<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------
                                    FORM 10-K

(Mark One)
  /X/        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

                                       OR

  / /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                         COMMISSION FILE NUMBER 0-21803

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

                          AFTERMARKET TECHNOLOGY CORP.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

               DELAWARE                                       95-4486486
      (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                        Identification No.)

         ONE OAK HILL CENTER, SUITE 400
               WESTMONT, IL                                      60559
    (Address of Principal Executive Offices)                   (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (630) 455-6000
        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                          COMMON STOCK, $.01 PAR VALUE

          Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

          Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /

          The aggregate market value of the voting stock held by non-affiliates
of the Registrant (based on the closing price of such stock, as reported by The
Nasdaq National Market, on February 28, 2001) was $33.2 million.

          The number of shares outstanding of the Registrant's Common Stock, as
of February 28, 2001, was 20,559,371 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE
          None.

<PAGE>

                          AFTERMARKET TECHNOLOGY CORP.

                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

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<S>                                                                                                              <C>
ITEM 1.        BUSINESS............................................................................................ 1

ITEM 2.        PROPERTIES..........................................................................................11

ITEM 3.        LEGAL PROCEEDINGS...................................................................................11

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................11

ITEM 5.        MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS.................................................................................12

ITEM 6.        SELECTED FINANCIAL DATA.............................................................................13

ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS.................................................................15

ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..........................................25

ITEM 8.        CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................................26

ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
               ON ACCOUNTING AND FINANCIAL DISCLOSURE..............................................................50

ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..................................................50

ITEM 11.       EXECUTIVE COMPENSATION..............................................................................53

ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
               AND MANAGEMENT......................................................................................57

ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................................59

ITEM 14.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.....................................61
</TABLE>


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                        FORWARD-LOOKING STATEMENT NOTICE

          Certain statements contained in this Annual Report 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 Item 1. "Business--Certain Factors
Affecting the Company" and Item 7. "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Further, certain forward-looking
statements are based upon assumptions as to future events that may not prove to
be accurate.

                                     PART I

ITEM 1.   BUSINESS

BACKGROUND

          Aftermarket Technology Corp. ("ATC") was incorporated under the laws
of Delaware in July 1994 at the direction of Aurora Capital Group to acquire
Aaron's Automotive Products, Inc. ("Aaron's"), H.T.P., Inc. ("HTP"), Mamco
Converters, Inc. ("Mamco") and RPM Merit, Inc. ("RPM"). Aaron's, HTP, Mamco and
RPM as they existed prior to their acquisition by ATC are hereinafter
collectively referred to as the "Predecessor Companies." Subsequent to these
initial acquisitions, the Company acquired Component Remanufacturing
Specialists, Inc. ("CRS"), Mascot Truck Parts Inc. ("Mascot") and King-O-Matic
Industries Limited ("King-O-Matic") in 1995, Tranzparts, Inc. ("Tranzparts") and
Diverco, Inc. ("Diverco") in 1996, Replacement and Exchange Parts Co., Inc.
("REPCO"), ATS Remanufacturing ("ATS"), Trans Mart, Inc. ("Trans Mart") and the
Metran companies (Metran Automatic Transmission Parts Corp., Metran Boston, Inc.
and Metran Parts of Pennsylvania, Inc.) ("Metran") in 1997, and the OEM Division
("Autocraft") of The Fred Jones Companies, Inc. (formerly known as Autocraft
Industries, Inc.) in March 1998. At the end of 1997, Diverco, HTP, Mamco,
Metran, REPCO, Trans Mart and Tranzparts were merged together to form ATC
Distribution Group, Inc. ("ATCDG") and King-O-Matic and RPM became wholly owned
subsidiaries of ATCDG (ATCDG, King-O-Matic and RPM are collectively referred to
as the "Distribution Group"). RPM was merged into ATCDG at the end of 1998. In
February 1999, ATC sold Mascot. During the fourth quarter of 1999, the
Distribution Group acquired substantially all the assets of All Transmission
Parts, Inc. and its affiliate, All Automatic Transmission Parts, Inc.
(collectively "All Trans"). In October 2000, ATC sold the Distribution Group.
ATC conducts all of its operations through its wholly-owned subsidiaries and
each of their respective subsidiaries. Throughout this Annual Report, except
where the context otherwise requires, the "Company" refers collectively to ATC
and its subsidiaries and the predecessors to such subsidiaries.

          On December 20, 1996, ATC consummated an initial public offering of
its Common Stock (the "IPO"). Simultaneous with the consummation of the IPO,
Aftermarket Technology Holdings Corp. ("Holdings"), the sole stockholder of ATC
prior to the IPO, was merged into ATC (the "Reorganization"). Upon the
effectiveness of the Reorganization, each outstanding share of Holdings Common
Stock was converted into one share of ATC Common Stock, and each outstanding
share of Holdings Redeemable Exchangeable Cumulative Preferred Stock was
converted into one share of ATC Redeemable Exchangeable Cumulative Preferred
Stock, which was immediately thereafter redeemed for an amount in cash equal to
$100.00 plus an amount in cash equal to accrued and unpaid dividends on the
Holdings Preferred Stock to the date of the Reorganization.

          In August 2000, the Company adopted a plan to discontinue a segment of
its business, known as the Independent Aftermarket, which consisted of the
Distribution Group and the U.S business that remanufactures domestic and foreign
engines primarily for sale through a branch distribution network into the
automotive aftermarket. As a result of this decision, the Independent
Aftermarket segment of its business has been reflected in the accompanying
consolidated financial statements and discussion and analysis as discontinued
operations. See "Discontinued Operations."


                                       1
<PAGE>

GENERAL

          The Company is a leading remanufacturer and distributor of drivetrain
and electronic products used in the repair of vehicles in the automotive
aftermarket and a world-class provider of value added warehouse and distribution
services, returned material reclamation and disposition services. The Company's
principal products include remanufactured transmissions, torque converters,
engines, electronic control modules, instrument and display clusters and radios.
The Company also provides value added warehouse and distribution services,
turnkey order fulfillment and information services and returned material
reclamation and disposition services. The Company has two reportable segments:
the Drivetrain Remanufacturing ("Drivetrain") segment and the Logistics segment.

          The Drivetrain segment consists of five operating units (Aaron's,
Autocraft Industries, Autocraft UK, CRS and ATS) that principally sell
factory-approved remanufactured transmissions directly to original equipment
manufacturers ("OEMs") primarily for use as replacement parts by their domestic
dealers during the warranty and post-warranty periods following the sale of a
vehicle. The principal customers for these transmissions are DaimlerChrysler
Corporation, Ford Motor Company, General Motors Corporation and certain foreign
OEMs. In addition, the Drivetrain segment sells select remanufactured engines to
certain European OEMs (including Ford's and GM's European operations and
Jaguar).

          The Logistics segment consists of three operating units acquired in
the Autocraft acquisition: Logistics Services, a provider of value added
warehouse and distribution services, turnkey order fulfillment and information
services for AT&T Wireless Services; Autocraft Material Recovery, a provider of
returned material reclamation and disposition services (known as reverse
logistics), primarily for Ford and, to a lesser extent, General Motors; and
Autocraft Electronics, an automotive electronic components remanufacturing and
distribution business.

          Since its formation, the continuing operations of the Company have
grown, both internally and through acquisitions at a compound annual revenue
growth rate of approximately 24%. The Company believes its core competencies and
the foundation of its success include (i) its remanufacturing technology, (ii)
world class fulfillment and customer service capabilities, (iii) excellent
information technology management and response skills, (iv) high quality
products with a sound ISO quality foundation and (v) excellent customer
relationships. In addition, the Company has benefited from industry trends
towards (i) the increasing use of remanufactured products 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 and (ii) the rapidly increasing use of third party
logistics providers as a cost effective logistics solution.

          The Company's strategy is to continue growth both organically and
through strategic acquisitions. The Company intends to expand its business by:
(i) increased penetration of its existing customer base; (ii) the capture of new
Drivetrain and Logistics customers; and (iii) the introduction of new products
and services to both existing and new customers. The Company plans to supplement
these growth strategies with strategic and other opportunistic acquisitions in
the future.

          See "Certain Factors Affecting the Company."

REMANUFACTURING

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

          When an 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 it into its component pieces, replace worn or broken parts with
remanufactured or new components, and reinstall the assembly in the vehicle
("rebuild"); (ii) replace the assembly with an assembly from a remanufacturer
such as the Company; or (iii) in rare instances, replace the assembly with a new
assembly manufactured by the OEM.


                                       2
<PAGE>

          In its remanufacturing operations, the Company obtains used
transmissions, hard parts, engines and related components, commonly known as
"cores," which are sorted by vehicle 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 and the
components that can be incorporated into the remanufactured product are cleaned,
refurbished and tested. All components determined not reusable or repairable are
replaced by other remanufactured or new components. 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. After testing, completed products are generally packaged for
immediate delivery.

          The cores used in the Company's remanufacturing process for sale to
its OEM customers are provided primarily by the OEMs. In the case of OEMs other
than DaimlerChrysler, the dealers return cores to the OEM, which then ships them
to the Company. Chrysler cores are sent to the Company through its central core
return center. See "Drivetrain Customers."

          There are three primary benefits of using remanufactured components
rather than rebuilt or new components in repair of vehicles:

     -    First, costs to the OEM associated with remanufactured assemblies
          generally are 50% less than new or dealer-rebuilt assemblies due to
          the remanufacturer's use of high volume manufacturing techniques and
          salvage methods that enable the remanufacturer to refurbish and reuse
          a high percentage of original components.

     -    Second, remanufactured assemblies are generally of consistent high
          quality due to the precision manufacturing techniques, technical
          upgrades and rigorous inspection and testing procedures employed in
          remanufacturing. The quality of a rebuilt assembly is heavily
          dependent on the skill level of the particular mechanic. 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 are leading to what management believes is a trend
          toward the use of remanufactured assemblies for aftermarket repairs.
          For warranty repairs, consistent quality is important to the OEM
          providing the applicable warranty, because once installed, the
          remanufactured product is usually covered by the OEM's warranty for
          the balance of the original warranty period.

     -    Third, replacement of a component with a remanufactured component
          generally takes considerably less time than the time needed to rebuild
          the component, thereby significantly reducing the time the vehicle is
          at the dealer or repair shop and allows the dealer and repair shops to
          increase their volume of business.

          The Company believes that because of this combination of high quality,
low cost and efficiency, the use of remanufactured assemblies for repairs is
growing compared to the use of new or rebuilt assemblies.

DRIVETRAIN REMANUFACTURING SEGMENT

          The Company's Drivetrain segment consists of five operating units that
primarily remanufacture and sell transmissions directly to automobile
manufacturers. In addition, the Drivetrain segment sells select remanufactured
engines to certain European OEMs, including Ford's and General Motor's European
operations and Jaguar.

          REMANUFACTURED TRANSMISSIONS

          The Company remanufactures factory-approved transmissions for warranty
and post-warranty replacement of transmissions for DaimlerChrysler, Ford,
General Motors and several foreign OEMs, including Hyundai, Mitsubishi, Isuzu,
Subaru and Kia, primarily 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.


                                       3
<PAGE>

          REMANUFACTURED ENGINES

          The Company operates a facility in England that remanufactures
factory-approved engines for several European OEMs, including Jaguar and the
European divisions of Ford and General Motors. These engines are used for
warranty and post-warranty replacement. The facility in England also does
assembly and modification of new production engines for certain of its OEM
customers.

          DRIVETRAIN CUSTOMERS

          The Company's largest Drivetrain segment customers are DaimlerChrysler
and Ford, to whom the Company primarily supplies remanufactured transmissions
for use in Chrysler and Ford automobiles and light trucks. Additionally, the
Company provides remanufactured components to several other OEMs including
transmissions to General Motors, Mitsubishi, Kia, Hyundai and Isuzu and engines
to Jaguar, Land Rover, Aston Martin and the European divisions of Ford and
General Motors. Products are generally sold to each OEM pursuant to supply
arrangements for individual transmission or engine models, which supply
arrangements typically may be terminated by the OEM at any time.

          Drivetrain segment sales accounted for 74.1%, 82.0% and 85.2% of the
Company's 2000, 1999 and 1998 revenues, respectively. Sales to DaimlerChrysler
accounted for 31.5%, 34.4% and 32.1% of the Company's revenues in 2000, 1999 and
1998, respectively, and sales to Ford accounted for 32.6%, 33.0% and 30.5% of
the Company's revenues in 2000, 1999 and 1998, respectively.

          Historically, the Company has developed and maintained strong
relationships at many levels in both the corporate and factory organizations of
the Chrysler division of DaimlerChrysler. In recognition of the Company's
consistently high level of service and product quality throughout its
relationship with DaimlerChrysler, in each of the eight years prior to and
including 2000, the Company has received the highest award bestowed by Chrysler
to its suppliers for which the Company was eligible. The Company is one of a
select group of Chrysler's suppliers to receive such awards for the eight-year
period. Additionally, over the past two years, the Company has strengthened its
relationships with many of its other Drivetrain customers, as evidenced by the
award of new business with Ford, Jaguar, Isuzu and General Motors. The Company
has also recently received an award from Ford for "Dedication to Customer
Satisfaction" for its role in a production rework program.

          All of the Company's facilities that remanufacture transmissions have
QS-9000 certification, a complete quality management system developed for
DaimlerChrysler, Ford, General Motors and truck manufacturers who subscribe to
the ISO 9002 quality standards. The system is designed to help suppliers, such
as the Company, develop a quality system that emphasizes defect prevention and
continuous improvement in manufacturing processes. Certain of the facilities
have also received Ford's Q1 quality certification.

          DaimlerChrysler began implementing remanufacturing programs for its
Chrysler transmission models in 1986 and selected the Company as its sole
supplier of remanufactured transmissions in 1989. DaimlerChrysler has advised
the Company that, by implementing a remanufacturing program for Chrysler
vehicles, DaimlerChrysler has realized substantial warranty cost savings,
standardized the quality of its dealers' aftermarket repairs and reduced its own
inventory of replacement parts. Currently, the Company provides all
remanufactured front-wheel-drive transmissions purchased by DaimlerChrysler for
use in Chrysler vehicles. In late 1998, the Company commenced production of
remanufactured Chrysler rear-wheel-drive transmissions. The Company presently
does not provide remanufactured transmissions or other components to
DaimlerChrysler's Mercedes Benz division.

          The Company began remanufacturing transmissions for Ford in 1989 and
for General Motors in 1985. The Company believes that it provides approximately
85% of the remanufactured transmissions purchased by Ford and approximately 30%
of the remanufactured transmissions purchased by General Motors.

LOGISTICS SEGMENT

          The Company's Logistics segment is comprised of a warehouse,
distribution and turnkey order fulfillment and information services business, an
automotive electronic parts remanufacturing and distribution business and a
material


                                       4
<PAGE>

recovery parts processing and Internet-based auction business, all of which were
acquired as part of the Autocraft acquisition.

          LOGISTICS SERVICES

          The logistics services operating unit provides value added warehouse
and distribution services, turnkey order fulfillment and information services
for AT&T Wireless Services ("ATTWS"). As part of its product offering, the
Company provides bulk and direct fulfillment of cellular telephones and
accessories to ATTWS subscribers and partners and point-of-sale and other
marketing materials to ATTWS partners. The Company also provides accessory
packaging services, inventory tracking and management and processes all
warranty-service exchanges.

          AUTOMOTIVE ELECTRONIC COMPONENTS

          The automotive electronic components operating unit remanufactures
automotive electronic control modules (which manage various engine functions)
primarily for Delphi, remanufactures and distributes radios and instrument and
display clusters for General Motors, Delphi and Ford, and remanufactures and
distributes cellular telephones and other cellular products (E.G., navigation
systems) for Ford, General Motors, Audi, Jaguar and Volkswagen.

          MATERIAL RECOVERY

          As part of its relationship with Ford, the Company also provides
returned material reclamation and disposition services to assist Ford with the
management of its dealer parts inventory. Under this program, Ford dealers send
their excess parts inventory to the Company. The parts are then sorted and
disposed of in one of three ways: useful parts that are needed by other dealers
are redistributed; useful parts that are not needed by other dealers are sold to
remanufacturers, wholesale distributors and other third parties through an
innovative on-line Internet auction process; and useless parts are scrapped and
recycled. As a result of the introduction of the materials recovery program, the
number of parts that are sent to landfills has been significantly reduced to
less than 2%. The Company has recently expanded the scope of this business by
providing similar services, currently on a more limited scale, to General
Motors.

BUSINESS STRATEGY

          The Company's strategy is to position itself as a world-class provider
of logistics and remanufacturing products and services. The Company expects to
achieve growth both organically and through strategic and opportunistic
acquisitions. The strategy for organic growth includes: (i) increasing
penetration of its current customer base; (ii) introducing new products and
services to both existing and new customers; and (iii) gaining new customers.

          INCREASING SALES TO EXISTING CUSTOMERS

          DRIVETRAIN CUSTOMERS. The Company intends to increase its business
with its existing Drivetrain customers by working with OEMs to increase dealer
utilization of remanufactured transmissions in both the warranty and
post-warranty periods. The Company is working in tandem with OEMs to highlight
to dealers the quality and cost advantages of using remanufactured assemblies
versus rebuilding. The Company is also working with OEMs to reduce the lag time
prior to the introduction of a remanufacturing program for new transmission
models and model years. In addition, the post-warranty repair market, which the
Company believes is significantly larger than the OEM dealer warranty repair
market, presents a growth opportunity. Currently, the vast majority of
post-warranty repairs are performed by aftermarket repair specialists rather
than by OEM dealers. Given the relatively low cost and high 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 high 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. The
Company has introduced a number of new transmission models and related
drivetrain products in the last several years for its OEM customers.

          LOGISTICS CUSTOMERS. The Company intends to increase penetration of
its existing Logistics customer base, broadening its offering of products and
services by focusing on its core competencies and how it can add value in
satisfaction of the customer's needs. Examples of this include the Company being
awarded by ATTWS, during 2000,


                                       5
<PAGE>

programs covering the packaging and distribution of cellular telephone
accessories and the distribution of point-of-sale and other marketing materials.

          INTRODUCING NEW PRODUCTS

          DRIVETRAIN SEGMENT. The Company believes that OEMs recognize that the
use of remanufactured assemblies provide a high quality, lower cost alternative
to rebuilding damaged assemblies or replacing them with new assemblies. For this
reason, the Company believes that OEMs are interested in working with large,
high quality remanufacturers to reduce the OEMs' warranty costs and increase
their parts sales into the post-warranty aftermarket. The Company continues to
work with its OEM customers to identify additional remanufactured products and
services where the Company can provide value to the OEM. In this way, the
Company believes that it will be able to leverage its customer relationships and
remanufacturing competency. In 2000, the Company was selected by Ford to supply
remanufactured transmissions for use in Ford's new Focus, which is a global
platform, and to supply a new line of Motorcraft-branded remanufactured
transmissions.

          LOGISTICS SEGMENT. The Company also intends to leverage its core
competencies in logistics and electronics remanufacturing by working with its
existing and new customers to identify products and services where the Company
can add value in satisfaction of the customers' needs. Examples of this strategy
include the Company being awarded a small but strategic contract by a new
customer for vehicle disassembly and salvage and the awarding by General Motors
of a pilot for a national material recovery program.

          ESTABLISHING NEW CUSTOMER RELATIONSHIPS

          DRIVETRAIN CUSTOMERS. The Company believes that opportunities for
growth exist with several foreign OEMs regarding their United States-based
remanufacturing programs. The Company believes that this represents an
opportunity for growth and is currently working to develop programs with certain
of these OEMs.

          LOGISTICS CUSTOMERS. The Company believes that its logistics services
business should be attractive to new customers who recognize that outsourcing
this function will enable them to both focus on their core competencies and have
an efficient product distribution system. The Company also believes that the
ability to sell product via Internet auctions, cost savings and environmental
benefits provided by its material recovery business, will be attractive to other
OEMs.

          The foregoing discussion of the Company's business strategy contains
forward-looking statements. See "Forward-Looking Statement Notice."

DISCONTINUED OPERATIONS

          In August 2000, the Company adopted a plan to discontinue a segment of
its business, known as the Independent Aftermarket, which contained the
Distribution Group (a distributor of remanufactured transmissions and related
drivetrain components to independent aftermarket customers) and the U.S.
business that remanufactures domestic and foreign engines primarily for sale
through a branch distribution network into the automotive aftermarket (as
distinguished from the Drivetrain segment business that remanufactures engines
in England for OEMs). As a result of this decision, the Independent Aftermarket
segment of its business has been reflected in the accompanying consolidated
financial statements and discussion and analysis as discontinued operations.

          In October 2000, the Company completed the sale of the Distribution
Group to ATCDG Acquisition Corp., Inc. ("Buyer"), an indirect wholly owned
subsidiary of Aceomatic-Recon Holdings Corporation, which is an affiliate of The
Riverside Company, for $60.1 million in cash, Series B Preferred Stock of Buyer
valued by the Company at $1.9 million (stated value of $8.7 million net of a
valuation allowance of $6.8 million) and an 18% senior subordinated promissory
note of Buyer in a principal amount of $10.1 million and a discounted value of
$8.4 million, which note is due in October 2005.


                                       6
<PAGE>

COMPETITION

          In its Drivetrain segment, the Company primarily competes in the
market for remanufactured transmissions sold to the automotive aftermarket
directly through the OEM dealer networks. This market, narrowly defined, is one
in which the majority of industry supply comes from a limited number of
participants. Competition is based primarily on product quality, service,
delivery, technical support and price and tends to be split along customer
lines. The Company believes that it has established excellent relationships with
its customers and believes 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.

          In its Logistics segment, the Company primarily competes in a
fragmented, high growth market as a niche participant offering a specialized
value-added service requiring severe service level requirements. Based on its
world-class performance levels, the Company believes it is well positioned to
compete in this rapid growth market. Some of the Company's competitors in this
segment are larger and have greater financial and other resources than the
Company.

EMPLOYEES

          As of December 31, 2000, the Company had approximately 3,500 full-time
employees. The Company believes its employee and labor relations are good. The
Company has never experienced any work stoppage and none of its employees are
members of any labor union.

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 and impose liability for
the costs of cleaning up, and certain damages resulting from, past spills,
disposals or other releases of hazardous substances.

          In connection with the acquisition of certain subsidiaries, some of
which have been subsequently divested, 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 facilities have had or may have had
releases of hazardous materials that may require remediation and also may be
subject to potential liabilities for contamination from off-site disposal of
substances or wastes. These assessments also found that certain reporting and
other regulatory requirements, including certain waste management procedures,
were not or may not have been satisfied. Although there can be no assurance, the
Company believes that, based in part on the investigations conducted, in part on
certain remediation completed prior to or since the acquisitions, and in part on
the indemnification provisions of the agreements entered into in connection with
the Company's acquisitions, the Company will not incur any material liabilities
relating to these matters.

          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 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 Federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA" or "Superfund")
provides for cleanup of sites from which there has been a release or threatened
release of hazardous substances, and authorizes recovery of related response
costs and certain other damages from potentially responsible parties ("PRPs").
PRPs are broadly defined under CERCLA, and generally include present owners and
operators of a site and certain past owners and operators. As a general rule,
courts have interpreted CERCLA to impose strict, joint and several liability
upon all persons liable for cleanup costs. As a practical matter, however, at
sites where there are multiple PRPs, the costs of cleanup typically are
allocated among the PRPs according to a volumetric or other standard. The EPA
has preliminarily estimated that it will cost approximately $47.0 million to
construct and approximately $4.0 million per year for an indefinite period to
operate an interim remedial groundwater pumping and treatment system for the
part of the Superfund site within which RPM's


                                       7
<PAGE>

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 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. Although there can be no
assurance, the Company believes that it will not incur any material liability as
a result of these environmental conditions.

          In connection with the October 2000 sale of the Distribution Group,
the Company has agreed to indemnify the buyer against (i) environmental
liability at former Distribution Group facilities that had been closed prior to
the Distribution Group sale, including the former manufacturing facility in
Azusa, California mentioned above and the former manufacturing facilities in
Mexicali, Mexico and Dayton, Ohio (ii) any other environmental liability of the
Distribution Group relating to periods prior to the Distribution Group sale, in
most cases subject to a $750,000 deductible and a $12.0 million cap.

CERTAIN FACTORS AFFECTING THE COMPANY

          Set forth below are certain factors that may affect the Company's
business:

          DEPENDENCE ON SIGNIFICANT CUSTOMERS

          In 2000, the Company had three customers that individually accounted
for more than 10% of revenues. Ford accounted for approximately 32.6%, 33.0% and
30.5% of the Company's net sales for 2000, 1999 and 1998, respectively.
DaimlerChrysler accounted for 31.5%, 34.4% and 32.1% of net sales in 2000, 1999
and 1998, respectively, and ATTWS accounted for 15.3%, 7.0% and 4.1% of the
Company's net sales during 2000, 1999 and 1998, respectively.

          DaimlerChrysler and Ford, like other North American OEMs, generally
require their dealers using remanufactured products to use only those from
approved suppliers. Although the Company is currently the only factory-approved
supplier of remanufactured transmissions for Chrysler vehicles and one of two
suppliers to Ford, DaimlerChrysler and Ford (like the Company's other OEM
customers) are 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 them or that they will not approve other suppliers in
the future. In addition, within the last five years the standard new vehicle
warranty for Chrysler vehicles was reduced from seven years/70,000 miles to
three years/36,000 miles and a shorter warranty could be implemented 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 DaimlerChrysler or Ford would have a material adverse effect on the
Company. See "Drivetrain Remanufacturing Segment--Drivetrain 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 OEMs. 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. There can be no assurance that the Company will


                                       8
<PAGE>

not experience core shortages in the future. If the Company were to experience
such a shortage for an extended period of time, it could have a material adverse
effect on the Company.

          Certain component parts required in the Company's transmission
remanufacturing process are manufactured by the Company's 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.

          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
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 in the event that such acquisitions are made at levels that
exceed the fair market value of net tangible 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 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 Strategy."

          INDEBTEDNESS AND LIQUIDITY

          The Company had outstanding indebtedness of $227.5 million at December
31, 2000. The level of the Company's consolidated indebtedness could have
important consequences, 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 Item 5. "Market for Registrant's
Common Equity and Related Stockholder Matters." In addition, the Company's bank
credit agreement contains covenants that (i) require the Company to meet certain
financial ratios and (ii) limit the Company's ability to, among other things,
incur indebtedness, make acquisitions, make capital expenditures, make
investments, engage in mergers and dispose of assets. The indentures that govern
the Company's 12% Senior Subordinated Notes due 2004 (the "Senior Notes")
contain, among other things, a covenant that limits the Company's ability to
incur additional indebtedness. Any default by the Company with respect to such
covenants, or any inability on the part of the Company to obtain necessary
liquidity, could have a material adverse effect on the Company. See Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."

          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 and impose liability for
the costs of cleaning up, and certain damages resulting from, past spills,
disposals or other releases of hazardous substances. In connection with its
acquisitions, the Company conducted certain investigations of the acquired
companies' facilities and their compliance with applicable environmental laws.
These investigations found various environmental matters and conditions that
could, under certain circumstances, expose the Company to liability.
Furthermore, the company from which RPM acquired its assets has been identified
by the United States Environmental Protection Agency as one of the many
potentially responsible parties for environmental liabilities associated with a
"Superfund" site located in the area of


                                       9
<PAGE>

RPM's former manufacturing facilities and one of its current distribution
facilities. Although no assurances can be given, the Company believes that it
will not incur any material liabilities relating to these matters. See
"Environmental."

          COMPETITION

          While the Company believes it is well positioned to compete in its two
market segments, there can be no assurance that the Company will be successful
competing against other companies in its industry segments, some of which are
larger than the Company and have greater financial and other resources available
to them than does the Company. See "Competition."

          CONTROL OF THE COMPANY; ANTI-TAKEOVER MATTERS

          The Company is controlled by Aurora Equity Partners L.P. and Aurora
Overseas Equity Partners I, L.P. (collectively, the "Aurora Partnerships"),
which as of February 28, 2001 hold approximately 67% of the voting power in the
Company (through direct ownership and certain voting arrangements). Therefore,
the Aurora Partnerships will be able to elect all of the directors of the
Company and approve or disapprove any matter submitted to a vote of the
Company's stockholders. As a result of the Aurora Partnerships' 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 the Aurora Partnerships
or their participation in the transaction. The general partner of each of the
Aurora Partnerships is controlled by Richard R. Crowell, Gerald L. Parsky and
Richard K. Roeder, each of whom is a director 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 (as defined
therein), which could also have the effect of discouraging a third party from
acquiring the Company. See Item 12. "Security Ownership of Certain Beneficial
Owners and Management."

          In addition, the Company's Board of Directors is authorized, subject
to certain limitations prescribed by law, to issue up to 2,000,000 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.


                                       10
<PAGE>

ITEM 2.   PROPERTIES

          The Company conducts its business from the following facilities:

<TABLE>
<CAPTION>
                               APPROXIMATE   LEASE EXPIRA-
     LOCATION                   SQ. FEET       TION DATE            PRODUCTS PRODUCED/SERVICES PROVIDED
-------------------------      ------------  -------------   -------------------------------------------------------------
<S>                            <C>           <C>             <C>
Joplin, MO                        264,000          2008      transmissions and transfer cases (1)
Springfield, MO                   280,800          2004      transmissions (1)
Springfield, MO                   200,000          2006      engines (2)
Springfield, MO                    30,900          2001      torque converters (1) (3)
Springfield, MO                    34,000          2001      cleaning and testing equipment (1) (3)
Gastonia, NC                      130,000          2002      transmissions and valve bodies (1)
Mahwah, NJ                        160,000          2003      transmissions, transfer cases and assorted components (1)
Oklahoma City, OK                  98,000         owned      returned material reclamation and disposition (4)
Oklahoma City, OK                 207,000         owned      transmissions (1)
Carrollton (Dallas), TX            39,000          2006      radios and instrument and display clusters (4)
Ft. Worth, TX                     220,000          2008      cellular phone and accessory distribution (4)
Ft. Worth, TX                     108,000          2005      cellular phone accessory packaging and returns processing (4)
Houston, TX                        50,000          2002      engine control modules and radios (4)
Grantham, England                 120,000         owned      engines and related components (1)
</TABLE>
----------------
(1)  This facility is used by the Drivetrain segment.
(2)  This facility is used by the discontinued operations.
(3)  These facilities are being consolidated into other existing facilities.
(4)  This facility is used by the Logistics segment.

          The Company also leases assorted warehouses and space for its
corporate offices and computer services.

          The Company believes that its current facilities are adequate for the
current level of the Company's activities. The Company's manufacturing sites
have the flexibility to add both additional shifts and production workers needed
to accommodate additional demand for products and services. However, in the
event the Company were to experience a material increase in sales, the Company
may require additional manufacturing facilities. The Company believes such
additional facilities are readily available on a timely basis on commercially
reasonable terms. Further, the Company believes that the leased space housing
its existing facilities is not unique and could be readily replaced, if
necessary, at the end of the terms of its existing leases on commercially
reasonable terms. Historically, the Company has been able to renew leases or
find alternate space upon the expiration of its leases without material
interruption in the subject facilities' operations.

ITEM 3.   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.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          No matters were submitted to a vote of the stockholders of the Company
during the quarter ended December 31, 2000.


                                       11
<PAGE>

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          The Company's Common Stock has been traded on the Nasdaq National
Market under the symbol "ATAC" since the IPO in December 1996. As of February
28, 2001, there were approximately 79 record holders of its Common Stock. The
following table sets forth for the periods indicated the range of high and low
sale prices of the Common Stock as reported by Nasdaq:

<TABLE>
<CAPTION>
                                                                                   HIGH       LOW
                                                                                   ----       ---
<S>                                                                                <C>        <C>
2000
   First quarter................................................................   13 7/8     9 7/16
   Second quarter...............................................................   12 7/8     5
   Third quarter................................................................    8 7/8     5
   Fourth quarter...............................................................    6 3/8     1 5/8

1999
   First quarter................................................................    9 7/8     4 1/2
   Second quarter...............................................................   12 3/8     6 7/8
   Third quarter................................................................   11 7/8     8 1/32
   Fourth quarter...............................................................   12 5/8     7 3/4
</TABLE>

          On February 28, 2001, the last sale price of the Common Stock, as
reported by Nasdaq, was $5 5/8 per share.

          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
its Common Stock in the foreseeable future. Furthermore, as a holding company
with no independent operations, the ability of the Company to pay cash dividends
is 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 its Common Stock unless certain
financial ratio tests are satisfied. In addition, the agreement for the
Company's bank credit facility contains certain covenants that, among other
things, prohibit the payment of dividends by the Company. See Item 7.
"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.

          During 2000, the Company did not issue any securities that were not
registered under the Securities Act of 1933, as amended.


                                       12
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA

          The results of the Company's Independent Aftermarket segment (which
consists of (i) ATC Distribution Group, Inc. ("Distribution Group"), a
distributor of remanufactured transmissions and related drivetrain components
to independent aftermarket customers and (ii) the remanufactured engines
business, which remanufactures and distributes engines primarily to independent
aftermarket customers) are classified as discontinued operations in the
financial data presented below. The selected financial data presented below with
respect to the statements of operations data for the years ended December 31,
2000, 1999 and 1998 and the balance sheet data at December 31, 2000 and 1999 are
derived from the 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
operations data for the years ended December 31, 1997 and 1996 and the balance
sheet data at December 31, 1998, 1997 and 1996, are derived from the
Consolidated Financial Statements of the Company that have been audited by Ernst
& Young LLP, independent auditors, but are not included herein. The data
provided should be read in conjunction with the Consolidated Financial
Statements, related notes and other financial information included in this
Annual Report.

<TABLE>
<CAPTION>
                                                                         CONSOLIDATED
                                                 -------------------------------------------------------------

                                                               FOR THE YEARS ENDED DECEMBER 31,
                                                 -------------------------------------------------------------
                                                    2000          1999         1998        1997       1996
                                                 ----------    ----------    ---------   --------    --------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                              <C>           <C>           <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................        $  343,357    $  328,024    $ 272,643   $167,776    $146,096
Cost of sales............................           222,939       216,217      195,109     92,668      82,496
Special charges..........................                --           113           --         --          --
                                                 ----------    ----------    ---------   --------    --------
Gross profit.............................           120,418       111,694       77,534     75,108      63,600
Selling, general and administrative
  expenses...............................            48,971        47,026       42,720     25,374      18,218
Amortization of intangible
  assets.................................             5,025         5,065        4,572      2,807       2,532
Special charges..........................                --         3,864        4,024         --          --
                                                 ----------    ----------    ---------   --------    --------
Income from operations...................            66,422        55,739       26,218     46,927      42,850
Interest expense, net and other..........            23,727        22,451       21,245     14,313      15,978
Income tax expense ......................            16,249        12,224        2,841     13,078      10,937
                                                 ----------    ----------    ---------   --------    --------
Income from continuing operations (1)(2).            26,446        21,064        2,132     19,536      15,935
Preferred stock dividends................                --            --           --         --       2,222
                                                 ----------    ----------    ---------   --------    --------

Income from continuing operations
  available to common stockholders.......        $   26,446    $   21,064     $  2,132  $  19,536    $ 13,713
                                                 ==========    ==========     ========  =========    ========

Income from continuing operations per
  share (3)..............................        $     1.25    $     1.00     $   0.10  $    1.01    $   1.00
Shares used in computation of income from
  continuing operations per share (3)....            21,163        21,164       21,078     19,335      15,918

OTHER DATA:
Capital expenditures (4).................        $   11,376    $    6,948     $  7,523  $   3,942    $  3,756
</TABLE>


                                       13
<PAGE>

<TABLE>
<CAPTION>
                                                                           CONSOLIDATED
                                                 ------------------------------------------------------------------
                                                                          DECEMBER 31,
                                                 ------------------------------------------------------------------
                                                   2000           1999          1998           1997          1996
                                                 ----------    ----------    ---------       --------      --------
                                                                          (IN THOUSANDS)
<S>                                             <C>              <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Working capital, continuing operations......    $ 45,663         $ 13,972      $ 21,772      $ 27,405      $ 50,554
Property, plant and equipment, net..........      44,070           39,397        38,157        11,517         8,574
Total assets................................     400,020          572,359       513,472       357,882       310,922
Long-term liabilities (5)...................     213,537          302,491       258,042       152,571       167,233
Common stockholders' equity.................      80,239          176,144       168,011       175,429       105,832
</TABLE>
---------------
(1)  Income from continuing operations for the years ended December 31, 2000,
     1999, 1998, 1997 and 1996 exclude loss (income) from discontinued
     operations, net of income taxes, of $123,329, $14,257, $9,247, $(3,467) and
     $(364), respectively.

(2)  Income from continuing operations for the year ended December 31, 1998
     excludes an extraordinary item in the amount of $703 ($1,172 less related
     income tax benefit of $469). This amount consisted of (i) a $340 charge
     resulting from the early redemption of $9,615 in principal amount of the
     Senior Notes, which included the payment of a 4.0% early redemption premium
     and the write-off of related debt issuance costs and (ii) a charge of $363
     for the write-off of previously capitalized debt issuance costs in
     connection with the termination of the Company's previous revolving credit
     facility. In addition, income from continuing operations for the year ended
     December 31, 1997 excludes an extraordinary item in the amount of $3,749
     ($6,269 less related income tax benefit of $2,520). This amount consisted
     of (i) a $3,425 charge resulting from the early redemption of $40,000 in
     principal amount of the Senior Notes, which included the payment of a 12.0%
     early redemption premium and the write-off of related debt issuance costs
     and (ii) a charge of $324 for the write-off of previously capitalized debt
     issuance costs in connection with the termination of the Company's previous
     revolving credit facility.

(3)  See Item 8. "Consolidated Financial Statements and Supplementary Data-Note
     14" for a description of the computation of earnings per share.

(4)  Excludes capital expenditures made by certain of the Company's subsidiaries
     prior to such subsidiaries' respective acquisitions and any capital
     expenditures made in connection with such acquisitions.

(5)  Includes long-term deferred tax liabilities of $15,068, $11,492, $8,044 and
     $5,252 at December 31, 1999, 1998, 1997 and 1996, respectively.


                                       14
<PAGE>

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

          The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and notes thereto included
elsewhere in this Annual Report. See Item 8. "Consolidated Financial Statements
and Supplementary Data."

          Readers are cautioned that the following discussion contains certain
forward-looking statements and should be read in conjunction with the
"Forward-Looking Statement Notice" appearing at the beginning of this Annual
Report.

CHANGES IN SEGMENT REPORTING

          In 2000, the Company made certain changes in its segment reporting.
The Company (i) reclassified its remanufactured engines operating unit from the
Original Equipment Manufacturer ("OEM") segment to the Independent Aftermarket
segment due to similar economic characteristics and other factors, including
type of customer and method of distribution, (ii) revised its methodology for
allocation of corporate overhead and changed from a partial to a full allocation
of expenses relating to the Company's corporate offices to more accurately
reflect segment financial performance and (iii) as a result of a strategy to
strengthen its position in the logistics marketplace, the Company realigned
certain of its business units under a common management team to form the
Logistics segment. As a result, the Company has two reportable segments,
Drivetrain Remanufacturing (formerly OEM) and Logistics. All prior-year segment
information has been restated to conform to the 2000 presentation. The
Independent Aftermarket segment was discontinued, as explained below.

DISCONTINUED OPERATIONS

          In August 2000, the Company adopted a plan to discontinue the
Independent Aftermarket segment of its business, comprised of the Distribution
Group, a distributor of remanufactured transmissions and related drivetrain
components to independent aftermarket customers and its domestic remanufactured
engines business, which remanufactures and distributes domestic and foreign
engines primarily through a branch distribution network to independent
aftermarket customers. As a result of this decision, the Independent Aftermarket
segment has been reflected in the accompanying consolidated financial statements
and management's discussion and analysis as discontinued operations.

          In October 2000, the Company completed the sale of the Distribution
Group to ATCDG Acquisition Corp., Inc. ("Buyer"), an indirect wholly owned
subsidiary of Aceomatic-Recon Holdings Corporation, which is an affiliate of The
Riverside Company, for $60.1 million in cash, Series B preferred stock of Buyer
valued by the Company at $1.9 million (stated value of $8.7 million net of a
valuation allowance of $6.8 million) and an 18% senior subordinated promissory
note of the Buyer in a principal amount of $10.1 million and a discounted value
of $8.4 million.

OVERVIEW

          The Company has two reportable segments in continuing operations:
the Drivetrain Remanufacturing segment and the Logistics segment. The
Drivetrain Remanufacturing segment consists of five operating units that
primarily sell remanufactured transmissions directly to DaimlerChrysler,
Ford, General Motors and several foreign OEMs, primarily for use as
replacement parts by their domestic dealers during the warranty and
post-warranty periods following the sale of a vehicle. In addition, the
Drivetrain Remanufacturing segment sells select remanufactured and newly
assembled engines to certain European OEMs, including Ford's and General
Motors's European operations and Jaguar. The Company's Logistics segment is
comprised of three business units, all of which were acquired in the
Autocraft acquisition: a provider of value added warehouse and distribution
services, turnkey order fulfillment and information services for AT&T
Wireless Services; a provider of returned material reclamation and
disposition services


                                       15
<PAGE>

for Ford and General Motors; and an automotive electronic components
remanufacturing and distribution business, primarily for Delphi and Visteon. See
Item 8. "Consolidated Financial Statements and Supplementary Data-Note 17."

          Since its formation, the Company has benefited from a combination of
organic and acquisition-related revenue growth, achieving compound annual growth
in continuing operations revenue of approximately 24% from 1996 through 2000.
The Company's revenues in the Drivetrain Remanufacturing segment have increased
at a compound annual growth rate of 15% since 1996, to $254.3 million in 2000,
due largely to the addition of Ford as a customer through the acquisition of
Autocraft in March 1998. The Autocraft acquisition also included the three
business units that now comprise the Company's Logistics segment, where on a pro
forma basis, as if the Autocraft acquisition had taken place on January 1, 1998,
revenue has grown at a compound annual growth rate of 36% since 1998, to $89.1
million. This growth is entirely organic and is driven primarily by increases in
value added warehouse and distribution services fueled by the demand for
cellular phones and services.

          The Company regularly evaluates strategic acquisition opportunities
and, consistent with its strategy to strengthen its position in the logistics
marketplace, expects it will continue to do so in the future. During the first
quarter of 1998, the Company acquired substantially all of the assets of
Autocraft, the OEM Division of The Fred Jones Companies, Inc. and will continue
to consider opportunistic acquisitions in its Drivetrain Remanufacturing
segment.

          During 1999 and 1998, the Company recorded special charges of $4.0
million in each year, primarily related to certain initiatives designed to
improve operating efficiencies and reduce costs. See "Results of Operations" for
a complete discussion of these charges. In addition, in 1998 the Company
recorded charges for non-recurring costs totaling $10.2 million. As previously
disclosed, the Company believes that these charges were one-time in nature due
to the application of new information and estimation methodologies.

          During 2000, the Company reduced its debt by $81.2 million from $308.7
million to $227.5 million, through a combination of cash flow from continuing
operations and the proceeds from the sale of the Distribution Group.
Additionally, the loss on the sale of the Distribution Group generated
approximately $44.0 million of income tax benefits for the Company.

RESULTS OF OPERATIONS

          The following table sets forth certain financial statement data
expressed in millions of dollars and as a percentage of net sales.

<TABLE>
<CAPTION>
                                                           For the Years Ended December 31,
                                             ------------------------------------------------------------
                                                     2000                    1999              1998
                                             ----------------------   ------------------  ---------------
<S>                                           <C>         <C>         <C>      <C>        <C>      <C>
Net sales.................................       $343.4   100.0%      $328.0   100.0%     $272.6   100.0%
Cost of sales.............................        223.0    64.9        216.2    65.9       195.1    71.6
Special charges...........................            -       -          0.1     0.0           -       -
                                                 ------   -----       ------   -----      ------   -----
Gross profit..............................        120.4    35.1        111.7    34.1        77.5    28.4
SG&A expenses.............................         49.0    14.3         47.0    14.3        42.7    15.7
Amortization of intangible assets.........          5.0     1.5          5.1     1.6         4.6     1.7
Special charges...........................            -       -          3.9     1.2         4.0     1.4
                                                 ------   -----       ------   -----      ------   -----
Income from operations....................         66.4    19.3         55.7    17.0        26.2     9.6
Interest expense, net and other...........         23.7     6.9         22.4     6.8        21.2     7.8
                                                 ------   -----       ------   -----      ------   -----
Income from continuing operations, before
   income taxes...........................         42.7    12.4         33.3    10.2         5.0     1.8
Income tax expense........................         16.3     4.7         12.2     3.8         2.9     1.0
                                                 ------   -----       ------   -----      ------   -----
Income from continuing operations.........      $  26.4     7.7%      $ 21.1     6.4%     $  2.1     0.8%
                                                =======   =====       ======   =====      ======   =====
</TABLE>


                                       16
<PAGE>

          YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

          Income from continuing operations increased $5.3 million, or 25.1%, to
$26.4 million in 2000 from $21.1 million in 1999. During 1999, the Company
recorded pre-tax special charges of $4.0 million, primarily related to certain
initiatives designed to improve operating efficiencies and reduce costs (see
"Special Charges" below). Excluding special charges, income from continuing
operations increased $2.8 million, or 11.9%, from $23.6 million for the year
ended December 31, 1999. This increase was primarily attributable to a
significant increase in revenues in the Logistics segment, partially offset by a
decline in revenues in the Drivetrain Remanufacturing segment. Income from
continuing operations per diluted share increased to $1.25 in 2000 from $1.00 in
1999. Excluding special charges, income from continuing operations per diluted
share was $1.11 for the year ended December 31, 1999.

          NET SALES. Net sales increased $15.4 million, or 4.7%, to $343.4
million in 2000 from $328.0 million in 1999. This increase is attributable to
increased sales in the Company's Logistics segment partially offset by a
decrease in revenues in the Drivetrain Remanufacturing segment. See "Drivetrain
Remanufacturing Segment" and "Logistics Segment" for a discussion of net sales.

          GROSS PROFIT. Gross profit increased $8.7 million, or 7.8%, to $120.4
million in 2000 from $111.7 million in 1999. This increase is principally due to
increased revenues in the Logistics segment, improved yield and favorable mix of
remanufactured transmissions, favorable material variances and the benefit of
cost reduction initiatives implemented during 1999 and 2000. As a result, gross
profit as a percentage of net sales increased to 35.1% from 34.1% between the
two periods.

          SG&A EXPENSES. Selling, general and administrative ("SG&A") expenses
increased $2.0 million, or 4.3%, to $49.0 million in 2000 from $47.0 million in
1999. The increase is due primarily to an increase in expense supporting
increased sales volume and growth initiatives in the Logistics segment,
partially offset by a decrease in expense in the Drivetrain Remanufacturing
segment. As a percentage of net sales, SG&A remained constant at 14.3%.

          AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
decreased slightly to $5.0 million in 2000 from $5.1 million in 1999.

          SPECIAL CHARGES. During 1999, the Company recorded $4.0 million of
special charges, of which $0.1 million was included as a component of cost of
sales. These charges consisted of $2.6 million of severance and other costs
related to the reorganization of certain management functions and $1.4 million
of severance, plant exit and other costs.

          The Company, as an ongoing part of its planning process, continues to
identify and evaluate areas where cost efficiencies can be achieved through
consolidation of redundant facilities, outsourcing functions or changing
processes or systems. Implementation of any of these could require the Company
to incur special charges, which would be offset over time by the projected cost
savings.

          INCOME FROM OPERATIONS. Principally as a result of the factors
described above, income from operations increased $10.7 million, or 19.2%, to
$66.4 million in 2000 from $55.7 million in 1999. As a percentage of net sales,
income from operations increased to 19.3% from 17.0%, between the two periods.
Excluding special charges of $4.0 million recorded in 1999, income from
operations was $59.7 million or 18.2% of net sales, for the year ended December
31, 1999.

          INTEREST EXPENSE, NET AND OTHER. Interest expense, net and other
increased $1.3 million, or 5.8%, to $23.7 million in 2000 from $22.4 million in
1999. The increase primarily resulted from an overall increase in interest rates
in 2000 as compared to 1999. Interest expense of $6.1 million for the year ended
December 31, 2000 has been allocated to discontinued operations based on the
total consideration received from the sale of the Distribution Group and an
estimate of the proceeds expected from the sale or disposal of the
remanufactured engines business. Interest expense of $4.1 million for the year
ended December 31, 1999


                                       17
<PAGE>

has been allocated to the discontinued operations based on the total
consideration received from the sale of the Distribution Group and an estimate
of the proceeds expected from the sale or disposal of the remanufactured engines
business, less the amount of debt attributable to the acquisition of All Trans
(part of the Distribution Group) in the fourth quarter of 1999.

          DISCONTINUED OPERATIONS. In August 2000, the Company adopted a plan to
discontinue the Independent Aftermarket segment of its business, comprised of
the Distribution Group and the remanufactured aftermarket engines business. In
October 2000, the Company completed the sale of the Distribution Group.
Management believes that the exit from this segment, which reduces debt and
generates significant tax benefits, offers a strategic opportunity to focus
resources on the businesses of the Company that are profitable and have greater
growth potential. As a result of the decision to exit the Independent
Aftermarket segment and the associated sale of the Distribution Group, the
Company recorded a charge of $114.8 million for the estimated loss on disposal
of discontinued operations, net of tax benefits of $59.2 million, during the
year ended December 31, 2000. The pre-tax charge of $174.0 million includes the
write-off of previously allocated goodwill, valuation allowances for certain
assets, provisions for anticipated operating losses until disposal of $12.9
million and anticipated costs of disposal, including lease terminations,
severance, retention and other employee benefits and professional fees. In
addition, the loss from discontinued operations includes a loss of $8.5 million
and $14.3 million, net of income tax benefits of $4.4 million and $8.1 million,
from the operations of the Independent Aftermarket segment during the period
from January 1, 2000 to August 3, 2000 (the measurement date for discontinued
operations) and during the year ended December 31, 1999, respectively.

          DRIVETRAIN REMANUFACTURING SEGMENT

          The following table presents net sales, special charges and segment
profit expressed in millions of dollars and as a percentage of net sales:

<TABLE>
<CAPTION>
                                                 For the Years Ended December 31,
                                             -----------------------------------------
                                                     2000                   1999
                                             -------------------     -----------------
<S>                                          <C>          <C>        <C>        <C>
Net sales..................................  $ 254.3      100.0%     $ 268.9    100.0%
                                             =======      =====      =======    =====
Special charges...........................   $     -          -%     $   1.0      0.4%
                                             =======      =====      =======    =====
Segment profit.............................  $ 49.0        19.3%     $  50.5     18.8%
                                             =======      =====      =======    =====
</TABLE>

          NET SALES. Net sales decreased $14.6 million, or 5.4%, to $254.3
million in 2000 from $268.9 million in 1999. The decrease was primarily the
result of (i) a decline in shipments of Asian car model remanufactured
transmissions due to the termination of an unprofitable contract, delays in the
introduction of new model years into the remanufacturing program by certain OEMs
and production disruptions associated with an unsuccessful union organization
campaign and certain management changes, (ii) a decline in sales of
remanufactured transmissions to General Motors due to a reduction of its
inventory levels and the termination of an unprofitable contract, (iii) a
general decline in sales of remanufactured transmissions due to an overall
softness in demand resulting from a relatively mild winter in 1999, partially
offset by improved yield and one-time rework projects and (iv) decreased sales
of engines and related parts in the segment's European operations. Sales to
DaimlerChrysler accounted for 31.5% and 34.4% of the Company's revenues (42.5%
and 42.0% of segment revenues) in 2000 and 1999, respectively. Sales to Ford
accounted for 32.6% and 33.0% of the Company's revenues (40.8% and 36.8% of
segment revenues) in 2000 and 1999, respectively.

          SPECIAL CHARGES. The Drivetrain Remanufacturing segment recorded $1.0
million of special charges in 1999 relating to severance and plant exit costs.

          SEGMENT PROFIT. Segment profit decreased $1.5 million, or 3.0%, to
$49.0 million (19.3% of segment net sales) in 2000 from $50.5 million (18.8% of
segment net sales) in 1999. Excluding special charges of $1.0 million in 1999,
segment profit would have decreased $2.5 million, or 4.9%, from $51.5 million
(19.2%


                                       18
<PAGE>

of segment net sales) in 1999. The decrease was primarily the result of the
factors impacting sales as described above, partially offset by a reduction in
allocated corporate overhead in 2000 as compared to 1999.

          LOGISTICS SEGMENT

          The following table presents net sales, special charges and segment
profit expressed in millions of dollars and as a percentage of net sales:

<TABLE>
<CAPTION>
                                                  For the Years Ended December 31,
                                              ----------------------------------------
                                                     2000                   1999
                                              -----------------        ---------------
<S>                                           <C>         <C>          <C>      <C>
Net sales..................................   $  89.1     100.0%       $ 59.1   100.0%
                                              =======     =====        ======   =====
Special charges...........................    $     -         -%       $  0.6     1.0%
                                              =======     =====        ======   =====
Segment profit............................    $  17.4      19.5%       $  7.7    13.0%
                                              =======     =====        =====    =====
</TABLE>

          NET SALES. Net sales increased $30.0 million, or 50.8%, to $89.1
million in 2000 from $59.1 million in 1999. This increase was primarily
attributable to an increase in sales for value added warehouse and distribution
services, driven by the strong growth in the market for cellular phones and
services, coupled with the benefit of two new programs the Company was awarded
by AT&T Wireless Services. These programs cover the packaging and distribution
of cell phone accessories and the distribution of point-of-sale and other
marketing materials. Sales to AT&T Wireless Services accounted for 15.3% and
7.0% of the Company's revenues (59.1% and 38.9% of segment revenues) in 2000 and
1999, respectively.

          SPECIAL CHARGES. Special charges recorded during 1999 of $0.6 million
relate to facility exit costs and other costs related to the Electronics
business unit.

          SEGMENT PROFIT. Segment profit increased $9.7 million, or 126.0%, to
$17.4 million (19.5% of segment net sales) in 2000 from $7.7 million (13.0% of
segment net sales) in 1999. Excluding special charges of $0.6 million in 1999,
segment profit would have increased $9.1 million, or 109.6%, from $8.3 million
(14.0% of segment net sales) in 1999. This increase was primarily the result of
the increased sales volume, combined with the benefit of restructuring
initiatives implemented in the Electronics business unit in late 1999.

          YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

          Income from continuing operations increased $19.0 million, or 904.8%,
to $21.1 million in 1999 from $2.1 million in 1998. During each of 1999 and
1998, the Company recorded pre-tax special charges of $4.0 million, related to
certain initiatives designed to improve operating efficiencies and reduce costs
(see "Special Charges" below). In addition, during 1998, the Company recorded
pre-tax charges for non-recurring costs totaling $10.2 million. Excluding these
non-recurring costs and special charges, income from continuing operations would
have increased $12.7 million, or 116.5%, to $23.6 million for the year ended
December 31, 1999, from $10.9 million for the year ended December 31, 1998. This
increase was primarily attributable to increased volume in both the Drivetrain
Remanufacturing and Logistics segments'. Income from continuing operations per
diluted share increased to $1.00 in 1999 from $0.10 in 1998. Excluding special
charges and non-recurring expense, income from continuing operations per diluted
share increased to $1.11 for the year ended December 31, 1999 from $0.52 for the
year ended December 31, 1998.

          NET SALES. Net sales increased $55.4 million, or 20.3%, to $328.0
million in 1999 from $272.6 million in 1998. This increase is partially
attributable to the full-year benefit of sales from Autocraft, which was
acquired in March 1998. On a pro forma basis, as if the February 1999 sale of
Mascot and the acquisition of Autocraft had both taken place on January 1, 1998,
net sales would have increased $34.3 million, or 11.7%, to $327.3 million in
1999 from $293.0 million in 1998. This increase in sales, on a pro forma basis,
was primarily attributable to increased sales in the Company's Drivetrain
Remanufacturing and


                                       19
<PAGE>

Logistics segments'. See "Drivetrain Remanufacturing Segment" and " Logistics
Segment" for a discussion of net sales.

          GROSS PROFIT. Gross profit increased $34.2 million, or 44.1%, to
$111.7 million in 1999 from $77.5 million in 1998. Excluding special charges of
$0.1 million recorded in 1999 and non-recurring costs of $8.9 million recorded
in 1998, gross profit increased $25.4 million, or 29.4%, during 1999 as compared
to 1998. As a percentage of net sales, gross profit before non-recurring costs
and special charges increased to 34.1% in 1999 from 31.7% in 1998. The increase
in gross profit was principally due to the increased volume of sales in the
Drivetrain Remanufacturing and Logistics segments' and associated operating
leverage.

          SG&A EXPENSES. SG&A expenses increased $4.3 million, or 10.1%, to
$47.0 million in 1999 from $42.7 million in 1998. Excluding non-recurring costs
of $1.3 million recorded in 1998, SG&A expenses increased $5.6 million during
1999 as compared to 1998 and as a percentage of net sales decreased to 14.3% in
1999 from 15.2% in 1998. This increase was due primarily to an increase in
expense supporting increased sales volume and growth initiatives in the
Logistics segment and a full year of expense related to the Autocraft
acquisition.

          AMORTIZATION OF INTANGIBLE ASSETS. Amortization of intangible assets
increased $0.5 million, or 10.9%, to $5.1 million in 1999 from $4.6 million in
1998. The increase is primarily attributable to a full year of amortization for
the Autocraft acquisition.

          SPECIAL CHARGES. During 1999, the Company recorded $4.0 million of
special charges, of which $0.1 million was included as a component of cost of
sales. These charges consisted of $2.6 million of severance and other costs
related to the reorganization of certain management functions and $1.4 million
of severance, plant exit and other costs.

          During 1998, the Company recorded $4.0 million of special charges.
These charges consisted of $2.4 million related to a state's interpretation of
its tax law that subjected a portion of the Drivetrain Remanufacturing segment's
operations over the past four years to a state tax for the first time and $1.6
million of restructuring charges consisting principally of employee severance
costs and certain other exit costs.

          INCOME FROM OPERATIONS. Principally as a result of the factors
described above, income from operations increased $29.5 million, or 112.6%, to
$55.7 million in 1999 from $26.2 million in 1998. As a percentage of net sales,
income from operations increased to 17.0% from 9.6%, between the two periods.
Excluding non-recurring costs of $10.2 million recorded in 1998 and special
charges of $4.0 million recorded in each of 1999 and 1998, income from
operations increased $19.3 million during 1999 as compared to 1998. As a
percentage of net sales, income from operations before non-recurring costs and
special charges increased to 18.2% from 14.8% between the two periods.

          INTEREST EXPENSE, NET AND OTHER. Interest expense, net and other
increased $1.2 million, or 5.7%, to $22.4 million in 1999 from $21.2 million in
1998. The increase primarily resulted from a full year of borrowing under the
Company's $120.0 million term loan credit facility in March 1998 to finance the
Autocraft acquisition.

          EXTRAORDINARY ITEMS. In 1998, an extraordinary item in the amount of
$0.7 million ($1.2 million before related income tax benefit of $0.5 million)
was recorded. This amount consisted of (i) a $0.4 million charge for the
write-off of previously capitalized debt issuance costs in connection with the
termination of the Company's previous revolving credit facility and (ii) a $0.3
million charge resulting from the repurchase of $9.6 million in principal amount
of the Senior Notes in open market transactions.


                                       20
<PAGE>

          DRIVETRAIN REMANUFACTURING SEGMENT

          The following table presents net sales, special charges and segment
profit expressed in millions of dollars and as a percentage of net sales:

<TABLE>
<CAPTION>
                                                   For the Years Ended December 31,
                                             -----------------------------------------
                                                     1999                   1998
                                             ------------------      -----------------
<S>                                          <C>          <C>        <C>        <C>
Net sales..................................  $ 268.9      100.0%     $ 232.3    100.0%
                                             =======      =====      =======    =====
Special charges...........................   $   1.0        0.4%     $   2.4      1.0%
                                             =======      =====      =======    =====
Segment profit.............................  $  50.5       18.8%     $  24.5     10.5%
                                             =======      =====      =======    =====
</TABLE>

          NET SALES. Net sales increased $36.6 million, or 15.8%, to $268.9
million in 1999 from $232.3 million in 1998. On a pro forma basis, as if the
Autocraft acquisition and the sale of Mascot had taken place on January 1,
1998, net sales would have increased $23.2 million, or 9.5%, to $268.2
million in 1999 from $245.0 million in 1998. The increase was primarily due
to increased sales of remanufactured transmissions to DaimlerChrysler and
Ford, partially offset by a decrease in sales volume of engines and related
parts in the segment's European operations. Sales to DaimlerChrysler
accounted for 34.4% and 32.1% of the Company's revenues (42.0% and 37.6% of
segment revenues) in 1999 and 1998, respectively. Sales to Ford accounted for
33.0% and 30.5% of the Company's revenues (36.8% and 33.2% of segment
revenues) in 1999 and 1998, respectively.

          SPECIAL CHARGES. The Drivetrain Remanufacturing segment recorded $1.0
million of special charges in 1999. These charges consisted of severance and
plant exit costs.

          The Drivetrain Remanufacturing segment recorded $2.4 million of
special charges in 1998 relating to a state's interpretation of its tax law that
subjected a portion of the segment's operations over the past four years to a
state tax for the first time.

          SEGMENT PROFIT. Segment profit increased $26.0 million, or 106.1%, to
$50.5 million (18.8% of segment net sales) in 1999 from $24.5 million (10.5% of
segment net sales) in 1998. Excluding special charges of $1.0 million and $2.4
million in 1999 and 1998, respectively, and non-recurring costs of $10.2 million
recorded in 1998, segment profit would have increased $14.4 million, or 38.8%,
to $51.5 million (19.2% of segment net sales) in 1999 from $37.1 million (16.0%
of segment net sales) in 1998. The increase was primarily the result of
increased sales volume, associated operating leverage and yield on
remanufactured transmissions.

          LOGISTICS SEGMENT

          The following table presents net sales, special charges and segment
profit expressed in millions of dollars and as a percentage of net sales:

<TABLE>
<CAPTION>
                                                  For the Years Ended December 31,
                                             -----------------------------------------
                                                     1999                   1998
                                             -------------------       ---------------
<S>                                          <C>          <C>          <C>      <C>
Net sales........................            $  59.1      100.0%       $ 40.3   100.0%
                                             =======      =====        ======   =====
Special charges..................            $   0.6        1.0%       $   -        -%
                                             =======      =====        ======   =====
Segment profit...................            $   7.7       13.0%       $ 3.4      8.4%
                                             =======      =====        =====    =====
</TABLE>

          NET SALES. Net sales increased $18.8 million, or 46.7%, to $59.1
million in 1999 from $40.3 million in 1998. On a pro forma basis, as if the
Autocraft acquisition had taken place on January 1, 1998, net sales


                                       21
<PAGE>

would have increased $11.1 million, or 23.1%, from $48.0 million in 1998. This
increase was primarily attributable to an increase in sales for value added
warehouse and distribution services, driven by the strong growth in the market
for cellular phones and services.

          SPECIAL CHARGES. Special charges recorded during 1999 of $0.6 million
relate to facility exit and other costs in the Electronics business unit.

          SEGMENT PROFIT. Segment profit increased $4.3 million, or 126.5%, to
$7.7 million in 1999 from $3.4 million in 1998. Excluding special charges of
$0.6 million in 1999, segment profit in 1999 would have increased $4.9 million,
or 144.1%, to $8.3 million in 1999 from $3.4 million in 1998. The increase was
primarily the result of the additional sales volume described above, partially
offset by an increase in costs in the Logistics Services business unit
associated with enhancements to its information systems to support future
growth.

LIQUIDITY AND CAPITAL RESOURCES

          CASH FLOW & CAPITAL EXPENDITURES

          The Company had total cash and cash equivalents on hand of $2.0
million at December 31, 2000, representing a net decrease in cash and cash
equivalents of $6.4 million in 2000. Net cash provided by operating activities
from continuing operations was $42.2 million in 2000. During 2000, the Company
entered into an agreement with one of its Drivetrain Remanufacturing customers
to rework a specified number of transmission units. The terms of this agreement
were intended to match cash inflows and outflows associated with the transfer of
inventories; however, timing differences existed at December 31, 2000. As a
result, the Company's balance sheet reflects (i) accounts receivable of $4.7
million, (ii) inventories of $6.8 million and (iii) accounts payable of $19.5
million associated with this program. This program's completion is expected by
the end of the first quarter of 2001. Net cash provided by investing activities
from continuing operations was $48.8 million for the year, including $60.1
million from the sale of the Distribution Group partially offset by $11.4
million in capital expenditures, primarily for equipment purchases and leasehold
improvements. Net cash used in financing activities of $82.0 million includes
net payments of $79.9 million made on the Credit Facility, $1.2 million in
payment of amounts due to former owners of acquired companies and $0.5 million
of net payments made on the Canadian bank line of credit, partially offset by
$0.4 million of proceeds from the exercise of stock options. In conjunction with
the sale of Distribution Group, the Company's Canadian bank line of credit was
paid off in full in October 2000.

          The Company's capital expenditures from continuing operations in 2000
were $11.4 million, consisting of (i) $5.5 million primarily related to computer
systems and machinery and equipment to support growth initiatives in the
Logistics segment, (ii) $5.2 million for additional transmission remanufacturing
equipment and other improvements to support planned increases in production
capacity and efficiencies in certain of the Company's remanufacturing plants
within its Drivetrain Remanufacturing segment and (iii) $0.7 million primarily
related to equipment to support growth in the Company's overall infrastructure.
During 2001, the Company has budgeted $15.0 million for capital expenditures for
remanufacturing equipment to support cost reduction initiatives and capacity
expansion as well as to support growth initiatives in the Company's Logistics
segment.

          Under the terms of the Company's 1997 acquisition of ATS
Remanufacturing (which remanufactures transmissions for General Motors), the
Company is required to make payments to the seller and to certain other key
individuals on each of the first 14 anniversaries of the closing date. Through
December 31, 2000, the Company had made $3.9 million of these payments.
Substantially all of the remaining 11 payments, which aggregate to approximately
$15.0 million (present value of $12.7 million as of December 31, 2000), are
contingent upon the attainment of certain sales levels by ATS, which the Company
believes are more likely than not to be attained.


                                       22
<PAGE>

          FINANCING

          The Company raised total net proceeds of $61.6 million in its initial
public offering and concurrent private placement of common stock in December
1996 and an additional $47.9 million in a secondary offering in October 1997.
From the Company's inception in July 1994 to December 1996, the Company funded
its operations and investments in property and equipment, including
acquisitions, through the issuance of Senior Notes totaling $162.4 million, the
private sale of preferred stock of $20.0 million and common stock of $20.0
million, and to a lesser extent through cash provided by operating activities
and revolving bank lines. In December 1996, the preferred stock and $40.0
million in principal amount of the Senior Notes were redeemed with proceeds from
the initial public offering. The net proceeds from the secondary offering were
used to repay borrowings under the Credit Facility. In September and October
1998, the Company redeemed $2.2 million and $7.4 million, respectively, in
principal amount of the Senior Notes, with borrowings under the Credit Facility.

          In February 1997, the Company terminated its $30.0 million revolving
credit facility with a bank syndicate led by The Chase Manhattan Bank ("Chase")
that had been scheduled to mature in July 1999 and replaced it with the $100.0
million revolving portion of the Credit Facility, which is also with Chase. The
Credit Facility is available to finance the Company's working capital
requirements, future acquisitions and other general corporate needs, and will
expire in December 2003.

          In March 1998, the Credit Facility was amended and restated to provide
the $120.0 million term loan facility in addition to the existing revolving
facility. The Company borrowed $120.0 million under this term loan facility on
March 6, 1998 to purchase Autocraft and pay related transaction expenses. The
term loan is payable in quarterly installments through December 31, 2003.

          On December 20, 1999, the borrowing capacity under the term loan
portion of the Credit Facility was increased by $10.0 million. On December 24,
1999, the Company borrowed this $10.0 million and used the proceeds to reduce
the outstanding borrowings under the revolving portion of the Credit Facility.
These additional borrowings are payable in quarterly installments through
December 31, 2003.

          The Credit Facility's rate of interest is determined at either (i) the
Alternate Base Rate plus a specified margin or (ii) the Eurodollar Rate plus a
specified margin. The "Alternate Base Rate" is equal to the highest of (a)
Chase'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 Chase
for Eurodollar deposits for one, two, three, six or, if available by all
lenders, nine months (as selected by the Company) in the interbank Eurodollar
market. The applicable margins for both Alternate Base Rate and Eurodollar Rate
loans are subject to a quarterly adjustment based on the Company's leverage
ratio as of the end of the four fiscal quarters then completed. At December 31,
2000, the Alternate Base Rate margin was 1.00% and the Eurodollar margin was
2.00%.

          Amounts advanced under the Credit Facility are secured by
substantially all the assets of the Company. The Credit Facility contains
several covenants, including ones that require the Company to maintain certain
levels of net worth, leverage and cash flow coverage and others that limit the
Company's ability to incur indebtedness, make capital expenditures, create
liens, engage in mergers and consolidations, make restricted payments (including
dividends), sell assets, make investments, issue stock and engage in
transactions with affiliates of the Company and its subsidiaries.

          Based on its operating results during 1998, the Company was in
technical default of the leverage and cash flow covenants of the Credit Facility
and the Company's interest rate swap agreement as of December 31, 1998. This
resulted in a cross default under the line of credit for the Company's Canadian
subsidiaries. Due to the defaults, the Company was prohibited from further
borrowings under the Credit Facility and the Canadian line of credit. In March
1999, the Company obtained from its lenders waivers of the various defaults and
certain amendments to the Credit Facility and the interest rate swap agreement.
In December 1999, in conjunction with the $10.0 million increase in the Credit
Facility, the leverage ratio and interest coverage covenants in the credit
agreement were amended to be consistent with the Company's then current
financial projections.


                                       23
<PAGE>

          Based on its operating results during the first six months of 2000 and
in conjunction with the decision to discontinue the Independent Aftermarket
segment, the Company was in technical default of the net worth, leverage and
interest coverage covenants of the Credit Facility and the Company's interest
rate swap agreement as of June 30, 2000. This resulted in a cross default under
the line of credit for the Company's Canadian subsidiary. Due to the defaults,
the Company was prohibited from further borrowings under the Credit Facility and
its Canadian line of credit. The Company obtained from its lenders waivers of
the various defaults, and additionally, certain amendments to the Credit
Facility and the interest rate swap agreement were made consistent with the
Company's then-current financial projections.

          On October 26, 2000, the Company obtained (i) the required consent of
the parties to the Credit Facility to complete the sale of the Distribution
Group and (ii) certain amendments to the leverage and interest coverage ratios
contained in the Credit Facility consistent with the terms of such sale. The
terms of this consent required that the Company utilize a portion of the net
cash proceeds from the sale of the Distribution Group to make a prepayment on
the term loan portion of the Credit Facility. The remainder of the cash proceeds
were applied against the revolving portion of the Credit Facility and will be
reinvested in the continuing businesses over the 330 days following the date of
the sale. Remaining balances outstanding on the term loan will be amortized
ratably in quarterly installments through December 31, 2003. Concurrent with
this consent and amendment, the loan pricing grid contained in the Credit
Facility was modified to more closely reflect current conditions in the credit
market. However, as of December 31, 2000, the Alternate Base Rate and Eurodollar
margins remained unchanged at 1.00% and 2.00%, respectively. As of December 31,
2000, the Company was in compliance with its covenants and believes that it will
be able to comply with these covenants in the future.

          Additionally, the Company has approximately $111.0 million of the
Senior Notes outstanding. The indentures under which the Senior Notes were
issued contain certain covenants that, among other things, limit the Company's
ability to incur additional indebtedness. As of December 31, 2000, the Company
was in compliance with such covenants and believes that it will be able to
comply with these covenants in the future.

          As of December 31, 2000, the Company's additional borrowing capacity
under the Credit Facility was $33.2 million. In addition, the Company had cash
and cash equivalents on hand of $2.0 million at December 31, 2000.

          The Company believes that cash on hand, cash flow from operations and
existing borrowing capacity will be sufficient to fund its ongoing operations
and its budgeted capital expenditures. In pursuing future acquisitions, the
Company will continue to consider the effect that any such acquisition costs may
have on its liquidity. In order to consummate such acquisitions, the Company may
need to seek additional capital through borrowings or equity financing.

IMPACT OF NEW ACCOUNTING STANDARDS

          In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (as amended by
SFAS No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -
DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133 issued June 1999 and
amended by SFAS No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND
CERTAIN HEDGING ACTIVITIES - AN AMENDMENT TO FASB STATEMENT 133 issued June
2000), effective for periods beginning after June 15, 2000. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated a part of a hedge and, if it is, the type of hedge
transaction. Adoption of SFAS No. 133 will not have a significant effect on the
Company's results of operations or its financial position. The Company was
required to adopt SFAS No. 133 on January 1, 2001.


                                       24
<PAGE>

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 Item 1. "Business-Environmental" for a discussion of certain
environmental matters relating to the Company.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DERIVATIVE FINANCIAL INSTRUMENTS

          The Company does not hold or issue derivative financial instruments
for trading purposes. The Company uses derivative financial instruments to
manage its exposure to fluctuations in interest rates. Neither the aggregate
value of these derivative financial instruments nor the market risk posed by
them is material to the Company. The Company uses interest rate swaps to convert
variable rate debt to fixed rate debt to reduce volatility risk. For additional
discussion regarding the Company's use of such instruments, see Item 8.
"Consolidated Financial Statements and Supplementary Data-Note 2."

INTEREST RATE EXPOSURE

          Based on the Company's overall interest rate exposure during the year
ended December 31, 2000, and assuming similar interest rate volatility in the
future, a near-term (12 months) change in interest rates would not materially
affect the Company's consolidated financial position, results of operation or
cash flows. Interest rate movements of 10% would not have a material effect on
the Company's financial position, results of operation or cash flows.

FOREIGN EXCHANGE EXPOSURE

          The Company has one foreign operation that exposes it to translation
risk when the local currency financial statements are translated to U.S.
dollars. Since changes in translation risk are reported as adjustments to
stockholders' equity, a 10% change in the foreign exchange rate would not have a
material effect on the Company's financial position, results of operation or
cash flows.


                                       25
<PAGE>

ITEM 8.   CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          Aftermarket Technology Corp.

                        Consolidated Financial Statements

              For the years ended December 31, 2000, 1999 and 1998

<TABLE>
<CAPTION>
                                    CONTENTS
<S>                                                                                                   <C>
Report of Ernst & Young LLP, Independent Auditors......................................................27
Consolidated Balance Sheets............................................................................28
Consolidated Statements of Operations..................................................................29
Consolidated Statements of Stockholders' Equity........................................................30
Consolidated Statements of Cash Flows..................................................................31
Notes to Consolidated Financial Statements.............................................................32
</TABLE>


                                       26
<PAGE>

                REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Stockholders and Board of Directors
Aftermarket Technology Corp.

          We have audited the accompanying consolidated balance sheets of
Aftermarket Technology Corp. and subsidiaries (the Company) as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three years in the period
ended December 31, 2000. Our audits also included the financial statement
schedule listed in the Index of Item 14 (a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

          We conducted our audits in accordance with auditing standards
generally accepted in the United States. 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 consolidated financial statements referred to
above present fairly, in all material respects, the consolidated financial
position of Aftermarket Technology Corp. and subsidiaries at December 31, 2000
and 1999, and the consolidated results of their operations and their
consolidated cash flows for each of the three years in the period ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.

ERNST & YOUNG LLP

Chicago, Illinois
February 22, 2001
(Except for Note 22, as to which the date is March 2, 2001)


                                       27
<PAGE>

                          AFTERMARKET TECHNOLOGY CORP.
                           CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                           2000           1999
                                                                                        ---------      ---------
<S>                                                                                     <C>            <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                                            $   2,035      $   8,469
   Accounts receivable, net                                                                58,624         46,266
   Inventories                                                                             43,513         36,289
   Prepaid and other assets                                                                 4,976          2,636
   Refundable income taxes                                                                  2,730              -
   Deferred income taxes                                                                   31,904         14,036
   Assets of discontinued operations held for sale, net                                     6,002         87,966
                                                                                        ---------      ---------
Total current assets                                                                      149,784        195,662

Property, plant and equipment, net                                                         44,070         39,397
Debt issuance costs, net                                                                    4,175          5,268
Cost in excess of net assets acquired, net                                                174,833        179,974
Deferred income taxes                                                                      12,852              -
Other assets                                                                               10,308            180
Assets of discontinued operations held for sale, net                                        3,998        151,878
                                                                                        ---------      ---------
Total assets                                                                            $ 400,020      $ 572,359
                                                                                        =========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                                     $  54,163      $  35,976
   Accrued expenses                                                                        26,584         29,716
   Income taxes payable                                                                         -          2,685
   Bank line of credit                                                                          -            543
   Credit facility                                                                         14,700         21,760
   Amounts due to sellers of acquired companies                                             2,672          2,384
   Deferred compensation                                                                        -            660
   Liabilities of discontinued operations                                                   8,125              -
                                                                                        ---------      ---------
Total current liabilities                                                                 106,244         93,724

12% Series B and D Senior Subordinated Notes                                              111,033        111,214
Amount drawn on credit facility, less current portion                                      92,000        164,799
Amounts due to sellers of acquired companies, less current portion                          6,931          7,759
Deferred compensation, less current portion                                                 3,125          2,944
Other long-term liabilities                                                                   448            707
Deferred income taxes                                                                           -         15,068

Stockholders' Equity:
     Preferred stock, $.01 par value; shares authorized - 2,000,000; none issued                -              -
     Common stock, $.01 par value; shares authorized - 30,000,000;
       Issued - 20,923,510 and 20,612,764 (including shares held in treasury)                 209            206
     Additional paid-in capital                                                           136,882        135,894
     Accumulated (deficit) earnings                                                       (54,400)        42,483
     Accumulated other comprehensive loss                                                    (458)          (445)
     Common stock held in treasury, at cost (172,000 shares)                               (1,994)        (1,994)
                                                                                        ---------      ---------
Total stockholders' equity                                                                 80,239        176,144
                                                                                        ---------      ---------
Total liabilities and stockholders' equity                                              $ 400,020      $ 572,359
                                                                                        =========      =========
</TABLE>

SEE ACCOMPANYING NOTES.


                                       28
<PAGE>

                          AFTERMARKET TECHNOLOGY CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                      2000         1999         1998
                                                                   ---------    ---------    ---------
<S>                                                                <C>          <C>          <C>
Net sales                                                          $ 343,357    $ 328,024    $ 272,643
Cost of sales                                                        222,939      216,217      195,109
Special charges                                                            -          113            -
                                                                   ---------    ---------    ---------
Gross profit                                                         120,418      111,694       77,534

Selling, general and
    administrative expense                                            48,971       47,026       42,720
Amortization of intangible assets                                      5,025        5,065        4,572
Special charges                                                            -        3,864        4,024
                                                                   ---------    ---------    ---------

Income from operations                                                66,422       55,739       26,218

Other income (expense), net                                              173          323         (376)
Interest expense                                                      23,900       22,774       20,869
                                                                   ---------    ---------    ---------

Income from continuing operations, before income taxes                42,695       33,288        4,973

Income tax expense                                                    16,249       12,224        2,841
                                                                   ---------    ---------    ---------

Income from continuing operations                                     26,446       21,064        2,132

Loss from discontinued operations, net of income taxes              (123,329)     (14,257)      (9,247)
                                                                   ---------    ---------    ---------

Income (loss) before extraordinary items                             (96,883)       6,807       (7,115)

Extraordinary items, net of income taxes                                   -            -         (703)
                                                                   ---------    ---------    ---------
Net income (loss)                                                  $ (96,883)   $   6,807    $  (7,818)
                                                                   =========    =========    =========
Per common share - basic:
    Income from continuing operations                              $    1.28    $    1.04    $    0.11
    Loss from discontinued operations                                  (5.97)       (0.71)       (0.47)
    Extraordinary items                                                    -            -        (0.03)
                                                                   ---------    ---------    ---------
    Net income (loss)                                              $   (4.69)   $    0.33    $   (0.39)
                                                                   =========    =========    =========
Per common share - diluted:
    Income from continuing operations                              $    1.25    $    1.00    $    0.10
    Loss from discontinued operations                                  (5.83)       (0.68)       (0.44)
    Extraordinary items                                                    -            -        (0.03)
                                                                   ---------    ---------    ---------
    Net income (loss)                                              $   (4.58)   $    0.32    $   (0.37)
                                                                   =========    =========    =========
</TABLE>

SEE ACCOMPANYING NOTES.


                                       29
<PAGE>

                          AFTERMARKET TECHNOLOGY CORP.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                               Accumu-     Accumulated
                                                                 Additional     lated         Other
                                           Preferred   Common     Paid-In     (Deficit)    Comprehensive   Treasury
                                             Stock      Stock     Capital      Earnings    Income (Loss)    Stock         Total
                                             -----      -----    ----------    --------    -------------    -----         -----
<S>                                        <C>         <C>       <C>          <C>          <C>             <C>          <C>
Balance at January 1, 1998                 $     -     $  195    $  131,604   $  43,494    $         136   $      -     $  175,429

Issuance of 834,494 shares of common
     stock from exercise of stock options        -          9         3,500           -                -          -          3,509

Purchase of 172,000 shares of common
     stock for treasury                          -          -             -           -                -     (1,994)        (1,994)


Net loss                                         -          -             -      (7,818)               -          -         (7,818)
Translation adjustment                           -          -             -           -           (1,115)         -         (1,115)
                                                                                                                        ----------
     Comprehensive loss                                                                                                     (8,933)
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1998                     -        204       135,104      35,676             (979)    (1,994)       168,011

Issuance of 200,996 shares of common
     stock from exercise of stock options        -          2           790           -                -          -            792

Net income                                       -          -             -       6,807                -          -          6,807
Translation adjustment                           -          -             -           -              534          -            534
                                                                                                                        ----------
     Comprehensive income                                                                                                    7,341
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 1999                     -        206       135,894      42,483             (445)    (1,994)       176,144

Issuance of 196,528 shares of common
     stock from exercise of stock options        -          2           989           -                -          -            991

Issuance of 114,218 shares of common
     stock from exercise of stock warrants       -          1            (1)          -                -          -              -


Net loss                                         -          -             -     (96,883)               -          -        (96,883)
Translation adjustment                           -          -                         -              (13)         -            (13)
                                                                                                                        ----------
     Comprehensive loss                                                   -                                                (96,896)
                                           ---------------------------------------------------------------------------------------
Balance at December 31, 2000               $     -     $  209    $  136,882  $  (54,400)   $        (458)  $ (1,994)    $   80,239
                                           =======================================================================================
</TABLE>

SEE ACCOMPANYING NOTES.


                                       30
<PAGE>

                               AFTERMARKET TECHNOLOGY CORP.
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                          2000         1999         1998
                                                                       ---------     --------     --------
<S>                                                                    <C>           <C>          <C>
OPERATING ACTIVITIES:
Net income (loss)                                                      $ (96,883)    $  6,807     $  (7,818)
Net loss from discontinued operations                                    123,329       14,257         9,247
Extraordinary items                                                            -            -           703
                                                                       ---------     --------     ---------
Income from continuing operations                                         26,446       21,064         2,132

Adjustments to reconcile income from continuing
  operations to net cash provided by operating activities -
  continuing operations:
       Depreciation and amortization                                      12,146       11,722         9,681
       Amortization of debt issuance costs                                 1,238          978           766
       Provision for losses on accounts receivable                           208           27           521
       Loss on sale of equipment                                             144           19           101
       Deferred income taxes                                              13,386       (2,577)       (1,314)
       Changes in operating assets and liabilities,
         net of businesses acquired or discontinued/sold:
           Accounts receivable                                           (12,862)       5,567         3,163
           Inventories                                                    (7,447)       1,096        (1,107)
           Prepaid and other assets                                       (4,917)      12,070           745
           Accounts payable and accrued expenses                          13,849        8,550        11,320
                                                                       ---------     --------     ---------
Net cash provided by operating activities -
  continuing operations                                                   42,191       58,516        26,008

Net cash provided by (used in) operating activities -
  discontinued operations                                                (12,430)     (28,449)        1,368

INVESTING ACTIVITIES:
Purchases of property, plant and equipment                               (11,376)      (6,948)       (7,523)
Acquisition of company, net of cash received                                   -            -      (114,761)
Proceeds from sale of businesses                                          60,079        3,808             -
Proceeds from sale of equipment                                              103          164           722
                                                                       ---------     --------     ---------
Net cash provided by (used in) investing activities -
  continuing operations                                                   48,806       (2,976)     (121,562)

Net cash used in investing activities -
  discontinued operations                                                 (3,006)     (57,155)      (16,657)

FINANCING ACTIVITIES:
Borrowings (payments) on credit facility, net                            (79,859)      48,209       127,250
Payments on bank line of credit, net                                        (543)      (1,541)       (2,261)
Payment of debt issuance costs                                              (144)      (1,274)       (2,425)
Redemption of senior subordinated notes                                        -            -       (10,000)
Proceeds from exercise of stock options                                      434          625         1,394
Purchase of common stock for treasury                                          -            -        (1,994)
Payments on amounts due to sellers of acquired companies                  (1,173)      (8,098)         (650)
Payments of deferred compensation related to acquired company               (700)           -             -
                                                                       ---------     --------     ---------
Net cash provided by (used in) financing activities                      (81,985)      37,921       111,314

Effect of exchange rate changes on cash and cash equivalents                 (10)          32            31
                                                                       ---------     --------     ---------

Increase (decrease) in cash and cash equivalents                          (6,434)       7,889           502

Cash and cash equivalents at beginning of year                             8,469          580            78
                                                                       ---------     --------     ---------
Cash and cash equivalents at end of year                               $   2,035     $  8,469     $     580
                                                                       =========     ========     =========
===========================================================================================================
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
       Interest                                                        $  29,203     $ 25,166     $  21,335
       Income taxes, net                                                   3,856       (6,426)        4,420
Noncash investing activities:
       Sale of business - note and preferred stock received               10,294            -             -
</TABLE>

SEE ACCOMPANYING NOTES.


                                       31
<PAGE>

                          AFTERMARKET TECHNOLOGY CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


NOTE 1.   THE COMPANY

          The Company has two reportable segments in continuing operations: the
Drivetrain Remanufacturing segment and the Logistics segment. The Drivetrain
Remanufacturing segment consists of four operating units that sell
remanufactured transmissions directly to DaimlerChrysler, Ford, General Motors
and several foreign Original Equipment Manufacturers ("OEMs"), primarily for use
as replacement parts by their domestic dealers during the warranty and
post-warranty periods following the sale of a vehicle. In addition, the
Drivetrain Remanufacturing segment sells select remanufactured and newly
assembled engines to certain European OEMs, including Ford's and General
Motors's European operations and Jaguar. The Company's Logistics segment is
comprised of three businesses: a provider of value-added warehouse and
distribution services, turnkey order fulfillment and information services for
AT&T Wireless Services; a provider of returned material reclamation and
disposition services for Ford and General Motors; and an automotive electronic
components remanufacturing and distribution business, primarily for Delphi and
Visteon. Established in 1994, the Company maintains manufacturing facilities and
logistics operations in the United States and a manufacturing facility in the
United Kingdom.

          As discussed more thoroughly in Note 3, the Company's Independent
Aftermarket segment, which contained (i) ATC Distribution Group, Inc.
("Distribution Group"), a distributor of remanufactured transmissions and
related drivetrain components to independent aftermarket customers, which was
sold in October 2000 and (ii) the domestic remanufactured engines business,
which remanufactures and distributes domestic and foreign engines primarily
through a branch distribution network to independent aftermarket customers, is
presented as discontinued operations in the accompanying financial statements.

NOTE 2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

          The accompanying consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.

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.

CASH AND CASH EQUIVALENTS

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

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,
cores and finished goods. Consideration is given to deterioration, obsolescence
and other factors in evaluating the estimated market value of inventory based
upon management's judgement and available information.

PROPERTY, PLANT AND EQUIPMENT

          Property, plant and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using straight-line methods over the
estimated useful lives of the assets for financial reporting purposes, as
follows: five to twelve years for machinery and equipment, three to six years
for autos and


                                       32
<PAGE>

trucks, three to ten years for furniture and fixtures and up to 40 years for
buildings and leasehold improvements. Depreciation and amortization expense was
$7,122, $6,655 and $5,109 for the years ended December 31, 2000, 1999 and 1998,
respectively.

INTERNAL USE COMPUTER SOFTWARE

          The Company accounts for these costs in accordance with the provisions
of SOP 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED
FOR INTERNAL USE. Accordingly, the Company expenses costs incurred in the
preliminary stage and, thereafter, capitalizes costs incurred in developing or
obtaining internal use software and Web site development. Such capitalized costs
are included in property, plant and equipment and are amortized over a period of
not more than five years.

FOREIGN CURRENCY TRANSLATION

          The functional currency for the Company's foreign operations is the
applicable local currency. Accordingly, all balance sheet accounts have been
translated using the exchange rates in effect at the balance sheet date, and
income statement amounts have been translated using the average exchange rates
for the year. The translation adjustments resulting from the changes in exchange
rates have been reported separately as a component of stockholders' equity. The
effects of transaction gains and losses were not material for the periods
presented.

DEBT ISSUANCE COSTS

          Debt issuance costs incurred in connection with the sale of the Senior
Notes (see Note 10) and the Credit Facility (see Note 9) are being amortized
over the life of the debt using a method which approximates the interest method.
Debt issuance costs are reflected net of accumulated amortization of $4,608 and
$3,370 at December 31, 2000 and 1999, respectively.

COST IN EXCESS OF NET ASSETS ACQUIRED

          The excess of cost over the fair market value of the net assets of
businesses acquired (goodwill) is amortized on a straight-line basis over 40
years. Cost in excess of net assets acquired is reflected net of accumulated
amortization of $22,999 and $17,858 at December 31, 2000 and 1999, respectively.

OTHER ASSETS - LONG TERM

          As part of the proceeds from the sale of the Distribution Group (see
Note 3), the Company received from the Buyer (i) Series B preferred stock valued
by the Company at $1.9 million (stated value of $8.7 million net of a valuation
allowance of $6.8 million) and (ii) an 18% senior subordinated promissory note
dated October 27, 2000 ("18% Buyer Note") with a principal amount of $10.1
million and a discounted value of $8.4 million. The 18% Buyer Note, which
matures on October 28, 2005, bears interest at (i) 15% per annum compounded
semi-annually due and payable in arrears semi-annually on April 27 and October
27 of each year or until the principal amount is paid in full and (ii) 3% per
annum compounded semi-annually due and payable in full at the earlier of the
maturity date or date until the principal amount is paid in full. During the
year ended December 31, 2000, $228 of interest income, classified as other
income (expense), net on the accompanying statements of operations, was recorded
on the 18% Buyer Note. No income has been recorded for the Series B preferred
stock. Both of these financial instruments are classified as a part of other
assets in the accompanying balance sheet.

IMPAIRMENT OF LONG-LIVED AND INTANGIBLE ASSETS

          Long-lived assets and identifiable intangibles (including related cost
in excess of net assets acquired) are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of the related asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of the asset to future undiscounted cash
flows expected to be generated by the asset. If the asset is determined to be
impaired, the impairment recognized is measured by the amount by which the
carrying value of the asset exceeds its fair value.


                                       33
<PAGE>

CONCENTRATION OF CREDIT RISK

          Financial instruments that potentially subject the Company to a
significant concentration of credit risk consist of accounts receivable from its
customers including DaimlerChrysler, Ford, General Motors and AT&T Wireless
Services, which are located throughout the United States and, to a lesser
extent, the United Kingdom. The credit risk associated with the Company's
accounts receivable is mitigated by its credit evaluation process, although
collateral is not required. The Company grants credit to certain customers who
meet pre-established credit requirements.

          Accounts receivable is reflected net of an allowance for doubtful
accounts of $380 and $596 at December 31, 2000 and 1999, respectively.

REVENUE RECOGNITION

          Revenues are recognized at the time of shipment to the customer or as
services are performed.

WARRANTY COST RECOGNITION

          The Company accrues for estimated warranty costs as sales are made.

STOCK- BASED COMPENSATION

          The Company has elected to follow APB Opinion No. 25, ACCOUNTING FOR
STOCK ISSUED TO EMPLOYEES, and related interpretations in accounting for the
stock options granted to employees and directors. Accordingly, employee and
director compensation expense is recognized only for those options whose price
is less than fair market value at the measurement date. The Company has adopted
the disclosure-only provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION.

SEGMENT REPORTING

          During 2000, the Company realigned certain of its business units under
a common management team to form the Logistics segment. In addition, the Company
changed the name of its OEM segment to Drivetrain Remanufacturing. In accordance
with SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION, the new segment classifications, organized in terms of the
Company's current strategy and positioning, represent how the Company's
financial information is reviewed by its chief operating decision maker. In
addition, the Company revised its allocation methodology of corporate overhead
and changed from a partial to a full allocation of expenses relating to the
Company's corporate offices. All prior-year segment information has been
restated to conform to the 2000 presentation. (See Note 17.)

OFF BALANCE SHEET DERIVATIVE INSTRUMENTS

          During 1998, the Company entered into an interest rate swap agreement.
The interest rate swap agreement is used by the Company to manage interest rate
risk on a portion of its floating rate credit facility. The interest rate swap
is matched as a hedge against, and originally had the same maturity date as, the
Credit Facility. The interest rate swap agreement converts the floating interest
rate on a portion of the Credit Facility to a fixed rate. The cost of the
interest rate swap is recorded as part of interest expense and accrued expenses.
During 1999, the Company, in exchange for consideration received, shortened the
maturity dates on a portion of its interest rate swap agreements to January
2001, and recorded a deferred gain of $636, which will be recognized over the
life of the original agreements. The balance of the deferred gain was $452 and
$631 at December 31, 2000 and 1999, respectively. Fair value of these
instruments is based on estimated current settlement cost.


                                       34
<PAGE>

NEW ACCOUNTING STANDARDS

          In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (as amended by
SFAS No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -
DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133 issued June 1999 and
amended by SFAS No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND
CERTAIN HEDGING ACTIVITIES - AN AMENDMENT TO FASB STATEMENT 133 issued June
2000), effective for periods beginning after June 15, 2000. SFAS No. 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated a part of a hedge and, if it is, the type of hedge
transaction. Adoption of SFAS No. 133 will not have a significant effect on the
Company's results of operations or its financial position. The Company was
required to adopt SFAS No. 133 on January 1, 2001.

RECLASSIFICATIONS

          Certain prior-year amounts have been reclassified to conform to the
2000 presentation.

NOTE 3:   DISCONTINUED INDEPENDENT AFTERMARKET SEGMENT

          On August 3, 2000, the Company adopted a plan to discontinue the
Independent Aftermarket segment of its business, containing the Distribution
Group, located in the United States, Canada and Mexico, and its remanufactured
engines business located in the United States. The Distribution Group
distributed remanufactured transmissions and related drive train components to
independent aftermarket customers for use in the repair of automobiles and light
trucks primarily following expiration of the new vehicle warranty. The
remanufactured engines business remanufactures and distributes domestic and
foreign engines primarily through a branch distribution network to independent
aftermarket customers. Because the measurement date occurred prior to issuance
of the Company's June 30, 2000 interim financial statements, the discontinued
presentation was first shown on those second quarter and year-to-date condensed
interim financial statements.

          On October 27, 2000, the Company consummated the sale of all the
outstanding capital stock of the Distribution Group to ATCDG Acquisition Corp.,
Inc. ("Buyer"), an indirect wholly owned subsidiary of Aceomatic-Recon Holdings
Corporation, which is an affiliate of The Riverside Company. The purchase price
for the stock of the Distribution Group was comprised of $60.1 million in cash,
Series B preferred stock of Buyer valued by the Company at $1.9 million (stated
value of $8.7 million net of a valuation allowance of $6.8 million) and an 18%
senior subordinated promissory note of the Buyer with a principal amount of
$10.1 million and a discounted value of $8.4 million. In addition, the cash
purchase price is subject to increase or decrease if it is determined that the
Distribution Group's net working capital as of the closing was above or below a
specified target amount.

          On the measurement date, the Company estimated a loss on disposal
of the Independent Aftermarket segment of $114,849 (net of tax benefit of
$59,164), which includes a provision for anticipated losses from the
measurement date until disposal, the write-off of previously allocated
goodwill, provisions for the valuation of certain assets, and anticipated
costs of disposal including lease terminations, severance, retention and
other employee benefits, professional fees and other costs directly
associated with the discontinuance.

          The estimated loss on the sale of the Distribution Group and the
actual losses from discontinued operations incurred since the measurement date
have been applied against the accrued loss established effective with the
measurement date. The accrual balance as of December 31, 2000 of $8,125,
classified as liabilities of discontinued operations, represents an estimate of
the remaining obligations and other costs related to the sale of the
Distribution Group and the disposal of the remanufactured aftermarket engines
business.

          The consolidated statements of operations have been reclassified to
report the operating results of the Independent Aftermarket segment as
discontinued operations and accordingly, their results have been excluded from
continuing operations for all periods presented. Net sales from the Independent
Aftermarket were $201,950, $236,941 and $214,130 for the years ended December
31, 2000, 1999 and 1998, respectively. Interest expense for the year ended
December 31, 2000 of $6,058 has been allocated to the discontinued


                                       35
<PAGE>

operations based on the actual consideration received from the sale of the
Distribution Group and the anticipated consideration from the sale of the
remanufactured aftermarket engines business. Interest expense for the years
ended December 31, 1999 and 1998 of $4,121 and $2,804, respectively, has been
allocated to the discontinued operations based on the actual consideration
received from the sale of the Distribution Group, less the amount of debt
attributable to the acquisition of All Trans (part of the Distribution Group) in
the fourth quarter of 1999, and the anticipated consideration from the sale of
the remanufactured aftermarket engines business.

          Details of the loss recorded from discontinued operations are as
follows:

<TABLE>
<CAPTION>
                                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                                    --------------------------------------
                                                                      2000            1999          1998
                                                                    --------        --------      --------
<S>                                                                 <C>             <C>           <C>
Loss from operations........................................        $ 12,848        $ 22,336      $ 15,264
Income tax benefit..........................................          (4,368)         (8,079)       (6,017)
                                                                    --------        --------      --------
Loss from operations, net of income taxes...................           8,480          14,257         9,247
                                                                    --------        --------      --------
Estimated loss from disposal................................         161,081               -             -
Estimated loss from operations between measurement date and
  disposal..................................................          12,932               -             -
Income tax benefit..........................................         (59,164)              -             -
                                                                    --------        --------      --------
Estimated loss from disposal, net of income taxes...........         114,849               -             -
                                                                    --------        --------      --------
Loss from discontinued operations, net of income taxes......        $123,329        $ 14,257      $  9,247
                                                                    ========        ========      ========
</TABLE>

          The net assets of discontinued operations held for sale in the balance
sheets include the following:

<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,
                                                                     --------------------------------------
                                                                         2000                     1999
                                                                     -----------              -------------
<S>                                                                  <C>                      <C>
Accounts receivable, net.....................................        $     3,823              $      24,520
Inventories, net.............................................             16,012                     84,213
Other current assets.........................................                355                      3,476
Property, plant and equipment, net...........................              7,996                     35,972
Cost in excess of net assets acquired, net...................             15,614                    115,065
Other, net...................................................                  -                        841
Accounts payable.............................................                (52)                   (11,151)
Accrued expenses.............................................             (8,661)                   (13,092)
                                                                     -----------              -------------
                                                                          35,087                    239,844
Valuation allowances for losses on discontinued operations...            (25,087)                         -
                                                                     -----------              -------------
Assets of discontinued operations held for sale, net.........             10,000                    239,844
Liabilities of discontinued operations...................                 (8,125)                         -
                                                                     -----------              -------------
Net assets of discontinued operations....................            $     1,875              $     239,844
                                                                     ===========              =============
</TABLE>

NOTE 4.   ACQUISITIONS AND SALE OF SUBSIDIARIES

          In July 1997, the Company acquired substantially all of the assets of
ATS Remanufacturing ("ATS"), a remanufacturer of automatic transmissions and
related components located in Gastonia, North Carolina. To complete this
acquisition, the Company made cash payments totaling $12.9 million, including
transaction fees and related expenses. In addition, the ATS acquisition requires
subsequent payments due on each of the first eight anniversaries and the fifth
through 14th anniversaries of the closing date to the seller and certain other
key officers and employees of ATS, respectively. Through December 31, 2000, the
Company had made $3.9 million of additional payments related to the ATS
acquisition. Substantially all of the remaining payments to be made in the
future, which will aggregate to approximately $15.0 million (present value $12.7
million as of December 31, 2000), are contingent upon the attainment of certain
sales levels by ATS, which the Company believes are more likely than not to be
attained. Goodwill recorded for ATS approximated $26.1 million. The operations
of ATS were not material to the Company's consolidated operations.


                                       36
<PAGE>

          In March 1998, the Company acquired substantially all the assets of
the OEM Division of Autocraft Industries, Inc. ("Autocraft"), which contained
(i) a remanufacturer and distributor of remanufactured transmissions to Ford,
(ii) a value added logistics business providing services to AT&T Wireless
Services, (iii) a reverse logistics services business, (iv) a remanufacturer and
distributor of electronic control modules, instrument display clusters and
radios and (v) a manufacturer and distributor of select remanufactured and newly
assembled engines to certain European OEMs, including Ford's and General
Motors's European operations and Jaguar. The purchase price of approximately
$121.7 million, including transaction fees and related expenses, includes $5.7
million paid during 1999 based on the performance of the OEM Division's European
operations during 1998. Goodwill recorded approximated $73.4 million.

          These acquisitions have been accounted for under the purchase method
of accounting. Accordingly, the allocation of the cost of the acquired assets
and liabilities has been made on the basis of the estimated fair value. The
consolidated financial statements include the operating results of each business
from the date of acquisition.

          In December 1998, the Company agreed to sell the assets of its
Canadian heavy-duty truck remanufacturing operation ("Mascot") for $3.8 million
in cash and the assumption of certain liabilities. As part of this transaction,
the Company recorded a $1.2 million loss in the fourth quarter of 1998. In
February 1999, the Company collected the $3.8 million of cash proceeds.

          The pro forma effects of the 1998 Autocraft acquisition and the sale
of Mascot in 1999 were immaterial to the Company's results of operations for the
years ended December 31, 1999 and 1998.

NOTE 5.   RELATED-PARTY TRANSACTIONS

          At December 31, 2000, amounts due to sellers of acquired companies and
deferred compensation consist of additional purchase price payable to former
owners and certain officers and employees of ATS, acquired in 1997. Amounts are
payable through 2011.

          During 1999 and 1998, the Company received fees totaling $1,229 and
$1,062, respectively, from The Fred Jones Companies, Inc., the former owner of
Autocraft, for computer systems support services provided by the Company. In
addition, during 1999 and 1998, the Company sold $63 and $95, respectively, of
products to certain automobile dealerships owned by a limited liability company
in which The Fred Jones Companies has a significant equity interest. Fred Hall,
a former director of the Company, is Chairman, President, Chief Executive
Officer and a significant stockholder of The Fred Jones Companies. In 2000, the
Company continued to have transactions with The Fred Jones Companies, Inc., but
is no longer considered a related party as Fred Hall left his position on the
Board of Directors of the Company during 1999.

          The Company rents certain of its facilities from previous owners of
acquired companies. Rent expense includes amounts paid to certain of these
related parties of $318 and $1,033 for the years ended December 31, 1999 and
1998, respectively. No amounts were paid for related party rents for the year
ended December 31, 2000.

          The Company paid or owed at year end to Aurora Capital Partners
("ACP"), which controls the Company's largest stockholders, $750, $800 and
$1,875 in fees for investment banking services provided in connection with
companies acquired or divested in 2000, 1999 and 1998, respectively. The amounts
paid to ACP in 2000 and 1999 were associated with the Distribution Group and are
presented as discontinued operations in the accompanying financial statements.
In addition, ACP was paid management fees of $549, $596 and $541 in 2000, 1999
and 1998, respectively. The Company reimburses ACP for out-of-pocket expenses
incurred in connection with providing management services. ACP is also entitled
to various additional fees depending on the Company's profitability or certain
significant corporate transactions. No such additional fees were paid in 2000,
1999 or 1998.

          As part of the stock purchase agreement between the Company and the
Buyer of the Distribution Group, the Company receives fees for information
systems services provided to Buyer. During 2000, the Company received $11 for
such services and is owed $316 at December 31, 2000. The information systems
service agreement between the Company and the Buyer expires on March 31, 2001.


                                       37


<PAGE>

NOTE 6.   INVENTORIES

          Inventories of continuing operations consist of the following:

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                               ----------------------------------------
                                                                     2000                        1999
                                                               -----------                  -----------
       <S>                                                     <C>                          <C>
       Raw materials, including core inventories......         $    38,075                  $    28,284
       Work-in-process................................               1,672                        1,855
       Finished goods.................................               3,766                        6,150
                                                               -----------                  -----------
                                                               $    43,513                  $    36,289
                                                               ===========                  ===========
</TABLE>


NOTE 7.   PROPERTY, PLANT AND EQUIPMENT

          Property, plant and equipment of continuing operations are summarized
as follows:

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                     ----------------------------------
                                                                        2000                     1999
                                                                     -----------            -----------
       <S>                                                           <C>                    <C>
       Land..................................................        $     2,029            $     2,029
       Buildings.............................................             10,616                 10,074
       Machinery and equipment...............................             42,067                 32,849
       Autos and trucks......................................              1,023                    887
       Furniture and fixtures................................              2,640                  2,271
       Leasehold improvements................................             10,706                  9,906
       Construction in process...............................                698                  1,017
                                                                     -----------            -----------
                                                                          69,779                 59,033
       Less:  Accumulated depreciation and amortization..                (25,709)               (19,636)
                                                                     -----------            -----------
                                                                     $    44,070            $    39,397
                                                                     ===========            ===========
</TABLE>

NOTE 8.   ACCRUED EXPENSES

          Accrued expenses of continuing operations are summarized as follows:

<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                       --------------------------------
                                                                        2000                     1999
                                                                       ---------               --------
    <S>                                                                <C>                     <C>
    Payroll and related costs.........................                 $  10,466               $  8,242
    Interest payable..................................                     5,818                  7,101
    Non-income related taxes..........................                     2,851                  2,863
    Warranty..........................................                     1,181                    970
    Restructuring and other costs.....................                       223                  3,070
    Other.............................................                     6,045                  7,470
                                                                       ---------               --------
                                                                       $  26,584               $ 29,716
                                                                       =========               ========
</TABLE>

NOTE 9.   CREDIT FACILITY

          In March 1998, the credit agreement for the Company's $100.0 million
credit facility with The Chase Manhattan Bank, as agent (the "Bank"), was
amended and restated to provide for a new credit facility comprised of a $100.0
million line of credit (the "Revolver") and a $120.0 million term loan (the
"Term Loan") (collectively, the "Credit Facility") to finance the Company's
working capital requirements, future acquisitions and the acquisition of
Autocraft (see Note 4). In December 1999, the Company's credit agreement was
amended and restated to allow for an additional $10.0 million in borrowings
under the Term Loan. Amounts advanced under the Credit Facility are secured by
substantially all the assets of the Company.


                                       38
<PAGE>

Amounts outstanding under the Term Loan are payable in quarterly installments
through December 31, 2003. Amounts advanced under the Revolver become due on
December 31, 2003. The balance outstanding on the Term Loan as of December 31,
2000 and 1999 was $44.1 million and $103.4 million, respectively. The Company
may prepay outstanding advances under the Revolver or the Term Loan in whole or
in part without incurring any premium or penalty. The balance on the Revolver
was $62.6 million and $83.2 million as of December 31, 2000 and 1999,
respectively. In addition, the Company had outstanding letters of credit issued
against the Credit Facility totaling $4.2 million and $1.9 million at December
31, 2000 and 1999, respectively.

          At the Company's election, amounts advanced under the Credit
Facility will bear interest at either (i) the Alternate Base Rate plus a
specified margin, or (ii) the Eurodollar Rate plus a specified margin. 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, six or, if available by all lenders,
nine months (as selected by the Company). The applicable margins for both
Alternate Base Rate and Eurodollar Rate loans are subject to a quarterly
adjustment based on the Company's leverage ratio as of the end of the four
fiscal quarters then completed. At December 31, 2000, the Alternate Base Rate
and the Eurodollar Rate margins are 1.00% and 2.00%, respectively. Interest
payments on advances that bear interest based upon the Alternate Base Rate
are due quarterly in arrears and on the termination date, and interest
payments on advances that 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
average interest rate on the credit facility for the years ended December 31,
2000, 1999 and 1998 was 8.75%, 7.70% and 6.72%, respectively.

          The Company paid the Bank a facility and commitment fee upon the
effective date of the Credit Facility and subsequently in December 1999, related
to the increase in the Term Loan. In addition, the Company is required to pay
the Bank quarterly in arrears a commitment fee equal to a per annum percentage
of the average daily unused portion of the Credit Facility during such quarter.
The commitment is subject to a quarterly adjustment based on the Company's
leverage ratio as of the end of the four fiscal quarters then completed. At
December 31, 2000, the quarterly commitment fee percentage is 0.500%. 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 rate per annum equal to
the applicable margin then in effect for advances bearing interest at the
Eurodollar Rate.

          During 1998, in order to convert $50.0 million of its Credit Facility
to a fixed rate, the Company entered into a series of interest rate swap
agreements scheduled to mature during July 2003. During 1999, the Company
revised the maturity dates on $35.0 million of the swap agreements to January
2001 in exchange for proceeds of $0.6 million. The proceeds were recorded as a
deferred gain and are being amortized over the original life of the interest
rate swap agreements.

          The Credit Facility contains several covenants, including ones that
require the Company to maintain certain levels of net worth, leverage and cash
flow coverage, and others that limit the Company's ability to incur
indebtedness, make capital expenditures, create liens, engage in mergers and
consolidations, make restricted payments (including dividends), sell assets,
make investments, issue stock and engage in transactions with affiliates of the
Company and its subsidiaries.

          Based on its operating results during the six months ended June 30,
2000 and in conjunction with the decision to discontinue the Independent
Aftermarket segment (see Note 3), the Company was in technical default of the
net worth, leverage and interest coverage covenants of the Credit Facility and
the Company's interest rate swap agreement as of June 30, 2000. Due to these
defaults, the Company was not able to borrow under the Credit Facility. During
August 2000, the Company obtained from its lenders waivers of the various
defaults and certain amendments to the Credit Facility and the interest rate
swap agreement. As of December 31, 2000, the Company was in compliance with the
various covenants contained in the Credit Facility.

          Annual maturities of the Company's Credit Facility are as follows as
of December 31, 2000:

<TABLE>
<S>                                                     <C>
2001................................................... $ 14,700
2002...................................................   14,700
2003...................................................   77,300
                                                        --------
                                                        $106,700
                                                        ========
</TABLE>


                                       39
<PAGE>

NOTE 10.  12% SERIES B AND D SENIOR SUBORDINATED NOTES

          On August 2, 1994, the Company completed a private placement issuance
of $120.0 million of 12% Series A Senior Subordinated Notes due in 2004.
Proceeds from the issuance were used to partially finance the acquisitions made
by the Company in 1994. The privately placed debt was subsequently exchanged for
public debt (Series B).

          On June 1, 1995, the Company completed another private placement
issuance of $40.0 million of 12% Series C Senior Subordinated Notes due in 2004.
Proceeds of $42.4 million from the issuance were used to finance acquisitions
made by the Company during 1995. These notes have an effective interest rate of
10.95%. The privately placed debt was subsequently exchanged for public debt
(Series D).

          Interest on the 12% Series B and Series D Senior Subordinated Notes
(the "Senior Notes") is payable semiannually on February 1 and August 1 of each
year. The Senior Notes will mature on August 1, 2004. Beginning on August 1,
1999, and each anniversary date thereafter, the Senior Notes may be redeemed at
the option of the Company, in whole or in part, at the redemption prices
specified below, plus accrued and unpaid interest:

<TABLE>
<CAPTION>
          AUGUST 1,                                        REDEMPTION PRICE
          ---------                                        ----------------
<S>                                                        <C>
          2000...........................................         104%
          2001...........................................         102
          2002 and thereafter............................         100
</TABLE>

          During 1997, in accordance with the terms of the Senior Notes, the
Company redeemed $30.0 million in principal amount of the Series B Senior Notes
and $10.0 million in principal amount of the Series D Senior Notes. In
connection with these redemptions, the Company recorded an extraordinary loss of
$3.8 million, net of tax.

          During 1998, the Company purchased and retired a total of $2.2
million in principal amount of the Series D Senior Notes and $7.4 million in
principal amount of the Series B Senior Notes in open market transactions. In
connection with these purchases, the Company recorded an extraordinary loss
of $0.3 million, net of tax.

          In the event of a change in control, the Company would be required to
offer to repurchase the Senior Notes at a price equal to 101% of the principal
amount plus accrued and unpaid interest.

          The Senior Notes are general obligations of the Company, subordinated
in right of payment to all existing and future senior debt (including the
Company's Credit Facility). The Senior Notes are guaranteed by each of the
Company's existing and future subsidiaries other than any subsidiary designated
as an unrestricted subsidiary (as defined). As of December 31, 2000, the Company
had no unrestricted subsidiaries. The Company may incur additional indebtedness,
including borrowings under its Credit Facility (see Note 9), subject to certain
limitations as contained in the Senior Notes indentures.

          The indentures under which the Senior Notes were issued contain
certain covenants that, among other things, limit the Company's ability to incur
additional indebtedness under certain conditions, issue disqualified capital
stock, engage in transactions with affiliates, incur liens, make certain
restricted payments (including dividends), make certain asset sales and permit
certain restrictions on the ability of its subsidiaries to make distributions.


                                       40
<PAGE>

NOTE 11.  INCOME TAXES

          Income tax expense from continuing operations consists of the
following:

<TABLE>
<CAPTION>
                                      FOR THE YEARS ENDED DECEMBER 31,
                                      --------------------------------
                                         2000     1999       1998
                                       --------  --------   -------
<S>                                    <C>       <C>        <C>
Current:
  Federal............................. $ 12,623  $ 10,146   $ 2,293
  State...............................    1,109       965       327
  Foreign.............................       70         -       516
                                       --------  --------   -------
Total current.........................   13,802    11,111     3,136
Deferred:
  Federal.............................    2,486     1,550      (249)
  State...............................       13        (4)      (46)
  Foreign.............................      (52)     (433)        -
                                       --------  --------   -------
Total deferred........................    2,447     1,113      (295)
                                       --------  --------   -------
                                       $ 16,249  $ 12,224   $ 2,841
                                       ========  ========   =======
</TABLE>

          In addition, the Company has recognized tax benefits related to the
exercise of certain non-qualified stock options and the disposition of certain
ISO shares prior to the expiration of the statutory holding period as an
increase in stockholders' equity of $411, $64 and $2,196 for the years ended
December 31, 2000, 1999 and 1998, respectively.

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

<TABLE>
<CAPTION>
                                        FOR THE YEARS ENDED DECEMBER 31,
                             -----------------------------------------------------
                                    2000             1999               1998
                             ----------------  ----------------   ----------------
                             AMOUNT   PERCENT  AMOUNT   PERCENT   AMOUNT   PERCENT
                             ------   -------  -------  -------   -------  -------
<S>                          <C>      <C>      <C>      <C>       <C>      <C>
Tax at U.S. statutory rates  $14,943    35.0%  $11,651     35.0%  $ 1,741    35.0%
State income taxes, net of
  federal tax benefit......    1,027     2.4       952      2.9       149     3.0
Foreign income taxes.......     (495)   (1.1)     (740)    (2.2)      675    13.6
Goodwill amortization......      232     0.5       235      0.7       234     4.7
Other......................      542     1.3       126      0.3        42     0.8
                             -------  ------   -------   ------   -------  ------
                             $16,249    38.1%  $12,224     36.7%  $ 2,841    57.1%
                             =======  ======   =======   ======   =======  ======
</TABLE>

          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 assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                                              DECEMBER 31,
                                                                   -----------------------------
                                                                         2000              1999
<S>                                                                <C>              <C>
Deferred tax assets:
   Inventory obsolescence reserve................................. $         464    $      3,912
   Product warranty accruals......................................         1,538           1,088
   Special charge accruals........................................         2,030           3,067
   Discontinued operations reserve................................        12,254               -
   Other accruals and deferrals...................................         2,889           5,545
   Net operating losses...........................................        49,186           1,814
                                                                   -------------    ------------
Total deferred tax assets.........................................        68,361          15,426
Deferred tax liabilities:
   Amortization of intangible assets .............................        12,485          12,270
   Accelerated depreciation.......................................         1,388           2,151
   Other accruals and deferrals...................................           545             669
                                                                   -------------    ------------
Total deferred tax liabilities....................................        14,418          15,090
   Valuation allowance............................................        (9,187)         (1,368)
                                                                   -------------    ------------
Net deferred tax asset (liability)................................ $      44,756    $     (1,032)
                                                                   =============    ============
</TABLE>


                                       41
<PAGE>

          As of December 31, 2000, the Company had Federal and State net
operating loss carryforwards of approximately $109,029. These loss carryforwards
are available as an offset to the future taxable income of the Company and its
subsidiaries. The Federal loss carryforward expires in 2020, and the state loss
carryforwards expire in varying amounts from 2004 to 2020. The Company, through
its subsidiary in the U.K., has surplus Advance Corporate Tax ("ACT") of
approximately $424 available as a direct offset to future U.K. tax liability.
The Company's surplus ACT can be carried over indefinitely.

          A valuation allowance has been established, in accordance with the
requirements of SFAS 109, for the tax benefits associated with certain state
loss carryforwards. Due to the limitations imposed by certain states on the
Company's ability to utilize these benefits, realization is not deemed likely. A
valuation allowance has also been established for certain foreign tax benefits
due to similar limitations imposed by the foreign tax jurisdiction. The Company
believes that, consistent with the standards set forth under SFAS 109, it is
more likely than not that the tax benefits associated with the balance of loss
carryforwards and other deferred tax assets will be realized through future
taxable earnings or alternative tax strategies.

NOTE 12.  STOCK OPTIONS AND WARRANTS

          The Company provides stock options to employees, non-employee
directors and independent contractors under its 2000 Stock Incentive Plan (the
"2000 Plan"), its 1998 Stock Incentive Plan (the "1998 Plan") and its 1996 Stock
Incentive Plan (the "1996 Plan"). The Plans provide for granting of
non-qualified and incentive stock option awards. Options under the Plans are
generally granted at fair value and vest over a period of time to be determined
by the Board of Directors, generally from three to five years. Options under the
Plans expire 10 years from the date of grant. The Company has reserved 0.8
million, 1.2 million and 2.4 million shares of common stock under the 2000, 1998
and 1996 Plans, respectively. Options available for grant under the Plans were
714,683, 249,355 and 525,106 as of December 31, 2000, 1999 and 1998,
respectively.

          A summary of the status of the Company's option plans are presented
below:

<TABLE>
<CAPTION>
                                               2000                        1999                       1998
                                     ----------------------      ----------------------      ----------------------
                                                   WEIGHTED-                   WEIGHTED-                  WEIGHTED-
                                                    AVERAGE                     AVERAGE                    AVERAGE
                                                    EXERCISE                   EXERCISE                    EXERCISE
                                       SHARES        PRICE        SHARES         PRICE        SHARES        PRICE
                                     -----------   ---------     ----------   ---------     -----------   ---------
<S>                                  <C>           <C>           <C>          <C>           <C>           <C>
Outstanding at beginning of year...    1,918,675    $ 7.43        1,843,920     $ 7.46        1,993,914    $ 3.82
Granted............................      763,950    $10.93          544,500     $ 8.05        1,336,000    $ 9.54
Exercised..........................     (196,528)   $ 2.21         (200,996)    $ 3.11         (834,494)   $ 1.67
Canceled...........................     (479,278)   $11.26         (268,749)    $12.18         (651,500)   $ 7.97
                                      ----------                  ---------                  ----------
Outstanding at end of year.........    2,006,819    $ 8.36        1,918,675     $ 7.43        1,843,920    $ 7.46
                                      ==========                  =========                   =========
Exercisable at end of year.........      976,798    $ 6.14          874,083     $ 5.40          600,234    $ 4.71
                                      ==========                  =========                   =========

Weighted-average fair value of
   options granted during the
  year.............................                 $ 8.44                      $ 6.07                     $ 5.98
</TABLE>


                                       42
<PAGE>

          The following summarizes information about options outstanding as of
December 31, 2000:

<TABLE>
<CAPTION>
                               OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
                     ----------------------------------------     ------------------------
                                      AVERAGE      WEIGHTED-                     WEIGHTED-
      RANGE OF                       REMAINING      AVERAGE                      AVERAGE
      EXERCISE                      CONTRACTUAL     EXERCISE                     EXERCISE
       PRICES          SHARES          LIFE         PRICES         SHARES         PRICES
                    -----------    ------------    ----------     ---------     ----------
<S>                 <C>            <C>             <C>            <C>           <C>
$ 1.67                   11,696      5.0 years      $ 1.67           11,696      $ 1.67
$ 4.60-$6.90            896,000      5.8 years      $ 5.04          796,667      $ 5.03
$ 6.91-$9.20            239,834      8.5 years      $ 8.92           80,196      $ 8.92
$ 9.21-$11.50           741,700      8.9 years      $10.90           33,334      $10.00
$11.51-$18.50           117,589      7.0 years      $17.12           54,905      $16.69
                    -----------                                   ---------
                      2,006,819      7.3 years      $ 8.36          976,798      $ 6.14
                    ===========                                   =========
</TABLE>

          During 1994, the Company issued warrants to purchase 421,056 shares of
Common Stock at $1.67 per share, the fair value of the Common Stock on the date
of grant. The warrants are exercisable through 2004. During 2000, in a cashless
transaction, 140,352 of these warrants were exercised and 114,218 shares of the
Company's common stock were issued.

          Had compensation cost for the Company's Plans been determined in
accordance with SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, the
Company's reported net income and earnings per share would have been adjusted to
the proforma amounts indicated below:

<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED DECEMBER 31,
                                                              --------------------------------------------
                                                                2000               1999              1998
                                                               -------           ---------       ---------
<S>                                                            <C>               <C>              <C>
Income from continuing operations:
     As reported......................................         $26,446           $ 21,064         $ 2,132
     Pro forma........................................          23,570             18,137            (210)
Basic earnings per common share:
     As reported......................................         $  1.28           $   1.04         $  0.11
     Pro forma........................................            1.14               0.89           (0.01)
</TABLE>

          The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>
                                                                     FOR THE YEARS ENDED DECEMBER 31,
                                                              ----------------------------------------------
                                                                2000               1999               1998
                                                             ---------          ---------          ----------
     <S>                                                    <C>                <C>                 <C>
     Expected volatility..............................          87.90%             72.17%             71.16%
     Risk-free interest rates.........................           6.25%              5.75%              5.25%
     Expected lives...................................       5.2 years          7.9 years          6.3 years
</TABLE>

          The Company has not paid and does not anticipate paying dividends;
therefore, the expected dividend yield is assumed to be zero.

NOTE 13.  COMMON AND PREFERRED STOCK

          On August 26, 1998, the Company's Board of Directors authorized the
Company to repurchase 350,000 shares of the Company's Common Stock. During 1998,
the Company repurchased 172,000 shares at an average price of $11.59 per share.
(See Note 22.)


                                       43
<PAGE>

NOTE 14.  EARNINGS PER SHARE

          The following table sets forth the computation of basic and diluted
earnings per share from continuing operations:

<TABLE>
<CAPTION>
                                                                      FOR THE YEARS ENDED DECEMBER 31,
                                                            ------------------------------------------------
                                                                 2000               1999              1998
                                                             ---------          ---------        -----------
<S>                                                         <C>               <C>                <C>
Numerator:
   Income from continuing operations......................  $    26,446       $    21,064        $    2,132
                                                            ===========       ===========        ==========
Denominator:
   Weighted-average common shares outstanding.............   20,663,102        20,324,640         19,985,850
   Effect of dilutive securities:
      Employee stock options and warrants.................      500,387           838,961          1,092,511
                                                            -----------       -----------        -----------
   Denominator for diluted earnings per common share .....   21,163,489        21,163,601         21,078,361
                                                            ===========       ===========        ===========

Basic earnings per common share...........................  $      1.28       $      1.04        $      0.11
Diluted earnings per common share.........................         1.25              1.00               0.10
</TABLE>

NOTE 15.  EMPLOYEE RETIREMENT PLANS

          The Company's defined contribution plans provide substantially all
U.S. salaried and hourly employees of the Company an opportunity to accumulate
personal funds for their retirement, subject to minimum duration of employment
requirements. Contributions are made on a before-tax basis to substantially all
of these plans.

          As determined by the provisions of each plan, the Company matches a
portion of the employees' basic voluntary contributions. Company matching
contributions to the plans were approximately $882, $877 and $475 for the plan
years ending in 2000, 1999 and 1998, respectively.

          In addition, the Company's subsidiary located in the U.K. provides a
voluntary retirement benefits plan for its employees. Company matching
contributions to this plan were approximately $291, $414 and $329 for the years
ended December 31, 2000, 1999 and 1998, respectively.

NOTE 16.  COMMITMENTS AND CONTINGENCIES

          The Company leases certain facilities and equipment under various
operating lease agreements, which expire on various dates through 2012. Facility
leases that expire generally are expected to be renewed or replaced by other
leases. Future minimum rental commitments under non-cancelable operating leases
with terms in excess of one year are as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
<S>                                                                          <C>
2001....................................................................    $    6,565
2002....................................................................         4,948
2003....................................................................         4,788
2004....................................................................         4,008
2005....................................................................         2,565
2006 and thereafter.....................................................         5,920
                                                                            ----------
                                                                            $   28,794
                                                                            ==========
</TABLE>

          Rent expense for all operating leases approximated $7,143, $6,640 and
$4,959 for the years ended December 31, 2000, 1999 and 1998, respectively.

          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


                                       44
<PAGE>

violations and impose liability for the costs of cleaning up, and certain
damages resulting from, past spills, disposals or other releases of hazardous
substances.

          In connection with the acquisition of certain subsidiaries, 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 facilities have had or
may have had releases of hazardous materials that may require remediation and
also may be subject to potential liabilities for contamination from off-site
disposal of substances or wastes. These assessments also found that certain
reporting and other regulatory requirements, including certain waste management
procedures, were not or may not have been satisfied. Although there can be no
assurance, the Company believes that, based in part on the investigations
conducted, in part on certain remediation completed prior to the acquisitions,
and in part on the indemnification provisions of the agreements entered into in
connection with the Company's acquisitions, the Company will not incur any
material liabilities relating to these matters.

          The company from which RPM Merit ("RPM") acquired its assets (the
"Prior RPM Company") has been identified by the United States Environmental
Protection Agency (the "EPA") as one of 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 Federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended ("CERCLA" or "Superfund")
provides for cleanup of sites from which there has been a release or threatened
release of hazardous substances, and authorizes recovery of related response
costs and certain other damages from potentially responsible parties ("PRPs").
PRPs are broadly defined under CERCLA and generally include present owners and
operators of a site and certain past owners and operators. As a general rule,
courts have interpreted CERCLA to impose strict, joint and several liability
upon all persons liable for cleanup costs. As a practical matter, however, at
sites where there are multiple PRPs, the costs of cleanup typically are
allocated among the PRPs according to a volumetric or other standard. The EPA
has preliminarily estimated that it will cost approximately $47.0 million to
construct and approximately $4.0 million per year for an indefinite period to
operate an interim remedial groundwater pumping and treatment system for the
part 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
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. Although there can be no assurance, the Company believes that it
will not incur any material liability as a result of these environmental
conditions.

          In connection with the sale of the Distribution Group (the "DG Sale")
on October 27, 2000 (see Note 3), the Company has agreed to certain matters with
Buyer that could result in contingent liability to the Company in the future.
These include the Company's indemnification of Buyer against (i) environmental
liability at former Distribution Group facilities that had been closed prior to
the DG Sale, including the former manufacturing facility in Azusa, California
mentioned above and the former manufacturing facilities in Mexicali, Mexico and
Dayton, Ohio, (ii) any other environmental liability of the Distribution Group
relating to periods prior to the DG Sale, in most cases subject to a $0.8
million deductible and a $12.0 million cap, (iii) liabilities of the
Distribution Group existing at the time of the DG Sale but not disclosed to
Buyer, subject to the $0.8 million deductible and $12.0 million cap, (iv) any
tax liability of the Distribution Group relating to periods prior to the DG Sale
and (v) certain health claims that may be asserted by employees of the
Distribution Group relating to the air quality at one of its facilities prior to
the DG Sale. In addition, prior to the DG Sale several of the Distribution
Group's real estate and equipment leases were guaranteed by the


                                       45
<PAGE>

Company. These guarantees remain in effect after the DG Sale so the Company
continues to be liable for the Distribution Group's obligations under such
leases in the event that the Distribution Group does not honor those
obligations. Buyer has agreed to indemnify the Company for any liability that
the Company may incur pursuant to the guarantees.


NOTE 17.  REPORTABLE SEGMENTS

          The Company has two reportable segments in continuing operations: the
Drivetrain Remanufacturing segment and the Logistics segment. The Drivetrain
Remanufacturing segment consists of five operating units that primarily sell
remanufactured transmissions directly to DaimlerChrysler, Ford, General Motors
and several foreign OEMs, primarily for use as replacement parts by their
domestic dealers during the warranty and post-warranty periods following the
sale of a vehicle. In addition, the Drivetrain Remanufacturing segment sells
select remanufactured and newly assembled engines to certain European OEMs,
including Ford's and General Motors's European operations and Jaguar. The
Company's Logistics segment consists of three operating units: a provider of
value added warehouse and distribution services, turnkey order fulfillment and
information services for AT&T Wireless Services; a provider of returned material
reclamation and disposition services to Ford and General Motors; and an
automotive electronic components remanufacturing and distribution business,
primarily for Delphi and Visteon.

          The Company evaluates performance based upon income from operations.
The reportable segments' accounting policies are the same as those described in
the summary of significant accounting policies (see Note 2.)

          As a result of and concurrent with the decision to discontinue the
Company's Independent Aftermarket segment, the management fees previously
allocated to this discontinued segment have been re-allocated to continuing
operations. Additionally, and to more accurately reflect segment financial
performance, the Company revised its allocation methodology of corporate
overhead and changed from a partial to a full allocation of expenses relating
to the Company's corporate offices. Allocation percentages for each business
unit are based on full year profit before tax. These revisions have been
incorporated for all periods presented.

         The  reportable  segments  are each  managed  and  measured  separately
primarily due to the differing customers,  production  processes,  products sold
and distribution channels. The reportable segments are as follows:

<TABLE>
<CAPTION>
                                                         Drivetrain
                                                      Remanufacturing       Logistics          Totals
                                                      ---------------       ---------          ------
<S>                                                   <C>                   <C>               <C>
As of and for the year ended December 31, 2000:
-----------------------------------------------
   Revenues from external customers.................      $ 254,280          $ 89,077         $ 343,357
   Depreciation and amortization expense............          9,360             2,786            12,146
   Segment profit..................................          49,028            17,394            66,422
   Segment assets...................................        382,499            63,090           445,589
   Expenditures for long-lived assets...............          5,156             5,556            10,712

As of and for the year ended December 31, 1999:
-----------------------------------------------
   Revenues from external customers................       $ 268,897          $ 59,127         $ 328,024
   Depreciation and amortization expense............          9,441             2,281            11,722
   Special charges..................................            975               570             1,545
   Segment profit..................................          50,506             7,665            58,171
   Segment assets..................................         336,135            47,103           383,238
   Expenditures for long-lived assets..............           4,421             1,942             6,363

As of and for the year ended December 31, 1998:
-----------------------------------------------
   Revenues from external customers................       $ 232,320          $ 40,323         $ 272,643
   Depreciation and amortization expense............          8,066             1,615             9,681
   Special charges..................................          2,400                 -             2,400
   Segment profit (loss)............................         24,458             3,384            27,842
   Segment assets..................................         320,502            40,558           361,060
   Expenditures for long-lived assets..............           4,695             2,560             7,255
</TABLE>


                                       46
<PAGE>

          A reconciliation of the reportable segments to consolidated net sales,
operating income and consolidated assets are as follows:

<TABLE>
<CAPTION>
                                                                      As of and for the
                                                                  Years Ended December 31,
                                                                  ------------------------
                                                             2000          1999           1998
                                                             ----          ----           ----
<S>                                                        <C>           <C>           <C>
Net Sales:
----------
    External revenues from reportable segments..........   $ 343,357     $ 328,024     $ 272,643
                                                           =====================================
Profit:
-------
    Total profit for reportable segments................   $  66,422     $  58,171     $  27,842
    Unallocated amounts:
      Special charges...................................           -        (2,432)       (1,624)
                                                           -------------------------------------
           Income from operations.......................   $  66,422     $  55,739     $  26,218
                                                           =====================================
Assets:
-------
    Total assets for reportable segments................   $ 445,589     $ 383,238     $ 361,060
    Elimination of intercompany accounts................    (104,627)      (77,849)      (34,165)
    Unallocated corporate assets........................      49,058        27,126        13,003
    Discontinued assets.................................      10,000       239,844       173,574
                                                           -------------------------------------
           Consolidated assets..........................   $ 400,020     $ 572,359     $ 513,472
                                                           =====================================
</TABLE>

           Other significant  items as disclosed within the reportable  segments
are reconciled to the consolidated totals as follows:

<TABLE>
<CAPTION>
                                                         Segment       Unallocated
                                                         Totals     Corporate Items   Consolidated
                                                         ------     ---------------   ------------
<S>                                                      <C>        <C>               <C>
OTHER SIGNIFICANT ITEMS:
    FOR THE YEAR ENDED DECEMBER 31, 2000
      Expenditures for long-lived assets.............     $10,712           $  664        $11,376

    FOR THE YEAR ENDED DECEMBER 31, 1999
      Special charges................................     $ 1,545           $2,432        $ 3,977
      Expenditures for long-lived assets.............       6,363              585          6,948

    FOR THE YEAR ENDED DECEMBER 31, 1998
      Special charges................................     $ 2,400           $1,624        $ 4,024
      Expenditures for long-lived assets.............       7,255              268          7,523
</TABLE>

          Revenues and long-lived assets by geographic area are determined by
the location of the Company's facilities as follows:

<TABLE>
<CAPTION>
                                                                     As of and for the
                                                                 Years ended December 31,
                                                                 ------------------------
                                                             2000          1999          1998
                                                             ----          ----          ----
<S>                                                        <C>             <C>           <C>
Net Sales:
----------
    United States.......................................   $  322,590      $ 305,124     $ 244,194
    Canada and Europe...................................       20,767         22,900        28,449
                                                           ----------      ---------     ---------
    Consolidated net sales..............................   $  343,357      $ 328,024     $ 272,643
                                                           ==========      =========     =========

Long-lived Assets:
-------------------
    United States.......................................   $ 232,119      $ 209,355     $ 215,611
    Canada and Europe...................................      14,119         15,464        15,096
    Assets of discontinued operations held for sale, net       3,998        151,878       107,412
                                                           ---------      ---------     ---------
    Consolidated long-lived assets......................   $ 250,236      $ 376,697     $ 338,119
                                                           =========      =========     =========
</TABLE>


                                       47
<PAGE>

          For the year ended December 31, 2000, the Company's three significant
external customers, Ford (Drivetrain Remanufacturing and Logistics segments'),
Daimler Chrysler (Drivetrain Remanufacturing segment) and AT&T Wireless Services
(Logistics segment) represented $111,818, $107,999 and $52,653 of consolidated
net sales for 2000, respectively.

          For the years ended December 31, 1999 and 1998, the Company had two
significant external customers, DaimlerChrysler (Drivetrain Remanufacturing
segment) and Ford (Drivetrain Remanufacturing and Logistics segments'),
representing $112,819 and $108,257 of consolidated net sales for 1999,
respectively and $87,429 and $83,155 of consolidated net sales for 1998,
respectively.

NOTE 18.  FAIR VALUE OF FINANCIAL INSTRUMENTS

          The carrying amount of the Company's financial instruments approximate
their fair values due to the fact that they are either short-term in nature or
re-priced to fair value through floating interest rates with the exception of
the following: (i) Company's Senior Notes, (ii) interest rate swap agreement,
(iii) Series B preferred stock investment and (iv) 18% senior subordinated
promissory note investment. The Series B preferred stock and the 18% senior
subordinated promissory note, received by the Company on October 27, 2000 as
part of the proceeds from the sale of the Distribution Group, had a fair value
which approximated their carrying value at December 31, 2000.

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

<TABLE>
<CAPTION>
                                                                             December 31,
                                                            ---------------------------------------------
                                                                      2000                   1999
                                                            -----------------------  ---------------------
                                                             Carrying      Fair      Carrying      Fair
                                                               Amount      Value      Amount       Value
                                                             --------      --------  --------     --------
<S>                                                          <C>           <C>       <C>           <C>
 Series B Senior Notes..................................      $ 82,570     $ 78,417  $ 82,570     $82,686
 Series D Senior Notes..................................        27,815       26,416    27,815      27,854
 Interest rate swap agreement...........................             -          (69)        -         775
 Series B preferred stock...............................         8,593        8,593         -           -
 18% senior subordinated promissory note................         1,929        1,929         -           -
</TABLE>

NOTE 19.  SPECIAL CHARGES

          During 1998 and 1999, the Company implemented certain initiatives
designed to improve operating efficiencies and reduce costs. In 1998, the
Company recorded $4,024 in special charges related to these initiatives,
consisting of $1,624 in restructuring costs and $2,400 in non-income related
taxes. The $1,624 restructuring cost includes $975 of severance costs for three
people, $349 of exit costs and $300 of other costs. The severance costs were
incurred in connection with the replacement of the Company's Chief Executive
Officer and other members of management. The non-income related tax charge is
due to a state's 1998 interpretation of tax laws. This interpretation was
applied retroactively to prior fiscal years. Due to a change in distribution
operations, the Company's exposure to the effect of this tax interpretation has
been significantly reduced in future tax periods.

          In 1999, the Company recorded $3,977 of special charges primarily
related to the initiation of three actions. First, the Company recorded $2,557
of costs primarily related to its management reorganization consisting of $2,282
of severance costs for 41 people and $275 of other costs. Second, the Company
recorded $850 of costs to exit a plant within its Drive Train Remanufacturing
segment consisting of $500 of costs related to the write-down of fixed assets
and $350 of severance costs for 130 people. Third, the Company recorded $570 of
costs related to its Logistics segment consisting of $168 related to the
write-down of accounts receivable balances from customers the segment no longer
services, $164 of severance costs for nine people, $125 of exit and other costs
and $113 of inventory write-downs classified as Cost of Sales - Special Charges.


                                       48
<PAGE>

<TABLE>
<CAPTION>
                                                                              Loss on
                                    Termination        Exit / Other         Write-Down of
                                      Benefits            Costs               Assets             Total
                                    ------------      -------------         --------------     ----------
<S>                                 <C>               <C>                   <C>                <C>
Provision 1998....................  $    975          $   3,049             $    -             $  4,024
Payments 1998.....................      (135)                 -                  -                 (135)
                                    --------          ---------             ------             --------
Reserve at December 31, 1998......       840              3,049                  -                3,889
Provision 1999....................     2,796                400                781                3,977
Payments 1999.....................    (1,289)            (1,026)                 -               (2,315)
                                    --------          ---------             ------             --------
Reserve at December 31, 1999......     2,347              2,423                781                5,551
Payments 2000.....................    (1,802)              (344)                 -               (2,146)
Asset write-offs 2000.............         -                  -               (825)                (825)
Reclassification 2000.............         -                (44)                44                    -
                                    --------          ---------             ------             --------
Reserve at December 31, 2000......  $    545          $   2,035             $    -             $  2,580
                                    ========          =========             ======             ========
</TABLE>


NOTE 20.  EXTRAORDINARY ITEMS

          In March 1998, in connection with the restatement and amendment of the
credit agreement to provide for the Credit Facility, the Company recorded an
extraordinary item of $363, net of income tax benefit of $242, related to the
write-off of previously capitalized debt issuance costs.

          In September and October 1998, the Company purchased and retired
$9,615 in principal amount of its Senior Notes in open market transactions. In
connection with these repurchases, the Company recorded an extraordinary item of
$340, net of income tax benefit of $227, related to the purchase price premium
and the write-off of unamortized deferred financing fees.

NOTE 21.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 QUARTER
                                                               ---------------------------------------------
                                                                 FIRST       SECOND       THIRD      FOURTH
                                                               ---------    --------    --------    ---------
<S>                                                             <C>          <C>        <C>         <C>
2000
----
Net sales..................................................     $ 86,502    $ 82,666    $ 81,577    $ 92,612
Gross profit...............................................       31,374      28,496      28,210      32,338
Income from continuing operations..........................        7,831       5,714       5,943       6,958
Earnings per common share (1)..............................     $   0.38    $   0.28    $   0.29    $   0.34
Earnings per common share-assuming dilution (1)............         0.37        0.27        0.28        0.33

1999
----
Net sales..................................................     $ 76,324    $ 82,388    $ 83,157    $ 86,155
Gross profit...............................................       23,774      26,984      28,495      32,441
Income from continuing operations..........................        2,351       4,909       5,815       7,989
Earnings per common share (1)..............................     $   0.11    $   0.24    $   0.29    $   0.39
Earnings per common share-assuming dilution (1)............         0.11        0.23        0.27        0.38
</TABLE>

     (1)  Earnings per share data is presented before discontinued operations.

NOTE 22.  SUBSEQUENT EVENTS

          During the first quarter of 2001, the Company, together with certain
members of management and directors of the Company, certain principals and
affiliates of the Aurora Capital Group and certain other shareholders of the
Company, announced its intention to commence a program for the purchase of up to
1,750,000 shares of the Company's common stock. Such purchases may be made from
time to time in the open market, through privately negotiated transactions or
through block purchases. The purchase program commenced on January 8, 2001, and
is being conducted in accordance with the Securities and Exchange Commissions'
Rule 10b-18, subject to market conditions, applicable legal requirements and
other factors. As of March 2, 2001, 1,072,700 shares of the Company's common
stock have been purchased under the program, of which 204,266 shares at an
average price of $4.40 per share were purchased by the Company.


                                       49
<PAGE>

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

DIRECTORS AND EXECUTIVE OFFICERS

          The directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                              AGE        POSITIONS
----                              ---        ---------
<S>                               <C>        <C>
Michael T. DuBose                 47         Chairman of the Board, President and Chief Executive Officer
Barry C. Kohn                     45         Vice President and Chief Financial Officer
Lawrence W. Baker                 58         Vice President, Automotive Sales and Marketing
John J. Machota                   49         Vice President, Human Resources
Mary T. Ryan                      47         Vice President, Communications and Investor Relations
Joseph Salamunovich               41         Vice President, General Counsel and Secretary
Paul J. Komaromy                  51         President, Aaron's  and CRS
Matt J. Pieper                    41         President, ATC Logistics
Robert Anderson                   80         Director
Richard R. Crowell                46         Director
Dale F. Frey                      68         Director
Mark C. Hardy                     37         Director
Dr. Michael J. Hartnett           55         Director
Gerald L. Parsky                  58         Director
Richard K. Roeder                 52         Director
William A. Smith                  55         Director
J. Richard Stonesifer             64         Director
</TABLE>

          MICHAEL T. DUBOSE joined the Company as Chairman of the Board of
Directors, President and Chief Executive Officer in 1998. Prior to that he
served as a consultant to Aurora Capital Group from 1997. From 1995 to 1997 Mr.
DuBose was Chairman and Chief Executive Officer of Grimes Aerospace Company, an
international engineering, manufacturing and distribution company. From 1993 to
1995 he served as Senior Vice President of SAI Corporation's computer equipment
manufacturing and systems sector. Prior to that Mr. DuBose held various
positions at General Instrument and General Electric Company. Mr. DuBose holds a
M.S. in Management from the Stanford University Graduate School of Business.

          BARRY C. KOHN joined the Company as Vice President and Chief Financial
Officer in January 1999. During 1998 he served as a self-employed financial
consultant. From 1995 to 1997 Mr. Kohn was Senior Vice President and Chief
Financial Officer of Grimes Aerospace Company. Between 1987 and 1995 he held
increasingly senior positions at Grimes including Treasurer, Controller and
Manager of Business Planning. Mr. Kohn holds a Masters of Accounting from The
Ohio State University and is a Certified Public Accountant (inactive).

          LAWRENCE W. BAKER joined the Company as Vice President, Automotive
Sales & Marketing in January 2001. Prior to that, Mr. Baker was employed for 35
years with DaimlerChrysler, most recently serving as Vice President of the Mopar
Parts division from 1999 to 2000, as General Manager of Mopar from 1994 to 1999,
as General Manager of the Jeep/Eagle division from 1990 to 1994 and as General
Manager of the Dodge Car & Truck division from 1989 to 1990. Mr. Baker holds a
B.S. in Marketing from Ohio State University.

          JOHN J. MACHOTA joined the Company as Vice President, Human Resources
in 1997. From 1996 to 1997, he was a self-employed human resources consultant.
From 1995 to 1996, Mr. Machota was Vice President, Compensation for Waste
Management, Inc. and from 1993 to 1995 served as Waste Management's Vice
President, Human Resource


                                       50
<PAGE>

Services. From 1986 to 1993 Mr. Machota was Vice President, Human Resources
for a subsidiary of Waste Management and prior to that held various other
positions in the human resources area. Mr. Machota holds a M.S. in Industrial
Relations from Loyola University.

          MARY T. RYAN joined the Company as Vice President, Communications and
Investor Relations in April 1999. From 1996 to 1998, Ms. Ryan served as Vice
President, Corporate Affairs for American Disposal Services, Inc. From 1995 to
1996 she was a self-employed public relations consultant. Prior to that Ms. Ryan
was employed for more than ten years with Waste Management, Inc. Ms. Ryan holds
a M.B.A. from DePaul University.

          JOSEPH SALAMUNOVICH joined the Company as Vice President, General
Counsel and Secretary in 1997. From 1995 to 1997 Mr. Salamunovich was a partner
in the law firm of Gibson, Dunn & Crutcher LLP, where he specialized in
corporate and securities law matters. From 1986 to 1995 Mr. Salamunovich was an
associate of the same firm. Mr. Salamunovich holds a J.D. from Loyola Law
School.

          PAUL J. KOMAROMY joined the Company in February 2000 as President of
the Company's Aaron's Automotive Products, Inc. subsidiary. He has also served
as President of the Company's Component Remanufacturing Specialists, Inc.
subsidiary since January 2001. From 1997 to 1999 Mr. Komaromy was Vice President
and General Manager of the Engine Systems and Accessories division of
AlliedSignal, Inc. From 1987 to 1997 Mr. Komaromy was employed with Grimes
Aerospace, serving as Senior Vice President and General Manager of the Vision
Systems division from 1996 to 1997 and as Senior Vice President, Operations and
Engineering from 1991 to 1995. From 1978 to 1987 Mr. Komaromy was employed with
the Power Systems division of Cooper Industries. Mr. Komaromy holds a M.S. in
Industrial Administration from the Carnegie-Mellon University Graduate School of
Industrial Administration. Aaron's remanufactures transmissions and engines for
the Chrysler division of DaimlerChrysler Corporation and engines for sale to
independent aftermarket customers.

          MATTHEW J. PIEPER joined the Company as General Manager of its
Logistics Services business unit in October 1998 and served as Vice President of
ATC Logistics from June 2000 until November 2000 when he became President of ATC
Logistics. Prior to joining the Company, Mr. Pieper served as a Regional
Distribution Manager for the Perrier division of Nestles Foods from 1996 to
1998. Before that he served in various logistics and manufacturing positions for
the Pepsi-Cola Company from 1989 to 1996. Mr. Pieper holds a B.B.A. in
Transportation/Logistics from Iowa State University and a M.B.A. from Baylor
University.

          ROBERT ANDERSON became a director of the Company in 1997. Mr. Anderson
has been associated with Rockwell International Corporation since 1968, where he
has been Chairman Emeritus since 1990 and served previously as Chairman of the
Executive Committee from 1988 to 1990 and as Chairman of the Board and Chief
Executive Officer from 1979 to 1988. Mr. Anderson is a director of Motor Cargo
Industries, Inc.

          RICHARD R. CROWELL became a director of the Company in 1994. Mr.
Crowell is President and a founding partner of Aurora Capital Group.

          DALE F. FREY became a director of the Company in 1997. Prior to his
retirement in 1997, Mr. Frey was Chairman of the Board, President and Chief
Executive Officer of General Electric Investment Corporation, a position he had
held since 1984, and was a Vice President of General Electric Company since
1980. Mr. Frey is a director of Praxair, Inc., Roadway Express and Community
Health Systems.

          MARK C. HARDY became a director of the Company in 1994. Mr. Hardy is a
Managing Director and partner of Aurora Capital Group. Prior to joining Aurora
Capital Group in 1993, Mr. Hardy was an Associate at Bain & Company, a
consulting firm.

          DR. MICHAEL J. HARTNETT became a director of the Company in 1994.
Since 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. 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 subsidiary of Ingersall-Rand.


                                       51
<PAGE>

          GERALD L. PARSKY became a director of the Company in 1997. Mr. Parsky
is the Chairman and a founding partner of Aurora Capital Group. Prior to forming
Aurora Capital Group in 1991, Mr. Parsky was a senior partner and a member of
the Executive and Management Committees of the law firm of Gibson, Dunn &
Crutcher LLP. Prior to that, he served as an official with the United States
Treasury Department and the Federal Energy Office, and as Assistant Secretary of
the Treasury for International Affairs.

          RICHARD K. ROEDER became a director of the Company in 1994. Mr. Roeder
is a founding partner and Managing Director of Aurora Capital Group. Prior to
forming Aurora Capital Group 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 and a member of its National Management Committee.

          WILLIAM A. SMITH has been a director of the Company since 1994. He
served as Chairman Emeritus of the Board of Directors from 1997 to 1998 and
prior to that served as Chairman of the Board since 1994. Mr. Smith was
President and Chief Executive Officer of the Company from 1994 until 1996. From
1993 to 1994 Mr. Smith served as a consultant to Aurora Capital Group in
connection with the formation of the Company and its initial acquisitions. Prior
to that Mr. Smith was President of the Rucker Fluid Power Division of Lucas
Industries, plc. and held various positions with Navistar International
Transportation Corporation, Labinal, Inc. (a French automotive and aerospace
equipment manufacturer) and Cummins Engine Company.

          J. RICHARD STONESIFER became a director of the Company in 1997. Prior
to his retirement in 1996, Mr. Stonesifer was employed with the General Electric
Company for 37 years, serving most recently as President and Chief Executive
Officer of GE Appliances, and was an executive officer and Senior Vice President
of the General Electric Company, from January 1992 until his retirement. Mr.
Stonesifer is a director of Polaris Industries, Inc.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

          Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than 10% of
any equity security of the Company to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and to furnish copies of
these reports to the Company. Based solely on a review of the copies of the
forms that the Company received, the Company believes that all such forms
required during 2000 were filed on a timely basis except for the Form 3 of Matt
J. Pieper, which were filed two months late.


                                       52
<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

          The following table sets forth, for the three most recently completed
fiscal years, the cash compensation for services in all capacities to the
Company of (i) the Company's Chief Executive Officer and (ii) the four persons
who as of December 31, 2000 were the other most highly compensated executive
officers of the Company and its subsidiaries (collectively, the "Named Executive
Officers"):

<TABLE>
<CAPTION>
                                                        ANNUAL             LONG-TERM COMPENSATION
                                                     COMPENSATION                  AWARDS
                                                ------------------------    ---------------------
                                                                             NUMBER OF SECURITIES
                                                                                  UNDERLYING           ALL OTHER
NAME AND PRINCIPAL POSITION            YEAR      SALARY       BONUS (1)        OPTIONS (#) (2)        COMPENSATION
---------------------------            ----     --------      ----------       ---------------        ------------
<S>                                    <C>      <C>           <C>              <C>                    <C>
 Michael T. DuBose (3)                 2000     $470,000        $425,777           100,000              $ 23,800(4)
   Chairman, President and             1999      400,000         319,500             --                  203,940(5)
   Chief Executive Officer             1998       17,534           --              500,000                  --

 Jerry E. Kanis (6)                    2000      216,346         117,970            25,000               108,328(7)
   Former President, Autocraft Group   1999        --              --                --                     --
                                       1998        --              --                --                     --

 Barry C. Kohn (8)                     2000      270,000         130,451            35,000                  --
   Chief Financial Officer             1999      226,154         110,000            90,000                36,963(9)
                                       1998        --              --                --                     --

 Paul J. Komaromy (10)                 2000      238,850          81,000            50,000               156,746(7)
   President, Aaron's and CRS          1999        --              --                --                     --
                                       1998        --              --                --                     --

 Matt J. Pieper (11)                   2000      161,904         210,000            35,000                10,576(12)
   President, ATC Logistics            1999      117,616          84,035             5,000                 9,725(12)
                                       1998       19,038           7,000             3,000                  --
</TABLE>
---------------

(1)  Bonuses for a particular year are paid during the first quarter of the
     following year, except in the case of Mr. DuBose, whose 1999 bonus was
     paid at the end of the year in which it is earned.

(2)  Consists of options to purchase securities of the Company, which options
     were issued pursuant to the Company's 1996 Stock Incentive Plan (the "1996
     Plan"), 1998 Stock Incentive Plan (the "1998 Plan") or 2000 Stock Incentive
     Plan (the "2000 Plan" and, together with the 1996 Plan and the 1998 Plan,
     the "Stock Plans"). Pursuant to the Stock Plans, the Compensation and Human
     Resources Committee of the Board of Directors makes recommendations to the
     Board of Directors regarding the amount, terms and conditions of each
     option to be granted.

(3)  Mr. DuBose joined the Company as Chairman, President and Chief Executive
     Officer in December 1998.

(4)  Consists of allowances for automobile, club dues and financial planning.

(5)  Includes (i) $176,770 of relocation benefits (including $76,770 of income
     tax "gross up") and (ii) $14,954 of automobile allowance.

(6)  Mr. Kanis became President of the Autocraft Group in January 2000 and
     ceased to hold such position in March 2001.

(7)  Consists of relocation benefits.

(8)  Mr. Kohn joined the Company as Vice President and Chief Financial Officer
     in January 1999.

(9)  Includes $31,750 of relocation benefits (including $11,750 of income tax
     "gross up").

(10) Mr. Komaromy became President of Aaron's in February 2000.


                                       53
<PAGE>

(11) Mr. Pieper joined the Company in October 1998 and became President of ATC
     Logistics in November 2000. At that time his annual base salary was
     increased to $225,000.

(12) Consists of an automobile allowance.

          Set forth below is the annual base salary for the Company's Chief
Executive Officer and each of its other four most highly compensated executive
officers as of March 1, 2001:

<TABLE>
<CAPTION>
                                                              ANNUAL
                    NAME                                   BASE SALARY
-----------------------------------------------------      -----------
<S>                                                        <C>
Michael T. DuBose....................................        $470,000
Lawrence W. Baker....................................         300,000
Barry C. Kohn........................................         270,000
Paul J. Komaromy.....................................         270,000
Matt J. Pieper.......................................         225,000
</TABLE>

OPTION GRANTS TABLE

          Shown below is information concerning grants of options issued by the
Company to the Named Executive Officers during 2000:

<TABLE>
<CAPTION>
                                       INDIVIDUAL                                            POTENTIAL REALIZABLE
                                         GRANTS                                                VALUE AT ASSUMED
                             --------------------------                                        ANNUAL RATES OF
                               NUMBER OF       % OF TOTAL                                         STOCK PRICE
                              SECURITIES         OPTIONS                                        APPRECIATION
                              UNDERLYING       GRANTED TO        EXERCISE                     FOR OPTION TERM(1)
                            OPTIONS GRANTED   EMPLOYEES IN        PRICE       EXPIRATION   ---------------------
           NAME                   (#)          FISCAL YEAR      ($/SHARE)        DATE        5% ($)      10% ($)
-----------------------     ---------------   ------------      ----------    ----------   ---------   ---------
<S>                         <C>               <C>               <C>           <C>          <C>         <C>
Michael T. DuBose......        100,000(2)         13.1           $11.4375      2/24/10      $719,380   $1,822,973
Jerry E. Kanis.........         25,000(3)          3.3           $11.4375      2/24/10       179,845      455,743
Barry C. Kohn..........         35,000(2)          4.6           $11.4375      2/24/10       251,783      638,040
Paul J. Komaromy.......         25,000(3)          3.3           $11.4375      2/24/10       179,845      455,743
                                25,000(4)          3.3           $11.125       5/10/10       174,911      443,260
Matt J. Pieper.........         15,000(4)          2.0           $11.125       5/10/10       104,947      265,956
                                20,000(5)          2.6           $ 4.438       11/9/10        55,821      141,461
</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 1998 Plan. One third of the options
     vest and become exercisable on each of February 24, 2001, 2002 and 2003.

(3)  These options were granted under the 1996 Plan. One third of the options
     vest and become exercisable on each of February 24, 2001, 2003 and 2005.

(4)  These options were granted under the 2000 Plan. One third of the options
     vest and become exercisable on each of May 10, 2001, 2003 and 2005.

(5)  These options were granted under the 1996 Plan. One third of the options
     vest and become exercisable on each of November 9, 2001, 2003 and 2005.


                                       54
<PAGE>

AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE

          Shown below is information relating to the exercise of stock options
during 2000 by the Named Executive Officers and the value of unexercised options
for each of the Named Executive Officers as of December 31, 2000:

<TABLE>
<CAPTION>
                                                          NUMBER OF SECURITIES          VALUE OF UNEXERCISED
                                                          UNDERLYING UNEXERCISED        IN-THE-MONEY OPTIONS
                                SHARES                     OPTIONS AT FISCAL YEAR-END      AT FISCAL YEAR-END (1)
                             ACQUIRED ON       VALUE       ----------------------------  ---------------------------
           NAME                EXERCISE       REALIZED     EXERCISABLE    UNEXERCISABLE  EXERCISABLE   UNEXERCISABLE
------------------------    ------------     ---------     -------------   ------------  -----------   -------------
<S>                         <C>              <C>           <C>             <C>           <C>           <C>
Michael T. DuBose......            --            --          333,334         266,666          --             --
Jerry E. Kanis.........            --            --             --            25,000          --             --
Barry C. Kohn..........            --            --           30,000          95,000          --             --
Paul J. Komaromy.......            --            --             --            50,000          --             --
Matt J. Pieper.........            --            --            2,667          40,333          --             --
</TABLE>
---------------
(1)  None of the options were in the money at December 31, 2000 based on the
     closing price of the Common Stock on the Nasdaq National Market System on
     December 29, 2000 (the last trading date of the year), which was $2.188 per
     share.

EMPLOYMENT AGREEMENTS

          The Company typically enters into an employment agreement with each of
its executive officers (including the Named Executive Officers) that provides
for a three-year term and is automatically renewable thereafter on a
year-to-year basis. The agreement includes a noncompetition provision for a
period of 18 months from the termination of the executive officer's employment
with the Company and a nondisclosure provision which is effective for the term
of the employment agreement and indefinitely thereafter. The executive officer
is entitled to severance equal to his base salary for a period of 12 months
after termination if he is terminated without cause (as defined in the
employment agreement), except in the cases of Mr. DuBose, whose severance period
is the longer of 24 months or the balance of the initial contract term, and Mr.
Kohn, whose severance period is 18 months.

STOCK INCENTIVE PLANS

          Pursuant to the 1996, 1998 and 2000 Plans, officers, directors,
employees and consultants of the Company and its affiliates are eligible to
receive options to purchase Common Stock and other awards. Awards under the 1996
Plan 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.
Awards under the 1998 and 2000 Plans may take the form of stock options, annual
incentive bonuses and incentive stock.

          The Stock Plans are administered by the Compensation and Human
Resources Committee of the Board of Directors (the "Committee"), although the
Board of Directors may exercise any authority of the Committee under the Plans
in lieu of the Committee's exercise thereof. While the Stock Plans permit the
Committee to grant awards, such grants are typically made by the Board of
Directors based on the Committee's recommendations regarding the recipients and
type and amount of awards. Subject to the express provisions of the Stock Plans,
the Committee has broad authority in administering and interpreting the Stock
Plans. Options granted to employees may be options intended to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended, or options not intended to so qualify. Awards to employees 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 Committee,
any change of control of the Company.

          The aggregate number of shares of Common Stock that can be issued
under the Stock Plans may not exceed 4,350,000. As of January 31, 2001, there
were outstanding options to purchase an aggregate of 1,950,289 shares of Common
Stock granted to directors, officers and employees of the Company and its
subsidiaries and certain independent contractors pursuant to the Plans, and the
number of shares available for issuance pursuant to options


                                       55
<PAGE>

yet to be granted under the Plans was 775,519. In February 2001 the Company
granted options to employees to purchase an additional 111,000 shares of Common
Stock.

          In most cases, outstanding options are subject to certain vesting
provisions and expire on the tenth anniversary of the date of grant. The
exercise prices of options outstanding under the Plans as of January 31, 2001
are as follows:

<TABLE>
<CAPTION>
   NUMBER OF OPTION SHARES           EXERCISE PRICE
   -----------------------           --------------
   <S>                               <C>
              20,000                    $  4.438
              24,000                       4.67
             632,000                       5.00
              95,000                       5.0312
             108,000                       5.3125
               3,000                       5.5625
               9,000                       6.875
              38,500                       8.50
              19,167                       8.9375
             150,834                       9.00
              16,000                       9.125
             200,000                      10.00
             334,200                      11.125
             190,000                      11.4375
              35,088                      14.75
              75,500                      18.125
</TABLE>

          For information regarding options granted to directors and officers of
the Company, see Item 12. "Security Ownership of Certain Beneficial Owners and
Management."

COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS

          The members of the Compensation and Human Resources Committee are
Messrs. Crowell, Parsky and Stonesifer. Messrs. Crowell and Parsky are (i) two
of the three stockholders and directors of Aurora Advisors, Inc., the general
partner of Aurora Capital Partners, which is the general partner of Aurora
Equity Partners, L.P. ("AEP"), the largest stockholder of the Company, and (ii)
two of the three stockholders and directors of Aurora Overseas Advisors, Ltd.,
the general partner of Aurora Overseas Capital Partners L.P., the general
partner of Aurora Overseas Equity Partners I, L.P. ("AOEP"), a significant
stockholder of the Company. See Item 12. "Security Ownership of Certain
Beneficial Owners and Management." In addition, Messrs. Crowell and Parsky are
the senior members of Aurora Capital Group (of which the Aurora Partnerships are
a part), which provides investment banking and management services to the
Company pursuant to a management services agreement. See Item 13. "Certain
Relationships and Related Transactions."


                                       56
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          The following table sets forth the beneficial ownership of the Common
Stock (the only class of issued and outstanding voting securities of the
Company), as of February 1, 2001 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 was known by the Company to
beneficially own more than 5% of the outstanding shares of any class of voting
securities of the Company.

<TABLE>
<CAPTION>
                                                                                    NUMBER OF          VOTING
                                                                                    SHARES (1)       PERCENTAGE
                                                                                    -----------      ----------
<S>                                                                                 <C>              <C>
Aurora Equity Partners L.P. (other beneficial owners: Richard R.
   Crowell, Gerald L. Parsky and Richard K. Roeder) (2)(3).................          12,355,490        60.0
Aurora Overseas Equity Partners I, L.P. (other beneficial owners:
   Richard R. Crowell, Gerald L. Parsky and Richard K. Roeder) (3)(4)......           5,281,704        25.7
General Electric Pension Trust (5).........................................           2,425,708        11.8
Michael T. DuBose (6)(7)...................................................             401,146         1.9
Jerry E. Kanis (8).........................................................               8,807         *
Barry C. Kohn (7)(9).......................................................              94,980         *
Paul J. Komaromy (10)......................................................              18,334         *
Matt J. Pieper (11)........................................................              12,297         *
Robert Anderson (12)(13)...................................................              64,585         *
Richard R. Crowell (2)(3)(4)(13)...........................................          13,699,336        66.6
Dale F. Frey (14)..........................................................              91,181         *
Mark C. Hardy (3)(13)(15)..................................................              25,305         *
Dr. Michael J. Hartnett (16)...............................................              93,966         *
Gerald L. Parsky (2)(3)(4)(13)(17).........................................          13,699,336        66.6
Richard K. Roeder (2)(3)(4)(13)............................................          13,699,336        66.6
J. Richard Stonesifer (18).................................................              65,045         *
William A. Smith (19)......................................................             545,984         2.7
All directors and officers as a group (18 persons) (20)....................          15,144,737        71.1
</TABLE>
---------------
*    Less than 1%.

(1)  The shares of Common Stock underlying warrants or options granted under the
     Stock Plans that are exercisable as of February 26, 2001 or that will
     become exercisable within 60 days thereafter (such warrants or options
     being referred to as "Exercisable") are deemed to be outstanding for the
     purpose of calculating the beneficial ownership of the holder of such
     warrants or options, but are not deemed to be outstanding for the purpose
     of computing the beneficial ownership of any other person.

(2)  Consists of (i) 8,417,632 shares owned by AEP (one of the Aurora
     Partnerships), (ii) 2,425,708 shares owned by the General Electric Pension
     Trust ("GEPT") (see Note 5 below) and (iii) 1,512,150 shares that are
     subject to an irrevocable proxy granted to the Aurora Partnerships by
     certain holders of Common Stock, including Messrs. Anderson, Crowell,
     Hardy, Parsky and Roeder, certain other limited partners of AEP and certain
     affiliates of a limited partner of AOEP (the other Aurora Partnership). The
     proxy terminates upon the earlier of the transfer of such shares or July
     31, 2004. AEP is a Delaware limited partnership the general partner of
     which is Aurora Capital Partners, a Delaware limited partnership whose
     general partner is Aurora Advisors, Inc. Messrs. Crowell, Parsky and Roeder
     are the sole stockholders and directors of Aurora Advisors, are limited
     partners of Aurora Capital Partners and may be deemed to beneficially share
     ownership of the Common Stock beneficially owned by AEP and may be deemed
     to be the organizers of the Company under regulations promulgated under the
     Securities Act.

(3)  The address of this stockholder is 10877 Wilshire Boulevard, Suite 2100,
     Los Angeles, CA 90024.


                                       57
<PAGE>

(4)  Consists of (i) 1,343,846 shares owned by AOEP, (ii) 2,425,708 shares owned
     by GEPT (see Note 5 below) and (iii) 1,512,150 shares that are subject to
     an irrevocable proxy granted to the Aurora Partnerships by certain holders
     of Common Stock, including Messrs. Anderson, Crowell, Hardy, Parsky and
     Roeder, certain other limited partners of AEP and certain affiliates of a
     limited partner of AOEP. The proxy terminates upon the earlier of the
     transfer of such shares or July 31, 2004. AOEP is a Cayman Islands limited
     partnership the general partner of which is Aurora Overseas Capital
     Partners, L.P., a Cayman Islands limited partnership, whose general partner
     is Aurora Overseas Advisors, Ltd. Messrs. Crowell, Parsky and Roeder are
     the sole stockholders and directors of Aurora Overseas Advisor,, are
     limited partners of Aurora Overseas Capital Partners and may be deemed to
     beneficially own the shares of the Company's Common Stock beneficially
     owned by AOEP. AOEP's address is West Wind Building, P.O. Box 1111,
     Georgetown, Grand Cayman, Cayman Islands, B.W.I.

(5)  With limited exceptions, GEPT has agreed to vote these shares in the same
     manner as the Aurora Partnerships vote their respective shares of Common
     Stock. This provision terminates upon the earlier of the transfer of such
     shares or July 31, 2004. GEPT's address is 3003 Summer Street, Stamford, CT
     06905.

(6)  Includes 366,668 shares subject to Exercisable options. Excludes 233,332
     shares subject to options that are not Exercisable.

(7)  The address of this stockholder is One Oak Hill Center, Suite 400,
     Westmont, IL 60559.

(8)  Includes 8,334 shares subject to Exercisable options. Excludes 16,666
     shares subject to options that are not Exercisable. Mr. Kanis's address is
     9901 West Reno Road, Oklahoma City, OK 73127.

(9)  Includes 71,667 shares subject to Exercisable options. Excludes 53,333
     shares subject to options that are not Exercisable.

(10) Includes 8,334 shares subject to Exercisable options. Excludes 41,666
     shares subject to options that are not Exercisable. Mr. Komaromy's address
     is 1637 South Cobblestone Court, Springfield, MO 65809.

(11) Includes 2,667 shares subject to Exercisable options. Excludes 40,333
     shares subject to options that are not Exercisable. Mr. Pieper's address is
     2301 Eagle Parkway, Suite 100, Ft. Worth, TX 76177.

(12) Includes (i) 4,290 shares held by Mr. Anderson's wife (including 2,790
     shares held by her as trustee for her relatives), as to which Mr.
     Anderson disclaims beneficial ownership, and (ii) 40,667 shares subject
     to Exercisable options. Excludes 34,333 shares subject to options that
     are not Exercisable. Mr. Anderson's address is 10877 Wilshire Boulevard,
     Suite 1405, Los Angeles, CA 90024-4341.

(13) The shares actually owned by this person (as distinguished from the
     shares that this person is deemed to beneficially own) are subject to an
     irrevocable proxy granted to the Aurora Partnerships.

(14) Includes (i) 25,257 shares owned by a limited partnership of which Mr. Frey
     is general partner, (ii) 4,000 shares held by him as trustee for his
     grandchildren and (iii) 40,667 shares subject to Exercisable options.
     Excludes 34,333 shares subject to options that are not Exercisable. Mr.
     Frey disclaims beneficial ownership of 96% of the shares owned by the
     limited partnership. Mr. Frey's address is One Gorham Island, Westport, CT
     06880.

(15) Includes 12,000 shares subject to options that are Exercisable.

(16) Includes 70,176 shares subject to Exercisable warrants. Mr. Hartnett's
     address is 60 Round Hill Road, Fairfield, CT 06430.

(17) Includes 2,000 shares held by Mr. Parsky's wife, as to which Mr. Parsky
     disclaims beneficial ownership.

(18) Includes 40,667 shares subject to Exercisable options. Excludes 34,333
     shares subject to options that are not Exercisable. Mr. Stonesifer's
     address is 8473 Bay Colony Drive, Naples, FL 34108.

(19) Mr. Smith's address is 1717 East LaRua, Pensacola, FL 32501.

(20) Includes 711,907 shares subject to Exercisable warrants and options.
     Excludes 608,357 shares subject to options that are not Exercisable.


                                       58
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          The Company believes the transactions described below were beneficial
to the Company and were on terms at least as favorable to the Company as could
have been obtained from unaffiliated third parties pursuant to arms-length
negotiations.

RELATIONSHIP WITH AURORA CAPITAL GROUP

          The Company was formed in 1994 at the direction of Aurora Capital
Group, of which the Aurora Partnerships are a part. Aurora Capital Group is
controlled by Messrs. Crowell, Hardy, Parsky and Roeder, who are directors of
the Company. See Item 12. "Security Ownership of Certain Beneficial Owners and
Management."

          The Company pays to Aurora Management Partners ("AMP"), which is a
part of Aurora Capital Group, a base annual management fee of $550,000 for
advisory and consulting services pursuant to a written management services
agreement (the "Management Services Agreement"). AMP 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 has not been increased as a result of any of the Company's
acquisitions. The base annual management fee is also subject to increase for
specified cost of living increases pursuant to which the base annual management
fee was most recently increased in January 1999 from $540,000. If the Company's
EBITDA in any year exceeds management's budgeted EBITDA by 15.0% or more for
that year, AMP 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 2000, AMP did not
receive this additional management fee in 2000.

          The base annual management fee payable to AMP will be reduced as the
collective beneficial ownership of Common Stock by the Aurora Partnerships
declines below 50% as follows: for any period during which the collective
beneficial ownership of the Aurora Partnerships is less than 50% but at least
40%, the base annual management fee payable for the period will be 80% of the
original base annual management fee (as such original base annual management fee
may previously have been adjusted due to discretionary increases by the Board of
Directors or cost of living increases as described above, the "Original Fee");
for any period during which the Aurora Partnerships' collective beneficial
ownership is less than 40% but at least 30%, the base annual management fee
payable for the period will be 60% of the Original Fee; and for any period
during which the collective beneficial ownership of the Aurora Partnerships is
less than 30% but at least 20%, the base annual management fee payable for the
period will be 40% of the Original Fee. If the Aurora Partnerships' collective
beneficial ownership declines below 20%, the Management Services Agreement will
terminate. As of March 2, 2000, the collective beneficial ownership of the
Aurora Partnerships for purposes of the Management Services Agreement was
approximately 63%. See Item 12. "Security Ownership of Certain Beneficial Owners
and Management."

          If the Company consummates any significant acquisitions, AMP will be
entitled to receive a fee from the Company for investment banking services in
connection with the transaction. The fee is 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. Since the Company's
formation, it has paid approximately $5.2 million of fees to AMP for investment
banking services in connection with the Company's acquisitions. In January 2001
the Company paid AMP a $750,000 fee for services in connection with the October
2000 sale of the Distribution Group.

          Notwithstanding the foregoing, no payment will be made to AMP 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 Credit Facility. The Management Services Agreement also
provides that the Company shall provide Aurora Capital Group and its directors,
employees, partners and affiliates with customary indemnification against all
actions not involving gross negligence or willful misconduct.


                                       59
<PAGE>

          In October 1996, the Company granted options for an aggregate of
48,000 shares of Common Stock to Mark C. Hardy (a director of the Company), Kurt
Larsen (a former director of the Company) and two consultants of the Company,
all four of whom were then employees of Aurora Capital Group. These options,
which have an exercise price of $4.67 per share, become exercisable in one-third
increments on each of the first three anniversaries of the date of grant and
expire in 2006. In 1997, 12,000 of these options terminated when Mr. Larsen
resigned from Aurora Capital Group and in 2000 one of the consultants exercised
12,000 options.

INDEMNIFICATION AGREEMENTS

          The Company has entered into separate but identical indemnification
agreements (the "Indemnification Agreements") with each director and executive
officer of the Company. The Indemnification Agreements provide for, among other
things, the following: (i) indemnification to the fullest extent permitted by
law against any and all expenses (including attorneys' fees and all other costs
and obligations of any nature whatever), judgments, fines, penalties and amounts
paid in settlement (including all interest, assessments and other charges paid
or payable in connection therewith) of any claim, unless the Company determines
that such indemnification is not permitted under applicable law; (ii) the prompt
advancement of expenses to the director or officer, including attorneys' fees
and all other costs, fees, expenses and obligations paid or incurred in
connection with investigating or defending any threatened, pending or completed
action, suit or proceeding related to the fact that such director or officer is
or was a director or officer of the Company or is or was serving at the request
of the Company as a director, officer, employee, trustee, agent or fiduciary of
another corporation, partnership, joint venture, employee benefit plan, trust or
other enterprise, and for repayment to the Company if it is found that such
director or officer is not entitled to such indemnification under applicable
law; (iii) a mechanism through which the director or officer may seek court
relief in the event the Company determines that the director or officer is not
permitted to be indemnified under applicable law (and therefore is not entitled
to indemnification under the Indemnification Agreement); and (iv)
indemnification against expenses (including attorneys' fees) incurred in seeking
to collect from the Company an indemnity claim or advancement of expenses to the
extent successful.

REGISTRATION RIGHTS

          The holders of the Common Stock outstanding before the IPO in December
1996 have certain "demand" and "piggyback" registration rights pursuant to a
stockholders agreement. In addition, GEPT has certain "demand" and "piggyback"
registration rights with respect to a portion of the shares of Common Stock
owned by it.


                                       60
<PAGE>

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
          ON FORM 8-K

(a)  Index to Financial Statements, Financial Statement Schedules and Exhibits:

          1.   Financial Statements Index

          See Index to Financial Statements and Supplemental Data on page 26.

          2.   Financial Statement Schedules Index

          II - Valuation and Qualifying Accounts.............................S-1

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

          3.   Exhibit Index

          The following exhibits are filed as part of this Annual Report on Form
10-K, or are incorporated herein by reference.

<TABLE>
<CAPTION>
   EXHIBIT
    NUMBER                                      DESCRIPTION
   --------                                     -----------
<S>            <C>
     3.1       Amended and Restated Certificate of Incorporation of Aftermarket
               Technology Corp. (previously filed as Exhibit 3.1 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 1996 and incorporated herein by this reference)
     3.2       Certificate of Designations, Preferences, and Relative,
               Participating, Option and Other Special Rights of Preferred Stock
               and Qualifications, Limitations and Restrictions Thereof of
               Redeemable Exchangeable Cumulative Preferred Stock of Aftermarket
               Technology Corp. (previously filed as Exhibit 3.2 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 1996 and incorporated herein by this reference)
     3.3       Amended and Restated Bylaws of Aftermarket Technology Corp.
               (previously filed as Exhibit 3.3 to the Company's Registration
               Statement on Form S-1 (File No. 333-35543) filed on September 12,
               1997 and incorporated herein by this reference)
     3.4       Certificate of Amendment of Restated Certificate of Incorporation
               of Aftermarket Technology Corp. filed with the Delaware Secretary
               of State on August 7, 1998 (previously filed as Exhibit 3.4 to
               the Company's Annual Report on Form 10-K for the year ended
               December 31, 1998 and incorporated herein by this reference)
     4.1       Indenture, dated August 2, 1994, among Aftermarket Technology
               Corp., the Guarantors named therein and Firstar Bank of
               Minnesota, N.A. (formerly known as American Bank N.A.), as
               Trustee for the Series B 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 Firstar Bank of
               Minnesota, N.A. (formerly known as American Bank N.A.), as
               Trustee for the Series D 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 Firstar Bank of Minnesota, N.A. (formerly known as American
               Bank N.A.), as Trustee for the Series B Notes (previously filed
               as Exhibit 4.3 to Amendment No. 1 to the Company's Registration
               Statement on Form S-1 filed on October 25, 1996, Commission File
               No. 333-6697, and incorporated herein by this reference)


                                       61
<PAGE>

     4.4       Second Supplemental Indenture, dated as of June 1, 1995, among
               Aftermarket Technology Corp., the Guarantors named therein and
               Firstar Bank of Minnesota, N.A. (formerly known as American Bank
               N.A.), as Trustee for the Series B Notes (previously filed as
               Exhibit 4.4 to Amendment No. 1 to the Company's Registration
               Statement on Form S-1 filed on October 25, 1996, Commission File
               No. 333-5597, and incorporated herein by this reference)
     4.5       Third Supplemental Indenture to the Series B Indenture and First
               Supplemental Indenture to the Series D Indenture, dated as of
               July 25, 1996, among Aftermarket Technology Corp., the Guarantors
               named therein and Firstar Bank of Minnesota, N.A. (formerly known
               as American Bank N.A.), as Trustee for the Notes (previously
               filed as Exhibit 4.5 to Amendment No. 1 to the Company's
               Registration Statement on Form S-1 filed on October 25, 1996,
               Commission File No. 333-5597, and incorporated herein by this
               reference)
     4.6       Fourth Supplemental Indenture to the Series B Indenture and
               Second Supplemental Indenture to the Series D Indenture, dated as
               of June 1, 1998, among Aftermarket Technology Corp., the
               Guarantors named therein and Firstar Bank of Minnesota, N.A.
               (formerly known as American Bank N.A.), as Trustee for the Notes
               (previously filed as Exhibit 4.6 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1998 and
               incorporated herein by this reference)
    10.1       Stockholders Agreement, dated as of August 2, 1994, among
               Holdings, and certain of its stockholders, optionholders and
               warrant holders (the Stockholders Agreement) (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       Amendment No. 1 to the Stockholders Agreement, dated as of June
               24, 1996 (previously filed as Exhibit 10.38 to Amendment No. 2 to
               the Company's Registration Statement on Form S-1 filed on
               November 6, 1996, Commission File No. 333-5597, and incorporated
               herein by this reference)
    10.3       Amendment No. 2 to the Stockholders Agreement, dated as of
               October 24, 1996 (previously filed as Exhibit 10.39 to Amendment
               No. 2 to the Company's Registration Statement on Form S-1 filed
               on November 6, 1996, Commission File No. 333-5597, and
               incorporated herein by this reference)
    10.4       Amendment No. 3 to Stockholders Agreement, dated as of December
               4, 1996 (previously filed as Exhibit 10.4 to the Company's Annual
               Report on Form 10-K for the year ended December 31, 1996 and
               incorporated herein by this reference)
    10.5       Amendment No. 4 to Stockholders Agreement, dated as of December
               16, 1996 (previously filed as Exhibit 10.5 to the Company's
               Annual Report on Form 10-K for the year ended December 31, 1996
               and incorporated herein by this reference)
    10.6       Amended and Restated Credit Agreement, dated as of March 6, 1998,
               among Aftermarket Technology Corp., the Lenders from time to time
               parties thereto and The Chase Manhattan Bank (the Credit
               Agreement) (previously filed as Exhibit 10.6 to the Company's
               Annual Report on Form 10-K for the year ended December 31, 1997
               and incorporated herein by this reference)
    10.7       Guarantee and Collateral Agreement, dated as of March 6, 1998, by
               Aftermarket Technology Corp. and each of the signatories thereto
               in favor of The Chase Manhattan Bank as Agent for the banks and
               other financial institutions from time to time parties to the
               Amended and Restated Credit Agreement (see Exhibit 10.6)
               (previously filed as Exhibit 10.7 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1997 and
               incorporated herein by this reference)
    10.8       Amended and Restated Tax Sharing Agreement, dated as of December
               20, 1996, among Aftermarket Technology Holdings Corp., Aaron's
               Automotive Products, Inc., ATC Components, Inc., CRS Holdings
               Corp., Diverco Acquisition Corp., H.T.P., Inc., Mamco Converters,
               Inc., R.P.M. Merit, Inc. and Tranzparts Acquisition Corp.
               (previously filed as Exhibit 10.8 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1996 and
               incorporated herein by this reference)
    10.9       Amended and Restated Management Services Agreement, dated as of
               November 18, 1996, by and among Aftermarket Technology Corp., the
               subsidiaries of Aftermarket Technology Corp., and Aurora Capital
               Partners L.P. (previously filed as Exhibit 10.4 to Amendment No.
               4 to the Company's Registration Statement on Form S-1 filed on
               October 25, 1996, Commission File No. 333-5597, and incorporated
               herein by this reference)
    10.10      Aftermarket Technology Corp. 1996 Stock Incentive Plan
               (previously filed as Exhibit 10.10 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1996 and
               incorporated herein by this reference)


                                       62
<PAGE>

    10.11      Form of Incentive Stock Option Agreement (previously filed as
               Exhibit 10.36 to Amendment No. 1 to the Company's Registration
               Statement on Form S-1 filed on October 25, 1996, Commission File
               No. 333-5597, and incorporated herein by this reference)
    10.12      Form of Non-Qualified Stock Option Agreement (previously filed as
               Exhibit 10.37 to Amendment No. 1 to the Company's Registration
               Statement on Form S-1 filed on October 25, 1996, Commission File
               No. 333-5597, and incorporated herein by this reference)
    10.13      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)
    10.14      Amended and Restated Warrant Certificate, dated as of August 2,
               1994, for 280,704 warrants issued to William E. Myers, Jr.
               (previously filed as Exhibit 10.18 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1996 and
               incorporated herein by this reference)
    10.15      Amended and Restated Warrant Certificate, dated as of August 2,
               1994, for 70,176 warrants issued to Brian E. Sanderson
               (previously filed as Exhibit 10.19 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1996 and
               incorporated herein by this reference)
    10.16      Amended and Restated Warrant Certificate, dated June 24, 1996,
               for 70,176 warrants issued to Michael J. Hartnett (previously
               filed as Exhibit 10.20 to the Company's Annual Report on Form
               10-K for the year ended December 31, 1996 and incorporated herein
               by this reference)
    10.17      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)
    10.18      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)
    10.19      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)
    10.20      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)
    10.21      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)
    10.22      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)
    10.23      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)
    10.24      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,


                                       63
<PAGE>

               Tranzparts, Inc. and Tranzparts Acquisition Corp. (previously
               filed as Exhibit 10.23 to Amendment No. 1 to the Company's
               Registration Statement on Form S-1 filed on October 25, 1996,
               Commission File No. 333-5597, and incorporated herein by this
               reference)
    10.25      Stock Purchase Agreement, dated as of October 1, 1996, by and
               among Robert T. Carren Qualified Annuity Trust, Robert T. Carren,
               Diverco, Inc., and Diverco Acquisition Corp. (previously filed as
               Exhibit 10.34 to Amendment No. 1 to the Company's Registration
               Statement on Form S-1 filed on October 25, 1996, Commission File
               No. 333-5597, and incorporated herein by this reference)
    10.26      Stock Purchase Agreement, dated as of January 31, 1997, by and
               among S. Jay Wilemon, Ricki J. Wilemon, Bradley J. Wilemon, Corby
               L. Wilemon, Replacement & Exchange Parts Co., Inc., Aftermarket
               Technology Corp. and Repco Acquisition Corp. (previously filed as
               Exhibit 10.30 to the Company's Annual Report on Form 10-K for the
               year ended December 31, 1996 and incorporated herein by this
               reference)
    10.27      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)
    10.28      Amended and Restated Lease, dated as of June 1, 1997, by and
               among Confar Investors II, L.L.C. and Aaron's Automotive
               Products, Inc. (previously filed as Exhibit 10.33 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 1997 and incorporated herein by this reference)
    10.29      Sublease, dated April 20, 1994, between Troll Associates, Inc.
               and Component Remanufacturing Specialists, Inc. with respect to
               property located at 400 Corporate Drive, Mahwah, New Jersey
               (previously filed as Exhibit 10.40 to Amendment No. 2 to the
               Company's Registration Statement on Form S-1 filed on November 6,
               1996, Commission File No. 333-5597, and incorporated herein by
               this reference)
    10.30      Sublease Modification and Extension Agreement, dated as of
               February 28, 1996, between Olde Holding Company and Component
               Remanufacturing Specialists, Inc. with respect to property
               located at 400 Corporate Drive, Mahwah, New Jersey (previously
               filed as Exhibit 10.41 to Amendment No. 2 to the Company's
               Registration Statement on Form S-1 filed on November 6, 1996,
               Commission File No. 333-5597, and incorporated herein by this
               reference)
    10.31      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)
    10.32      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)
    10.33      Stock Subscription Agreement, dated as of November 18, 1996,
               between Aftermarket Technology Corp. and the Trustees of the
               General Electric Pension Trust (previously filed as Exhibit 10.44
               to Amendment No. 4 to the Company's Registration Statement on
               Form S-1 filed on October 25, 1996, Commission File No. 333-5597,
               and incorporated herein by this reference)
    10.34      Asset Purchase Agreement dated as of July 31, 1997 among
               Automatic Transmission Shops Inc., C.W. Smith, ATS
               Remanufacturing, Inc. and Aftermarket Technology Corp.
               (previously filed as Exhibit 10.41 to the Company's Registration
               Statement on Form S-1 (File No. 333-35543) filed on September 12,
               1997 and incorporated herein by this reference)
    10.35      Lease Agreement dated as July 31, 1997 between C.W. Smith and ATS
               Remanufacturing, Inc. (previously filed as Exhibit 10.42 to the
               Company's Registration Statement on Form S-1 (File No. 333-35543)
               filed on September 12, 1997 and incorporated herein by this
               reference)
    10.36      Stock Purchase Agreement dated as of July 21, 1997 among Gary A.
               Gamble, James E. Henderson, Trans Mart, Inc., TM-AL Acquisition
               Corp. and Aftermarket Technology Corp. (previously filed as
               Exhibit 10.43 to the Company's Registration Statement on Form S-1
               (File No. 333-35543) filed on September 12, 1997 and incorporated
               herein by this reference)


                                       64
<PAGE>

    10.37      Amendment No. 1 to Stock Purchase Agreement dated as of August
               15, 1997 among Gary A. Gamble, James E. Henderson, Trans Mart,
               Inc., TM-AL Acquisition Corp. and Aftermarket Technology Corp.
               (previously filed as Exhibit 10.44 to the Company's Registration
               Statement on Form S-1 (File No. 333-35543) filed on September 12,
               1997 and incorporated herein by this reference)
    10.38      Amendment No. 2 to Stock Purchase Agreement dated as of August
               15, 1997 among Gary A. Gamble, James E. Henderson, Trans Mart,
               Inc., TM-AL Acquisition Corp. and Aftermarket Technology Corp.
               (previously filed as Exhibit 10.45 to the Company's Registration
               Statement on Form S-1 (File No. 333-35543) filed on September 12,
               1997 and incorporated herein by this reference)
    10.39      Form of Indemnification Agreement between Aftermarket Technology
               Corp. and directors and certain officers (previously filed as
               Exhibit 10.46 to Amendment No. 1 the Company's Registration
               Statement on Form S-1 (File No. 333-35543) filed on October 1,
               1997 and incorporated herein by this reference)
    10.40      Stock Purchase Agreement, dated as of November 14, 1997, by and
               among Matthew Obeid, Metran Automatic Transmission Parts Corp.,
               Metran of Boston, Inc., Metran Parts of Pennsylvania, Inc., TM-AL
               Acquisition Corp. and Aftermarket Technology Corp. (previously
               filed as Exhibit 10.48 to the Company's Annual Report on Form
               10-K for the year ended December 31, 1997 and incorporated herein
               by this reference)
    10.41      Asset Purchase Agreement, dated as of February 10, 1998, by and
               among Autocraft Industries, Inc., Fred Jones Industries A Limited
               Partnership, and Aftermarket Technology Corp. (previously filed
               as Exhibit 10.49 to the Company's Annual Report on Form 10-K for
               the year ended December 31, 1997 and incorporated herein by this
               reference)
    10.42      Amendment No. 1 to Asset Purchase Agreement, dated as of February
               10, 1998, by and among Autocraft Industries, Inc., Fred Jones
               Industries A Limited Partnership, and Aftermarket Technology
               Corp. (previously filed as Exhibit 10.50 to the Company's Annual
               Report on Form 10-K for the year ended December 31, 1997 and
               incorporated herein by this reference)
    10.43      Employment Agreement, dated as of July 28, 1994, between Kenneth
               A. Bear and Aaron's Automotive Products, Inc. (previously filed
               as Exhibit 10.51 to the Company's Annual Report on Form 10-K for
               the year ended December 31, 1997 and incorporated herein by this
               reference)
    10.44      Employment Agreement, dated as of February 21, 1997, between
               Joseph Salamunovich and Aftermarket Technology Corp. (previously
               filed as Exhibit 10.52 to the Company's Annual Report on Form
               10-K for the year ended December 31, 1997 and incorporated herein
               by this reference)
    10.45      Employment Agreement, dated as of March 6, 1998, between Ronald
               E. Bradshaw and Aftermarket Technology Corp. (previously filed as
               Exhibit 10.53 to the Company's Annual Report on Form 10-K for the
               year ended December 31, 1997 and incorporated herein by this
               reference)
    10.46      Employment Agreement, dated as of December 15, 1998, between
               Michael T. DuBose and Aftermarket Technology Corp. (previously
               filed as Exhibit 10.54 to the Company's Annual Report on Form
               10-K for the year ended December 31, 1998 and incorporated herein
               by this reference)
    10.47      Aftermarket Technology Corp. 1998 Stock Incentive Plan
               (previously filed as Exhibit 10.55 to the Company's Annual Report
               on Form 10-K for the year ended December 31, 1998 and
               incorporated herein by this reference)
    10.48      Waiver and Amendment dated as of March 26, 1999 to the Amended
               and Restated Credit Agreement, dates as of March 26, 1998, among
               Aftermarket Technology Corp., the several banks and other
               financial institutions from time to time parties thereto and The
               Chase Manhatten Bank, as agent (previously filed as Exhibit 10.56
               to the Company's Annual Report on Form 10-K for the year ended
               December 31, 1998 and incorporated herein by this reference)
    10.49      Consent and Amendment dated as of August 25, 1999 to the Amended
               and Restated Credit Agreement, dates as of March 26, 1998, among
               Aftermarket Technology Corp., the several banks and other
               financial institutions from time to time parties thereto and The
               Chase Manhatten Bank, as agent (previously filed as Exhibit 10.57
               to the Company's Annual Report on Form 10-K for the year ended
               December 31, 1999 and incorporated herein by this reference)
    10.50      Third Amendment dated as of December 20, 1999 to the Amended and
               Restated Credit Agreement, dates as of March 26, 1998, among
               Aftermarket Technology Corp., the several banks and other
               financial institutions from time to time parties thereto and The
               Chase Manhatten Bank, as agent (previously filed as


                                       65
<PAGE>

               Exhibit 10.58 to the Company's Annual Report on Form 10-K for the
               year ended December 31, 1999 and incorporated herein by this
               reference)
    10.51      Asset Purchase Agreement, dated as of October 1, 1999, by and
               among All Transmission Parts, Inc., All Automatic Transmission
               Parts, Inc., David E. Helm, Barry C. Helm, Aftermarket Technology
               Corp. and ATC Distribution Group, Inc. (previously filed as
               Exhibit 10.1 to the Company's Current Report on Form 8-K dated
               October 1, 1999 and incorporated herein by this reference)
    10.52      Form of Employment Agreement between Aftermarket Technology Corp.
               and its officers (previously filed as Exhibit 10.60 to the
               Company's Annual Report on Form 10-K for the year ended December
               31, 1999 and incorporated herein by this reference)
    10.53      Stock Purchase Agreement dated as of September 1, 2000 between
               Aftermarket Technology Corp. and ATCDG Acquisition Corp., Inc.
               (previously filed as Exhibit 10.1 to the Company's Current Report
               on Form 8-K dated October 27, 2000 and incorporated herein by
               this reference)
    10.54      Amendment to Stock Purchase Agreement dated as of October 27,
               2000 between Aftermarket Technology Corp. and ATCDG Acquisition
               Corp., Inc. (previously filed as Exhibit 10.2 to the Company's
               Current Report on Form 8-K dated October 27, 2000 and
               incorporated herein by this reference)
    10.55      Amendment and Waiver, dated as of August 2, 2000, to the Amended
               and Restated Credit Agreement, dated as of March 6, 1998, among
               Aftermarket Technology Corp., the several banks and other
               financial institutions from time to time parties thereto and The
               Chase Manhattan Bank, as agent (previously filed as Exhibit 10.3
               to the Company's Current Report on Form 8-K dated October 27,
               2000 and incorporated herein by this reference)
    10.56      Consent and Amendment, dated as of October 26, 2000, to the
               Amended and Restated Credit Agreement, dated as of March 6, 1998,
               among Seller, the several banks and other financial institutions
               from time to time parties thereto and The Chase Manhattan Bank,
               as agent (previously filed as Exhibit 10.4 to the Company's
               Current Report on Form 8-K dated October 27, 2000 and
               incorporated herein by this reference)
   *10.57      Aftermarket Technology Corp. 2000 Stock Incentive Plan
   *10.58      Amendment, dated as of March 1, 2001, to the Amended and Restated
               Credit Agreement, dated as of March 6, 1998, among Seller, the
               several banks and other financial institutions from time to time
               parties thereto and The Chase Manhattan Bank, as agent
     *21       List of Subsidiaries
     *23       Consent of Ernst & Young LLP, independent auditors
</TABLE>
-----------
*    Filed herewith


                                       66
<PAGE>

(b)  Reports on Form 8-K

     During the quarter ended December 31, 2000 the Company filed the following
     reports on Form 8-K:

     (1)  Report dated October 27, 2000, reporting under Item 2 that on October
          27, 2000, the Company completed the sale of all the outstanding
          capital stock of ATC Distribution Group, Inc.


(c)  Refer to (a) 3 above.

(d)  Refer to (a) 2 above.


                                       67
<PAGE>

                                   SIGNATURES

          Pursuant to the requirements of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized,
on March 9, 2001.

                                    AFTERMARKET TECHNOLOGY CORP.

                                    By:           /s/ Michael T. DuBose
                                        ----------------------------------------
                                                    Michael T. DuBose
                                            Chairman of the Board, President and
                                                  Chief Executive Officer

          Pursuant to the requirements of the Securities Exchange Act of 1934,
this Annual Report on Form 10-K has been signed by the following persons in the
capacities indicated on the dates indicated.

<TABLE>
<CAPTION>
                 SIGNATURE                                         TITLE                              DATE
---------------------------------------     --------------------------------------------------  --------------
<S>                                         <C>                                                 <C>
                                             Chairman of the Board, President and Chief
           /s/ Michael T. DuBose             Executive Officer (Principal Executive Officer)    March 9, 2001
 --------------------------------------
             Michael T. DuBose

                                             Chief Financial Officer (Principal Financial and
             /s/ Barry C. Kohn               Accounting Officer)                                March 9, 2001
 --------------------------------------
               Barry C. Kohn


            /s/ Robert Anderson              Director                                           March 9, 2001
 --------------------------------------
              Robert Anderson


           /s/ Richard R. Crowell            Director                                           March 9, 2001
 --------------------------------------
             Richard R. Crowell


              /s/ Dale F. Frey               Director                                           March 9, 2001
 --------------------------------------
                Dale F. Frey


             /s/ Mark C. Hardy               Director                                           March 9, 2001
 --------------------------------------
               Mark C. Hardy


          /s/ Michael J. Hartnett            Director                                           March 9, 2001
 --------------------------------------
            Michael J. Hartnett


            /s/ Gerald L. Parsky             Director                                           March 9, 2001
 --------------------------------------
              Gerald L. Parsky


                                       68
<PAGE>

           /s/ Richard K. Roeder             Director                                           March 9, 2001
 --------------------------------------
             Richard K. Roeder


            /s/ William A. Smith             Director                                           March 9, 2001
 --------------------------------------
              William A. Smith


         /s/ J. Richard Stonesifer           Director                                           March 9, 2001
 --------------------------------------
           J. Richard Stonesifer
</TABLE>


                                       69
<PAGE>

                          AFTERMARKET TECHNOLOGY CORP.

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               ADDITIONS
                                                                 --------------------------------
                                                  BALANCE AT      CHARGED TO         CHARGE TO
                                                 BEGINNING OF      COSTS AND           OTHER                         BALANCE AT END
                                                    PERIOD         EXPENSES           ACCOUNTS      DEDUCTIONS          OF PERIOD
                                                 ------------      ----------        -----------    ----------       --------------
<S>                                              <C>               <C>               <C>            <C>              <C>
     Year ended December 31, 1998:
Reserve and allowances  deducted
 from asset accounts:
   Allowance for uncollectible accounts              $   25           $  521           $  245(2)      $  315(1)             $  476
   Reserve for inventory obsolescence                   702            2,506            1,387(2)         337                 4,258
     Year ended December 31, 1999:
Reserve and allowances  deducted
 from asset accounts:
   Allowance for uncollectible accounts                 476               27              114(2)          21(1)                596
   Reserve for inventory obsolescence                 4,258              600                -          2,792                 2,066
     Year ended December 31, 2000:
Reserve and allowances  deducted
 from asset accounts:
   Allowance for uncollectible accounts                 596              208                -            424(1)                380
   Reserve for inventory obsolescence                 2,066              416                -            394                 2,088
</TABLE>

  (1)      Accounts written off, net of recoveries
  (2)      Balances added or removed through acquisitions or sales of companies


                                      S-1