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Letter to the Editor

FinishMaster Announces Strong Second Quarter Financial Results

INDIANAPOLIS -- FinishMaster, Inc. has reported that net income for the quarter ended June 30, 2001 increased 87 percent to $1,982,000 on net sales of $86,241,000, compared to net income of $1,061,000 on net sales of $87,343,000 in the prior year. Earnings per share increased 86 percent to $0.26 from $0.14 in the prior year.

Higher gross margins, lower overall expense levels and reduced interest expense were the primary contributors to the improved financial performance for the second quarter. Gross margins as a percentage of net sales were 36.7 percent versus 35.9 percent in the prior year. This improvement was primarily the result of large inventory purchases made prior to manufacturers' price increases. Lower overall debt levels were the major contributor to the decrease in interest expense.

"Based upon discussions with customers and vendors, management believes that sales in the automotive paint aftermarket in the United States are down in excess of 2% for the first half of this year," said Wes Dearbaugh, President and Chief Operating Officer. "Several factors that have contributed to this softening in demand include slower overall economic conditions, continued productivity improvements in the use of automotive paint, and flat to declining number of automobiles being repaired."

The soft automotive paint aftermarket had an impact on the Company's net sales for the quarter which declined 1.3 percent compared to the prior year.

For the six months ended June 30, 2001, net income increased 44 percent to $2,821,000 on net sales of $169,476,000, compared to net income of $1,965,000 on net sales of $172,013,000 in the prior year. Earnings per share increased 42% to $0.37 from $0.26 in the prior year. Net income before extraordinary loss on early extinguishment of debt for the current year was $3,316,000 or $0.44 per share.

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