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Letter to the Editor

FinishMaster Announces First Quarter Financial Results and Acquisition

FinishMaster, Inc., a national independent distributor of automotive paints and related accessories, has reported net income for the first quarter ended March 31, 2002 was $3,124,000, or $0.40 per share, compared to net income of $839,000, or $0.11 per share in the prior year period.

FinishMaster also announced the acquisition of Innovative Refinish Supply, Inc., located in Phoenix, Arizona.

Effective January 1, 2002, FinishMaster adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." Based upon currently available information, management does not anticipate a material impact on its financial position or results of operations from the initial impairment review.

Increased income from operations of $2,287,000, which resulted from higher gross margins and lower amortization expense, was the primary contributor to the improved financial performance for the quarter. Improved gross margins of $1,267,000 were attributable to higher net sales and discounts earned from normal vendor programs. Lower amortization expense of $1,041,000 was due primarily to the adoption of SFAS No. 142, which eliminates the amortization of goodwill and intangible assets with indefinite useful lives.

Even though net sales increased 1.5 percent for the quarter to $84,131,000 from $82,896,000 in the prior year period, "same store" sales declined 1.8 percent.

"Our sales picture reflects the ongoing pattern of declining revenue in the paint and material aftermarket," stated Wes Dearbaugh, President and Chief Operating Officer. "We continue our efforts to increase sales and gain market share. We believe our 'same store' sales decline is less than the overall market decline."

Andre B. Lacy, Chairman and CEO added, "We are pleased with our continuing overall progress, especially the reduced non-amortization expense as a percentage of net sales and our continuing acquisition program. I am concerned with the continued weak industry demand for automotive paint and materials reflected in our 'same store` sales decline. We must turn this around or we must develop other ways to increase revenues."

FinishMaster, headquartered in Indianapolis, operates three major distribution centers and 159 branches in 25 of the 35 largest metropolitan areas in the country.

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