Precision Auto Care Announces Year End Results- $7.7 million Loss

LEESBURG, Va., Oct. 24 -- Precision Auto Care, Inc. today announced for the fiscal year ending June 30, 2002, a loss of $7.7 million, or $(0.69) per share, on revenues of $20.6 million, compared with a loss of $18.9 million or $(2.38) per share on revenues of $23.1 million, for the prior year. For the quarter ending June 30, 2002, the Company incurred a loss of $128,000, or $(0.01) per share on revenues of $5.2 million, compared to a loss of $13.3 million or $(1.67) per share on revenues of $5.6 million for the comparable quarter in 2001.

The Company's CEO, Louis M. Brown, Jr., stated, "Although the bottom line was still negative, we are pleased that we are reducing the operating losses and especially pleased about the fourth quarter results. We were able to resolve and settle a previously reported judgment against the Company without having to spend money out of pocket. This was a huge plus given our cash situation. In FY03, the Company will turn its focus to strategies that will make the company grow profitably both domestically and internationally in the franchise arena."

Robert Falconi, the Company's CFO stated, "The Company is currently renegotiating the terms of its Senior Debt and is confident that a deal can be struck that will significantly reduce future interest expense and will be a major step forward towards profitability. In FY03, cash flow will still be very tight as we try to liquidate obligations from the past and at the same time increase sales and reduce operating costs."

Although the Company has negotiated extensions of Senior Debt, in the event that the Company is unable to consummate the renegotiation of its Senior Debt, accomplish its strategic objectives or is otherwise unable to generate revenues sufficient to cover operating expenses and pay other debt, the Company would not be able to sustain operations at the current level. This would require the Company to further reduce expenses and liquidate certain assets.

Precision Auto Care, Inc.'s affiliate, Precision Franchising LLC, is one of the world's largest franchisor of auto care centers, with 444 operating centers as of June 30, 2002. The Company franchises and operates Precision Tune Auto Care centers around the world.

Cautionary Statement: The statements in this press release contain forward-looking statements within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. These statements are based on the Company's current expectations, estimates and projections. Statements that are not historical facts are forward-looking statements and typically are identified by words like "believe," "anticipate," "could," "estimate," "expect," "intend," "plan," "project," "will" and similar terms. These statements are not guarantees of future performance, events or results and involve potential risks and uncertainties. Accordingly, actual results may differ from current expectations, estimates and projections. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Important factors that may impact the Company's actual results include: (i) business conditions and the general economy; (ii) the federal, state and local regulatory environment; (iii) increased competitive pressure in the automotive after-market services business; (iv) significant automotive technology advances; (v) management's ability to execute the Company's business plan; and (vi) the Company's ability to sell franchises in each. Additional information concerning risks and uncertainties that could cause actual results to differ materially from those projected or suggested in the forward-looking statements in the Company's filings with the Securities and Exchange Commission and in its Annual Report on Form 10-K for the year ended June 30, 2001.

                                            Three Months Ending June 30, 2002

    000s except per share amounts

                                                   2002          2001
    Revenue                                     $  5,197      $  5,639
    Net (loss)                                  $   (128)     $(13,293)
    Diluted (loss) per share                    $  (0.01)     $  (1.67)
    Shares outstanding - diluted                  12,800         8,193


                                            Twelve Months Ending June 30, 2002

    000s except per share amounts


                                                   2002          2001
    Revenue                                     $ 20,560      $ 23,151
    Net (loss)                                  $ (7,699)     $(18,928)
    Diluted (loss) per share                    $  (0.69)     $  (2.38)
    Shares outstanding - diluted                  11,116         7,966

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