INTERLINE BRANDS INC DE 10 K Annual Reports 2009 02 25 PDF

Processed and formatted by SEC Watch - Visit SECWatch.
com
Use these links to rapidly review the document

TABLE OF CONTENTS
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934
For the fiscal year ended December 26, 2008
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number: 001-32380
INTERLINE BRANDS, INC.

(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
03-0542659
(I.R.S. Employer Identification No.)
801 West Bay Street, Jacksonville, Florida

(Address of principal executive offices)
32204
(Zip Code)
(904) 421 1400

(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of e ach class
Nam e of e ach e xch an ge on wh ich re giste re d
Common Stock, $.01 par value per share
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o
No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes o No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. o
Processed and formatted by SEC Watch - Visit SECWatch.com
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
Nonaccelerated filer o
Smaller reporting company o
(Do not check if a smaller

reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o
No
As of June 27, 2008, the aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $469.4 million
based on the closing sale price as reported on the New York Stock Exchange.
As of February 24, 2009, there were 32,449,946 shares of the registrant's common stock outstanding (excluding 111,414 shares held in
treasury), par value $0.01.
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's definitive Proxy Statement for its Annual Meeting of Stockholders to be held May 7, 2009 is incorporated by reference in
Part III of this Form 10-K.
TABLE OF CONTENTS
ITEM
PAGE
PART I
1.
Business
1A.
Risk Factors
13
1B.
Unresolved Staff Comments
23
2.
Properties
23
3.
Legal Proceedings
25
4.
Submission of Matters to a Vote of Security Holders
25
PART II
5.
Market for Registrant's Common Equity, Related Stockholder Matters and

Issuer Purchases of Equity Securities
26
6.
Selected Financial Data
29
7.
Management's Discussion and Analysis of Financial Condition and

Results of Operations
32
7A.
Quantitative and Qualitative Disclosures About Market Risk
46
8.
Financial Statements and Supplementary Data
47
9.
Changes in and Disagreements with Accountants on Accounting and

Financial Disclosure
47
9A.
Controls and Procedures
47
9B.
Other Information
48
PART III
10.
Directors, Executive Officers and Corporate Governance
49
11.
Executive Compensation
49
12.
Security Ownership of Certain Beneficial Owners and Management and

Related Stockholder Matters
49
13.
Certain Relationships and Related Transactions, and Director Independence
49
14.
Principal Accounting Fees and Services
49
PART IV
15.
Exhibits, Financial Statement Schedules
50
16.
Signatures
51
i
Table of Contents
PART I
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. Forwardlooking statements include information concerning our possible or assumed future results of operations, including descriptions of our
business strategy. These statements often include words such as "may," "believe," "expect," "anticipate," "intend," "plan," "estimate" or
similar expressions. 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:
economic slowdowns,
general market conditions,
credit market contractions,
product cost and price fluctuations due to market conditions,
consumer spending and debt levels,
adverse changes in trends in the home improvement and remodeling and home building markets,
the highly competitive nature of the maintenance, repair and operations distribution industry,
material facilities and systems disruptions and shutdowns,
failure to realize expected benefits from acquisitions,
our ability to purchase products from suppliers on favorable terms,
the length of our supply chains,
work stoppages or other business interruptions at transportation centers or shipping ports,
fluctuations in the cost of commodity-based products, raw materials and fuel prices,
currency exchange rates,
the loss of significant customers,
our ability to accurately predict market trends,
failure to locate, acquire and successfully integrate acquisition candidates,
dependence on key employees,
our inability to protect trademarks,
adverse publicity and litigation,
our level of debt,

1
Table of Contents
interest rate fluctuations,
future cash flows,
changes in consumer preferences,
labor and benefit costs,
weather conditions, and
the other factors described under "Part I. Item 1ARisk Factors" in this Annual Report on Form 10-K.
You should keep in mind that any forward-looking statement made by us in this report, or elsewhere, speaks only as of the date on which
we make it. 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, you should keep in mind that any forward-looking statement made in this report or elsewhere might not
occur. Notwithstanding the foregoing, all information contained in this report is materially accurate as of the date of this report.
ITEM 1.
Business
Our Company
We are a leading national distributor and direct marketer of maintenance, repair and operations ("MRO") products. We have one
operating segment, the distribution of MRO products. We stock over 90,000 MRO products in the following categories: plumbing, janitorial
and sanitary, electrical, lighting, hardware, security, heating, ventilation and air conditioning, and other miscellaneous products. Our products
are primarily used for the repair, maintenance, remodeling and refurbishment of properties and non-industrial facilities. We are able to realize
higher operating margins by focusing on repair, maintenance, remodeling and refurbishment customers, who generally make smaller, more
frequent purchases and require high levels of service. Our diverse customer base includes facilities maintenance customers, which consist of
multi-family housing facilities, educational institutions, lodging and health care facilities, government properties and building service
contractors; professional contractors who are primarily involved in the repair, remodeling and construction of residential and non-industrial
facilities; and specialty distributors, including 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 market and sell our products primarily through twelve distinct and targeted brands, each of which is nationally recognized in the
markets we serve for providing premium products at competitive prices with reliable same-day or next-day delivery. Wilmar, AmSan, Sexauer,
Maintenance USA and Trayco brands generally serve our facilities maintenance customers; Barnett, Copperfield, U.S. Lock, Sun Star and
Leran brands generally serve our professional contractor customers; Hardware Express and AF Lighting brands generally serve our specialty
distributors 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 the individual needs of each respective customer group served. We reach our markets using a
variety of sales channels, including a sales force of over 600 field sales representatives, over 400 telesales and customer service
representatives, a direct marketing program of approximately five million pieces annually, brand-specific websites and a national accounts
sales program. We deliver our products through our network of 70 regional distribution centers, 30 professional contractor showrooms and
two national distribution centers ("NDCs") located throughout the United States and Canada, 23 vendor managed inventory locations at large
professional contractor customer locations and a dedicated fleet of trucks. Our broad distribution network allows us the ability to provide
reliable, same-day or next-day delivery service to 98% of the U.S. population.
2
Table of Contents
Our information technology and logistics platform supports 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 branded catalogs,
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 platform also benefits 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, our common operating platform has
enabled us to improve customer service, maintain lower operating costs, efficiently manage working capital and support our growth initiatives.
In this document, unless otherwise indicated, "we" refers to Interline Brands, Inc., a Delaware corporation, and its consolidated
subsidiaries; and "Interline New Jersey" refers to Interline Brands, Inc., a New Jersey corporation through which we conduct our business.
Strategy
Our objective is to become the leading supplier of MRO products to our three principal end markets: facilities maintenance, professional
contractor and specialty distributor. In pursuing this objective, we plan to increase our net sales, earnings and return on invested capital by
capitalizing on our information technology and logistics platform to successfully execute our organic growth, geographic expansion, operating
efficiency and strategic acquisition initiatives.
Organic Growth Initiatives. We seek to further penetrate the markets we serve, and to expand into new product areas, by
utilizing and increasing our already successful new product and marketing strategies, including: expanding our national accounts
program, increasing customer use of our supply chain management services, continuing to develop proprietary products under
our exclusive brands, and selectively adding new products and new categories to our various brand offerings.
Geographic Expansion Opportunities. We believe we can further penetrate the markets we serve and expand into new markets
by increasing the number of our field sales and telesales territories to serve additional sales regions and other initiatives.
Operating Efficiencies. We will continue to focus on enhancing our operating efficiency, which will increase profitability,
improve our cash conversion cycle and increase our return on invested capital.
Acquisitions. We will continue to maintain a disciplined acquisition strategy of adding new customers and/or product offerings
in currently served markets and pursuing acquisitions of established brands in new or existing markets in an effort to further
leverage our operating infrastructure.
Industry and Market Overview

The MRO distribution industry is over $300 billion in size according to a U.S. BancorpPiper Jaffray Research Report and encompasses
the supply of a wide range of products, including plumbing and electrical supplies, hand-tools, janitorial supplies, safety equipment and many
other categories. Customers served by the MRO distribution industry include heavy industrial manufacturers that use MRO supplies for the
repair and overhaul of production equipment and machinery; owners and managers of facilities such as apartment complexes, office buildings,
schools, hotels and hospitals that use MRO supplies largely for maintenance, repair and refurbishment; and professional contractors. The size
of our addressable market in facilities maintenance, including janitorial and sanitation, and repair
3
Table of Contents
and remodeling market, which generally excludes new commercial and residential construction and heavy industrial manufacturing, is
approximately $53 billion.
Within the MRO distribution industry, we focus on serving customers in three principal end markets: facilities maintenance, professional
contractors and specialty distributors. Our customers are primarily engaged in the repair, maintenance, remodeling, refurbishment and
construction of properties and non-industrial facilities, as opposed to the maintenance of heavy industrial facilities and machinery. Our
facilities maintenance customers are individuals and entities responsible for the maintenance and repair of various commercial properties,
including apartment buildings, schools, hotels and health care facilities. Our professional contractor customers buy our products to provide
plumbing, electrical, heating, ventilation and air conditioning ("HVAC") and mechanical services to their residential and commercial customers.
Our specialty distributor customers consist primarily of hardware stores and small plumbing and electrical distributors that purchase our
products for resale.
Our Products
We stock over 90,000 standard and specialty MRO products in a number of product categories, including plumbing, janitorial and sanitary
supplies, electrical and lighting, heating, ventilation and air conditioning, appliances and parts, security, hardware and tools, window and floor
coverings, and paint accessories. We offer a broad range of brand name and exclusive brand products.
Product Categories
The approximate percentages of our net sales for the fiscal year ended December 26, 2008 by product category were as follows:
Pe rce n t of
Ne t Sale s
Produ ct C ate gory
Plumbing
Janitorial and sanitary
Heating, ventilation and air conditioning
Electrical and lighting
Appliances and parts
Security
Hardware and tools
Other
Total
28%
25
11
9
6
5
4
12
100%
The following is a discussion of our principal product categories:

Plumbing Products. We sell a broad range of plumbing products, from individual faucet parts to complete bathroom renovation kits. In
addition, we sell both brand name and exclusive brand products. For example, we sell brand name products from manufacturers including
Moen and Delta. We also sell exclusive brand plumbing products under various proprietary trademarks, including Premier faucets and water
heaters, DuraPro tubular products and ProPlus retail plumbing accessories.
Janitorial and Sanitary Products. Our comprehensive selection of janitorial and sanitary products includes brooms, mops, trash can
liners, cleaning chemicals, paper towels and bath tissue. We offer a number of products from leading janitorial and sanitary manufacturers,
such as Kimberly-Clark and Georgia-Pacific. We also offer exclusive brand janitorial and sanitary products under the Renown brand.
4
Table of Contents
Electrical and Lighting Products. Our comprehensive selection of electrical and lighting products range from electrical wire and
breakers to light fixtures and light bulbs. We offer brand name products from leading electrical supply manufacturers, including Eaton,
Sylvania and Leviton, as well as a number of exclusive brand electrical products, such as Preferred Industries.
Heating, Ventilation and Air Conditioning Products. We offer a variety of HVAC products, including condensing units, thermostats,
fans and motors under both brand and exclusive brand names. Manufacturers include Nordyne, Goodman and Honeywell. We also offer
specialty ventilation and chimney maintenance products through our Copperfield brand.
Appliances and Parts. Our comprehensive range of appliances and parts includes stoves, washer/dryer components, garbage
disposers, refrigerators and range hoods. We sell a number of brand name products of leading appliance manufacturers, including General
Electric and Whirlpool. We also sell a number of high-quality replacement parts from a number of different suppliers.
Security Products. We sell a broad range of security hardware products, from individual lock-sets to computerized master-key systems.
We sell a number of brand name products of leading security hardware manufacturers, including Kwikset and Schlage. We also sell a number
of exclusive brand security hardware products, such as U.S. Lock hardware, Legend locks and Rx master keyways.
Hardware and Tools. We sell a variety of hardware products and tools, including hinges, power tools and mini blinds. Our brand name
products include DeWalt, Channellock and Hagar Hinge. Our exclusive brand hardware products include Yukon, Legend and Anvil Mark.
Exclusive Brand Products
Our size and reputation have enabled us to develop and market various lines of exclusive brand products, which we believe offer our
customers high quality, low-cost alternatives to the brand name products we sell. Third-party manufacturers, primarily in Asia and the United
States, using our proprietary branding and packaging design, manufacture our exclusive brand products to our specifications. Our sales force,
catalogs and promotional flyers emphasize the comparative value of our exclusive brand products. Since our exclusive brand products are
typically less expensive for us to purchase from suppliers, we are able to improve our profit margin with the sale of these products, despite the
fact that we sell them to our customers at a discount to our non-exclusive brand product offerings. In addition, we have found that we develop
strong relationships with our exclusive brand customers and generate increased repeat business, as exclusive brand customers generally
return to us for future service and replacement parts on previously purchased products.
New Product Offerings
We constantly monitor and evaluate our product offerings both to assess the sales performance of our existing products and to
discontinue products that fail to meet specified sales criteria. We also create new product offerings in response to customer requirements by
adjusting our product portfolio within existing product lines as well as by establishing new product line categories. These categories can
either be new to Interline or new to a brand. For example, as we integrated AmSan into Interline, we added certain AmSan products to our other
brands where appropriate. Through these efforts, we are able to sell more products to existing customers as well as address our customers'
changing product needs and thereby retain and attract customers. Further, by introducing new product lines, we provide our customers with
additional opportunities for cost savings and a one-stop shopping outlet with broad product offerings. We believe that introducing new
products in existing product lines and creating new product lines are both strategies which enable us to increase penetration of existing
customer accounts, as well as attract new customers to our brands.
5
Table of Contents
Our Brands
We market and sell products to our customers primarily through twelve distinct and targeted brands: Wilmar, AmSan, Barnett,
Sexauer, Hardware Express, Copperfield, Maintenance USA, U.S. Lock, SunStar, LeranSM, Trayco, and AF Lighting. Each of
our brands is focused on serving a particular customer group. Wilmar, AmSan, Sexauer, Maintenance USA and Trayco brands generally serve
facilities maintenance customers; Barnett, Copperfield, U.S. Lock, SunStar and Leran brands generally serve our professional contractor
customers; Hardware Express and AF Lighting brands generally serve our specialty distributor customers. Our brands are distinguished not
only by the type of products offered, but also by the levels of service provided to customers. We have brands that market a wide range of
product categories, such as Wilmar, as well as brands that specialize in a particular group of products, such as U.S. Lock, which focuses on
security hardware, SunStar, which focuses on specialty lighting, and Copperfield, which focuses on chimney repair and maintenance products.
We have brands that market complementary services to our customers, including inventory management and technical assistance, and brands
that offer products without support services. We believe that our brand-based business model effectively allows us to offer a deep product
offering to very targeted customer end-markets. We have core competencies in almost all of the sales channels available to a distributor
including national account sales professionals, field sales representatives, outbound and inbound telesales and customer service
representatives, direct marketing via catalog and flyers, professional contractor showrooms, vendor managed inventory locations, and
internet-based service capabilities. This allows us to effectively compete for a broad range of customers across our industry by offering our
customers the service and delivery platform they prefer and often require.
Facilities Maintenance Brands
We serve our facilities maintenance customers primarily through our Wilmar, AmSan, Sexauer, Maintenance USA and Trayco brands.
Facilities maintenance customers buy our products for maintenance, repair and remodeling, and often need to obtain products with minimal
delay. In many cases, our facilities maintenance customers also look to us for support services such as inventory management, technical
advice and assistance and equipment servicing and training.
Wilmar. Our Wilmar brand markets and sells maintenance products to the multi-family housing market. Through its master catalog,
Wilmar is able to act as a one-stop shopping resource for multi-family housing maintenance managers by offering one of the industry's most
extensive selections of standard and specialty plumbing, hardware, electrical, janitorial and related products. Wilmar provides same-day or
next-day delivery in local markets on our own trucks served by our distribution centers, and ships by parcel delivery services or other carriers
to other areas. The Wilmar brand sells primarily through field sales representatives, as well as through direct marketing and telesales. We also
have a successful national accounts program at Wilmar where national account managers market to high level officers at real estate investment
trusts, or REITs, and other property management companies. Through this program, we assist large multi-location customers in reducing total
supply chain costs.
AmSan. Our AmSan brand markets and sells a comprehensive range of janitorial and sanitary products to institutional facilities, such as
schools and universities, health care sites, lodging and government properties and building service contractors. We sell AmSan products
primarily through field sales representatives supported by a full line catalog, which includes national brand product offerings as well as
AmSan's exclusive brand product line Renown. In addition, AmSan provides customers with reliable technical support, equipment repair
services, and customized training programs, all of which make AmSan an important supplier to our customers. AmSan provides same-day or
next-day delivery in local markets served by our distribution centers and ships by parcel delivery services or other carriers to other areas.
6
Table of Contents
Sexauer. Our Sexauer brand markets and sells specialty plumbing and facility maintenance products to institutional customers, including
education, lodging, health care and other facilities maintenance customers. We believe that the catalog of Sexauer products is well known in
the industry as a comprehensive source of specialty plumbing and facility maintenance products. In addition to a broad product portfolio,
Sexauer offers customers an extensive selection of service and procurement solutions, drawing upon our product and supply management
expertise.
Maintenance USA. Our Maintenance USA brand markets and sells a broad portfolio of MRO products to facilities, including multifamily housing, lodging and institutional customers. Since Maintenance USA sells our products primarily through telesales and direct
marketing, it represents a low cost supply alternative to smaller property managers and more cost-conscious customers requiring minimal
support services.
Trayco. Our Trayco brand markets and sells an extensive inventory of specialty plumbing items as well as a wide array of other facilities
maintenance products. Trayco specializes in hard-to-find items and provides access to hundreds of manufacturers. Trayco sells its products
through the use of a catalog and field sales personnel.
Professional Contractor and Specialty Distributor Brands
We serve our professional contractor customers primarily through our Barnett, Copperfield, U.S. Lock, SunStar and Leran brands and our
specialty distributor customers primarily through our Hardware Express and AF Lighting brands. Professional contractors generally purchase
our products for specific job assignments and/or to resell the product to end-customers.
Barnett. Our Barnett brand markets and sells a broad range of MRO products to professional contractors, including plumbing, electrical,
building and HVAC contractors, typically for repair, remodeling and construction applications. The Barnett brand also sells its products to
specialty distributors, which are generally smaller and carry fewer products than Barnett. Sales are made primarily through catalogs, telesales,
field sales and direct marketing. In addition, Barnett has field sales representatives and regional sales managers in select markets throughout
the United States. Customers can also receive technical support and assistance in selecting products by calling our customer service centers.
In addition to next-day delivery, Barnett also offers customers the convenience of a network of local professional contractor showrooms or Pro
Centers as well as on-site vendor managed inventory capabilities.
Hardware Express. Our Hardware Express brand markets and sells our full range of products primarily to retail hardware stores. While
Hardware Express customers may order our products for general inventory purposes, we also specialize in working with independent stores to
sell our exclusive brand products through custom designed retail display sets. We believe that our retail hardware store customers prefer our
exclusive brand products because they are priced more competitively than non-exclusive brand products. In addition, our retail display
program enables our hardware customers to present an entire line of products in a professional and organized manner. Hardware Express sells
its products through a catalog, supplemented by direct marketing and telesales personnel, and a specialty display sales program of exclusive
brand products which is coordinated by field sales representatives.
Copperfield. Our Copperfield brand markets and sells specialty ventilation and chimney maintenance products to chimney professionals
and hearth retailers, through direct marketing, outbound telesales and field sales representatives. Copperfield offers more than 5,000 brand
name and exclusive brand repair and replacement items including chimney replacement and relining products, specialty ventilation
components, hearth products, gas and electrical appliances and an assortment of gas and solid fuel burning appliances.
7
Table of Contents
U.S. Lock. Our U.S. Lock brand markets and sells security hardware products to professional locksmiths. Our primary marketing vehicle
for U.S. Lock products is our U.S. Lock dealer program, in which professional locksmiths receive incentives such as rebates based on annual
purchase volumes and favored pricing on proprietary items in return for paying an annual membership fee, displaying our U.S. Lock logo in
their stores and assisting in other promotional activities. Sales are made primarily through telesales and direct marketing.
Leran. Our Leran brand markets and sells an extensive line of propane, plumbing, HVAC, electrical and hardware products including
copper tubing and brass fittings as well as appliances and water heaters to professional contractors. Leran sells its products through the use
of a catalog supplemented by telesales personnel.
SunStar/AF Lighting. Our SunStar and AF Lighting brands market and sell residential lighting and electrical products to electrical
contractors, electrical distributors, lighting showrooms and mass merchants through direct marketing, outbound telesales and a network of
manufacturer's representatives.
Sales and Marketing
We market our products nationally and internationally through a variety of channels. The majority of our sales to facilities maintenance
customers are made through field sales representatives, and the majority of our sales to professional contractors and specialty distributors are
made through telesales supported by catalog and promotional mailings, and field sales in major metropolitan markets.
As MRO customers grow in size, their supply chain becomes increasingly complex and difficult to manage. Customers find that they get
lost in a maze of suppliers and inventory. In many cases, customers have no view into or control over their product spend, inventory
shrinkage, and indirect MRO personnel costs. To meet this need, we offer a range of sophisticated supply chain management solutions
designed to solve the unique problems of each of our customers. By offering customers services beyond fulfillment such as product
standardization, vendor consolidation, inventory management, product training, and electronic invoicing, we provide a suite of services that
can be utilized either individually or as a group based upon the customer's size and supply chain complexity. Our customers rely upon us as a
supply chain partner rather than a vendor and in turn realize significant benefits by reducing overall product spend, improving inventory
management, and lowering their indirect MRO spend. As supply chain partners, we become our customers' single source for MRO supplies
and knowledge.
We also serve our facilities maintenance and professional contractor customers with brand-specific websites, though the majority of
customer orders are received through the other channels discussed above. For a more detailed description of our approach to e-commerce, see
"Management Information Systems."
Our marketing strategy involves targeting our marketing channels and efforts to specific customer groups. As a result of our longstanding relationships with customers, we have been able to assemble a database of customer purchasing information, such as end market
purchasing trends, product and pricing preferences and support service requirements. In addition, we are able to track information such as
customer retention and reactivation as well as new account acquisitions. We are also able to track the success of a particular marketing effort
once it is implemented by analyzing the purchases of the customers targeted by that effort. Our information systems allow us to use this data
to develop more effective sales and marketing programs. For example, our understanding of the preferences of our large, multi-family housing
customers led to our development of a national accounts program, through which field sales representatives focus on developing contacts
with national accounts. We will continue to leverage our customer knowledge and shared brand information system to develop successful
sales and marketing strategies.
8
Table of Contents
Field Sales Representatives
Our direct sales force markets and sells to all levels of the customer's organization, including senior property management executives, local
and regional property managers, on-site maintenance managers, and owners and managers of professional plumbing, electrical and HVAC
contractors. Our direct sales force marketing efforts are designed to establish and solidify customer relationships through frequent contact,
while emphasizing our broad product selection, reliable same-day or next-day delivery, high level of customer service and competitive pricing.
We maintain one of the largest direct sales forces in our industry, with over 600 field sales representatives covering markets throughout
the United States, Canada and Central America. We have found that we obtain a greater percentage of our customers' overall spending on
MRO products in markets serviced by local sales representatives, particularly in regions where these representatives are supported by a
nearby distribution center that enables same-day or next-day delivery of our product line.
Our field sales representatives are expected not only to generate orders, but also to act as problem solving customer service
representatives. Our field sales representatives are trained and qualified to assist customers in shop organization, special orders, part
identification and complaint resolution. We compensate the majority of our field sales representatives based on a commission program or on a
combination of salary and bonus program. We will continue to seek additional opportunities where we can leverage the strength of our field
sales force to generate additional sales from our customers.
Telesales
Our telesales operation has been designed to make ordering our products as convenient and efficient as possible. We divide our telesales
staff into outbound and inbound groups. Our outbound telesales representatives are responsible for maintaining relationships with existing
customers and prospecting for new customers. These representatives are assigned individual accounts in specified territories and have
frequent contact with existing and prospective customers in order to make telesales presentations, notify customers of current promotions and
encourage additional purchases. Our inbound telesales representatives are trained to process orders quickly from existing customers, provide
technical support and expedite and process new customer applications, as well as handle all other customer service requests. We offer our
customers nationwide toll-free telephone numbers and brand-specific telesales representatives who are familiar with a particular brand's
markets, products and customers. Our call centers are staffed by over 400 telesales, customer service and technical support personnel, who
utilize our proprietary, on-line order processing system. This sophisticated software provides the telesales staff with detailed customer profiles
and information about products, pricing, promotions and competition.
Catalogs and Direct Marketing
Our catalogs and direct marketing promotional flyers are key marketing tools that allow us to communicate our product offerings to both
existing and potential customers. We create catalogs, some of which exceed 1,000 pages, for most of our brands and mail them on an annual or
semi-annual basis to our existing customers. We often supplement these catalog mailings by sending our customers promotional flyers. Most
of our branded catalogs have been distributed for over three decades and we believe that these catalog titles have achieved a high degree of
recognition among our customers.
In targeting potential direct marketing customers, we sometimes make our initial contact through promotional flyers, rather than by
sending a complete catalog. We obtain mailing lists of prospective customers from outside marketing information services and other sources.
We are able to gauge the effectiveness of our promotional flyer mailings through the use of proprietary database analysis methods, as well as
through our telesales operations. Once customers begin to place orders with us, we
9
Table of Contents
typically send an initial catalog and include the customer on our periodic mailing list for updated catalogs and promotional materials. We
believe that this approach is a cost-effective way for us to contact large numbers of potential customers and to determine which customers
should be targeted for continuous marketing.
We produce the design and layout for our catalogs and promotional mailings using a sophisticated catalog content database and
software system. Our catalogs are indexed and illustrated to provide simplified pricing information and to highlight new product offerings. Our
promotional mailings introduce new product offerings, sale-promotion items and other periodic offerings. Illustrations, photographs and copy
are shared among brand catalogs and mailings or customized for a specific brand, allowing for fast and efficient production of multi-branded
media. In addition, we frequently build custom catalogs designed specifically for the needs of our larger customers.
Operations and Logistics
Distribution Network
We have a network strategically located to serve the largest metropolitan areas throughout the United States and Canada comprised of 70
regional distribution centers, 30 professional contractor showrooms and two NDCs. We also maintain a dedicated fleet of trucks to assist in
local delivery of products. The geographic scope of our distribution network and the efficiency of our information system enable us to provide
reliable, same-day or next-day delivery service to over 98% of the U.S. population.
Our regional distribution centers are central to our operations and range in size from approximately 7,600 square feet to approximately
210,000 square feet. Our regional distribution centers are typically maintained under operating leases in commercial or industrial centers, and
primarily consist of warehouse and shipping facilities. We have also had success with opening professional contractor showrooms in existing
distribution centers and in freestanding locations, which allow customers to obtain products from a fixed location without ordering in advance.
Inbound Logistics
Our 317,100 square foot NDC in Nashville, Tennessee and our 173,000 square foot NDC in Salt Lake City, Utah receive the majority of our
supplier shipments and efficiently re-distribute products to our regional distribution centers. Some over-sized or seasonal products are directly
shipped to regional distribution centers by suppliers. Our use of NDCs has significantly reduced regional distribution center replenishment
lead times while simultaneously improving our customer fill rates.
Outbound Logistics
Once a telesales or customer service representative enters an order into our computer system, the order is picked and processed in the
distribution center nearest to the customer. For customers located within the local delivery radius of a distribution center, our own trucks or
third-party carriers will deliver the products directly to the customer the same or next day. For customers located outside the local delivery
radius of a distribution center, we deliver products via parcel delivery companies, such as UPS. Large orders, or orders that cannot be
delivered via parcel delivery, are delivered by common carriers. We generally arrange for pick-up of returns at no charge to the customer in the
local delivery radius. For customers outside the local delivery radius, we provide parcel service pick-up of the returns at no charge and also
provide a full refund if the return is the result of our error. Portions of our sales are delivered direct from the supplier.
10
Table of Contents
Suppliers and Purchasing
Our suppliers play an important role in our success. We work closely with our supplier base to ensure product merchandising and costs
are managed effectively. Wherever possible, we seek to develop long-standing relationships with our suppliers. We also manage sourcing risk
by developing multiple sources of competitive product supply for many key products. Due to our high volume of purchases, we are able to
obtain purchase terms we believe to be more favorable than those available to most local suppliers of MRO products.
We buy our products from over 3,100 suppliers located in the United States and throughout the world. A majority of our purchases are
from primarily domestic supplier partners with the remainder from foreign-based suppliers primarily located throughout Asia and South
America.
With regard to inventory, our customer-centric strategy balances the need for high fill rates with the aggressive management of inventory
levels. Our goals are to continue to increase our inventory efficiency over the long term as we grow, further optimize our distribution network,
manage stock keeping unit complexity and leverage our common information technology and logistics platforms. We also balance inventory
efficiency with global sourcing opportunities, which have longer supply lead times than domestic relationships.
In addition to our inventory management team, our purchasing process is managed through an inventory management system which
forecasts demand based on customer ordering patterns. This system monitors our inventory and alerts our purchasing managers of items
approaching low levels of stock. We balance ordering and carrying costs in an effort to minimize total inventory costs. Demand forecasting is
automated and is primarily based on historical sales and/or seasonally adjusted demand and supply lead times, which in turn are key inputs
into setting safety stock levels.
Management Information Systems
We operate a customer service and inventory management system that allows us to manage customer relationships and to administer and
distribute thousands of products. Our systems encompass all major business functions for each of our brands and enable us to receive and
process orders, manage inventory, verify credit and payment history, generate customer invoices, receive payments and manage our
proprietary customer lists. We have consistently invested in our information technology, as we believe that the efficiency and flexibility of our
information system are critical to the success of our business.
Our information systems have been instrumental in our efforts to streamline our inventory management processes. Our information
systems track each item of our inventory and its location within our distribution network. By monitoring inventory levels, we are able to
quickly re-order products or shift inventory through our distribution network in order to ensure product availability. Our systems also allow us
to monitor sales of products, enabling us to eliminate products that do not perform to our sales targets. Our information systems have also
allowed us to create a more efficient order fulfillment process. Our local distribution centers are linked to our information systems, which
provide them with real-time access to inventory availability, order tracking and customer creditworthiness.
We constantly seek new ways to generate additional efficiencies, such as by utilizing e-commerce. For our larger brands, our customers
can browse brand-specific product offerings online and use the internet to send electronic purchase orders to our order entry system.
Additionally, we integrate with industry-leading business-to-business portals that allow customers to receive real-time inventory visibility and
order product. Our customers can integrate these systems into their own purchase order systems, thereby making their supply chain operate
more seamlessly. In addition, we offer our customers the option of receiving invoices electronically. For customers that place frequent orders
and have the ability
11
Table of Contents
to receive electronic invoices, this program can dramatically reduce ordering costs by eliminating invoice handling and automating the
matching and payment process. We believe that by offering services like electronic purchasing and invoicing, which remove transaction costs
from the supply chain, we encourage our customers to use us as their single source for MRO supplies.
Competition
The MRO product distribution industry is highly competitive. Competition in our industry is primarily based upon product line breadth,
product availability, service capabilities and price. We face significant competition from national and regional distributors, such as HD
Supply, Inc., Ferguson and W.W. Grainger, Inc. These competitors market their products through the use of direct sales forces as well as
direct marketing and catalogs. In addition, we face competition from traditional channels of distribution such as retail outlets, small wholesalers
and large warehouse stores, including Home Depot and Lowe's. We also compete with buying groups formed by smaller distributors, internetbased procurement service companies, auction businesses and trade exchanges.
We expect that competition in our industry will continue to be strong in the future. The MRO product distribution industry is
consolidating, as traditional MRO product distributors attempt to achieve economies of scale and increase efficiency. Furthermore, MRO
product customers are continuing to seek low cost alternatives to replace traditional methods of purchasing and sources of supply. We
believe that the current trend is for customers to reduce the number of suppliers and rely on lower cost alternatives such as direct marketing
and/or integrated supply arrangements, which will contribute to competition in our industry.
Environmental and Health and Safety Matters
Some of the products we handle and sell, such as cleaning chemicals, are considered hazardous materials. Accordingly, we are subject to
certain federal, state and local environmental laws and regulations, including those governing the transportation, management and disposal of,
and exposure to, hazardous materials and the cleanup of contaminated sites. While we could incur costs as a result of liabilities under, or
violations of, such environmental laws and regulations or arising out of the presence of hazardous materials in the environment, including the
discovery of any such materials resulting from historical operations at our sites, we do not believe that we are subject to any such costs that
are material. We are also subject to health and safety requirements including the Occupational, Safety and Health Act. We believe we are in
compliance in all material respects with all environmental laws and regulations and health and safety requirements applicable to our facilities
and operations.
Trademarks and Other Intellectual Property
We have registered and nonregistered trade names, trademarks and service marks covering the principal brand names and product lines
under which our products are marketed, including AF LightingSM, AmSan, Barnett, Copperfield, Eagle Maintenance Supply Hardware
Express, LeranSM, Maintenance MartSM, Maintenance USA, Premier, ProPlus, Renown, Renovations Plus, Sexauer, SunStar
Lighting, Trayco, U.S. Lock, and Wilmar. We also own several patents for certain products manufactured and marketed under our
Copperfield brand. We believe that our trademarks and other intellectual property rights are important to our success and our competitive
position. Accordingly, our policy is to pursue and maintain registration of our trade names, trademarks and other intellectual property
whenever appropriate and to oppose vigorously any infringement or dilution of our trade names, trademarks and other intellectual property.
12
Table of Contents
Employees
As of December 26, 2008, we had 3,552 employees, of whom 97 were unionized. Currently, we have two labor agreements in place: one for
our Mt. Laurel, New Jersey distribution center and one for our Elkridge, Maryland distribution center. The Mt. Laurel, New Jersey agreement
was renegotiated on October 18, 2007 and will expire on October 17, 2010. The total number of employees within this bargaining unit is 66. The
Elkridge, Maryland agreement was renegotiated on November 1, 2007 and will expire on October 31, 2010. The total number of employees
within this bargaining unit is 31. We have not experienced any work stoppages resulting from management or union disagreements and believe
that our employee relations are satisfactory.
Available Information
Our internet address is www.interlinebrands.com. We make available, free of charge, through our internet site, via a hyperlink to the
10KWizard.com web site, our annual reports on Form 10-K; quarterly reports on Form 10-Q; current reports on Form 8-K; and any amendments
to those reports filed or furnished pursuant to the Exchange Act, as soon as reasonably practicable after such material is electronically filed
with, or furnished to, the Securities and Exchange Commission ("SEC").
ITEM 1A. Risk Factors
The following risk factors should be read carefully in connection with evaluating us and this Annual Report on Form 10-K. Certain
statements in "Risk Factors" are forward-looking statements. See "Forward-Looking Statements" above.
Risks Relating to Our Business
Adverse changes in global economic conditions may negatively affect our industry, business and results of operations.
Financial markets in the United States, Europe and Asia have experienced substantial disruption in recent months, including, among other
things, extreme volatility in security prices, severely diminished liquidity and credit availability, rating downgrades of certain investments and
declining valuations of others. Governments have taken unprecedented actions intended to address these market conditions and it remains
unclear whether such government actions will prove effective. The United States economy is currently undergoing a period of slowdown,
which most observers view as a recession, and the future economic environment may continue to worsen.
The MRO product distribution industry is affected by changes in economic conditions outside our control, which can result in increased
vacancies in the residential rental housing market and a general decrease in product demand from professional contractors and specialty
distributors. Such economic developments may affect our business in a number of ways. Reduced demand may drive us and our competitors
to offer products at promotional prices, which would have a negative impact on our profitability. In addition, the current tightening of credit in
financial markets may adversely affect the ability of our customers and suppliers to obtain financing for significant purchases and operations
and could result in a decrease in, or cancellation of, orders for our products. If demand for our products continues to slow down or decrease,
we will not be able to improve our revenues and we may run the risk of failing to satisfy the financial and other restrictive covenants to which
we are subject under our existing indebtedness. Reduced revenues as a result of decreased demand may also reduce our working capital for
planned growth and otherwise hinder our ability to improve our performance in connection with our long term strategy.
13
Table of Contents
The trading price of our common stock may be volatile.

The market price of our common stock could be subject to wide fluctuations in response to, among other things, the risk factors described
in this and other periodic reports, and other factors beyond our control, such as fluctuations in the valuation of companies perceived by
investors to be comparable to us. Furthermore, the stock markets have experienced price and volume fluctuations that have affected and
continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate
to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political, and
market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of
our common stock. In the past, many companies that have experienced volatility in the market price of their stock have been subject to
securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in
substantial costs and divert our management's attention from other business concerns, which could seriously harm our business.
An impairment in the carrying value of our goodwill or other intangible assets could adversely affect our financial condition and results
of operations.
Goodwill represents the difference between the purchase price of acquired companies and the related fair values of net assets acquired.
We test goodwill for impairment annually and whenever events or changes in circumstances indicate that impairment may have occurred. We
compare the carrying value of a reporting unit, including goodwill, to the fair value of the unit. Carrying value is based on the assets and
liabilities associated with the operations of that reporting unit. If the carrying value is less than the fair value, no impairment exists. If the
carrying value is higher than the fair value, there is an indication of impairment. A significant amount of judgment is involved in determining if
an indication of impairment exists. Factors may include, among others: a significant decline in our expected future cash flows; a sustained,
significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate;
unanticipated competition; the testing for recoverability of a significant asset group within a reporting unit; and slower growth rates. Any
adverse change in these factors would have a significant impact on the recoverability of these assets and negatively affect our financial
condition and consolidated results of operations. We compute the amount of impairment by comparing the implied fair value of reporting unit
goodwill with the carrying amount of that goodwill. We are required to record a non-cash impairment charge if the testing performed indicates
that goodwill has been impaired.
As with goodwill, we test our indefinite-lived intangible assets (primarily trade names) for impairment annually and whenever events or
changes in circumstances indicate that their carrying value may not be recoverable. We estimate the fair value of the trademarks based on an
income valuation model using the relief from royalty method, which requires assumptions related to projected revenues from our annual longrange plan, assumed royalty rates that could be payable if we did not own the trademarks and a discount rate.
We cannot accurately predict the amount and timing of any impairment of assets. Should the value of goodwill or other intangible assets
become impaired, there could be an adverse effect on our financial condition and consolidated results of operations.
Our allowance for doubtful accounts may prove inadequate or we may be negatively affected by credit risk exposures.
Our business depends on the creditworthiness of our customers. We periodically review our allowance for doubtful accounts for
adequacy considering economic conditions and trends, collateral values and credit quality indicators, including past charge-off experience and
levels of past due
14
Table of Contents
accounts. We cannot be certain that our allowance for doubtful accounts will be adequate over time to cover losses in our accounts receivable
because of adverse changes in the economy or events adversely affecting specific customers, industries or markets. The current economic
environment is dynamic and the credit worthiness of our customers and the value of collateral underlying our accounts receivable can change
significantly over very short periods of time. Our allowance may not keep pace with changes in the creditworthiness of our customers or
collateral values. If the credit quality of our customer base materially decreases, if the risk of a market, industry, or group of customers changes
significantly, or if our allowance for doubtful accounts is not adequate, our business, financial condition and results of operations could
suffer.
One of the key markets in which we operate is impacted by trends in home improvement, home remodeling and home building. Adverse
changes in economic factors specific to these industries may negatively impact the rate of growth of our net sales.
The professional contractor market is impacted by trends in home improvement, home remodeling and new home construction. Trends in
these areas are in turn dependent upon a number of factors, including demographic trends, interest rates, tax policy, employment levels,
consumer confidence and the economy generally. Unfavorable changes in demographics or a weakening of the national economy or of any
regional or local economy in which we operate could adversely affect consumer spending, result in decreased demand for repair, improvement,
remodeling or construction products and adversely affect our business. For example, during 2008 our average organic daily sales rate in the
professional contractor and specialty distributor markets was down 12.1% and 6.6%, respectively.
We operate in a highly competitive industry, and if we are unable to compete successfully we could lose customers, and our sales may
decline.
The MRO product distribution industry is highly competitive. We face significant competition from national and regional distributors
which market their products through the use of direct sales forces as well as direct marketing and catalogs. In addition, we face competition
from traditional channels of distribution such as retail outlets, small dealerships and large warehouse stores and from buying groups formed
by smaller distributors, internet-based procurement service companies, auction businesses and trade exchanges. We expect that new
competitors may develop over time as internet-based enterprises become more established and reliable and refine their service capabilities.
In addition, the MRO product distribution industry is undergoing changes driven by industry consolidation and increased customer
demands. Traditional MRO product distributors are consolidating operations and acquiring or merging with other MRO product distributors to
achieve economies of scale and increase efficiency. This consolidation trend could cause the industry to become more competitive and make it
more difficult for us to maintain our operating margins.
Competition in our industry is primarily based upon product line breadth, product availability, service capabilities and price. To the extent
that existing or future competitors seek to gain or retain market share by reducing price or by increasing support service offerings, we may be
required to lower our prices or to make additional expenditures for support services, thereby reducing our profitability.
Fluctuations in the cost of raw materials, fuel prices or in currency exchange rates could significantly reduce our revenues and
profitability.
As a distributor of manufactured products, our profitability is related to the prices we pay to the manufacturers from which we purchase
our products and to the cost of transporting the products to us and our customers. The price that our suppliers charge us for our products is
dependent in part upon the availability and cost of the raw materials used to produce those products. Such raw materials are often subject to
price fluctuations, frequently due to factors beyond our control, including changes in
15
Table of Contents
supply and demand, general U.S. and international economic conditions, labor costs, competition and government regulations. Increases in
the cost of raw materials, such as copper, oil, stainless steel, aluminum, zinc, plastic and PVC and other commodities and raw materials, have
occurred in the past and adversely impacted our operating results. Transportation prices are significantly dependent on fuel prices, which
generally change due to factors beyond our control, such as changes in worldwide demand, disruptions in supply, changes in the political
climate in the Middle East and other regions and changes in government regulations. Fluctuations in raw materials and fuel prices may
increase our costs and significantly reduce our revenues and profitability.
A significant decline in raw materials, fuel and transportation costs may also adversely affect us. For example, during 2005 and 2006, the
cost of our products increased materially because of raw materials, fuel and transportation cost increases and other demand factors. During
this period, a significant portion of our sales growth resulted from our price increases related to these increased costs. The nature and extent
of such an impact is difficult to predict, quantify and measure. To the extent the costs of products increase or decrease, the prices we charge
for our products may correspondingly increase or decrease, adversely affecting our revenues and profitability.
In addition, many of our suppliers price their products in currencies other than the U.S. dollar or incur costs of production in non-U.S.
currencies. Accordingly, depreciation of the U.S. dollar against foreign currencies could increase the price we pay for these products. For
example, a substantial portion of our products are 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. Such a move would most likely result in an increase in the
cost of products that are sourced from suppliers in China.
Loss of key suppliers, lack of product availability or loss of delivery sources could decrease our revenues and profitability.
Our ability to offer a wide variety of products to our customers is dependent upon our ability to obtain adequate product supply from
manufacturers or other suppliers. While in many instances we have agreements, including supply chain agreements, with our suppliers, these
agreements are generally terminable by either party on limited notice. The loss of, or a substantial decrease in the availability of, products from
our suppliers, or the loss of our key supplier agreements, could cause our revenues and profitability to decrease. In addition, supply
interruptions could arise from shortages of raw materials, labor disputes or weather conditions affecting products or shipments, transportation
disruptions or other factors beyond our control. Loss of a key foreign supplier could disrupt our supply chain for approximately 60 to 90 days,
or longer, and loss of key suppliers from an individual country could result in disruptions of approximately 120 to 150 days, or longer. Short
and long term disruptions in our supply chain would result in higher inventory levels as we replace similar product domestically, a higher cost
of product and ultimately a decrease in our revenues and profitability. Although no individual supplier represents more than 6% of our total
purchases, a disruption in the timely availability of our product by our key suppliers could result in a decrease in our revenues and
profitability.
We could face potential product quality and product liability claims relating to the products we distribute, which could result in a decline
in revenues and profitability and negatively impact customer confidence.
We rely on manufacturers and other suppliers to provide us with the products we sell and distribute. As we do not have direct control
over the quality of the products manufactured or supplied by such third party suppliers, we are exposed to risks relating to the quality of the
products we distribute. It is possible that inventory from a manufacturer or supplier could be sold to our customers and later be alleged to
have quality problems or to have caused personal injury, subjecting us to
16
Table of Contents
potential claims from customers or third parties. The risk of claims may be greater with respect to our exclusive brand products, as these
products are customarily manufactured by third party suppliers outside the United States, particularly in China. We have been subject to
claims in the past, which have been resolved without material financial impact. Product liability claims can be expensive to defend and can
divert the attention of management and other personnel for significant time periods, regardless of the ultimate outcome. An unsuccessful
product liability defense could be highly costly and accordingly result in a decline in revenues and profitability. In addition, uncertainties with
respect to the Chinese legal system may adversely affect us in resolving claims arising from our exclusive brand products manufactured in
China. Because many laws and regulations are relatively new and the Chinese legal system is still evolving, the interpretations of many laws,
regulations and rules are not always uniform. Finally, even if we are successful in defending any claim relating to the products we distribute,
claims of this nature could negatively impact customer confidence in our products and our company.
If the government of China were to reduce or withdraw the tax benefits they provide our Chinese suppliers, the cost of some of our
products could increase and therefore our profitability may be significantly reduced.
China's turnover tax system consists of value-added tax ("VAT"), consumption tax and business tax. Export sales are exempted under
VAT rules and an exporter who incurs input VAT on the manufacture of goods can claim a tax rebate from Chinese tax authorities. Currently,
our Chinese suppliers benefit from the tax rebates that China provides them to export their products. If these tax rebates are reduced or
eliminated, some of our Chinese-sourced products could become more expensive for us, thereby reducing our profitability.
In some cases, we are dependent on long supply chains, which may subject us to interruptions in the supply of many of the products that
we distribute.
A significant portion of the products that we distribute is imported from foreign countries, including China. We are thus dependent on
long supply chains for the successful delivery of many of our products. The length and complexity of these supply chains make them
vulnerable to numerous risks, many of which are beyond our control, which could cause significant interruptions or delays in delivery of our
products. Factors such as labor disputes, currency fluctuations, changes in tariff or import policies, severe weather or terrorist attacks or
armed hostilities may disrupt these supply chains. We expect more of our name brand and exclusive brand products will be imported in the
future, which will further increase these risks. A significant interruption in our supply chains caused by any of the above factors could result
in increased costs or delivery delays and result in a decrease in our revenues and profitability.
Our ability to both maintain our existing customer base and to attract new customers is dependent in many cases upon our ability to
deliver products and fulfill orders in a timely and cost-effective manner.
To ensure timely delivery of our products to our customers, we frequently rely on third parties, including couriers such as UPS and other
national shippers as well as various local and regional trucking contractors and logistics consulting and management companies. Outsourcing
this activity generates a number of risks, including decreased control over the delivery process and service timeliness and quality. Any
sustained inability of these third parties to deliver our products to our customers could result in the loss of customers or require us to seek
alternative delivery sources, if they are available, which may result in significantly increased costs and delivery delays. Furthermore, the need
to identify and qualify substitute service providers or increase our internal capacity could result in unforeseen operations problems and
additional costs. Moreover, if demand for our products increases, we may be unable to secure sufficient additional capacity from our current
service providers, or others, on commercially reasonable terms, if at all.
17
Table of Contents
The loss of any of our significant customers could significantly reduce our revenues and profitability.
Our 10 largest customers generated approximately $67.1 million, or approximately 6%, of our sales in the year ended December 26, 2008,
and our largest customer accounted for approximately 2% of our sales in the year ended December 26, 2008. The loss of one or more of our
significant customers or deterioration in our relations with any of them could significantly reduce our revenues and profitability.
We may not be able to protect our trademarks, which could diminish the strength of our trademarks or limit our ability to use our
trademarks and, accordingly, undermine our competitive position.
We believe that our trademarks are important to our success and our competitive position. For instance, we market and sell products
primarily through twelve distinct and targeted brands: Wilmar, AmSan, Barnett, Sexauer, Hardware Express, Copperfield,
Maintenance USA, U.S. Lock, SunStar, LeranSM, Trayco, and AF Lighting. We believe many of our customers have developed
strong consumer loyalty to these targeted brands. Accordingly, we devote resources to the establishment and protection of our trademarks,
including with respect to our brand names and our exclusive brand products. However, the actions we have taken may be inadequate to
prevent imitation of our brands and concepts by others or to prevent others from claiming violations of their trademarks and proprietary rights
by us. In addition, others may assert rights in our trademarks. Our exclusive rights to our trademarks are subject to the common law rights of
any other person who began using the trademark (or a confusingly similar mark) prior to the date of federal registration. Future actions by third
parties may diminish the strength of our trademarks or limit our ability to use our trademarks and, accordingly, undermine our competitive
position.
We may not be able to facilitate our growth strategy by identifying or completing transactions with attractive acquisition candidates,
which could impede our revenues and profitability.
Our acquisitions of Barnett in 2000, Florida Lighting in 2003, Copperfield in 2005 and AmSan in 2006 have contributed significantly to our
growth. An important element of our growth strategy is to continue to seek additional businesses to acquire in order to add new customers
within our existing markets and to acquire brands in new markets. We cannot assure you that we will be able to identify attractive acquisition
candidates or complete the acquisition of any identified candidates at favorable prices and upon advantageous terms and conditions.
Furthermore, we believe that our industry is currently in a process of consolidation, and competition for attractive acquisition candidates is
therefore likely to escalate, thereby limiting the number of acquisition candidates or increasing the overall costs of making acquisitions. In
addition, in view of the current disruptions in the credit markets, we may not be able to obtain financing necessary to complete acquisitions on
attractive terms or at all. Difficulties we may face in identifying or completing acquisitions could impede our revenue growth and profitability.
We cannot assure you that we will be able to successfully complete the integration of future acquisitions or manage other consequences of
our acquisitions, which could impede our ability to remain competitive and, ultimately, our revenues and profitability.
Acquisitions involve significant risks and uncertainties, including difficulties integrating acquired personnel and other corporate cultures
into our business, difficulties associated with information systems conversions, the potential loss of key employees, customers or suppliers,
the assumption of liabilities and exposure to unforeseen liabilities of acquired companies, the difficulties in achieving target synergies and the
diversion of management attention and resources from existing operations. We may not be able to fully integrate the operations of future
acquired businesses with our own in an efficient and cost-effective manner or without significant disruption to our existing operations. We
may also be required to incur additional debt in order to consummate acquisitions in the future. Such debt may be substantial and may limit our
flexibility in using our cash flow from operations. Our failure to
18
Table of Contents
integrate future acquired businesses effectively or to manage other consequences of our acquisitions, including increased indebtedness,
could impede our ability to remain competitive and, ultimately, our revenues and profitability.
Disruption in our information technology systems could significantly lower our revenues and profitability.
Our operations are dependent upon our information technology systems that encompass all of our major business functions. We rely
upon our information technology systems to manage and replenish inventory, to fill and ship customer orders on a timely basis and to
coordinate our sales and marketing activities across all of our brands. We believe that our information technology systems play a key role in
our ability to achieve operating and financial efficiencies. Any substantial disruption of our information technology systems for any
prolonged time period could result in delays in receiving inventory and supplies or filling customer orders and, accordingly, could significantly
lower our revenues and profitability.
Disruption in our national distribution centers could significantly lower our revenues and profitability.
We currently maintain two national distribution centers, which are essential to the efficient operation of our national distribution network.
Any serious disruption to these distribution centers due to fire, earthquake, act of terrorism or any other cause could damage a significant
portion of our inventory and could materially impair our ability to distribute our products to our customers. In addition, we could incur
significantly higher costs and longer lead times associated with distributing our products to our customers during the time that it takes for us
to reopen or replace these centers. As a result, any such disruption could significantly lower our revenues and profitability.
We may be unable to retain senior executives and attract and retain other qualified employees which might hinder our growth and could
impede our ability to run our business and potentially reduce our revenues and profitability.
Our success depends in part on our ability to attract, hire, train and retain qualified managerial, sales and marketing personnel. We face
significant competition for these types of personnel in our industry. We may be unsuccessful in attracting and retaining the personnel we
require to conduct and expand our operations successfully and, in such an event, our revenues and profitability could decline. In addition, key
personnel may leave us and compete against us. Our success also depends, to a significant extent, on the continued service of our senior
management team. The loss of any member of our senior management team or other qualified employees could impair our ability to execute our
business plan and growth strategy, cause us to lose customers and reduce our net sales, or lead to employee morale problems and/or the loss
of key employees.
If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent
fraud. As a result, current and potential stockholders could lose confidence in our financial reporting, which would harm the trading
price of our stock.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. Any failure to implement required
new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our
reporting obligations. Inadequate internal controls could also cause investors to lose confidence in our reported financial information, which
could have a negative effect on the trading price of our stock.
19
Table of Contents
Risks Relating to Our Indebtedness
The volatility and disruption of the capital and credit markets may impair our access to sufficient capital.
The United States credit markets are currently experiencing an unprecedented contraction. As a result of the tightening credit markets, we
may not be able to obtain additional financing on favorable terms, or at all. While we intend to finance our operational cash flow, capital
expenditures, debt service obligations and growth projects with existing cash and cash flow from operations, we may require accessing our
credit facility. However, due to the existing uncertainty in the capital and credit markets, access to our credit facility may not be available. For
example, one of the financial institutions that support our revolving credit facility has failed and we may not be able to find a replacement,
which could negatively impact our ability to borrow under our revolving credit facility. In addition, if the current pressures on credit continue
or worsen, we may not be able to refinance our outstanding debt when due, which could have a material adverse effect on our business.
Decreased access to the credit markets and other financing sources could also restrict our ability to make acquisitions and grow our business.
Furthermore, if our operating results, cash flow or capital resources prove inadequate, or if interest rates increase significantly, we could
face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt and other obligations. If
we are unable to service our debt, we could be forced to reduce or delay planned capital expenditures, sell assets, restructure or refinance our
debt or seek additional equity capital, and we may be unable to take any of the actions on satisfactory terms or in a timely manner. Further, any
of these actions may not be sufficient to allow us to service our debt obligations or may have an adverse impact on our business. Our existing
debt agreements limit our ability to take certain of these actions. Our failure to generate sufficient operating cash flow to pay our debts, to
refinance our indebtedness or to successfully undertake any of these other actions could have a material adverse effect on us.
Our indebtedness may limit our cash flow available to invest in the ongoing needs of our business, which could prevent us from fulfilling
our obligations.
As of December 26, 2008, our total indebtedness was $411.7 million, of which $8.3 million was outstanding in the form of letters of credit.
As of December 26, 2008, we had $223.4 million of senior indebtedness outstanding and $30.5 million in additional revolving loan availability
under our $100.0 million revolving loan facility. Our effective borrowing capacity is reduced by the limitation under the bank credit facility's
ratio of net total indebtedness to adjusted consolidated EBITDA, as defined by the credit facility, and by the failure of one of the financial
institutions that support our revolving credit facility. Also as of December 26, 2008, we had $62.7 million of total cash on hand (including
$25.0 million netted against debt for purposes of covenant compliance).
Our indebtedness could have important consequences, including:
our debt could limit our ability to obtain additional financing on satisfactory terms in the future for working capital, capital
expenditures, acquisitions and other general corporate purposes;
a significant portion of our cash flow from operations must be dedicated to the payment of principal and interest on our debt,
which will reduce the funds available to us for our operations;
some of our debt is, and will continue to be, at variable rates of interest, which may result in higher interest expense in the event
of increases in interest rates;
our debt could limit our flexibility in planning for, or reacting to, changes in our business or our industry;
20
Table of Contents
our debt may potentially place us at a competitive disadvantage to the extent we are more highly leveraged than some of our
competitors;
our debt could make it more difficult for us to satisfy our obligations under our credit facility, exposing us to the risk of default on
our secured debt, which could result in a foreclosure on our assets, and in turn negatively affect our ability to operate as a going
concern;
our failure to comply with the financial and other restrictive covenants in the documents governing our indebtedness could result
in an event of default that, if not cured or waived, could harm our business or prospects and could result in our filing for
bankruptcy; and
our debt may make us more vulnerable to a further downturn in the economy, our industry or our business.
Our level of indebtedness increases the possibility that we may be unable to generate sufficient cash to pay when due the principal of,
interest on or other amounts due in respect of our indebtedness. In addition, we may incur additional debt from time to time to finance strategic
acquisitions, investments or for other purposes, subject to the restrictions contained in the documents governing our indebtedness. If we
incur additional debt, the risks associated with our leverage, including our ability to service our debt, would increase. We cannot be certain
that our earnings will be sufficient to allow us to pay principal and interest on our debt and meet our other obligations. If we do not have
sufficient earnings, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell more securities, none
of which we can guarantee we will be able to do. Our ability to incur additional debt will be limited by the terms and conditions of our credit
facility. On June 23, 2006 we completed a series of refinancing transactions consisting of (1) an offering of $200.0 million of 81/8% senior
subordinated notes due 2014 and (2) entered into a $330.0 million bank credit facility. This bank credit facility consists of a $100.0 million 7-year
term loan, a $130.0 million 7-year delayed draw term loan and a $100.0 million 6-year revolving credit facility of which a portion not exceeding
$40.0 million is available in the form of letters of credit. In July 2006, we utilized, within the terms of our credit agreement, the incremental
$130.0 million term loan to fund the AmSan acquisition. In addition, the credit facility provides for an additional incremental term loan and
revolver borrowings, limited by certain restrictions, in the aggregate principal amount of up to $100.0 million and $50.0 million, respectively.
Each incremental term loan must be in a minimum principal amount of $25.0 million.
Despite our level of indebtedness, we may be able to incur substantially more debt. This could further exacerbate the risks described
above.
We may be able to incur significant additional indebtedness in the future. Although the indenture governing our 81/8% senior
subordinated notes due 2014 and the credit agreement governing our credit facility contain restrictions on the incurrence of additional
indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with
these restrictions could be substantial. Specifically, the indenture permits us to incur all the indebtedness provided for in our new revolving
loan facility. Furthermore, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness, as defined in the
applicable agreement. To the extent new debt is added to our current debt levels, the substantial leverage risks described above would
increase.
The terms of our credit facility and the indenture governing the 81/8% senior subordinated notes may restrict our current and future
operations, particularly our ability to respond to changes in our business or to take certain actions.
Our credit facility and the indenture governing the 81/8% senior subordinated notes contain, and any future indebtedness of ours would
likely contain, a number of restrictive covenants that impose
21
Table of Contents
significant operating and financial restrictions on us, including restrictions on our ability to, among other things:
incur additional debt,
pay dividends and make other restricted payments,
create liens,
make investments, including business acquisitions,
engage in sales of assets and subsidiary stock,
enter into sale and leaseback transactions,
enter into transactions with affiliates,
transfer all or substantially all of our assets or enter into merger or consolidation transactions, and
make capital expenditures.
The credit facility also requires us to maintain certain financial ratios, which become more restrictive over time. A failure by us to comply
with the covenants or financial ratios contained in the credit facility could result in an event of default under the facility which could materially
and adversely affect our operating results and our financial condition. In the event of any default under our credit facility, the lenders under
our credit facility are not required to lend any additional amounts to us and could elect to declare all borrowings outstanding, together with
accrued and unpaid interest and fees, to be due and payable, require us to apply all of our available cash to repay these borrowings or prevent
us from making debt service payments on the 81/8% senior subordinated notes, any of which could result in an event of default under the
81/8% senior subordinated notes. If the indebtedness under our credit facility or the 81/8% senior subordinated notes were to be accelerated,
there can be no assurance that our assets would be sufficient to repay such indebtedness in full.
We may not be able to generate sufficient cash flow to meet our debt service obligations.
Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt obligations will depend on our
future financial performance, which will be affected by a range of economic, competitive, regulatory, legislative and business factors, many of
which are beyond our control. Our indebtedness under the credit facility bears interest at a variable rate.
Historically, we have funded our debt service obligations and other capital requirements through internally generated cash flow and funds
borrowed under our credit agreement. We expect our cash flow from operations and the loan availability under our credit agreement to be our
primary source of funds in the future. If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including
payments on the 81/8% senior subordinated notes, we may have to undertake alternative financing plans, such as refinancing or restructuring
our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure you that any
refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds realized from
those sales, or that additional financing could be obtained on acceptable terms, if at all. Our inability to generate sufficient cash flow to satisfy
our debt obligations, or to refinance our obligations on commercially reasonable terms, would have an adverse effect on our business,
financial condition and results of operations, as well as on our ability to satisfy our obligations in respect of the 81/8% senior subordinated
notes.
22
Table of Contents
ITEM 1B. Unresolved Staff Comments

None.
ITEM 2. Properties
We operate out of 135 locations throughout the United States, Canada and Puerto Rico consisting of 70 regional distribution centers, 30
professional contractor showrooms, 23 vendor-managed inventory locations, 7 administrative and support facilities, three cross-dock facilities
and two NDCs.
We lease 109 properties. The majority of these leases are for terms of five to ten years. We own our corporate headquarters located in
Jacksonville, Florida, and regional distribution centers in Long Island, New York and Louisville, Kentucky, both of which have attached
administrative and support facilities. None of the owned properties are subject to any mortgages; however, our corporate headquarters in
Jacksonville, Florida is subject to a development agreement with the City of Jacksonville. The 23 vendor-managed inventory locations are
customer specific locations whereby we assist those customers with their MRO inventory management process.
We believe that our properties are in good operating condition and adequately serve our current business operations.
The ranges in size of the locations we operate out of are as follows (not including vendor-managed inventory locations and cross-dock
facilities):
S iz e
(in squ are fe e t)
National distribution centers

Regional distribution centers
Professional contractor showrooms
Administrative and support facilities
173,000-317,100
7,600-210,000
2,600- 27,000
3,200- 37,000
23
Table of Contents
The following table sets forth the states, territories and provinces we operate out of (not including vendor-managed inventory locations
and cross-dock facilities):
Location
U.S. State
Alabama
Arizona
California
Colorado
Florida
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Jersey
New York
North Carolina
National an d
Re gion al
Distribution
C e n te rs
Profe ssional
C on tractor
S h owroom s
Adm inistrative
an d S u pport
Location s
1
1
5
1
7
1
5
1
1
3
1
2
1
1
1
2
1
1
4
2
2
1
5
2
3
1
1
2
2
1
1
1
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
Tennessee
Texas
Utah
Virginia
Washington
Subtotal
U.S. Territory
Puerto Rico
Subtotal
Canadian Province
Alberta
Ontario
Subtotal
Total
24
3
2
1
2
1
4
6
1
1
5
69
1
1
1
1
2
2
30
1
1
1
1
2
72
0
30
0
7
Table of Contents
ITEM 3. Legal Proceedings
We are involved in various legal proceedings in the normal course of our business. In the opinion of management, none of the
proceedings is material in relation to our consolidated financial statements.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the fourth quarter of our year ended December 26, 2008, through the
solicitation of proxies or otherwise.
25
Table of Contents
PART II
ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Since December 16, 2004, our common stock has been publicly traded on the New York Stock Exchange ("NYSE") under the symbol "IBI".
As of February 24, 2009, there were approximately 100 holders of record of our outstanding common stock.
Stock Price Performance
The following Performance Graph and related information shall not be deemed "soliciting material" or to be "filed" with the Securities
and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act or the
Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing.
The following performance graph compares the performance of our common stock with the performance of the New York Stock Exchange
Composite and the Standard & Poor's Small Cap 600 Index, during the period from the Company's initial public offering on December 16, 2004
through December 26, 2008. The Company has chosen the Standard and Poor's Small Cap 600 Index for comparison because the Standard and
Poor's Small Cap 600 Index includes companies of similar capitalization to the Company. The graph plots the changes in value of an initial $100
investment over the indicated time period, assuming all dividends are reinvested.
GRAPHIC
26
Table of Contents
De ce m be r 16, De ce m be r 31, De ce m be r 30, De ce m be r 29, De ce m be r 28, De ce m be r 26,
2004
2004
2005
2006
2007
2008
IBI
$
Standard and Poor's Small Cap 600
New York Stock Exchange Composite
100.00 $
100.00
100.00
101.68 $
101.58
101.66
131.50 $
108.34
108.72
129.88 $
123.58
128.14
127.69 $
122.96
137.46
56.94
79.19
77.65
The following table sets forth the high and low sale price per share of our common stock during the periods indicated:
High
Low
Fiscal Year 2008

First quarter ended March 28, 2008
Second quarter ended June 27, 2008
Third quarter ended September 26, 2008
Fourth quarter ended December 26, 2008
$22.34
$20.20
$18.59
$16.45
$17.31
$14.70
$12.83
$ 6.74
Fiscal Year 2007

First quarter ended March 30, 2007
Second quarter ended June 29, 2007
Third quarter ended September 28, 2007
Fourth quarter ended December 28, 2007
$23.19
$27.18
$28.13
$25.10
$20.08
$21.31
$21.93
$21.71
Dividends
We have never declared dividends on our common stock. Our ability to declare and pay dividends on our common stock is subject to the
requirements of Delaware law. In addition, we are a parent company with no business operations of our own. Accordingly, our sources of cash
are dividends and distributions with respect to our ownership interest in Interline New Jersey that are derived from the earnings and cash flow
generated by our businesses. The ability of Interline New Jersey to pay dividends to us is restricted under certain of its debt and other
agreements.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth information as of December 26, 2008 regarding compensation plans under which our equity securities are
authorized for issuance.
Plan C ate gory
(a)
(b)
Nu m be r of se cu ritie s to
be issu e d u pon e xe rcise of
ou tstan ding option s
W e ighte d-ave rage

e xe rcise price of
ou tstan ding option s ($)
Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders
Total
3,618,338(1) $
3,618,338(1) $
(c)
Nu m be r of se cu ritie s
re m aining available for
future issu an ce u n de r
e qu ity com pe n sation
plan s (e xcluding
se cu ritie s re fle cte d
in colum n (a))
19.10(2)
19.10(2)
(1)
Includes 254,256 restricted share units and 42,060 deferred stock units granted to management and non-employee directors,
respectively, pursuant to the 2004 Equity Incentive Plan.
(2)
The weighted-average exercise price excludes restricted share units and deferred stock units.
27
3,308,685
3,308,685
Table of Contents
Further, as of December 26, 2008, there were 3,322,022 stock options outstanding with a weighted-average exercise price of $19.10 and a
weighted-average term of 5.9 years and 315,516 full value shares outstanding under our equity compensation plans. As of December 26, 2008,
there were 3,308,685 shares remaining to be awarded under our equity compensation plans (3,304,285 under the 2004 Equity Incentive Plan and
4,400 under the 2000 Stock Award Plan).
Purchases of Equity Securities by the Issuer
The following table summarizes repurchases of our stock, comprised entirely of shares returned or sold to us to satisfy employee tax
withholding obligations that arose upon the vesting of restricted share units and shares of unvested forfeited restricted stock awards returned
to us, during the three months ended December 26, 2008:
Pe riod
Total Num be r of
S h are s
Purchase d
Ave rage Price

Paid pe r
S h are
10.83
10.83
October 2008
(September 27-October 24)
November 2008
(October 25-November 21)
December 2008
(November 22-December 26)
Total
26,488
26,488
$
$
Total Num be r of S h are s

Purchase d as Part of Publicly
An n ou n ce d Plans or Program s
Maxim u m Nu m be r of S h are s that

May Ye t Be Purchase d Un de r the
Plan s or Program s
28
Table of Contents
ITEM 6. Selected Financial Data
The table below presents our selected historical consolidated financial data for 2008, 2007, 2006, 2005 and 2004. The information presented
below should be read in conjunction with "Management's Discussion and Analysis of Financial Conditions and Results of Operations" and
the consolidated financial statements included elsewhere in this report.
De ce m be r 26,
2008(1)
Income Statement Data:

Net sales
Cost of sales
Gross profit
Operating expenses
Secondary offering and IPO related expenses(3)
Operating income
Interest and other expense, net
Change in fair value of interest rate swaps
Gain (Loss) on extinguishment of debt
Income before income taxes
Provision for income taxes
Net income
Preferred stock dividends
Net income (loss) applicable to common stockholders
Earnings (loss) per share:
Basic
Diluted
Cash dividends declared per share
Cash Flow Data:
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Capital expenditures
Fiscal Ye ar En de d
De ce m be r 28, De ce m be r 29, De ce m be r 30,
2007
2006(1)
2005(1)
(in thou san ds, e xce pt pe r sh are data)
De ce m be r 31,
2004(2)
1,195,663 $
746,037
449,626
360,659
88,967
(26,284)
2,775
65,458
24,625
40,833
40,833 $
1,239,027 $
765,137
473,890
359,796
114,094
(30,672)
83,422
32,460
50,962
50,962 $
1,067,570 $
658,698
408,872
307,179
101,693
(30,170)
(20,843)
50,680
19,495
31,185
31,185 $
851,928 $
526,334
325,594
242,644
932
82,018
(24,544)
(10,340)
47,134
18,335
28,799
28,799 $
743,905
458,516
285,389
214,684
9,215
61,490
(39,344)
8,232
(660)
29,718
11,617
18,101
(54,389)
(36,288)
1.26
1.58
0.97
0.90
(25.21)
1.25
1.56
0.95
0.89
(25.21)
56,192 $
17,715
(15,844)
20,582
57,730 $
(64,211)
4,441
14,906
29,946 $
(139,298)
113,226
7,813
38,838 $
(81,133)
(24,062)
7,920
(1,403)
(7,329)
76,006
6,763
Balance Sheet Data (as of end of period):

Cash and cash equivalents
Total assets
Total debt(4)
Stockholders' equity
Other Data:
Depreciation and amortization
Adjusted EBITDA(5)
62,724
962,848
403,390
420,073
4,975
936,834
418,590
377,414
6,852
890,569
421,066
320,679
2,958
705,769
285,075
284,542
69,178
673,380
303,275
252,899
17,414
107,474
15,114
130,452
14,427
116,726
13,049
96,638
12,600
83,759
(1)
We acquired CCS Enterprises, Inc. ("Copperfield") in July 2005, AmSan LLC ("AmSan") in July 2006 and Eagle Maintenance
Supply, Inc. ("Eagle") in August 2008. Their results have been included in the financial statements since their respective acquisition
date.
(2)
Fiscal year ended December 31, 2004 was a 53-week year. All other years presented were 52-week years.
29
Table of Contents
(3)
Secondary offering expenses in 2005 consist of expenses related to the secondary stock offering by certain shareholders of which we
received no proceeds. IPO related expenses in 2004 consist of additional compensation expense for forgiveness of shareholder loans
and one-time bonuses that relate to the IPO transaction.
(4)
Total debt represents the amount of our short-term debt and long-term debt.
(5)
We define Adjusted EBITDA as net income plus interest expense (income), net, change in fair value of interest rate swaps, cumulative
effect of change in accounting principle, (gain) loss on extinguishment of debt, secondary offering and IPO related expenses, provision
for income taxes and depreciation and amortization. Adjusted EBITDA differs from earnings before interest, taxes, depreciation and
amortization ("EBITDA") and may not be comparable to EBITDA or Adjusted EBITDA as reported by other companies. Adjusted
EBITDA differs from Consolidated EBITDA per our credit facility agreement for purposes of determining our net leverage ratio.
We present Adjusted EBITDA herein because we believe it to be relevant and useful information to our investors since it is
consistently used by our management to evaluate the operating performance of our business and to compare our operating performance
with that of our competitors. Management also uses Adjusted EBITDA for planning purposes, including the preparation of annual
operating budgets, and to determine appropriate levels of operating and capital investments. We therefore utilize Adjusted EBITDA as
a useful alternative to net income as an indicator of our operating performance compared to the Company's plan. However, Adjusted
EBITDA is not a measure of financial performance under generally accepted accounting principles ("GAAP"). Accordingly, Adjusted
EBITDA should not be used in isolation or as a substitute for other measures of financial performance reported in accordance with
GAAP, such as gross margin, operating income, net income, cash flows from operating, investing and financing activities or other
income or cash flow statement data prepared in accordance with GAAP.
Our definition of Adjusted EBITDA specifically excludes certain items, including change in fair value of interest rate swaps, cumulative
effect of change in accounting principle, loss on extinguishment of debt, and secondary and IPO related expenses, which we believe are
not indicative of our core operating results as follows:
Change in fair value of interest rate swapsPrior to our IPO, we entered into derivative financial instruments from time to time,
including interest rate swap exchange agreements, to manage our exposure to fluctuations in interests rates on our debt. We believe the
gains that we realized in connection with changes in the fair value of these interest rate swaps before our IPO are not indicative or
comparable to current operating results.
Gain (Loss) on extinguishment of debtWe have recorded gains and losses associated with the early extinguishment of debt. In 2003,
we refinanced our 16% senior subordinated notes with 111/2% senior subordinated notes and amended our credit facility. In 2004 and
2005, we used proceeds from our IPO to repay the term loan under our credit facility and partially redeem our 111/2% senior
subordinated notes. In 2006, we refinanced our 111/2% senior subordinated notes and credit facility with 81/8% senior subordinated
notes and a new credit facility. In 2008, we repurchased $12.9 million of our 81/8% senior subordinated notes at 773/8% of par, or
$10.0 million. Since these transactions correspond to the financing of the Company, we believe the losses associated with these specific
significant financing transactions are not indicative of our core operating results.
Secondary offering and IPO related expensesThese expenses include additional compensation expense for forgiveness of shareholder
loans and one-time bonuses to senior employees in connection with our IPO in 2004 as well as secondary offering related expenses
resulting from the secondary public offering by certain of our stockholders in 2005. Because these offering transactions are one-time or
infrequent in nature, we believe these expenses are not indicative of normalized performance but rather the result of specific
transactions not expected to repeat on a recurring basis.
These items impacted net income over the periods presented which make direct comparisons between years less meaningful and more
difficult without adjusting for them. While we believe that some of the items excluded in the calculation of Adjusted EBITDA are not
indicative of our core operating results, these items do impact our income statement, and management therefore utilizes Adjusted
EBITDA as an operating performance measure in conjunction with GAAP measures such as net income.
In addition, we believe the remaining adjustments in arriving at Adjusted EBITDA, comprised of interest expense (income), net,
provision for income taxes and depreciation and amortization, are appropriate because these adjustments allow management and
investors to evaluate our operating performance without regard to
30
Table of Contents
these items which can vary from company to company depending upon the acquisition history, capital intensity, financing options and
the method by which its assets were acquired. We continuously manage and monitor our capital structure, tax position and capital
spending to ensure that they are appropriate. While the exclusion of these items limits the usefulness of this non-GAAP measure as a
performance measure because it does not reflect all the related expenses we incurred, adjusting for these items and monitoring our
performance with and without them helps management and investors more meaningfully evaluate and compare the results of our
operations from period to period and to those of other companies.
The computation of Adjusted EBITDA is as follows (in thousands):
De ce m be r 26,
2008
Net income
Interest expense, net
Change in fair value of interest rate swaps
(Gain) Loss on extinguishment of debt
Secondary offering and IPO related expenses
Provision for income taxes
De ce m be r 28,
2007
40,833 $
27,377
(2,775)
24,625
17,414
107,474 $
De ce m be r 29, De ce m be r 30,
2006
2005
50,962
31,916
32,460
15,114
130,452
31,185
30,776
20,843
19,495
14,427
116,726
28,799
25,183
10,340
932
18,335
13,049
96,638
De ce m be r 31,
2004
18,101
39,798
(8,232)
660
9,215
11,617
12,600
83,759
Reconciliation of Average Organic Daily Sales to Net Sales

Average organic daily sales are defined as sales for a period of time divided by the number of shipping days in that period of time
excluding any sales from acquisitions made subsequent to the beginning of the prior year period. The computation of average organic daily
sales is as follows (dollar amounts in thousands):
2008
2007
% Variance
Net Sales
Less Acquisitions:
Organic Sales
Daily Sales:
Ship Days
Average Daily Sales(1)
Average Organic Daily Sales(2)
$
$
1,195,663 $
(9,434)
1,186,229 $
252
4,745
4,707
1,239,027
1,239,027
2007
2006
% Variance
-3.5% $
-4.3% $
1,239,027 $
(131,605)
1,107,422 $
1,067,570
1,067,570
16.1%
252
4,917
-3.5% $
252
4,917
252
4,236
16.1%
4,917
-4.3% $
4,395
4,236
3.7%
3.7%
(1)
Average daily sales are defined as sales for a period of time divided by the number of shipping days in that period of time.
(2)
Average organic daily sales are defined as sales for a period of time divided by the number of shipping days in that period of time
excluding any sales from acquisitions made subsequent to the beginning of the prior year period.
Average organic daily sales is presented herein because we believe it to be relevant and useful information to our investors since it is
used by our management to evaluate the operating performance of our business, as adjusted to exclude the impact of acquisitions, and
compare our organic operating performance with that of our competitors. However, average organic daily sales is not a measure of
financial performance under GAAP and it should be considered in addition to, but not as a substitute for, other measures of financial
performance reported in accordance with GAAP, such as net sales. Management utilizes average organic daily sales as an operating
performance measure in conjunction with GAAP measures such as net sales.
31
Table of Contents
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in conjunction with "Selected Financial Data" and our consolidated financial statements
included elsewhere in this report. Some of the statements in the following discussion are forward-looking statements. See "ForwardLooking Statements" above.
Overview
We are a leading national distributor and direct marketer of MRO products. We market and sell our products primarily through twelve
distinct and targeted brands. 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 the individual needs of each respective customer group served.
We stock over 90,000 MRO products in the following categories: plumbing, electrical, hardware, security hardware, heating, ventilation
and air conditioning, janitorial and sanitary and other miscellaneous products. Our products are primarily used for the repair, maintenance,
remodeling, refurbishment and construction of properties and non-industrial facilities.
Our highly diverse customer base includes facilities maintenance customers, professional contractors and specialty distributors. Our
customers range in size from individual contractors and independent hardware stores to apartment management companies and national
purchasing groups. No single customer accounted for more than 2% of our sales during 2008.
Results of Operations
The following table presents information derived from the consolidated statements of earnings expressed as a percentage of revenues for
the periods indicated:
% of Ne t Sale s
De ce m be r 26,
2008
Net sales
Cost of sales
Gross profit
Operating Expenses:
Selling, general and
administrative expenses
Depreciation and
amortization
Total operating expense
Operating income
Gain (Loss) on extinguishment
of debt
Interest expense
Interest and other income
Income before income
taxes
Income tax provision
Net income
(1)
% of Ne t Sale s
De ce m be r 28,
2007
100.0%
62.4
37.6
100.0%
61.8
38.2
28.8
27.9
1.4
30.2
7.4
% In cre ase
(De cre ase ) 2008 vs.
2007(1)
De ce m be r 28,
2007
(3.5)%
(2.5)
(5.1)
De ce m be r 29,
2006
% In cre ase
(De cre ase ) 2007 vs.
2006(1)
100.0%
61.8
38.2
100.0%
61.7
38.3
(0.4)
27.9
27.4
17.9
1.2
29.0
9.2
16.3
0.2
(22.0)
1.2
29.0
9.2
1.4
28.8
9.5
0.5
17.1
12.2
0.2
(2.4)
0.2
(2.7)
0.3
100.0
(16.0)
(32.4)
(2.7)
0.3
(2.0)
(2.9)
0.1
(100.0)
8.1
171.6
5.5
(2.1)
3.4%
6.7
(2.6)
4.1%
(21.5)
(24.1)
(19.9)%
6.7
(2.6)
4.1%
4.7
(1.8)
2.9%
Percent increase (decrease) represents the actual change as a percent of the prior year's result.
32
16.1%
16.2
15.9
64.6
66.5
63.4%
Table of Contents
The following discussion refers to the term average daily sales and average organic daily sales. Average daily sales are defined as sales
for a period of time divided by the number of shipping days in that period of time. Average organic daily sales are defined as sales for a period
of time divided by the number of shipping days in that period of time excluding any sales from acquisitions made subsequent to the beginning
of the prior year period. For a reconciliation of average organic daily sales growth to GAAP-based financial measures, see "Item 6. Selected
Financial DataReconciliation of Average Organic Daily Sales."
Fiscal Year Ended December 26, 2008 Compared to Fiscal Year Ended December 28, 2007
Overview. During 2008, our sales declined 3.5% and organic sales declined 4.3%. We believe this decline is in part associated with the
widely reported general economic downturn and credit crisis. Demand from customers in our facilities maintenance end-markets, which make
up 69% of our total sales and includes multi-family housing and institutional MRO customers, declined 0.3% during 2008 compared to 2007.
Demand from our professional contractor and specialty distributor customers, which represent 19% and 12% of our total sales, respectively,
declined 12.1% and 6.6%, respectively. Demand from these customers continues to be impacted by the prolonged declines in residential new
construction and renovations activity. Net income as a percentage of sales was 3.4% in 2008 compared to 4.1% in 2007. The decline in net
income is a result of lower sales, costs associated with our previously announced operational initiatives, such as employee separation benefits
and closing underperforming professional contractor showrooms. In addition, we incurred higher bad debt expense and higher rent and other
occupancy costs, which were driven by our Auburn, Massachusetts, and Richmond, Virginia distribution center consolidations. These higher
costs were offset in part by decreases in compensation and fringe benefits, performance-based bonus and share-based compensation expense
and lower interest expense associated with lower interest rates. We will continue to work on lowering our operating costs in the near term
while continuing to invest in our operating platform for the long term. Accordingly, in addition to the operational initiatives such as headcount
reductions, the closing of underperforming professional contractor showrooms and the consolidation of distribution centers, some of which
have been partially completed, our plans include continued investments in information technology solutions to optimize our customer service
as well as our credit and collections capabilities.
Net Sales. Net sales decreased by $43.4 million, or 3.5%, to $1,195.7 million in 2008 from $1,239.0 million in 2007. Average daily sales were
$4.7 million in 2008 and $4.9 million in 2007, a 3.5% decrease. The decline in sales resulted from the net impact of a 0.3% decrease in sales to our
facilities maintenance customers and a continued decline in sales to our professional contractor and specialty distributor customers of 12.1%
and 6.6%, respectively. We expect sales to our facilities maintenance, professional contractor and specialty distributor end-markets to remain
weak during 2009 as the general economic downturn and credit crisis is expected to continue specifically with respect to the housing market.
Gross Profit. Gross profit decreased by $24.3 million, or 5.1%, to $449.6 million in 2008 from $473.9 million in 2007 as a direct result of the
decrease in sales as well as the decline of gross profit margin during the year. Gross profit margins decreased 60 basis points to 37.6% in 2008
from 38.2% in 2007. This decrease in our gross profit margins is primarily related to a decline in our direct selling gross margins, lower gross
profit dollars associated with our supplier programs such as payment discounts and volume based purchase discounts, and higher costs
included in gross profit associated with the cost of adding a new west coast national distribution center.
33
Table of Contents
Selling, General and Administrative Expenses. SG&A expenses decreased by $1.5 million, or 0.4%, to $343.8 million in 2008 from
$345.3 million in 2007. As a percent of sales, SG&A increased 90 basis points to 28.8% for 2008 compared to 27.9% for 2007. The increase in
SG&A expenses as a percent of sales is primarily comprised of 1) 40 basis points for higher occupancy related costs, such as rent expense;
2) 20 basis points for costs associated with our previously announced operational initiatives, such as headcount reduction and closing
underperforming professional-contractor showrooms; 2) 20 basis points for higher bad debt expense resulting from the current tight credit
market, and 4) 10 basis points for project expenses associated with the consolidation of distribution operations in Auburn, Massachusetts,
and Richmond, Virginia. These costs were offset in part by lower performance-based bonus and share-based compensation expense.
Depreciation and Amortization. Depreciation and amortization expense increased by $2.4 million, or 16.3%, to $16.9 million in 2008 from
$14.5 million in 2007. As a percentage of sales, depreciation and amortization was 1.4% or 20 basis points higher than the 1.2% rate in the
comparable prior year period. These increases were due to higher depreciation resulting from our higher capital spending associated with our
information systems infrastructure and distribution center consolidation and integration efforts. In 2008, we had $11.1 million of depreciation
and $5.8 million of amortization compared to $8.9 million and $5.6 million in 2007, respectively.
Operating Income. As a result of the foregoing, operating income decreased by $25.1 million, or 22.0%, to $89.0 million in 2008 from
$114.1 million in 2007.
Gain on Extinguishment of Debt. Gain on extinguishment of debt was $2.8 million in 2008. In December 2008, we repurchased
$12.9 million of our 81/8% senior subordinated notes at 773/8% of par, or $10.0 million. In connection with the repurchase of our 81/8% senior
subordinated notes, we recorded a gain on extinguishment of debt of $2.8 million net of $0.1 million in deferred financing costs written-off. We
did not extinguish debt in 2007.
Interest Expense. Interest expense decreased by $5.4 million to $28.5 million in 2008 from $33.9 million in 2007. This decrease was
primarily due to lower interest rates as well as scheduled reductions in the principal balance of our term-debt.
Interest and Other Income. Interest and other income decreased by $1.1 million to $2.2 million in 2008 from $3.3 million in 2007. This
decrease was primarily attributable to lower interest income associated with lower interest rates earned on cash and cash equivalents balances.
Provision for Income Taxes. The provision for income taxes was $24.6 million in 2008 compared to a provision of $32.5 million in 2007.
The effective tax rate for 2008 decreased by 130 basis points to 37.6% compared to 38.9% for 2007. The decrease in the effective tax rate was
primarily due to the decrease in a liability associated with previously unrecognized tax benefits as well as the increase in tax exempt interest
recorded. During 2008, we obtained resolutions on the uncertain tax positions that we took for two states and determined that we no longer
needed the full amount of the accruals that we had established. As such, we made the appropriate adjustments, of which $0.8 million favorably
impacted our effective tax rate for the year.
Fiscal Year Ended December 28, 2007 Compared to Fiscal Year Ended December 29, 2006
Overview. Net sales for 2007 increased $171.5 million, or 16.1%, to a record $1,239.0 million from $1,067.6 million in 2006. On an average
daily sales basis, net sales for 2007 increased 16.1%. The increase of net sales was driven by a combination of acquisition growth associated
with our July 2006 acquisition of AmSan and strong sales growth in our facilities maintenance end-market offset by a sales decline in our
professional contractor and specialty distributor end-markets. Average organic daily sales grew 14.2% in our facilities maintenance endmarket, which represents approximately 67% of our sales
34
Table of Contents
as we continued to benefit from strong demand for our products and our continued investment in this faster growing part of our business
where we have added field sales capabilities, expanded our national account base and executed well on our supply chain management
capabilities. Our growth was offset in part by a 9.7% and 10.2% decrease in average organic daily sales to our professional contractor and
specialty distributor customers, respectively. Sales to these two end-markets made up a smaller 21% and 12% of our sales, respectively, and
were negatively impacted by the continued slow-down in the residential housing and remodeling market. Average organic daily sales, which
exclude $131.6 million in net sales from AmSan in the first half of the year, grew 3.7%.
SG&A expenses in 2007 increased as a percentage of sales to 27.9% from 27.4% in 2006 primarily reflecting the effect of our AmSan
acquisition, which had a higher operating expense cost structure than the rest of our business. In addition, SG&A expenses were impacted by
higher share-based compensation, increased health-care costs and increased rent expense, which arose from our expansion of various regional
distribution centers, offset in part by lower sales and marketing expenses associated with the decline in sales demand in our professional
contractor and specialty distributor end-markets. Operating income increased $12.4 million, or 12.2%, over the prior year to $114.1 million in
2007 from $101.7 million in 2006. Adjusted EBITDA increased $13.7 million, or 11.8%, to $130.5 million in 2007 from $116.7 million in 2006.
Adjusted EBITDA is not a measure of financial performance under GAAP. For a reconciliation of EBITDA to GAAP-based financial measures,
see "Item 6. Selected Financial Data."
As a result of strong facilities maintenance end-market sales performance, operating expense control and focus on efficiently managing
working capital, we generated $57.7 million in cash from operations and continued to provide improving year-over-year returns on tangible
capital ("ROTC") which we define as Adjusted EBITDA divided by the trailing five quarter average of accounts receivable, inventory and
property, plant and equipment less accounts payable.
Net Sales. Net sales increased by $171.5 million, or 16.1%, to $1,239.0 million in 2007 from $1,067.6 million in 2006. Average daily sales
were $4.9 million in 2007 and $4.2 million in 2006, a 16.1% increase. The $171.5 million sales increase included $131.6 million from our AmSan
acquisition in July 2006. The remaining increase was attributable to improved demand for our products, growth initiatives and price increases.
Gross Profit. Gross profit increased by $65.0 million, or 15.9%, to $473.9 million in 2007 from $408.9 million in 2006. Gross profit margins
decreased a modest 0.1% to 38.2% in 2007 from 38.3% in 2006. This decrease in our gross profit margins is primarily related to the decrease in
freight revenue as a result of the decrease in sales activity to our professional contractor and specialty distributor end-markets.
Selling, General and Administrative Expenses. SG&A expenses increased by $52.5 million, or 17.9%, to $345.3 million in 2007 from
$292.8 million in 2006. The largest increase in SG&A expenses were related in part to our acquisition of AmSan, which accounted for
$38.2 million in higher costs. Certain expenses within SG&A, such as delivery expenses and the costs of running our pro contractor
showrooms and regional distribution centers, not including rent expense, fluctuate with sales volume. These items, along with higher sharebased compensation associated with grants of equity awards during the year, increased rent expense arising from our expansion of various
regional distribution centers and higher health-care costs, accounted for the remainder of the increase. As a result, SG&A expenses increased
as a percentage of sales to 27.9% of sales in 2007 from 27.4% of sales in 2006. Specifically, share-based compensation, rent expense and healthcare costs accounted for thirteen basis points, seventeen basis points and ten basis points, respectively, of the increase in SG&A expenses as
a percent of sales.
35
Table of Contents
Depreciation and Amortization. Depreciation and amortization expense increased by $0.1 million, or 0.5%, to $14.5 million in 2007 from
$14.4 million in 2006. This was primarily due to the depreciation and amortization associated with our AmSan acquisition. In 2007, we had
$8.9 million of depreciation and $5.6 million of amortization compared to $8.7 million and $5.7 million in 2006, respectively.
Operating Income. As a result of the foregoing, operating income increased by $12.4 million, or 12.2%, to $114.1 million in 2007 from
$101.7 million in 2006.
Loss on Extinguishment of Debt. We did not extinguish debt in 2007. Loss on extinguishment of debt was $20.8 million in 2006. In
connection with the offering of $200.0 million of 81/8% senior subordinated notes and entering into a $330.0 million bank credit facility in June
2006, we repurchased the 111/2% senior subordinated notes of Interline New Jersey and repaid the indebtedness under the prior credit facility
of Interline New Jersey. The 111/2% senior subordinated notes were repurchased at a price equal to 110.51% of their principal amount. In
connection with the repurchase of the 111/2% senior subordinated notes and the repayment of the prior credit facility, we recorded a loss on
early extinguishment of debt of $20.7 million. The loss was comprised of $13.7 million in tender premiums associated with the repurchase of the
111/2% senior subordinated notes and a non-cash charge of $7.0 million in deferred financing costs associated with the repurchase of the
111/2% senior subordinated notes and the repayment of the prior credit facility. In addition, in December 2006, we recorded a non-cash charge
of $0.1 million in deferred financing costs associated with the repayment of $10.0 million of the $230.0 million of the outstanding term debt.
Interest Expense. Interest expense increased by $2.5 million in 2007 to $33.9 million from $31.4 million in 2006. This increase was
attributed to higher overall debt balances resulting from the additional $130.0 million term loan incurred in July 2006 associated with our
AmSan acquisition offset in part by a related favorable refinancing transaction which significantly reduced the rate of our fixed rate notes and
our overall weighted average cost of debt.
Interest and Other Income. Interest and other income increased by $2.1 million in 2007 to $3.3 million from $1.2 million in 2006. This
increase was primarily attributable to higher interest income earned on excess cash balances which we invested in short-term investments.
Provision for Income Taxes. The provision for income taxes was $32.5 million in 2007 compared to a provision of $19.5 million in 2006.
The effective tax rate for 2007 increased by 40 basis points to 38.9% compared to 38.5% for 2006. The increase in the effective tax rate was
primarily due to the additional liability associated with unrecognized tax benefits arising from the adoption of Financial Accounting Standards
Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement No. 109,
("FIN 48") partially offset by tax-free income generated from our short-term investments and the decrease of non-deductible expenses
associated with decreases in travel and entertainment expenses incurred.
Seasonality
We experience some seasonal fluctuations as sales of our products typically increase in the second and third fiscal quarters of the year
due to increased apartment turnover and related maintenance and repairs in the multi-family residential housing sector during these periods.
Typically, November, December and January sales are lower across most of our brands because customers may defer purchases at year-end as
their budget limits are met and because of the winter holiday season between Thanksgiving Day and New Year's Day. Our Copperfield brand
experiences approximately two-thirds of sales between July and December. As such, our first quarter sales and earnings typically tend to be
lower than the remaining three quarters of the year.
36
Table of Contents
Liquidity and Capital Resources
Overview
We are a holding company whose only asset is the stock of our subsidiaries. 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.
As of December 26, 2008, we had $187.1 million of 81/8% senior subordinated notes due 2014 and a $330.0 million bank credit facility. The
senior subordinated notes mature on June 15, 2014 and interest is payable on June 15 and December 15 of each year. As of December 26,
2008, the 81/8% senior subordinated notes had an estimated fair market value of $147.8 million or 79.0% of par. The bank credit facility consists
of a $230.0 million 7-year term loan and a $100.0 million 6-year revolving credit facility of which a portion not exceeding $40.0 million is available
in the form of letters of credit. As of December 26, 2008, we had $8.3 million of letters of credit issued under the revolving loan facility and
$215.1 million of aggregate principal outstanding under the term loan facility.
81/8%
The debt instruments of Interline New Jersey, primarily the credit facility entered into on June 23, 2006 and the indenture governing the
terms of the 81/8% senior subordinated notes, contain significant restrictions on the payment of dividends and distributions to us by Interline
New Jersey. Interline New Jersey's credit facility allows it to pay dividends, make distributions to us or make investments in us in an aggregate
amount not to exceed $2.0 million during any fiscal year, so long as Interline New Jersey is not in default or would be in default as a result of
such payments. In addition, ordinary course distributions for overhead (up to $3.0 million annually) and taxes are permitted, as are annual
payments of up to $7.5 million in respect of our stock option or other benefit plans for management or employees and (provided Interline New
Jersey is not in default) aggregate payments of up to $40.0 million depending on the pro forma net leverage ratio as of the last day of the
previous quarter. In addition, the indenture for the 81/8% senior subordinated notes generally restricts the ability of Interline New Jersey to
pay distributions to us and to make advances to, or investments in, us to an amount generally equal to 50% of the net income of Interline New
Jersey, plus an amount equal to the net proceeds from certain equity issuances, subject to compliance with a leverage ratio and no default
having occurred and continuing. The indenture also contains certain permitted exceptions including (1) allowing us to pay our franchise taxes
and other fees required to maintain our corporate existence, to pay for general corporate and overhead expenses and to pay expenses incurred
in connection with certain financing, acquisition or disposition transactions, in an aggregate amount not to exceed $10.0 million per year;
(2) allowing certain tax payments; and (3) allowing certain permitted distributions up to $75 million. For a further description of the new credit
facility, see "Credit Facility" below.
Financial Condition
Working capital increased by $23.0 million to $354.2 million as of December 26, 2008 from $331.2 million as of December 28, 2007. The
increase in working capital was primarily funded by cash flows from operating activities.
Cash Flow
Operating Activities. Net cash provided by operating activities was $56.2 million during the year ended December 26, 2008 compared to
net cash provided by operating activities of $57.7 million and $29.9 million during the years ended December 28, 2007 and December 29, 2006,
respectively.
Net cash provided by operating activities during the year ended December 26, 2008 of $56.2 million primarily consisted of net income of
$40.8 million and adjustments for non-cash items of
37
Table of Contents
$25.8 million offset by cash used in working capital of $9.6 million. Adjustments for non-cash items primarily consisted of $17.4 million in
depreciation and amortization of property, equipment and intangible assets, $3.8 million in share-based compensation, $6.7 million in bad debt
expense and $1.1 million in amortization of debt issuance costs offset by $2.8 million in net gain from the repurchase of $12.9 million of our
81/8% senior subordinated notes. The cash used in working capital consisted of increased inventory levels of $19.1 million as a result of lower
sales in the latter part of the year as well as increased inventory to stock our new west coast NDC in Salt Lake City, Utah, and new MRO
product offerings for our institutional facilities maintenance customers, increased accrued expenses primarily from lower accrued
compensation and related benefits of $6.8 million and overpayment of estimated income taxes of $2.6 million due to lower net income than
expected. These uses in cash were partially offset by $10.3 million generated from trade receivables resulting from increased collections and
the decline in sales and increased trade payables balances of $6.9 million as a result of the increased inventory levels and the timing of related
payments for this inventory.
$51.0 million and adjustments for non-cash items of $26.4 million offset by cash used in working capital to support the growth of our business
of $18.5 million. Adjustments for non-cash items primarily consisted of $15.1 million in depreciation and amortization of property, equipment
and intangible assets, $5.4 million in share-based compensation, $4.3 million in bad debt expense and $1.1 million in amortization of debt
issuance costs. The primary sources of cash used in working capital were trade receivables of $15.0 million on sales from growth our facility
maintenance customers, lower trade payable on lower purchase volume of $6.8 million, and decreased accrued expenses and accrued interest
due to timing of $4.4 million and $2.7 million, respectively, partially offset the decrease in inventory of $11.1 million on improved inventory
turns and lower inventory needs associated with lower sales demand from our professional contractor and specialty distributor customers.
$31.2 million and adjustments for non-cash items of $41.4 million offset by cash used in working capital to support the growth of our business
of $42.1 million. Adjustments for non-cash items primarily consisted of $14.4 million in depreciation and amortization of property, equipment
and intangible assets, $20.8 million in redemption premiums and write-offs of debt issuance costs as a result of our June 2006 refinancing
transaction, $3.8 million in share-based compensation, $3.4 million in bad debt expense and $1.4 million in amortization of debt issuance costs
partially offset by changes in deferred income taxes of $2.2 million. The key drivers of cash used in working capital were trade receivables of
$5.0 million from sales growth, inventory holding levels increasing by $18.6 million and the timing of trade accounts payable payments of
$18.6 million.
Investing Activities. Net cash provided by investing activities was $17.7 million during the year ended December 26, 2008 compared to
net cash used in investing activities of $64.2 million and$139.3 million during the years ended December 28, 2007 and December 29, 2006,
respectively.
Net cash provided by investing activities during the year ended December 26, 2008 was attributable to $48.5 million in net sales of shortterm investments comprised of tax exempt auction rate securities and variable rate demand notes offset by $20.6 million in capital expenditures
made in the ordinary course of business and $10.2 million in costs related to purchases of businesses, net of cash acquired, including
$9.6 million for Eagle Maintenance Supply, Inc.
Net cash used in investing activities during the year ended December 28, 2007 was attributable to $48.5 million in net purchases of shortterm investments comprised of tax exempt auction rate securities and variable rate demand notes as well as $14.9 million in capital expenditures
made in the ordinary course of business. In addition, we incurred costs related to purchases of businesses, net of cash acquired, of
$0.8 million, including $0.7 million for AmSan.
38
Table of Contents
Net cash used in investing activities during the year ended December 29, 2006 was attributable to capital expenditures made in the
ordinary course of business of $7.8 million and costs related to purchases of businesses, net of cash acquired, of $131.5 million, including
$130.8 million for AmSan.
Financing Activities. Net cash used in financing activities totaled $15.8 million during the year ended December 26, 2008 compared to
net cash provided by financing activities of $4.4 million and $113.2 million during the years ended December 28, 2007 and December 29, 2006,
respectively.
Net cash used in financing activities during the year ended December 26, 2008 was primarily attributable to our repurchase of $12.9 million
of our 81/8% senior subordinated notes at 773/8% of par, or $10.0 million, the net decrease in purchase card payable of $2.9 million, our
repayment of $2.7 million of term debt and capital lease obligations and $1.1 million for the acquisition of treasury stock to satisfy minimum
statutory tax withholding requirements resulting from the vesting or exercising of equity awards offset by $0.8 million of proceeds from stock
options exercised and excess tax benefits from share-based compensation.
Net cash provided by financing activities during the year ended December 28, 2007 was primarily attributable to the net increase in
purchase card payable of $6.6 million offset by our repayment of $2.9 million of term debt and capital lease obligations offset by $0.8 million of
proceeds from stock options exercised and excess tax benefits from share-based compensation.
Net cash provided by financing activities during the year ended December 29, 2006 was primarily attributable to our June 2006 refinancing
transaction, which included the repayment of $160.0 million of term debt, our repurchase of $130.0 million of our 111/2% senior subordinated
notes and $13.7 million in redemption premiums offset by the issuance of $198.6 million of 81/8% senior subordinated notes, net of $1.4 million
discount, and $230.0 million of term debt, less $9.7 million in debt issuance costs associated with the issuance of the 81/8% senior
subordinated notes and the term debt. In addition, we repaid $3.4 million of borrowings on our revolving credit facility and capital lease
obligations partially offset by $1.5 million from stock options exercised and excess tax benefits from share-based compensation.
Capital Expenditures
Capital expenditures were $20.6 million in 2008, $14.9 million in 2007 and $7.8 million in 2006. Capital expenditures as a percentage of sales
were 1.7%, 1.2% and 0.7% in 2008, 2007 and 2006, respectively. The increase in capital expenditures during 2008 was primarily due to the
upgrade of our telecommunications network, the continued consolidation of our distribution center network, the purchase of warehouse
equipment and overall investments in our information technology systems. The increase in capital expenditures during 2007 was due to the
expansion of existing distribution centers and warehouse equipment and investments in our information technology systems including
necessary for the integration of our AmSan acquisition.
Credit Facility
Borrowings under the term loan and the revolving credit facility bear interest, at Interline New Jersey's option, at either LIBOR plus 1.75%
or at the alternate base rate, which is the greater of the Prime Rate or the Federal Funds Effective Rate plus 0.50%, plus 0.75%. As of
December 26, 2008, the interest rate in effect with respect to the term loan was 2.90% for the LIBOR option and 4.00% for the alternate base rate
option. Outstanding letters of credit under the revolving credit facility are subject to a per annum fee equal to the applicable margin under the
revolving credit facility. The interest rate margin is subject to pricing adjustments at the end of each fiscal quarter based on the ratio of net
total indebtedness to consolidated EBITDA, as defined by the credit facility. The term loan matures on June 23, 2013 and the revolving loan
facility matures on June 23, 2012. Amounts under the term loan are due and payable in quarterly installments equal to 1.0% of the original
principal amount
39
Table of Contents
on an annual basis through June 23, 2013, with the balance payable in one final installment at the maturity date.
The bank credit facility, which is secured by substantially all of the assets of Interline New Jersey and is guaranteed by us and by the
domestic subsidiaries of Interline New Jersey, contains affirmative, negative and financial covenants that limit Interline New Jersey's ability to
incur additional indebtedness, pay dividends on its common stock or redeem, repurchase or retire its common stock or subordinated
indebtedness, make certain investments, sell assets, and consolidate, merge or transfer assets, and that require Interline New Jersey to
maintain certain financial ratios as of the last day of each fiscal quarter, including a minimum ratio based on an adjusted and consolidated
EBITDA to consolidated cash interest expense and a maximum ratio of net total indebtedness to an adjusted consolidated EBITDA. As of
December 26, 2008, the maximum ratio of net total indebtedness to adjusted consolidated EBITDA, as defined by the credit facility, was 3.5
times. Interline New Jersey and the Company were in compliance with all covenants at December 26, 2008.
In connection with the bank credit facility, Interline New Jersey is required to pay administrative fees, commitment fees, letter of credit
issuance and administration fees and certain expenses and to provide certain indemnities, all of which are customary for financings of this
type. The bank credit facility also allows for certain incremental term loans and incremental commitments under the revolving credit facility
which are available to Interline New Jersey to repay indebtedness and make acquisitions if certain conditions, including various financial ratios
are met.
Liquidity
Historically, our capital requirements have been for debt service obligations, working capital requirements, including inventory, 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 as well as cash flow from operations and
loan availability under our credit facility to be our primary source of funds in the future. Letters of credit, which are issued under the revolving
loan facility under our credit facility, are used to support payment obligations incurred for our general corporate purposes.
As of December 26, 2008, we had $30.5 million of availability under our $100.0 million revolving credit facility. Our effective borrowing
capacity is reduced by the limitation under the bank credit facility's ratio of net total indebtedness to adjusted consolidated EBITDA, as
defined by the credit facility, and by the failure of one of the financial institutions that support our revolving credit facility. Also as of
December 26, 2008, we had $62.7 million of total cash on hand (including $25.0 million netted against debt for purposes of covenant
compliance).
We believe that cash and cash equivalents on hand, cash flow from operations and available borrowing capacity under our credit facility
will be adequate to finance our ongoing operational cash flow needs and debt service obligations in the foreseeable future.
Recent Events
Senior Subordinated Notes Repurchase
Subsequent to December 26, 2008, we repurchased $25.4 million of our 81/8% senior subordinated notes at an average of 95.267% of par,
or $24.2 million, net of transaction costs. In connection with the repurchase of the 81/8% senior subordinated notes, we recorded a gain on the
extinguishment of debt of $0.9 million, net of $0.3 million in original issue discount and deferred financing costs written-off, in the first quarter
of 2009.
40
Table of Contents
Contractual Obligations and Off-Balance Sheet Arrangements
The following table sets forth our contractual obligations as of December 26, 2008 (in thousands):
Total
Le ss th an 1 ye ar
Term debt
$217,350
81/8% senior subordinated notes
187,100
Revolving credit facility(1)
Interest
116,112
Operating leases
79,760
Capital leases
516
Non-compete agreement
200
Employment agreements
5,386
Deferred compensation and retirement plans
903
Total contractual cash obligations(2)(3)
$607,327
1,625
21,997
20,000
279
200
4,127
106
48,334
2-3
ye ars
4-5
ye ars
$ 4,875
43,711
26,743
237
1,259
212
$77,037
$210,850
42,803
15,267
212
$269,132
Afte r 5 ye ars
187,100
7,601
17,750
373
212,824
(1)
Our senior secured revolving credit facility includes a revolving credit facility. As of December 26, 2008, we had $8.3 million in letters of
credit issued under the revolving credit facility. See Liquidity and Capital Resources above for more information.
(2)
Trade accounts payable of $68.3 million are excluded from the table but generally payable within 30 to 60 days. Accrued interest payable
which is currently recorded as a liability is also excluded from the table. See Item 8. Financial Statements and Supplementary Data and
the accompanying audited consolidated financial statements.
(3)
As more fully disclosed in Note 17. Income Taxes to our audited consolidated financial statements included in this report, we adopted
FIN 48 on December 30, 2006. As of December 26, 2008, we have recognized $0.3 million of liabilities for unrecognized tax benefits of
which $0.1 million related to penalties and interest. The final outcome of these tax uncertainties is dependent upon various matters
including tax examinations, legal proceedings, changes in regulatory tax laws, or interpretation of those tax laws, or expiration of statutes
of limitation. However, based on the number of jurisdictions, the uncertainties associated with litigation, and the status of examinations,
including the protocols of finalizing audits by the relevant tax authorities, which could include formal legal proceedings, there is a high
degree of uncertainty regarding the future cash outflows associated with these tax uncertainties. As of December 26, 2008, we are
unable to make a reasonably reliable estimate of the timing of payments in individual years beyond 12 months due to uncertainties in the
timing of tax audit outcomes. As a result, this amount is not included in the table above.
As of December 26, 2008, except for operating leases and letters of credit, we had no material off-balance sheet arrangements.
Critical Accounting Policies

In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of
America, 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
41
Table of Contents
assumptions under different circumstances or conditions. The significant accounting policies that we believe are the most critical in order to
fully understand and evaluate our financial position and results of operations include the following policies.
Revenue Recognition
While our recognition of revenue is predominantly derived from routine transactions and does not involve significant judgment, revenue
recognition represents an important accounting policy for us. We recognize a sale when the product has been shipped and risk of loss has
passed to the customer, collection of the resulting receivable is probable, persuasive evidence of an arrangement exists, and the price is fixed
or determinable. Sales are recorded net of estimated discounts, rebates and returns. A portion of our sales is delivered directly from the
supplier to our customers. These direct-shipment sales are recorded on a gross basis, with the corresponding cost of goods sold, in
accordance with the guidance in Emerging Issues Task Force ("EITF") Issue No. 99-19, Reporting Revenues Gross as a Principal versus Net
as an Agent, ("EITF 99-19"). We provide limited product return and protection rights to certain customers. We accrue product return reserves.
A provision is made for estimated product returns based on sales volumes and our experience. Actual returns have not varied materially from
amounts provided historically.
Vendor Rebates
We account for vendor rebates in accordance with EITF Issue 02-16, Accounting by a Customer (Including a Reseller) for Certain
Consideration Received from a Vendor, ("EITF 02-16"). Many of our arrangements with our vendors provide for us to receive a rebate of a
specified amount, payable to us when we achieve any of a number of measures generally related to the volume of purchases from our vendors.
We account for these rebates as a reduction of the prices of the related vendors' products, which reduces the inventory cost until the period in
which we sell the product, at which time these rebates reduce cost of sales in our income statement. Throughout the year, we estimate the
amount of rebates receivable based upon the expected level of purchases. We continually revise these estimates to reflect actual rebates
earned based on actual purchase levels. Historically, our actual rebates have been within our expectations used for our estimates. If we fail to
achieve a measure which is required to obtain a vendor rebate, we will have to record a charge in the period that we determine the criteria or
measure for the vendor rebate will not be met to the extent the vendor rebate was estimated and included as a reduction to cost of sales. If
market conditions were to change, vendors may change the terms of some or all of these programs. Although these changes would not affect
the amounts which we have recorded related to products already purchased, it may impact our gross margin on products we sell or revenues
earned in future periods.
Allowances for Doubtful Accounts
We maintain allowances for doubtful accounts for estimated losses resulting from the inability to collect outstanding amounts from
customers. The allowances include specific amounts for those accounts that are likely to be uncollectible, such as accounts of customers in
bankruptcy and general allowances for those accounts that management currently believes to be collectible but may later become
uncollectible. Estimates are used to determine the allowances for bad debts and are based on historical collection experience, current economic
trends, credit worthiness of customers and changes in customer payment terms. Adjustments to credit limits are made based upon payment
history and our customers' current credit worthiness. If the financial condition of our customers were to deteriorate, allowances may be needed
that will increase selling, general and administrative expenses and decrease accounts receivable.
42
Table of Contents
Write-Offs for Excess and Obsolete Inventory
Inventories are valued at the lower of cost or market. We determine inventory cost using the average cost method. We adjust inventory
for excess and obsolete inventory and for the difference by which the cost of the inventory exceeds the estimated market value. In order to
determine the adjustments, management reviews inventory quantities on hand, slow movement reports and sales history reports. Management
estimates the required adjustment based on estimated demand for products and market conditions. To the extent historical results are not
indicative of future results and if events occur that affect our relationships with suppliers or the salability of our products, additional write-offs
may be needed that will increase our cost of sales and decrease inventory.
Goodwill, Intangibles and Other Long-Lived Assets
Management assesses the recoverability of our goodwill, identifiable intangibles and other long-lived assets whenever events or changes
in circumstances indicate that 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) significant negative industry or
economic trends; (3) a significant increase in competition; and (4) 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 using a
projected discounted cash flow method. Management must make assumptions regarding estimated future cash flows and other factors to
determine the fair value of these respective assets. If these estimates or related assumptions change in the future, we may be required to record
an impairment charge. Impairment charges would be included in our statements of operations, and would result in reduced carrying amounts of
the related assets in our balance sheets.
Share-Based Compensation
We account for share-based compensation in accordance with FASB Statement No. 123 (revised 2004), Share-Based Payment,
("FAS 123R"). Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date
based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is generally
the vesting period.
We currently use the Black-Scholes option pricing model to determine the fair value of stock options. The fair value of restricted stock
awards, restricted share units, depending on the grant, and deferred stock units is based on the fair market values of the underlying stock on
the dates of grant. The determination of the fair value of stock-based awards on the date of grant using an option pricing model is affected by
our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock
price volatility over the expected term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate,
estimated forfeitures and expected dividends.
We estimate the expected term of options granted by calculating the average term from our historical stock option exercise experience. We
estimate the volatility of our common stock based on the historical performance of our common stock. We base the risk-free interest rate on
zero-coupon yields implied from U.S. Treasury issues with remaining terms similar to the expected term on the options. We do not anticipate
paying any cash dividends in the foreseeable future and therefore use an expected dividend yield of zero in the option pricing model. We are
required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those
estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those
awards that are expected to vest. See Note 13. Share-Based Compensation to our audited consolidated financial statements included in this
report.
43
Table of Contents
If we use different assumptions for estimating stock-based compensation expense in future periods or if actual forfeitures differ materially
from our estimated forfeitures, the change in our stock-based compensation expense could materially affect our operating income, net income
and net income per share.
Income Taxes
We account for income taxes in accordance with FASB Statement No. 109, Accounting for Income Taxes, ("FAS 109"). Significant
judgment is required in determining our provision for income taxes, current tax assets and liabilities, deferred tax assets and liabilities, and our
future taxable income for purposes of assessing our ability to realize future benefit from our deferred tax assets. A valuation allowance is
established to reduce our deferred tax assets to the amount that is considered more likely than not to be realized through the generation of
future taxable income and other tax planning opportunities. To the extent that a determination is made to establish or adjust a valuation
allowance, the expense or benefit is recorded in the period in which the determination is made.
Our accounting for income taxes requires us to exercise judgment for known issues under discussion with tax authorities and transactions
yet to be settled. Effective December 30, 2006, we adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxesan Interpretation of FASB Statement No. 109, ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in accordance with FAS 109. FIN 48 clarifies the application of FAS 109 by defining criteria that an individual tax position must
meet for any part of the benefit of that position to be recognized in the financial statements. Additionally, FIN 48 provides guidance on the
measurement, derecognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. See
Note 17. Income Taxes to our audited consolidated financial statements included in this report.
Future rulings by tax authorities and future changes in tax laws and their interpretation, changes in projected levels of taxable income and
future tax planning strategies could impact our actual effective tax rate and our recorded tax balances. If actual results differ from estimates we
have used, or if we adjust these estimates in future periods, our operating results and financial position could be materially affected.
Legal Contingencies
From time to time, in the course of our business, we become involved in legal proceedings. In accordance with FASB Statement No. 5,
Accounting for Contingencies, ("FAS 5") if it is probable that, as a result of a pending legal claim, an asset had been impaired or a liability had
been incurred at the date of the financial statements and the amount of the loss is estimable, an accrual for the costs to resolve the claim is
recorded in accrued expenses in our balance sheets. Professional fees related to legal claims are included in selling, general and administrative
expenses in our statements of operations. Management, with the assistance of outside counsel, determines whether it is probable that a
liability from a legal claim has been incurred and estimates the amount of loss. The analysis is based upon potential results, assuming a
combination of litigation and settlement strategies. As discussed in Note 15. Commitments and Contingencies to our audited consolidated
financial statements included in this report, management does not believe that currently pending proceedings will have a material adverse
effect on our consolidated financial position. It is possible, however, that future results of operations for any particular period could be
materially affected by changes in our assumptions related to these proceedings.
44
Table of Contents
Recently Adopted Accounting Standards
Effective December 29, 2007, we adopted FASB Statement No. 157, Fair Value Measurements, ("FAS 157") as amended by FASB Staff
Position No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address
Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, ("FSP 157-1"), FASB Staff Position
No. 157-2, Effective Date of FASB Statement No. 157, ("FSP 157-2") and FASB Staff Position 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active, ("FSP 157-3"). FAS 157 applies prospectively to all other accounting
pronouncements that require or permit fair value measurements. FAS 157 defines fair value 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." FAS 157 also requires disclosure
about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped,
based on significant levels of inputs. The adoption of FAS 157 did not have any impact on our financial position, results of operations and
cash flows. See Note 2. Summary of Significant Accounting Policies to the consolidated financial statements included in this report.
FSP 157-1 amends FAS 157 to exclude from the scope of FAS 157 certain leasing transactions accounted for under FASB Statement
No. 13, Accounting for Leases. The adoption of FAS 157 on our leasing transactions did not have a material impact on our financial position,
results of operations and cash flows and did not result in additional disclosures.
FSP 157-2 amends FAS 157 to defer the effective date of FAS 157 for non-financial assets and non-financial liabilities, except for items that
are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until fiscal years beginning after
November 15, 2008 and interim periods within those fiscal years. We are currently evaluating the impact the provisions of FAS 157 will have on
our non-financial assets and non-financial liabilities since the application of FAS 157 for such items was deferred.
FSP 157-3 clarifies the application of FAS 157 in a market that is not active. The Company considered the guidance provided by FSP 157-3
in its determination of estimated fair values as of December 26, 2008, and the impact was not material to our financial position, results of
operations and cash flows.
Effective December 29, 2007, we adopted FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115, ("FAS 159"). FAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective of FAS 159 is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. The adoption of FAS 159 did not have any impact on our financial position, results of operations and
cash flows since we did not elect to apply the fair value option for any of our eligible financial instruments or other items as of the
December 29, 2007 effective date.
Accounting Standards Not Yet Adopted
In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations, ("FAS 141R"), which replaces FASB
Statement No. 141, Business Combinations, ("FAS 141"). FAS 141R establishes principles and requirements for how an acquirer recognizes
and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree
and the goodwill acquired. FAS 141R also establishes disclosure requirements that will enable users to evaluate the nature and financial
effects of the business combination. FAS 141R is effective for fiscal years beginning after December 15, 2008 with early adoption prohibited.
We are currently evaluating the impact that adoption of FAS 141R will have on
45
Table of Contents
our financial position, results of operations and cash flows; however, as of December 26, 2008, we have $0.7 million in deferred acquisition
costs which are classified as prepaid expenses and other current assets on our consolidated balance sheet and will be expensed in the first
quarter of 2009 in accordance with FAS 141R.
In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statementsan
amendment of ARB No. 51, ("FAS 160"). FAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes
in a parent's ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated.
FAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of
the noncontrolling owners. FAS 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations,
but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a
subsidiary. FAS 160 is effective for fiscal years beginning after December 15, 2008 with early adoption prohibited. We are currently evaluating
the impact that adoption of FAS 160 will have on our financial position, results of operations and cash flows.
Recently Issued Accounting Standards
In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities,
("FAS 161"). FAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. The
provisions of FAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with
early application encouraged. We are currently evaluating the impact the provisions of FAS 161 will have on our financial position, results of
operations and cash flows. We do not currently have any derivative instruments.
In May 2008, the FASB issued FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, ("FAS 162").
FAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to
be used in preparing financial statements that are presented in conformity with generally accepted accounting principles ("GAAP") for
nongovernmental entities in the United States. FAS 162 is effective 60 days following SEC approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles. The provisions of FAS 162 will not have any impact on our financial position, results of operations and cash flows.
Certifications
Our Chief Executive Officer has certified to the New York Stock Exchange that he is not aware of any violations by the company of NYSE
corporate governance listing standards. We have included as exhibits to this Annual Report on Form 10-K certificates of our Chief Executive
Officer and Chief Financial Officer certifying the quality of our public disclosure.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
Commodity Price Risk
We are aware 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 is affected by price
fluctuations in copper, oil, stainless steel, aluminum, zinc, plastic and PVC and other commodities and raw materials. We seek to
46
Table of Contents
minimize the effects of inflation and changing prices 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 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 December 26, 2008, the interest rate in effect
with respect to our $215.1 million variable rate term debt was 2.90% for the LIBOR option and 4.00% for the alternate base rate option. 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 or results of operations. Based on the outstanding variable rate term debt as of December 26, 2008, a 1.0%
annual increase or decrease in current market interest rates would have the effect of causing a $2.2 million pre-tax change to our statement of
operations.
The fair market value of our fixed rate debt is subject to interest rate risk. As of December 28, 2008, the estimated fair market value of our
$187.1 million 81/8% senior subordinated notes was $147.8 million or 79.0% of par.
Foreign Currency Exchange Risk
The majority of our purchases from foreign-based suppliers are from China and other countries in Asia and are transacted in U.S. dollars.
Accordingly, our risk to foreign currency exchange rates was not material as of December 26, 2008.
Derivative Financial Instruments
As of December 26, 2008, we did not have any interest rate swap exchange agreements, or swaps. Historically, we have entered into
derivative financial instruments from time to time, including interest rate exchange agreements, to manage our exposure to fluctuations in
interest rates on our debt. Under our former swap agreements, we paid a fixed rate on the notional amount to our banks and the banks paid us
a variable rate on the notional amount equal to a base LIBOR rate.
We periodically evaluate the costs and benefits of any changes in our interest rate risk. Based on such evaluation, we may enter into new
interest rate swaps to manage our interest rate exposure. Our derivative activities, all of which are for purposes other than trading, are initiated
within the guidelines of corporate risk-management policies.
ITEM 8. Financial Statements and Supplementary Data
Our consolidated financial statements are provided in part IV, Item 15 of this filing.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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
47
Table of Contents
our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 26, 2008. Based
on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 26, 2008, our disclosure controls and
procedures were effective to (1) ensure that 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) ensure that 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.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting
based on the framework in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation, under the Internal ControlIntegrated Framework, our management concluded that our internal control
over financial reporting was effective as of December 26, 2008.
The report of our independent registered public accounting firm related to the effectiveness of internal control over financial reporting is
included on page F-1 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during the quarter ended December 26, 2008 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and
procedures or our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived
and operated, can provide only reasonable assurance that the objectives of a control system are met. Further, any control system reflects
limitations on resources, and the benefits of a control system must be considered relative to its costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been
detected. The design of a control system is also based upon certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become
inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. Our disclosure controls
are designed to provide reasonable assurance of achieving their objectives.
ITEM 9B. Other Information
None.
48
Table of Contents
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference from our definitive proxy statement to be filed not later than 120 days
after the end of the fiscal year covered by this Annual Report on Form 10-K pursuant to Regulation 14A.
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
ITEM 14. Principal Accounting Fees and Services
49
Table of Contents
PART IV
ITEM 15. Exhibits, Financial Statement Schedules
(a)
Documents filed as part of the report.

(1)
(2)
Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Earnings
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Exhibits
See Exhibit Index beginning on page 52.
50
F-1
F-3
F-4
F-5
F-6
F-8 to F-46
Table of Contents
ITEM 16. Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
By:
/s/ MICHAEL J. GREBE
Michael J. Grebe
Chief Executive Officer and President
Date: February 25, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of
the Registrant and in the capacities indicated and on the dates indicated.
S ignature
Title
Date
Chairman of the Board, Chief Executive Officer and

President (Principal Executive Officer)
February 25, 2009
Chief Financial Officer (Principal Accounting

Officer and Principal Financial Officer)
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Director
February 25, 2009
Michael J. Grebe
/s/ THOMAS J. TOSSAVAINEN
Thomas J. Tossavainen
/s/ GIDEON ARGOV
Gideon Argov
/s/ MICHAEL E. DEDOMENICO
Michael E. DeDomenico
/s/ JOHN J. GAVIN
John J. Gavin
/s/ BARRY J. GOLDSTEIN
Barry J. Goldstein
/s/ ERNEST K. JACQUET
Ernest K. Jacquet
/s/ CHARLES W. SANTORO
Charles W. Santoro
/s/ DREW T. SAWYER
Drew T. Sawyer
Director
February 25, 2009

51
Table of Contents
EXHIBIT INDEX
1.1 Underwriting Agreement dated as of August 3, 2005 among Interline Brands, Inc., the several selling stockholders named on
Schedule A thereto and the several underwriters named on Schedule B thereto, for whom Credit Suisse First Boston LLC and Lehman
Brothers, Inc. acted as representatives (incorporated by reference to exhibit 1.1 to Interline Brand, Inc.'s Amendment No. 1 to
Registration Statement on Form S-1 filed on July 22, 2005 (No. 333-126515)).
1.2 Underwriting Agreement, dated as of June 9, 2006, among Interline Delaware, Interline New Jersey and certain subsidiary guarantors
listed in Schedule 2 thereto, Lehman Brothers Inc. and J.P. Morgan Securities Inc, as representatives of the several underwriters listed in
Schedule 1 thereto (incorporated by reference to the Company's Current Report on Form 8-K filed June 13, 2006).
2.1 Agreement and Plan of Merger dated December 21, 2004 (incorporated by reference to Exhibit 2.1 to Interline Brands, Inc.'s Annual
Report on Form 10-K for the fiscal year ended December 31, 2004).
2.2 Securities Purchase Agreement, dated as of May 23, 2006, by and among American Sanitary Incorporated, AmSan, LLC, Golder, Thoma,
Cressey, Rauner Fund V, L.P., GTCR Associates V, GTCR Capital Partners, L.P. and Interline New Jersey (incorporated by reference to
the Company's interim report on Form 8-K filed July 10, 2006).
3.1 Amended and Restated Certificate of Incorporation of Interline Brands, Inc. (incorporated by reference to Exhibit 3.1 to Interline
Brands, Inc.'s Form S-3 Registration Statement filed on May 24, 2006 (No. 333-134415)).
3.2 Amended and Restated By-Laws of Interline Brands, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on
Form 8-K filed November 14, 2007).
4.1 Form of Specimen Certificate (incorporated by reference to Exhibit 4.2 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1
Registration Statement filed on December 14, 2004 (No. 333-116482)).
4.2 Credit Agreement, dated June 23, 2006 among Interline Delaware, Interline Brands, Inc., a wholly-owned subsidiary of Interline Delaware
("Interline New Jersey"), as borrower, the lenders party therein, JPMorgan Chase Bank, N.A., as administrative agent, Lehman
Commercial Paper Inc., as syndication agent, Credit Suisse, Bank of America, N.A., Wachovia Bank, National Association and SunTrust
Bank, each as a co-documentation agent and J.P. Morgan Securities Inc. and Lehman Brothers Inc. as joint bookrunners and joint-lean
arrangers (incorporated by reference to the Company's interim report on Form 8-K filed June 26, 2006).
4.3 Guarantee and Collateral Agreement, dated as of June 23, 2006, among Interline Delaware, Interline New Jersey, certain subsidiaries of
Interline New Jersey and JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to the Company's interim report on
Form 8-K filed June 26, 2006).
4.4 Base Indenture, dated as of June 23, 2006, among Interline New Jersey, Interline Delaware, as guarantor, certain subsidiaries of Interline
Delaware and the Bank of New York Trust Company, N.A., as trustee (incorporated by reference to the Company's interim report on
Form 8-K filed June 26, 2006).
52
Table of Contents
4.5 First Supplemental Indenture, dated as of June 23, 2006, among Interline New Jersey, Interline Delaware, as guarantor, certain
subsidiaries of Interline Delaware and the Bank of New York Trust Company, N.A., as trustee (incorporated by reference to the
Company's interim report on Form 8-K filed June 26, 2006).
4.6 Second Supplemental Indenture, dated as of July 3, 2006, by and among Interline New Jersey, Interline Delaware, AmSan as a
subsidiary guarantor, certain other subsidiaries of Interline New Jersey and the Bank of New York Trust Company, N.A., as trustee
(incorporated by reference to the Company's interim report on Form 8-K filed July 10, 2006).
4.7 Supplement No.1, dated as of July 3, 2006, to the Guarantee and Collateral Agreement, dated June 23, 2006, between AmSan, LLC and
JPMorgan Chase Bank, N.A., as collateral agent (incorporated by reference to the Company's interim report on Form 8-K filed July 10,
2006).
10.1 Amended and Restated Shareholders' Agreement dated as of September 29, 2000 among Interline Opco and certain of its shareholders
(incorporated by reference to Exhibit 9.1 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration Statement filed on
December 14, 2004 (No. 333-116482)).
10.2 Amendment No. 1 to Amended and Restated Shareholders' Agreement dated as of March 15, 2004 among Interline Opco and certain of
its shareholders (incorporated by reference to Exhibit 9.2 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration
Statement filed on December 14, 2004 (No. 333-116482)).
10.3 Amendment No. 2 to Amended and Restated Shareholders' Agreement dated as of December 21, 2004 among Interline Opco and
certain of its shareholders (incorporated by reference to Exhibit 9.3 to Interline Brands, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 2004).
10.4 2000 Stock Award Plan, as amended and restated July, 2000 (incorporated by reference to Exhibit 10.24 to Interline Brands, Inc.'s
Amendment No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333-116482)).
10.5 2004 Equity Incentive Plan (incorporated by reference to Appendix A to the Company's definitive proxy statement for its annual
meeting of stockholders held on May 8, 2008, Commission File No. 1-32380).
10.6 Form of Stock Option Agreement (executive) (furnished herewith).
10.7 Form of Stock Option Agreement (non-executive) (furnished herewith).
10.8 Form of Non-Employee Directors Option Agreement (incorporated by reference to Exhibit 10.45 to Interline Brands, Inc.'s Amendment
No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333-116482)).
10.9 Form of Restricted Share Unit Agreement (incorporated by reference to the Company's interim report filed on Form 8-K March 17,
2006).
10.10 Amendment to Restricted Share Unit Agreements (furnished herewith).
10.11 Form of Time-Based Restricted Share Unit Agreement (furnished herewith).
10.12 Form of Deferred Stock Unit Agreement and Notice of Election for Non-employee Directors (incorporated by reference to Exhibit 10.36
to Interline Brands, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 30, 2005).
10.13 Amendment to Deferred Stock Unit Agreements for Non-employee Directors (furnished herewith).
53
Table of Contents
10.14 Form of Management Restricted Stock Agreement (incorporated by reference to Exhibit 10.44 to Interline Brands, Inc.'s Amendment
No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333-116482)).
10.15 Form of Non-Employee Directors Restricted Stock Agreement (incorporated by reference to Exhibit 10.46 to Interline Brands, Inc.'s
Amendment No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333-116482)).
10.16 Executive Cash Incentive Plan (incorporated by reference to Appendix B to the Company's definitive proxy statement for its annual
meeting of stockholders held on May 11, 2006, Commission File No. 1-32380).
10.17 Employment Agreement dated as of August 13, 2004, by and between Interline Brands, Inc. and Michael J. Grebe (incorporated by
reference to Exhibit 10.32 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration Statement filed on December 14, 2004
(No. 333-116482)).
10.18 Amendment to Employment Agreement dated as of December 2, 2004, by and between Interline Brands, Inc. and Michael J. Grebe
December 14, 2004 (No. 333-116482)).
10.19 Amendment to Employment Agreement dated as of December 31, 2008, by and between Interline Brands, Inc. and Michael J. Grebe
(furnished herewith).
10.20 Incentive Stock Option Agreement of Michael J. Grebe, dated as of May 16, 2000 (incorporated by reference to Exhibit 10.11 to
Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333-116482)).
10.21 Employment Agreement dated as of August 13, 2004, by and between Interline Brands, Inc. and William E. Sanford (incorporated by
(No. 333-116482)).
10.22 Amendment to Employment Agreement dated as of December 2, 2004, by and between Interline Brands, Inc. and William E. Sanford
December 14, 2004 (No. 333-116482)).
10.23 Incentive Stock Option Agreement dated as of May 16, 2000, by and between Wilmar Industries, Inc. and William E. Sanford
December 14, 2004 (No. 333-116482)).
10.24 Separation Agreement and General Release of All Claims dated June 14, 2008 between Interline Brands, Inc. and William E. Sanford
(incorporated by reference to Exhibit 10.1 to Interline Brands, Inc.'s Current Report filed on Form 8-K June 17, 2008).
10.25 Employment Agreement, dated July 25, 2005, between Interline Opco and Thomas J. Tossavainen (incorporated by reference to
Exhibit 10.55 of Interline Brands, Inc.'s Amendment No. 2 to Form S-1 filed on August 1, 2005 (No. 333-126515)).
10.26 Amendment to Employment Agreement dated as of December 31, 2008, by and between Interline Brands, Inc. and Thomas J.
Tossavainen (furnished herewith).
10.27 Employment Agreement, dated April 30, 2007, between Interline Brands, Inc. and Kenneth D. Sweder (furnished herewith).
54
Table of Contents
10.28 First Amendment to Employment Agreement, dated October 20, 2008, between Interline Brands, Inc. and Kenneth D. Sweder
10.29 Amendment to Employment Agreement dated as of December 31, 2008, by and between Interline Brands, Inc. and Kenneth D. Sweder
10.30 Change in Control Severance Agreement, dated April 30, 2007, between Interline Brands, Inc. and Kenneth D. Sweder (furnished
herewith).
10.31 First Amendment to Change in Control Severance Agreement, dated October 20, 2008, between Interline Brands, Inc. and Kenneth D.
Sweder (furnished herewith).
10.32 Restricted Share Unit Agreement under the 2004 Equity Incentive Plan, dated as of October 20, 2008, between Kenneth D. Sweder and
Interline Brands, Inc. (furnished herewith).
10.33 Employment Agreement dated as of January 7, 2004, by and between Interline Opco and Fred Bravo (incorporated by reference to
Exhibit 10.25 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333116482)).
10.34 Amendment to Employment Agreement dated September 27, 2004, by and between Interline Brands, Inc. and Fred Bravo (incorporated
by reference to Exhibit 10.34 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration Statement filed on December 14,
2004 (No. 333-116482)).
10.35 Amendment to Employment Agreement dated as of December 2, 2004, by and between Interline Brands, Inc. and Fred Bravo
December 14, 2004 (No. 333-116482)).
10.36 Amendment to Employment Agreement dated as of December 31, 2008, by and between Interline Brands, Inc. and Fred M. Bravo
10.37 Employment Agreement dated as of January 7, 2004, by and between Interline Opco and Pamela L. Maxwell (incorporated by reference
to Exhibit 10.26 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration Statement filed on December 14, 2004 (No. 333116482)).
10.38 Amendment to Employment Agreement, dated as of September 27, 2004, by and between Interline Brands, Inc. and Pamela L. Maxwell
December 14, 2004 (No. 333-116482)).
10.39 Amendment to Employment Agreement, dated as of December 2, 2004, by and between Interline Brands, Inc. and Pamela L. Maxwell
December 14, 2004 (No. 333-116482)).
10.40 Amendment to Employment Agreement dated as of December 31, 2008, by and between Interline Brands, Inc. and Pamela L. Maxwell
10.41 Employment Agreement, dated as of January 14, 2004, by and between Interline Brands, Inc. and James A. Spahn (furnished herewith).
10.42 Amendment to Employment Agreement, dated as of October 28, 2004, by and between Interline Brands, Inc. and James A. Spahn
10.43 Amendment to Employment Agreement dated as of December 31, 2008, by and between Interline Brands, Inc. and James A. Spahn
55
Table of Contents
10.44 Form of Change in Control Severance Agreement (incorporated by reference to Exhibit 10.42 to Interline Brands, Inc.'s Annual Report
on Form 10-K for the fiscal year ended December 29, 2006).
10.45 Form of Amendment to Change in Control Severance Agreement (furnished herewith).
10.46 Management Agreement, dated May 16, 2000, by and between Wilmar Industries, Inc. and Parthenon Capital, Inc. (incorporated by
(No. 333-116482)).
10.47 Amendment to Management Agreement, dated September 29, 2000, by and between Wilmar Industries, Inc. and Parthenon
Capital, Inc. (incorporated by reference to Exhibit 10.42 to Interline Brands, Inc.'s Amendment No. 5 to Form S-1 Registration
Statement filed on December 14, 2004 (No. 333-116482)).
11.1 Computation of earnings per share information included in Note 2 to the Consolidated Financial Statements (furnished herewith).
21.1 List of Subsidiaries of Interline Brands, Inc. (furnished herewith).
23.1 Consent of Deloitte & Touche LLP (furnished herewith).
31.1 Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (furnished herewith).
31.2 Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (furnished herewith).
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 (furnished herewith).
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 (furnished herewith).
56
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Interline Brands, Inc.
Jacksonville, Florida
We have audited the accompanying consolidated balance sheets of Interline Brands, Inc. and subsidiaries (the "Company") as of
December 26, 2008 and December 28, 2007, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each
of the three years in the period ended December 26, 2008. We also have audited the Company's internal control over financial reporting as of
December 26, 2008, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. The Company's management is responsible for these financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion
on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that
our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal
executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors,
management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
the company's assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper
management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also,
projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that
the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
F-1
Table of Contents
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Interline Brands, Inc. and subsidiaries as of December 26, 2008 and December 28, 2007, and the results of their operations and their cash flows
for each of the three years in the period ended December 26, 2008, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of December 26, 2008, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
/s/ DELOITTE & TOUCHE LLP
Certified Public Accountants

February 25, 2009
F-2
Table of Contents
INTERLINE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 26, 2008 AND DECEMBER 28, 2007
(in thousands, except share and per share data)
De ce m be r 26,
2008
ASSETS
Current Assets:
Short-term investments
Accounts receivabletrade (net of allowance for doubtful accounts of $12,140 and $7,268)
Inventory
Income tax receivable
Prepaid expenses and other current assets
Deferred income taxes
Total current assets
Property and equipment, net
Goodwill
Other intangible assets, net
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
Accrued expenses and other current liabilities
Accrued interest
Income tax payable
Current portion of long-term debt
Capital leasecurrent
Total current liabilities
Long-Term Liabilities:
Long-term debt, net of current portion
Capital leaselong term
Other liabilities
Total liabilities
Commitments and contingencies
De ce m be r 28,
2007
62,724
139,522
211,200
1,452
22,884
19,010
456,792
46,033
317,117
132,787
10,119
962,848
68,255
31,394
1,072
1,625
239
102,585
37,210
401,765
226
989
542,775
4,975
48,540
154,571
190,974
23,664
15,359
438,083
37,131
313,462
136,734
11,424
936,834
60,159
42,175
838
1,173
2,300
218
106,863
33,351
416,290
464
2,452
559,420
Senior preferred stock; $0.01 par value, 20,000,000 shares authorized; no shares outstanding as of
December 26, 2008 and December 28, 2007
Stockholders' Equity:
Common stock; $0.01 par value, 100,000,000 authorized; 32,561,360 issued and 32,449,946 outstanding as
of December 26, 2008 and 32,350,188 issued and 32,308,105 outstanding as of December 28, 2007
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income
Treasury stock, at cost, 111,414 shares as of December 26, 2008 and 42,083 shares as of December 28,
2007
Total stockholders' equity
Total liabilities and stockholders' equity
326
571,868
(150,833)
695
324
567,860
(191,666)
1,751
(1,983)
420,073
962,848 $
(855)
377,414
936,834
See accompanying notes to consolidated financial statements.

F-3
Table of Contents

CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 26, 2008, DECEMBER 28, 2007 AND DECEMBER 29, 2006
(in thousands, except share and per share data)
Net sales
Cost of sales
Gross profit
Operating Expenses:
Selling, general and administrative expenses
Operating income
Gain (Loss) on extinguishment of debt
Interest expense
Interest and other income
Net income
Earnings Per Share:
Basic
Diluted
Weighted-Average Shares Outstanding:
Basic
Diluted
2008
2007
2006
$ 1,195,663
746,037
449,626
$ 1,239,027
765,137
473,890
$ 1,067,570
658,698
408,872
343,793
16,866
360,659
88,967
2,775
(28,482)
2,198
65,458
24,625
40,833 $
345,297
14,499
359,796
114,094
(33,923)
3,251
83,422
32,460
50,962 $
1.26
1.58
0.97
1.25
1.56
0.95
292,752
14,427
307,179
101,693
(20,843)
(31,367)
1,197
50,680
19,495
31,185
32,364,492
32,241,906
32,141,958
32,573,552
32,703,430
32,748,400

F-4
Table of Contents

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
Accum u late d
Addition al
O the r
Total
Paid-In
Accum u late d C om pre h e n sive
De fe rre d
Tre asu ry S tockh olde rs'
S h are s Am ou n t
C apital
De ficit
Incom e
C om pe n sation
S tock
Equ ity
Balance at December 30, 2005
32,220,669 $
322 $
558,183 $
(273,037) $
992 $
(1,918) $
$
284,542
Offering costs
(30)
(30)
Reclassification to adopt FAS 123R
(1,918)
1,918
Share-based compensation
3,847
3,847
Issuance of restricted stock
17,800
Issuance of common stock from

exercise of stock options
69,752
1
1,074
1,075
T ax benefits on stock options
exercised
284
284
T ax benefits on other vested sharebased payments
194
194
Repurchase of common stock
(498)
(498)
Adjustment to initially apply
FAS 158
90
90
Comprehensive income:
Net income
31,185
Foreign currency translation
(10)
T otal comprehensive income
31,175
C om m on S tock

32,308,221
Issuance of restricted stock
4,600
37,367
exercised
Cumulative impact of change in
accounting for uncertainty in
income taxes
Net income
Unrecognized gain on employee
benefits net of amortization
323
561,634
5,377
(241,852)
1,072
(498)
597
598
128
128

32,350,188
38,595
exercised
vesting of restricted share units
172,577
Net income
Amortization of unrecognized
gain on employee benefits
324
567,860
3,782
656
656
53
53
(2)
326 $
124
(357)
(776)
320,679
5,377
124
(357)
(776)
50,962
(125)
804
51,641
(191,666)
1,751
(855)
(481)
(1,128)
377,414
3,782
(481)
(1,128)
40,833
11
(1,067)
39,777
32,561,360 $
571,868 $
(150,833) $
695 $

F-5
Table of Contents
(1,983) $
420,073
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
2008
2007
2006
Cash Flows from Operating Activities:

Net income
$ 40,833 $ 50,962 $ 31,185
Adjustments to reconcile net income to net cash provided by operating activities:
17,414
15,114
14,427
Gain on extiguishment of debt, net of discount
(2,890)
Amortization of debt issuance costs

1,143
1,094
1,352
Amortization of discount on 81/8% senior subordinated notes
148
135
63
Write-off of debt issuance costs
115
7,180
Tender and redemption premiums on 111/2% senior subordinated notes
13,663
3,782
5,377
3,847
Excess tax benefits from share-based compensation
(147)
(252)
(478)
(680)
516
(2,199)
Provision for doubtful accounts
6,711
4,277
3,443
Loss on disposal of property and equipment
191
139
83
Changes in assets and liabilities which provided (used) cash, net of business acquired:
Accounts receivabletrade
10,303
(15,030)
(5,027)
Inventory
(19,148)
11,098
(18,555)
Prepaid expenses and other current assets
1,461
(306)
(1,971)
Other assets
661
(1,277)
(546)
Accounts payable
6,871
(6,771)
(18,571)
(6,800)
(4,374)
(324)
Accrued interest
234
(2,678)
1,271
Income taxes
(2,558)
(396)
1,060
Other liabilities
(1,452)
102
43
Net cash provided by operating activities
56,192
57,730
29,946
Cash Flows from Investing Activities:
Purchase of property and equipment, net
(20,582)
(14,906)
(7,813)
Purchase of short-term investments
(35,531) (168,962)
Proceeds from sales and maturities of short-term investments

84,071
120,422
Purchase of businesses, net of cash acquired

(10,243)
(765) (131,485)
Net cash provided by (used in) investing activities
17,715
(64,211) (139,298)
F-6
Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(in thousands)
2008
2007
2006
Cash Flows from Financing Activities:

(Decrease) Increase in purchase card payable, net
(2,909)
6,579
Decrease in revolver, net
(3,000)
Repayment of term debt
(2,486) (2,613) (160,008)
Repayment of 81/8% senior subordinated notes
(9,984)
(130,000)
Payment of tender and redemption premiums on 111/2% senior subordinated notes
(13,663)
Proceeds from issuance of 81/8% senior subordinated notes, net of discount
198,566
Proceeds from issuance of term debt
230,000
Payment of debt issuance costs
(34)
(9,724)
Proceeds from stock options exercised
656
564
1,046
Excess tax benefits from share-based compensation
147
252
478
Treasury stock acquired to satisfy minimum tax withholding requirements
(1,050)
Payments on capital lease obligations

(218)
(307)
(439)
Initial public offering costs
(30)
Net cash (used in) provided by financing activities
(15,844)
4,441
113,226
Effect of exchange rate changes on cash and cash equivalents
(314)
163
20
Net increase (decrease) in cash and cash equivalents
57,749
(1,877)
3,894
Cash and cash equivalents at beginning of period
4,975
6,852
2,958
Cash and cash equivalents at end of period
$ 62,724 $ 4,975 $ 6,852
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest
Income taxes, net of refunds
Schedule of Non-Cash Investing and Financing Activities:
Adjustments to liabilities assumed and goodwill on businesses acquired
$ 26,864
$36,140
$ 29,232
$ 28,905
$32,646
$ 21,101
$ 1,027
305
1,535

F-7
Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS AND BACKGROUND
Description of Business
Interline Brands, Inc., a Delaware corporation, and its subsidiaries ("Interline" or the "Company") is a direct marketer and specialty
distributor of maintenance, repair and operations, ("MRO") products. The Company sells plumbing, electrical, hardware, security, heating,
ventilation and air conditioning, janitorial and sanitary and other MRO products. Interline's highly diverse customer base consists of multifamily housing, educational, lodging, government and health care facilities, professional contractors and specialty distributors.
The Company markets and sells its products primarily through twelve distinct and targeted brands. The Company utilizes a variety of
sales channels, including a direct sales force, telesales representatives, a direct marketing program, brand-specific websites and a national
accounts sales program. The Company delivers its products through its network of regional distribution centers and professional contractor
showrooms located throughout the United States and Canada, two national distribution centers, vendor managed inventory locations at large
professional contractor customer locations and its dedicated fleet of trucks. Through its broad distribution network, the Company provides
same day/next day delivery service to the majority of the U.S. population.
Background
In December 2004, the Company completed its initial public offering (the "IPO"). Immediately prior to the closing of the IPO, a
reincorporation merger occurred and the Company became the holding company of the Interline group of businesses, including its principal
operating subsidiary, Interline Brands, Inc., a New Jersey corporation ("Interline New Jersey").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The 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 accounting principles generally accepted in the United States of America. All intercompany
balances and transactions have been eliminated in consolidation.
Fiscal Year
The Company operates on a 52-53 week fiscal year, which ends on the last Friday in December. The fiscal years ended December 26, 2008,
December 28, 2007 and December 29, 2006 were fifty-two week years. References herein to 2008, 2007 and 2006 are for the fiscal years ended
December 26, 2008, December 28, 2007 and December 29, 2006, respectively.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent liabilities at the date of the
F-8
Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those
estimates and assumptions.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable approximate fair
value because of the short maturities of these items. The carrying values of variable rate notes payable and long-term debt are reasonable
estimates of their fair values. Estimated fair values of fixed rate notes payable and long-term debt are determined by quoted market prices as
the debt is publicly traded.
Foreign Currency Translation
Assets and liabilities of the Company's foreign subsidiary, where the functional currency is the local currency, are translated into United
States dollars at the year-end exchange rate. The related translation adjustments are recorded as a component of other comprehensive income.
Revenues and expenses are translated using average exchange rates prevailing during the year.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less.
Short-Term Investments
The Company accounts for investments in accordance with FASB Statement No. 115, Accounting for Certain Investments in Debt and
Equity Securities, ("FAS 115"). The Company's short-term investments primarily include investments in high-grade tax exempt auction rate
securities and variable rate demand notes, which are debt instruments, such as municipal bonds, with long-term scheduled maturities and
periodic interest rate reset dates. The interest rates on these investments are typically reset to market prevailing rates every 35 days or less,
and in some cases every 7 days or less. Due to the liquidity provided by the interest rate reset mechanism and the short-term nature of the
Company's investment in these investments, they have been classified as current assets. Short-term investments are recorded at fair value
based on current market rates and are classified as available-for-sale. Changes in the fair value, if any, are included in accumulated other
comprehensive income, net of applicable taxes. As of December 26, 2008 and December 28, 2007, there were no unrealized gains and losses
associated with these investments. During 2008 and 2007, all income generated from short-term investments was recorded as interest income.
Concentrations of Credit Risk
Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of accounts receivable.
The Company's accounts receivable are principally from facilities maintenance, professional contractor and specialty distributor customers in
the United States and Canada. Concentration of credit risk with respect to accounts receivable, however, is limited due to the large number of
customers comprising the Company's customer base. The Company performs
F-9
Table of Contents

credit evaluations of its customers; however, the Company's policy is not to require collateral. As of December 26, 2008 and December 28,
2007, the Company had no significant concentrations of credit risk.
Inventories
Inventories, consisting substantially of finished goods, are valued at the lower of cost or market. Inventory cost is determined using the
weighted-average cost method. The Company adjusts inventory for excess and obsolete inventory and for the difference by which the cost of
the inventory exceeds the estimated market value. In order to determine the adjustments, management reviews inventory quantities on hand,
slow movement reports and sales history reports. Management estimates the required adjustment based on estimated demand for products
and market conditions. To the extent historical results are not indicative of future results and if events occur that affect the Company's
relationships with suppliers or the salability of their products, additional write-offs may be needed that will increase cost of sales and decrease
inventory.
Vendor Rebates
The Company accounts for vendor rebates in accordance with the Emerging Issues Task Force ("EITF") Issue No. 02-16, Accounting by
a Customer (Including a Reseller) for Certain Consideration Received from a Vendor, ("EITF 02-16"). Many of the Company's arrangements
with its vendors provide for the Company to receive a rebate of a specified amount of consideration, payable to the Company when the
Company achieves any of a number of measures, generally related to the volume level of purchases from its vendors. The Company accounts
for such rebates as a reduction of the prices of the vendor's products and therefore as a reduction of inventory until it sells the product, at
which time such rebates reduce cost of sales in the Company's statement of operations. Throughout the year, the Company estimates the
amount of the rebate earned based on estimated purchases to date relative to the purchase levels that mark the Company's progress toward
earning the rebates. The Company continually revises these estimates to reflect actual rebates earned based on actual purchase levels.
Property and Equipment
Property and equipment purchased in the normal course of business is stated at cost, net of accumulated depreciation and amortization.
Expenditures for additions, renewals and betterments are capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred. Property and equipment acquired in connection with acquisitions are recorded at amounts which approximate fair market value as of
the date of the acquisition. Upon the retirement or disposal of assets, the cost and accumulated depreciation or amortization is eliminated from
the accounts and the resulting gain or loss is credited or charged to operations. Leasehold improvements and assets under capital leases are
amortized, using the straight-line method, over the lesser of the estimated useful lives or the term of the lease.
F-10
Table of Contents

Depreciation and amortization, including assets under capital leases, is computed using the straight-line method based upon estimated
useful lives of the assets as follows:
Buildings
Machinery and equipment
Office furniture and equipment
Vehicles
Leasehold improvements
39-40 years
5-7 years
3-7 years
5 years
1-10 years
Costs of Computer Software Developed or Obtained for Internal Use

The Company capitalizes costs related to internally developed software in accordance with Statement of Position ("SOP") No. 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, ("SOP 98-1"). Only costs incurred during the
development stage, including design, coding, installation and testing are capitalized. These capitalized costs primarily represent internal labor
costs for employees directly associated with the software development. Upgrades or modifications that result in additional functionality are
capitalized. Capitalized costs were $1.7 million, $1.8 million and $0.8 million for 2008, 2007 and 2006, respectively. As of December 26, 2008 and
December 28, 2007, there was $4.4 million and $4.3 million, respectively, of unamortized capitalized software costs. During 2008, 2007 and 2006,
amortization expense associated with capitalized software costs was $1.6 million, $1.4 million and $0.9 million, respectively.
Goodwill
Goodwill represents the excess of the costs of acquired companies over the fair value of their net tangible assets. In accordance with
Financial Accounting Standards Board ("FASB") Statement No. 142, Goodwill and Other Intangible Assets, ("FAS 142") the Company does
not amortize goodwill but is required to annually evaluate goodwill for impairment. Goodwill is tested for impairment at least annually, or
whenever events of changes in circumstances indicate that the carrying amount may not be recoverable. The Company has elected to perform
its annual goodwill impairment test as of the last day of each year. The determination of whether goodwill has become impaired involves a
significant level of judgment in the assumptions underlying the approach used to determine the value of the Company's reporting unit.
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 in future
periods. If impairment indicators are present in such periods, the resulting impairment charges could be material. No impairment was identified
as a result of its impairment test for any year presented.
Other Intangible Assets
Other intangible assets include amounts assigned to trademarks, customer lists and relationships, non-compete agreements and deferred
debt issuance costs. Other intangibles are amortized over their useful lives, 13 to 20 years for customer lists and relationships and 1 to 10 years
for non-compete agreements. Deferred debt issuance costs are amortized as a component of interest expense over the term of the related debt
using the effective interest method or a method that approximates the
F-11
Table of Contents

effective interest method. Effective September 30, 2006, the Company determined that its trademarks had indefinite lives and discontinued the
amortization of its trademarks. The Company has elected to perform its annual impairment test on long-lived assets as of the last day of each
year. No impairment was identified as a result of its impairment test for any year presented.
Impairment of Long-Lived Assets
The Company evaluates its intangible assets for impairment on an annual basis or when an event occurs or circumstances change that
would indicate that the fair value of the intangible asset has reduced 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 intangible assets have become impaired
involves a significant level of judgment in the assumptions underlying the approach used to determine the value of the intangible 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 in future
periods. If impairment indicators are present in such periods, the resulting impairment charges could be material. The Company has not
identified any impairment losses with respect to long-lived assets for any year presented.
Risk Insurance
The Company has a $0.3 million self-insured retention per occurrence in connection with its workers' compensation policy ("Risk
Insurance"). The Company accrues its estimated cost in connection with its portion of its Risk Insurance losses using an actuarial
methodology based on claims filed, historical development factors and an estimate of claims incurred but not yet reported. The Company does
not discount its workers compensation reserve. Claims paid are charged against the reserve.
Taxes Collected and Remitted
The Company records non-income taxes collected from customers and remitted to governmental agencies on a net basis.
Revenue Recognition
The Company recognizes revenue in accordance with Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB")
No. 101, Revenue Recognition in Financial Statements, ("SAB 101") as amended by SAB No. 104, Revenue Recognition, corrected copy,
("SAB 104"). The SEC requires that the following four basic criteria must be met before the Company recognizes revenue:
persuasive evidence of an arrangement exists;
delivery has occurred or services have been rendered;
the seller's price to the buyer is fixed or determinable; and
collectibility is reasonably assured.

F-12
Table of Contents

The Company recognizes a sale when the risk of loss has passed to the customer. For goods shipped by third party carriers, the Company
recognizes revenue upon shipment since the terms are generally FOB shipping point. For goods delivered on the Company's dedicated fleet of
trucks, the Company recognizes revenue upon delivery to the customer. Sales are recorded net of estimated discounts, rebates and returns. A
portion of the Company's sales are delivered direct from the suppliers. These direct-shipment sales are recorded on a gross basis, with the
corresponding cost of goods sold, in accordance with the guidance in EITF Issue No. 99-19, Reporting Revenues Gross as a Principal verses
Net as an Agent, ("EITF 99-19"). The Company bills some shipping and handling costs to its customers and has included this amount in
revenue. The Company provides product return and protection rights to certain customers. A provision is made for estimated product returns
based on sales volumes and our experience. Actual returns have not varied materially from amounts provided historically.
Cost of Sales
Cost of sales includes merchandise costs less vendor rebates, freight-in and operating costs related to the Company's National
Distribution Centers.
Shipping and Handling Costs
Shipping and handling costs have been included in selling, general and administrative expenses on the consolidated statements of
operations. Shipping and handling costs were $57.3 million, $58.9 million, and $52.0 million in 2008, 2007 and 2006, respectively.
Advertising Costs
Costs of producing and distributing sales catalogs and promotional flyers are capitalized and charged to expense over the life of the
related catalog and promotional flyers. Advertising expenses, net of co-op advertising, were $2.3 million, $3.1 million, and $3.8 million in 2008,
2007 and 2006, respectively. Co-op advertising was $2.3 million in 2008, $2.5 million in 2007 and $2.3 million in 2006.
Share-Based Compensation
Effective December 31, 2005, the Company adopted the provisions of FASB Statement No. 123 (revised 2004), Share-Based Payment,
("FAS 123R") using the modified prospective application transition method. Under this method, the share-based compensation cost
recognized beginning December 31, 2005 includes compensation cost for (1) all share-based payments granted prior to, but not vested as of
December 31, 2005, based on the grant date fair value originally estimated in accordance with the provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation, ("FAS 123") and (2) all share-based payments granted subsequent to December 30, 2005, based
on the grant date fair value estimated in accordance with the provisions of FAS 123R. Compensation cost under FAS 123R is recognized
ratably using the straight-line attribution method over the expected vesting period or to the retirement eligibility date, if less than the vesting
period when vesting is not contingent upon any future performance. In addition, pursuant to FAS 123R, the Company is required to estimate
the amount of expected forfeitures when calculating the compensation costs, instead of accounting for forfeitures as incurred, which was the
method previously used by the Company.
F-13
Table of Contents

During 2008, the Company entered in to a separation agreement with an executive. Under the separation agreement and in exchange for
non-competition and non-solicitation restrictions relating to activities after leaving the Company, the Company amended certain stock options
granted to the executive in connection with the Company's initial public offering in December 2004. The amendments allow the executive the
right to exercise those stock options until December 31, 2010. As a result of the modification to those stock options, the Company recorded
$0.7 million in share-based compensation expense. The total share-based compensation expense, which is included in the consolidated
statement of earnings, was $3.8 million, $5.4 million and $3.8 million for 2008, 2007 and 2006, respectively. See Note 13. Share-Based
Compensation for more information.
Income Taxes
Taxes on income are provided using an asset and liability approach to financial accounting and reporting for income taxes. Deferred
income tax assets and liabilities are computed for differences between the financial statement carrying values and the tax bases of assets and
liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on
enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income. Valuation allowances are
established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertainty in
income taxes in accordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan Interpretation of FASB
Statement No. 109, ("FIN 48"). See Note 17. Income Taxes for more information.
Earnings per Share
Earnings per share for all years has been computed in accordance with FASB Statement No. 128, Earnings per Share, ("FAS 128"). Basic
earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the year.
Diluted earnings per share is computed by dividing net income by the weighted-average number of shares outstanding during the year as
adjusted for the potential dilutive effect of stock options and non-vested shares of restricted stock, restricted share units and deferred stock
units using the treasury stock method.
The following summarizes the shares of common stock used to calculate earnings per share including the potentially dilutive impact of
stock options, restricted stock, restricted stock units and
F-14
Table of Contents

deferred stock units, calculated using the treasury stock method, as included in the calculation of diluted weighted-average shares:
De ce m be r 26,
2008
Ye ar En de d
De ce m be r 28,
2007
De ce m be r 29,
2006
32,364,492
32,241,906
32,141,958
102,383
2,088
72,317
32,272
32,573,552
358,561
17,991
73,946
11,026
32,703,430
497,042
48,959
59,199
1,242
32,748,400
Weighted average shares outstandingbasic

Dilutive shares resulting from:
Stock options
Restricted stock
Restricted stock units
Deferred stock uits
Weighted average shares outstandingdiluted
During 2008, 2007 and 2006, options to purchase 2,197,830 shares, 1,022,405 shares and 266,788 shares of common stock, respectively,
were excluded from the computations of diluted weighted-average shares outstanding because the exercise prices of those options are greater
than the average market value of common stock and the effect would be anti-dilutive.
Segment Information
In accordance with FASB Statement No.131, Disclosure about segments of an Enterprise and Related Information, ("FAS 131"), the
Company has one operating segment and reportable segment, the distribution of MRO products. The Company's net sales by product
category were as follows (in thousands):
Produ ct C ate gory
Plumbing
Janitorial and sanitary
Heating, ventilation and air conditioning
Electrical and lighting
Appliances and parts
Security
Hardware and tools
Other
Total
De ce m be r 26, 2008
340,399
299,261
126,340
111,158
67,433
60,674
52,655
137,743
1,195,663
Ye ar En de d
De ce m be r 28, 2007
The Company's revenues and assets outside the United States are not significant.
F-15
380,522
283,416
119,416
129,019
72,312
62,247
56,748
135,347
1,239,027
De ce m be r 29, 2006
378,512
149,632
123,568
127,511
59,548
56,262
51,075
121,462
1,067,570
Table of Contents

Recently Adopted Accounting Standards
Effective December 29, 2007, the Company adopted FASB Statement No. 157, Fair Value Measurements, ("FAS 157") as amended by
FASB Staff Position No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements
That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13, ("FSP 157-1"), FASB Staff
Position No. 157-2, Effective Date of FASB Statement No. 157, ("FSP 157-2") and FASB Staff Position 157-3, Determining the Fair Value of a
Financial Asset When the Market for That Asset is Not Active, ("FSP 157-3"). FAS 157 applies prospectively to all other accounting
pronouncements that require or permit fair value measurements. FAS 157 defines fair value 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." FAS 157 also requires disclosure
about how fair value is determined for assets and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped,
based on significant levels of inputs as follows:
Level 1
Level 2
Level 3
quoted prices in active markets for identical assets or liabilities;

quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or
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 table below includes a rollforward of the Company's investments in auction rate securities from December 28, 2007 to December 26,
2008 and a reclassification of these investments from Level 1 to Level 3 in the valuation hierarchy (in thousands):
Q u ote d Mark e t Price s in Active Mark e ts (Le ve l 1)
Fair value at December 28, 2007

Purchase
Sales
Transfers (out) in
Fair value at December 26, 2008
48,540
35,531
(78,071)
(6,000)
S ignificant Unobse rvable Inpu ts (Le ve l 3)
(6,000)
6,000
The adoption of FAS 157 did not have any impact on the Company's financial position, results of operations and cash flows.
FSP 157-1 amends FAS 157 to exclude from the scope of FAS 157 certain leasing transactions accounted for under FASB Statement
No. 13, Accounting for Leases. The adoption of FAS 157 on the Company's leasing transactions did not have a material impact on the
Company's financial position, results of operations and cash flows and did not result in additional disclosures.
FSP 157-2 amends FAS 157 to defer the effective date of FAS 157 for non-financial assets and non-financial liabilities, except for items that
are recognized or disclosed at fair value in the financial
F-16
Table of Contents

statements on a recurring basis (at least annually) until fiscal years beginning after November 15, 2008 and interim periods within those fiscal
years. The Company is currently evaluating the impact the provisions of FAS 157 will have on its non-financial assets and non-financial
liabilities since the application of FAS 157 for such items was deferred.
FSP 157-3 clarifies the application of FAS 157 in a market that is not active. The Company considered the guidance provided by FSP 157-3
in its determination of estimated fair values as of December 26, 2008, and the impact was not material to its financial position, results of
operations and cash flows.
Effective December 29, 2007, the Company adopted FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial
LiabilitiesIncluding an amendment of FASB Statement No. 115, ("FAS 159"). FAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective of FAS 159 is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. The adoption of FAS 159 did not have any impact on the Company's financial position, results of
operations and cash flows since the Company did not elect to apply the fair value option for any of its eligible financial instruments or other
items as of the December 29, 2007 effective date.
Accounting Standards Not Yet Adopted
In December 2007, the FASB issued FASB Statement No. 141 (revised 2007), Business Combinations, ("FAS 141R"), which replaces FASB
Statement No. 141, Business Combinations, ("FAS 141"). FAS 141R establishes principles and requirements for how an acquirer recognizes
and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree
and the goodwill acquired. FAS 141R also establishes disclosure requirements that will enable users to evaluate the nature and financial
effects of the business combination. FAS 141R is effective for fiscal years beginning after December 15, 2008 with early adoption prohibited.
The Company is currently evaluating the impact that adoption of FAS 141R will have on its financial position, results of operations and cash
flows; however, as of December 26, 2008, the Company has $0.7 million in deferred acquisition costs which are classified as prepaid expenses
and other current assets on the Company's consolidated balance sheet and will be expensed in the first quarter of 2009 in accordance with
FAS 141R.
In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statementsan
amendment of ARB No. 51, ("FAS 160"). FAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes
in a parent's ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated.
FAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of
the noncontrolling owners. FAS 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations,
but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a
subsidiary. FAS 160 is effective for fiscal years beginning after December 15, 2008 with early adoption prohibited. The
F-17
Table of Contents

Company is currently evaluating the impact that adoption of FAS 160 will have on its financial position, results of operations and cash flows.
Recently Issued Accounting Standards
In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities,
("FAS 161"). FAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an entity's financial position, financial performance, and cash flows. The
provisions of FAS 161 are effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with
early application encouraged. The Company is currently evaluating the impact the provisions of FAS 161 will have on its financial position,
results of operations and cash flows. The Company does not currently have any derivative instruments.
In May 2008, the FASB issued FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles, ("FAS 162").
FAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to
be used in preparing financial statements that are presented in conformity with generally accepted accounting principles ("GAAP") for
nongovernmental entities in the United States. FAS 162 is effective 60 days following SEC approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles. The provisions of FAS 162 will not have any impact on the Company's financial position, results of operations and cash flows.
3. ACQUISITION
On August 21, 2008, Interline New Jersey completed the acquisition of Eagle Maintenance Supply, Inc. ("Eagle") for a purchase price of
$9.6 million in cash, including transaction fees of $0.1 million. Eagle is a distributor of janitorial and sanitary supplies to the institutional
marketplace. This acquisition represents an expansion of the Company's institutional facilities maintenance business. The acquisition was
accounted for in accordance with FASB Statement No. 141, Business Combinations ("FAS 141"). The results of Eagle have been included in
the Company's condensed consolidated financial statements since August 22, 2008. Supplemental pro forma information has not been
provided because it is immaterial.
Given the recent acquisition date, the Company has not completed its allocation of the purchase price; therefore, the final fair value
assessment is not yet complete. Currently, of the $9.6 million purchase price, $2.1 million was allocated to the net assets, $0.1 million was
allocated to non-compete agreements and have a weighted-average useful life of 18 months, $3.0 million was allocated to customer
relationships and have a weighted-average useful life of approximately 16 years and the remaining $4.5 million was allocated to goodwill. This
acquisition was treated as a purchase and sale of assets for federal income tax purposes. Accordingly, the $4.4 million allocated to goodwill is
expected to be deductible for tax purposes. The Company expects to complete the allocation process during the second quarter of fiscal 2009.
As a result of its integration plan, the Company accrued, as part of the purchase price, $0.1 million in employee severance and other
facility integration costs associated with the Eagle acquisition.
F-18
Table of Contents

4. RESTRUCTURING AND ACQUISITON ACCRUALS
Restructuring Accruals
During the three months ended September 26, 2008, the Company began undertaking significant changes in its cost structure. These
operational initiatives focus on reducing the Company's overall operating cost structure. The Company took the following specific actions
during the year ended December 26, 2008:
reduced our workforce; and
closed and consolidated certain facilities.
The restructuring charges related to these various initiatives were $2.3 million during the year ended December 26, 2008 and are included
as part of selling, general and administrative expenses in the Company's statement of earnings. The following table summarizes the changes to
accruals assumed in connection with the Company's restructuring, which are included in accrued expenses and other current liabilities (in
thousands):
Em ploye e S e paration C osts

Provisions
Payments
Fixed asset write-offs
Facility C losin g and O the r C osts
1,127
(797)
330
Total
$
1,208
2,335
(210) (1,007)
(154)
(154)
844 $ 1,174
Acquisition Accruals
The following table summarizes the changes to reserves assumed in connection with the Company's business combinations (in
thousands):
Em ploye e S e ve ran ce an d Re location

Payments
Write-offs
Additions to reserve
Payments
Write-offs
Additions to reserve
1,093
(1,073)
248
268
(108)
(103)
38
95
$
F-19
Facility C losin g and O the r C osts
Total
5,321 $ 6,414
(471) (1,544)
(1,925) (1,925)
1,252
1,500
4,177
4,445
(1,428) (1,536)
(787)
(890)
20
58
1,982 $ 2,077
Table of Contents

5. ACCOUNTS RECEIVABLE
The Company's trade receivables are exposed to credit risk. The majority of the market served by the Company is comprised of numerous
individual accounts, none of which is individually significant. The Company monitors the creditworthiness of its customers on an ongoing
basis and provides a reserve for estimated bad debt losses. 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):
Ye ar En de d
Balan ce at Be ginn ing of Ye ar
December 29, 2006

December 28, 2007(2)
December 26, 2008
$
$
$
8,150
10,224
7,268
C h arge d to Expe n se
$
$
$
3,443
4,277
6,711
De du ction s(1)
$
$
$
(1,369)
(7,233)
(1,839)
Balan ce at En d of Ye ar
$
$
$
10,224
7,268
12,140
(1)
Accounts receivable written-off as uncollectible, net of recoveries.
(2)
During 2007, the Company performed a detailed review of its allowance for doubtful accounts. Based on that review, the Company
increased the number of accounts written-off as uncollectible. The majority of the accounts receivable written-off as uncollectible had
been fully reserved for in prior years.
6. SHORT-TERM INVESTMENTS
The Company did not hold any short-term investment as of December 26, 2008. Short-term investments consisted of the following as of
December 28, 2007 (in thousands):
De ce m be r 28, 2007
Auction rate securities

Variable rate demand notes
32,575
15,965
48,540
$
7. PREPAID EXPENSES
Prepaid expenses and other current assets consisted of the following as of December 26, 2008 and December 28, 2007 (in thousands):
De ce m be r 26, 2008
Vendor rebates receivable

Prepaid insurance
Prepaid rent
Other
$
F-20
12,734
2,796
1,932
5,422
22,884
De ce m be r 28, 2007
16,556
1,997
1,567
3,544
23,664
Table of Contents

8. PROPERTY AND EQUIPMENT
Major classifications of property and equipment as of December 26, 2008 and December 28, 2007 are as follows (in thousands):
De ce m be r 26, 2008
Land
Building
Machinery and equipment
Office furniture and equipment
Vehicles
Leasehold improvements
Construction in progress
Less: Accumulated depreciation and amortization

$
400
9,262
87,396
7,389
2,196
11,857
118,500
(72,467)
46,033
De ce m be r 28, 2007
400
9,258
68,972
7,105
1,509
10,170
1,982
99,396
(62,265)
37,131
Depreciation and amortization expense, including for assets under capital leases, was $11.6 million, $9.5 million, and $8.7 million for 2008,
2007 and 2006, respectively.
9. GOODWILL AND OTHER INTANGIBLE ASSETS
Changes to goodwill during 2008 and 2007 were as follows (in thousands):
Acquired goodwill
Purchase price adjustments
Acquired goodwill
Purchase price adjustments
$313,077
690
(305)
313,462
4,682
(1,027)
$317,117
The acquired goodwill during 2007 relates to the Company's July 2006 acquisition of AmSan LLC ("AmSan"). The acquired goodwill
during 2008 primarily relates to the Company's August 2008 acquisition of Eagle. See Note 3. Acquisition for further detail associated with the
Eagle acquisition.
Purchase price adjustments during 2007 relate primarily to the write-off of unused acquisition accruals created for the estimated losses on
lease abandonments and facility consolidations associated with the Barnett, Inc., Florida Lighting, Inc., Copperfield and AmSan acquisitions
offset by the related adjustments to deferred taxes for these write-offs.
Purchase price adjustments during 2008 relate primarily to the write-off of unused acquisition accruals created for the estimated loss on
property and equipment and operating leases associated with the AmSan and Barnett, Inc. acquisitions as well as the release of the remaining
escrow liability associated with the CCS Enterprises, Inc. acquisition which expired during 2008.
F-21
Table of Contents

9. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
The gross carrying amount and accumulated amortization of the Company's intangible assets other than goodwill as of December 26, 2008
and December 28, 2007 were as follows (in thousands):
De ce m be r 26, 2008
Gross C arrying Am ou n t
Customer lists
Customer relationships
Trademarks
Non-compete agreements
Deferred debt issuance costs
Total
Accum u late d Am ortiz ation
49,362
48,200
61,121
2,762
9,499
170,944
49,362
45,200
61,121
2,616
9,615
167,914
Ne t Book Valu e
19,568
7,580
5,568
2,653
2,788
38,157
16,733
4,850
5,568
2,384
1,645
31,180
29,794
40,620
55,553
109
6,711
132,787
De ce m be r 26, 2007
Customer lists
Customer relationships
Trademarks
Non-compete agreements
Deferred debt issuance costs
Total
32,629
40,350
55,553
232
7,970
136,734
The amortization of deferred debt issuance costs, recorded as a component of interest expense, was $1.1 million, $1.1 million, and
$1.4 million in 2008, 2007 and 2006, respectively. The write-off of deferred debt issuance costs totaled $0.1 million and $7.2 million in 2008 and
2006, respectively, related to the extinguishment of debt. The Company did not write-off any deferred debt issuance costs during 2007.
Amortization expense on other intangible assets was $5.8 million, $5.6 million, and $5.7 million for 2008, 2007 and 2006, respectively.
Expected amortization expense on other intangible assets (excluding deferred debt issuance costs which will vary depending upon debt
payments) for each of the five succeeding fiscal years is expected to be as follows (in thousands):
Fiscal Ye ar
Fu ture Estim ate d Am ortiz ation
2009
2010
2011
2012
2013
$
$
$
$
$
5,960
5,768
5,653
5,601
5,577
F-22
Table of Contents

10. ACCRUED LIABILITIES
Accrued expenses and other current liabilities consisted of the following as of December 26, 2008 and December 28, 2007 (in thousands):
De ce m be r 26, 2008
Accrued compensation and benefits

Purchase card payable(1)
Other
10,139
4,314
16,941
31,394
De ce m be r 28, 2007
13,703
7,223
21,249
42,175
(1)
Purchase card payable is comprised of trade vendor invoices that were paid pursuant to a purchase card agreement with a
third-party intermediary. The Company has entered into a purchase card agreement with a third-party intermediary
whereby the third-party intermediary pays the trade vendor invoices in accordance with the terms agreed to by the vendor
and the Company. The third-party intermediary bills the Company for amounts disbursed on a monthly basis. As a result,
there could be an outstanding payable due to the third-party intermediary at any period end. The net activity in purchase
card payable is shown as cash flows from financing activities. In addition, the Company receives a rebate from the thirdparty intermediary based on the volume of transactions administered by the third-party intermediary totaling $0.6 million
and $0.4 million during 2008 and 2007, respectively.
11. DEBT
Long-term debt consisted of the following as of December 26, 2008 and December 28, 2007 (in thousands):
Term loans
Notes payable
81/8% senior subordinated notes, net of unamortized discount of $1,060 as of December 26, 2008 and $1,235 as
of December 28, 2007
De ce m be r 26,
2008
De ce m be r 28,
2007
216,550
3,275
186,040
403,390
(1,625)
401,765 $
198,765
418,590
(2,300)
416,290
Less: Current portion

$
215,075
2,275
In April 2003, Interline New Jersey issued a non-recourse note payable in the principal amount of $3.3 million for the purchase of an
investment. During 2008, in accordance with the terms of the note, the Company used part of the capital distributed by the investment to pay
down $1.0 million of the note. This note, which is secured only by the investment, bears interest at a rate of 4.0% per annum, with principal due
in full in April 2010.
F-23
Table of Contents

11. DEBT (Continued)
In May 2003, Interline New Jersey completed an offering of $200.0 million of 111/2% senior subordinated notes due 2011 and entered into a
$205.0 million senior secured credit facility. In December 2004, Interline New Jersey elected to redeem $70.0 million of the 111/2% senior
subordinated notes using proceeds from the Company's IPO and gave the 30-day notice required by the indenture. Also in December 2004,
Interline New Jersey amended its term loan facility and revolving loan facility. The term loan was reduced to $100.0 million from $140.0 million
and the revolving loan facility was increased to $100.0 million from $65.0 million. As part of the amendment, Interline New Jersey paid down
$31.3 million of the term loan using proceeds from the Company's IPO. The term loan facility was due to mature on December 31, 2010 and the
revolving loan facility was due to mature on May 31, 2008.
In June 2006, Interline New Jersey completed a series of refinancing transactions consisting of (1) an offering of $200.0 million of 81/8%
senior subordinated notes due 2014 and (2) entering into a $330.0 million bank credit facility. The new bank credit facility consists of a
$100.0 million 7-year term loan, a $130.0 million 7-year delayed draw term loan and a $100.0 million 6-year revolving credit facility of which a
portion not exceeding $40.0 million is available in the form of letters of credit. The delayed draw term loan was available solely to fund the
acquisition of substantially all of the assets of American Sanitary Incorporated and the acquisition-related fees and expenses. The proceeds
from the 81/8% senior subordinated notes and the new bank credit facility were used to repurchase the 111/2% senior subordinated notes and
to repay the indebtedness under the prior credit facility. The 111/2% senior subordinated notes were repurchased at a price equal to 110.51% of
their principal amount. In connection with the repurchase of the 111/2% senior subordinated notes and the repayment of the prior credit
facility, Interline New Jersey recorded a loss on early extinguishment of debt of $20.7 million. The loss was comprised of $13.7 million in tender
premiums associated with the repurchase of the 111/2% senior subordinated notes and a non-cash charge of $7.0 million in deferred financing
costs written-off associated with the repurchase of the 111/2% senior subordinated notes and the repayment of the prior credit facility.
The 81/8% senior subordinated notes were priced at 99.3%, or $198.6 million, of their principal amount, representing a yield to maturity of
1
8 /4%. The discount of $1.4 million is being amortized over the term of the 81/8% senior subordinated notes. The amortization of the discount,
recorded as a component of interest expense, was $0.1 million in 2008, 2007 and 2006. The 81/8% senior subordinated notes mature on June 15,
2014 and interest is payable on June 15 and December 15 of each year. Debt issuance costs capitalized in connection with the 81/8% senior
subordinated notes were $5.8 million. In December 2008, the Company repurchased $12.9 million of the 81/8% senior subordinated notes at
773/8% of par, or $10.0 million. In connection with the repurchase of the 81/8% senior subordinated notes, the Company recorded a gain on the
extinguishment of debt of $2.8 million net of $0.1 million in deferred financing costs written-off. As of December 26, 2008 and December 28,
2007, the $187.1 million and $200.0 million in then outstanding 81/8% senior subordinated notes, respectively, had an estimated fair market
value of $147.8 million, or 79% of par, and $198.0 million, or 99% of par, respectively.
Borrowings under the new term loan, the delayed draw facility and the new revolving credit facility bear interest, at Interline New Jersey's
option, at either LIBOR plus 1.75% or at the alternate base rate, which is the greater of the Prime Rate or the Federal Funds Effective Rate plus
0.50%, plus
F-24
Table of Contents

0.75%. As of December 26, 2008, the interest rate in effect with respect to the new term loan and the delayed draw facility was 2.90% for the
LIBOR option and 4.00% for the alternate base rate option. Outstanding letters of credit under the new revolving credit facility are subject to a
per annum fee equal to the applicable margin under the new revolving credit facility. The interest rate margin is subject to pricing adjustments
at the end of each fiscal quarter based on the ratio of net total indebtedness to adjusted consolidated EBITDA, as defined by the credit
facility. The new term loan and the delayed draw facility mature on June 23, 2013 and the revolving loan facility matures on June 23, 2012.
Amounts under the new term loan and the delayed draw facility are due and payable in quarterly installments equal to 1.0% of the original
principal amount on an annual basis through June 23, 2013, with the balance payable in one final installment at the maturity date. Debt
issuance costs capitalized in connection with the new term loan, the delayed draw facility and the new revolving credit facility were
$3.9 million.
The debt instruments of Interline New Jersey, primarily the credit facility and the indenture governing the terms of the 81/8% senior
subordinated notes, contain significant restrictions on the payment of dividends and distributions to the Company by Interline New Jersey.
Interline New Jersey's credit facility allows it to pay dividends, make distributions to the Company or make investments in the Company in an
aggregate amount not to exceed $2.0 million during any fiscal year, so long as Interline New Jersey is not in default or would be in default as a
result of such payments. In addition, ordinary course distributions for overhead (up to $3.0 million annually) and taxes are permitted, as are
annual payments of up to $7.5 million in respect of the Company's stock option or other benefit plans for management or employees and
(provided Interline New Jersey is not in default) aggregate payments of up to $40.0 million depending on the pro forma net leverage ratio as of
the last day of the previous quarter. In addition, the indenture for the 81/8% senior subordinated notes generally restricts the ability of Interline
New Jersey to pay distributions to the Company and to make advances to, or investments in, the Company to an amount generally equal to
50% of the net income of Interline New Jersey, plus an amount equal to the net proceeds from certain equity issuances, subject to compliance
with a leverage ratio and no default having occurred and continuing. The indenture also contains certain permitted exceptions including
(1) allowing the Company to pay its franchise taxes and other fees required to maintain its corporate existence, to pay for general corporate and
overhead expenses and to pay expenses incurred in connection with certain financing, acquisition or disposition transactions, in an aggregate
amount not to exceed $10.0 million per year; (2) allowing certain tax payments; and (3) allowing certain permitted distributions up to $75 million.
In connection with the new bank credit facility, Interline New Jersey is required to pay administrative fees, commitment fees, letter of credit
issuance and administration fees and certain expenses and to provide certain indemnities, all of which are customary for financings of this
type. The new bank credit facility also allows for certain incremental term loans and incremental commitments under the revolving credit facility
which are available to Interline New Jersey to repay indebtedness and make acquisitions if certain conditions, including various financial ratios
are met.
The new bank credit facility, which is secured by substantially all of the assets of Interline New Jersey and is guaranteed by the Company
and by the domestic subsidiaries of Interline New Jersey, contains affirmative, negative and financial covenants that limit Interline New
Jersey's ability to incur additional indebtedness, pay dividends on its common stock or redeem, repurchase or retire its
F-25
Table of Contents

common stock or subordinated indebtedness, make certain investments, sell assets, and consolidate, merge or transfer assets, and that require
Interline New Jersey to maintain certain financial ratios as of the last day of each fiscal quarter, including a minimum ratio of adjusted
consolidated EBITDA, as defined by the credit facility, to consolidated cash interest expense and a maximum ratio of net total indebtedness to
adjusted consolidated EBITDA, as defined by the credit facility. As of December 26, 2008, the maximum ratio of net total indebtedness to
adjusted consolidated EBITDA, as defined by the credit facility, was 3.5 times. Interline New Jersey and the Company were in compliance with
all covenants as of December 26, 2008 and December 28, 2007.
As of December 26, 2008 and December 28, 2007, Interline New Jersey had $30.5 million and $87.9 million, respectively, available under its
revolving credit facility. The Company's effective borrowing capacity is reduced by the limitation under the bank credit facility's ratio of net
total indebtedness to adjusted consolidated EBITDA, as defined by the credit facility, and by the failure of one of the financial institutions
that support its revolving credit facility.
Total letters of credit issued under the revolving credit facility as of December 26, 2008 and December 28, 2007 were $8.3 million and
$12.1 million, respectively. There were no borrowings under the revolving credit facility as of December 26, 2008 and December 28, 2007.
The maturities of long-term debt subsequent to December 26, 2008 are as follows (in thousands):
Fiscal Ye ar
2009
2010
2011
2012
2013
Thereafter
$ 1,625
3,575
1,300
1,300
209,550
187,100
$404,450
12. PREFERRED STOCK

The Company has the authority to issue 20,000,000 shares of preferred stock, par value $.01 per share. As of December 26, 2008 and
December 28, 2007 there were no preferred shares issued or outstanding. In connection with the reincorporation merger and IPO transaction,
the preferred stock of Interline New Jersey was converted to common stock of the Company.
13. SHARE-BASED COMPENSATION
Stock Incentive Plans
During 2000, Interline New Jersey established a Stock Award Plan (the "2000 Plan"), under which Interline New Jersey may award a total
of 6,395 shares of common stock in the form of incentive stock options (which may be awarded to key employees only), nonqualified stock
options, stock appreciation rights ("SARs") and restricted stock awards, all of which may be awarded to directors, officers, key employees and
consultants. The Company's compensation committee will determine in its sole
F-26
Table of Contents

13. SHARE-BASED COMPENSATION (Continued)
discretion whether a SAR is settled in cash, shares or a combination of cash and shares. In connection with the Company's IPO in December
2004, options to purchase shares of the common stock of Interline New Jersey were converted into options to purchase shares of the
Company's common stock.
During 2004, the Company adopted the 2004 Equity Incentive Plan, (the "2004 Plan"), under which the Company may award 3,175,000
shares in the form of incentive stock options, nonqualified stock options, stock appreciation rights, or SARs, restricted stock, restricted share
units ("RSUs"), deferred stock units ("DSUs") and stock bonus awards, all of which may be awarded to any employee, director, officer or
consultant of the Company. In May 2006, the stockholders of the Company approved an amendment to the 2004 Plan whereby the number of
shares of the Company's common stock reserved for issuance under the 2004 Plan was increased by 2,000,000 shares and to further restrict the
repricing of awards granted under the 2004 Plan without first obtaining approval by the Company's stockholders. In May 2008, the
stockholders of the Company approved amendments to the 2004 Plan, including to increase the number of shares of common stock reserved
for issuance and available for grants thereunder to 3,800,000 as of January 1, 2008 and to change the method by which shares subject to full
value awards granted thereunder are counted against the 2004 Plan's share limit. Effective January 1, 2008, shares subject to grants of full value
awards, or awards other than options or SARs, count against the applicable share limits under the 2004 Plan as 1.8 shares for every 1 share
granted, while shares subject to stock options or SARs count against the applicable share limits as 1 share for every 1 share granted.
These plans allow the Company to fulfill its incentive stock option, nonqualified stock option, SAR, restricted stock, RSU, DSU and stock
bonus award obligations using unissued or treasury shares.
Stock Options
Under the terms of the 2000 Plan, the exercise price per share for an incentive stock option may not be less than 100% of the fair market
value of a share of common stock on the grant date. The exercise price per share for an incentive stock option granted to a person owning
stock possessing more than 10% of the total combined voting power of all classes of stock may not be less than 110% of the fair market value
of a share of common stock on the grant date. These incentive stock options vest in 25% increments over four years and may not be
exercisable after the expiration of ten years from the date of grant.
Under the terms of the 2004 Plan, the exercise price of the options will not be less than the fair market value of the common stock at the
date of grant, generally vest in 25% increments over four years and may not be exercisable after the expiration of seven or ten years from the
date of grant.
As permitted by FAS 123R, the fair values of stock options were estimated using the Black-Scholes option-pricing model. Expected
volatility is based on historical performance of the Company's stock. The Company also uses historical data to estimate the timing and amount
of stock option exercises and forfeitures. The expected life represents the period of time that stock options are expected to remain outstanding
and is based on the contractual term of the stock options and expected exercise behavior. The risk-free interest rate is based on U.S. Treasury
zero-coupon issues with a remaining term equal to
F-27
Table of Contents

the expected option life assumed at the date of grant. The Black-Scholes weighted-average assumptions were as follows:
De ce m be r 26, 2008
Expected volatility
Expected dividends
Risk-free interest rate
Expected life (in years)
Ye ar En de d
De ce m be r 28, 2007
33.6%
0.0%
2.9%
5.0
De ce m be r 29, 2006
27.0%
0.0%
4.5%
5.0
27.7%
0.0%
4.9%
5.0
The weighted average fair value per option of stock options granted during 2008, 2007 and 2006 was $6.64, $6.88 and $7.96, respectively.
A summary of stock option activity as of December 26, 2008 and changes during the year then ended is presented below:
W e ighte dAve rage Exe rcise
Price
O ptions
S h are s
Outstanding at December 28, 2007

Granted
Exercised
Forfeited or expired
Outstanding at December 26, 2008
2,989,429
453,374
(38,595)
(82,186)
3,322,022
Vested or expected to vest at December 26,

2008
Exercisable at December 26, 2008
W e ighte dAve rage Re m aining

C on tractu al Te rm
(in ye ars)
Aggre gate Intrin sic

Value (1)
(in thou san ds)
(1)
19.05
19.25
15.00
19.78
19.10
5.9
3,302,474
19.10
5.9
2,394,195
18.54
5.9
The aggregate intrinsic value represents the amount by which the fair value of the underlying stock at period end exceeds the stock
option exercise price.
The total intrinsic value, the difference between the exercise price and the market price on the date of exercise, of all stock options
exercised during 2008, 2007 and 2006 was $0.1 million, $0.3 million and $0.7 million, respectively. Proceeds from stock options exercised during
2008, 2007 and 2006 were $0.7 million, $0.6 million and $1.0 million, respectively. As of December 26, 2008, there was $4.5 million of total
unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of
2.5 years.
Restricted Stock, Restricted Stock Units and Deferred Stock Units
Shares of restricted stock granted under the 2004 Plan to executives, employees and non-employee directors do not have an exercise price.
The share-based compensation expense associated with the
F-28
Table of Contents

restricted stock is based on the quoted market price of the Company's shares of common stock on the date of grant. The restricted stock
awards for executives vest either on an accelerated basis in one-third installments over three years provided that certain pre-established
annual percentage increases in the Company's earnings per share are attained or on the seventh anniversary of the date of grant. One half of
the restricted stock awards granted to employees vest evenly over three years and one half vest evenly over five years. The restricted stock
awards for non-employee directors vest evenly over two years or at the end of three years, depending on the grant.
RSUs granted under the 2004 Plan to management do not have an exercise price. The share-based compensation expense associated with
the RSUs is based on the quoted market price of the Company's shares of common stock on the date of grant. Depending on the grant, (1) one
half of the RSUs vest on an accelerated basis in two installments over two years provided that certain pre-established annual percentage
increases in the Company's earnings per share are attained and one half vest evenly over three years; or (2) one half of the RSUs vest on the
second grant date anniversary if certain earnings before interest, taxes, depreciation and amortization ("EBITDA") targets are met and one half
vest on the third grant date anniversary if certain EBITDA targets are met; or (3) one half of the RSUs vest evenly over three years and one
half vest evenly over five years; or (4) on the earlier of A) the fourth grant date anniversary, provided that (1) the average daily closing price of
a share of the Company's common stock during any 20-consecutive-trading-day period ("Average Closing Price") commencing on or after the
grant date equals or exceeds a specified amount prior to the fourth grant date anniversary; and (2) the executive's employment has not
terminated prior to the fourth grant date anniversary; or (B) the date that is the later of (1) the date on which the Average Closing Price equals
or exceeds a higher specified amount and (2) the fifth grant date anniversary of the Transaction Date, provided that the participant's
employment has not yet terminated, and provided further that it occurs not later than the seventh grant date anniversary.
DSUs granted under the 2004 Plan to non-employee directors do not have an exercise price. The share-based compensation expense
associated with the DSUs is based on the quoted market price of the Company's shares of common stock on the date of grant. DSUs vest on
the grant date or evenly over the non-employee directors' current service term; depending on the grant. All DSUs are to be settled in shares of
the Company's common stock upon termination of the non-employee directors' service or one year after termination of the non-employee
directors' service; depending on the grant.
F-29
Table of Contents

A summary status of restricted stock, RSUs and DSUs as of December 26, 2008, and changes during the year then ended is presented
below:
Re stricte d S tock
W e ighte dAve rage Grant Date
S h are s
Fair Value
Outstanding at December 28,

2007
Granted
Vested
Forfeited
Outstanding at December 26,
2008
79,482
(57,082)
(3,200)
19,200
Re stricte d S h are Un its

S h are s
Fair Value
17.73
369,252
15.37
24.11
23.69
229,194
(172,577)
(171,613)
254,256
De fe rre d S tock Un its

S h are s
Fair Value
22.22
27,283
17.25
23.34
20.97
17.82
14,777
42,060
24.10
15.52
21.08
The total fair value of restricted stock vested during 2008, 2007 and 2006 was $1.1 million, $1.1 million and $1.6 million, respectively. The
total fair value of restricted share units vested during 2008 was $2.4 million. No restricted share units vested during 2007 and 2006. As of
December 26, 2008, there was $0.7 million of total unrecognized compensation cost related to unvested restricted stock, RSUs and DSUs. The
cost is expected to be recognized over a weighted-average period of 2.6 years.
14. EMPLOYEE BENEFIT PLANS
401(k) Plan
The Company has qualified profit sharing plans under Section 401(k) of the Internal Revenue Code. Pursuant to the 401(k) plan, the
Company matches employee contributions at a rate of 50% of the first 5% up to the statutory maximum of $5,500 per employee. Company
contributions to the 401(k) plan were $2.1 million, $2.1 million and $1.6 million for 2008, 2007 and 2006, respectively.
Supplemental Executive Retirement Plan
As a result of the AmSan acquisition, the Company has a supplemental executive retirement plan ("AmSan SERP"). The AmSan SERP is a
nonqualified plan that covers three AmSan employees. Upon adoption of FAS 158, Employers' Accounting for Defined Benefit Pension and
Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106, and 132(R), ("FAS 158") the Company decreased the
liability associated with the AmSan SERP as of December 29, 2006 by $0.1 million and recorded the unrecognized gain in accumulated other
comprehensive income. The projected benefit obligation for the AmSan SERP as of December 26, 2008 and December 28, 2007 was $0.5 million
and $0.6 million, respectively, and is included in other liabilities on the Company's consolidated balance sheet. The Company does not fund
this liability and no assets are held by the AmSan SERP. The accumulated benefit obligation for the AmSan SERP as of December 26, 2008 and
December 28, 2007 was $0.5 million and $0.6 million, respectively.
F-30
Table of Contents

14. EMPLOYEE BENEFIT PLANS (Continued)
The reconciliation of the projected benefit obligation for the AmSan SERP is as follows (in thousands):
Ye ar En de d
De ce m be r 26, 2008
Beginning projected benefit obligation

Service cost
Interest cost
Prior service cost
Cash benefits paid
Ending projected benefit obligation
570
17
30
(80)
537
De ce m be r 28, 2007
Pe riod from
Ju ly 3,
2006 to
De ce m be r 29,
2006
435 $
28
28
126
(47)
570 $
402
22
11
435
The components of net periodic benefit cost are as follows (in thousands):
Ye ar En de d
De ce m be r 26, 2008
Service cost
Interest cost
Gain recognized
Prior service cost
Net periodic benefit cost
17
30
(31)
41
57
De ce m be r 28, 2007
Pe riod from
Ju ly 3,
2006 to
De ce m be r 29,
2006
28 $
28
(31)
33
58 $
22
11
(15)
4
22
The weighted-average assumptions used to determine the projected benefit obligation and the net periodic benefit cost are as follows:
De ce m be r 26, 2008
Discount rate
Rate of compensation increase
5.5%
0.0%
F-31
De ce m be r 28, 2007
5.5%
0.0%
Table of Contents

14. EMPLOYEE BENEFIT PLANS (Continued)
The following benefit payments are expected to be paid under the AmSan SERP (in thousands):
Fiscal Ye ar
2009
2010
2011
2012
2013
Thereafter
$ 80
80
80
80
80
269
$669
The Company has one whole-life insurance policy for each AmSan employee covered by the AmSan SERP. The cash surrender value of
these policies as of December 26, 2008 and December 28, 2007 was $0.4 million and $0.6 million, respectively, and is included in other assets on
the Company's consolidated balance sheet.
Deferred Compensation Plan
As a result of the AmSan acquisition, the Company has a nonqualified deferred compensation plan ("AmSan DCP"). Contributions and
interest expense for the AmSan DCP for 2008, 2007 and for the period from July 3, 2006 to December 29, 2006 were immaterial. Payments under
the AmSan DCP were immaterial during 2008 and $0.2 million during 2007. There were no payments during the period from July 3, 2006 to
December 29, 2006. The liability for the AmSan DCP as of December 26, 2008 and December 28, 2007 was $0.2 million and $0.2 million,
respectively, and is included in other liabilities on the Company's consolidated balance sheet. The Company does not fund this liability and no
assets are held by the AmSan DCP.
The following benefit payments, including interest and estimated future contributions, are expected to be paid under the AmSan DCP (in
thousands):
Fiscal Ye ar
2009
2010
2011
2012
2013
Thereafter
$ 26
26
26
26
26
104
$234
F-32
Table of Contents

15. COMMITMENTS AND CONTINGENCIES
Lease Commitments
The Company leases its facilities under operating and capital leases expiring at various dates through 2019. Minimum future rental
payments under these operating and capital leases as of December 26, 2008 are as follows (in thousands):

Fiscal Ye ar
O pe ratin g
C apital
2009
2010
2011
2012
2013
Thereafter
Total payments
$ 20,000
15,313
11,430
9,159
6,108
17,750
$ 79,760
$ 279
234
4
517
Less: Amount representing interest

Present value of minimum lease payments
Less: Current portion
(52)
465
(239)
$ 226
In connection with the Copperfield acquisition, the Company leases an office building from an entity in which an employee and his family
hold an ownership interest in the property. This lease was amended in November 2005 and will expire on November 30, 2010, with an option to
extend for one additional five year term. Minimum annual rent payable under this lease is $0.2 million, plus all real estate taxes and
assessments, and all operating costs related to the building. The total rent expense for this lease was $0.2 million for 2008, 2007 and 2006. The
Company believes that the terms of the lease are no less favorable to it than could be obtained from an unaffiliated party.
In connection with the AmSan acquisition, the Company leases five properties from entities in which employees and their families hold an
ownership interest. Two of these leases expired on December 31, 2008 and the remaining three leases expire on March 25, 2009, March 31, 2009
and January 31, 2013, respectively. Minimum annual rent payable under these leases is $1.4 million, including all real estate taxes and
assessments, plus all operating costs related to the properties. The total rent expense for these leases was $1.3 million for 2008, $1.3 million for
2007 and $0.6 million for the period from July 3, 2006 to December 29, 2006. The Company believes that the terms of these leases are no less
favorable to it than could be obtained from unaffiliated parties.
Rent expense under all operating leases was $34.9 million, $32.4 million, and $25.1 million for 2008, 2007 and 2006, respectively. Certain of
the leases provide that the Company pays taxes, insurance and other operating expenses applicable to the leased premises.
Employment Agreement
The Company has employment agreements of various dates through 2010 with certain officers and employees, unless terminated earlier by
the Company, at combined salaries of $5.4 million, plus bonuses and subject to adjustments.
F-33
Table of Contents

15. COMMITMENTS AND CONTINGENCIES (Continued)
Contingent Liabilities
As of December 26, 2008 and December 28, 2007, the Company was contingently liable for unused letters of credit aggregating $8.3 million
and $12.1 million, respectively.
Legal Proceedings
The Company is involved in various legal proceedings in the ordinary course of its business that are not anticipated to have a material
adverse effect on the Company's results of operations or financial position.
16. INTEREST AND OTHER INCOME
Interest and other income consisted of the following during 2008, 2007 and 2006 (in thousands):
De ce m be r 26, 2008
Interest income
Other income
1,105
1,093
2,198
Ye ar En de d
De ce m be r 28, 2007
$
$
2,007
1,244
3,251
De ce m be r 29, 2006
$
$
591
606
1,197
17. INCOME TAXES

The provision for income taxes for 2008, 2007 and 2006, was as follows (in thousands):
De ce m be r 26, 2008
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign
$
21,475
3,361
469
25,305
(449)
(228)
(3)
(680)
24,625
F-34
Ye ar En de d
De ce m be r 28, 2007
26,654
4,946
344
31,944
504
15
(3)
516
32,460
De ce m be r 29, 2006
18,726
2,778
190
21,694
(2,028)
(234)
63
(2,199)
19,495
Table of Contents

17. INCOME TAXES (Continued)
The components of income before income taxes were as follows (in thousands):
De ce m be r 26, 2008
United States
Foreign
Total
$
$
64,140
1,318
65,458
Ye ar En de d
De ce m be r 28, 2007
$
$
82,490
932
83,422
De ce m be r 29, 2006
$
$
49,908
772
50,680
The reconciliation of the provision for income taxes at the federal statutory tax rate to the provision for income taxes is as follows:
De ce m be r 26, 2008
Federal statutory tax rate

State income taxes, net of federal benefit
Non-deductible expenses
Derecognition of uncertain tax positions
Tax exempt interest
Foreign income taxes
Other
35.00%
4.03
0.37
(1.21)
(0.50)
0.01
(0.08)
37.62%
Ye ar En de d
De ce m be r 28, 2007
35.00%
3.87
0.36
(0.28)
0.02
(0.06)
38.91%
De ce m be r 29, 2006
35.00%
3.10
0.56
(0.03)
(0.16)
38.47%
Deferred income taxes result primarily from temporary differences in the recognition of certain expenses for financial and income tax
reporting purposes. The components of the Company's deferred
F-35
Table of Contents

tax assets and liabilities as of December 26, 2008 and December 28, 2007 consist of the following (in thousands):
De ce m be r 26, 2008
Deferred tax assets:

Inventory
Bad debt reserves
Closing costs accrual
Vacation accrual
Vendor discounts
Other
Total deferred tax assets
Deferred tax liabilities:
Identifiable intangibles
Depreciation
Other
Total deferred tax liabilities
Net deferred tax liabilities
7,413
4,723
809
987
2,790
7,728
24,450
(37,144)
(4,190)
(1,316)
(42,650)
(18,200)
De ce m be r 28, 2007
5,110
2,894
1,685
984
2,062
7,561
20,296
(35,727)
(1,591)
(970)
(38,288)
(17,992)
The Company files numerous consolidated and separate income tax returns in the United States Federal jurisdiction and in many state and
foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal income tax examinations for years before 2004 and
is no longer subject to state and local, or foreign income tax examinations by tax authorities for years before 2003.
Effective December 30, 2006, the Company adopted the provisions of FIN 48. FIN 48 clarifies the accounting for uncertainty in income
taxes recognized in accordance with FASB Statement No. 109, Accounting for Income Taxes, ("FAS 109"). FIN 48 clarifies the application of
FAS 109 by defining criteria that an individual tax position must meet for any part of the benefit of that position to be recognized in the
financial statements. Additionally, FIN 48 provides guidance on the measurement, derecognition, classification and disclosure of tax positions,
along with accounting for the related interest and penalties. The Company recognizes potential accrued penalties and accrued interest related
to unrecognized tax benefits within its statements of earnings as selling, general and administrative expenses and interest expense,
respectively. To the extent penalties and interest are not assessed with respect to uncertain tax positions, amounts accrued will be reduced
and reflected as a reduction of selling, general and administrative expenses and interest expense, respectively.
As a result of the adoption of FIN 48, the Company recognized an increase of $0.8 million, in the liability for unrecognized tax benefits,
including penalties and interest, net of tax, which was accounted for as an increase to the December 30, 2006 balance of accumulated deficit.
As of the date of adoption and after the impact of recognizing the increase in liability noted above, the Company's liability for unrecognized tax
benefits totaled $1.4 million, including penalties and interest, net of tax. Of this $1.4 million, $1.0 million, net of tax, represented the amount of
unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate. In conjunction with the adoption of
F-36
Table of Contents

FIN 48, the Company accrued $0.4 million of penalties and interest at December 30, 2006 which is included as a component of the $1.4 million
liability for unrecognized tax benefits noted above.
During 2008, the Company reduced the liability for unrecognized tax benefits related to certain state income tax matters as a result of
favorable resolutions in two states. Of the $2.1 million reduction, $1.5 million was related to gross unrecognized tax benefits and $0.3 million
and $0.3 million was related to interest and penalties, respectively. Of these amounts, $0.8 million reduced the Company's effective tax rate. A
reconciliation of the gross beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
Additions for tax positions taken during prior years
Additions for tax positions taken during prior years
Settlements with taxing authorities
$ 1,478
307
1,785
43
(1,508)
$ 320
The Company does not anticipate that total unrecognized tax benefits will significantly change prior to December 25, 2009.
During 2008 and 2007, the Company recognized less than $0.1 million and $0.1 million, respectively, in potential penalties and interest
associated with uncertain tax positions. As December 26, 2008 and December 28, 2007, the Company's liability for unrecognized tax benefits
that, if recognized, would favorably affect the effective income tax rate was $0.2 million and $1.1 million, respectively, net of tax. As of
December 26, 2008 and December 28, 2007, the Company had $0.1 million and $0.5 million, respectively, accrued for the potential payment of
penalties and interest associated with uncertain tax positions, net of tax.
18. GUARANTOR SUBSIDIARIES
In June 2006, Interline New Jersey (the "Subsidiary Issuer") issued $200.0 million of 81/8% senior subordinated notes due 2014 and
entered into a $330.0 million bank credit facility (see Note 11. Debt). The 81/8% senior subordinated notes and the bank credit facility are fully
and unconditionally guaranteed, jointly and severally, on a subordinated basis by the Company (the "Parent Company") and all of Interline
New Jersey's 100% owned domestic subsidiaries: Wilmar Holdings, Inc., Wilmar Financial, Inc., Glenwood Acquisition LLC, AmSan LLC and
Eagle Maintenance Supply, Inc. (the "Guarantor Subsidiaries"). The guarantees by the subsidiary guarantors are senior to any of their existing
and future subordinated obligations, equal in right of payment with any of their existing and future senior subordinated indebtedness and
subordinated to any of their existing and future senior indebtedness.
The Company is a holding company whose only asset is the stock of its subsidiaries. The Company conducts virtually all of its business
operations through Interline New Jersey. Accordingly, the Company's only material sources of cash are dividends and distributions with
respect to its ownership interests in Interline New Jersey that are derived from the earnings and cash flow generated by Interline New Jersey.
Through December 26, 2008, no dividends have been paid.
F-37
Table of Contents

18. GUARANTOR SUBSIDIARIES (Continued)
The following tables set forth, on a condensed consolidating basis, the balance sheets, statements of operations and statements of cash
flows for the Parent Company, Subsidiary Issuer and Guarantor Subsidiaries for all financial statement periods presented in the Company's
consolidated financial statements. The Subsidiary Issuer does not allocate integration expenses, corporate overhead or other expenses for
shared services to the Guarantor Subsidiaries; therefore, the following tables do not reflect any such allocation.
CONDENSED CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 26, 2008
(in thousands)
Pare n t
C om pany
(Gu aran tor)
AS S ETS
Current Assets:
Inventory
Intercompany receivable
Other current assets
T otal current assets

P roperty and equipment, net
Goodwill
Investment in subsidiaries
Other assets
S u bsidiary
Issu e r
420,073
T otal assets
LIABILITIES AND S HAREHO LDERS '
EQ UITY
Accounts payable
Intercompany payable
Debt and capital leaseshort-term
61,741
110,964
188,622
40,448
Gu aran tor
S u bsidiarie s
401,775
42,730
246,657
90,035
294,476
1,839
C on solidating
Adjustm e n ts
983
28,558
22,578
123,615
2,898
178,632
3,303
70,460
42,752
8,280
C on solidate d
(123,615)
(123,615)
(714,549)
62,724
139,522
211,200
43,346
456,792
46,033
317,117
132,787
10,119
420,073
1,077,512
303,427
(838,164)
962,848
68,552
26,506
123,615
1,859
5,960
(297)
(123,615)
68,255
32,466
1,864
T otal current liabilities
220,532
5,965
399,707
37,497
2,284
702
T otal liabilities
657,736
8,951
(123,912)
542,775
Senior preferred stock
660,236
(660,236)
Long-T erm Liabilities:

T erm debt and capital leaselong-term
Other liabilities
Shareholders' equity (deficit)
420,073
T otal liabilities and shareholders' equity
420,073
(240,460)
$
1,077,512
(123,912)
294,476
$
303,427
Table of Contents

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 28, 2007
(in thousands)
401,991
38,199
(54,016)
$
F-38
102,585
(838,164)
420,073
$
962,848

Pare n t
C om pany
(Gu aran tor)
AS S ETS
Current Assets:
Short-term investments
Inventory
Intercompany receivable
Other current assets
T otal current assets

P roperty and equipment, net
Goodwill
Investment in subsidiaries
Other assets
S u bsidiary
Issu e r
377,414
T otal assets
LIABILITIES AND S HAREHO LDERS '
EQ UITY
Accounts payable
Intercompany payable
Debt and capital leaseshort-term
7,564
48,540
127,482
172,431
34,612
Gu aran tor
S u bsidiarie s
390,629
34,188
247,198
95,403
260,200
1,710
C on solidating
Adjustm e n ts
18
27,089
18,543
113,867
4,411
163,928
2,943
66,264
41,331
9,714
C on solidate d
(2,607)
(113,867)
(116,474)
(637,614)
4,975
48,540
154,571
190,974
39,023
438,083
37,131
313,462
136,734
11,424
377,414
1,029,328
284,180
(754,088)
936,834
49,770
37,281
113,867
2,508
12,996
6,905
10
(2,607)
(113,867)
60,159
44,186
2,518
T otal current liabilities
203,426
19,911
413,465
35,023
3,289
780
T otal liabilities
651,914
23,980
(116,474)
559,420
Senior preferred stock
575,571
(575,571)
Long-T erm Liabilities:

T erm debt and capital leaselong-term
Other liabilities
Shareholders' equity (deficit)
377,414
T otal liabilities and shareholders' equity
377,414
(198,157)
$
1,029,328
(116,474)
260,200
$
284,180
Table of Contents

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
(in thousands)
416,754
35,803
(62,043)
$
F-39
FOR THE YEAR ENDED DECEMBER 26, 2008
106,863
(754,088)
377,414
$
936,834

Pare n t
C om pany
(Gu aran tor)
Net sales
Cost of sales
Gross profit
Operating Expenses:
Selling, general and administrative
expenses
Equity earnings of subsidiaries
Operating income
Gain on extinguishment of debt, net
Interest and other (expense) income, net
Net income
Net income (loss) attributable to common
stockholders
(1)
S u bsidiary
Issu e r
916,403
570,747
345,656
Gu aran tor
S u bsidiarie s(1)
279,260
175,290
103,970
C on solidating
Adjustm e n ts
C on solidate d
$ 1,195,663
746,037
449,626
(65,458)
(65,458)
65,458
286,141
14,008
(24,597)
275,552
70,104
57,652
2,858
60,510
43,460
90,055
90,055
(90,055)
343,793
16,866
360,659
88,967
65,458
24,625
40,833
2,775
(22,352)
50,527
9,694
40,833
(84,665)
(2,577)
40,883
14,931
25,952
(1,355)
(91,410)
(24,625)
(66,785)
84,665
2,775
(26,284)
65,458
24,625
40,833
40,833
(43,832)
25,952
17,880
The Subsidiary Issuer does not allocate integration expenses, corporate overhead or other expenses for shared services to the
Guarantor Subsidiaries; therefore, the results for the Guarantor Subsidiaries do not reflect any such allocation.
F-40
Table of Contents

(in thousands)
40,833

Pare n t
C om pany
(Gu aran tor)
Net sales
Cost of sales
Gross profit
Operating Expenses:
Selling, general and administrative
expenses
Operating income
Net income
Net income (loss) attributable to common
stockholders
(1)
S u bsidiary
Issu e r
974,430
602,115
372,315
Gu aran tor
S u bsidiarie s(1)
264,597
163,022
101,575
C on solidating
Adjustm e n ts
C on solidate d
$ 1,239,027
765,137
473,890
(83,422)
(83,422)
83,422
286,833
11,857
(21,632)
277,058
95,257
58,464
2,642
61,106
40,469
105,054
105,054
(105,054)
345,297
14,499
359,796
114,094
83,422
32,460
50,962
(24,423)
70,834
19,872
50,962
(73,808)
(5,013)
35,456
12,588
22,868
(1,236)
(106,290)
(32,460)
(73,830)
73,808
(30,672)
83,422
32,460
50,962
50,962
(22,846)
22,868
(22) $
F-41
Table of Contents

(in thousands)
50,962

Pare n t
C om pany
(Gu aran tor)
Net sales
Cost of sales
Gross profit
Operating Expenses:
Selling, general and administrative expenses
Operating income
Loss on extinguishment of debt
Net income
Net income (loss) attributable to
common stockholders
(1)
S u bsidiary
Issu e r
Gu aran tor
S u bsidiarie s(1)
C on solidating
Adjustm e n ts
$ 937,818
579,020
358,798
129,752
79,678
50,074
C on solidate d
$ 1,067,570
658,698
408,872
(50,680)
(50,680)
50,680
255,448
13,075
(16,790)
251,733
107,065
37,304
1,352
38,656
11,418
67,470
67,470
(67,470)
292,752
14,427
307,179
101,693
50,680
19,495
31,185
(20,843)
(44,945)
41,277
10,092
31,185
(64,343)
15,381
26,799
9,403
17,396
(606)
(68,076)
(19,495)
(48,581)
64,343
(20,843)
(30,170)
50,680
19,495
31,185
31,185
$ (33,158)
17,396
15,762
31,185
F-42
Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(in thousands)

Pare n t
C om pany
(Gu aran tor)
Net cash provided by (used in) operating

activities
Proceeds from sales and maturities of shortterm investments
Other
Net cash provided by (used in) investing
activities
Decrease in purchase card payable, net
Repayment of debt and capital lease
obligations
Repayment of 81/8% senior subordinated
notes
Other
Net cash (used in) provided by financing
activities
Effect of exchange rate changes on cash and
cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of
period
S u bsidiary
Issu e r
67,731
Gu aran tor
S u bsidiarie s
C on solidating
Adjustm e n ts
(11,539)
C on solidate d
56,192
(19,073)
(35,531)
(1,509)
(20,582)
(35,531)
84,071
(10,219)
(14,047)
(24)
14,047
84,071
(10,243)
5,201
(1,533)
14,047
17,715
(2,909)
(2,909)
(2,694)
(10)
(2,704)
(9,984)
(247)
14,047
(14,047)
(9,984)
(247)
(15,834)
14,037
(14,047)
(15,844)
(314)
56,784
965
7,564
64,348
18
983
F-43
Table of Contents

(in thousands)
(2,607)
(2,607)
(314)
57,749
4,975
62,724

Proceeds from sales and maturities of short-term investments
Other
Net cash (used in) provided by investing activities
Repayment of debt and capital lease obligations
Other
Net cash provided by (used in) financing activities
Pare n t
C om pany
(Gu aran tor)
S u bsidiary
Issu e r
Gu aran tor
S u bsidiarie s
C on solidating
Adjustm e n ts
59,384
(993)
C on solidate d
(661) $
(13,475)
(168,962)
120,422
(974)
(2,543)
(65,532)
(1,431)
209
(1,222)
2,543
2,543
(2,595)
(34)
7,395
4,766
163
(1,219)
8,783
7,564
(325)
2,543
2,218
3
15
18
(2,543)
(2,543)
(661)
(1,946)
(2,607) $
57,730
(14,906)
(168,962)
120,422
(765)
(64,211)
(2,920)
(34)
7,395
4,441
163
(1,877)
6,852
4,975
F-44
Table of Contents

(in thousands)

Net cash (used in) provided by investing activities
Repayment of debt and capital lease obligations
Payment of tender and redemption premiums
Proceeds from issuance of 81/8% senior subordinated notes, net
of discount
Proceeds from issuance of term debt
Other
Net cash provided by (used in) financing activities
Pare n t
C om pany
(Gu aran tor)
S u bsidiary
Issu e r
Gu aran tor
S u bsidiarie s
C on solidating
Adjustm e n ts
C on solidate d
$
F-45
Table of Contents
25,512
4,434
29,946
(7,610)
(133,727)
(141,337)
(203)
2,242
2,039
(7,813)
(131,485)
(139,298)
(163,407)
(130,000)
(13,663)
(40)
(163,447)
(130,000)
(13,663)
198,566
230,000
(9,724)
8,260
120,032
20
4,227
2,610
$
6,837
(6,766)
(6,806)
(333)
348
15
198,566
230,000
(9,724)
1,494
113,226
20
3,894
2,958
6,852

19. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of our quarterly results of operations for 2008 and 2007 (in thousands, except per share amounts):
First
2008
Net sales
Gross profit
Net income
Earnings Per Share:
Basic
Diluted
2007
Net sales
Gross profit
Net income
Earnings Per Share:
Basic
Diluted
Q u arte r
S e con d
Th ird
Fourth
$289,146
110,050
8,674
$311,429
115,800
11,175
$317,504
120,936
13,736
$277,584
102,840
7,248
$
$
$
$
$
$
$
$
0.27
0.27
0.35
0.34
0.42
0.42
0.22
0.22
$295,403
112,294
9,440
$313,247
117,967
11,975
$330,193
125,428
15,988
$300,184
118,201
13,559
$
$
$
$
$
$
$
$
0.29
0.29
0.37
0.37
0.50
0.49
0.42
0.41
20. SUBSEQUENT EVENT

Subsequent to December 26, 2008, the Company repurchased $25.4 million of its 81/8% senior subordinated notes at an average of
95.267% of par, or $24.2 million, net of transaction costs. In connection with the repurchase of the 81/8% senior subordinated notes, the
Company recorded a gain on the extinguishment of debt of $0.9 million, net of $0.3 million in original issue discount and deferred financing
costs written-off, in the first quarter of 2009.
F-46
Exhibit 10.6
2004 EQUITY INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
, 200
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the Agreement) is made and entered into this
day of
(the Date of Grant) by and between Interline Brands, Inc. (the Company) and
(the Optionee).
W I T N E S S E T H:
1.
Grant of Option.
(a)
The Option. The Company hereby grants to the Optionee an option (the Option) to purchase
shares of Common Stock on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan. This
Option is not intended to be treated as an Incentive Stock Option, as such term is defined in Section 422 of the Internal Revenue Code of 1986,
as amended.
(b)
Incorporation by Reference, Etc. The provisions of the Plan are hereby incorporated herein by reference.
Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any
capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Plan.
2.
Terms and Conditions.
(a)
Purchase Price. The price at which the Optionee shall be entitled to purchase shares of Common Stock
upon the exercise of all or any portion of this Option shall be $
per share. Shares of Common Stock acquired upon the exercise of the
Option shall hereinafter be referred to as Option Shares.
(b)
Expiration Date. The Option shall expire at 11:59 p.m. Eastern Standard Time on the seventh anniversary
of the Date of Grant (the Expiration Date).
(c)
Exercisability of Option. Subject to the Optionees continued employment with the Company or an
Affiliate, the Option shall become vested and exercisable as to twenty-five percent (25%) of the Option Shares subject thereto on each of the
first, second, third and fourth anniversaries of the Date of Grant.
(d)
Method of Exercise. The Option may be exercised only by written notice, in a form to be provided by the
Committee, and delivered to the Company in person or sent by mail in accordance with Section 4(a) hereof and, in either case,
accompanied by payment therefor. The Option Price shall be payable (i) in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised (including by means of attestation of ownership of a sufficient number of shares of Stock in lieu of actual delivery
of such shares to the Company), (ii) in the discretion of the Committee, either (A) in other property having a fair market value on the date of
exercise equal to the Option Price or (B) by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly
to the Company an amount of loan proceeds, or proceeds from the sale of the Option Shares subject to the Option, sufficient to pay the Option
Price or (iii) by such other method as the Committee may allow. Notwithstanding the foregoing, in no event shall an Optionee be permitted to
exercise an Option in the manner described in clause (ii) of the preceding sentences if the Committee determines that exercising an Option in
such manner would violate the Sarbanes-Oxley Act of 2002, any other applicable law or the applicable rules and regulations of the Securities
and Exchange Commission, the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the
securities of the Company or any of its Affiliates are listed or traded.
(e)
Exercise Upon Termination of Employment. In the event that the Optionee ceases to be employed by the
Company and its Affiliates the Option held by the Optionee (to the extent then outstanding) shall terminate as follows:
(i)
Without Cause or by the Optionee. If the Company or its Affiliates terminates the Optionees
employment with the Company or its Affiliates without Cause (other than due to Disability) or the Optionee resigns for Good
Reason (as such term is defined in any employment agreement entered into by and between the Company and the Optionee in effect
on the Date of Grant), then the unvested portion of the Option shall expire on the date of termination and the vested portion of the
Option shall remain exercisable by the Optionee through the earlier of (x) the Expiration Date or (y) a period of one-hundred twenty
(120) days following such termination of employment, and shall thereafter terminate without further consideration to the Optionee. If
the Optionees employment with the Company or its Affiliates is terminated by the Optionee without Good Reason (other than due to
Retirement), the unvested portion of the Option shall expire on the date of termination and the vested portion of the Option shall
remain exercisable by the Optionee through the earlier of (x) the Expiration Date or (y) a period of ninety (90) days following such
termination of employment, and shall thereafter terminate without further consideration to the Optionee.
(ii)
For Cause. If the Optionees employment with the Company or its Affiliates is terminated by the
Company or its Affiliates for Cause, then the both the unvested and the vested portions of the Option shall terminate and expire on
the date of such termination of employment without further consideration to the Optionee.
(iii)
Death or Disability. If the Optionees employment with the Company or its Affiliates is
terminated due to the Optionees death or by
2
the Company due to Disability, then the unvested portion of the Option shall immediately vest on the date of termination and the
Option shall remain exercisable by the Optionee (or the Optionees estate or beneficiary, as applicable) through the earlier of (x) the
Expiration Date or (y) the first anniversary of such date of termination.
(iv)
Retirement. If the Optionees employment with the Company or its Affiliates is terminated due to
the Optionees Retirement (as defined below), then the unvested portion of the Option shall continue to vest in accordance with
Section 2(c) of this Agreement; provided, however, that Optionee has been employed by the Company for at least one year from the
Date of Grant, and each portion of the Option once vested shall remain exercisable by the Optionee through the earlier of (x) the
Expiration Date or (y) a period of one-hundred twenty (120) days following the fourth anniversary of the Date of Grant; provided,
however, that (y) shall not be less than one year from the date of Optionees Retirement. For purposes of this Agreement, Retirement
shall mean the voluntary termination of an Optionees employment by the Company after the Optionee is fifty-five (55) years of age
and has at least ten (10) years of service with the Company.
(f)
Transferability. The Option may not be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by the Optionee other than by will or by the laws of descent and distribution, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company; provided, that, the
designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such
permitted transfer of the Option to heirs or legatees of the Optionee shall be effective to bind the Company unless the Committee shall have
been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and conditions hereof. During the Optionees lifetime, the Option is
exercisable only by the Optionee or Optionees legal representative.
(g)
Rights as Stockholder. The Optionee shall not be deemed for any purpose to be the owner of any of the
Option Shares subject to this Option unless, until and to the extent that (i) the Option shall have been exercised pursuant to its terms and
(ii) the Company shall have issued and delivered to the Optionee the Option Shares.
3.
Withholding Taxes.
(a)
As a condition of the exercise of the Option, the Optionee shall pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local taxes of any kind required by law to be withheld upon the
exercise of the Option and the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any
kind otherwise due to
3
the Optionee, federal, state and local taxes of any kind required by law to withheld upon the exercise of the Option.
(b)
Without limiting the generality of clause (a) above, the Optionee may satisfy, in whole or in part, the
foregoing withholding liability (but no more than the minimum required withholding liability) by having the Company withhold from the Option
Shares otherwise issuable pursuant to the exercise of the Option a number of shares with a Fair Market Value equal to such withholding
liability.
4.
Miscellaneous.
(a)
Notices. Any and all notices, designations, consents, offers, acceptances and any other communications
provided for herein shall be given in writing and shall be delivered either personally or by registered or certified mail, postage prepaid, which
shall be addressed, in the case of the Company to the Secretary of the Company at the principal office of the Company and, in the case of the
Optionee, to Optionees address appearing on the books of the Company or to Optionees residence or to such other address as may be
designated in writing by the Optionee.
(b)
No Right to Continued Employment. Nothing in the Plan or in this Agreement shall confer upon the
Optionee any right to continue in the employ of the Company or its Affiliates shall interfere with or restrict in any way the right of the
Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Optionee at any time for any reason
whatsoever.
(c)
Bound by Plan. By signing this Agreement, the Optionee acknowledges that Optionee has received a
copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.
(d)
Successors. The terms of this Agreement shall be binding upon and inure to the benefit of the Company,
its successors and assigns, and of the Optionee and the beneficiaries, executors, administrators, heirs and successors of the Optionee.
(e)
Invalid Provision. The invalidity or unenforceability of any particular provision hereof shall not affect the
other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.
(f)
Modifications. No change, modification or waiver of any provision of this Agreement shall be valid
unless the same be in writing and signed by the parties hereto.
(g)
Entire Agreement. This Agreement and the Plan contain the agreement and understanding of the parties
hereto with respect to the subject matter contained herein and therein and supersede all prior communications, representations and
negotiations in respect thereto.
4
(h)
Governing Law. This Agreement and the rights of the Optionee hereunder shall be construed and
determined in accordance with the laws of the State of New York.
(i)
Headings. The headings of the Sections hereof are provided for convenience only and are not to serve as
a basis for interpretation or construction, and shall not constitute a part, of this Agreement.
(j)
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
[Signature page follows]
5
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto on the date set forth above.
By:
Name:
Title:
By:
Optionee
Address:
Exhibit 10.7
NONQUALIFIED STOCK OPTION AGREEMENT
, 200
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the Agreement) is made and entered into this
day of
(the Date of Grant) by and between Interline Brands, Inc. (the Company) and
(the Optionee).
W I T N E S S E T H:
1.
Grant of Option.
(a)
The Option. The Company hereby grants to the Optionee an option (the Option) to purchase
shares of Common Stock on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan. This
Option is not intended to be treated as an Incentive Stock Option, as such term is defined in Section 422 of the Internal Revenue Code of 1986,
as amended.
(b)
Incorporation by Reference, Etc. The provisions of the Plan are hereby incorporated herein by reference.
Except as otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any
capitalized terms not otherwise defined in this Agreement shall have the meaning set forth in the Plan.
2.
(a)
Purchase Price. The price at which the Optionee shall be entitled to purchase shares of Common Stock
upon the exercise of all or any portion of this Option shall be $
per share. Shares of Common Stock acquired upon the exercise of the
Option shall hereinafter be referred to as Option Shares.
(b)
Expiration Date. The Option shall expire at 11:59 p.m. Eastern Standard Time on the seventh anniversary
of the Date of Grant (the Expiration Date).
(c)
Exercisability of Option. Subject to the Optionees continued employment with the Company or an
Affiliate, the Option shall become vested and exercisable as to twenty-five percent (25%) of the Option Shares subject thereto on each of the
first, second, third and fourth anniversaries of the Date of Grant.
(d)
Method of Exercise. The Option may be exercised only by written notice, in a form to be provided by the
Committee, and delivered to the Company in person or sent by mail in accordance with Section 4(a) hereof and, in either case,
accompanied by payment therefor. The Option Price shall be payable (i) in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised (including by means of attestation of ownership of a sufficient number of shares of Stock in lieu of actual delivery
of such shares to the Company), (ii) in the discretion of the Committee, either (A) in other property having a fair market value on the date of
exercise equal to the Option Price or (B) by delivering to the Committee a copy of irrevocable instructions to a stockbroker to deliver promptly
to the Company an amount of loan proceeds, or proceeds from the sale of the Option Shares subject to the Option, sufficient to pay the Option
Price or (iii) by such other method as the Committee may allow. Notwithstanding the foregoing, in no event shall an Optionee be permitted to
exercise an Option in the manner described in clause (ii) of the preceding sentences if the Committee determines that exercising an Option in
such manner would violate the Sarbanes-Oxley Act of 2002, any other applicable law or the applicable rules and regulations of the Securities
and Exchange Commission, the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the
securities of the Company or any of its Affiliates are listed or traded.
(e)
Exercise Upon Termination of Employment. In the event that the Optionee ceases to be employed by the
Company and its Affiliates the Option held by the Optionee (to the extent then outstanding) shall terminate as follows:
(i)
Without Cause or by the Optionee. If the Company or its Affiliates terminates the Optionees
employment with the Company or its Affiliates without Cause (other than due to Disability), then the unvested portion of the Option
shall expire on the date of termination and the vested portion of the Option shall remain exercisable by the Optionee through the
earlier of (x) the Expiration Date or (y) a period of one-hundred twenty (120) days following such termination of employment, and shall
thereafter terminate without further consideration to the Optionee. If the Optionees employment with the Company or its Affiliates is
terminated by the Optionee for any reason (other than due to Retirement), the unvested portion of the Option shall expire on the date
of termination and the vested portion of the Option shall remain exercisable by the Optionee through the earlier of (x) the Expiration
Date or (y) a period of ninety (90) days following such termination of employment, and shall thereafter terminate without further
consideration to the Optionee.
(ii)
For Cause. If the Optionees employment with the Company or its Affiliates is terminated by the
Company or its Affiliates for Cause, then the both the unvested and the vested portions of the Option shall terminate and expire on
the date of such termination of employment without further consideration to the Optionee.
(iii)
Death or Disability. If the Optionees employment with the Company or its Affiliates is
terminated due to the Optionees death or by the Company due to Disability, then the unvested portion of the Option shall
immediately vest on the date of termination and the Option shall remain exercisable by the Optionee (or the Optionees estate or
beneficiary, as
2
applicable) through the earlier of (x) the Expiration Date or (y) the first anniversary of such date of termination.
(iv)
Retirement. If the Optionees employment with the Company or its Affiliates is terminated due to
the Optionees Retirement (as defined below), then the unvested portion of the Option shall continue to vest in accordance with
Section 2(c) of this Agreement; provided, however, that Optionee has been employed by the Company for at least one year from the
Date of Grant, and each portion of the Option once vested shall remain exercisable by the Optionee through the earlier of (x) the
Expiration Date or (y) a period of one-hundred twenty (120) days following the fourth anniversary of the Date of Grant; provided,
however, that (y) shall not be less than one year from the date of Optionees Retirement. For purposes of this Agreement, Retirement
shall mean the voluntary termination of an Optionees employment by the Company after the Optionee is fifty-five (55) years of age
and has at least ten (10) years of service with the Company.
(f)
Transferability. The Option may not be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by the Optionee other than by will or by the laws of descent and distribution, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company; provided, that, the
designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such
permitted transfer of the Option to heirs or legatees of the Optionee shall be effective to bind the Company unless the Committee shall have
been furnished with written notice thereof and a copy of such evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and conditions hereof. During the Optionees lifetime, the Option is
exercisable only by the Optionee or Optionees legal representative.
(g)
Rights as Stockholder. The Optionee shall not be deemed for any purpose to be the owner of any of the
Option Shares subject to this Option unless, until and to the extent that (i) the Option shall have been exercised pursuant to its terms and
(ii) the Company shall have issued and delivered to the Optionee the Option Shares.
3.
Withholding Taxes.
(a)
As a condition of the exercise of the Option, the Optionee shall pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any federal, state or local taxes of any kind required by law to be withheld upon the
exercise of the Option and the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any
kind otherwise due to the Optionee, federal, state and local taxes of any kind required by law to withheld upon the exercise of the Option.
3
(b)
Without limiting the generality of clause (a) above, the Optionee may satisfy, in whole or in part, the
foregoing withholding liability (but no more than the minimum required withholding liability) by having the Company withhold from the Option
Shares otherwise issuable pursuant to the exercise of the Option a number of shares with a Fair Market Value equal to such withholding
liability.
4.
Miscellaneous.
(a)
Notices. Any and all notices, designations, consents, offers, acceptances and any other communications
provided for herein shall be given in writing and shall be delivered either personally or by registered or certified mail, postage prepaid, which
shall be addressed, in the case of the Company to the Secretary of the Company at the principal office of the Company and, in the case of the
Optionee, to Optionees address appearing on the books of the Company or to Optionees residence or to such other address as may be
designated in writing by the Optionee.
(b)
No Right to Continued Employment. Nothing in the Plan or in this Agreement shall confer upon the
Optionee any right to continue in the employ of the Company or its Affiliates shall interfere with or restrict in any way the right of the
Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Optionee at any time for any reason
whatsoever.
(c)
Bound by Plan. By signing this Agreement, the Optionee acknowledges that Optionee has received a
copy of the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.
(d)
its successors and assigns, and of the Optionee and the beneficiaries, executors, administrators, heirs and successors of the Optionee.
(e)
Invalid Provision. The invalidity or unenforceability of any particular provision hereof shall not affect the
other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.
(f)
Modifications. No change, modification or waiver of any provision of this Agreement shall be valid
unless the same be in writing and signed by the parties hereto.
(g)
Entire Agreement. This Agreement and the Plan contain the agreement and understanding of the parties
hereto with respect to the subject matter contained herein and therein and supersede all prior communications, representations and
negotiations in respect thereto.
(h)
Governing Law. This Agreement and the rights of the Optionee hereunder shall be construed and
determined in accordance with the laws of the State of New York.
4
(i)
(j)
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.
5
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto on the date set forth above.
By:
Name:
Title:
By:
Optionee
Address:
EXHIBIT 10.10
AMENDMENT TO RESTRICTED SHARE UNIT AWARD AGREEMENTS
WHEREAS, Interline Brands, Inc. (the Company) has previously made grants of restricted share units pursuant to the
terms of the Interline Brands, Inc. 2004 Equity Incentive Plan (as heretofore amended from time to time, the Plan) and award agreements
thereunder (the RSU Agreements);
WHEREAS, Section 11(t) of the Plan provides that if the Committee (each capitalized but undefined term shall have the
meaning ascribed to such term in the Plan) determines that any amounts payable under the Plan will be taxable to a Participant under
Section 409A of the Code and related Treasury guidance prior to payment to such Participant of such amount, the Company may adopt such
amendments to the Plan and Awards and appropriate policies and procedures that the Committee determines necessary or appropriate to
preserve the intended tax treatment of the benefits provided by the Plan and Awards thereunder and/or take such other actions as the
Committee determines necessary or appropriate to avoid or limit the imposition of an additional tax under Section 409A of the Code; and
WHEREAS, the Committee has determined that it is necessary and appropriate to make the amendment contained herein.
NOW, THEREFORE, each RSU Agreement outstanding on the date hereof is hereby amended as follows, effective as of the
date hereof:
1.
If the Participant is, or at any time prior to the last date on which it is possible to become fully vested under his or
her RSU Agreement, may become eligible to terminate employment and qualify as a retirement under the terms of such RSU Agreement (a
Retirement Eligible Participant), then (a) notwithstanding anything to the contrary in such RSU Agreement, a Change in Control shall not be
a distribution event under such RSU Agreement unless such event satisfies the definition of a change in the ownership or effective control of
a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code and
any Treasury Regulations promulgated thereunder; and (b) the phrase as soon as reasonably practicable (or words of similar import), each
time it occurs in such RSU Agreement, shall be interpreted to mean (if not followed by a more definitive time for payment): as soon as
reasonably practicable (but in no event later than ninety (90) days); provided, that if distribution is in connection with a Change in Control,
such phrase shall be interpreted to mean immediately prior to or as soon as reasonable practicable (but in no event later than fourteen (14)
days).
2.
If the Participant is not a Retirement Eligible Participant, or if the RSU Agreement does not provide for special
provisions upon retirement, then the phrase as soon as reasonably practicable (or words of similar import), each time it occurs in the RSU
Agreement, shall be interpreted to mean (if not followed by a more definitive time for payment): as soon as reasonably practicable (but in no
event later than the March 15 next occurring); provided, that if distribution is in connection with a
Change in Control, such phrase shall be interpreted to mean immediately prior to or as soon as reasonable practicable (but in no event later
than fourteen (14) days).
3.
Continuing Effect of the Agreements. Except as expressly modified hereby, the provisions of each Agreement are
and shall remain in full force and effect.
4.
Governing Law. This amendment shall be governed by, construed under, and interpreted in accordance with the
laws of the State of New York applicable to agreements made and to be wholly performed within that State, without regard to its conflict of
laws provisions or any conflict of laws provisions of any other jurisdiction which would cause the application of any law other than that of the
State of New York.

By: /s/ Michael J. Grebe
Name: Michael J. Grebe
Title: Chairman, CEO & President
2
EXHIBIT 10.11
RESTRICTED SHARE UNIT AGREEMENT
THIS RESTRICTED SHARE UNIT AGREEMENT (the Agreement) is made and entered into this
200 (hereinafter the Date of Grant) by and between Interline Brands, Inc., (the Company) and
day of
(the Participant).
R E C I T A L S:
WHEREAS, the Company has adopted the Interline Brands, Inc. 2004 Equity Incentive Plan (the Plan), pursuant to which
awards of Restricted Share Units may be granted; and
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the Committee) has determined that
it is in the best interests of the Company and its stockholders to grant to the Participant an award of Restricted Share Units as provided herein
and subject to the terms set forth herein.
NOW THEREFORE, for and in consideration of the premises and the covenants of the parties contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their
successors and assigns, hereby agree as follows:
1. Grant of Restricted Share Units. The Company hereby grants on the Date of Grant, to the Participant a total of
[
] Restricted Share Units (the Award) on the terms and conditions set forth in this Agreement and as otherwise provided in the
Plan. Such Restricted Share Units shall be credited to a separate account maintained for the Participant on the books of the Company (the
Account). On any given date, the value of each Restricted Share Unit comprising the Award shall equal the Fair Market Value of one share
of Common Stock. The Award shall vest and settle in accordance with Section 3 hereof.
2. Incorporation by Reference, Etc. The provisions of the Plan are hereby incorporated herein by reference. Except as
otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms
not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Committee shall have final authority to interpret
and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and
conclusive upon the Participant and his legal representative in respect of any questions arising under the Plan or this Agreement.
3.
(a)
Vesting, Settlement and Forfeiture. Except as otherwise provided in the Plan and this Agreement, and
contingent upon the Participants continued employment with the Company, 50% of the Restricted Share Units shall vest on the second
anniversary of the Date of Grant (the First Service-Based Vesting Date) and 50% of the Restricted Share Units shall vest on the third
anniversary of the Date of Grant (the Second Service-Based Vesting Date). On each applicable Service-Based Vesting Date, the Company
shall settle the portion of the Award that is vested on such date and shall therefore (i) issue and deliver to the Participant one share of
Common Stock for each Restricted Share Unit subject to the Award (the RSU Shares), with any fractional shares paid out in cash (and, upon
such settlement, the Restricted Share Units shall cease to be credited to the Account) and (ii) enter the Participants name as a stockholder of
record with respect to the RSU Shares on the books of the Company.
(b)
Restrictions. The Award granted hereunder may not be sold, pledged or otherwise transferred (other than
by will or the laws of decent and distribution) and may not be subject to lien, garnishment, attachment or other legal process. The Participant
acknowledges and agrees that, with respect to each Restricted Share Unit credited to his Account, he has no voting rights with respect to the
Company unless and until each such Restricted Share Unit is settled in RSU Shares pursuant to Section 3(a) hereof.
(c)
Effect of Termination of Employment.
(i)
Except as provided in subsections (ii), (iii) and (iv) of this Section 3(c), if the Participants
employment with the Company terminates prior to the Second Service-Based Vesting Date for any reason, any unvested Restricted Share
Units shall be forfeited without consideration to the Participant.
(ii)
Upon the termination of the Participants employment with the Company due to his death or by
the Company due to his Disability occurring prior to the Second Service-Based Vesting Date, all unvested Restricted Share Units shall vest
and be settled in shares of Common Stock as soon as reasonably practicable following the date of termination.
(iii)
Upon (x) the termination of the Participants employment without Cause or (y) the Participants
voluntary termination for Good Reason (as that term is defined in a written employment agreement between the Participant and the Company
in effect at the date of termination, it being understood that if there is no such employment agreement, or if the employment agreement does
not contain a definition of Good Reason, then Good Reason shall be inapplicable for purposes of this Agreement), in either case within 24
months following a Change in Control, any unvested Restricted Share Units outstanding on the date of termination shall vest and be settled in
shares of Common Stock as soon as reasonably practicable following the date of termination.
(iv)
Upon the termination of the Participants employment for Retirement (as defined below) prior to
the Second Service-Based Vesting Date, any unvested Restricted Share Units shall vest on the applicable dates on which they would
otherwise have vested in accordance with Section 3(a) had the Participants employment not so terminated, and
2
such Restricted Share Units shall be settled in shares of Common Stock as soon as reasonably practicable (but in no event later than 30 days)
following each such applicable date.
For purposes of this Agreement, Retirement shall mean the voluntary termination of a
Participants employment by the Company after the Participant is fifty-five (55) years of age and has at least ten (10) years of service with the
Company.
(d)
Dividends. If on any date dividends are paid on shares of Common Stock (Shares) underlying the
Award (the Dividend Payment Date), then the number of Restricted Share Units credited to the Account shall, as of the Dividend Payment
Date, be increased by that number of Restricted Share Units equal to: (a) the product of (i) the number of Restricted Share Units in the
Account as of the Dividend Payment Date and (ii) the per Share cash amount of such dividend (or, in the case of a dividend payable in
Shares or other property, the per Share equivalent cash value of such dividend as determined in good faith by the Committee) divided by
(b) the Fair Market Value of a Share on the Dividend Payment Date. Such additional Restricted Share Units shall also be subject to the
restrictions in Section 3(b) and the other terms and conditions of this Agreement.
(e)
Change in Control. Notwithstanding anything in the Plan to the contrary, in the event the Award is not
assumed or replaced by an award of equivalent value upon a Change in Control which occurs prior to the Second Service-Based Vesting
Date, then upon the Change in Control all of the Restricted Share Units shall vest immediately prior to the Change in Control, and such
Restricted Share Units shall be settled in shares of Common Stock (or the cash equivalent thereof) as soon as reasonably practicable
following the Change in Control.
(f)
Taxes and Withholding. Upon the settlement of the Award in accordance with Section 3(a) hereof, the
Participant shall recognize taxable income in respect of the Award and the Company shall report such taxable income to the appropriate taxing
authorities in respect of the Award as it determines to be necessary and appropriate. Upon the settlement of the Award in RSU Shares, the
Participant shall be required as a condition of such settlement to pay to the Company by check or wire transfer the amount of any income,
payroll, or social tax withholding that the Company determines is required; provided that the Participant may elect to satisfy such tax
withholding obligation by having the Company withhold from the settlement that number of RSU Shares having a Fair Market Value equal to
the amount of such withholding; provided, further, that the number of RSU Shares that may be so withheld by the Company shall be limited
to that number of RSU Shares having an aggregate Fair Market Value on the date of such withholding equal to the aggregate amount of the
Participants income, payroll and social tax liabilities based upon the applicable minimum withholding rates.
(g)
Rights as a Stockholder. Upon and following the First Service-Based Vesting Date and the Second
Service-Based Vesting Date, the Participant shall be the record owner of the RSU Shares settled upon such applicable date unless and until
such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a common stockholder of the Company,
including, without limitation, voting rights, if any, with respect to the shares. Prior to the First Service-Based Vesting Date or the Second
Service-Based
3
Vesting Date, as applicable, the Participant shall not be deemed for any purpose to be the owner of shares of Common Stock underlying the
Restricted Share Units.
(h)
Section 409A and Timing of Distributions. Notwithstanding anything to the contrary in this Agreement:
(i)
If the Participant is, or at any time prior to the last date on which it is possible to become fully
vested under this Agreement, may become eligible to terminate employment and qualify as a Retirement under
Section 3(c)(iv) hereof (a Retirement Eligible Participant), then (A) notwithstanding anything to the contrary in
Section 3(e) hereof, a Change in Control shall not be a distribution event hereunder unless such event satisfies the definition
of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of
the assets of a corporation pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder;
and (B) the phrase as soon as reasonably practicable (or words of similar import), each time it occurs in this Agreement,
shall be interpreted to mean (if not followed by a more definitive time for payment): as soon as reasonably practicable (but
in no event later than ninety (90) days); provided, that if distribution is in connection with a Change in Control, such
phrase shall be interpreted to mean immediately prior to or as soon as reasonable practicable (but in no event later than
fourteen (14) days).
(ii)
If the Participant is not a Retirement Eligible Participant, then the phrase as soon as reasonably
practicable (or words of similar import), each time it occurs in this Agreement, shall be interpreted to mean (if not followed
by a more definitive time for payment): as soon as reasonably practicable (but in no event later than the March 15 next
occurring); provided, that if distribution is in connection with a Change in Control, such phrase shall be interpreted to mean
immediately prior to or as soon as reasonable practicable (but in no event later than fourteen (14) days).
4.
Miscellaneous.
(a)
General Assets. All amounts credited to the Account under this Agreement shall continue for all
purposes to be part of the general assets of the Company, Participants interest in the Account shall make the Participant only a general,
unsecured creditor of the Company.
(b)
Notices. All notices, demands and other communications provided for or permitted hereunder shall be
made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery:
if to the Company:
200 East Park Drive, Suite
Mt. Laurel, NJ 08054
4
Attention: Annette Ricciuti

if to the Participant, at the Participants last known address on file with the Company.
All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally
delivered; when delivered by courier, if delivered by commercial courier service; five business days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.
(c)
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.
(d)
No Rights to Service. Nothing contained in this Agreement shall be construed as giving the Participant
any right to be retained, in any position, as a consultant or director of the Company or its Affiliates or shall interfere with or restrict in any way
the right of the Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Participant at any time for
any reason whatsoever.
(e)
Bound by Plan. By signing this Agreement, the Participant acknowledges that he has received a copy of
the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.
(f)
Beneficiary. The Participant may file with the Committee a written designation of a beneficiary on such
form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participants estate shall be deemed to be the Participants beneficiary.
(g)
its successors and assigns, and of the Participant and the beneficiaries, executors, administrators, heirs and successors of the Participant.
(h)
Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding of the
parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in
respect thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed
by the parties hereto.
(i)
Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the
State of New York without regard to principles of conflicts of law thereof, or principals of conflicts of laws of any other jurisdiction which
could cause the application of the laws of any jurisdiction other than the State of New York.
5
(j)
(k)
Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

By:
Name:
Title:
Participant
7
EXHIBIT 10.13
AMENDMENT TO DEFERRED STOCK UNIT AWARD AGREEMENTS
FOR NON-EMPLOYEE DIRECTORS
WHEREAS, Interline Brands, Inc. (the Company) has previously made grants of deferred stock units to non-employee
directors pursuant to the terms of the Interline Brands, Inc. 2004 Equity Incentive Plan (as heretofore amended from time to time, the Plan)
and award agreements thereunder (the DSU Agreements);
WHEREAS, Section 11(t) of the Plan provides that if the Committee (each capitalized but undefined term shall have the
meaning ascribed to such term in the Plan) determines that any amounts payable under the Plan will be taxable to a Participant under
Section 409A of the Code and related Treasury guidance prior to payment to such Participant of such amount, the Company may adopt such
amendments to the Plan and Awards and appropriate policies and procedures that the Committee determines necessary or appropriate to
preserve the intended tax treatment of the benefits provided by the Plan and Awards thereunder and/or take such other actions as the
Committee determines necessary or appropriate to avoid or limit the imposition of an additional tax under Section 409A of the Code; and
WHEREAS, the Committee has determined that it is necessary and appropriate to make the amendments contained herein.
NOW, THEREFORE, each outstanding DSU Agreement is hereby amended as follows, effective as of the date hereof:
1.
Notwithstanding anything to the contrary in the DSU Agreement, a Change in Control shall not be a distribution
event thereunder unless such event satisfies the definition of a change in the ownership or effective control of a corporation, or a change in
the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code and any Treasury Regulations
promulgated thereunder.
2.
The phrase as soon as reasonably practicable (or words of similar import), each time it occurs in the DSU
Agreement, shall be interpreted to mean (if not followed by a more definitive time for payment): as soon as reasonably practicable (but in no
event later than thirty (30) days).
3.
Continuing Effect of the Agreements. Except as expressly modified hereby, the provisions of each Agreement are
and shall remain in full force and effect.
4.
Governing Law. This amendment shall be governed by, construed under, and interpreted in accordance with the
laws of the State of New York applicable to agreements made and to be wholly performed within that State, without regard to its conflict of
laws provisions or any conflict of laws provisions of any other jurisdiction which would cause the application of any law other than that of the
State of New York.
Title: Chairman, CEO & President
EXHIBIT 10.19
AMENDMENT TO
EMPLOYMENT AGREEMENT
This AMENDMENT (this Amendment) to the Employment Agreement (the Employment Agreement), dated as of
August 13, 2004 and as previously amended on December 2, 2004, between Interline Brands, Inc., a New Jersey corporation (the Company),
and Michael J. Grebe (Executive) is dated as of December 31, 2008.
WHEREAS, the Company and Executive wish to amend the Employment Agreement as provided herein to reflect certain
changes required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the Code).
NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the parties hereby
agree as follows:
1.
Except as defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the
Employment Agreement.
2.
Amendment to Section 1.4 of the Employment Agreement. The definition of Change in Control is hereby
amended by adding the following language at the end thereof to read as follows:
Moreover, in the event that payments hereunder would otherwise be considered deferred compensation subject to
Section 409A, a Change in Control shall not be deemed to occur unless the event giving rise to the Change in Control satisfies the definition of
a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a
corporation pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder.
3.
Amendment to Section 5.2 of the Employment Agreement. Section 5.2 of the Employment Agreement is hereby
Any bonus payable hereunder shall be paid in any event on or prior to March 15 of the year following the year such bonus
is earned.
4.
Amendment to Section 5.5 of the Employment Agreement. Section 5.5 of the Employment Agreement is hereby
To the extent that any reimbursements pursuant to this Section 5.5 or otherwise under Section 5 of this Agreement are
taxable to Executive, any such reimbursement payment due to Executive shall be paid to Executive as promptly as practicable, and in all events
on or before the last day of Executives taxable year following the taxable year in which the related expense was incurred. Any such
reimbursements are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that
Executive receives in
one taxable year shall not affect the amount of such benefits or reimbursements that Executive receives in any other taxable year.
5.
Amendment to Section 6 of the Employment Agreement.
(a)
Sections 6.1 and 6.2 of the Employment Agreement are each hereby amended to provide that any payments of a
pro-rata Bonus shall be payable at such time as bonuses for the relevant year would have otherwise been paid had Executives employment
not terminated.
(b)
Section 6.3 of the Employment Agreement is hereby amended to provide that, if necessary to comply with
Section 409A, the amount payable under Section 6.3(a) (Base Salary lump sum payment) shall be payable shall be paid in the form of salary
continuation for a period of two years from the date of the Executives termination (provided that if the date of the Executives termination
occurs during the two-year period following a Change in Control, such amount shall be payable in a lump sum upon the date of termination).
(c)
Section 6.9 of the Employment Agreement is amended by adding the following language at the end thereof to read
as follows:
Executive shall execute and deliver such release the Company within 60 days following the date of Executives termination
of employment. Notwithstanding anything to the contrary in this Agreement, in the event that such payments hereunder would otherwise be
considered deferred compensation subject to Section 409A, any such payments shall not commence until the 61st day following the Date of
Termination.
6.
A new Section 14 of the Employment Agreement is hereby added to read as follows:
14.
Section 409A.
(i)
For purposes of this Agreement, Section 409A means Section 409A of the Internal Revenue Code of 1986, as
amended, and the Treasury Regulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect
from time to time. The parties intend that any amounts payable hereunder that could constitute deferred compensation within the meaning
of Section 409A will comply with Section 409A, and this Agreement shall be administered, interpreted and construed in a manner that does not
result in the imposition of additional taxes, penalties or interest under Section 409A. In this regard, the provisions of this Section 18 shall only
apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Notwithstanding the
foregoing, the Company does not guarantee any particular tax effect, and Executive shall be solely responsible and liable for the satisfaction of
all taxes, penalties and interest that may be imposed on or for the account of Executive in connection with this Agreement (including any taxes,
penalties and interest under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold
Executive (or any beneficiary) harmless from any or all of such taxes, penalties or interest. With respect to the time of payments of any
2
amounts under this Agreement that are deferred compensation subject to Section 409A, references in this Agreement to termination of
employment (and substantially similar phrases) shall mean separation from service within the meaning of Section 409A. For purposes of
Section 409A, each of the payments that may be made under this Agreement are designated as separate payments.
(ii) Notwithstanding anything in this Agreement to the contrary, if Executive is a specified employee within the meaning
of Section 409A(a)(2)(B)(i) of the Code and is not disabled within the meaning of Section 409A(a)(2)(C) of the Code, no payments under this
Agreement that are deferred compensation subject to Section 409A shall be made to Executive prior to the date that is six months after the
date of Executives separation from service (as defined in Section 409A) or, if earlier, Executives date of death. Following any applicable six
month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that is also a
business day.
(iii)
In addition, for a period of six months following the date of separation from service, to the extent that the Company
reasonably determines that any of the benefit plan coverages are described in Section 6.3(c) are deferred compensation and may not be
exempt from U.S. federal income tax, Executive shall in advance pay to the Company an amount equal to the stated taxable cost of such
coverages for six months (and at the end of such six-month period, Executive shall be entitled to receive from the Company a reimbursement of
the amounts paid by Executive for such coverages), and any payments, benefits or reimbursements paid or provided to Executive under
Section 6.3(c) of this Agreement shall be paid or provided as promptly as practicable, and in all events not later than the last day of the third
taxable year following the taxable year in which the Executives separation from service occurs.
(iv)
For the avoidance of doubt, it is intended that any indemnification or expense reimbursement made hereunder shall
be exempt from Section 409A. Notwithstanding the foregoing, if any indemnification or expense reimbursement made hereunder shall be
determined to be deferred compensation within the meaning of Section 409A, then (i) the amount of the indemnification or expense
reimbursement during one taxable year shall not affect the amount of the indemnification or expense reimbursement during any other taxable
year, (ii) the indemnification or expense reimbursement shall be made on or before the last day of Executives taxable year following the year in
which the expense was incurred, and (iii) the right to indemnification or expense reimbursement hereunder shall not be subject to liquidation or
exchange for another benefit.
(v)
Any payment by the Company of any Special Reimbursement provided in Section 6.8 of this Agreement will be paid
as provided therein but in all events not later than the end of Executives taxable year next following Executives taxable year in which
Executive remits the related taxes, and any other indemnification payment provided in Section 6.8 of this Agreement shall be paid to Executive
as provided therein but in all events on or before the last day of Executives taxable year following the taxable year in which the taxes that are
the subject of the claim are remitted to the taxing authority or where, as a result of such claim, no taxes are remitted, by the end of Executives
taxable year following Executives taxable year in which the
3
claim is completed (if an audit) or there is a final and nonappealable settlement or other resolution of the claim.
7.
Continuing Effect of Employment Agreement. Except as expressly modified hereby, the provisions of the
Employment Agreement are and shall remain in full force and effect.
8.
Governing Law. This Amendment shall be governed by, construed under, and interpreted in accordance with the
laws of the State of Florida applicable to agreements made and to be wholly performed within that State, without regard to its conflict of laws
provisions or any conflict of laws provisions of any other jurisdiction which would cause the application of any law other than that of the
State of Florida.
9.
Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same instrument.
4
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on the date first written above.
/s/ Thomas J. Tossavainen
By: Thomas J. Tossavainen
Its: Chief Financial Officer
EXECUTIVE
/s/ Michael J. Grebe
Michael J. Grebe
[Signature page to amendment to
Employment Agreement between the Company and Michael J. Grebe]
5
EXHIBIT 10.26
AMENDMENT TO
This AMENDMENT (this Amendment) to the Employment Agreement (the Employment Agreement), dated as of July 25,
2005 among Interline Brands, Inc., a New Jersey corporation (the Company), and Thomas J. Tossavainen (Executive) is dated as of
December 31, 2008.
agree as follows:
1.
Defined Terms. Except as defined herein, capitalized terms used herein shall have the meanings ascribed to such
terms in the Employment Agreement.
2.
Amendment to Section 4 of the Employment Agreement. Section 4 of the Employment Agreement is hereby
Payments of annual bonus that are earned, if any, shall be made as soon as practicable following the determination by the
Company that such amounts have been earned, but in any event on or prior to March 15 of the year following the year such bonus is earned.
3.
To the extent that any reimbursements pursuant to this Agreement are taxable to Executive, any such reimbursement
payment due to Executive shall be paid to Executive as promptly as practicable, and in all events on or before the last day of Executives
taxable year following the taxable year in which the related expense was incurred. Any such reimbursements are not subject to liquidation or
exchange for another benefit and the amount of such benefits and reimbursements that Executive receives in one taxable year shall not affect
the amount of such benefits or reimbursements that Executive receives in any other taxable year.
4.
Amendment to Section 7 of the Employment Agreement. Sections 7(b) and 7(c) of the Employment Agreement are
each hereby amended to provide that any payments of a Pro Rata Bonus shall be payable at such time as bonuses for the relevant year would
have otherwise been paid had Executives employment not terminated.
5.
Further Amendment to Section 7 of the Employment Agreement. Section 7(f) of the Employment Agreement is
hereby amended by adding the following at the end thereof to read as follows:
The Executive shall execute and deliver the waiver and release described in this Section 7(f) to the Company within 30 days
following the date of Executives termination of employment.
6.
Amendment to Section 12 of the Employment Agreement. A new Section 12(k) of the Employment Agreement is
hereby added to read as follows:
(k)
Section 409A.
(i)
result in the imposition of additional taxes, penalties or interest under Section 409A. In this regard, the provisions of this Section 12(k) shall
only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Notwithstanding the
(ii)
Notwithstanding anything in this Agreement to the contrary, if Executive is a specified employee within the
meaning of Section 409A(a)(2)(B)(i) of the Code and is not disabled within the meaning of Section 409A(a)(2)(C) of the Code, no payments
under this Agreement that are deferred compensation subject to Section 409A shall be made to Executive prior to the date that is six months
after the date of Executives separation from service (as defined in Section 409A) or, if earlier, Executives date of death. Following any
applicable six month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that
is also a business day.
(iii)
reasonably determines that any of the benefit plan coverages are described in Section 7(c)(iii) are deferred compensation and may not be
Section 7(c)(iii) of this Agreement shall be paid or provided as promptly as
2
practicable, and in all events not later than the last day of the third taxable year following the taxable year in which the Executives separation
from service occurs.
(iv)
For the avoidance of doubt, it is intended that any indemnification payment or expense reimbursement made
hereunder shall be exempt from Section 409A. Notwithstanding the foregoing, if any indemnification payment or expense reimbursement
made hereunder shall be determined to be deferred compensation within the meaning of Section 409A, then (i) the amount of the
indemnification payment or expense reimbursement during one taxable year shall not affect the amount of the indemnification payments or
expense reimbursement during any other taxable year, (ii) the indemnification payments or expense reimbursement shall be made on or before
the last day of the Executives taxable year following the year in which the expense was incurred, and (iii) the right to indemnification payments
or expense reimbursement hereunder shall not be subject to liquidation or exchange for another benefit.
7.
8.
State of Florida.
9.
3

By: Michael J. Grebe
Its: President and Chief Executive Officer
EXECUTIVE
/s/ Thomas J. Tossavainen

Employment Agreement between the Company and Thomas J. Tossavainen]
4
EXHIBIT 10.27
AGREEMENT entered into as of the 30th day of April, 2007 (the Effective Date) by and between INTERLINE BRANDS,
INC., a New Jersey corporation (the Company), and Ken Sweder (Executive).
WHEREAS the Company desires to employ Executive as Chief Merchandising Officer and Executive is willing to serve the
Company in such capacity for the period and upon such other terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable
consideration and intending to be legally bound hereby, the parties agree as follows:
1.
Term of Employment. Executives term of employment with the Company under this Agreement shall begin on
April 30, 2007, and unless sooner terminated as hereafter provided, shall continue for one (1) year (the Employment Term); provided that the
Employment Term shall automatically be extended for successive one-year periods; provided further that the Agreement may be terminable by
either party upon sixty (60) days written notice of such partys intention to terminate.
2.
Position.
(a)
Executive shall serve as Chief Merchandising Officer of the Company. In such position, Executive shall
have such duties and authority as are customarily associated with such position and agrees to perform such duties and functions as shall from
time to time be assigned or delegated to Executive by the President of the Company or his designee.
(b)
During the Employment Term, Executive will devote substantially all of Executives business time and best
efforts to the performance of Executives duties hereunder and will not engage in any other business, profession or occupation for
compensation or otherwise which would conflict with the rendition of such services, either directly or indirectly, without the prior written
consent of the President of the Company.
3.
Base Salary. During the Employment Term, the Company shall pay Executive an annual base salary (the Base
Salary) at the annual rate of $260,000, payable in regular installments in accordance with the Companys usual payroll practices. Such base
salary may, at the sole discretion of the President of the Company, be upwardly adjusted.
4.
Bonus. With respect to each calendar year during the Employment Term, Executive shall be eligible to earn an
annual bonus award with a target of 50% percent of the Base Salary (the Target Bonus), based upon bonus plans to be
i
established and determined by the Board of Directors of the Company (the Board) from time to time. The actual amount of the annual bonus
award may be more or less than the Target Bonus and will determined on the same basis as bonus payments made to other executives of the
Company. For 2007, Executives annual bonus award will be prorated to reflect the portion of the calendar year for which Executive was
employed by the Company.
5.
Employee Benefits And Perquisites.
(a)
Benefits. During the Employment Term, Executive shall be eligible to participate in the Companys
employee benefit plans (including, without limitation, its health insurance and short term and long term disability insurance plans) on the same
basis as those benefits are generally made available to other executives of the Company. All of the benefits and perquisites described in this
Section 5(a) shall hereafter be referred to collectively as the Benefits.
(b)
Car Allowance. During the Employment Term, the Company shall pay Executive an amount of $1,000 per
month as an automobile allowance.
6.
Relocation.
(a)
Relocation Expenses. Executive shall be reimbursed for reasonable relocation expenses (the Relocation
Expenses) incurred by Executive in connection with Executives relocation to Jacksonville, Florida, subject to such substantiation and
documentation as the Company may reasonably require; provided however, that the Relocation Expenses shall not exceed a maximum amount
of $110,000.
(b)
Relocation Payment. Executive shall be entitled to receive a one-time relocation payment in an amount of
$25,000 on the date that is the later of (i) thirty (30) days following Executives relocation to Jacksonville, Florida, or (ii) 120 days after the first
day of the Employment Term.
7.
Business Expenses. During the Employment Term, reasonable business expenses incurred by Executive in the
performance of Executives duties hereunder shall be reimbursed by the Company in accordance with the Companys policies on expense
reimbursement, in effect from time to time.
8.
Performance-Based Restricted Share Units. Executive shall receive on the first day of the Employment Term 8,577
Restricted Share Units (the Award), with a target awards equal to two-thirds of the Award, or 5,718 Restricted Share Units (theTarget
Award)
with respect to the Companys Common Stock that will be subject to forfeiture provisions and such other terms and
conditions as are set forth in the restricted share unit agreement (the Performance Based Restricted Share Unit Agreement) being
entered into concurrently herewith by the Company and Executive, which agreement is attached hereto as Exhibit A.
9.
Time-Based Restricted Share Units. Executive shall receive on the first day of the Employment Term 18,298
restricted share units with respect to the Companys Common Stock that will be subject to forfeiture provisions and such other terms and
conditions as are set forth in the restricted share unit agreement (the Time-Based Restricted Share Unit Agreement) being entered into
concurrently herewith by the Company and Executive, which agreement is attached hereto as Exhibit B.
11.
Stock Options Executive shall receive on the first day of the Employment Term non-qualified stock options to
purchase 30,000 shares of the Companys Common Stock that will be subject to the terms and conditions as are set forth in the non-qualified
stock option agreement (the Stock Option Agreement) being entered into concurrently herewith by the Company and Executive, which
agreement is attached hereto as Exhibit C.
12.
Termination. Notwithstanding any other provision of this Agreement:
(a)
For Cause By the Company. The Employment Term and Executives employment hereunder may be
terminated by the Company for Cause. For purposes of this Agreement, Cause shall mean (i) Executives gross neglect of, or willful and
continued failure to substantially perform, Executives duties hereunder (other than as a result of total or partial incapacity due to physical or
mental illness); (ii) a willful act by Executive against the interests of the Company or which causes or is intended to cause harm to the
Company or its stockholders; (iii) Executives conviction, or plea of no contest or guilty, to a felony under the laws of the United States or any
state thereof or of a lesser offense involving dishonesty, the theft of Company property or moral turpitude; or (iv) a material breach of the
Agreement by Executive which is not cured by Executive within twenty (20) days (where the breach is curable) following written notice to
Executive by the Company of the nature of the breach. Upon termination of Executives employment for Cause pursuant to this Section 12(a),
Executive shall be paid any accrued and unpaid Base Salary and Benefits through the date of termination and shall have no additional rights to
any compensation or any other benefits under the Agreement or otherwise.
(b)
Disability or Death. The Employment Term and Executives employment hereunder shall terminate upon
Executives death or if Executive is unable for an aggregate of six (6) months in any twelve (12) consecutive month period to perform
Executives duties due to Executives physical or mental incapacity, as reasonably determined by the Board (such incapacity is hereinafter
referred to as Disability). Upon termination of Executives employment hereunder for either Disability or death, Executive or Executives
estate (as the case may be) shall be entitled to receive (i) any accrued and unpaid Base Salary and Benefits and (ii) a bonus for the calendar
year in which termination occurs, equal to the bonus which Executive would have been entitled to if he had remained employed by the
Company at the end of such
calendar year, multiplied by a fraction, the numerator of which is the number of days in such calendar year preceding the date of death or
termination of employment and the denominator of which is 365 (a Pro Rata Bonus). Upon termination of Executives employment due to
Disability or death pursuant to this Section 12(b), Executive shall have no additional rights to any compensation or any other benefits under
this Agreement. All other benefits, if any, due Executive following Executives termination for Disability or death shall be determined in
accordance with the plans, policies and practices of the Company.
(c)
Without Cause By the Company. The Employment Term and Executives employment hereunder may be
terminated by the Company without Cause. If Executives employment is terminated by the Company without Cause (other than by
reason of Disability or death), Executive shall be entitled to receive (i) any accrued and unpaid Base Salary and Benefits, (ii) continuation of
Executives Base Salary for a period of twelve (12) months from the date of termination (the Severance Payment), (iii) continuation of
Executives health and dental insurance coverage on the same basis as those benefits are generally made available to other executives of the
Company for a period of twelve (12) months from the date of termination and (iv) a Pro Rata Bonus. Upon termination of Executives
employment by the Company without Cause pursuant to this Section 12(c), Executive shall have no additional rights to any compensation or
any other benefits under this Agreement. All other benefits, if any, due Executive following Executives termination of employment by the
Company without Cause shall be determined in accordance with the plans, policies and practices of the Company.
(d)
Voluntary Termination By Executive. Executive shall provide the Company thirty (30) days advance
written notice in the event Executive terminates Executives employment, other than for Good Reason (as hereinafter defined); provided that
the President may, in his sole discretion, terminate Executives employment with the Company prior to the expiration of the thirty-day notice
period. In such event and upon the expiration of such thirty-day period (or such shorter time as the President in his sole discretion may
determine), Executives employment under this Agreement shall immediately and automatically terminate, and Executive shall be limited to
receiving any Base Salary earned and unpaid as of Executives termination date.
(e)
Termination For Good Reason. Executive may terminate Executives employment hereunder for Good
Reason at any time during the Employment Term. For purposes of the Agreement, Good Reason shall mean (i) a material breach of the
terms of this Agreement by the Company, (ii) the Company requiring Executive to move Executives primary place of employment more than
thirty-five (35) miles from the then current place of employment, if such move materially increases Executives commute, or (iii) a material
diminution of Executives responsibilities, provided that any of the foregoing is not cured by the Company within twenty (20) days following
receipt of written notice by Executive to the Company of the specific nature of the breach. No termination for Good Reason shall be permitted
unless the Company shall have first received written notice from Executive describing the basis
of such termination for Good Reason. A termination of Executives employment for Good Reason pursuant to this Section 12(e) shall be
treated for purposes of this Agreement as a termination by the Company without Cause and the provisions of Section 12(c) relating to the
payment of compensation and benefits shall apply.
(f)
Benefits/Release. In addition to any amounts which may be payable following a termination of
employment pursuant to one of the paragraphs of this Section 12, Executive or Executives beneficiaries shall be entitled to receive any
benefits that may be provided for under the terms of an employee benefit plan in which Executive is participating at the time of termination.
Notwithstanding any other provision of this Agreement to the contrary, Executive acknowledges and agrees that any and all payments, other
than the payment of any accrued and unpaid Base Salary and Benefits, to which Executive is entitled under this Section 12 are conditioned
upon and subject to Executives execution of a general waiver and release, in such form as may be prepared by the Companys attorneys, of all
claims and issues arising under the Employment Agreement, except for such matters covered by provisions of this Agreement which expressly
survive the termination of this Agreement.
(g)
Except as provided in this Section 12, the Company shall have no further obligation or liability under this
Agreement following a termination of employment by Executive.
(h)
Notice of Termination. Any purported termination of employment by the Company or by Executive shall
be communicated by written notice of termination to the other party hereto in accordance with Section 17(h) hereof.
13.
Non-Competition.
(a)
Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company
and its affiliates, the valuable confidential business information in such Executives possession and the customer goodwill associated with the
ongoing business practice of the Company, and accordingly agrees as follows:
(i)
During the Employment Term and, for a period ending on the expiration of one year following the
termination of Executives employment (the Restricted Period), Executive will not directly or indirectly, (i) engage in any business for
Executives own account that competes with the business of the Company, (ii) enter the employ of, or render any services to, any person
engaged in any business that competes with the business of the Company, (iii) acquire a financial interest in, or otherwise become actively
involved with, any person engaged in any business that competes with the business of the Company, directly or indirectly, as an individual,
partner, shareholder, officer, director, principal, agent, trustee or consultant, or (iv) interfere with business relationships (whether formed
before or after the date of this Agreement) between the Company or any of its affiliates that are engaged in a business similar to the business
of the Company (the Company Affiliates) and customers or suppliers of the Company or the Company Affiliates.
(ii)
Notwithstanding anything to the contrary in this Agreement, Executive may directly or indirectly own,
solely as a passive investment, securities of any person engaged in the business of the Company which are publicly traded on a national or
regional stock exchange or on the over-the-counter market if Executive (i) is not a controlling person of, or a member of a group which controls,
such person and (ii) does not, directly or indirectly, own one percent (1%) or more of any class of securities of such person.
(iii)
During the Restricted Period, and for an additional one year after the end of the Restricted Period,
Executive will not, directly or indirectly, (i) without the written consent of the Company, solicit or encourage any employee of the Company or
the Company Affiliates to leave the employment of the Company or the Company Affiliates, or (ii) without the written consent of the Company
(which shall not be unreasonably withheld), hire any such employee who has left the employment of the Company or the Company Affiliates
(other than as a result of the termination of such employment by the Company or the Company Affiliates) within one year after the termination
of such employees employment with the Company or the Company Affiliates.
(iv)
During the Restricted Period, Executive will not, directly or indirectly, solicit or encourage to cease to work
with the Company or the Company Affiliates any consultant then under contract with the Company or the Company Affiliates.
(b)
It is expressly understood and agreed that although Executive and the Company consider the restrictions
contained in this Section 13 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an unenforceable restriction against Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding
shall not affect the enforceability of any of the other restrictions contained herein.
14.
Confidentiality. Executive will not at any time (whether during or after Executives employment with the company)
disclose or use for Executives own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates,
any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading,
investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans, or the business and
affairs of the Company generally, or of any subsidiary or affiliate of the Company, provided that the foregoing shall not apply to information
which is generally known to the industry or the public other than as a result of Executives breach of this covenant. Executive agrees
that upon termination of Executives employment with the Company for any reason, he will return to the Company immediately all memoranda,
books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the
Company and its affiliates, except that he may retain personal notes, notebooks and diaries. Executive further agrees that he will not retain or
use for Executives account at any time any trade names, trademark or other proprietary business designation used or owned in connection
with the business of the Company or its affiliates.
15.
Specific Performance. Executive acknowledges and agrees that the Companys remedies at law for a breach or
threatened breach of any of the provisions of Section 13 or Section 14 would be inadequate and, in recognition of this fact, Executive agrees
that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any
other equitable remedy which may then be available.
16.
Independence, Severability and Non-Exclusivity. Each of the rights and remedies set forth in this Agreement shall
be independent of the others and shall be severally enforceable and all of such rights and remedies shall be in addition to and not in lieu of
any other rights and remedies available to the Company or its affiliates under the law or in equity. If any of the provisions contained in this
Agreement, including without limitation, the rights and remedies enumerated herein, is hereafter construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, or rights or remedies, which shall be given full effect without regard to the
invalid portions.
17.
Miscellaneous.
(a)
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the
State of Florida without regard to its conflicts of law doctrine.
(b)
Entire Agreement/Amendments. This Agreement contains the entire understanding of the parties with
respect to the employment of Executive by the Company. There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may
not be altered, modified, or amended except by written instrument signed by the parties hereto.
(c)
No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver of such partys rights or deprive such party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(d)
Severability. In the event that any one or more of the provisions of this Agreement shall be or become
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not
be affected thereby.
(e)
Assignment. This Agreement shall not be assignable by Executive. This Agreement may be assigned by
the Company to a company which is a successor in interest to substantially all of the business operations of the Company or to the financial
institution(s) providing the Companys senior credit facility. Such assignment shall become effective when the Company notifies Executive of
such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such successor company, provided that any assignee expressly assumes the obligations,
rights and privileges of this Agreement.
(f)
No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for
pursuant to this Agreement by seeking other employment and, to the extent that Executive obtains or undertakes other employment, the
payment will not be reduced by the earnings of Executive from the other employment.
(g)
Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon
personal or legal representatives, executors, administrators, successors, heirs, distributes, devises and legatees.
(h)
Notice. For the purpose of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed, in the case of Executive, to Executives address on file with the Company; all notices to the
Company shall be directed to the attention of the President or to such other address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be effective only upon receipt.
(i)
Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such
Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
(j)
Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
Title: Chairman and CEO
EXECUTIVE
/s/ Kenneth D. Sweder
EXHIBIT 10.28
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AGREEMENT (Agreement) is made and entered into this 20th day of October, 2008 (the Effective Date), by and
between INTERLINE BRANDS, INC., a New Jersey corporation (Company), and Kenneth D. Sweder (Executive).
WHEREAS, the Executive is currently an employee of the Company; and
WHEREAS, the Company and the Executive desire to amend the employment agreement entered into by, and between the
parties, dated as of April 30, 2007 (the Employment Agreement) and enter into certain additional agreements; and
WHEREAS, the Company considers it essential to its best interests and the best interests of its stockholders to provide for
the continued employment of the Executive by the Company and to amend the Employment Agreement; and
WHEREAS, the Executive is willing to accept and continue his employment on the terms hereinafter set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:
1.
Section 2(a) of the Employment Agreement is hereby deleted in its entirety and shall be replaced with the following
provisions and incorporated into the Employment Agreement as the new and substituted Section 2(a):
(a)
Executive shall serve as Executive Vice President and Chief Operating Officer of the Company. In such position,
Executive shall have such duties and authority as are customarily associated with such position and agrees to perform such
duties and functions as shall from time to time be assigned or delegated to Executive by the Chief Executive Officer of the
Company or his designee. Executives principal place of employment shall be at the Companys headquarters in
Jacksonville, Florida.
2.
Effective as of the Effective Date, Executives annual base salary shall be increased to $350,000.
3.
Effective as of the Effective Date, Executives Target Bonus (for purposes of the Employment Agreement) shall be
increased to an amount equal to 75% of Executives annual base salary.
4.
Executive shall be granted on or as soon as practicable following the Effective Date an award for 40,551 restricted
share units with respect to the Companys Common Stock that will be subject to forfeiture provisions and such other terms and conditions as
are set forth in the restricted share unit agreement being entered
into concurrently herewith by the Company and Executive, which agreement is attached hereto as Exhibit A.
5.
entirety as follows:
The Employment Agreement is hereby amended by adding Section 10 to the Employment Agreement to read in its
10.
Stock Ownership Guidelines. Executive agrees to comply with the Companys Executive Stock Ownership Policy at
the level(s) applicable to individuals considered Senior Executive Officers for purposes of such Policy.
6.
Section 12(c) of the Employment Agreement is hereby amended by deleting each reference to twelve (12) and
replacing it with eighteen (18).
7.
Section 12(e) of the Employment Agreement shall be amended by deleting the word primary in clause (ii) thereof
and replacing it with principal.
8.
Section 12(f) of the Employment Agreement is hereby amended to read in its entirety as follows:
(f)
Benefits/Release. In addition to any amounts which may be payable following a termination of employment
pursuant to one of the paragraphs of this Section 12, Executive or Executives beneficiaries shall be entitled to receive any
benefits that may be provided for under the terms of an employee benefit plan in which Executive is participating at the time
of termination. Notwithstanding any other provision of this Agreement to the contrary, Executive acknowledges and agrees
that any and all payments, other than the payment of any accrued and unpaid Base Salary and Benefits, to which Executive
is entitled under this Section 12 are conditioned upon and subject to Executives execution of a general waiver and release,
in such form as may be prepared by the Companys attorneys, which has become effective in accordance with its terms, of
all claims and issues arising under the Employment Agreement, except for such matters covered by provisions of this
Agreement which expressly survive the termination of this Agreement (the Release).
9.
Section 13(a)(i) of the Employment Agreement is hereby amended to read in its entirety as follows:
(i)
During the Employment Term and, for a period ending on the expiration of two years following the termination of
Executives employment (the Restricted Period), Executive will not directly or indirectly, (i) engage in any business for
Executives own account that competes with the business of the Company as of the date of termination of the Executives
employment, (ii) enter the employ of, or render any services to, any person engaged in any business that competes with the
business of the Company as of the date of termination of the Executives
2
employment, (iii) acquire a financial interest in, or otherwise become actively involved with, any person engaged in any
business that competes with the business of the Company as of the date of termination of the Executives employment,
directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or
(iv) interfere with business relationships (whether formed before or after the date of this Agreement) between the Company
or any of its affiliates that are engaged in a business similar to the business of the Company as of the date of termination of
the Executives employment (the Company Affiliates) and customers or suppliers of the Company or the Company
Affiliates.
10.
Section 17(a) of the Employment Agreement is hereby amended to read in its entirety as follows:
(a)
Governing Law; Consent to Jurisdiction.
(i)
This Agreement shall be governed by and construed in accordance with the laws of the State of Florida
without regard to its conflicts of law doctrine.
(ii)
Except as otherwise specifically provided herein, Executive and the Company each hereby irrevocably
submits to the exclusive jurisdiction of any state or federal court serving Duval County, Florida over any dispute arising out
of or relating to this Agreement.
11.
The Employment Agreement is hereby further amended by deleting each reference to the position of President
and replacing it with Chief Executive Officer.
12.
Except as modified or amended herein, the Employment Agreement remains in full force and effect. Nothing
contained herein invalidates or shall impair or release any covenant, condition or stipulation in the Employment Agreement, and the same,
except as herein modified and amended, shall continue in full force and effect.
13.
This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of
which taken together shall constitute one Agreement. The parties specifically agree that facsimile signatures are acceptable and permitted and
shall be considered original and authentic. Each party executing this Agreement represents that such party has the full authority and legal
power to do so.
3

Name: Michael Grebe
Title: Chairman & Chief Executive
Officer
EXECUTIVE
By: /s/ Kenneth D. Sweder
Name: Kenneth D. Sweder
4
EXHIBIT 10.29
AMENDMENT TO
April 30, 2007, between Interline Brands, Inc., a New Jersey corporation (the Company), and Kenneth D. Sweder (Executive) is dated as of
December 31, 2008.
agree as follows:
1.
2.
3.
4.
Amendment to Section 12 of the Employment Agreement. Sections 12(b) and 12(c) of the Employment Agreement
are each hereby amended to provide that any payments of a Pro Rata Bonus shall be payable at such time as bonuses for the relevant year
would have otherwise been paid had Executives employment not terminated.
5.
The Executive shall execute and deliver the waiver and release described in this Section 12(f) to the Company within 30
days following the date of Executives termination of employment.
6.
(k)
Section 409A.
(i)
business day.
(iii)
2
(iv)
7.
8.
State of Florida.
9.
3

EXECUTIVE
Kenneth D. Sweder

Employment Agreement between the Company and Kenneth D. Sweder]
4
EXHIBIT 10.30
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is entered into as of the 30th day of April, 2007 (the Effective Date) by and between INTERLINE
BRANDS, INC., a Delaware corporation (the Company), and Kenneth D. Sweder (Executive).
WITNESSETH
WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to
protecting and enhancing the best interests of the Company and its stockholders; and
WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in
control may arise and that such possibility may result in the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the Compensation Committee of the Board (as defined in Section 1) has determined that it is in the best
interests of the Company and its stockholders to secure Executives continued services and to ensure Executives continued and undivided
dedication to Executives duties in the event of any threat or occurrence of a Change in Control (as defined in Section 1) of the Company;
and
WHEREAS, the Compensation Committee, at a meeting held on March 1, 2007, has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, the Company and
Executive hereby agree as follows:
1.
Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below:
(a)
Affiliate means, with respect to a specified person, a person that, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control with, the person specified.
(b)
Board means the Board of Directors of the Company.
(c)
Bonus Amount means (i) the average of the annual bonus earned by Executive from the Company (or its
Affiliates) in respect of the last three (3) completed fiscal years of the Company or such lesser number of fiscal years for which Executive was
employed by the Company and eligible to earn an annual bonus from the Company immediately preceding Executives Date of Termination
(annualized in the event Executive was not employed by the Company (or its Affiliates) for the whole of any such fiscal year), or (ii) if the Date
of Termination occurs before Executive has been employed for a full fiscal year, and before the date Company pays Executive Executives
annual bonus for the fiscal year in which Executives employment commenced,
Executives target annual bonus for the fiscal year of the Company which includes Executives Date of Termination.
(d)
Cause means (i) Executives conviction of, or pleading nolo contendere to, a felony, (ii) Executives
gross neglect of Executives duties to the Company, (iii) Executives willful misconduct in connection with the performance of Executives
duties to the Company, which results in material and demonstrable damage to the Company or (iv) Executives failure to follow the lawful
directions of the Board, consistent with Executives position with the Company; provided, however that Executive shall not be deemed to have
been terminated for Cause unless (A) written notice has been delivered to Executive setting forth the reasons for the Companys intention to
terminate Executive for Cause and (B) a period of 14 days has elapsed since delivery of such notice and, in the case of clauses (ii) and
(iv) above, Executive has failed to cure the circumstances claimed to constitute Cause within such 14-day period. For purpose of the
preceding sentence, no act or failure to act by Executive shall be considered willful unless done or omitted to be done by Executive in bad
faith and without reasonable belief that Executives action or omission was in the best interests of the Company. Any act, or failure to act,
based upon authority given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel for the Company (or upon
the instructions of any other officer of the Company senior to Executive) shall be conclusively presumed to be done, or omitted to be done, by
Executive in good faith and in the best interests of the Company. Cause shall not exist unless and until the Company has delivered to
Executive a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding Executive if Executive is a Board member)
at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together
with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i), (ii), (iii), or
(iv) has occurred and specifying the particulars thereof in detail. The Company must notify Executive of any event constituting Cause within
ninety (90) days following knowledge of any member of the Board other than Executive (if applicable) of its existence or such event shall not
constitute Cause under this Agreement.
(e)
Change in Control means any of the following: (i) any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Exchange Act)) (other than an Affiliate or any employee
benefit plan (or any related trust) of the Company or an Affiliate of the Company), (a Person) becomes after the date hereof the beneficial
owner of 50% or more of either the then outstanding Stock or the combined voting power of the then outstanding voting securities of the
Company entitled to vote in the election of directors; (ii) during any 24-month period individuals who, as of the Effective Date, constitute the
Board (the Incumbent Directors) cease for any reason to constitute at least a majority of the Board; provided that any individual who
becomes a director after the Effective Date whose election, or nomination for election by the Companys shareholders, was approved by a vote
or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such
individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection
with an actual or threatened
2
election contest relating to the election of the directors of the Company (as such terms are used in Rule 14a-11 under the Exchange Act);
(iii) the consummation of a merger, reorganization or consolidation with respect to which the individuals and entities who were the respective
beneficial owners of the Stock and voting securities of the Company immediately before such merger, reorganization or consolidation do not,
after such merger, reorganization or consolidation, beneficially own, in substantially the same proportion as their ownership, immediately
before such merger, reorganization or consolidation, directly or indirectly, more than 50% of, respectively, the then outstanding common
shares and the combined voting power of the then outstanding voting securities entitled to vote in the election of directors; or (iv) the
approval by shareholders of the Company of (A) the sale or other disposition of all or substantially all of the assets of the Company (other
than to an Affiliate of the Company), or (B) the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any
Person acquires beneficial ownership of more than 50% of the then outstanding Stock as a result of the acquisition of the Stock by the
Company which reduces the number of shares of Stock outstanding; provided, that if after such acquisition by the Company such person
becomes the beneficial owner of additional Stock that increases the percentage of outstanding Stock beneficially owned by such person, a
Change in Control of the Company shall then occur.
(f)
Code means the Internal Revenue Code of 1986, as amended, and regulations and rulings thereunder.
References to a particular section of the Code shall include references to successor provisions.
(g)
Date of Termination means (1) the effective date on which Executives employment by the Company
terminates as specified in a prior written notice by the Company or Executive, as the case may be, to the other, delivered pursuant to Section 13
or (2) if Executives employment by the Company terminates by reason of death, the date of death of Executive.
(h)
Disability means termination of Executives employment by the Company due to Executives absence
from Executives duties with the Company on a full-time basis for at least one hundred eighty (180) consecutive days as a result of Executives
incapacity due to physical or mental illness.
(i)
Exchange Act means the Securities Exchange Act of 1934, as amended. References to a particular
section of, or rule under, the Exchange Act shall include references to successor provisions.
(j)
Good Reason means, without Executives express written consent, the occurrence of any of the
following events after a Change in Control:
(i)
any (A) change in the duties or responsibilities (including reporting responsibilities) of Executive
that is inconsistent in any material and adverse respect with Executives position(s), duties or
3
responsibilities with the Company immediately prior to such Change in Control (including any material and adverse diminution of
such duties or responsibilities); provided, however, that Good Reason shall not be deemed to occur upon a change in duties or
responsibilities (other than reporting responsibilities) that is solely and directly a result of the Company no longer being a publicly
traded entity and does not involve any other event set forth in this paragraph (j) or (B) material and adverse change in Executives
titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change in
Control;
(ii)
a material breach of an employment agreement to which Executive and the Company are parties;
(iii)
a reduction by the Company in Executives rate of annual base salary or target annual bonus
opportunity as in effect immediately prior to such Change in Control or as the same may be increased from time to time thereafter;
(iv)
any requirement of the Company that Executive (A) be based anywhere more than thirty-five (35)
miles from the office where Executive is located at the time of the Change in Control, if such relocation increases Executives commute
by more than twenty (20) miles, or (B) travel on Company business to an extent substantially greater than the travel obligations of
Executive immediately prior to such Change in Control;
(v)
a reduction by the Company of more than 5% in Executives aggregate benefits under employee
benefit plans, welfare benefit plans and fringe benefit plans in which Executive is participating immediately prior to such Change in
Control, unless Executive is permitted to participate in other plans providing Executive with substantially equivalent benefits in the
aggregate (at substantially equivalent cost with respect to welfare benefit plans);
(vi)
the failure of the Company to provide Executive with paid vacation in accordance with the most
favorable vacation policies of the Company and its Affiliates as in effect for Executive immediately prior to such Change in Control,
including the crediting of all service for which Executive had been credited under such vacation policies prior to the Change in
Control;
(vii)
any refusal by the Company to continue to permit Executive to engage in activities not directly
related to the business of the Company in which Executive was permitted to engage prior to the Change in Control;
(viii)
any purported termination of Executives employment which is not effectuated pursuant to
Section 14 (and which will not constitute a termination hereunder); or
4
(ix)
the failure of the Company to obtain the assumption and, if applicable, guarantee, agreement from
any successor (and parent corporation) as contemplated in Section 12(b).
An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt
of notice thereof given by Executive shall not constitute Good Reason. Executives right to terminate employment for Good Reason shall not
be affected by Executives incapacity due to mental or physical illness and Executives continued employment shall not constitute consent to,
or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Executive must provide notice
of termination of employment for Good Reason within ninety (90) days following Executives knowledge of an event constituting Good Reason
or such event shall not constitute a termination for Good Reason under this Agreement.
(k)
Qualifying Termination means a termination of Executives employment (i) by the Company other than
for Cause or (ii) by Executive for Good Reason. Termination of Executives employment on account of death or Disability shall not be treated
as a Qualifying Termination.
(l)
Safe Harbor Amount means the greatest pre-tax amount of Payments (as defined in Section 4(a)) that
could be paid to Executive without causing Executive to become liable for any Excise Tax (as defined in Section 4(a)) in connection
therewith.
(m)
SEC means the Securities and Exchange Commission.
(n)
Stock means the Common Stock of the Company.
(o)
Termination Period means the period of time beginning with a Change in Control and ending two
(2) years following such Change in Control. Notwithstanding anything in this Agreement to the contrary, if (i) Executives employment is
terminated prior to a Change in Control for reasons that would have constituted a Qualifying Termination if they had occurred following a
Change in Control and (ii) (A) such termination (or Good Reason event) was at the request of a third party who had indicated an intention or
taken steps reasonably calculated to effect a Change in Control and a Change in Control involving such third party (or a party competing with
such third party to effectuate a Change in Control) does occur, or (B) such termination (or Good Reason event) otherwise occurs in connection
with a potential Change in Control and such Change in Control does occur, then for purposes of this Agreement, the date immediately prior to
the date of such termination of employment or event constituting Good Reason shall be treated as the date of a Change in Control. For
purposes of determining the timing of payments and benefits to Executive under Section 3, the date of the actual Change in Control shall be
treated as Executives Date of Termination under Section 1(g).
5
2.
Term of Agreement. This Agreement shall be effective on the date hereof and shall continue in effect until and
unless the Company shall have given one (1) years written notice of cancellation; provided, that, notwithstanding the delivery of any such
notice, this Agreement shall continue in effect for a period of two (2) years after a Change in Control, if such Change in Control shall have
occurred during the term of this Agreement. Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if
Executive or the Company terminates Executives employment prior to a Change in Control except as provided in the second sentence of
Section 1(o).
3.
Payments Upon Termination of Employment.
(a)
Qualifying Termination - Severance. If during the Termination Period the employment of Executive shall
terminate pursuant to a Qualifying Termination, then the Company shall provide to Executive, subject to the proviso to the first sentence of
Section 10:
(i)
within ten (10) days following the Date of Termination, a lump-sum cash amount equal to the sum
of (A) Executives base salary through the Date of Termination and any bonus amounts which have become payable, to the extent
not theretofore paid or deferred, (B) a pro rata portion of Executives annual bonus for the fiscal year in which Executives Date of
Termination occurs in an amount equal to (1) Executives target annual bonus, multiplied by (2) a fraction, the numerator of which is
the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator
of which is three hundred sixty-five (365), and (C) any accrued vacation pay, in each case to the extent not theretofore paid; plus
(ii)
within ten (10) days following the Date of Termination, a lump-sum cash amount equal to (i) one
and one-half (1.5) times Executives highest annual rate of base salary during the 12-month period immediately prior to Executives
Date of Termination plus (ii) one and one-half (1.5) times Executives Bonus Amount, paid within ten (10) days following the Date of
Termination; provided that, if necessary to avoid tax penalties under Section 409A of the Code, the payment shall be delayed, without
interest, until the first day which is at least six months following the Date of Termination.
(b)
Qualifying Termination - Benefits. If during the Termination Period the employment of Executive shall
terminate pursuant to a Qualifying Termination, the Company shall, subject to the proviso to the first sentence of Section 10, continue to
provide, for a period of eighteen (18) months following Executives Date of Termination, Executive (and Executives dependents, if applicable)
with the same level of medical and dental benefits upon substantially the same terms and conditions (including contributions required by
Executive for such benefits) as existed immediately prior to Executives Date of Termination (or, if more favorable to Executive, as such benefits
and terms and conditions existed immediately prior to the Change in Control); provided, that, if Executive cannot continue to participate in the
Company plans providing such benefits, the Company shall otherwise provide such benefits on the same
6
after-tax basis as if continued participation had been permitted. Notwithstanding the foregoing, in the event Executive becomes reemployed
with another employer and becomes eligible to receive medical and/or dental benefits from such employer, the Companys obligation to
provide such medical and/or dental benefits described herein shall cease.
(c)
Execution of Release. Any payments or benefits that would otherwise be payable or provided to Executive
under Sections 4(a)(i)(B), 4(a)(ii) and 4(b) shall not be payable or provided unless and until the Company has received from Executive a signed
release of employment-related claims against the Company, its Subsidiaries and their respective employees, officers and directors, in a form
prepared by the Company and reasonably acceptable to Executive.
(d)
Nonqualifying Termination. If during the Termination Period the employment of Executive shall terminate
other than by reason of a Qualifying Termination, then the Company shall pay to Executive within thirty (30) days following the Date of
Termination, a lump-sum cash amount equal to the sum of Executives base salary through the Date of Termination and any bonus amounts
which have become payable, to the extent not theretofore paid or deferred, and any accrued vacation pay, to the extent not theretofore paid.
The Company may make such additional payments, and provide such additional benefits, to Executive as the Company and Executive may
agree in writing, or to which Executive may be entitled under the compensation and benefit plans, policies, and arrangements of the Company.
4.
Certain Additional Payments by the Company.
(a)
If it is determined (as hereafter provided) that any payment or distribution by the Company to or for the
benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to
or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation
right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (each a Payment),
would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest and penalties,
are hereafter collectively referred to as the Excise Tax), then Executive will be entitled to receive an additional payment or payments (a
Gross-Up Payment) in an amount such that, after payment by Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon the Payments. Notwithstanding the previous sentence, if the aggregate value of the Payments for purposes of
Sections 280G and 4099 of the Code equals or exceeds 100%, but is not greater than 110%, of the Safe Harbor Amount, then no Gross-Up
Payment shall be payable to Executive and the aggregate amount of Payments payable to Executive shall be reduced in the manner selected by
Executive to the Safe Harbor Amount.
7
(b)
Subject to the provisions of Section 4(f) hereof, all determinations required to be made under this
Section 4, including whether an Excise Tax is payable by Executive and the amount of such Excise Tax and whether a Gross-Up Payment is
required and the amount of such Gross-Up Payment, will be made by the public accounting firm that is retained by the Company as of the date
immediately prior to the Change in Control (the Accounting Firm). Executive will direct the Accounting Firm to submit its determination and
detailed supporting calculations to both the Company and Executive within 15 calendar days after the date of Executives termination of
employment, if applicable, and any other such time or times as may be requested by the Company or Executive. If the Accounting Firm
determines that any Excise Tax is payable by Executive, the Company will pay the required Gross-Up Payment to Executive within five
business days after receipt of such determination and calculations. If the Accounting Firm determines that no Excise Tax is payable by
Executive, it will, at the same time as it makes such determination, furnish Executive with an opinion that Executive has substantial authority
not to report any Excise Tax on Executives federal, state, local income or other tax return. Subject to the provisions of this Section, any
determination by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company and Executive. As a
result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made (an Underpayment), consistent with the
calculations required to be made hereunder. In the event that an Underpayment is made and the Company exhausts or fails to pursue its
remedies pursuant to Section 4(f) hereof and Executive thereafter is required to make a payment of any Excise Tax, Executive will direct the
Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting
calculations to both the Company and Executive as promptly as possible. Any such Underpayment will be promptly paid by the Company to,
or for the benefit of, Executive within five business days after receipt of such determination and calculations.
(c)
The Company and Executive will each provide the Accounting Firm access to and copies of any books,
records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm,
and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by
Section 4(b) hereof.
(d)
The federal, state and local income or other tax returns filed by Executive will be prepared and filed on a
consistent basis with the determination of the Accounting Firm with respect to the Excise Tax payable by Executive. Executive will make
proper payment of the amount of any Excise Tax and, at the request of the Company, provide to the Company true and correct copies (with
any amendments) of Executives federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax
returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company, evidencing
such payment. If prior to the filing of Executives federal income tax return, or
8
corresponding state or local tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, Executive will within five business days pay to the Company the amount of such reduction.
(e)
The fees and expenses of the Accounting Firm for its services in connection with the determinations and
calculations contemplated by Sections 4(b) and (d) hereof will be borne by the Company. If such fees and expenses are initially advanced by
Executive, the Company will reimburse Executive the full amount of such fees and expenses within five business days after receipt from
Executive of a statement therefor and reasonable evidence of Executives payment thereof.
(f)
Executive will notify the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of a Gross-Up Payment. Such notification will be given as promptly as practicable but
no later than 10 business days after Executive actually receives notice of such claim and Executive will further apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by Executive). Executive will
not pay such claim prior to the earlier of (i) the expiration of the 30-calendar-day period following the date on which Executive gives such
notice to the Company and (ii) the date that any payment of amount with respect to such claim is due. If the Company notifies Executive in
writing prior to the expiration of such period that it desires to contest such claim, Executive will:
(i)
provide the Company with any written records or documents in Executives possession relating
to such claim reasonably requested by the Company;
(ii)
take such action in connection with contesting such claim as the Company will reasonably
request in writing from time to time, including without limitation accepting legal representation with respect to such claim by an
attorney competent in respect of the subject matter and reasonably selected by the Company;
(iii)
cooperate with the Company in good faith in order effectively to contest such claim; and
(iv)
permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in
connection with such contest and will indemnify and hold harmless Executive, on an after-tax basis, for and against any Excise Tax or income
tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses.
Without limiting the foregoing provisions of this Section 4(f), the Company will control all proceedings taken in connection with the contest of
any claim contemplated by this Section 4(f) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings,
9
hearings and conferences with the taxing authority in respect of such claim (provided that Executive may participate therein at Executives own
cost and expense) and may, at its option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company will determine; provided, however, that if the Company directs Executive to
pay the tax claimed and sue for a refund, the Company will advance the amount of such payment to Executive on an interest-free basis and will
indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Companys control of any such contested claim will be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(g)
If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 4(f) hereof,
Executive receives any refund with respect to such claim, Executive will (subject to the Companys complying with the requirements of
Section 4(f) hereof) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after any
taxes applicable thereto). If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 4(f) hereof, a
determination is made that Executive will not be entitled to any refund with respect to such claim and the Company does not notify Executive
in writing of its intent to contest such denial or refund prior to the expiration of 30 calendar days after such determination, then such advance
will be forgiven and will not be required to be repaid and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid pursuant to this Section 4.
5.
Withholding Taxes. The Company may withhold from all payments due to Executive (or Executives beneficiary or
estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom. In the case of
the withholding of an Excise Tax, such withholding shall be consistent with any determination made under Section 4.
6.
Reimbursement of Expenses. If any contest or dispute shall arise under this Agreement involving termination of
Executives employment with the Company or involving the failure or refusal of the Company to perform fully in accordance with the terms
hereof, the Company shall reimburse Executive, on a current basis, for all reasonable legal fees and expenses, if any, incurred by Executive in
connection with such contest or dispute (regardless of the result thereof); provided, however, Executive shall be required to repay any such
amounts to the Company to the extent that a court or an arbitration panel issues a final order from which no appeal can be taken, or with
respect to which the time period to appeal has expired, setting forth that Executive has not substantially prevailed on at least one material issue
in dispute.
10
7.
Employment by Subsidiaries. Employment by the Company for purposes of this Agreement shall include
employment by any Affiliate.
8.
Restrictive Covenants.
(a)
Non-Competition and Non-Solicitation. Executive acknowledges and recognizes the highly competitive
nature of the businesses of the Company and its Affiliates, the valuable confidential business information in Executives possession and the
customer goodwill associated with the ongoing business practice of the Company, and accordingly agrees as follows:
(i)
For a period ending on the expiration of one year following the termination of Executives
employment (the Restricted Period), Executive will not directly or indirectly, (A) engage in any business for Executives
own account that competes with the business of the Company, (B) enter the employ of, or render any services to, any
person engaged in any business that competes with the business of the Company, (C) acquire a financial interest in, or
otherwise become actively involved with, any person engaged in any business that competes with the business of the
Company, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant,
or (D) interfere with business relationships (whether formed before or after the date of this Agreement) between the
Company or any of its Affiliates that are engaged in a business similar to the business of the Company (the Company
Affiliates) and customers or suppliers of the Company or the Company Affiliates.
(ii)
Notwithstanding anything to the contrary in this Agreement, Executive may directly or indirectly
own, solely as a passive investment, securities of any person engaged in the business of the Company which are publicly
traded on a national or regional stock exchange or on the over-the-counter market if Executive (A) is not a controlling person
of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own one percent (1%) or
more of any class of securities of such person.
(iii)
During the Restricted Period, and for an additional one year after the end of the Restricted Period,
Executive shall not, directly or indirectly, (A) without the written consent of the Company, solicit or encourage any
employee of the Company or the Company Affiliates to leave the employment of the Company or the Company Affiliates, or
(B) without the written consent of the Company (which shall not be unreasonably withheld), hire any such employee who
has left the employment of the Company or the Company Affiliates (other than as a result of the termination of such
employment by the Company or the Company Affiliates) within one year after the termination of such employees
employment with the Company or the Company Affiliates.
11
(iv)
During the Restricted Period, Executive will not, directly or indirectly, solicit or encourage to
cease to work with the Company or the Company Affiliates any consultant then under contract with the Company or the
Company Affiliates.
(b)
Non-Disclosure of Confidential Information. Executive will not at any time (whether during or after
Executives employment with the Company) disclose or use for Executives own benefit or purposes or the benefit or purposes of any other
person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company
and any of its Subsidiaries or Affiliates, any trade secrets, information, data, or other confidential information relating to customers,
development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes,
financing methods, plans, or the business and affairs of the Company generally, or of any Subsidiary or Affiliate of the Company, provided,
however, that the foregoing shall not apply to information which is generally known to the industry or the public other than as a result of
Executives breach of this covenant. Executive agrees that upon termination of Executives employment with the Company for any reason,
Executive will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies
thereof or therefrom, in any way relating to the business of the Company and its Affiliates, except that Executive may retain personal notes,
notebooks and diaries. Executive further agrees that Executive will not retain or use for Executives account at any time any trade names,
trademark or other proprietary business designation used or owned in connection with the business of the Company or its Affiliates.
(c)
Non-disparagement. Executive agrees (whether during or after Executives employment with the Company)
not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Company or the officers or directors of
the Company other than to the extent reasonably necessary in order to (i) assert a bona fide claim against the Company arising out of
Executives employment with the Company, or (ii) respond in a truthful and appropriate manner to any legal process or give truthful and
appropriate testimony in a legal or regulatory proceeding.
(d)
Mutual Dependence of Covenants and Condition Subsequent. Executive covenants and agrees to be
bound by the restrictive covenants and agreements contained in this Section 8 to the maximum extent permitted by Florida law, it being the
intent and spirit of the parties that the restrictive covenants and agreements contained in this Agreement shall be valid and enforceable in all
respects, and, subject to the terms and conditions of this Agreement, Executives compliance with the covenants contained in Section 8(a) is
mutually dependent upon and a condition subsequent to the Companys obligation to make the payments described in Section 3 of this
Agreement and such payments shall immediately cease upon any breach of Section 8(a). Likewise, if Executive commences any action in court
or in arbitration challenging the validity of, seeking to invalidate or otherwise seeking some sort of declaration that the covenants and
agreements in Section 8(a) are void, voidable or invalid, the Companys obligations to make the payments described in Section 3 of this
Agreement shall immediately cease as of the time of the commencement of such action or proceeding. If the Company does not
12
discover Executives breach of Section 8(a) or the commencement of any such action or arbitration proceedings until after one or more
payments under Section 3 have been made to Executive, Executive shall be obligated to immediately return all such payments to the Company
that were paid and received after the breach of Section 8(a).
(e)
Remedies Upon Breach. If Executive breaches the provisions of Sections 8 (a), (b) or (c), the Company
shall have the right to have such restrictive covenants specifically enforced by any court of competent jurisdiction, it being agreed that any
breach of such restrictive covenants would cause irreparable injury to the Company and that money damages would not provide an adequate
remedy for such injury. Accordingly, the Company shall be entitled to injunctive relief to enforce the terms of such restrictive covenants and
to restrain Executive from any violation thereof. The rights and remedies set forth in this Section 8(e) shall be independent of all other others
rights and remedies available to the Company for a breach of such restrictive covenants, and shall be severally enforceable from, in addition
to, and not in lieu of, any other rights and remedies available at law or in equity.
9.
Survival. The respective obligations and benefits afforded to the Company and Executive as provided in Sections 3
(to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of this Agreement), 4
(to the extent that Payments are made to Executive as a result of a Change in Control that occurs during the term of this Agreement), 5, 6,
12(c) and 10 shall survive the termination of this Agreement.
10.
Full Settlement; Resolution of Disputes. The Companys obligation to make any payments and provide any
benefits pursuant to this Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other
severance payments to Executive under any other severance or employment agreement between Executive and the Company, and any
severance plan of the Company; provided, however, that if any such other agreement or plan would provide Executive with a greater payment
or more or longer benefits in respect of any particular item described hereunder (e.g., severance, welfare benefits), then Executive shall receive
such particular item of payment and/or benefit pursuant to such other agreement or plan, in lieu of receiving that particular item pursuant to
this Agreement. The Companys obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against Executive or others. In no event shall Executive be obligated to seek other employment
or take other action by way of mitigation of the amounts payable and benefits provided to Executive under any of the provisions of this
Agreement and, except as provided in Section 3(b), such amounts shall not be reduced whether or not Executive obtains other employment.
The parties agree that any controversy or claim of either party hereto arising out of or in any way relating to this Agreement, or breach thereof,
shall be settled by final and binding arbitration in Jacksonville, Florida by three arbitrators in accordance with the rules of the American
Arbitration Association applicable to the resolution of employment disputes, and that judgment upon any award rendered may be entered by
the prevailing party in any court having jurisdiction thereof. The Company shall bear all costs and expenses arising in connection with any
arbitration proceeding pursuant to this Section.
13
11.
Scope of Agreement. Nothing in this Agreement shall be deemed to entitle Executive to continued employment
with the Company or its Subsidiaries, and if Executives employment with the Company or its Subsidiaries shall terminate prior to a Change in
Control, Executive shall have no further rights under this Agreement (except as otherwise provided hereunder); provided, however, that any
termination of Executives employment with the Company or its Subsidiaries during the Termination Period shall be subject to all of the
provisions of this Agreement.
12.
Successors; Binding Agreement.
(a)
This Agreement shall not be terminated by any Change in Control or other merger, consolidation,
statutory share exchange, sale of substantially all the assets or similar form of corporate transaction involving the Company (a Business
Combination). In the event of any Business Combination, the provisions of this Agreement shall be binding upon the surviving corporation,
and such surviving corporation shall be treated as the Company hereunder.
(b)
The Company agrees that in connection with any Business Combination, it will cause any successor
entity to the Company unconditionally to assume (and for any parent entity in such Business Combination to guarantee), by written
instrument delivered to Executive (or Executives beneficiary or estate), all of the obligations of the Company hereunder.
(c)
This Agreement shall inure to the benefit of and be enforceable by Executives personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive shall die while any amounts
would be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to such person or persons appointed in writing by Executive to receive such amounts or, if no
person is so appointed, to Executives estate.
13.
Notice. (a) For purposes of this Agreement, all notices and other communications required or permitted hereunder
shall be in writing and shall be by hand delivery or by registered or certified mail, return receipt requested, postage prepaid, or by nationally
recognized overnight courier service, addressed as follows:
If to Executive, to Executives principal residence as reflected in the records of the Company.
If to the Company:
801 West Bay Street
Jacksonville, Florida 32204
Attn.: Chief Executive Officer
14
or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
14.
A written notice of Executives Date of Termination by the Company or Executive, as the case may be, to the other,
shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Executives employment under the provision so indicated and (iii) specify
the termination date (which date shall be not less than fifteen (15) (thirty (30), if termination is by the Company for Disability) nor more than
sixty (60) days after the giving of such notice). The failure by Executive or the Company to set forth in such notice any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude
Executive or the Company from asserting such fact or circumstance in enforcing Executives or the Companys rights hereunder.
15.
GOVERNING LAW; VALIDITY. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF FLORIDA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, OF SUCH PRINCIPLES OF ANY
OTHER JURISDICTION WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE
OF FLORIDA. THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE
VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN
FULL FORCE AND EFFECT.
16.
Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original
and all of which together shall constitute one and the same instrument.
17.
Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is
agreed to in writing and signed by Executive and by a duly authorized officer of the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right Executive or the Company may
have hereunder, including, without limitation, the right of Executive to terminate employment for Good Reason, shall not be deemed to be a
waiver of such provision or right or any other provision or right of this Agreement. Except as otherwise specifically provided herein, the rights
of, and benefits payable to, Executive, Executives estate or Executives beneficiaries pursuant to this Agreement are in addition to any rights
of, or benefits payable to, Executive, Executives estate or Executives
15
beneficiaries under any other employee benefit plan or compensation program of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer of the
Company and Executive has executed this Agreement as of the day and year first above written.

Name: Michael j. Grebe
Title: Chairman and CEO
EXECUTIVE
Kenneth D. Sweder
16
EXHIBIT 10.31
FIRST AMENDMENT TO CHANGE IN CONTROL
SEVERANCE AGREEMENT
THIS AGREEMENT (Agreement) is made and entered into this 20th day of October, 2008 (the Effective Date), by and
between INTERLINE BRANDS, INC., a Delaware corporation (Company), and Kenneth D. Sweder (Executive).
WHEREAS, the Company and the Executive desire to amend the Change in Control Severance Agreement entered into by,
and between the parties, dated as of April 30, 2007 (the Change in Control Agreement).
NOW, THEREFORE, in consideration of the premises contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and Executive agree as follows:
1.
Section 3(a)(ii) of the Change in Control Agreement is hereby amended by deleting each reference to one and onehalf (1.5) and replacing it with one and three-quarters (1.75).
2.
Section 3(b) of the Change in Control Agreement is hereby amended by deleting the reference to eighteen (18)
and replacing it with twenty-one (21).
3.
Section 8(a)(i) of the Change in Control Agreement is hereby amended to read in its entirety as follows:
(i)
For a period ending on the expiration of two years following the termination of Executives employment (the
Restricted Period), Executive will not directly or indirectly, (A) engage in any business for Executives own account that
competes with the business of the Company as of the date of termination of the Executives employment, (B) enter the
employ of, or render any services to, any person engaged in any business that competes with the business of the Company
as of the date of termination of the Executives employment, (C) acquire a financial interest in, or otherwise become actively
involved with, any person engaged in any business that competes with the business of the Company as of the date of
termination of the Executives employment, directly or indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, trustee or consultant, or (D) interfere with business relationships (whether formed before or after the date of
this Agreement) between the Company or any of its Affiliates that are engaged in a business similar to the business of the
Company as of the date of termination of the Executives employment (the Company Affiliates) and customers or suppliers
of the Company or the Company Affiliates.
4.
Sections 16 and 17 of the Change in Control Agreement are hereby renumbered as Sections 17 and 18. A new
Section 16 of the Change in Control is hereby added to read in its entirety as follows:
16.
Consent to Jurisdiction. Except as otherwise specifically provided herein, Executive and the Company
each hereby irrevocably submits to the exclusive jurisdiction of any state or federal court serving Duval County, Florida
over any dispute arising out of or relating to this Agreement.
5.
Except as modified or amended herein, the Change in Control Agreement remains in full force and effect. Nothing
contained herein invalidates or shall impair or release any covenant, condition or stipulation in the Change in Control Agreement, and the
same, except as herein modified and amended, shall continue in full force and effect.
6.
This Agreement may be executed in one or more counterparts, each of which shall constitute an original and all of
which taken together shall constitute one Agreement. The parties specifically agree that facsimile signatures are acceptable and permitted and
shall be considered original and authentic. Each party executing this Agreement represents that such party has the full authority and legal
power to do so.

Name: Michael Grebe
Title: Chairman & Chief Executive
Officer
EXECUTIVE
By: /s/ Kenneth D. Sweder
Name: Kenneth D. Sweder
2
EXHIBIT 10.32
Performance-Based Restricted Share Units
EXHIBIT A
RESTRICTED SHARE UNIT AGREEMENT
THIS RESTRICTED SHARE UNIT AGREEMENT (the Agreement), is made and entered into effective as of the 20th day of
October, 2008 (hereinafter the Date of Grant), between Interline Brands, Inc., a New Jersey corporation (the Company), and Kenneth D.
Sweder (the Participant).
R E C I T A L S:
WHEREAS, the Company has adopted the Interline Brands, Inc. 2004 Equity Incentive Plan (the Plan), pursuant to which
awards of Restricted Share Units may be granted; and
WHEREAS, the Compensation Committee of the Board of Directors of the Company (the Committee) has determined that
it is in the best interests of the Company and its stockholders to grant to the Participant an award of Restricted Share Units as provided herein
and subject to the terms set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the covenants of the parties contained in this Agreement,
and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto, for themselves, their
successors and assigns, hereby agree as follows:
1. Grant of Restricted Share Units. The Company hereby grants on the Date of Grant, to the Participant a total of 40,551
Restricted Share Units (the Award), on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan. Such
Restricted Share Units shall be credited to a separate account maintained for the Participant on the books of the Company (the Account).
On any given date, the value of each Restricted Share Unit comprising the Award shall equal the Fair Market Value of one share of Common
Stock. The Award shall vest and settle in accordance with Section 3 hereof.
2. Incorporation by Reference, Etc. The provisions of the Plan are hereby incorporated herein by reference. Except as
otherwise expressly set forth herein, this Agreement shall be construed in accordance with the provisions of the Plan and any capitalized terms
not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Committee shall have final authority to interpret
and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and
conclusive upon the Participant and his legal representative in respect of any questions arising under the Plan or this Agreement.
3.
(a)
Vesting, Settlement and Forfeiture. Except as otherwise provided in the Plan and this Agreement, and
contingent upon the Participants continued service to the Company, the Award shall vest and become non-forfeitable as follows:
(i)
Performance-Based Vesting. The Award shall become vested on the date (the PerformanceBased Vesting Date) that is the earliest to occur of the following:
(A)
the fourth anniversary of the Date of Grant, provided that (1) the average daily closing
price of a share of Common Stock during any 20-consecutive-trading-day period commencing on or after the Date
of Grant (Average Closing Price) equals or exceeds $32.50 prior to the fourth anniversary of the Date of Grant;
and (2) the Participants employment has not terminated prior to the fourth anniversary of the Date of Grant; or
(B)
the date (the Residual Vesting Date) that is the later of (1) the date on which the
Average Closing Price equals or exceeds $35.00 and (2) the fifth anniversary of the Date of Grant, provided that the
Participants employment has not yet terminated as of the Residual Vesting Date, and provided further that the
Residual Vesting Date occurs not later than the seventh anniversary of the Date of Grant. For the avoidance of
doubt, the Award shall not vest under this Section 3(a)(i)(B), unless and until the conditions described in both
clause (1) and clause (2) hereof are satisfied.
(ii)
As soon as is administratively practicable (but in no event later than 14 days) following the
Performance-Based Vesting Date, the Company shall (i) issue and deliver to the Participant one share of Common Stock for
each Restricted Share Unit subject to the Award (the RSU Shares) (and, upon such settlement, the Restricted Share Units
shall cease to be credited to the Account) and (ii) enter the Participants name as a stockholder of record with respect to the
RSU Shares on the books of the Company.
(iii)
Forfeiture of Unvested Award. If the Award does not vest on or before the seventh anniversary
of the Date of Grant, the Restricted Share Units shall be irrevocably forfeited without consideration and the shares of
Common Stock representing such unvested amount may be used for other Awards under the Plan.
(b)
Restrictions. The Award granted hereunder may not be sold, pledged or otherwise transferred (other than
by will or the laws of decent and distribution) and may not be subject to lien, garnishment, attachment or other legal process. The Participant
acknowledges and agrees that, with respect to each Restricted Share Unit credited to his
2
Account, he has no voting rights with respect to the Company unless and until each such Restricted Share Unit is settled in RSU Shares
pursuant to Section 3(a) hereof.
(c)
Effect of Termination of Employment or Change in Control.
(i)
Except as otherwise provided in this Section 3(c), if the Participants employment with the
Company terminates prior to the Performance-Based Vesting Date for any reason, any unvested Restricted Share Units shall
be forfeited without consideration to the Participant.
(ii)
Upon the termination of Participants employment with the Company due to his death or by the
Company due to his Disability, all unvested Restricted Share Units shall vest and be settled in shares of Common Stock as
soon as reasonably practicable (but in no event later than 14 days) following the date of termination.
(iii)
Upon (x) the termination of the Participants employment without Cause or (y) the Participants
voluntary termination for Good Reason (as that term is defined in a written employment agreement between the Participant
and the Company in effect at the date of termination, it being understood that if there is no such employment agreement, or if
the employment agreement does not contain a definition of Good Reason, then Good Reason shall be inapplicable for
purposes of this Agreement), in either case provided that the Applicable Target has been achieved, all unvested Restricted
Share Units shall vest and be settled in shares of Common Stock as soon as reasonably practicable (but in no event later
than 14 days) following the date of termination. The Applicable Target means: (1) if termination of employment occurs on
or prior to the fourth anniversary of the Date of Grant, the Average Closing Price equals or exceeds $32.50 prior to the date
of termination; or (2) if termination occurs after the fourth anniversary and on or prior to the seventh anniversary of the Date
of Grant, the Average Closing Price equals or exceeds $35.00 prior to the date of termination.
(iv)
Upon the termination of the Participants employment for Retirement (as defined below), any
unvested Restricted Share Units shall vest on the applicable date on which they would otherwise have vested (if at all) in
accordance with Section 3(a) had the Participants employment not so terminated, and such Restricted Share Units shall be
settled in shares of Common Stock as soon as reasonably practicable (but in no event later than 14 days) following such
applicable date.
For purposes of this Agreement, Retirement shall mean the voluntary termination of a Participants employment by the
Company after the Participant is fifty-five (55) years of age and has at least ten (10) years of service with the Company.
Notwithstanding anything in the Plan to the contrary, if a Change in Control occurs prior to the Participants termination of
employment, then any unvested Restricted Share
3
Units outstanding immediately prior to the Change in Control shall vest and be settled in shares of Common Stock (or the cash equivalent
thereof) as soon as reasonably practicable (but in no event later than 14 days) following the Change in Control.
(d)
Dividends. If on any date dividends are paid on shares of Common Stock (Shares) underlying the
Award (the Dividend Payment Date), then the number of Restricted Share Units credited to the Account shall, as of the Dividend Payment
Date, be increased by that number of Restricted Share Units equal to: (a) the product of (i) the number of Restricted Share Units in the
Account as of the Dividend Payment Date and (ii) the per Share cash amount of such dividend (or, in the case of a dividend payable in
Shares or other property, the per Share equivalent cash value of such dividend as determined in good faith by the Committee) divided by
(b) the Fair Market Value of a Share on the Dividend Payment Date. Such additional Restricted Share Units shall also be subject to the
restrictions in Section 3(b) and the other terms and conditions of this Agreement.
(e)
Taxes and Withholding. Upon the settlement of the Award in accordance with Section 3(a) or
Section 3(c) hereof, the Participant shall recognize taxable income in respect of the Award and the Company shall report such taxable income
to the appropriate taxing authorities in respect of the Award as it determines to be necessary and appropriate. Upon the settlement of the
Award in RSU Shares, the Participant shall be required as a condition of such settlement to pay to the Company by check or wire transfer the
amount of any income, payroll, or social tax withholding that the Company determines is required; provided that the Participant may elect to
satisfy such tax withholding obligation by having the Company withhold from the settlement that number of RSU Shares having a Fair
Market Value equal to the amount of such withholding; provided, further, that the number of RSU Shares that may be so withheld by the
Company shall be limited to that number of RSU Shares having an aggregate Fair Market Value on the date of such withholding equal to the
aggregate amount of the Participants income, payroll and social tax liabilities based upon the applicable minimum withholding rates.
(f)
Rights as a Stockholder. Upon and following the Performance-Based Vesting Date (or the vesting date
under Section 3(c), if applicable), the Participant shall be the record owner of the RSU Shares settled upon such date unless and until such
shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a common stockholder of the Company,
including, without limitation, voting rights, if any, with respect to the shares. Prior to the Performance-Based Vesting Date (or the vesting
date under Section 3(c), if applicable), the Participant shall not be deemed for any purpose to be the owner of shares of Common Stock
underlying the Restricted Share Units.
4.
Miscellaneous.
(a)
General Assets. All amounts credited to the Account under this Agreement shall continue for all
purposes to be part of the general assets of the Company, Participants interest in the Account shall make the Participant only a general,
unsecured creditor of the Company.
4
(b)
Notices. All notices, demands and other communications provided for or permitted hereunder shall be
made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier, courier service or personal delivery:
if to the Company:
200 East Park Drive, Suite
Mt. Laurel, NJ 08054
Attention: Annette Ricciuti
if to the Participant, at the Participants last known address on file with the Company.
All such notices, demands and other communications shall be deemed to have been duly given when delivered by hand, if personally
delivered; when delivered by courier, if delivered by commercial courier service; five business days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.
(c)
Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.
(d)
No Rights to Service. Nothing contained in this Agreement shall be construed as giving the Participant
any right to be retained, in any position, as a consultant or director of the Company or its Affiliates or shall interfere with or restrict in any way
the right of the Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Participant at any time for
any reason whatsoever.
(e)
Bound by Plan. By signing this Agreement, the Participant acknowledges that he has received a copy of
the Plan and has had an opportunity to review the Plan and agrees to be bound by all the terms and provisions of the Plan.
(f)
Beneficiary. The Participant may file with the Committee a written designation of a beneficiary on such
form as may be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary
survives the Participant, the executor or administrator of the Participants estate shall be deemed to be the Participants beneficiary.
(g)
its successors and assigns, and of the Participant and the beneficiaries, executors, administrators, heirs and successors of the Participant.
(h)
Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding of the
parties hereto with respect to the subject matter contained herein and supersede all prior communications, representations and negotiations in
respect
5
thereto. No change, modification or waiver of any provision of this Agreement shall be valid unless the same be in writing and signed by the
parties hereto.
(i)
Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the
State of New York without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction which
could cause the application of the laws of any jurisdiction other than the State of New York.
(j)
Consent to Jurisdiction. Except as otherwise specifically provided herein, Executive and the Company
each hereby irrevocably submits to the exclusive jurisdiction of any state or federal court serving Duval County, Florida over any dispute
arising out of or relating to this Agreement.
(k)
(l)
Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

Title: Chairman & Chief Executive Officer
Kenneth D. Sweder
6
EXHIBIT 10.36
AMENDMENT TO
January 7, 2004, between Interline Brands, Inc., a New Jersey corporation (the Company), and Fred Bravo (Executive), as heretofore
amended, is dated as of December 31, 2008.
agree as follows:
1.
2.
3.
4.
5.
6.
(k)
Section 409A.
(i)
business day.
(iii)
2
(iv)
7.
8.
State of Florida.
9.
3

/S/ Michael J. Grebe
EXECUTIVE
/s/ Federico M. Bravo
Fred Bravo

Employment Agreement between the Company and Fred Bravo]
4
EXHIBIT 10.40
AMENDMENT TO
January 7, 2004, between Interline Brands, Inc., a New Jersey corporation (the Company), and Pamela L. Maxwell (Executive), as heretofore
amended, is dated as of December 31, 2008.
agree as follows:
1.
2.
3.
4.
5.
6.
(k)
Section 409A.
(i)
business day.
(iii)
2
(iv)
7.
8.
State of Florida.
9.
3

EXECUTIVE
/s/ Pamela L. Maxwell
Pamela L. Maxwell

Employment Agreement between the Company and Pamela L. Maxwell]
4
EXHIBIT 10.41
THIS IS AN EMPLOYMENT AGREEMENT (the AGREEMENT), dated as of 14 January 2004, by and between Interline
Brands, Inc., a New Jersey corporation (f/k/a Wilmar Industries, Inc.) (the COMPANY), and James A. Spahn (the EXECUTIVE).
WHEREAS, the Executive is currently an employee of the Company;
WHEREAS, the Company considers it essential to its best interests and the best interests of its stockholders to provide for the
continued employment of the Executive by the Company; and
WHEREAS, the Executive is willing to accept and continue his employment on the terms hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration
and intending to be legally bound hereby, the parties agree as follows:
1.
TERM OF EMPLOYMENT. The Executives term of employment with the Company under this Agreement shall begin on the
date hereof, and unless sooner terminated as hereafter provided, shall continue for one (1) year (the EMPLOYMENT TERM); PROVIDED
that the Employment Term shall automatically be extended for successive one-year periods; PROVIDED FURTHER that the Agreement may be
terminable by either party upon sixty (60) days written notice of such partys intention to terminate.
2.
POSITION.
(a) The Executive shall serve as a Vice President of the Company. In such position, the Executive shall have such
duties and authority as are customarily associated with such position and agrees to perform such duties and functions as shall from time to
time be assigned or delegated to him by the President of the Company or his designee.
(b) During the Employment Term, the Executive will devote substantially all of his business time and best efforts to
the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise
which would conflict with the rendition of such services, either directly or indirectly, without the prior written consent of the President of the
Company.
3.
BASE SALARY. During the Employment Term, the Company shall pay the Executive an annual base salary (the BASE
SALARY) at the annual rate of $136,500, payable in regular installments in accordance with the Companys usual payroll practices. Such base
salary may, at the sole discretion of the President of the Company, be upwardly adjusted.
4.
BONUS. With respect to each calendar year during the Employment Term, the Executive shall be eligible to earn an annual
bonus award of up to 45% percent of the Base Salary
(the MAXIMUM BONUS), based upon bonus plans to be established and determined by the Board of Directors of the Company (the
Board) from time to time.
5.
EMPLOYEE BENEFITS AND PERQUISITES. During the Employment Term, the Executive shall be eligible to participate in
the Companys employee benefit plans (including, without limitation, its health insurance and short term and long term disability insurance
plans) on the same basis as those benefits are generally made available to other executives of the Company. All of the benefits and perquisites
described in this Section 5 shall hereafter be referred to collectively as the BENEFITS.
6.
BUSINESS EXPENSES. During the Employment Term, reasonable business expenses incurred by Executive in the
performance of his duties hereunder shall be reimbursed by the Company in accordance with the Companys policies on expense
reimbursement, in effect from time to time.
7.
TERMINATION. Notwithstanding any other provision of this Agreement:
(a) FOR CAUSE BY THE COMPANY. The Employment Term and the Executives employment hereunder may be
terminated by the Company for Cause. For purposes of this Agreement, CAUSE shall mean (i) the Executives gross neglect of, or willful
and continued failure to substantially perform, his duties hereunder (other than as a result of total or partial incapacity due to physical or
mental illness); (ii) a willful act by the Executive against the interests of the Company or which causes or is intended to cause harm to the
Company or its stockholders; (iii) the Executives conviction, or plea of no contest or guilty, to a felony under the laws of the United States or
any state thereof or of a lesser offense involving dishonesty, the theft of Company property or moral turpitude; or (iv) a material breach of the
Agreement by the Executive which is not cured by the Executive within twenty (20) days (where the breach is curable) following written notice
to the Executive by the Company of the nature of the breach. Upon termination of the Executives employment for Cause pursuant to this
Section 7(a), the Executive shall be paid any accrued and unpaid Base Salary and Benefits through the date of termination and shall have no
additional rights to any compensation or any other benefits under the Agreement or otherwise.
(b) DISABILITY OR DEATH. The Employment Term and the Executives employment hereunder shall terminate upon
his death or if the Executive is unable for an aggregate of six (6) months in any twelve (12) consecutive month period to perform his duties due
to the Executives physical or mental incapacity, as reasonably determined by the Board (such incapacity is hereinafter referred to as
DISABILITY). Upon termination of the Executives employment hereunder for either Disability or death, the Executive or his estate (as the
case may be) shall be entitled to receive (i) any accrued and unpaid Base Salary and Benefits and (ii) a bonus for the calendar year in which
termination occurs, equal to the bonus which the Executive would have been entitled to if he had remained employed by the Company at the
end of such calendar year, multiplied by a fraction, the numerator of which is the number of days in such calendar year preceding the date of
death or termination of employment and the denominator of which is 365 (a PRO RATA BONUS). Upon termination of the Executives
employment due to Disability or death pursuant to this Section 7(b), the Executive shall have no additional rights to any compensation or any
other benefits under this Agreement. All other benefits, if any, due the Executive following his termination for Disability or death shall be
determined in accordance with the plans, policies and practices of the Company.
2
(c) WITHOUT CAUSE BY THE COMPANY. The Employment Term and the Executives employment hereunder may
be terminated by the Company without Cause. If the Executives employment is terminated by the Company without Cause (other than by
reason of Disability or death), the Executive shall be entitled to receive (i) any accrued and unpaid Base Salary and Benefits, (ii) continuation
of the Executives Base Salary for a period of twelve (12) months from the date of termination (the SEVERANCE PAYMENT),
(iii) continuation of the Executives health and dental insurance coverage on the same basis as those benefits are generally made available to
other executives of the Company and (iv) a Pro Rata Bonus. Upon termination of Executives employment by the Company without Cause
pursuant to this Section 7(c), Executive shall have no additional rights to any compensation or any other benefits under this Agreement. All
other benefits, if any, due Executive following Executives termination of employment by the Company without Cause shall be determined in
accordance with the plans, policies and practices of the Company.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. The Executive shall provide the Company thirty (30) days
advance written notice in the event the Executive terminates his employment, other than for Good Reason (as hereinafter defined); PROVIDED
that the President may, in his sole discretion, terminate the Executives employment with the Company prior to the expiration of the thirty-day
notice period. In such event and upon the expiration of such thirty-day period (or such shorter time as the President in his sole discretion may
determine), the Executives employment under this Agreement shall immediately and automatically terminate, and the Executive shall be limited
to receiving any Base Salary earned and unpaid as of the Executives termination date.
(e) TERMINATION FOR GOOD REASON. The Executive may terminate his employment hereunder for Good
Reason at any time during the Employment Term. For purposes of the Agreement, GOOD REASON shall mean (i) a material breach of the
terms of this Agreement by the Company, (ii) the Company requiring the Executive to move his primary place of employment more than thirtyfive (35) miles from the then current place of employment, if such move materially increases his commute, or (iii) a material diminution of the
Executives responsibilities, PROVIDED that any of the foregoing is not cured by the Company within twenty (20) days following receipt of
written notice by the Executive to the Company of the specific nature of the breach. No termination for Good Reason shall be permitted unless
the Company shall have first received written notice from the Executive describing the basis of such termination for Good Reason. A
termination of the Executives employment for Good Reason pursuant to this Section 7(e) shall be treated for purposes of this Agreement as a
termination by the Company without Cause and the provisions of Section 7(c) relating to the payment of compensation and benefits shall
apply.
(f) BENEFITS/RELEASE. In addition to any amounts which may be payable following a termination of employment
pursuant to one of the paragraphs of this Section 7, the Executive or his beneficiaries shall be entitled to receive any benefits that may be
provided for under the terms of an employee benefit plan in which the Executive is participating at the time of termination. Notwithstanding
any other provision of this Agreement to the contrary, the Executive acknowledges and agrees that any and all payments, other than the
payment of any accrued and unpaid Base Salary and Benefits, to which the Executive is entitled under this Section 7 are conditioned upon and
subject to the Executives execution of a general waiver and release, in such form as may be prepared by the Companys attorneys, of all claims
and issues arising under the
3
Employment Agreement, except for such matters covered by provisions of this Agreement which expressly survive the termination of this
Agreement.
(g) Except as provided in this Section 7, the Company shall have no further obligation or liability under this
Agreement following a termination of employment by the Executive.
(h) NOTICE OF TERMINATION. Any purported termination of employment by the Company or by the Executive shall
be communicated by written notice of termination to the other party hereto in accordance with Section 12(h) hereof.
8.
NON-COMPETITION.
(a) The Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and
its affiliates, the valuable confidential business information in such Executives possession and the customer goodwill associated with the
ongoing business practice of the Company, and accordingly agrees as follows:
(i) During the Employment Term and, for a period ending on the expiration of one year following the
termination of the Executives employment (the RESTRICTED PERIOD), the Executive will not directly or indirectly, (i) engage in any
business for the Executives own account that competes with the business of the Company, (ii) enter the employ of, or render any services to,
any person engaged in any business that competes with the business of the Company, (iii) acquire a financial interest in, or otherwise become
actively involved with, any person engaged in any business that competes with the business of the Company, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or (iv) interfere with business relationships (whether
formed before or after the date of this Agreement) between the Company or any of its affiliates that are engaged in a business similar to the
business of the Company (the COMPANY AFFILIATES) and customers or suppliers of the Company or the Company Affiliates.
(ii) Notwithstanding anything to the contrary in this Agreement, the Executive may directly or indirectly
own, solely as a passive investment, securities of any person engaged in the business of the Company which are publicly traded on a national
or regional stock exchange or on the over-the-counter market if the Executive (i) is not a controlling person of, or a member of a group which
controls, such person and (ii) does not, directly or indirectly, own one percent (1%) or more of any class of securities of such person.
(iii) During the Restricted Period, and for an additional one year after the end of the Restricted Period, the
Executive will not, directly or indirectly, (i) without the written consent of the Company, solicit or encourage any employee of the Company or
the Company Affiliates to leave the employment of the Company or the Company Affiliates, or (ii) without the written consent of the Company
(which shall not be unreasonably withheld), hire any such employee who has left the employment of the Company or the Company Affiliates
(other than as a result of the termination of such employment by the Company or the Company Affiliates)
4
within one year after the termination of such employees employment with the Company or the Company Affiliates.
(iv) During the Restricted Period, the Executive will not, directly or indirectly, solicit or encourage to cease
to work with the Company or the Company Affiliates any consultant then under contract with the Company or the Company Affiliates.
(b) It is expressly understood and agreed that although the Executive and the Company consider the restrictions
contained in this Section 8 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an unenforceable restriction against the Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding
shall not affect the enforceability of any of the other restrictions contained herein.
9.
CONFIDENTIALITY. The Executive will not at any time (whether during or after his employment with the company) disclose
or use for his own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation
or other business organization, entity or enterprise other than the Company and any of its subsidiaries or affiliates, any trade secrets,
information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, manufacturing processes, financing methods, plans, or the business and affairs of the Company
generally, or of any subsidiary or affiliate of the Company, PROVIDED that the foregoing shall not apply to information which is generally
known to the industry or the public other than as a result of the Executives breach of this covenant. The Executive agrees that upon
termination of his employment with the Company for any reason, he will return to the Company immediately all memoranda, books, papers,
plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its
affiliates, except that he may retain personal notes, notebooks and diaries. The Executive further agrees that he will not retain or use for his
account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of
the Company or its affiliates.
10. SPECIFIC PERFORMANCE. The Executive acknowledges and agrees that the Companys remedies at law for a breach or
threatened breach of any of the provisions of Section 8 or Section 9 would be inadequate and, in recognition of this fact, the Executive agrees
that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any
other equitable remedy which may then be available.
11. INDEPENDENCE, SEVERABILITY AND NON-EXCLUSIVITY. Each of the rights and remedies set forth in this Agreement
shall be independent of the others and shall be severally enforceable and all of such rights and remedies shall be in addition to and not in lieu
of any other rights and remedies available to the Company or its affiliates under the law or in equity. If any of the provisions contained in this
Agreement, including without limitation, the rights and
5
remedies enumerated herein, is hereafter construed to be invalid or unenforceable, the same shall not affect the remainder of the covenant or
covenants, or rights or remedies, which shall be given full effect without regard to the invalid portions.
12.
MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State
of Florida without regard to its conflicts of law doctrine.
(b) ENTIRE AGREEMENT/AMENDMENTS. This Agreement contains the entire understanding of the parties with
respect to the employment of the Executive by the Company. There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may
not be altered, modified, or amended except by written instrument signed by the parties hereto.
(c) NO WAIVER. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver of such partys rights or deprive such party of the right thereafter to insist upon strict adherence to that term
or any other term of this Agreement.
(d) SEVERABILITY. In the event that any one or more of the provisions of this Agreement shall be or become invalid,
illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be
affected thereby.
(e) ASSIGNMENT. This Agreement shall not be assignable by the Executive. This Agreement may be assigned by the
Company to a company which is a successor in interest to substantially all of the business operations of the Company or to the financial
institution(s) providing the Companys senior credit facility. Such assignment shall become effective when the Company notifies the Executive
of such assignment or at such later date as may be specified in such notice. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such successor company, PROVIDED that any assignee expressly assumes the
obligations, rights and privileges of this Agreement.
(f) NO MITIGATION. The Executive shall not be required to mitigate the amount of any payment provided for
pursuant to this Agreement by seeking other employment and, to the extent that the Executive obtains or undertakes other employment, the
payment will not be reduced by the earnings of the Executive from the other employment.
(g) SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to the benefit of and be binding upon
personal or legal representatives, executors, administrators, successors, heirs, distributes, devises and legatees.
(h) NOTICE. For the purpose of this Agreement, notices and all other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt
requested,
6
postage prepaid, addressed, in the case of the Executive, to the Executives address on file with the Company; all notices to the Company shall
be directed to the attention of the President or to such other address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon receipt.
(i) WITHHOLDING TAXES. The Company may withhold from any amounts payable under this Agreement such
Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
(j) COUNTERPARTS. This Agreement may be signed in counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
/s/ James A. Spahn

Name: James A. Spahn
5209 Thornridge Ct.
Sterling Hts, MI 48314
Title: President and CEO
8
EXHIBIT 10.42
Amendment to Employment Agreement
This Amendment is made this 28th day of October, 2004, by and between Interline Brands, Inc., a New Jersey Corporation (f/k/a Wilmar
Industries, Inc.) (Company), whose address is 801 West Bay Street, Jacksonville, Florida 32204 and James A. Spahn (Executive).
Whereas, the Company and Executive have previously entered into an Employment Agreement dated January 14, 2004 (the
Agreement); and,
Whereas, the Company and Executive desire to modify and amend the Agreement and certain provisions thereof.
Now, therefore, in consideration of the premises contained herein and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and Executive agree as follows:
1.
Section 1 of the Agreement entitled Term of Employment is hereby deleted in its entirety and shall be replaced with the following
provisions and incorporated into the Agreement as the new and substituted Section 1:
1. Term of Employment. The Executives term of employment with the Company under this Agreement shall begin on the
date hereof, and unless sooner terminated as hereafter provided, shall continue until January 14, 2005 (the Employment
Term); provided that the Employment Term shall automatically be extended for successive one-year periods unless the
Company provides written notice of non-renewal at least sixty (60) days prior to the end of the Employment Term or any
renewal term thereof.
The termination of the Executives employment at the end of the Employment Term or any successive one year period
thereafter on account of the Company giving notice to the Executive of its desire not to extend the Employment Term in
accordance with the provisions of this Section 1 shall be treated for all purposes as a termination without Cause pursuant to
Section 7 (c), and the provisions of Section 7 (c) shall apply to such termination. The termination of the Executives
employment at the end of the Employment Term or any successive one year period thereafter on account of the Executive
giving notice to the Company of his/her desire not to extend the Employment Term in accordance with the provisions of this
Section 1 shall be treated for all purposes as a voluntary termination pursuant to Section 7 (d), and the provisions of
Section 7 (d) shall apply to such termination.
2.
Except as modified or amended herein or by any offer letter to the Executive, the Agreement remains in full force and effect. Nothing
contained herein invalidates or shall impair or release any covenant, condition or stipulation in the Agreement, and the same, except as
herein modified and amended, shall continue in full force and effect.
3.
This Amendment may be executed in one or more counterparts, each of which shall constitute an original and all of which taken together
shall constitute one Agreement. The parties specifically agree that facsimile signatures are acceptable and permitted and shall be
considered original and authentic. Each party executing this Agreement represents that such party has the full authority and legal power
to do so.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, which is effective as of the date first above written.

By:
EXECUTIVE

(Signature)
/s/ JAMES A. SPAHN

(Signature)
Name: Michael J.Grebe

Title: President and CEO
Date: October 28, 2004
Name: James A. Spahn

Title: Vice President, Distribution
Date: October 28, 2004
EXHIBIT 10.43
AMENDMENT TO
January 14, 2004, between Interline Brands, Inc., a New Jersey corporation (the Company), and James A. Spahn (Executive) is dated as of
December 31, 2008.
agree as follows:
1.
2.
3.
4.
5.
6.
(k)
Section 409A.
(i)
business day.
(iii)
2
(iv)
7.
8.
State of Florida.
9.
3

EXECUTIVE
/s/ James A. Spahn
James A. Spahn
Employment Agreement between the Company and James A. Spahn]
4
EXHIBIT 10.45
AMENDMENT TO
CHANGE IN CONTROL SEVERANCE AGREEMENT
December
This AMENDMENT (this Amendment) to the Change in Control Severance Agreement (the CIC Agreement), dated as of
between Interline Brands, Inc., a Delaware corporation (the Company), and
(Executive) is dated as of
, 2008.
WHEREAS, the Company and Executive wish to amend the CIC Agreement as provided herein to reflect certain changes
required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the Code).
agree as follows:
1.
Except as defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the CIC
2.
The definition of Change in Control is hereby amended by adding the following language at the end thereof to
Agreement.
read as follows:
Moreover, in the event that payments hereunder would otherwise be considered deferred compensation subject to
Section 409A, a Change in Control shall not be deemed to occur unless the event giving rise to the Change in Control satisfies the definition of
a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a
corporation pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder.
3.
The definition of Good Reason is amended by deleting footnote 1.
4.
Section 3(c) of the CIC Agreement is hereby amended by deleting the phrase Sections 4(a)(i)(B), 4(a)(ii) and 4(b)
contained therein and replacing it with Sections 3(a)(i)(B), 3(a)(ii) and 3(b). Section 3(c) of the CIC Agreement is further amended by adding
the following language at the end thereof to read as follows:
Executive shall execute and deliver such release the Company within 60 days following the date of Executives termination
of employment. Notwithstanding anything to the contrary in this Agreement, in the event that such payments hereunder would otherwise be
considered deferred compensation subject to Section 409A, any such payments shall not commence until the 61st day following the Date of
Termination.
5.
A new Section 18 of the CIC Agreement is hereby added to read as follows:
18.
Section 409A.
(i)
result in the imposition of additional taxes, penalties or interest under Section 409A. In this regard, the provisions of this Section 18 shall only
apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Notwithstanding the
business day.
(iii)
reasonably determines that any of the benefit plan coverages are described in Section 3(b) are deferred compensation and may not be
Section 3(b) of this Agreement shall be paid or provided as promptly as practicable, and in all events not later than the last day of the third
taxable year following the taxable year in which the Executives separation from service occurs.
(iv)
For the avoidance of doubt, it is intended that any expense reimbursement made hereunder shall be exempt from
Section 409A. Notwithstanding the foregoing, if any expense reimbursement made hereunder shall be determined to be deferred
2
compensation within the meaning of Section 409A, then (i) the amount of the expense reimbursement during one taxable year shall not affect
the amount of the expense reimbursement during any other taxable year, (ii) the expense reimbursement shall be made on or before the last day
of Executives taxable year following the year in which the expense was incurred, and (iii) the right to expense reimbursement hereunder shall
not be subject to liquidation or exchange for another benefit.
(v)
Any payment by the Company of any Gross-Up Payment provided in Section 4 of this Agreement will be paid as
provided therein but in all events not later than the end of Executives taxable year next following Executives taxable year in which Executive
remits the related taxes, and any other indemnification payment provided in Section 4 of this Agreement shall be paid to Executive as provided
therein but in all events on or before the last day of Executives taxable year following the taxable year in which the taxes that are the subject of
the claim are remitted to the taxing authority or where, as a result of such claim, no taxes are remitted, by the end of Executives taxable year
following Executives taxable year in which the claim is completed (if an audit) or there is a final and nonappealable settlement or other
resolution of the claim.
(vi)
If the provisions of this Agreement would cause any amounts payable under Executives employment agreement
with the Company to be treated as deferred compensation subject to Section 409A, any such payments that are conditioned on Executives
delivery of a release of claims under the terms of the Employment Agreement shall not commence until the 61st day following Executives
termination of employment thereunder.
6.
Continuing Effect of CIC Agreement. Except as expressly modified hereby, the provisions of the CIC Agreement
are and shall remain in full force and effect.
7.
State of Florida.
8.
3

EXECUTIVE

CIC Agreement between the Company and Executive]
4
QuickLinks -- Click here to rapidly navigate through this document
EXHIBIT 21.1
LIST OF SUBSIDIARIES
As of December 26, 2008
New Jersey
Wilmar Financial, Inc.
Delaware
Wilmar Holdings, Inc.
Delaware
Glenwood Acquisition LLC
Delaware
Barnett of the Caribbean
Puerto Rico
Sexauer Ltd.
Ontario, Canada
AmSan LLC(1)
Delaware
Eagle Maintenance Supply, Inc. New Jersey
(1)
Effective December 26, 2008, AmSan LLC was merged into Interline Brands, Inc., a New Jersey corporation.
QuickLinks
EXHIBIT 21.1
LIST OF SUBSIDIARIES
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement No. 333-121443, No. 333-134389 and No. 333-151023 on
Form S-8 and No. 333-134415 on Form S-3 of our reports, dated February 25, 2009, relating to the consolidated financial statements of Interline
Brands, Inc., a Delaware corporation, and its subsidiaries and the effectiveness of Interline Brands, Inc.'s internal control over financial
reporting, appearing in this Annual Report on Form 10-K of Interline Brands, Inc. for the year ended December 26, 2008.
/s/ Deloitte & Touche LLP
February 25, 2009
QuickLinks
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
EXHIBIT 31.1
Certification Pursuant To
Rule 13a-14(a) of the Securities Exchange Act of 1934
I, Michael J. Grebe, certify that:
1.
I have reviewed this report on Form 10-K of Interline Brands, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
5.
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
By: /s/ MICHAEL J. GREBE

Title: Chairman of the Board,
QuickLinks
EXHIBIT 31.1
Certification Pursuant To Rule 13a-14(a) of the Securities Exchange Act of 1934
EXHIBIT 31.2
Certification Pursuant To
Rule 13a-14(a) of the Securities Exchange Act of 1934
I, Thomas J. Tossavainen, certify that:
1.
I have reviewed this report on Form 10-K of Interline Brands, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
5.
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent
functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
By: /s/ THOMAS J. TOSSAVAINEN
Name: Thomas J. Tossavainen

Title: Chief Financial Officer
QuickLinks
EXHIBIT 31.2
Certification Pursuant To Rule 13a-14(a) of the Securities Exchange Act of 1934
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Interline Brands, Inc. (the "Company") on Form 10-K for the period ending December 26, 2008 as
filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael J. Grebe, Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
Michael J. Grebe
Chairman of the Board,
February 25, 2009
QuickLinks
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Interline Brands, Inc. (the "Company") on Form 10-K for the period ending December 26, 2008 as
filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas J. Tossavainen, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations
of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ THOMAS J. TOSSAVAINEN
Chief Financial Officer
February 25, 2009
QuickLinks
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT
OF 2002

INTERLINE BRANDS INC DE 10 K Annual Reports 2009 02 25 PDF

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

INTERLINE BRANDS INC DE 10 K Annual Reports 2009 02 25 PDF

Загружено:

Авторское право:

Доступные форматы

Processed and formatted by SEC Watch - Visit SECWatch.

Use these links to rapidly review the document

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

Commission file number: 001-32380

INTERLINE BRANDS, INC.

801 West Bay Street, Jacksonville, Florida

(904) 421 1400

Nam e of e ach e xch an ge on wh ich re giste re d

Common Stock, $.01 par value per share

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Processed and formatted by SEC Watch - Visit SECWatch.com

Smaller reporting company o

(Do not check if a smaller

Unresolved Staff Comments

Submission of Matters to a Vote of Security Holders

Market for Registrant's Common Equity, Related Stockholder Matters and

Selected Financial Data

Management's Discussion and Analysis of Financial Condition and

Quantitative and Qualitative Disclosures About Market Risk

Financial Statements and Supplementary Data

Changes in and Disagreements with Accountants on Accounting and

Controls and Procedures

Processed and formatted by SEC Watch - Visit SECWatch.com

Directors, Executive Officers and Corporate Governance

Security Ownership of Certain Beneficial Owners and Management and

Certain Relationships and Related Transactions, and Director Independence

Principal Accounting Fees and Services

Exhibits, Financial Statement Schedules

general market conditions,

credit market contractions,

product cost and price fluctuations due to market conditions,

consumer spending and debt levels,

material facilities and systems disruptions and shutdowns,

failure to realize expected benefits from acquisitions,

our ability to purchase products from suppliers on favorable terms,

the length of our supply chains,

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

Processed and formatted by SEC Watch - Visit SECWatch.com

currency exchange rates,

the loss of significant customers,

our ability to accurately predict market trends,

failure to locate, acquire and successfully integrate acquisition candidates,

dependence on key employees,

our inability to protect trademarks,

adverse publicity and litigation,

our level of debt,

Processed and formatted by SEC Watch - Visit SECWatch.com

interest rate fluctuations,

future cash flows,

changes in consumer preferences,

labor and benefit costs,

weather conditions, and

Processed and formatted by SEC Watch - Visit SECWatch.com

Industry and Market Overview

Processed and formatted by SEC Watch - Visit SECWatch.com

Produ ct C ate gory

The following is a discussion of our principal product categories:

Processed and formatted by SEC Watch - Visit SECWatch.com

Processed and formatted by SEC Watch - Visit SECWatch.com

Processed and formatted by SEC Watch - Visit SECWatch.com

Processed and formatted by SEC Watch - Visit SECWatch.com