AFTERMARKET TECHNOLOGY CORP, S-1, 1996-06-24

AFTERMARKET TECHNOLOGY CORP
S-1, 1996-06-24
MOTOR VEHICLE PARTS & ACCESSORIES

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 24, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
AFTERMARKET TECHNOLOGY CORP.
(Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 3714 95-4486486
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) No.)
</TABLE>

-------------------

33309 FIRST WAY SOUTH, SUITE A-206
FEDERAL WAY, WASHINGTON 98003
(206) 838-0346
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
-------------------

WILLIAM A. SMITH
CHIEF EXECUTIVE OFFICER
AFTERMARKET TECHNOLOGY CORP.
33309 FIRST WAY SOUTH, SUITE A-206
FEDERAL WAY, WASHINGTON 98003
(206) 838-0346
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
-------------------

WITH COPIES TO:

<TABLE>
<S> <C>
BRUCE D. MEYER, ESQ. JEROME L. COBEN, ESQ.
Gibson, Dunn & Crutcher LLP Skadden, Arps, Slate, Meagher & Flom
333 South Grand Avenue 300 South Grand Avenue
Los Angeles, California 90071-3197 Los Angeles, California 90071-3144
(213) 229-7000 (213) 687-5000
</TABLE>

-------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
-------------------

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
-------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE (1) REGISTRATION FEE
<S> <C> <C>
Common Stock, par value $.01 per share................ $86,250,000 $29,742
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 based on an estimate of the maximum offering price.
-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CROSS REFERENCE SHEET
(PURSUANT TO RULE 404(A) OF THE SECURITIES ACT OF 1933,
AS AMENDED, AND ITEM 501 OF REGULATION S-K)

<TABLE>
<CAPTION>
ITEM NO. AND CAPTION IN FORM S-1 LOCATION OR CAPTION IN PROSPECTUS
- ---------------------------------------------------------------- -----------------------------------------------------

<C> <S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Facing Page of Registration Statement; Cross
Reference Sheet; Outside Front Cover Page of
Prospectus

2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page of Prospectus; Additional
Information

3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors

4. Use of Proceeds...................................... Use of Proceeds

5. Determination of Offering Price...................... Outside Front Cover Page of Prospectus; Risk Factors;
Underwriters

6. Dilution............................................. Dilution

7. Selling Security Holders............................. Not Applicable

8. Plan of Distribution................................. Outside Front Cover Page of Prospectus; Prospectus
Summary; Underwriters

9. Description of Securities to be Registered........... Description of Capital Stock; Certain United States
Federal Tax Consequences to Non-United States
Holders

10. Interests of Named Experts and Counsel............... Legal Matters; Experts

11. Information with Respect to the Registrant........... Outside Front Cover Page of Prospectus; Prospectus
Summary; Risk Factors; Reorganization; Dividend
Policy; Capitalization; Selected Financial Data; Pro
Forma Financial Data; Management's Discussion and
Analysis of Financial Condition and Results of
Operations; Business; Management; Ownership of
Voting Securities; Certain Transactions; Description
of Capital Stock; Description of Certain
Indebtedness; Financial Statements

12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION)

ISSUED JUNE 24, 1996
SHARES

[LOGO]

COMMON STOCK
-----------------

ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY.
PRIOR TO THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK.
IT IS CURRENTLY ESTIMATED THAT THE INITIAL OFFERING PRICE PER SHARE WILL BE
BETWEEN $ AND $ . SEE "UNDERWRITERS" FOR A DISCUSSION OF
THE FACTORS CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING
PRICE.
-------------------

APPLICATION WILL BE MADE FOR QUOTATION OF THE COMMON STOCK ON THE
NASDAQ NATIONAL MARKET UNDER THE SYMBOL "ATAC."
-------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS
OF THE COMMON STOCK.
-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------

PRICE $ A SHARE
-------------------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)
-------------- --------------- ------------
<S> <C> <C> <C>
PER SHARE............................ $ $ $
TOTAL (3)............................ $ $ $
</TABLE>

- ------------
(1) THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
(2) BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .
(3) THE COMPANY HAS GRANTED TO THE UNDERWRITERS AN OPTION, EXERCISABLE WITHIN
30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO AN AGGREGATE OF
ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING DISCOUNTS AND
COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF ANY. IF THE
UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL PRICE TO PUBLIC,
UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO COMPANY WILL BE
$ , $ AND $ , RESPECTIVELY. SEE "UNDERWRITERS."
------------------------

THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY SKADDEN, ARPS, SLATE, MEAGHER & FLOM, COUNSEL FOR THE UNDERWRITERS. IT IS
EXPECTED THAT THE DELIVERY OF THE SHARES WILL BE MADE ON OR ABOUT ,
1996 AT THE OFFICE OF MORGAN STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST
PAYMENT THEREFOR IN IMMEDIATELY AVAILABLE FUNDS.
-------------------

MORGAN STANLEY & CO.
INCORPORATED
WILLIAM BLAIR & COMPANY
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION

, 1996
<PAGE>
[PICTURES OR OTHER GRAPHICS TO BE SUPPLIED BY AMENDMENT]

2
<PAGE>
CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS THAT ARE NOT RELATED TO
HISTORICAL RESULTS ARE FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE PROJECTED OR IMPLIED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT
LIMITED TO, THOSE DISCUSSED UNDER "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS."
FURTHER, CERTAIN FORWARD-LOOKING STATEMENTS ARE BASED UPON ASSUMPTIONS AS TO
FUTURE EVENTS THAT MAY NOT PROVE TO BE ACCURATE. THESE FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES INCLUDING, BUT NOT LIMITED TO, THOSE
SET FORTH UNDER "RISK FACTORS."
-------------------

UNTIL , 1996 (25 DAYS AFTER THE COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
-------------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Prospectus Summary............................... 4
Risk Factors..................................... 9
Reorganization................................... 13
Use of Proceeds.................................. 13
Dividend Policy.................................. 13
Capitalization................................... 14
Dilution......................................... 15
Selected Financial Data.......................... 16
Pro Forma Financial Data......................... 17
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 19
Business......................................... 23
Management....................................... 34

Ownership of Voting Securities................... 40
Certain Transactions............................. 42
Description of Capital Stock..................... 44
Description of Certain Indebtedness.............. 46
Shares Eligible for Future Sale.................. 48
Certain United States Federal Tax Consequences to
Non-United States Holders...................... 48
Underwriters..................................... 51
Legal Matters.................................... 52
Experts.......................................... 52
Additional Information........................... 52
Index to Financial Statements.................... F-1
</TABLE>

-------------------

The Company intends to furnish to its stockholders annual reports containing
consolidated financial statements audited by an independent public accounting
firm and quarterly reports for the first three quarters of each fiscal year
containing interim unaudited financial information.
-------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
-------------------

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE COMMON STOCK OFFERED HEREBY BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.

3
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE HISTORICAL AND PRO FORMA FINANCIAL STATEMENTS OF THE
COMPANY, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE HEREIN. THROUGHOUT
THIS PROSPECTUS, EXCEPT WHERE THE CONTEXT OTHERWISE REQUIRES, THE "COMPANY"
REFERS COLLECTIVELY TO AFTERMARKET TECHNOLOGY CORP. ("ATC") AND ITS
SUBSIDIARIES, INCLUDING THE PREDECESSOR COMPANIES (AS DEFINED HEREIN) FOR
PERIODS PRIOR TO THE INITIAL ACQUISITIONS (AS DEFINED HEREIN). UNLESS THE
CONTEXT OTHERWISE REQUIRES, THE INFORMATION CONTAINED HEREIN GIVES EFFECT TO THE
REORGANIZATION (AS DEFINED HEREIN). UNLESS OTHERWISE INDICATED, ALL INFORMATION
IN THIS PROSPECTUS ASSUMES NO EXERCISE OF (I) THE UNDERWRITERS' OVER-ALLOTMENT
OPTION, (II) OUTSTANDING EMPLOYEE STOCK OPTIONS TO PURCHASE 254,463 SHARES OF
COMMON STOCK AND (III) OUTSTANDING WARRANTS TO PURCHASE 70,176 SHARES OF COMMON
STOCK.

THE COMPANY

The Company is a leading remanufacturer and distributor of drive train
products used in the aftermarket repair of passenger cars and light trucks. The
Company's principal products include remanufactured transmissions, torque
converters and engines, as well as remanufactured and new parts for the repair
of automotive drive train and engine assemblies. The Company's principal
customers include: (i) independent transmission rebuilders, general repair shops
and distributors (the "Independent Aftermarket"); (ii) original equipment
manufacturers ("OEMs"), principally Chrysler, for use as replacement parts by
their dealers; and (iii) retail automotive parts stores. The Company believes it
is uniquely positioned within the highly fragmented aftermarket for drive train
products as a result of its extensive product line, diverse customer base and
broad geographic presence, with 43 distribution centers throughout the United
States and Canada.

The automotive aftermarket in North America, which consists of sales of
parts and services for vehicles after their original purchase, has been
noncyclical and has generally experienced steady growth over the past ten years,
unlike the market for new vehicle sales. Between 1985 and 1995, estimated
industry-wide revenue for the automobile aftermarket increased from
approximately $126 billion to $170 billion. This consistent growth is due
principally to the increase in the number of vehicles in operation that are in
the prime repair age of four to 12 years and the increase in the average number
of miles driven annually per vehicle. The Company competes specifically in the
aftermarket segment for automotive transmissions, engines and other drive train
related products, which represents more than $7 billion of the entire automotive
aftermarket. The Company believes that within this segment the market for
remanufactured drive train products has grown faster than the overall automotive
aftermarket.

The Company was organized in 1994 by Aurora Capital Partners and a
management team led by William A. Smith to combine the businesses of four
existing companies serving the drive train remanufacturing market. Since that
time the Company has grown both internally and through four additional
acquisitions completed during 1995 and 1996. The Company and its predecessor
companies have achieved compound annual growth in revenue of 37.5% from 1992
through March 31, 1996 (29.9% if the Company's 1995 and 1996 acquisitions are
excluded). The Company believes the key elements of its success are the quality
and breadth of its product offerings and the Company's emphasis on strong
customer relationships, promoted by strong technical support, rapid delivery
time, innovative product development and competitive pricing. In addition, the
Company has benefited from the increasing use of remanufactured transmissions,
engines and other parts for aftermarket repairs as the industry recognizes that
remanufacturing provides a higher quality, lower cost alternative to rebuilding
the assembly or replacing it with a new assembly manufactured by an OEM.

4
<PAGE>
among companies serving the highly fragmented Independent Aftermarket.
Management believes that future acquisitions will enable it to enhance the
Company's revenues and profitability by expanding the Company's existing
distribution base, increasing the range of products sold through the Company's
distribution network and realizing economies of scale in areas including
purchasing, administration and inventory management.

HISTORY; REORGANIZATION

ATC and its sole stockholder, Aftermarket Technology Holdings Corp.
("Holdings"), were incorporated under the laws of Delaware in July 1994 at the
direction of Aurora Capital Partners L.P. ("ACP") to acquire Aaron's Automotive
Products, Inc. ("Aaron's"), H.T.P., Inc. ("HTP"), Mamco Converters, Inc.
("Mamco") and RPM Merit, Inc. ("RPM") (collectively, the "Initial
Acquisitions"). Aaron's, HTP, Mamco and RPM as they existed prior to the Initial
Acquisitions are hereinafter collectively referred to as the "Predecessor
Companies." Subsequent to the Initial Acquisitions, the Company acquired
Component Remanufacturing Specialists, Inc. ("CRS") and Mascot Truck Parts Inc.
("Mascot") in June 1995, and King-O-Matic Industries Limited ("King-O-Matic") in
September 1995 (collectively, the "1995 Acquisitions") and Tranzparts, Inc.
("Tranzparts") in April 1996 (the "1996 Acquisition" and, together with the
Initial Acquisitions and the 1995 Acquisitions, the "Acquisitions"). ATC
conducts all of its operations through its wholly-owned subsidiaries and each of
their respective subsidiaries.

Simultaneous with the consummation of this offering of Common Stock (the
"Offering"), Holdings will be merged into ATC (the "Reorganization"). Upon the
effectiveness of such merger, each outstanding share of Holdings Common Stock
will be converted into shares of ATC Common Stock, and each outstanding
share of Holdings Redeemable Exchangeable Cumulative Preferred Stock (the
"Holdings Preferred Stock") will be converted into the right to receive an
amount in cash equal to $100.00 plus an amount in cash equal to accrued and
unpaid dividends to the date of the Reorganization (the "Preferred Stock
Reorganization Consideration"). As of June 30, 1996, the aggregate Preferred
Stock Reorganization Consideration would be approximately $24 million. See
"Reorganization."

The principal executive offices of the Company are located at 33309 First
Way South, Suite A-206, Federal Way, Washington 98003, and its telephone number
is (206) 838-0346.

5
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Common Stock offered................ shares

Common Stock to be outstanding after
the Offering....................... shares (1)

Use of proceeds..................... For (i) the redemption of $30 million principal
amount of the Company's outstanding 12% Series B
Senior Subordinated Notes Due 2004 (the "Series B
Notes") and $10 million principal amount of 12%
Series D Senior Subordinated Notes Due 2004 (the
"Series D Notes" and, collectively with the Series B
Notes, the "Senior Notes"), and the payment of the
related redemption premium and all accrued interest
on the Senior Notes to be redeemed, and (ii) for the
payment of the aggregate Preferred Stock
Reorganization Consideration. See "Use of Proceeds."

Proposed Nasdaq National Market
symbol............................. "ATAC"
</TABLE>

- ---------

(1) Does not give effect to the issuance of shares reserved for issuance upon
the exercise of outstanding warrants and employee stock options.

RISK FACTORS

See "Risk Factors" for a description of certain risks to be considered
before making an investment in the Common Stock.

6
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA

The following tables present summary historical statement of income data for
the year ended December 31, 1993, summary pro forma statement of income data for
the years ended December 31, 1994 and December 31, 1995 and for the three months
ended March 31, 1995 and 1996, and summary historical balance sheet data at
December 31, 1995 and March 31, 1996. The 1993 data were derived from the
Combined Financial Statements of the Predecessor Companies. The pro forma 1994
data were derived from the Combined Financial Statements of the Predecessor
Companies and the Consolidated Financial Statements of the Company. The 1995 and
1996 data were derived from the Consolidated Financial Statements of the
Company. The pro forma adjustments give effect to the Company's formation and
its subsequent acquisitions (including related financings) as indicated in the
applicable footnotes below. The "as adjusted" amounts give effect to the
Offering and the anticipated application of the net proceeds therefrom. See "Use
of Proceeds." This data should be read in connection with the "Selected
Financial Data," "Pro Forma Financial Data," "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the Combined and
Consolidated Financial Statements and notes thereto appearing elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
PRO FORMA
COMBINED PRO FORMA PRO FORMA YEAR ENDED PRO FORMA
YEAR YEAR YEAR DECEMBER THREE MONTHS ENDED MARCH 31,
ENDED ENDED ENDED 31, -----------------------------------
DECEMBER DECEMBER DECEMBER 1995 1996
31, 31, 31, AS AS
1993 (1) 1994 (2) 1995 (3) ADJUSTED (3)(4) 1995 (3) 1996 (5) ADJUSTED (4)(5)
--------- --------- --------- ----------- --------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales................ $110,702 $157,792 $217,491 $217,491 $52,770 $ 66,186 $66,186
Cost of sales............ 66,687 92,857 133,102 133,102 33,008 39,799 39,799
--------- --------- --------- ----------- --------- --------- -----------
Gross profit............. 44,015 64,935 84,389 84,389 19,762 26,387 26,387
Selling, general and
administrative
expenses................ 25,682 30,361 44,208 44,208 9,759 12,923 12,923
Amortization of
intangible assets....... 28 3,057 3,806 3,806 976 930 930
--------- --------- --------- ----------- --------- --------- -----------
Operating income......... 18,305 31,517 36,375 36,375 9,027 12,534 12,534
Interest expense
(income), net........... (302) 14,521 19,012 14,583 4,855 4,836 3,605
Income taxes............. 471 6,902 7,032 8,826 1,690 3,225 3,741
--------- --------- --------- ----------- --------- --------- -----------
Net income............... 18,136 10,094 10,331 12,966 2,482 4,473 5,188
Preferred stock dividends
(6)..................... -- 2,000 2,093 -- 493 545 --
--------- --------- --------- ----------- --------- --------- -----------
Net income available to
common stockholders..... $ 18,136 $ 8,094 $ 8,238 $12,966 $ 1,989 $ 3,928 $ 5,188
--------- --------- --------- ----------- --------- --------- -----------
--------- --------- --------- ----------- --------- --------- -----------
Pro forma (7):
Net income per share... $ $
Shares used in
computation of net
income per share......

OTHER DATA:
Capital expenditures
(8)..................... $ 2,310 $ 3,186 $ 5,187 -- $ 1,195 $ 1,127 --
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------
DECEMBER 31, 1995 ACTUAL AS ADJUSTED (9)
----------------- --------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................................................... $ 57,066 $ 61,202 $ 67,641
Property, plant and equipment (net)................................ 10,784 11,506 11,506
Total assets....................................................... 247,932 254,327 252,515
Long-term debt (including current maturities) (10)................. 162,246 162,180 121,635
Preferred stock (6)................................................ 20,000 20,000 --
Common stockholders' equity........................................ 30,188 34,042 99,455
</TABLE>

- ---------

(FOOTNOTES ON FOLLOWING PAGE)

7
<PAGE>
(FOOTNOTES FROM PRIOR PAGE)
(1) Represents the combined historical results of the Predecessor Companies.
These results do not reflect the taxes that would have been payable by
certain of the Predecessor Companies if they had been taxed as C
Corporations rather than S Corporations during the period. In addition, the
results do not reflect the following adjustments related to the Initial
Acquisitions: (i) the interest expense and amortization of related financing
costs incurred in connection with the Initial Acquisitions; (ii) the
amortization of the goodwill created in connection with the Initial
Acquisitions; and (iii) the adjustment of compensation expense to levels
provided in new employment agreements following the Initial Acquisitions.
Accordingly, the 1993 combined results are not presented on the same basis
as the other periods presented.

(2) Reflects: (i) the results of operations of the Predecessor Companies as if
the Initial Acquisitions had occurred on January 1, 1994; (ii) federal and
state income taxes that would have been incurred for the year had all
Predecessor Companies been taxed as C Corporations and filed under a
consolidated tax return for the full period; and (iii) the initial capital
contribution made by Holdings in connection with the Initial Acquisitions as
if it had been made on January 1, 1994. The following reconciles the
Predecessor Companies' combined net income for the seven months ended July
31, 1994 (the date of the Initial Acquisitions) and the Company's
consolidated net income for the five months ended December 31, 1994 to the
pro forma net income for the year ended December 31, 1994:

<TABLE>
<S> <C>
Predecessor Companies' combined net income for the seven months ended July
31, 1994................................................................. $ 17,483
Company's consolidated net income for the five months ended December 31,
1994..................................................................... 3,611
---------
21,094
Net increase in interest expense on debt incurred in the Initial
Acquisitions............................................................. (8,640)
Increase in amortization of intangible assets acquired..................... (1,838)
Decrease in expenses associated with special bonuses paid by the
Predecessor Companies and other costs not duplicated..................... 4,320
Increase in cost of sales related to inventory write-up.................... (500)
Increase in provision for taxes for certain Predecessor Companies
previously taxed as S Corporations....................................... (4,342)
---------
$ 10,094
---------
---------
</TABLE>

(3) Reflects the results of operations of CRS, Mascot, King-O-Matic and
Tranzparts as if the 1995 Acquisitions (including related financings) and
the 1996 Acquisition had occurred on January 1, 1995.

(4) As adjusted to give effect to the anticipated application of the net
proceeds from the Offering as if the Offering had occurred at the beginning
of the respective periods. Amounts do not reflect the impact of the early
redemption premium on the Senior Notes that, combined with the related
unamortized debt issuance costs, will be expensed as an extraordinary item
at the time of redemption. As of March 31, 1996, the extraordinary item
would have been $3.4 million after the effect of taxes. See "Use of
Proceeds."

(5) Reflects the results of operations of Tranzparts as if the 1996 Acquisition
had occurred on January 1, 1996.

(6) Consists of Holdings Preferred Stock. See "Reorganization."

(7) Pro forma net income per share amounts are based on the number of shares
determined in accordance with Note 1 of Notes to Consolidated Financial
Statements, adjusted for the number of shares assumed to be issued in
connection with the Offering as if the Offering had occurred at the
beginning of the respective periods.

(8) Excludes capital expenditures made by each of CRS, Mascot, King-O-Matic and
Tranzparts prior to such subsidiaries' respective acquisitions and any
capital expenditures made in connection with such acquisitions.

(9) As adjusted to give effect to the application of the net proceeds from the
Offering as if the Offering had occurred on March 31, 1996. See "Use of
Proceeds" and "Capitalization."

(10) Excludes deferred tax liabilities. See Note 5 of Selected Financial Data.

8
<PAGE>
RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE SPECIFIC FACTORS SET
FORTH BELOW AS WELL AS THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS BEFORE
DECIDING TO INVEST IN THE COMMON STOCK OFFERED HEREBY.

DEPENDENCE ON SIGNIFICANT CUSTOMER. The Company's largest customer,
Chrysler, accounted for approximately $67.6 million and $23.7 million of the
Company's combined net sales for the year ended December 31, 1995 and the three
months ended March 31, 1996, respectively, or approximately 35.4% and 36.9%,
respectively, of the Company's net sales for such periods. No other customer
accounted for more than 10% of the Company's net sales during either of such
periods. Chrysler, like other North American OEMs, generally requires its
dealers using remanufactured products to use only those from approved suppliers.
Although the Company is currently the only factory-approved supplier of
remanufactured transmissions to Chrysler, Chrysler is not obligated to continue
to purchase the Company's products and there can be no assurance that the
Company will be able to maintain or increase the level of its sales to Chrysler
or that Chrysler will not approve other suppliers in the future. In addition,
within the last two years Chrysler reduced its standard new vehicle warranty
from seven years/70,000 miles to three years/36,000 miles and could implement a
shorter warranty in the future. Any such action could have the effect of
reducing the amount of warranty work performed by Chrysler dealers. An extended,
substantial decrease in orders from Chrysler would have a material adverse
effect on the Company. See "Business -- Marketing and Distribution; OEM
Customers."

SHORTAGE OF TRANSMISSION CORES AND COMPONENT PARTS. In its remanufacturing
operations, the Company obtains used transmissions, hard parts, engines and
related components, commonly known as "cores," which are sorted and either
placed into immediate production or stored until needed. The majority of the
cores remanufactured by the Company are obtained from customers as trade-ins.
The ability to obtain cores of the types and in the quantities required by the
Company is critical to the Company's ability to meet demand and expand
production. With the increased acceptance in the aftermarket of remanufactured
assemblies, the demand for cores has increased. The Company periodically has
experienced situations in which the inability to obtain sufficient cores has
limited its ability to accept all of the orders available to it. As part of its
expanding relationship with Chrysler and in response to the periodic shortage of
cores, in 1994 the Company established at Chrysler's request a central core
return center for all of Chrysler's transmission product lines and certain
engine product lines. The operation of this facility enables the Company to
manage more effectively the tracking and return of cores for Chrysler and its
United States dealers. There can be no assurance that the Company will not
experience core shortages in the future. If the Company were to experience such
a shortage, it could have a material adverse effect on the Company.

Certain component parts required in the remanufacturing process are
manufactured by Chrysler and the Company's other OEM customers. The Company has
experienced shortages of such component parts from time to time in the past and
future shortages could have a material adverse effect on the Company. In
addition, Chrysler's labor contract with the United Auto Workers expires in
September 1996. A prolonged strike could materially impair Chrysler's ability to
provide the Company with necessary component parts for transmissions
remanufactured for use in Chrysler vehicles.

ABILITY TO ACHIEVE AND MANAGE GROWTH. An important element in the Company's
growth strategy is the acquisition and integration of complementary businesses
in order to broaden its product offerings, capture market share and improve
profitability. There can be no assurance that the Company will be able to
identify or reach mutually agreeable terms with acquisition candidates, or that
the Company will be able to manage additional businesses profitably or
successfully integrate such additional businesses into the Company without
substantial costs, delays or other problems. Acquisitions may involve a number
of special risks, including: initial reductions in the Company's reported
operating results; diversion of management's attention; unanticipated problems
or legal liabilities; and a possible reduction in reported earnings due to
amortization of acquired intangible assets. Some or all of these items could
have a material adverse effect on the Company. There can be no assurance that
businesses acquired in the future will achieve sales and

9
<PAGE>
profitability that justify the investment therein. In addition, to the extent
that consolidation becomes more prevalent in the industry, the prices for
attractive acquisition candidates may increase to unacceptable levels. See
"Business -- Business Strategy -- External Growth."

In addition to growth through acquisitions, the Company plans to expand its
existing operations by broadening its product lines and increasing the number of
its distribution centers in the United States. There can be no assurance that
any new product lines introduced by the Company will be successful, that the
Company will manage successfully the start-up and marketing of new products or
that additional distribution centers will be integrated into the Company's
existing operations or will be profitable. See "Business -- Business Strategy --
Internal Growth."

INDEBTEDNESS AND LIQUIDITY. The Company had outstanding indebtedness of
$163.9 million at March 31, 1996, bearing interest at a weighted average rate of
11.7%, and the Company's ratio of earnings to fixed charges for the 12 months
then ended was 2.3 to 1. After giving effect to the consummation of the Offering
and the anticipated application of the net proceeds therefrom (after deducting
the underwriting discount and estimated expenses of the Offering), the
consolidated indebtedness of the Company at March 31, 1996 would have been
$123.4 million and the Company's ratio of earnings to fixed charges for the 12
months then ended would have been 3.1 to 1. The level of the Company's
consolidated indebtedness could have important consequences to the holders of
Common Stock, including the following: (i) a substantial portion of the
Company's cash flow from operations must be dedicated to the payment of
principal of and interest on its indebtedness and will not be available for
other purposes; (ii) the ability of the Company to obtain financing in the
future for working capital needs, capital expenditures, acquisitions,
investments, general corporate purposes or other purposes may be materially
limited or impaired; (iii) the Company's level of indebtedness may reduce its
flexibility to respond to changing business and economic conditions or take
advantage of business opportunities that may arise; and (iv) the ability of the
Company to pay dividends is restricted. See "Dividend Policy." Any default by
the Company with respect to its outstanding indebtedness, or any inability on
the part of the Company to obtain necessary liquidity, would have a material
adverse effect on the Company. See "Use of Proceeds" and "Description of Certain
Indebtedness."

DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the continued
services of its management team, including William A. Smith, Chairman of the
Board, President and Chief Executive Officer. Mr. Smith, Wesley N. Dearbaugh,
President and General Manager of Independent Aftermarket, and the presidents of
the operating subsidiaries have an average of 22 years experience in the
automotive aftermarket industry. Although the Company believes it could replace
key employees in an orderly fashion should the need arise, the loss of such
personnel could have a material adverse effect on the Company.

ENVIRONMENTAL MATTERS. The Company is subject to various evolving federal,
state, local and foreign environmental laws and regulations governing, among
other things, emissions to air, discharge to waters and the generation,
handling, storage, transportation, treatment and disposal of a variety of
hazardous and non-hazardous substances and wastes. These laws and regulations
provide for substantial fines and criminal sanctions for violations. The
operation of automotive parts remanufacturing plants involves environmental
risks.

The company from which RPM acquired its assets (the "Prior RPM Company"),
has been identified by the United States Environmental Protection Agency (the
"EPA") as one of the many potentially responsible parties for environmental
liabilities associated with a "Superfund" site located in the area of RPM's
former manufacturing facilities and current distribution facility in Azusa,
California. The EPA has preliminarily estimated that it will cost approximately
$47 million to construct and approximately $4 million per year for an indefinite
period to operate an interim remedial groundwater pumping and treatment system
for a part of the subregion of the Superfund site within which RPM's former
manufacturing facilities and current distribution facility, as well as those of
many other potentially responsible parties, are located. The actual cost of this
remedial action could vary substantially from this estimate, and additional
costs associated with the Superfund site are likely to be assessed. The Company
has significantly reduced its presence at the site and has moved all
manufacturing operations off-site. Since July 1995, the Company's only real
property interest in this site has been the lease of a 6,000 square foot storage
and distribution facility. The RPM

10
<PAGE>
acquisition agreement and the leases pursuant to which the Company leased RPM's
facilities after the Company acquired the assets of RPM (the "RPM Acquisition")
expressly provide that the Company did not assume any liabilities for
environmental conditions existing on or before the RPM Acquisition, although the
Company could become responsible for these liabilities under various legal
theories. The Company is indemnified against any such liabilities by the seller
of RPM as well as the Prior RPM Company shareholders. There can be no assurance,
however, that the Company would be able to make any recovery under any
indemnification provisions. Since the RPM Acquisition, the Company has been
engaged in negotiations with the EPA to settle any liability that it may have
for this site. The Company believes, although there can be no assurance, that it
will not incur any material liability as a result of these pre-existing
environmental conditions.

In connection with the Initial Acquisitions, the Company conducted certain
investigations of Aaron's, RPM's, HTP's and Mamco's facilities (in addition to
the Prior RPM Company's Azusa facilities) and their compliance with applicable
environmental laws. The Company conducted similar investigations in connection
with its subsequent acquisitions of CRS, Mascot, King-O-Matic and Tranzparts.
The investigations, which included "Phase I" assessments by independent
consultants of all manufacturing and certain distribution facilities, found that
certain remedial, reporting and other regulatory requirements, including certain
waste management procedures, were not or may not have been satisfied. Based in
part on the investigations conducted, and the indemnification provisions of the
agreements entered into in connection with the Initial Acquisitions and the
Company's subsequent acquisitions, the Company believes, although there can be
no assurance, that its liabilities relating to these environmental matters will
not have a material adverse effect, individually or in the aggregate, on the
Company. See "Business -- Environmental."

COMPETITION. The automotive aftermarket for transmissions, engines and
other drive train products is highly fragmented and highly competitive. There
can be no assurance that the Company will compete successfully with other
companies in its industry segment, some of which are larger than the Company and
have greater financial and other resources available to them than does the
Company.

CONTROL OF THE COMPANY; ANTI-TAKEOVER MATTERS. Upon consummation of the
Offering, the Company will be indirectly controlled by ACP, which will
beneficially own in the aggregate approximately % of the outstanding Common
Stock. Therefore, ACP will be able to elect all of the directors of the Company
and to approve or disapprove any matter submitted to a vote of the Company's
stockholders. As a result of ACP's substantial ownership interest in the Common
Stock, it may be more difficult for a third party to acquire the Company. A
potential buyer would likely be deterred from any effort to acquire the Company
absent the consent of ACP or its participation in the transaction. Two of the
three managing directors of ACP are directors of the Company. The Indentures
governing the Senior Notes contain provisions that would allow a holder to
require the Company to repurchase such holder's Senior Notes at a cash price
equal to 101% of the principal amount thereof, together with accrued interest,
upon the occurrence of a change of control of the Company. See "Ownership of
Voting Securities" and "Description of Certain Indebtedness."

In addition, the Company's Board of Directors is authorized, subject to
certain limitations prescribed by law, to issue up to shares of
preferred stock in one or more classes or series and to fix the designations,
powers, preferences, rights, qualifications, limitations or restrictions,
including voting rights, of those shares without any further vote or action by
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred stock
that may be issued in the future. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate transactions, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no current plans to issue shares of preferred stock.

POSSIBLE EFFECT ON SHARE PRICE OF SHARES ELIGIBLE FOR FUTURE SALE. Upon
consummation of the Offering, the Company will have shares of Common
Stock outstanding, of which approximately shares will be "restricted
securities" within the meaning of Rule 144 ("Rule 144") promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), and may not be sold
without registration under the Securities Act unless an exemption from
registration is available. Each of the Company's current

11
<PAGE>
stockholders and certain holders of the Company's outstanding options have been
granted certain "piggyback" registration rights with respect to the shares of
Common Stock owned by them or to be issued to them. However, the Company will
agree not to offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase an option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock for a period of 180 days from
the date of this Prospectus without the prior written consent of Morgan Stanley
& Co. Incorporated. Each of the Company's current stockholders, directors,
executive officers and warrant holders will enter into or is bound by a similar
agreement. No predictions can be made as to the effect, if any, that public
sales of shares or the availability of shares for sale will have on the market
price prevailing from time to time. Nevertheless, sales of substantial amounts
of the Common Stock in the public market, particularly by directors and officers
of the Company, or the perception that such sales could occur, could have an
adverse effect on the market price of the Common Stock. See "Shares Eligible for
Future Sale."

DILUTION. The initial public offering price per share of Common Stock will
exceed the net tangible book value per share of Common Stock. Accordingly, the
current stockholders of the Company will experience an immediate appreciation in
the net tangible book value of their equity investment in the Company, and the
purchasers of Common Stock will experience immediate and substantial dilution in
the net tangible book value of their equity investment in the Company. In
addition, there will be outstanding after the consummation of the Offering
options and warrants to purchase approximately shares of Common Stock at
exercise prices ranging from $ to $ per share, the exercise of which would
cause further dilution to new investors. See "Dilution."

ABSENCE OF A PUBLIC MARKET; DETERMINATION OF OFFERING PRICE. Prior to the
Offering, there has been no public market for the Common Stock. Consequently,
the initial public offering price will be determined through negotiations
between the Company and representatives of the Underwriters. See "Underwriters"
for factors to be considered in determining the initial public offering price.
There can be no assurance that a regular trading market for the Common Stock
will develop after the Offering or, if developed, that a public trading market
can be sustained. The initial public offering price will not necessarily
reflect, and may be higher than, the market price of the Common Stock after the
Offering.

12
<PAGE>
REORGANIZATION

Simultaneous with the consummation of the Offering, Holdings will be merged
into ATC. Upon the effectiveness of such merger, each outstanding share of
Holdings Common Stock will be converted into shares of ATC Common
Stock and each outstanding share of Holdings Preferred Stock will be converted
into the right to receive the Preferred Stock Reorganization Consideration. As
of June 30, 1996 the aggregate Preferred Stock Reorganization Consideration
would be approximately $24 million. Holdings' 1994 Stock Incentive Plan will
become ATC's plan (the "Stock Incentive Plan"), and outstanding employee stock
options that were issued by Holdings pursuant to the Holdings plan will be
converted into options to purchase ATC Common Stock. Outstanding warrants that
were issued by Holdings will be converted into warrants to purchase ATC Common
Stock on the same exercise ratio as the ratio applicable to the Holdings Common
Stock.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares offered
hereby are estimated to be approximately $69 million (approximately $79 million
if the Underwriters' over-allotment option is exercised in full), based upon an
assumed offering price of $ per share and after deducting estimated
underwriting discounts and offering expenses.

Approximately $46.8 million of the net proceeds of the Offering will be used
by the Company to redeem $40,000,000 in aggregate principal amount of the
Company's Senior Notes at a redemption price of 112% plus accrued interest
thereon (assuming a June 30, 1996 redemption date). Approximately $24 million of
the net proceeds of the Offering will be used by the Company to pay the
aggregate Preferred Stock Reorganization Consideration.

Any remaining net proceeds will be used by the Company for general corporate
purposes. Pending such application, the Company intends to invest the net
proceeds from this Offering in investment-grade, short-term, interest-bearing
securities. If the net proceeds from the Offering are not sufficient to fund the
intended redemption of Senior Notes and payment of the aggregate Preferred Stock
Reorganization Consideration, the balance will be paid from cash on hand.

DIVIDEND POLICY

The Company has not paid cash dividends on its Common Stock to date. Because
the Company currently intends to retain any earnings to provide funds for the
operation and expansion of its business and for the servicing and repayment of
indebtedness, the Company does not intend to pay cash dividends on the Common
Stock in the foreseeable future. Furthermore, as a holding company with no
independent operations, the ability of the Company to pay cash dividends will be
dependent upon the receipt of dividends or other payments from its subsidiaries.
Under the terms of the Indentures governing the Senior Notes, the Company is not
permitted to pay any dividends on the Common Stock unless certain financial
ratio tests are satisfied. In addition, the Company's revolving credit facility
contains certain covenants which, among other things, prohibit the payment of
dividends by the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources." Any
determination to pay cash dividends on the Common Stock in the future will be at
the sole discretion of the Company's Board of Directors.

13
<PAGE>
CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at March 31, 1996, and as adjusted to give effect to the sale of
shares of Common Stock offered hereby at an assumed initial public
offering price of $ per share, and the application of the estimated net
proceeds therefrom as described under "Use of Proceeds." This table should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT(1):
12% Senior Notes due 2004........................................................... $ 162,180 $ 121,635
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 1,000,000 shares authorized; 200,000 shares issued
and outstanding; no shares issued and outstanding, as adjusted (2)................. 20,000 --
Common stock, $.01 par value, 5,000,000 shares authorized; 2,000,000 shares issued
and outstanding; shares as
adjusted (3)....................................................................... 20,000 88,850
Retained earnings................................................................... 14,017 10,580(4)
Cumulative translation adjustment................................................... 25 25
---------- -----------
Total stockholders' equity........................................................ 54,042 99,455
---------- -----------
Total capitalization............................................................ $ 216,222 $ 221,090
---------- -----------
---------- -----------
</TABLE>

- ---------

(1) In addition, the Company had approximately $26 million available under its
$30 million revolving credit facility as of March 31, 1996.

(2) Consists of Holdings Preferred Stock. See "Recapitalization."

(3) Does not give effect to the issuance of shares reserved for issuance upon
the exercise of outstanding warrants and employee stock options. See "Shares
Eligible for Future Sale."

(4) The 12% Senior Notes are subject to a redemption premium. This premium,
combined with the related unamortized debt issuance costs, will be expensed
as an extraordinary item at the time of redemption. As of March 31, 1996,
the extraordinary item would have been $3.4 million after the effect of
taxes.

14
<PAGE>
DILUTION

The pro forma net tangible book value of the Company as of March 31, 1996
was $(112.6) million, or $( ) per share of Common Stock. Net tangible book
value per share is determined by dividing the tangible net worth of the Company
(total assets less intangible assets and total liabilities) by the number of
common shares outstanding, after giving effect to the payment of the Preferred
Stock Reorganization Consideration. Without taking into account any changes in
such net tangible book value after March 31, 1996, other than to give effect to
the sale of the shares of Common Stock at an assumed initial public
offering price of $ per share and the anticipated application of the net
proceeds therefrom, pro forma net tangible book value of the Company as of March
31, 1996 would have been approximately $(45.6) million, or $( ) per share
(after giving effect to the use of the net proceeds from this Offering). This
represents an immediate increase in net tangible book value of $ per share to
current ATC stockholders and an immediate dilution of $ per share to new
stockholders. Dilution to new stockholders is determined by subtracting the net
tangible book value per share after this Offering from the initial public
offering price per share. The following table illustrates this per share
dilution.

<TABLE>
<S> <C> <C>
Initial public offering price per share........... $
Net tangible book value per share before
Offering....................................... $ ()
Increase per share attributable to sale of
Common Stock...................................
---------
Pro forma net tangible book value per share after
Offering......................................... ()
---------
Dilution per share to new investors............... $
---------
---------
</TABLE>

The following table summarizes, on a pro forma basis as of March 31, 1996,
the difference between existing stockholders after giving effect to the payment
of the Preferred Stock Reorganization Consideration and the purchasers of shares
in the Offering with respect to the number of shares of Common Stock purchased
from the Company, the total consideration paid and the average price per share
paid by the existing stockholders and by purchasers of the shares offered hereby
(before deducting the underwriting discount and estimated offering expenses
payable by the Company).

<TABLE>
<CAPTION>
SHARES PURCHASED (1) TOTAL CONSIDERATION AVERAGE
----------------------- -------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders.................. 2,000,000 % $ 20,000,000 % $ 10.00
New stockholders.......................
---------- ----- ------------- -----
Total.............................. 100.0% 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>

- ---------
(1) Does not give effect to the issuance of shares reserved for issuance upon
the exercise of outstanding warrants and employee stock options. See "Shares
Eligible for Future Sale." To the extent warrants or options are exercised,
there will be further dilution to new investors.

15
<PAGE>
SELECTED FINANCIAL DATA

The selected financial data presented below with respect to the statements
of income for the year ended December 31, 1993, seven months ended July 31,
1994, five months ended December 31, 1994, and the year ended December 31, 1995
and the balance sheets at December 31, 1994 and 1995 are derived from the
Combined Financial Statements of the Predecessor Companies and Consolidated
Financial Statements of the Company that have been audited by Ernst & Young LLP,
independent auditors, and are included elsewhere herein, and are qualified by
reference to such financial statements and notes related thereto. The selected
financial data with respect to the statement of income data for the year ended
December 31, 1992 and the balance sheet data at December 31, 1992 and 1993, are
derived from the audited Combined Financial Statements of the Predecessor
Companies that have been audited by Ernst & Young LLP, independent auditors, but
are not included herein. The balance sheet data at December 31, 1991 and the
statement of income data for the year then ended are derived from the unaudited
financial statements of the Predecessor Companies. The balance sheet data at
March 31, 1996 and the statement of income data for the three months ended March
31, 1995 and 1996 are derived from unaudited consolidated financial statements.
The unaudited consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, the Company considers necessary
for a fair presentation of the financial position at such date and the results
of operations for such periods. Operating results for the three months ended
March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. The data provided should be read
in conjunction with the Consolidated Financial Statements, related notes, and
other financial information included in this Prospectus.

<TABLE>
<CAPTION>
COMBINED
--------------------------------------------- CONSOLIDATED
-----------------------------------------------
FOR THE FOR THE THREE
YEAR ENDED FOR THE FOR THE FIVE FOR THE YEAR MONTHS ENDED
DECEMBER 31, SEVEN MONTHS MONTHS ENDED ENDED MARCH 31,
-------------------------- ENDED DECEMBER 31, DECEMBER 31, -----------------
1991 1992 1993 JULY 31, 1994 (1) 1994 1995 1995 1996
------- ------- -------- ----------------- ------------ ------------ ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales.......................... $63,612 $75,264 $110,702 $90,056 $67,736 $190,659 $40,638 $ 64,147
Cost of sales...................... 39,770 45,588 66,687 52,245 40,112 115,499 24,970 38,359
------- ------- -------- ------- ------------ ------------ ------- --------
Gross profit....................... 23,842 29,676 44,015 37,811 27,624 75,160 15,668 25,788
Selling, general and administrative
expenses.......................... 18,220 22,103 25,682 20,475 14,206 38,971 8,034 12,463
Amortization of intangible
assets............................ 28 28 28 16 1,210 3,308 720 916
------- ------- -------- ------- ------------ ------------ ------- --------
Operating income................... 5,594 7,545 18,305 17,320 12,208 32,881 6,914 12,409
Interest expense (income), net..... (314) (258) (302) (158) 6,032 16,915 3,568 4,842
Income taxes (2)................... 145 150 471 (5) 2,565 6,467 1,393 3,168
------- ------- -------- ------- ------------ ------------ ------- --------
Net income......................... $ 5,763 $ 7,653 $ 18,136 $17,483 3,611 9,499 1,953 4,399
------- ------- -------- -------
------- ------- -------- -------
Preferred stock dividends.......... 853 2,093 493 545
------------ ------------ ------- --------
Net income available to common
stockholders...................... $ 2,758 $ 7,406 $ 1,460 $ 3,854
------------ ------------ ------- --------
------------ ------------ ------- --------
Pro forma (unaudited)(3):
Net income per common share...... $ $
Shares used in computation of net
income per share................
OTHER DATA:
Capital expenditures (4)........... $ 1,149 $ 1,141 $ 2,310 $ 1,850 $ 1,336 $ 5,187 $ 1,195 $ 1,127
</TABLE>

<TABLE>
<CAPTION>
COMBINED CONSOLIDATED
------------------------- -----------------------------
DECEMBER 31, DECEMBER 31,
------------------------- ------------------ MARCH 31,
1991 1992 1993 1994 1995 1996
------- ------- ------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.................... $14,825 $18,639 $26,651 $ 39,646 $ 57,066 $ 61,202
Property, plant and equipment
(net)............................. 3,167 3,274 4,678 6,196 10,784 11,506
Total assets....................... 26,558 32,654 45,618 187,293 247,932 254,327
Long-term debt (including current
maturities) (5)................... 1,060 1,497 998 121,483 165,724 165,654
Preferred stock.................... -- -- -- 20,000 20,000 20,000
Common stockholders' equity........ 18,144 22,107 31,720 22,757 30,188 34,042
</TABLE>

- ------------
(1) The combined financial statements for the seven months ended July 31, 1994
include the operations of the Predecessor Companies up to their respective
acquisition dates; operations for RPM between July 20, 1994 and July 31,
1994 and for the other three Predecessor Companies for August 1st and 2nd,
1994 are not significant. All material transactions between the Predecessor
Companies have been eliminated.

(2) Two of the Predecessor Companies elected to be taxed as S Corporations for
all periods through consummation of the Initial Acquisitions; therefore, for
federal and state income tax purposes, any income or loss generally was not
taxed to these companies but was reported by their respective stockholders.
A pro forma provision for taxes based on income reflecting the estimated
provision for federal and state income taxes which would have been provided
had these companies been C Corporations and included in consolidated returns
with the Company is as follows: $2,304, $3,036 and $7,334 for the years
ended December 31, 1991, 1992 and 1993, respectively, and $7,004 for the
seven months ended July 31, 1994.

(3) See Note 1 of Notes to Consolidated Financial Statements for description of
the computation of pro forma net income per share.

(4) Excludes capital expenditures made by each of CRS, Mascot, King-O-Matic and
Tranzparts prior to such subsidiaries' respective acquisitions and any
capital expenditures made in connection with such acquisitions.

(5) Includes deferred tax liabilities of $1,438, $3,478 and $3,474 at December
31, 1994 and 1995 and March 31, 1996, respectively.

16
<PAGE>
PRO FORMA FINANCIAL DATA

The Unaudited Pro Forma Consolidated Statements of Income give effect to
business acquisitions made in 1995 and 1996 which were accounted for using the
purchase method of accounting. The acquisitions were as follows:

<TABLE>
<S> <C>
Component Remanufacturing Specialists, Inc. (CRS).......... June 1995
Mascot Truck Parts (Mascot)................................ June 1995
King-O-Matic Industries Limited (King-O-Matic)............. September 1995
Tranzparts, Inc. (Tranzparts).............................. April 1996
</TABLE>

The Unaudited Pro Forma Consolidated Statements of Income for the year ended
December 31, 1995 and for the three months ended March 31, 1996 assume that the
1995 Acquisitions and the 1996 Acquisition occurred on January 1, 1995 and the
1996 Acquisition occurred on January 1, 1996, respectively. The Unaudited Pro
Forma Statements of Income include the historical consolidated statements of
income of the Company (which includes the operations of CRS, Mascot,
King-O-Matic and Tranzparts from the dates of their respective acquisitions),
adjusted for the pro forma effects of the 1995 and 1996 Acquisitions. The
Unaudited Pro Forma Consolidated Statements of Income, as adjusted, for the year
ended December 31, 1995 and for the three months ended March 31, 1996, reflect
the anticipated application of the estimated net proceeds from the sale of
shares of Common Stock at an assumed offering price of $ per share,
as if the Offering had occurred on January 1, 1995 and January 1, 1996,
respectively.

The Unaudited Pro Forma Consolidated Statements of Income are not
necessarily indicative of the results of the operations that would actually have
occurred if the transactions had been consummated as of January 1, 1995 or
January 1, 1996 or of the future operations. These statements should be read in
conjunction with the Consolidated Financial Statements, related notes, and other
financial information included in this Prospectus.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)

<TABLE>
<CAPTION>
COMBINED ADJUSTMENTS
ACQUIRED PRO FORMA PRO FORMA FOR PRO FORMA
COMPANY BUSINESSES (1) ADJUSTMENTS CONSOLIDATED OFFERING AS ADJUSTED (2)
-------- -------------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net sales............................... $190,659 $26,832 $217,491 $217,491
Cost of sales........................... 115,499 16,499 $ 1,104(3) 133,102 133,102
-------- ------- ------------ ---------------
Gross profit............................ 75,160 10,333 84,389 84,839
Selling, general and administrative 38,971 6,780 (1,879)(4) 44,208 44,208
expenses............................... 40(5)
296(6)
Amortization of intangible assets....... 3,308 227 271(7) 3,806 3,806
-------- ------- ------------ ---------------
Income from operations.................. 32,881 3,326 36,375 36,375
Interest expense, net................... 16,915 129 2,108(8) 19,012 $(4,429)(9) 14,583
(140)(10)
-------- ------- ------------ ---------------
Income before income taxes.............. 15,966 3,197 17,363 21,792
Provision for income taxes.............. 6,467 95 470(11) 7,032 1,794(12) 8,826
-------- ------- ------------ ---------------
Net income.............................. $ 9,499 $ 3,102 $ 10,331 $ 12,966
-------- ------- ------------ ---------------
-------- ------- ------------ ---------------
</TABLE>

17
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS)

<TABLE>
<CAPTION>
ADJUSTMENTS
PRO FORMA PRO FORMA FOR PRO FORMA
COMPANY TRANZPARTS ADJUSTMENTS CONSOLIDATED OFFERING AS ADJUSTED (2)
------- ---------- ----------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net sales.................................... $64,147 $2,039 $66,186 $66,186
Cost of sales................................ 38,359 1,440 39,799 39,799
------- ---------- ------------ -------
Gross profit................................. 25,788 599 26,387 26,387
Selling, general and administrative
expenses.................................... 12,463 433 $ 27(5) 12,923 12,923
Amortization of intangible assets............ 916 53 (39)(7) 930 930
------- ---------- ------------ -------
Income from operations....................... 12,409 113 12,534 12,534
Interest expense (income), net............... 4,842 (57) (28)(10) 4,836 $(1,231)(9) 3,605
79(13)
------- ---------- ------------ -------
Income before income taxes................... 7,567 170 7,698 8,929
Provision for income taxes................... 3,168 41 16(11) 3,225 516(12) 3,741
------- ---------- ------------ -------
Net income................................... $4,399 $ 129 $ 4,473 $ 5,188
------- ---------- ------------ -------
------- ---------- ------------ -------
</TABLE>

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

(1) Includes the historical operations of the acquired businesses prior to
their acquisition by the Company. Accordingly, included in these amounts are CRS
and Mascot for the five months ended June 1, 1995 and June 6, 1995,
respectively, King-O-Matic for the eight months ended September 12, 1995 and
Tranzparts for the year ended December 31, 1995.

(2) As adjusted to give effect to the anticipated application of the net
proceeds from the Offering as if the Offering had occurred at the beginning of
the respective periods. Amounts do not reflect the impact of the early
redemption premium on the Senior Notes that, combined with the related
unamortized debt issuance costs, will be expensed as an extraordinary item at
the time of redemption. As of March 31, 1996, the extraordinary item would have
been $3.4 million after the effect of taxes.

(3) Prior to its acquisition by the Company, one of the acquired companies
reduced its inventory reserve to state inventory at its fair value at the time
of the acquisition. Such amount would have been reflected as a purchase price
adjustment on January 1, 1995, and accordingly, is excluded from the pro forma
results for the period.

(4) Adjusts the compensation of the former owner of one of the acquired
companies to the amount payable under his employment agreement entered into with
the Company at the time of the acquisition.

(5) Reflects the revised rental payments on facilities based upon the lease
agreements signed at the time of the acquisition.

(6) Prior to its acquisition by the Company, one of the acquired companies
reduced its bad debt reserve to reflect estimated net realizable value of
receivables at the time of the acquisition. Such amount would have been
reflected as a purchase price adjustment on January 1, 1995, and accordingly, is
excluded from the pro forma results for the period.

(7) Reflects additional amortization expense for the acquired companies
from the beginning of the period through the respective acquisition date.

(8) Reflects additional interest expense on debt issued in connection with
the acquisitions, as if the issuance had been consummated as of the beginning of
the periods presented. Amount includes $89,000 of debt issuance costs amortized
over the life of the related debt.

(9) Eliminates interest on the Senior Notes that are assumed to have been
redeemed.

(10) Eliminates interest on debt not assumed in the acquisitions.

(11) Reflects the adjustment of income taxes as a result of the pro forma
adjustments described in these Notes and the additional taxes that would have
been expensed had certain acquired companies been taxed as C Corporations rather
than S Corporations.

(12) Reflects additional income taxes resulting from the adjustment for
interest expense.

(13) Eliminates gain on sale to former owner of a building which was
subsequently leased to the Company.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion should be read in conjunction with the Combined
Financial Statements of the Predecessor Companies and the Consolidated Financial
Statements of the Company and notes thereto included elsewhere in this
Prospectus. The Combined Financial Statements of the Predecessor Companies
represent the combination of the historical financial statements of the four
separate businesses of the Predecessor Companies.

The Company's revenues are generated through the sale of drive train
products used in the automotive aftermarket repair of passenger cars and light
trucks. Since its formation, the Company has benefited from a combination of
internal and acquisition-related revenue growth. The Company achieved compound
annual growth in revenue of 37.5% from 1992 through March 31, 1996 (29.9% if the
1995 and 1996 Acquisitions are excluded).

The Company's revenues from sales to Independent Aftermarket customers
increased by 46.3% from $58.5 million to $85.6 million between 1992 and 1995.
This growth was due to geographic expansion through addition of distribution
centers, a broadened product line, enhanced customer service, effective sales
efforts and acquisitions. During the same period, revenues from sales to OEM
customers increased 407.7% from $16.8 million to $85.3 million due to increased
sales to existing customers, including Chrysler, and the addition of new
customers. Revenues from sales to retail automotive parts stores increased from
virtually none in 1992 to $19.8 million in 1995.

The primary components of the Company's cost of goods sold are the cost of
cores and component parts, labor costs and overhead. While certain of these
costs have fluctuated as a percentage of sales over time, cost of goods sold as
a percentage of sales has remained relatively flat from 1992 through 1995.
Selling, general and administrative ("SG&A") expenses consist primarily of
salaries, commissions, rent, marketing expenses and other management
infrastructure expenses. SG&A expenses as a percentage of sales declined from
23.2% in 1993 to 20.5% in 1995 principally due to the effect of spreading
certain fixed costs over a larger sales base.

The Company regularly evaluates strategic acquisition opportunities in the
automotive aftermarket business and expects to continue to do so in the future.

RESULTS OF OPERATIONS

The following table sets forth certain financial statement data expressed in
millions of dollars and as a percentage of net sales. The pro forma statement of
income for the year ended December 31, 1994 reflects the combined financial
statements for the seven months ended July 31, 1994 for Aaron's, HTP, Mamco and
RPM, and the consolidated operations of these companies for the five months
ended December 31, 1994. Pro forma expense adjustments were made to reflect the
Initial Acquisitions as if they had occurred on January 1, 1994.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
THREE MONTHS ENDED MARCH 31,
COMBINED PRO FORMA CONSOLIDATED -----------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- ------------- -------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $110.7 100.0% $157.8 100.0% $190.7 100.0% $40.6 100.0% $64.1 100.0%
Cost of sales............ 66.7 60.3 92.9 58.9 115.5 60.6 25.0 61.6 38.3 59.8
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
Gross profit............. 44.0 39.7 64.9 41.1 75.2 39.4 15.6 38.4 25.8 40.2
Selling, general and
administrative.......... 25.7 23.2 30.4 19.2 39.0 20.5 8.0 19.7 12.5 19.5
Amortization of
intangible assets....... -- -- 3.0 1.9 3.3 1.7 .7 1.7 .9 1.4
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
Operating income......... 18.3 16.5 31.5 20.0 32.9 17.2 6.9 17.0 12.4 19.3
Interest expense
(income), net........... (.3) (.3) 14.5 9.2 16.9 8.8 3.5 8.6 4.9 7.6
Provision for income
taxes................... 0.5 0.4 6.9 4.4 6.5 3.4 1.4 3.5 3.1 4.8
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
Net income............... $ 18.1 16.4% $ 10.1 6.4% $ 9.5 5.0% $ 2.0 4.9% $ 4.4 6.9%
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
</TABLE>

19
<PAGE>
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31,
1995

NET SALES. Net sales increased from $40.6 million for the three month
period ended March 31, 1995 to $64.1 million for the three month period ended
March 31, 1996, representing an increase of $23.5 million or 57.9%. Net sales
for the three month period ended March 31, 1996 included $12.3 million from CRS,
Mascot and King-O-Matic which were acquired on June 1, 1995, June 9, 1995 and
September 12, 1995, respectively.

Net sales of remanufactured transmissions increased by $15.7 million or
94.0%, from $16.7 million for the three month period ended March 31, 1995 to
$32.4 million for the three month period ended March 31, 1996. This increase was
due primarily two factors: remanufactured transmission sales of $7.8 million to
foreign OEMs generated by CRS, and an increase in remanufactured transmission
sales to Chrysler of $6.6 million or 39.8%, from $16.6 million for the three
month period ended March 31, 1995 to $23.2 million for the three month period
ended March 31, 1996.

Net sales of remanufactured engines increased 68.2%, from $4.4 million for
the three month period ended March 31, 1995 to $7.4 million for the three month
period ended March 31, 1996. This increase was due primarily to a significant
expansion of the Company's customer base in the retail chain store and
independent aftermarkets.

Net sales of repair kits and hard parts and other drive train products
increased $4.8 million or 24.6%, from $19.5 million for the three month period
ended March 31, 1995 to $24.3 million for the three month period ended March 31,
1996. This increase was primarily due to the opening of five new distribution
centers during the first quarter of 1995 and the acquisition of King-O-Matic.

GROSS PROFIT. Gross profit as a percentage of net sales increased from
38.4% for the three month period ended March 31, 1995 to 40.2% for the three
month period ended March 31, 1996. The increase was primarily due to greater
absorption of overhead costs resulting from higher production and sales volumes.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of net sales,
SG&A expenses decreased from 19.7% for the three month period ended March 31,
1995 to 19.5% for the three month period ended March 31, 1996. However, SG&A
expenses increased in absolute dollars from $8.0 million for the three month
period ended March 31, 1995 to $12.5 million for three month period ended March
31, 1996, representing an increase of $4.5 million or 56.3%. The increase in
SG&A expenses was due largely to the acquisition of CRS, Mascot, and
King-O-Matic. Other significant factors contributing to the increase in SG&A
expenses included the relocation and upgrade of RPM's main facilities in Rancho
Cucamonga, California, and the new manufacturing plant in Joplin, Missouri.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
increased $0.2 million for the three month period ended March 31, 1996 as
compared to the three month period ended March 31, 1995 reflecting the increase
in intangible assets that occurred as a result of the acquisitions of CRS,
Mascot and King-O-Matic.

INCOME FROM OPERATIONS. Principally as a result of the factors described
above, income from operations increased from $6.9 million for the three month
period ended March 31, 1995 to $12.4 million for the three month period March
31, 1996.

INTEREST EXPENSE (INCOME), NET. Interest expense increased $1.4 million
from $3.5 million for the three month period ended March 31, 1995 to $4.9
million for the three month period ended March 31, 1996. The increase in
interest expense reflects additional interest on the Series D Notes that were
issued principally to finance the acquisitions of CRS, Mascot and King-O-Matic
and the related amortization of debt issuance costs.

CONSOLIDATED YEAR ENDED DECEMBER 31, 1995 COMPARED TO PRO FORMA YEAR ENDED
DECEMBER 31, 1994

NET SALES. Net sales increased by $32.9 million from $157.8 million in 1994
to $190.7 in 1995 primarily as a result of the acquisitions of CRS, Mascot, and
King-O-Matic. The three new acquisitions provided $24.7 million in additional
revenues. Net sales of remanufactured transmissions increased from $68.4 million
in 1994 to $85.9 million in 1995. The volume increase of remanufactured
transmissions resulted principally from the acquisitions of CRS and Mascot,
partially offset by a reduction in net sales of remanufactured transmissions to
Chrysler from $66.8 million in 1994 to $64.8 million in 1995. Net sales to
Chrysler reflected a decrease from $19.8 million during the third quarter of
1994 to $13.2 million for the third quarter of 1995 as

20
<PAGE>
Chrysler reduced its inventory of remanufactured transmissions, partially offset
by an increase from $16.4 million during the fourth quarter of 1994 to $18.9
million for the fourth quarter of 1995. Net sales of repair kits, hard parts and
other drive train products increased $6.0 million from $69.0 million in 1994 to
$75.0 million in 1995 primarily as a result of the Company's acquisition of
King-O-Matic. Net sales of remanufactured engines increased $4.6 million from
$15.2 million in 1994 to $19.8 million in 1995. The volume increase of
remanufactured engines resulted from increased demand from Western Auto at its
retail outlets, and the addition of new retail customers.

GROSS PROFIT. Gross profit as a percentage of net sales decreased from
41.1% in 1994 to 39.4% in 1995. The gross profit decrease of 1.7% of net sales
was due in large part to increased labor costs relating to remanufactured
engines and transmissions. The Company was not able to recover all of the
additional costs through increased selling prices.

In addition, the aggregate gross profit was affected by the acquisitions
that occurred in 1995. Total net sales in 1995 includes $24.7 million for CRS,
Mascot and King-O-Matic at a combined gross profit which was somewhat lower than
that of the Company as a whole for 1995.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses increased from
$30.4 million in 1994 to $39.0 in 1995 or, as a percentage of net sales, from
19.2% in 1994 to 20.5% in 1995. The increase was partly due to the Company's
acquisitions of CRS, Mascot and King-O-Matic, which comprised $3.3 million of
the Company's SG&A expenses in 1995. Other significant factors that contributed
to the increase in SG&A expenses were the relocation of RPM's main facilities
from Azusa, California to Rancho Cucamonga, California and the addition of a new
manufacturing plant in Joplin, Missouri, both of which resulted in an increase
in ongoing SG&A expenses and a significant amount of non-recurring SG&A expenses
being incurred during 1995. Legal, audit, tax and other professional fees were
also higher in 1995 principally due to a full year of ATC operations as compared
with only five months of operations in 1994.

AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
increased $0.3 million in 1995 reflecting the increase in intangible assets that
occurred as a result of the acquisitions of CRS, Mascot and King-O-Matic.

INCOME FROM OPERATIONS. Principally as a result of the factors described
above, income from operations increased from $31.5 million in 1994 to $32.9
million in 1995.

INTEREST EXPENSE (INCOME), NET. Interest expense increased $2.4 million
from $14.5 million in 1994 to $16.9 million in 1995. The increase in interest
expense reflects additional interest on the Series D Notes that were issued
principally to finance the acquisitions of CRS, Mascot and King-O-Matic and the
related amortization of debt issuance costs.

PRO FORMA 1994 COMPARED TO COMBINED 1993

NET SALES. Net sales increased by $47.1 million from $110.7 million in 1993
to $157.8 million in 1994 primarily as a result of increases in the number of
units sold. The increase in net sales is primarily comprised of an increase in
net sales of remanufactured transmissions from $37.5 million during 1993 to
$68.4 million during 1994. The volume increase of remanufactured transmissions
resulted principally from increased demand from Chrysler due to an increased use
of remanufactured transmissions in lieu of rebuilt transmissions for OEM
warranty-related service. Net sales of repair kits, hard parts and other drive
train products increased $9.7 million from $59.3 million in 1993 to $69.0
million in 1994, despite facility relocation of five distribution centers and
the relocation of the Company's Dayton, Ohio torque converter plant to expand
capacity. Net sales of remanufactured engines increased $4.8 million from $10.4
million in 1993 to $15.2 million in 1994. The volume increase of remanufactured
engines resulted from increased demand from Western Auto at its retail outlets.

GROSS PROFIT. Gross profit as a percentage of net sales increased from
39.7% in 1993 to 41.1% in 1994, primarily as a result of an increase in gross
profit due to higher sales volume resulting in greater absorption of overhead.
During 1994, the Company began its program of increasing capacity and has
realized increased labor efficiencies with the upgrading and reorganization of
certain manufacturing facilities.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. As a percentage of net sales,
SG&A expenses decreased from 23.2% of net sales in 1993 to 19.2% of net sales in
1994, primarily due to higher sales volume. The

21
<PAGE>
improvement in the percentage occurred despite the additional expenses incurred
by the Company related to the start-up of the new Dayton torque converter plant,
increases in legal, accounting and professional fees relating to the integration
of the Predecessor Companies and increases in administrative support expenses.
Management believes that approximately half of these expenses are non-recurring
in nature. SG&A expenses for purposes of the pro forma financial statements for
1994 exclude $3.5 million of one time employee bonuses and $0.8 million of
excess executive compensation and other costs, which were paid by the
Predecessor Companies, net of certain new overhead expenses.

INCOME FROM OPERATIONS. Principally as a result of the factors described
above, income from operations increased from $18.3 million in 1993 to $31.5
million in 1994.

INTEREST EXPENSE (INCOME), NET. Interest expense increased $14.8 million
from $(.3) million in 1993 to $14.5 million in 1994. The increase in interest
expense reflects interest on the Series B Senior Notes, interest on the
outstanding amounts from time to time under the Revolving Credit Agreement, and
the amortization of deferred debt issuance costs.

LIQUIDITY AND CAPITAL RESOURCES

Since the Company's inception in July 1994, the Company has funded its
operations and investments in property and equipment, including acquisitions,
through the issuance of Senior Notes totaling $162.4 million and the private
sale of Preferred and Common Stock totaling $40 million, and, to a lesser
extent, through cash provided by operating activities.

Net cash provided by operating activities was $10.8 million in 1995. Net
cash used in operating activities was $0.7 million for the three months ended
March 31, 1996 principally due to the semi-annual cash payment of interest on
the Senior Notes and increases in working capital that exceeded the net income
and depreciation for the period. Net cash used in investing activities was $45.4
million and $1.1 million for 1995 and for the three months ended March 31, 1996,
respectively. The net cash used in investing activities in 1995 was attributable
to capital expenditures of $5.2 million, due primarily to investments in the
Company's Joplin, Missouri and Rancho Cucamonga, California manufacturing
facilities and $40.3 million used to acquire CRS, Mascot and King-O-Matic. Net
cash provided by financing activities was $34.0 million in 1995, due principally
to the issuance of $42.4 million of Senior Notes, which was partially offset by
certain payments on other debt facilities and amounts due to former
stockholders. Net cash provided by financing activities was $0.9 million during
the three months ended March 31, 1996 due to additional borrowings.

The Company has budgeted $9.8 million for capital expenditures for all of
1996. The budget includes $2.1 million for additional engine remanufacturing
equipment and $3.1 million for transmission remanufacturing equipment to provide
additional capacity. Of the budgeted capital expenditures, as of May 31, 1996,
the Company had incurred $2.8 million and had placed purchase orders of $2.1
million for additional equipment and leasehold improvements.

The Company has a $30.0 million revolving credit facility that matures in
July 1999. As of March 31, 1996, the Company had approximately $26 million
available under the revolving credit facility.

The Company believes that cash on hand, cash flow from operations and
existing borrowing capacity will be sufficient to fund its ongoing operations.
To the extent the Company is successful in completing acquisitions, the
Company's liquidity may be negatively affected, and the Company may be required
to raise additional capital through additional borrowings or equity financing.

INFLATION; LACK OF SEASONALITY

Although the Company is subject to the effects of changing prices, the
impact of inflation has not been a significant factor in results of operations
for the periods presented. In some circumstances, market conditions or customer
expectations may prevent the Company from increasing the prices of its products
to offset the inflationary pressures that may increase its costs in the future.
Historically, there has been little seasonal fluctuation in the Company's
business.

ENVIRONMENTAL MATTERS

See "Business -- Environmental" for a discussion of certain environmental
matters relating to the Company.

22
<PAGE>
BUSINESS

GENERAL

The Company is a leading remanufacturer and distributor of drive train
products used in the aftermarket repair of passenger cars and light trucks. The
Company's principal products include remanufactured transmissions, torque
converters and engines, as well as remanufactured and new parts for the repair
of automotive drive train and engine assemblies. The Company's principal
customers include: (i) independent transmission rebuilders, general repair shops
and distributors (I.E., the Independent Aftermarket); (ii) OEMs, principally
Chrysler, for use as replacement parts by their dealers; and (iii) retail
automotive parts stores. The Company believes it is uniquely positioned within
the highly fragmented aftermarket for drive train products as a result of its
extensive product line, diverse customer base and broad geographic presence,
with 43 distribution centers throughout the United States and Canada.

The Company's strategy is to achieve growth both internally and through
strategic acquisitions. The Company intends to expand its existing business by:
(i) increasing penetration of its current customer base; (ii) gaining new OEM,
Independent Aftermarket and retail customers; and (iii) introducing new products
to both existing and new customers. Strategic acquisitions have also been an
important element in the Company's historical growth. The Company sees
significant opportunities to continue expanding its customer base, geographic
presence and product offerings through additional strategic acquisitions,
particularly among companies serving the highly fragmented Independent
Aftermarket. Management believes that future acquisitions will enable it to
enhance the Company's revenues and profitability by expanding the Company's
existing distribution base, increasing the range of products sold through the
Company's distribution network and realizing economies of scale in areas
including purchasing, administration and inventory management.

AUTOMOTIVE AFTERMARKET INDUSTRY

MARKET SIZE AND GROWTH

23
<PAGE>
REMANUFACTURING

Remanufacturing is a process through which used assemblies, such as
transmissions or engines, are returned to a central facility where they are
disassembled and their component parts cleaned, refinished and tested. The
usable component parts are then combined with new parts in a high volume,
precision manufacturing process to create remanufactured assemblies.

When a drive train assembly such as a transmission or engine fails, there
are generally three alternatives available to return the vehicle to operating
condition. The dealer or independent repair shop may: (i) remove the assembly,
disassemble the unit into its component pieces, replace worn or broken parts
with remanufactured or new components, and reinstall that assembly ("rebuild");
(ii) replace the assembly with a remanufactured assembly or; (iii) in limited
instances, replace the assembly with a new assembly manufactured by the OEM.
Costs to the OEM associated with remanufactured assemblies generally are 50%
less than new or rebuilt assemblies due to the remanufacturers' use of high
volume manufacturing techniques and salvage methods that increase the number of
reusable components. In addition, remanufactured assemblies are generally of
higher quality than rebuilt assemblies because of the precision manufacturing
techniques, technical upgrades and rigorous inspection and testing procedures
employed in remanufacturing. In contrast, the quality of a rebuilt assembly is
heavily dependent on the skill level of the particular mechanic, who typically
is less able to remain current with engineering changes than remanufacturers,
who work in close liaison with OEM engineers. In addition, the proliferation of
transmission and engine designs, the increasing complexity of transmissions and
engines that incorporate electronic components, and the shortage of highly
trained mechanics qualified to rebuild assemblies all have tended to favor
remanufacturing over rebuilding assemblies for aftermarket repairs. For warranty
repairs, consistent quality of warranty repairs is important to the OEM standing
behind the applicable warranty, because once installed, the remanufactured
product is usually covered by the OEM for the balance of the original warranty
period. The Company believes that because of this combination of high quality
and low cost, the use of remanufactured assemblies for aftermarket repairs is
growing compared to the use of new or rebuilt assemblies.

PRODUCTS

The principal product lines of the Company are remanufactured transmissions,
repair kits and hard parts used in drive train repairs, and remanufactured
engines. The following table sets forth, by product line, the Company's combined
net sales (dollars in millions) and the percentage of the Company's total net
sales for the years 1993, 1994 and 1995 and the first three months of 1995 and
1996:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
------------------------------------------------ -----------------------------
1993 1994 1995 1995 1996
-------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Transmissions....... $ 37.5 33.9% $ 68.4 43.4% $ 85.9 45.0% $16.7 41.1% $32.4 50.5%
Repair Kits and Hard
Parts.............. 59.3 53.5 69.0 43.8 75.0 39.4 17.5 43.1 20.9 32.6
Engines............. 10.4 9.4 15.2 9.6 19.8 10.4 4.4 10.9 7.4 11.6
Other............... 3.5 3.2 5.2 3.2 10.0 5.2 2.0 4.9 3.4 5.3
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
Total............... $110.7 100.0% $157.8 100.0% $190.7 100.0% $40.6 100.0% $64.1 100.0%
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
------ ------ ------ ------ ------ ------ ----- ------ ----- ------
</TABLE>

TRANSMISSIONS

The Company remanufactures transmissions which are factory approved and
suitable for warranty and post-warranty replacement of transmissions for
Chrysler and 12 foreign OEMs, including Hyundai Motor America, Subaru of America
and American Isuzu, for their United States dealer networks. The number of
transmission models remanufactured by the Company has been increasing to
accommodate the greater number of models currently used in vehicles manufactured
by the Company's OEM customers. The majority of the Company's transmissions are
sold to Chrysler under Chrysler's MOPAR brand name. In addition, the Company
rebuilds heavy duty truck transmissions and air compressors in Canada.

REPAIR KITS AND HARD PARTS

Repair kits sold by the Company consist of gaskets, friction plates, seals,
bands, filters and other "soft" parts that are used in rebuilding transmissions
for substantially all domestic and most imported passenger cars and light
trucks. Kits are currently sold principally to the Independent Aftermarket. Each
kit is designed

24
<PAGE>
specifically to include substantially all of the soft parts necessary for
rebuilding a particular model of transmission. In addition to manufacturing or
remanufacturing certain of the components that are used in its kits, the Company
maintains a variety of supply relationships that allow it to purchase components
for its kits at competitive prices. The components manufactured or
remanufactured by the Company include various friction plates, gaskets and
bands. Many of the Company's competitors do not manufacture any of the
components that they distribute and the Company believes this provides it a cost
advantage over its competitors. The repair kits are sold under the RPM, HTP,
KING-O-MATIC and TRANZPARTS brand names.

The Company remanufactures torque converters (the coupler between the
transmission and engine), planetary gears (speed regulating devices inside the
transmission) and transmission fluid pumps. These "hard" parts are sold
principally to the Independent Aftermarket for use in drive train repairs. Many
of the Company's competitors do not distribute as broad a line of hard parts or
remanufacture hard parts that they distribute. The Company believes these
factors provide it both an availability and cost advantage over its competitors.
Hard parts are sold under the RPM, HTP, MAMCO AND TRANZPARTS brand names.

ENGINES

The Company remanufactures engines designed as replacement engines for use
in many domestic passenger cars and light trucks. Principal customers are
Western Auto, O'Reilly Auto Parts and APS Holding Corporation, as well as the
Independent Aftermarket. Over the past three years, the variety of engine models
remanufactured by the Company has increased from 50 to 75 as the Company has
expanded the range of engines offered to meet customer requirements. In June
1996, the Company introduced engine repair kits marketed to the Independent
Aftermarket under the PROFORMANCE brand name. These kits are designed to provide
mechanics with the components required to repair or rebuild a broad selection of
domestic engine models.

OTHER

Other products consist principally of remanufactured rack and pinion
assemblies and CV axles for passenger cars and light trucks for the Independent
Aftermarket, and cleaning and testing equipment for the Independent Aftermarket
and other industrial businesses. These products are sold under the RPM, HTP,
KING-O-MATIC, TRANZPARTS and INTERCONT brand names. In the fourth quarter of
1995, the Company became the sole supplier of fully enclosed aqueous cleaning
equipment to Safety-Kleen (a provider of parts cleaner services). This equipment
permits the cleaning of automotive and industrial components without the use of
environmentally damaging solvents.

MARKETING AND DISTRIBUTION

The Company distributes its products to: (i) the Independent Aftermarket;
(ii) its OEM customers for use as replacement parts by their dealers; and (iii)
retail automotive parts stores.

INDEPENDENT AFTERMARKET

The Company supplies transmission repair kits and hard parts used in drive
train repairs to over 11,000 of the approximately 17,000 independent
transmission rebuilders and distributors in the United States and Canada, such
as AAMCO Transmissions Inc., MOTRA Corp. and Lee Myles Associates Corp. These
products are used in the Independent Aftermarket to rebuild transmissions and
other assemblies using remanufactured and new component parts purchased from a
variety of suppliers. In addition, the Company supplies transmission and engine
repair kits, hard parts used in drive train repairs, remanufactured engines and
certain remanufactured components such as CV axles to over 1,000 of the
approximately 54,000 general repair shops in the United States. Transmission and
engine repairs performed in the Independent Aftermarket are generally for
vehicles no longer covered by warranty or for OEM dealers who do not have access
to remanufactured assemblies or lack the in-house capabilities to repair
transmissions.

There are two characteristics of the Independent Aftermarket that influence
the Company's business strategy. First, as the number of vehicle models has
proliferated and repairs have become increasingly complex, the Independent
Aftermarket has grown more dependent on its suppliers for technical support and
for assistance in managing inventory by delivering product on a just-in-time
basis at competitive prices. Second, Independent Aftermarket customers
(including those affiliated with larger organizations such as

25
<PAGE>
AAMCO, MOTRA and Lee Myles) generally purchase parts at the individual repair
shop level. Independent Aftermarket customers tend to make purchasing decisions
based on availability and rapid delivery of products, competitive pricing,
breadth of product offering and technical assistance. To respond to these
requirements, the Company has developed a strategy of geographic expansion of
its distribution system to provide its Independent Aftermarket customers with
short-notice rapid delivery, high service levels and technical support for a
broad product offering in each local market. This is accomplished through 43
distribution centers located throughout the United States and Canada from which
the Company provides local technical support and a wide range of products
delivered by Company-operated trucks to its customers. The Company believes that
this system is the most extensive in the drive train segment of the automotive
aftermarket and represents a competitive advantage for the Company relative to
its typically smaller, local competitors. Accordingly, the Company believes
there are opportunities for further geographic penetration in this relatively
fragmented market. See "-- Business Strategy -- Internal Growth -- Independent
Aftermarket."

The Company has developed a common product identification and numbering
system which is currently being implemented on a Company-wide basis. In
addition, the Company is in the process of electronically linking its
distribution centers through a computer network that will enable each center to
determine more quickly if and where a particular part is located within the
distribution system, thereby further enhancing customer service. The Company
expects to implement this process in stages during 1996 and 1997, and it
estimates that the process will be completed by the end of 1997. These changes
are expected to improve customer service, increase product availability, enhance
inventory management and improve operational efficiencies.

New customers are developed by a direct sales force operating from the
Company's local distribution centers, by national and local trade publication
advertising and by telemarketing. The Company also participates in trade shows.
The Company believes its RPM, HTP, KING-O-MATIC, MAMCO, TRANZPARTS and INTERCONT
brand names are well recognized and respected in their regional markets. Sales
to Independent Aftermarket customers accounted for 44.9% of the Company's
revenues in 1995 and 39.2% in the first quarter of 1996.

OEM CUSTOMERS

The Company provides factory-approved remanufactured transmissions to OEMs
for use in warranty and, to a lesser extent, post-warranty repair work by their
dealers. The Company's largest OEM customer is Chrysler, to whom the Company
also supplies certain factory-approved remanufactured engines. The Company sells
to 12 foreign OEMs, including Hyundai Motor America, Subaru of America and
American Isuzu. Products are sold to each OEM pursuant to supply arrangements
for individual transmission models. Sales to the Company's OEM customers
accounted for 44.9% of the Company's 1995 revenues and 49.1% of first quarter
1996 revenues. Sales to Chrysler accounted for 35.4% and 36.9% of the Company's
revenues in 1995 and in the first quarter of 1996, respectively. See "Risk
Factors -- Dependence on Significant Customer."

Over the past 12 years, the Company has developed and maintained strong
relationships at many levels of both the corporate and the factory organizations
of Chrysler. In recognition of the Company's consistently high level of service
and product quality throughout its relationship with Chrysler, in 1995 the
Company was awarded the Platinum Pentastar award, the highest award Chrysler
bestows on a supplier. The Company's Platinum Pentastar was one of only 14
awarded to Chrysler's 3,500 suppliers in 1995 and marks the first time that the
Platinum Pentastar has been awarded to a remanufacturer or to a supplier that
serves exclusively as a MOPAR aftermarket parts supplier. In addition to its
Platinum Pentastar, the Company received Gold Pentastar awards in 1993, 1994 and
1995. Only seven suppliers received the Gold Pentastar award in each of these
years.

Chrysler began implementing remanufacturing programs for its transmission
models in 1986 and selected the Company as its sole supplier of remanufactured
transmissions in 1989. Chrysler has advised the Company that, by implementing a
remanufacturing program, Chrysler has realized substantial warranty cost
savings, standardized the quality of its dealers' aftermarket repairs and
reduced its own inventory of

26
<PAGE>
replacement parts. Currently, Chrysler has remanufacturing programs for
transmission models that are used in less than 70% of its vehicles, and the
Company is the only factory-approved supplier of remanufactured transmissions
for these models. The Company estimates that, of the Chrysler transmissions for
which there is a remanufacturing program, the Company currently provides less
than 50% of the transmissions subject to major repair by Chrysler dealers, with
the balance being rebuilt by the dealers. This has been due to dealers' electing
to rebuild transmissions, generally through their own service departments,
rather than replacing them with remanufactured assemblies, as well as historical
constraints on the availability to the Company of parts from Chrysler used in
the remanufacturing process and, to a lesser extent, the availability of cores
to the Company.

As part of its expanding relationship with Chrysler and in response to the
periodic shortage of cores, at Chrysler's request the Company recently
established a central core return center for all of Chrysler's transmission
models and certain engine lines through which the Company manages the tracking
and return of cores. Under the Company's management system, Chrysler dealers
make arrangements to ship transmission and engine cores to a regional depot,
which then ships directly to the Company's central core return center located
near its main remanufacturing facility. The Company thus assists Chrysler by
improving the efficient and timely return of cores at a cost savings to
Chrysler. Furthermore, the Company performs value-added services such as core
audit and analysis in conjunction with Chrysler engineers. Additionally, the
Company's improved ability to track core supply allows it to schedule its
production more efficiently. The Company believes that this central core
facility has reduced the risk of future Chrysler core shortages. In addition,
the increased number of cores has resulted in a greater number of reusable
parts, which, together with recently expanded production capacity at Chrysler,
has increased the Company's supply of parts required in the remanufacturing
process.

Net sales to Chrysler grew from $14.9 million in 1991 to $67.6 million in
1995 and were $23.7 million for the first quarter of 1996. The Company has
developed a new production line dedicated to remanufacturing certain of the
Chrysler transmission models that are not yet covered by the remanufacturing
programs and has received an initial purchase order from Chrysler, although the
Company has not begun remanufacturing these transmission models.

RETAIL AUTOMOTIVE PARTS STORES

The Company supplies remanufactured engines, transmission filter kits,
engine components and engine repair kits to a portion of the approximately
60,000 automotive aftermarket retail stores throughout the United States, which
offer new and remanufactured parts and assemblies to a broad range of customers,
principally "do-it-yourself" customers and general repair shops. The retail
automotive parts store market is highly fragmented with most retail stores
obtaining products similar to those provided by the Company from a variety of
regional suppliers. These customers tend to make purchasing decisions based on
price, rapid delivery of products and breadth of product offering. As a supplier
with a national scope and a broader product line than many of its competitors,
the Company provides high quality products, competitive prices and high service
levels as well as promotional literature and advertisements. The Company's
principal retail customers are Western Auto (885 retail locations in 35 states)
and O'Reilly Auto Parts (191 retail locations in five states). Sales to retail
automotive parts stores have grown from virtually zero in 1991 to $19.8 million
in 1995 and $7.5 million in the first quarter of 1996.

BUSINESS STRATEGY

The Company's strategy is to achieve growth both internally and through
strategic acquisitions. The Company intends to expand its existing business by:
(i) increasing penetration of its current customer base; (ii) gaining new OEM,
Independent Aftermarket and retail customers; and (iii) introducing new products
to both existing and new customers. Strategic acquisitions have also been an
important element in the Company's historical growth. The Company sees
significant opportunities to continue expanding its customer base, geographic
presence and product offerings through additional strategic acquisitions,
particularly among companies serving the highly fragmented Independent
Aftermarket. Management believes that future acquisitions will enable it to
improve the Company's revenues and profitability by expanding the

27
<PAGE>
Company's existing distribution base, increasing the range of products sold
through the Company's distribution network and realizing economies of scale in
areas including purchasing, administration and inventory management.

INTERNAL GROWTH -- INDEPENDENT AFTERMARKET

INCREASING BUSINESS TO EXISTING CUSTOMERS. The Company believes that it
currently supplies less than one-third of the remanufactured or new drive train
component requirements of its Independent Aftermarket customers. The Company
believes it is well positioned to expand sales to these customers through the
implementation of a common parts numbering system, a systemwide computer-based
inventory tracking system and the stocking in a central location of certain hard
parts that the Company's customers have previously had difficulty obtaining. The
Company also intends to expand its business with existing customers by
cross-selling products among its subsidiaries' customers. For example,
King-O-Matic has recently introduced Mamco torque converters to its customers
and RPM has increased its hard parts sales by offering HTP products.

ESTABLISHING NEW CUSTOMER RELATIONSHIPS. The Company believes that its
product mix and distribution network position it to expand its Independent
Aftermarket customer base in two ways. First, although the Company's
distribution network is currently the most extensive in the drive train segment
of the automotive aftermarket, there are significant opportunities for the
Company to expand to additional geographic markets. The Company currently has
facilities in 41 markets in the United States and Canada and has identified
expansion opportunities in over 60 additional markets. The Company opened ten
and closed two distribution centers in 1995. Second, the Company recently has
expanded its customer base to include general repair shops in the United States.
Although the Company began supplying this market on a selected basis with a
limited product line in 1993, since January 1995 the Company has expanded its
distribution of remanufactured engines and engine repair kits from two to ten
distribution centers and plans to expand the availability of these product lines
to its other distribution centers. The Company now serves approximately 1,000 of
the approximately 54,000 general repair shops in the United States. The
Company's product line breadth and depth and its distribution network contrast
with those of many other suppliers which offer only a limited product line on a
regional or local level. These factors are expected to enable the Company to
broaden its penetration among general repair shops with minimal additional
investment.

INTRODUCING NEW PRODUCTS. The Company regularly introduces new products for
the Independent Aftermarket. The Company monitors sales trends and is in
frequent communication with customers regarding potential new products. For
example, the Company has increased its remanufactured engine models from 50 to
75 since the beginning of 1995. The Company believes that its reputation for
high quality products and customer service enables it to leverage its
relationships with existing customers to sell additional products.

The Company also explores other opportunities to service the Independent
Aftermarket. For example, the Company has become the sole supplier of fully
enclosed aqueous cleaning equipment to Safety-Kleen, a provider of parts cleaner
services. The Company expects that the market for aqueous cleaning equipment,
which allows automotive and industrial parts to be cleaned without the use of
environmentally damaging solvents, will grow due to increasingly stringent
environmental regulations regarding the use and disposal of solvents.

INTERNAL GROWTH -- OEM

INCREASING SALES TO EXISTING CUSTOMERS. The Company intends to increase its
business with its existing OEM customers by working with the OEMs to increase
dealer utilization of remanufactured transmissions in both the warranty and
post-warranty period. The Company estimates that, of the transmissions for which
its OEM customers have remanufacturing programs, the Company currently provides
less than 50% of the transmissions subject to major repair by such customers,
with the balance being transmissions rebuilt by dealer mechanics. The Company is
working in tandem with OEMs to highlight to dealers the quality and cost
advantages of using remanufactured assemblies versus rebuilding. In addition,
the post-warranty repair market, which the Company believes is approximately
eight times as large as the OEM dealer warranty

28
<PAGE>
repair market, presents a growth opportunity. Currently, the vast majority of
post-warranty repairs are performed in the Independent Aftermarket rather than
at OEM dealers. Given the relatively low cost and higher quality of
remanufactured components, OEM dealers can enhance their cost competitiveness
compared to independent service centers through the increased use of
remanufactured components as well as providing end customers with a higher
quality product. To the extent that OEM dealers increase their level of
post-warranty repairs, the Company is well positioned to capitalize on this
market growth.

INTRODUCING NEW PRODUCTS. The Company has introduced 33 new transmission
models and a number of related drive train products in the last three years for
its OEM customers. The Company has developed a new production line dedicated to
remanufacturing certain of the Chrysler transmission models that are not yet
covered by the remanufacturing program and has received an initial purchase
order, although the Company has not begun remanufacturing these new products.
The Company's ability to add new products is in part dependent on the support
and approval of the OEM. The Company believes that its reputation for high
quality products and customer service will generate increased demand from OEMs
for additional remanufactured components.

ESTABLISHING NEW CUSTOMER RELATIONSHIPS. The Company believes that
opportunities exist with several foreign automotive OEMs relative to United
States based remanufacturing programs. The Company believes that this represents
an opportunity for growth and is currently working to develop programs with
certain foreign OEMs. In 1995, the Company initiated a remanufactured
transmission program for Mitsubishi and currently supplies remanufactured
transmissions models used in approximately 65% of the Mitsubishi vehicles.

INTERNAL GROWTH -- RETAIL STORES

INCREASING SALES TO EXISTING CUSTOMERS. The Company intends to increase its
business with its existing retail customers by increasing the distribution of
its current products throughout these customers' networks. For example, in 1992
the Company began supplying remanufactured engines to Western Auto and in 1996,
was selected to supply remanufactured engines to Western Auto's fourth
distribution center, thereby expanding this relationship to include all 885
Western Auto stores. The Company has generally increased its business with its
existing retail customers as they have increased their market coverage and
expects to continue to do so. In addition, the Company intends to increase sales
to existing customers by providing customized marketing programs. For example,
in 1995 the Company introduced an extended warranty program for remanufactured
engines to certain of its retail store customers.

ESTABLISHING NEW CUSTOMER RELATIONSHIPS. Of the 60,000 retail automotive
parts stores in the United States, the Company currently sells products to
approximately 1,000 stores, principally through three retail chains. The Company
believes that its position as a leading national supplier of remanufactured
engines affords it the opportunity to service additional national retail chains
as certain of these chains convert from a currently fragmented base of suppliers
and as other chains expand their product lines to include remanufactured
engines. For example, in 1995 the Company added O'Reilly Auto Parts and in 1996
the Company added APS Holding Corporation (which conducts retail operations
under names including "Big A Auto Parts") as customers.

INTRODUCING NEW PRODUCTS. The Company plans to increase its sales to
existing retail automotive parts store customers by introducing additional
products such as clutch kits, engine components and engine repair kits.
Recently, the Company's product offerings to retail chain stores were enhanced
by the acquisition of King-O-Matic, which added transmission filter kits to the
Company's product line. King-O-Matic products have been subsequently sold to
certain existing retail customers, allowing the Company to increase revenues
with limited incremental expenses.

EXTERNAL GROWTH -- ACQUISITIONS

Strategic acquisitions have been an important element in the Company's
historical growth, and the Company plans to continue expanding its customer
base, geographic locations and product offerings through strategic acquisitions
in the future. The Independent Aftermarket supplier base is highly fragmented
and many local independent drive train product distributors lack the financial
and managerial resources to expand. Many such distributors also have limited
opportunities to realize their investment in the business.

29
<PAGE>
This dynamic has historically created a significant number of attractive
potential acquisition candidates and the Company believes that significant
opportunities for profitable growth through acquisitions will continue to exist
for the foreseeable future. By integrating an acquired company's products into
the Company's distribution system, the Company is able to offer these products
to a substantially greater number of markets than was the case prior to the
acquisition. In addition, the Company expects to realize economies of scale in
areas including purchasing, administration and inventory management.

The Company's management is experienced in identifying acquisition
opportunities and completing and integrating acquisitions within the automotive
aftermarket. Since its formation and acquisition of Aaron's, HTP, Mamco and RPM
in 1994, ATC has acquired CRS, Mascot and King-O-Matic in 1995 and Tranzparts in
April 1996.

REMANUFACTURING OF TRANSMISSIONS, HARD PARTS AND ENGINES

In its remanufacturing operations, the Company obtains used transmissions,
hard parts, engines and related components, commonly known as "cores," which are
sorted by make and model and either placed into immediate production or stored
until needed. In the remanufacturing process, the cores are evaluated and
disassembled into their component parts. The components that can be incorporated
into the remanufactured product are cleaned, tested and refinished. All
components determined not reusable or repairable are replaced by other
remanufactured or new components. The units are then reassembled using
high-volume precision manufacturing techniques into finished assemblies.
Inspection and testing are conducted at various stages of the remanufacturing
process, and each finished assembly is tested on equipment designed to simulate
performance under operating conditions. Primarily as a result of its rigorous
quality control procedures, the Company has experienced an insignificant number
of warranty claims on its products. After testing, completed products are then
packaged for immediate delivery or shipped to one of the Company's distribution
centers.

The majority of the cores used in the Company's remanufacturing process for
sale to its Independent Aftermarket and retail customers are obtained from
customers as trade-ins. The Company encourages its Independent Aftermarket and
retail customers to return cores on a timely basis and charges customers a
supplemental core charge in connection with purchases of engines and critical
hard parts. The customer can satisfy this charge by returning a usable core or
making a cash payment equal to the amount of the supplemental core charge. If
cores are not returned in a timely manner, the Company then must procure cores
through its network of independent core brokers. While core prices are subject
to supply and demand price volatility, the Company believes its procurement
network for cores will continue to provide cores at reasonable prices.

COMPETITION

The Company competes in the highly fragmented automobile aftermarket for
transmissions, engines and other drive train components, in which the majority
of industry supply comes from small local/regional participants. Competition is
based primarily on product quality, service, delivery, technical support and
price. Many of the Company's competitors operate only in certain geographic
regions with a limited product line. The Company is one of the largest
participants in the aftermarket for remanufactured drive train components,
offers a more complete line of products across a varied customer base and has a
much broader geographic presence than many of its competitors. As a result, the
Company believes that it is well positioned to enhance its competitive position
by expanding its product line through the development of new products or
acquisition of new businesses as well as by expanding its distribution network
into new geographic markets. Nevertheless, the aftermarket for remanufactured
drive train components remains highly competitive, and certain of the Company's
competitors are larger than the Company and have greater financial and other
resources available to them than does the Company.

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<PAGE>
FACILITIES

The Company currently leases 54 facilities with total leased space of
approximately 1.9 million square feet. The following table sets forth certain
information regarding the manufacturing facilities and distribution centers of
the Company.

<TABLE>
<CAPTION>
LEASE
APPROXIMATE EXPIRATION
LOCATION SQ. FEET DATE TYPE OF FACILITY/PRODUCTS MANUFACTURED
- ---------------------------- ------------ --------------- ---------------------------------------------------------
<S> <C> <C> <C>
Phoenix, Arizona 22,000 1997 Distribution Center
Tucson, Arizona 6,400 1998 Distribution Center
Azusa, California 6,000 1998 Distribution Center
Fresno, California 14,000 1997 Distribution Center
Los Angeles, California 4,700 1998 Distribution Center
Oakland, California 10,000 1997 Distribution Center
Rancho Cucamonga, California 153,000 2002 Distribution Center, Torque Converters, Repair Kits, Hard
Parts
Sacramento, California 11,200 1998 Distribution Center
San Diego, California 10,000 1997 Distribution Center
San Jose, California 10,000 2000 Distribution Center
Van Nuys, California 6,800 2000 Distribution Center
Colorado Springs, Colorado 5,000 1997 Distribution Center
Denver, Colorado 9,000 1997 Distribution Center
Atlanta, Georgia 14,900 1998 Distribution Center
Chicago, Illinois 20,000 2000 Distribution Center
Louisville, Kentucky 51,500 1999 Distribution Center, Repair Kits, Hard Parts
Louisville, Kentucky 12,000 (1) CV Axles
Louisville, Kentucky 9,200 (1) CV Axles
Grand Rapids, Michigan 9,000 1998 Distribution Center
Taylor, Michigan 12,200 2000 Distribution Center
Joplin, Missouri 264,000 1998 Transmissions, Engines
Kansas City, Missouri 10,200 2000 Distribution Center
Springfield, Missouri 280,800 2004 Distribution Center, Transmissions, Engines
Springfield, Missouri 30,000 1998 Torque Converters
Springfield, Missouri 20,000 1996 Core Storage
Springfield, Missouri 98,800 (1) Core Storage
Springfield, Missouri 10,000 1996 Core Storage
Springfield, Missouri 200,000 2006 Core Storage
Springfield, Missouri 34,000 1998 Cleaning and Testing Equipment
St. Louis, Missouri 9,700 1998 Distribution Center
Las Vegas, Nevada 7,500 1999 Distribution Center
Mahwah, New Jersey 92,900 2002 Distribution Center, Transmissions
Albuquerque, New Mexico 7,000 1997 Distribution Center
Charlotte, North Carolina 23,000 2001 Distribution Center
Dayton, Ohio 42,000 1999 Distribution Center, Torque Converters
Portland, Oregon 20,000 1997 Distribution Center
Memphis, Tennessee 37,800 2003 Distribution Center, Repair Kits
Dallas, Texas 15,000 1997 Distribution Center
Salt Lake City, Utah 15,000 1997 Distribution Center
Norfolk, Virginia 9,700 2000 Distribution Center
Federal Way, Washington 1,600 1998 Corporate Offices
Seattle, Washington 22,000 1997 Distribution Center
Spokane, Washington 9,500 2000 Distribution Center
Janesville, Wisconsin 30,000 2001 Distribution Center, Repair Kits, Hard Parts
Edmonton, Alberta 14,800 1998 Distribution Center, Heavy Duty Truck Transmissions
Calgary, Alberta 3,000 1996 Distribution Center
Moncton, New Brunswick 12,000 2000 Distribution Center
Mississauga, Ontario 35,100 1998 Distribution Center, Heavy Duty Truck Transmissions and
Air Compressors
Mississauga, Ontario 24,000 2000 Distribution Center
Montreal, Quebec 11,200 2000 Distribution Center
Regina, Saskatchewan 600 (1) Distribution Center
Vancouver, British Columbia 7,800 1997 Distribution Center
Vancouver, British Columbia 7,300 1997 Distribution Center
Mexicali, Mexico 77,100 1998 Torque Converters, Cleaning and Testing Equipment
</TABLE>

- ------------
(1) Month-to-month lease.

31
<PAGE>
ENVIRONMENTAL

The Company is subject to various evolving federal, state, local and foreign
environmental laws and regulations governing, among other things, emissions to
air, discharge to waters and the generation, handling, storage, transportation,
treatment and disposal of a variety of hazardous and non-hazardous substances
and wastes. These laws and regulations provide for substantial fines and
criminal sanctions for violations. The operation of automotive parts
remanufacturing plants involves environmental risks.

Prior to the RPM Acquisition, the company from whom RPM acquired its assets
(the "Prior RPM Company") leased nine properties in the City of Azusa,
California (the "Azusa Properties") from a general partnership consisting of the
Prior RPM Company shareholders. The Azusa Properties are within an area which,
as a result of regional groundwater contamination, has been designated by the
EPA as the Baldwin Park Operable Unit ("BPOU") of the San Gabriel Valley
Superfund Sites. The federal Superfund law (the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended ("CERCLA")) both
provides for the appropriate cleanup of contaminated sites and assigns liability
for the cost of such cleanups. The parties held responsible for cleanup costs
are broadly defined under CERCLA, and generally include present owners and
operators of a site and certain past owners and operators. Liability for cleanup
costs imposed against such "responsible parties" is strict, joint and several.
However, such costs are typically allocable among responsible parties through
settlement or litigation based on factors including each particular party's
relative contribution of contaminants to the site and ability to pay.

The EPA has proposed a groundwater treatment system as an interim remedial
measure for the BPOU. The EPA has estimated that it will cost approximately $47
million to construct this system and approximately $4 million per year for an
indefinite period to operate it. The Company has not independently evaluated
this estimate, and the actual cost may vary substantially from this estimate. In
addition, the EPA has incurred substantial costs to date and will likely
continue to incur such costs in overseeing the implementation of remedial
measures. Further, if the EPA determines that the interim remedial measures are
not adequate, additional costs could be incurred. In addition to cleanup costs,
the responsible parties may be required to pay for natural resources damage. In
1993, the EPA notified the Prior RPM Company, the general partnership consisting
of the Prior RPM Company shareholders which owns the Azusa Properties and
approximately 100 other entities that they may be potentially responsible
parties ("PRPs") for the San Gabriel Valley Superfund Sites as present or former
owners or operators of properties located within that Site. In January 1995, the
EPA sent letters to 16 of these parties with respect to 15 properties in the
BPOU, describing 4 of those properties as apparently the "largest contributors
to the groundwater contamination" and the remaining 11 properties as apparently
in a range of moderate to lesser contributors. The letters identify the
recipients as PRPs for the proposed interim remediation and request that they
enter into negotiations to design, construct and operate the cleanup remedy. The
recipients of the letters included a general partnership comprised of the Prior
RPM Company shareholders, which was informed that the EPA considers it
responsible for two of the sites described as lesser to moderate contributors to
the contamination.

In conjunction with the federal and state environmental investigation of
this area, the Prior RPM Company has been required by the California Regional
Water Quality Control Board (the "Water Board") to conduct an investigation on
the Azusa Properties. This investigation has detected soil contamination on
certain of the Azusa Properties formerly leased by RPM and as a result, the
Prior RPM Company is being required by the Water Board to undertake further
investigations and may be required to undertake remedial action on those
properties.

For one year after the RPM Acquisition, the Company leased the Azusa
Properties pursuant to leases which provide that the Company has not assumed any
liabilities with respect to environmental conditions existing on or about these
properties prior to the commencement of the lease period, although the Company
could be held responsible for such liabilities under various legal theories.
Since the RPM Acquisition, the Company has been engaged in negotiations with the
EPA to settle any liability that it may have for this site. The RPM acquisition
agreement provides that the Company did not assume any environmental liabilities
associated with hazardous substances existing on or about the Azusa Properties
occupied by the Prior RPM

32
<PAGE>
Company prior to the RPM Acquisition and that the Prior RPM Company and the
Prior RPM Company shareholders will jointly and severally indemnify the Company
for all liabilities or damages (other than consequential damages) that the
Company may reasonably incur as a result of any claim asserted against the
Company relating to unassumed environmental liabilities. There can be no
assurance, however, that the Company would be able to make any recovery under
any indemnification provisions. The Company also could become responsible if the
conduct of its business contributed to any environmental contamination on these
properties. The Company took steps to insure that its business at these
properties was conducted in compliance with applicable environmental laws and in
a manner that does not contribute to any environmental contamination. Moreover,
the Company has significantly reduced its presence at the site and has moved all
manufacturing operations off-site. Since July 18, 1995, the Company's only real
property interest in the Azusa Properties has been the lease of a 6,000 square
foot storage and distribution facility. The Company believes, although there can
be no assurance, that it will not incur any material liability as a result of
the pre-existing environmental conditions.

In connection with the CRS, Mascot, King-O-Matic, Aaron's, RPM, HTP, Mamco
and Tranzparts acquisitions, the Company conducted certain investigations of
these companies' facilities and their compliance with applicable environmental
laws. The investigations, which included "Phase I" assessments by independent
consultants of all manufacturing and certain distribution facilities, found that
certain remedial, reporting and other regulatory requirements, including certain
waste management procedures, were not or may not have been satisfied. Based in
part on the investigations conducted, and the indemnification provisions of the
agreements entered into in connection with these acquisitions, the Company
believes, although there can be no assurance, that its liabilities relating to
these environmental matters will not have a material adverse effect,
individually or in the aggregate, on the Company.

LEGAL PROCEEDINGS

From time to time, the Company has been and is involved in various legal
proceedings. Management believes that all of such litigation is routine in
nature and incidental to the conduct of its business, and that none of such
litigation, if determined adversely to the Company, would have a material
adverse effect, individually or in the aggregate, on the Company.

EMPLOYEES

As of March 31, 1996, the Company employed approximately 2,800 people. The
Company believes its employee and labor relations are good. None of the
Company's subsidiaries has experienced a work stoppage in its history, and the
Company has not experienced any work stoppage since its formation in 1994. None
of the Company's employees are members of any labor union.

33
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth the name, age and position with the Company
of each of the persons who serve as directors and executive officers of the
Company. Each director of the Company will hold office until the next annual
meeting of stockholders of the Company or until his successor has been elected
and qualified. Officers of the Company are elected by the Board of Directors of
the Company and serve at the discretion of the Board.

<TABLE>
<CAPTION>
NAME AGE POSITIONS
- ----------------------------------- ----------- ----------------------------------------------------------------------
<S> <C> <C>
William A. Smith 50 Chairman of the Board of Directors, President and Chief Executive
Officer
John C. Kent 44 Chief Financial Officer
Wesley N. Dearbaugh 44 President and General Manager, Independent Aftermarket
Daniel C. Buie 38 Corporate Controller
James R. Wehr 43 President, Aaron's
Michael L. LePore 42 President, CRS
Barry E. Schwartz 51 President, Mascot
Kenneth A. Bear 44 Executive Vice President and General Manager, Aaron's
Richard R. Crowell 41 Director
Mark C. Hardy 32 Director
Dr. Michael J. Hartnett 50 Director
Kurt B. Larsen 32 Director
William E. Myers, Jr. 36 Director
Richard K. Roeder 47 Director
</TABLE>

Mr. Larsen is expected to resign his position as a director of the Company
shortly after completion of the Offering. In that event, the remaining
directors, pursuant to the Company's Bylaws, will select a new director to fill
the resulting vacancy on the Board of Directors. It is expected that the new
director will have no prior affiliation with the Company or ACP.

WILLIAM A. SMITH became Chairman of the Board of Directors, President and
Chief Executive Officer of the Company in July 1994. From March 1993 to July
1994, Mr. Smith served as a consultant to ACP in connection with the Initial
Acquisitions. From March 1992 to March 1993, Mr. Smith was President of the
Rucker Fluid Power Division of Lucas Industries, plc. From October 1988 to March
1992, Mr. Smith was Vice President of Parts Operations for Navistar
International Transportation Corporation, a truck engine manufacturer, where Mr.
Smith managed its aftermarket parts business, including four new aftermarket
business lines. From July 1985 to October 1988, Mr. Smith served as President
for Labinal, Inc., a French automotive and aerospace equipment manufacturer,
where he was in charge of its North American operations. From 1979 to 1985, Mr.
Smith was Vice President of Marketing of the Cummins Diesel Recon business,
Cummins Engine Company's aftermarket remanufacturing division. From 1972 to
1979, Mr. Smith held several director level positions at Cummins Engine Company
covering distribution, technical service, service training, market planning,
parts marketing, service publications and warranty administration.

WESLEY N. DEARBAUGH joined ATC as President and General Manager of
Independent Aftermarket in June 1996. From 1993 to June 1996, Mr. Dearbaugh was
a Partner and Vice President of Marketing for Cummins, S.W., a multi-branch
distributor of heavy duty parts and service. From 1992 to 1993, he was Vice
President of Marketing for SEI, a large pension consulting firm. From 1983 to
1992, Mr. Dearbaugh held senior management and partner positions in value
investment funds and limited partnerships. From 1979 to 1983, Mr. Dearbaugh held
positions at Cummins Diesel Recon, Cummins Engine Company's Aftermarket
Remanufacturing Division including General Manager of Fuel Systems,
Director-Product Management, and Manager of Sales & Marketing. From 1974 to
1979, Mr. Dearbaugh held several positions in industrial engineering and
technical sales at Atlas Crankshaft, a manufacturing division of Cummins Engine
Company.

34
<PAGE>
JOHN C. KENT became Chief Financial Officer of the Company in July 1994.
From March 1990 to July 1994, Mr. Kent was Vice President, Finance and Chief
Financial Officer of Aerotest, Inc., an aircraft maintenance and modification
company. In March 1995, Aerotest filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy Code. The Aerotest bankruptcy
proceedings are still pending. From 1987 to March 1990, Mr. Kent was an
Assistant Treasurer at Security Pacific Auto Finance. From 1978 to 1987 Mr. Kent
served in several capacities at Western Airlines, Inc., including Director of
Cash and Risk Management.

DANIEL C. BUIE became the Corporate Controller of the Company in November
1995. Mr. Buie, a CPA, was the Chief Financial Officer of The Bagel Place, Inc.
(a subsidiary of Specialty Foods Corp.) from 1994 to 1995. Mr. Buie was the Vice
President, Finance and Administration of Davey Roofing Inc. from 1991 to 1994,
and Controller of Davey Roofing from 1987 to 1991. In August 1993, Davey Roofing
filed a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code, largely as a result of the severe real estate recession in
Southern California. Prior to joining Davey Roofing, Mr. Buie was an Audit
Manager with the public accounting firm of Deloitte & Touche.

JAMES R. WEHR has been President of Aaron's, since August 1990 and has
responsibility for developing and maintaining the relationships between Aaron's
and Chrysler, other OEMs and Western Auto. In 1983 Mr. Wehr founded Intercont,
Inc., a cleaning and testing equipment division of Aaron's. Mr. Wehr has been
involved in the automotive aftermarket since 1969.

MICHAEL L. LEPORE has been President of CRS since 1984. From 1976 to 1984
Mr. LePore was manager of U.S. Operations for Borg-Warner Parts and Service
Division, a subsidiary of Borg Warner LTD U.K.

BARRY E. SCHWARTZ has been the President of Mascot since 1988.

KENNETH A. BEAR has been Executive Vice President and General Manager at
Aaron's since 1983.

RICHARD R. CROWELL became a director of the Company in July 1994. Mr.
Crowell is a founding partner and Managing Director of ACP. Prior to forming ACP
in 1991, Mr. Crowell was a Managing Director of Rosecliff, Inc., the management
company for Acadia Partners L.P. at its inception in 1987.

MARK C. HARDY became a director of the Company in July 1994. Mr. Hardy is a
Vice President of ACP and joined ACP in June 1993. Prior to joining ACP, Mr.
Hardy was an Associate at Bain & Company, a consulting firm.

DR. MICHAEL J. HARTNETT became a director of the Company in July 1994. Since
March 1992 Dr. Hartnett has been Chairman, President and Chief Executive Officer
of Roller Bearing Company of America, Inc., a manufacturer of ball and roller
bearings that is controlled by an affiliate of ACP. Prior to joining Roller
Bearing in 1990 as General Manager of its Industrial Tectonics subsidiary, Dr.
Hartnett spent 18 years with The Torrington Company, a bearing manufacturer.

KURT B. LARSEN became a director of the Company in July 1994. Mr. Larsen is
a Principal of ACP and joined ACP at its founding in 1991. Prior to joining ACP,
Mr. Larsen was an Associate at Drexel Burnham Lambert Inc.

WILLIAM E. MYERS, JR. became a director of the Company in July 1994. Mr.
Myers has been, for more than the past five years, the Chairman of the Board and
Chief Executive Officer of W.E. Myers and Company, a private merchant bank.

RICHARD K. ROEDER became a director of the Company in July 1994. Mr. Roeder
is a founding partner and Managing Director of ACP. Prior to forming ACP in
1991, Mr. Roeder was a partner in the law firm of Paul, Hastings, Janofsky &
Walker, where he served as Chairman of the firm's Corporate Law Department since
1987.

BOARD OF DIRECTORS COMMITTEES AND COMPENSATION

The Board of Directors of the Company has appointed two committees: the
Audit Committee and the Compensation Committee. The members of the Audit
Committee are Messrs. Roeder, Hardy and Larsen.

35
<PAGE>
After Mr. Larsen resigns as a director, the Board will select one of the
directors to succeed him on the Audit Committee. The members of the Compensation
Committee are Messrs. Crowell, Roeder and Smith. The Compensation Committee
administers the Company's Stock Incentive Plan. Directors do not receive
compensation for service on the Board of Directors or its committees, and the
Company does not expect to pay fees to its directors for the foreseeable future.

EXECUTIVE COMPENSATION

COMPENSATION SUMMARY

The following table sets forth, for the period beginning with the
commencement of the Company's operations in July 1994 and ending on December 31,
1994, and for the year ended December 31, 1995, the cash compensation paid or
awarded by the Company to the Chief Executive Officer, and the other four most
highly compensated Executive Officers of the Company (the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
--------------
ANNUAL NUMBER OF
COMPENSATION SECURITIES ALL OTHER
-------------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#)(1) ($)
- ---------------------------------------------- --------- ------------ ------------ -------------- -------------
<S> <C> <C> <C> <C> <C>
William A. Smith.............................. 1995 300,000 -- -- --
Chairman of the Board of Directors, 1994 150,000 -- 140,351 250,000(2)
President and Chief Executive Officer
James R. Wehr................................. 1995 258,000 -- -- --
President, Aaron's 1994 109,000 -- 23,392 --
Michael L. LePore............................. 1995 160,838(3) 179,038(4) 11,696 --
President, CRS 1994 120,451 131,119 -- --
Kenneth A. Bear............................... 1995 103,200 60,000 -- --
Executive Vice President and 1994 44,140 32,960 11,696 --
General Manager, Aaron's
John C. Kent.................................. 1995 124,615 12,000 -- --
Chief Financial Officer 1994 56,154 -- 11,696 --
</TABLE>

- ---------
(1) Includes only options to purchase securities of the Company, which options
were issued pursuant to the Stock Incentive Plan. Pursuant to the Stock
Incentive Plan, the Compensation Committee of the Board of Directors
determines the terms and conditions of each option granted.

(2) In July 1994 the Company paid Mr. Smith $250,000 for consultation services
rendered in connection with the Initial Acquisitions.

(3) Includes five months salary of $56,777 prior to the acquisition by the
Company of CRS in April 1995.

(4) Includes $86,759 of bonus earned prior to the acquisition by the Company of
CRS in April 1995.

36
<PAGE>
OPTION GRANTS

Shown below is information concerning grants of options issued by the
Company to the Named Executive Officers for the year ended December 31, 1995.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL POTENTIAL REALIZABLE
GRANTS VALUE AT ASSUMED
--------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM (1)
OPTIONS GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------
NAME (#) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- ------------------------------------------- ------------------ ------------- ----------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William A. Smith........................... -- -- -- -- -- --
James R. Wehr.............................. -- -- -- -- -- --
Michael L. LePore.......................... 5,848(2) 28.5% $ 10.00 6/1/2005 $ 16,140 $ 35,703
5,848(3) 28.5 10.00 12/31/2005 16,140 35,703
Kenneth A. Bear............................ -- -- -- -- -- --
John C. Kent............................... -- -- -- -- -- --
</TABLE>

- ---------
(1) The potential gains shown are net of the option exercise price and do not
include the effect of any taxes associated with exercise. The amounts shown
are for the assumed rates of appreciation only, do not constitute
projections of future stock price performance, and may not necessarily be
realized. Actual gains, if any, on stock option exercises depend on the
future performance of the Common Stock, continued employment of the optionee
through the term of the options, and other factors.

(2) These options were granted under the Stock Incentive Plan. One third of the
options vest and become exercisable on each of the first three anniversaries
of the date of grant.

(3) These options were granted under the Stock Incentive Plan. One third of the
options vest and become exercisable on the first, third and fifth
anniversaries of the date of the grant.

EXERCISES OF OPTIONS AND AGGREGATE YEAR-END OPTION VALUES

Shown below is information with respect to the year-end values of all
options held by the Named Executive Officers. No Named Executive Officer
exercised any options during the fiscal year ended December 31, 1995.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (1)
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William A. Smith.......................................... 93,568 46,783 $ 748,544 $ 374,264
James R. Wehr............................................. 7,797 15,595 62,376 124,760
Michael L. LePore......................................... 0 11,696 0 93,568
Kenneth A. Bear........................................... 3,899 7,797 31,192 62,376
John C. Kent.............................................. 3,899 7,797 31,192 62,376
</TABLE>

- ---------
(1) The exercise price of each option is $10 per share, the same price per share
as paid by all purchasers of the Company's Common Stock at the time of the
Initial Acquisitions. There have been no subsequent issuances of the Common
Stock since such time. The values of the unexercised options represent the
Company's estimated net value of the Common Stock underlying the options as
of December 31, 1995, $18, less the applicable per share exercise price of
the option, $10.

37
<PAGE>
MANAGEMENT COMPENSATION AND EMPLOYMENT AGREEMENTS

William A. Smith entered into an employment agreement with the Company
effective as of July 29, 1994, pursuant to which he will serve as Chief
Executive Officer of the Company at an annual salary of $300,000 for a period of
three years. The employment agreement with Mr. Smith contains a noncompete
provision for a period of five years from the cessation of his employment with
the Company and a nondisclosure provision which is effective for the term of the
employment agreement and indefinitely thereafter. Mr. Smith is also entitled to
participate in any bonus, incentive or other benefit plans provided by the
Company to its employees.

John C. Kent entered into an employment agreement with the Company effective
as of July 29, 1994, pursuant to which he will serve as Chief Financial Officer
of the Company at an annual salary of $120,000 for a period of three years. The
employment agreement with Mr. Kent contains a noncompete provision for a period
of five years from the cessation of his employment with the Company and a
nondisclosure provision which is effective for the term of the employment
agreement and indefinitely thereafter. Mr. Kent is also entitled to participate
in any bonus, incentive or other benefit plans provided by the Company to its
employees. Subsequent to the date of his employment agreement, Mr. Kent agreed
to serve as the Chief Financial Officer of the Company.

James R. Wehr entered into an employment agreement with Aaron's effective as
of August 2, 1994, pursuant to which he will serve as President of Aaron's at an
annual salary of $260,000 for a period of three years, which Aaron's may renew
annually for an additional one year term. The employment agreement and related
agreements with Mr. Wehr contain a noncompete provision for a period ending
August 1, 1999 and a nondisclosure provision which is effective for the term of
his employment with Aaron's and indefinitely thereafter. Mr. Wehr is also
entitled to participate in any bonus, incentive or other benefit plans provided
by Aaron's to its employees.

Michael L. LePore entered into an employment agreement with CRS effective as
of June 1, 1995, pursuant to which he will serve as President of CRS at an
annual salary of approximately $180,000 for a period of five years, which CRS
may renew for an additional one year term. The employment agreement and related
agreements with Mr. LePore contain a noncompete provision for a period ending
June 1, 2002 and a nondisclosure provision which is effective for the term of
his employment with CRS and indefinitely thereafter. Mr. LePore is also entitled
to participate in any bonus, incentive or other benefit plans provided by CRS to
its employees.

Kenneth A. Bear entered into an employment agreement with Aaron's effective
July 28, 1994, pursuant to which he will serve as Executive Vice President and
General Manager of Aaron's at an annual salary of $104,000 for a period of three
years, which Aaron's may renew annually for an additional one year term. The
employment agreement with Mr. Bear contains a nondisclosure provision which is
effective for the term of his employment with Aaron's and indefinitely
thereafter. Mr. Bear is also entitled to participate in any bonus, incentive or
other benefit plans provided by Aaron's to its employees.

The Compensation Committee is also considering implementation of one or more
forms of retirement or similar plans for its officers and employees.

1994 STOCK INCENTIVE PLAN

The 1994 Stock Incentive Plan was adopted in order to provide incentives to
employees and directors of the Company by granting them awards tied to the
Company's Common Stock. In February 1995, the Stock Incentive Plan was amended
to include non-employee directors and independent contractors. The Stock
Incentive Plan is administered by the Compensation Committee, which has broad
authority in administering and interpreting the Stock Incentive Plan. Awards are
not restricted to any specified form or structure and may include, without
limitation, sales or bonuses of stock, restricted stock, stock options, reload
stock options, stock purchase warrants, other rights to acquire stock,
securities convertible into or redeemable for stock, stock appreciation rights,
phantom stock, dividend equivalents, performance units or performance shares
(collectively, "Awards"). Options granted to employees under the Stock Incentive
Plan may be options intended to qualify as incentive stock options under Section
422 of the Internal Revenue Code of

38
<PAGE>
1986, as amended, or options not intended to so qualify. An Award granted under
the Stock Incentive Plan to an employee or independent contractor may include a
provision terminating the Award upon termination of employment under certain
circumstances or accelerating the receipt of benefits upon the occurrence of
specified events, including, at the discretion of the Compensation Committee,
any change of control of the Company.

As of June 15, 1996, the Company has granted options to purchase an
aggregate of up to 254,463 shares of Common Stock to officers and employees of
the Company. The exercise price for these options is $10 per share. Each option
is subject to certain vesting provisions. All options expire on the tenth
anniversary of the date of grant. For certain information regarding options
granted to officers of the Company, see "Ownership of Voting Securities."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee are Richard K. Roeder, William A.
Smith and Richard R. Crowell. Mr. Smith does not participate in any matters
considered by the Committee relating to his compensation.

39
<PAGE>
OWNERSHIP OF VOTING SECURITIES

The following table sets forth the beneficial ownership of each class of
issued and outstanding voting securities of the Company, as of June 15, 1996, by
each director of the Company, each of the Named Executive Officers, the
directors and executive officers of the Company as a group and each person who
at such time beneficially owned more than 5% of the outstanding shares of any
class of voting securities of the Company.

<TABLE>
<CAPTION>
VOTING PERCENTAGE
------------------------
NUMBER OF BEFORE AFTER
SHARES (1) OFFERING OFFERING
---------- ----------- -----------
<S> <C> <C> <C>
Aurora Equity Partners L.P. (2)(4) .............................................. 1,638,662 81.9%
West Wind Building
P.O. Box 1111
Georgetown, Grand Cayman
Cayman Islands, B.W.I.
Aurora Overseas Equity Partners I, L.P. (3)(4) .................................. 596,587 29.8
West Wind Building
P.O. Box 1111
Georgetown, Grand Cayman
Cayman Islands, B.W.I.
General Electric Pension Trust(4) ............................................... 177,143 8.9
3003 Summer Street
Stanford, CT 06905
William A. Smith (5)(6).......................................................... 147,664 6.9
John C. Kent (6)(7).............................................................. 3,899 *
James R. Wehr (8) ............................................................... 161,845 8.0
2600 North Westgate
Springfield, MO 65803
Michael L. LePore (9) ........................................................... 1,949 *
400 Corporate Drive
Mahwah, NJ 07430
Kenneth A. Bear (7) ............................................................. 3,899 *
2600 North Westgate
Springfield, MO 65803
Richard R. Crowell (2)(3)(4)(10)................................................. 1,840,020 92.0
Richard K. Roeder (2)(3)(4)(10).................................................. 1,837,426 91.9
Mark C. Hardy (10)(11)........................................................... 1,410 *
Dr. Michael J. Hartnett (12) .................................................... 7,797 *
60 Round Hill Road
Fairfield, CT 06430
Kurt B. Larsen (10)(11).......................................................... 2,437 *
William E. Myers, Jr. (13) ...................................................... 46,784 2.3
2 North Lake Avenue, Suite 650
Pasadena, CA 91101
All directors and officers as a group (14 persons)(14)........................... 2,210,857 99.6
</TABLE>

- ---------
* Less than 1%.

(1) The shares of Common Stock underlying options, warrants, rights or
convertible securities that are exercisable as of June 15, 1996 or that will
become exercisable within 60 days thereafter are deemed to be outstanding
for the purpose of calculating the beneficial ownership of the holder of
such options, warrants, rights or convertible securities, but are not deemed
to be outstanding for the purpose of computing the beneficial ownership of
any other person.

40
<PAGE>
(2) Includes 221,419 shares of Holdings Common Stock that are subject to an
irrevocable proxy granted to Aurora Equity Partners L.P. ("AEP") and Aurora
Overseas Equity Partners I, L.P. ("AOEP") by certain holders of Holdings
Common Stock, including Messrs. Crowell, Hardy, Larsen and Roeder, Gerald L.
Parsky, certain other limited partners of AEP and certain affiliates of a
limited partner of AOEP. The proxy terminates upon the transfer of such
shares. AEP is a Delaware limited partnership the general partner of which
is ACP, a Delaware limited partnership whose general partner is Aurora
Advisors, Inc. ("AAI"). Messrs. Crowell, Roeder and Parsky are the sole
stockholders and directors of AAI, are limited partners of ACP and may be
deemed to beneficially own the shares of Holdings Common Stock beneficially
owned by AEP and all the shares of Common Stock of the Company held by
Holdings and may be deemed to be the organizers of the Company under
regulations promulgated under the Securities Act. Also includes the 177,143
shares of Holdings Common Stock held by General Electric Pension Trust. See
Footnote (4) below.

(3) Includes 221,419 shares of Holdings Common Stock that are subject to an
irrevocable proxy granted to AEP and AOEP by certain holders of Holdings
Common Stock, including Messrs. Crowell, Hardy, Larsen, Roeder, Parsky,
certain other limited partners of AEP and certain affiliates of a limited
partner of AOEP. The proxy terminates upon the transfer of such shares. AOEP
is a Cayman Islands limited partnership the general partner of which is
Aurora Overseas Capital Partners P.L. ("AOCP"), a Cayman Islands limited
partnership whose general partner is Aurora Overseas Advisors, Ltd.
("AOAL"). Messrs. Crowell, Roeder and Parsky are the sole stockholders and
directors of AOAL, are limited partners of AOCP and may be deemed to
beneficially own the shares of Holdings Common Stock beneficially owned by
AOEP and all the shares of Common Stock of the Company held by Holdings.
Also includes the 177,143 shares of Holdings Common Stock held by General
Electric Pension Trust. See Footnote (4) below.

(4) With limited exceptions, General Electric Pension Trust has agreed to vote
these shares in the same manner as AEP and AOEP vote their respective shares
of Holdings Common Stock. This provision terminates upon the transfer of
such shares.

(5) Includes 140,351 shares of Common Stock subject to options granted under
the Stock Incentive Plan that are exercisable as of June 15, 1996 or that
will become exercisable within 60 days thereafter.

(6) The address for this beneficial holder is 33309 First Way South, Suite
A-206, Federal Way, WA 98003.

(7) Consists of shares of Common Stock subject to options granted under the
Stock Incentive Plan that are exercisable as of June 15, 1996 or that will
become exercisable within 60 days thereafter. Excludes 7,797 shares of
Common Stock subject to options granted under the Stock Incentive Plan that
are not exercisable within 60 days of June 15, 1996.

(8) Includes 15,595 shares of Common Stock subject to options granted under the
Stock Incentive Plan that are exercisable as of June 15, 1996 or that will
become exercisable within 60 days thereafter. Excludes 7,797 shares of
Common Stock subject to options granted under the Stock Incentive Plan that
are not exercisable within 60 days of June 15, 1996.

(9) Consists of shares of Common Stock subject to options granted under the
Stock Incentive Plan that are exercisable as of June 15, 1996 or that will
become exercisable within 60 days thereafter. Excludes 9,747 shares of
Common Stock subject to options granted under the Stock Incentive Plan that
are not exercisable within 60 days of June 15, 1996.

(10) The address for this beneficial holder is 1800 Century Park East, Suite
1000, Los Angeles, CA 90067.

(11) The holder of these shares has granted an irrevocable proxy covering these
shares to AEP and AOEP.

(12) Includes 7,797 shares of Common Stock subject to warrants that are
exercisable as of June 15, 1996 or that will become exercisable within 60
days thereafter. Excludes 3,899 shares of Common Stock subject to warrants
that are not exercisable within 60 days of June 15, 1996.

(13) Consists of shares of Common Stock subject to exercisable warrants.

(14) Includes 220,607 shares of Common Stock subject to warrants and employee
stock options that are exercisable as of June 15, 1996 or that will become
exercisable within 60 days thereafter.

41
<PAGE>
CERTAIN TRANSACTIONS

The Company believes the transactions described below that were entered into
by the Company and its subsidiaries were beneficial to the respective companies,
and were at least as favorable to the respective companies as could have been
obtained from unaffiliated third parties pursuant to arms-length negotiations.

FEES PAYABLE TO ACP

Fees in the amount of $0.8 million were paid to ACP in 1995 for investment
banking services provided in connection with the acquisitions of Mascot, CRS and
King-O-Matic. The Company has also agreed to pay to ACP a base annual management
fee of $500,000 for advisory and consulting services pursuant to a written
management services agreement (the "Management Services Agreement"). ACP is also
entitled to reimbursements from the Company for all of its reasonable
out-of-pocket costs and expenses incurred in connection with the performance of
its obligations under the Management Services Agreement. The base annual
management fee is subject to increase, at the discretion of the disinterested
members of the Company's Board of Directors, by up to an aggregate of $250,000
in the event the Company consummates one or more significant corporate
transactions. The base annual management fee was not increased as a result of
the acquisitions of CRS, Mascot and King-O-Matic. The base annual management fee
is also subject to increase for specified cost of living increases. If the
Company's EBITDA (earnings before interest, taxes, depreciation and
amortization) in any year exceeds management's budgeted EBITDA by 15.0% or more
for that year, ACP will be entitled to receive an additional management fee
equal to one half of its base annual management fee for such year. Because the
Company's EBITDA did not exceed management's budgeted EBITDA by 15.0% in 1995,
ACP did not receive this additional management fee in 1995. In the event the
Company consummates any significant corporate transaction (which will not
include this Offering), ACP will be entitled to receive a closing fee from the
Company equal to 2.0% of the first $75.0 million of the acquisition
consideration (including debt assumed and current assets retained) and 1.0% of
acquisition consideration (including debt assumed and current assets retained)
in excess of $75.0 million. Notwithstanding the foregoing, no payment will be
made to ACP pursuant to the Management Services Agreement at any time that
certain events of default shall have occurred and be then continuing under any
of the Indentures governing the Senior Notes or the Revolving Credit Agreement.
The Management Services Agreement also provides that the Company shall provide
ACP and its directors, employees, partners and affiliates with customary
indemnification against all actions not involving gross negligence or willful
misconduct. The base annual management fee payable to ACP will be reduced as the
collective beneficial ownership of Common Stock by AEP and AOEP declines below
50%: for any period during which the collective beneficial ownership of AEP and
AOEP is less than 50% but at least 40%, the base annual management fee payable
for the period will be reduced 20%; for any period during which AEP's and AOEP's
collective beneficial ownership is less than 40% but at least 30%, the base
annual management fee payable for the period will be reduced 20% from the fee
paid in the previous period; and for any period during which the collective
beneficial ownership of AEP and AOEP is less than 30% but at least 20%, the base
annual management fee payable for the period will be reduced 20% from the fee
paid in the prior period. If AEP's and AOEP's collective beneficial ownership
declines below 20%, the Management Services Agreement will terminate. For
information regarding the general and certain of the limited partners of ACP,
see "Ownership of Voting Securities."

FACILITY LEASES

In connection with its acquisition of Aaron's, the Company entered into a
lease with CRW, Inc., an affiliate of C.R. Wehr and James R. Wehr (whose
individual family trusts owned all of the outstanding capital stock of Aaron's
prior to its acquisition by the Company), for Aaron's headquarters and primary
remanufacturing facility located in Springfield, Missouri with an initial term
beginning as of January 1, 1994 and expiring as of December 31, 2004, subject to
the Company's option to extend the term for a period of five years. The monthly
base rent is $33,105 and the Company is responsible for paying property taxes,
insurance and maintenance expenses for the leased premises. The Company also
entered into three leases with C.R. Wehr, Westway Partnership, JRW, Inc. and
C.J. Cates Real Estate Co. (each, an affiliate of C.R. Wehr and James R. Wehr)
for three manufacturing facilities comprising approximately 84,000 square feet
for an aggregate rent of $12,000 per month with an initial term beginning as of
January 1, 1994 and expiring as of

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December 31, 1996 and December 31, 1998 (depending upon the facility), subject
to the Company's option to extend the term of the lease for a 30,000 square foot
facility for one successive period of five years through December 31, 2003. In
November 1994, the Company entered into another lease with the same parties for
a 98,800 square foot storage facility for monthly rent of $7,300 per month. The
initial term of the lease expired during 1995 and pursuant to its terms,
continues as a month-to-month lease until terminated. The Company is responsible
for paying property taxes, insurance and maintenance expenses for each of these
leased premises. James R. Wehr is an executive officer of the Company.

In addition, the Company recently entered into a new lease with Patricia L.
Bridgeforth, Mr. Wehr's sister. The lease for Aaron's 200,000 square foot core
storage facility has an initial term of ten years, expiring October 31, 2006,
with an option to renew for five years. The base monthly rent is $35,833 for the
initial term, with specified increases for each renewal term. The Company is
also required to pay taxes, maintenance and operating expenses.

Prior to its acquisition by the Company, RPM was a party to numerous written
leases with a general partnership consisting of the former RPM shareholders.
Aggregate rent with respect to these leases was approximately $61,975 per month
as of July 31, 1994 and the premises consisted of approximately 246,300 square
feet in the aggregate. RPM's former headquarters, primary remanufacturing
facility and several storage facilities comprised approximately 109,300 square
feet and were located in Azusa, California (approximately 30 miles northeast of
Los Angeles) (the "Azusa Facilities"). In connection with its acquisition of
RPM, the Company entered into leases with that general partnership for the Azusa
Facilities for an initial one year term from July 19, 1994, subject to the
Company's option to extend the term for three successive six-month periods. The
aggregate monthly rent payment on the Azusa Facilities was $27,325. The other
137,000 square feet of properties previously leased by such general partnership
to RPM were also leased to the Company for an initial term of three years from
July 19, 1994, subject to the Company's option to cancel the lease after one
year. The lease for the Azusa Facilities expired on July 19, 1995 and the
Company canceled the lease for the other 137,000 square feet of properties as of
such date, and RPM's operations were relocated to Rancho Cucamonga, California.
At such time a new lease for an Azusa distribution facility consisting of
approximately 6,000 square feet was entered into with the former RPM
shareholders for an initial term of three years with an aggregate monthly rent
payment of $1,450.

Mascot is a party to a lease with The Estate of Murray Schwartz, Barry
Schwartz, Bernard Schwartz and Bertha Schwartz for Mascot's remanufacturing
facility located in Mississauga, Ontario. Rent payments under such lease for the
approximately 35,100 square foot facility are $9,505 Canadian per month
beginning as of October 1, 1993 and expiring as of September 30, 1998. The
Company has an option to extend the term for a period of five years subject to
renegotiation of the annual rent amount. The Company is responsible for paying
property taxes, insurance and maintenance expenses for the leased premises.
Barry Schwartz is an executive officer of the Company.

PAYMENT OF PREFERRED STOCK REORGANIZATION CONSIDERATION

Upon the effectiveness of the Reorganization, each outstanding share of
Holdings Common Stock will be converted into shares of ATC Common Stock
and each outstanding share of Holdings Preferred Stock will be converted into
the right to receive the Preferred Stock Reorganization Consideration in cash,
which will be an amount in cash equal to $100.00 per share of Holdings Preferred
Stock plus an amount equal to accrued and unpaid dividends to the date of the
Reorganization. As of June 30, 1996, the aggregate Preferred Stock
Reorganization Consideration would be approximately $24 million. Certain holders
of Holdings Preferred Stock are affiliates of the Company, including AEP and
AOEP and will receive a portion of the Preferred Stock Reorganization
Consideration. Certain executive officers of the Company, including Messrs.
Smith, Wehr and Hester, hold an aggregate of 12,563 shares of Holdings Preferred
Stock, and certain directors, including Messrs. Crowell, Hardy, Larsen and
Roeder, directly hold an aggregate of 612 shares of Holdings Preferred Stock.
Mr. Crowell and Mr. Roeder may also be deemed to beneficially own the shares of
Holdings Preferred Stock held by AEP and AOEP (see footnotes 2 and 3 under
"Ownership of Voting Securities").

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REGISTRATION RIGHTS

The holders of the Company's outstanding Common Stock have been granted
certain registration rights pursuant to a Stockholders' Agreement. See "Shares
Eligible for Future Sale" for a description of such rights.

DESCRIPTION OF CAPITAL STOCK

Giving effect to the Reorganization, the authorized capital stock of ATC
consists of shares of Common Stock, par value $0.01 per share, and
shares of Preferred Stock, par value $0.01 per share ("Preferred Stock"). As of
June 15, 1996, 2,000,000 shares of Common Stock were issued and outstanding and
were held of record by 37 stockholders and 370,176 shares were reserved for
issuance under outstanding options and warrants. As of the same date, no shares
of Preferred Stock were outstanding.

COMMON STOCK

Each holder of Common Stock is entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders. Holders of Common
Stock do not have the right to cumulate their votes in the election of
Directors. Subject to preferences that may be granted to the holders of
Preferred Stock, each holder of Common Stock is entitled to share ratably in
distributions to stockholders and to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor and,
in the event of the liquidation or dissolution of the Company, is entitled to
share ratably in all assets of the Company remaining after payment of
liabilities. Holders of Common Stock have no conversion, preemptive or other
subscription rights, and there are no redemption rights or sinking fund
provisions with respect to the Common Stock. The outstanding Common Stock is,
validly issued, fully paid and non-assessable.

Additional shares of Common Stock may be issued from time to time by the
Company. The Company's Certificate of Incorporation provides that the Board of
Directors has no power to alter the rights of any outstanding shares of Common
Stock. Certain other provisions of the Company's Certificate of Incorporation
affect the rights of holders of Common Stock and may have the effect of
delaying, deferring or preventing a change in control of the Company.

PREFERRED STOCK

The Board of Directors, without further action by the holders of Common
Stock, may issue shares of Preferred Stock and may fix or alter the voting
rights, redemption provisions (including sinking fund provisions), dividend
rights, dividend rates, liquidation preferences, conversion rights and the
designation of and number of shares constituting any wholly unissued series of
Preferred Stock. The issuance of Preferred Stock could adversely affect the
voting power and other rights of the holders of Common Stock. See "Risk Factors
- -- Control of the Company; Anti-Takeover Matters."

The authority possessed by the Board of Directors to issue Preferred Stock
could potentially be used to discourage attempts by others to obtain control of
the Company through a merger, tender offer, proxy contest or otherwise by making
such attempts more difficult to achieve or more costly. The Board of Directors
may issue Preferred Stock with voting and conversion rights that could adversely
affect the voting power of the holders of Common Stock. There are no agreements
or understandings for the issuance of Preferred Stock and the Board of Directors
has no present intention to issue any Preferred Stock.

WARRANTS

In August 1994, the Company issued warrants to Mr. Myers and another
individual to purchase an aggregate of 58,480 shares of Common Stock, which are
exercisable at any time. In December 1994, the Company issued warrants to Dr.
Hartnett to purchase an aggregate of 11,696 shares of Common Stock, which
warrants vest one third annually beginning December 31, 1994.

Each warrant, when exercised, entitles the holder thereof to receive the
number of shares of Common Stock set forth on such Warrant at $10.00 per share.
The warrants will automatically expire on the tenth anniversary of the date of
grant. The exercise price and the number of Warrant Shares are subject to

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customary anti-dilution provisions that are effective upon the occurrence of
certain events such as stock splits and stock dividends. In the event of an
issuance of Common Stock to either AEP, AOEP or their affiliates below the fair
market value of the Common Stock on the date of such issuance, the exercise
price of 58,480 of the warrants and the number of shares issuable upon the
exercise thereof will be adjusted accordingly; the other 11,696 warrants do not
contain this adjustment provision. In addition, the warrants are subject to
customary provisions regarding the assumption by a successor corporation in the
event of reorganization, reclassification, consolidation, merger or sale of the
Company. The issuance of Common Stock pursuant to the Offering will not cause
any adjustment in the warrants.

The warrant holders have no right to vote on matters submitted to the
stockholders of the Company and have no right to receive dividends. The warrant
holders are not entitled to share in the assets of the Company in the event of
the liquidation or dissolution of the Company or the winding up of the Company's
affairs.

ANTI-TAKEOVER STATUTE

Section 203 of the DGCL generally prohibits a Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless (i) prior to the date of the business
combination, the transaction is approved by the board of directors of the
corporation, (ii) upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested stockholder owns
at least 85% of the outstanding voting stock, or (iii) on or after the date such
stockholder became an interested stockholder, the business combination is
approved by the board and by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested stockholder. A
"business combination" includes mergers, certain asset sales and certain other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years, did own) 15% or more of the corporation's voting stock.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company's Certificate of Incorporation limits the liability of directors
to the maximum extent permitted by Delaware law. Delaware law provides that
directors of a company will not be personally liable for monetary damages for
breach of their fiduciary duties as directors, except for liability for (i) any
breach of their duty of loyalty to the company or its stockholders, (ii) acts or
omissions not in good faith or involving intentional misconduct or a knowing
violation of law, (iii) unlawful payment of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the DGCL or (iv) any
transaction from which the director derived an improper personal benefit.

The Company's Bylaws provide that the Company shall pay all costs and
expenses (including legal expenses) incurred by and indemnify from any monetary
liability its present and former officers and directors who are named or
threatened to be named, a party to any administrative, civil, investigative or
criminal proceeding potentially seeking to impose liability on such person for
acts alleged to have been committed by such person while a director or officer
of the Company or while serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, unless a determination is made that the person did
not act in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, or, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. Such determination shall be made (i) by the Board by a majority vote
of a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) of such a quorum is not obtainable, or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written option, or (iii) by the stockholders of the Company. There is no action
or proceeding pending or, to the knowledge of the Company, threatened which may
result in a claim for indemnification by any director officer, employee or agent
of the Company.

The Company believes that the provisions in its Certificate of Incorporation
and its Bylaws are necessary to attract and retain qualified persons as officers
and Directors.

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TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Company's Common Stock is
ChaseMellon Shareholder Services.

DESCRIPTION OF CERTAIN INDEBTEDNESS

The materials terms of certain indebtedness of the Company are described
below. Each of the following summaries is subject to and qualified in its
entirety by reference to the detailed provisions of the respective agreements
and instruments to which each summary relates. Copies of such agreements and
instruments have been filed as exhibits to the Registration Statement of which
this Prospectus is a part.

REVOLVING CREDIT AGREEMENT

In July 1994 Company entered into a Revolving Credit Agreement with Chemical
Bank (the "Bank") and Heller Financial, Inc. providing for a $30.0 million
revolving credit facility available to the Company for working capital purposes.
Subject to the satisfaction of customary conditions, advances under the
Revolving Credit Agreement may be made, and letters of credit may be issued, in
each case up to an aggregate of $30.0 million at any time prior to July 19, 1999
(the "Termination Date"). The funds available to be advanced may not exceed the
aggregate of 85% of the Company's eligible accounts receivable and 60% of the
Company's eligible inventory, in each case as defined in the Revolving Credit
Agreement. All amounts advanced under the Revolving Credit Agreement become due
and payable on the Termination Date. The Company may pre-pay outstanding
advances in whole or in part without incurring any premium or penalty.

All obligations of the Company and its subsidiaries under the Revolving
Credit Agreement are secured by a first priority security interest in all of the
accounts receivable and inventory of the Company and its existing and future
subsidiaries. The obligations of the Company under the Revolving Credit
Agreement are guaranteed by each of the Company's existing and future
subsidiaries.

At the Company's election, amounts advanced under the Revolving Credit
Agreement will bear interest at either (i) the Alternate Base Rate plus 1.5%, or
(ii) the Eurodollar Rate plus 2.5%. The "Alternate Base Rate" is equal to the
highest of (a) the Bank's prime rate, (b) the secondary market rate for
three-month certificates of deposit plus 1.0%, and (c) the federal funds rate
plus 0.5%, in each case as in effect from time to time. The "Eurodollar Rate" is
the rate offered by the Bank for eurodollar deposits for one, two, three or six
months (as selected by the Company) in the interbank eurodollar market in the
approximate amount of the Bank's share of the advance under the Revolving Credit
Agreement. Interest payments on advances which bear interest based upon the
Alternate Base Rate are due quarterly in arrears and on the Termination Date,
and interest payments on advances which bear interest based upon the Eurodollar
Rate are due on the last day of each relevant interest period (or, if such
period exceeds three months, quarterly after the first day of such period).

The Revolving Credit Agreement contains extensive affirmative and negative
covenants, including, among others, covenants relating to levels of net worth,
leverage, EBITDA and cash flow coverage and certain limits on the ability of the
Company to incur indebtedness, make capital expenditures, create liens, engage
in mergers and consolidations, make restricted payments, make asset sales, make
capital expenditures or investments, issue stock and engage in transactions with
affiliates of the Company and its subsidiaries. The Revolving Credit Agreement
also contains customary events of default provisions.

The Company paid the Bank a one time facility and commitment fee upon the
effectiveness of the Revolving Credit Agreement and is required to pay the Bank
quarterly in arrears a commitment fee equal to 0.5% per annum of the average
daily unused portion of the Revolving Credit Agreement during such quarter. The
Company must also reimburse the Bank for certain legal and other costs of the
Bank and pay a fee on outstanding letters of credit at a per annum equal to the
applicable margin then in effect for advances bearing interest at the Eurodollar
Rate.

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SENIOR NOTES

GENERAL. ATC's $120,000,000 aggregate principal amount of its Series B
Notes and $40,000,000 aggregate principal amount of its Series D Notes were
issued pursuant to an Indenture dated August 2, 1994, by and among ATC, each of
ATC's subsidiaries and American Bank National Association, as trustee. The
Senior Notes are fully and unconditionally guaranteed on a joint and several
basis by each of ATC's subsidiaries. Each series of Senior Notes has
substantially identical terms. The Senior Notes may be redeemed at the option of
the Company in whole or in part at (a) 106% of the principal amount redeemed on
or after August 1, 1999 but prior to August 1, 2000, (b) 104% of the principal
amount redeemed on or after August 1, 2000 but prior to August 1, 2001, (c) 102%
of the principal amount redeemed on or after August 1, 2001 but prior to August
1, 2002 or (d) 100% of the principal amount redeemed on or after August 1, 2002
through maturity, in each case plus accrued and unpaid interest, if any.
Notwithstanding the foregoing, at any time prior to August 1, 1997, the Company
may also redeem up to $30 million and $10 million in aggregate principal amount
of the Series B Notes and Series D Notes, respectively, at 112% of the principal
amount redeemed with the net cash proceeds from one or more public equity
offerings of the Company, and intends to do so in connection with the Offering.

The Indentures governing the Senior Notes contain various restrictive
covenants that, among other things, limit: (i) the incurrence of certain
additional indebtedness by the Company or its subsidiaries; (ii) the creation of
Senior Debt of the Company which is, by its terms, subordinated in right of
payment to other indebtedness of the Company; and (iii) the payment of dividends
on capital stock of the Company and its subsidiaries (see "Risk Factors --
Absence of Dividends"). Affirmative covenants include, among others, an
obligation to pay principal, interest and premium, if any, when due, hold funds
for note payments in trust, maintain its corporate existence, maintain its
properties in good condition, pay taxes when due, furnish to the trustee copies
of certain financial information, and certify as to whether the Company is in
default within 120 days after the end of each fiscal year of the Company. Events
of default under the Indentures governing the Senior Notes include, among other
things: (i) a default in the payment of any interest on any Senior Note when
due, which default continues for 30 days; (ii) a default in the payment of any
principal of or premium, if any, on any Senior Note when due; (iii) the failure
by the Company to comply with any agreement or covenant in the Indentures
governing the Senior Notes, which failure continues for 30 days after a Notice
of Default (as defined in the Indentures governing the Senior Notes) is given;
(iv) final unsatisfied judgments in excess of $2.5 million (excluding amounts
covered by insurance) not discharged, waived or stayed for 60 days; (v) default
under indebtedness of the Company or any of its subsidiaries, which indebtedness
has a principal amount of over $2.5 million either resulting from the failure to
pay principal at maturity or as a result of which the maturity of such
indebtedness has been accelerated prior to its stated maturity; and (vi) certain
events of bankruptcy, insolvency or reorganization of the Company or any of its
subsidiaries.

CHANGE OF CONTROL PUT. Upon the occurrence of a Change of Control, the
Company will be required to make an offer to repurchase the Senior Notes at a
price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest thereon. A "Change of Control" is defined as (i) any sale or
transfer of all or substantially all of the assets of the Company, on a
consolidated basis, in one transaction or a series of related transactions, if,
immediately after giving effect to such transaction, any person (other than the
Company, its subsidiaries or certain other entities related to ACP (an "Excluded
Person")) is or becomes the "beneficial owner," directly or indirectly, of more
than 35% of the total voting power, (ii) any person (other than an Excluded
Person) is or becomes the "beneficial owner," directly or indirectly, of more
than 35% of the total voting power in the aggregate of all classes of
outstanding capital stock of the Company unless the percentage so owned by an
Excluded Person is greater. The occurrence of the Offering will not constitute a
"Change of Control" for purposes of the Senior Notes.

In addition, indebtedness under the Indentures governing the Senior Notes
and the Revolving Credit Agreement would be accelerated or trigger a similar
repurchase right upon a change of control, as defined in the relevant debt
instrument, and other debt the Company may incur could contain a similar
provision. In the event of any such occurrence, the Company would be required to
repay such indebtedness. See "Risk Factors -- Control of the Company,
Antitakeover Matters."

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SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have shares of
Common Stock outstanding. The shares sold in the Offering (
shares if the Underwriters' over-allotment option is exercised in full) will be
freely tradable without restriction under the Securities Act, except for any
such shares held at any time by an "affiliate" of the Company, as such term is
defined under Rule 144 promulgated under the Securities Act.

The 2,000,000 shares of Common Stock outstanding immediately prior the
consummation of the Offering were issued in private transactions and may be
publicly sold only if registered under the Securities Act or sold in accordance
with an applicable exemption from registration, such as Rule 144. In general,
under Rule 144, as currently in effect, a person who has beneficially owned
shares for at least two years, including an "affiliate," as that term is defined
in Rule 144, is entitled to sell, within any three-month period, a number of
"restricted" shares that does not exceed the greater of one percent (1%) of the
then outstanding shares of Common Stock ( shares immediately after the
Offering) or the average weekly trading volume during the four calendar weeks
preceding such sale. Sales under Rule 144 are subject to certain manner of sale
limitations, notice requirements and the availability of current public
information about the Company. Rule 144(k) provides that a person who is not
deemed an "affiliate" and who has beneficially owned shares for at least three
years is entitled to sell such shares at any time under Rule 144 without regard
to the limitations described above.

The Company currently has outstanding warrants and employee stock options to
purchase an aggregate of 324,639 shares of Common Stock. The shares issuable
upon the exercise of such warrants and options will be "restricted" shares for
Rule 144 purposes.

The parties to a Stockholders Agreement among the Company and its
stockholders, certain of its optionholders and its warrant holders (the
"Stockholders Agreement"), who in the aggregate held all of the outstanding
shares of Common Stock as of March 31, 1996, have been granted certain
"piggy-back" registration rights with respect to shares of the Common Stock in
connection with a qualified initial public offering by the Company and in
connection with certain secondary public offerings effected by the Company. The
Company will bear all expenses incident to any such registration, including the
fees and expenses of a single counsel retained by the selling stockholders;
however, each selling stockholder will be responsible for the underwriting
discounts and commissions and transfer taxes in connection with shares sold by
such stockholder. Each selling stockholder and the underwriters through whom
shares are sold on behalf of a selling stockholder will be entitled to customary
indemnification from the Company against certain liabilities, including
liabilities under the Securities Act.

The Company will agree with the Underwriters not to sell or otherwise
dispose of any shares of Common Stock for a period of 180 days from the date of
this Prospectus without the prior written consent of Morgan Stanley & Co.
Incorporated. Each of the Company's current stockholders, directors, executive
officers and warrant holders will enter into or is bound by a similar agreement.
See "Underwriters."

The Company is unable to estimate the number of shares that may be sold in
the future by the existing stockholders or the effect, if any, that sales of
shares by such stockholders will have on the market price of the Common Stock
prevailing from time to time. Sales of substantial amounts of Common Stock by
such stockholders could adversely affect prevailing market prices.

CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS

The following is a general discussion of certain United States Federal tax
consequences of the acquisition, ownership, and disposition of the Common Stock
by an initial purchaser that, for United States Federal income tax purposes, is
not a "United States person" (a "Non-United States Holder"). This discussion is
based upon the United States Federal tax law now in effect, which is subject to
change, possibly retroactively. For purposes of this discussion, a "United
States person" means a citizen or resident of the United States, a corporation,
partnership, or other entity created or organized in the United States or under
the laws of the

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United States or of any political subdivision thereof, or an estate or trust
whose income is includible in gross income for United States Federal income tax
purposes regardless of its source. This discussion does not consider any
specific facts or circumstances that may apply to a particular Non-United States
Holder. Prospective investors are urged to consult their tax advisors regarding
the United States Federal tax consequences of acquiring, holding, and disposing
of Common Stock, as well as any tax consequences that may arise under the laws
of any foreign, state, local, or other taxing jurisdiction.

DIVIDENDS

Dividends on Common Stock paid to a Non-United States Holder generally will
be subject to withholding of United States Federal income tax at the rate of
30%, unless the withholding rate is reduced under an applicable income tax
treaty between the United States and the country of tax residence of the
Non-United States Holder. The 30% withholding tax will not apply if the dividend
is effectively connected with a trade or business conducted within the United
States by the Non-United States Holder (or, alternatively, where an income tax
treaty applies, if the dividend is effectively connected with a permanent
establishment maintained within the United States by the Non-United States
Holder), but, instead, the dividend will be subject to the United States Federal
income tax on net income that applies to United States persons (and, with
respect to corporate holders, also may be subject to the branch profits tax). A
Non-United States Holder may be required to satisfy certain certification
requirements in order to claim treaty benefits or to otherwise claim a reduction
of or exemption from withholding under the foregoing rules. A Non-United States
Holder that is eligible for a reduced rate of U.S. withholding tax pursuant to a
tax treaty may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund with the United States Internal Revenue Service.

GAIN ON DISPOSITION

A Non-United States Holder will generally not be subject to United States
Federal income tax on gain recognized on a sale, redemption, or other
disposition of Common Stock unless (i) the gain is effectively connected with
the conduct of a trade or business within the United States by the Non-United
States Holder, or (ii) in the case of a Non-United States Holder who is a
nonresident alien individual and holds the Common Stock as a capital asset, such
holder is present in the United States for 183 or more days in the taxable year
and certain other requirements are met.

Also, special rules apply to Non-United States Holders if the Company is or
becomes a "United States real property holding corporation" for United States
Federal income tax purposes. In general, gain on the disposition of interests in
a United States real property holding corporation is subject to United States
Federal income tax. A corporation is generally a United States real property
holding corporation if the fair market value of its United States real property
interests equals or exceeds 50 percent of the sum of the fair market value of
its worldwide real property interests plus its other assets used or held for use
in a trade of business. The Company believes it is not currently, and is not
likely to become, a United States real property holding corporation for United
States Federal income tax purposes.

FEDERAL ESTATE TAXES

Common Stock owned or treated as owned by an individual who is not a citizen
or resident (as specifically defined for United States Federal estate tax
purposes) of the United States at the date of death, or Common Stock subject to
certain lifetime transfers made by such an individual, will be included in such
individual's estate for United States Federal estate tax purposes and may be
subject to United States Federal estate tax, unless an applicable estate tax
treaty provides otherwise. Estates of nonresident aliens are generally allowed a
credit that is equivalent to an exclusion of $600,000 of assets from the estate
for United States Federal estate tax purposes.

INFORMATION REPORTING AND BACKUP WITHHOLDING

The Company must report to the holders of the Common Stock and to the
Internal Revenue Service the amount of any dividends paid on Common Stock in
each calendar year and the amounts of tax withheld, if any, with respect to such
payments. That information may also be made available to the tax authorities of
the country in which a Non-United States Holder resides.

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Under temporary United States Treasury regulations, United States
information reporting requirements and backup withholding tax will generally not
apply to dividends paid on the Common Stock to a Non-United States Holder.
Payments by a United States office of a broker of the proceeds of a sale of the
Common Stock is subject to both backup withholding at a rate of 31% and
information reporting unless the holder certifies its Non-United States Holder
status under penalties of perjury or otherwise establishes an exemption.
Information reporting requirements (but not backup withholding) will also apply
to payments of the proceeds of sales of the Common Stock by foreign offices of
United States brokers, or foreign brokers with certain types of relationships to
the United States, unless the broker has documentary evidence in its records
that the holder is a Non-United States Holder and certain other conditions are
met, or the holder otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules will be refunded or credited against the Non-United
States Holder's United States Federal income tax liability, provided that the
required information is furnished to the Internal Revenue Service.

These information reporting and backup withholding rules are under review by
the United States Treasury and their application to the Common Stock could be
changed by future regulations. On April 15, 1996, the IRS issued proposed
Treasury Regulations concerning the withholding of tax and reporting for certain
amounts paid to non-resident individuals and foreign corporations. The proposed
Treasury Regulations, if adopted in their present form, would be effective for
payments made after December 31, 1997. Prospective investors should consult
their tax advisors concerning the potential adoption of such proposed Treasury
Regulations and the potential effect on their ownership of the Common Stock.

THE FOREGOING IS INTENDED ONLY AS A SUMMARY OF CERTAIN FEDERAL INCOME TAX
ASPECTS OF HOLDING COMMON STOCK AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING
AND ADVICE BASED UPON THE INDIVIDUAL CIRCUMSTANCES OF THE HOLDER.

50
<PAGE>
UNDERWRITERS

Under the terms and subject to conditions contained in an Underwriting
Agreement dated the date hereof, the Underwriters named below, for whom Morgan
Stanley & Co. Incorporated, William Blair & Company, L.L.C. and Donaldson,
Lufkin & Jenrette Securities Corporation are serving as Representatives, have
severally agreed to purchase, and the Company has agreed to sell to them, the
respective number of shares of Common Stock set forth opposite the name of such
Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Morgan Stanley & Co. Incorporated.................................................
William Blair & Company, L.L.C....................................................
Donaldson, Lufkin & Jenrette Securities Corporation...............................
-----------
Total.........................................................................
-----------
-----------
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by counsel
and to certain other conditions, including the conditions that no stop order
suspending the effectiveness of the Registration Statement of which this
Prospectus is a part is in effect and no proceedings for such purpose are
pending before or threatened by the Securities and Exchange Commission and that
there has been no material adverse change or any development involving a
prospective material adverse change in the business, financial condition or
results of operations of ATC and its subsidiaries, taken as a whole, from that
set forth in such Registration Statement. The Underwriters are obligated to take
and pay for all of the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any are taken.

The Underwriters propose to offer part of the shares of Common Stock offered
hereby directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price which represents a
concession not in excess of $ per share under the public offering price.
Any Underwriter may allow, and such dealers may re-allow, a concession not in
excess of $ per share to other Underwriters or to certain other dealers.

Pursuant to the Underwriting Agreement, the Company has granted to the
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an additional shares of Common Stock at
the public offering price set forth on the cover page hereof, less underwriting
discounts and commissions. The Underwriters may exercise such option to purchase
solely for the purpose of covering over-allotments, if any, incurred in the sale
of the shares of Common Stock offered hereby. To the extent such option is
exercised, each Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set forth next to such Underwriter's name in the preceding
table bears to the total number of shares of Common Stock offered by the
Underwriters hereby.

The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Common Stock offered by them.

The Company, on the one hand, and the Underwriters, on the other hand, have
agreed to indemnify each other against certain liabilities, including
liabilities under the Securities Act.

The Company will agree in the Underwriting Agreement that it will not,
without the prior written consent of Morgan Stanley & Co. Incorporated, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common or any securities convertible into or exercisable or
exchangeable for Common Stock or enter into any swap or other arrangement that
transfers to another, in whole on in part, any of the economic consequences of
ownership of the Common Stock, for a period of 180 days after the date of this
Prospectus. Each of the Company's current stockholders, directors, executive
officers and warrant holders will enter into or is bound by a similar agreement.

51
<PAGE>
At the request of the Company, the Underwriters have reserved up to
shares of the shares of Common Stock offered hereby for sale at the
public offering price to certain directors, officers and employees of the
Company. The number of shares of Common Stock available for sale to the general
public will be reduced to the extent such persons purchase such reserved shares.
Any reserved shares not so purchased will be offered by the Underwriters to the
general public on the same basis as the other shares offered hereby. All
purchasers of the shares of Common Stock reserved pursuant to this paragraph who
are also directors or executive officers of the Company will be required to
enter into agreements identical to those described in the immediately preceding
paragraph restricting the transferability of such shares for a period of 180
days after the date of this Prospectus.

PRICING OF THE OFFERING

Prior to the Offering, there has been no public market for the shares of
Common Stock of the Company. The initial public offering price will be
determined by negotiation between the Company and the Representatives. Among the
factors considered in determining the initial public offering price will be the
future prospects of the Company and its industry in general, sales, earnings and
certain other financial and operating information of the Company in recent
periods, and the price-earnings ratios, price-sales ratios, market prices of
securities and certain financial and operating information of companies engaged
in activities similar to those of the Company. The estimated initial public
offering price range set forth on the cover page of this preliminary Prospectus
is subject to change as a result of market conditions and other factors.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Gibson, Dunn & Crutcher LLP, Los Angeles,
California. Upon consummation of the Initial Acquisitions, certain partners of
Gibson, Dunn & Crutcher LLP acquired beneficial interests in shares representing
in the aggregate less than 1% of all outstanding Common Stock at the same price
per share paid by other purchasers of Common Stock on or prior to that date.
Certain matters in connection with the Offering will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom, Los Angeles, California.

EXPERTS

The consolidated financial statements of Aftermarket Technology Corp. as of
December 31, 1994 and 1995 and for the five months ended December 31, 1994 and
for the year ended December 31, 1995, the combined financial statements of the
Predecessor Companies to Aftermarket Technology Corp. for the year ended
December 31, 1993 and for the seven months ended July 31, 1994, and the
financial statements of Component Remanufacturing Specialists, Inc. as of March
31, 1995 and for the ten months then ended included in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein and
in the Registration Statement, and are included in reliance on such reports
given upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain items of which are omitted as permitted by the rules and regulations of
the Commission. Statements made in this Prospectus as to the contents of any
agreement or other document referred to herein are not necessarily complete, and
reference is made to the copy of such agreement or other document filed as an
exhibit or schedule to the Registration Statement and each such statement shall
be deemed qualified in its entirety by such reference. For further information,
reference is made to the Registration Statement and to the exhibits and
schedules

52
<PAGE>
filed therewith, which are available for inspection without charge at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549. Copies of the material containing this
information may be obtained from the Commission upon payment of the prescribed
fees.

The Company is subject to the periodic reporting and other information
requirements of the Securities Exchange Act of 1934, as amended. Such reports
may be inspected at the public reference facilities maintained by the Commission
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and 7 World Trade Center, 13th Floor, New York, New
York 10048. Copies of such material may be obtained by mail from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.

The Company intends to furnish to its stockholders annual reports containing
consolidated financial statements audited by an independent public accounting
firm accompanied by an opinion expressed by such independent public accounting
firm and quarterly reports for the first three quarters of each fiscal year
containing unaudited consolidated financial information in each case prepared in
accordance with generally accepted accounting principles.

The "Aaron's Transmissions" trademark is a federally protected servicemark
of the Company. This Prospectus also contains the registered trademarks of other
companies.

53
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Aftermarket Technology Corp.
Report of Ernst & Young LLP, Independent Auditors........................................................ F-2
Consolidated Balance Sheets.............................................................................. F-3
Consolidated Statements of Income........................................................................ F-4
Consolidated Statements of Stockholders' Equity.......................................................... F-5
Consolidated Statements of Cash Flows.................................................................... F-6
Notes to Consolidated Financial Statements............................................................... F-8
Component Remanufacturing Specialists, Inc.
Report of Ernst & Young LLP, Independent Auditors........................................................ F-19
Balance Sheet............................................................................................ F-20
Statement of Income...................................................................................... F-21
Statement of Stockholders' Equity........................................................................ F-22
Statement of Cash Flows.................................................................................. F-23
Notes to Financial Statements............................................................................ F-24
</TABLE>

F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Stockholders and Board of Directors
Aftermarket Technology Corp.

We have audited the accompanying consolidated balance sheets of Aftermarket
Technology Corp. (the Company) as of December 31, 1994 and 1995, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
five months ended December 31, 1994, and for the year ended December 31, 1995.
We have also audited the accompanying combined statements of income,
stockholders' equity, and cash flows of the Predecessor Companies to Aftermarket
Technology Corp. (the Predecessor Companies) for the year ended December 31,
1993 and for the seven months ended July 31, 1994. These financial statements
are the responsibility of the Company's and Predecessor Companies' managements.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Aftermarket
Technology Corp. at December 31, 1994 and 1995, and the consolidated results of
the Company's operations and cash flows for the five months ended December 31,
1994, and for the year ended December 31, 1995 and the combined results of the
operations of the Predecessor Companies to Aftermarket Technology Corp. and
their cash flows for the year ended December 31, 1993, and for the seven months
ended July 31, 1994, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Seattle, Washington
June 21, 1996

F-2
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
DECEMBER 31, PRO FORMA AS ADJUSTED
----------------------------- MARCH 31, MARCH 31, MARCH 31,
1994 1995 1996 1996 (1) 1996 (1)
------------- ------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
(NOTE 1)
ASSETS
Current assets:
Cash and cash equivalents....................... $ 9,427,318 $ 8,755,691 $ 7,847,594 $ 7,847,594 $ 7,606,664
Accounts receivable, net........................ 24,622,834 32,965,874 35,275,054 35,275,054 35,275,054
Inventories..................................... 26,635,133 43,064,712 48,247,273 48,247,273 48,247,273
Prepaid and other assets........................ 579,002 2,032,671 2,186,273 2,186,273 2,186,273
Deferred tax assets............................. 1,435,000 2,267,000 2,277,467 2,277,467 2,277,467
------------- ------------- ------------- ------------- -------------
Total current assets.............................. 62,699,287 89,085,948 95,833,661 95,833,661 95,592,731
Equipment and leasehold improvements:
Machinery and equipment......................... 3,373,435 7,187,840 7,992,879 7,992,879 7,992,879
Autos and trucks................................ 958,296 1,503,760 1,481,576 1,481,576 1,481,576
Furniture and fixtures.......................... 429,744 858,070 941,215 941,215 941,215
Leasehold improvements.......................... 1,823,208 2,860,711 3,071,516 3,071,516 3,071,516
------------- ------------- ------------- ------------- -------------
6,584,683 12,410,381 13,487,186 13,487,186 13,487,186
Less accumulated depreciation and
amortization................................... 388,520 1,625,917 1,981,421 1,981,421 1,981,421
------------- ------------- ------------- ------------- -------------
6,196,163 10,784,464 11,505,765 11,505,765 11,505,765
Debt issuance costs, net.......................... 5,715,838 7,162,690 6,957,376 6,957,376 5,386,112
Cost in excess of net assets acquired, net........ 112,344,868 140,652,620 139,703,890 139,703,890 139,703,890
Other assets...................................... 337,252 245,897 326,440 326,440 326,440
------------- ------------- ------------- ------------- -------------
Total assets...................................... $ 187,293,408 $ 247,931,619 $ 254,327,132 $ 254,327,132 $ 252,514,938
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................ $ 5,897,091 $ 12,951,575 $ 14,088,562 $ 14,088,562 $ 14,088,562
Accrued payroll and related costs............... 1,433,142 2,094,237 3,010,457 3,010,457 3,010,457
Accrued interest payable........................ 6,066,835 8,097,647 3,346,640 3,346,640 2,546,640
Other accrued expenses.......................... 2,652,723 3,170,162 5,577,660 5,577,660 5,577,660
Bank lines of credit............................ 1,160,000 811,067 1,736,064 25,226,994 1,736,064
Due to former stockholders...................... 4,989,867 36,734 36,734 36,734 36,734
Income taxes payable............................ -- 1,912,116 3,344,268 3,344,268 955,465
Dividends payable............................... 853,288 2,946,300 3,490,930 -- --
------------- ------------- ------------- ------------- -------------
Total current liabilities......................... 23,052,956 32,019,838 34,631,315 54,631,315 27,951,582
Deferred tax liabilities.......................... 1,483,000 3,478,000 3,473,966 3,473,966 3,473,966
12% Series B and D Senior Subordinated Notes...... 120,000,000 162,245,762 162,179,661 162,179,661 121,634,746
Commitments and contingencies.....................
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares -- 1,000,000
Issued and outstanding shares -- 200,000
Aggregate liquidation and redemption value of
$23,033,582 at December 31, 1995.............. 20,000,000 20,000,000 20,000,000 -- --
Common stock, $.01 par value:
Authorized shares -- 5,000,000
Issued and outstanding shares -- 2,000,000..... 20,000,000 20,000,000 20,000,000 20,000,000 88,850,000
Retained earnings............................... 2,757,462 10,163,019 14,017,190 14,017,190 10,579,644
Cumulative translation adjustment............... -- 25,000 25,000 25,000 25,000
------------- ------------- ------------- ------------- -------------
Total stockholders' equity........................ 42,757,462 50,188,019 54,042,190 34,042,190 99,454,644
------------- ------------- ------------- ------------- -------------
Total liabilities and stockholders' equity........ $ 187,293,408 $ 247,931,619 $ 254,327,132 $ 254,327,132 $ 252,514,938
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>

- ------------
(1) The pro forma balance sheet reflects the redemption of all outstanding
preferred stock, including accrued dividends, without the application of
the net proceeds from the Company's proposed initial public offering. The
pro forma as adjusted balance sheet reflects the application of the
estimated net proceeds to the Company from the offering.

See accompanying notes.

F-3
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
COMBINED CONSOLIDATED
----------------------------- -----------------------------------------------------------
FOR THE FOR THE
SEVEN MONTHS FIVE MONTHS THREE MONTHS ENDED
YEAR ENDED ENDED ENDED YEAR ENDED MARCH 31,
DECEMBER 31, JULY 31, DECEMBER 31, DECEMBER 31, ---------------------------
1993 1994 1994 1995 1995 1996
------------- ------------- ------------- ------------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Net sales.......................... $110,702,341 $90,055,996 $67,735,869 $190,659,143 $40,637,671 $64,146,518
Cost of sales...................... 66,686,938 52,245,178 40,111,819 115,499,023 24,969,950 38,359,022
------------- ------------- ------------- ------------- ------------ ------------
Gross profit....................... 44,015,403 37,810,818 27,624,050 75,160,120 15,667,721 25,787,496
Selling, general, and
administrative expense............ 25,681,754 20,475,113 14,205,750 38,971,230 8,033,706 12,462,567
Amortization of intangible
assets............................ 28,202 15,534 1,209,971 3,307,563 720,142 915,655
------------- ------------- ------------- ------------- ------------ ------------
Income from operations............. 18,305,447 17,320,171 12,208,329 32,881,327 6,913,873 12,409,274
Interest and other income.......... 536,670 288,059 341,342 1,099,588 198,956 222,118
Interest expense................... 235,220 130,036 6,373,921 18,015,346 3,766,564 5,064,175
------------- ------------- ------------- ------------- ------------ ------------
Income before income taxes......... 18,606,897 17,478,194 6,175,750 15,965,569 3,346,265 7,567,217
Provision (benefit) for income
taxes............................. 471,000 (5,000) 2,565,000 6,467,000 1,393,000 3,168,416
------------- ------------- ------------- ------------- ------------ ------------
Net income......................... $ 18,135,897 $17,483,194 3,610,750 9,498,569 1,953,265 4,398,801
------------- -------------
------------- -------------
Dividends accrued on preferred
stock............................. 853,288 2,093,012 493,151 544,630
------------- ------------- ------------ ------------
Net income available to common
stockholders...................... $ 2,757,462 $ 7,405,557 $ 1,460,114 $ 3,854,171
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
Pro forma (unaudited):
Income before income taxes per
above........................... $ 18,606,897 $17,478,194
Provision for income taxes....... 7,334,000 7,004,000
------------- -------------
------------- -------------
Pro forma net income............. $ 11,272,897 $10,474,194
------------- -------------
------------- -------------
Net income per share............. $ $
------------- ------------
------------- ------------
Shares used in calculation of pro
forma net income per share......
------------- ------------
------------- ------------
</TABLE>

See accompanying notes.

F-4
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMBINED
----------------------------
FOR THE
SEVEN MONTHS
YEAR ENDED ENDED
DECEMBER 31, JULY 31,
1993 1994
------------- -------------
<S> <C> <C>
Stockholders' equity at beginning of period........................................ $ 22,106,960 $ 31,719,717
Distributions to stockholders.................................................... (8,523,140) (5,503,000)
Net income....................................................................... 18,135,897 17,483,194
------------- -------------
Stockholders' equity at end of period.............................................. $ 31,719,717 $ 43,699,911
------------- -------------
------------- -------------
</TABLE>

<TABLE>
<CAPTION>
CONSOLIDATED
-----------------------------------------------------------------------
CUMULATIVE
PREFERRED COMMON RETAINED TRANSLATION
STOCK STOCK EARNINGS ADJUSTMENT TOTAL
------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Issuance of 200,000 shares of
preferred stock for cash at $100 per
share, August 2, 1994............... $ 20,000,000 $ -- $ -- $ $ 20,000,000
Issuance of 2,000,000 shares of
common stock for cash at $10 per
share, August 2, 1994............... -- 20,000,000 -- -- 20,000,000
Net income for the five months ended
December 31, 1994................... -- -- 3,610,750 -- 3,610,750
Accrued dividends on preferred
stock............................... -- -- (853,288) -- (853,288)
------------- ------------- ------------- ----------- -------------
Balance at December 31, 1994........... 20,000,000 20,000,000 2,757,462 0 42,757,462
Translation adjustment............... -- -- -- 25,000 25,000
Net income for the year ended
December 31, 1995................... -- -- 9,498,569 -- 9,498,569
Accrued dividends on preferred
stock............................... -- -- (2,093,012) -- (2,093,012)
------------- ------------- ------------- ----------- -------------
Balance at December 31, 1995........... 20,000,000 20,000,000 10,163,019 25,000 50,188,019
Net income for the three months ended
March 31, 1996 (unaudited).......... -- -- 4,398,801 -- 4,398,801
Accrued dividends on preferred stock
(unaudited)......................... -- -- (544,630) -- (544,630)
------------- ------------- ------------- ----------- -------------
Balance at March 31, 1996
(unaudited)........................... $ 20,000,000 $ 20,000,000 $ 14,017,190 $ 25,000 $ 54,042,190
------------- ------------- ------------- ----------- -------------
------------- ------------- ------------- ----------- -------------
</TABLE>

See accompanying notes.

F-5
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS

INVESTING ACTIVITIES
Purchases of equipment.................. (2,310,175) (1,850,224) (1,335,551) (5,187,400) (1,194,589) (1,126,758)
Proceeds from sale of fixed assets...... 130,236 78,657 55,603 7,685 -- 3,500
Acquisition of companies, net of cash
received............................... -- -- (146,954,457) (40,264,452) -- --
------------- ------------ ------------- ------------ ------------ -----------
Net cash used in investing activities... (2,179,939) (1,771,567) (148,234,405) (45,444,167) (1,194,589) (1,123,258)
</TABLE>

F-6
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
COMBINED CONSOLIDATED
---------------------------- ---------------------------------------------------------
FOR THE FOR THE
SEVEN MONTHS FIVE MONTHS THREE MONTHS ENDED
YEAR ENDED ENDED ENDED YEAR ENDED MARCH 31,
DECEMBER 31, JULY 31, DECEMBER 31, DECEMBER 31, --------------------------
1993 1994 1994 1995 1995 1996
------------- ------------ ------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
FINANCING ACTIVITIES
Issuance of senior subordinated notes... $ -- $ -- $120,000,000 $42,400,000 $ -- $ --
Borrowings on revolving credit
facility............................... -- -- 18,160,000 3,500,000 -- 924,997
Payments on revolving credit facility... -- -- (17,000,000) (4,742,458) -- --
Payment of debt issuance costs.......... -- -- (5,697,413) (2,179,167) -- --
Payment of offering costs............... -- -- (5,339,855) -- -- --
Net payments on other long-term debt.... (166,718) (100,584) (358,637) -- -- --
Borrowings (payments) on bank lines of
credit................................. 800,000 (1,000,000) -- -- -- --
Payment on amounts due to former
stockholders........................... -- -- -- (4,987,088) (4,083,834) --
Net payments to related parties......... (579,344) (88,737) -- -- -- --
Sale of common stock.................... -- -- 20,000,000 -- -- --
Sale of preferred stock................. -- -- 20,000,000 -- -- --
Distributions to stockholders........... (8,523,140) (5,503,000) -- -- -- --
------------- ------------ ------------- ------------ ------------ -----------
Net cash (used in) provided by financing
activities............................. (8,469,202) (6,692,321) 149,764,095 33,991,287 (4,083,834) 924,997
------------- ------------ ------------- ------------ ------------ -----------
Increase (decrease) in cash and cash
equivalents............................ (165,974) 2,667,470 9,427,318 (671,627) (4,922,409) (908,097)
Cash and cash equivalents at beginning
of period.............................. 747,654 581,680 -- 9,427,318 9,427,318 8,755,691
------------- ------------ ------------- ------------ ------------ -----------
Cash and cash equivalents at end of
period................................. $ 581,680 $ 3,249,150 $ 9,427,318 $ 8,755,691 $ 4,504,909 $7,847,594
------------- ------------ ------------- ------------ ------------ -----------
------------- ------------ ------------- ------------ ------------ -----------
Cash paid during the period for:
Interest.............................. $ 233,133 $ 128,259 $ 185,817 $15,376,365 $ 7,222,838 $9,663,016
------------- ------------ ------------- ------------ ------------ -----------
------------- ------------ ------------- ------------ ------------ -----------
Income taxes.......................... $ 360,179 209,671 $ 2,571,000 $ 3,221,356 $ 1,000 $1,563,943
------------- ------------ ------------- ------------ ------------ -----------
------------- ------------ ------------- ------------ ------------ -----------
</TABLE>

See accompanying notes.

F-7
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements of Aftermarket Technology Corp.
include the combined results of Aftermarket Technology Holdings Corp. (Holdings)
and its wholly owned subsidiary, Aftermarket Technology Corp. (ATC)
(collectively, the "Company"). Concurrent with the completion of ATC's proposed
initial public offering, Holdings will be merged into ATC. The accompanying
financial statements are presented on a combined basis with the elimination of
intercompany accounts and transactions and will represent the historical
financial statements of ATC upon the completion of the merger.

The consolidated financial statements include the results of the following
remanufactured automotive products businesses which sell to customers throughout
the United States and Canada: (i) Aaron's Automotive Products, Inc. (Aaron's), a
Springfield, Missouri based remanufacturer of transmissions, engines, torque
converters, and other drive train parts for automotive original equipment
manufacturers, independent rebuilders and distributors, and retail chain store
customers; (ii) Component Remanufacturing Specialists (CRS), a Mahwah, New
Jersey based remanufacturer and distributor of automotive drive train and
transmission components; (iii) H.T.P., Inc. (HTP), a Louisville, Kentucky based
remanufacturer and warehouse distributor of new and remanufactured parts for
independent transmission rebuilders; (iv) Mamco Converters, Inc. (Mamco), a
Dayton, Ohio based remanufacturer of torque converters for independent
transmission rebuilders and distributors; (v) King-O-Matic and Mascot Truck
Parts Inc. (Mascot), Canadian based remanufacturers and distributors of
automotive components and a rebuilder of heavy duty truck transmissions,
respectively, are located in Mississauga, Canada; and (vi) RPM Merit (RPM), a
Rancho Cucamonga, California (formerly Azusa, California) based remanufacturer
of torque converters, constant velocity axles, and transmission fluid pumps, and
a warehouse distributor of remanufactured parts and new part kits to independent
transmission rebuilders.

The combined financial statements of the Predecessor Companies to
Aftermarket Technology Corp. (the Predecessor Companies) represent the
combination of the historical financial statements of Aaron's, RPM, HTP, and
Mamco. The Company was formed for the purpose of effecting the acquisitions of
the Predecessor Companies and is a wholly owned subsidiary of Holdings. Holdings
does not have any operations other than its investment in the Company. The
Predecessor Companies were acquired pursuant to four separate purchase
agreements for a total purchase price of approximately $160.4 million (the
Initial Acquisitions). The combined financial statements for the seven months
ended July 31, 1994 include the operations of the Predecessor Companies up to
their respective closing dates, which approximated July 31, 1994.

INTERIM FINANCIAL INFORMATION

The financial information at March 31, 1996 and for the three months ended
March 31, 1995 and 1996 is unaudited but includes all adjustments (consisting
only of normal recurring adjustments) that the Company considers necessary for a
fair presentation of the financial position at such date and the operating
results and cash flows for those periods. Operating results for the three months
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the entire year.

PRINCIPLES OF CONSOLIDATION

The Company's acquisitions have been accounted for as purchases, and the
consolidated financial statements for the twelve months ended December 31, 1995
and five months ended December 31, 1994 include operations of the Company and
its wholly owned operating subsidiaries from the dates of acquisition.
Significant intercompany accounts and transactions have been eliminated in
consolidation.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with original maturities
of one year or less to be cash equivalents.

F-8
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist primarily of new and used engine and transmission parts, and
cores and finished goods. Appropriate consideration is given to deterioration,
obsolescence, and other factors in evaluating estimated market value.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements are stated at cost. Depreciation is
computed using accelerated and straight-line methods over the estimated useful
lives of the assets, which range from three to fifteen years.

FOREIGN CURRENCY TRANSLATION

The financial statements of Canadian subsidiaries have been translated into
U.S. dollars in accordance with SFAS No. 52, "Foreign Currency Translation." All
balance sheet accounts have been translated using the exchange rates in effect
at the balance sheet date. Income statement amounts have been translated using
the average exchange rate for the year. The translation gain resulting from the
changes in exchange rates has been reported separately as a component of
stockholders' equity.

The effect on the statements of income of transaction gains or losses is
insignificant for the periods presented.

DEBT ISSUANCE COSTS

Debt issuance costs incurred in connection with the sale of the 12% Series B
and Series D Senior Subordinated Notes (Note 6) and Revolving Credit Facility
(Note 5) are being amortized over the life of the debt of ten, nine, and seven
years, respectively.

COST IN EXCESS OF NET ASSETS ACQUIRED

The excess of the purchase price over the fair value of the assets purchased
is being amortized over 40 years on a straight-line basis. Cost in excess of net
assets acquired is reflected net of accumulated amortization of $1,199,809 and
$4,466,669 at December 31, 1994 and 1995, respectively.

In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," the Company
assesses the recoverability of cost in excess of net assets acquired by
determining whether the amortization of the asset balance over its remaining
life can be recovered through the undiscounted future operating cash flows of
the acquired operation. The amount of the impairment, if any, is measured based
on projected discounted future operating cash flows. The Company believes that
no impairment has occurred and that no reduction in the estimated useful life is
warranted.

CREDIT POLICY

The Company grants credit to certain customers who meet pre-established
credit requirements. The Company maintains a credit policy which requires
certain customers to pay for products upon delivery. Credit losses are provided
for in the financial statements and consistently have been within management's
expectations.

F-9
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Accounts receivable is reflected net of an allowance for doubtful accounts
of $766,000 and $2,469,000 at December 31, 1994 and 1995, respectively.

STOCK-BASED COMPENSATION

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." Statement No. 123 is effective
for fiscal years beginning after December 15, 1995. Under Statement No. 123,
stock-based compensation expense is measured using either the intrinsic value
method, as prescribed by Accounting Principles Board Opinion No. 25, or the fair
value method described in Statement No. 123. Companies choosing the intrinsic
value method will be required to disclose the pro forma impact of the fair value
method on net income and earnings per share. The Company plans to implement
Statement No. 123 in 1996 using the intrinsic value method.

INCOME TAXES

Two of the Predecessor Companies elected to be taxed as S Corporations for
all periods through the respective closing dates of the Acquisitions; therefore,
for federal and state income tax purposes, any income or loss accrued prior to
that date generally was not taxed to these companies but was reported by their
respective stockholders. The pro forma provision for taxes reflects the
estimated provision for federal and state income taxes which could have been
provided had these companies been C Corporations and filed consolidated returns.
Because these pro forma income taxes do not represent obligations of, and will
not be paid by, the Predecessor Companies, they have not been reflected in the
combined balance sheets or in the combined statements of cash flows.

PRO FORMA DATA (UNAUDITED)

PRO FORMA NET INCOME PER SHARE

Pro forma net income per share will be calculated as follows upon the
determination of the number of shares of common stock to be offered in the
Company's proposed initial public offering and the assumed initial public
offering price per share:

Pro forma net income per share is based on the weighted average number of
shares of common stock and common equivalent shares outstanding using the
treasury stock method and the estimated number of shares of common stock to be
issued in the Company's proposed initial public offering whose net proceeds will
be used to redeem the outstanding preferred stock. Pursuant to the Securities
and Exchange Commission requirements, common and common equivalent shares issued
during the 12-month period prior to the initial filing of the Company's proposed
initial public offering have been included in the calculation as if they were
outstanding for all periods presented using the treasury stock method, based on
the assumed initial public offering price.

The remainder of the net proceeds from the sale of shares of common
stock offered by the Company in its proposed initial public offering will be
used to repay certain indebtedness. Assuming these shares had been issued and
the indebtedness repaid, the pro forma net income per share would have been
$ and $ for the year ended December 31, 1995 and the three months ended
March 31, 1996, respectively.

PRO FORMA BALANCE SHEET

As a result of the Company's proposed initial public offering, all
outstanding preferred stock, including accrued dividends, will be redeemed. The
pro forma balance sheet at March 31, 1996 reflects the redemption of the
preferred stock including accrued dividends without the application of net
proceeds from such offering. The amounts were assumed to have been funded from
the Company's available line of credit at

F-10
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
March 31, 1996. The pro forma as adjusted balance sheet reflects the anticipated
application of the net proceeds from the sale of shares of common stock at
an assumed initial public offering price of $ per share.

2. ACQUISITIONS
During the year ended December 31, 1995, the Company acquired three new
companies for a total purchase price of approximately $42.8 million. The CRS and
Mascot acquisitions closed on June 1, 1995, and June 9, 1995, respectively, and
the King-O-Matic acquisition closed on September 12, 1995 (collectively, the
1995 Acquisitions). The Company issued $40 million of principal amount of 12%
Senior Subordinated Notes due in 2004 concurrent with the acquisition of CRS,
the proceeds of which financed the New Acquisitions (Note 6). The acquisitions
have been accounted for as purchases. Accordingly, the allocation of the cost of
the acquired assets and liabilities has been made on the basis of the estimated
fair value.

In addition, on April 2, 1996, the Company acquired Tranzparts, Inc. for
$4.0 million in a transaction accounted for as a purchase.

The consolidated financial statements include the operating results of each
business from the date of acquisition. The following unaudited pro forma
information for the year ended December 31, 1994 reflects the acquisition of the
Predecessor Companies as if the acquisition had occurred on January 1, 1994,
adjusted to give effect for federal and state income taxes on the results of
operations had all Predecessor Companies been taxed as a corporation and filed a
consolidated return, and gives effect to the 1995 acquisitions as if such
acquisitions had occurred on January 1, 1994. The unaudited pro forma
information for the year ended December 31, 1995 gives effect to the 1995
Acquisitions and the acquisition of Tranzparts as if such acquisitions occurred
on January 1, 1995. The pro forma information includes adjustments for interest
expense that would have been incurred to finance the acquisitions, additional
depreciation based on the fair market values of the property, plant, and
equipment acquired, and amortization of intangibles arising from the
transactions. The pro forma financial information is not necessarily indicative
of the results of operations as they would have been had the transactions been
effected on the assumed dates.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1994 1995
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Net sales.................................................................... $ 192,431 $ 217,491
Net income................................................................... 8,824 10,331
</TABLE>

3. RELATED-PARTY TRANSACTIONS
Aaron's had sales to a company owned by Aaron's former stockholders
amounting to $327,472 for the year ended December 31, 1993 and $115,422 for the
seven months ended July 31,1994.

The Predecessor Companies leased land and buildings, primarily its
production facilities, under operating lease arrangements with the respective
stockholders, or entities controlled by the stockholders, of the Predecessor
Companies. Rent expense under these operating leases amounted to $1,156,000 for
the year ended December 31, 1993, and $808,000 for the seven months ended July
31, 1994. Upon completion of the Prior Acquisitions, the Company entered into
three- to five-year lease agreements on most of the properties which had been
leased from related parties to the Predecessor Companies.

The Company had liabilities to former stockholders totaling $4,989,867 and
$36,734 at December 31, 1994 and 1995, respectively. These amounts are composed
primarily of an additional purchase price payable to Aaron's former
stockholders. The remaining amount will be paid upon collection of certain
accounts receivable in 1996.

F-11
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

3. RELATED-PARTY TRANSACTIONS (CONTINUED)
The Company paid Aurora Capital Partners (ACP), which has a majority
interest in Holdings, the Company's parent, $800,000 in fees for investment
banking services provided in connection with the acquisitions of Mascot, CRS,
and King. In addition, ACP was paid management fees of $208,000 and $500,000 in
1994 and 1995, respectively. ACP is also entitled to various additional fees
depending on the Company's profitability or future acquisitions. No such fees
were paid in 1994 and 1995.

4. INVENTORIES
Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------- MARCH 31,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Raw materials, including core inventories........................... $ 7,415,495 $ 19,015,530 $ 19,148,678
Work-in-process..................................................... 186,338 1,394,479 691,858
Finished goods...................................................... 19,033,300 22,654,703 28,406,737
------------- ------------- -------------
$ 26,635,133 $ 43,064,712 $ 48,247,273
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

Finished goods include purchased parts which are available for sale.

5. BANK LINES OF CREDIT
On July 19, 1994, the Company entered into an agreement with Chemical Bank,
as agent, providing for a $30 million revolving credit facility (Revolving
Credit Facility) to finance the Prior Acquisitions and for working capital
purposes. The funds available to be advanced may not exceed 85% of the Company's
eligible accounts receivable and 60% of the Company's eligible inventories, as
defined in the agreement. The available borrowing base at December 31, 1995 was
approximately $27 million. All amounts advanced are secured by all accounts
receivable and inventories and become due on July 31, 1999. The Company may
prepay outstanding advances in whole or in part without incurring any premium or
penalty.

At the Company's election, amounts advanced under the Revolving Credit
Facility will bear interest at either (i) the Alternate Base Rate plus 1.5% or
(ii) the Eurodollar Rate plus 2.5%. The Alternate Base Rate is equal to the
highest of (a) the Bank's prime rate, (b) the secondary market rate for
three-month certificates of deposit plus 1.0%, or (c) the federal funds rate
plus 0.5%. Interest payments on advances which bear interest based upon the
Alternate Base Rate are due quarterly in arrears, and interest payments on
advances which bear interest based upon the Eurodollar Rate are due on the last
day of each relevant interest period (or, if such period exceeds three months,
quarterly after the first day of such period).

The Company paid the Bank a one-time facility and commitment fee upon
establishing the Revolving Credit Facility and is required to pay the Bank
quarterly in arrears a commitment fee of 0.5% per annum of the average daily
unused portion of the Revolving Credit Facility.

The Revolving Credit Agreement contains several covenants, including levels
of net worth, leverage, EBITDA and cash flow coverage, and certain limits on the
Company to incur indebtedness, make capital expenditures, create liens, engage
in mergers and consolidations, make restricted payments (including dividends),
make asset sales, make investments, issue stock, and engage in transactions with
affiliates of the Company and its subsidiaries. At December 31, 1995, no amounts
were outstanding under this line of credit.

On June 8, 1995, the Company entered into an agreement with the Royal Bank
of Canada (Royal Bank), as agent, providing for a C$1.35 million revolving
credit facility for working capital purposes. All amounts advanced are secured
by an irrevocable standby letter of credit from Chemical Bank in the amount of
the U.S. equivalent of C$1.35 million. At December 31, 1995, $811,067 was
outstanding under this line of

F-12
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

5. BANK LINES OF CREDIT (CONTINUED)
credit. Amounts advanced under the credit agreement bear interest at the Royal
Bank prime rate and are payable on the 30th of each quarter-end commencing
September 30, 1995. The rate in effect at December 31, 1995 was 7.5%.

6. 12% SERIES B AND SERIES D SENIOR SUBORDINATED NOTES
On August 2, 1994, the Company completed a private placement issuance of
$120 million of principal amount of 12% Series A Senior Subordinated Notes due
2004. Proceeds from the issuance, together with the $40 million capital
contribution, were used to finance the Initial Acquisitions. The privately
placed debt was exchanged for public debt (designated Series B) on February 22,
1995.

On June 1, 1995, the Company completed another private placement issuance of
$40 million of principal amount of 12% Series C Senior Subordinated Notes due in
2004. Proceeds of $42.4 million from the issuance were used to finance the 1995
Acquisitions. These notes have an effective interest rate of 10.95%. The
privately placed debt was exchanged for public debt (designated Series D) on
September 10, 1995.

Interest on the Notes is payable semiannually on February 1 and August 1 of
each year, commencing on February 1, 1995 for the Series B Notes and August 1,
1995 for the Series D Notes. The Notes will mature on August 1, 2004. On or
after August 1, 1999, the Notes may be redeemed at the option of the Company, in
whole or in part, at specified redemption prices plus accrued and unpaid
interest:

<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ----------------------------------------------------------------------- ---------------
<S> <C>
1999................................................................... 106%
2000................................................................... 104
2001................................................................... 102
2002 and thereafter.................................................... 100
</TABLE>

In addition, at any time on or prior to August 1, 1997, the Company may,
subject to certain requirements, redeem up to $30 million of the Series B Notes
and $10 million of the Series D Notes of the aggregate principal amount of the
Notes with the net cash proceeds of one or more public equity offerings, at a
price equal to 112% of the principal amount to be redeemed plus accrued and
unpaid interest. In the event of a change in control, the Company would be
required to offer to repurchase the Notes at a price equal to 101% of the
principal amount plus accrued and unpaid interest.

The Notes are general obligations of the Company, subordinated in right of
payment to all existing and future senior debt (including the Revolving Credit
Facility). The Notes are guaranteed by each of the Company's existing and future
subsidiaries other than any subsidiary designated as an unrestricted subsidiary
(as defined). The Company may incur additional indebtedness, including
borrowings under its $30 million Revolving Credit Facility (Note 5), subject to
certain limitations.

The indenture under which the Notes were issued contains certain covenants
that, among other things, limit the Company from incurring other indebtedness,
issuing disqualified capital stock, engaging in transactions with affiliates,
incurring liens, making certain restricted payments (including dividends),
making certain asset sales, and permitting certain restrictions on the ability
of its subsidiaries to make distributions. As of December 31, 1995, the Company
was in compliance with such covenants.

F-13
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1995
------------ ------------
<S> <C> <C>
Deferred tax liabilities:
Book basis of intangible assets in excess of tax amounts............... $ 1,466,000 $ 3,208,000
Other.................................................................. 17,000 270,000
------------ ------------
Total deferred tax liabilities........................................... 1,483,000 3,478,000
Deferred tax assets:
Inventory obsolescence reserve......................................... 483,000 898,000
Bad debt reserves...................................................... 331,000 545,000
Product warranty accruals.............................................. 295,000 438,000
Other.................................................................. 326,000 386,000
------------ ------------
Total deferred tax assets................................................ 1,435,000 2,267,000
Valuation allowance for deferred tax assets.............................. -- --
------------ ------------
Net deferred tax asset................................................... 1,435,000 2,267,000
------------ ------------
Net deferred tax liability............................................... $ 48,000 $ 1,211,000
------------ ------------
------------ ------------
</TABLE>

Significant components of the provision for income taxes attributable to
operations are as follows:

<TABLE>
<CAPTION>
FIVE MONTHS
ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Current:
Federal.................................................................. $2,136,000 $4,429,000
State.................................................................... 379,000 764,000
------------ ------------
Total current.............................................................. 2,515,000 5,193,000
Deferred:
Federal.................................................................. 53,000 1,137,000
State.................................................................... (3,000) 137,000
------------ ------------
Total deferred............................................................. 50,000 1,274,000
------------ ------------
$2,565,000 $6,467,000
------------ ------------
------------ ------------
</TABLE>

F-14
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

7. INCOME TAXES (CONTINUED)
The components of the provision for deferred income taxes are as follows:

<TABLE>
<CAPTION>
FIVE MONTHS
ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------
<S> <C> <C>
Amortization of intangible assets.......................................... $ 754,000 $1,759,000
Inventory obsolescence reserve............................................. (483,000) (333,000)
Bad debt reserves.......................................................... (85,000) (223,000)
Product warranty accruals.................................................. (56,000) (20,000)
Depreciation............................................................... 2,000 339,000
Other...................................................................... (82,000) (248,000)
------------ ------------
Provision for deferred income taxes........................................ $ 50,000 $1,274,000
------------ ------------
------------ ------------
</TABLE>

The reconciliation of income tax expense computed at the U.S. federal
statutory tax rates to income tax expense is as follows:

<TABLE>
<CAPTION>
FIVE MONTHS
ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995
------------------------- -------------------------
AMOUNT PERCENT AMOUNT PERCENT
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Tax at U.S. statutory rates.............................. $ 2,159,000 35.0% $ 5,588,000 35.0%
State income taxes, net of federal tax benefit........... 244,000 3.9 529,000 3.3
Other.................................................... 162,000 2.7 350,000 2.2
------------ --- ------------ ---
$ 2,565,000 41.6% $ 6,467,000 40.5%
------------ --- ------------ ---
------------ --- ------------ ---
</TABLE>

8. PREFERRED STOCK
The Company has issued 200,000 shares of nonvoting preferred stock. The
preferred stock accrues dividends at 10% per annum and accrues interest at 10%
per annum on unpaid dividends. Dividends are payable annually on the last
business day in June if declared by the Board of Directors. Dividends on each
share of the preferred stock are cumulative and accrue from day to day, whether
or not earned or declared, commencing with the date of issue of such share. No
dividends have been paid to date.

The preferred stock is exchangeable at the option of the Company, in whole
or in part, after July 31, 1996, for Subordinated Exchange Debentures due July
31, 2006. The Debentures shall be issued pursuant to an indenture the form of
which shall have been approved by the Company and the holders of a majority of
the outstanding shares of preferred stock.

The preferred stock may be redeemed at the option of the Board of Directors
at any time, in whole or in part, at a redemption price equal to the stated
value per share, together with accrued and unpaid dividends to the date fixed
for such redemption. Shares of preferred stock are also subject to mandatory
redemption should substantially all of the assets of the Company be sold or
transferred, or should there be a merger of Holdings with or into any other
corporation in which Holdings is not the surviving entity. In the case of a
mandatory redemption, outstanding shares of preferred stock would be redeemed at
a redemption price equal to the stated value per share, together with accrued
and unpaid dividends including accrued interest to the date fixed for such
redemption.

In the event of any liquidation, the preferred stockholders are entitled to
receive an amount equal to the stated value per share, together with accrued and
unpaid dividends. Thereafter, any remaining proceeds

F-15
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

8. PREFERRED STOCK (CONTINUED)
shall be distributed to the common stockholders. If the assets of the Company
are not sufficient to pay the redemption amount, then holders of outstanding
shares of preferred stock shall share ratably in such distribution.

9. COMMON STOCK
At December 31, 1995, the Company had 370,176 shares of common stock
reserved for the exercise and future granting of stock options and warrants.

STOCK OPTION PLAN

The Company adopted its 1994 Stock Incentive Plan in July 1994 in order to
provide incentives to employees and directors of the Company. The Company has
reserved 300,000 shares of common stock for issuance under the plan. Options are
generally granted at the fair value on the date of grant and vest over a period
of time to be determined by the Board of Directors, generally five years. The
options expire 10 years from the date of grant.

The following table summarizes the stock option activity:

<TABLE>
<CAPTION>
SHARES
SUBJECT PRICE
TO OPTION PER SHARE
----------- -------------
<S> <C> <C>
Granted in 1994................................................................. 233,919 $ 10
-----------
Balance, December 31, 1994....................................................... 233,919 10
Granted in 1995................................................................ 20,544 10
-----------
Balance, December 31, 1995 and March 31, 1996.................................... 254,463 10
-----------
-----------
</TABLE>

At December 31, 1995 and March 31, 1996, 126,706 options are exercisable,
and 45,537 options remain available for future grant.

In connection with the prior acquisitions, warrants to purchase 58,480
shares of common stock at $10 per share were issued to two individuals. The
warrants are exercisable through 2004. The Company has also issued a warrant to
one member of the Board of Directors to purchase 11,696 shares of common stock
at $10 per share, the fair value of the common stock on the date of grant. The
warrant vests one-third annually beginning December 31, 1994.

10. COMMITMENTS AND CONTINGENCIES
The Company leases certain facilities under various operating lease
agreements which expire on various dates through 2004. Leases that expire
generally are expected to be renewed or replaced by other leases. Future minimum
lease payments as of December 31, 1995 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
- ---------------------------------------------------------------------
<S> <C>
1996................................................................. $ 3,878,952
1997................................................................. 3,751,918
1998................................................................. 3,026,401
1999................................................................. 2,221,990
2000................................................................. 1,841,698
Thereafter........................................................... 3,134,820
-------------
$ 17,855,779
-------------
-------------
</TABLE>

F-16
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

10. COMMITMENTS AND CONTINGENCIES (CONTINUED)
Rent expense under operating leases approximated $1,800,000, $1,159,000,
$902,000, and $3,114,999 for the year ended December 31, 1993, the seven months
ended July 31, 1994, the five months ended December 31, 1994, and the year ended
December 31, 1995, respectively.

Rent expense includes amounts paid to related parties of $254,000 and
$611,000 for the five months ended December 31, 1994 and the year ended December
31, 1995, respectively.

The company from which RPM acquired its assets in 1994 (the "Prior RPM
Company") has been identified by the EPA as one of the many potentially
responsible parties for environmental liabilities associated with a "Superfund"
site located in the area of the Company's former manufacturing facilities and
current distribution facility in Azusa, California. The EPA has preliminarily
estimated that it will cost approximately $47 million to construct, and
approximately $4 million per year for an indefinite period to operate, an
interim remedial groundwater treatment system for the part of the Superfund Site
within which the Company's former manufacturing facilities and current
distribution facility, as well as those of many other potentially responsible
parties, are located. The actual cost of this remedial action could vary
substantially from this estimate, and additional costs associated with the
Superfund site are likely to be assessed. The Company has significantly reduced
its presence at the site and has moved all manufacturing operations off-site.
Since July 1995, the Company's only real property interest in this site has been
the lease of a 6,000 square foot storage and distribution facility. The RPM
acquisition agreement and the leases pursuant to which the Company leased RPM's
facilities after the RPM Acquisition expressly provide that the Company did not
assume any liabilities for environmental conditions existing on or before the
RPM Acquisition, although the Company could become responsible for these
liabilities under various legal theories. The Company is indemnified against any
such liabilities by the seller of RPM as well as the Prior RPM Company
shareholders. There can be no assurance, however, that the Company would be able
to make any recovery under any indemnification provisions. Since the RPM
Acquisition, the Company has been engaged in negotiations with EPA to settle any
liability that it may have for this site. The Company's management believes that
the Company will not incur any material liability as a result of these
pre-existing environmental conditions.

In connection with the acquisitions of Aaron's, RPM, HTP, Mamco, CRS,
King-O-Matic and Tranzparts, the Company conducted certain investigations of
these companies' facilities and their compliance with applicable environmental
laws. The investigations, which for all manufacturing and certain distribution
facilities also included "Phase I" assessments by independent consultants, found
that certain remedial, reporting and other regulatory requirements, including
certain hazardous waste management procedures, were not or may not have been
satisfied. Based in part on the investigations conducted and the indemnification
provisions of the Prior Acquisitions' agreements with respect to certain of
these matters, the Company's management believes that its liabilities relating
to these environmental matters will not have a material adverse effect on its
future consolidated financial position or results of operations.

The Company is also involved in several lawsuits which arise in the ordinary
course of business which management believes will not have a material adverse
effect, individually or in the aggregate, on the Company's consolidated
financial position or results of operations.

11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of all financial instruments approximate their fair
values at December 31, 1994 and 1995, except for the Series B and Series D
subordinated debt.

F-17
<PAGE>
AFTERMARKET TECHNOLOGY CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(INFORMATION AS OF MARCH 31, 1996 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1996 IS UNAUDITED)

11. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The fair values of the Company's Series B and Series D subordinated debt are
estimated using discounted cash flow analyses, based on the Company's current
incremental borrowing rates for similar types of borrowing arrangements.

The carrying amounts and fair values of these financial instruments at
December 31 are as follows:

<TABLE>
<CAPTION>
1994 1995
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
12% subordinated notes (Series B)...................... $ 120,000 $ 123,600 $ 120,000 $ 126,600
12% subordinated notes (Series D)...................... -- -- 40,000 42,200
</TABLE>

12. SIGNIFICANT CUSTOMER
For the year ended December 31, 1993, the seven months ended July 31, 1994,
the five months ended December 31, 1994, and the year ended December 31, 1995,
sales to one customer accounted for 34%, 43%, 45%, and 35% of net sales,
respectively. Additionally, at December 31, 1994 and 1995, this customer
accounted for approximately 71% and 46% of accounts receivable, respectively. No
other customer accounted for more than 10% of net sales in any period.

F-18
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

Board of Directors
Component Remanufacturing Specialists, Inc.

We have audited the accompanying balance sheet of Component Remanufacturing
Specialists, Inc. (the Company) as of March 31, 1995, and the related statements
of income, stockholders' equity and cash flows for the ten months then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Component Remanufacturing
Specialists, Inc. at March 31, 1995 and the results of its operations and its
cash flows for the ten months then ended in conformity with generally accepted
accounting principles.

ERNST & YOUNG LLP

White Plains, New York
May 3, 1995, except for Note 5
as to which the date is May 10, 1995

F-19
<PAGE>
COMPONENT REMANUFACTURING SPECIALISTS, INC.
BALANCE SHEET
MARCH 31, 1995

<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents...................................... $1,909,060
Accounts receivable............................................ 3,209,663
Inventories.................................................... 2,518,626
Prepaid insurance.............................................. 107,141
----------
Total current assets......................................... 7,744,490
Equipment and leasehold improvements:
Machinery and equipment........................................ 1,069,900
Furniture and fixtures......................................... 50,236
Leasehold improvements......................................... 286,254
----------
1,406,390
Less accumulated depreciation and amortization................. (890,649)
----------
515,741
Covenants not to compete, net.................................... 88,434
Costs in excess of net assets acquired, net...................... 619,391
Other assets..................................................... 33,166
----------
Total assets................................................. $9,001,222
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $2,067,107
Accrued compensation........................................... 251,891
Accrued warranty............................................... 330,000
Other accrued expenses......................................... 133,202
Income taxes payable........................................... 49,796
Notes payable.................................................. 151,667
----------
Total current liabilities.................................... 2,983,663
Stockholders' equity:
Common stock (2,500 shares authorized, 300 shares issued and
outstanding -- no par value).................................. --
Additional paid-in capital..................................... 530,000
Retained earnings.............................................. 5,487,559
----------
Total stockholders' equity................................... 6,017,559
----------
Total liabilities and stockholders' equity................... $9,001,222
----------
----------
</TABLE>

See accompanying notes.

F-20
<PAGE>
COMPONENT REMANUFACTURING SPECIALISTS, INC.
STATEMENT OF INCOME
TEN MONTHS ENDED MARCH 31, 1995

<TABLE>
<S> <C>
Sales............................................................. $19,024,253
Cost of sales..................................................... 13,534,690
-----------
Gross profit...................................................... 5,489,563
Selling, general and administrative expense....................... 779,165
Amortization of intangible assets................................. 77,515
-----------
Income from operations............................................ 4,632,883
Interest income................................................... 53,250
Interest expense.................................................. 21,348
-----------
Income before income taxes........................................ 4,664,785
Provision for state income taxes.................................. 114,000
-----------
Net income........................................................ $ 4,550,785
-----------
-----------
</TABLE>

See accompanying notes.

F-21
<PAGE>
COMPONENT REMANUFACTURING SPECIALISTS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN RETAINED
CAPITAL EARNINGS TOTAL
---------- ------------ ------------
<S> <C> <C> <C>
Balance at June 1, 1994................................................... $ 530,000 $ 2,644,180 $ 3,174,180
Dividends............................................................... -- 1,707,406 1,707,406
Net income.............................................................. -- 4,550,785 4,550,785
---------- ------------ ------------
Balance at March 31, 1995................................................. $ 530,000 $ 5,487,559 $ 6,017,559
---------- ------------ ------------
---------- ------------ ------------
</TABLE>

See accompanying notes.

F-22
<PAGE>
COMPONENT REMANUFACTURING SPECIALISTS, INC.
STATEMENT OF CASH FLOWS
TEN MONTHS ENDED MARCH 31, 1995

<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income...................................................................... $4,550,785
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation.................................................................. 74,423
Amortization.................................................................. 77,515
Loss on sale of equipment..................................................... 79,788
Changes in operating assets and liabilities:
Accounts receivable......................................................... (1,266,650)
Inventories................................................................. (830,994)
Prepaid and other assets.................................................... (33,653)
Accounts payable and accrued expenses....................................... (475,820)
----------
Net cash provided by operating activities....................................... 2,175,394
INVESTING ACTIVITIES
Purchases of equipment and leasehold improvements............................... (466,213)
----------
Net cash used in investing activities........................................... (466,213)
FINANCING ACTIVITIES
Payments on long-term debt...................................................... (277,379)
Dividends....................................................................... (1,707,406)
----------
Net cash used in financing activities........................................... (1,984,785)
----------
Decrease in cash................................................................ (275,604)
Cash and cash equivalents at beginning of period................................ 2,184,664
----------
Cash and cash equivalents at end of period...................................... $1,909,060
----------
----------
Cash paid during the period for:
Interest...................................................................... $ 21,348
----------
----------
Income taxes.................................................................. $ 950,000
----------
----------
</TABLE>

See accompanying notes.

F-23
<PAGE>
COMPONENT REMANUFACTURING SPECIALISTS, INC.
NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS ACTIVITY

The Company is a New Jersey based remanufacturer of automotive components
for original equipment manufacturers (OEMs). It has U.S. and Canadian
remanufacturing rights for designated transmissions, steering racks and water
pumps produced by certain foreign and domestic OEMs.

SIGNIFICANT CUSTOMERS

For the ten months ended March 31, 1995, sales to the Company's three
largest customers, all of whom are subsidiaries of foreign corporations,
approximated 51%, 15% and 13% of sales. Additionally, at March 31, 1995,
accounts receivable from these three customers approximated $1,403,000, $468,000
and $669,000, respectively. Contracts with customers may be terminated by either
party generally upon 30 days notice.

The Company generally sells to a limited number of OEMs. The Company grants
credit to substantially all of these customers. No credit losses are expected by
management, and no provision for credit losses are reflected in the financial
statements.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market and consist primarily of new and used transmission parts. Reserves
consider deterioration, obsolescence and other factors in evaluating estimated
net realizable value.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements are stated at cost. Depreciation is
computed using accelerated and straight-line methods over the estimated useful
lives of the assets which range from five to twenty years.

CASH AND CASH EQUIVALENTS

Investments with maturities of less than 90 days when purchased are
considered the equivalent of cash. Cash and cash equivalents are principally
held by one financial institution.

INTANGIBLE ASSETS

Covenants not to compete are being amortized over five years and are
presented net of accumulated amortization of $576,566.

WARRANTY

The Company extends warranties upon installation ranging from one year or
12,000 miles to two years or 24,000 miles, whichever occurs first. The estimated
cost under existing warranties has been provided for in the financial
statements.

INCOME TAXES

As of June 1, 1994, the Company elected to be treated as an "S Corporation"
for Federal and State tax purposes under the provisions of the respective taxing
authorities.

The Company provides for state income taxes based on income reported for
financial reporting purposes.

F-24
<PAGE>
COMPONENT REMANUFACTURING SPECIALISTS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. INVENTORIES
Inventories consist of the following at March 31, 1995:

<TABLE>
<S> <C>
Raw material parts...................................................... $2,337,767
Work-in-process......................................................... 130,612
Finished goods.......................................................... 50,247
---------
$2,518,626
---------
---------
</TABLE>

3. BANK LINE OF CREDIT AND NOTES PAYABLE
The Company has a $1,200,000 line of credit which bears interest at the
prime rate (9%) plus .75% and is collateralized by all the tangible and
intangible property of the Company and is available through December 6, 1995. At
March 31, 1995, the Company did not have any outstanding borrowings under the
line of credit. The line of credit is subject to compliance provisions,
including working capital requirements, other borrowings, acquisitions,
redemption of Company stock and dividends. The agreement also provides covenants
as to ownership and management control (See Note 5).

Notes Payable of $151,667 bear interest at 10% and are payable in monthly
installments through December 1995 to the former majority shareholders of the
Company. Included in that amount is approximately $68,000 due to the president
of the Company who currently maintains a minority interest in the Company.

4. COMMITMENTS
In July 1994, the Company relocated its operations to a new manufacturing
facility. The facility is subleased under a five-year noncancelable lease
expiring July 12, 1999. There is an option to renew the lease for two additional
five year periods at an increased monthly rental. Rent expense for leased
facilities for the ten months ended March 31, 1995 was $251,110.

The facility lease also requires the Company to pay real estate taxes and
common area maintenance charges.

The following is a schedule of future minimum rental payments under
operating leases:

<TABLE>
<CAPTION>
YEAR ENDING MARCH 31 TOTAL
- ---------------------- ------------
<S> <C>
1996 $ 317,000
1997 301,000
1998 323,000
1999 330,000
2000 83,000
------------
$ 1,354,000
------------
------------
</TABLE>

5. SUBSEQUENT EVENTS
Effective April 1, 1995, the Company instituted a 401K plan covering
substantially all of its employees.

On May 10, 1995, the Company's shareholders signed a stock purchase
agreement to sell their common stock in the Company to Aftermarket Technology
Corp. The transaction is expected to close on or about June 1, 1995.

F-25
<PAGE>
[LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with the offering are as follows:

<TABLE>
<CAPTION>
EXPENSES AMOUNT
- ----------------------------------------------------------------------------------- ---------
<S> <C>
SEC Registration Fee............................................................... $ 29,742
NASD Fee........................................................................... 9,125
Nasdaq National Market Fee......................................................... *
Printing Expenses.................................................................. *
Legal Fees and Expenses............................................................ *
Transfer Agent and Registrar Fees.................................................. *
Accounting Fees and Expenses....................................................... *
Blue Sky Fees and Expenses......................................................... 20,000
Miscellaneous Expenses............................................................. *
---------
TOTAL.......................................................................... $ *
---------
---------
</TABLE>

- ---------
* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS.

Section 145 of the DGCL makes provision for the indemnification of officers
and directors in terms sufficiently broad to indemnify officers and directors of
the Company under certain circumstances from liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933.
The Company's Certificate of Incorporation and Bylaws provide, in effect, that,
to the fullest extent and under the circumstances permitted by Section 145 of
the DGCL, the Company will indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is a director or officer of the Company or is or was
serving at the request of the Company as a director or officer of another
corporation or enterprise. The Company may, in its discretion, similarly
indemnify its employees and agents. The Certificate of Incorporation relieves
its directors from monetary damages to the Company or its stockholders for
breach of such director's fiduciary duty as directors to the fullest extent
permitted by the DGCL. Under Section 102(b)(7) of the DGCL, a corporation may
relieve its directors from personal liability to such corporation or its
stockholders for monetary damages for any breach of their fiduciary duty as
directors except (i) for a breach of the duty of loyalty, (ii) for failure to
act in good faith, (iii) for intentional misconduct or knowing violation of law,
(iv) for willful or negligent violation of certain provisions in the DGCL
imposing certain requirements with respect to stock repurchases, redemption and
dividends, or (v) for any transactions from which the director derived an
improper personal benefit. Depending upon the character of the proceeding, under
Delaware law, the Company may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding if the person
indemnified acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interest of the Company, and, with respect to
any criminal action or proceeding, had no cause to believe his or her conduct
was unlawful. To the extent that a director or officer of the Company has been
successful in the defense of any action, suit or proceeding referred to above,
the Company will be obligated to indemnify him or her against expenses
(including attorneys' fees) actually and reasonably incurred in connection
therewith.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In July 1996, the Company issued 1,000 shares of Common Stock to Holdings in
consideration of $13.5 million in cash. The Company believes that this
transaction was exempt from registration under the Securities Act pursuant to
Section 4(2) thereof. Concurrent with the consummation of the Offering,

II-1
<PAGE>
Holdings will be merged into the Company, and each outstanding share of Holdings
Common Stock will be converted into shares of Common Stock of the Company. The
following is a description of the issuances of the unregistered securities of
Holdings.

Holdings sold all 2,000,000 currently outstanding shares of its Common Stock
in July 1994 at the time of the Initial Acquisitions at a price of $10.00 per
share to AEP, AOEP and certain other investors. There have been no subsequent
issuances of the Common Stock of Holdings since such time. The Company believes
that this transaction was exempt from registration pursuant to Section 4(2) of
the Act.

In August 1994, Holdings issued options to purchase an aggregate of 216,375
shares of its Common Stock to seven individuals, including Messrs. Smith, Wehr,
Hester, Kent and Bear. In September 1994, Holdings issued options to purchase an
aggregate of 11,696 shares to non-affiliates of the Company. In October 1994,
Holdings issued options to purchase 5,848 shares to a non-affiliate of the
Company. In connection with the acquisition of the outstanding capital stock of
CRS, Holdings in June 1995 issued options to purchase an aggregate of 6,848
shares of Common Stock to Mr. LePore and another former shareholder of CRS. Also
in June 1995, Holdings issued options to purchase 5,848 shares of Common Stock
to a non-affiliate. In August 1995 and November 1995, Holdings issued options to
purchase 1,000 shares to each of Mr. Prugh and a non-affiliate, respectively. In
December 1995, Holdings issued options to purchase 5,848 shares to Mr. LePore.

In August 1994, Holdings issued warrants to purchase an aggregate of 58,480
shares of its Common Stock to Mr. Myers and one other individual. In December
1994, Holdings issued warrants to purchase 11,696 shares of its Common Stock to
Dr. Hartnett.

The exercise price for each of the above options and warrants is $10.00, the
same price per share as paid by all purchasers of the Company's Common Stock at
the time of the Initial Acquisitions. The Company believes that the issuances of
these options and warrants were exempt from registration pursuant to Section
4(2) of the Securities Act.

On August 2, 1994, the Company completed the sale of $120 million of Series
A Notes to Chemical Securities Inc. and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchasers"). The Series A Notes were resold to
Qualified Institutional Buyers ("QIBs") and Accredited Institutional Investors
("AII"). The Initial Purchasers resold the Series A Notes to QIBs and AIIs. The
Company believes that the initial placement of the securities was exempt from
registration under Section 4(2) of the Act and the resale of the Notes by the
Initial Purchasers was exempt from Registration by virtue of Rule 144A under the
Act ("Rule 144A").

On June 1, 1995, the Company completed the sale of an aggregate $40 million
principal amount of Series C Notes to the Initial Purchasers. The Initial
Purchasers resold the Series C Notes to QIBs and AIIs. The Company believes that
the initial placement of the securities was exempt from registration under
Section 4(2) of the Act and the resale of the Notes by the Initial Purchasers
was exempt from Registration by virtue of Rule 144A.

ITEM 16. EXHIBITS.

(a) Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement
*3.1 Amended and Restated Certificate of Incorporation of Aftermarket Technology Corp.
3.2 Bylaws of Aftermarket Technology Corp. (previously filed as Exhibit 3.2 to the Company's
Registration Statement on Form S-4 filed on November 30, 1994, Commission File No. 33-86838 and
incorporated herein by this reference)
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------
<C> <S>
4.1 Indenture, dated August 2, 1994, among Aftermarket Technology Corp., the Guarantors named therein
and American Bank National Association, as Trustee for the Notes (previously filed as Exhibit 4.1
to the Company's Registration Statement on Form S-4 filed on November 30, 1994, Commission File
No. 33-86838 and incorporated herein by this reference)
4.2 Indenture, dated June 1, 1995, among Aftermarket Technology Corp., the Guarantors named therein and
American Bank National Association, as Trustee for the Notes (previously filed as Exhibit 4.1 to
the Company's Registration Statement on Form S-4 filed on June 21, 1995, Commission File No.
33-93776 and incorporated herein by this reference)
*4.3 First Supplemental Indenture, dated as of February 23, 1995, among Aftermarket Technology Corp.,
the Guarantors named therein and American Bank National Association, as Trustee for the Notes
*4.4 Second Supplemental Indenture, dated as of June 1, 1995, among Aftermarket Technology Corp., the
Guarantors named therein and American Bank National Association, as Trustee for the Notes
*5.1 Opinion and consent of Gibson, Dunn & Crutcher LLP.
10.1 Stockholders Agreement, dated as of August 2, 1994, among Holdings, and certain of its
stockholders, optionholders and warrant holders (previously filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-4 filed on November 30, 1994, Commission File No. 33-86838 and
incorporated herein by this reference)
10.2 Revolving Credit Agreement, dated as of July 19, 1994, among Aftermarket Technology Corp., the
Lenders from time to time parties thereto and Chemical Bank, as Agent (previously filed as Exhibit
10.5 to the Company's Registration Statement on Form S-4 filed on November 30, 1994, Commission
File No. 33-86838 and incorporated herein by this reference)
10.3 Tax Sharing Agreement, dated July 19, 1994, among Aftermarket Technology Holdings Corp. and
Aftermarket Technology Corp. (previously filed as Exhibit 10.18 to the Company's Registration
Statement on Form S-4 filed on November 30, 1994, Commission File No. 33-86838 and incorporated
herein by this reference)
10.4 Management Services Agreement, dated July 19, 1994, by and among Aftermarket Technology Corp., the
subsidiaries of Aftermarket Technology Corp., and Aurora Capital Partners L.P. (previously filed
as Exhibit 10.12 to the Company's Registration Statement on Form S-4 filed on November 30, 1994,
Commission File No. 33-86838 and incorporated herein by this reference)
*10.5 Aftermarket Technology Holdings Corp. Amended and Restated 1994 Stock Incentive Plan.
10.6 Employment Agreement, dated as of July 29, 1994, between Aftermarket Technology Corp. and William
A. Smith (previously filed as Exhibit 10.6 to the Company's Registration Statement on Form S-4
filed on November 30, 1994, Commission File No. 33-86838 and incorporated herein by this
reference)
10.7 Employment Agreement, dated as of July 29, 1994, between RPM Merit, Inc. and John C. Kent
(previously filed as Exhibit 10.7 to the Company's Registration Statement on Form S-4 filed on
November 30, 1994, Commission File No. 33-86838 and incorporated herein by this reference)
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.8 Employment Agreement, dated August 2, 1994, between Kenneth T. Hester and H.T.P., Inc. (previously
filed as Exhibit 10.8 to the Company's Registration Statement on Form S-4 filed on November 30,
1994, Commission File No. 33-86838 and incorporated herein by this reference)
10.9 Employment Agreement, dated August 2, 1994, between James R. Wehr and Aaron's Automotive Products,
Inc. (previously filed as Exhibit 10.9 to the Company's Registration Statement on Form S-4 filed
on November 30, 1994, Commission File No. 33-86838 and incorporated herein by this reference)
10.10 Employment Agreement, dated as of June 1, 1995, between Michael L. LePore and Component
Remanufacturing Specialists, Inc. (previously filed as Exhibit 10.11 to the Company's Registration
Statement on Form S-4 filed on June 21, 1995, Commission File No. 33-93776 and incorporated herein
by this reference)
10.11 Employment Agreement, dated as of June 9, 1995, between Barry E. Schwartz and Mascot Truck Parts
Inc. (previously filed as Exhibit 10.12 to the Company's Registration Statement on Form S-4 filed
on June 21, 1995, Commission File No. 33-93776 and incorporated herein by this reference)
10.12 Employment Agreement, dated September 12, 1995, between Gordon King and King-O-Matic Industries
Limited (previously filed as Exhibit 10.12 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated herein by this reference)
*10.13 Employment Agreement, dated as of April 2, 1996, between J. Peter Donoghue and Tranzparts, Inc.
10.14 Warrant Certificate, dated August 2, 1994, for 46,784 warrants issued to William E. Myers, Jr.
(previously filed as Exhibit 10.10 to the Company's Registration Statement on Form S-4 filed on
November 30, 1994, Commission File No. 33-86838 and incorporated herein by this reference)
10.15 Warrant Certificate, dated August 2, 1994, for 11,696 warrants issued to Brian E. Sanderson
(previously filed as Exhibit 10.11 to the Company's Registration Statement on Form S-4 filed on
November 30, 1994, Commission File No. 33-86838 and incorporated herein by this reference)
10.16 Stock Purchase Agreement, dated May 16, 1994, by and among C.R. Wehr, Jr., Rev. Liv. Trust, James
R. Wehr, Aaron's Automotive Products, Inc. and AAP Acquisition Corp. (previously filed as Exhibit
10.14 to the Company's Registration Statement on Form S-4 filed on November 30, 1994, Commission
File No. 33-86838 and incorporated herein by this reference)
10.17 Stock Purchase Agreement, dated July 21, 1994, by and among John B. Maynard, Kenneth T. Hester,
H.T.P., Inc. and HTP Acquisition Corp. (previously filed as Exhibit 10.15 to the Company's
Registration Statement on Form S-4 filed on November 30, 1994, Commission File No. 33-86838 and
incorporated herein by this reference)
10.18 Stock Purchase Agreement, dated July 21, 1994, by and among John B. Maynard, Mamco Converters, Inc.
and Mamco Acquisition Corp. (previously filed as Exhibit 10.16 to the Company's Registration
Statement on Form S-4 filed on November 30, 1994, Commission File No. 33-86838 and incorporated
herein by this reference)
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.19 Asset Purchase Agreement, dated June 24, 1994, by and among RPM Merit, Donald W. White, John A.
White, The White Family Trust and RPM Acquisition Corp. (previously filed as Exhibit 10.17 to the
Company's Registration Statement on Form S-4 filed on November 30, 1994, Commission File No.
33-86838 and incorporated herein by this reference)
10.20 Agreement and Plan of Merger and Reorganization, dated May 10, 1995, by and among Component
Remanufacturing Specialists, Inc., James R. Crane, Michael L. LePore, Aftermarket Technology
Corp., CRS Holdings Corp. and CRS Acquisition Corp. (previously filed as Exhibit 2 to the
Company's Current Report on Form 8-K filed on June 15, 1995, Commission File No. 33-80838-01 and
incorporated herein by this reference)
10.21 Stock Purchase Agreement, dated June 9, 1995, by and among Dianne Hanthorn, Jobian Limited, Randall
Robinson, Barry E. Schwartz, Bradley Schwartz, Angela White, John White, Incorporated Investments
Limited, Glenn M. Hanthorn, Guido Sala and Tony Macharacek, Mascot Truck Parts Inc. and Mascot
Acquisition Corp. (previously filed as Exhibit 10.22 to the Company's Registration Statement on
Form S-4 filed on June 21, 1995, Commission File No. 33-93776 and incorporated herein by this
reference)
10.22 Stock Purchase Agreement, dated September 12, 1995, by and among Gordon King, 433644 Ontario
Limited, 3179338 Canada Inc., King-O-Matic Industries Limited, KOM Acquisition Corp. and
Aftermarket Technology Corp. (previously filed as Exhibit 10.23 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 and incorporated herein by this reference)
*10.23 Stock Purchase Agreement, dated as of April 2, 1996, by and among the Charles T. and Jean F. Gorham
Charitable Remainder Trust dated March 27, 1996, Charles T. Gorham, J. Peter Donoghue, Tranzparts,
Inc. and Tranzparts Acquisition Corp.
10.24 Lease, dated as of October 1, 1993, between The Estate of Murray Schwartz, Barry Schwartz, Bernard
Schwartz and Bertha Schwartz and Mascot Truck Parts Inc. with respect to property located at 1415
Shawson Drive, Mississauga, Ontario (previously filed as Exhibit 10.5 to the Company's
Registration Statement on Form S-4 filed on June 21, 1995, Commission File No. 33-93776 and
incorporated herein by this reference)
10.25 Lease, dated January 1, 1994, between CRW, Incorporated and Aaron's Automotive Products, Inc. with
respect to property located at 2600 North Westgate, Springfield, Missouri (previously filed as
Exhibit 10.4 to the Company's Registration Statement on Form S-4 filed on November 30, 1994,
Commission File No. 33-86838 and incorporated herein by this reference)
*10.26 Lease, dated May 31, 1996, between Patricia L. Bridgeforth and Aaron's Automotive Products, Inc.
with respect to property located at 2720 N. Airport Commerce Avenue, Springfield, Missouri
10.27 Exchange and Registration Rights Agreement, dated August 2, 1994, by and among Aftermarket
Technology Corp., the subsidiaries of Aftermarket Technology Corp., Chemical Securities Inc., and
Donaldson, Lufkin & Jenrette Securities Corporation (previously filed as Exhibit 10.13 to the
Company's Registration Statement on Form S-4 filed on November 30, 1994, Commission File No.
33-83868 and incorporated herein by this reference)
</TABLE>

II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------
<C> <S>
10.28 Exchange and Registration Rights Agreement, dated June 1, 1995, by and among Aftermarket Technology
Corp., the subsidiaries of Aftermarket Technology Corp., Chemical Securities Inc., and Donaldson,
Lufkin & Jenrette Securities Corporation (previously filed as Exhibit 10.16 to the Company's
Registration Statement on Form S-4 filed on June 21, 1995, Commission File No. 33-93776 and
incorporated herein by this reference)
*10.29 Form of Merger Agreement between Aftermarket Technology Holdings Corp. and Aftermarket Technology
Corp.
*11.1 Computation of Pro Forma Net Income Per Share
*21.1 List of Subsidiaries
23.1 Consent of Ernst & Young LLP, independent auditors (included on page II-8)
*23.2 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on page II-7)
27.1 Financial Data Schedule
</TABLE>

- ---------
* To be filed by amendment.

(b) Financial Statement Schedules. The following financial statement
schedule is filed with Part II of this Registration Statement:

II Valuation and Qualifying Accounts

All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
applicable instructions or are inapplicable and therefore have been omitted.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising out of the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense in any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial BONA FIDE offering thereof.

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

II-6
<PAGE>
SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Federal Way, State of
Washington, on June 24, 1996.

AFTERMARKET TECHNOLOGY CORP.

By: /s/ WILLIAM A. SMITH

-----------------------------------
William A. Smith
CHIEF EXECUTIVE OFFICER

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints William A. Smith, John C. Kent and Richard
K. Roeder his true and lawful attorneys-in-fact and agents, each with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the dates indicated.

<TABLE>
<C> <S> <C>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------
Chairman of the Board of
/s/ WILLIAM A. SMITH Directors and Chief Executive
------------------------------------------- Officer (Principal Executive June 24, 1996
William A. Smith Officer)

/s/ JOHN C. KENT
------------------------------------------- Chief Financial Officer June 24, 1996
John C. Kent (Principal Financial Officer)

/s/ DANIEL C. BUIE
------------------------------------------- Corporate Controller (Principal June 24, 1996
Daniel C. Buie Accounting Officer)

/s/ RICHARD R. CROWELL
------------------------------------------- Director June 24, 1996
Richard R. Crowell

/s/ MARK C. HARDY
------------------------------------------- Director June 24, 1996
Mark C. Hardy

/s/ MICHAEL J. HARTNETT
------------------------------------------- Director June 24, 1996
Michael J. Hartnett

/s/ KURT B. LARSEN
------------------------------------------- Director June 24, 1996
Kurt B. Larsen

/s/ WILLIAM E. MYERS, JR.
------------------------------------------- Director June 24, 1996
William E. Myers, Jr.

/s/ RICHARD K. ROEDER
------------------------------------------- Director June 24, 1996
Richard K. Roeder
</TABLE>

II-7
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the use of our reports dated June 21, 1996 with
respect to Aftermarket Technology Corp. and May 3, 1995, except for Note 5 as to
which the date is May 10, 1995 with respect to Component Remanufacturing
Specialists, Inc., in the Registration Statement on Form S-1 and related
Prospectus of Aftermarket Technology Corp. for the registration of its common
stock.

/s/ ERNST & YOUNG LLP

Seattle, Washington
June 21, 1996

II-8
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
ON FINANCIAL STATEMENTS SCHEDULE

Stockholders and Board of Directors
Aftermarket Technology Corp.

We have audited the accompanying consolidated balance sheets of Aftermarket
Technology Corp. (the Company) as of December 31, 1994 and 1995 and the related
consolidated statements of income, stockholders' equity, and cash flows for the
five months ended December 31, 1994 and for the year ended December 31, 1995
(included elsewhere in this Registration Statement). We have also audited the
related combined statements of income, stockholders' equity and cash flows of
the Predecessor Companies to Aftermarket Technology Corp. (the Predecessor
Companies) for the year ended December 31, 1993 and for the seven months ended
July 31, 1994 (included elsewhere in this Registration Statement). Our audit
also included the financial statement schedule as of and for each of the three
years in the period ended December 31, 1995 listed in Item 16(b) of this
Registration Statement. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

/s/ ERNST & YOUNG LLP

Seattle, Washington
June 21, 1996

S-1
<PAGE>
AFTERMARKET TECHNOLOGY CORP.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
ADDITIONS
----------------------
BALANCE AT CHARGED TO CHARGE TO
BEGINNING COSTS AND OTHER BALANCE AT
OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
----------- ----------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Combined:
Year ended December 31, 1993:
Reserve and allowances deducted from
asset accounts:
Allowance for uncollectible
accounts............................. $ 421,640 $ 459,753 $ -- $ 556,643(1) $ 324,750
Seven months ended July 31, 1994:
Reserve and allowances deducted from
asset accounts:
Allowance for uncollectible
accounts............................. 324,750 308,550 -- 32,588(1) 600,712

Consolidated:
Five months ended December 31, 1994:
Reserve and allowances deducted from
asset accounts:
Allowance for uncollectible
accounts............................. 600,712 190,044 -- 24,756(1) 766,000
Reserve for inventory obsolescence.... -- 785,603 -- -- 785,605
Year ended December 31, 1995:
Reserve and allowances deducted from
asset accounts:
Allowance for uncollectible
accounts............................. 766,000 1,239,138 1,216,529(2) 752,667(1) 2,469,000
Reserve for inventory obsolescence.... 785,603 1,034,259 294,442(2) -- 2,114,304
</TABLE>

- ------------

(1) Uncollectible accounts written off, net of recoveries.

(2) Balances added through new acquisitions.

S-2

<PAGE>
<ARTICLE> 5

<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 DEC-31-1995
<CASH> 7,847,594 8,755,691
<SECURITIES> 0 0
<RECEIVABLES> 37,889,634 35,434,874
<ALLOWANCES> 2,614,580 2,469,000
<INVENTORY> 48,247,273 43,064,712
<CURRENT-ASSETS> 95,833,661 89,085,948
<PP&E> 13,487,186 12,410,381
<DEPRECIATION> 1,981,421 1,625,917
<TOTAL-ASSETS> 254,327,132 247,931,619
<CURRENT-LIABILITIES> 34,631,315 32,019,838
<BONDS> 162,179,661 162,245,762
0 0
20,000,000 20,000,000
<COMMON> 20,000,000 20,000,000
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 254,327,132 247,931,619
<SALES> 64,146,518 190,659,143
<TOTAL-REVENUES> 64,146,518 190,659,143
<CGS> 38,359,022 115,499,023
<TOTAL-COSTS> 13,378,222 42,278,793
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 5,064,175 18,015,346
<INCOME-PRETAX> 7,367,217 15,965,569
<INCOME-TAX> 3,168,416 6,467,000
<INCOME-CONTINUING> 4,398,801 9,498,569
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,398,801 9,498,569
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

</TABLE>