10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

R QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM       TO

Commission File No. 001-33861

MOTORCAR PARTS OF AMERICA, INC.

(Exact name of registrant as specified in its charter)

New York	11-2153962
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2929 California Street, Torrance, California	90503
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (310) 212-7910

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 £ No R

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes £ No R

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £	Accelerated filer R	Non-accelerated filer £	Smaller reporting company £
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes £ No R

There were 14,471,321 shares of Common Stock outstanding at December 10, 2012.

MOTORCAR PARTS OF AMERICA, INC.

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	4
Consolidated Balance Sheets as of September 30, 2012 (unaudited) and March 31, 2012	4
Consolidated Statements of Operations (unaudited) for the three and six months ended September 30, 2012 and 2011	5
Consolidated Statements of Comprehensive Loss (unaudited) for the three and six months ended September 30, 2012 and 2011	6
Consolidated Statements of Cash Flows (unaudited) for the six months ended September 30, 2012 and 2011	7
Condensed Notes to Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3. Quantitative and Qualitative Disclosures About Market Risk	39
Item 4. Controls and Procedures	39
PART II — OTHER INFORMATION
Item 1A. Risk Factors	41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 5. Other Information	41
Item 6. Exhibits	42
SIGNATURES	44

2

MOTORCAR PARTS OF AMERICA, INC.

GLOSSARY

The following terms are frequently used in the text of this report and have the meanings indicated below.

“Used Core” — An automobile part which has been used in the operation of a vehicle. Generally, the Used Core is an original equipment (“OE”) automobile part installed by the vehicle manufacturer and subsequently removed for replacement. Used Cores contain salvageable parts which are an important raw material in the remanufacturing process. We obtain most Used Cores by providing credits to our customers for Used Cores returned to us under our core exchange program. Our customers receive these Used Cores from consumers who deliver a Used Core to obtain credit from our customers upon the purchase of a newly remanufactured automobile part. When sufficient Used Cores cannot be obtained from our customers, we will purchase Used Cores from core brokers, who are in the business of buying and selling Used Cores. The Used Cores purchased from core brokers or returned to us by our customers under the core exchange program, and which have been physically received by us, are part of our raw material or work in process inventory included in long-term core inventory.

“Remanufactured Core” — The Used Core underlying an automobile part that has gone through the remanufacturing process and through that process has become part of a newly remanufactured automobile part. The remanufacturing process takes a Used Core, breaks it down into its component parts, replaces those components that cannot be reused and reassembles the salvageable components of the Used Core and additional new components into a remanufactured automobile part. Remanufactured Cores are included in our on-hand finished goods inventory and in the remanufactured finished good product held for sale at customer locations. Used Cores returned by consumers to our customers but not yet returned to us continue to be classified as Remanufactured Cores until we physically receive these Used Cores. All Remanufactured Cores are included in our long-term core inventory or in our long-term core inventory deposit.

3

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	September 30, 2012			March 31, 2012
ASSETS	(Unaudited)
Current assets:
Cash	$	32,328,000		$	32,617,000
Short-term investments		368,000			342,000
Accounts receivable — net		21,829,000			20,036,000
Inventory— net		82,731,000			95,071,000
Inventory unreturned		9,318,000			9,819,000
Deferred income taxes		3,638,000			3,793,000
Prepaid expenses and other current assets		5,596,000			6,553,000
Total current assets		155,808,000			168,231,000
Plant and equipment — net		12,892,000			12,738,000
Long-term core inventory — net		192,902,000			194,406,000
Long-term core inventory deposit		27,226,000			26,939,000
Long-term deferred income taxes		2,147,000			1,857,000
Goodwill		68,356,000			68,356,000
Intangible assets — net		21,399,000			22,484,000
Other assets		8,217,000			6,887,000
TOTAL ASSETS	$	488,947,000		$	501,898,000
LIABILITIES AND SHAREHOLDERS'  EQUITY
Current liabilities:
Accounts payable	$	116,830,000		$	126,100,000
Accrued liabilities		23,749,000			19,379,000
Customer finished goods returns accrual		22,647,000			21,695,000
Other current liabilities		4,831,000			2,331,000
Current portion of term loan		1,700,000			500,000
Current portion of capital lease obligations		306,000			414,000
Total current liabilities		170,063,000			170,419,000
Term loan, less current portion		92,746,000			84,500,000
Revolving loan		42,089,000			48,884,000
Deferred core revenue		10,226,000			9,775,000
Customer core returns accrual		102,445,000			113,702,000
Other liabilities		2,779,000			751,000
Capital lease obligations, less current portion		124,000			248,000
Total liabilities		420,472,000			428,279,000
Commitments and contingencies
Shareholders' equity:
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued		-			-
Series A junior participating preferred stock; par value $.01 per share, 20,000 shares authorized; none issued		-			-
Common stock; par value $.01 per share, 20,000,000 shares authorized; 14,471,321 and 12,533,821 shares issued; 14,456,921 and 12,519,421 outstanding at September 30, 2012 and March 31, 2012, respectively		145,000			125,000
Treasury stock, at cost, 14,400 shares of common stock at September 30, 2012 and March 31, 2012, respectively		(89,000	)		(89,000	)
Additional paid-in capital		114,489,000			98,627,000
Additional paid-in capital-warrant		-			1,879,000
Accumulated other comprehensive loss		(1,236,000	)		(884,000	)
Accumulated deficit		(44,834,000	)		(26,039,000	)
Total shareholders' equity		68,475,000			73,619,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	488,947,000		$	501,898,000

The accompanying condensed notes to consolidated financial statements are an integral part hereof.

4

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net sales	$	111,632,000		$	107,616,000		$	200,655,000		$	178,126,000
Cost of goods sold		94,911,000			92,637,000			171,820,000			156,114,000
Gross profit		16,721,000			14,979,000			28,835,000			22,012,000
Operating expenses:
General and administrative		11,193,000			11,309,000			22,757,000			19,618,000
Sales and marketing		3,904,000			3,197,000			7,443,000			5,650,000
Research and development		461,000			401,000			897,000			817,000
Acquisition costs		-			309,000			-			713,000
Total operating expenses		15,558,000			15,216,000			31,097,000			26,798,000
Operating income (loss)		1,163,000			(237,000	)		(2,262,000	)		(4,786,000	)
Interest expense, net		6,162,000			3,389,000			11,246,000			5,303,000
Loss before income tax expense		(4,999,000	)		(3,626,000	)		(13,508,000	)		(10,089,000	)
Income tax expense		3,934,000			1,813,000			5,287,000			3,655,000
Net loss	$	(8,933,000	)	$	(5,439,000	)	$	(18,795,000	)	$	(13,744,000	)
Basic net loss per share	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)
Diluted net loss per share	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)
Weighted average number of shares outstanding:
Basic		14,456,921			12,451,600			14,192,235			12,367,030
Diluted		14,456,921			12,451,600			14,192,235			12,367,030

The accompanying condensed notes to consolidated financial statements are an integral part hereof.

5

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Loss

(Unaudited)

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(8,933,000	)	$	(5,439,000	)	$	(18,795,000	)	$	(13,744,000	)
Other Comprehensive income (loss), net of tax:
Unrealized gain (loss) on short-term investments		9,000			(26,000	)		2,000			(26,000	)
Foreign currency translation		193,000			(731,000	)		(354,000	)		(446,000	)
Total other comprehensive income (loss), net of tax		202,000			(757,000	)		(352,000	)		(472,000	)
Comprehensive loss	$	(8,731,000	)	$	(6,196,000	)	$	(19,147,000	)	$	(14,216,000	)

The accompanying condensed notes to consolidated financial statements are an integral part hereof.

6

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	September 30,
Cash flows from operating activities:	2012			2011
Net loss	$	(18,795,000	)	$	(13,744,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		1,643,000			2,685,000
Amortization of intangible assets		1,085,000			969,000
Amortization of deferred financing costs		796,000			43,000
Amortization of finished goods inventory step-up valuation		-			6,001,000
Gain due to change in fair value of warrant liability		(57,000	)		-
Net (recovery of) provision for inventory reserves		(744,000	)		294,000
Provision for customer payment discrepancies		521,000			59,000
Provision for doubtful accounts		151,000			46,000
Deferred income taxes		219,000			(316,000	)
Share-based compensation expense		24,000			27,000
Impact of tax benefit on APIC pool from stock options exercised		1,000			67,000
Loss on disposal of assets		37,000			-
Changes in current assets and liabilities:
Accounts receivable		(2,465,000	)		(5,833,000	)
Inventory		14,724,000			(24,009,000	)
Inventory unreturned		501,000			173,000
Prepaid expenses and other current assets		812,000			3,774,000
Other assets		(114,000	)		(124,000	)
Accounts payable and accrued liabilities		(5,204,000	)		(3,543,000	)
Customer finished goods returns accrual		952,000			(2,511,000	)
Deferred core revenue		451,000			431,000
Long-term core inventory		(136,000	)		(14,357,000	)
Long-term core inventory deposits		(287,000	)		(489,000	)
Customer core returns accrual		(11,257,000	)		4,860,000
Other liabilities		2,599,000			263,000
Net cash used in operating activities		(14,543,000	)		(45,234,000	)
Cash flows from investing activities:
Purchase of plant and equipment		(1,860,000	)		(678,000	)
Change in short term investments		(22,000	)		(21,000	)
Net cash used in investing activities		(1,882,000	)		(699,000	)
Cash flows from financing activities:
Borrowings under revolving loan		46,734,000			106,694,000
Repayments under revolving loan		(53,529,000	)		(70,990,000	)
Proceeds from term loan		10,000,000			10,000,000
Repayments of term loan		-			(1,000,000	)
Deferred financing costs		(799,000	)		-
Payments on capital lease obligations		(232,000	)		(300,000	)
Exercise of stock options		5,000			257,000
Excess tax benefit from employee stock options exercised		3,000			213,000
Impact of tax benefit on APIC pool from stock options exercised		(1,000	)		(67,000	)
Proceeds from issuance of common stock		15,004,000			-
Stock issuance costs		(1,034,000	)		-
Net cash provided by financing activities		16,151,000			44,807,000
Effect of exchange rate changes on cash		(15,000	)		(154,000	)
Net increase (decrease) in cash		(289,000	)		(1,280,000	)
Cash — Beginning of period		32,617,000			2,477,000
Cash — End of period	$	32,328,000		$	1,197,000
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	11,879,000		$	3,307,000
Income taxes		1,664,000			1,544,000
Non-cash investing and financing activities:
Common stock issued in business acquisition	$	-		$	4,946,000
Warrants issued in connection with debt		1,625,000			-

The accompanying condensed notes to consolidated financial statements are an integral part hereof.

7

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES

Condensed Notes to Consolidated Financial Statements

September 30, 2012

(Unaudited)

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013. This report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2012, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on September 28, 2012.

The accompanying consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

1. Company Background and Organization

Motorcar Parts of America, Inc. and its subsidiaries (the “Company” or “MPA”) is a leading manufacturer, remanufacturer, and distributor of aftermarket automobile parts. These replacement parts are sold for use on vehicles after initial vehicle purchase. These automotive parts are sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers.

The Company obtains used automobile parts, commonly known as Used Cores, primarily from its customers under the Company’s core exchange program. It also purchases Used Cores from vendors (core brokers). The customers grant credit to the consumer when the used part is returned to them, and the Company in turn provides a credit to the customers upon return to the Company. These Used Cores are an essential material needed for the remanufacturing operations.

The Company has remanufacturing, warehousing and shipping/receiving operations for automobile parts in North America and Asia. In addition, the Company utilizes various third party warehouse distribution centers in North America.

Pursuant to the guidance provided under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), the Company has two reportable segments, rotating electrical and undercar product line, based on the way the Company manages, evaluates and internally reports its business activities.

2. Acquisition

On May 6, 2011, the Company entered into and consummated transactions pursuant to the Purchase Agreement. Pursuant to the Purchase Agreement, the Company purchased (i) all of the outstanding equity of FAPL, (ii) all of the outstanding equity of Introcan, Inc., a Delaware corporation (“Introcan”), and (iii) 1% of the outstanding equity of Fapco S.A. de C.V., a Mexican variable capital company (“Fapco”) (collectively, “Fenco”). Since FAPL owned 99% of Fapco prior to these acquisitions, the Company now owns 100% of Fapco.

The unaudited pro forma information presented is for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results. The following historical financial information has been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisition, (ii) factually supportable, and (iii) with respect to statements of operations, expected to have a continuing impact on the combined results, including the amortization of the fair value of the identifiable intangible assets and the cost of goods sold impact related to the fair value step-up of inventory acquired. The unaudited pro forma information does not reflect any operating efficiencies, associated cost savings or additional costs that the Company may achieve with respect to the combined companies.

8

The unaudited pro forma financial information presented below for the six months ended September 30, 2011 assumes the acquisition had occurred on April 1, 2011. Financial information presented below for the six months ended September 30, 2012 represents actual results of operations for the period.

	Six Months Ended
	September 30,
	2012			2011
Net sales	$	200,655,000		$	204,660,000
Operating income (loss)		(2,262,000	)		(6,430,000	)
Loss before income tax expense		(13,508,000	)		(12,526,000	)
Net loss		(18,795,000	)		(16,388,000	)
Basic net loss per share	$	(1.32	)	$	(1.33	)
Diluted net loss per share	$	(1.32	)	$	(1.33	)

3. Goodwill

At September 30, 2012 and March 31, 2012, the Company had $68,356,000 of goodwill recorded in the Company’s undercar product line segment in connection with its May 2011 acquisition.

During the second quarter of fiscal 2013, the Company discontinued supplying its undercar products to a major non-profitable customer of the undercar product line segment. The net sales to this customer represented approximately 31.0% for the six months ended September 30, 2012 and 20.8% for the year ended March 31, 2012 from the date of acquisition on May 6, 2011, of net sales for the undercar product line segment. As a result, the Company performed an interim impairment test of the related goodwill and intangible assets as of the end of the second quarter of fiscal 2013.

The Company evaluates whether goodwill has been impaired at the reporting unit level by first determining whether the estimated fair value of the reporting unit is less than its carrying value and, if so, by determining whether the implied fair value of goodwill within the reporting unit is less than the carrying value. The Company determined the fair value of the reporting unit based on an equal weighting of: (1) a discounted cash flow method, (2) guideline company method, and (3) guideline transaction method.  The discounted cash flow analysis establishes fair value by estimating the present value of the projected future cash flows of a reporting unit and applying a 3% terminal growth rate. The present value of estimated discounted future cash flow is determined using significant estimates of revenue and costs for the reporting unit, driven by assumed growth rates, as well as appropriate discount rates. The discount rate of 14% was determined using a weighted average cost of capital that incorporates long term government bonds, effective cost of debt, and the cost of equity of similar guideline companies. The market approach is calculated using market multiples and comparable transaction data for guideline companies. The guideline information was based on publicly available information. A valuation multiple was selected based on a financial benchmarking analysis that compared the reporting unit’s benchmark results with the guideline information. In addition to these financial considerations, qualitative factors such as business descriptions, markets served, and profitability were considered in the ultimate selection of the multiple used to estimate a value on a minority basis. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value. Management has performed sensitivity analysis on its significant assumptions and has determined that a change in its assumptions within selected sensitivity testing levels would not impact its conclusion. Based on the results of the Company’s interim analysis of goodwill as of the end of second quarter of fiscal 2013, the reporting unit’s fair value exceeded its carrying value, indicating that there was no goodwill impairment.

9

4. Intangible Assets

Rotating Electrical Product Line

The following is a summary of the intangible assets attributable to the Company’s rotating electrical product line segment subject to amortization at September 30, 2012 and March 31, 2012.

		September 30, 2012				March 31, 2012
	Weighted Average Amortization Period	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Trademarks	9 years	$	553,000	$	299,000	$	553,000	$	262,000
Customer relationships	12 years		6,464,000		2,420,000		6,464,000		2,096,000
Non-compete agreements	4 years		257,000		185,000		257,000		160,000
Total	11 years	$	7,274,000	$	2,904,000	$	7,274,000	$	2,518,000

Undercar Product Line

As noted in Note 3 above, the Company discontinued supplying its undercar products to a major unprofitable customer. As a result, the Company performed an interim impairment test of its intangible assets attributable to the Company’s undercar product line segment and concluded that there was no impairment.

The following is a summary of the undercar product line segment’s intangible assets subject to amortization at September 30, 2012 and March 31, 2012.

		September 30, 2012				March 31, 2012
	Weighted Average Amortization Period	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Trademarks	20 years	$	11,159,000	$	779,000	$	11,159,000	$	500,000
Customer relationships	10 years		7,680,000		1,075,000		7,680,000		691,000
Non-compete agreements	2 years		144,000		100,000		144,000		64,000
Total	16 years	$	18,983,000	$	1,954,000	$	18,983,000	$	1,255,000

Consolidated amortization expense for acquired intangible assets for the three and six months ended September 30, 2012 and 2011 is as follows:

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Amortization expense	$	542,000	$	542,000	$	1,085,000	$	969,000

10

The consolidated aggregate estimated future amortization expense for intangible assets subject to amortization is as follows:

Year Ending March 31,
2013 - remaining 6 months	$	1,087,000
2014		2,070,000
2015		1,996,000
2016		1,675,000
2017		1,592,000
Thereafter		12,979,000
Total	$	21,399,000

5. Accounts Receivable — Net

Included in accounts receivable — net are significant offset accounts related to customer allowances earned, customer payment discrepancies, returned goods authorizations (“RGA”) issued for in-transit unit returns, estimated future credits to be provided for Used Cores returned by the customers and potential bad debts. Due to the forward looking nature and the different aging periods of certain estimated offset accounts, they may not, at any point in time, directly relate to the balances in the open trade accounts receivable.

Accounts receivable — net is comprised of the following:

	September 30, 2012			March 31, 2012
Accounts receivable — trade	$	71,554,000		$	67,038,000
Allowance for bad debts		(934,000	)		(968,000	)
Customer allowances earned		(18,329,000	)		(16,250,000	)
Customer payment discrepancies		(624,000	)		(280,000	)
Customer returns RGA issued		(4,849,000	)		(5,875,000	)
Customer core returns accruals		(24,989,000	)		(23,629,000	)
Less: total accounts receivable offset accounts		(49,725,000	)		(47,002,000	)
Total accounts receivable — net	$	21,829,000		$	20,036,000

Warranty Returns

The Company allows its customers to return goods to the Company that their end-user customers have returned to them, whether the returned item is or is not defective (warranty returns). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of total unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company’s net sales. At September 30, 2012, the warranty return accrual of $2,336,000 was included under the customer returns RGA issued in the above table and in accounts receivable – net in the consolidated balance sheets and the warranty estimate of $7,922,000 was included in customer finished goods returns accrual in the consolidated balance sheets.

11

Change in the Company’s warranty return accrual is as follows:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	10,284,000		$	7,120,000		$	9,023,000		$	8,969,000
Charged to expense (1)		18,977,000			17,783,000			35,578,000			30,626,000
Amounts processed (1)		(19,003,000	)		(17,579,000	)		(34,343,000	)		(32,271,000	)
Balance at end of period	$	10,258,000		$	7,324,000		$	10,258,000		$	7,324,000

(1)           Amounts shown above as warranty claims processed and charged to expense for the three and six months ended September 30, 2011 have been reclassified to conform to the current year presentation.

6. Inventory

Inventory is comprised of the following:

	September 30, 2012			March 31, 2012
Non-core inventory
Raw materials	$	29,220,000		$	31,560,000
Work-in-process		190,000			153,000
Finished goods		59,705,000			72,171,000
		89,115,000			103,884,000
Less allowance for excess and obsolete inventory		(6,384,000	)		(8,813,000	)
Total	$	82,731,000		$	95,071,000
Inventory unreturned	$	9,318,000		$	9,819,000
Long-term core inventory
Used cores held at the Company's facilities	$	48,410,000		$	47,206,000
Used cores expected to be returned by customers		5,295,000			5,542,000
Remanufactured cores held in finished goods		22,553,000			25,751,000
Remanufactured cores held at customers' locations		120,446,000			118,402,000
		196,704,000			196,901,000
Less allowance for excess and obsolete inventory		(3,802,000	)		(2,495,000	)
Total	$	192,902,000		$	194,406,000
Long-term core inventory deposit	$	27,226,000		$	26,939,000

12

7. Major Customers

The Company’s largest customers accounted for the following total percentage of net sales and accounts receivable — trade:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
Sales	2012			2011			2012			2011
Customer A		38	%		43	%		37	%		40	%
Customer B		16	%		7	%		16	%		8	%
Customer C (1)		21	%		15	%		20	%		13	%

Accounts receivable - trade	September 30, 2012			March 31, 2012
Customer A		29	%		31	%
Customer B		9	%		8	%
Customer C (1)		22	%		21	%

(1)           As noted in Note 3, the Company discontinued supplying its undercar products to customer C but has retained the rotating electrical product line sales to this customer.

The Company’s largest suppliers accounted for the following total percentage of raw materials purchases:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
Significant supplier purchases	2012			2011			2012			2011
Supplier A		19	%		11	%		18	%		13	%

8. Debt

The Company has the following outstanding credit agreements.

Parent Company Credit Agreement

The Company has a financing agreement (the “Parent Company Financing Agreement”) with a syndicate of lenders, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank, National Association, as administrative agent (the “Parent Company Loans”). The Parent Company Loans consist of: (i) term loans aggregating $75,000,000 (the “Parent Company Term Loans”) and (ii) revolving loans of up to $20,000,000, subject to borrowing base restrictions and a $10,000,000 sublimit for letters of credit (the “Parent Company Revolving Loans,”). The Parent Company Loans mature on January 17, 2017. The lenders hold a security interest in substantially all of the assets of the Company’s rotating electrical segment. The Parent Company Financing Agreement permits the Company to invest up to $20,000,000 in Fenco.

In May 2012, the Company entered into a second amendment to the Parent Company Financing Agreement (the “Second Amendment”) and borrowed an additional $10,000,000, for an aggregate of $85,000,000 (the “Amended Parent Company Term Loans”) in term loans. The Second Amendment, among other things, modified the interest rates per annum applicable to the Amended Parent Company Term Loans. The Amended Parent Company Term Loans will bear interest at rates equal to, at the Company’s option, either LIBOR plus 8.5% or a base rate plus 7.5%.

The Amended Parent Company Term Loans require quarterly principal payments of $250,000 beginning on October 1, 2012 and increase to $600,000 per quarter on April 1, 2013 and to $1,350,000 on October 1, 2013 until the final maturity date. Among other things, the Second Amendment provides for certain amended financial covenants, and requires that the Company maintain cash and cash equivalents of up to $10,000,000 in the aggregate until its obligations with respect to a significant supplier have ceased.

13

In August 2012, the Company entered into a third amendment and waiver to the Parent Company Financing Agreement (the “Third Amendment”) which, among other things, (i) permitted the Company to enter into the Fenco Credit Line described below, (ii) to make additional investments in Fenco in an aggregate amount not to exceed $20,000,000 at any time outstanding, (iii) added additional reporting requirements regarding financial reports and material notices under the Fenco Credit Line described below, and (iv) removed the Second Amendment requirement that the Company maintain cash and cash equivalents of up to $10,000,000.

The Parent Company Financing Agreement, as amended, among other things, requires the Company to maintain certain financial covenants including a maximum senior leverage ratio, a minimum fixed charge coverage ratio, and minimum consolidated earnings before interest, income tax, depreciation and amortization expenses (“EBITDA”). The Company was in compliance with all financial covenants and reporting requirements under the Parent Company Financing Agreement, as amended, as of September 30, 2012.

There was no outstanding balance on the Parent Company Revolving Loans at September 30, 2012 and March 31, 2012. As of September 30, 2012, $16,955,000 was available under the Parent Company Revolving Loans. The Company had reserved $626,000 of the Parent Company Revolving Loans for standby letters of credit for workers’ compensation insurance and $2,200,000 for commercial letters of credit as of September 30, 2012.

In connection with the Second Amendment, the Company issued a warrant (the “Cerberus Warrant”) to Cerberus Business Finance, LLC. Pursuant to the Cerberus Warrant, Cerberus Business Finance, LLC, may purchase up to 100,000 shares of the Company’s common stock for an initial exercise price of $17.00 per share for a period of five years.  The exercise price is subject to adjustments, among other things, for sales of common stock by the Company at a price below the exercise price. As a result of the issuance of the Supplier Warrant in August 2012 (as described below) at an initial exercise price of $7.75 per share, the exercise price of the Cerberus Warrant was reduced to $7.75 per share. As the exercise price of the Cerberus Warrant was reduced, the number of shares of the Company’s common stock that may be purchased upon the exercise of the Cerberus Warrant was increased to 219,355 so that the aggregate exercise price of the Cerberus Warrant after the adjustment is the same as the aggregate exercise price prior to the adjustment. The fair value of the Cerberus Warrant using the Monte Carlo simulation model was $607,000 at May 24, 2012 and $357,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012.During the three and six months ended September 30, 2012, a gain of $260,000 and $250,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

Fenco Credit Agreement

The Company’s wholly-owned subsidiaries, FAPL and Introcan, as borrowers (the “Fenco Borrowers”), entered into an amended and restated credit agreement, dated May 6, 2011 (the “Fenco Credit Agreement”) with Manufacturers and Traders Trust Company as lead arranger, M&T Bank as lender and administrative agent and the other lenders from time to time party thereto (the “Fenco Lenders”). Pursuant to the Fenco Credit Agreement, the Fenco Lenders have made available to the Fenco Borrowers a revolving credit facility in the maximum principal amount of $50,000,000 (the “Fenco Revolving Facility”) and a term loan in the principal amount of $10,000,000 (the “Fenco Term Loan”). The availability of the Fenco Revolving Facility is subject to a borrowing base calculation consisting of eligible accounts receivable and eligible inventory.

In August 2012, Fenco entered into a second amendment to the Fenco Credit Agreement (the “Fenco Second Amendment”) with the Fenco lenders which, among other things, (i) extended the maturity date to October 6, 2014, (ii) amended the maximum amount of the revolving facility to (y) $55,000,000 for the period up to and including December 31, 2012 and (z) $50,000,000 for the period on or after January 1, 2013 through October 6, 2014, (iii) replaced the repayment schedule and the amounts for the term loan to require quarterly principal payments of $500,000 beginning on June 30, 2013 and increasing to $1,000,000 per quarter beginning December 31, 2013 through September 30, 2014, with the remaining unpaid principal amount being due on the final maturity date, (iv) provided for certain mandatory prepayments of the term loan, and (v) revised certain financial covenants regarding minimum EBITDA, minimum fixed charge coverage, unused borrowing availability under the Fenco revolving credit facility, and maximum capital expenditures.  The maturity date may be accelerated upon the occurrence of an insolvency event or event of default under the Fenco Credit Agreement.

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The outstanding balance on the Fenco Revolving Facility was $42,089,000 and $48,884,000 at September 30, 2012 and March 31, 2012, respectively. As of September 30, 2012, approximately $712,000 was reserved for standby commercial letters of credit and $264,000 was reserved for certain expenses. As of September 30, 2012, approximately $8,969,000 was available under the Fenco Revolving Facility. The Fenco Lenders hold a security interest in substantially all of the assets of the undercar product line segment.

The Fenco Borrowers may receive advances under the Fenco Revolving Facility by any one or more of the following options: (i) swingline advances in Canadian or US dollars; (ii) Canadian dollar prime-based loans; (iii) US dollar base rate loans; (iv) LIBOR loans; or (v) letters of credits.

The Fenco Term Loan bears interest at the LIBO rate plus an applicable margin. Outstanding advances under the Revolving Facility bear interest as follows:

(i) in respect of swingline advances in Canadian dollars and Canadian dollar prime-based loans, at the reference rate announced by the Royal Bank of Canada plus an applicable margin;

(ii) in respect of swingline advances in US dollars and US dollar base rate loans, at a base rate (which shall be equal to the highest of (x) M&T Bank’s prime rate, (y) the Federal Funds Rate plus ½ of 1%, or (z) the one month LIBO rate) plus an applicable margin;

(iii) in respect of LIBOR loans, at the LIBO rate plus an applicable margin.

The Fenco Credit Agreement, as amended, among other things, requires the Fenco Borrowers to maintain certain financial covenants. As of September 30, 2012, the Fenco Borrowers were in compliance with all financial covenants and reporting requirements under the Fenco Credit Agreement.

Neither the Parent Company Financing Agreement nor the Fenco Credit Agreement contain any cross default provisions with respect to the other agreement.

Strategic Cooperation Agreement

In August 2012, the Company entered into a revolving credit agreement (the “Agreement”) with Wanxiang America Corporation (the “Supplier”) and Fenco. Under the terms of the Agreement, the Supplier agreed to provide a revolving credit line for purchases of automotive parts and components by Fenco in an aggregate principal amount not to exceed $22,000,000 (the “Fenco Credit Line”), of which $2,000,000 will only be available for accrued interest and other amounts payable (the “Obligations”). Payment for all purchases will be due and payable 120 days after the date of the bill of lading. Any amounts remaining unpaid following the due date will bear interest at a rate of 1% per month. The Fenco Credit Line will mature on July 31, 2017. Among other things, the Agreement requires that Fenco, on an annual basis, purchase at least approximately $33,000,000 of new automotive parts and components. After July 1, 2014, the Supplier has the right to settle up to $8,000,000 (the “Receivable Sale Option”) of the Company’s outstanding Obligations in exchange, at the Company’s option, for (i) shares of the Company’s common stock valued at $7.75 per share, subject to certain adjustments, or (ii) cash in an amount equal to 135% of the amount of the outstanding Obligations sold to the Company. Any outstanding Obligations settled by the Supplier will reduce the Fenco Credit Line. The Obligations under the Agreement are guaranteed by the Company and certain of its subsidiaries.

In connection with this Agreement, the Company also issued a warrant (the “Supplier Warrant”) to the Supplier to purchase up to 516,129 shares of the Company’s common stock for an initial exercise price of $7.75 per share exercisable at any time after two years from August 22, 2012 and on or prior to September 30, 2017. The exercise price is subject to adjustments, among other things, for sales of common stock by the Company at a price below the exercise price. Any outstanding Obligations settled by the Supplier will reduce the Fenco Credit Line. The Company is obligated to issue no more than an aggregate of 1,032,258 shares of its common stock in connection with the Receivable Sale Option and Supplier Warrant. The Obligations under this Agreement are subordinated to the Company’s obligations under the Parent Company Financing Agreement. The fair value of the Supplier Warrant using the Monte Carlo simulation model was $1,018,000 at August 22, 2012, and $1,211,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. A loss of $193,000 was recorded in general and administrative expenses due to the change in the fair value of the warrant liability from the date of grant in August 2012.

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9. Accounts Receivable Discount Programs

Both of the Company’s segments use receivable discount programs with certain customers and their respective banks. Under these programs, the Company may sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate collection of customers’ receivables.

The following is a summary of the Company’s accounts receivable discount programs:

	Six Months Ended
	September 30,
	2012			2011
Receivables discounted	$	157,335,000		$	133,222,000
Weighted average days		316			312
Annualized weighted average discount rate		2.8	%		2.9	%
Amount of discount as interest expense	$	3,824,000		$	3,363,000

10. Net Loss Per Share

Basic net loss per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and warrants, which would result in the issuance of incremental shares of common stock.

The following presents a reconciliation of basic and diluted net loss per share.

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(8,933,000	)	$	(5,439,000	)	$	(18,795,000	)	$	(13,744,000	)
Basic shares		14,456,921			12,451,600			14,192,235			12,367,030
Effect of dilutive stock options and warrants		-			-			-			-
Diluted shares		14,456,921			12,451,600			14,192,235			12,367,030
Net loss per share:
Basic	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)
Diluted	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)

The effect of dilutive options and warrants excludes 1,451,784 shares subject to options and 735,484 shares subject to warrants with exercise prices ranging from $1.80 to $15.06 per share for the three and six months ended September 30, 2012 and 1,506,354 shares subject to options and 546,283 shares subject to warrants with exercise prices ranging from $1.80 to $15.06 per share for the three and six months ended September 30, 2011 — all of which were anti-dilutive.

11. Income Taxes

The Company recorded income tax expenses for the three and six months ended September 30, 2012 and 2011. This is primarily due to the federal and state income tax provision on pretax income in the U.S. and not recognizing income tax benefits related to the net losses of Fenco’s Canadian operations for the three and six months ended September 30, 2012 and 2011 due to the recoverability of these tax benefits not being deemed by the Company to be more likely than not to be realized. In addition, for the three and six months ended September 30, 2012, the Company recorded $50,000 and $98,000, respectively, of income tax expense specifically related to the Fenco subsidiaries located in Mexico, a separate tax jurisdiction. For the three and six months ended September 30, 2011, the Company recorded $93,000 and $140,000, respectively, of income tax expense specifically related to the Fenco subsidiaries located in Mexico, a separate tax jurisdiction.

16

The income tax expenses, excluding the net losses of Fenco’s Canadian operations, reflect effective income tax rates of 37.6% and 37.7% for the three and six months ended September 30, 2012, respectively. The income tax expenses, excluding the net losses of Fenco’s Canadian operations, reflect income tax rates of 36.2% and 40.1% for the three and six months ended September 30, 2011, respectively. The income tax rates for all periods were higher than the federal statutory rates primarily due to state income taxes, which were partially offset by the benefit of lower statutory tax rates in foreign taxing jurisdictions.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions with varying statutes of limitations.

12. Financial Risk Management and Derivatives

Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company’s facilities overseas, expose the Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currency. The Company’s primary risk exposure is from changes in the rate between the U.S. dollar and the Mexican peso related to the operation of the Company’s facilities in Mexico. The Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for Mexican pesos in order to mitigate this risk. The extent to which forward foreign currency exchange contracts are used is modified periodically in response to management’s estimate of market conditions and the terms and length of specific purchase requirements to fund those overseas facilities and purchases.

The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations and purchases will be materially affected by changes in exchange rates. The Company does not hold or issue financial instruments for trading purposes. The forward foreign currency exchange contracts are designated for forecasted expenditure requirements to fund foreign operations and purchases.

The Company had forward foreign currency exchange contracts with a U.S. dollar equivalent notional value of $15,039,000 and $13,494,000 at September 30, 2012 and March 31, 2012, respectively. These contracts generally expire in a year or less, at rates agreed at the inception of the contracts. The counterparty to this derivative transaction is a major financial institution with investment grade or better credit rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are reflected in current period earnings and accounted for as an increase or offset to general and administrative expenses.

The following table shows the effect of the Company’s derivative instruments on its consolidated statements of operations:

	Gain (Loss) Recognized within General and Administrative Expenses
	Three Months Ended					Six Months Ended
Derivatives Not Designated as	September 30,					September 30,
Hedging Instruments	2012		2011			2012		2011
Forward foreign currency exchange contracts	$	431,000	$	(1,799,000	)	$	340,000	$	(1,887,000	)

The fair value of the forward foreign currency exchange contracts of $219,000 is included in prepaid expenses and other current assets in the consolidated balance sheet at September 30, 2012. The fair value of the forward foreign currency exchange contracts of $121,000 is included in other current liabilities in the consolidated balance sheet at March 31, 2012.

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13. Fair Value Measurements

The following table summarizes the Company’s financial assets and liabilities measured at fair value, by level within the fair value hierarchy as of September 30, 2012 and March 31, 2012:

	September 30, 2012								March 31, 2012
			Fair Value Measurements								Fair Value Measurements
			Using Inputs Considered as								Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	368,000	$	368,000		-		-	$	342,000	$	342,000		-		-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		219,000		-	$	219,000		-		-		-		-		-
Liabilities
Other current liabilities
Deferred compensation		368,000		368,000		-		-		342,000		342,000		-		-
Forward foreign currency exchange contracts		-		-		-		-		121,000		-	$	121,000		-
Other liabilities
Warrant liability		1,568,000		-		-	$	1,568,000		-		-		-		-

The Company’s short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. During the three months ended September 30, 2012 and 2011, a gain of $431,000 and a loss of $1,799,000, respectively, was recorded in general and administrative expenses due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts. During the six months ended September 30, 2012 and 2011, a gain of $340,000 and a loss of $1,887,000, respectively, was recorded in general and administrative expenses due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts.

The Company estimates the fair value of the warrant liability using level 3 inputs and the Monte Carlo simulation model at each balance sheet date. This amount is recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. Any subsequent changes in the fair value of the warrant liability will be recorded in current period earnings as a general and administrative expense. During the three and six months ended September 30, 2012, a gain of $67,000 and $57,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

The assumptions used to determine the fair value of the Cerberus Warrant and the Supplier Warrant recorded as warrant liability were:

	September 30, 2012
	Cerberus Warrant			Supplier Warrant
Risk free interest rate		0.54	%		0.62	%
Expected life in years		4.65			5.00
Expected volatility		55.93	%		56.59	%
Dividend yield		-			-
Probability of future financing		0	%		0	%

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The risk free interest rate used was based on U.S. treasury-note yields with terms commensurate with the remaining term of the warrants. The expected life is based on the remaining contractual term of the warrants and the expected volatility is based on the Company’s daily historical volatility over a period commensurate with the remaining term of the warrants.

A summary of the change to the Company’s warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is presented below:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2012			2011		2012			2011
Beginning balance	$	617,000		$	-	$	-		$	-
Newly issued		1,018,000			-		1,625,000			-
Total (gain) loss included in net loss		(67,000	)		-		(57,000	)		-
Warrants exercised		-			-		-			-
Net transfers in (out) of Level 3		-			-		-			-
Ending balance	$	1,568,000		$	-	$	1,568,000		$	-

During the three and six months ended September 30, 2012, the Company had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

The carrying amounts of cash, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loans, term loans and other long-term liabilities approximate their fair value based on current rates for instruments with similar characteristics.

14. Segment Information

The Company has two reportable segments, the rotating electrical segment and the undercar product line segment, based on the way the Company manages, evaluates and internally reports its business activities.

The rotating electrical segment is comprised of the Company’s alternator and starter business. This segment remanufactures, produces, and distributes alternators and starters for import and domestic cars, light trucks, heavy duty, agricultural and industrial applications. These replacement parts are sold for use on vehicles after initial vehicle purchase.

The undercar product line segment manufactures, remanufactures and distributes new and remanufactured aftermarket auto parts, including steering components, brake calipers, master cylinders, hub assembly and bearings, clutches and clutch hydraulics for virtually all passenger and truck vehicles.

The Company’s products are sold to automotive retail chain stores, warehouse distributors, and to major automobile manufacturers throughout North America.

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The results of operations of Fenco have been included from the date of acquisition on May 6, 2011. Financial information relating to the Company’s reportable segments is as follows:

	Three months ended September 30, 2012
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations		Consolidated
Net sales to external customers	$	57,652,000	$	53,980,000		$	-	$	111,632,000
Gross profit (loss)		20,096,000		(3,375,000	)		-		16,721,000
Operating income (loss)		13,519,000		(12,356,000	)		-		1,163,000
Net income (loss)		6,503,000		(15,436,000	)		-		(8,933,000	)

	Three months ended September 30, 2011
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations			Consolidated
Net sales to external customers	$	45,737,000	$	61,879,000		$	-		$	107,616,000
Intersegment revenue, net of cost		836,000		-			(836,000	)		-
Gross profit (loss)		15,091,000		(338,000	)		226,000			14,979,000
Operating income (loss)		5,480,000		(5,943,000	)		226,000			(237,000	)
Net income (loss)		3,026,000		(8,691,000	)		226,000			(5,439,000	)

	Six months ended September 30, 2012
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations		Consolidated
Net sales to external customers	$	104,451,000	$	96,204,000		$	-	$	200,655,000
Gross profit (loss)		34,915,000		(6,080,000	)		-		28,835,000
Operating income (loss)		20,216,000		(22,478,000	)		-		(2,262,000	)
Net income (loss)		8,870,000		(27,665,000	)		-		(18,795,000	)

	Six months ended September 30, 2011
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations			Consolidated
Net sales to external customers	$	84,753,000	$	93,373,000		$	-		$	178,126,000
Intersegment revenue, net of cost		1,612,000		-			(1,612,000	)		-
Gross profit (loss)		27,847,000		(5,835,000	)		-			22,012,000
Operating income (loss)		10,272,000		(15,058,000	)		-			(4,786,000	)
Net income (loss)		5,252,000		(18,996,000	)		-			(13,744,000	)

	September 30, 2012
	Rotating		Undercar
Selected balance sheet data	Electrical		Product Line			Eliminations			Consolidated
Current assets	$	109,690,000	$	75,441,000		$	(29,323,000	)	$	155,808,000
Non-current assets		213,781,000		173,922,000			(54,564,000	)		333,139,000
Total assets	$	323,471,000	$	249,363,000		$	(83,887,000	)	$	488,947,000
Current liabilities	$	68,704,000	$	130,682,000		$	(29,323,000	)	$	170,063,000
Non-current liabilities		95,813,000		204,214,000			(49,618,000	)		250,409,000
Total liabilities		164,517,000		334,896,000			(78,941,000	)		420,472,000
Equity (deficit)		158,954,000		(85,533,000	)		(4,946,000	)		68,475,000
Total liabilities and equity	$	323,471,000	$	249,363,000		$	(83,887,000	)	$	488,947,000

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	March 31, 2012
	Rotating		Undercar
Selected balance sheet data	Electrical		Product Line			Eliminations			Consolidated
Current assets	$	115,451,000	$	81,778,000		$	(28,998,000	)	$	168,231,000
Non-current assets		179,167,000		186,896,000			(32,396,000	)		333,667,000
Total assets	$	294,618,000	$	268,674,000		$	(61,394,000	)	$	501,898,000
Current liabilities	$	72,987,000	$	126,430,000		$	(28,998,000	)	$	170,419,000
Non-current liabilities		85,201,000		200,112,000			(27,453,000	)		257,860,000
Total liabilities		158,188,000		326,542,000			(56,451,000	)		428,279,000
Equity (deficit)		136,430,000		(57,868,000	)		(4,943,000	)		73,619,000
Total liabilities and equity	$	294,618,000	$	268,674,000		$	(61,394,000	)	$	501,898,000

	Six months ended September 30, 2012
	Rotating			Undercar
Selected cash flow data	Electrical			Product Line			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	340,000		$	(14,883,000	)	$	-	$	(14,543,000	)
Net cash used in investing activities		(1,437,000	)		(445,000	)		-		(1,882,000	)
Net cash provided by (used in) financing activities		23,022,000			(6,871,000	)				16,151,000
Effect of exchange rate changes on cash		(15,000	)		-					(15,000	)
Cash — Beginning of period		32,379,000			238,000					32,617,000
Cash — End of period		31,921,000			407,000			-		32,328,000
Additional selected financial data
Depreciation and amortization	$	1,438,000		$	1,290,000		$	-	$	2,728,000
Capital expenditures		1,415,000			445,000			-		1,860,000

	Six months ended September 30, 2011
	Rotating			Undercar
Selected cash flow data	Electrical			Product Line			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	4,076,000		$	(49,310,000	)	$	-	$	(45,234,000	)
Net cash used in investing activities		(625,000	)		(74,000	)		-		(699,000	)
Net cash provided by financing activities		36,708,000			8,099,000			-		44,807,000
Effect of exchange rate changes on cash		(154,000	)		-			-		(154,000	)
Cash — Beginning of period		2,477,000			-			-		2,477,000
Cash — End of period		857,000			340,000			-		1,197,000
Additional selected financial data
Depreciation and amortization	$	1,777,000		$	1,877,000		$	-	$	3,654,000
Capital expenditures		604,000			74,000			-		678,000

15. Equity Transaction

In April 2012, the Company entered into a Subscription Agreement and a Registration Rights Agreement to raise approximately $15,004,000 in gross proceeds and net proceeds of $13,970,000 after expenses through a private placement of its common stock. Pursuant to the terms of the Subscription Agreement, certain accredited investors purchased an aggregate of 1,936,000 shares of common stock in a private placement exempt from registration under the Securities Act in reliance upon Rule 506 of Regulation D, for a purchase price of $7.75 per share. The Company used the proceeds to enhance the integration of its Fenco acquisition and for general corporate purposes.

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Pursuant to the Registration Rights Agreement, the Company has agreed to file a registration statement with the SEC to register for resale the common stock sold in the private placement not later than 45 days after the closing of the private placement and to use commercially reasonable efforts to cause such registration statement to be declared effective, subject to certain exceptions, within 60 days of closing (or 120 days in the event of an SEC review). Failure to meet these deadlines and certain other events may result in the Company’s payment to the purchasers of liquidated damages in the amount of 1.0% of the purchase price per 30-day period pending filing of the registration statement, effectiveness of the registration statement or other events, as applicable. On June 12, 2012, the Company filed a registration statement under the Securities Act of 1933 to register the shares of common stock; however, the registration statement has yet to be declared effective and the Company began accruing liquidated damages starting on August 25, 2012. Liquidated damages may be settled either in cash or, at the option of the purchaser, in shares of the Company’s common stock. As of September 30, 2012, the Company had accrued $150,000 for the settlement of these liquidated damages.

16. Subsequent Events

Equity Transaction

In December, 2012, the Company entered into a stock repurchase agreement (the “Stock Repurchase Agreement”) with Mel Marks, the Company’s founder, a member of the board of directors of the Company and consultant to the Company, and Melmarks Enterprises LLLP, a limited liability limited partnership controlled by Mr. Marks (the “Shareholders”), which, among other things, provides the Shareholders with the option to sell up to $300,000 of the Company’s common stock held by the Shareholders (the “Shares”), on or prior to February 28, 2013, at a purchase price that is 10% below the average daily closing price per share of the Company’s common stock for the five consecutive trading days immediately preceding the date of the notice of sale.

In connection with the Stock Repurchase Agreement, the Company entered into a fourth amendment to the Parent Company Financing Agreement (the “Fourth Amendment”), which, among other things, permitted the Company to repurchase the Shares pursuant to the Stock Repurchase Agreement.

17. New Accounting Pronouncements

Comprehensive Income

In June 2011, the FASB issued guidance which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. This guidance eliminates the option to present components of other comprehensive income as a part of the statement of equity. This guidance should be applied, retrospectively, for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Other than the change in presentation, the Company has determined the changes from the adoption of this guidance on April 1, 2012 did not have an impact on its consolidated financial position and the results of operations.

Testing Goodwill for Impairment

In September 2011, the FASB issued an amendment which gives an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the first step of the two-step goodwill impairment test. If the carrying value of the reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss, if any. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance on April 1, 2012 did not have any impact on the Company’s consolidated financial position and the results of operations.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents factors that Motorcar Parts of America, Inc. and its subsidiaries (“our,” “we” or “us”) believe are relevant to an assessment and understanding of our consolidated financial position and results of operations. This financial and business analysis should be read in conjunction with our March 31, 2012 audited consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on September 28, 2012.

Disclosure Regarding Private Securities Litigation Reform Act of 1995

This report contains certain forward-looking statements with respect to our future performance 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 our relationship with any of our major customers, the increasing customer pressure for lower prices and more favorable payment and other terms, the increasing demands on our working capital, the significant strain on working capital associated with large Remanufactured Core inventory purchases from customers, our ability to obtain any additional financing we may seek or require, our ability to maintain positive cash flows from operations, potential future changes in our previously reported results as a result of the identification and correction of errors in our accounting policies or procedures or potential material weaknesses in our internal controls over financial reporting, lower revenues than anticipated from new and existing contracts, our failure to meet the financial covenants or the other obligations set forth in our credit agreements and our lenders’ refusal to waive any such defaults, any meaningful difference between projected production needs and ultimate sales to our customers, increases in interest rates, changes in the financial condition of any of our major customers, the impact of high gasoline prices, the potential for changes in consumer spending, consumer preferences and general economic conditions, increased competition in the automotive parts industry, including increased competition from Chinese and other offshore manufacturers, difficulty in obtaining Used Cores and component parts or increases in the costs of those parts, political, criminal or economic instability in any of the foreign countries where we conduct operations, currency exchange fluctuations, unforeseen increases in operating costs, our ability to integrate our Fenco operations, and other factors discussed herein and in our other filings with the SEC.

Management Overview

We are a leading manufacturer, remanufacturer, and distributor of aftermarket automobile parts.

We historically have remanufactured alternators and starters for import and domestic cars, light trucks, heavy duty, agricultural and industrial applications. As a result of our May 2011 acquisition of the business formerly operated by FAPL, we also manufacture, remanufacture and distribute new and remanufactured steering components, brake calipers, master cylinders, hub assembly and bearings, and clutches and clutch hydraulics for virtually all passenger and truck vehicles. We intend to focus our efforts in the near term on four major categories: rotating electrical, brakes, steering, and wheel hubs and bearings. All of these parts are non-discretionary.

We have two reportable segments, our existing product lines were included under the rotating electrical and the product lines from our FAPL acquisition were included under the undercar product line, based on the way we manage, evaluate and internally report our business activities.

The after-market for automobile parts is divided into two markets. The first market is the do-it-yourself (“DIY”) market, which is generally serviced by the large retail chain outlets. Consumers who purchase parts from the DIY channel generally install parts into their vehicles themselves. In most cases, this is a cheaper alternative than having the repair performed by a professional installer. The second market is the professional installer market, commonly known as the do-it-for-me (“DIFM”) market. This market is serviced by the traditional warehouse distributors, the dealer networks, and the commercial divisions of retail chains. Generally, the consumer in this channel is a professional parts installer.

Our products are distributed to both the DIY and DIFM markets and are distributed predominantly throughout North America. We sell our products to the largest auto parts retail and traditional warehouse chains and to major automobile manufacturers for both their aftermarket programs and their warranty replacement programs (“OES”). Demand and replacement rates for aftermarket remanufactured automobile parts generally increase with the age of vehicles and increases in miles driven.

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Historically, the largest share of our business was in the DIY market. While that is still the case, our DIFM business is now a significant part of our business. In difficult economic times, we believe consumers are more likely to purchase lower cost replacement parts in both the DIY and DIFM markets. We focus on supplying both these channels with the most cost efficient replacement parts for the consumer to purchase.

The DIFM market is an attractive opportunity for growth. We are positioned to benefit from this market opportunity in two ways: (1) our auto parts retail customers are expanding their efforts to target the DIFM market and (2) we sell our products under private label and our Quality-Built®, Talon®, Xtreme®, Reliance™, Fenco™, Dynapak®, and other brand names directly to suppliers that focus on professional installers. In addition, we sell our products to OE manufacturers for distribution to the professional installer both for warranty replacement and their general aftermarket channels. We have been successful in growing sales to this market.

Undercar Product Line Turnaround Plan

Our top turnaround priority continues to be improvement of the financial performance of our undercar product line business to position it for sustained profitability and growth in the long-term. At the same time we are focused on maintaining strong liquidity and bringing the level of customer service in our undercar business to the excellent level of customer service we had achieved and strive to maintain in our rotating electrical business. We have been systematically and aggressively implementing our undercar product line turnaround plan since acquisition with our initial goal to enhance customer service followed by our plan to streamline the operations, with a goal of achieving profitability and positive cash flow for the undercar business. This turnaround plan is built on the following elements: upgrading customer service levels; focusing on product excellence; discontinuing certain product offerings; improving manufacturing and logistics productivity; and implementing cost savings throughout the operating model.

Customer Service Levels. We have made certain inventory purchases above our normal cost in order to expedite improving customer service levels. This initiative has resulted in significant improvements in our customers’ order fill rates. As a result, we had to increase our inventory levels by approximately $27 million in the aggregate from May 2011 through the quarter ended December 31, 2011. These inventory levels declined in the quarter ended September 30, 2012 to below the May 2011 levels. We expect these inventory levels to decrease as we continue to normalize our operations.

Product Excellence. We continue to place significant attention on improving product excellence in our undercar product line business. We have implemented a personnel training program at Fenco’s facilities in Monterrey, Mexico and have also implemented new quality control systems including new end of line testing at all of our production facilities. Throughout our system we have engaged third party labs to test purchased products.

Review of Product Offerings. With our Fenco acquisition we have added several new product lines which are vehicle operation critical. We have reviewed and continue to review the market opportunities for our products and potential products. In the third quarter of fiscal 2012, we discontinued the CV axle product line and shut-down the related facility. We have successfully supported our customers through this transition and continue to sell down the remaining CV axle inventory. Additionally, we exited the clutch product line during the second quarter of fiscal 2013.

Manufacturing Productivity. We have implemented a process of continuing improvements at Fenco facilities and expect to see enhancement to productivity as we introduce lean operating disciplines.

During the second quarter of fiscal 2013, we discontinued supplying our products to a major non-profitable customer of this segment. The net sales to this customer represented approximately 31.0% for six months ended September 30, 2012 and 20.8% for the year ended March 31, 2012 from the date of acquisition on May 6, 2011, of net sales for this segment. We have no further obligation to accept additional product returns from this customer. As our ongoing commitment to excellence in customer service, we have continued to support this customer through this transition during the third quarter of fiscal 2013.  In accordance with our net-of-core revenue recognition policy, we expect to record revenue from the sale of these Remanufactured Cores which were previously recorded as a customer core returns accrual and the related long-term core inventory in the consolidated balance sheet.

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In addition, during fiscal 2013, we reached an agreement with one of our third-party logistics service providers located in Pennsylvania to terminate its services provided to the undercar product line segment effective November 5, 2012. Among other things, this agreement requires us to (i) pay all invoice amounts and other invoices for services rendered up to and the date of actual vacating of the premises and (ii) pay a termination fee of approximately $1,402,000. In addition, we agreed to pay $95,000 per month all-inclusive rental fee to use the property for period not to exceed eight months from the termination date.

To improve Fenco’s liquidity, in August 2012, Fenco entered into a second amendment to the Fenco Credit Agreement which, among other things, amended the maximum amount of the revolving facility to (i) $55,000,000 for the period up to and including December 31, 2012 and (ii) $50,000,000 for the period on or after January 1, 2013 through October 6, 2014. In August 2012, we entered into a revolving credit agreement with the Supplier and Fenco pursuant to which the Supplier agreed to provide a revolving credit line for purchases of automotive parts and components by Fenco in an aggregate principal amount not to exceed $22,000,000, of which $2,000,000 will only be available for accrued interest and other amounts payable. We have negotiated payment plans for our accounts payable with the majority of Fenco’s suppliers and vendors, of which approximately $39,000,000 was past due at November 28, 2012.

Our implementation of our plan for Fenco has taken longer and cost more than initially anticipated. We anticipate continuing to refine this turnaround plan as the various elements are implemented. We expect these and related initiatives will be substantially completed in the first quarter of fiscal 2014. Our ability to successfully implement this plan and the timing of our implementation of this plan will depend on, among other things, our customer and vendor support and the financial resources that are or will become available for implementation of this plan.

Results of Operations for the Three Months Ended September 30, 2012 and 2011

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.

The following table summarizes certain key operating data by segment for the periods indicated:

	Rotating			Undercar
Three months ended September 30,	Electrical			Product Line			Consolidated
2012
Gross profit (loss) percentage		34.9	%		(6.3	)%		15.0	%
Cash flow provided by (used in) operations	$	10,946,000		$	(8,730,000	)	$	2,216,000
Finished goods turnover (annualized) (1)		7.4			5.4			6.0
Annualized return on equity (2)		-			-			(48.5	)%
2011
Gross profit (loss) percentage		32.4	%		(0.5	)%		13.9	%
Cash flow used in operations	$	(762,000	)	$	(17,635,000	)	$	(18,397,000	)
Finished goods turnover (annualized) (1)		5.7			4.2			4.6
Annualized return on equity (2)		-			-			(18.6	)%

____________

(1) Annualized finished goods turnover for the fiscal quarter is calculated by multiplying cost of sales for the quarter by 4 and dividing the result by the average between beginning and ending non-core finished goods inventory values for the fiscal quarter. We believe this provides a useful measure of our ability to turn production into revenues.

(2) Annualized return on equity is computed as consolidated net income for the fiscal quarter multiplied by 4 and dividing the result by beginning consolidated shareholders’ equity. Annualized return on equity measures our ability to invest shareholders’ funds profitably.

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Net Sales and Gross Profit

The following table summarizes net sales and gross profit by segment for the three months ended September 30, 2012 and 2011:

	Rotating			Undercar
Three months ended September 30,	Electrical			Product Line			Eliminations			Consolidated
2012
Net sales to external customers	$	57,652,000		$	53,980,000		$	-		$	111,632,000
Cost of goods sold		37,556,000			57,355,000			-			94,911,000
Gross profit (loss)		20,096,000			(3,375,000	)		-			(16,721,000	)
Cost of goods sold as a percentage of net sales		65.1	%	106.3		%		-			85.0	%
Gross profit (loss) percentage		34.9	%	(6.3		)%		-			15.0	%
2011
Net sales	$	45,737,000		$	61,879,000		$	-		$	107,616,000
Intersegment revenue, net of cost		836,000			-			(836,000	)		-
Cost of goods sold		31,482,000			62,217,000			(1,062,000	)		92,637,000
Gross profit (loss)		15,091,000			(338,000	)		226,000			14,979,000
Cost of goods sold as a percentage of net sales		67.6	%		100.5	%		-			86.1	%
Gross profit (loss) percentage		32.4	%		(0.5	)%		-			13.9	%

Net Sales. Our consolidated net sales for the three months ended September 30, 2012 increased by $4,016,000, or 3.7%, to $111,632,000 compared to consolidated net sales for the three months ended September 30, 2011 of $107,616,000.

· Rotating electrical product line

The net sales in our rotating electrical product line segment increased by $11,915,000 or 26.1%, to $57,652,000 for the three months ended September 30, 2012 compared to net sales of $45,737,000 for the three months ended September 30, 2011. The increase in net sales in our rotating electrical product line segment was due primarily to increased sales to our existing customers and to a lesser extent increased sales to new customers.

· Undercar product line

The net sales in our undercar product line segment decreased by $7,899,000 or 12.8%, to $53,980,000 for the three months ended September 30, 2012 compared to net sales of $61,879,000 for the three months ended September 30, 2011. This decrease in net sales in our undercar product line segment was due primarily to the discontinuation of certain unprofitable product lines and customers subsequent to September 30, 2011 as part of our undercar product line turnaround plan.

Cost of Goods Sold/Gross Profit. Our consolidated cost of goods sold as a percentage of consolidated net sales decreased during the three months ended September 30, 2012 to 85.0% from 86.1% for the three months ended September 30, 2011, resulting in a corresponding increase in our consolidated gross profit percentage of 1.1% to 15.0% for the three months ended September 30, 2012 from 13.9% for the three months ended September 30, 2011.

· Rotating electrical product line

The gross profit percentage in our rotating electrical product line increased to 34.9% from 32.4% during the three months ended September 30, 2011, which reflects lower per unit manufacturing costs.

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· Undercar product line

The gross profit percentage in our undercar product line was negative 6.3% and 0.5% for the three months ended September 30, 2012 and 2011, respectively, representing a gross loss of $3,375,000 and $338,000 for the same periods. Our gross loss in our undercar product line for the three months ended September 30, 2012 was primarily impacted by higher production, warehousing and distribution costs. Higher production, warehousing and distribution costs were due to the increase in under-absorption of manufacturing overhead resulting from lower production levels.

In addition, our gross loss in our undercar product line during the three months ended September 30, 2012 was further impacted by (i) termination fees of $1,402,000 related to an agreement to terminate services with one of our third-party logistics service providers, (ii) severance costs included in cost of sales related to the production workforce of $1,272,000, (iii) contractual customer penalties of $817,000, (iv) losses of $795,000 related to certain unprofitable product lines we stopped selling and supporting in December 2011, (v) vendor support allowance for a certain product line of $500,000, and (vi) premium freight cost of $80,000 in order to improve our fill rates and ability to service our customers.

Operating Expenses

The following table summarizes operating expenses by segment for the three months ended September 30, 2012 and 2011:

	Rotating			Undercar
Three months ended September 30,	Electrical			Product Line			Eliminations		Consolidated
2012
General and administrative	$	4,392,000		$	6,801,000		$	-	$	11,193,000
Sales and marketing		1,724,000			2,180,000			-		3,904,000
Research and development		461,000			-			-		461,000
Percent of net sales
General and administrative		7.6	%		12.6	%		-		10.0	%
Sales and marketing		3.0	%		4.0	%		-		3.5	%
Research and development		0.8	%		-			-		0.4	%
2011
General and administrative	$	7,004,000		$	4,305,000		$	-	$	11,309,000
Sales and marketing		1,897,000			1,300,000			-		3,197,000
Research and development		401,000			-			-		401,000
Acquisition costs		309,000			-			-		309,000
Percent of net sales
General and administrative		15.3	%		7.0	%		-		10.5	%
Sales and marketing		4.1	%		2.1	%		-		3.0	%
Research and development		0.9	%		-			-		0.4	%
Acquisition costs		0.7	%		-			-		0.3	%

General and Administrative. Our consolidated general and administrative expenses for the three months ended September 30, 2012 were $11,193,000, which represents a decrease of $116,000, or 1.0%, from general and administrative expenses for the three months ended September 30, 2011 of $11,309,000. The decrease of $2,612,000 in general and administrative expenses for our rotating electrical business during the three months ended September 30, 2012 was primarily due to (i) a gain of $431,000 recorded due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts compared to a loss of $1,799,000 recorded during the three months ended September 30, 2011 and (ii) $848,000 of decreased professional services and travel incurred in connection with our Fenco operations. These decreases were partly offset by $481,000 of increased general and administrative expenses at our offshore locations. The increase of $2,496,000 in general and administrative expenses for our undercar product line during the three months ended September 30, 2012 was primarily attributable to (i) $1,429,000 of severance, (ii) $1,292,000 of increased professional services fees and other consulting fees, (iii) $497,000 of increased audit fees, and (iv) $286,000 of increased bank charges. These increases in general and administrative expenses were partly offset by lower employee related expenses due to the reduction in workforce.

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Sales and Marketing. Our consolidated sales and marketing expenses for the three months ended September 30, 2012 increased $707,000, or 22.1%, to $3,904,000 from $3,197,000 for the three months ended September 30, 2011. The decrease of $173,000 for our rotating electrical business was due primarily to (i) $96,000 of decreased travel incurred in connection with our Fenco operations and (ii) $45,000 of decreased trade shows expense. The increase of $880,000 in sales and marketing expenses for our undercar product line during the three months ended September 30, 2012 was primarily due to (i) $747,000 of severance and (ii) $283,000 of increased travel expenses. These increases were partly offset by a decrease of $140,000 in sales commissions and agent fees.

Research and Development. Our consolidated research and development expenses increased by $60,000, or 15.0%, to $461,000 for the three months ended September 30, 2012 from $401,000 for the three months ended September 30, 2011. The increase in research and development expenses was due primarily to an increase of $31,000 of employee-related expenses and $27,000 of increased supplies for our rotating electrical business during the three months ended September 30, 2012.

Acquisition Costs. We incurred $309,000 of legal and professional fees in connection with the Fenco acquisition during the three months ended September 30, 2011.

Interest Expense

Interest Expense. Reflecting our increased leverage as a result of the acquisition of Fenco and the increase in the size of our business, net consolidated interest expense for the three months ended September 30, 2012 increased $2,773,000, or 81.8%, to $6,162,000 from $3,389,000 for the three months ended September 30, 2011. This increase in net interest expense was attributable to increased outstanding loan balances and higher interest rates incurred primarily by the rotating electrical product line segment during the three months ended September 30, 2012 as compared to the three months ended September 30, 2011.

Provision for Income Taxes

Income Tax. Our income tax expense was $3,934,000 and $1,813,000 during the three months ended September 30, 2012 and 2011, respectively. This was primarily due to the federal and state income tax provision on pretax income in the U.S. and not recognizing income tax benefits related to the net losses of Fenco’s Canadian operations during the period due to the recoverability of these tax benefits not being deemed by us to be more likely than not to be realized.  The income tax expenses, excluding the net losses of Fenco’s Canadian operations, reflect income tax rates of 37.6% and 36.2% for the three months ended September 30, 2012 and 2011, respectively. The income tax rates were higher than the federal statutory tax rates primarily due to state income taxes, which were partially offset by the benefit of lower statutory tax rates in other foreign taxing jurisdictions.

In addition, any potential future income tax benefits associated with the net loss we incurred from Fenco’s Canadian operations during fiscal 2013 was not recognized due primarily to our assessment of the recoverability of these tax benefits. We have provided a valuation allowance against these net operating loss carryforwards as we determined that it is not more likely than not that the deferred asset will be realized.

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Results of Operations for the Six Months Ended September 30, 2012 and 2011

The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein. The acquisition of Fenco on May 6, 2011 has had a significant impact on the comparability of results as discussed below.

The following table summarizes certain key operating data by segment for the periods indicated:

	Rotating			Undercar
Six months ended September 30,	Electrical			Product Line			Consolidated
2012
Gross profit (loss) percentage		33.4	%		(6.3	)%		14.4	%
Cash flow provided by (used in) operations	$	340,000		$	(14,883,000	)	$	(14,543,000	)
Finished goods turnover (annualized) (1)		7.2			4.4			5.2
Annualized return on equity (2)		-			-			(51.1	)%
2011
Gross profit (loss) percentage		32.2	%		(6.2	)%		12.4	%
Cash flow provided by (used in) operations	$	4,076,000		$	(49,310,000	)	$	(45,234,000	)
Finished goods turnover (annualized) (1)		5.8			4.4			4.8
Annualized return on equity (2)		-			-			(29.9	)%

____________

(1) Annualized finished goods turnover for the rotating electrical segment for the six months ended September 30, 2012 and 2011 and for the undercar product line for the six months ended September 30, 2012 is calculated by multiplying segment cost of sales for each six month period by 2 and dividing the result by the average between each respective segment’s beginning and ending non-core finished goods inventory values for the six month period. Annualized finished goods turnover for the undercar product line for the six months ended September 30, 2011 is calculated by multiplying segment cost of sales for the period by 2.4 and dividing the result by the average between beginning and ending segment non-core finished goods inventory values for the period. We believe this provides a useful measure of our ability to turn production into revenues.

(2) Annualized return on equity is computed as net income for the rotating electrical segment for the six month period multiplied by 2 plus net loss for the undercar product line segment for the period since acquisition multiplied by 2.4 and dividing the result by beginning consolidated shareholders’ equity. Annualized return on equity measures our ability to invest shareholders’ funds profitably.

Net Sales and Gross Profit

The following table summarizes net sales and gross profit by segment for the six months ended September 30, 2012 and 2011:

	Rotating			Undercar
Six months ended September 30,	Electrical			Product Line			Eliminations			Consolidated
2012
Net sales to external customers	$	104,451,000		$	96,204,000		$	-		$	200,655,000
Cost of goods sold		69,536,000			102,284,000			-			171,820,000
Gross profit (loss)		34,915,000			(6,080,000	)		-			28,835,000
Cost of goods sold as a percentage of net sales		66.6	%		106.3	%		-			85.6	%
Gross profit (loss) percentage		33.4	%		(6.3	)%		-			14.4	%
2011
Net sales	$	84,753,000		$	93,373,000		$	-		$	178,126,000
Intersegment revenue, net of cost		1,612,000			-			(1,612,000	)		-
Cost of goods sold		58,518,000			99,208,000			(1,612,000	)		156,114,000
Gross profit (loss)		27,847,000			(5,835,000	)		-			22,012,000
Cost of goods sold as a percentage of net sales		67.8	%		106.2	%		-			87.6	%
Gross profit (loss) percentage		32.2	%		(6.2	)%		-			12.4	%

Net Sales. Our consolidated net sales for the six months ended September 30, 2012 increased by $22,529,000, or 12.6%, to $200,655,000 compared to consolidated net sales for the six months ended September 30, 2011 of $178,126,000.

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· Rotating electrical product line

The net sales in our rotating electrical product line segment increased by $19,698,000 or 23.2%, to $104,451,000 for the six months ended September 30, 2012 compared to net sales of $84,753,000 for the six months ended September 30, 2011.  The increase in net sales in our rotating electrical product line segment was due primarily to increased sales to our existing customers and to a lesser extent increased sales to new customers.

· Undercar product line

The net sales in our undercar product line segment increased by $2,831,000 or 3.0%, to $96,204,000 for the six months ended September 30, 2012 compared to net sales of $93,373,000 for the six months ended September 30, 2011. This increase in net sales in our undercar product line segment was due primarily to the full period impact of our May 6, 2011 acquisition of Fenco, partly offset by the discontinuation of certain unprofitable product lines and customers subsequent to September 30, 2011 as part of our undercar product line turnaround plan.

Cost of Goods Sold/Gross Profit. Our consolidated cost of goods sold as a percentage of consolidated net sales decreased during the six months ended September 30, 2012 to 85.6% from 87.6% for the six months ended September 30, 2011, resulting in a corresponding increase in our consolidated gross profit percentage of 2.0% to 14.4% for the six months ended September 30, 2012 from 12.4% for the six months ended September 30, 2011.

· Rotating electrical product line

The gross profit percentage in our rotating electrical product line increased to 33.4% from 32.2% during the six months ended September 30, 2011. Our increased gross profit percentage in our rotating electrical product line for the six months ended September 30, 2012 is a result of lower per unit manufacturing costs, partially offset by $1,665,000 of marketing and certain other allowances made in connection with the purchase of inventory from a new customer we acquired in the first quarter of fiscal 2013.

· Undercar product line

The gross profit percentage in our undercar product line was negative 6.3% and 6.2% for the six months ended September 30, 2012 and 2011, respectively, representing a negative gross profit of $6,080,000 and $5,835,000 for the same periods. Our gross profit in our undercar product line for the six months ended September 30, 2012 was primarily impacted by higher production, warehousing and distribution costs. Higher production, warehousing and distribution costs were due to the increase in under-absorption of manufacturing overhead resulting from lower production levels.

In addition, our gross profit in our undercar product line during the six months ended September 30, 2012 was further impacted by (i) contractual customer penalties of $1,882,000, (ii) losses of $1,506,000 related to certain unprofitable product lines we stopped selling and supporting in December 2011, (iii) termination fees of $1,402,000 related to an agreement to terminate services with one of our third-party logistics service providers, (iv) severance costs related to our production workforce of $1,272,000, (v) vendor support allowance of $1,145,000, (vi) allowance to a customer of $355,000 in connection with a return of certain products, and (vii) premium freight cost of $125,000 in order to improve our fill rates and ability to service our customers.

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Operating Expenses

The following table summarizes operating expenses by segment for the six months ended September 30, 2012 and 2011:

	Rotating			Undercar
Six months ended September 30,	Electrical			Product Line			Eliminations		Consolidated
2012
General and administrative	$	10,306,000		$	12,451,000		$	-	$	22,757,000
Sales and marketing		3,496,000			3,947,000			-		7,443,000
Research and development		897,000			-			-		897,000
Percent of net sales
General and administrative		9.9	%		12.9	%		-		11.3	%
Sales and marketing		3.3	%		4.1	%		-		3.7	%
Research and development		0.9	%		-			-		0.4	%
2011
General and administrative	$	12,314,000		$	7,304,000		$	-	$	19,618,000
Sales and marketing		3,731,000			1,919,000			-		5,650,000
Research and development		817,000			-			-		817,000
Acquisition costs		713,000			-			-		713,000
Percent of net sales
General and administrative		14.5	%		7.8	%		-		11.0	%
Sales and marketing		4.4	%		2.1	%		-		3.2	%
Research and development		1.0	%		-			-		0.5	%
Acquisition costs		0.8	%		-			-		0.4	%

General and Administrative. Our consolidated general and administrative expenses for the six months ended September 30, 2012 were $22,757,000, which represents an increase of $3,139,000, or 16.0%, from general and administrative expenses for the six months ended September 30, 2011 of $19,618,000. The decrease of $2,008,000 in general and administrative expenses for our rotating electrical business during the six months ended September 30, 2012 was primarily due to (i) a gain of $340,000 recorded due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts compared to a loss of $1,887,000 recorded during the six months ended September 30, 2011 and (ii) $1,156,000 of decreased professional services and travel incurred in connection with our Fenco operations. These decreases were partly offset by (i) $535,000 of increased audit fees, (ii) $393,000 of increased general and administrative expenses at our offshore locations, and (iii) $360,000 of increased legal expense. The increase of $5,147,000 in general and administrative expenses for our undercar product line during the six months ended September 30, 2012 was primarily attributable to (i) $3,182,000 of increased professional services fees and other consulting fees, (ii) $1,429,000 of severance, and (iii) $1,003,000 of increased audit fees. These increases in general and administrative expenses were partly offset by lower employee related expenses due to reduction in workforce.

Sales and Marketing. Our consolidated sales and marketing expenses for the six months ended September 30, 2012 increased $1,793,000, or 31.7%, to $7,443,000 from $5,650,000 for the six months ended September 30, 2011. The decrease of $235,000 for our rotating electrical business was due primarily to (i) $127,000 of decreased travel incurred in connection with our Fenco operations, (ii) $44,000 of decreased trade shows expense, (iii) $38,000 of decreased advertising expense, and (iv) $28,000 of decreased employee-related expenses. The increase of $2,028,000 in sales and marketing expenses for our undercar product line during the six months ended September 30, 2012 was primarily due to (i) $747,000 of severance, (ii) $655,000 of increased travel expenses, and (iii) $578,000 of increased advertising expense.

Research and Development. Our consolidated research and development expenses increased by $80,000, or 9.8%, to $897,000 for the six months ended September 30, 2012 from $817,000 for the six months ended September 30, 2011. The increase in research and development expenses for our rotating electrical business was due primarily to an increase of $60,000 of employee-related expenses and $35,000 of increased supplies expense during the six months ended September 30, 2012, partly offset by $25,000 of decreased travel.

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Acquisition Costs. We incurred $713,000 of legal and professional fees in connection with the Fenco acquisition during the six months ended September 30, 2011.

Interest Expense

Interest Expense. Reflecting our increased leverage as a result of the acquisition of Fenco and the increase in the size of our business, net consolidated interest expense for the six months ended September 30, 2012 increased $5,943,000, or 112.1%, to $11,246,000 from $5,303,000 for the six months ended September 30, 2011. This increase in net interest expense was attributable to (i) increased outstanding loan balances and higher interest rates incurred primarily by the rotating electrical product line segment during the six months ended September 30, 2012 as compared to the six months ended September 30, 2011, (ii) the full period impact of interest expense incurred on the outstanding loan balances by the undercar product line business since our acquisition on May 6, 2011, and (iii) increased discount on factored receivables due to a higher balance of receivables were discounted during the six months ended September 30, 2012.

Provision for Income Taxes

Income Tax. Our income tax expense was $5,287,000 and $3,655,000 during the six months ended September 30, 2012 and 2011, respectively. This was primarily due to the federal and state income tax provision on pretax income in the U.S. and not recognizing income tax benefits related to the net losses of Fenco’s Canadian operations during the period due to the recoverability of these tax benefits not being deemed by us to be more likely than not to be realized. The income tax expenses, excluding the net losses of Fenco’s Canadian operations, reflect income tax rates of 37.7% and 40.1% for the six months ended September 30, 2012 and 2011, respectively. The income tax rates were higher than the federal statutory tax rates primarily due to state income taxes, which were partially offset by the benefit of lower statutory tax rates in other foreign taxing jurisdictions.

In addition, any potential future income tax benefits associated with the net loss we incurred from Fenco’s Canadian operations during fiscal 2013 was not recognized due primarily to our assessment of the recoverability of these tax benefits. We have provided a valuation allowance against these net operating loss carryforwards as we determined that it is not more likely than not that the deferred asset will be realized.

Liquidity and Capital Resources

The Company remanufactures, manufactures, and distributes automobile parts for import and domestic cars, light trucks, heavy duty, agricultural and industrial applications. These replacement parts are sold for use on vehicles after initial vehicle purchase. These automotive parts are sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers.

Overview

At September 30, 2012, we had negative working capital of $14,255,000, a ratio of current assets to current liabilities of 0.9:1, and cash of $32,328,000, compared to negative working capital of $2,188,000, a ratio of current assets to current liabilities of 1:1, and cash of $32,617,000 at March 31, 2012.

In accordance with our core accounting policies, we classify all of our core inventories as long-term assets and the portion of core liability related to the core inventory purchased and on the shelves of our customers, are recorded as long-term liabilities. These accounts are therefore excluded from the working capital and current ratio calculations. We do not recognize revenue or the related cost of sales from the sale of Remanufactured Cores; however, we do invoice and collect for the core value. These accounts receivable amounts are classified as short-term assets. In addition, upon the sale of a Remanufactured Core, a core liability is created to record the obligation to provide our customer with a credit upon the return of a like core by the customer. Since the return of a core is based on the sale of a remanufactured automobile part to an end user of our customer, the offset to this core liability generated by its return to us by our customer is usually followed by the sale of a replacement remanufactured auto part, and thus a portion of the core liability is continually outstanding and is recorded as long-term. The long-term core inventory as of September 30, 2012 was $192,902,000 compared to $194,406,000 at March 31, 2012. The long-term core liability as of September 30, 2012 was $102,445,000 compared to $113,702,000 at March 31, 2012.

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During the six months ended September 30, 2012, we used cash generated from the use of our receivable discount programs with certain of our major customers, from the private placement of our common stock, and our loans as our primary sources of liquidity. These sources were primarily used to pay down our accounts payable balances, enhance the integration of our Fenco acquisition, and pay for the capital expenditure obligations.

In April 2012, we entered into a Subscription Agreement and a Registration Rights Agreement to raise $15,004,000 in gross proceeds and net proceeds of $13,970,000 after expenses, through a private placement of our common stock. Pursuant to the terms of the Subscription Agreement, certain accredited investors purchased an aggregate of 1,936,000 shares of common stock in a private placement exempt from registration under the Securities Act in reliance upon Rule 506 of Regulation D, for a purchase price of $7.75 per share. We used the proceeds to enhance the integration of our Fenco acquisition and for general corporate purposes.

Pursuant to the Registration Rights Agreement, we have agreed to file a registration statement with the SEC to register for resale the common stock sold in the private placement not later than 45 days after the closing of the private placement and to use commercially reasonable efforts to cause such registration statement to be declared effective, subject to certain exceptions, within 60 days of closing (or 120 days in the event of an SEC review). Failure to meet these deadlines and certain other events may result in our payment to the Purchasers of liquidated damages in the amount of 1.0% of the purchase price per 30-day period pending filing of the registration statement, effectiveness of the registration statement or other events, as applicable. On June 12, 2012, we initially filed a registration statement under the Securities Act of 1933 to register the shares of common stock; however, the registration statement has yet to be declared effective and we began accruing liquidated damages starting on August 25, 2012. Liquidated damages may be settled either in cash or, at the option of the purchaser, in shares of our common stock. As of September 30, 2012, we had accrued $150,000 for the settlement of these liquidated damages.

In May 2012, we entered into the Second Amendment to the Parent Company Financing Agreement and borrowed an additional $10,000,000, for an aggregate of $85,000,000 under the Amended Parent Company Term Loans. The Second Amendment, among other things, modified the interest rates per annum applicable to the Amended Parent Company Term Loans. The Amended Parent Company Term Loans will bear interest at rates equal to, at our option, either LIBOR plus 8.5% or a base rate plus 7.5%. The Amended Parent Company Term Loans require quarterly principal payments of $250,000 beginning on October 1, 2012 and increase to $600,000 per quarter on April 1, 2013 and to $1,350,000 on October 1, 2013 until the final maturity date. Among other things, the Second Amendment provides for certain amended financial covenants, and requires that we maintain cash and cash equivalents of up to $10,000,000 in the aggregate until our obligations with respect to a significant supplier have ceased.

In connection with the Second Amendment, we issued the Cerberus Warrant to Cerberus Business Finance, LLC. Pursuant to the Cerberus Warrant, Cerberus Business Finance, LLC, may purchase up to 100,000 shares of our common stock for an initial exercise price of $17.00 per share for a period of five years. The exercise price is subject to adjustments, among other things, for sales of common stock by us at a price below the exercise price. As a result of the issuance of the Supplier Warrant in August 2012 at an initial exercise price of $7.75 per share, the exercise price of the Cerberus Warrant was reduced to $7.75 per share. As the exercise price of the Cerberus Warrant was reduced, the number of shares of our common stock that may be purchased upon the exercise of the Cerberus Warrant was increased to 219,355 so that the aggregate exercise price of the Cerberus Warrant after the adjustment is the same as the aggregate exercise price prior to the adjustment. The fair value of the Cerberus Warrant using the Monte Carlo simulation model was $607,000 at May 24, 2012 and $357,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. During the three and six months ended September 30, 2012, a gain of $260,000 and $250,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

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In August 2012, we entered into the Third Amendment to the Parent Company Financing Agreement which, among other things, (i) permitted us to enter into the Fenco Credit Line, (ii) to make additional investments in Fenco in an aggregate amount outstanding not to exceed $20,000,000 at any time, (iii) added additional reporting requirements regarding financial reports and material notices under the Fenco Credit Line, and (iv) removed the Second Amendment requirement that we maintain cash and cash equivalents of up to $10,000,000.

In August 2012, Fenco entered into the Fenco Second Amendment with the Fenco lenders which, among other things, (i) extended the maturity date to October 6, 2014, (ii) amended the maximum amount of the revolving facility to (y) $55,000,000 for the period up to and including December 31, 2012 and (z) $50,000,000 for the period on or after January 1, 2013 through October 6, 2014, (iii) replaced the repayment schedule and the amounts for the term loan to require quarterly principal payments of $500,000 beginning on June 30, 2013 and increasing to $1,000,000 per quarter beginning December 31, 2013 through September 30, 2014, with the remaining unpaid principal amount being due on the final maturity date, (iv) provided for certain mandatory prepayments of the term loan, and (v) revised certain financial covenants regarding minimum EBITDA, minimum fixed charge coverage, unused borrowing availability under the Fenco revolving credit facility, and maximum capital expenditures.

Neither the Parent Company Financing Agreement nor the Fenco Credit Agreement contain any cross default provisions with respect to the other agreement.

In August 2012, we entered into the Agreement with the Supplier and Fenco. Under the terms of the Agreement, the Supplier agreed to provide a revolving credit line for purchases of automotive parts and components by Fenco in an aggregate principal amount not to exceed $22,000,000 under the Fenco Credit Line, of which $2,000,000 will only be available for accrued interest and other amounts payable under the Obligations. Payment for all purchases will be due and payable 120 days after the date of the bill of lading. Any amounts remaining unpaid following the due date will bear interest at a rate of 1% per month. The Fenco Credit Line will mature on July 31, 2017. Among other things, the Agreement requires that Fenco on an annual basis, purchase at least approximately $33,000,000 of new automotive parts and components from the Supplier. After July 1, 2014, the Supplier has the right to settle up to $8,000,000 under the Receivable Sale Option of our outstanding Obligations in exchange, at our option, for (i) shares of our common stock valued at $7.75 per share, subject to certain adjustments, or (ii) cash in an amount equal to 135% of the amount of the outstanding Obligations sold to us. The Obligations under the Agreement are guaranteed by us and certain of our subsidiaries. As of September 30, 2012, we had approximately $17,000,000 outstanding under the Fenco Credit Line.

In connection with this Agreement, we also issued the Supplier Warrant to the Supplier to purchase up to 516,129 shares of our common stock for an initial exercise price of $7.75 per share exercisable at any time after two years from August 22, 2012 and on or prior to September 30, 2017. The exercise price is subject to adjustments, among other things, for sales of common stock by us at a price below the exercise price. Any outstanding Obligations settled by the Supplier will reduce the Fenco Credit Line. We are obligated to issue no more than an aggregate of 1,032,258 shares of our common stock in connection with the Receivable Sale Option and Supplier Warrant. The Obligations under this Agreement are subordinated to our obligations under the Parent Company Financing Agreement. The fair value of the Supplier Warrant using the Monte Carlo simulation model was $1,018,000 at August 22, 2012, and $1,211,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. During the three and six months ended September 30, 2012, a loss of $193,000 was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

We believe our cash on hand, short-term investments, use of receivable discount programs with certain of our major customers, amounts available under our credit agreements, and amounts available under the Fenco Credit Line are sufficient to satisfy our expected future working capital needs, repayment of the current portion of our term loans, capital lease commitments, and capital expenditure obligations over the next twelve months. However, our ability to continue to meet such liquidity needs is subject to and will be affected by cash utilized in operations, including our undercar product line turnaround plan, continued general economic conditions, uncertain industry conditions, and the financial condition of our customers and suppliers.

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Cash Flows

Net cash used in operating activities was $14,543,000 and $45,234,000 for the six months ended September 30, 2012 and 2011, respectively. The rotating electrical segment provided cash from operations of $340,000 during the six months ended September 30, 2012 compared to $4,076,000 during the six months ended September 30, 2011. The changes in operating activities for the rotating electrical segment were due primarily to the pay-down of accounts payable balances incurred in connection with the inventory provided to Fenco in fiscal 2012 and a decrease in accounts receivable balances. The undercar product line segment used cash from operations of $14,883,000 and $49,310,000 during the six months ended September 30, 2012 and 2011, respectively. The most significant changes in our undercar product line segment were due primarily to decreases in non-core inventory, core inventory, and customer core return accrual during the six months ended September 30, 2012 compared to increases in the same period of the prior year.

Net cash used in investing activities was $1,882,000 and $699,000 during the six months ended September 30, 2012 and 2011, respectively. Our capital expenditures for our rotating electrical segment for the six months ended September 30, 2012 and 2011 was $1,415,000 and $604,000, respectively, primarily related to the purchase of equipment for our manufacturing facilities. Our capital expenditures for our undercar product line segment for the six months ended September 30, 2012 and 2011 was $445,000 and $74,000, respectively, primarily related to the conversion of Fenco’s financial and operating systems to the applications used at our corporate headquarters in Torrance, California, and purchase of equipment for Fenco manufacturing facilities.

Net cash provided by financing activities was $16,151,000 and $44,807,000 for the six months ended September 30, 2012 and 2011, respectively. The rotating electrical segment provided net cash from financing activities of $23,022,000 and $36,708,000 during the six months ended September 30, 2012 and 2011, respectively. This decrease was due to decreased borrowings compared to the prior year partly offset by the net proceeds received from our private placement during the six months ended September 30, 2012. The net cash provided by financing activities was used primarily to finance Fenco. The undercar product line segment used net cash from financing activities of $6,871,000 due primarily to the repayment of amounts outstanding under the Fenco Revolving Facility during the six months ended September 30, 2012 compared to borrowing $10,000,000 under the Fenco Term Loan during the six months ended September 30, 2011.

Capital Resources

Debt

We have the following outstanding credit agreements.

Parent Company Credit Agreement

We are party to the Parent Company Financing Agreement involving the Parent Company Loans. The Parent Company Loans consist of the Parent Company Term Loans and the Parent Company Revolving Loans. The Parent Company Loans mature on January 17, 2017. The lenders hold a security interest in substantially all of the assets of our rotating electrical segment. The Parent Company Financing Agreement permits us to invest up to $20,000,000 in Fenco.

In May 2012, we entered into the Second Amendment and borrowed an additional $10,000,000, for an aggregate of $85,000,000 in term loans. The Second Amendment, among other things, modified the interest rates per annum applicable to the Amended Parent Company Term Loans. The Amended Parent Company Term Loans will bear interest at rates equal to, at our option, either LIBOR plus 8.5% or a base rate plus 7.5%.

The Amended Parent Company Term Loans require quarterly principal payments of $250,000 beginning on October 1, 2012 and increase to $600,000 per quarter on April 1, 2013 and to $1,350,000 on October 1, 2013 until the final maturity date. Among other things, the Second Amendment provides for certain amended financial covenants, and requires that we maintain cash and cash equivalents of up to $10,000,000 in the aggregate until our obligations with respect to a significant supplier have ceased.

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In August 2012, we entered into a Third Amendment and waiver to the Parent Company Financing Agreement which, among other things, (i) permitted us to enter into the Fenco Credit Line, (ii) to make additional investments in Fenco in an aggregate amount not to exceed $20,000,000 at any time outstanding, (iii) added additional reporting requirements regarding financial reports and material notices under the Fenco Credit Line, and (iv) removed the Second Amendment requirement that we maintain cash and cash equivalents of up to $10,000,000.

The Parent Company Financing Agreement, as amended, among other things, requires us to maintain certain financial covenants including a maximum senior leverage ratio, a minimum fixed charge coverage ratio, and minimum consolidated EBITDA. We were in compliance with all financial covenants and reporting requirements under the Parent Company Financing Agreement, as amended, as of September 30, 2012.

The following table summarizes the financial covenants required under the Parent Company Financing Agreement as of September 30, 2012:

	Calculation as of September 30, 2012		Financial covenants required per the Parent Company Financing Agreement
Maximum senior leverage ratio		2.19		3.40
Minimum fixed charge coverage ratio		1.53		1.10
Minimum consolidated EBITDA	$	38,883,000	$	26,500,000

There was no outstanding balance on the Parent Company Revolving Loans at September 30, 2012 and March 31, 2012. As of September 30, 2012, $16,955,000 was available under the Parent Company Revolving Loans. We had reserved $626,000 of the Parent Company Revolving Loans for standby letters of credit for workers’ compensation insurance and $2,200,000 for commercial letters of credit as of September 30, 2012.

Fenco Credit Agreement

The Fenco Borrowers entered into the Fenco Credit Agreement with the Fenco Lenders. Pursuant to the Fenco Credit Agreement, the Fenco Lenders have made available to the Fenco Borrowers the Fenco Revolving Facility and the Fenco Term Loan. The availability of the Fenco Revolving Facility is subject to a borrowing base calculation consisting of eligible accounts receivable and eligible inventory.

In August 2012, Fenco entered into a Second Amendment to the Fenco Credit Agreement with the Fenco Lenders which, among other things, (i) extended the maturity date to October 6, 2014, (ii) amended the maximum amount of the Fenco Revolving Facility to (y) $55,000,000 for the period up to and including December 31, 2012 and (z) $50,000,000 for the period on or after January 1, 2013 through October 6, 2014, (iii) replaced the repayment schedule and the amounts for the Fenco Term Loan to require quarterly principal payments of $500,000 beginning on June 30, 2013 and increasing to $1,000,000 per quarter beginning December 31, 2013 through September 30, 2014, with the remaining unpaid principal amount being due on the final maturity date, (iv) provided for certain mandatory prepayments of the Fenco Term Loan, and (v) revised certain financial covenants regarding minimum EBITDA, minimum fixed charge coverage, unused borrowing availability under the Fenco Revolving Credit Facility, and maximum capital expenditures. The maturity dates may be accelerated upon the occurrence of an insolvency event or event of default under the Fenco Credit Agreement.

The outstanding balance on the Fenco Revolving Facility was $42,089,000 and $48,884,000 at September 30, 2012 and March 31, 2012, respectively. As of September 30, 2012, approximately $712,000 was reserved for standby commercial letters of credit and $264,000 was reserved for certain expenses. As of September 30, 2012, approximately $8,969,000 was available under the Fenco Revolving Facility. The Fenco Lenders hold a security interest in substantially all of the assets of the undercar product line segment.

The Fenco Borrowers may receive advances under the Fenco Revolving Facility by any one or more of the following options: (i) swingline advances in Canadian or US dollars; (ii) Canadian dollar prime-based loans; (iii) US dollar base rate loans; (iv) LIBOR loans; or (v) letters of credits.

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The Fenco Term Loan bears interest at the LIBO rate plus an applicable margin. Outstanding advances under the Fenco Revolving Facility bear interest as follows:

(i) in respect of swingline advances in Canadian dollars and Canadian dollar prime-based loans, at the reference rate announced by the Royal Bank of Canada plus an applicable margin;

(ii) in respect of swingline advances in US dollars and US dollar base rate loans, at a base rate (which shall be equal to the highest of (x) M&T Bank’s prime rate, (y) the Federal Funds Rate plus ½ of 1%, or (z) the one month LIBO rate) plus an applicable margin;

(iii) in respect of LIBOR loans, at the LIBO rate plus an applicable margin.

The Fenco Credit Agreement, among other things, requires the Fenco Borrowers to maintain a minimum EBITDA of not less than $600,000 for the period from September 1, 2012 to September 30, 2012. As of September 30, 2012, the Fenco Borrowers were in compliance with all financial covenants and reporting requirements under the Fenco Credit Agreement.

Neither the Parent Company Financing Agreement nor the Fenco Credit Agreement contain any cross default provisions with respect to the other agreement.

Strategic Cooperation Agreement

In August 2012, we entered into the Agreement with the Supplier and Fenco. Under the terms of the Agreement, the Supplier agreed to provide the Fenco Credit Line in an aggregate amount not to exceed $22,000,000 of which $2,000,000 will only be available for accrued interest and other amounts payable. Payment for all purchases will be due and payable 120 days after the date of the bill of lading. Any amounts remaining unpaid following the due date will bear interest at a rate of 1% per month. The Fenco Credit Line will mature on July 31, 2017. Among other things, the Agreement requires that Fenco on an annual basis, purchase at least approximately $33,000,000 of new automotive parts and components. After July 1, 2014, the Supplier has the right to exercise the Receivable Sale Option under which the Supplier may settle up to $8,000,000 of our outstanding Obligations in exchange, at our option, for (i) shares of our common stock valued at $7.75 per share, subject to certain adjustments, or (ii) cash in an amount equal to 135% of the amount of the outstanding Obligations sold to us. Any outstanding Obligations settled by the Supplier will reduce the Fenco Credit Line. The Obligations under the Agreement are guaranteed by us and certain of our subsidiaries. As of September 30, 2012, we had approximately $17,000,000 outstanding under the Fenco Credit Line.

Our ability to comply in future periods with the financial covenants in the Parent Financing Agreement and Fenco Credit Agreement will depend on our ongoing financial and operating performance, which, in turn, will be subject to economic conditions and to financial, business and other factors, many of which are beyond our control and will be substantially dependent on the selling prices and demand for our products, customer demands for marketing allowances and other concessions, raw material costs, and our ability to successfully implement our overall business strategy, including the integration of our Fenco acquisition. If a violation of any of the covenants occurs in the future, we would attempt to obtain a waiver or an amendment from our lenders or the Fenco Lenders, as applicable. No assurance can be given that we would be successful in this regard.

Receivable Discount Programs

Both our segments use receivable discount programs with certain customers and their respective banks. Under these programs, we have options to sell those customers’ receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allows us to accelerate collection of customers’ receivables. While these arrangements have reduced our working capital needs, there can be no assurance that these programs will continue in the future. Interest expense resulting from these programs would increase if interest rates rise, if utilization of these discounting arrangements expands or if the discount period is extended to reflect more favorable payment terms to customers.

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The following is a summary of the receivable discount programs:

	Six Months Ended
	September 30,
	2012			2011
Receivables discounted	$	157,335,000		$	133,222,000
Weighted average days		316			312
Annualized weighted average discount rate		2.8	%		2.9	%
Amount of discount as interest expense	$	3,824,000		$	3,363,000

Off-Balance Sheet Arrangements

At September 30, 2012, we had no off-balance sheet financing or other arrangements with unconsolidated entities or financial partnerships (such as entities often referred to as structured finance or special purpose entities) established for purposes of facilitating off-balance sheet financing or other debt arrangements or for other contractually narrow or limited purposes.

Capital Expenditures and Commitments

Capital Expenditures

Our capital expenditures were $1,860,000 for the six months ended September 30, 2012, which primarily related to the purchase of equipment for our manufacturing facilities and the conversion of Fenco’s financial and operating systems to the applications used at our corporate headquarters in Torrance, California. We expect our fiscal year 2013 capital expenditures to be in the range of $3,000,000 to $4,000,000. We expect to use our working capital and incur additional capital lease obligations to finance these capital expenditures.

Related Party Transactions

Our related party transactions primarily consist of employment and director agreements and stock option agreements. Our related party transactions have not changed since March 31, 2012.

Subsequent Events

Equity Transaction

In December, 2012, we entered into the Stock Repurchase Agreement with Mel Marks, our founder, a member of our board of directors and consultant, and Melmarks Enterprises LLLP, a limited liability limited partnership controlled by Mr. Marks, which, among other things, provides the Shareholders with the option to sell up to $300,000 of our common stock held by the Shareholders, on or prior to February 28, 2013, at a purchase price that is 10% below the average daily closing price per share of our common stock for the five consecutive trading days immediately preceding the date of the notice of sale.

In connection with the Stock Repurchase Agreement, we entered into the Fourth Amendment to the Parent Company Financing Agreement, which, among other things, permitted us to repurchase the Shares pursuant to the Stock Repurchase Agreement.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates that are presented in our Annual Report on Form 10-K for the year ended March 31, 2012, which was filed on September 28, 2012, except as discussed below.

38

New Accounting Pronouncements

Comprehensive Income

In June 2011, the FASB issued guidance which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. This guidance eliminates the option to present components of other comprehensive income as a part of the statement of equity. This guidance should be applied, retrospectively, for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Other than the change in presentation, we have determined the changes from the adoption of this guidance on April 1, 2012 did not have an impact on our consolidated financial position and the results of operations.

Testing Goodwill for Impairment

In September 2011, the FASB issued an amendment which gives an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the first step of the two-step goodwill impairment test. If the carrying value of the reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss, if any. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance on April 1, 2012 did not have any impact on our consolidated financial position and the results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information provided in Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K as of March 31, 2012, which was filed on September 28, 2012.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures designed to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of management, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer, we have conducted an evaluation of the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on this evaluation, our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer concluded that MPA’s disclosure controls and procedures were not effective as of September 30, 2012, as the Company has not filed this report in a timely manner and has not remediated the material weakness in internal control over financial reporting described below under Changes in Internal Control Over Financial Reporting.

39

Inherent Limitations Over Internal Controls

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control may not prevent misstatements. Further, an evaluation of the effectiveness of internal control may not detect misstatements.

Changes in Internal Control Over Financial Reporting

There were no changes in MPA’s internal control over financial reporting during the second quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, MPA’s internal control over financial reporting.

On May 6, 2011, MPA acquired Fenco, a privately-owned Toronto-based manufacturer, remanufacturer and distributor of new and remanufactured aftermarket auto parts. For additional information regarding the acquisition, refer to Note 3 in the Notes to Consolidated Financial Statements included in our March 31, 2012 audited consolidated financial statements in our Annual Report on Form 10-K as of March 31, 2012 filed with the SEC on September 28, 2012 and, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in Item 2 of this Quarterly Report.

Since the acquisition of Fenco, we have been unable to timely file our Quarterly Reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the second, third and fourth quarters of our fiscal year 2012, and first and second quarters of our fiscal year 2013.  As a result, we concluded that our internal control over financial reporting was not effective because of the existence of a material weakness in our financial statement close process at Fenco. Specifically, systems required to segregate and account for transactions accurately were inadequate.  Also, the financial policies and procedures at Fenco did not provide for effective oversight and review of the reconciliation of accounts at month or quarter ends. Moreover, there is a lack of sufficient personnel with appropriate knowledge, experience and training in U.S. GAAP and lack of sufficient analysis, reconciliations and documentation of the application of U.S. GAAP to transactions.  As a result, Fenco was unable to complete the financial close process on a timely and accurate basis.

As a result of the material weakness, we commenced a review of the internal control over financial reporting at Fenco and began putting in place appropriate oversight and controls.  In fiscal year 2012, direct oversight by MPA management of Fenco accounting personnel was substantially increased.  Experienced accounting personnel were added to review core and other transactions, which improved the overall accounting skill set.  The core receiving and return transactions were integrated into our financial reporting process and additional core tracking procedures were implemented.  Controls over sales and purchasing transactions were improved to ensure their inclusion in the proper reporting period.  At the start of the third quarter of fiscal 2013, the Fenco financial and operating systems were converted to the applications used at MPA.  In conjunction with this system conversion, Fenco accounting was also centralized at MPA headquarters in Torrance, California.  These changes are expected to permit more timely reporting of consolidated financial results going forward.

The initial assessment of internal control over financial reporting for the acquired business will be conducted over the course of fiscal year 2013 and reported as of March 31, 2013.

40

PART II — OTHER INFORMATION

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Item 1A to Part I of our Annual Report on Form 10-K for the fiscal year ended March 31, 2012, filed on September 28, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Limitation on Payment of Dividends—The Parent Company Credit Agreement prohibits the declaration or payment of any dividends by us other than dividends payable in our capital stock.

Equity Transaction

In April 2012, we entered into a Subscription Agreement and a Registration Rights Agreement to raise $15,004,000 in gross proceeds through a private placement of our common stock. Pursuant to the terms of the Subscription Agreement, 17 accredited investors purchased an aggregate of 1,936,000 shares of common stock in a private placement exempt from registration under the Securities Act in reliance upon Rule 506 of Regulation D, for a purchase price of $7.75 per share. We plan to use the proceeds to enhance the integration of our Fenco acquisition and for general corporate purposes.

Pursuant to the Registration Rights Agreement, we have agreed to file a registration statement with the SEC to register for resale the common stock sold in the private placement not later than 45 days after the closing of the private placement and to use commercially reasonable efforts to cause such registration statement to be declared effective, subject to certain exceptions, within 60 days of closing (or 120 days in the event of an SEC review). Failure to meet these deadlines and certain other events may result in our payment to the Purchasers of liquidated damages in the amount of 1.0% of the purchase price per 30-day period pending filing of the registration statement, effectiveness of the registration statement or other events, as applicable. On June 12, 2012, we initially filed a registration statement under the Securities Act of 1933 to register the shares of common stock; however, the registration statement has yet to be declared effective and we began accruing liquidated damages starting on August 25, 2012. Liquidated damages may be settled either in cash or, at the option of the purchaser, in shares of our common stock. As of September 30, 2012, we had accrued $150,000 for the settlement of these liquidated damages.

Item 5. Other Information

None.

41

Item 6. Exhibits

(a) Exhibits:

Number	Description of Exhibit	Method of Filing
3.1	Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 declared effective on March 22, 1994 (the “1994 Registration Statement”).
3.2	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (No. 33-97498) declared effective on November 14, 1995.
3.3	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997.
3.4	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (the “1998 Form 10-K”).
3.5	Amendment to Certificate of Incorporation of the Company	Incorporated by reference to Exhibit C to the Company’s proxy statement on Schedule 14A filed with the SEC on November 25, 2003.
3.6	Amended and Restated By-Laws of Motorcar Parts of America, Inc.	Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on August 24, 2010.
4.1	Specimen Certificate of the Company’s common stock	Incorporated by reference to Exhibit 4.1 to the 1994 Registration Statement.
4.2	Form of Underwriter’s common stock purchase warrant	Incorporated by reference to Exhibit 4.2 to the 1994 Registration Statement.
4.3	1994 Stock Option Plan	Incorporated by reference to Exhibit 4.3 to the 1994 Registration Statement.
4.4	Form of Incentive Stock Option Agreement	Incorporated by reference to Exhibit 4.4 to the 1994 Registration Statement.
4.5	1994 Non-Employee Director Stock Option Plan	Incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended March 31, 1995.
4.6	1996 Stock Option Plan	Incorporated by reference to Exhibit 4.6 to the Company’s Registration Statement on Form S-2 (No. 333-37977) declared effective on November 18, 1997.

42

Number	Description of Exhibit	Method of Filing
4.8	2004 Non-Employee Director Stock Option Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A for the 2004 Annual Shareholders Meeting.
4.9	Registration Rights Agreement among the Company and the investors identified on the signature pages thereto, dated as of May 18, 2007	Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on May 18, 2007.
4.10	Form of Warrant to be issued by the Company to investors in connection with the May 2007 Private Placement	Incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed on May 18, 2007.
4.11	2010 Incentive Award Plan	Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on December 15, 2010.
10.1	Stock Repurchase Agreement, dated as of December 3, 2012, by and among Motorcar Parts of America, Inc., Mel Marks and Melmarks Enterprises LLLP	Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on December 6, 2012.
10.2	Fourth Amendment to Financing Agreement, dated as of December 3, 2012, among Motorcar Parts of America, Inc., each lender from time to time party thereto, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank, National Association, as administrative agent.	Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on December 6, 2012.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith.
31.3	Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002	Filed herewith.
32.1	Certifications of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002	Filed herewith.
101.1	The following financial information from Motorcar Parts of America, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in Extensible Business Reporting Language (“XBRL”) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Cash Flows; and (v) the Condensed Notes to Consolidated Financial Statements	Furnished herewith.

43

SIGNATURES

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, thereunto duly authorized.

	MOTORCAR PARTS OF AMERICA, INC
Dated: December 18, 2012	By:	/s/ David Lee
		David Lee
		Chief Financial Officer
Dated: December 18, 2012	By:	/s/ Kevin Daly
		Kevin Daly
		Chief Accounting Officer

44

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Selwyn Joffe, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 18, 2012	/s/ Selwyn Joffe
	Selwyn Joffe
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, David Lee, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 18, 2012	/s/ David Lee
	David Lee
	Chief Financial Officer

EX-31.3

Exhibit 31.3

CERTIFICATIONS

I, Kevin Daly, certify that:

1. I have reviewed this report on Form 10-Q of Motorcar Parts of America, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused, such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based upon such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 18, 2012	/s/ Kevin Daly
	Kevin Daly
	Chief Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATE OF CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND CHIEF ACCOUNTING OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Selwyn Joffe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Selwyn Joffe

Selwyn Joffe

Chief Executive Officer

December 18, 2012

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, David Lee, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David Lee

David Lee

Chief Financial Officer

December 18, 2012

In connection with the Quarterly Report of Motorcar Parts of America, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Quarterly Report”), I, Kevin Daly, Chief Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

1. The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Kevin Daly

Kevin Daly

Chief Accounting Officer

December 18, 2012

The foregoing certifications are being furnished to the Securities and Exchange Commission as part of the accompanying report on Form 10-Q. A signed original of each of these statements has been provided to Motorcar Parts of America, Inc. and will be retained by Motorcar Parts of America, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Intangible Assets, Amortization Expense (Details) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Amortization of intangible assets [Abstract]
Amortization expense	$ 542,000	$ 542,000	$ 1,085,000	$ 969,000
Finite-lived intangible assets, future amortization expense [Abstract]
2013 - remaining 6 months	1,087,000		1,087,000
2014	2,070,000		2,070,000
2015	1,996,000		1,996,000
2016	1,675,000		1,675,000
2017	1,592,000		1,592,000
Thereafter	12,979,000		12,979,000
Total	$ 21,399,000		$ 21,399,000

XML

Fair Value Measurements (Details) (USD $)	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Forward Foreign Currency Exchange Contracts [Member]	Sep. 30, 2011 Forward Foreign Currency Exchange Contracts [Member]	Sep. 30, 2012 Forward Foreign Currency Exchange Contracts [Member]	Sep. 30, 2011 Forward Foreign Currency Exchange Contracts [Member]	Sep. 30, 2012 Warrant Liability [Member]	Sep. 30, 2012 Warrant Liability [Member]	Sep. 30, 2012 Supplier Warrant [Member]	Sep. 30, 2012 Cerberus Warrant [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member]	Mar. 31, 2012 Fair Value, Measurements, Recurring [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Level 1 [Member]	Mar. 31, 2012 Fair Value, Measurements, Recurring [Member] Level 1 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Level 2 [Member]	Mar. 31, 2012 Fair Value, Measurements, Recurring [Member] Level 2 [Member]	Sep. 30, 2012 Fair Value, Measurements, Recurring [Member] Level 3 [Member]	Mar. 31, 2012 Fair Value, Measurements, Recurring [Member] Level 3 [Member]
Short-term Investments [Abstract]
Mutual funds													$ 368,000	$ 342,000	$ 368,000	$ 342,000	$ 0	$ 0	$ 0	$ 0
Prepaid expenses and other current assets [Abstract]
Forward foreign currency exchange contracts													219,000	0	0	0	219,000	0	0	0
Other current liabilities [Abstract]
Deferred compensation													368,000	342,000	368,000	342,000	0	0	0	0
Forward foreign currency exchange contracts													0	121,000	0	0	0	121,000	0	0
Other liabilities [Abstract]
Warrant liability													1,568,000	0	0	0	0	0	1,568,000	0
Net gain (loss) on forward foreign currency exchange contracts					431,000	(1,799,000)	340,000	(1,887,000)
Fair value assumptions of warrants [Abstract]
Risk free interest rate (in hundredths)											0.62%	0.54%
Expected life											5 years	4 years 7 months 24 days
Expected volatility (in hundredths)											56.59%	55.93%
Dividend yield (in hundredths)											0.00%	0.00%
Probability of future financing (in hundredths)											0.00%	0.00%
Change in warrant liability measured at fair value recurring basis using significant unobservable inputs (Level 3) [Rollforward]
Beginning balance	617,000	0	0	0
Newly issued	1,018,000	0	1,625,000	0
Total (gain) loss included in net loss (gain)	(67,000)	0	(57,000)	0					(67,000)	(57,000)
Warrants exercised	0	0	0	0
Net transfers in (out) of Level 3	0	0	0	0
Ending balance	$ 1,568,000	$ 0	$ 1,568,000	$ 0

XML

Income Taxes (Details) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income Taxes [Abstract]
Income tax expense related to Fenco subsidiaries in Mexico	$ 50,000	$ 93,000	$ 98,000	$ 140,000
Income tax expenses, excluding the net losses of Fenco's Canadian operations (in hundredths)	37.60%	36.20%	37.70%	40.10%

XML

Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Financial Assets and Liabilities Measured at Fair Value Recurring Basis

The following table summarizes the Company's financial assets and liabilities measured at fair value, by level within the fair value hierarchy as of September 30, 2012 and March 31, 2012:

	September 30, 2012								March 31, 2012
			Fair Value Measurements								Fair Value Measurements
			Using Inputs Considered as								Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	368,000	$	368,000		-		-	$	342,000	$	342,000		-		-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		219,000		-	$	219,000		-		-		-	$	-		-
Liabilities
Other current liabilities
Deferred compensation		368,000		368,000		-		-		342,000		342,000		-		-
Forward foreign currency exchange contracts		-		-		-		-		121,000		-	$	121,000		-
Other liabilities
Warrant liability		1,568,000		-		-	$	1,568,000		-		-		-		-

Assumptions Used To Determine Fair Value of Warrant Liability

The assumptions used to determine the fair value of the Cerberus Warrant and the Supplier Warrant recorded as warrant liability were:

	September 30, 2012
	Cerberus Warrant			Supplier Warrant
Risk free interest rate		0.54	%		0.62	%
Expected life in years		4.65			5.00
Expected volatility		55.93	%		56.59	%
Dividend yield		-			-
Probability of future financing		0	%		0	%

Change in Warrant Liability Measured at Fair Value Recurring Basis Using Significant Unobservable Inputs (Level 3)

A summary of the change to the Company's warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is presented below:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2012			2011		2012			2011
Beginning balance	$	617,000		$	-	$	-		$	-
Newly issued		1,018,000			-		1,625,000			-
Total (gain) loss included in net loss		(67,000	)		-		(57,000	)		-
Warrants exercised		-			-		-			-
Net transfers in (out) of Level 3		-			-		-			-
Ending balance	$	1,568,000		$	-	$	1,568,000		$	-

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Acquisition (Tables)

6 Months Ended

Sep. 30, 2012

Acquisition [Abstract]

Business Acquisition, Pro Forma Information

The unaudited pro forma financial information presented below for the six months ended September 30, 2011 assumes the acquisition had occurred on April 1, 2011. Financial information presented below for the six months ended September 30, 2012 represents actual results of operations for the period.

 

	Six Months Ended
	September 30,
	2012			2011
Net sales	$	200,655,000		$	204,660,000
Operating income (loss)		(2,262,000	)		(6,430,000	)
Loss before income tax expense		(13,508,000	)		(12,526,000	)
Net loss		(18,795,000	)		(16,388,000	)
Basic net loss per share	$	(1.32	)	$	(1.33	)
Diluted net loss per share	$	(1.32	)	$	(1.33	)

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Equity Transaction (Details) (USD $)	6 Months Ended
	Sep. 30, 2012
Equity Transaction [Abstract]
Proceeds from issuance of common stock	$ 15,004,000
Net proceeds from issuance of common stock	13,970,000
Shares issued to accredited investors in private placement (in shares)	1,936,000
Share price (in dollars per share)	$ 7.75
Period for filing registration statement, maximum	45 days
Period for registration statement to declare effective	60 days
Period for registration statement to declare effective of SEC review	120 days
Liquidated damages per 30 days (in hundredths)	1.00%
Liquidated damages accrued	$ 150,000

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Major Customers (Details)	3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended				6 Months Ended					12 Months Ended	6 Months Ended	12 Months Ended	6 Months Ended		12 Months Ended		3 Months Ended		6 Months Ended
	Sep. 30, 2012 Sales [Member] Customer A [Member]	Sep. 30, 2011 Sales [Member] Customer A [Member]	Sep. 30, 2012 Sales [Member] Customer A [Member]	Sep. 30, 2011 Sales [Member] Customer A [Member]	Sep. 30, 2012 Sales [Member] Customer B [Member]	Sep. 30, 2011 Sales [Member] Customer B [Member]	Sep. 30, 2012 Sales [Member] Customer B [Member]	Sep. 30, 2011 Sales [Member] Customer B [Member]	Sep. 30, 2012 Sales [Member] Customer C [Member]		Sep. 30, 2011 Sales [Member] Customer C [Member]		Sep. 30, 2012 Sales [Member] Customer C [Member]		Sep. 30, 2011 Sales [Member] Customer C [Member]		Sep. 30, 2012 Accounts Receivable - Trade [Member] Customer A [Member]	Mar. 31, 2012 Accounts Receivable - Trade [Member] Customer A [Member]	Sep. 30, 2012 Accounts Receivable - Trade [Member] Customer B [Member]	Mar. 31, 2012 Accounts Receivable - Trade [Member] Customer B [Member]	Sep. 30, 2012 Accounts Receivable - Trade [Member] Customer C [Member]		Mar. 31, 2012 Accounts Receivable - Trade [Member] Customer C [Member]		Sep. 30, 2012 Significant supplier purchases [Member] Supplier A [Member]	Sep. 30, 2011 Significant supplier purchases [Member] Supplier A [Member]	Sep. 30, 2012 Significant supplier purchases [Member] Supplier A [Member]	Sep. 30, 2011 Significant supplier purchases [Member] Supplier A [Member]
Concentration Risk [Line Items]
Concentration risk percentage (in hundredths)	38.00%	43.00%	37.00%	40.00%	16.00%	7.00%	16.00%	8.00%	21.00%	[1]	15.00%	[1]	20.00%	[1]	13.00%	[1]	29.00%	31.00%	9.00%	8.00%	22.00%	[1]	21.00%	[1]	19.00%	11.00%	18.00%	13.00%

[1] As noted in Note 3, the Company discontinued supplying its undercar products to customer C but has retained the rotating electrical product line sales to this customer.

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Goodwill (Details) (USD $)			3 Months Ended				6 Months Ended						6 Months Ended	12 Months Ended
	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2012 Net Sales [Member] Customer C [Member]		Sep. 30, 2011 Net Sales [Member] Customer C [Member]		Sep. 30, 2012 Net Sales [Member] Customer C [Member]		Sep. 30, 2011 Net Sales [Member] Customer C [Member]		Sep. 30, 2012 Undercar Product Line [Member]	Mar. 31, 2012 Undercar Product Line [Member]	Sep. 30, 2012 Undercar Product Line [Member] Customer Concentration Risk [Member] Net Sales [Member] Customer C [Member]	Mar. 31, 2012 Undercar Product Line [Member] Customer Concentration Risk [Member] Net Sales [Member] Customer C [Member]
Goodwill [Line Items]
Goodwill	$ 68,356,000	$ 68,356,000									$ 68,356,000	$ 68,356,000
Terminal growth rate (in hundredths)											3.00%
Weighted average discount rate (in hundredths)											14.00%
Concentration Risk [Line Items]
Concentration risk percentage (in hundredths)			21.00%	[1]	15.00%	[1]	20.00%	[1]	13.00%	[1]			31.00%	20.80%

[1] As noted in Note 3, the Company discontinued supplying its undercar products to customer C but has retained the rotating electrical product line sales to this customer.

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Financial Risk Management and Derivatives (Details) (USD $)			3 Months Ended		6 Months Ended
	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2012 Forward Foreign Currency Exchange Contracts [Member] General and Administrative Expenses [Member]	Sep. 30, 2011 Forward Foreign Currency Exchange Contracts [Member] General and Administrative Expenses [Member]	Sep. 30, 2012 Forward Foreign Currency Exchange Contracts [Member] General and Administrative Expenses [Member]	Sep. 30, 2011 Forward Foreign Currency Exchange Contracts [Member] General and Administrative Expenses [Member]
Financial Risk Management and Derivatives [Abstract]
Notional amount of foreign currency derivatives	$ 15,039,000	$ 13,494,000
Derivative Instruments, Gain (Loss) [Line Items]
Forward foreign currency exchange contracts			431,000	(1,799,000)	340,000	(1,887,000)
Forward foreign currency exchange contracts included in prepaid expenses and other current assets	219,000
Forward foreign currency exchange contracts included in other current liabilities		$ 121,000

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Acquisition

6 Months Ended

Sep. 30, 2012

Acquisition [Abstract]

Acquisition

2. Acquisition

On May 6, 2011, the Company entered into and consummated transactions pursuant to the Purchase Agreement. Pursuant to the Purchase Agreement, the Company purchased (i) all of the outstanding equity of FAPL, (ii) all of the outstanding equity of Introcan, Inc., a Delaware corporation ("Introcan"), and (iii) 1% of the outstanding equity of Fapco S.A. de C.V., a Mexican variable capital company ("Fapco") (collectively, "Fenco"). Since FAPL owned 99% of Fapco prior to these acquisitions, the Company now owns 100% of Fapco.

The unaudited pro forma information presented is for illustrative purposes only and is not necessarily indicative of the results of operations that would have been realized if the acquisition had been completed on the date indicated, nor is it indicative of future operating results. The following historical financial information has been adjusted to give effect to pro forma events that are (i) directly attributable to the acquisition, (ii) factually supportable, and (iii) with respect to statements of operations, expected to have a continuing impact on the combined results, including the amortization of the fair value of the identifiable intangible assets and the cost of goods sold impact related to the fair value step-up of inventory acquired. The unaudited pro forma information does not reflect any operating efficiencies, associated cost savings or additional costs that the Company may achieve with respect to the combined companies.

The unaudited pro forma financial information presented below for the six months ended September 30, 2011 assumes the acquisition had occurred on April 1, 2011. Financial information presented below for the six months ended September 30, 2012 represents actual results of operations for the period.

 

	Six Months Ended
	September 30,
	2012			2011
Net sales	$	200,655,000		$	204,660,000
Operating income (loss)		(2,262,000	)		(6,430,000	)
Loss before income tax expense		(13,508,000	)		(12,526,000	)
Net loss		(18,795,000	)		(16,388,000	)
Basic net loss per share	$	(1.32	)	$	(1.33	)
Diluted net loss per share	$	(1.32	)	$	(1.33	)

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Debt (Details) (USD $)	3 Months Ended		6 Months Ended		0 Months Ended	6 Months Ended	0 Months Ended	6 Months Ended			40 Months Ended		0 Months Ended	3 Months Ended	6 Months Ended							1 Months Ended	6 Months Ended	12 Months Ended							1 Months Ended		3 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	May 24, 2012 Parent Company Financing Agreement [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member]	May 24, 2012 Parent Company Financing Agreement [Member] Term Loans [Member]	Sep. 30, 2013 Parent Company Financing Agreement [Member] Term Loans [Member]	Mar. 31, 2013 Parent Company Financing Agreement [Member] Term Loans [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Term Loans [Member]	Jan. 17, 2017 Parent Company Financing Agreement [Member] Term Loans [Member]	May 23, 2012 Parent Company Financing Agreement [Member] Term Loans [Member]	May 24, 2012 Parent Company Financing Agreement [Member] Term Loans [Member] Cerberus Warrant [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Term Loans [Member] Cerberus Warrant [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Term Loans [Member] Cerberus Warrant [Member]	Aug. 31, 2012 Parent Company Financing Agreement [Member] Term Loans [Member] Cerberus Warrant [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Revolving Facility [Member]	Mar. 31, 2012 Parent Company Financing Agreement [Member] Revolving Facility [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Revolving Facility [Member] Letter of Credit [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Revolving Facility [Member] Commercial Letter Of Credit [Member]	Sep. 30, 2012 Parent Company Financing Agreement [Member] Revolving Facility [Member] Standby Letters of Credit [Member]	Aug. 31, 2012 Fenco Credit Agreement [Member]	Sep. 30, 2013 Fenco Credit Agreement [Member] Term Loans [Member]	Sep. 30, 2014 Fenco Credit Agreement [Member] Term Loans [Member]	Sep. 30, 2012 Fenco Credit Agreement [Member] Term Loans [Member]	Jan. 01, 2013 Fenco Credit Agreement [Member] Revolving Facility [Member]	Sep. 30, 2012 Fenco Credit Agreement [Member] Revolving Facility [Member]	Aug. 31, 2012 Fenco Credit Agreement [Member] Revolving Facility [Member]	Mar. 31, 2012 Fenco Credit Agreement [Member] Revolving Facility [Member]	Sep. 30, 2012 Fenco Credit Agreement [Member] Revolving Facility [Member] Commercial Letter Of Credit [Member]	Aug. 31, 2012 Strategic Cooperation Agreement [Member]	Aug. 31, 2012 Strategic Cooperation Agreement [Member] Supplier Warrant [Member]	Sep. 30, 2012 Strategic Cooperation Agreement [Member] Supplier Warrant [Member]	Aug. 22, 2012 Strategic Cooperation Agreement [Member] Supplier Warrant [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 85,000,000					$ 75,000,000					$ 20,000,000		$ 10,000,000						$ 10,000,000	$ 50,000,000		$ 55,000,000			$ 22,000,000
Debt instrument, maturity date						Jan. 17, 2017																Oct. 06, 2014									Jul. 31, 2017
Authorized amount of additional investment in subsidiary						20,000,000
Additional borrowings										10,000,000
Reference interest rate							LIBOR
Interest rate over LIBOR rate under option 1 (in hundredths)							8.50%
Interest rate above LIBOR rate under option 2 (in hundredths)							7.50%
Quarterly principal payments								600,000	250,000		1,350,000												500,000	1,000,000
Financial covenants related to cash equivalents, removed under third amendment					10,000,000
Outstanding balance under revolving loan																	0	0		2,200,000	626,000						42,089,000		48,884,000	712,000
Amount available under revolving facility																	16,955,000										8,969,000
Credit facility reserved for certain expenses																											264,000
Credit facility available for accrued interest and other amounts payable																															2,000,000
Payment terms under the Strategic Cooperation Agreement																															120 days
Interest rate (in hundredths)																															1.00%
Minimum value of new automotive parts and components to be purchased under the agreement																															33,000,000
Maximum receivable sale option under the Strategic Cooperation Agreement																															8,000,000
Common stock issuances to settle obligations under the receivable sale option (in dollars per share)																															$ 7.75
Cash payments to settle obligations under the receivable sale option (in hundredths)																															135.00%
Number of shares that can be purchased under warrants (in shares)													100,000			219,355																516,129
Initial exercise price (in dollars per share)													$ 17.00			$ 7.75																$ 7.75
Warrant term													5 years																			2 years
Aggregate maximum number of shares obligated to issued under the Receivable Sale Option and Supplier Warrants (in shares)																															1,032,258
Fair value of warrants issued													607,000	357,000	357,000																		1,211,000	1,018,000
Total (gain) loss included in net loss (gain)	$ (67,000)	$ 0	$ (57,000)	$ 0										$ (260,000)	$ (250,000)																		$ 193,000
Interest rate added to federal funds rate (in hundredths)																											0.50%

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Major Customers (Tables)

6 Months Ended

Sep. 30, 2012

Major Customers [Abstract]

Schedule of Largest Customer and Suppliers

The Company's largest customers accounted for the following total percentage of net sales and accounts receivable — trade:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
Sales	2012			2011			2012			2011
Customer A		38	%		43	%		37	%		40	%
Customer B		16	%		7	%		16	%		8	%
Customer C (1)		21	%		15	%		20	%		13	%

Accounts receivable - trade	September 30, 2012			March 31, 2012
Customer A		29	%		31	%
Customer B		9	%		8	%
Customer C (1)		22	%		21	%

(1)As noted in Note 3, the Company discontinued supplying its undercar products to customer C but has retained the rotating electrical product line sales to this customer.

The Company's largest suppliers accounted for the following total percentage of raw materials purchases: 

	Three Months Ended						Six Months Ended
	September 30,						September 30,
Significant supplier purchases	2012			2011			2012			2011
Supplier A		19	%		11	%		18	%		13	%

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Inventory (Tables)

6 Months Ended

Sep. 30, 2012

Inventory [Abstract]

Schedule of Inventory

Inventory is comprised of the following:

	September 30, 2012			March 31, 2012
Non-core inventory
Raw materials	$	29,220,000		$	31,560,000
Work-in-process		190,000			153,000
Finished goods		59,705,000			72,171,000
		89,115,000			103,884,000
Less allowance for excess and obsolete inventory		(6,384,000	)		(8,813,000	)
Total	$	82,731,000		$	95,071,000
Inventory unreturned	$	9,318,000		$	9,819,000
Long-term core inventory
Used cores held at the Company's facilities	$	48,410,000		$	47,206,000
Used cores expected to be returned by customers		5,295,000			5,542,000
Remanufactured cores held in finished goods		22,553,000			25,751,000
Remanufactured cores held at customers' locations		120,446,000			118,402,000
		196,704,000			196,901,000
Less allowance for excess and obsolete inventory		(3,802,000	)		(2,495,000	)
Total	$	192,902,000		$	194,406,000
Long-term core inventory deposit	$	27,226,000		$	26,939,000

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Accounts Receivable Discount Programs (Details) (USD $)	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Accounts Receivable Discount Programs [Abstract]
Receivables discounted	$ 157,335,000	$ 133,222,000
Weighted average days	316 days	312 days
Annualized weighted average discount rate (in hundredths)	2.80%	2.90%
Amount of discount as interest expense	$ 3,824,000	$ 3,363,000

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Accounts Receivable Discount Programs (Tables)

6 Months Ended

Sep. 30, 2012

Accounts Receivable Discount Programs [Abstract]

Schedule of Accounts Receivable Discount Programs

The following is a summary of the Company's accounts receivable discount programs:

	Six Months Ended
	September 30,
	2012			2011
Receivables discounted	$	157,335,000		$	133,222,000
Weighted average days		316			312
Annualized weighted average discount rate		2.8	%		2.9	%
Amount of discount as interest expense	$	3,824,000		$	3,363,000

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Net Loss Per Share (Tables)

6 Months Ended

Sep. 30, 2012

Net Loss Per Share [Abstract]

Schedule of Reconciliation of Basic And Diluted Net Loss Per Share

The following presents a reconciliation of basic and diluted net loss per share.

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(8,933,000	)	$	(5,439,000	)	$	(18,795,000	)	$	(13,744,000	)
Basic shares		14,456,921			12,451,600			14,192,235			12,367,030
Effect of dilutive stock options and warrants		-			-			-			-
Diluted shares		14,456,921			12,451,600			14,192,235			12,367,030
Net loss per share:
Basic	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)
Diluted	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)

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Company Background and Organization

6 Months Ended

Sep. 30, 2012

Company Background and Organization [Abstract]

Company Background and Organization

1. Company Background and Organization

Motorcar Parts of America, Inc. and its subsidiaries (the "Company" or "MPA") is a leading manufacturer, remanufacturer, and distributor of aftermarket automobile parts. These replacement parts are sold for use on vehicles after initial vehicle purchase. These automotive parts are sold to automotive retail chain stores and warehouse distributors throughout North America and to major automobile manufacturers.

The Company obtains used automobile parts, commonly known as Used Cores, primarily from its customers under the Company's core exchange program. It also purchases Used Cores from vendors (core brokers). The customers grant credit to the consumer when the used part is returned to them, and the Company in turn provides a credit to the customers upon return to the Company. These Used Cores are an essential material needed for the remanufacturing operations.

The Company has remanufacturing, warehousing and shipping/receiving operations for automobile parts in North America and Asia. In addition, the Company utilizes various third party warehouse distribution centers in North America.

Pursuant to the guidance provided under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), the Company has two reportable segments, rotating electrical and undercar product line, based on the way the Company manages, evaluates and internally reports its business activities.

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Financial Risk Management and Derivatives (Tables)

6 Months Ended

Sep. 30, 2012

Financial Risk Management and Derivatives [Abstract]

Schedule of Derivative Instruments on Consolidated Statements of Operations

The following table shows the effect of the Company's derivative instruments on its consolidated statements of operations:

		Gain (Loss) Recognized within General and Administrative Expenses
		Three Months Ended					Six Months Ended
Derivatives Not Designated as		September 30,					September 30,
Hedging Instruments		2012		2011			2012		2011
Forward foreign currency exchange contracts	$	431,000	$	(1,799,000	)	$	340,000	$	(1,887,000	)

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Accounts Receivable - Net (Details) (USD $)	3 Months Ended				6 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011		Mar. 31, 2012
Accounts Receivable - Net [Abstract]
Accounts receivable - trade	$ 71,554,000				$ 71,554,000				$ 67,038,000
Allowance for bad debts	(934,000)				(934,000)				(968,000)
Customer allowances earned	(18,329,000)				(18,329,000)				(16,250,000)
Customer payment discrepancies	(624,000)				(624,000)				(280,000)
Customer returns RGA issued	(4,849,000)				(4,849,000)				(5,875,000)
Customer core returns accruals	(24,989,000)				(24,989,000)				(23,629,000)
Less: total accounts receivable offset accounts	(49,725,000)				(49,725,000)				(47,002,000)
Total accounts receivable - net	21,829,000				21,829,000				20,036,000
Warranty Returns [Abstract]
Warranty accrual included in customer returns RGA issued	2,336,000				2,336,000
Warranty accrual included in customer finished goods returns accrual	7,922,000				7,922,000
Change in Warranty Accrual [Roll Forward]
Balance at beginning of period	10,284,000		7,120,000		9,023,000		8,969,000
Charged to expense	18,977,000	[1]	17,783,000	[1]	35,578,000	[1]	30,626,000	[1]
Amounts processed	(19,003,000)	[1]	(17,579,000)	[1]	(34,343,000)	[1]	(32,271,000)	[1]
Balance at end of period	$ 10,258,000		$ 7,324,000		$ 10,258,000		$ 7,324,000

[1] Amounts shown above as warranty claims processed and charged to expense for three and six months ended September 30, 2011 have been reclassified to conform to the current year presentation.

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Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2012	Mar. 31, 2012
Current assets:
Cash	$ 32,328,000	$ 32,617,000
Short-term investments	368,000	342,000
Accounts receivable - net	21,829,000	20,036,000
Inventory- net	82,731,000	95,071,000
Inventory unreturned	9,318,000	9,819,000
Deferred income taxes	3,638,000	3,793,000
Prepaid expenses and other current assets	5,596,000	6,553,000
Total current assets	155,808,000	168,231,000
Plant and equipment - net	12,892,000	12,738,000
Long-term core inventory net	192,902,000	194,406,000
Long-term core inventory deposit	27,226,000	26,939,000
Long-term deferred income taxes	2,147,000	1,857,000
Goodwill	68,356,000	68,356,000
Intangible assets - net	21,399,000	22,484,000
Other assets	8,217,000	6,887,000
TOTAL ASSETS	488,947,000	501,898,000
Current liabilities:
Accounts payable	116,830,000	126,100,000
Accrued liabilities	23,749,000	19,379,000
Customer finished goods returns accrual	22,647,000	21,695,000
Other current liabilities	4,831,000	2,331,000
Current portion of term loan	1,700,000	500,000
Current portion of capital lease obligations	306,000	414,000
Total current liabilities	170,063,000	170,419,000
Term loan, less current portion	92,746,000	84,500,000
Revolving loan	42,089,000	48,884,000
Deferred core revenue	10,226,000	9,775,000
Customer core returns accrual	102,445,000	113,702,000
Other liabilities	2,779,000	751,000
Capital lease obligations, less current portion	124,000	248,000
Total liabilities	420,472,000	428,279,000
Commitments and contingencies
Statement [Line Items]
Preferred stock	0	0
Common stock; par value $.01 per share, 20,000,000 shares authorized;14,471,321 and 12,533,821 shares issued; 14,456,921 and 12,519,421 outstanding at September 30, 2012 and March 31, 2012, respectively	145,000	125,000
Treasury stock, at cost, 14,400 shares of common stock at September 30, 2012 and March 31, 2012, respectively	(89,000)	(89,000)
Additional paid-in capital	114,489,000	98,627,000
Additional paid-in capital-warrant	0	1,879,000
Accumulated other comprehensive loss	(1,236,000)	(884,000)
Accumulated deficit	(44,834,000)	(26,039,000)
Total shareholders' equity	68,475,000	73,619,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	488,947,000	501,898,000
Series A junior participating preferred stock [Member]
Statement [Line Items]
Preferred stock	$ 0	$ 0

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Net Loss Per Share (Details) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net Loss Per Share [Abstract]
Net income (loss)	$ (8,933,000)	$ (5,439,000)	$ (18,795,000)	$ (13,744,000)
Basic (in shares)	14,456,921	12,451,600	14,192,235	12,367,030
Effect of dilutive stock options and warrants (in shares)	0	0	0	0
Diluted shares (in shares)	14,456,921	12,451,600	14,192,235	12,367,030
Net loss per share [Abstract]
Basic (in dollars per share)	$ (0.62)	$ (0.44)	$ (1.32)	$ (1.11)
Diluted (in dollars per share)	$ (0.62)	$ (0.44)	$ (1.32)	$ (1.11)
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of earnings per share (in shares)	1,451,784	1,506,354	1,451,784	1,506,354
Exercise price of antidilutive options and warrants, minimum (in dollars per share)	$ 1.80	$ 1.80	$ 1.80	$ 1.80
Exercise price of antidilutive options and warrants, maximum (in dollars per share)	$ 15.06	$ 15.06	$ 15.06	$ 15.06
Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive shares excluded from computation of earnings per share (in shares)	735,484	546,283	735,484	546,283

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss	$ (18,795,000)	$ (13,744,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,643,000	2,685,000
Amortization of intangible assets	1,085,000	969,000
Amortization of deferred financing costs	796,000	43,000
Amortization of finished goods inventory step-up valuation	0	6,001,000
Gain due to change in fair value of warrant liability	(57,000)	0
Net (recovery of) provision for inventory reserves	(744,000)	294,000
Provision for customer payment discrepancies	521,000	59,000
Provision for doubtful accounts	151,000	46,000
Deferred income taxes	219,000	(316,000)
Share-based compensation expense	24,000	27,000
Impact of tax benefit on APIC pool from stock options exercised	1,000	67,000
Loss on disposal of assets	37,000	0
Changes in current assets and liabilities:
Accounts receivable	(2,465,000)	(5,833,000)
Inventory	14,724,000	(24,009,000)
Inventory unreturned	501,000	173,000
Prepaid expenses and other current assets	812,000	3,774,000
Other assets	(114,000)	(124,000)
Accounts payable and accrued liabilities	(5,204,000)	(3,543,000)
Customer finished goods returns accrual	952,000	(2,511,000)
Deferred core revenue	451,000	431,000
Long-term core inventory	(136,000)	(14,357,000)
Long-term core inventory deposits	(287,000)	(489,000)
Customer core returns accrual	(11,257,000)	4,860,000
Other liabilities	2,599,000	263,000
Net cash used in operating activities	(14,543,000)	(45,234,000)
Cash flows from investing activities:
Purchase of plant and equipment	(1,860,000)	(678,000)
Change in short term investments	(22,000)	(21,000)
Net cash used in investing activities	(1,882,000)	(699,000)
Cash flows from financing activities:
Borrowings under revolving loan	46,734,000	106,694,000
Repayments under revolving loan	(53,529,000)	(70,990,000)
Proceeds from term loan	10,000,000	10,000,000
Repayments of term loan	0	(1,000,000)
Deferred financing costs	(799,000)	0
Payments on capital lease obligations	(232,000)	(300,000)
Exercise of stock options	5,000	257,000
Excess tax benefit from employee stock options exercised	3,000	213,000
Impact of tax benefit on APIC pool from stock options exercised	(1,000)	(67,000)
Proceeds from issuance of common stock	15,004,000	0
Stock issuance costs	(1,034,000)	0
Net cash provided by financing activities	16,151,000	44,807,000
Effect of exchange rate changes on cash	(15,000)	(154,000)
Net increase (decrease) in cash	(289,000)	(1,280,000)
Cash - Beginning of period	32,617,000	2,477,000
Cash - End of period	32,328,000	1,197,000
Cash paid during the period for:
Interest	11,879,000	3,307,000
Income taxes	1,664,000	1,544,000
Non-cash investing and financing activities:
Common stock issued in business acquisition	0	4,946,000
Warrants issued in connection with debt	$ 1,625,000	$ 0

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Company Background and Organization (Details)	6 Months Ended
	Sep. 30, 2012
Company Background and Organization [Abstract]
Number of Reportable Segments	2

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Equity Transaction

6 Months Ended

Sep. 30, 2012

Equity Transaction [Abstract]

Equity Transaction

15. Equity Transaction

In April 2012, the Company entered into a Subscription Agreement and a Registration Rights Agreement to raise approximately $15,004,000 in gross proceeds and net proceeds of $13,970,000 after expenses through a private placement of its common stock. Pursuant to the terms of the Subscription Agreement, certain accredited investors purchased an aggregate of 1,936,000 shares of common stock in a private placement exempt from registration under the Securities Act in reliance upon Rule 506 of Regulation D, for a purchase price of $7.75 per share. The Company used the proceeds to enhance the integration of its Fenco acquisition and for general corporate purposes.

Pursuant to the Registration Rights Agreement, the Company has agreed to file a registration statement with the SEC to register for resale the common stock sold in the private placement not later than 45 days after the closing of the private placement and to use commercially reasonable efforts to cause such registration statement to be declared effective, subject to certain exceptions, within 60 days of closing (or 120 days in the event of an SEC review). Failure to meet these deadlines and certain other events may result in the Company's payment to the purchasers of liquidated damages in the amount of 1.0% of the purchase price per 30-day period pending filing of the registration statement, effectiveness of the registration statement or other events, as applicable. On June 12, 2012, the Company filed a registration statement under the Securities Act of 1933 to register the shares of common stock; however, the registration statement has yet to be declared effective and the Company began accruing liquidated damages starting on August 25, 2012. Liquidated damages may be settled either in cash or, at the option of the purchaser, in shares of the Company's common stock.  As of September 30, 2012, the Company had accrued $150,000 for the settlement of these liquidated damages.

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Acquisition (Details) (USD $)	6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	May 06, 2011 Fapco [Member]
Business Acquisition [Line Items]
Direct ownership interest acquired (in hundredths)			1.00%
FAPL's ownership interest prior to acquisition (in hundredths)			99.00%
Combined direct and indirect ownership interest subsequent to acquisition (in hundredths)			100.00%
Business Acquisition, Pro Forma Information [Abstract]
Net sales	$ 200,655,000	$ 204,660,000
Operating income (loss	(2,262,000)	(6,430,000)
Loss before income tax expense	(13,508,000)	(12,526,000)
Net loss	$ (18,795,000)	$ (16,388,000)
Basic net loss per share (in dollars per share)	$ (1.32)	$ (1.33)
Diluted net loss per share (in dollars per share)	$ (1.32)	$ (1.33)

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New Accounting Pronouncements

6 Months Ended

Sep. 30, 2012

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

17. New Accounting Pronouncements

Comprehensive Income

In June 2011, the FASB issued guidance which requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income, or in two separate but consecutive statements. This guidance eliminates the option to present components of other comprehensive income as a part of the statement of equity. This guidance should be applied, retrospectively, for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011. Other than the change in presentation, the Company has determined the changes from the adoption of this guidance on April 1, 2012 did not have an impact on its consolidated financial position and the results of operations.

Testing Goodwill for Impairment

In September 2011, the FASB issued an amendment which gives an entity the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step goodwill impairment test is unnecessary. If an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then it is required to perform the first step of the two-step goodwill impairment test. If the carrying value of the reporting unit exceeds its fair value, then the entity is required to perform the second step of the goodwill impairment test to measure the amount of the impairment loss, if any. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted if an entity's financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance on April 1, 2012 did not have any impact on the Company's consolidated financial position and the results of operations.

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Basis of Presentation

6 Months Ended

Sep. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2013. This report should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the fiscal year ended March 31, 2012, which are included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on September 28, 2012.

The accompanying consolidated financial statements have been prepared on a consistent basis with, and there have been no material changes to, the accounting policies described in Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements that are presented in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2012.

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2012	Mar. 31, 2012
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	5,000,000	5,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	20,000,000	20,000,000
Common stock, issued (in shares)	14,471,321	12,533,821
Common stock, outstanding (in shares)	14,456,921	12,519,421
Treasury stock, shares (in shares)	14,400	14,400
Series A Junior Participating Preferred Stock [Member]
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	20,000	20,000
Preferred stock, issued (in shares)	0	0

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Net Loss Per Share

6 Months Ended

Sep. 30, 2012

Net Loss Per Share [Abstract]

Net Loss Per Share

10. Net Loss Per Share

Basic net loss per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share includes the effect, if any, from the potential exercise or conversion of securities, such as stock options and warrants, which would result in the issuance of incremental shares of common stock.

The following presents a reconciliation of basic and diluted net loss per share.

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Net loss	$	(8,933,000	)	$	(5,439,000	)	$	(18,795,000	)	$	(13,744,000	)
Basic shares		14,456,921			12,451,600			14,192,235			12,367,030
Effect of dilutive stock options and warrants		-			-			-			-
Diluted shares		14,456,921			12,451,600			14,192,235			12,367,030
Net loss per share:
Basic	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)
Diluted	$	(0.62	)	$	(0.44	)	$	(1.32	)	$	(1.11	)

The effect of dilutive options and warrants excludes 1,451,784 shares subject to options and 735,484 shares subject to warrants with exercise prices ranging from $1.80 to $15.06 per share for the three and six months ended September 30, 2012 and 1,506,354 shares subject to options and 546,283 shares subject to warrants with exercise prices ranging from $1.80 to $15.06 per share for the three and six months ended September 30, 2011 — all of which were anti-dilutive.

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Document and Entity Information	6 Months Ended
	Sep. 30, 2012	Dec. 10, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	MOTORCAR PARTS AMERICA INC
Entity Central Index Key	0000918251
Current Fiscal Year End Date	--03-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,471,321
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012

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Income Taxes

6 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

11. Income Taxes

The Company recorded income tax expenses for the three and six months ended September 30, 2012 and 2011. This is primarily due to the federal and state income tax provision on pretax income in the U.S. and not recognizing income tax benefits related to the net losses of Fenco's Canadian operations for the three and six months ended September 30, 2012 and 2011 due to the recoverability of these tax benefits not being deemed by the Company to be more likely than not to be realized. In addition, for the three and six months ended September 30, 2012, the Company recorded $50,000 and $98,000, respectively, of income tax expense specifically related to the Fenco subsidiaries located in Mexico, a separate tax jurisdiction. For the three and six months ended September 30, 2011, the Company recorded $93,000 and $140,000, respectively, of income tax expense specifically related to the Fenco subsidiaries located in Mexico, a separate tax jurisdiction.

The income tax expenses, excluding the net losses of Fenco's Canadian operations, reflect income tax rates of 37.6% and 37.7% for the three and six months ended September 30, 2012, respectively. The income tax expenses, excluding the net losses of Fenco's Canadian operations, reflect effective income tax rates of 36.2% and 40.1% for the three and six months ended September 30, 2011, respectively. The income tax rates for all periods were higher than the federal statutory rates primarily due to state income taxes, which were partially offset by the benefit of lower statutory tax rates in foreign taxing jurisdictions.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions with varying statutes of limitations.

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Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Statements of Operations (Unaudited) [Abstract]
Net sales	$ 111,632,000	$ 107,616,000	$ 200,655,000	$ 178,126,000
Cost of goods sold	94,911,000	92,637,000	171,820,000	156,114,000
Gross profit	16,721,000	14,979,000	28,835,000	22,012,000
Operating expenses:
General and administrative	11,193,000	11,309,000	22,757,000	19,618,000
Sales and marketing	3,904,000	3,197,000	7,443,000	5,650,000
Research and development	461,000	401,000	897,000	817,000
Acquisition costs	0	309,000	0	713,000
Total operating expenses	15,558,000	15,216,000	31,097,000	26,798,000
Operating income (loss)	1,163,000	(237,000)	(2,262,000)	(4,786,000)
Interest expense, net	6,162,000	3,389,000	11,246,000	5,303,000
Loss before income tax expense	(4,999,000)	(3,626,000)	(13,508,000)	(10,089,000)
Income tax expense	3,934,000	1,813,000	5,287,000	3,655,000
Net loss	$ (8,933,000)	$ (5,439,000)	$ (18,795,000)	$ (13,744,000)
Basic net loss per share	$ (0.62)	$ (0.44)	$ (1.32)	$ (1.11)
Diluted net loss per share	$ (0.62)	$ (0.44)	$ (1.32)	$ (1.11)
Weighted average number of shares outstanding:
Basic (in shares)	14,456,921	12,451,600	14,192,235	12,367,030
Diluted (in shares)	14,456,921	12,451,600	14,192,235	12,367,030

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Accounts Receivable - Net

6 Months Ended

Sep. 30, 2012

Accounts Receivable - Net [Abstract]

Accounts Receivable - Net

5. Accounts Receivable — Net

Included in accounts receivable — net are significant offset accounts related to customer allowances earned, customer payment discrepancies, returned goods authorizations ("RGA") issued for in-transit unit returns, estimated future credits to be provided for Used Cores returned by the customers and potential bad debts. Due to the forward looking nature and the different aging periods of certain estimated offset accounts, they may not, at any point in time, directly relate to the balances in the open trade accounts receivable.

Accounts receivable — net is comprised of the following:

	September 30, 2012			March 31, 2012
Accounts receivable — trade	$	71,554,000		$	67,038,000
Allowance for bad debts		(934,000	)		(968,000	)
Customer allowances earned		(18,329,000	)		(16,250,000	)
Customer payment discrepancies		(624,000	)		(280,000	)
Customer returns RGA issued		(4,849,000	)		(5,875,000	)
Customer core returns accruals		(24,989,000	)		(23,629,000	)
Less: total accounts receivable offset accounts		(49,725,000	)		(47,002,000	)
Total accounts receivable — net	$	21,829,000		$	20,036,000

Warranty Returns

The Company allows its customers to return goods to the Company that their end-user customers have returned to them, whether the returned item is or is not defective (warranty returns). The Company accrues an estimate of its exposure to warranty returns based on a historical analysis of the level of this type of return as a percentage of total unit sales. Amounts charged to expense for these warranty returns are considered in arriving at the Company's net sales. At September 30, 2012, the warranty return accrual of $2,336,000 was included under the customer returns RGA issued in the above table and in accounts receivable - net in the consolidated balance sheets and the warranty estimate of $7,922,000 was included in customer finished goods returns accrual in the consolidated balance sheets.

Change in the Company's warranty return accrual is as follows:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	10,284,000		$	7,120,000		$	9,023,000		$	8,969,000
Charged to expense (1)		18,977,000			17,783,000			35,578,000			30,626,000	(1)
Amounts processed (1)		(19,003,000	)		(17,579,000	)		(34,343,000	)		(32,271,000	)(1)
Balance at end of period	$	10,258,000		$	7,324,000		$	10,258,000		$	7,324,000

(1)  Amounts shown above as warranty claims processed and charged to expense for three and six months ended September 30, 2011 have been reclassified to conform to the current year presentation.

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Intangible Assets

6 Months Ended

Sep. 30, 2012

Intangible Assets [Abstract]

Intangible Assets

4. Intangible Assets

Rotating Electrical Product Line

The following is a summary of the intangible assets attributable to the Company's rotating electrical product line segment subject to amortization at September 30, 2012 and March 31, 2012.

 

		September 30, 2012				March 31, 2012
	Weighted Average Amortization Period	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Trademarks	9 years	$	553,000	$	299,000	$	553,000	$	262,000
Customer relationships	12 years		6,464,000		2,420,000		6,464,000		2,096,000
Non-compete agreements	4 years		257,000		185,000		257,000		160,000
Total	11 years	$	7,274,000	$	2,904,000	$	7,274,000	$	2,518,000

Undercar Product Line

As noted in Note 3 above, the Company discontinued supplying its undercar products to a major unprofitable customer. As a result, the Company performed an interim impairment test of its intangible assets attributable to the Company's undercar product line segment and concluded that there was no impairment. .

The following is a summary of the undercar product line segment's intangible assets subject to amortization at September 30, 2012 and March 31, 2012.

 

		September 30, 2012				March 31, 2012
	Weighted Average Amortization Period	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Trademarks	20 years	$	11,159,000	$	779,000	$	11,159,000	$	500,000
Customer relationships	10 years		7,680,000		1,075,000		7,680,000		691,000
Non-compete agreements	2 years		144,000		100,000		144,000		64,000
Total	16 years	$	18,983,000	$	1,954,000	$	18,983,000	$	1,255,000

Consolidated amortization expense for acquired intangible assets for the three and six months ended September 30, 2012 and 2011 is as follows:

 

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Amortization expense	$	542,000	$	542,000	$	1,085,000	$	969,000

The consolidated aggregate estimated future amortization expense for intangible assets subject to amortization is as follows:

 

Year Ending March 31,
2013 - remaining 6 months	$	1,087,000
2014		2,070,000
2015		1,996,000
2016		1,675,000
2017		1,592,000
Thereafter		12,979,000
Total	$	21,399,000

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Subsequent Events

6 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

16. Subsequent Events

Equity Transaction

In December, 2012, the Company entered into a stock repurchase agreement (the "Stock Repurchase Agreement") with Mel Marks, the Company's founder, a member of the board of directors of the Company and consultant to the Company, and Melmarks Enterprises LLLP, a limited liability limited partnership controlled by Mr. Marks (the "Shareholders"), which, among other things, provides the Shareholders with the option to sell up to $300,000 of the Company's common stock held by the Shareholders (the "Shares") at a purchase price that is 10% below the average daily closing price per share of the Company's common stock for the five consecutive trading days immediately preceding the date of the notice of sale.

In connection with the Stock Repurchase Agreement, the Company entered into a fourth amendment to the Parent Company Financing Agreement (the "Fourth Amendment"), which, among other things, permitted the Company to repurchase the Shares pursuant to the Stock Repurchase Agreement.

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Financial Risk Management and Derivatives

6 Months Ended

Sep. 30, 2012

Financial Risk Management and Derivatives [Abstract]

Financial Risk Management and Derivatives

12. Financial Risk Management and Derivatives

Purchases and expenses denominated in currencies other than the U.S. dollar, which are primarily related to the Company's facilities overseas, expose the Company to market risk from material movements in foreign exchange rates between the U.S. dollar and the foreign currency. The Company's primary risk exposure is from changes in the rate between the U.S. dollar and the Mexican peso related to the operation of the Company's facilities in Mexico. The Company enters into forward foreign currency exchange contracts to exchange U.S. dollars for Mexican pesos in order to mitigate this risk. The extent to which forward foreign currency exchange contracts are used is modified periodically in response to management's estimate of market conditions and the terms and length of specific purchase requirements to fund those overseas facilities and purchases.

The Company enters into forward foreign currency exchange contracts in order to reduce the impact of foreign currency fluctuations and not to engage in currency speculation. The use of derivative financial instruments allows the Company to reduce its exposure to the risk that the eventual cash outflow resulting from funding the expenses of the foreign operations and purchases will be materially affected by changes in exchange rates. The Company does not hold or issue financial instruments for trading purposes. The forward foreign currency exchange contracts are designated for forecasted expenditure requirements to fund foreign operations and purchases.

The Company had forward foreign currency exchange contracts with a U.S. dollar equivalent notional value of $15,039,000 and $13,494,000 at September 30, 2012 and March 31, 2012, respectively. These contracts generally expire in a year or less, at rates agreed at the inception of the contracts. The counterparty to this derivative transaction is a major financial institution with investment grade or better credit rating; however, the Company is exposed to credit risk with this institution. The credit risk is limited to the potential unrealized gains (which offset currency fluctuations adverse to the Company) in any such contract should this counterparty fail to perform as contracted. Any changes in the fair values of forward foreign currency exchange contracts are reflected in current period earnings and accounted for as an increase or offset to general and administrative expenses.

The following table shows the effect of the Company's derivative instruments on its consolidated statements of operations:

		Gain (Loss) Recognized within General and Administrative Expenses
		Three Months Ended					Six Months Ended
Derivatives Not Designated as		September 30,					September 30,
Hedging Instruments		2012		2011			2012		2011
Forward foreign currency exchange contracts	$	431,000	$	(1,799,000	)	$	340,000	$	(1,887,000	)

The fair value of the forward foreign currency exchange contracts of $219,000 is included in prepaid expenses and other current assets in the consolidated balance sheet at September 30, 2012. The fair value of the forward foreign currency exchange contracts of $121,000 is included in other current liabilities in the consolidated balance sheet at March 31, 2012.

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Debt

6 Months Ended

Sep. 30, 2012

Debt [Abstract]

Debt

8. Debt

The Company has the following outstanding credit agreements.

Parent Company Credit Agreement

The Company has a financing agreement (the "Parent Company Financing Agreement") with a syndicate of lenders, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank, National Association, as administrative agent (the "Parent Company Loans"). The Parent Company Loans consist of: (i) term loans aggregating $75,000,000 (the "Parent Company Term Loans") and (ii) revolving loans of up to $20,000,000, subject to borrowing base restrictions and a $10,000,000 sublimit for letters of credit (the "Parent Company Revolving Loans,"). The Parent Company Loans mature on January 17, 2017. The lenders hold a security interest in substantially all of the assets of the Company's rotating electrical segment. The Parent Company Financing Agreement permits the Company to invest up to $20,000,000 in Fenco.

In May 2012, the Company entered into a second amendment to the Parent Company Financing Agreement (the "Second Amendment") and borrowed an additional $10,000,000, for an aggregate of $85,000,000 (the "Amended Parent Company Term Loans") in term loans. The Second Amendment, among other things, modified the interest rates per annum applicable to the Amended Parent Company Term Loans. The Amended Parent Company Term Loans will bear interest at rates equal to, at the Company's option, either LIBOR plus 8.5% or a base rate plus 7.5%.

The Amended Parent Company Term Loans require quarterly principal payments of $250,000 beginning on October 1, 2012 and increase to $600,000 per quarter on April 1, 2013 and to $1,350,000 on October 1, 2013 until the final maturity date. Among other things, the Second Amendment provides for certain amended financial covenants, and requires that the Company maintain cash and cash equivalents of up to $10,000,000 in the aggregate until its obligations with respect to a significant supplier have ceased.

In August 2012, the Company entered into a third amendment and waiver to the Parent Company Financing Agreement (the "Third Amendment") which, among other things, (i) permitted the Company to enter into the Fenco Credit Line described below, (ii) to make additional investments in Fenco in an aggregate amount not to exceed $20,000,000 at any time outstanding, (iii) added additional reporting requirements regarding financial reports and material notices under the Fenco Credit Line described below, and (iv) removed the Second Amendment requirement that the Company maintain cash and cash equivalents of up to $10,000,000.

The Parent Company Financing Agreement, as amended, among other things, requires the Company to maintain certain financial covenants including a maximum senior leverage ratio, a minimum fixed charge coverage ratio, and minimum consolidated earnings before interest, income tax, depreciation and amortization expenses ("EBITDA"). The Company was in compliance with all financial covenants and reporting requirements under the Parent Company Financing Agreement, as amended, as of September 30, 2012.

There was no outstanding balance on the Parent Company Revolving Loans at September 30, 2012 and March 31, 2012. As of September 30, 2012, $16,955,000 was available under the Parent Company Revolving Loans. The Company had reserved $626,000 of the Parent Company Revolving Loans for standby letters of credit for workers' compensation insurance and $2,200,000 for commercial letters of credit as of September 30, 2012.

In connection with the Second Amendment, the Company issued a warrant (the "Cerberus Warrant") to Cerberus Business Finance, LLC. Pursuant to the Cerberus Warrant, Cerberus Business Finance, LLC, may purchase up to 100,000 shares of the Company's common stock for an initial exercise price of $17.00 per share for a period of five years.  The exercise price is subject to adjustments, among other things, for sales of common stock by the Company at a price below the exercise price. As a result of the issuance of the Supplier Warrant in August 2012 (as described below) at an initial exercise price of $7.75 per share, the exercise price of the Cerberus Warrant was reduced to $7.75 per share. As the exercise price of the Cerberus Warrant was reduced, the number of shares of the Company's common stock that may be purchased upon the exercise of the Cerebus Warrant was increased to 219,355 so that the aggregate exercise price of the Cerberus Warrant after the adjustment is the same as the aggregate exercise price prior to the adjustment. The fair value of the Cerberus Warrant using the Monte Carlo simulation model was $607,000 at May 24, 2012 and $357,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012.During the three and six months ended September 30, 2012, a gain of $260,000 and $250,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

Fenco Credit Agreement

The Company's wholly-owned subsidiaries, FAPL and Introcan, as borrowers (the "Fenco Borrowers"), entered into an amended and restated credit agreement, dated May 6, 2011 (the "Fenco Credit Agreement") with Manufacturers and Traders Trust Company as lead arranger, M&T Bank as lender and administrative agent and the other lenders from time to time party thereto (the "Fenco Lenders"). Pursuant to the Fenco Credit Agreement, the Fenco Lenders have made available to the Fenco Borrowers a revolving credit facility in the maximum principal amount of $50,000,000 (the "Fenco Revolving Facility") and a term loan in the principal amount of $10,000,000 (the "Fenco Term Loan"). The availability of the Fenco Revolving Facility is subject to a borrowing base calculation consisting of eligible accounts receivable and eligible inventory.

In August 2012, Fenco entered into a second amendment to the Fenco Credit Agreement (the "Fenco Second Amendment") with the Fenco lenders which, among other things, (i) extended the maturity date to October 6, 2014, (ii) amended the maximum amount of the revolving facility to (y) $55,000,000 for the period up to and including December 31, 2012 and (z) $50,000,000 for the period on or after January 1, 2013 through October 6, 2014, (iii) replaced the repayment schedule and the amounts for the term loan to require quarterly principal payments of $500,000 beginning on June 30, 2013 and increasing to $1,000,000 per quarter beginning December 31, 2013 through September 30, 2014, with the remaining unpaid principal amount being due on the final maturity date, (iv) provided for certain mandatory prepayments of the term loan, and (v) revised certain financial covenants regarding minimum EBITDA, minimum fixed charge coverage, unused borrowing availability under the Fenco revolving credit facility, and maximum capital expenditures.  The maturity date may be accelerated upon the occurrence of an insolvency event or event of default under the Fenco Credit Agreement.

The outstanding balance on the Fenco Revolving Facility was $42,089,000 and $48,884,000 at September 30, 2012 and March 31, 2012, respectively. As of September 30, 2012, approximately $712,000 was reserved for standby commercial letters of credit and $264,000 was reserved for certain expenses. As of September 30, 2012, approximately $8,969,000 was available under the Fenco Revolving Facility. The Fenco Lenders hold a security interest in substantially all of the assets of the undercar product line segment.

The Fenco Borrowers may receive advances under the Fenco Revolving Facility by any one or more of the following options: (i) swingline advances in Canadian or US dollars; (ii) Canadian dollar prime-based loans; (iii) US dollar base rate loans; (iv) LIBOR loans; or (v) letters of credits.

The Fenco Term Loan bears interest at the LIBO rate plus an applicable margin. Outstanding advances under the Revolving Facility bear interest as follows:

(i) in respect of swingline advances in Canadian dollars and Canadian dollar prime-based loans, at the reference rate announced by the Royal Bank of Canada plus an applicable margin;

(ii) in respect of swingline advances in US dollars and US dollar base rate loans, at a base rate (which shall be equal to the highest of (x) M&T Bank's prime rate, (y) the Federal Funds Rate plus 1/2 of 1%, or (z) the one month LIBO rate) plus an applicable margin;

(iii) in respect of LIBOR loans, at the LIBO rate plus an applicable margin.

The Fenco Credit Agreement, as amended, among other things, requires the Fenco Borrowers to maintain certain financial covenants. As of September 30, 2012, the Fenco Borrowers were in compliance with all financial covenants and reporting requirements under the Fenco Credit Agreement.

Neither the Parent Company Financing Agreement nor the Fenco Credit Agreement contain any cross default provisions with respect to the other agreement.

Strategic Cooperation Agreement

In August 2012, the Company entered into a revolving credit agreement (the "Agreement") with Wanxiang America Corporation (the "Supplier") and Fenco. Under the terms of the Agreement, the Supplier agreed to provide a revolving credit line for purchases of automotive parts and components by Fenco in an aggregate principal amount not to exceed $22,000,000 (the "Fenco Credit Line"), of which $2,000,000 will only be available for accrued interest and other amounts payable (the "Obligations"). Payment for all purchases will be due and payable 120 days after the date of the bill of lading. Any amounts remaining unpaid following the due date will bear interest at a rate of 1% per month. The Fenco Credit Line will mature on July 31, 2017. Among other things, the Agreement requires that Fenco, on an annual basis, purchase at least approximately $33,000,000 of new automotive parts and components. After July 1, 2014, the Supplier has the right to settle up to $8,000,000 (the "Receivable Sale Option") of the Company's outstanding Obligations in exchange, at the Company's option, for (i) shares of the Company's common stock valued at $7.75 per share, subject to certain adjustments, or (ii) cash in an amount equal to 135% of the amount of the outstanding Obligations sold to the Company. Any outstanding Obligations settled by the Supplier will reduce the Fenco Credit Line. The Obligations under the Agreement are guaranteed by the Company and certain of its subsidiaries.

In connection with this Agreement, the Company also issued a warrant (the "Supplier Warrant") to the Supplier to purchase up to 516,129 shares of the Company's common stock for an initial exercise price of $7.75 per share exercisable at any time after two years from August 22, 2012 and on or prior to September 30, 2017. The exercise price is subject to adjustments, among other things, for sales of common stock by the Company at a price below the exercise price. Any outstanding Obligations settled by the Supplier will reduce the Fenco Credit Line. The Company is obligated to issue no more than an aggregate of 1,032,258 shares of its common stock in connection with the Receivable Sale Option and Supplier Warrant. The Obligations under this Agreement are subordinated to the Company's obligations under the Parent Company Financing Agreement. The fair value of the Supplier Warrant using the Monte Carlo simulation model was $1,018,000 at August 22, 2012, and $1,211,000 at September 30, 2012. This amount was recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. A loss of $193,000 was recorded in general and administrative expenses due to the change in the fair value of the warrant liability from the date of grant in August 2012.

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Inventory

6 Months Ended

Sep. 30, 2012

Inventory [Abstract]

Inventory

6. Inventory

Inventory is comprised of the following:

	September 30, 2012			March 31, 2012
Non-core inventory
Raw materials	$	29,220,000		$	31,560,000
Work-in-process		190,000			153,000
Finished goods		59,705,000			72,171,000
		89,115,000			103,884,000
Less allowance for excess and obsolete inventory		(6,384,000	)		(8,813,000	)
Total	$	82,731,000		$	95,071,000
Inventory unreturned	$	9,318,000		$	9,819,000
Long-term core inventory
Used cores held at the Company's facilities	$	48,410,000		$	47,206,000
Used cores expected to be returned by customers		5,295,000			5,542,000
Remanufactured cores held in finished goods		22,553,000			25,751,000
Remanufactured cores held at customers' locations		120,446,000			118,402,000
		196,704,000			196,901,000
Less allowance for excess and obsolete inventory		(3,802,000	)		(2,495,000	)
Total	$	192,902,000		$	194,406,000
Long-term core inventory deposit	$	27,226,000		$	26,939,000

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Major Customers

6 Months Ended

Sep. 30, 2012

Major Customers [Abstract]

Major Customers

7. Major Customers

The Company's largest customers accounted for the following total percentage of net sales and accounts receivable — trade:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
Sales	2012			2011			2012			2011
Customer A		38	%		43	%		37	%		40	%
Customer B		16	%		7	%		16	%		8	%
Customer C (1)		21	%		15	%		20	%		13	%

Accounts receivable - trade	September 30, 2012			March 31, 2012
Customer A		29	%		31	%
Customer B		9	%		8	%
Customer C (1)		22	%		21	%

(1)As noted in Note 3, the Company discontinued supplying its undercar products to customer C but has retained the rotating electrical product line sales to this customer.

The Company's largest suppliers accounted for the following total percentage of raw materials purchases: 

	Three Months Ended						Six Months Ended
	September 30,						September 30,
Significant supplier purchases	2012			2011			2012			2011
Supplier A		19	%		11	%		18	%		13	%

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Accounts Receivable Discount Programs

6 Months Ended

Sep. 30, 2012

Accounts Receivable Discount Programs [Abstract]

Accounts Receivable Discount Programs

9. Accounts Receivable Discount Programs

Both of the Company's segments use receivable discount programs with certain customers and their respective banks. Under these programs, the Company may sell those customers' receivables to those banks at a discount to be agreed upon at the time the receivables are sold. These discount arrangements allow the Company to accelerate collection of customers' receivables.

The following is a summary of the Company's accounts receivable discount programs:

	Six Months Ended
	September 30,
	2012			2011
Receivables discounted	$	157,335,000		$	133,222,000
Weighted average days		316			312
Annualized weighted average discount rate		2.8	%		2.9	%
Amount of discount as interest expense	$	3,824,000		$	3,363,000

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Segment Information (Tables)

6 Months Ended

Sep. 30, 2012

Segment Information [Abstract]

Schedule of information relating to the entity's reportable segments

The results of operations of Fenco have been included from the date of acquisition on May 6, 2011. Financial information relating to the Company's reportable segments is as follows:

	Three months ended September 30, 2012
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations		Consolidated
Net sales to external customers	$	57,652,000	$	53,980,000		$	-	$	111,632,000
Gross profit (loss)		20,096,000		(3,375,000	)		-		16,721,000
Operating income (loss)		13,519,000		(12,356,000	)		-		1,163,000
Net income (loss)		6,503,000		(15,436,000	)		-		(8,933,000	)

	Three months ended September 30, 2011
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations			Consolidated
Net sales to external customers	$	45,737,000	$	61,879,000		$	-		$	107,616,000
Intersegment revenue, net of cost		836,000		-			(836,000	)		-
Gross profit (loss)		15,091,000		(338,000	)		226,000			14,979,000
Operating income (loss)		5,480,000		(5,943,000	)		226,000			(237,000	)
Net income (loss)		3,026,000		(8,691,000	)		226,000			(5,439,000	)

	Six months ended September 30, 2012
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations		Consolidated
Net sales to external customers	$	104,451,000	$	96,204,000		$	-	$	200,655,000
Gross profit (loss)		34,915,000		(6,080,000	)		-		28,835,000
Operating income (loss)		20,216,000		(22,478,000	)		-		(2,262,000	)
Net income (loss)		8,870,000		(27,665,000	)		-		(18,795,000	)

	Six months ended September 30, 2011
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations			Consolidated
Net sales to external customers	$	84,753,000	$	93,373,000		$	-		$	178,126,000
Intersegment revenue, net of cost		1,612,000		-			(1,612,000	)		-
Gross profit (loss)		27,847,000		(5,835,000	)		-			22,012,000
Operating income (loss)		10,272,000		(15,058,000	)		-			(4,786,000	)
Net income (loss)		5,252,000		(18,996,000	)		-			(13,744,000	)

	September 30, 2012
	Rotating		Undercar
Selected balance sheet data	Electrical		Product Line			Eliminations			Consolidated
Current assets	$	109,690,000	$	75,441,000		$	(29,323,000	)	$	155,808,000
Non-current assets		213,781,000		173,922,000			(54,564,000	)		333,139,000
Total assets	$	323,471,000	$	249,363,000		$	(83,887,000	)	$	488,947,000
Current liabilities	$	68,704,000	$	130,682,000		$	(29,323,000	)	$	170,063,000
Non-current liabilities		95,813,000		204,214,000			(49,618,000	)		250,409,000
Total liabilities		164,517,000		334,896,000			(78,941,000	)		420,472,000
Equity (deficit)		158,954,000		(85,533,000	)		(4,946,000	)		68,475,000
Total liabilities and equity	$	323,471,000	$	249,363,000		$	(83,887,000	)	$	488,947,000

	March 31, 2012
	Rotating		Undercar
Selected balance sheet data	Electrical		Product Line			Eliminations			Consolidated
Current assets	$	115,451,000	$	81,778,000		$	(28,998,000	)	$	168,231,000
Non-current assets		179,167,000		186,896,000			(32,396,000	)		333,667,000
Total assets	$	294,618,000	$	268,674,000		$	(61,394,000	)	$	501,898,000
Current liabilities	$	72,987,000	$	126,430,000		$	(28,998,000	)	$	170,419,000
Non-current liabilities		85,201,000		200,112,000			(27,453,000	)		257,860,000
Total liabilities		158,188,000		326,542,000			(56,451,000	)		428,279,000
Equity (deficit).		136,430,000		(57,868,000	)		(4,943,000	)		73,619,000
Total liabilities and equity	$	294,618,000	$	268,674,000		$	(61,394,000	)	$	501,898,000

	Six months ended September 30, 2012
	Rotating			Undercar
Selected cash flow data	Electrical			Product Line			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	340,000		$	(14,883,000	)	$	-	$	(14,543,000	)
Net cash used in investing activities		(1,437,000	)		(445,000	)		-		(1,882,000	)
Net cash provided by (used in) financing activities		23,022,000			(6,871,000	)				16,151,000
Effect of exchange rate changes on cash		(15,000	)		-					(15,000	)
Cash — Beginning of period		32,379,000			238,000					32,617,000
Cash — End of period		31,921,000			407,000			-		32,328,000
Additional selected financial data
Depreciation and amortization	$	1,438,000		$	1,290,000		$	-	$	2,728,000
Capital expenditures		1,415,000			445,000			-		1,860,000

	Six months ended September 30, 2011
	Rotating			Undercar
Selected cash flow data	Electrical			Product Line			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	4,076,000		$	(49,310,000	)	$	-	$	(45,234,000	)
Net cash used in investing activities		(625,000	)		(74,000	)		-		(699,000	)
Net cash provided by financing activities		36,708,000			8,099,000			-		44,807,000
Effect of exchange rate changes on cash		(154,000	)		-			-		(154,000	)
Cash — Beginning of period		2,477,000			-			-		2,477,000
Cash — End of period		857,000			340,000			-		1,197,000
Additional selected financial data
Depreciation and amortization	$	1,777,000		$	1,877,000		$	-	$	3,654,000
Capital expenditures		604,000			74,000			-		678,000

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Subsequent Events (Details) (Subsequent Event [Member], Repurchase of Equity [Member], USD $)	1 Months Ended
	Dec. 31, 2012
Subsequent Event [Member] | Repurchase of Equity [Member]
Subsequent Event [Line Items]
Maximum amount of common stock to be sold by Shareholders	$ 300,000
Purchase price discount percentage (in hundredths)	10.00%
Number of consecutive trading days	5 days

XML

Segment Information

6 Months Ended

Sep. 30, 2012

Segment Information [Abstract]

Segment Information

14. Segment Information

The Company has two reportable segments, the rotating electrical segment and the undercar product line segment, based on the way the Company manages, evaluates and internally reports its business activities.

The rotating electrical segment is comprised of the Company's alternator and starter business. This segment remanufactures, produces, and distributes alternators and starters for import and domestic cars, light trucks, heavy duty, agricultural and industrial applications. These replacement parts are sold for use on vehicles after initial vehicle purchase.

The undercar product line segment manufactures, remanufactures and distributes new and remanufactured aftermarket auto parts, including steering components, brake calipers, master cylinders, hub assembly and bearings, clutches and clutch hydraulics for virtually all passenger and truck vehicles.

The Company's products are sold to automotive retail chain stores, warehouse distributors, and to major automobile manufacturers throughout North America.

The results of operations of Fenco have been included from the date of acquisition on May 6, 2011. Financial information relating to the Company's reportable segments is as follows:

	Three months ended September 30, 2012
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations		Consolidated
Net sales to external customers	$	57,652,000	$	53,980,000		$	-	$	111,632,000
Gross profit (loss)		20,096,000		(3,375,000	)		-		16,721,000
Operating income (loss)		13,519,000		(12,356,000	)		-		1,163,000
Net income (loss)		6,503,000		(15,436,000	)		-		(8,933,000	)

	Three months ended September 30, 2011
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations			Consolidated
Net sales to external customers	$	45,737,000	$	61,879,000		$	-		$	107,616,000
Intersegment revenue, net of cost		836,000		-			(836,000	)		-
Gross profit (loss)		15,091,000		(338,000	)		226,000			14,979,000
Operating income (loss)		5,480,000		(5,943,000	)		226,000			(237,000	)
Net income (loss)		3,026,000		(8,691,000	)		226,000			(5,439,000	)

	Six months ended September 30, 2012
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations		Consolidated
Net sales to external customers	$	104,451,000	$	96,204,000		$	-	$	200,655,000
Gross profit (loss)		34,915,000		(6,080,000	)		-		28,835,000
Operating income (loss)		20,216,000		(22,478,000	)		-		(2,262,000	)
Net income (loss)		8,870,000		(27,665,000	)		-		(18,795,000	)

	Six months ended September 30, 2011
	Rotating		Undercar
Selected income statement data	Electrical		Product Line			Eliminations			Consolidated
Net sales to external customers	$	84,753,000	$	93,373,000		$	-		$	178,126,000
Intersegment revenue, net of cost		1,612,000		-			(1,612,000	)		-
Gross profit (loss)		27,847,000		(5,835,000	)		-			22,012,000
Operating income (loss)		10,272,000		(15,058,000	)		-			(4,786,000	)
Net income (loss)		5,252,000		(18,996,000	)		-			(13,744,000	)

	September 30, 2012
	Rotating		Undercar
Selected balance sheet data	Electrical		Product Line			Eliminations			Consolidated
Current assets	$	109,690,000	$	75,441,000		$	(29,323,000	)	$	155,808,000
Non-current assets		213,781,000		173,922,000			(54,564,000	)		333,139,000
Total assets	$	323,471,000	$	249,363,000		$	(83,887,000	)	$	488,947,000
Current liabilities	$	68,704,000	$	130,682,000		$	(29,323,000	)	$	170,063,000
Non-current liabilities		95,813,000		204,214,000			(49,618,000	)		250,409,000
Total liabilities		164,517,000		334,896,000			(78,941,000	)		420,472,000
Equity (deficit)		158,954,000		(85,533,000	)		(4,946,000	)		68,475,000
Total liabilities and equity	$	323,471,000	$	249,363,000		$	(83,887,000	)	$	488,947,000

	March 31, 2012
	Rotating		Undercar
Selected balance sheet data	Electrical		Product Line			Eliminations			Consolidated
Current assets	$	115,451,000	$	81,778,000		$	(28,998,000	)	$	168,231,000
Non-current assets		179,167,000		186,896,000			(32,396,000	)		333,667,000
Total assets	$	294,618,000	$	268,674,000		$	(61,394,000	)	$	501,898,000
Current liabilities	$	72,987,000	$	126,430,000		$	(28,998,000	)	$	170,419,000
Non-current liabilities		85,201,000		200,112,000			(27,453,000	)		257,860,000
Total liabilities		158,188,000		326,542,000			(56,451,000	)		428,279,000
Equity (deficit).		136,430,000		(57,868,000	)		(4,943,000	)		73,619,000
Total liabilities and equity	$	294,618,000	$	268,674,000		$	(61,394,000	)	$	501,898,000

	Six months ended September 30, 2012
	Rotating			Undercar
Selected cash flow data	Electrical			Product Line			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	340,000		$	(14,883,000	)	$	-	$	(14,543,000	)
Net cash used in investing activities		(1,437,000	)		(445,000	)		-		(1,882,000	)
Net cash provided by (used in) financing activities		23,022,000			(6,871,000	)				16,151,000
Effect of exchange rate changes on cash		(15,000	)		-					(15,000	)
Cash — Beginning of period		32,379,000			238,000					32,617,000
Cash — End of period		31,921,000			407,000			-		32,328,000
Additional selected financial data
Depreciation and amortization	$	1,438,000		$	1,290,000		$	-	$	2,728,000
Capital expenditures		1,415,000			445,000			-		1,860,000

	Six months ended September 30, 2011
	Rotating			Undercar
Selected cash flow data	Electrical			Product Line			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	4,076,000		$	(49,310,000	)	$	-	$	(45,234,000	)
Net cash used in investing activities		(625,000	)		(74,000	)		-		(699,000	)
Net cash provided by financing activities		36,708,000			8,099,000			-		44,807,000
Effect of exchange rate changes on cash		(154,000	)		-			-		(154,000	)
Cash — Beginning of period		2,477,000			-			-		2,477,000
Cash — End of period		857,000			340,000			-		1,197,000
Additional selected financial data
Depreciation and amortization	$	1,777,000		$	1,877,000		$	-	$	3,654,000
Capital expenditures		604,000			74,000			-		678,000

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Intangible Assets (Tables)

6 Months Ended

Sep. 30, 2012

Intangible Assets [Abstract]

Schedule of Finite-Lived Intangible Assets

The following is a summary of the intangible assets attributable to the Company's rotating electrical product line segment subject to amortization at September 30, 2012 and March 31, 2012.

 

		September 30, 2012				March 31, 2012
	Weighted Average Amortization Period	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Trademarks	9 years	$	553,000	$	299,000	$	553,000	$	262,000
Customer relationships	12 years		6,464,000		2,420,000		6,464,000		2,096,000
Non-compete agreements	4 years		257,000		185,000		257,000		160,000
Total	11 years	$	7,274,000	$	2,904,000	$	7,274,000	$	2,518,000

The following is a summary of the undercar product line segment's intangible assets subject to amortization at September 30, 2012 and March 31, 2012.

 

		September 30, 2012				March 31, 2012
	Weighted Average Amortization Period	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Intangible assets subject to amortization
Trademarks	20 years	$	11,159,000	$	779,000	$	11,159,000	$	500,000
Customer relationships	10 years		7,680,000		1,075,000		7,680,000		691,000
Non-compete agreements	2 years		144,000		100,000		144,000		64,000
Total	16 years	$	18,983,000	$	1,954,000	$	18,983,000	$	1,255,000

Schedule of Amortization Expense for Acquired Intangible Assets

Consolidated amortization expense for acquired intangible assets for the three and six months ended September 30, 2012 and 2011 is as follows:

 

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2012		2011		2012		2011
Amortization expense	$	542,000	$	542,000	$	1,085,000	$	969,000

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The consolidated aggregate estimated future amortization expense for intangible assets subject to amortization is as follows:

 

Year Ending March 31,
2013 - remaining 6 months	$	1,087,000
2014		2,070,000
2015		1,996,000
2016		1,675,000
2017		1,592,000
Thereafter		12,979,000
Total	$	21,399,000

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Segment Information (Details) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Mar. 31, 2012
Segment Information [Abstract]
Number of reportable segments			2
Selected income statement data [Abstract]
Net sales to external customers	$ 111,632,000	$ 107,616,000	$ 200,655,000	$ 178,126,000
Intersegment revenue, net of cost		0		0
Gross profit (loss)	16,721,000	14,979,000	28,835,000	22,012,000
Operating income (loss)	1,163,000	(237,000)	(2,262,000)	(4,786,000)
Net income (loss)	(8,933,000)	(5,439,000)	(18,795,000)	(13,744,000)
Selected balance sheet data [Abstract]
Current assets	155,808,000		155,808,000		168,231,000
Non-current assets	333,139,000		333,139,000		333,667,000
TOTAL ASSETS	488,947,000		488,947,000		501,898,000
Current liabilities	170,063,000		170,063,000		170,419,000
Non-current liabilities	250,409,000		250,409,000		257,860,000
Total liabilities	420,472,000		420,472,000		428,279,000
Equity (deficit)	68,475,000		68,475,000		73,619,000
Total liabilities and equity	488,947,000		488,947,000		501,898,000
Selected Cash Flow Information [Abstract]
Net cash provided by (used in) operating activities			(14,543,000)	(45,234,000)
Net cash used in investing activities			(1,882,000)	(699,000)
Net cash provided by (used in) financing activities			16,151,000	44,807,000
Effect of exchange rate changes on cash			(15,000)	(154,000)
Cash - Beginning of period			32,617,000	2,477,000
Cash - End of period	32,328,000	1,197,000	32,328,000	1,197,000
Additional selected financial data [Abstract]
Depreciation and amortization			2,728,000	3,654,000
Capital expenditures			1,860,000	678,000
Rotating Electrical [Member]
Selected income statement data [Abstract]
Net sales to external customers	57,652,000	45,737,000	104,451,000	84,753,000
Intersegment revenue, net of cost		836,000		1,612,000
Gross profit (loss)	20,096,000	15,091,000	34,915,000	27,847,000
Operating income (loss)	13,519,000	5,480,000	20,216,000	10,272,000
Net income (loss)	6,503,000	3,026,000	8,870,000	5,252,000
Selected balance sheet data [Abstract]
Current assets	109,690,000		109,690,000		115,451,000
Non-current assets	213,781,000		213,781,000		179,167,000
TOTAL ASSETS	323,471,000		323,471,000		294,618,000
Current liabilities	68,704,000		68,704,000		72,987,000
Non-current liabilities	95,813,000		95,813,000		85,201,000
Total liabilities	164,517,000		164,517,000		158,188,000
Equity (deficit)	158,954,000		158,954,000		136,430,000
Total liabilities and equity	323,471,000		323,471,000		294,618,000
Selected Cash Flow Information [Abstract]
Net cash provided by (used in) operating activities			340,000	4,076,000
Net cash used in investing activities			(1,437,000)	(625,000)
Net cash provided by (used in) financing activities			23,022,000	36,708,000
Effect of exchange rate changes on cash			(15,000)	(154,000)
Cash - Beginning of period			32,379,000	2,477,000
Cash - End of period	31,921,000	857,000	31,921,000	857,000
Additional selected financial data [Abstract]
Depreciation and amortization			1,438,000	1,777,000
Capital expenditures			1,415,000	604,000
Undercar Product Line [Member]
Selected income statement data [Abstract]
Net sales to external customers	53,980,000	61,879,000	96,204,000	93,373,000
Intersegment revenue, net of cost		0		0
Gross profit (loss)	(3,375,000)	(338,000)	(6,080,000)	(5,835,000)
Operating income (loss)	(12,356,000)	(5,943,000)	(22,478,000)	(15,058,000)
Net income (loss)	(15,436,000)	(8,691,000)	(27,665,000)	(18,996,000)
Selected balance sheet data [Abstract]
Current assets	75,441,000		75,441,000		81,778,000
Non-current assets	173,922,000		173,922,000		186,896,000
TOTAL ASSETS	249,363,000		249,363,000		268,674,000
Current liabilities	130,682,000		130,682,000		126,430,000
Non-current liabilities	204,214,000		204,214,000		200,112,000
Total liabilities	334,896,000		334,896,000		326,542,000
Equity (deficit)	(85,533,000)		(85,533,000)		(57,868,000)
Total liabilities and equity	249,363,000		249,363,000		268,674,000
Selected Cash Flow Information [Abstract]
Net cash provided by (used in) operating activities			(14,883,000)	(49,310,000)
Net cash used in investing activities			(445,000)	(74,000)
Net cash provided by (used in) financing activities			(6,871,000)	8,099,000
Effect of exchange rate changes on cash			0	0
Cash - Beginning of period			238,000	0
Cash - End of period	407,000	340,000	407,000	340,000
Additional selected financial data [Abstract]
Depreciation and amortization			1,290,000	1,877,000
Capital expenditures			445,000	74,000
Eliminations [Member]
Selected income statement data [Abstract]
Net sales to external customers	0	0	0	0
Intersegment revenue, net of cost		(836,000)		(1,612,000)
Gross profit (loss)	0	226,000	0	0
Operating income (loss)	0	226,000	0	0
Net income (loss)	0	226,000	0	0
Selected balance sheet data [Abstract]
Current assets	(29,323,000)		(29,323,000)		(28,998,000)
Non-current assets	(54,564,000)		(54,564,000)		(32,396,000)
TOTAL ASSETS	(83,887,000)		(83,887,000)		(61,394,000)
Current liabilities	(29,323,000)		(29,323,000)		(28,998,000)
Non-current liabilities	(49,618,000)		(49,618,000)		(27,453,000)
Total liabilities	(78,941,000)		(78,941,000)		(56,451,000)
Equity (deficit)	(4,946,000)		(4,946,000)		(4,943,000)
Total liabilities and equity	(83,887,000)		(83,887,000)		(61,394,000)
Selected Cash Flow Information [Abstract]
Net cash provided by (used in) operating activities			0	0
Net cash used in investing activities			0	0
Net cash provided by (used in) financing activities				0
Effect of exchange rate changes on cash				0
Cash - Beginning of period				0
Cash - End of period	0	0	0	0
Additional selected financial data [Abstract]
Depreciation and amortization			0	0
Capital expenditures			$ 0	$ 0

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Inventory (Details) (USD $)	Sep. 30, 2012	Mar. 31, 2012
Non-core inventory [Abstract]
Raw materials	$ 29,220,000	$ 31,560,000
Work in process	190,000	153,000
Finished goods	59,705,000	72,171,000
Non-core inventory, gross	89,115,000	103,884,000
Less allowance for excess and obsolete inventory	(6,384,000)	(8,813,000)
Total	82,731,000	95,071,000
Inventory unreturned	9,318,000	9,819,000
Long-term core inventory [Abstract]
Used cores held at the Company's facilities	48,410,000	47,206,000
Used cores expected to be returned by customers	5,295,000	5,542,000
Remanufactured cores held in finished goods	22,553,000	25,751,000
Remanufactured cores held at customers' locations	120,446,000	118,402,000
Long-term core inventory - gross	196,704,000	196,901,000
Less allowance for excess and obsolete inventory	(3,802,000)	(2,495,000)
Total	192,902,000	194,406,000
Long-term core inventory deposit	$ 27,226,000	$ 26,939,000

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Consolidated Statements of Comprehensive Loss (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Consolidated Statements of Comprehensive Loss (Unaudited) [Abstract]
Net loss	$ (8,933,000)	$ (5,439,000)	$ (18,795,000)	$ (13,744,000)
Other Comprehensive income (loss), net of tax:
Unrealized gain (loss) on short-term investments	9,000	(26,000)	2,000	(26,000)
Foreign currency translation	193,000	(731,000)	(354,000)	(446,000)
Total other comprehensive income (loss), net of tax	202,000	(757,000)	(352,000)	(472,000)
Comprehensive loss	$ (8,731,000)	$ (6,196,000)	$ (19,147,000)	$ (14,216,000)

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Goodwill

6 Months Ended

Sep. 30, 2012

Goodwill [Abstract]

Goodwill

3. Goodwill

At September 30, 2012 and March 31, 2012, the Company had $68,356,000 of goodwill recorded in the Company's undercar product line segment in connection with its May 2011 acquisition.

During the second quarter of fiscal 2013, the Company discontinued supplying its undercar products to a major non-profitable customer of the undercar product line segment. The net sales to this customer represented approximately 31.0% for the six months ended September 30, 2012 and 20.8% for the year ended March 31, 2012 from the date of acquisition on May 6, 2011, of net sales for the undercar product line segment. As a result, the Company performed an interim impairment test of the related goodwill and intangible assets as of the end of the second quarter of fiscal 2013.

The Company evaluates whether goodwill has been impaired at the reporting unit level by first determining whether the estimated fair value of the reporting unit is less than its carrying value and, if so, by determining whether the implied fair value of goodwill within the reporting unit is less than the carrying value. The Company determined the fair value of the reporting unit based on an equal weighting of: (1) a discounted cash flow method, (2) guideline company method, and (3) guideline transaction method.  The discounted cash flow analysis establishes fair value by estimating the present value of the projected future cash flows of a reporting unit and applying a 3% terminal growth rate. The present value of estimated discounted future cash flow is determined using significant estimates of revenue and costs for the reporting unit, driven by assumed growth rates, as well as appropriate discount rates. The discount rate of 14% was determined using a weighted average cost of capital that incorporates long term government bonds, effective cost of debt, and the cost of equity of similar guideline companies. The market approach is calculated using market multiples and comparable transaction data for guideline companies. The guideline information was based on publicly available information. A valuation multiple was selected based on a financial benchmarking analysis that compared the reporting unit's benchmark results with the guideline information. In addition to these financial considerations, qualitative factors such as business descriptions, markets served, and profitability were considered in the ultimate selection of the multiple used to estimate a value on a minority basis. The selection and weighting of the various fair value techniques may result in a higher or lower fair value. Judgment is applied in determining the weightings that are most representative of fair value. Management has performed sensitivity analysis on its significant assumptions and has determined that a change in its assumptions within selected sensitivity testing levels would not impact its conclusion. Based on the results of the Company's interim analysis of goodwill as of the end of second quarter of fiscal 2013, the reporting unit's fair value exceeded its carrying value, indicating that there was no goodwill impairment.

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Accounts Receivable - Net (Tables)

6 Months Ended

Sep. 30, 2012

Accounts Receivable - Net [Abstract]

Schedule of Accounts Receivable

Accounts receivable — net is comprised of the following:

	September 30, 2012			March 31, 2012
Accounts receivable — trade	$	71,554,000		$	67,038,000
Allowance for bad debts		(934,000	)		(968,000	)
Customer allowances earned		(18,329,000	)		(16,250,000	)
Customer payment discrepancies		(624,000	)		(280,000	)
Customer returns RGA issued		(4,849,000	)		(5,875,000	)
Customer core returns accruals		(24,989,000	)		(23,629,000	)
Less: total accounts receivable offset accounts		(49,725,000	)		(47,002,000	)
Total accounts receivable — net	$	21,829,000		$	20,036,000

Schedule of Warranty Return Accrual

Change in the Company's warranty return accrual is as follows:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2012			2011			2012			2011
Balance at beginning of period	$	10,284,000		$	7,120,000		$	9,023,000		$	8,969,000
Charged to expense (1)		18,977,000			17,783,000			35,578,000			30,626,000	(1)
Amounts processed (1)		(19,003,000	)		(17,579,000	)		(34,343,000	)		(32,271,000	)(1)
Balance at end of period	$	10,258,000		$	7,324,000		$	10,258,000		$	7,324,000

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Intangible Assets (Details) (USD $)	6 Months Ended
	Sep. 30, 2012	Mar. 31, 2012
Rotating Electrical [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	11 years
Gross Carrying Value	$ 7,274,000	$ 7,274,000
Accumulated Amortization	2,904,000	2,518,000
Rotating Electrical [Member] | Trademarks [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	9 years
Gross Carrying Value	553,000	553,000
Accumulated Amortization	299,000	262,000
Rotating Electrical [Member] | Customer Relationships [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	12 years
Gross Carrying Value	6,464,000	6,464,000
Accumulated Amortization	2,420,000	2,096,000
Rotating Electrical [Member] | Non-compete Agreements [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	4 years
Gross Carrying Value	257,000	257,000
Accumulated Amortization	185,000	160,000
Undercar Product Line [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	16 years
Gross Carrying Value	18,983,000	18,983,000
Accumulated Amortization	1,954,000	1,255,000
Undercar Product Line [Member] | Trademarks [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	20 years
Gross Carrying Value	11,159,000	11,159,000
Accumulated Amortization	779,000	500,000
Undercar Product Line [Member] | Customer Relationships [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	10 years
Gross Carrying Value	7,680,000	7,680,000
Accumulated Amortization	1,075,000	691,000
Undercar Product Line [Member] | Non-compete Agreements [Member]
Finite-lived intangible assets, net [Abstract]
Weighted Average Amortization Period	2 years
Gross Carrying Value	144,000	144,000
Accumulated Amortization	$ 100,000	$ 64,000

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Fair Value Measurements

6 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

13. Fair Value Measurements

The following table summarizes the Company's financial assets and liabilities measured at fair value, by level within the fair value hierarchy as of September 30, 2012 and March 31, 2012:

	September 30, 2012								March 31, 2012
			Fair Value Measurements								Fair Value Measurements
			Using Inputs Considered as								Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Assets
Short-term investments
Mutual funds	$	368,000	$	368,000		-		-	$	342,000	$	342,000		-		-
Prepaid expenses and other current assets
Forward foreign currency exchange contracts		219,000		-	$	219,000		-		-		-	$	-		-
Liabilities
Other current liabilities
Deferred compensation		368,000		368,000		-		-		342,000		342,000		-		-
Forward foreign currency exchange contracts		-		-		-		-		121,000		-	$	121,000		-
Other liabilities
Warrant liability		1,568,000		-		-	$	1,568,000		-		-		-		-

The Company's short-term investments, which fund its deferred compensation liabilities, consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable the Company to obtain pricing information on an ongoing basis.

The forward foreign currency exchange contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers. During the three months ended September 30, 2012 and 2011, a gain of $431,000 and a loss of $1,799,000, respectively, was recorded in general and administrative expenses due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts. During the six months ended September 30, 2012 and 2011, a gain of $340,000 and a loss of $1,887,000, respectively, was recorded in general and administrative expenses due to the change in the value of the forward foreign currency exchange contracts subsequent to entering into the contracts.

The Company estimates the fair value of the warrant liability using level 3 inputs and the Monte Carlo simulation model at each balance sheet date. This amount is recorded as a warrant liability which is included in other liabilities in the consolidated balance sheet at September 30, 2012. Any subsequent changes in the fair value of the warrant liability will be recorded in current period earnings as a general and administrative expense. During the three and six months ended September 30, 2012, a gain of $67,000 and $57,000, respectively, was recorded in general and administrative expenses due to the change in the fair value of the warrant liability.

The assumptions used to determine the fair value of the Cerberus Warrant and the Supplier Warrant recorded as warrant liability were:

	September 30, 2012
	Cerberus Warrant			Supplier Warrant
Risk free interest rate		0.54	%		0.62	%
Expected life in years		4.65			5.00
Expected volatility		55.93	%		56.59	%
Dividend yield		-			-
Probability of future financing		0	%		0	%

The risk free interest rate used was based on U.S. treasury-note yields with terms commensurate with the remaining term of the warrants. The expected life is based on the remaining contractual term of the warrants and the expected volatility is based on the Company's daily historical volatility over a period commensurate with the remaining term of the warrants.

A summary of the change to the Company's warrant liability, as measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is presented below:

	Three Months Ended					Six Months Ended
	September 30,					September 30,
	2012			2011		2012			2011
Beginning balance	$	617,000		$	-	$	-		$	-
Newly issued		1,018,000			-		1,625,000			-
Total (gain) loss included in net loss		(67,000	)		-		(57,000	)		-
Warrants exercised		-			-		-			-
Net transfers in (out) of Level 3		-			-		-			-
Ending balance	$	1,568,000		$	-	$	1,568,000		$	-

During the three and six months ended September 30, 2012, the Company had no significant measurements of assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

The carrying amounts of cash, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short-term nature of these instruments. The carrying amounts of the revolving loans, term loans and other long-term liabilities approximate their fair value based on current rates for instruments with similar characteristics.