UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	~~September~~March 2627, ~~2014~~2015
or
o	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:	001-32380

INTERLINE BRANDS, INC.

(Exact name of registrant as specified in its charter)



Delaware		03-0542659
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

701 San Marco Boulevard Jacksonville, Florida		32207
(Address of principal executive offices)		(Zip Code)

(904) 421-1400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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 ý No o

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 ý No o

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.



	Large accelerated filer o		Accelerated filer o

	Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of ~~October~~April 2428, ~~2014~~2015, ~~there~~the ~~were~~number ~~1,482,209~~of shares outstanding of the registrant’'s common stock ~~issued and outstanding~~, par value $0.01. per share, was 1,499,280.

Table of Contents

INTERLINE BRANDS, INC. AND SUBSIDIARIES

TABLE OF CONTENTS - FORM 10-Q

ITEM		PAGE
	PART I - FINANCIAL INFORMATION
1.	Financial Statements (Unaudited)
	Consolidated Balance Sheetsas of September 26, 2014 and December 27, 2013	3
	Consolidated Balance Sheetsas of March 27, 2015 and December 26, 2014	3
	Consolidated Statements of Operationsfor the three and nine months ended September 26, 2014 and September 27, 2013	4
	Consolidated Statements of Operationsfor the three months ended March 27, 2015 and March 28, 2014	4
	Consolidated Statements of Other Comprehensive Income (Loss)for the three and nine months ended September 26, 2014 and September 27, 2013	5
	Consolidated Statements of Other Comprehensive Lossfor the three months ended March 27, 2015 and March 28, 2014	5
	Consolidated Statements of Cash Flows for the nine months ended September 26, 2014 and September 27, 2013	6
	Consolidated Statements of Cash Flows for the three months ended March 27, 2015 and March 28, 2014	6
	Notes to Unaudited Consolidated Financial Statements	8
2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	1813
3.	Quantitative and Qualitative Disclosures About Market Risk	3324
4.	Controls and Procedures	3426
	PART II - OTHER INFORMATION
1.	Legal Proceedings	3527
1A.	Risk Factors	3527
2.	Unregistered Sales of Equity Securities and Use of Proceeds	3527
3.	Defaults Upon Senior Securities	3628
4.	Mine Safety Disclosures	3628
5.	Other Information	3628
6.	Exhibits	3729
	Signatures

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PART I - FINANCIAL INFORMATION

ITEM 1. Financial Statements.

INTERLINE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share data)

	September 26, 2014			December 27, 2013
	March 27, 2015			December 26, 2014
ASSETS
Current Assets:
Cash and cash equivalents	$	6,~~127~~576		$	6,~~102~~064
Accounts receivable - trade (net of allowance for doubtful accounts of $4,127 and $3,595 as of September 26, 2014 and December 27, 2013, respectively)	197,388			165,420
Accounts receivable - trade (net of allowance for doubtful accounts of $4,301 and $4,190 as of March 27, 2015 and December 26, 2014, respectively)	192,243			177,878
Inventories	~~287~~317,~~759~~545			~~276~~302,~~341~~743
Prepaid expenses and other current assets	3836,~~950~~378			4042,~~936~~596
Income taxes receivable	—8,082			134,~~563~~139
Deferred income taxes	1530,~~171~~259			1530,~~179~~290
Total current assets	~~545~~591,~~395~~083			~~517~~563,~~541~~710
Property and equipment, net	54,~~113~~587			5854,~~665~~844
Goodwill	486,439			486,439
Other intangible assets, net	~~355~~333,~~414~~726			~~445~~345,~~046~~314
Other assets	109,~~303~~143			10,~~042~~315
Total assets	$	1,~~451~~474,~~664~~978		$	1,~~517~~460,~~733~~622
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	~~136~~121,~~418~~127		$	~~123~~126,~~915~~116
Accrued expenses and other current liabilities	7486,~~385~~311			6996,~~939~~272
Accrued interest	86,~~231~~650			1917,~~755~~305
Income taxes payable	1,951			—
Current portion of long-term debt	3,500			83,500
Current portion of long-term debt	3,500			—
Current portion of capital leases	1			10
Current portion of capital leases	24			231
Total current liabilities	217,589			323,203
Total current liabilities	224,509			213,840
Long-Term Liabilities:
Deferred income taxes	~~112~~117,~~768~~844			~~145~~116,~~584~~358
Long-term debt, net of current portion	~~789~~824,~~943~~255			~~798~~702,~~347~~099
Capital leases, net of current portion	—			10
Other liabilities	2,243			2,445
Other liabilities	2,519			3,099
Total liabilities	1,161,931			1,144,105
Total liabilities	1,129,739			1,160,880
Commitments and contingencies (see Note 4)
Commitments and contingencies (see Note 6)
Stockholders' Equity:
Common stock; $0.01 par value, 2,500,000 authorized; 1,479,463 and 1,478,151 shares issued and outstanding as of September 26, 2014 and December 27, 2013, respectively	15			15
Common stock; $0.01 par value, 2,500,000 authorized; 1,502,092 and 1,501,418 shares issued and 1,499,053 and 1,499,142 shares outstanding as of March 27, 2015 and December 26, 2014, respectively	15			15
Additional paid-in capital	~~395~~401,~~175~~286			~~392~~400,~~201~~231
Accumulated deficit	(7285,~~257~~612		)	(3481,~~784~~856		)
Accumulated other comprehensive loss	(~~879~~1,697		)	(~~579~~1,165		)
Treasury stock, at cost, 415 shares held as of September 26, 2014 and none as of December 27, 2013	(129		)	—
Treasury stock, at cost, 3,039 and 2,276 shares held as of March 27, 2015 and December 26, 2014, respectively	(945		)	(708		)
Total stockholders' equity	~~321~~313,~~925~~047			~~356~~316,~~853~~517
Total liabilities and stockholders' equity	$	1,~~451~~474,~~664~~978		$	1,~~517~~460,~~733~~622
See accompanying notes to unaudited consolidated financial statements.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands)

			Three Months Ended						~~Nine Months Ended~~
			September 26, 2014			September 27, 2013			September 26, 2014			September 27, 2013
			March 27, 2015			March 28, 2014
Net sales			$	~~442~~411,~~445~~747		$	~~421~~392,~~541~~469		$	~~1,260,456~~		$	~~1,208,000~~
Cost of sales			~~288~~269,~~046~~688			~~274~~256,~~563~~679			~~824,697~~			~~790,993~~
	Gross profit		~~154~~142,~~399~~059			~~146~~135,~~978~~790			~~435,759~~			~~417,007~~
Operating Expenses:
	Selling, general and administrative expenses		~~113~~115,~~480~~875			~~130~~113,~~052~~975			~~341,695~~			~~347,288~~
	Depreciation and amortization		1413,~~369~~110			12,~~531~~604			~~39,567~~			~~37,583~~
	Merger related expenses		—			~~303~~102			~~102~~			~~1,275~~
		Total operating expenses	~~127~~128,~~849~~985			~~142~~126,~~886~~681			~~381,364~~			~~386,146~~
Operating income			2613,~~550~~074			49,~~092~~109			~~54,395~~			~~30,861~~
Impairment of other intangible assets			—			—			(67,500		)	—
Loss on extinguishment of debt, net			(6,655		)	(4,153		)
Loss on extinguishment of debt, net			—			—			(4,172		)	—
Interest expense			(12,867		)	(15,684		)
Interest expense			(14,518		)	(15,753		)	(44,708		)	(47,356		)
Interest and other income			188			192
Interest and other income			291			448			688			1,249
	Loss before income taxes		(6,260		)	(10,536		)
	Income (loss) before income taxes		12,323			(11,213		)	(61,297		)	(15,246		)
Income tax benefit			(2,504		)	(4,442		)
Income tax expense (benefit)			5,125			(4,007		)	(23,824		)	(7,732		)
	Net loss		$	(3,756	)	$	(6,094	)
	Net income (loss)		$	7,198		$	(7,206	)	$	(37,473	)	$	(7,514	)
See accompanying notes to unaudited consolidated financial statements.
See accompanying notes to unaudited consolidated financial statements.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (~~LOSS) (UNAUDITED) (in thousands)

		Three Months Ended						~~Nine Months Ended~~
		September 26, 2014			September 27, 2013			September 26, 2014			September 27, 2013
		March 27, 2015			March 28, 2014
Net income (loss)		$	7,198		$	(7,206	)	$	(37,473	)	$	(7,514	)
Net loss		$	(3,756	)	$	(6,094	)
Other comprehensive (loss) income, net of tax:
Other comprehensive loss, net of tax:
	Foreign currency translation adjustments	(~~331~~532		)	~~159~~(240		)	~~(300~~		)	~~(259~~		)
Other comprehensive (loss) income		(331		)	159			(300		)	(259		)
Other comprehensive loss		(532		)	(240		)
Comprehensive income (loss)		$	6,867		$	(7,047	)	$	(37,773	)	$	(7,773	)
Comprehensive loss		$	(4,288	)	$	(6,334	)
See accompanying notes to unaudited consolidated financial statements.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

				Nine Months Ended
				Three Months Ended
				September 26, 2014			September 27, 2013
				March 27, 2015			March 28, 2014
Cash Flows from Operating Activities:
	Net loss			$	(373,~~473~~756	)	$	(76,~~514~~094	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization		3913,~~567~~110			3712,~~583~~604
		Impairment of other intangible assets		67,500			—
		Amortization of deferred lease incentive obligation		(189		)	(211		)
		Amortization of deferred lease incentive obligation		(622		)	(633		)
		Amortization of deferred debt financing costs		986			987
		Amortization of deferred debt financing costs		3,129			2,836
		Amortization of debt discount (premium)		31			(539		)
		Amortization of debt discount (premium)		(476		)	(2,342		)
		Tender premiums and expenses related to debt extinguishments		4,043			18,491
		Tender premiums and expenses on OpCo Notes		18,510			—
		Write-off of unamortized OpCo Notes fair value adjustment		—			(17,803		)
		Write-off of unamortized OpCo Notes fair value adjustment		(17,803		)	—
		Write-off of deferred debt issuance costs		2,612			3,465
		Write-off of deferred debt issuance costs		3,465			—
		Share-based compensation		961			692
		Share-based compensation		2,591			3,933
		Excess tax benefits from share-based compensation		9			—
		Deferred income taxes		~~(32~~1,~~809~~517		)	~~(13~~6,~~038~~018		)
		Provision for doubtful accounts		~~2,186~~290			~~1,816~~453
		Loss (gain) on disposal of property and equipment		42			(1		)
		Gain on disposal of property and equipment		(13		)	—
		Other		~~(63~~209		)	~~(300~~9		)
	Changes in assets and liabilities:
		Accounts receivable - trade		(3414,~~210~~759		)	(3012,~~381~~273		)
		Inventories		(1114,~~518~~967		)	~~(11~~1,~~768~~366		)
		Prepaid expenses and other current assets		16,~~842~~214			~~(830~~8,251		)
		Other assets		~~(319~~1,162		)	(9178		)
		Accounts payable		13(5,~~051~~407		)	10(8,~~650~~743		)
		Accrued expenses and other current liabilities		4(7,~~397~~105		)	17(2,~~525~~411		)
		Accrued interest		(1110,~~524~~655		)	(211,~~026~~559		)
		Income taxes		15(3,~~511~~956		)	5(2,~~899~~607		)
		Other liabilities		(13		)	(~~226~~22		)
			Net cash provided by operating activities	24,961			11,092
			Net cash used in operating activities	(29,676		)	(10,004		)
Cash Flows from Investing Activities:
		Purchases of property and equipment, net		(135,~~254~~509		)	(144,~~415~~398		)
			Net cash used in investing activities	(135,~~254~~509		)	(144,~~415~~398		)
Cash Flows from Financing Activities:
		Proceeds from ABL Facility		82164,000			~~104~~42,000
		Payments on ABL Facility		(~~116~~41,000		)	(~~111~~47,~~500~~000		)
		Proceeds from issuance of Term Loan Facility, net		~~349,125~~—			—349,125
		Payments on Term Loan Facility		(~~1,750~~875		)	—
		Payment of deferred debt financing costs		(8,024		)	(228		)
		Partial redemption of HoldCo Notes		(80,000		)	—
		Repayment of OpCo Notes		~~(300,000~~—		)	—(300,000		)
		Payment of tender premiums and expenses on OpCo Notes		(18,510		)	—
		Payment of tender premiums and expenses related to debt extinguishments		(4,043		)	(18,491		)
		Increase in purchase card payable, net		1,419			1,845
		Payment of deferred debt financing costs		(71		)	(7,140		)
		Payments on capital lease obligations		(145		)	(399		)
		Decrease in purchase card payable, net		(1,853		)	(306		)
		Proceeds from issuance of common stock		365			800
		Payments on capital lease obligations		(9		)	(79		)
			Net cash used in financing activities	(11,520		)	(5,482		)
		Proceeds from issuance of common stock		—			140
Effect of exchange rate changes on cash and cash equivalents				(162		)	(128		)
		Excess tax benefits from share-based compensation		(9		)	—
Net increase (decrease) in cash and cash equivalents				25			(8,933		)
		Purchases of treasury stock		(134		)	—
Cash and cash equivalents at beginning of period				6,102			15,801
			Net cash provided by financing activities	36,006			18,249
Cash and cash equivalents at end of period				$	6,127		$	6,868
Effect of exchange rate changes on cash and cash equivalents				(309		)	(123		)
Net increase in cash and cash equivalents				512			3,724
Cash and cash equivalents at beginning of period				6,064			6,102
Cash and cash equivalents at end of period				$	6,576		$	9,826

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), CONTINUED

(in thousands)

		Nine Months Ended
		Three Months Ended
		September 26, 2014			September 27, 2013
		March 27, 2015			March 28, 2014
Supplemental Disclosure of Cash Flow Information:
Cash paid (received) during the period for:
	Interest	$	5322,~~480~~459		$	4826,~~714~~779
	Income taxes, net of refunds	~~(6,510~~217		)	(~~313~~7,851		)
Schedule of Non-Cash Investing and Financing Activities:
	Capital expenditures incurred but not yet paid	~~433~~2,038			~~603~~1,095
	Accrued deferred debt issuance costs	—			849
See accompanying notes to unaudited consolidated financial statements.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Interline Brands, Inc., a Delaware corporation, and its subsidiaries (“Interline” or the “Company”) is a leading national distributor and direct marketer of broad-line maintenance, repair and operations (“MRO”) products into the facilities maintenance end-market. The Company sells janitorial and sanitation (“JanSan”) supplies, plumbing, heating, ventilation and air conditioning (“HVAC”), hardware, electrical, appliances, security, and other MRO products. Interline’s diverse customer base of over 100,000 customers consists of institutions, such as educational, lodging, health care, and government facilities; multi-family housing, such as apartment complexes; and residential, including professional contractors, and plumbing and hardware retailers. Interline's customers range in size from individual contractors and independent hardware stores to apartment management companies and national purchasing groups.

The Company currently markets and sells its products primarily through ~~thirteen~~eight ~~brands~~targeted across three primary end markets. During the second quarter of 2014, the Company made a strategic marketing decision to simplify its brand structure within the institutional end market, which will result in fewer brands ~~serving this customer base~~. The Company utilizes a variety of sales channels, including a direct field sales force, inside sales representatives, a direct marketing program, brand-specific websites, a national account sales program and various supply chain programs. The Company delivers its products through its network of distribution centers and professional contractor showrooms located throughout the United States, Canada and Puerto Rico, as well as vendor managed inventory locations at large professional contractor and institutional customer locations, and its dedicated fleet of trucks and third-party carriers. Through its broad distribution network, the Company is able to provide next-day delivery service to approximately 98% of the U.S. population and same-day delivery service to most major metropolitan markets in the U.S.

Interline Brands, Inc. is the holding company of the Interline group of businesses, including its principal operating subsidiary, Interline Brands, Inc., a New Jersey corporation (“Interline New Jersey”).

Basis of Presentation

On September 7, 2012 (the "Merger Date"), pursuant to an Agreement and Plan of Merger dated as of May 29, 2012, Isabelle Holding Company Inc., a Delaware corporation (“Parent”), and Isabelle Acquisition Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. Immediately following the effective time of the Merger, Parent was merged with and into the Company, with the Company surviving (the "Second Merger"). Prior to the Merger Date, the Company operated as a public company with its common stock traded on the New York Stock Exchange. As a result of the Merger, Interline's common stock became privately held.

The accompanying unaudited interim consolidated financial statements include the accounts of Interline Brands, Inc. and all of its wholly-owned subsidiaries. These statements have been prepared in accordance with ~~U.S.~~United States generally accepted accounting principles ("U.S. GAAP") and instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in the financial statements included in the Company’s Annual Report on Form 10-K have been condensed or omitted. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 2726, ~~2013~~2014 filed with the SEC.

All adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented have been recorded. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include valuation reserves for accounts receivable and income taxes, lower of cost or market and obsolescence reserves for inventory, reserves for self-insurance programs, legal contingencies, and valuation of goodwill and other intangible assets. Actual results could differ from those estimates.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Reclassifications

The Company has reclassified certain items previously reported in the financial statements ~~and accompanying notes~~ in order to conform to current year presentation. The reclassifications were made within current assets and ~~have~~had no impact on working capital.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment on an annual basis or when an event occurs or circumstances change that would indicate that the fair value of the long-lived asset has fallen below its carrying amount. Such evaluations include an assessment of customer retention, cash flow projections and other factors the Company believes are relevant. The discounted future expected net cash flows of each identifiable asset are used to measure impairment losses. The determination of whether long-lived assets have become impaired involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the long-lived asset. Changes in the Company's strategy or assumptions, environmental or other regulations, and/or market conditions could significantly impact these judgments. The Company monitors market conditions and other factors to determine if interim impairment tests are necessary.

During the second quarter of fiscal year 2014, the Company recorded non-cash charges of $67.5 million related to the impairment of certain indefinite-lived trademark assets. These impairments were primarily due to a strategic marketing decision to phase out certain brand names through the remainder of the fiscal year and market the related products under a new consolidated brand name which resulted in a change in the expected useful life of the intangible assets. The impairment charges were determined by comparing the fair value of the trademarks, derived using discounted cash flow analyses, to the current carrying value. The Company has evaluated whether other trademark assets not associated with the rebranding still remain indefinite-lived, noting no other events have occurred that would cause an impairment of the other trademark assets or any other long-lived assets including goodwill. Refer to Note 3 for additional disclosures regarding the impairment charges.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Disclosure about how fair value is determined for assets and liabilities is based on a hierarchy established from the significant levels of inputs as follows:


Level 1	quoted prices in active markets for identical assets or liabilities;


Level 2	quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or


Level 3	unobservable inputs, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The fair value of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate the carrying amount due to the short maturities of these items. AsThe ~~previously~~fair ~~discussed,~~value of the Company’s ~~recorded~~ABL ~~nonrecurring~~Facility, ~~charges~~Term ofLoan ~~$67.5~~Facility, ~~million~~and ~~related~~HoldCo toNotes ~~the~~is ~~impairment~~determined ofby ~~certain~~quoted ~~indefinite-lived~~market ~~trademark~~prices ~~assets~~and ~~during~~other ~~the~~inputs ~~second~~that ~~quarter~~are ofobservable ~~2014.~~for Inthese ~~conjunction with the Company's impairment analysis~~liabilities, ~~these~~which ~~trademark~~are ~~assets were remeasured at their fair value of $3.6 million using~~ Level 3,2 ~~significant unobservable~~ inputs. ~~Key~~The ~~assumptions~~carrying ~~include~~amount ~~projected revenue attributable to the products~~ and~~/or~~ ~~services~~fair ~~that~~value ~~utilize~~of the ~~trademark~~ABL ~~assets~~Facility, ~~their~~Term ~~expected~~Loan ~~economic life~~Facility, ~~a discount rate of 13%~~ and aHoldCo ~~royalty~~Notes ~~rate~~as ~~range~~ of ~~0.6%~~March 27, to2015 ~~1.5%.~~and ~~Refer~~December 26, to2014 ~~Note~~were 3as ~~for~~follows ~~additional~~(in ~~disclosures regarding the impairment charges.~~thousands):



	March 27, 2015				December 26, 2014
Description	Carrying Amount		Fair Value		Carrying Amount		Fair Value
ABL Facility	$	197,000	$	197,901	$	74,000	$	74,370
Term Loan Facility⁽¹⁾	345,755		343,901		346,599		333,480
HoldCo Notes	285,000		299,250		365,000		379,600

____________________


(1)	As of March 27, 2015 and December 26, 2014, the carrying amount of the Term Loan Facility included an unamortized original issue discount of $0.7 million and $0.8 million, respectively.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of the Company’s ABL Facility, Term Loan Facility, OpCo Notes, and HoldCo Notes is determined by quoted market prices and other inputs that are observable for these liabilities, which are Level 2 inputs. The carrying amount and fair value of the ABL Facility, Term Loan Facility, OpCo Notes, and HoldCo Notes as of September 26, 2014 and December 27, 2013 were as follows (in thousands):

	September 26, 2014				December 27, 2013
Description	Carrying Amount		FairValue		Carrying Amount		FairValue
ABL Facility	$	81,000	$	81,485	$	115,000	$	115,098
Term Loan Facility(1) (2)	347,443		343,026		—		—
OpCo Notes(1)	—		—		318,347		317,625
HoldCo Notes	365,000		378,688		365,000		398,763

____________________

(1) In March of 2014, Interline New Jersey entered into the Term Loan Facility and used a portion of the proceeds to finance the redemption of the OpCo Notes and discharged its remaining obligations thereunder.

(2) As of September 26, 2014, the carrying amount of the Term Loan Facility included an unamortized original issue discount of $0.8 million.

Segment Information

The Company has one operating segment and, therefore, one reportable segment, the distribution of MRO products into the facilities maintenance end-market. The Company’s revenues and assets outside the United States are not significant. The Company’s net sales by product category were as follows (in thousands):

Three Months Ended

~~Nine Months Ended~~

Product Category(1)

~~September~~March 2627, ~~2014~~2015

~~September~~March 2728, ~~2013~~2014

~~September 26, 2014~~

~~September 27, 2013~~

JanSan

~~197~~184,~~801~~097

~~189~~178,~~148~~867

~~574,063~~

~~554,504~~

Plumbing

76,~~026~~002

72,~~403~~431

~~222,976~~

~~214,971~~

Hardware, tools and fixtures

3837,~~081~~701

3435,~~428~~625

~~109,204~~

~~98,407~~

HVAC

3626,~~757~~250

3623,~~159~~798

~~97,108~~

~~97,678~~

Electrical and lighting

2322,~~598~~939

2220,~~656~~993

~~66,960~~

~~63,773~~

Appliances and parts

2622,~~507~~981

2320,~~727~~528

~~69,718~~

~~62,039~~

Security and safety

1817,~~743~~840

17,~~878~~202

~~53,830~~

~~52,150~~

Other

2423,~~932~~937

2523,~~142~~025

~~66,597~~

~~64,478~~

Net sales

~~442~~411,~~445~~747

~~421~~392,~~541~~469

~~1,260,456~~

~~1,208,000~~

____________________


(1)	The Company continually refines its product classification groupings and, as a result, stock keeping units are periodically realigned within product categories. Therefore, the prior periods in these tables have been recast to be consistent with current presentation.

Recently Issued Accounting Guidance

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue From Contracts With Customers ("ASU 2014-09"), that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. The company is currently assessing the impact that this standard will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest — Imputation of Interest ("ASU 2015-03"). The amendments in ASU 2015-03 require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The amendments in ASU 2015-03 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. Entities are required to apply the amendments in ASU 2015-03 on a retrospective basis wherein the balance sheet of each individual period presented should be adjusted to reflect the amendment. Further, upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. This ASU is not expected to have a material impact on the Company's consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, Intangibles — Goodwill and Other — Internal-Use Software ("ASU 2015-05"). The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments in ASU 2015-05 are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~Recently~~those ~~Issued~~fiscal ~~Accounting~~years, ~~Guidance~~with early adoption permitted. Entities have the option to apply the amendments in ASU 2015-05 on a prospective or retrospective basis. Further, upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. This ASU is not expected to have a material impact on the Company's consolidated financial statements.

In March 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-05"). The amendments contained within this guidance clarify the applicable guidance for the release of the cumulative translation adjustment under current U.S. GAAP when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The amendments in ASU 2013-05 are effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter, with early adoption permitted. The amendments should be applied prospectively to derecognition events occurring after the effective date, and prior periods should not be adjusted. This ASU is not expected to have a material impact on the Company's consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09, Revenue From Contracts With Customers ("ASU 2014-09"), that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The amendments in this update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The company is currently assessing the impact that this standard will have on its consolidated financial statements.

In June 2014, the FASB issued ASU No.2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period ("ASU 2014-12"). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification Topic No. 718, “Compensation — Stock Compensation” (“ASC 718”), as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in this update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. Entities may apply the amendments in ASU 2014-12 either: (a) prospectively to all awards granted or modified after the effective date; or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. This ASU is not expected to have a material impact on the Company's consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40)-Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance to U.S. GAAP about management’s responsibility to evaluate whether there is a substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Specifically, ASU 2014-15 (1) defines the term substantial doubt, (2) requires an evaluation of every reporting period including interim periods, (3) provides principles for considering the mitigating effect of management’s plan, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) requires an express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for annual periods beginning after December 15, 2016 and interim periods within those reporting periods. Earlier adoption is permitted. This ASU is not expected to have a material impact on the Company's consolidated financial statements.

Other accounting standards that have been recently issued by the FASB are not expected to have a material impact on the Company’s consolidated financial statements.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Recently Adopted Accounting Guidance

In ~~February~~March 2013, the FASB issued ASU No. 2013-0405, ~~Liabilities~~Parent’s ~~(Topic~~Accounting ~~405)~~for -the ~~Obligations~~Cumulative ~~Resulting~~Translation ~~from~~Adjustment ~~Joint~~upon ~~and~~Derecognition ~~Several~~of ~~Liability~~Certain ~~Arrangements~~Subsidiaries ~~for~~or ~~Which~~Groups ~~the~~of ~~Total~~Assets ~~Amount~~within ofa ~~the~~Foreign ~~Obligation~~Entity isor ~~Fixed~~of atan ~~the~~Investment ~~Reporting~~in ~~Date~~a Foreign Entity ("ASU 2013-0405"). The ~~objective of the~~ amendments incontained within this ~~update is to provide~~ guidance ~~for~~clarify the ~~recognition,~~applicable ~~measurement,~~guidance ~~and disclosure of obligations resulting from joint and several liability arrangements~~ for ~~which~~ the ~~total~~release ~~amount~~ of the ~~obligation~~cumulative ~~within~~translation ~~the~~adjustment ~~scope~~under ofcurrent ~~this guidance is fixed at the reporting date, except for obligations addressed within existing~~ U.S. GAAP. ~~Examples~~when ~~of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. This guidance requires~~ an entity ceases to ~~measure~~have ~~obligations~~a ~~resulting~~controlling ~~from~~financial ~~joint~~interest ~~and~~in ~~several~~a ~~liability~~subsidiary ~~arrangements~~or ~~for~~group ~~which the total amount~~ of ~~the~~assets ~~obligation~~that ~~within the scope~~ is ~~fixed~~a atbusiness ~~the~~within ~~reporting~~a ~~date,~~foreign ~~as the sum of the amount the reporting~~ entity ~~agreed to pay on the basis of its arrangement amount its co-obligors, plus any additional amount the entity expects to pay on behalf of its co-obligors~~. The ~~guidance also requires an entity to disclose the nature and amount of the obligations as well as other information about those obligations. The~~ amendments in ASU 2013-0405 are effective prospectively for ~~fiscal~~the ~~years,~~first ~~and~~annual ~~interim~~period ~~periods within those years,~~ beginning after December 15, ~~2013~~2014, and ~~should~~interim beand ~~retrospectively~~annual ~~applied to all prior~~ periods ~~presented~~thereafter, ~~for~~with ~~those~~early ~~obligations~~adoption ~~resulting~~permitted. ~~from~~The ~~joint~~amendments ~~and~~should ~~several~~be ~~liability~~applied ~~arrangements~~prospectively ~~within~~to ~~the~~derecognition ~~ASU's~~events ~~scope~~occurring ~~that~~after ~~exist at~~ the ~~beginning~~effective ofdate, anand ~~entity's~~prior ~~fiscal year of adoption. An entity may elect to use hindsight for the comparative~~ periods, ~~and~~ should ~~disclose~~not ~~that~~be ~~fact~~adjusted. ~~Early adoption was permitted.~~ Effective December 2827, ~~2013~~2014, the Company adopted this ASU, which did not have a material impact on the Company's consolidated financial statements.

In July 2013, the FASB issued ASU No. 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"). The objective of this ASU is to eliminate the diversity in practice on how entities present unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 will require entities to present an unrecognized tax benefit, or a portion of an unrecognized tax benefit, as a reduction to a deferred tax asset (with certain exceptions) for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, with early adoption permitted. The amendments should be applied prospectively, although retrospective application was permitted. Effective December 28, 2013, the Company adopted this ASU, which did not have a material impact on the Company's consolidated financial statements.

2. ACCOUNTS RECEIVABLE

The Company's trade accounts receivable consist primarily of individual accounts, none of which is individually significant. Trade receivables are inherently exposed to credit risk, and thus the Company monitors the creditworthiness of its customers on an ongoing basis and provides a reserve for estimated uncollectible accounts. If the financial condition of the Company’s customers were to deteriorate, increases in its allowance for doubtful accounts may be needed.

The activity in the allowance for doubtful accounts consisted of the following (in thousands):

Balance at December 27, 2013

Charged to Expense

Deductions(1)

Balance at September 26, 2014

Balance at December 26, 2014

Charged to Expense

Deductions(1)

Balance at March 27, 2015

34,~~595~~190

~~2,186~~290

(~~1,654~~179

)

4,~~127~~301

____________________


(1)	Accounts receivable previously charged to expense, written-off as uncollectible, net of recoveries.

3. ~~OTHER INTANGIBLE ASSETS~~DEBT

~~During~~The ~~the second quarter of fiscal year 2014, the~~ Company's ~~recorded~~outstanding ~~non-cash~~debt ~~charges~~consisted of ~~$67.5 million related to~~ the ~~impairment~~following ofas certain indefinite-lived trademark assets. These impairments were primarily due to a strategic marketing decision to phase out certain brand names and market the related products under a new consolidated brand name. This decision resulted in a change in the expected useful life of ~~the associated trademark assets. The impairment charges were determined by comparing the fair value of the trademarks~~March 27, ~~derived~~2015 ~~using~~and ~~a discounted cash flow analysis based on the income approach~~December 26, ~~relief~~2014 ~~from~~(in royalty method, to the current carrying value. Prior to the impairment analysis the associated trademarks had a carrying value of $71.1 million, and after the impairment charge the associated trademarks had a remaining carrying value of $3.6 million which will be amortized over a definite life of six months. thousands):



	March 27, 2015		December 26, 2014
ABL Facility	$	197,000	$	74,000
Term Loan Facility⁽¹⁾	345,755		346,599
HoldCo Notes	285,000		365,000
Total debt	$	827,755	$	785,599
Less: Current portion	3,500		83,500
Long-term debt	$	824,255	$	702,099

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the net book value information related to other intangible assets as of September 26, 2014 and December 27, 2013 (in thousands):

(in thousands)		September 26, 2014		December 27, 2013
Indefinite-lived intangibles assets:
	Trademarks	114,500		$	185,600
Definite-lived intangible assets:
	Trademarks	1,800		—
	Customer relationships	215,725		237,488
	Deferred debt financing costs	23,389		21,958
	Other intangible assets, net	$	355,414	$	445,046

4. DEBT

The Company's outstanding debt consisted of the following as of September 26, 2014 and December 27, 2013 (in thousands):

	September 26, 2014		December 27, 2013
ABL Facility	$	81,000	$	115,000
Term Loan Facility(1)	347,443		—
OpCo Notes(2)	—		318,347
HoldCo Notes	365,000		365,000
Total debt	$	793,443	$	798,347
Less: Current portion	3,500		—
Long-term debt	$	789,943	$	798,347

____________________

(1) AsThe ~~of September 26, 2014, the~~ Term Loan Facility included an unamortized original issue discount of $0.7 million and $0.8 million as of March 27, 2015 and December 26, 2014, respectively.

~~(2)~~ As of ~~December~~ March 27, ~~2013,~~2015 ~~the~~and ~~OpCo~~December 26, ~~notes~~2014, ~~included~~respectively, anInterline ~~unamortized~~New ~~fair~~Jersey ~~value~~had ~~premium of~~ $18105.36 million ~~recorded~~and as$209.7 amillion ~~result~~available ofunder the ~~Merger~~ABL Facility. OnThere ~~March~~were ~~26,~~$197.0 ~~2014,~~million ~~Interline~~and ~~New~~$74.0 ~~Jersey~~million ~~discharged~~borrowings ~~its~~under ~~remaining~~the ~~obligations~~revolving ~~under~~credit ~~the~~facilities ~~OpCo~~as ~~Notes.~~of

As of September 26, 2014 and December 27, 2013, respectively, Interline New Jersey had $183.8 million and $145.8 million available under the ABL Facility (as defined below). There were $81.0 million and $115.0 million borrowings under the revolving credit facilities as of September 26, 2014 and December 27, 2013, respectively, and total letters of credit issued under the revolving credit facilities of $10.2 million and $10.5 million as of the same dates.11

On March 17, 2014, Interline New Jersey completed the following financing transactions:

• entered into a first lien term loan under which Interline New Jersey incurred a term loan in an aggregate principal amount of $350.0 million (the "Term Loan Facility"); and

• amended the asset-based senior secured revolving credit facility, dated as of September 7, 2012 (the “ABL Facility”), by entering into the First Amendment to Credit Agreement to permit the incurrence of the Term Loan Facility and make other changes in connection with the refinancing (the “First ABL Facility Amendment”).

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

~~The proceeds from the Term Loan Facility were used to finance the redemption of Interline New Jersey's outstanding 7.50% Notes due 2018 (the "OpCo Notes")~~March 27, ~~the~~2015 ~~repayment of a portion of amounts outstanding under the ABL Facility~~ and ~~the~~December 26, ~~payment~~2014, ~~of related fees~~respectively, ~~costs~~ and ~~expenses.~~total Inletters ~~connection with the redemption~~ of ~~the~~credit ~~OpCo~~issued ~~Notes,~~under the ~~Company~~revolving ~~recorded~~credit afacilities ~~loss on early extinguishment~~ of ~~debt in the amount of~~ $410.2 million. ~~The loss was comprised of $18.5 million in consent solicitation, tender premium, call premium~~ and ~~related transaction costs less a non-cash benefit of~~ $1411.3 million ~~associated~~as ~~with the write-off~~ of the ~~unamortized~~same ~~fair value premium of $17~~dates.~~8 million less the write-off of the unamortized deferred debt financing costs of $3.5 million.~~

On ~~April~~December 830, 2014, ~~Interline~~the ~~New~~Company ~~Jersey~~used ~~further~~a ~~amended~~combination of cash on hand and borrowings under the recently amended ABL Facility byto ~~entering~~redeem ~~into~~$80.0 million of the ~~Second~~$365.0 ~~Amendment~~million tooutstanding ~~Credit~~aggregate ~~Agreement~~principal toamount ~~amend~~of ~~certain~~the ~~pricing~~HoldCo ~~terms~~Notes ~~applicable~~at toa redemption price of 105% of the ~~ABL~~outstanding ~~Facility~~aggregate principal amount to be redeemed, plus accrued and ~~extend~~unpaid interest through the ~~maturity~~redemption date. ofIn connection with the ~~ABL~~partial ~~Facility~~redemption toof ~~April~~the 8,HoldCo ~~2019~~Notes, atthe ~~which~~Company ~~date~~recorded ~~the~~a ~~principal~~loss ~~amount~~on ~~outstanding~~early ~~under~~extinguishment of debt in the ~~ABL~~amount ~~Facility~~of ~~will~~$6.7 bemillion. ~~due~~The ~~and~~loss ~~payable~~was comprised of $4.1 million in ~~full~~tender (premium and related transaction costs and the ~~“Second~~write-off ~~ABL~~of ~~Facility~~the ~~Amendment”)~~unamortized deferred debt issuance costs of $2.6 million.

~~Deferred~~Interline ~~financing~~New ~~costs~~Jersey ~~associated~~and ~~with~~ the ~~Term~~Company ~~Loan~~were ~~Facility,~~in ~~the~~compliance ~~First~~with ~~ABL~~all ~~Facility~~covenants ~~Amendment~~contained ~~and~~in the ~~Second~~ ABL Facility, ~~Amendment~~Term ~~totaled~~Loan ~~approximately~~Facility ~~$8.0~~and ~~million.~~HoldCo Notes as of March 27, 2015.

~~Interline~~4. ~~New~~COMMITMENTS ~~Jersey~~AND ~~and the Company were in compliance with all covenants contained in the ABL Facility, Term Loan Facility and HoldCo Notes as of September 26, 2014.~~CONTINGENCIES

ABL Facility Amendments

As amended by the First ABL Facility Amendment, Interline New Jersey and its restricted subsidiaries will be permitted under the ABL Facility to incur secured or unsecured indebtedness so long as (i) in the event that the proceeds thereof are used to redeem HoldCo Notes, the pro forma interest coverage ratio of Interline New Jersey and its restricted subsidiaries is at least 2.00:1.00 or (ii) in the event the proceeds thereof are used for another purpose, (A) if such indebtedness is secured on a second-lien or other junior basis or is unsecured, the pro forma total leverage ratio of Interline New Jersey and its restricted subsidiaries is less than or equal to 6.50:1.00, or (B) if such indebtedness is secured on a first-lien basis, the pro forma ratio of (x) consolidated first lien indebtedness of Interline New Jersey and its restricted subsidiaries and (y) consolidated EBITDA of Interline New Jersey and its restricted subsidiaries (such ratio, the “First Lien Leverage Ratio”) is less than or equal to 3.75:1.00.

The First ABL Facility Amendment also released the security interest previously granted by the Company to secure the ABL Facility, subject to a requirement that the Company re-pledge its assets to secure the ABL Facility in the event that the Company’s 10.00% / 10.75% Senior Notes due 2018 (the “HoldCo Notes”) are no longer outstanding. Accordingly, while the Company will guaranty both the Term Loan Facility and the ABL Facility, its assets will not be pledged to secure either such facility so long as the HoldCo Notes remain outstanding.

Obligations under the ABL Facility will continue to be guaranteed by the Company and each of the wholly-owned material subsidiaries of the co-borrowers under the ABL Facility. These obligations will be primarily secured, subject to certain exceptions, by a security interest in substantially all of the assets of Interline New Jersey and each of its wholly-owned material U.S. subsidiaries. This security interest will be comprised of a first-priority lien on generally all of the current assets (including accounts receivable and inventory) of Interline New Jersey and the other grantors, which assets secure the Term Loan on a second-priority basis, and a second-priority lien on generally all of the fixed assets of Interline New Jersey and the other grantors, which assets secure the Term Loan on a first-priority basis.

From the date of the Second ABL Facility Amendment through the end of Interline New Jersey’s first fiscal quarter after the closing date thereof, borrowings were subject to an interest rate equal to LIBOR plus 1.50% in the case of Eurodollar revolving loans, and an applicable base rate plus 0.50% in the case of Alternate Base Rate (“ABR”) loans. The principal balance outstanding under the ABL Facility may be voluntarily prepaid in advance, without penalty or premium, at any time in whole or in part, subject to certain breakage costs.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of the end of the first fiscal quarter following the closing of the Second ABL Facility Amendment, the interest rates applicable to obligations under the ABL Facility will be determined as of the end of each fiscal quarter in accordance with applicable rates set forth in the table below, which interest rates are generally 0.25% lower than the rates in effect prior to the Second ABL Facility Amendment:

	Revolver ABR Spread	Revolver Eurodollar Spread
Category 1
Greater than $150.0 million	0.25%	1.25%
Category 2
Greater than $75.0 million but less than or equal to $150.0 million	0.50%	1.50%
Category 3
Less than or equal to $75.0 million	0.75%	1.75%

period of four consecutive fiscal quarters ending on the last day of the fiscal quarter most recently ended is greater than 1.75:1.00. This step-down is currently available for Category 3 borrowings and will be available for Category 2 borrowings during the second fiscal quarter of 2015. As of September 26, 2014, the interest rate in effect with respect to the ABL Facility was 1.69% for the Eurodollar revolving loans and 3.75% for the ABR revolving loans.

The Second ABL Facility Amendment also revised the terms of the commitment fee payable by Interline New Jersey in respect of unutilized commitments, which will be equal to 0.375% per annum for the ABL Facility if utilization is less than 25.0% of the aggregate commitments and 0.25% per annum if the utilization of the ABL Facility exceeds 25.0% of the aggregate commitments.

Term Loan Facility

The initial aggregate principal amount of the Term Loan is equal to $350.0 million. The Term Loan Facility allows for incremental increases in an aggregate principal amount of up to (i) $100.0 million plus (ii) the amount as of the date of incurrence that would not cause the First Lien Leverage Ratio to exceed 3.75:1.00. The Term Loan Facility will mature on the earlier of (A) March 17, 2021 and (B) the date which is 91 days prior to the maturity date of the HoldCo Notes.

Obligations under the Term Loan Facility are guaranteed by the Company and each of the wholly-owned material U.S. subsidiaries of Interline New Jersey. These obligations are primarily secured, subject to certain exceptions, by a security interest in substantially all of the assets of Interline New Jersey and each of its wholly-owned material U.S. subsidiaries. This security interest is comprised of a first-priority lien on generally all of the fixed assets of Interline New Jersey and the other grantors, which assets secure the ABL Facility on a second-priority basis, and a second-priority lien on generally all of the current assets (including accounts receivable and inventory) of Interline New Jersey and the other grantors, which assets secure the ABL Facility on a first-priority basis. The assets held directly by the Company will not secure the Term Loan Facility, except that the Company will be required to grant a security interest in these assets in the event that the HoldCo Notes are no longer outstanding.

The Term Loan Facility will bear interest, at the borrower’s option, at (i) LIBOR subject to a minimum floor of 1.00%, plus 300 basis points ("LIBO Rate") or (ii) an ABR subject to a minimum floor of 2.0%, plus 200 basis points. In addition, at the closing of the Term Loan Facility, Interline New Jersey paid (in addition to customary fees) an upfront fee equal to 0.25% of the principal amount thereof. As of September 26, 2014, the interest rate in effect with respect to the Term Loan Facility was 4.00% for LIBO Rate borrowings and 5.25% for ABR borrowings.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Under the Term Loan Facility, Interline New Jersey may voluntarily prepay principal at any time and from time to time without penalty or premium, other than a 1.00% premium during the first six months following the closing date for re-pricing transactions only. The Term Loan Facility is due and payable in quarterly installments equal to 0.25% of the original principal amount, with the balance payable in one final installment at the maturity date. Additional provisions include the requirement to repay the Term Loan Facility with certain asset sale and insurance proceeds, certain debt proceeds and 50% of excess cash flow (reducing to 25% if the First Lien Leverage Ratio is no more than 3.00:1.00 and 0% if the First Lien Leverage Ratio is no more than 2.75:1.00).

The Term Loan Facility does not include any financial covenants; however, it does contain certain restrictive covenants (in each case, subject to exclusions) that limit, among other things, the ability of Interline and the restricted subsidiaries to:

• create, incur, assume or suffer to exist, any liens,

• create, incur, assume or permit to exist, directly or indirectly, any additional indebtedness,

• consolidate, merge, amalgamate, liquidate, wind up or dissolve themselves,

• convey, sell, lease, license, assign, transfer or otherwise dispose of their assets,

• make certain restricted payments,

• make certain investments,

• amend or otherwise alter the terms of documents related to certain subordinated indebtedness,

• enter into transactions with affiliates, and

• prepay certain indebtedness.

The covenants are subject to various baskets and materiality thresholds, with certain of the baskets to the restrictions on the repayment of subordinated indebtedness, restricted payments and investments being available only when the pro forma interest coverage ratio of Interline New Jersey and its restricted subsidiaries is at least 2.00:1.00.

The Term Loan Facility provides that Interline New Jersey and its restricted subsidiaries may incur secured or unsecured indebtedness so long as (i) (A) in the event that the proceeds thereof are used to redeem HoldCo Notes, the pro forma interest coverage ratio of Interline New Jersey and its restricted subsidiaries is at least 2.00:1.00 or (B) in the event the proceeds thereof are used for another purpose, the pro forma total leverage ratio of Interline New Jersey and its restricted subsidiaries is less than or equal to 6.50:1.00 and (ii) in the event any of such indebtedness is secured on a first-lien basis, the First Lien Leverage Ratio is less than or equal to 3.75:1.00.

The Term Loan Facility contains certain customary representations and warranties, affirmative covenants and events of default, including, among other things, payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness (subject to certain restrictions on cross-defaults to the financial covenant contained in the ABL Facility), certain events of bankruptcy, certain events under ERISA, judgment defaults, actual or asserted failure of any material guaranty or security documents supporting the Term Loan Facility to be in full force and effect and change of control. If such an event of default occurs, the Agent under the Term Loan Facility is entitled to take various actions, including the acceleration of amounts due and all other actions that a secured creditor is permitted to take following a default.

5. RELATED PARTY TRANSACTIONS

Transactions with Principal Owners

Subsequent to the Merger, all of the Company's outstanding stock became privately held by certain affiliates of Goldman, Sachs & Co., including GS Capital Partners VI Fund, L.P. and its related entities, and P2 Capital Partners, LLC and its related entities (collectively, the "Sponsors"), and certain members of Company management. In conjunction with the previously discussed financing transactions, the Company paid approximately $2.6 million to Goldman, Sachs & Co. for underwriting services rendered in connection with the Term Loan Facility and tender fees incurred as the lead agent on the OpCo Notes redemption. See Note 4. Debt for additional information related to the financing transactions and the related redemption of the OpCo Notes.

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INTERLINE BRANDS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. COMMITMENTS AND CONTINGENCIES

Contingent Liabilities

As of ~~September~~March 2627, ~~2014~~2015 and December 2726, ~~2013~~2014, the Company was contingently liable for outstanding letters of credit aggregating to $10.2 million and $1011.53 million, respectively.

Legal Proceedings

In May 2011, the Company was named as a defendant in the case of Craftwood Lumber Company v. Interline Brands, Inc. ("Craftwood Matter"), filed before the Nineteenth Judicial Circuit Court of Lake County, Illinois, and subsequently removed to the United States District Court for the Northern District of Illinois. The complaint alleges that the Company sent unsolicited fax advertisements to businesses nationwide in violation of the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 (“Junk Fax Act”). At the time of filing the initial complaint in state court, the plaintiff also filed a motion asking the Court to certify a class of plaintiffs comprised of businesses who allegedly received unsolicited fax advertisements from the Company during the four-year statute of limitations period. In its amended complaint filed in the United States District Court, the plaintiff seeks preliminary and permanent injunctive relief enjoining the Company from violating the Junk Fax Act, as well as statutory damages for each fax transmission found to be in violation of the Junk Fax Act. ~~The~~In ~~Company continues to vigorously contest class action certification and liability; however, in~~ light of the Company's assessment of potential legal risks associated with the Craftwood Matter, the Company recorded a pre-tax charge in the amount of $20.5 million in the third quarter of 2013. ~~The~~In ~~pre-tax~~the ~~charge~~fourth ~~was~~quarter ~~included~~of ~~in selling~~2014, ~~general~~the ~~and~~Company ~~administrative~~filed ~~expenses~~a injoint ~~the~~notice ~~statements~~ of ~~operations~~settlement ~~for~~with the ~~fiscal~~Court ~~year~~for ~~ended~~aggregate ~~December~~consideration ~~27,~~in ~~2013. As of September 26, 2014 and December 27, 2013,~~ the ~~litigation-related~~amount ~~accrual~~ of $2040.50 million. ~~was~~The ~~included~~settlement inhas ~~accrued~~been ~~expenses~~granted ~~and~~approval ~~other~~by ~~current liabilities in~~ the ~~consolidated~~Court ~~balance~~and ~~sheets.~~payment ~~Based upon the uncertain outcome~~ of the ~~Craftwood~~settlement ~~Matter,~~consideration ais ~~range~~expected ofto ~~reasonable~~occur ~~outcomes~~during ~~cannot~~the besecond ~~estimated~~or asthird ofquarter ~~the date~~ of ~~these~~fiscal ~~financial~~year ~~statements~~2015. ~~Accordingly, actual results may differ.~~

As a result of the executed settlement agreement, the Company recorded an additional pre-tax charge in the amount of $19.5 million during the fiscal year ended December 26, 2014. Estimated charges recorded in conjunction with the Craftwood Matter were included in selling, general and administrative expenses in the statements of operations during the respective fiscal years. As of March 27, 2015 and December 26, 2014, the litigation-related accrual of $39.9 million was included in accrued expenses and other current liabilities in the consolidated balance sheets.

The Company is involved in various other legal proceedings in the ordinary course of its business and have not been fully adjudicated. These actions, when ultimately concluded and determined, will not, in the opinion of management, have a material effect upon the Company’s consolidated financial statements.

Because the outcome of litigation is inherently uncertain, the Company may not prevail in these proceedings and the ultimate exposure cannot be estimated if the Company were not to prevail. Accordingly, any rulings against the Company could have a material adverse effect on the consolidated financial statements.

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

References to “us” and “we” are to the Company. You should read the following discussion in conjunction with our unaudited consolidated financial statements and related notes included in this quarterly report, and our audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”).

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are subject to risks and uncertainties. You should not place undue reliance on those statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy, the impact of the Merger, as defined in ~~"Recent~~Part ~~Developments"~~1. ~~below~~Item 1. Note 1. Description of Business and Basis of Presentation, and amounts that may be paid for resolution of legal matters. These statements often include words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or similar expressions, including, without limitation, certain statements in “Results of Operations”, “Liquidity and Capital Resources”, and Item 3. Quantitative and Qualitative Disclosures About Market Risk. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this report, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include:


•	our level of indebtedness,


•	future cash flows,


•	the highly competitive nature of the maintenance, repair and operations distribution industry,


•	general market conditions,

• the impact of the ~~current~~brand ~~rebranding initiative~~unification,

• the impact of ~~potential~~the resolution of current or future ~~impairment~~legal ~~charges~~claims,


•	apartment vacancy rates and effective rents,


•	governmental and educational budget constraints,


•	work stoppages or other business interruptions at transportation centers or shipping ports,


•	health care costs,


•	our ability to accurately predict market trends,

• ~~adverse~~fluctuations ~~publicity~~in the cost of commodity-based products and raw materials (such as copper) and fuel prices,

• ~~the~~weather ~~impact~~conditions ofand ~~the~~catastrophic ~~resolution~~weather ~~of current or future legal claims~~events,

• labor and benefit costs,


•	the loss of significant customers,


•	adverse changes in trends in the home improvement and remodeling and home building markets,

• health care costs,


•	product cost and price fluctuations due to inflation and currency exchange rates,


•	inability to identify, acquire and successfully integrate acquisition candidates,


•	our ability to purchase products from suppliers on favorable terms,

• fluctuations in the cost of commodity-based products and raw materials (such as copper) and fuel prices,


•	our customers' ability to pay us,


•	inability to realize expected benefits from acquisitions,


•	consumer spending and debt levels,


•	interest rate fluctuations,

• credit market contractions,

• weather conditions and catastrophic weather events,


•	material facilities and systems disruptions and shutdowns,


•	the length of our supply chains,


•	adverse publicity,


•	labor and benefit costs,


•	dependence on key employees,

18• credit market contractions,


•	disruptions in information technology systems,

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Forward-Looking Statements (continued)


•	changes to tariffs between the countries in which we operate,


•	our ability to protect trademarks,


•	changes in governmental regulations related to our product offerings, and


•	changes in consumer preferences.

Any forward-looking statements made by us in this report, or elsewhere, speak only as of the date on which we make them. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. In light of these risks and uncertainties, any forward-looking statements made in this report or elsewhere might not occur.

Executive Summary

Overview

We are a leading national distributor and direct marketer of broad-line maintenance, repair and operations (“MRO”) products. We have one operating segment, the distribution of MRO products into the facilities maintenance end-market. We stock approximately 100,000 MRO products in the following categories: janitorial and sanitation (“JanSan”); hardware, tools and fixtures; plumbing; heating, ventilation and air conditioning (“HVAC”); electrical and lighting; appliances and parts; security and safety; and other miscellaneous maintenance products. Our products are primarily used for the repair, maintenance, remodeling, and refurbishment of non-industrial and residential facilities.

Our diverse facilities maintenance customer base includes institutions, such as educational, lodging, health care, and government facilities; multi-family housing, such as apartment complexes; and residential customers, including professional contractors, and plumbing and hardware retailers. Our customers range in size from individual contractors and independent hardware stores to apartment management companies and national purchasing groups.

We currently market and sell our products primarily through ~~thirteen~~eight distinct and targeted brands, each of which is recognized in the facilities maintenance markets they serve for providing quality products at competitive prices with reliable same-day or next-day delivery. ~~The~~During ~~AmSan®~~the first quarter of 2015, ~~JanPak~~the Company announced the launch of a new institutional brand, SupplyWorksTM, which represents the unification of five of Interline’s leading brands – AmSan®, CleanSource®, ~~Sexauer~~JanPak®, ~~and~~ Trayco® ~~brands~~and ~~generally~~Sexauer® ~~serve~~– ~~our~~under ~~institutional~~one ~~facilities~~national ~~customers;~~brand. ~~the~~The Wilmar® and Maintenance USA® brands ~~generally~~continue to serve our multi-family housing facilities customers;, ~~and~~while the Barnett®, Copperfield®, U.S. Lock®, Hardware Express®, ~~LeranSM~~ and AFLeranSM ~~Lighting®~~ brands generally serve our residential facilities customers. Our multi-brand operating model, which we believe is unique in the industry, allows us to use a single platform to deliver tailored products and services to ~~meet~~enhance the ~~individual needs of each respective~~ customer ~~group~~service ~~served.~~experience ~~During~~and ~~the~~meet ~~second quarter of 2014,~~ the ~~Company~~individual ~~made~~needs a strategic marketing decision to simplify our brand structure within the institutional end-market. This rebranding initiative is designed to consolidate our institutional brands under a single national brand name and increase brand awareness as a market leading institutional platform. We reach our markets using a variety of ~~sales~~each ~~channels,~~respective ~~including a field sales force of approximately 1,137 associates, which includes sales management and related associates, approximately 449 inside sales and~~ customer ~~service~~group and support associates, a direct marketing program consisting of catalogs and promotional flyers, brand‑specific websites, a national accounts sales program, and other supply chain programs, such as vendor managed inventoryserved.

WeOur ~~deliver~~marketing ~~our~~strategy ~~products~~utilizes ~~through~~a ~~our~~variety ~~network~~ of 67sales ~~distribution centers~~channels, 21including ~~professional~~a ~~contractor~~field ~~showrooms~~sales ~~located~~force ~~throughout~~of ~~the~~approximately ~~United States~~1,200 ~~Canada~~associates, ~~and~~which ~~Puerto~~includes ~~Rico,~~sales 75management ~~vendor-managed~~and ~~inventory~~related ~~locations~~associates, atapproximately ~~large~~460 ~~customer~~inside ~~locations~~sales and acustomer ~~dedicated~~service ~~fleet of trucks~~ and ~~third~~support ~~party~~associates, ~~carriers.~~a ~~Our~~direct ~~broad~~marketing ~~distribution~~program ~~network~~consisting ~~enables~~of uscatalogs toand ~~provide~~promotional ~~reliable~~flyers, ~~next-day~~brand‑specific ~~delivery~~websites, ~~service~~a tonational ~~approximately~~accounts ~~98%~~sales ofprogram, ~~the U.S. population~~ and ~~same-day~~other ~~delivery~~supply ~~service~~chain toprograms, ~~most~~such ~~major~~as ~~metropolitan~~vendor ~~markets~~managed ~~in the U~~inventory.S.

We deliver our products through a network of 67 distribution centers, 21 professional contractor showrooms located throughout the United States ("U.S"), Canada, and Puerto Rico, 74 vendor-managed inventory locations at large customer locations and a dedicated fleet of trucks and third party carriers. Our broad distribution network enables us to provide reliable, next-day delivery service to approximately 98% of the U.S. population and same-day delivery service to most major metropolitan markets in the U.S.

Our information technology and logistics platforms support our major business functions, allowing us to market and sell our products at varying price points depending on the customer’s service requirements. While we market our products under a variety of brands, generally our brands draw from the same inventory within common distribution centers and share associated employee and transportation costs. In addition, we have centralized marketing, purchasing and catalog production operations to support our brands. We believe that our information technology and logistics platforms also benefit our customers by allowing us to offer a broad product selection at highly competitive prices while maintaining the unique customer appeal of each of our targeted brands. Overall, we believe that our common operating platforms have enabled us to improve customer service, maintain lower operating costs, efficiently manage working capital and support our growth initiatives.

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Recent Developments

~~Rebranding~~Brand ~~Initiative~~Unification

During the ~~second~~first quarter of ~~fiscal year 2014~~2015, the Company ~~management~~announced ~~made~~the launch of a ~~strategic~~new ~~marketing~~institutional ~~decision~~brand, toSupplyWorksTM ~~rebrand~~("SupplyWorks"),which ~~certain~~represents ~~trademark~~the ~~assets~~unification of five of Interline’s leading brands – AmSan®, CleanSource®, JanPak®, Trayco® and Sexauer® – under one ~~new~~ national brand. ~~name~~The ~~within~~SupplyWorks ~~our~~brand ~~institutional~~product ~~customer~~offering ~~end~~includes ~~market.~~over ~~Management~~140,000 ~~believes~~items ~~the~~spanning ~~rebranding~~everything ~~initiative~~from ~~will~~plumbing ~~provide~~and ~~positive~~cleaning ~~outcomes~~supplies asto itHVAC, ~~relates~~electrical and other maintenance and repair products to ~~brand~~help ~~recognition~~customers enhance the performance, safety, health and ~~market~~sustainability ~~share~~of facilities across the United States. ~~The~~With ~~rebranding~~over is3,000 ~~not~~supply ~~expected~~partners, SupplyWorks features a strong portfolio of branded products from Georgia-Pacific, 3M, Diversey Care, Kimberly-Clark, Kohler, Schlage and Spartan, among others, as well as Interline’s own exclusive brands. SupplyWorks will leverage a team of over 900 highly-trained facility maintenance experts and customer support professionals to ~~have~~serve a ~~significant~~diverse ~~impact~~and onexpanding ~~operations~~customer orbase including: building service contractors, office buildings, schools and universities, healthcare institutions, lodging, and high-traffic buildings such as airports, stadiums and shopping malls. This brand unification makes SupplyWorks one of the ~~quality~~largest broad line facilities maintenance businesses in the U.S. providing a full suite of ~~our~~products ~~product~~and ~~offerings~~solutions to institutional and commercial customers.

As a result of the rebranding initiative the Company recorded non-cash charges of $67.5 million related to the impairment of certain indefinite-lived trademark assets due to a change in the expected useful life of the intangible assets. The impairment charges were determined by comparing the fair value of the trademarks, derived using discounted cash flow analyses, to the current carrying value. Prior to the impairment analysis the associated trademarks had a carrying value of $71.1 million, and after the impairment charge the associated trademarks had a remaining carrying value of $3.6 million which will be amortized over a definite life of six months.

Financing Transactions

On ~~March~~December 1730, 2014, ~~Interline~~the ~~New~~Company ~~Jersey~~used ~~completed~~a combination of cash on hand and borrowings under the ~~following~~recently ~~financing~~amended ABL Facility (as defined below) to redeem $80.0 million of the $365.0 million aggregate principal amount of senior notes (the "HoldCo Notes") at a redemption price of 105% of the outstanding aggregate principal amount to be redeemed, plus accrued and unpaid interest through the redemption date. In connection with the redemption of the HoldCo Notes, the Company recorded a loss on early extinguishment of debt in the amount of $6.7 million. The loss was comprised of $4.1 million in tender premium and related transactions: costs and the write-off of the unamortized deferred debt issuance costs of $2.6 million.

•Refer ~~entered~~to "—Liquidity ~~into~~and aCapital ~~first~~Resources" ~~lien~~in ~~term~~Part ~~loan~~I. ~~under~~Item ~~which~~2. ~~Interline~~Management’s ~~New~~Discussion ~~Jersey~~and ~~incurred~~Analysis aof ~~term~~Financial ~~loan~~Condition inand anResults ~~aggregate~~of ~~principal~~Operations ~~amount~~herein offor ~~$350.0~~additional ~~million~~information (regarding the ~~"Term~~Company's ~~Loan~~financing ~~Facility"); and~~arrangements.

•Business amended the asset-based senior secured revolving credit facility, dated as of September 7, 2012 (the “ABL Facility”), by entering into the First Amendment to Credit Agreement to permit the incurrence of the Term Loan Facility and make other changes in connection with the refinancing (the “First ABL Facility Amendment”).Environment

~~The~~Corporate proceeds from the Term Loan Facility were used to finance the redemption of Interline New Jersey's outstanding 7.50% Notes due 2018 (the "OpCo Notes"), the repayment of a portion of amounts outstanding under the ABL Facility and the payment of related fees, costs and expenses. In connection with the redemption of the OpCo Notes, the Company recorded a loss on early extinguishment of debt in the amount of $4.2 million during the nine months ended September 26, 2014. The loss was comprised of $18.5 million in consent solicitation, tender premium, call premium and related transaction costs less a non-cash benefit of $14.3 million associated with the write-off of the unamortized fair value premium of $17.8 million less the write-off of the unamortized deferred debt financing costs of $3.5 million. Strategy

OnOur ~~April~~objective 8,is ~~2014,~~to ~~Interline~~become ~~New~~the ~~Jersey~~leading ~~further~~national ~~amended~~supplier of MRO products in the ~~ABL~~facilities ~~Facility~~maintenance byend-market, ~~entering~~which ~~into~~is ~~the~~comprised ~~Second~~of ~~Amendment~~our toinstitutional, ~~Credit~~multi-family ~~Agreement~~housing toand ~~amend~~residential ~~certain~~facilities ~~pricing~~customers. ~~terms~~In ~~applicable~~pursuing this objective, we plan to ~~the~~increase ~~ABL~~our ~~Facility~~net sales, earnings and ~~extend~~return ~~the~~on ~~maturity~~invested ~~date~~capital ofby ~~the~~capitalizing ~~ABL~~on ~~Facility~~our tosize ~~April~~and 8scale, ~~2019~~sales force, atsupply ~~which~~chain ~~date~~programs, ~~the~~information ~~principal~~technology ~~amount~~and ~~outstanding~~logistics ~~under~~platforms ~~the~~to ~~ABL~~successfully ~~Facility~~execute ~~will~~our beorganic ~~due~~growth, ~~and~~operating ~~payable~~efficiency inand ~~full~~strategic ~~(the~~acquisition ~~“Second ABL Facility Amendment”)~~initiatives.

~~See~~For ~~"—Liquidity~~additional ~~and~~information ~~Capital~~regarding ~~Resources"~~our ~~for~~corporate ~~further~~strategy, ~~information~~refer ~~regarding~~to the ~~financing~~strategy ~~transactions~~discussion provided in Part I. Item 1. Business of our Annual Report on Form 10-K for the year ended December 26, 2014.

20Trends and Uncertainties

We experience some seasonal fluctuations during the second and third fiscal quarters as sales of our products typically increase during these periods due to increased apartment turnover and related maintenance and repairs in the multi-family and residential housing sector and increased repairs and maintenance of educational and governmental facilities in the institutional sector as well as increases in HVAC sales during these periods. Our first and fourth quarter sales and earnings typically tend to be slightly lower than the other two quarters of the year due to winter weather and the holiday season.

For additional information regarding trends and uncertainties that could affect our financial position, results of operations and cash flows, refer to the risk factors discussion provided in Part I. Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 26, 2014 as well as “Part I. Item 2—Forward-Looking Statements” disclosed above.

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Outlook

Looking ahead to the remainder of fiscal year 2015, we plan to continue to make investments in our sales force, E-commerce capabilities, supply chain management services and information systems. These investments are expected to continue to drive higher levels of revenue growth, and enhance our scale and capabilities.

Results of Operations

The following table presents information derived from the consolidated statements of operations expressed as a percentage of net sales for the three ~~and nine~~ months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014:

		Three Months Ended			~~Nine Months Ended~~
		% of Net Sales			~~% of Net Sales~~
		September 26, 2014	September 27, 2013	% Increase (Decrease)(1)	September 26, 2014	September 27, 2013	% Increase (Decrease)(1)
		March 27, 2015	March 28, 2014	% Increase (Decrease)(1)
Net sales		100.0%	100.0%	54.09%	~~100.0%~~	~~100.0%~~	~~4.3%~~
Cost of sales		65.15	65.14	45.91	~~65.4~~	~~65.5~~	~~4.3~~
	Gross profit	34.95	34.96	54.06	~~34.6~~	~~34.5~~	~~4.5~~
Operating Expenses:
Selling, general and administrative expenses		2528.61	3029.90	~~(12~~1.7)	~~27.1~~	~~28.7~~	~~(1.6)~~
Depreciation and amortization		3.2	3.02	144.70	~~3.1~~	~~3.1~~	~~5.3~~
Merger related expenses		—	~~0.1~~—	(100.0)	—	~~0.1~~	~~(92.0)~~
	Total operating expenses	2831.93	3332.93	~~(10~~1.5)8	~~30.3~~	~~32.0~~	~~(1.2)~~
Operating income		63.02	12.03	~~548~~43.85	~~4.3~~	~~2.6~~	~~76.3~~
Impairment of other intangible assets		—	—	—	(5.4)	—	—
Loss on extinguishment of debt, net		(1.6)	(1.1)	60.2
Loss on extinguishment of debt, net		—	—	—	(0.3)	—	—
Interest expense		(3.1)	(4.0)	(18.0)
Interest expense		(3.3)	(3.7)	(7.8)	(3.5)	(3.9)	(5.6)
Interest and other income		—	—	(2.1)
Interest and other income		0.1	0.1	(35.0)	0.1	0.1	(44.9)
	Loss before income taxes	(1.5)	(2.7)	(40.6)
	Income (loss) before income taxes	2.8	(2.7)	(209.9)	(4.9)	(1.3)	302.1
Income tax benefit		(0.6)	(1.1)	(43.6)
Income tax expense (benefit)		1.2	(1.0)	(227.9)	(1.9)	(0.6)	208.1
	Net loss	(0.9)%	(1.6)%	(38.4)%
Net income (loss)		1.6%	(1.7)%	(199.9)%	(3.0)%	(0.6)%	398.7%

____________________


(1)	Percent increase (decrease) represents the actual change as a percentage of the prior year’s result.

Comparison of the operating results for the three months ended ~~September~~March 2627, ~~2014~~2015 to the three months ended ~~September~~March 2728, ~~2013~~2014

Net Sales and Gross Profit

		Three Months Ended
(in thousands)		~~September~~March 2627, ~~2014~~2015		~~September~~March 2728, ~~2013~~2014
Net sales		$	~~442~~411,~~445~~747	$	~~421~~392,~~541~~469
Cost of sales		~~288~~269,~~046~~688		~~274~~256,~~563~~679
	Gross profit	$	~~154~~142,~~399~~059	$	~~146~~135,~~978~~790

Net sales. Net sales increased by $2019.93 million, or 54.09%, for the three months ended ~~September~~March 2627, ~~2014~~2015 compared to the three months ended ~~September~~March 2728, ~~2013~~2014. Sales to our institutional facilities customers increased by $1310.92 million, sales to our multi-family housing facilities customers increased by $68.47 million, and sales to our residential facilities customers increased by $1.36 million. There were 6364 shipping days in both the three months ended ~~September~~March 2627, ~~2014~~2015 and the three months ended ~~September~~March 2728, ~~2013~~2014.

The year-over-year increase in net sales for the three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014 primarily reflects continued economic ~~improvements~~stability across our facilities maintenance end-market, combined with our continued investments in our sales force, marketing, and our information technology, including an ongoing focus on national accounts and supply chain services. Sales to our institutional facilities customers, which comprised 5045% of our total sales, increased 65.87% in total. Sales to our multi-family housing facilities customers, which comprised 3135% of our total sales, increased 46.84%. Sales to our residential facilities customers, which comprised 19% of our total sales, increased 1.6%. We believe we are starting to more fully realize the benefits of our efforts to strengthen our business, improve our competitive position, and enhance our market capabilities. We expect these trends to continue for the remainder of 2014 as we continue our investments in our sales force and other key areas of our business.

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~~Gross~~which ~~profit.~~comprised ~~Gross~~20% ~~profit~~of ~~increased~~our bytotal ~~$7.4 million~~sales, orincreased 52.0%~~, for~~. ~~the~~We ~~three~~believe ~~months~~we ~~ended~~are ~~September 26,~~starting ~~2014~~to ~~compared~~more tofully realize the ~~three~~benefits ~~months~~of ~~ended~~our ~~September 27~~efforts to strengthen our business, ~~2013~~improve our competitive position, and enhance our market capabilities. AsWe aexpect ~~percentage~~these trends to continue for the remainder of 2015 as we continue our investments in our sales force, ~~gross~~E-commerce ~~profit~~capabilities, ~~margin~~supply ~~was~~chain ~~consistent~~management ~~year-over-year~~services atand 34other key areas of our business.~~9%.~~

Gross profit. Gross profit increased by $6.3 million, or 4.6%, for the three months ended March 27, 2015 compared to the three months ended March 28, 2014. As a percentage of sales, gross profit margin was 34.5% and 34.6% during the three months ended March 27, 2015 and March 28, 2014, respectively.

Operating Expenses

		Three Months Ended
(in thousands)		~~September~~March 2627, ~~2014~~2015		~~September~~March 2728, ~~2013~~2014
Selling, general and administrative expenses		$	~~113~~115,~~480~~875	$	~~130~~113,~~052~~975
Depreciation and amortization		1413,~~369~~110		12,~~531~~604
Merger related expenses		—		~~303~~102
	Total operating expenses	$	~~127~~128,~~849~~985	$	~~142~~126,~~886~~681

Selling, general and administrative expenses ("SG&A"). SG&A expenses ~~decreased~~increased by $161.69 million, or 121.7%, for the three months ended ~~September~~March 2627, ~~2014~~2015 as compared to the same period in the prior year. As a percentage of net sales, SG&A expenses decreased ~~530~~90 basis points to 2528.61% for the three months ended ~~September~~March 2627, ~~2014~~2015 compared to 3029.90% for the three months ended ~~September~~March 2728, ~~2013~~2014. The decrease in SG&A expenses as a percentage of net sales was ~~primarily~~ due to ~~$20.5~~continued ~~million~~management inof ~~nonrecurring~~our ~~litigation-related~~cost ~~charges~~structure ~~recorded~~as ~~during~~well ~~the~~as ~~third~~lower ~~quarter~~distribution ofcenter ~~2013,~~consolidation ~~slightly~~and ~~offset~~restructuring bycosts ~~additional~~during ~~expenses related to~~ the ~~continued~~current ~~investments in our sales force during 2014~~period.

Depreciation and amortization. Depreciation and amortization expense increased by $10.85 million, or 144.70%, for the three months ended ~~September~~March 2627, ~~2014~~2015 compared to the three months ended ~~September~~March 2728, ~~2013~~2014. As a percentage of net sales, depreciation and amortization was 3.2% for the three months ended ~~September~~March 2627, ~~2014~~2015 and 3.02% for the three months ended ~~September~~March 2728, ~~2013. The increase was primarily driven by additional amortization of trademarks that were determined to have a definite life during the second quarter of~~ 2014.

Merger related expenses. Merger related expenses incurred for the three months ended ~~September~~March 2728, ~~2013~~2014 of $0.31 million consisted of transaction related compensation ~~of $0.1 million and professional fees of $0.1 million all~~ incurred as a direct result of the Merger. There were no merger related expenses incurred during the three months ended ~~September~~March 2627, ~~2014~~2015.

Operating Income

	Three Months Ended
(in thousands)	~~September~~March 2627, ~~2014~~2015		~~September~~March 2728, ~~2013~~2014
Operating income	$	2613,~~550~~074	$	49,~~092~~109

Operating income. As a result of the foregoing, operating income ~~changed~~increased by $224.50 million, or ~~548~~43.85%, to $2613.61 million for the three months ended ~~September~~March 2627, ~~2014~~2015 from $49.1 million for the three months ended ~~September~~March 2728, ~~2013~~2014.

Other Income (Expense)

		Three Months Ended
(in thousands)		~~September~~March 2627, ~~2014~~2015			~~September~~March 2728, ~~2013~~2014
Interest expense		(14,518		)	(15,753		)
Loss on extinguishment of debt, net		$	(6,655	)	$	(4,153	)
Interest and other income		291			448
Interest expense		(12,867		)	(15,684		)
	Income (loss) before income taxes	$	12,323		$	(11,213	)
Interest and other income		188			192
	Loss before income taxes	$	(6,260	)	$	(10,536	)

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~~Interest~~Loss ~~expense~~on extinguishment of debt. ~~Interest~~In ~~expense~~connection ~~decreased~~with the partial redemption of the HoldCo Notes and the related financing transactions that occurred during the period ended March 27, 2015, we recorded a loss on extinguishment of debt, net of $16.27 million, orwhich 7consisted of $4.~~8%,~~1 ~~during~~million in tender premium and related transaction costs and the write-off of the unamortized deferred debt issuance costs of $2.6 million. During the three months ended ~~September 26~~March 28, 2014 asin ~~compared~~connection towith the ~~three~~redemption ~~months~~of ~~ended~~the ~~September 27~~OpCo Notes due 2018 (the "OpCo Notes") and the related refinancing transactions, ~~2013~~we recorded a loss on extinguishment of debt, net of $4.2 ~~The~~million ~~decrease~~which consisted of $18.5 million in ~~interest~~consent ~~expense~~solicitation, ~~was~~tender ~~directly~~premium, ~~attributable~~call topremium ~~interest~~and ~~expense~~related ~~savings~~transaction ~~realized~~costs asless a ~~result~~non-cash benefit of $14.3 million associated with the ~~financing~~write-off ~~transactions~~of ~~that~~the ~~occurred~~unamortized infair value premium of $17.8 million less the ~~first~~write-off ~~quarter~~of the unamortized deferred debt financing costs of ~~2014~~$3.5 million.

Interest expense. Interest expense decreased $2.8 million, or 18.0%, during the three months ended March 27, 2015 as compared to the three months ended March 28, 2014. The decrease in interest expense was directly attributable to interest expense savings realized as a result of the financing transactions that occurred in the first quarters of 2015 and 2014.

Income Tax Benefit and Net Income (Loss)

		Three Months Ended
(in thousands)		~~September~~March 2627, ~~2014~~2015			~~September~~March 2728, ~~2013~~2014
Income tax expense (benefit)		$	5,125		$	(4,007	)
Income tax benefit		$	(2,504	)	$	(4,442	)
	Net income (loss)	$	7,198		$	(7,206	)
	Net loss	$	(3,756	)	$	(6,094	)

Income tax ~~expense (~~benefit). Income tax ~~expense~~benefit ~~increased~~decreased $9.1.9 million to $52.15 million for the three months ended ~~September~~March 2627, ~~2014~~2015 ~~from~~compared anto ~~income tax benefit of~~ $4.04 million for the three months ended ~~September~~March 2728, ~~2013~~2014. The ~~increase~~decrease in income tax ~~expense~~benefit is primarily related to ~~book~~the ~~income~~decrease in ~~the three months ended September 26,2014 compared to~~ book loss inas compared the ~~three~~comparable ~~months~~prior ~~ended~~year ~~September 27, 2013~~period.

The effective tax rate for the three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014 was 4140.60% and 3542.72%, respectively. The change in the effective tax rate during the ~~third~~first quarter of ~~2014~~2015 compared to the comparable prior year period is due to ~~higher~~lower ~~permanent~~state ~~items~~tax inrate infor ~~the~~favorable ~~third~~tax ~~quarter~~planning ofstrategies ~~2014~~implemented ~~compared~~in ~~to third quarter 2013~~2015.

Net ~~income (~~loss). ~~Net~~As ~~income as~~ a ~~percentage~~result of the foregoing, net ~~sales~~loss ~~was~~decreased 1by $2.63 million or 38.4% ~~for~~during the three months ended ~~September~~March 2627, ~~2014~~2015 as compared to the three months ended March 28, 2014. As a percentage of net sales, net loss ofwas 10.79% for the ~~same~~three ~~period~~months inended ~~the~~March 27, ~~prior~~2015 ~~year~~compared ~~primarily due~~ to ~~nonrecurring~~1.6% ~~litigation-related~~for ~~charges recorded during~~ the ~~third~~same ~~quarter~~period ofin ~~fiscal~~the ~~year~~prior ~~2013~~year.

Comparison of the operating results for the nine months ended September 26, 2014 to the nine months ended September 27, 2013

Net Sales and Gross Profit

		Nine Months Ended
(in thousands)		September 26, 2014		September 27, 2013
Net sales		$	1,260,456	$	1,208,000
Cost of sales		824,697		790,993
	Gross profit	$	435,759	$	417,007

Net sales. Net sales increased by $52.5 million, or 4.3%,for the nine months ended September 26, 2014 compared the nine months ended September 27, 2013. Sales to our institutional facilities customers increased by $31.3 million, sales to our multi-family housing facilities customers increased by $19.0 million, and sales to our residential facilities customers increased by $3.4 million. There were 191 shipping days in both the nine months ended September 26, 2014 and the nine months ended September 27, 2013.

The year-over-year increase in net sales primarily reflects continued economic improvements across our facilities maintenance end-market, combined with our continued investments in our sales force and our information technology. Sales to our institutional facilities customers, which comprised 50% of our total sales, increased 5.2% in total. Sales to our multi-family housing facilities customers, which comprised 30% of our total sales, increased 5.2%. Sales to our residential facilities customers, which comprised 20% of our total sales, increased 1.4%. We believe we are starting to more fully realize the benefits of our efforts to strengthen our business, improve our competitive position, and enhance our market capabilities. We expect these trends to continue for the remainder of 2014 as we continue our investments in our sales force and other key areas of our business.

Gross profit. Gross profit increased by $18.8 million, or 4.5%, to $435.8 million for the nine months ended September 26, 2014 from $417.0 million for the nine months ended September 27, 2013. During the nine months ended September 26, 2014, gross profit margin increased 10 basis points to 34.6% from 34.5% for the same period in the prior year.

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Operating Expenses

		Nine Months Ended
(in thousands)		September 26, 2014		September 27, 2013
Selling, general and administrative expenses		$	341,695	$	347,288
Depreciation and amortization		39,567		37,583
Merger related expenses		102		1,275
	Total operating expenses	$	381,364	$	386,146

Selling, general and administrative expenses ("SG&A"). SG&A expenses decreased by $5.6 million, or 1.6%, for the nine months ended September 26, 2014 as compared to the nine months ended September 27, 2013. As a percentage of net sales, SG&A expenses decreased 160 basis points to 27.1% for the nine months ended September 26, 2014 compared to 28.7% for the nine months ended September 27, 2013. The decrease in SG&A expenses as a percentage of net sales was primarily due to $20.5 million in nonrecurring litigation-related charges recorded during the third quarter of 2013 and overall lower expenses across the majority of our cost structure as a percentage of net sales during the current year. These factors were slightly offset by higher payroll costs and travel and entertainment expenses related to the continued investments in our sales force during 2014.

Depreciation and amortization. Depreciation and amortization expense increased by $2.0 million, or 5.3%, during the nine months ended September 26, 2014 compared to the nine months ended September 27, 2013. The increase was primarily driven by the additional amortization of trademark assets that were determined to have a definite life during the second quarter of 2014. As a percentage of net sales, depreciation and amortization was consistent at 3.1% for the nine months ended September 26, 2014 and September 27, 2013.

Merger related expenses. Merger related expenses incurred during the nine months ended September 26, 2014 of $0.1 million were comprised of transaction related compensation incurred as a direct result of the Merger. Merger related expenses incurred for the nine months ended September 27, 2013 of $1.3 million consisted of transaction related compensation of $0.7 million, professional fees of $0.4 million, and other costs of $0.2 million, all incurred as a direct result of the Merger.

Operating Income

	Nine Months Ended
(in thousands)	September 26, 2014		September 27, 2013
Operating income	$	54,395	$	30,861

Operating income. As a result of the foregoing, operating income increased by $23.5 million, or 76.3%, to $54.4 million for the nine months ended September 26, 2014 from $30.9 million for the nine months ended September 27, 2013.

Other Income (Expense)

		Nine Months Ended
(in thousands)		September 26, 2014			September 27, 2013
Impairment of other intangible assets		$	(67,500	)	$	—
Loss on extinguishment of debt, net		(4,172		)	—
Interest expense		(44,708		)	(47,356		)
Interest and other income		688			1,249
	Loss before income tax	$	(61,297	)	$	(15,246	)

Impairment of other intangible assets. During the nine months ended September 26, 2014, the Company recorded non-cash charges of $67.5 million related to the impairment of certain indefinite-lived trademark assets. These impairments were primarily due

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to a strategic marketing decision to phase out certain brand names which resulted in a change in the expected useful life of the intangible assets. The impairment charges were determined by comparing the fair value of the trademarks, derived using discounted cash flow analyses, to the current carrying value. There was no impairment charge that occurred during the same period in the prior year.

Loss on extinguishment of debt. In connection with the redemption of the OpCo Notes and the related financing transactions, we recorded a loss on extinguishment of debt, net of $4.2 million which consisted of $18.5 million in consent solicitation, tender premium, call premium and related transaction costs less a non-cash benefit of $14.3 million associated with the write-off of the unamortized fair value premium of $17.8 million and the write-off of the unamortized deferred debt financing costs of $3.5 million. There was no extinguishment of debt that occurred during the same period in the prior year.

Interest expense. Interest expense decreased $2.6 million, or 5.6%, for the nine months ended September 26, 2014 compared to the nine months ended September 27, 2013. The decrease in interest expense was directly attributable to interest expense savings realized as a result of the financing transactions that occurred in the first quarter of 2014.

Income Tax Benefit and Net Loss

		Nine Months Ended
(in thousands)		September 26, 2014			September 27, 2013
Income tax benefit		$	(23,824	)	$	(7,732	)
	Net loss	$	(37,473	)	$	(7,514	)

Income tax benefit. Income tax benefit increased by $16.1 million year-over-year with a benefit of $23.8 million for the nine months ended September 26, 2014 compared to $7.7 million for the nine months ended September 27, 2013. The increase in income tax benefit is primarily related to the second quarter impairment charges.

The effective tax rate for the nine months ended September 26, 2014 and September 27, 2013 was 38.9% and 50.7%, respectively. The change in the effective tax rate during the nine months ended September 26, 2014 compared to the comparable prior year period is due to a refinement in the deferred state tax rates estimated during the nine months ended September 27, 2013.

Net loss. Net loss as a percentage of net sales was 3.0% for the nine months ended September 26, 2014 compared to 0.62% in the comparable prior year period due to the impairment of other intangible assets as well as the loss on extinguishment of debt as a result of the current year financing transactions, as more fully discussed in the "—Liquidity and Capital Resources" section below.

Liquidity and Capital Resources

Overview

We are a holding company whose only asset is the stock of Interline New Jersey. We conduct virtually all of our business operations through Interline New Jersey. Accordingly, our only material sources of cash are dividends and distributions with respect to our ownership interests in Interline New Jersey that are derived from the earnings and cash flow generated by Interline New Jersey.

On ~~March~~December 1730, 2014, ~~Interline~~the ~~New~~Company ~~Jersey~~used ~~completed~~a combination of cash on hand and borrowings under the ~~following~~recently ~~refinancing~~amended ABL Facility (as defined below) to redeem $80.0 million of the HoldCo Notes at a redemption price of 105% of the outstanding aggregate principal amount to be redeemed, plus accrued and unpaid interest through the redemption date. In connection with the partial redemption of the HoldCo Notes, the Company recorded a loss on early extinguishment of debt in the amount of $6.7 million. The loss was comprised of $4.1 million in tender premium and related transactions: costs and the write-off of the unamortized deferred debt issuance costs of $2.6 million.

•The ~~entered~~debt ~~into~~instruments aof ~~first~~Interline ~~lien~~New ~~term~~Jersey, ~~loan~~primarily ~~agreement~~the ~~under~~ABL ~~which~~Facility ~~Interline~~and ~~New~~the ~~Jersey~~Term ~~incurred~~Loan aFacility ~~term~~(as ~~loan~~defined inbelow), ancontain ~~aggregate~~significant ~~principal~~restrictions ~~amount~~on the payment of ~~$350.0~~dividends ~~million~~and (distributions to the Company by Interline New Jersey. See “—ABL Facility” and “—Term Loan Facility”); for more information on the ABL Facility and the Term Loan Facility, respectively.

•Interline ~~amended~~New ~~the~~Jersey ~~asset-based~~and ~~senior~~the ~~secured~~Company ~~revolving~~were ~~credit~~in ~~facility,~~compliance ~~dated~~with asall ofcovenants ~~September~~contained 7,in ~~2012 (~~the “ABL Facility”), ~~by entering into~~ the ~~First Amendment to Credit Agreement to permit the incurrence of the~~ Term Loan Facility, and ~~make~~HoldCo ~~other~~Notes ~~changes~~as inof ~~connection~~March 27, ~~with the refinancing (the “First ABL Facility Amendment”)~~2015.

The proceeds from the Term Loan Facility were used to finance the redemption of Interline New Jersey's outstanding 7.50% Notes due 2018 (the "OpCo Notes"), the repayment of a portion of amounts outstanding under the ABL Facility and the payment of related fees, costs and expenses. In connection with the redemption of the OpCo Notes, the Company recorded a loss on early extinguishment of debt in the amount of $4.2 million during the nine months ended September 26, 2014. The loss was comprised of 18

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$18.5 million in consent solicitation, tender premium, call premium and related transaction costs less a non-cash benefit of $14.3 million associated with the unamortized fair value premium of $17.8 million less unamortized deferred financing costs of $3.5 million.

In addition to making changes that were required in order to permit the incurrence of the Term Loan Facility and the redemption of the OpCo Notes, the First ABL Facility Amendment also made various changes to the ABL Facility that were intended to conform certain covenant baskets and related terms with those contained in the Term Loan Facility (the terms of which are disclosed below under "—Term Loan Facility”). The First ABL Facility Amendment also released the security interest previously granted by the Company to secure the ABL Facility, subject to a requirement that the Company re-pledge its assets to secure the ABL Facility in the event that the Company’s 10.00% / 10.75% Senior Notes due 2018 (the “HoldCo Notes”) are no longer outstanding. Accordingly, while the Company will guaranty both the Term Loan Facility and the ABL Facility, its assets will not be pledged to secure either such facility so long as the HoldCo Notes remain outstanding.

On April 8, 2014, Interline New Jersey further amended the ABL Facility by entering into the Second Amendment to Credit Agreement to amend certain pricing terms applicable to the ABL Facility and extend the maturity date of the ABL Facility to April 8, 2019 (the “Second ABL Facility Amendment”).

The debt instruments of Interline New Jersey, primarily the ABL Facility and the Term Loan, contain significant restrictions on the payment of dividends and distributions to the Company by Interline New Jersey. See “—ABL Facility” and “—Term Loan Facility” for more information on the ABL Facility and the Term Loan Facility, respectively.

Interline New Jersey and the Company were in compliance with all covenants contained in the ABL Facility, the Term Loan Facility, and HoldCo Notes as of September 26, 2014.

Liquidity

Historically, our capital requirements have been for debt service obligations, working capital requirements, including inventories, accounts receivable and accounts payable, acquisitions, the expansion and maintenance of our distribution network and upgrades of our information systems. We expect this to continue in the foreseeable future. Historically, we have funded these requirements through cash flow generated from operating activities and funds borrowed under our credit facility. We expect our cash on hand, cash flow from operations and availability under our ABL Facility to be our primary source of funds in the future. From time to time, based on market conditions and other factors, we may repay or refinance all or any of our existing indebtedness, including repurchasing or redeeming our bonds, or incur additional indebtedness. Letters of credit, which are issued under our ABL Facility, are used to support payment obligations incurred for our general corporate purposes.

As of ~~September~~March 2627, ~~2014~~2015, we had cash and cash equivalents of $~~183~~6.86 million of. ~~availability~~A ~~under~~portion of our ~~ABL~~cash ~~Facility,~~and ~~net~~cash ofequivalents ~~$10.2~~are ~~million~~denominated in ~~letters~~various offoreign ~~credit.~~currencies Weand ~~believe~~held ~~that~~by ~~cash~~our ~~and~~foreign ~~cash~~subsidiaries. ~~equivalents~~These onbalances ~~hand,~~are ~~cash~~associated ~~flow~~with ~~from~~our ~~operations~~permanent reinvestment strategy and ~~available~~are ~~borrowing~~subject ~~capacity~~to ~~under~~fluctuations ~~our~~in ~~ABL~~currency ~~Facility~~exchange ~~will~~rates. beWe ~~adequate~~do tonot ~~finance~~believe ~~our~~that ~~ongoing~~the ~~operational~~indefinite ~~cash~~reinvestment ~~flow~~of ~~needs~~these ~~and~~funds ~~debt~~offshore ~~service~~impairs ~~obligations~~our ~~for~~ability ~~the~~to ~~foreseeable~~meet ~~future.~~our domestic working capital needs

From time to time, based on market conditions and other factors, we may repay or refinance all or any of our existing indebtedness, including repurchasing or redeeming our bonds, or incur additional indebtedness. Letters of credit, which are issued under our ABL Facility, are used to support payment obligations incurred for our general corporate purposes.

As of March 27, 2015, we had $105.6 million of availability under our ABL Facility, net of $10.2 million in letters of credit. We believe that cash and cash equivalents on hand, cash flow from operations and available borrowing capacity under our ABL Facility will be adequate to finance our ongoing operational cash flow needs and debt service obligations for the foreseeable future.

Financial Condition

Working capital increased by $17133.20 million to $~~320~~373.95 million as of ~~September~~March 2627, ~~2014~~2015 from $~~303~~240.75 million as of December 2726, ~~2013~~2014. The increase in working capital was primarily driven by an increase in accounts receivable—trade due to the increase in net sales, an increase in inventory levels ~~due~~ to support higher sales and demand for import products as well as build-up for ~~normal~~ seasonal demand, and a reduction of ~~interest~~ accrued interest on the Company's outstanding debt due to normal scheduled payments as well as a result of the ~~early~~partial redemption of the ~~OpCo~~HoldCo Notes during the first quarter of ~~2014~~2015.

Cash Flow

Operating Activities. Net cash ~~provided~~used byin operating activities was $2529.07 million and $1110.10 million for the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014, respectively.

Net cash ~~provided~~used byin operating activities of $2529.07 million for the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015 primarily consisted of a net loss of $373.58 million, non-cash adjustments of $8523.26 million, and net cash used by working capital items of $2250.56 million. The non-cash adjustments of $8523.26 million primarily consisted of an$13.1 ~~impairment~~million in depreciation and amortization of ~~other~~property and equipment and intangible assets, loss on early extinguishment of debt in the amount of $676.57 million, which consisted of $394.61 million in ~~depreciation~~tender premium and ~~amortization~~related oftransaction ~~property~~costs and ~~equipment~~the ~~and~~write-off ~~intangible~~of ~~assets~~the unamortized deferred debt issuance costs of $2.6 million, $321.85 million in deferred income taxes, ~~primarily~~$1.0 ~~related~~million toin ~~the~~amortization ~~impairment~~ of ~~intangibles~~deferred debt issue costs, and ~~loss~~$1.0 onmillion ~~early~~in ~~extinguishment~~share-based ofcompensation. ~~debt~~The innet ~~the~~cash ~~amount~~used by working capital items primarily consisted of $415.20 million, ~~which~~from ~~consisted~~an ofincrease in inventory levels support higher sales and demand for import products as well as build-up for seasonal demand, $1814.58 million infrom ~~consent~~increased ~~solicitation~~trade receivables, ~~tender~~net ~~premium~~of changes in provision for doubtful accounts, ~~call~~resulting ~~premium~~from ~~and~~an ~~related~~increase ~~transaction~~in ~~costs~~net ~~less~~sales aduring ~~non-cash~~the ~~benefit~~current ofperiod, a $1410.37 million ~~associated~~decrease ~~with~~in accrued interest due to normal scheduled payments as well as a result of the ~~write-off~~partial redemption of the ~~unamortized~~HoldCo ~~fair~~Notes ~~value~~during ~~premium~~the first quarter of 2015, $177.81 million ~~less~~from ~~the~~decreases ~~write~~in accrued expenses and other current liabilities primarily related to lower payroll and incentive compensation accruals as compared to prior year-~~off~~end due to timing of ~~the~~payments ~~unamortized~~as ~~deferred~~well ~~debt~~as ~~financing~~payment ~~costs~~of fiscal year 2014 accrued bonuses, $5.4 million from decreases in trade accounts payable due to timing of purchases and related payments, and $34.50 million from increases in income tax receivable due to current tax benefit. ~~These~~The ~~amounts~~net ~~were~~cash used by working capital items was partially offset by an decrease of $06.52 million inprepaid ~~net~~expenses ~~amortization~~and other current assets primarily related to timing of ~~debt~~collections ~~discount/~~of rebates from our vendors.

26Net cash used in operating activities of $10.0 million for the three months ended March 28, 2014 primarily consisted of a net loss of $6.1 million, adjustments for non-cash items of $24.2 million and net cash used by working capital items of $28.0 million. Adjustments for non-cash items primarily consisted of $12.6 million in depreciation and amortization of property and equipment and intangible assets, $6.0 million in deferred income taxes, and loss on early extinguishment of debt in the amount of $4.2 million, which consisted of $18.5 million in consent solicitation, tender premium, call premium and related transaction costs less a non-cash benefit of $14.3 million associated with the write-off of the unamortized fair value premium of $17.8 million less the write-off of the unamortized deferred debt financing costs of $3.5 million. The cash used by working capital items primarily consisted of $12.3

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~~premiums on the OpCo and Term Loan Facility, and $0.6~~ million ~~of amortization of deferred lease incentive obligations. The net cash used by working capital items primarily consisted of $34.2 million~~ from increased trade receivables, net of changes in provision for doubtful accounts, resulting from increased sales ~~in the current year as~~ compared to the prior year, ~~$11.5 million from~~ an ~~increase in inventory levels due to build-up for normal seasonal demand as well as expected sales growth, a~~ $11.56 million ~~decrease~~change in accrued interest due to the early redemption of the OpCo Notes., ~~The net cash used by working capital items was partially offset by~~ $138.17 million from ~~increased~~reduced trade payables balances as a result of the timing of purchases and related payments, $42.4 million from ~~increased~~a decrease in accrued expenses and other current liabilities as a result of ~~increased~~lower accrued ~~sales~~salaries ~~tax, freight charges~~ and ~~customer~~wages ~~rebates~~ due to ~~increased~~the ~~sales,~~timing aof ~~decrease~~payrolls, ofand $12.86 million infrom ~~prepaid~~changes ~~expenses~~in ~~and~~income ~~other~~taxes. ~~current~~The ~~assets~~cash ~~primarily~~used ~~related~~by toworking ~~timing~~capital ofitems ~~collections~~was ofpartially ~~rebates~~offset ~~from~~by ~~our~~an ~~vendors, and~~ $158.53 million ~~from~~decrease ~~changes~~ in ~~income~~prepaid ~~taxes~~expenses ~~due~~and toother ancurrent ~~increase~~assets primarily as a result of ~~$9.0~~timing ~~million~~of incollections ~~taxes~~of ~~payable~~rebates from our vendors and $61.54 million infrom ~~tax~~decreased ~~refunds,~~inventory ~~net of payments~~levels.

~~Net~~Investing ~~cash provided by operating activities of $11~~Activities.1 ~~million~~Net ~~for the nine months ended September 27, 2013 primarily consisted of a net loss of $7.5 million, adjustments for non-~~cash ~~items of $29.9 million and net cash~~ used ~~by working capital items of $10.9 million. Adjustments for non-cash items primarily consisted of $37.6 million~~ in ~~depreciation~~investing ~~and~~activities ~~amortization~~totaled ~~of property and equipment and intangible assets,~~ $35.95 million ~~in share-based compensation, $2.8 million in amortization of debt financing costs,~~ and $14.84 million ~~in provisions~~ for ~~doubtful~~the ~~accounts.~~three ~~These~~months ~~amounts~~ended ~~were partially offset by $13.0 million in deferred income taxes~~March 27, ~~$2.3~~2015 ~~million~~and ~~in amortization of the fair value adjustment recorded to the OpCo Notes in connection with the Merger transactions~~March 28, ~~$0.6 million of amortization of deferred lease incentive obligations~~2014, ~~and $0~~respectively.3 ~~million of other items.~~ The respective cash ~~used~~outflows ~~by working capital items primarily consisted of $30.4 million from increased trade receivables, net of changes in provision~~ for ~~doubtful~~each ~~accounts,~~period ~~resulting~~relate ~~from increased sales compared~~ to the prior year, $11.8 million from increased inventory levels due to increased demand, a $2.0 million decrease in accrued interest due to normal timing of accrual and payment activity, and $0.8 million in increased prepaid expenses and other current assets primarily as a result of timing of collections of rebates from our vendors. The cash used by working capital ~~items~~expenditures ~~was~~made ~~partially offset by $17.5 million from an increase~~ in ~~accrued expenses and other current liabilities as a result of~~ the ~~accrual~~ordinary ofcourse ~~litigation-related costs, offset in part by lower payroll and incentive compensation accruals as compared to the prior year-end due to timing~~ of ~~payments, timing of promotional spending, and timing of other miscellaneous accrual and payment activity, $10~~business.~~7 million from increased trade payables balances as a result of the timing of purchases and related payments, and $5.9 million from changes in income taxes.~~

~~Investing~~Financing Activities. Net cash ~~used~~provided inby ~~investing~~financing activities totaled $1336.30 million and $1418.42 million for the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014, respectively. ~~The respective cash outflows for each period relate to capital expenditures made in the ordinary course of business.~~

~~Financing Activities.~~ Net cash ~~used~~provided inby financing activities ~~totaled $11.5 million~~ for the ~~nine~~three months ended ~~September~~March 2627, ~~2014.~~2015 ~~The~~are ~~cash~~attributable ~~outflows primarily related~~ to $~~300~~123.0 million ~~used~~in tonet ~~finance~~proceeds on the ~~redemption~~ABL ofFacility ~~the~~offset ~~OpCo~~by ~~Notes,~~cash ~~$34.0~~outflows ~~million~~related into ~~net~~partial ~~payments~~redemption onof the ~~ABL~~HoldCo ~~Facility~~Notes of $80.0 million, payments of tender premiums and expenses related to redemption of the ~~OpCo~~HoldCo Notes of $184.51 million, $81.09 million ofnet ~~payments~~decrease ~~for~~in ~~debt~~purchase ~~issuance~~card ~~costs~~payables, and payments made on Term Loan Facility of $10.89 million. ~~The cash outflows were partially offset by cash inflows related to proceeds from the issuance of the Term Loan Facility totaling $349.1 million and $1.4 million net increase in purchase card payables.~~

Net cash ~~used~~provided inby financing activities ~~totaled $5.5 million~~ for the ~~nine~~three months ended ~~September~~March 2728, ~~2013.~~2014 ~~The cash outflows~~ were attributable to $7349.51 million in net ~~payments~~proceeds onfrom the ~~ABL~~issuance of Term Loan Facility, offset by $0300.40 million ofused ~~payments~~to onfinance ~~capital~~the ~~lease~~redemption ~~obligations~~of ~~and~~the OpCo Notes, $018.25 million ofin ~~payments~~the onpayment ~~debt~~of ~~financing~~tender ~~costs,~~premiums ~~offset~~and inexpenses ~~part~~on bythe OpCo Notes, $17.81 million ~~net~~of ~~increase~~payments infor ~~purchase~~debt ~~card~~issuance ~~payable~~costs, and $05.80 million ofin ~~proceeds~~net ~~from~~payments on the ~~issuance~~ABL ~~of common stock~~Facility.

Capital Expenditures

Capital expenditures were $135.35 million during the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015, compared to $144.4 million for the ~~nine~~three months ended ~~September~~March 2728, ~~2013~~2014. Capital expenditures as a percentage of net sales were 1.13% for the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015, and 1.21% for the ~~nine~~three months ended ~~September~~March 2728, ~~2013~~2014. Capital expenditures during ~~2014~~the first quarter of 2015 and ~~2013~~2014 were driven primarily by the continued consolidation of our distribution center network, including the investments in larger, more efficient distribution centers and enhancements to our information technology systems. We expect our capital expenditures during the remainder of ~~2014~~2015 to be comparable with our historical capital expenditures as a percentage of sales.

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ABL Facility

~~On September 7, 2012,~~ Interline New Jersey ~~entered~~holds ~~into~~ an asset-based senior secured revolving credit facility with a syndicate of lenders that permits revolving borrowings in an aggregate principal amount of up to $~~275~~325.0 million (the "ABL Facility"). The ABL Facility also provides for a sub-limit of borrowings on same-day notice referred to as swingline loans up to $30.0 million and a sub-limit for the issuance of letters of credit up to $45.0 million. Subject to certain conditions, the principal amount of the ABL Facility may be increased from time to time up to an amount which, in the aggregate for all such increases, does not exceed $100.0 million, in $25.0 million increments. ~~There~~The ~~are~~principal noamount ~~scheduled~~outstanding ~~amortization~~will ~~payments~~be due ~~under~~and ~~the~~payable ~~ABL~~in ~~Facility.~~full ~~The~~at ~~Second ABL Facility Amendment extended the~~ maturity, ~~date~~on ~~of the ABL Facility to~~ April 8, 2019~~, at which date the principal amount outstanding under the ABL Facility will be due and payable in full~~.

Advances under the ABL Facility are limited to the lesser of (a) the aggregate commitments under the ABL Facility and (b) the sum of the following:


•	85% of the book value of eligible accounts receivable; plus


•	the lesser of (i) 70% of the lower of cost (net of rebates and discounts) or market value of eligible inventory; and (ii) 85% of the appraised net orderly liquidation value of eligible inventory;


•	minus certain reserves as may be established under the ABL Facility.

Future borrowings under the ABL Facility are subject to the Company's representation and warranty that no event, change or condition has occurred that has had, or could reasonably be expected to have, a material adverse effect on the Company (as defined in the ABL Facility).

Obligations under the ABL Facility are guaranteed by the Company and each of the wholly-owned material subsidiaries of the co-borrowers under the ABL Facility. These obligations are primarily secured, subject to certain exceptions, by a security interest in substantially all of the assets of Interline New Jersey and each of its wholly-owned material U.S. subsidiaries. This security interest is comprised of a first-priority lien on generally all of the current assets (including accounts receivable and inventory) of Interline New Jersey and the other grantors, which assets secure the Term Loan on a second-priority basis, and a second-priority lien on generally all of the fixed assets of Interline New Jersey and the other grantors, which assets secure the Term Loan on a first-priority basis. The assets held directly by the Company will not secure the ABL Facility, except that the Company will be required to grant a security interest in these assets in the event that the HoldCo Notes are no longer outstanding.

	Revolver ABR Spread	Revolver Eurodollar Spread
Category 1
Greater than $150.0 million	0.25%	1.25%
Category 2
Greater than $75.0 million but less than or equal to $150.0 million	0.50%	1.50%
Category 3
Less than or equal to $75.0 million	0.75%	1.75%

The applicable rates for Category 1 will be available starting in the second fiscal quarter of 2015. The applicable rates for Category 2 and Category 3 are subject to a 0.25% step-down from the spread described above if the fixed charge coverage ratio for the period of four consecutive fiscal quarters ending on the last day of the fiscal quarter most recently ended is greater than 1.75:1.00. This step-down is currently available for Category 3 borrowings and will be available for Category 2 borrowings during the second fiscal quarter of 2015. As of September 26, 2014, the interest rate in effect with respect to the ABL Facility was 1.69% for the Eurodollar revolving loans and 3.75% for the ABR revolving loans.

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~~The~~is ~~Second~~comprised ~~ABL~~of ~~Facility~~a ~~Amendment~~first-priority ~~also~~lien ~~revised~~on ~~the~~generally ~~terms~~all of the ~~commitment~~current ~~fee~~assets ~~payable~~(including byaccounts receivable and inventory) of Interline New Jersey inand ~~respect~~the ofother ~~unutilized commitments~~grantors, which ~~will~~assets besecure ~~equal~~the toTerm ~~0.375%~~Loan ~~per~~on ~~annum~~a ~~for~~second-priority ~~the~~basis, ~~ABL~~and ~~Facility~~a ifsecond-priority ~~utilization~~lien ison ~~less~~generally ~~than~~all ~~25.0%~~ of the ~~aggregate~~fixed ~~commitments~~assets of Interline New Jersey and 0the other grantors, which assets secure the Term Loan on a first-priority basis.~~25%~~ ~~per~~The ~~annum~~assets ifheld directly by the ~~utilization~~Company ofwill not secure the ABL Facility, ~~exceeds~~except ~~25.0%~~that ofthe Company will be required to grant a security interest in these assets in the ~~aggregate~~event ~~commitments~~that the HoldCo Notes are no longer outstanding.

The interest rates applicable to obligations under the ABL Facility will be determined as of the end of each fiscal quarter in accordance with applicable rates set forth in the table below:



	Revolver ABR Spread	Revolver Eurodollar Spread
Category 1
Greater than $177.3 million	0.25%	1.25%
Category 2
Greater than $88.6 million but less than or equal to $177.3 million	0.50%	1.50%
Category 3
Less than or equal to $88.6 million	0.75%	1.75%

The applicable rates for Category 1 will be available starting in the second fiscal quarter of 2015. The applicable rates for Category 2 and Category 3 are subject to a 0.25% step-down from the spread described above if the fixed charge coverage ratio for the period of four consecutive fiscal quarters ending on the last day of the fiscal quarter most recently ended is greater than 1.75:1.00. This step-down is currently available for Category 3 borrowings and will be available for Category 2 borrowings during the second fiscal quarter of 2015. As of March 27, 2015, the interest rate in effect with respect to the ABL Facility was 1.69% for the Eurodollar revolving loans and 3.75% for the ABR revolving loans.

In addition to paying interest on outstanding principal under the ABL facility, Interline New Jersey is required to pay a commitment fee in respect of unutilized commitments, which is equal to 0.375% per annum for the ABL Facility if utilization is less than 25.0% of the aggregate commitments and 0.25% per annum if the utilization of the ABL Facility exceeds 25.0% of the aggregate commitments. The principal balance outstanding may be voluntarily prepaid in advance, without penalty or premium, at any time in whole or in part, subject to certain breakage costs.

The ABL Facility requires the Company and its restricted subsidiaries, on a consolidated basis, to maintain a fixed charge coverage ratio (defined as the ratio of EBITDA, as defined in the credit agreement, to the sum of cash interest, principal payments on indebtedness and accrued income taxes, dividends or distributions and repurchases, redemptions or retirement of the equity interest of the Company) of at least 1.00:1.00 when the excess availability is less than or equal to the greater of: (i) 10% of the total commitments under the ABL Facility; and (ii) $25.0 million.

Interline New Jersey and its restricted subsidiaries may incur secured or unsecured indebtedness so long as (i) in the event that the proceeds thereof are used to redeem HoldCo Notes, the pro forma interest coverage ratio of Interline New Jersey and its restricted subsidiaries is at least 2.00:1.00 or (ii) in the event the proceeds thereof are used for another purpose, (A) if such indebtedness is secured on a second-lien or other junior basis or is unsecured, the pro forma total leverage ratio of Interline New Jersey and its restricted subsidiaries is less than or equal to 6.50:1.00 or (B) if such indebtedness is secured on a first-lien basis, the pro forma ratio of (x) consolidated first lien indebtedness of Interline New Jersey and its restricted subsidiaries and (y) consolidated EBITDA of Interline New Jersey and its restricted subsidiaries (such ratio, the “First Lien Leverage Ratio”) is less than or equal to 3.75:1.00. While the Company guarantees both the Term Loan Facility and the ABL Facility, its assets are not be pledged to secure either such facility so long as the HoldCo Notes remain outstanding.

The ABL Facility also contains restrictive covenants (in each case, subject to exclusions) that limit, among other things the ability of Interline New Jersey and its restricted subsidiaries to:


•	create, incur, assume or suffer to exist, any liens,


•	create, incur, assume or permit to exist, directly or indirectly, any additional indebtedness,


•	consolidate, merge, amalgamate, liquidate, wind up or dissolve themselves,


•	convey, sell, lease, license, assign, transfer or otherwise dispose of their assets,


•	make certain restricted payments,


•	make certain investments,

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•	amend or otherwise alter the terms of documents related to certain subordinated indebtedness,


•	enter into transactions with affiliates, and


•	prepay certain indebtedness.

The ABL Facility provides that Interline New Jersey and its restricted subsidiaries may incur secured or unsecured indebtedness so long as (i) in the event that the proceeds thereof are used to redeem HoldCo Notes, the pro forma interest coverage ratio of Interline New Jersey and its restricted subsidiaries is at least 2.00:1.00 or (ii) in the event the proceeds thereof are used for another purpose, (A) if such indebtedness is secured on a second-lien or other junior basis or is unsecured, the pro forma total leverage ratio of Interline New Jersey and its restricted subsidiaries is less than or equal to 6.50:1.00 or (B) if such indebtedness is secured on a first-lien basis, the pro forma ratio of (x) consolidated first lien indebtedness of Interline New Jersey and its restricted subsidiaries and (y) consolidated EBITDA of Interline New Jersey and its restricted subsidiaries (such ratio, the “First Lien Leverage Ratio”) is less than or equal to 3.75:1.00.

The ABL Facility contains certain customary representations and warranties, affirmative and other covenants and events of default, including, among other things, payment defaults, breach of representations and warranties, covenant defaults, cross-defaults to certain indebtedness bankruptcy, certain events under the Employee Retirement Income Security Act ("ERISA"), judgment defaults, actual or asserted failure of any material guaranty or security document supporting the ABL Facility to be in force and effect and a change of control. If such an event of default occurs the agent under the ABL Facility is entitled to take various actions, including the acceleration of amounts due under the ABL Facility, the termination of all revolver commitments and all other actions that a secured creditor is permitted to take following a default.

Term Loan Facility

~~On March 17, 2014,~~ Interline New Jersey ~~entered~~has ~~into~~ a first lien term loan agreement under which Interline New Jersey incurred a term loan in an aggregate principal amount of $350.0 million (the "Term Loan Facility"). The initial aggregate principal amount of the Term Loan Facility is equal to $350.0 million. The Term Loan Facility allows for incremental increases in an aggregate principal amount of up to (i) $100.0 million plus (ii) the amount as of the date of incurrence that would not cause the First Lien Leverage Ratio to exceed 3.75:1.00. The Term Loan Facility will mature on the earlier of (A) March 17, 2021 and (B) the date which is 91 days prior to the maturity date of the HoldCo Notes.

29The Term Loan Facility bears interest, at the borrower’s option, at (i) LIBOR subject to a minimum floor of 1.0%, plus 300 basis points ("LIBO Rate") or (ii) an ABR subject to a minimum floor of 2.0%, plus 200 basis points. In addition, at the closing of the Term Loan Facility, Interline New Jersey paid (in addition to customary fees) an upfront fee equal to 0.25% of the principal amount thereof. As of March 27, 2015, the interest rate in effect with respect to the Term Loan Facility was 4.00% for LIBO Rate borrowings and 5.25% for ABR borrowings.

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The Term Loan Facility will bear interest, at the borrower’s option, at (i) LIBOR subject to a minimum floor of 1.0%, plus 300 basis points ("LIBO Rate") or (ii) an ABR subject to a minimum floor of 2.0%, plus 200 basis points. In addition, at the closing of the Term Loan Facility, Interline New Jersey paid (in addition to customary fees) an upfront fee equal to 0.25% of the principal amount thereof. As of September 26, 2014, the interest rate in effect with respect to the Term Loan Facility was 4.00% for LIBO Rate borrowings and 5.25% for ABR borrowings.

Under the Term Loan Facility, Interline New Jersey may voluntarily prepay principal at any time and from time to time without penalty or premium, other than a 1.0% premium during the first six months following the closing date for re-pricing transactions only. The Term Loan Facility is due and payable in quarterly installments equal to 0.25% of the original principal amount, with the balance payable in one final installment at the maturity date. Additional provisions include the requirement to repay the Term Loan Facility with certain asset sale and insurance proceeds, certain debt proceeds and 50% of excess cash flow (reducing to 25% if the First Lien Leverage Ratio is no more than 3.00:1.00 and 0% if the First Lien Leverage Ratio is no more than 2.75:1.00).


•	create, incur, assume or suffer to exist, any liens,


•	create, incur, assume or permit to exist, directly or indirectly, any additional indebtedness,


•	consolidate, merge, amalgamate, liquidate, wind up or dissolve themselves,


•	convey, sell, lease, license, assign, transfer or otherwise dispose of their assets,


•	make certain restricted payments,


•	make certain investments,


•	amend or otherwise alter the terms of documents related to certain subordinated indebtedness,


•	enter into transactions with affiliates, and


•	prepay certain indebtedness.

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HoldCo Notes

In connection with the Merger, Interline Delaware issued $365.0 million in aggregate principal amount of the HoldCo Notes due November 15, 2018. Debt financing costs capitalized in connection with the HoldCo Notes were $16.7 million. On December 30, 2014, the Company used a combination of cash on hand and borrowings under the recently amended ABL Facility to redeem $80.0 million of the $365.0 million outstanding aggregate principal amount of the HoldCo Notes at a redemption price of 105% of the outstanding aggregate principal amount to be redeemed, plus accrued and unpaid interest through the redemption date. In connection with the partial redemption of the HoldCo Notes, the Company recorded a loss on early extinguishment of debt in the amount of $6.7 million. The loss was comprised of $4.1 million in tender premium and related transactions costs and the write-off of the unamortized deferred debt issuance costs of $2.6 million.

The HoldCo Notes are the Company's general senior unsecured obligations; rank pari passu in right of payment with all existing and future indebtedness of the Company, other than subordinated obligations; are senior in right of payment to any future subordinated obligations of the Company; are not guaranteed by any subsidiary of the Company; are effectively subordinated to any existing or future obligations of the Company that are secured by liens on assets of the Company (including the Company's guarantee of the ABL Facility, which is secured by a pledge of the stock of Interline New Jersey) to the extent of the value of such assets, unless the HoldCo Notes are equally and ratably secured by such assets; are structurally subordinated to all existing and future indebtedness (including ~~the OpCo Notes and~~ indebtedness under the ABL Facility) of, and other claims and obligations (including preferred stock) of, the subsidiaries of the Company, except to the extent a subsidiary of the Company executes a guaranty agreement in the future. The HoldCo Notes are not guaranteed by any of the Company's subsidiaries.

30The HoldCo Notes bear interest at a rate of 10.00% per annum with respect to cash interest and 10.75% per annum with respect to any paid-in-kind ("PIK") interest, payable semi-annually on January 15 and July 15. The Company is required to pay interest on the HoldCo Notes in cash, unless its subsidiaries are restricted from dividending money to it (or have limited ability to do so), subject to certain circumstances. The Company may at any time redeem some or all of the HoldCo Notes at certain fixed redemption prices expressed as percentages of the principal amount, plus accrued and unpaid interest.

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of, the subsidiaries of the Company, except to the extent a subsidiary of the Company executes a guaranty agreement in the future. The HoldCo Notes are not guaranteed by any of the Company's subsidiaries.

The HoldCo Notes bear interest at a rate of 10.00% per annum with respect to cash interest and 10.75% per annum with respect to any paid-in-kind ("PIK") interest, payable semi-annually on January 15 and July 15. The Company is required to pay interest on the HoldCo Notes in cash, unless its subsidiaries are restricted from dividending money to it (or have limited ability to do so), subject to certain circumstances.

The Company has the option to redeem the HoldCo Notes prior to November 15, 2014 at a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest to the date of redemption. At any time on or after November 15, 2014, the Company may redeem some or all of the HoldCo Notes at certain fixed redemption prices expressed as percentages of the principal amount, plus accrued and unpaid interest. At any time prior to November 15, 2014, the Company may, from time to time, redeem up to 35% of the aggregate principal amount of the HoldCo Notes with any funds up to an aggregate amount equal to the net cash proceeds received by the Company from certain equity offerings at a price equal to 110.00% of the principal amount of the HoldCo Notes redeemed, plus accrued and unpaid interest and additional interest, if any, to the redemption date, provided that the redemption occurs within 90 days of the closing date of such equity offering, and at least 65% of the aggregate principal amount of the HoldCo Notes remain outstanding immediately thereafter.

The Indenture governing the HoldCo Notes contains covenants limiting, among other things, the ability of the Company and its restricted subsidiaries to incur additional indebtedness, issue preferred stock, create or incur certain liens on assets, pay dividends and make other restricted payments, create restriction on dividend and other payments to the Company from certain of its subsidiaries, sell assets and subsidiary stock, engage in transactions with affiliates, consolidate, merge or transfer all or substantially all of the Company's assets and the assets of its subsidiaries and create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications.

The holders of the HoldCo Notes have the right to require us to repurchase their notes upon certain change of control events.

~~Critical Accounting Policies~~23

In preparing the unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"), we are required to make certain estimates, judgments and assumptions. These estimates, judgments and assumptions affect the reported amounts of assets and liabilities, including the disclosure of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. On an ongoing basis, we evaluate these estimates and assumptions. We base our estimates and assumptions on historical experience and on various other factors that we believe are reasonable at the time we make the estimates and assumptions. Actual results may differ from these estimates and assumptions under different circumstances or conditions.

Our critical accounting policies are included in our Annual Report on Form 10-K for the year ended December 27, 2013 filed with the SEC. During the nine months ended September 26, 2014, there were no significant changes to any of our critical accounting policies other than as set forth below.

Goodwill, Intangibles and Other Long-Lived Assets

Management assesses the recoverability and performs impairment tests of goodwill, intangible and other long-lived assets in accordance with accounting principles generally accepted in the United States. Management assesses the recoverability of goodwill and indefinite-lived intangible assets at least annually, or more frequently if events or circumstances indicate that an asset may be impaired. For certain other long-lived assets, recoverability and/or impairment tests are required only when conditions exist that indicate the carrying value may not be recoverable. The following factors, if present, may trigger an impairment review: (1) significant underperformance relative to expected historical or projected future operating results; (2) a significant adverse change in the extent or manner in which an assets is being used; (3) significant negative industry or economic trends; (4) a significant increase in competition; and (5) a significant increase in interest rates on debt. If the recoverability of these assets is unlikely because of the existence of one or more of the above-mentioned factors, an impairment analysis is performed by comparing the estimated fair value, calculated in accordance with ASC 820, Fair Value Measurements and Disclosures, to the carrying value. Management's assessment of the recoverability and impairment tests of intangible assets involve critical accounting estimates. These estimates require significant management judgment. Factors that management must estimate include, among others the economic life of the asset, estimated future cash flows, assumed royalty rates and other factors. The variability of these factors depends on a number of conditions, including uncertainty about future events, and thus our accounting estimates may change from period to period and may result in future

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~~impairment~~Critical ~~charges.~~Accounting ~~The~~Policies ~~Company records impairment charges in the statements of operations,~~ and ~~any~~New ~~impairment~~Accounting ~~charge would result in reduced carrying amounts of the related assets on the balance sheet.~~Pronouncements

~~During~~In preparing the ~~second~~unaudited ~~quarter~~consolidated offinancial ~~fiscal~~statements ~~year~~in ~~2014,~~conformity ~~the~~with ~~Company~~accounting ~~recorded~~principles ~~non-cash~~generally ~~charges~~accepted ofin ~~$67.5 million related to~~ the ~~impairment~~United States of ~~certain~~America ~~indefinite-lived trademark assets~~("U.S. ~~These~~GAAP"), ~~impairments~~we ~~were~~are ~~primarily~~required ~~due~~ to amake ~~strategic~~certain ~~marketing~~estimates, ~~decision~~judgments toand ~~phase~~assumptions. ~~out~~These ~~certain~~estimates, ~~brand~~judgments ~~names~~and ~~which~~assumptions ~~resulted~~affect ~~in a change in~~ the ~~expected~~reported ~~useful~~amounts ~~life~~ of ~~the intangible~~ assets. ~~The~~and ~~charges~~liabilities, ~~were~~including ~~determined~~the ~~using~~disclosure aof ~~discounted~~contingent ~~cash~~assets ~~flow~~and ~~analysis~~liabilities, ~~based~~at on the ~~income~~date ~~approach,~~of ~~relief~~the ~~from~~financial ~~royalty~~statements ~~method,~~and ~~which~~the ~~requires~~reported ~~assumptions~~amounts ~~related~~of ~~to projected~~ revenues ~~from~~and ~~annual~~expenses ~~forecasted~~during ~~plans,~~the ~~assumed~~periods ~~royalty~~presented. ~~rates~~On ~~that~~an ~~could~~ongoing bebasis, ~~payable if~~ we ~~did~~evaluate ~~not~~these ~~own~~estimates ~~the trademarks,~~ and ~~an estimated discount rate~~assumptions. ~~Prior~~We tobase ~~the~~our ~~impairment~~estimates ~~analysis~~and ~~the~~assumptions ~~associated~~on ~~trademarks~~historical ~~had~~experience aand ~~carrying~~on ~~value~~various ofother ~~$71.1~~factors ~~million,~~that ~~and~~we ~~after~~believe ~~the~~are ~~impairment~~reasonable ~~charge~~at the ~~associated~~time ~~trademarks~~we ~~had~~make athe ~~remaining~~estimates ~~carrying~~and ~~value of $3~~assumptions.6 ~~million~~Actual ~~which~~results ~~will~~may bediffer ~~amortized~~from ~~over~~these aestimates ~~definite~~and ~~life~~assumptions ofunder ~~six~~different ~~months. Management~~circumstances ~~has evaluated whether other triggering events have occurred, noting no other events that would cause impairment of the other trademark assets~~ or ~~any other long-lived assets including goodwill~~conditions.

~~Recently~~Our ~~Issued~~critical ~~Accounting~~accounting ~~Guidance~~policies are included in our Annual Report on Form 10-K for the year ended December 26, 2014 filed with the SEC. During the three months ended March 27, 2015, there were no significant changes to any of our critical accounting policies. For further information about recently issued and recently adopted accounting pronouncements, see Note 1. "Description of the Business and Basis of Presentation" in the Notes to the Consolidated Financial Statements included herein.

In March 2013, the FASB issued ASU No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity ("ASU 2013-05"). The amendments contained within this guidance clarify the applicable guidance for the release of the cumulative translation adjustment under current U.S. GAAP when an entity ceases to have a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity. The amendments in ASU 2013-05 are effective prospectively for the first annual period beginning after December 15, 2014, and interim and annual periods thereafter, with early adoption permitted. The amendments should be applied prospectively to derecognition events occurring after the effective date, and prior periods should not be adjusted. This ASU is not expected to have a material impact on the Company's consolidated financial statements.

In May 2014, FASB issued ASU No. 2014-09, Revenue From Contracts With Customers, that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance ("ASU 2014-09"). The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The amendments in this update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The company is currently assessing the impact that this standard will have on its consolidated financial statements.

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Other accounting standards that have been recently issued by the FASB are not expected to have a material impact on the Company’s consolidated financial statements.

Recently Adopted Accounting Guidance

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405) - Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date ("ASU 2013-04"). The objective of the amendments in this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing U.S. GAAP. Examples of obligations within the scope of this ASU include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. This guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement amount its co-obligors, plus any additional amount the entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligations as well as other information about those obligations. The amendments in ASU 2013-04 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013, and should be retrospectively applied to all prior periods presented for those obligations resulting from joint and several liability arrangements within the ASU's scope that exist at the beginning of an entity's fiscal year of adoption. An entity may elect to use hindsight for the comparative periods, and should disclose that fact. Early adoption was permitted. Effective December 28, 2013, the Company adopted this ASU, which did not have a material impact on the Company's consolidated financial statements.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

Commodity Price Risk

WeA ~~are~~small ~~aware~~portion of the potentially unfavorable effects inflationary pressures may create through higher product and material costs, higher asset replacement costs and related depreciation, and higher interest rates. In addition, our operating performance iscould ~~affected~~be impacted by price fluctuations in copper, oil, stainless steel, aluminum, zinc, plastic and polyvinyl chloride ("PVC"), and other commodities and raw materials. We are aware of the potentially unfavorable effects inflationary pressures may create through higher product and material costs and higher asset replacement costs. Additionally, we are aware of potential unfavorable effects on sales and gross margin in deflationary commodity price environments. We seek to minimize the effects of inflation, deflation, and ~~changing~~other ~~prices~~price changes through economies of purchasing and inventory management resulting in cost reductions and productivity improvements as well as price increases to maintain reasonable profit margins. However, such commodity price fluctuations have from time to time created ~~cyclicality~~some variability in our financial performance, and could continue to do so in the future. In addition, our use of priced catalogs may not allow us to offset such cost increases quickly, resulting in a decrease in gross margins and profit.

Interest Rate Risk

Our variable rate term debt is sensitive to changes in the general level of interest rates. As of ~~September~~March 2627, ~~2014~~2015, our variable rate debt outstanding consisted of $81197.0 million under the ABL Facility and $~~348~~346.35 million under the Term Loan Facility. While our variable rate term debt obligations expose us to the risk of rising interest rates, we do not believe that the potential exposure is material to our overall financial performance, results of operations, or cash flows. Based on the outstanding variable rate debt as of ~~September~~March 2627, ~~2014~~2015, a 1.0% annual increase or decrease in current market interest rates would have the effect of causing a $02.80 million pre-tax change to our statement of operations for the ABL Facility and a $0.56 million pre-tax change for the Term Loan Facility.

33The fair market value of our ABL Facility, Term Loan Facility, and HoldCo Notes is subject to interest rate risk. As of March 27, 2015, the estimated fair market value of our debt was as shown below (in thousands):

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	Fair Market Value		Percent of Par
ABL Facility	$	197,901	100.46%
Term Loan Facility	$	343,901	99.25%
HoldCo Notes	$	299,250	105.00%

The fair market value of our ABL Facility, Term Loan Facility, and HoldCo Notes is subject to interest rate risk. As of September 26, 2014, the estimated fair market value of our debt was as shown below (in thousands):

	Fair Market Value		Percent of Par
ABL Facility	$	81,485	100.60%
Term Loan Facility	$	343,026	98.50%
HoldCo Notes	$	378,688	103.75%

Foreign Currency Exchange Risk

~~The~~We ~~majority~~are ofexposed ~~our~~to ~~purchases~~foreign ~~from~~currency ~~foreign-based~~exchange ~~suppliers~~rate ~~are~~risks ~~from~~through ~~China~~our ~~and~~inventory ~~other~~purchases ~~countries~~from inforeign ~~Asia~~based suppliers and ~~are~~operations ~~transacted~~ in ~~U.S. dollars. Accordingly,~~ our ~~risk to~~ foreign ~~currency~~locations ~~exchange~~including ~~rates~~Canada, ~~was~~China ~~not~~and ~~material~~other asAsian ~~of September 26, 2014~~countries.

~~Most~~Because ofthe ~~our~~functional ~~foreign~~currency ~~suppliers~~related ~~incur~~to ~~costs~~most of ~~production~~our inforeign ~~non-U.S.~~operations ~~currencies.~~is ~~Accordingly, depreciation of~~ the ~~U.S.~~applicable ~~dollar~~local ~~against~~currency, ~~foreign currencies could increase the price~~ we ~~pay~~are ~~for~~exposed ~~these~~to ~~products.~~foreign Acurrency ~~substantial~~exchange ~~portion~~rate ofrisks ~~our~~arising ~~products is sourced~~ from ~~suppliers~~transaction in ~~China and~~ the ~~value~~normal course of ~~the~~business. ~~Chinese~~Our ~~Yuan~~primary ~~has~~currency ~~increased~~exposure ~~relative~~risks toare with the ~~U.S.~~Canadian dollar ~~since~~and ~~July~~the ~~2005,~~Chinese ~~when it was allowed to fluctuate against a basket of foreign currencies~~Yuan. ~~Most~~However, ~~experts believe that~~ the ~~value~~majority of ~~the~~our ~~Yuan~~purchases ~~will~~from ~~continue~~foreign-based tosuppliers ~~increase~~are ~~relative~~transacted toin ~~the~~ U.S. ~~dollar absent a policy change in how China regulates its currency~~dollars. ~~The~~Accordingly, ~~continued~~our ~~increase~~risk ~~in the value of the Chinese Yuan relative~~ to ~~the~~foreign ~~U.S.~~currency ~~dollar~~exchange ~~would~~rates ~~most~~has ~~likely~~not ~~result~~historically inbeen ~~an increase in the cost of products that are sourced from suppliers in China~~material.

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In contrast, most of our foreign suppliers incur costs of production in non-U.S. currencies. As a result, depreciation of the U.S. dollar against foreign currencies could pressure supplier revenue streams leading to increases in the price we pay for these products. A substantial portion of our products is sourced from suppliers in China and the value of the Chinese Yuan has increased relative to the U.S. dollar since July 2005, when it was allowed to fluctuate against a basket of foreign currencies. Most experts believe that the value of the Yuan will continue to increase relative to the U.S. dollar over the next few years absent a policy change in how China regulates its currency. The continued increase in the value of the Chinese Yuan relative to the U.S. dollar would most likely result in an increase in the cost of products that are sourced from suppliers in China.

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ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~March 2627, ~~2014~~2015. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~September~~March 2627, ~~2014~~2015, our disclosure controls and procedures were effective to ensure that: (1) material information disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (2) information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting occurred during the quarter ended ~~September~~March 2627, ~~2014~~2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings.

In May 2011, ~~the~~we ~~Company~~were ~~was~~ named as a defendant in the case of Craftwood Lumber Company v. Interline Brands, Inc. ("Craftwood Matter"), filed before the Nineteenth Judicial Circuit Court of Lake County, Illinois, and subsequently removed to the United States District Court for the Northern District of Illinois ("the Court"). The complaint alleges that ~~the~~we ~~Company~~ sent unsolicited fax advertisements to businesses nationwide in violation of the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 (“Junk Fax Act”). At the time of filing the initial complaint in state court, the plaintiff also filed a motion asking the Court to certify a class of plaintiffs comprised of businesses who allegedly received unsolicited fax advertisements from ~~the~~us ~~Company~~ during the four-year statute of limitations period. In its amended complaint filed in the United States District Court, the plaintiff seeks preliminary and permanent injunctive relief enjoining the Company from violating the Junk Fax Act, as well as statutory damages for each fax transmission found to be in violation of the Junk Fax Act. ~~The~~On ~~Company~~November ~~continues~~17, ~~to vigorously contest class action certification and liability; however~~2014, inwe ~~light~~filed ofa ~~the~~joint ~~Company's~~notice ~~assessment~~ of ~~potential~~settlement ~~legal risks associated~~ with the ~~Craftwood~~Court ~~Matter,~~advising ~~the~~them ~~Company~~of ~~recorded a pre-tax charge in~~ the ~~amount~~settlement of ~~$20.5 million in~~ the ~~third~~Craftwood ~~quarter of 2013~~Matter. ~~The~~Under ~~pre-tax charge was included in selling, general and administrative expenses in~~ the ~~statements~~terms of ~~operations for~~ the ~~fiscal~~settlement ~~year~~agreement ~~ended~~we ~~December~~agreed ~~27,~~to ~~2013.~~total Assettlement consideration of ~~September 26,~~$40.0 ~~2014 and December 27~~million, ~~2013,~~representing ~~the~~an ~~litigation-related~~after ~~accrual~~tax payment of $2024.53 million. ~~was~~The ~~included~~settlement inhas ~~accrued~~been ~~expenses~~granted ~~and~~approval ~~other~~by ~~current liabilities in~~ the ~~consolidated~~Court ~~balance~~and ~~sheets.~~payment ~~Based upon the uncertain outcome~~ of the ~~Craftwood~~settlement ~~Matter,~~consideration ais ~~range~~expected ofto ~~reasonable~~occur ~~outcomes~~during ~~cannot~~the besecond ~~estimated~~or asthird ofquarter ~~the date~~ of ~~these~~fiscal ~~financial~~year ~~statements~~2015. ~~Accordingly, actual results may differ.~~

As part of this matter, a pre-tax charge of $20.5 million was recorded in the third quarter of 2013 and an additional $19.5 million pre-tax charge was recorded in the fourth quarter of 2014 and is included in selling, general and administrative expenses in the statements of operations for the fiscal years ended December 27, 2013 and December 26, 2014, respectively. As of March 27, 2015 and December 26, 2014, a litigation related accrual of $39.9 million was included in accrued expenses and other current liabilities in the consolidated balance sheets.

We are involved in various other legal proceedings that have arisen in the ordinary course of our business and have not been fully adjudicated. These actions, when ultimately concluded and determined, will not, in the opinion of management, have a material effect upon our consolidated financial statements.

Because the outcome of litigation is inherently uncertain, we may not prevail in these proceedings and we cannot estimate our ultimate exposure in such proceedings if we do not prevail. Accordingly, any rulings against us in the above proceedings could have a material adverse effect on our financial performance and liquidity.

ITEM 1A. Risk Factors.

For information regarding factors that could affect our financial position, results of operations and cash flows, see the risk factors discussion provided in our Annual Report on Form 10-K for the year ended December 2726, ~~2013~~2014 in Part I. Item 1A. Risk Factors. See also “Part I. Item 2—Forward-Looking Statements” above.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

~~The~~During ~~following~~the ~~table~~three ~~summarizes~~months ended March 27, 2015, the ~~information~~Company ~~with~~sold ~~respect~~342 shares of unregistered equity securities. The sale of the Company's common stock was not subject to ~~sales~~any ~~made~~underwriting bydiscount or commission. The common stock was privately offered and sold to employees of the Company, pursuant to Rule 506 of ~~shares~~Regulation D, and the sales were exempt from registration under the Securities Act. The transactions did not involve any public offering and were sold to a limited group of ~~its~~persons. ~~common~~Each ~~stock~~recipient ~~during~~either received adequate information about the ~~three~~Company ~~months~~or ~~ended~~had ~~September 26~~access, ~~2014:~~through employment or other relationships, to such information, and the Company determined that each recipient had such knowledge and experience in financial and business matters that they were able to evaluate the merits and risks of an investment in the Company.

Date of Sale	Title of Securities Sold	Number of Shares Sold	Aggregate Sale Price
July 23, 2014	Common stock	32	$	10,000
July 25, 2014	Common stock	450	$	140,000
July 28, 2014	Common stock	161	$	50,000

Purchases of Equity Securities by the Issuer

~~The~~During ~~following~~the ~~table~~three ~~provides~~months ~~information~~ended ~~related~~March 27, to2015, the ~~purchase~~Company repurchased 763 shares of ~~common~~which 332 represented shares ~~during~~tendered in satisfaction of the ~~three~~exercise ~~months~~price ~~ended~~and ~~September 26,~~tax ~~2014:~~withholding obligations related to the non-cash exercise of stock options during the period.

Date of Sale		Title of Securities Sold		Number of Shares Sold(1)		Aggregate Sale Price
September 19, 2014		Common stock		353		$	109,792

____________________

(1) Shares purchased represent shares tendered in satisfaction of the exercise price and tax withholding obligations related to the non-cash exercise of stock options during the period.

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ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Mine Safety Disclosures.

None.

ITEM 5. Other Information.

None.

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ITEM 6. Exhibits.

The following exhibits are being filed as part of this Quarterly Report on Form 10-Q:

Exhibit Number		Document
		PLAN OF ACQUISITION, REORGANIZATION ARRANGEMENT, LIQUIDATION OR SUCCESSION
2.1		Agreement and Plan of Merger among Isabelle Holding Company Inc., Isabelle Acquisition Sub Inc., and Interline Brands, Inc., dated as of May 29, 2012 (incorporated by reference to Exhibit 2.1 of Current Report on Form 8-K filed on May 29, 2012).
		ARTICLES OF INCORPORATION AND BYLAWS
3.1		Third Amended and Restated Certificate of Incorporation of Interline Brands, Inc. (incorporated by reference to Exhibit 3.1 of Current Report on Form 8-K filed on September 13, 2012).
3.2		Sixth Amended and Restated By-Laws of Interline Brands, Inc., effective as of November 9, 2012 (incorporated by reference to Exhibit 3.3 of Quarterly Report on Form 10-Q filed on November 13, 2012).
		INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
4.1		Form of Specimen Certificate of Common Stock of the Company (incorporated by reference to Exhibit 4.2 to the Company's Amendment No. 4 to Registration Statement on Form S-1 filed on December 3, 2004 (No. 333-116482)).
4.2		Purchase Agreement, dated November 4, 2010, among Interline New Jersey, the Company, as guarantor, subsidiary guarantors named therein and Barclays Capital Inc. as the representative of several initial purchasers named therein (incorporated by reference to Exhibit 10.35 to the Company's Registration Statement on Form S-4 filed on December 16, 2010 (No. 333-171215)).
4.3		Indenture, dated as of November 16, 2010, among Interline New Jersey, as issuer, the Company, as guarantor, subsidiary guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-4 filed on December 16, 2010 (No. 333-171215)).
4.4		Registration Rights Agreement, dated as of November 16, 2010, by and among Interline New Jersey, the guarantors named therein, Barclays Capital Inc., J.P. Morgan Securities LLC, BB&T Capital Markets, a division of Scott Stringfellow, LLC, Goldman, Sachs & Co., Lazard Capital Markets LLC, SunTrust Robinson Humphrey, Inc. and U.S. Bancorp Investments, Inc. (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-4 filed on December 16, 2010 (No. 333-171215)).
4.5		Second Supplemental Indenture among Interline Brands, Inc., the Subsidiary Guarantors, and Wells Fargo Bank, National Association, as Trustee, dated as of June 19, 2012 (incorporated by reference to Exhibit 4.1 of Current Report on Form 8-K filed on June 29, 2012).
4.6		Indenture Agreement for 10%/10.75% Senior Notes due 2018, among Isabelle Acquisition Sub Inc., as Issuer and Wells Fargo Bank, National Association, as Trustee, dated as of August 6, 2012 (incorporated by reference to Exhibit 4.1 of Current Report on Form 8-K filed on September 13, 2012).
4.7		Successor Supplemental Indenture, among Interline Brands, Inc. (as successor by merger to Isabelle Acquisition Sub Inc.) and Wells Fargo Bank, National Association, as trustee under the Indenture, dated as of September 7, 2012 (incorporated by reference to Exhibit 4.2 of Current Report on Form 8-K filed on September 13, 2012).
4.8		Exchange and Registration Rights Agreement, among Interline Brands, Inc., Goldman, Sachs & Co., and Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated August 6, 2012 (incorporated by reference to Exhibit 4.3 of Current Report on Form 8-K filed on September 13, 2012).
4.9		Joinder Agreement, among Interline Brands, Inc., Goldman, Sachs & Co., and Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated September 7, 2012 (incorporated by reference to Exhibit 4.4 of Current Report on Form 8-K filed on September 13, 2012).
4.10		Fifth Supplemental Indenture, dated as of March 12, 2014, among Interline New Jersey, the Company, the Subsidiary Guarantors and Wells Fargo Bank, National Association, as Trustee, to the Indenture dated as of November 16, 2010 (as amended and supplemented) (incorporated by reference to Exhibit 4.1 of Current Report on Form 8-K filed on March 12, 2014).
		MATERIAL CONTRACTS
		STATEMENTS RE COMPUTATION OF RATIOS
10.1		First Lien Term Loan Agreement, dated as of March 17, 2014, among Interline Brands, Inc., a New Jersey Corporation, as the borrower, Interline Brands, Inc., a Delaware corporation, the subsidiaries of the borrower from time to time party thereto, the lenders from time to time party thereto, and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on March 19, 2014).
12.1	†	Computation of earnings to fixed charges and earnings to combined fixed charges and preferred dividends of Interline Brands, Inc..
10.2		First Amendment to Credit Agreement, dated as of March 17, 2014, among Interline Brands, Inc., a New Jersey corporation, Wilmar Financial, Inc., JanPak, LLC, JanPak of South Carolina, LLC, IBI Merchandising Services, Inc., each as a borrower, Interline Brands, Inc., a Delaware corporation, Glenwood Acquisition LLC and Zip Technology, LLC, as additional loan parties, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 of Current Report on Form 8-K filed on March 19, 2014).
		CERTIFICATIONS
31.1	†	Certification of the Chief Executive Officer of Interline Brands, Inc., pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification of the Chief Financial Officer of Interline Brands, Inc., pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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Exhibit Number		Document
10.3		Pledge and Security Agreement, dated as of March 17, 2014, among Interline Brands, Inc., a New Jersey corporation, certain of its subsidiaries party thereto, and Barclays Bank PLC, as administrative agent (incorporated by reference to Exhibit 10.3 of Current Report on Form 8-K filed on March 19, 2014).
10.4		Amended and Restated Pledge and Security Agreement, dated as of March 17, 2014, among Interline Brands, Inc., a New Jersey corporation, certain of its subsidiaries party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.4 of Current Report on Form 8-K filed on March 19, 2014).
10.5		Intercreditor Agreement, dated as of March 17, 2014, among Interline Brands, Inc., a New Jersey corporation, Interline Brands, Inc., a Delaware corporation, the other grantors from time to time party thereto, Bank of America, N.A., as revolving facility agent, and Barclays Bank PLC, as first lien administrative agent and first lien security agent (incorporated by reference to Exhibit 10.5 of Current Report on Form 8-K filed on March 19, 2014).
10.6		Second Amendment to Credit Agreement, dated as of April 8, 2014, among Interline Brands, Inc., a New Jersey corporation, Wilmar Financial, Inc., JanPak, LLC, JanPak of South Carolina, LLC, IBI Merchandising Services, Inc., each as a borrower, Interline Brands, Inc., a Delaware corporation, Glenwood Acquisition LLC and Zip Technology, LLC, as additional loan parties, the lenders from time to time party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on April 11, 2014).
10.7		First Amendment to Amended and Restated Pledge and Security Agreement, dated as of April 8, 2014, among Interline Brands, Inc., a New Jersey corporation, certain of its subsidiaries party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.2 of Current Report on Form 8-K filed on April 11, 2014).
10.8		Employment Agreement, dated as of May 19, 2014, by and between Interline Brands, Inc. and Federico Pensotti (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K filed on May 16, 2014).
		STATEMENTS RE COMPUTATION OF RATIOS
12.1	†	Computation of earnings to fixed charges and earnings to combined fixed charges and preferred dividends of Interline Brands, Inc..
		CERTIFICATIONS
31.1	†	Certification of the Chief Executive Officer of Interline Brands, Inc., pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification of the Chief Financial Officer of Interline Brands, Inc., pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	†	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		INTERACTIVE DATA FILES
101.INS	*	XBRL Instance Document
101.SCH	*	XBRL Taxonomy Extension Schema Document
101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document

† Furnished herewith.

* Attached as Exhibit 101 to this report are the following items formatted in XBRL (Extensible Business Reporting Language):

1 Consolidated Balance Sheets (Unaudited) as of ~~September~~March 2627, ~~2014~~2015 and December 2726, ~~2013~~2014;

2 Consolidated Statements of Operations ~~and Comprehensive Loss~~ (Unaudited) for the three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014, respectively;

3 Consolidated Statements of Operations and Comprehensive Loss (Unaudited) for the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014, respectively;

4 Consolidated Statements of Cash Flows (Unaudited) for the ~~nine~~three months ended ~~September~~March 2627, ~~2014~~2015 and ~~September~~March 2728, ~~2013~~2014, respectively;


5	Notes to the Unaudited Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		INTERLINE BRANDS, INC.
		(Registrant)
October 27, 2014		/S/ FEDERICO PENSOTTI
May 1, 2015		/S/ FEDERICO L. PENSOTTI
Date		Federico L. Pensotti
		Chief Financial Officer
		(Duly Authorized Signatory and Principal Financial Officer)

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