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The Parts Source, Inc. d/b/a Ace Auto Parts Announces Year End Results

30 March 1998

The Parts Source, Inc. d/b/a Ace Auto Parts Announces Year End Results

    CLEARWATER, Fla., March 27 -- The Parts Source, Inc. d/b/a
Ace Auto Parts today announced financial results for the year
ended December 31, 1997.
    Net sales for the 1997 fiscal year increased 49.7% to a record
$40.1 million as compared to $26.8 million for 1996.  Same store sales for
1997 were up 11.6% compared to the same period in 1996.  The Company realized
a net loss of $259,000 or $(.08) per share-diluted, as compared to pro forma
net earnings of $225,000 or $.08 pro forma per share, diluted, in the
comparable period in 1996.
    Thomas D. Cox, President and Chief Executive Officer, commented, "The
Company fell short of 1997 year end profit expectations due to new stores
operating at a loss and continued pressure on gross margins from the Company's
unsuccessful attempt to decrease product costs with increased purchases from
its current supplier.  Twenty of our forty-four stores were added during 1996
and 1997.  Earnings should improve as new stores mature and sales volumes
increase.  In January 1998, due to APS, our principal supplier's financial
difficulties, we sent notice to APS asking for written assurance that APS has
the ability to meet its obligation under the supplier purchase agreement.  We
believe the agreement has been breached and therefore notified APS that the
agreement has been terminated.  In February 1998, APS filed a petition with
the U.S. Bankruptcy Court for protection and is seeking reorganization under
Chapter 11 of the Bankruptcy Code.  We continue to purchase the majority of
our products from APS and we feel this action will not have a material adverse
effect on operations.
    "To improve gross profit margins, we have begun negotiations with
manufacturers to buy direct and we are considering opening our own
distribution center," Mr. Cox continued.  "Our management team has experience
in warehouse distribution and feel that acquiring products on a direct basis
should have a positive impact on earnings;  however, there can be no assurance
that we will be successful in this endeavor.  At this early stage, we have not
concluded that we will discontinue purchasing from APS and are exploring all
alternatives.
    "Although disappointed with the year end results, we are pleased with the
annual revenue growth of 49.7% along with the continuing trend to gain market
share with an 11.6% same store sales increase."

    Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995:
    Some of the information in this press release constitutes forward-looking
information based on current information and expectations of the Company that
involve a number of uncertainties.  Among the factors that could materially
affect the validity of the forward-looking information are the following:
changes in current industry trends, changes in competitive factors, changes in
the economic environment in which the Company has its operations, and other
factors which would generally affect the operations of the Company.
    Ace Auto Parts is a specialty supplier and retailer of automotive
replacement parts, tools, supplies, equipment and accessories to both
professional mechanics and do-it-yourself customers.  The Company presently
operates 44 stores in the state of Florida.

SOURCE  The Parts Source, Inc. d/b/a Ace Auto Parts