- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 10-Q <Table> [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ____________ </Table> COMMISSION FILE NUMBER 333-61713 HEAFNER TIRE GROUP, INC. <Table> A DELAWARE CORPORATION (IRS EMPLOYER IDENTIFICATION NO.) 56-0754594 </Table> 12200 HERBERT WAYNE COURT SUITE 150 HUNTERSVILLE, NORTH CAROLINA 28078 (704) 992-2000 Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Number of common shares outstanding at May 14, 2002: 5,126,917 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS <Table> <Caption> PAGE ---- PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Condensed Consolidated Balance Sheets -- March 30, 2002 (unaudited) and December 29, 2001......................... 1 Condensed Consolidated Statements of Operations (unaudited) -- Quarters Ended March 30, 2002 and March 31, 2001...................................................... 2 Condensed Consolidated Statements of Cash Flows (unaudited) -- Quarters Ended March 30, 2002 and March 31, 2001...................................................... 3 Notes to Condensed Consolidated Financial Statements........ 4 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................... 14 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk...... 16 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings............................................... 16 ITEM 6. Exhibits and Reports on Form 8-K................................ 17 Signatures...................................................... 18 </Table> PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. HEAFNER TIRE GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEETS -- MARCH 30, 2002 AND DECEMBER 29, 2001 (in thousands, except share amounts) <Table> <Caption> MARCH 30, 2002 DECEMBER 29, 2001 -------------- ----------------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents................................. $ 3,628 $ 4,131 Accounts receivable, net of allowances of $3,849 and $3,571................................................. 102,554 93,621 Inventories, net.......................................... 159,238 154,212 Deferred income taxes..................................... 12,944 27,364 Other current assets...................................... 7,779 10,851 -------- -------- Total current assets................................... 286,143 290,179 -------- -------- Property and equipment, net................................. 24,690 27,486 Goodwill, net............................................... 93,940 93,940 Other intangible assets, net................................ 4,462 5,171 Deferred income taxes....................................... 12,005 16,626 Other assets................................................ 6,597 9,618 -------- -------- Total assets...................................... $427,837 $443,020 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable.......................................... $175,656 $170,571 Accrued expenses.......................................... 20,501 20,643 Current maturities of long-term debt...................... 5,479 5,295 -------- -------- Total current liabilities.............................. 201,636 196,509 -------- -------- Revolving credit facility and other long-term debt.......... 155,288 126,544 Series D Senior Notes....................................... 28,600 150,000 Capital lease obligations................................... 15,320 1,346 Other liabilities........................................... 7,660 8,042 Commitments and contingencies Redeemable preferred stock (Note 10)........................ 11,035 24,115 Stockholders' investment: Preferred stock (Note 11)................................. 42,353 -- Common stock, par value $.01 per share; 50,000,000 and 15,000,000 shares authorized; 5,126,917 and 5,136,917 shares issued and outstanding.......................... 51 51 Additional paid-in capital................................ 22,748 22,751 Warrants.................................................. 1,759 1,137 Notes receivable from sale of stock....................... (337) (340) Retained deficit.......................................... (58,276) (87,135) -------- -------- Total stockholders' investment......................... 8,298 (63,536) -------- -------- Total liabilities and stockholders' investment.... $427,837 $443,020 ======== ======== </Table> The accompanying notes to condensed consolidated financial statements are an integral part of these balance sheets. 1 HEAFNER TIRE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands) <Table> <Caption> QUARTERS ENDED ------------------------ MARCH 30, MARCH 31, 2002 2001 --------- --------- Net sales................................................... $251,564 $267,792 Cost of goods sold.......................................... 203,904 216,391 -------- -------- Gross profit.............................................. 47,660 51,401 Selling, general and administrative expenses................ 42,527 52,844 -------- -------- Operating income (loss)................................... 5,133 (1,443) Other income (expense): Interest expense, net..................................... (6,329) (7,410) Other income, net......................................... 160 334 -------- -------- Loss from continuing operations before income taxes......... (1,036) (8,519) Benefit for income taxes.................................... (414) (649) -------- -------- Loss from continuing operations before extraordinary item... (622) (7,870) Loss from discontinued operations, net of income tax benefit of $0 and $514............................................ -- (769) Loss on disposal of discontinued operations, net of income tax benefit of $89 and $0................................. (134) -- -------- -------- Loss before extraordinary item.............................. (756) (8,639) Extraordinary gain on repurchase of Series D Senior Notes, net of income tax provision of $19,990 and $0............. 29,975 -- -------- -------- Net income (loss)........................................... $ 29,219 $ (8,639) ======== ======== </Table> The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 2 HEAFNER TIRE GROUP, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) <Table> <Caption> QUARTERS ENDED ------------------------------- MARCH 30, 2002 MARCH 31, 2001 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net cash used in continuing operating activities..... $ (8,988) $(17,761) -------- -------- Net cash provided by discontinued operations......... -- 2,957 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net of cash acquired........................ -- (538) Purchase of property and equipment........................ (277) (3,030) Proceeds from sale of property and equipment.............. 536 825 Proceeds from sale of assets of discontinued operations... -- 1,445 Other, net................................................ (92) 315 -------- -------- Net cash provided by (used in) investing activities.......................................... 167 (983) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from revolving credit facility and other long-term debt......................................... 32,325 18,947 Repurchase of Series D Senior Notes....................... (64,959) -- Net proceeds from sale-leaseback transaction.............. 13,285 -- Proceeds received from issuance of preferred stock........ 28,913 -- Principal payments on other long-term debt................ (1,246) (513) -------- -------- Net cash provided by financing activities............ 8,318 18,434 -------- -------- Net (decrease) increase in cash and cash equivalents........ (503) 2,647 Cash and cash equivalents, beginning of period.............. 4,131 3,327 -------- -------- Cash and cash equivalents, end of period.................... $ 3,628 $ 5,974 ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -- Cash payments for interest................................ $ 6,632 $ 2,524 ======== ======== Cash payments for taxes................................... $ 13 $ 256 ======== ======== </Table> The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 3 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 30, 2002 1. NATURE OF BUSINESS: Heafner Tire Group, Inc. (together with its subsidiaries, the "Company") (formerly The J. H. Heafner Company, Inc.), is a Delaware corporation primarily engaged in the wholesale distribution of tires and tire accessories. 2. BASIS OF PRESENTATION: The unaudited condensed consolidated financial statements have been prepared by the Company and have not been audited. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position of the Company, the results of its operations and cash flows have been made. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's consolidated financial statements reported on Form 10-K for the fiscal year ended December 29, 2001. The results of the operations for the quarter ended March 30, 2002 are not necessarily indicative of the operating results for the full fiscal year. Certain prior period amounts have been reclassified to conform to the current period presentation. 3. NEW ACCOUNTING PRONOUNCEMENTS: In July 2001, the FASB issued Statement No. 141 "Business Combinations" ("SFAS 141") and Statement No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141 requires that the purchase method of accounting be used for all business combinations completed after June 30, 2001. This statement also specifies that intangible assets acquired in a purchase method business combination must meet certain criteria to be recognized and reported apart from goodwill. SFAS 142 revises the accounting for purchased goodwill and intangible assets. Under SFAS 142, goodwill and intangible assets with indefinite lives will no longer be amortized, but will be tested for impairment annually and in the event of an impairment indicator adjustments will be made to comply with the standard. SFAS 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("SFAS 121"). The provisions of SFAS 141 apply to all business combinations initiated after June 30, 2001. The Company adopted the provisions of SFAS 142 effective January 1, 2002. The Company has until June 30, 2002 to complete the first step analysis to determine whether their goodwill is impaired. The Company is in the process of completing this analysis and has not determined the impact of potential goodwill impairment on the financial statements. The following table illustrates the comparable adjusted net income (loss) for the first quarter of 2002 and 2001: <Table> <Caption> FOR THE QUARTER ENDED --------------------- MARCH 30, MARCH 31, 2002 2001 --------- --------- Reported loss before extraordinary item..................... $ (756) $(8,639) Add back: goodwill amortization, net of income tax benefit of $113................................................... -- 1,635 ------- ------- Adjusted loss before extraordinary item................ $ (756) $(7,004) ======= ======= Reported net income (loss).................................. $29,219 $(8,639) Add back: goodwill amortization, net of income tax benefit of $113................................................... -- 1,635 ------- ------- Adjusted net income (loss)............................. $29,219 $(7,004) ======= ======= </Table> 4 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) In August 2001, the FASB issued Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes SFAS 121. However, this Statement retains the fundamental provisions of SFAS 121 for (a) recognition and measurement of the impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sale. This Statement supersedes the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" ("APB 30"), for the disposal of a segment of a business. However, this Statement retains the requirement of APB 30 to report discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of (by sale, by abandonment, or in a distribution to owners) or is classified as held for sale. This Statement also amends ARB No. 51, "Consolidated Financial Statements", to eliminate the exception to consolidation for a temporarily controlled subsidiary. The provisions of SFAS 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. The Company has adopted the provisions effective January 1, 2002. 4. INVENTORIES: Inventories consist primarily of automotive tires, wheels and accessories and are valued at the lower of cost, determined on the first-in, first-out (FIFO) method or market. The Company performs periodic assessments to determine the existence of obsolete, slow-moving and non-saleable inventories and records necessary provisions to reduce such inventories to net realizable value. Terms with a majority of the Company's tire vendors allow return of tire products, within limitations, specified in their supply agreements. 5. SHIPPING AND HANDLING COSTS: Outbound shipping and handling costs are classified as selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. Such expenses totaled $15.7 million and $18.0 million for the quarters ended March 30, 2002 and March 31, 2001, respectively. 6. DEFERRED INCOME TAXES: The Company has deferred tax assets of $24.9 million and $44.0 million at March 30, 2002 and December 29, 2001, respectively. The decrease in net deferred tax assets is primarily attributable to the utilization of $20.0 million of net operating loss carryforwards as it relates to the extraordinary gain for retirement of the Series D Senior Notes (see Note 9). Management has evaluated the Company's deferred tax assets and has concluded that the realizability of the deferred tax assets is "more likely than not", except as it relates to certain state net operating loss carryforwards ("NOLs"). Accordingly, a valuation allowance of $2.0 million has been provided. This evaluation considered the historical and long-term expected profitability of the Company's continuing operations and the expected efficiencies to be gained from efforts initiated in 2001 to streamline operations. Given the timing of the reversal of its temporary differences and the expiration date of its net operating loss carryovers, the Company believes that taxable income generated in current and future years will be sufficient to utilize the remaining net deferred tax assets. The Company's ability to generate future taxable income is dependent on numerous factors including general economic conditions, the state of the replacement tire market and other factors beyond management's control. Therefore, there can be no assurance that the Company will meet its expectation of future taxable income. 5 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 7. FINANCING ARRANGEMENTS: REVOLVING CREDIT FACILITY On March 18, 2002, the Company and its lenders executed an amendment to the revolving credit facility ("Revolver") to, among other things, amend the financial covenants contained therein, change the rate at which borrowings thereunder bear interest and amend certain definitions contained therein. In addition, the amended facility provides for additional availability due in part to a reduction in the minimum availability reserve (as defined in the agreement). The minimum availability reserve will begin to increase by $0.5 million in August 2002 and will increase each month until the reserve reaches the original amount in August 2003. The amended agreement provides for borrowings in the aggregate principal amount of up to the lesser of $180.0 million or the Borrowing Base, as defined in the agreement, which is based on 85% of eligible accounts receivable, the lesser of 65% of eligible tire inventory plus 65% of certain secured tire inventory (within limitations as defined in the agreement) or $90 million and the lesser of 50% of all other eligible inventory or $35 million less defined reserves. A nonrefundable fee of approximately $0.5 million was charged in connection with this amendment. The Revolver term expires in March 2005, extendable by the Company and the banks for an additional five years. Borrowings under the Revolver bear interest, at (i) the Base Rate, as defined, plus the applicable margin (2.0% as of March 30, 2002) or (ii) the Eurodollar Rate, as defined, plus the applicable margin (3.25% as of March 30, 2002). As a result of the amendment, the applicable margins as of April 1, 2002 for Eurodollar Rate loans are increased to 3.5%. These margins are subject to performance-based step-downs resulting in margins ranging from 0.75% to 2.0% for Base Rate loans and 2.0% to 3.5% for Eurodollar Rate loans, respectively. The Revolver, as amended, requires the Company to meet certain financial requirements, including minimum EBITDA, fixed charge coverage and tangible capital funds, all as defined, and minimum loan availability and certain covenants which, among other things, restrict the ability of the Company to incur additional indebtedness; enter into guarantees; make loans and investments; make capital expenditures; declare dividends; engage in mergers, consolidations and asset sales; enter into transactions with affiliates; create liens and encumbrances; enter into sale/leaseback transactions; modify material agreements; and change the business it conducts. As of May 14, 2002, the Company's financial measures were in excess of the minimums required, as amended, and management expects that such amounts will remain above the minimums for the foreseeable future. The Company's obligations under the Revolver are secured by all inventories and accounts receivable. Aggregate annual maturities of long-term debt, reflecting the debt restructuring discussed in Note 9, (excluding capital lease obligations) at March 30, 2002, are as follows (in thousands): <Table> <Caption> YEAR ENDING DECEMBER: ----------- 2002 (remainder).................................. $ 4,750 2003.............................................. 2,795 2004.............................................. 1,790 2005.............................................. 151,043 2006.............................................. 172 Thereafter........................................ 28,817 -------- $189,367 ======== </Table> 6 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) CAPITAL LEASE OBLIGATIONS On March 27, 2002, the Company completed an agreement for the sale and leaseback of three of its owned facilities generating cash proceeds of $13.9 million. The Company reports this transaction as a capital lease using direct financing lease accounting. As such, the Company recorded a $14.0 million capital lease obligation during the first quarter. The Company has determined that all cash paid to the lessor is properly recorded as interest expense and that the capital lease obligation will be reduced when the Company no longer has continuing involvement with the properties. The initial term of the lease is for 20 years, followed by two, 10-year renewal options. The annual rent paid under the terms of the lease is $1.6 million annually (paid quarterly) and is adjusted for CPI changes every two years. In addition, the purchaser received warrants to purchase 0.75% of the Company's fully diluted common stock. The warrants have a term of 10 years with a stated exercise price of $3.00 per warrant. 8. DISCONTINUED OPERATIONS: Effective January 26, 2001, the Company's Board of Directors authorized the exit of its retail operations and determined that it was in the Company's best interest to solely concentrate on wholesale distribution, which is its core business. In that regard, effective May 15, 2001, the Company completed a transaction pursuant to a Stock Purchase Agreement to sell all the capital stock in Winston Tire Company ("Winston"), its retail segment, to Performance Management, Inc. for a purchase price of approximately $10.0 million, of which $2.8 million is payable May 15, 2002. Accordingly, this segment has been reflected as a discontinued operation in the accompanying consolidated financial statements and previously reported financial results for all periods have been restated to reflect this treatment. Winston incurred operating losses subsequent to the January 26, 2001 measurement date through the date of sale, which were charged to the Company's existing reserve for discontinued operations. In the first quarter 2002, the Company recorded an additional loss on disposal of discontinued operations of approximately $0.1 million, net of income tax benefit of $0.1 million, for a cumulative net loss on sale of $13.9 million. Net sales of discontinued operations for the period ended January 26, 2001, the measurement date, were approximately $12.8 million. Net sales from continuing operations for the period ended March 31, 2001 include approximately $10.5 million of intersegment sales to Winston that have not been eliminated in the accompanying statement of operations. On January 15, 2002, Winston filed for protection from creditors under Chapter 11 of the United States Bankruptcy Code. In connection therewith, the Company has agreed to provide Winston with a $2.0 million trade credit facility to acquire inventory from the Company and as such, the Supply and Retail Distribution Agreement dated May 15, 2001, was terminated in its entirety. The Company entered into a Settlement Agreement, dated January 16, 2002, with Winston, which was approved by the Bankruptcy Court by order dated February 6, 2002. The Company remains liable as a guarantor on certain of Winston's leases. As of March 30, 2002, total obligations of the Company, as guarantor on these leases is approximately $18 million. However, the Company has secured assignments or sublease agreements for a substantial amount of these commitments. The Company has assessed the terms of the settlement and its estimated guarantor obligations and believes that any potential liability has been adequately considered in prior provisions. However, due to the inherent uncertainties of the bankruptcy process, the Company may be exposed to additional liabilities, which are currently not known or quantifiable. 9. EXTRAORDINARY ITEM: On February 5, 2002, the Company commenced an offer (as amended, the "Offer") to purchase its outstanding 10% Series D Senior Notes ("Senior Notes") due in 2008. The Offer contemplated the purchase 7 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) by the Company of up to $126 million in aggregate principal amount of outstanding Senior Notes at a purchase price of not less than $450 nor greater than $535 per $1,000 in outstanding principal amount plus accrued but unpaid interest to but excluding the payment date. Concurrently with the Offer, the Company solicited consents to the amendment of certain covenants contained in the Indenture governing the Senior Notes, dated as December 1, 1998 (as amended and supplemented from time to time, the "Indenture"), among the Company, the Subsidiary Guarantors from time to time party thereto (the "Subsidiary Guarantors") and First Union National Bank, as trustee (the "Trustee"). On March 27, 2002, the Company completed the Offer and repurchased $121.4 million in outstanding principal amount of the Senior Notes at a purchase price of $535 per $1,000 in face amount of Senior Notes, plus accrued and unpaid interest of $4.5 million. The Company funded the repurchase of the Senior Notes through several debt restructuring transactions ("Restructuring Transactions"). The Restructuring Transactions consisted of (i) an amendment to the Company's revolving credit facility to provide additional availability, (ii) a sale and leaseback of three of the Company's tire distribution warehouses generating cash proceeds of $13.9 million and (iii) an equity investment of $28.9 million from the issuance of 9,637,592 shares of Series D preferred stock to the Company's existing stockholders. Concurrently with the repurchase of the Senior Notes, the Company, the Subsidiary Guarantors and the Trustee executed the Fourth Supplemental Indenture to the Indenture. The amendments to the Indenture were effected primarily to permit the Restructuring Transactions and make other required modifications. The Company has accounted for the repurchase and extinguishment of the Senior Notes as an extraordinary item. In the first quarter 2002, the Company has recorded a $30.0 million extraordinary gain, net of income tax provision of $20.0 million. 10. REDEEMABLE PREFERRED STOCK: The following represents the Company's issued and outstanding redeemable preferred stock, reflecting the amendment and modifications discussed in Note 11 below (in thousands, except share amounts): <Table> <Caption> MARCH 30, 2002 DECEMBER 29, 2001 -------------- ----------------- (UNAUDITED) Redeemable preferred stock Series A -- 4% cumulative; 7,000 shares authorized, issued and outstanding....... $ 7,000 $ 7,000 Redeemable preferred stock Series B -- variable rate cumulative; 4,500 shares authorized, issued and outstanding........................................... 4,035 4,035 Redeemable preferred stock Series C-- 12% cumulative; 1,333,334 shares authorized, issued and outstanding at December 29, 2001..................................... -- 13,080 ------- ------- Total redeemable preferred stock.............. $11,035 $24,115 ======= ======= </Table> 11. STOCKHOLDERS' INVESTMENT: AMENDMENT TO ARTICLES OF INCORPORATION In conjunction with the Restructuring Transactions, the Company amended and restated its articles of incorporation to authorize 50,000,000 shares of a single class of $.01 par value common stock and 10,982,426 shares of $.01 par value preferred stock. Of the 10,982,426 shares of preferred stock, 7,000 shares are initially designated Series A preferred stock, 4,500 shares are initially designated Series B preferred stock, 1,333,334 shares are initially designated Series C preferred stock and 9,637,592 shares are initially designated Series D preferred stock. The conversion price of the Series C preferred stock was reduced to $3.00 per common share and the holders' redemption rights were eliminated. 8 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) PREFERRED STOCK The following represents the Company's issued and outstanding preferred stock (in thousands, except share amounts): <Table> <Caption> MARCH 30, 2002 DECEMBER 29, 2001 -------------- ----------------- (UNAUDITED) Preferred stock Series C-- 12% cumulative; 1,333,334 shares authorized, issued and outstanding............. 13,440 -- Preferred stock Series D-- 12% cumulative; 9,637,592 shares authorized; 9,637,592 and 0 shares issued and outstanding........................................... 28,913 -- ------- ------- Total preferred stock......................... $42,353 $ -- ======= ======= </Table> On March 27, 2002, the Company issued 9,637,592 shares of Series D preferred stock for $3.00 per share in exchange for $28.9 million in cash contributed by certain of its principal stockholders. The proceeds were used to repurchase certain of the Company's Senior Notes. Shares of Series D preferred stock accrue dividends at an annual rate of 12% and are redeemable by the Company, but not the holder, at the initial price plus any cumulative unpaid dividends as of the redemption date. However, as long as any shares of Series A preferred stock or Series B preferred stock remain outstanding, no dividends may be paid, nor redemption occur. In addition, shares of Series D preferred stock are convertible into common stock at a conversion price of $3.00 per common share. 12. COMMITMENTS AND CONTINGENCIES: See "PART II -- OTHER INFORMATION, Item 1. Legal Proceedings." The Company is party to various lawsuits and claims, including purported class actions, arising in the normal course of business. In the opinion of management, these lawsuits and claims are not, singularly or in the aggregate, material to the Company's financial position or results of operations. 13. SUBSEQUENT EVENT: On April 17, 2002, the Company announced plans to change its name from Heafner Tire Group to American Tire Distributors(R) effective July 4, 2002. The new name is part of the Company's transition from a collection of companies joined through acquisition into a single-minded organization with an unmatched, coast-to-coast footprint in the distribution market. The move follows two years of reorganization during which the Company discontinued its venture into tire retailing and strengthened its financial condition. 14. SUBSIDIARY GUARANTOR FINANCIAL INFORMATION: The Company's Senior Notes are guaranteed on a full, unconditional and joint and several basis by all of the Company's direct subsidiaries, each of which is wholly-owned. The condensed consolidating financial information for the Company is as follows (in thousands): 9 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Condensed consolidated balance sheets as of March 30, 2002 and December 29, 2001, are as follows: <Table> <Caption> AS OF MARCH 30, 2002 --------------------------------------------------- PARENT SUBSIDIARY COMPANY GUARANTORS ELIMINATIONS CONSOLIDATED -------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents........................ $ 3,024 $ 604 $ -- $ 3,628 Accounts receivable, net......................... 75,682 26,872 -- 102,554 Inventories, net................................. 110,523 48,715 -- 159,238 Other current assets............................. 19,647 1,076 -- 20,723 Intercompany receivables......................... 60,232 -- (60,232) -- -------- -------- --------- -------- Total current assets.......................... 269,108 77,267 (60,232) 286,143 -------- -------- --------- -------- Property and equipment, net........................ 18,927 5,763 -- 24,690 Goodwill and other intangible assets, net.......... 50,507 47,895 -- 98,402 Investment in subsidiaries......................... 65,688 -- (65,688) -- Other assets....................................... 17,683 919 -- 18,602 -------- -------- --------- -------- Total assets............................. $421,913 $131,844 $(125,920) $427,837 ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable................................. $175,567 $ 89 $ -- $175,656 Accrued expenses................................. 16,963 3,538 -- 20,501 Current maturities of long-term debt............. 4,748 731 -- 5,479 Intercompany payables............................ -- 60,232 (60,232) -- -------- -------- --------- -------- Total current liabilities..................... 197,278 64,590 (60,232) 201,636 -------- -------- --------- -------- Revolving credit facility and other long-term debt............................................. 155,199 89 -- 155,288 Series D Senior Notes.............................. 28,600 -- -- 28,600 Capital lease obligations.......................... 15,164 156 -- 15,320 Other liabilities.................................. 6,339 1,321 -- 7,660 Redeemable preferred stock......................... 11,035 -- -- 11,035 Stockholders' investment: Intercompany investment.......................... -- 76,633 (76,633) -- Preferred stock.................................. 42,353 -- -- 42,353 Common stock, par value $.01 per share; 50,000,000 shares authorized; 5,126,917 shares issued and outstanding........................ 51 -- -- 51 Additional paid-in capital....................... 22,748 -- -- 22,748 Warrants......................................... 1,759 -- -- 1,759 Notes receivable from sale of stock.............. (337) -- -- (337) Retained deficit................................. (58,276) (10,945) 10,945 (58,276) -------- -------- --------- -------- Total stockholders' investment................ 8,298 65,688 (65,688) 8,298 -------- -------- --------- -------- Total liabilities and stockholder's investment............................. $421,913 $131,844 $(125,920) $427,837 ======== ======== ========= ======== </Table> 10 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) <Table> <Caption> AS OF DECEMBER 29, 2001 --------------------------------------------------- PARENT SUBSIDIARY COMPANY GUARANTORS ELIMINATION CONSOLIDATED -------- ---------- ------------ ------------ ASSETS Current assets: Cash and cash equivalents........................ $ 3,423 $ 708 $ -- $ 4,131 Accounts receivable, net......................... 67,368 26,253 -- 93,621 Inventories, net................................. 105,296 48,916 -- 154,212 Other current assets............................. 33,835 4,380 -- 38,215 Intercompany receivables......................... 65,072 -- (65,072) -- -------- -------- --------- -------- Total current assets.......................... 274,994 80,257 (65,072) 290,179 -------- -------- --------- -------- Property and equipment, net........................ 19,628 7,858 -- 27,486 Goodwill and other intangible assets, net.......... 50,543 48,568 -- 99,111 Investment in subsidiaries......................... 66,350 -- (66,350) -- Other assets....................................... 24,032 2,212 -- 26,244 -------- -------- --------- -------- Total assets............................. $435,547 $138,895 $(131,422) $443,020 ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current liabilities: Accounts payable................................. $170,170 $ 401 $ -- $170,571 Accrued expenses................................. 17,628 3,015 -- 20,643 Current maturities of long-term debt............. 3,568 1,727 -- 5,295 Intercompany payables............................ -- 65,072 (65,072) -- -------- -------- --------- -------- Total current liabilities..................... 191,366 70,215 (65,072) 196,509 -------- -------- --------- -------- Revolving credit facility and other long-term debt............................................. 126,036 508 -- 126,544 Series D Senior Notes.............................. 150,000 -- -- 150,000 Capital lease obligations.......................... 1,163 183 -- 1,346 Other liabilities.................................. 6,403 1,639 -- 8,042 Redeemable preferred stock......................... 24,115 -- -- 24,115 Stockholders' investment: Intercompany investment.......................... -- 76,634 (76,634) -- Common stock, par value $.01 per share; 15,000,000 shares authorized; 5,136,917 shares issued and outstanding........................ 51 -- -- 51 Additional paid-in capital....................... 22,751 -- -- 22,751 Warrants......................................... 1,137 -- -- 1,137 Notes receivable from sale of stock.............. (340) -- -- (340) Retained deficit................................. (87,135) (10,284) 10,284 (87,135) -------- -------- --------- -------- Total stockholders' investment................ (63,536) 66,350 (66,350) (63,536) -------- -------- --------- -------- Total liabilities and stockholder's investment............................. $435,547 $138,895 $(131,422) $443,020 ======== ======== ========= ======== </Table> 11 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Condensed consolidated statements of operations for the quarters ended March 30, 2002 and March 31, 2001 are as follows: <Table> <Caption> FOR THE QUARTER ENDED MARCH 30, 2002 --------------------------------------------------- PARENT SUBSIDIARY COMPANY GUARANTORS ELIMINATION CONSOLIDATED -------- ---------- ------------ ------------ Net sales.......................................... $184,557 $ 67,007 $ -- $251,564 Cost of goods sold................................. 148,807 55,097 -- 203,904 -------- -------- --------- -------- Gross profit..................................... 35,750 11,910 -- 47,660 Selling, general and administrative expenses....... 29,525 13,002 -- 42,527 -------- -------- --------- -------- Operating income (loss).......................... 6,225 (1,092) -- 5,133 Other income (expense): Interest expense, net............................ (6,294) (35) -- (6,329) Other income, net................................ 134 26 -- 160 Equity in loss of subsidiaries................... (661) -- 661 -- -------- -------- --------- -------- Loss from continuing operations before income taxes............................................ (596) (1,101) 661 (1,036) Provision (benefit) for income taxes............... 26 (440) -- (414) -------- -------- --------- -------- Loss from continuing operations before extraordinary item............................... (622) (661) 661 (622) Loss on disposal of discontinued operations........ (134) -- -- (134) -------- -------- --------- -------- Loss before extraordinary item..................... (756) (661) 661 (756) Extraordinary gain on repurchase of Senior Notes... 29,975 -- -- 29,975 -------- -------- --------- -------- Net income (loss).................................. $ 29,219 $ (661) $ 661 $ 29,219 ======== ======== ========= ======== </Table> <Table> <Caption> FOR THE QUARTER ENDED MARCH 31, 2001 --------------------------------------------------- PARENT SUBSIDIARY COMPANY GUARANTORS ELIMINATION CONSOLIDATED -------- ---------- ------------ ------------ Net sales.......................................... $181,411 $ 86,381 $ -- $267,792 Cost of goods sold................................. 148,374 68,017 -- 216,391 -------- -------- --------- -------- Gross profit..................................... 33,037 18,364 -- 51,401 Selling, general and administrative expenses....... 33,316 19,528 -- 52,844 -------- -------- --------- -------- Operating loss................................... (279) (1,164) -- (1,443) Other income (expense): Interest expense, net............................ (7,363) (47) -- (7,410) Other income, net................................ 225 109 -- 334 Equity in loss of subsidiaries................... (1,787) -- 1,787 -- -------- -------- --------- -------- Loss from continuing operations before income taxes............................................ (9,204) (1,102) 1,787 (8,519) Benefit for income taxes........................... (565) (84) -- (649) -------- -------- --------- -------- Loss from continuing operations.................... (8,639) (1,018) 1,787 (7,870) Loss from discontinued operations.................. -- (769) -- (769) -------- -------- --------- -------- Net loss........................................... $ (8,639) $ (1,787) $ 1,787 $ (8,639) ======== ======== ========= ======== </Table> 12 HEAFNER TIRE GROUP, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Condensed consolidated statements of cash flows for the quarters ended March 30, 2002 and March 31, 2001 are as follows: <Table> <Caption> FOR THE QUARTER ENDED MARCH 30, 2002 --------------------------------------------------- PARENT SUBSIDIARY COMPANY GUARANTORS ELIMINATION CONSOLIDATED -------- ---------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net cash provided by (used in) continuing operations.................................. $(13,480) $ 4,492 $ -- $ (8,988) -------- -------- --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment................. (219) (58) -- (277) Proceeds from sale of property and equipment....... 10 526 -- 536 Other, net......................................... (92) -- -- (92) Intercompany....................................... 4,840 (4,840) -- -- -------- -------- --------- -------- Net cash provided by (used in) investing activities.................................. 4,539 (4,372) -- 167 -------- -------- --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from revolving credit facility and other long-term debt............................. 32,325 -- -- 32,325 Repurchase of Series D Senior Notes................ (64,959) -- -- (64,959) Net proceeds from sale-leaseback transaction....... 13,285 -- -- 13,285 Proceeds received from issuance of preferred stock............................................ 28,913 -- -- 28,913 Principal payments on other long-term debt......... (1,022) (224) -- (1,246) -------- -------- --------- -------- Net cash provided by (used in) financing activities.................................. 8,542 (224) -- 8,318 -------- -------- --------- -------- Net decrease in cash and cash equivalents.......... (399) (104) -- (503) Cash and cash equivalents, beginning of period..... 3,423 708 -- 4,131 -------- -------- --------- -------- Cash and cash equivalents, end of period........... $ 3,024 $ 604 $ -- $ 3,628 ======== ======== ========= ======== </Table> <Table> <Caption> FOR THE QUARTER ENDED MARCH 31, 2001 --------------------------------------------------- PARENT SUBSIDIARY COMPANY GUARANTORS ELIMINATION CONSOLIDATED -------- ---------- ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net cash used in continuing operations........ $(16,151) $ (1,610) $ -- $(17,761) -------- -------- --------- -------- Net cash provided by discontinued operations.................................. -- 2,957 -- 2,957 -------- -------- --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisitions, net of cash acquired................. (538) -- -- (538) Purchase of property and equipment................. (1,591) (1,439) -- (3,030) Proceeds from sale of property and equipment....... 822 3 -- 825 Proceeds from sale of assets of discontinued operations....................................... -- 1,445 -- 1,445 Other, net......................................... 315 -- -- 315 Intercompany....................................... (2,643) 2,643 -- -- -------- -------- --------- -------- Net cash provided by (used in) investing activities.................................. (3,635) 2,652 -- (983) -------- -------- --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds of revolving credit facility.......... 18,947 -- -- 18,947 Principal payments on other long-term debt......... (132) (381) -- (513) -------- -------- --------- -------- Net cash provided by (used in) financing activities.................................. 18,815 (381) -- 18,434 -------- -------- --------- -------- Net increase (decrease) in cash and cash equivalents...................................... (971) 3,618 -- 2,647 Cash and cash equivalents, beginning of period..... 3,518 (191) -- 3,327 -------- -------- --------- -------- Cash and cash equivalents, end of period........... $ 2,547 $ 3,427 $ -- $ 5,974 ======== ======== ========= ======== </Table> 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion and analysis of the results of operations, financial condition and liquidity of the Company should be read in conjunction with the financial statements and related notes included in this report. RESULTS OF OPERATIONS QUARTER ENDED MARCH 30, 2002 COMPARED TO QUARTER ENDED MARCH 31, 2001 Consolidated net sales in the first quarter of 2002 decreased by $16.2 million or 6.1% to $251.6 million compared to $267.8 million in the first quarter 2001. Sales in the first quarter 2002 were negatively impacted by continued weakness in the replacement tire market. Competition remains strong across all segments in the first quarter 2002 as competitors fought for limited sales dollars. Units of passenger and light truck tires shipped for the tire distribution industry were up approximately 3.3% in the first quarter of 2002 with shipments of 53.1 million units compared to shipments of 51.4 million units in the first quarter of 2001. First quarter 2002 industry unit shipments represent shipments to tire dealers and distributors and do not necessarily reflect sell out to retail customers. Gross profit decreased by $3.7 million or 7.3% to $47.7 million in the first quarter 2002 compared to $51.4 million in the first quarter 2001. Gross profit as a percentage of sales decreased 0.3% to 18.9% in the first quarter 2002 compared to 19.2% in the first quarter 2001. The decrease in gross profit is primarily attributed to decreased sales in first quarter 2002 as compared to first quarter 2001. Selling, general and administrative expenses decreased by $10.3 million in the first quarter 2002 representing 16.9% as a percentage of sales compared to 19.7% in 2001. Decreased operating expenses were a direct result of significant cost cutting initiatives undertaken throughout 2001. First quarter 2001 expenses included $1.8 million in severance payments. Interest expense decreased in the first quarter 2002 by $1.1 million to $6.3 million due to lower interest rates and reduced average monthly borrowings on the revolving credit facility resulting from improved working capital management. The income tax benefit in the first quarter 2002 was $0.4 million compared to $0.6 million for the same quarter in 2001. EBITDA from continuing operations increased $4.7 million to $7.5 million in the first quarter of 2002 compared to $2.8 million in the first quarter of 2001. This increase is primarily due to lower selling, general and administrative expenses. LIQUIDITY AND CAPITAL RESOURCES At March 30, 2002, the combined net indebtedness (net of cash) of the Company was $185.7 million compared to $304.9 million at March 31, 2001 and $277.7 million at December 29, 2001. Total commitments by the lenders under the Company's revolving credit facility ("Revolver") were $180.0 million at March 30, 2002. Available borrowings under the Revolver at March 30, 2002 were $15.1 million. The Company's principal sources of cash during the first quarter of 2002 were from borrowings under the Revolver and the issuance of Series D preferred stock. Cash was used to retire Series D Senior Notes. Cash used in continuing operations was $9.0 million for the quarter ended March 30, 2002 compared to $17.8 million for the quarter ended March 31, 2001. Net working capital at March 30, 2002 totaled $84.5 million, compared to $93.7 million at December 29, 2001, a decrease of $9.2 million. The decrease in working capital is primarily due to the decrease in deferred tax assets as a result of the extraordinary gain on the repurchase of the Senior Notes. Capital expenditures during the first quarter of 2002 and 2001 amounted to $0.3 million and $3.0 million, respectively. Capital expenditures in 2002 included warehouse racking and computer system upgrades. Effective March 18, 2002, the Company and its lenders amended the Revolver to, among other things, amend the financial covenants contained therein, change the rate at which borrowings thereunder bear 14 interest, and amend certain definitions contained therein. In addition, the amended facility provides for additional availability of approximately $27.5 million. Following these amendments, borrowings will bear interest at (i) the Base Rate, as defined, plus the applicable margin or (ii) the Eurodollar Rate, as defined, plus the applicable margin. As of April 1, 2002, the applicable margin on Eurodollar rate loans was increased resulting in an applicable margin of 3.5% (3.25% at March 30, 2002). The applicable margins are subject to performance-based step-downs resulting in margins from 0.75% to 2.0% for Base Rate loans and 2.00% to 3.50% for Eurodollar Rate loans, respectively. The Revolver, as amended, requires the Company to meet certain financial requirements, including minimum EBITDA, fixed charge coverage and tangible capital funds, all as defined, and minimum loan availability and certain covenants which, among other things, restrict the ability of the Company to incur additional indebtedness; enter into guarantees; make loans and investments; make capital expenditures; declare dividends; engage in mergers, consolidations and asset sales; enter into transactions with affiliates; create liens and encumbrances; enter into sale/leaseback transactions; modify material agreements; and change the business it conducts. The Company's obligations under the Revolver are secured by all inventories and accounts receivable. On February 5, 2002, the Company commenced an offer (as amended, the "Offer") to purchase its outstanding 10% Series D Senior Notes ("Senior Notes") due in 2008. The Offer contemplated the purchase by the Company of up to $126 million in aggregate principal amount of outstanding Senior Notes at a purchase price of not less than $450 nor greater than $535 per $1,000 in outstanding principal amount plus accrued but unpaid interest to but excluding the payment date. Concurrently with the Offer, the Company solicited consents to the amendment of certain covenants contained in the Indenture governing the Senior Notes, dated as December 1, 1998 (as amended and supplemented from time to time, the "Indenture"), among the Company, the Subsidiary Guarantors from time to time party thereto (the "Subsidiary Guarantors") and First Union National Bank, as trustee (the "Trustee"). On March 27, 2002, the Company completed the Offer and repurchased $121.4 million in outstanding principal amount of the Senior Notes at a purchase price of $535 per $1,000 in face amount of Senior Notes, plus accrued and unpaid interest of $4.5 million. The Company funded the repurchase of the Senior Notes through several debt restructuring transactions ("Restructuring Transactions"). The Restructuring Transactions consisted of (i) an amendment to the Company's revolving credit facility to provide additional availability, (ii) a sales and leaseback of three of the Company's tire distribution warehouses generating cash proceeds of $13.9 million and (iii) an equity investment of $28.9 million from the issuance of 9,637,592 shares of Series D preferred stock to the Company's existing stockholders. Concurrently with the repurchase of the Senior Notes, the Company, the Subsidiary Guarantors and the Trustee executed the Fourth Supplemental Indenture to the Indenture. The Company has accounted for the gain on the repurchase of the Senior Notes as an extraordinary item. In first quarter 2002, the Company has recorded an $30.0 million extraordinary gain, net of income tax provision of $20.0 million. The Company anticipates that its principal use of cash going forward will be to meet working capital and debt service requirements and to make capital expenditures. Based upon current and anticipated levels of operations, the Company believes that its cash flow from operations, together with amounts available under the Revolver, will be adequate to meet its anticipated requirements. There can be no assurance, however, that the Company's business will continue to generate sufficient cash flow from operations in the future to meet these requirements or to service its debt, and Heafner may be required to refinance all or a portion of its existing debt, or to obtain additional financing. These increased borrowings may result in higher interest payments. In addition, there can be no assurance that any such refinancing would be possible or that any additional financing could be obtained. The inability to obtain additional financing could have a material adverse effect on the Company. 15 INCOME TAXES The Company has deferred tax assets of $24.9 million and $44.0 million at March 30, 2002 and December 29, 2001, respectively. The decrease in net deferred tax assets is primarily attributable to the utilization of net operating loss carryforwards as it relates to the extraordinary gain for retirement of the Series D Senior Notes. Management has evaluated the Company's deferred tax assets and has concluded that the realizability of the deferred tax assets is "more likely than not", except as it relates to certain state net operating loss carryforwards. Accordingly, a valuation allowance of $2.0 million has been provided. This evaluation considered the historical and long-term expected profitability of the Company's continuing operations and the expected efficiencies to be gained from efforts initiated in 2001 to streamline operations. Given the timing of the reversal of its temporary differences and the expiration date of its net operating loss carryovers, the Company believes that taxable income generated in current and future years will be sufficient to utilize the remaining net deferred tax assets. The Company's ability to generate future taxable income is dependent on numerous factors including general economic conditions, the state of the replacement tire market and other factors beyond management's control. Therefore, there can be no assurance that the Company will meet its expectation of future taxable income. CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION This report contains "forward-looking statements," which are statements other than statements of historical facts. These forward-looking statements use phrases such as "expects" or "anticipates". The forward-looking statements include, among other things, the Company's expectations and estimates about its business operations, strategy, and its expectations and estimates about its future financial performance, including its financial position, cash flows from operations, capital expenditures and ability to refinance indebtedness. The forward-looking statements in this Form 10-Q are intended to be subject to the safe harbor protection provided by the federal securities laws. The forward-looking statements are subject to risks, uncertainties and assumptions about the Company and about the future, and could prove not to be correct. Cautionary statements describing factors that could cause actual results to differ materially from the Company's expectations are discussed in this report, including in conjunction with the forward-looking statements included in this report. All subsequent written or oral forward-looking statements attributable to the Company or to persons acting on behalf of the Company are expressly qualified in their entirety by those cautionary statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report may not occur. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. For the period ended March 30, 2002, the Company did not experience any material changes from the quantitative and qualitative disclosures about market risk presented in the Company's Report on Form 10-K for the fiscal year ended December 29, 2001. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On April 4, 2002, the Company was named as a defendant in re Tires Incorporated of Broward v. The Goodyear Tire & Rubber Company, Martino Tire Company, Martino Tire Co. of Plantations, Martino Tire Co of Nob Hill, Martino Tire Co. of Hallandale, Wal-Mart Stores, Inc., Sears, Roebuck and Co., Tiresoles of Broward, Inc., Liberty Tire and Heafner Tire Group. The plaintiff alleges, among other things, a violation of Robinson-Patman Act. The Company believes the claim is without merit and is vigorously defending the matter. There have been no other material developments in legal proceedings involving the Company since those reported in the Company's Report on Form 10-K for the fiscal year ended December 29, 2001. 16 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits 4.1 Agreement, dated as of May 13, 2002, among the stockholders of Heafner Tire Group, Inc., a Delaware corporation named on the signature pages hereto. (b) Reports on Form 8-K Report on Form 8-K was filed on April 11, 2002 related to the consummation of several debt restructuring transactions. 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: May 14, 2002 HEAFNER TIRE GROUP, INC. By: /s/ WILLIAM E. BERRY ------------------------------------ William E. Berry Executive Vice President and Chief Financial Officer (On behalf of the Registrant and as Principal Financial Officer) 18