canadian~~receivable ~~FILO~~of ~~borrowing base at any time equals~~ the ~~sum~~U.S. ~~(subject~~or toCanadian ~~certain~~loan ~~reserves~~parties, ~~and~~as ~~other~~applicable; ~~adjustments) of:~~ plus

• 5The lesser of (a) 70% of the lesser of cost or market value of eligible ~~accounts~~tire ~~receivable~~inventory of the U.S. or Canadian loan parties, as applicable and (b) 85% of the net orderly liquidation value of eligible tire inventory of the U.S. or Canadian loan parties, as applicable; plus

• 10The lesser of (a) 50% of the ~~net~~lower ~~orderly~~of ~~liquidation~~cost or market value of ~~the~~ eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable and (b) 85% of the net orderly liquidation value of eligible non-tire inventory of the U.S. or Canadian loan parties, as applicable.

~~All~~The ~~obligations under the~~ U.S. ~~ABL Facility and the U.S.~~ FILO ~~Facility are unconditionally guaranteed by Holdings~~ and ~~substantially all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material restricted subsidiaries, other than Tire Pros Francorp. The Canadian ABL Facility and~~ the Canadian FILO ~~Facility~~borrowing ~~are unconditionally guaranteed by the U.S. loan~~base ~~parties,~~at ~~TriCan and~~ any ~~future,~~time ~~direct~~equals ~~and indirect, wholly-owned, material restricted Canadian subsidiaries. Obligations under~~ the ~~U.S.~~sum ABL Facility and the U.S. FILO Facility are secured by a first-priority lien on inventory, accounts receivable and related assets and a second-priority lien on substantially all other assets of the U.S. loan parties, (subject to certain ~~exceptions.~~reserves ~~Obligations under the Canadian ABL Facility~~ and the Canadian FILO Facility are secured by a first-priority lien on inventory, accounts receivable and related assets of the U.S. loan parties and the Canadian loan parties and a second-priority lien on substantially all other ~~assets~~adjustments) of: ~~the U.S. loan parties and the Canadian loan parties, subject to certain exceptions.~~

~~The~~• ~~ABL~~5% Facility and FILO Facility contain customary covenants, including covenants that restricts our ability to incur additional debt, grant liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of ~~assets,~~eligible ~~prepay~~accounts ~~certain~~receivable ~~debt, declare dividends, modify certain material agreements, enter into transactions with affiliates or change our fiscal year. The terms~~ of the ABL Facility and FILO Facility generally restrict distributions or the payment of dividends in respect of our stock subject to certain exceptions requiring compliance with certain availability levels and fixed charge coverage ratios under the ABL Facility and other customary negotiated exceptionsU. ~~If the amount available for additional borrowings under the ABL Facility is less than the greater of (a) 10~~S.0% ofor ~~the~~Canadian ~~lesser~~loan ~~of (x) the aggregate commitments under the ABL Facility and (y) the aggregate borrowing base and (b) $25.0 million~~parties, ~~then~~as weapplicable; would be subject to an additional covenant requiring us to meet a fixed charge coverage ratio of 1.0 to 1.0. As of July 5, 2014, our additional borrowing availability under the ABL Facility was above the required amount and we were therefore not subject to the additional covenants. plus

~~Senior~~• ~~Secured~~10% ~~Term~~of ~~Loan~~the net orderly liquidation value of the eligible tire and non-tire inventory of the U.S. or Canadian loan parties, as applicable.

InAll ~~connection~~obligations ~~with~~under the ~~acquisition~~U.S. ofABL ~~Terry’s~~Facility ~~Tire,~~and onthe ~~March 28,~~U.S. ~~2014,~~FILO ~~ATDI~~Facility ~~entered~~are ~~into~~unconditionally aguaranteed ~~credit~~by ~~agreement~~Holdings ~~that~~and ~~provided~~substantially ~~for~~all aof ~~senior~~ATDI’s ~~secured~~existing ~~term~~and ~~loan~~future, ~~facility~~direct inand ~~the~~indirect, ~~aggregate~~wholly-owned ~~principal~~domestic ~~amount~~material ofrestricted ~~$300.0~~subsidiaries, ~~million~~other ~~(the~~than ~~“Initial~~Tire ~~Term~~Pros ~~Loan”)~~Francorp. The ~~Initial~~Canadian ~~Term~~ABL ~~Loan~~Facility ~~was~~and ~~issued~~the atCanadian aFILO ~~discount~~Facility ofare 0unconditionally guaranteed by the U.~~25%~~S. ~~which~~loan parties, ~~combined~~TriCan ~~with~~and ~~certain~~any ~~debt~~future, ~~issuance~~direct ~~costs~~and ~~paid~~indirect, ~~at closing~~wholly-owned, ~~resulted~~ inmaterial ~~net~~restricted ~~proceeds~~Canadian ofsubsidiaries. ~~approximately~~Obligations ~~$290~~under the U.9S. ~~million~~ABL Facility and the U.S. ~~The~~FILO ~~Initial~~Facility ~~Term~~are ~~Loan~~secured ~~will~~by ~~accrete~~a ~~based~~first-priority lien on aninventory, ~~effective~~accounts ~~interest~~receivable and ~~rate~~related ofassets 6%and toa ansecond-priority ~~aggregate~~lien ~~accreted~~on ~~value~~substantially all other assets of ~~$300~~the U.0S. ~~million~~loan parties, ~~the~~subject ~~full~~to ~~principal~~certain ~~amount~~exceptions. atObligations ~~maturity.~~under ~~The~~the ~~net~~Canadian ~~proceeds~~ABL ~~from~~Facility and the Canadian FILO Facility are secured by a first-priority lien ~~Initial~~on ~~Term~~inventory, ~~Loan~~accounts ~~were~~receivable ~~used~~and torelated ~~finance~~assets of the U.S. loan parties and the Canadian loan parties and a ~~portion~~second-priority lien on substantially all other assets of the ~~Terry’s~~U.S. ~~Tire~~loan ~~Purchase~~parties ~~Price~~and the Canadian loan parties, subject to certain exceptions.

46The ABL Facility and FILO Facility contain customary covenants, including covenants that restricts our ability to incur additional debt, grant liens, enter into guarantees, enter into certain mergers, make certain loans and investments, dispose of assets, prepay certain debt, declare dividends, modify certain material agreements, enter into transactions with affiliates or change our fiscal year. The terms of the ABL Facility and FILO Facility generally restrict distributions or the payment of dividends in respect of our stock subject to certain exceptions requiring compliance with certain availability levels and fixed charge coverage ratios under the ABL Facility and other customary negotiated exceptions. If the amount available for additional borrowings under the ABL Facility is less than the greater of (a) 10.0% of the lesser of (x) the aggregate commitments under the ABL Facility and (y) the aggregate borrowing base and (b) $25.0 million, then we would be subject to an additional covenant requiring us to meet a fixed charge coverage ratio of 1.0 to 1.0. As of October 4, 2014, our additional borrowing availability under the ABL Facility was above the required amount and we were therefore not subject to the additional covenants.

~~Table~~47 ~~of Contents~~

~~Borrowings under~~Senior ~~the~~Secured Term Loan bear interest at a rate per annum equal to, at our option, either (a) a Eurodollar rate determined by reference to LIBOR, plus an applicable margin of 475 basis points or (b) 375 basis points over an alternative base rate determined by reference of the higher of the federal funds rate plus 50 basis points, the prime rate and 100 basis points over the one month Eurodollar rate. The Eurodollar rate is subject to an interest rate floor of 100 basis points. The applicable margins under the Term Loan are subject to a step down based on a consolidated net leverage ratio, as defined in the agreement.

~~All~~In ~~obligations~~connection ~~under~~with the ~~Term~~acquisition ~~Loan~~of ~~are~~Terry’s ~~unconditionally~~Tire, ~~guaranteed~~on byMarch 28, ~~Holdings and~~2014, ~~subject~~ATDI toentered ~~certain~~into ~~customary~~a ~~exceptions,~~credit ~~all~~agreement ofthat provided for a ~~ATDI’s~~senior ~~existing~~secured ~~and~~term ~~future,~~loan ~~direct~~facility ~~and~~in ~~indirect,~~the ~~wholly-owned~~aggregate ~~domestic~~principal ~~material~~amount ~~subsidiaries~~of $300.0 ~~Obligations~~million ~~under~~ (the “Initial Term Loan”). ~~are~~The ~~secured~~Initial byTerm Loan was issued at a ~~first-priority~~discount ~~lien~~of on0.25% ~~substantially~~which, ~~all~~combined ~~property~~with certain debt issuance costs paid at closing, resulted ~~assets~~in ~~and~~net ~~capital~~proceeds ~~stock~~of approximately $290.9 million. The Initial Term Loan will accrete based on an effective interest rate of ~~ATDI~~6% ~~except~~to ~~accounts receivable~~an aggregate accreted value of $300.0 million, ~~inventory~~the ~~and~~full ~~related~~principal ~~intangible~~amount ~~assets~~at ~~and~~maturity. aThe ~~second-priority~~net ~~lien~~proceeds onfrom ~~all~~the Initial ~~accounts~~Term ~~receivable~~Loan ~~and~~were ~~related~~used ~~intangible~~to ~~assets~~finance a portion of the Terry’s Tire Purchase Price.

~~The~~On June 16, 2014, ATDI amended the Initial Term Loan ~~contains~~(the ~~customary~~“Incremental ~~covenants,~~Amendment”) ~~including~~to ~~covenants~~borrow ~~that~~an ~~restrict~~additional ~~our~~$340.0 ~~ability~~million (the “Incremental Term Loan”) on the same terms as the Initial Term Loan. Pursuant to ~~incur~~the ~~additional~~Incremental ~~debt~~Amendment, ~~create~~until ~~liens~~August 15, ~~enter~~2014, ~~into~~ATDI also ~~guarantees,~~had ~~enter~~the ~~into~~right ~~certain~~to ~~mergers,~~borrow ~~make~~up ~~certain~~to ~~loans~~an additional $80.0 million (the “Delayed Draw Term Loan” and ~~investments~~collectively with the Initial Term Loan and the Incremental Term Loan, ~~dispose~~the of“Term ~~assets~~Loan”) on the same terms as the Initial Term Loan. The proceeds from the Incremental Term Loan, ~~prepay~~net ~~certain~~of related debt, ~~declare~~issuance ~~dividends~~costs paid at closing, ~~modify~~amounted ~~certain~~to ~~material~~approximately ~~agreements~~$335.7 million, ~~enter~~and ~~into~~were ~~transactions~~used, ~~with~~in ~~affiliates~~part, ~~change~~to ~~the~~redeem ~~nature~~all $250.0 million aggregate principal amounts of ~~our~~notes ~~business~~outstanding orunder ~~change~~ATDI’s ~~our~~Senior ~~fiscal~~Secured ~~year.~~Notes ~~The~~and ~~terms~~related offees ~~the~~and ~~Term~~expenses ~~Loan~~as ~~generally~~more ~~restrict~~fully ~~distributions~~described orbelow, and the ~~payment~~remaining ofproceeds ~~dividends~~will inbe ~~respect~~used offor ~~our~~working ~~stock~~capital ~~subject~~requirements toand ~~certain~~other ~~exceptions~~general ~~such~~corporate aspurposes, including the ~~amount~~financing of ~~50%~~potential offuture acquisitions. ~~net~~We ~~income~~received ~~(reduced~~the byproceeds ~~100%~~from ofthe ~~net~~Delayed ~~losses)~~Draw ~~for~~Term Loan at the ~~period~~ ~~beginning~~end ~~January 1,~~of the second quarter of 2014. ~~and~~The ~~other~~maturity ~~customary~~date ~~negotiated~~for ~~exceptions~~the Term Loan is June 1, 2018.

WeBorrowings ~~are required to make principal payments equal to 0.25% of the aggregate principal amount outstanding~~ under the Term Loan onbear ~~the~~interest ~~last~~at ~~business~~a ~~day~~rate ofper ~~each~~annum ~~March,~~equal ~~June~~to, ~~September~~at ~~and~~our ~~December~~option, ~~commencing~~either ~~with~~(a) a ~~the~~Eurodollar ~~last~~rate ~~business~~determined ~~day~~by reference ~~of June 2014. In addition, subject~~ to ~~certain exceptions~~LIBOR, weplus ~~are required~~an toapplicable ~~repay~~margin ~~the~~of ~~Term~~475 ~~Loan~~basis inpoints ~~certain~~or ~~circumstances,~~(b) 375 ~~including~~basis ~~with~~points ~~50%~~over ~~(which~~an ~~percentage~~alternative ~~will~~base berate ~~reduced~~determined toby ~~25%~~reference ~~and~~of ~~0%,~~the ashigher ~~applicable,~~of ~~subject~~the tofederal ~~attaining~~funds ~~certain~~rate ~~senior~~plus ~~secured~~50 ~~net~~basis ~~leverage~~points, ~~ratios)~~the ofprime ~~its~~rate ~~annual~~and ~~excess~~100 ~~cash~~basis ~~flow, as defined~~points inover the ~~Term~~one ~~Loan~~month ~~agreement~~Eurodollar rate. The ~~Term~~Eurodollar ~~Loan~~rate ~~also~~is ~~contains~~subject ~~repayments~~to ~~provision~~an ~~related~~interest torate ~~non-ordinary~~floor ~~course~~of ~~asset~~100 orbasis ~~property~~points. ~~sales~~The ~~when~~applicable ~~certain~~margins ~~conditions~~under ~~are~~the ~~met,~~Term ~~and~~Loan ~~related~~are subject to ~~the~~a ~~incurrence~~step ofdown ~~debt~~based ~~that~~on isa ~~not~~consolidated ~~permitted~~net ~~under~~leverage ~~the~~ratio, as defined in the agreement.

~~Senior~~All ~~Secured~~obligations ~~Notes~~under the Term Loan are unconditionally guaranteed by Holdings and, subject to certain customary exceptions, all of ATDI’s existing and future, direct and indirect, wholly-owned domestic material subsidiaries. Obligations under the Term Loan are secured by a first-priority lien on substantially all property, assets and capital stock of ATDI except accounts receivable, inventory and related intangible assets and a second-priority lien on all accounts receivable and related intangible assets.

OnThe ~~May 16,~~Term ~~2014~~Loan contains customary covenants, ~~ATDI~~including ~~delivered~~covenants athat ~~Notice~~restrict ofour ~~Full~~ability ~~Redemption~~to incur additional debt, ~~providing~~create ~~for~~liens, ~~the~~enter ~~redemption~~into guarantees, ofenter ~~all~~into ~~$250.0~~certain ~~million~~mergers, ~~aggregate~~make ~~principal~~certain ~~amount~~ loans and investments, dispose of ~~the~~assets, ~~9.75%~~prepay ~~Senior~~certain ~~Secured~~debt, ~~Notes~~declare ~~(“Senior~~dividends, ~~Secured~~modify ~~Notes”)~~certain onmaterial ~~June 16~~agreements, ~~2014~~enter (into transactions with affiliates, change the ~~“Redemption~~nature ~~Date”)~~of atour abusiness ~~price~~or change ~~equal~~our tofiscal ~~104~~year.~~875%~~ The terms of the ~~principal~~Term ~~amount~~Loan ofgenerally ~~the~~restrict ~~Senior~~distributions ~~Secured~~or ~~Notes~~the ~~redeemed~~payment ~~plus~~of ~~accrued~~dividends ~~and~~in ~~unpaid~~respect ~~interest, if~~of ~~any,~~our ~~to,~~stock ~~but~~subject ~~excluding~~to ~~the~~certain ~~Redemption~~exceptions ~~Date~~such (as the ~~“Redemption~~amount ~~Price”).~~of On50% ~~June 16,~~of ~~2014,~~net ~~using~~income ~~proceeds~~(reduced ~~from~~by ~~the~~100% ~~Incremental~~of ~~Term~~net ~~Loan,~~losses) for the period ~~Senior~~beginning ~~Secured~~January 1, ~~Notes~~2014 ~~were~~and ~~redeemed~~other ~~for~~customary anegotiated ~~Redemption Price of $263~~exceptions.2 ~~million.~~

~~Senior~~We ~~Subordinated~~were ~~Notes~~required to make a principal payment under the Term Loan equal to $1.6 million on the last business day of June 2014. Commencing with the last business day of September 2014, we are required to make principal payments equal to $1.8 million on the last business day of each March, June, September and December. In addition, subject to certain exceptions, we are required to repay the Term Loan in certain circumstances, including with 50% (which percentage will be reduced to 25% and 0%, as applicable, subject to attaining certain senior secured net leverage ratios) of its annual excess cash flow, as defined in the Term Loan agreement. The Term Loan also contains repayments provision related to non-ordinary course asset or property sales when certain conditions are met, and related to the incurrence of debt that is not permitted under the agreement.

~~On May 28, 2010, ATDI issued $200.0 million in aggregate principal amount of its 11.50%~~ Senior ~~Subordinated~~Secured Notes due 2018 (the “Initial Subordinated Notes”). Interest on the Initial Subordinated Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2010.

InOn ~~connection~~May 16, ~~with~~2014, ~~the~~ATDI ~~consummation~~delivered ofa ~~the~~Notice ~~Hercules~~of ~~acquisition,~~Full ~~on January 31~~Redemption, ~~2014,~~providing ~~ATDI~~for ~~completed~~ the ~~sale~~redemption ~~to certain purchasers~~ of ~~an additional~~all $~~225~~250.0 million in aggregate principal amount of ~~its~~the 119.5075% Senior ~~Subordinated~~Secured Notes ~~due 2018~~ (~~the~~ “~~Additional~~Senior ~~Subordinated~~Secured Notes”) ~~and~~on June 16, ~~collectively~~2014 ~~with~~ (the ~~Initial Subordinated Notes, the~~ “~~Senior~~Redemption ~~Subordinated Notes~~Date”). ~~The~~at ~~Additional~~a ~~Subordinated~~price ~~Notes~~equal ~~were~~to ~~issued~~104.875% atof athe ~~discount from their~~ principal amount atof ~~maturity~~the ~~and~~Senior ~~generated~~Secured ~~net~~Notes ~~proceeds~~redeemed ofplus ~~approximately~~accrued ~~$221.1~~and ~~million.~~unpaid ~~The~~interest, if ~~Additional~~any, ~~Subordinated~~to, ~~Notes~~but ~~will~~excluding ~~accrete~~the ~~based~~Redemption onDate an(the ~~effective interest~~“Redemption ~~rate~~Price”). ofOn ~~12%~~June 16, to2014, anusing ~~aggregate~~proceeds ~~accreted~~from ~~value~~the ofIncremental ~~$225.0~~Term ~~million~~Loan, the ~~full~~Senior ~~principal~~Secured ~~amount~~Notes atwere ~~maturity~~redeemed for a Redemption Price of $263.2 million.

47Senior Subordinated Notes

~~Table~~On May 28, 2010, ATDI issued $200.0 million in aggregate principal amount of ~~Contents~~its 11.50% Se

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Filing Compare · American Tire Distributors Holdings, Inc.