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The Parts Source, Inc. Announces Three Month Results

18 May 1998

The Parts Source, Inc. D/b/a Ace Auto Parts Announces Three Month Results

    CLEARWATER, Fla., May 15 -- The Parts Source, Inc. d/b/a Ace
Auto Parts has reported that for the three months ended March
31, 1998 revenues rose 10.1%, to $10.6 million, as compared to $9.7 million
for the same three months of 1997. This increase was due primarily to $1.2
million in sales from nine new stores acquired or opened during 1997. Same
store sales for the three months decreased 2.2%. This decrease was
attributable primarily to a decrease in sales from certain stores that were
acquired in the fourth quarter of 1996, resulting from more strict credit,
pricing and operating policies instituted. These new policies also resulted in
turnover of personnel, which had a disruptive effect on customer
relationships. The Company anticipates sales to increase in these stores as
they mature.
    The Company reported a net loss of ($28,141) for the three months ending
March 31, 1998, as compared to net earnings of $51,248 for the same three
months of 1997. This resulted in a ($.01) loss per share for the three months
ending March 31, 1998, as compared to a $.02 diluted earnings per share for
the same three months of 1997. The loss was due in part to new stores that
typically operate at a higher expense percentage as well as a one-time write
off of $80,000 in back compensation to certain past and present employees.
    The Company is continuing to evaluate its alternatives to improve gross
profit margins. These alternatives include opening or acquiring a distribution
center, which will enable the Company to improve its acquisition cost of
merchandise.
    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 operation 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 43 stores in the State of Florida.