U.S. Auto Parts Network, Inc. Reports Record Sales of $120 Million

Fourth Quarter 2006 Net Sales Increase 134% to $36.8 Million Over 2005

CARSON, Calif., March 20 /PRNewswire-FirstCall/ -- U.S. Auto Parts Network, Inc. (Nasdaq: PRTS), a leading online provider of aftermarket auto parts and accessories, today reported its financial results for the fourth quarter and fiscal year ended December 31, 2006.

Net sales for the fourth quarter ended December 31, 2006 were $36.8 million, an increase of 134% from $15.7 million in the prior year period. Net loss for the fourth quarter of fiscal 2006 was $(0.02) million, or $(0.00) per diluted share on approximately 22 million shares outstanding, compared to net income of $2.1 million, or $0.16 per diluted share on approximately 13 million shares outstanding. Adjusted EBITDA for the fourth quarter of 2006, which excludes share-based compensation expense related to option grants of $0.3 million, was $3.2 million compared to Adjusted EBITDA of $2.7 million in the prior year period.

Net sales for fiscal year 2006 were $120.1 million, an increase of 101% from $59.7 million for fiscal year 2005. Net income for the fiscal year ended December 31, 2006 was $3.5 million, or $0.17 per diluted share on approximately 20.0 million shares outstanding, compared to net income of $6.8 million, or $0.52 per diluted share on approximately 13.2 million shares outstanding. Adjusted EBITDA for fiscal year 2006, which excludes share-based compensation expense related to option grants of $0.9 million, was $13.3 million, an increase of 51% from $8.8 million for fiscal year 2005.

"2006 marked a year of many accomplishments," said Mehran Nia, President and Chief Executive Officer. "We raised a significant amount of capital through debt and equity offerings, completed the acquisition of our largest competitor, as well as prepared the Company for its initial public offering. Through these events, we believe we have set the foundation for U.S. Auto Parts to accelerate growth and continue to gain market share. We achieved revenue growth in excess of 100%, driven by growth in our SKU count, as we expanded our product offering to include engine parts and performance parts and accessories, as well as growth in the number of unique visitors to our network of websites in 2006."

Mr. Nia continued, "This is a very dynamic time in the fragmented aftermarket auto parts market, and we have a number of initiatives in place which we believe will enable us to profitably capitalize on these opportunities. We recently added several key members to our management team and we are confident that we have the leadership in place to execute on the many growth opportunities that lie ahead."

Mr. Nia concluded, "We remain especially committed to increasing stockholder value as evidenced by our recent decision to extend the lock-up agreements of our major shareholders, our executive team and our board of directors for an additional six months from the original lock-up period committed in order to further align ourselves with our stockholders and to focus on our long-term strategy."

Michael McClane, Chief Financial Officer, added, "We saw growth in many of our key metrics during the year, validating the strength of our product offering and business model. Our recent initial public offering and subsequent repayment of debt has strengthened our financial position. While we are proud of these major accomplishments, we still have opportunities for improvement. Our entire team is focused on completing the integration of Partsbin, improving the technology and systems infrastructure, and increasing overall profitability."

    Key Full Year and Q4 2006 Operating Metrics

    *  Unique visitors - The number of monthly unique visitors in the fourth
       quarter of 2006 rose to 20.4 million, an increase of 35% compared to
       the fourth quarter of 2005 on a pro-forma basis after giving effect to
       the acquisition of Partsbin.

    *  Conversion rate - The conversion rate in 2006 increased to 1.2% from
       1.1% in 2005.

    *  Orders - The number of orders placed through our e-commerce websites
       rose to approximately 748,000 orders in 2006 from 288,000 in 2005,
       representing an increase of approximately 160%.

    *  Average order value - The average order value of purchases on our
       websites remained stable at approximately $120 in 2006.

    *  Customer acquisition cost - The customer acquisition cost in 2006 was
       $10 per customer, compared to $8 in 2005.

Mr. McClane concluded, "Looking ahead, we plan to continue to execute on our growth strategy while maintaining a strict focus on profitability through focusing on gross margin expansion and operating expense control. While we are confident we have the initiatives and people in place to achieve this goal, we believe it will require some time to fully implement, and the results will not be realized immediately. As a industry leader in the aftermarket auto parts space, we believe we are uniquely positioned to grow our market share and we are confident about our long-term prospects."

    Outlook for 2007
    Expectations for the first quarter of 2007 are as follows:

    *  Net sales are expected to be in the range of $39 million to $41
       million.

    *  Operating expenses (including depreciation and amortization of software
       and intangibles) as a percentage of net sales are expected to be in the
       range of 31% to 33%.

    *  Net income per diluted share is expected to be in the range of $(0.02)
       to $0.00 with approximately 26.7 million shares outstanding.

         *  This includes the estimated impact of share-based compensation
            expense of approximately $0.02 per diluted share or $0.6 million.

         *  This includes the estimated impact of depreciation and
            amortization of software and intangibles of approximately $0.09
            per diluted share.

    *  Adjusted EBITDA is expected to be in the range of $2.5 million to $3.0
       million.

    Expectations for the fiscal year ending December 31, 2007 are as follows.

    *  Net sales are expected to be in the range of $170 million to $185
       million.

    *  Operating expenses (including depreciation and amortization of software
       and intangibles) as a percentage of net sales are expected to be in the
       range of 30% to 33%.

    *  Diluted net income per share is expected to be in the range of $0.05 to
       $0.17 assuming approximately 29.3 million shares outstanding.

         *  This includes the estimated impact of share-based compensation
            expense of $0.09 per diluted share or $2.5 million.

         *  This includes the estimated impact of depreciation and
            amortization of software and intangibles of approximately $0.31
            per diluted share.

    *  Adjusted EBITDA is expected to be in the range of $14 million to $18
       million.

    Non-GAAP Financial Measures

Regulation G, "Conditions for Use of Non-GAAP Financial Measures," and other provisions of the Securities Exchange Act of 1934, as amended, define and prescribe the conditions for use of certain non-GAAP financial information. We provide "EBITDA" and "Adjusted EBITDA," which are non-GAAP financial measures. EBITDA consists of net income before (a) interest expense, net; (b) income tax provision (benefit); (c) amortization of intangibles; and (d) depreciation and amortization. Adjusted EBITDA further adjusts EBITDA to exclude share-based compensation expense related to the Company's grant of stock options and other equity instruments.

The Company believes these non-GAAP financial measures provide important supplemental information to management and investors. These non-GAAP financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting the Company's business and results of operations.

Management uses EBITDA and Adjusted EBITDA as measurements of the Company's operating performance because they assist in comparisons of the Company's operating performance on a consistent basis by removing the impact of items not directly resulting from core operations. Internally, these non- GAAP measures are also used by management for planning purposes, including the preparation of internal budgets; to allocate resources to enhance financial performance; to evaluate the effectiveness of operational strategies; and to evaluate the Company's capacity to fund capital expenditures and to expand its business. The Company also believes that analysts and investors use EBITDA and Adjusted EBITDA as supplemental measures to evaluate the overall operating performance of companies in our industry.

These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. Management strongly encourages investors to review the Company's consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-GAAP adjustments described above, and exclusion of these items from the Company's non-GAAP measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

    The table below reconciles net income to EBITDA and Adjusted EBITDA for
the periods presented:


                                                            Quarter Ended
                         Years Ended December 31,            December 31,

                     2004         2005        2006        2005          2006

    Net income     $7,133       $6,819       $3,496      $2,063         $22


    Interest
     expense, net      44          106       1,510          37          560
    Income tax
     provision
     (benefit)        328         (163)        550          35           23
    Amortization of
     intangibles        8           17       5,092           4        2,055
    Depreciation
     and
     amortization     448        1,976       1,786         521          245
    EBITDA          7,961        8,755       12,434       2,660       2,861
    Share-based
     compensation      --           --          856          --         349
    Adjusted
     EBITDA        $7,961       $8,755      $13,290      $2,660      $3,210



    Conference Call

The Company will conduct a conference call with analysts and investors to discuss the results today, March 20, 2007 at 1:45 pm Pacific Time (4:45 pm Eastern Time). The conference call, which will be conducted by Mehran Nia, President and Chief Executive Officer, Howard Tong, Chief Operating Officer, and Michael McClane, Chief Financial Officer, will be broadcast live over the Internet and accessible through the Investor Relations section of the Company's website at www.usautoparts.net where the call will be archived for two weeks. To view this press release or the financial or other statistical information required by SEC Regulation G, please visit the Investor Relations section of the U.S. Auto Parts website at investor.usautoparts.net.

About U.S. Auto Parts Network, Inc.

Established in 1995, U.S. Auto Parts is a leading online provider of aftermarket auto parts, including body parts, engine parts, performance parts and accessories. Through the Company's network of websites, U.S. Auto Parts provides individual consumers with a comprehensive selection of approximately 550,000 competitively priced products that are mapped by a proprietary product database to over 4.3 million product applications based on vehicle makes, models and years. U.S. Auto Parts' flagship websites are located at www.partstrain.com and www.autopartswarehouse.com and the Company's corporate website is located at www.usautoparts.net.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are based on management's current expectations, estimates and projections about the Company's business and its industry, as well as certain assumptions made by the Company. Words such as ''anticipates,'' ''expects,'' ''intends,'' ''plans,'' ''believes,'' ''seeks,'' ''estimates,'' ''may,'' ''will'' and variations of these words or similar expressions are intended to identify forward-looking statements. These statements include, but are not limited to, the Company's expectations regarding its future operating results, potential growth and market share. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors.

Important factors that may cause such a difference include, but are not limited to, the demand for the Company's products; the Company's ability to expand its product offerings; the competitive environment in the Company's industry; the effect of technological changes; the Company's cash needs and ability to control costs; changes in general economic or market conditions; and other factors discussed in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the Risk Factors contained in the Company's prospectus filed February 8, 2007, and available at www.usautoparts.net and the SEC's website at www.sec.gov. You are urged to consider these factors carefully in evaluating the forward-looking statements in this release and are cautioned not to place undue reliance on such forward- looking statements, which are qualified in their entirety by this cautionary statement. Unless otherwise required by law, the Company expressly disclaims any obligation to update publicly any forward-looking statements, whether as result of new information, future events or otherwise.



                U.S. AUTO PARTS NETWORK, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except share and per share data)


                                           Years Ended December 31,
                                     2004             2005         2006

    Net sales                       $40,658         $59,698      $120,060
    Cost of sales                    21,334          34,829        78,573

    Gross profit                     19,324          24,869        41,487

    Operating expenses:
      General and administrative(1)   3,599           7,254         9,594
      Marketing(1)                    4,526           5,802        15,102
      Fulfillment(1)                  2,990           4,357         4,963
      Technology(1)                     776             868         1,332
      Amortization of intangibles         8              17         5,092

        Total operating expenses     11,899          18,298        36,083

    Income from operations            7,425           6,571         5,404

    Other income (expense), net:
      Loss from disposition of assets    --              --            (5)
      Other income                       80             191           157
      Interest income                    --              --            95
      Interest expense                  (44)           (106)       (1,605)

        Other income (expense), net      36              85       (1,358)

    Income before income taxes        7,461           6,656         4,046
    Income tax provision (benefit)      328            (163)          550

    Net income                       $7,133          $6,819        $3,496


    Basic net income per share        $0.54           $0.52         $0.24
    Diluted net income per share      $0.54           $0.52         $0.17
    Shares used in computation of
     basic net income
     per share                   13,200,000      13,200,000    14,437,657
    Shares used in computation
     of diluted net income
     per share                   13,200,000      13,200,000    19,990,431
    Shares used in computation
     of pro forma basic net
     income per share
     (unaudited)                 13,200,000      19,833,255    21,070,912
    Shares used in computation
     of pro forma diluted net
     income per share
     (unaudited)                 13,200,000      19,833,255    21,099,003

    Pro forma provision for
     income taxes (unaudited)         2,964           2,657         1,717
    Pro forma basic net income
     per share (unaudited)            $0.34           $0.20         $0.11
    Pro forma diluted net income
     per share (unaudited)            $0.34           $0.20         $0.11



    (1) Includes share-based compensation expense related to option grants, as
follows:

                                              Years Ended December 31,
                                        2004           2005          2006


    General and administrative expense  $--             $--          $582
    Marketing expense                    --              --           171
    Fulfillment expense                  --              --            25
    Technology expense                   --              --            78
                                        $--             $--          $856



                U.S. AUTO PARTS NETWORK, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                      (in thousands, except share data)

                                                           December 31,
                                                       2005           2006

    Assets
    Current assets:
      Cash and cash equivalents                       $1,353         $2,381
      Accounts receivable, net                         1,637          2,789
      Inventory, net                                   8,800          8,796
      Other current assets                               361          2,083

        Total current assets                          12,151         16,049
    Property and equipment, net                        2,259          2,716
    Intangible assets, net                                25         33,362
    Goodwill                                              --         14,179
    Deferred income taxes                                 --          1,703
    Other noncurrent assets                               49          1,901

        Total assets                                 $14,484        $69,910

    Liabilities and Stockholders' Equity
    Current liabilities:
      Accounts payable                                $6,882         $9,091
      Accrued expenses                                 1,307          2,912
      Line of credit                                      --          2,000
      Notes payable                                       96         10,805
      Capital leases payable, current portion            170             62
      Other current liabilities                          423          2,392

        Total current liabilities                      8,878         27,262

    Notes payable, less current portion, net              --         21,922
    Capital leases payable, less current portion         357            114

        Total liabilities                              9,235         49,298

    Noncontrolling interest in consolidated entity        10             --


    Commitments and contingencies

    Stockholders' equity:
      Series A convertible preferred stock, par value
       $0.001; 11,100,000 shares authorized; 0 and
       11,055,425 issued and outstanding, as of
       December 31, 2005 and 2006, respectively;
       (liquidation preference of $45,000 at December
       31, 2006)                                          --             11
      Common stock, par value $0.001; 50,000,000 shares
       authorized; 13,200,000 and 15,199,672 issued
       and outstanding, as of December 31, 2005 and
       December 31, 2006, respectively                    13             15
      Additional paid-in capital                         526         68,906
      Accumulated other comprehensive income              --              5
      Retained earnings (accumulated deficit)          4,700        (48,325)

        Total stockholders' equity                     5,239         20,612

          Total liabilities and stockholders'
           equity                                    $14,484        $69,910



                U.S. AUTO PARTS NETWORK, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (in thousands)


                                            Years Ended December 31,
                                      2004            2005          2006

    Operating activities
    Net income                       $7,133          $6,819        $3,496
    Adjustments to reconcile net
     income to net cash provided
     by operating activities:
      Depreciation and amortization     448           1,976         1,786
      Amortization of intangibles         8              17         5,092
      Non-cash interest expense          --              --            61
      Loss from disposition of assets    --              --             5
      Share-based compensation and other --              --           956
      Realized gain on sale of
       marketable securities             (8)            (75)           --
      Deferred income taxes              79             (79)       (1,703)
      Effect of changes in foreign
       currencies                        --              --             5

    Changes in operating assets
     and liabilities:
      Accounts receivable, net         (222)           (489)       (1,152)
      Inventory, net                   (779)         (3,336)           608
      Other current assets              (32)           (286)       (1,628)
      Other noncurrent assets           (91)             43        (1,824)
      Accounts payable and accrued
       expenses                         (37)          4,942           769
      Other current liabilities           4             104           889

    Net cash provided by operating
     activities                       6,503           9,636         7,360

    Investing activities
    Additions to property, equipment
     and intangibles                 (1,368)           (440)       (1,890)
    Acquisition of business, net
     of cash acquired                    --              --       (24,381)
    Proceeds from sale of equipment      --             154            --
    Proceeds from sale of marketable
     securities                          63             653            --
    Purchase of marketable
     securities                        (558)             --            --
    Payments (borrowings) of
     related-party loans                (82)            356            --

    Net cash provided by (used in)
     investing activities            (1,945)            723       (26,271)

    Financing activities
    Proceeds from credit line         1,500           2,000         2,000
    Payments of credit line             (10)         (3,500)           --
    Proceeds received from notes
     payable, net of discount            --              --        31,705
    Payments made on notes payable       --              --        (4,111)
    Proceeds received on issuance of
     Series A convertible preferred
     stock,net of offering costs         --              --        42,246
    Payments of short-term financing    (45)           (105)         (351)
    (Payments) borrowings to
     related party                      324            (230)           --
    Payments to related parties        (685)         (1,547)           --
    Contributed capital                  --              10            --
    Proceeds from sale of common
     stock                               --              --           150
    Stockholder distributions        (5,629)         (7,764)       (1,700)
    Recapitalization distribution        --              --       (50,000)

    Net cash provided by (used in)
     financing activities            (4,545)        (11,136)       19,939

    Net increase (decrease) in
     cash and cash equivalents           13            (777)        1,028
    Cash and cash equivalents,
     beginning of period              2,117           2,130         1,353

    Cash and cash equivalents,
     end of period                   $2,130          $1,353        $2,381

    Supplemental disclosure of
     noncash financing activities:
      Property acquired under capital
       leases                           $40            $500           $--
      Property acquired under note
       payable to related party       2,234              --            --
      Undistributed earnings related
       to terminated S corporation
       status                            --           4,821
      Issuance of common stock in
       connection with business
       acquisition                       --              --        20,000
      Issuance of note payable to
       selling shareholders in
       connection with business
       acquisition                       --              --         5,000
      Issuance of warrants for costs
       associated with debt and equity
       issuances                         --              --           147

    Cash paid during the period for:
      Interest                           $7             $76        $1,330
      Income taxes                      147             469         3,378

SOURCE U.S. Auto Parts Network, Inc.