BONDED MOTORS, INC. ANNOUNCES FOURTH QUARTER, ANNUAL RESULTS.

LOS ANGELES--(BUSINESS WIRE)--Feb. 10, 1997--

Revenues Increase 27% for Quarter, 37% for Year

One Time Charge of $447,977 Taken in Fourth Quarter

Aaron Landon, Chairman of the Board and Chief Executive Officer of Bonded Motors, Inc. (Nasdaq, NMS:BMTR) announced today operating results for the fourth quarter and year ended December 31, 1996. Revenues increased 27% to $4.4 million for the quarter versus $3.5 million in the comparable 1995 quarter, and 37% to $18.6 million for the full year versus $13.6 million for 1995. Net income for the quarter, after a pre-tax charge of $447,977 totaled $351,412 versus $249,568 (before extraordinary items) for the same quarter in the prior year.

During the fourth quarter of 1996, the Company changed its estimate of costs included in completed engine inventory, resulting in a one time charge of $447,977. That charge is reflected in cost of sales for the fourth quarter and in cost of sales for the fiscal year ended December 31, 1996.

Net income for the year, including the one time charges, rose 35% to $1,571,501 versus net income (before extraordinary items) of $1,161,746 in 1995. The number of common and common equivalent shares outstanding for the fourth quarter and full year of 1996 were 3,080,910 and 2,797,206 respectively, versus 1,966,000 and 1,972,000 for the comparable 1995 periods, reflecting the completion of the Company's initial public offering in April, 1996. Per share earnings for the fourth quarter and full year ended December 31, 1996 were $.11 and $.56 respectively, versus $.13 and $.65 for the comparable 1995 period (fewer shares).

Commenting on the results, Mr. Landon noted, "We are generally pleased with our growth in revenues and profits for 1996, which we consider a foundation year. We were able to open new regional distribution centers throughout the United States to better service our national customer base, and we expanded our manufacturing facility during the fourth quarter to accommodate anticipated increased demand.

"We will be expanding our customer base in 1997, and anticipate that our growth rate will continue as it has for the past three years."

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: The statements in this release regarding the business conditions of the automotive aftermarket for remanufactured engines and the expansion of the company's products and markets are forward looking statement that include risks and uncertainties, including but not limited to product demand and development, technological advancements, impact of competitive products and pricing growth targeted markets, manufacturing capacity, risks of foreign operations ability to integrate and leverage acquisitions and other information detailed from time to time in the Company's Securities and Exchange Commission filings.

Bonded Motors is a remanufacturer of car and light-truck engines with headquarters in Los Angeles and regional distribution centers in the states of California, Washington, Colorado, Ohio, Pennsylvania, and Georgia. The Company's principal customers are discount automotive parts chain stores such as Pep Boys - Manny Moe & Jack, Trak Automotive, CSK Automotive (Checkers, Schucks, and Kragens), and Paccar Automotive (Grands and Al's Auto Parts). -0-

            Bonded Motors, Inc. Statements of Earnings
                          (Unaudited)

                        Three Months Ended        Twelve Months Ended
                            December 31               December 31
                         1996        1995          1996         1995
Net sales           $4,410,901   $3,476,878   $18,636,604   $13,620,736
Cost of sales        3,654,737/a  2,541,922    14,351,284/a  10,174,434
Gross profit           756,164      934,956     4,285,320     3,446,302

Selling, general and
  administrative
  expenses             753,136      748,063     2,685,141     2,117,879
Earnings from
  operations             3,028      186,893     1,600,179     1,328,423

Other (expenses) income:
  Interest (expense)
    income, net         10,655      (25,663)           (7)      (80,328)
  Other                      -       12,338             -        65,651
  Earnings before
   income taxes         13,683      173,568     1,600,172     1,313,746

Income tax (expense)   337,729       76,000       (28,671)     (152,000)
Earnings before
  extraordinary item   351,412      249,568     1,571,501     1,161,746

Extraordinary item
  gain from forgiveness of
  debt net of income tax
  effect of $15,000          -       12,000             -       119,000

Net Earnings          $351,412     $261,568    $1,571,501    $1,280,746


Earnings per common and common equivalent shares:
  Earnings before
   extraordinary item    $0.11        $0.13         $0.56         $0.59
  Extraordinary item         -         0.01             -          0.06
   Net earnings          $0.11        $0.13         $0.56         $0.65


Weighted average
 common and common
 equivalent shares
 outstanding         3,080,910     1,966,000     2,797,206    1,972,000


a/ Includes one time charge of $447,977.

CONTACT: Bonded Motors Inc.

Paul Sullivan, 213/583-8631

or

Coffin Communications Group

John Muir, 818/789-0100