Motorcar Parts & Accessories, Inc.

Table of Contents

Table of Contents

Table of Contents

Attached hereto as Exhibit 99.1 is a press release issued by Motorcar Parts & Accessories, Inc. on November 11, 2003, which is incorporated by reference herein.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Motorcar Parts & Accessories, Inc. Announces Improved
Second Quarter FY 2004 Results

TORRANCE, Calif., November 11, 2003 — Motorcar Parts & Accessories, Inc. (“MPA”) (OTC: MPAA.PK), a leading provider of remanufactured starters and alternators for the automotive aftermarket which recently announced an expected change of name to Motorcar Parts of America, Inc., today reported financial results for the second quarter of its fiscal year 2004, ended September 30, 2003.

•

Balance sheet strengthened with $8.6 million of cash and equivalents and $39 million of shareholders’ equity

Revenues for the second quarter of FY2004 were $46.4 million, an increase of 4.4% from the second quarter of FY2003. Operating income for the second quarter was $3.6 million, an increase of 47.5% as compared to $2.4 million for the second quarter of FY2003. Net income for the quarter increased 22.9% to $1.9 million, compared to $1.5 million for the three months ended September 30, 2002. Earnings per diluted share were $0.23 in the second quarter, as compared to $0.18 for the same period last year.

For the first six months of FY2004, the Company earned $2.6 million, or $0.32 per diluted share, on revenues of $83.5 million, as compared to net income of $3.5 million, or $0.41 per share, on revenues of $92.9 million for the same period in FY2003.

“These second quarter results confirm that MPA is on the right track with our business transformation strategy to position the company to pursue renewed growth in the future,” said Chairman, President and CEO, Selwyn Joffe. “At the beginning of this fiscal year, we set out to build a strong foundation for MPA’s future, including furthering our lean manufacturing strategy; strengthening our relationships with our retail partners; developing new products; and strengthening our balance sheet. We have made meaningful progress towards each of these strategic objectives.”

•

Achieved its goal of converting almost all of its manufacturing to lean manufacturing processes, resulting in meaningful improvements in gross margin, product quality, manufacturing throughput and inventory requirements;

•

Pursued its new product initiatives, resulting to date in products targeting motorcycles, personal watercraft and high amperage applications;

•

Repurchased the equivalent of 539,000 shares of common stock for an aggregate of $1,008,490, equal to an average price of $1.87 per share. The repurchased common stock equivalents were in the form of a warrant to purchase 400,000 shares, a stock option to purchase 60,000 shares and 79,000 common shares.

In the second quarter of FY 2004, the Company’s gross profit grew by 44.8% to $7 million, or 15.2% of sales, as compared to $4.9 million, or 10.9% of sales, in the prior year’s quarter. Operating income as a percentage of net sales in the second quarter increased by 230 basis points to 7.7%, as compared to 5.4% a year ago.

Operating expense was $3.5 million for the second quarter of FY2004, as compared to $2.4 million for the prior year period. “Despite expenses relating to indemnification and officer severance packages of $752,000 for this year’s quarter versus $268,000 in the prior year’s second quarter, the company was still able to exceed its operating profit goals,” said Joffe.

In the second quarter and first half of fiscal 2004, the Company recognized $1.4 million and $1.7 million for income taxes, reflecting that MPA no longer has net operating losses for book purposes, although it does for tax purposes. This taxable rate of 42% for the second quarter and 39.8% for the first six months of FY2004 resulted in lower net income as compared to the prior six month period.

Joffe commented, “The Company’s balance sheet is strong, with $8.6 million in cash and equivalents, working capital of $24.5 million, and positive shareholders’ equity of $39 million.”

Motorcar Parts & Accessories, Inc., dba Motorcar Parts of America (MPA), is a leading manufacturer of replacement alternators and starters for imported and domestic cars and light trucks in the United States and Canada. MPA also assembles and distributes ignition wire sets for imported and domestic cars and light trucks. MPA has facilities in the United States in Torrance, California, and Nashville, Tennessee, as well as overseas in Singapore and Malaysia. The company website is located at www.motorcarparts.com.

This press release may contain certain forward-looking statements with respect to the future performance of the Company that involve risks and uncertainties. Various factors could cause actual results to differ materially from those projected in such statements. These factors include, but are not limited to: concentration of sales to certain customers, changes in the Company’s relationship with any of its customers, the potential for changes in consumer spending, consumer preferences and general economic conditions, increased competition in the automotive parts remanufacturing industry, unforeseen increases in operating costs and other factors discussed herein and in the Company’s filings with the Securities and Exchange Commission.


					September 30,			March 31,
					2003			2003

					(Unaudited)
				ASSETS
Current Assets:
	Cash and cash equivalents				$	8,661,000		$	1,307,000
	Short term investments					223,000			162,000
	Accounts receivable — net					7,683,000			12,764,000
	Inventory — net					25,328,000			27,583,000
	Income tax refund receivable					—			28,000
	Prepaid expenses and other current assets					577,000			577,000

		Total current assets				42,472,000			42,421,000
Plant and equipment — net						5,302,000			5,228,000
Deferred tax asset						9,060,000			10,521,000
Other assets						1,068,000			1,112,000

		TOTAL ASSETS			$	57,902,000		$	59,282,000

			LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	9,734,000		$	8,082,000
	Accrued liabilities					3,545,000			2,559,000
	Line of credit					3,000,000			9,932,000
	Deferred compensation					229,000			214,000
	Other current liabilities					897,000			18,000
	Income taxes payable					172,000			—
	Current portion of capital lease obligations					412,000			815,000

		Total current liabilities				17,989,000			21,620,000
	Capitalized lease obligations, less current portion					836,000			209,000

		Total liabilities				18,825,000			21,829,000
				SHAREHOLDERS’ EQUITY
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued						—			—
Common stock; par value $.01 per share, 20,000,000 shares authorized; 7,946,955 and 7,960,455 shares issued and outstanding at September 30, 2003 and March 31, 2003						80,000			80,000
Additional paid-in capital						52,825,000			53,126,000
Common stock held in treasury, at cost (79,000 shares)						(296,000	)		—
Accumulated other comprehensive loss						(124,000	)		(107,000	)
Accumulated deficit						(13,408,000	)		(15,646,000	)

		Total shareholders’ equity				39,077,000			37,453,000

		TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY			$	57,902,000		$	59,282,000

The condensed notes to consolidated financial statements to be available in the Company’s Form 10-Q for the period ended September 30, 2003 are an integral part hereof.

MOTORCAR PARTS & ACCESSORIES, INC.

Consolidated Statements of Operations
(Unaudited)


			Six Months Ended				Three Months Ended
			September 30,				September 30,

			2003		2002		2003		2002

Net sales			$	83,526,000	$	92,861,000	$	46,424,000	$	44,456,000
Cost of goods sold				72,388,000		82,822,000		39,388,000		39,598,000

		Gross Margin		11,138,000		10,039,000		7,036,000		4,858,000

Operating expenses:
		General and administrative		5,283,000		4,179,000		2,921,000		2,030,000
		Sales and marketing		707,000		572,000		414,000		270,000
		Research and development		281,000		284,000		137,000		142,000

		Total operating expenses		6,271,000		5,035,000		3,472,000		2,442,000

Operating income				4,867,000		5,004,000		3,564,000		2,416,000
Interest expense — net				581,000		1,488,000		288,000		872,000

Income before provision for income taxes				4,286,000		3,516,000		3,276,000		1,544,000
Provision for income taxes				1,708,000		1,000		1,378,000		—

Net income			$	2,578,000	$	3,515,000	$	1,898,000	$	1,544,000

Basic net income per share			$	.32	$	.44	$	.24	$	.19

Diluted net income per share			$	.32	$	.41	$	.23	$	.18

Weighted average number of shares outstanding
	- basic			7,998,326		7,960,455		7,995,350		7,960,455
	- diluted			8,125,339		8,589,820		8,227,735		8,542,299

The condensed notes to consolidated financial statements to be available in the Company’s
Form 10-Q for the period ended September 30, 2003 are an integral part hereof.

MOTORCAR PARTS & ACCESSORIES, INC.

Consolidated Statement of Cash Flows
(Unaudited)


					Six Months Ended
					September 30,

					2003			2002

Cash flows from operating activities:
		Net income			$	2,578,000		$	3,515,000
		Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization				1,195,000			1,212,000
		Provision for deferred income taxes				1,461,000			—
		(Increase) decrease in:
			Accounts receivable			5,081,000			4,642,000
			Inventory			2,255,000			3,504,000
			Prepaid expenses and other current assets			—			(723,000	)
			Income tax refund receivable			28,000			—
			Other assets			44,000			555,000
		Increase (decrease) in:
			Accounts payable and accrued expenses			2,638,000			(1,957,000	)
			Deferred compensation			15,000			(3,000	)
			Income taxes payable			172,000			—
			Other liabilities			879,000			825,000

				Net cash provided by operating activities		16,346,000			11,570,000

Cash flows from investing activities:
	Purchase of property, plant and equipment					(1,269,000	)		(204,000	)
	Change in short term investments					(61,000	)		3,000

				Net cash used in investing activities		(1,330,000	)		(201,000	)

Cash flows from financing activities:
	Net repayments under line of credit					(6,932,000	)		(6,639,000	)
	Proceeds from options exercised					72,000			—
	Net borrowings (re-payments) on capital lease obligation					224,000			(575,000	)
	Repurchase of warrants, stock options and shares					(1,009,000	)		—

				Net cash used in financing activities		(7,645,000	)		(7,214,000	)

Effect of exchange rate changes on cash						(17,000	)		(91,000	)

NET INCREASE IN CASH AND CASH EQUIVALENTS						7,354,000			4,064,000
CASH AND CASH EQUIVALENTS- BEGINNING OF PERIOD						1,307,000			92,000

CASH AND CASH EQUIVALENTS — END OF PERIOD					$	8,661,000		$	4,156,000

Supplemental disclosures of cash flow information:
	Cash paid during the period for:
			Interest		$	586,485		$	1,485,378
			Income taxes		$	142,259			—
	Non-cash investing and financing activities:
			Property acquired under capital lease		$	755,000			—

The condensed notes to consolidated financial statements to be available in the Company’s
Form 10-Q for the period ended September 30, 2003 are an integral part hereof.

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New York	0-23538	11-2153962

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


2929 California Street, Torrance, CA		90503

(Address of principal executive offices)		(Zip Code)


	Item 5. Other Events and Regulation FD Disclosure.
	Item 7. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT 99.1


		MOTORCAR PARTS & ACCESSORIES, INC.

		/s/ Charles Yeagley

Date: November 11, 2003		Charles Yeagley Chief Financial Officer

Exhibit No.

Description

Press Release, November 11, 2003.


		2929 California Street Torrance, California 90503 Tel. 310.212.7910 Fax. 310.212.6315 800.890.9988 www.motorcarparts.com


		Crocker Coulson Partner CCG Investor Relations		Selwyn Joffe Chairman, President & CEO Motorcar Parts & Accessories, Inc. (310) 972-4005

		(818) 789 — 0100 crocker.coulson@ccgir.com