Cragar Industries, Inc. Reports Earnings for Q2 1997

29 July 1997

    PHOENIX, July 29 -- Cragar Industries, Inc.
today reported a 70% increase in net earnings to $273,734 for the second
quarter ended June 30, 1997 from net earnings of $160,970 for the same quarter
ended June 30, 1996.  Net sales for the second quarter was $6.3 million, a 7%
increase over $5.9 million for the comparable quarter in 1996.  Earnings per
share for the quarter was reported at $.12 comparable to $.14 for the second
quarter 1996.  The weighted average number of common shares outstanding was
2,368,601 million for the quarter.
    The Company attributed the second quarter's increase in earnings and sales
to the introduction of several new styles of wheels, higher margins on new
products shipped during the second quarter and a continued focus on decreasing
manufacturing costs.  In addition, with reduced debt, interest costs were
down.
    Net earnings for the first six months of fiscal 1997 was $282,322, down
41% from $479,710 during the same period a year ago.  For the first half of
fiscal 1997, Cragar reported net sales of $10.9 million as compared to the
first half fiscal 1996 amount of $12.5 million, a decrease of 13%.  Earnings
per share declined from $.43 for the first six months of 1996 to $.12 for the
same period in 1997.
    The six month sales figure reflected Cragar's decision to withdraw from a
low margin relationship with a customer and the reduction of sales of wire
wheels.  Selling, general and administrative expenses increased due to costs
associated with public company responsibilities, including reporting
requirements and investor relations, and the added costs of newly introduced
selling and marketing initiatives of the Company.  Combined, the reduction in
sales and increase in costs led to the decrease in net earnings for the six
months period ending June 30, 1997 versus the same period in 1996.
    "We are pleased with the Company's continued performance as we implement
strategies that we believe will enable us to become the industry's leader in
wheel sales and marketing," commented Michael L. Hartzmark, President and CEO
of Cragar.  "With a highly skilled executive management team now in place,
newly introduced product lines and a focus on continuing to achieve the goals
we set for the Company in our IPO, we are positioned for the next phase of
accomplishments."
    During the quarter, the Company made several key hiring decisions to
complete the executive management team.  Robert L. Prescott was hired as Chief
Financial Officer.  Rob brings over 17 years of expertise from related
financial positions with a concentrated emphasis on re-engineering projects
that decreased operating expenses while increasing production.  Also, the
Company hired Michael G. Burroughs as Executive Vice President, Marketing.
Michael has over 20 years in the industry,  most notably as former President
and CEO of Burroughs & Associates, a marketing and advertising firm
specializing in the automotive aftermarket business.
    Several beneficial strategic alliances were also formed during the
quarter.  The Company formed an alliance with OE Enterprises, a design and
engineering firm in Rochester Hills, MI, to develop, design and engineer an
exclusive product line of upscale, higher margin wheels targeted at a new, and
future potential, customer base.  Also, Larry Shinoda was retained to design
the new "retro-looking" Cragar S/S wheel to appeal to today's, and the
future's, automotive enthusiast.
    Cragar Industries, Inc. is an international manufacturer and marketer of
automotive wheels and wheel accessories for cars, trucks and racing vehicles.

    For additional information, contact Lynn A. Howe, Investor Relations, 602-
 247-1300.  Internet address:  http://www.prnewswire.com/cnoc.  To obtain
additional hard copies, call Fax-On-Demand at 800-758-5804, ext. 122432.

    In the content of this release, we may make forward-looking statements
regarding future events or the future financial performance of the Company.
Please refer to the Risk Factors in the Company's filings with the Securities
and Exchange Commission which identify some important factors that could cause
the actual results to differ materially from those contained in our forward-
looking statements.  These factors include product availability, market
conditions and competitive factors, as well as general economic conditions.

                           CRAGAR INDUSTRIES, INC.
                           Condensed Balance Sheets
                     June 30, 1997 and December 31, 1996
                                  Unaudited

                                    Assets

                                                     June 30     December 31
                                                        1997            1996
    Current Assets:
      Cash and cash equivalents                           $0         863,049
      Accounts receivable, less allowance for
        doubtful accounts of $24,514 as of 6/30/97
        and $28,475 as of 12/31/96                 7,349,260       3,562,358
      Inventories, net                             6,010,861       6,302,612
      Prepaid expenses                               339,219          38,498
           Total current assets                   13,699,340      10,766,517

    Property and equipment, net                    1,062,861         825,505
    Other assets, net                                102,927         163,122

                                                 $14,865,128      11,755,144

                       Liabilities and Stockholders' Equity

    Current liabilities:
      Accounts payable                            $2,887,976       2,509,473
      Accrued expenses                             1,747,944       1,439,627
      Accrued interest                                74,137         123,352
      Current installments of capital lease
        obligations                                  138,053          69,219
      Current installments of long-term debt           7,897           7,999
           Total current liabilities               4,856,007       4,149,670

    Notes payable                                  5,553,142       2,957,392
    Capital lease obligations, less current
     installments                                      6,166         108,123
    Long-term debt, less current installments              0           3,736
    Excess of fair value of assets acquired
     over cost                                       368,734         737,468
          Total liabilities                       10,784,049       7,956,389

    Stockholders' equity:
      Preferred stock, par value $.01; authorized
        200,000 shares, no shares issued and outstanding   0               0
      Common stock, par value $.01; authorized
        5,000,000 shares, 2,210,305 shares issued
        and outstanding at 6/30/97                    22,103          22,103
      Additional paid-in capital                  11,335,142      11,335,141
      Accumulated deficit                        (7,276,166)     (7,558,489)
          Total stockholders' equity               4,081,079       3,798,755
                                                 $14,865,128      11,755,144

                           CRAGAR INDUSTRIES, INC.
                      Condensed Statements of Operations
           Three months and six months ended June 30, 1997 and 1996
                                  Unaudited

                                   Three Months Ended         Six Months Ended
                                   June 30    June 30      June 30    June 30
                                      1997       1996         1997       1996

    Net sales                    6,275,309  5,873,838   10,919,830 12,527,683
    Cost of goods sold           5,036,555  5,077,714    8,899,651 10,694,672
        Gross profit             1,238,754    796,124    2,020,179  1,833,011

    Selling, general and
      administrative expenses      981,624    616,311    1,811,703  1,269,409
    Amortization of excess of
      fair value of assets
    acquired over cost           (184,367)  (184,367)    (368,734)  (368,734)
        Income from operations     441,497    364,180      577,210    932,336

    Non-operating expenses, net
      Interest expense, net        142,323    285,349      253,044    523,000
      Other, net                    25,440     16,690       41,844     28,455
        Total non-operating
           expenses                167,763    302,039      294,888    551,455

        Income before income taxes 273,734     62,141      282,322    380,881

    Income taxes                         0     31,171            0     31,171

        Income
       (before extraordinary item) 273,734     30,970      282,322    349,710

    Extraordinary item:
      Gain on sale of assets             0  (130,000)            0  (130,000)

        Net earnings               273,734    160,970      282,322    479,710

    Earnings per common
      equivalent share                0.12       0.14         0.12       0.43

    Shares used in computation   2,368,601  1,115,556    2,368,601  1,115,556

SOURCE  Cragar Industries, Inc.