<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D. C.

                                  FORM 10-KSB

                       FOR ANNUAL AND TRANSITION REPORTS
                    PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(MARK ONE)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended February 25, 1998

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from                        to 
                               ----------------------    ---------------------

                          COMMISSION FILE NO. 0-28812

                         RANKIN AUTOMOTIVE GROUP, INC.
             (Exact name of registrant as specified in its charter)

LOUISIANA                                                     72-0838383
---------                                                     ----------
   (State of incorporation or organization)                (IRS tax number)

3711 MACARTHUR DRIVE, ALEXANDRIA, LA                             71302
------------------------------------                             -----
   (Address of principal executive offices)                    (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (318)487-1081
                                                   ---------------

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 or 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.  [X]

         As of February 25, 1998, 4,535,000 shares of the Registrant's Common
Stock were outstanding, and the aggregate market value of  the voting stock of
the Registrant held by non-affiliates (1,741,000 shares) was approximately
$5,549,438 based on the market price at that date.
<PAGE>   2
                       DOCUMENT INCORPORATED BY REFERENCE

         The Registrant's definitive proxy statement regarding the 1998 annual
shareholders meeting is incorporated by reference in Part III (Items 9 through
13) of this Report.

           CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

         The discussion in this Report contains forward-looking statements that
involve risks and uncertainties.  The Company's actual results could differ
significantly from those discussed herein.  Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
in "Risk Factors", "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business," as well as those discussed elsewhere
in this Report.  Statements contained in this Report that are not historical
facts are forward-looking statements that are subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995.  A number of
important factors could cause the Company's actual results for fiscal 1999 and
beyond to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company.  These factors include,
without limitation, those listed below in "Risk Factors."

                                  RISK FACTORS

         Growth through Acquisitions.  The Company's growth strategy includes
acquisitions, and the Company intends to continue to seek additional
acquisition opportunities.  There can be no assurance that the Company will be
able successfully to identify suitable acquisition candidates, secure financing
on acceptable terms, complete acquisitions, integrate acquired operations into
existing operations or expand into new markets.  There can also be no assurance
that future acquisitions will not have an adverse effect upon the Company's
operating results, particularly in the fiscal quarters immediately following
the completion of such acquisitions while the operations of the acquired
business arc being integrated into the Company's operations.  Once integrated,
acquired operations may not achieve levels of revenues, profitability or
productivity comparable with those achieved by the Company's existing
operations, or otherwise perform as expected.  In addition, the Company
competes for acquisition and expansion opportunities with companies that have
substantially greater resources.

         Need for Additional Financing.  To the extent that the Company incurs
indebtedness to fund its growth program, the Company will be subject to the
risks associated with incurring additional indebtedness, including the risks
that interest rates may fluctuate and cash flow may be insufficient to pay
principal and interest on any such indebtedness.  There can be no assurance
that any additional financing above that available from the line of credit will
be available to the Company on commercially reasonable terms.  If such
additional financing is not available, the Company may have to curtail its
long-range growth program.

         Competition.  Both the Professional Installer and the "do-it-yourself"
(DIY) portions of the Company's business are highly competitive.  The Company's
major competitors in the Professional Installer portion of its business include
independent warehouse distributors and parts stores, automobile dealerships and
national warehouse distributors and associations, such as National Automotive
Parts Association ("NAPA"), Carquest and All Pro.  Competitors in the DIY
portion of the Company's business include national and regional automotive
parts chains such as Auto Zone, Western Auto, Pep Boys, independently owned
parts stores, automobile dealerships and mass or general merchandise, and
discount


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<PAGE>   3
and convenience chains that carry automotive products.  Many of the Company's
competitors are larger and have greater financial resources than the Company.
Some of the larger DIY competitors have entered into the Professional Installer
portion of the business and this could have a material adverse effect on the
Company's operations.

         Reliance on One Supplier.  The Company's business has been dependent
in a material respect upon its close relationship with its principal vendor,
APS, Inc., and its ability to continue to purchase products from this vendor at
favorable prices and favorable terms, including those offered through financial
incentives, such as cooperative advertising arrangements, other marketing
incentive programs and non-financial benefits such as distribution services.
In January 1998, due to non-competitive pricing from APS, Inc., the Company by
contract sent notice to APS, Inc., informing them that the product purchase
agreement had been cancelled.  The Company is continuing to evaluate its
available potential alternatives.

         In February 1998, APS, Inc., along with its parent and affiliated
companies, filed for protection and is seeking reorganization under Chapter 11
of the United States Bankruptcy Code ("Chapter 11").  The Company continues to
purchase most of its product from APS, Inc., however, the Company has begun
negotiations with potential new suppliers.  If the Company was unable to
identify and enter into agreements with alternative vendors of similar parts
that offer similar programs to APS, Inc., or there is a disruption of the
Company's vendor relationship with APS, Inc., or there is a material change in
any terms of purchase, advertising, incentive or other programs offered by APS,
Inc., it could have a material adverse affect on the Company's business.
Management of the Company believes that the outcome of the APS, Inc., Chapter
11 proceedings will not have a material adverse effect on its business.

         Dependence Upon Key Personnel.  The success of the Company has been
largely dependent on the efforts of Mr.  Randall Rankin.  The loss of the
services of Mr. Rankin could have a materially adverse effect on the Company's
business and results of operations.  In order to successfully implement and
manage its growth strategy, the Company will be dependent upon its ability to
continue to attract and retain qualified personnel.  There can be no assurance
that the Company will be able to attract such personnel.

         Continued Control of the Company by Principal Shareholder.  Mr.
Randall Rankin owns beneficially approximately 62% of the then outstanding
shares of the Company's Common Stock.  As a result, Mr. Rankin has the ability
to exercise effective voting control of the Company, including the election of
all of the Company's directors, and on any other matter being voted on by the
Company's shareholders, including any merger, sale of assets or other change in
control of the Company.

         No Dividends and None Anticipated.  The Company has not paid any
dividends since its inception and does not intend to pay dividends in the
foreseeable future.

         Volatility of Stock Price.  The trading price of the Company's Common
Stock may continue to be highly volatile and could be subject to significant
fluctuations in response to variations in the Company's quarterly operating
results, and other factors.  In addition, the stock market is subject to price
and volume fluctuations affecting the market price for the securities of many
companies generally, which fluctuations often are unrelated to operating
results.


                                      3
<PAGE>   4
                                     PART I

Item 1.  Description of Business

         The Company is a specialty supplier and retailer of automotive
replacement parts, tools, supplies, equipment and accessories to both
Professional Installers and DIY customers.  The Company operates 40 auto parts
stores and three machine shops in Louisiana, Mississippi and Eastern Texas,
twelve of which were acquired on October 25, 1996.  Six of the stores are
"wholesale oriented" selling primarily to the Professional Installers while the
remaining 34 stores are traditional stores selling to both the Professional
Installers and DIY customers.  The Company also maintains approximately 165
trucks that can make most deliveries to its wholesale customers within 30
minutes.  Stores carry an extensive product line of hard parts including
brakes, belts, hoses, filters, cooling system parts, tune-up parts, shock
absorbers, gaskets, batteries, bearings, engine parts, remanufactured
alternators and starters, chassis parts and exhaust systems.  In addition, the
Company also carries (i) maintenance items, such as oil, antifreeze, fluids,
engine additives and appearance products; (H) accessories, such as floor mats
and seat covers; (iii) automotive tools and (iv) professional service
equipment.  For the fiscal year ended February 25, 1998, approximately 90% of
the Company's sales was derived from hard parts, approximately 70% of the
Company's product sales was derived from Professional Installers and the
remaining 30% from DIY customers.

STORE OPERATIONS

         Company stores generally range in size from 4,200 to 10,000 square
feet.  The Company believes that its stores are "destination stores" generating
their own traffic rather than relying on traffic created by the presence of
other stores in the immediate vicinity.  Consequently, most traditional stores
are free-standing buildings situated on or near major traffic thoroughfares,
which offer ample parking and easy customer access.  Each traditional store
carries a mixture of hard parts and accessories.  The inventory of a wholesale
store consists only of hard parts.  Traditional stores carry 18,000-20,000
different SKUs of which 13,000 to 15,000 represent hard parts, whereas a
wholesale store will carry 17,000-19,000 different hard part SKUs.  Both the
traditional store and wholesale store sales are generated by a full-time sales
force of knowledgeable employees and free delivery service.

         Company stores service two distinct types of customers - the
Professional Installer (wholesale) customer and the DIY (retail) customer.  The
Company's traditional stores average 65% to 70% in Professional Installer sales
and 30% to 35% in DIY sales.  The Company's wholesale stores sell only to the
Professional Installer.  In addition, because wholesale stores carry a greater
selection of hard parts SKUs, including certain lower turnover hard parts not
generally carried in the traditional store, a wholesale store also provides the
additional stores within its area with access to a greater selection of hard
parts SKUs on a same day basis.  The Company also provides a delivery service
to its wholesale customers with 165 trucks.  The Company's 40 stores also
receive inventory deliveries nightly from APS, Inc..  The deliveries replenish
each store with the inventory sold the previous day and also provide a store
with the ability to special order SKUs not normally stocked by the Company's
stores.  This enables the Company to provide next day service to both the
wholesale and DIY customers.

         The Company's stores offer the Professional Installer and the DIY
customer a wide selection of nationally recognized brand names and "Big A"
(APS, Inc. private label) products for domestic and imported automobiles, vans
and trucks.  For the year ended February 25, 1998, new and remanufactured
automotive hard parts, such as engine and transmission parts, alternators,
starters, water pumps, and brake shoes and pads, accounted for approximately
90% of the Company's total sales.  Each traditional store


                                      4
<PAGE>   5
also carries an extensive selection of maintenance items, such as oil,
antifreeze, fluids, engine additives, appearance products, and accessories,
such as floor mats and seat covers, automotive tools and professional service
equipment.

OPERATING STRATEGY

         Because the Company pursues both the Professional Installer and the
DIY portions of the automotive aftermarket through its store network, the
Company believes that it is able to reach most consumers of automotive products
within its market areas.  The demand generated by this customer base permits
the Company to: (i) offer a broad selection of SKUs and (ii) restock and fill
special orders from its principal supplier, APS, Inc., on an overnight or in
some cases, a same-day basis.  Because of its distribution arrangement with
APS, Inc., the Company does not need to maintain a warehouse for those products
supplied by APS, Inc..  This allows the Company to utilize its working capital
and management resources for store operations, but still provide its customers
with up to 160,000 SKUs.  In January 1998, due to non-competitive pricing from
APS, Inc., the Company by contract sent notice to APS, Inc., informing them
that the product purchase agreement had been cancelled.  The Company is
continuing to evaluate its available potential alternatives.  In February 1998,
APS, Inc., along with its parent and affiliated companies, filed for protection
and is seeking reorganization under Chapter 11.  The Company continues to
purchase most of its product from APS, Inc., however, the Company has begun
negotiations with potential new suppliers.   See "Purchasing" and "Inventory
Management."

         The Company also believes that its service to both the Professional
Installer and DIY portions of the automotive market results in additional
benefits not generally enjoyed by competitors serving only one portion of the
market.  Because the Company principally deals with the more
technically-oriented Professional Installer, the Company's sales personnel are
required to be more technically proficient, particularly with regard to hard
parts.  The Company has found that such technical proficiency is also valued by
its DIY consumers, thereby enhancing the Company's ability to fulfill its
customer service strategy.  The Company's philosophy is to be a wholesale
customer's one call and a DIY customer's one stop for all their automotive
needs.

GROWTH STRATEGY

         The Company's growth strategy is to expand its operations throughout
the mid-South by purchasing automotive parts stores as they become available.
The Company's growth to date has been accomplished primarily through the
purchase of existing automotive parts stores.  The Company believes that
because of the recent trend in consolidation occurring in the auto parts
industry, a large number of independent operators will be available for
purchase.  Key factors considered by the Company in the acquisition selection
process include population density and growth-patterns, age and per capita
income, vehicle traffic counts, the number and type of existing automotive
repair facilities, other auto parts stores and other competitors within a
predetermined radius, and the operational strength of such competitors.
Although the cost to acquire the business of an independently owned parts store
varies, depending primarily on the amount of inventory and the size of real
estate, if any, being acquired, the Company estimates that the average cost to
acquire such a business and convert it to a Company store ranges from
approximately $225,000 to $350,000, excluding real estate.  Of this amount,
approximately $175,000 to $250,000 is allocable to inventory and the remainder
to fixed assets.  The Company estimates that an additional $75,000 would be
needed to fund the stores' operations for the initial four month period of
operations.  In the event acquisitions in a targeted area are not possible, or
impractical, the Company may attempt to lease a store site and refurbish it as
a Company store.  The costs associated with opening a new leased location are
slightly greater than acquiring a business and converting it to a Company
store.


                                      5
<PAGE>   6
Because the majority of the Company's sales comes from its wholesale customer
base, the first determining factor in selecting a new store location is the
amount of wholesale business available in that area.  When the Company targets
an area for a new store in a metropolitan market, a study is performed on
available sites.  If retail space is available at reasonable rates and market
size and local competition warrant it, a traditional store would be opened.  If
not, a wholesale store would be opened.  During the fiscal year ended February
25, 1998, the Company acquired one traditional store in Natchitoches, LA and
opened four traditional stores - two each in Louisiana and Texas.

         Same store growth through increased sales and profitability is also an
important part of the Company's growth strategy.  To achieve improved sales and
profitability at Company stores, the Company continually strives to improve
upon the service provided to its customers.  The Company believes that while
pricing is essential in the highly competitive environment of the automotive
aftermarket business, ultimately it is customer satisfaction (whether of the
Professional Installer or the DIY customer), resulting from superior customer
service, that generates increased sales and profitability.

ACQUISITIONS

         Since March 1, 1993, the Company has made the following acquisitions:

<TABLE>
<CAPTION>
         Date                     No. Stores    Location
         ----                     ----------    --------
         <S>                      <C>           <C>
         May 1993                 6             Monroe, LA
         June 1994                3             Opelousas and Lafayette, LA
         October 1994             1             Franklin, LA
         March 1995               1             Nacogdoches and Jasper,TX
         July 1995                1             Center, TX
         September 1995           4             Hammond, North Shore, New Orleans, LA
         May 1996                 1             Baton Rouge, LA
         July 1996                1             Lufkin, TX
         October 1996             12            Mississippi
         March 1997               2*            Winnfield, LA and Jasper, TX
         June 1997                1             Natchitoches, LA
         August 1997              1*            Ruston, LA
         September 1997           1*            Livingston, TX
</TABLE>

*  New Store Openings

CUSTOMER SERVICE

         The Company believes it is not only in the business of selling auto
parts, but, as important, is in the service business.  Heavy emphasis is placed
on having professional personnel to provide responsive customer service.
Employees receive extensive on-the-job training and participate in a cash
incentive program, allowing them to participate in the Company's financial
success.

         The Company's number one priority is customer satisfaction.  The
Company seeks to attract new Professional Installer and DIY customers and to
retain existing customers by conducting a variety of advertising and
promotional programs and by offering (i) superior in-store service through
highly motivated, technically-proficient sales people using advanced
point-of-sale systems, (ii) an extensive



                                      6
<PAGE>   7
selection of SKUs stocked in each store, (iii) same day or next day delivery of
over 160,000 SKUs, (iv) attractive stores in convenient locations, (v)
competitive pricing and (vi) a national warranty program.

         Each of the Company's sales personnel is required to be technically
proficient in the workings and application of Automotive Products.  See
"Personnel Training." This degree of technical proficiency is essential because
of the significant portion of the Company's business represented by the
Professional Installer.  The Company has found that the typical DIY customer
often seeks assistance from sales people, particularly in connection with the
purchase of hard parts.  The Company believes that the ability of its sales
personnel to provide such assistance is valued by the DIY customer, and
therefore is likely to result in repeat DIY business.  To assist the Company's
sales personnel in providing customer service, the Company has installed
advanced point-of-sale information systems.  These systems provide individual
stores with access to the Company's data base of manufacturer recommended parts
and the ability to locate parts at other stores.

PURCHASING

         In 1993, in connection with the purchase of six (6) stores from APS,
Inc., the Company entered into a product purchase agreement with APS, Inc., a
national distributor of a broad array of "Big A" brand and manufacturers
branded automotive replacement parts, as well as tools, equipment, supplies and
accessories.  Under the terms of this agreement, the Company agreed to purchase
merchandise from APS, Inc. over any given four (4) month consecutive billing
period at a minimum average of 80% of the Company's cost of goods less certain
exceptions.  On October 21, 1996, the Company agreed to extend the purchase
agreement through September 2002.  Purchases under this agreement aggregated
approximately $12.2 million and $17.2 million during the fiscal years ended
February 25, 1997 and 1998, respectively.  The Company has maintained its
accounts payable with APS, Inc. on a current basis and by reason thereof has
been able to take advantage of discounted payment terms offered by APS, Inc..

         In January 1998, due to non-competitive pricing from APS, Inc., the
Company by contract sent notice to APS, Inc. informing them that the product
purchase agreement had been cancelled.  The Company is continuing to evaluate
its available potential alternatives.  In February 1998, APS, Inc., along with
it parent and affiliated companies, filed for protection and is seeking
reorganization under Chapter 11.  The Company continues to purchase most of its
product from APS, Inc., however, the Company has begun negotiations with
potential new suppliers.

         APS, Inc. operates approximately 27 warehouses throughout the United
States with the nearest warehouses to the Company's stores being located in
Monroe, Louisiana; Dallas, Texas; and Jackson, Mississippi.  APS, Inc. has been
able to provide the Company with same day or next day delivery of needed parts.

         The Company participates in several APS, Inc. "Big A" programs, among
         which are the following:

         o       A national warranty program ("NWP").  The Company is able to
                 offer its customers a NWP, good at approximately 2,000 Big A
                 parts sources across the country.  This program is fully
                 funded by APS, Inc..

         o       A national advertising program.  The Company believes that
                 because of the expanse of geographic coverage included in its
                 market area, the national advertising program, plus the NWP,
                 gives the Company stores added recognition and a competitive
                 edge.


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<PAGE>   8
         o       A national account program.  This program makes the Company a
                 pre-approved vendor to most national service centers such as
                 Firestone, Sears, Montgomery Ward, Pep Boys, etc.

         In addition to the above programs, APS, Inc. provides the Company
with: (i) brand name products, (ii) pricing economies through increased
purchasing power and (iii) various services, including assistance in marketing,
cataloging and inventory control.

         APS, Inc. is a publicly held corporation whose shares of common stock
are traded Over-the-Counter.  According to reports filed with the Securities
and Exchange Commission, APS, Inc., formed in 1989, believes that it is the
second largest wholly owned warehouse distributor of automotive replacement
parts in the United States.  It supplies parts to more than 1,650 "Big A" parts
stores owned by independent jobbers and approximately 500 APS, Inc.-owned auto
parts stores.  For the year ended January 25, 1998, APS, Inc. had net sales of
approximately $812.9 million and a loss of approximately $95.3 million.  Its
total stockholders' equity at January 25, 1998 was approximately $18.6 million.

         If the Company were unable to purchase product from APS, Inc. or if
APS, Inc. had a material reduction in the terms of product purchases and if the
Company were unable to find a replacement supplier with favorable terms, then
the Company's business could be materially adversely affected.

INVENTORY MANAGEMENT

         While the Company continues to purchase most of its product from APS,
Inc., the Company has begun negotiations with potential new suppliers.  At this
early stage, the Company has not determined if a new supplier will replace APS,
Inc..  The Company currently warehouses product on a limited basis.  If the
Company decides to purchase product directly from its manufacturers, a larger
warehouse operation would be required.

         The Company maintains an inventory control department which, with the
help of APS, Inc. and their vendors, assures that the inventory in the stores
is current and up-to-date.  The department is constantly adding new SKUs and
deleting SKUs that have become less popular.  APS, Inc. provides the Company
with the ability to return substantially all APS, Inc. inventory, thereby
virtually eliminating loss from obsolescence.

         All inventory records are maintained on a computer which establishes a
minimum and a maximum order point for each SKU.  The Company is in the process
of upgrading its computer system to better enable management to monitor sales
and recommend stocking levels to its stores.  The Company's computer system is
equipped with electronic cataloging that has improved productivity.  The
computer system also supplies the Company with productivity reports by counter
and sales personnel.

MARKETING

         Since a majority of the Company's revenues are derived from the sale
of Automotive Products to the Professional Installer, the Company devotes
substantial time and energy to the development of its Professional Installer
business.  The Company's Vice Presidents are primarily responsible for the
development and maintenance of the Company's Professional Installer business.
There are approximately twenty full-time sales people operating from the
Company's traditional and wholesale stores dedicated solely to calling upon and
selling to the Professional Installer.  Moreover, each store manager
participates


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<PAGE>   9
in these activities by calling on existing and potential new Professional
Installers on a regular and periodic basis.  The Company has 165 trucks to
provide prompt delivery service to the Professional Installer.  Approximately
200 inside technically trained sales personnel market products to retail and
wholesale customers.

         The Company promotes sales to DIY consumers through an advertising
program which includes direct mail, newspaper and limited radio and television
advertising in selected markets.  Newspaper advertisements are generally
directed toward specific product and price promotions, frequently in connection
with specific sales events and promotions.  The Company also sponsors several
automotive related events in its market area each year in an effort to reach
wholesale and retail customers.  The Company believes that its advertising and
promotional activities have resulted in significant name recognition in its
market area.

         The Company believes that a competitive pricing policy is essential
within product categories in order to compete successfully.  Product pricing is
generally established to meet the pricing policies of competitors in the market
area served by each store.  Most automotive products sold by the Company are
priced at discounts from the manufacturer suggested list prices and additional
savings are offered through volume discounts and special promotional pricing.

PERSONNEL TRAINING

         The Company believes that technical proficiency on the part of each
sales person is essential to meet the needs of its customers, particularly the
Professional Installer, and that as a result of the Company's training program,
the enhanced technical proficiency of its sales personnel provides the Company
with a significant advantage over the smaller retail operators and the less
specialized mass merchandisers.

         The Company's training function is led and managed by its Vice
Presidents through a series of  bi-weekly, monthly and semi-annual sessions for
store managers, area managers and sales personnel.  The Company views its
training and development program as the key to its continued long term success.
Management believes that if it trains, develops, manages and motivates the
Company's employees properly, then customers, in turn, will receive the
superior service the Company views as its competitive advantage in the
marketplace.

COMPETITION

         The automotive parts aftermarket is highly competitive.  Automotive
products, similar or identical to those sold at the Company's stores, are
generally available from a variety of different competitors in the communities
served by the Company's stores.  The principle modes of competition are
customer service, merchandise selection and availability, location and price.

         The Company's major competitors in the Professional Installer portion
of its business include independent warehouse distributors and independently
owned parts stores, automobile dealers and national warehouse distributors and
associations, such as National Automotive Parts Association (NAPA), Carquest
and All Pro.  Competitors in the DIY portion of its business within its current
market area include automotive parts chains such as AutoZone, Western Auto, Pep
Boys, independently owned parts stores, automobile dealerships and mass or
general merchandisers, and discount and convenience chains that carry
automotive products.  Some of the larger DIY competitors have entered into the


                                      9
<PAGE>   10
Professional Installer portion of the business and this could have a material
adverse effect on the Company's operations.

         Although the Company believes that it has competed effectively in its
market area in the past, some of its competitors, or their parent
organizations, are larger in terms of sales volume and have access to greater
capital and management resources.

EMPLOYEES

         As of February 25, 1998, the Company had 420 employees, 155 of whom
are employed at the Company's traditional stores, 58 are employed at the
Company's wholesale stores, 24 are engaged as sales personnel, 150 are engaged
as delivery personnel and 33 are engaged as corporate and administrative
personnel.  The Company's employees are not subject to a collective bargaining
agreement.  The Company considers its relations with its employees to be
excellent, and strives to promote good employee relations through various
programs designed for such purposes.

SERVICE MARKS AND TRADEMARKS

         The Company has registered the trademark USA AUTO STORES in the States
of Louisiana, Texas and Mississippi.  The Company believes that its business is
not materially dependent on any patent, trademark, service mark or copyright.

ITEM 2. DESCRIPTION PROPERTIES

         The Company operates 40 auto parts stores and three machine shops in
31 cities located in Louisiana, Mississippi and Eastern Texas.  Of such stores,
three are leased from the Company's founder and President, Randall B.  Rankin,
with the remaining 37 stores being leased from nonaffiliated third parties.  In
addition, the Company leases one of three machine shops, a 2,200 sq. ft.
storage facility and the Company's executive offices located at 3510 MacLee
Drive and 3709 S. MacArthur Drive, Alexandria, Louisiana from Mr. Rankin.  The
Company stores generally range in size from 4,200 to 10,000 square feet.  See
"Item 13" for information with regard to the terms of the leases with Mr.
Rankin.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not a party to any material legal proceedings.

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

         None


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<PAGE>   11
                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         From the effective date of Company's initial public offering on
November 18, 1996, the Company's Common Stock has been and continues to be
traded on the over-the-counter market and is included for quotation on the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq"). There was no public market for the
Company's Common Stock prior to November 18, 1996.

         The following table sets forth the range of high and low bid
information for the Company's Common Stock for the period from the initial
public offering to the end of the fourth quarter of 1998.

<TABLE>
<CAPTION>
                                                      February 25,                   February 25,
                                                         1997                           1998            
                                                 ----------------------           ------------------
                                                  High             Low             High         Low            
                                                 ----------------------           ------------------
         <S>                                       <C>            <C>              <C>          <C>
         First Quarter                             N/A            N/A              24 1/2       13 1/2
         Second Quarter                            N/A            N/A              19 1/4        5 1/2
         Third Quarter                             14 7/8         10 3/8            6 1/4        2 1/8
         Fourth Quarter                            20 3/4         12 1/8            4 1/8        1 5/8
</TABLE>

         The market information above is derived from quotations on the
National Market System of Nasdaq. Such market quotations reflect inter-dealer
prices, without retail mark-ups, mark-downs, or commission and may not
necessarily represent actual transactions.

HOLDERS

         As of February 25, 1998 the approximate number of holders of record of
the Company's Common Stock was 42 and the approximate number of beneficial
holders, including individual participants in security position listings with
clearing agencies, was 1,500.

DIVIDENDS

         The Company has not paid any cash dividends to date and does not
anticipate or contemplate paying cash dividends in the foreseeable future.  It
is the present intention of management of the Company to utilize all available
funds for working capital and expansion of operations.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

OVERVIEW

         The Company opened its first store in 1979 and expanded to seven
stores by fiscal 1993.  In 1993, the Company entered into a product purchasing
agreement with APS, Inc..  In fiscal 1994, the Company acquired from APS, Inc.
five automotive parts stores and a machine shop located in and around Monroe,
Louisiana, for a total purchase price of approximately $2.5 million.  During
the fiscal year ended


                                      11
<PAGE>   12
February 25, 1995, the Company acquired four additional automotive parts stores
for a total purchase price of approximately $1.5 million.  During the fiscal
year ended February 25, 1996, the Company (i) acquired five additional
automotive parts stores for a total purchase price of approximately $1.7
minion, four of which were acquired from APS, Inc. (who had recently acquired
them from USA Auto Stores, Inc.) for a total purchase price of approximately
$1.3 million, (ii) closed one store and opened two stores.  In May and July
1996, the Company acquired two additional automotive parts stores for a total
purchase price of approximately $900,000 and on October 25, 1996 the Company
acquired the twelve Jackson Stores for a total purchase price of approximately
$2.5 million.  During the fiscal year ended February 25, 1998, the Company
opened four new traditional stores, two in Louisiana and two in East Texas, and
consolidated one store in Opelousas, Louisiana.  In addition, one traditional
store was acquired in Natchitoches, LA for a purchase price of $478,000.  As a
result of these acquisitions, the Company's net sales have increased from
approximately $4.1 million for the fiscal year ended February 25, 1993 to
approximately $38.7 million for the fiscal year ended February 25, 1998.

         The decline in net earnings for the year ended February 25, 1998
compared to the year ended February 25, 1997 was due to negative results in
fourth quarter operations.  During the fourth quarter the Company experienced a
net loss of approximately $881,000 ($.19 per share). This, in part, was
attributable to several factors.  The inconsistent shipping from APS, Inc.
during the fourth quarter and the associated circumstances with the anticipated
and actual filing of their Chapter 11 Petition caused much apprehension and
disruption within our customer and employee ranks.  Also, during this quarter,
the weather was very unseasonable, producing poor automotive parts sales
nationwide.

RESULTS OF OPERATIONS

         The following table sets forth certain selected historical operating
results for the Company as a percentage of net sales.

<TABLE>
<CAPTION>
                                                                                   Year Ended 
                                                                                  February 25,
                                                                                  ------------
                                                                                 1997     1998
<S>                                                                              <C>      <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  100.0%   100.0%
Cost of goods sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   66.2     66.8
                                                                                  ----     ----
         Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   33.8     33.2
Operating, selling, general and administrative expenses . . . . . . . . . . . .   31.7     35.3
                                                                                  ----     ----
         Earnings (loss) from operations. . . . . . . . . . . . . . . . . . . .    2.1     -2.1
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    1.4      0.1
Income taxes (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    0.2     -0.2
                                                                                 -----    -----
Net earnings (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    0.5%    -2.0%
                                                                                 =====    ===== 
</TABLE>

Year Ended February 25, 1997 Compared to Year Ended February 25, 1998

         Net Sales.  Product sales increased approximately $8.7 million, or
approximately 29.1%, from approximately $29.9 million from the year ended
February 25, 1997 to $38.7 million for year of 1998.  Approximately $3.1
million of the increase was due to the four new store openings and one
acquisition and the remaining increase was due primarily to an increase in same
store sales and acquisitions which were consummated in the prior year.  See
"Business - Operating Strategy" and "Business - Recent Acquisitions."


                                      12
<PAGE>   13
         Cost of Goods Sold.  Cost of goods sold increased from approximately
$19.8 million (66.2% of net sales) for the year ended February 25, 1997 to
approximately $25.8 million (66.8% of net sales) for the fiscal year of 1998.
The increase in the dollar amount of cost of goods sold was primarily
attributable to sales increases.  Cost of goods sold as a percentage of sales
increased primarily from sales increases in lower gross margin sales and new
store sales that initially operate at lower gross margins. These new stores'
cost of goods sold as a percentage of net sales should gradually decrease as
these new stores mature and sales volumes increase.  The Company continues to
purchase most of its product from APS, Inc., however, the Company has begun
negotiations with potential new suppliers.  If the Company decides to purchase
products directly from its manufacturers, a larger warehouse operation would be
required, the acquisition cost of parts should decrease and warehousing and
distribution expenses would increase.  At this early stage, the Company has not
determined if a new supplier will replace APS, Inc..

         Operating, Selling, General and Administrative Expenses.  Operating,
selling, general and administrative expenses ("OSG&A") increased from
approximately $9.5 million (approximately 31.7% of net sales) for the year
ended February 25, 1997 to approximately $13.6 million (approximately 35.3% of
net sales) for fiscal of 1998.  This $4.1 million increase (approximately 10.6%
of net sales) for the year ended February 25, 1998, resulted primarily from
additional store personnel and corporate overhead to support the increased
sales volume and store acquisitions.

         Interest Expense.  Net interest expense decreased from approximately
$427,000 (approximately 1.4% of the sales) for the fiscal year ended February
25, 1997 to approximately $53,000 (approximately 0.1% of net sales) for the
comparable year ended February 25, 1998.  The dollar and percentage decreases
were primarily attributable to the retirement of debt with funds received from
the initial public offering in November, 1996.

         Income Taxes. Income taxes decreased from $65,000 (approximately 32%
tax rate) for the fiscal year ended February 25, 1997 to a $60,000 credit
(approximately a -7.1% tax rate) for the comparable year ended February 25,
1998.  See Footnote 9 to accompanying audited financial statements for further
explanation.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary capital requirements have been the funding of
new store acquisitions, increased inventory levels and accounts receivables and
the expansion of the Company's delivery fleet of vehicles.  New store
acquisitions and the expansion of the delivery fleet have been funded by
borrowings secured by Company assets and more recently from the proceeds
received from the Company's initial public offering.

         The Company proposes to expand its operations by acquiring stores in
the next twelve month period.  The total cost of each additional store is
expected to range from approximately $225,000 to $350,000.  The cost of
acquiring such stores is expected to come from available cash, cash from
operations and the Company's line of credit with Hibernia National Bank.  The
Company has a line of credit of $7.5 million with the bank.  Loan financing will
be sought only in connection with acquisitions if available funds are
insufficient to consummate the purchase.  If such loan financing occurs, the
Company will be subject to the risks that interest rates may fluctuate and the
cash flow from such acquisition or acquisitions may be insufficient to pay the
principal and interest on such indebtedness.  At February 25, 1998 approximately
$2.5 million was available under the line of credit. As a result of APS, Inc.
filing for protection under Chapter 11 in February 1998, the percentage applied
to the amount


                                      13
<PAGE>   14
of eligible inventory that is used in the borrowing limit calculation could be
reduced from 70% to 50%.  Management believes this potential modification will
not have a material adverse effect on its business.

         Management believes that the cash expected to be provided by operating
activities, existing cash, existing bank credit facilities and trade credit
will be sufficient to fund both the short and long-term capital and liquidity
needs of the Company for the foreseeable future if the Company continues to use
APS, Inc. to warehouse and distribute the majority of its product needs.  If
the Company decides to purchase directly from manufacturers, a warehouse
operation would be needed which may require additional financing.  At this
early stage, the Company has not determined if a new supplier will replace APS,
Inc..

         Management's Discussion and Analysis of Financial Condition, Risk
Factors, Description of Business and Other Items contain statements regarding
matters that are not historical facts (including statements as to beliefs or
expectations of the Company) which are forward-looking statements.  Because
such forward-looking statements include risks and uncertainties, the Company's
actual results could differ materially from those discussed herein.

YEAR 2000

         The Company has begun addressing all the system modifications to
accommodate the turn of the century.  Management believes that it has dedicated
adequate resources to this project and does not believe that the cost of
implementation will have a significant impact on the Company's financial
condition.

INFLATION AND SEASONALITY

         The Company does not believe its operations are materially affected by
inflation.  The Company has been successful, in some cases, in reducing the
effects of merchandise cost increases principally by taking advantage of vendor
incentive programs, economies of scale resulting from increased volume of
purchases and selective forward buying.

         Store sales have historically been somewhat higher in the first and
second quarters (March through August).

ITEM 7. FINANCIAL STATEMENTS

         The information required by this Item is found immediately following
the signature page of this Report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         None


                                      14
<PAGE>   15
                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS; COMPLIANCE WITH
         SECTION 16(a) OF THE EXCHANGE ACT

OFFICERS

         The following table sets forth the names and ages of all executive
officers of the Company at February 25, 1998, including all positions and
offices with the Company held by him or her, and the period during which he has
served as such.

<TABLE>
<CAPTION>
         Name                          Age     Position
         ----                          ---     --------
         <S>                           <C>     <C>
         Randall B. Rankin             48      President and Director
         Deborah N. Eddlemon           42      Chief Financial Officer and Director
         Ricky D. Gunn                 39      V. Pres. of Operations and Director
         Harris Lake Smith, Jr         41      V. Pres. of Sales and Director
</TABLE>

         Each of  the executive officers listed above serves at the pleasure of
the Board of Directors for a term until his successor is duly elected and
qualified.  Mr. Randall Rankin is a party to an employment agreement with the
Company through November, 1998.  The following is a summary of the business
experience during the past five years of each of the Company's executive
officers.

         RANDALL B. RANKIN has been President of the Company since its
inception in 1978.  Prior thereto, he operated the business as a sole
proprietorship since its founding in 1968.  He has essentially spent his entire
adult life in various sales, marketing and administrative capacities with the
Company.  Mr. Rankin has served on numerous warehouse associations and
councils, advising aftermarket manufacturers on the needs of the auto parts
industry.  He is Chairman of the Board of the Louisiana Auto Parts Association.

         DEBORAH N. EDDLEMON is Senior Vice-President of Finance and
Administration.  She has over twenty-one years of experience in both public and
private accounting.  This includes nine years with a certified public
accounting firm in which she ultimately became a partner.  Ms. Eddlemon was the
CFO for a group of fourteen privately held companies.  She is a member of the
board of directors for a bank and serves on the executive and audit committees.
Ms. Eddlemon serves as the Chief Financial Officer and Secretary for Rankin
Automotive Group, Inc.  She became a director of the Company in August, 1997.

         RICKY D. GUNN is Vice President of Operations for the Company.  Mr.
Gunn began his automotive aftermarket experience in February 1976 with Motor
Supply Company in Monroe, Louisiana.  In 1987 he joined APS, Inc., and became
Division Manager when the Monroe stores were acquired by APS, Inc..  He joined
the Company in May 1993 as Vice President when the Monroe stores were acquired
by the Company.  Mr. Gunn is active on many advisory councils throughout the
auto parts industry including the "Big A" Jobber Council.  He became a director
of the Company in August 1996.

         HARRIS LAKE SMITH, JR. is Vice President of Sales and Marketing for
the Company.  He began his employment with the Company in 1974 as an outside
sales person covering the East Texas market.  He started the Lufkin, Texas
operation in 1991 and opened the Nacogdoches, Texas operation in early 1992.
Mr. Smith is active on several advisory councils including the "Big A" Jobber
Council.  He is also active in the Texas Auto Parts Association.  He became a
director of the Company in August 1996.


                                      15
<PAGE>   16
DIRECTORS

         Reference is made to the Company's definitive information statement
for the 1998 annual shareholders meeting involving the election of directors
which will be filed with the Commission within 120 days after the end of  the
fiscal year covered by this Report.  The information required by this Item and
contained in such definitive proxy statement is incorporated herein by
reference.

ITEM 10.  EXECUTIVE COMPENSATION

         Reference is made to the Company's definitive information statement
for the 1998 annual meeting of shareholders involving the election of directors
which will be filed with the Commission within 120 days after the end of the
fiscal year covered by this Report.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Reference is made to the Company's definitive information statement
for the 1998 annual meeting of shareholders involving the election of
directors, which will be filed with the Commission within 120 days after the
end of the fiscal year covered by this Report.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Reference is made to the Company's definitive information statement
for the 1998 annual meeting of shareholders involving the election of
directors, which will be filed with the Commission within 120 days after the
end of the fiscal year covered by this Report.


                                      16
<PAGE>   17
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

<TABLE>
<CAPTION>
         Exhibit
         Number                         Description
         ------------------------------------------
         <S>     <C>
         3.      (a)      Articles of Incorporation, as amended*

                 (b)      By-laws*

         4.               Form of Common Stock Certificate*

         10.     (a)      Copy of Stock Option Plan*

                 (b)      Copy of Underwriter's Warrant Agreement*

                 (c)      Copy of Product Purchase Agreement between the Registrant and A.P.S., Inc.*

                 (d)      Copy of Lease Agreement between the Registrant and Mr. Randall Rankin dated September 1, 1993
                          (corporate office)*

                 (e)      Copy of Lease Agreement between the Registrant and Mr. Randall Rankin dated July 1, 1991
                          (machine shop)*

                 (f)      Copy of Lease Agreement between the Registrant and Mr. Randall Rankin dated July 1, 1991
                          (Monroe Street store)*

                 (g)      Copy of Lease Agreement between the Registrant and Mr. Randall Rankin dated July 1,
                          1991 (South MacArthur Drive stores and redistribution facility)*

                 (h)      Copy of Lease Agreement between the Registrant and Mr. Randall Rankin dated July 1, 1991
                          (storage facility)*

                 (i)      Copy of Agreement of Sale by and Between Registrant and Parts, Inc. dated September 12, 1996
                          relating to the acquisition of the Jackson Stores*

                 (j)      Copy of Agreement of Sale between Registrant and American Parts System, Inc. dated October 20,
                          1994 relating to the acquisition of the Hammond Stores*

                 (k)      Copy of employment contract between the Registrant and Mr. Randall Rankin*

                 (l)      Commitment Letter from Hibernia National Bank dated September 11, 1996*

                 (m)      Copy of Lock-up Agreement between the Registrant and Mr. Randall Rankin*

                 (n)      Copy of Hibernia  National Bank's Amended & Restated Loan Agreement dated October 7, 1997**

                 (o)      Copy of Hibernia National Bank's 1st Amendment to Amended & Restated Loan Agreement dated May 19, 1998**
</TABLE>

*        Incorporated by reference to the Company's Registration Statement
         filed with the Securities and Exchange Commission (File No.
         333-5562-A) ordered effective November 18, 1996.

**       Filed herewith

(b)      Reports on Form 8-K

         None


                                      17
<PAGE>   18
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, hereunto duly authorized.



         Dated: May 20, 1998            RANKIN AUTOMOTIVE GROUP, INC.

                                        By: /s/ Randall B. Rankin
                                           ----------------------
                                           Randall B. Rankin, President and 
                                           Chief Executive Officer

                                        By: /s/ Deborah N. Eddlemon
                                           -------------------------
                                           Deborah N. Eddlemon, 
                                           Chief Financial Officer

         Pursuant to the requirements of the Securities Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

/s/ Randall B. Rankin                 Director         May 20, 1998
---------------------------                               
Randall B. Rankin


/s/ Otis Al Cannon, Jr.               Director         May 20, 1998
---------------------------                               
Otis Al Cannon, Jr.


/s/ Ricky D. Gunn                     Director         May 20, 1998
---------------------------                               
Ricky D. Gunn


/s/ Harris Lake Smith, Jr.            Director         May 20, 1998
---------------------------                               
Harris Lake Smith, Jr.


/s/ Ricky L. Sooter                   Director         May 20, 1998
---------------------------                               
Ricky L. Sooter, Esq.



/s/ Deborah N. Eddlemon               Director         May 20, 1998
---------------------------                               
Deborah N. Eddlemon



                                      18
<PAGE>   19



RANKIN AUTOMOTIVE GROUP, INC.

FINANCIAL STATEMENTS FOR THE YEARS ENDED
FEBRUARY 25, 1997 AND 1998 AND INDEPENDENT
AUDITORS' REPORT






                                      F-1
<PAGE>   20


INDEPENDENT AUDITORS' REPORT


Board of Directors
Rankin Automotive Group, Inc.
Alexandria, Louisiana

We have audited the accompanying balance sheet of Rankin Automotive Group, Inc.
as of February 25, 1998, and the related statements of operations, stockholders'
equity, and cash flows for each of the two years in the period ended February
25, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. These 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, such financial statements present fairly, in all material
respects, the financial position of the Company as of February 25, 1998, and the
results of its operations and its cash flows for each of the two years in the
period ended February 25, 1998, in conformity with generally accepted accounting
principles.



DELOITTE & TOUCHE LLP

New Orleans, Louisiana
April 27, 1998



                                      F-2
<PAGE>   21


RANKIN AUTOMOTIVE GROUP, INC.

BALANCE SHEET
FEBRUARY 25, 1998
--------------------------------------------------------------------------------

<TABLE>
<S>                                                                <C>         
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                        $  3,962,065
  Accounts receivable:
    Trade, net of allowance for doubtful accounts of $61,000          2,317,873
    Related party                                                        18,904
  Inventory                                                          12,874,352
  Prepaid expenses and other current assets                             167,924
                                                                   ------------
          Total current assets                                       19,341,118

PROPERTY AND EQUIPMENT - net                                          1,994,265

GOODWILL AND INTANGIBLE ASSETS - net                                    629,112
                                                                   ------------
TOTAL                                                              $ 21,964,495
                                                                   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                 $  3,383,715
  Accrued expenses                                                      593,477
  Current portion of long-term debt                                     155,186
                                                                   ------------
           Total current liabilities                                  4,132,378

LONG-TERM DEBT                                                        5,188,160
                                                                   ------------
           Total liabilities                                          9,320,538
                                                                   ------------

COMMITMENTS AND CONTIGENCIES                                                 --

STOCKHOLDERS' EQUITY:
  Preferred stock, no par value, 2,000,000 shares authorized,
    none issued                                                              --
  Common stock, $.01 par value, 10,000,000 shares authorized,
    4,550,000 shares issued                                              45,500
  Additional paid-in capital                                         13,083,830
  Accumulated deficit                                                  (290,373)
  Less treasury stock, 15,000 shares at cost                           (195,000)
                                                                   ------------
          Total stockholders' equity                                 12,643,957
                                                                   ------------
TOTAL                                                              $ 21,964,495
                                                                   ============
</TABLE>



See notes to financial statements.





                                      F-3
<PAGE>   22

RANKIN AUTOMOTIVE GROUP, INC.

STATEMENTS OF OPERATIONS
YEARS ENDED FEBRUARY 25, 1997 AND 1998
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                     1997              1998
<S>                                              <C>               <C>         
NET SALES                                        $ 29,946,333      $ 38,655,609

COST OF GOODS SOLD                                (19,825,239)      (25,823,966)
                                                 ------------      ------------

           Gross profit                            10,121,094        12,831,643

OPERATING, SELLING, GENERAL
  AND ADMINISTRATIVE EXPENSES                      (9,489,231)      (13,627,824)
                                                 ------------      ------------

EARNINGS (LOSS) FROM OPERATIONS                       631,863          (796,181)

INTEREST EXPENSE                                     (426,852)          (52,655)
                                                 ------------      ------------

EARNINGS (LOSS) BEFORE INCOME TAXES (CREDIT)          205,011          (848,836)

INCOME TAXES (CREDIT)                                  65,000           (60,000)
                                                 ------------      ------------

NET EARNINGS (LOSS)                              $    140,011      $   (788,836)
                                                 ============      ============

BASIC AND DILUTED EARNINGS
  (LOSS) PER COMMON SHARE                        $       0.04      $      (0.17)
                                                 ============      ============

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING                                       3,442,000         4,539,000
                                                 ============      ============
</TABLE>


See notes to financial statements.




                                      F-4
<PAGE>   23


RANKIN AUTOMOTIVE GROUP, INC.

STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED FEBRUARY 25, 1997 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                        RETAINED
                                           COMMON STOCK              ADDITIONAL         EARNINGS    
                                   -----------------------------       PAID-IN       (ACCUMULATED      TREASURY
                                      SHARES           AMOUNT          CAPITAL          DEFICIT)         STOCK             TOTAL
                                   ------------     ------------     ------------    ------------     ------------     ------------
<S>                                <C>              <C>              <C>             <C>              <C>              <C>         
BALANCE AT FEBRUARY 26, 1996          3,050,000     $     30,500     $    106,348    $    358,452     $         --     $    495,300

Net earnings for the year ended
  February 25, 1997                                                                       140,011                           140,011

Issuance of common stock              1,500,000           15,000       12,977,482                                        12,992,482
                                   ------------     ------------     ------------    ------------     ------------     ------------

BALANCE AT FEBRUARY 25, 1997          4,550,000           45,500       13,083,830         498,463                        13,627,793

Net loss for the year ended
  February 25, 1998                                                                      (788,836)                         (788,836)

Purchase of treasury stock                                                                                (195,000)        (195,000)
                                   ------------     ------------     ------------    ------------     ------------     ------------

BALANCE AT FEBRUARY 25, 1998          4,550,000     $     45,500     $ 13,083,830    $   (290,373)    $   (195,000)    $ 12,643,957
                                   ============     ============     ============    ============     ============     ============
</TABLE>


See notes to financial statements.



                                      F-5
<PAGE>   24



RANKIN AUTOMOTIVE GROUP, INC.

STATEMENTS OF CASH FLOWS
YEARS ENDED FEBRUARY 25, 1997 AND 1998
--------------------------------------------------------------------------------


<TABLE>
<CAPTION>
                                                                  1997             1998
<S>                                                           <C>              <C>          
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings (loss)                                         $    140,011     $   (788,836)
  Adjustments to reconcile net earnings (loss) to net cash
    used in operating activities:
      Depreciation and amortization                                270,221          396,284
      Changes in assets and liabilities:
        Increase in accounts receivable                           (506,078)        (146,390)
        Increase in inventories                                 (2,040,553)      (2,286,196)
        (Increase) decrease in other assets, net                    35,654          (50,398)
        Increase in accounts payable                               793,762          761,345
        Increase (decrease) in accrued expenses                    297,398         (121,517)
                                                              ------------     ------------

           Net cash used in operating activities                (1,009,585)      (2,235,708)
                                                              ------------     ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment, net                        (458,833)        (931,460)
  Cash paid in connection with acquisition                              --         (408,000)
                                                              ------------     ------------

           Net cash used in investing activities                  (458,833)      (1,339,460)
                                                              ------------     ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from public offering                                 12,992,482               --
  Borrowings under revolving line of credit                     32,982,504       20,951,351
  Repayments of borrowings under revolving
    line of credit                                             (35,717,159)     (17,407,603)
  Proceeds from other long-term obligations                             --          320,827
  Repayments of other long-term obligations                     (4,930,560)        (154,629)
  Purchase of treasury stock                                            --         (195,000)
  Decrease in notes payable to stockholder                        (145,706)              --
                                                              ------------     ------------

           Net cash provided by financing activities             5,181,561        3,514,946
                                                              ------------     ------------

NET INCREASE (DECREASE) IN CASH                                  3,713,143          (60,222)

CASH, BEGINNING OF YEAR                                            309,144        4,022,287
                                                              ------------     ------------

CASH, END OF YEAR                                             $  4,022,287     $  3,962,065
                                                              ============     ============
</TABLE>


See notes to financial statements.



                                      F-6
<PAGE>   25


RANKIN AUTOMOTIVE GROUP, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


1.    DESCRIPTION OF ORGANIZATION AND BUSINESS

      BUSINESS - Rankin Automotive Group, Inc., (the Company) was incorporated
      under the laws of the State of Louisiana in June 1978 and is a specialty
      wholesaler and retailer of automotive replacement parts, maintenance items
      and accessories for the professional installer and "do it yourself"
      markets through stores located in Louisiana, Mississippi and East Texas.

2.    COMPLETION OF PUBLIC OFFERING

      On November 21, 1996, the Company completed a public offering whereby the
      Company issued 1,500,000 shares of common stock for gross proceeds of
      $15,000,000 ($12,992,482 net of underwriting commissions and expenses).

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      CASH EQUIVALENTS - The Company considers all highly liquid investments
      with an original maturity of three months or less to be cash equivalents.

      USE OF ESTIMATES - The preparation of financial statements in conformity
      with generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. Actual results could differ from
      those estimates.

      INVENTORIES - Inventories, which consist of automotive hard parts,
      maintenance items, accessories and tools, are stated at the lower of cost
      or market with cost determined using the first-in, first-out (FIFO)
      method.

      PROPERTY AND EQUIPMENT, NET - Property and equipment are stated at cost
      less accumulated depreciation and amortization. Depreciation and
      amortization are provided using the straight-line method over the
      estimated useful lives of the assets.

      Expenditures for additions, major renewals or betterments are capitalized
      and expenditures for repairs and maintenance are charged to operations as
      incurred.

      INTANGIBLE ASSETS - Intangible assets consist primarily of goodwill and
      customer lists. These assets are being amortized on a straight-line basis
      over 5 to 25 years. Accumulated amortization amounted to approximately
      $70,000 at February 25, 1998.

      PRE-OPENING COSTS - Cost associated with the opening of new stores, which
      consist primarily of payroll and occupancy costs, are charged to
      operations as incurred.

      ADVERTISING - The Company expenses its share of all advertising costs as
      such costs are incurred. The portion of advertising expenditures which are
      to be recovered from vendors and other cooperative programs are recorded
      as a receivable. The Company does not defer any portion of its share of
      advertising costs.



                                      F-7
<PAGE>   26


      STOCK BASED COMPENSATION - The Company applies APB Opinion No. 25 and
      related interpretations in accounting for its stock options. Accordingly,
      no compensation cost has been recognized.

      INCOME TAXES - The Company accounts for income taxes using the liability
      method.

      CONCENTRATION OF CREDIT RISK - The Company grants credit to customers who
      meet pre-established credit requirements. The Company does not require
      collateral when trade credit is granted to customers. Credit losses are
      provided for in the financial statements as soon as they become probable.

      FAIR VALUE OF FINANCIAL INSTRUMENTS - The fair value of the Company's
      financial instruments such as accounts receivable, accounts payable and
      long-term debt approximate their carrying amounts.

      EARNINGS PER SHARE - In February 1997, the Financial Accounting Standards
      Board issued Statement of Accounting Standards (SFAS) No. 128, "Earnings
      per Share," which is effective for financial statements issued for periods
      ending after December 15, 1997. SFAS No. 128 replaces APB Opinion 15,
      Earnings per Share, and simplifies the computation of earnings per share
      (EPS) by replacing the presentation of primary EPS with a presentation of
      basic EPS. In addition, the Statement requires dual presentation of basic
      and diluted EPS by companies with complex capital structure. Basic EPS
      includes no dilution and is computed by dividing net income (loss) by the
      weighted-average number of common shares outstanding for the period.
      Diluted EPS reflects the potential dilution of securities that could share
      in the earnings of a company, similar to fully diluted EPS. The adoption
      of SFAS No. 128 by the Company did not have any impact on EPS as
      previously presented. Basic and diluted earnings (loss) per share is based
      on the weighted average number of shares outstanding of 3,442,000 in 1997
      and 4,539,000 in 1998.

4.    ACQUISITION OF BUSINESSES

      During the year ended February 25, 1997, the Company acquired 14 auto
      parts stores (all of which were acquired from A.P.S., Inc.). During the
      year ended February 25, 1998, the Company acquired one auto parts store.
      These acquisitions were accounted for as purchases and, accordingly, the
      purchase prices were allocated to the assets and liabilities based upon
      their estimated fair values as of the dates of acquisition. The Company
      paid cash totaling approximately $-0- in 1997 and $408,000 in 1998, and
      incurred debt to the seller of approximately $3,450,000 in 1997 and
      assumed liabilities of $70,000 in 1998 in exchange for assets with a
      purchase price of approximately $3,450,000 in 1997 and $478,000 in 1998.
      The results of operations of each acquisition are included in the
      accompanying Statements of Operations from the dates of acquisition. The
      following unaudited pro forma results of operations give effect to the
      acquisitions as though they had occurred on February 26, 1996 (in
      thousands except per share data):

<TABLE>
<CAPTION>
                                                             1997        1998
<S>                                                        <C>         <C>     
Net sales                                                  $ 38,082    $ 38,956
Net earnings (loss)                                             149        (789)
Basic and diluted earnings (loss) per share                     .04       (0.17)
</TABLE>


      The unaudited pro forma information is not necessarily indicative either
      of the results of operations that would have occurred had the purchases
      been made as of February 26, 1996 or of future results of operations of
      the combined companies.




                                      F-8
<PAGE>   27

5.    ACCOUNTS RECEIVABLE, RELATED PARTY

      The accounts receivable from the related party represents non-interest
      bearing trade receivables from a company partially owned and a company
      wholly owned by the principal stockholder of the Company and are due
      within thirty days.

6.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at February 25, 1998:

<TABLE>
<CAPTION>
                                                                       LIFE
                                                                      (YEARS)

<S>                                                  <C>              <C>
Furniture and fixtures and other office equipment    $   633,159        5-7
Leasehold improvements                                   510,603       10-15
Warehouse equipment                                      971,253       10-15
Transportation equipment                               1,107,418        5
                                                     -----------
                                                       3,222,433
Less:  accumulated depreciation and amortization       1,228,168
                                                     -----------
                                                     $ 1,994,265
                                                     ===========
</TABLE>

7.    LONG-TERM DEBT

      Long-term debt at February 25, 1998, consists of the following:

<TABLE>
<S>                                                                               <C>        
Borrowing under revolving line of credit with a maximum amount of $7,500,000
with a bank requiring monthly payments of interest at LIBOR plus 2.5% (8.2% at
February 25, 1998) with principal due December 1, 2001, collateralized by
substantially all assets of the Company                                           $ 4,952,972

Various notes payable, requiring monthly installments of approximately $12,700
including interest at various rates;
a portion of which are collateralized by equipment and vehicles                       390,374
                                                                                  -----------
                                                                                    5,343,346
Less current maturities                                                              (155,186)
                                                                                  -----------
                                                                                  $ 5,188,160
                                                                                  ===========
</TABLE>

      Aggregate maturities of long-term debt are as follows for the years ending
      February 25,

<TABLE>
<S>                                                                               <C>        
1999                                                                              $   155,186
2000                                                                                  142,950
2001                                                                                   89,037
2002                                                                                4,956,173
                                                                                  -----------

                                                                                  $ 5,343,346
                                                                                  ===========
</TABLE>


      The revolving line of credit agreement contains certain financial
      covenants relating to, among other things, current ratio, interest
      coverage and debt to equity ratio.



                                      F-9
<PAGE>   28


8.    ACCRUED EXPENSES

      Accrued expenses consist of the following at February 25, 1998:

<TABLE>
<S>                                                    <C>       
Accrued payroll and related taxes                      $527,076  
Other                                                    66,401  
                                                       --------  
                                                       $593,477  
                                                       ========  
</TABLE>

9.    INCOME TAXES

      Deferred income taxes reflect the net tax effects of temporary differences
      between the carrying amount 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 as of February
      25, 1998 are as follows:

<TABLE>
<S>                                                    <C>      
Deferred tax assets -
  Net operating loss carryforward                      $ 210,000
  Vacation pay and other items, net                       12,000
                                                       ---------
           Total deferred tax assets                     222,000

  Less valuation allowance                              (222,000)
                                                       ---------
           Net deferred tax assets                     $      --
                                                       =========
</TABLE>

      The components of income taxes (credit) are as follows:

<TABLE>
<CAPTION>
                                           1997           1998
<S>                                  <C>            <C>        
Currently payable (refundable)       $   25,000     $  (20,000)
Deferred                                 40,000        (40,000)
                                     ----------     ----------

                                     $   65,000     $  (60,000)
                                     ==========     ==========
</TABLE>

      Income taxes (credit) differ from the amounts computed by applying the
      U.S. Federal income tax rate of 34% to earnings (loss) before income
      taxes. The reasons for these differences are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  YEAR ENDED
                                                                 FEBRUARY 25,
                                                           -------------------------
                                                              1997           1998
<S>                                                        <C>            <C>        
Income taxes (credit) computed at statutory rates          $   70,000     $ (289,000)
Increase (decrease) in taxes due to:
  Change in valuation allowance                                    --        222,000
  Other, net                                                   (5,000)         7,000
                                                           ----------     ----------

Actual income taxes (credit)                               $   65,000     $  (60,000)
                                                           ==========     ==========

Actual tax rate                                                  32 %             (7)%
</TABLE>




                                      F-10
<PAGE>   29

      At February 25, 1998, the Company's management evaluated its deferred tax
      assets and determined that it was more likely than not that the deferred
      tax asset would not be realized and established a valuation allowance
      against its deferred tax assets.

      At February 25, 1998, the Company had a net operating loss carryforward of
      approximately $600,000 available to reduce future taxable income through
      2013.

      Income taxes paid amounted to approximately $60,000 in 1998 and were not
      significant in 1997.

10.   STOCKHOLDERS' EQUITY

      In connection with the public offering, on August 28, 1996, the Board of
      Directors approved an increase in the Company's capital stock authorized
      from 1,000 shares to 10,000,000 shares of $.01 par value common stock and
      authorized 2,000,000 shares of no par value preferred stock. On August 28,
      1996, the Company also effected a stock split whereby each share of common
      stock was exchanged for 3,050 shares of common stock. The weighted average
      common shares outstanding and all share data has been retroactively
      adjusted to reflect these transactions.

      The Board of Directors is authorized, without further stockholder action,
      to divide any or all shares of the authorized preferred stock into series
      and to fix and determine the designation, preferences and relative,
      participating, option or other special rights, and qualifications,
      limitations, or restrictions thereon of any series so established,
      including voting powers, dividend rights, liquidation preferences,
      redemption rights and conversion privileges. As of February 25, 1998, the
      Board had not authorized any issuances of any series of preferred stock
      and there are no plans, agreements or understandings for the authorization
      or issuance of any shares of preferred stock.

      The Board also instituted a stock option plan under which 250,000 shares
      of common stock are reserved for issuance at no less than the fair market
      value of the stock at the date of grant. Options to purchase 6,000 shares
      of common stock were granted in August 1996 and are exercisable at $10 per
      share beginning one year after the date of grant and expire ten years
      after the date of grant. All such options are outstanding and exercisable
      at February 25, 1998.

      The Company is applying APB Opinion No. 25 and related interpretations in
      accounting for the stock option plan. All options granted in 1997 were at
      the estimated fair market value on the date of grant. Accordingly, no
      compensation expense has been recognized. If the Company determined
      compensation cost based on the fair value at the date of grant of $1.75
      per each share under option, consistent with the requirements of Financial
      Accounting Standards Board Statement No. 123 "Accounting for Stock Based
      Compensation," the Company's net earnings (loss) and earnings (loss) per
      share would have been approximately $135,000 and $.04 in 1997 and
      $(784,000) and $(0.17) in 1998. In computing these pro forma amounts, the
      Company used the Black-Scholes Pricing Model and assumed a risk-free
      interest rate equal to approximately 6-1/2%, no dividends, no volatility
      and an expected life of approximately 3 years. The effects of applying
      SFAS No. 123 in this disclosure are not indicative of future amounts.




                                      F-11
<PAGE>   30

11.   COMMITMENTS AND CONTINGENCIES

      PURCHASE COMMITMENTS

      On October 21, 1996, the Company entered into an amended product purchase
      agreement with A.P.S., Inc. ("APS"), a national distributor of replacement
      auto parts. Under the terms of this agreement, the Company agreed to
      purchase merchandise from APS through September 2002, over any given
      four-month consecutive billing period at a minimum average of 80% of the
      Company's cost of goods as defined. Purchases under this agreement
      aggregated approximately $12,200,000 and $17,000,000 in 1997 and 1998,
      respectively.

      In January 1998, due to non-competitive pricing from APS, Inc., the
      Company by contract sent notice to APS, Inc. informing them that the
      product purchase agreement had been canceled. The Company is continuing to
      evaluate its available potential alternatives.

      In February 1998, APS, Inc. along with its parent and affiliated
      companies, filed for protection and is seeking reorganization under
      Chapter 11 of the United States Bankruptcy Code ("Chapter 11"). The
      Company continues to purchase most of its product from APS, Inc., however,
      the Company has begun negotiations with potential new suppliers. If the
      Company was unable to identify and enter into agreements with alternative
      vendors of similar parts that offer similar programs to APS, Inc., or
      there is a disruption of the Company's vendor relationship with APS, Inc.,
      or there is a material change in any terms of purchase, advertising,
      incentive or other programs offered by APS, Inc., it could have a material
      adverse effect on the Company's business. Management of the Company
      believes that the outcome of the APS, Inc., Chapter 11 proceedings will
      not have a material adverse effect on its business.

      LEASES

      The Company leases three of its stores, a machine shop, a storage
      facility, and its administrative offices from the principal stockholder of
      the Company and 29 (including 19 noncancelable operating leases from APS)
      of its stores from unrelated parties under noncancelable operating leases.
      In addition the Company leases eight of its stores from unrelated parties
      on a month to month basis. Such leases to unrelated parties expire during
      the fiscal years 1999 to 2003. Rent expense under leases with the
      principal stockholder aggregated approximately $244,000 in 1997 and
      $262,000 in 1998. Rent expense to other parties aggregated $520,000 in
      1997 and $850,000 in 1998. Most leases include provisions for lease
      extensions and also require the Company to pay real estate taxes,
      insurance and certain other expenses.

      Future minimum lease payments under noncancelable operating leases with
      initial or remaining terms of one year or more, for each of the next five
      years and thereafter are as follows:

<TABLE>
<CAPTION>
                                         PRINCIPAL     UNRELATED
                                        STOCKHOLDER     PARTIES         TOTAL
<S>                                      <C>           <C>           <C>        
1999                                     $  262,000    $  701,000    $  963,000 
2000                                        262,000       485,000       747,000 
2001                                        262,000       336,000       598,000 
2002                                        207,000       182,000       389,000 
2003                                        180,000        41,000       221,000 
Thereafter                                  600,000         4,000       604,000
                                         ----------    ----------    ----------
                                         $1,773,000    $1,749,000    $3,522,000
                                         ==========    ==========    ==========
</TABLE>




                                      F-12
<PAGE>   31

      The Company subleases a portion of one of its locations and sublease
      rental income amounted to approximately $15,000 in 1997 and $31,000 in
      1998. There are no significant sublease commitments at February 28, 1998.

12.   SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
                                                              YEAR ENDED
                                                             FEBRUARY 25,
                                                        ------------------------
                                                           1997          1998
<S>                                                     <C>           <C>       
Noncash investing and financing activities:
  Purchase of stores financed by seller                 $3,450,000    $   70,000
  Cash paid for interest                                   487,200       230,000
</TABLE>



                                     ******




                                      F-13
<PAGE>   32

                              INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                  EXHIBIT
-------                 -------
<S>                     <C>
10 (n)                  Copy of Hibernia National Bank's Amended & Restated Loan Agreement dated October 7, 1997**
10 (o)                  Copy of Hibernia National Bank's 1st Amendment to Amended & Restated Loan Agreement dated May 19, 1998**
27                      Financial Data Schedule**
</TABLE>

**             Filed herewith.