FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------------
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-27864
THE PARTS SOURCE, INC.
d/b/a Ace Auto Parts
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 59-3149403
- -------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1751 S. Missouri Avenue, Clearwater, Florida 34616
-------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(813) 588-0377
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
------- -------
At July 31, 1996, 3,185,000 shares of Common Stock of the Registrant were
outstanding.
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
INDEX
<TABLE>
<CAPTION>
Page
PART I. FINANCIAL INFORMATION Number
------
<S> <C>
Item 1. Financial Statements
Condensed Statements of Earnings--Three and six months ended
June 30, 1995 and June 30, 1996 (unaudited) 3
Condensed Balance Sheets--December 31, 1995 and
June 30, 1996 (unaudited) 4
Condensed Statement of Stockholders' Equity (Deficit)--
Year ended December 31, 1995 and six months ended
June 30, 1996 (unaudited) 5
Condensed Statements of Cash Flows--Six months ended
June 30, 1995 and June 30, 1996 (unaudited) 6
Notes to Condensed Financial Statements --June 30, 1996
(unaudited) 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION 14
SIGNATURES 14
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
CONDENSED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
---------------------------- ----------------------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 5,920,815 $ 6,455,098 $ 11,436,422 $ 12,695,816
Cost of goods sold 3,740,292 4,074,782 7,220,382 7,998,385
------------ ------------ ------------ ------------
Gross profit 2,180,523 2,380,316 4,216,040 4,697,431
Operating, selling, general and 1,947,692 2,248,995 3,792,694 4,354,770
------------ ------------ ------------ ------------
administrative expenses
Earnings from operations 232,831 131,321 423,346 342,661
------------ ------------ ------------ ------------
Other income (expense)
Interest expense (174,295) (63,058) (329,515) (225,430)
Other, net 13,378 29,535 17,962 36,336
------------ ------------ ------------ ------------
(160,917) (33,523) (311,553) (189,094)
------------ ------------ ------------ ------------
Net earnings before income taxes 71,914 97,798 111,793 153,567
Provision for income taxes:
Establishment of deferred income taxes -- 44,400 -- 44,400
Current and deferred income taxes -- 36,777 -- 36,777
------------ ------------ ------------ ------------
Net earnings $ 71,914 $ 16,621 $ 111,793 $ 72,390
============ ============ ============ ============
Pro forma information
Historical net earnings before income taxes $ 71,914 $ 97,798 $ 111,793 $ 153,567
Provision for income taxes 20,202 36,801 31,403 57,787
------------ ------------ ------------ ------------
Pro forma net earnings $ 51,712 $ 60,997 $ 80,390 $ 95,780
============ ============ ============ ============
Pro forma net earnings per common share $ .03 $ .02 $ .04 $ .04
============ ============ ============ ============
Weighted average common shares outstanding 2,000,000 3,087,307 2,000,000 2,543,653
============ ============ ============ ============
The accompanying notes are an integral part of these condensed statements.
</TABLE>
3
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
(unaudited)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 192,026 $ 1,050,681
Accounts receivable
Trade, net of allowance for doubtful accounts of $60,000 and $63,000 1,318,421 1,588,509
Stockholders 152,222 --
Other-primarily suppliers 537,914 383,705
Inventories 8,042,989 9,220,740
Prepaid expenses and other 54,148 160,068
------------ ------------
Total current assets 10,297,720 12,403,703
PROPERTY AND EQUIPMENT, NET 1,464,002 1,922,758
OTHER ASSETS
Goodwill, net of accumulated amortization of $21,000 and $27,000 110,964 104,379
Other 145,525 44,411
------------ ------------
256,489 148,790
------------ ------------
$ 12,018,211 $ 14,475,251
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current installments of long-term obligations $ 251,668 $ 92,796
Current installments of notes payable, related parties 109,555 137,343
Accounts payable, trade 5,712,550 5,913,361
Accrued liabilities 394,249 302,668
------------ ------------
Total current liabilities 6,468,022 6,446,168
LONG-TERM OBLIGATIONS, less current portion 5,683,077 273,600
NOTES PAYABLE, RELATED PARTIES, less current portion 446,179 247,105
OTHER LIABILITIES 87,827 69,007
DEFERRED INCOME TAXES -- 84,470
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock -- --
Common stock 2,000 3,185
Additional paid-in capital -- 7,948,220
Accumulated deficit (668,894) (596,504)
------------ ------------
(666,894) 7,354,901
------------ ------------
$ 12,018,211 $ 14,475,251
============ ============
The accompanying notes are an integral part of these condensed statements.
</TABLE>
4
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Additional Accumulated
Stock Paid in Capital Deficit Total
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $ 2,000 -- $ (821,279) $ (819,279)
Net earnings -- -- 152,385 152,385
----------- ----------- ----------- -----------
Balance at December 31, 1995 2,000 -- (668,894) (666,894)
Net earnings (unaudited) -- -- 72,390 72,390
Net proceeds from initial public offering (unaudited) 1,185 $ 7,948,220 -- 7,949,405
----------- ----------- ----------- -----------
Balance at June 30, 1996 (unaudited) $ 3,185 $ 7,948.220 $ (596,504) $ 7,354,901
=========== =========== =========== ===========
The accompanying notes are an integral part of this condensed statement.
</TABLE>
5
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
(unaudited)
--------------------------
1995 1996
----------- -----------
<S> <C> <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
Net earnings $ 111,793 $ 72,390
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization 92,445 128,991
Deferred income taxes, net -- 60,577
Other (8,504) (9,153)
Changes in assets and liabilities, net of acquisitions of businesses:
(Increase) in accounts receivable (714,691) (115,138)
(Increase) in inventories (1,082,528) (616,843)
(Increase) decrease in prepaid expenses and other 13,899 (82,027)
(Increase) decrease in other assets (19,981) 101,114
Increase in accounts payable 2,038,503 200,811
(Decrease) in accrued liabilities (100,138) (91,581)
(Decrease) in other liabilities (10,000) (10,000)
----------- -----------
Net cash provided by (used in) operating activities 320,798 (360,859)
----------- -----------
Cash flows from investing activities:
Cash paid for acquisitions of businesses -- (602,423)
Purchases of property and equipment (241,691) (533,578)
Proceeds from disposition of property and equipment 24,708 17,864
----------- -----------
Net cash used in investing activities (216,983) (1,118,137)
----------- -----------
Cash flows from financing activities:
Repayments of long-term obligations (155,399) (5,611,754)
Net proceeds from initial public offering -- 7,949,405
----------- -----------
Net cash provided by (used in) financing activities (155,399) 2,337,651
----------- -----------
Increase (decrease) in cash and cash equivalents (51,584) 858,655
Cash and cash equivalents, January 1 233,448 192,026
----------- -----------
Cash and cash equivalents, June 30 $ 181,864 $ 1,050,681
=========== ===========
The accompanying notes are an integral part of these condensed statements.
</TABLE>
6
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
NOTE A: BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all the information and
footnote disclosures required by generally accepted accounting principles for
complete financial statements. The condensed financial statements as of June 30,
1996 and for the three and six months ended June 30, 1995 and 1996 are unaudited
and reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
the financial position and operating results for the interim periods. The
results of operations for the six months ended June 30, 1996 are not necessarily
indicative of results that may be expected for the year ending December 31,
1996. The condensed financial statements should be read in conjunction with the
financial statements and notes thereto, together with management's discussion
and analysis of financial condition and results of operations, included in the
prospectus dated April 8, 1996.
NOTE B: ACQUISITIONS OF BUSINESSES
During the second quarter of 1996, the Company acquired substantially all the
assets of two auto parts stores. These acquisitions were accounted for as
purchases and accordingly, the purchase price was allocated to the assets and
liabilities based upon estimated fair value as of the date of acquisition. The
Company paid consideration totaling approximately $603,000 and assumed
liabilities totaling approximately $24,000 in exchange for approximately
$627,000 of assets. The results of operations of each acquisition is included in
the accompanying statements of earnings from the acquisition date. Had the
acquisitions occurred at the beginning of 1995 or 1996, the results would not
have been materially different from those reported.
NOTE C: INITIAL PUBLIC OFFERING
On April 8, 1996, the Company completed an initial public offering of 1,185,000
shares of common stock, par value of $.001 per share, for $8.00 per share. The
offering generated net proceeds to the Company of $7,949,405 after deducting
offering expenses of $298,195. A portion of such proceeds were used to reduce
approximately $5,600,000 of long-term indebtedness. The remaining proceeds will
be used to expand operations and for general working capital purposes.
NOTE D: LINES OF CREDIT
In August 1996, the Company signed a commitment letter with a financial
institution for a $7,000,000 revolving line of credit and a $500,000
non-revolving line of credit. The borrowing limit for the revolving line is
determined by the amount of eligible inventory and accounts receivable. The
borrowing limit for the non-revolving line is 100% of the assets being purchased
with the funds. These lines of credit are available through July 30, 1998 and
carry a variable interest rate of the London Interbank Offered Rates (LIBOR)
plus 2%. These lines, among other provisions, require the Company to maintain,
at a minimum, a current ratio of one to one and the ratio of total liabilities
to tangible net worth not to exceed 2.5 to 1.0.
7
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
NOTE E: PRO FORMA NET EARNINGS PER COMMON SHARE
Pro forma net earnings per common share is computed by dividing pro forma net
earnings by the weighted average number of shares of common stock outstanding
during each period. Pro forma net earnings includes a pro forma provision for
income taxes assuming the Company had been subject to income taxes as a C
Corporation for all periods presented prior to its initial public offering.
If the initial public offering of 1,185,000 shares of common stock had occurred
on January 1, 1996 and approximately $5,551,600 of the total net proceeds had
been applied to the reduction of debt, pro forma net earnings per share would
have been $.03 and $.08 for the three and six months ended June 30, 1996,
respectively (assuming 2,693,947 weighted average common shares outstanding).
NOTE F: INCOME TAXES
The Company was taxed as a S Corporation prior to the completion of its initial
public offering on April 8, 1996. Upon completion of its initial public
offering, the company terminated its S Corporation election and became subject
to federal and state income taxes as a C Corporation. As a result, on April 8,
1996, the Company recorded a net deferred tax liability of $44,400 which
represents the tax effect of the cumulative temporary differences existing on
this date with a corresponding charge to the provision for income taxes. For the
three and six months ended June 30, 1996, the provision for income taxes
consists of the one-time charge and the income taxes recorded related to net
earnings subsequent to April 8, 1996.
NOTE G: STATEMENTS OF CASH FLOW
Supplemental disclosures of cash flow information:
Six Months Ended
June 30,
(unaudited)
----------------------------
1995 1996
---------- ----------
Cash paid for interest $ 337,000 $ 250,000
========== ==========
8
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 1996
(unaudited)
Supplemental schedule of noncash investing and financing activities:
During the six months ended June 30, 1995, the Company incurred
approximately $10,482 of obligations under capital leases for the
acquisition of equipment.
The Company purchased substantially all the assets of two auto parts
stores during the six months ended June 30, 1996. In conjunction with
the acquisitions, assets acquired and liabilities assumed were as
follows:
Fair value of assets acquired $ 626,763
Cash paid 602,423
---------
Liabilities assumed $ 24,340
=========
9
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations for the three
months and six months ended June 30, 1995 and June 30, 1996 should be read in
conjunction with the Condensed Financial Statements of the Company with the
accompanying notes.
Results of Operations
The following table sets forth selected financial information derived from the
Company's statements of earnings expressed as a percentage of net sales for the
periods indicated.
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
------------------ ----------------
1995 1996 1995 1996
------ ------ ------ ------
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 63.2 63.1 63.1 63.0
------ ------ ------ ------
Gross profit 36.8 36.9 36.9 37.0
Operating, selling, general and
administrative expenses 32.9 34.9 33.2 34.3
------ ------ ------ ------
Earnings from operations 3.9 2.0 3.7 2.7
Other income (expense)
Interest expense (2.9) (1.0) (2.9) (1.8)
Other, net 0.2 0.5 0.2 0.3
------ ------ ------ ------
Net earnings before income taxes 1.2 1.5 1.0 1.2
Provision for income taxes - (1.2) - (0.6)
------ ------ ------ ------
Net earnings 1.2% 0.3% 1.0% 0.6%
====== ====== ====== ======
Three Months Ended June 30, 1995 Compared to Three Months Ended June 30, 1996.
NET SALES. Product sales increased by approximately $534,000 or 9.0% from $5.9
million for the three months ended June 30, 1995 to $6.5 million for the three
months ended June 30, 1996. $331,000 of this increase was due to an increase in
sales relating to the opening of one store in December of 1995 and the purchase
of two stores in the second quarter of 1996. The remaining $203,000 or 3.4%
increase in net sales resulted from same store sales growth.
10
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
COST OF GOODS SOLD. Cost of goods sold increased from $3.7 million for the three
months ended June 30, 1995 to $4.1 million for the three months ended June 30,
1996. This increase was primarily attributable to sales increases. Cost of goods
sold as a percentage of sales was relatively constant.
OPERATING, SELLING, GENERAL AND ADMINISTRATIVE ("OSG&A") EXPENSES. OSG&A
expenses increased $301,303 from $1.9 million for the three months ended June
30, 1995 to $2.2 million for the three months ended June 30, 1996. The increased
dollar amount of OSG&A expenses resulted primarily from additional store
personnel and delivery expenses to support the increased sales volume and other
overhead expenses incurred in anticipation of acquiring new stores. The increase
in OSG&A expenses as a percentage of net sales resulted primarily from overhead
expenses incurred in anticipation of acquiring new stores.
INTEREST EXPENSE. Interest expense decreased $111,237 from $174,295 for the
three months ended June 30, 1995 to $63,058 for the three months ended June 30,
1996. The decreased interest expense resulted primarily from the repayment of
debt from the initial public offering completed on April 8, 1996.
PROVISION FOR INCOME TAXES. The Company was taxed as a S Corporation prior to
the completion of its initial public offering on April 8, 1996. In conjunction
with the completion of the initial public offering, the Company was required to
record the cumulative tax effect of its net deferred income taxes of $44,400 on
this date. As a result, the provision for income taxes for the three months
ended June 30, 1996 includes this one-time charge and the income taxes related
to the net earnings recorded subsequent to April 8, 1996.
Six Months Ended June 30, 1995 Compared to Six Months Ended June 30, 1996.
NET SALES. Product sales increased by approximately $1.3 million or 11.0% from
$11.4 million for the six months ended June 30, 1995 to $12.7 million for the
six months ended June 30, 1996. $469,000 of this increase was due to an increase
in sales relating to the opening of one new store in December of 1995 and two
new stores in the second quarter of 1996. The remaining $790,000 or 6.9%
increase in net sales resulted from same store sales growth.
COST OF GOODS SOLD. Cost of goods sold increased from $7.2 million for the six
months ended June 30, 1995 to $8 million for the three months ended June 30,
1996. This increase was primarily attributable to sales increases. Cost of goods
sold as a percentage of sales was relatively constant.
11
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OPERATING, SELLING, GENERAL AND ADMINISTRATIVE ("OSG&A") EXPENSES. OSG&A
expenses increased $562,076 from $3.8 million for the six months ended June 30,
1995 to $4.4 million for the six months ended June 30, 1996. The increased
dollar amount of OSG&A expenses resulted primarily from additional store
personnel and delivery expenses to support the increased sales volume and other
overhead expenses incurred in anticipation of acquiring new stores. The increase
in OSG&A expenses as a percentage of net sales resulted primarily from overhead
expenses incurred in anticipation of acquiring new stores.
INTEREST EXPENSE. Interest expense decreased $104,085 from $329,515 for the six
months ended June 30, 1995 to $225,430 for the six month ended June 30, 1996.
The decreased interest expense resulted primarily from the repayment of debt
from the initial public offering completed on April 8, 1996.
PROVISION FOR INCOME TAXES. The Company was taxed as a S Corporation prior to
the completion of its initial public offering on April 8, 1996. In conjunction
with the completion of the initial public offering, the Company was required to
record the cumulative tax effect of its net deferred income taxes of $44,400 on
this date. As a result, the provision for income taxes for the six months ended
June 30, 1996 includes this one-time charge and the income taxes related to the
net earnings recorded subsequent to April 8, 1996.
NEW ACCOUNTING PRONOUNCEMENTS. In March 1995, the Financial Accounting Standards
Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". This pronouncement requires impairment losses to be recorded on
long-lived assets used in operations when impairment indicators are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. The Company has adopted SFAS 121 in the first
quarter of 1996 and the adoption had no material effect on the financial
statements.
SFAS No 123 "Accounting for Stock Based Compensation" has been issued by the
FASB in October, 1995. As it relates to stock options granted to employees, SFAS
No. 123 permits companies who have not done so already to, either adopt the
accounting method promulgated by Accounting Principles Board Opinion No. 25 (APB
No. 25) "Accounting for Stock Issued to Employees" to measure compensation, or
to adopt the fair value base method prescribed by SFAS No. 123. Management has
not adopted the provisions of SFAS No. 123 related to employee stock options.
However, the Company has implemented the remaining provisions of SFAS No. 123,
effective January 1, 1996.
12
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company's primary capital requirements have been the repayment of long-term
debt, funding of new store acquisitions, increased inventory levels, the
expansion of the delivery vehicle fleet and new computer enhancements. These
capital requirements have been primarily funded by net proceeds from the initial
public offering which occurred on April 8, 1996. The Company has also used trade
credit to finance its inventory expansion. The Company believes that it will be
able to continue financing its inventory growth through the extension of trade
credit from its vendors
The Company proposes to continue to expand its operations by acquiring 6 to 10
stores in the next nine month period. The total cost is expected to range from
$1.8 to $4.3 million. The funds needed will be provided by initial public
offering proceeds and debt financing.
In August 1996, the Company signed a commitment letter with a financial
institution for a $7,000,000 revolving line of credit and a $500,000
non-revolving line of credit. The borrowing limit for the revolving line is
determined by the amount of eligible inventory and accounts receivable. The
borrowing limit for the non-revolving line is 100% of the assets being purchased
with the funds. These lines of credit are available through July 30, 1998 and
carry a variable interest rate of the London Interbank Offered Rates (LIBOR)
plus 2%. These lines, among other provisions, require the Company to maintain,
at a minimum, a current ratio of one to one and the ratio of total liabilities
to tangible net worth not to exceed 2.5 to 1.0. The Company anticipates using
these lines of credit to finance its expansion program.
Management believes that the remaining net proceeds from the initial public
offering, the Company's existing cash, cash expected to be provided by operating
activities, and proposed lines of credit will be sufficient to meet the
Company's working capital and capital expenditure needs for at least the next
twelve months.
13
<PAGE>
THE PARTS SOURCE, INC.
(d/b/a Ace Auto Parts)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule (Electronic filing only)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Parts Source, Inc.
d/b/a Ace Auto Parts
--------------------------------------------
(Registrant)
August 12, 1996
- -----------------------
(Date)
/s/ Robert B. Morgan
--------------------------------------------
Robert B. Morgan
Chief Financial and Accounting Officer
(Principal Financial and Accounting Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE PARTS SOURCE, INC. (D/B/A ACE AUTO PARTS) FOR THE
SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,050,681
<SECURITIES> 0
<RECEIVABLES> 1,651,509
<ALLOWANCES> 63,000
<INVENTORY> 9,220,740
<CURRENT-ASSETS> 12,403,703
<PP&E> 2,389,280
<DEPRECIATION> 466,522
<TOTAL-ASSETS> 14,475,251
<CURRENT-LIABILITIES> 6,446,168
<BONDS> 520,705
0
0
<COMMON> 3,185
<OTHER-SE> 7,351,716
<TOTAL-LIABILITY-AND-EQUITY> 14,475,251
<SALES> 12,695,816
<TOTAL-REVENUES> 12,695,816
<CGS> 7,998,385
<TOTAL-COSTS> 4,354,770
<OTHER-EXPENSES> (36,336)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 225,430
<INCOME-PRETAX> 153,567
<INCOME-TAX> 81,177
<INCOME-CONTINUING> 72,390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,390
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
