EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm

EXHIBIT 99.1
Graphic

  CONTACT:
Gary S. Maier
 
Maier & Company, Inc.
 
(310) 471-1288

MOTORCAR PARTS OF AMERICA REPORTS FISCAL 2013
FOURTH QUARTER AND YEAR-END RESULTS

—Rotating Electrical Sales Up 18.2 Percent for Year—

LOS ANGELES, CA – June 17, 2013 – Motorcar Parts of America, Inc.
 
(Nasdaq: MPAA) today reported results for its fiscal 2013 fourth quarter and year ended March 31, 2013 – reflecting record sales for its rotating electrical business offset by the establishment of specific charge-off accruals related to its former undercar business segment.
 
Rotating electrical net sales for the fiscal 2013 fourth quarter increased 11.8 percent to $58.0 million from $51.9 million for the same period last year.  Gross profit for the rotating electrical segment for the fourth quarter was $18.1 million compared with $16.8 million a year earlier.  Gross profit as a percentage of sales for the rotating electrical segment was 31.2 percent compared with 32.5 percent last year.  Excluding certain undercar-related costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted EBITDA for the company’s rotating electrical segment was $10.5 million compared with $10.3 million for the same period a year earlier, and adjusted net income was $3.6 million, or $0.26 per diluted share, compared with $3.7 million, or $0.30 per diluted share, for the same period a year earlier.
 
The company reported a consolidated net loss for the fiscal 2013 fourth quarter of $73.7 million, or $5.09 per share, compared with a net loss of $12.9 million, or $1.03 per share, a year earlier.  Consolidated results include specific charge-off accruals related to the company’s investment in its former undercar business segment, and the required impairment of all intangible assets on Fenco’s balance sheet as a result of its pending liquidation.  On a non-GAAP adjusted basis, consolidated net loss was $2.1 million, or $0.14 per share compared with a net loss of $4.0 million, or $0.32 per share, a year ago.
 
Rotating electrical net sales for fiscal 2013 increased 18.2 percent to $213.2 million from $180.4 million for the prior fiscal year.  Gross profit for the rotating electrical segment for fiscal 2013 was $69.3 million compared with $57.3 million a year earlier.  Gross profit as a percentage of sales for the rotating electrical segment was 32.5 percent compared with 31.8 percent last year.  Excluding certain undercar-related costs and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, adjusted EBITDA for the company’s rotating electrical segment was $41.2 million compared with $32.1 million for the prior fiscal year, and adjusted net income was $13.8 million, or $0.98 per diluted share, reflecting higher interest expense, compared with $13.0 million, or $1.04 per diluted share, for fiscal 2012.
 
(more)
 
 
 

 

Motorcar Parts of America, Inc.
2-2-2

The company reported a consolidated net loss for fiscal 2013 of $91.5 million, or $6.39 per share, compared with a net loss of $48.5 million, or $3.90 per share, a year ago. Consolidated results include specific charge-off accruals related to the company’s investment in its former undercar business segment, and the required impairment of all intangible assets on Fenco’s balance sheet as a result of its pending liquidation.  On a non-GAAP adjusted basis, consolidated net loss was $12.2 million, or $0.85 per share compared with a net loss of $10.4 million, or $0.84 per share for the same period a year earlier.
 
“While we had made significant progress in our turnaround efforts for Fenco, it became clear that the cost savings and operational efficiencies that we achieved were not sufficient to continue our investment under the existing economic model.  However, our rotating electrical business is the cornerstone of our company and it is performing well. We expect continued growth, supported by strong liquidity with a cash position of $19.0 million and approximately $18.0 million available under the company’s revolving credit facility at fiscal year end.  Our management team is resilient, our customers are supportive and we look forward to the opportunities ahead,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
 
Joffe noted that the company expects to realize tax benefits of approximately $30 million as a result of the losses incurred through Fenco, which should further enhance Motorcar Parts of America’s liquidity.
 
He added that during the fourth quarter the company repurchased an aggregate 135, 327 shares and vested options at a weighted average price of $4.84, or a total of $654,675.

Use of Non-GAAP Measures
 
We define adjusted net loss as net loss adjusted for matters affecting net sales for our undercar product line, financing, consulting and other fees, share-based compensation expense, undercar product lines not supported, and other matters.  We define Adjusted EBITDA as adjusted net income (loss), plus interest expense, income tax expense and depreciation and amortization.  We calculate those measures for the entire company as well as the rotating electrical segment.  Adjusted net loss does not reflect many items that affect the company’s net loss, including many items related to Fenco.  Adjusted EBITDA does not reflect the impact of a number of items that affect the company’s net income, including financing, transition and acquisition-related costs.  Adjusted EBITDA and adjusted net loss are not measures of financial performance under GAAP, and should not be considered as alternatives to net income or income from operations as a measure of liquidity.  Adjusted EBITDA and adjusted net loss have significant limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of the company’s results as reported under GAAP.  For a reconciliation of net income (loss) to Adjusted EBITDA and adjusted net loss, for the company and the rotating electrical segment, see the financial tables included in the press release.

(more)
 
 
 

 
 
Motorcar Parts of America, Inc.
3-3-3

Teleconference and Web Cast
 
Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call the same day at 10:00 a.m. Pacific time to discuss the company’s financial results and operations.
 
The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (international).  For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America’s website www.motorcarparts.com.  A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time on Monday, June 17, 2013 through 8:59 p.m. Pacific time on Monday, June 24, 2013 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 93948671.
 
About Motorcar Parts of America
 
Motorcar Parts of America, Inc. is a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications.  Motorcar Parts of America’s products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices located in California, Tennessee, Mexico, Singapore and Malaysia.  Additional information is available at www.motorcarparts.com.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. The statements contained in this press release that are not historical facts are forward-looking statements based on the company’s current expectations and beliefs concerning future developments and their potential effects on the company. These forward-looking statements involve significant risks and uncertainties (some of which are beyond the control of the company) and are subject to change based upon various factors.  Reference is also made to the Risk Factors set forth in the company’s Form 10-K Annual Report filed with the Securities and Exchange Commission (SEC) in September 2012 and in its Forms 10-Q filed with the SEC for additional risks and uncertainties facing the company. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
 
#      #      #
 
(Financial tables follow)
 
 
 

 
 
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
 
   
Three Months Ended
   
Twelve Months Ended
 
   
March 31,
   
March 31,
 
 
 
2013
   
2012
   
2013
   
2012
 
   
(Unaudited)
             
                         
Net sales
  $ 89,336,000     $ 101,464,000     $ 406,266,000     $ 363,687,000  
Cost of goods sold
    86,486,000       94,188,000       350,538,000       335,980,000  
Gross profit
    2,850,000       7,276,000       55,728,000       27,707,000  
Operating expenses:
                               
General and administrative
    8,990,000       9,108,000       44,526,000       38,881,000  
Sales and marketing
    2,583,000       3,785,000       12,713,000       12,804,000  
Research and development
    924,000       495,000       2,628,000       1,765,000  
Impairment of goodwill and intangible assets
    84,686,000       -       84,686,000       -  
Impairment of plant and equipment
    -       -       -       1,031,000  
Acquisition costs
    -       -       -       713,000  
Total operating expenses
    97,183,000       13,388,000       144,553,000       55,194,000  
Operating (loss) income
    (94,333,000 )     (6,112,000 )     (88,825,000 )     (27,487,000 )
Other expense:
                               
Interest expense, net
    7,271,000       5,690,000       24,406,000       14,255,000  
(Loss) income before income tax expense
    (101,604,000 )     (11,802,000 )     (113,231,000 )     (41,742,000 )
Income tax expense
    (27,953,000 )     1,141,000       (21,720,000 )     6,772,000  
                                 
Net (loss) income
  $ (73,651,000 )   $ (12,943,000 )   $ (91,511,000 )   $ (48,514,000 )
                                 
Basic net (loss) income per share
  $ (5.09 )   $ (1.03 )   $ (6.39 )   $ (3.90 )
                                 
Diluted net (loss) income per share
  $ (5.09 )   $ (1.03 )   $ (6.39 )   $ (3.90 )
                                 
Weighted average number of shares outstanding:
                               
Basic
    14,462,457       12,519,421       14,327,310       12,442,684  
                                 
Diluted
    14,462,457       12,519,421       14,327,310       12,442,684  
 
 
 

 

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31,
 
   
2013
   
2012
 
ASSETS
           
Current assets:
           
Cash
  $ 19,434,000     $ 32,617,000  
Short-term investments
    411,000       342,000  
Accounts receivable — net
    14,311,000       20,036,000  
Inventory— net
    61,090,000       95,071,000  
Inventory unreturned
    12,150,000       9,819,000  
Deferred income taxes
    34,885,000       3,793,000  
Prepaid expenses and other current assets
    10,350,000       6,553,000  
Total current assets
    152,631,000       168,231,000  
Plant and equipment — net
    14,083,000       12,738,000  
Long-term core inventory — net
    158,476,000       194,406,000  
Long-term core inventory deposits
    27,610,000       26,939,000  
Long-term deferred income taxes
    2,546,000       1,857,000  
Goodwill
    -       68,356,000  
Intangible assets — net
    3,983,000       22,484,000  
Other assets
    7,745,000       6,887,000  
TOTAL ASSETS
  $ 367,074,000     $ 501,898,000  
LIABILITIES AND SHAREHOLDERS'  EQUITY
               
Current liabilities:
               
Accounts payable
  $ 113,753,000     $ 126,100,000  
Accrued liabilities
    14,856,000       19,379,000  
Customer finished goods returns accrual
    24,978,000       21,695,000  
Other current liabilities
    3,009,000       2,745,000  
Current portion of term loan
    3,900,000       500,000  
Revolving loan - in default
    49,277,000       -  
Term loan - in default
    10,000,000       -  
Total current liabilities
    219,773,000       170,419,000  
Term loan, less current portion
    80,110,000       84,500,000  
Revolving loan
    -       48,884,000  
Deferred core revenue
    12,014,000       9,775,000  
Customer core returns accrual
    50,414,000       113,702,000  
Other liabilities
    8,277,000       999,000  
Total liabilities
    370,588,000       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;14,460,979 and 12,533,821 shares issued; 14,460,979 and 12,519,421 outstanding at March 31, 2013 and 2012, respectively
    145,000       125,000  
Treasury stock, at cost, none at March 31, 2013 and 14,400 shares of common stock at March 31, 2012
    -       (89,000 )
Additional paid-in capital
    114,737,000       98,627,000  
Additional paid-in capital-warrant
    -       1,879,000  
Accumulated other comprehensive loss
    (846,000 )     (884,000 )
Accumulated deficit
    (117,550,000 )     (26,039,000 )
Total shareholders' (deficit) equity
    (3,514,000 )     73,619,000  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 367,074,000     $ 501,898,000  
 
 
 

 

MOTORCAR PARTS OF AMERICA, INC.
Consolidating Statement of Operations
Year Ended March 31, 2013
 
 
 
MPA (1)
   
Fenco (2)
   
Eliminations
   
Consolidated
 
                         
Net sales
  $ 213,151,000     $ 193,115,000     $ -     $ 406,266,000  
Cost of goods sold
    143,810,000       206,728,000       -       350,538,000  
Gross profit (loss)
    69,341,000       (13,613,000 )     -       55,728,000  
Operating expenses:
                               
General and administrative
    107,602,000       18,719,000       (81,795,000 )     44,526,000  
Sales and marketing
    7,290,000       5,423,000       -       12,713,000  
Research and development
    1,930,000       698,000       -       2,628,000  
Impairment of goodwill and intangible assets
    -       84,686,000       -       84,686,000  
Total operating expenses
    116,822,000       109,526,000       (81,795,000 )     144,553,000  
Operating loss
    (47,481,000 )     (123,139,000 )     81,795,000       (88,825,000 )
Other expense:
                               
Interest expense, net
    12,324,000       12,082,000       -       24,406,000  
Loss before income tax (benefit) expense
    (59,805,000 )     (135,221,000 )     81,795,000       (113,231,000 )
Income tax (benefit) expense
    (21,759,000 )     39,000       -       (21,720,000 )
                                 
Net loss
  $ (38,046,000 )   $ (135,260,000 )   $ 81,795,000     $ (91,511,000 )
 
(1) MPA includes Motorcar Parts of America, Inc., MVR Products Pte Limited, Unijoh Sdn. Bhd., Motorcar Parts de Mexico, S.A. de C.V., Central Auto Parts Co. Ltd., and Motorcar Parts of Canada, Inc.

(2) Fenco includes Fenwick Automotive Products Limited, Introcan, Inc., and Fapco S.A. de C.V.
 
 
 

 

MOTORCAR PARTS OF AMERICA, INC.
Consolidating Balance Sheets
March 31, 2013
 
   
MPA (1)
   
Fenco (2)
   
Eliminations
   
Consolidated
 
ASSETS
                       
Current assets:
                       
Cash
  $ 19,346,000     $ 88,000     $ -     $ 19,434,000  
Short-term investments
    411,000       -       -       411,000  
Accounts receivable — net
    3,884,000       12,550,000       (2,123,000 )     14,311,000  
Inventory— net
    33,139,000       29,252,000       (1,301,000 )     61,090,000  
Inventory unreturned
    6,981,000       5,169,000       -       12,150,000  
Deferred income taxes
    30,075,000       4,810,000       -       34,885,000  
Prepaid expenses and other current assets
    8,195,000       2,155,000       -       10,350,000  
Total current assets
    102,031,000       54,024,000       (3,424,000 )     152,631,000  
Plant and equipment — net
    10,036,000       4,047,000       -       14,083,000  
Investment in Fenco
    4,946,000       -       (4,946,000 )     -  
Long-term core inventory — net
    118,211,000       40,265,000       -       158,476,000  
Long-term core inventory deposits
    27,610,000       -       -       27,610,000  
Long-term deferred income taxes
    2,546,000       -       -       2,546,000  
Intangible assets — net
    3,983,000       -       -       3,983,000  
Other assets
    7,723,000       22,000       -       7,745,000  
TOTAL ASSETS
  $ 277,086,000     $ 98,358,000     $ (8,370,000 )   $ 367,074,000  
LIABILITIES AND SHAREHOLDERS'  EQUITY
                               
Current liabilities:
                               
Accounts payable
  $ 40,009,000     $ 106,332,000     $ (32,588,000 )   $ 113,753,000  
Accrued liabilities
    9,326,000       5,530,000       -       14,856,000  
Customer finished goods returns accrual
    14,289,000       10,689,000       -       24,978,000  
Other current liabilities
    1,192,000       1,817,000       -       3,009,000  
Current portion of term loan
    3,900,000       -       -       3,900,000  
Revolving loan - in default
            49,277,000       -       49,277,000  
Term loan - in default
    -       10,000,000       -       10,000,000  
Total current liabilities
    68,716,000       183,645,000       (32,588,000 )     219,773,000  
Term loan, less current portion
    80,110,000       -       -       80,110,000  
Deferred core revenue
    12,014,000       -       -       12,014,000  
Debenture loan to MPA
    -       52,631,000       (52,631,000 )     -  
Customer core returns accrual
    -       50,414,000       -       50,414,000  
Other liabilities
    3,481,000       4,796,000               8,277,000  
Total liabilities
    164,321,000       291,486,000       (85,219,000 )     370,588,000  
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;14,460,979 and 12,533,821 shares issued; 14,460,979 and 12,519,421 outstanding at March 31, 2013 and 2012, respectively
    145,000       -       -       145,000  
Treasury stock, at cost, none at March 31, 2013 and 14,400 shares of common stock at March 31, 2012
    -       -       -       -  
Additional paid-in capital
    114,737,000       4,946,000       (4,946,000 )     114,737,000  
Accumulated other comprehensive loss
    (846,000 )     -       -       (846,000 )
Accumulated deficit
    (1,271,000 )     (198,074,000 )     81,795,000       (117,550,000 )
Total shareholders' equity (deficit)
    112,765,000       (193,128,000 )     76,849,000       (3,514,000 )
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 277,086,000     $ 98,358,000     $ (8,370,000 )   $ 367,074,000  
 
(1) MPA includes Motorcar Parts of America, Inc., MVR Products Pte Limited, Unijoh Sdn. Bhd., Motorcar Parts de Mexico, S.A. de C.V., Central Auto Parts Co. Ltd., and Motorcar Parts of Canada, Inc.

(2) Fenco includes Fenwick Automotive Products Limited, Introcan, Inc., and Fapco S.A. de C.V.
 
 
 

 

Reconciliation of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has included the following non-GAAP adjusted financial measures in this press release and in the webcast to discuss the Company's financial results for the fiscal year 2013 and fiscal 2012 fourth quarter and twelve-month period. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains.  Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business.
 
These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business. However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Beginning with the first quarter of fiscal year 2012, the Company has begun providing segment information.  The two segments are defined as rotating electrical and acquired Fenco products, also referred to as the undercar segment. Income statement information relating to the Company’s reportable segments for the three months and twelve months ended March 31, 2013 is as follows:
 
 
 

 
 
Reconciliation of Non-GAAP Financial Measures
Exhibit 1
 
   
Three months ended March 31, 2013 (Unaudited)
 
                                     
                                 
Adjusted
 
   
Rotating
   
Undercar
         
As Reported
   
Adjustment
   
Consolidated
 
Income statement
 
Electrical
   
Product Line
   
Eliminations
   
Consolidated
   
(Non-GAAP)
 (1)
 
(Non-GAAP)
 
                                     
Net sales
  $ 58,042,000     $ 31,294,000     $ -     $ 89,336,000     $ (5,095,000 )  (2)   $ 84,241,000  
Cost of goods sold
    39,942,000       46,544,000       -       86,486,000       (15,518,000 )  (3)     70,968,000  
Gross profit (loss)
    18,100,000       (15,250,000 )     -       2,850,000       10,423,000       13,273,000  
Gross margin
    31.2 %     -48.7 %             3.2 %             15.8 %
Operating expenses:
                                               
General and administrative
    88,448,000       2,337,000       (81,795,000 )     8,990,000       (802,000 )  (4)     8,188,000  
Sales and marketing
    1,811,000       772,000       -       2,583,000       -       2,583,000  
Research and development
    588,000       336,000       -       924,000       (75,000 )  (5)     849,000  
Impairment of goodwill and intangible assets
    -       84,686,000       -       84,686,000       (84,686,000 )     -  
Total operating expenses
    90,847,000       88,131,000       (81,795,000 )     97,183,000       (85,563,000 )     11,620,000  
Operating income (loss)
    (72,747,000 )     (103,381,000 )     81,795,000       (94,333,000 )     95,986,000       1,653,000  
Interest expense, net
     3,951,000       3,320,000       -       7,271,000       (1,683,000 )  (6)     5,588,000 (B)
Income (loss) before income tax expense (benefit)
    (76,698,000 )     (106,701,000 )     81,795,000       (101,604,000 )     97,669,000       (3,935,000 )
Income tax expense (benefit)
    (27,996,000 )     43,000       -       (27,953,000 )     30,320,000 (7)     2,367,000 (B)
Net income (loss)
  $ (48,702,000 )   $ (106,744,000 )   $ 81,795,000     $ (73,651,000 )   $ 67,349,000     $ (6,302,000 ) (A)
Undercar product lines not supported
                                    4,230,000 (8)     4,230,000  
Net income (loss) - Adjusted
                                  $ 71,579,000     $ (2,072,000 )
                                                 
Diluted net income (loss) per share
                          $ (5.09 )   $ 4.66     $ (0.44 )
Undercar product lines not supported
                                  $ 0.29 (8)   $ 0.29  
Diluted net income (loss) per share - Adjusted
                                  $ 4.95     $ (0.14 )
Weighted average number of shares outstanding:
                                               
Diluted
                            14,462,457       14,462,457       14,462,457  
Depreciation and amortization
                                            1,294,000 (B)
Adjusted EBITDA - Sum of (A) and (B)
                                          $ 2,947,000  
Undercar product lines not supported
                                            4,230,000  
Adjusted EBITDA total
                                          $ 7,177,000  
 
(1) See following Exhibits for detailed segment analysis of results of operations.

   
Rotating
   
Undercar
       
   
Electrical
   
Product Line
   
Total
 
(2) Contractual customer penalties/unique customer allowances
    -       436,000       436,000  
Stock adjustment - sales/warranty adjustment
    -       (5,531,000 )     (5,531,000 )
Total
    -       (5,095,000 )     (5,095,000 )
                         
(3) Unusual inventory purchases and freight expenses
    -       38,000       38,000  
Stock adjustment - cost of goods sold
    -       2,831,000       2,831,000  
Inventory obsolescence/write-down/inefficiency
    -       12,649,000       12,649,000  
Total
    -       15,518,000       15,518,000  
                         
(4) Financing, severance, professional and other fees
    1,402,000       185,000       1,587,000  
Share-based compensation expense
    93,000       -       93,000  
Mark-to-market (gain)/loss
    (878,000 )     -       (878,000 )
Total
    617,000       185,000       802,000  
                         
(5) Consulting fees
    75,000       -       75,000  
(6) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $1,513,000, so eliminates in consolidation. Reflects $1,683,000 adjustment for one-time bank interest charges related to Fenco.
(7) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense.
(8) Certain Undercar product lines not supported resulted in a loss for the period from January 1, 2013 to March 31, 2013 of $4,230,000 - ($0.29) per share.
 
 
 

 
 
Reconciliation of Non-GAAP Financial Measures
Exhibit 2
 
   
Twelve months ended March 31, 2013 (Unaudited)
 
                                         
                                     
Adjusted
 
   
Rotating
   
Undercar
         
As Reported
   
Adjustment
       
Consolidated
 
Income statement
 
Electrical
   
Product Line
   
Eliminations
   
Consolidated
   
(Non-GAAP)
  (1 )  
(Non-GAAP)
 
                                         
Net sales
  $ 213,151,000     $ 193,115,000     $ -     $ 406,266,000     $ (43,806,000 ) (2 )   $ 362,460,000  
Cost of goods sold
    143,810,000       206,728,000       -       350,538,000       (48,536,000 ) (3 )     302,002,000  
Gross profit (loss)
    69,341,000       (13,613,000 )     -       55,728,000       4,730,000           60,458,000  
Gross margin.
    32.5 %     -7.0 %             13.7 %                 16.7 %
Operating expenses:
                                                   
General and administrative
    107,602,000       18,719,000       (81,795,000 )     44,526,000       (10,828,000 ) (4 )     33,698,000  
Sales and marketing
    7,290,000       5,423,000       -       12,713,000       (747,000 ) (5 )     11,966,000  
Research and development
    1,930,000       698,000       -       2,628,000       (75,000 ) (6 )     2,553,000  
Impairment of goodwill and intangible assets
    -       84,686,000       -       84,686,000       (84,686,000 )         -  
Total operating expenses
    116,822,000       109,526,000       (81,795,000 )     144,553,000       (96,336,000 )         48,217,000  
Operating income (loss)
    (47,481,000 )     (123,139,000 )     81,795,000       (88,825,000 )     101,066,000           12,241,000  
Interest expense, net
    12,324,000       12,082,000       -       24,406,000       (1,683,000 ) (7 )     22,723,000
(B)
Income (loss) before income tax expense (benefit)
    (59,805,000 )     (135,221,000 )     81,795,000       (113,231,000 )     102,749,000           (10,482,000  
Income tax expense (benefit)
    (21,759,000 )     39,000       -       (21,720,000 )     30,552,000   (8 )     8,832,000
(B)
Net income (loss)
  $ (38,046,000 )   $ (135,260,000 )   $ 81,795,000     $ (91,511,000 )   $ 72,197,000         $ (19,314,000
(A)
Undercar product lines not supported
                                    7,115,000   (9 )     7,115,000  
Net income (loss) - Adjusted
                                  $ 79,312,000         $ (12,199,000  
                                                     
Diluted net income (loss) per share
                          $ (6.39 )   $ 5.04         $ (1.35  
Undercar product lines not supported
                                  $ 0.50   (9 )   $ 0.50  
Diluted net income (loss) per share - Adjusted
                                  $ 5.54         $ (0.85  
Weighted average number of shares outstanding:
                                                   
Diluted
                            14,327,310       14,327,310           14,327,310  
Depreciation and amortization
                                                5,285,000
(B)
Adjusted EBITDA - Sum of (A) and (B)
                                              $ 17,526,000  
Undercar product lines not supported
                                                7,115,000  
Adjusted EBITDA total
                                              $ 24,641,000  

(1) See following Exhibits for detailed segment analysis of results of operations.

   
Rotating
   
Undercar
       
   
Electrical
   
Product Line
   
Total
 
(2)   Contractual customer penalties/unique customer allowances
    -       4,587,000       4,587,000  
Stock adjustment - sales/warranty adjustment
    -       2,390,000       2,390,000  
Core revenue - discontinued customer
    -       (50,783,000 )     (50,783,000 )
Total
    -       (43,806,000 )     (43,806,000 )
                         
(3)   Third-party warehouse exit termination fees
    -       1,402,000       1,402,000  
Severance
    -       1,272,000       1,272,000  
Unusual inventory purchases and freight expenses
    -       512,000       512,000  
Stock adjustment - cost of goods sold
    -       (2,285,000 )     (2,285,000 )
Inventory obsolescence/write-down/inefficiency
    -       15,986,000       15,986,000  
Core cost of revenue - discontinued customer
    -       31,649,000       31,649,000  
Total
    -       48,536,000       48,536,000  
                         
(4)   Financing, severance, professional and other fees
    3,384,000       6,824,000       10,208,000  
Share-based compensation expense
    1,010,000       24,000       1,034,000  
Mark-to-market (gain)/loss
    (414,000 )     -       (414,000 )
Total
    3,980,000       6,848,000       10,828,000  
                         
(5)   Severance and professional fees
    -       747,000       747,000  
                         
(6)   Consulting fees
    75,000       -       75,000  
(7)   Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $5,182,000, so eliminates in consolidation. Reflects $1,683,000 adjustment for one-time bank interest charges related to Fenco.
(8)   Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense.
(9)   Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to March 31, 2013 of $7,115,000 - ($0.50) per share.
 
 
 

 

Reconciliation of Non-GAAP Financial Measures
Exhibit 3
 
   
Three months ended March 31, 2013 (Unaudited)
 
                   
Adjusted
 
   
As Reported
             
Undercar
 
   
Undercar
   
Adjustment
       
Product Line
 
Income statement
 
Product Line
   
(Non-GAAP)
       
(Non-GAAP)
 
                       
Net sales
  $ 31,294,000     $ (5,095,000 ) (2 )   $ 26,199,000  
Cost of goods sold
    46,544,000       (15,518,000 ) (3 )     31,026,000  
Gross profit (loss)
    (15,250,000 )     10,423,000           (4,827,000 )
Gross margin
    -48.7 %                 -18.4 %(1)
Operating expenses:
                           
General and administrative
    2,337,000       (185,000 ) (4 )     2,152,000  
Sales and marketing
    772,000       -           772,000  
Research and development
    336,000                   336,000  
Impairment of goodwill and intangible assets
    84,686,000       (84,686,000 )         -  
Total operating expenses
    88,131,000       (84,871,000 )         3,260,000  
Operating income (loss)
    (103,381,000 )     95,294,000           (8,087,000 )
Interest expense, net
    3,320,000       (1,513,000 ) (5 )     1,807,000   (B)
Income (loss) before income tax expense (benefit)
    (106,701,000 )     96,807,000           (9,894,000 )
Income tax expense (benefit)
    43,000       -   (6 )     43,000   (B)
Net income (loss)
  $ (106,744,000 )   $ 96,807,000         $ (9,937,000 ) (A)
Undercar product lines not supported
                        4,230,000  (7)
Net income (loss) - Adjusted
                      $ (5,707,000 )
                             
Diluted net income (loss) per share
                      $ (0.69 )
Undercar product lines not supported
                      $ 0.29  (7)
Diluted net income (loss) per share - Adjusted
                      $ (0.39 )
Weighted average number of shares outstanding:
                           
Diluted
                        14,462,457  
Depreciation and amortization
                        582,000   (B)
Adjusted EBITDA - Sum of (A) and (B)
                      $ (7,505,000 )
Undercar product lines not supported
                        4,230,000  
Adjusted EBITDA total
                      $ (3,275,000 )

(1)   Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 16.1%, total gross margin would have been negative (2.3%) for the Undercar product line segment.

(2)   Contractual customer penalties/unique customer allowances
    436,000  
Stock adjustment - sales/warranty adjustment
    (5,531,000 )
Total
    (5,095,000 )
         
(3)   Unusual inventory purchases and freight expenses
    38,000  
Stock adjustment - cost of goods sold
    2,831,000  
Inventory obsolescence/write-down/inefficiency
    12,649,000  
Total
    15,518,000  
         
(4)   Financing, severance, professional and other fees
    185,000  
(5)   Intersegment interest expense for the Undercar product line segment is $1,513,000.
(6)   Tax effected for Undercar product line at 0% tax rate.
(7)   Certain Undercar product lines not supported resulted in a loss for the period from January 1, 2013 to March 31, 2013 of $4,230,000 - ($0.29) per share.
 
 
 

 

Reconciliation of Non-GAAP Financial Measures
Exhibit 4
 
   
Twelve months ended March 31, 2013 (Unaudited)
 
                   
Adjusted
 
   
As Reported
             
Undercar
 
   
Undercar
   
Adjustment
       
Product Line
 
Income statement
 
Product Line
   
(Non-GAAP)
       
(Non-GAAP)
 
                       
Net sales
  $ 193,115,000     $ (43,806,000 ) (2 )   $ 149,309,000  
Cost of goods sold
    206,728,000       (48,536,000 ) (3 )     158,192,000  
Gross profit (loss)
    (13,613,000 )     4,730,000           (8,883,000 )
Gross margin
    -7.0 %                 -5.9 %(1)
Operating expenses:
                           
General and administrative
    18,719,000       (6,848,000 ) (4 )     11,871,000  
Sales and marketing
    5,423,000       (747,000 ) (5 )     4,676,000  
Research and development
    698,000       -           698,000  
Impairment of goodwill and intangible assets
    84,686,000       (84,686,000 )         -  
Total operating expenses
    109,526,000       (92,281,000 )         17,245,000  
Operating income (loss)
    (123,139,000 )     97,011,000           (26,128,000 )
Interest expense, net
    12,082,000       (5,182,000 ) (6 )     6,900,000   (B)
Income (loss) before income tax expense (benefit)
    (135,221,000 )     102,193,000           (33,028,000 )
Income tax expense (benefit)
    39,000       -   (7 )     39,000   (B)
Net income (loss)
  $ (135,260,000 )   $ 102,193,000         $ (33,067,000 ) (A)
Undercar product lines not supported
                        7,115,000  (8)
Net income (loss) - Adjusted
                      $ (25,952,000 )
                             
Diluted net income (loss) per share
                      $ (2.31 )
Undercar product lines not supported
                      $ 0.50  (8)
Diluted net income (loss) per share - Adjusted
                      $ (1.81 )
Weighted average number of shares outstanding:
                           
Diluted
                        14,327,310  
Depreciation and amortization
                        2,436,000   (B)
Adjusted EBITDA - Sum of (A) and (B)
                      $ (23,692,000 )
Undercar product lines not supported
                        7,115,000  
Adjusted EBITDA total
                      $ (16,577,000 )
 
(1)   Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 4.7%, total gross margin would have been negative (1.2%) for the Undercar product line segment.

(2)   Contractual customer penalties/unique customer allowances
    4,587,000  
Stock adjustment - sales/warranty adjustment
    2,390,000  
Core revenue - discontinued customer
    (50,783,000 )
Total
    (43,806,000 )
         
(3)   Third-party warehouse exit termination fees
    1,402,000  
Severance
    1,272,000  
Unusual inventory purchases and freight expenses
    512,000  
Stock adjustment - cost of goods sold
    (2,285,000 )
Inventory obsolescence/write-down/inefficiency
    15,986,000  
Core cost of revenue - discontinued customer
    31,649,000  
Total
    48,536,000  
         
(4)   Financing, severance, professional and other fees
    6,824,000  
Share-based compensation expense
    24,000  
Total
    6,848,000  
         
(5)   Severance
    747,000  
(6)   Intersegment interest expense for the Undercar product line segment is $5,182,000.
(7)   Tax effected for Undercar product line at 0% tax rate.
(8)   Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to March 31, 2013
of $7,115,000 - ($0.50) per share.
 
 
 

 

Reconciliation of Non-GAAP Financial Measures
Exhibit 5

   
Three months ended March 31, 2013 (Unaudited)
 
                   
Adjusted
 
   
As Reported
             
Rotating
 
   
Rotating
   
Adjustment
       
Electrical
 
Income statement
 
Electrical
   
(Non-GAAP)
       
(Non-GAAP)
 
                       
Net sales
  $ 58,042,000     $ -         $ 58,042,000  
Cost of goods sold
    39,942,000       -           39,942,000  
Gross profit
    18,100,000       -           18,100,000  
Gross margin
    31.2 %                 31.2 %
Operating expenses:
                           
General and administrative
    88,448,000       (82,412,000 ) (1 )     6,036,000  
Sales and marketing
    1,811,000       -           1,811,000  
Research and development
    588,000       (75,000 ) (2 )     513,000  
Total operating expenses
    90,847,000       (82,487,000 )         8,360,000  
Operating income (loss)
    (72,747,000 )     82,487,000           9,740,000  
Interest expense, net
    3,951,000       (170,000 ) (3 )     3,781,000   (B)
Income (loss) before income tax expense (benefit)
    (76,698,000 )     82,657,000           5,959,000  
Income tax expense (benefit)
    (27,996,000 )     30,320,000   (4 )     2,324,000   (B)
Net income (loss)
  $ (48,702,000 )   $ 52,337,000         $ 3,635,000    (A)
                             
Diluted net income per share
                      $ 0.26  
Weighted average number of shares outstanding:
                           
Diluted
                        14,131,232  (5)
Depreciation and amortization
                        712,000   (B)
Adjusted EBITDA - Sum of (A) and (B)
                      $ 10,452,000  
                             
(1)   Financing, severance and other fees
    1,402,000                      
Reserve for Fenco investment
    81,795,000                      
Share-based compensation expense
    93,000                      
Mark-to-market (gain)/loss
    (878,000 )                    
Total
    82,412,000                      
                             
(2)   Consulting fees
    75,000                      
(3)   Intersegment interest income from the Undercar product line segment is $1,513,000 offset by an adjustment for $1,683,000 for one-time bank interest charges related to Fenco.
(4)   Tax effected for Rotating Electrical at 39% tax rate.
(5)   Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
 
 
 

 
 
Reconciliation of Non-GAAP Financial Measures
Exhibit 6
 
   
Twelve months ended March 31, 2013 (Unaudited)
 
                   
Adjusted
 
   
As Reported
             
Rotating
 
   
Rotating
   
Adjustment
       
Electrical
 
Income statement
 
Electrical
   
(Non-GAAP)
       
(Non-GAAP)
 
                       
Net sales
  $ 213,151,000     $ -         $ 213,151,000  
Cost of goods sold
    143,810,000       -           143,810,000  
Gross profit
    69,341,000       -           69,341,000  
Gross margin
    32.5 %                 32.5 %
Operating expenses:
                           
General and administrative
    107,602,000       (85,775,000 ) (1 )     21,827,000  
Sales and marketing
    7,290,000       -           7,290,000  
Research and development
    1,930,000       (75,000 ) (2 )     1,855,000  
Total operating expenses
    116,822,000       (85,850,000 )         30,972,000  
Operating income (loss)
    (47,481,000 )     85,850,000           38,369,000  
Interest expense, net
    12,324,000       3,499,000   (3 )     15,823,000   (B)
Income (loss) before income tax expense (benefit)
    (59,805,000 )     82,351,000           22,546,000  
Income tax expense (benefit)
    (21,759,000 )     30,552,000   (4 )     8,793,000   (B)
Net income (loss)
  $ (38,046,000 )   $ 51,799,000         $ 13,753,000   (A)
                             
Diluted net income per share
                      $ 0.98  
Weighted average number of shares outstanding:
                           
Diluted
                        13,967,310  (5)
Depreciation and amortization
                        2,849,000   (B)
Adjusted EBITDA - Sum of (A) and (B)
                      $ 41,218,000  
                             
(1)   Financing, severance and other fees
    3,384,000                      
Reserve for Fenco investment
    81,795,000                      
Share-based compensation expense
    1,010,000                      
Mark-to-market (gain)/loss
    (414,000 )                    
Total
    85,775,000                      
                             
(2)   Consulting fees
    75,000                      
(3)   Intersegment interest income from the Undercar product line segment is $5,182,000 offset by an adjustment for $1,683,000 for one-time bank interest charges related to Fenco.
(4)   Tax effected for Rotating Electrical at 39% tax rate.
(5)   Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
 
 
 

 
 
Reconciliation of Non-GAAP Financial Measures
Exhibit 7

   
Three months ended March 31, 2012 (Unaudited)
 
                   
Adjusted
 
   
As Reported
             
Rotating
 
   
Rotating
   
Adjustment
       
Electrical
 
Income statement
 
Electrical
   
(Non-GAAP)
       
(Non-GAAP)
 
                       
Net sales
  $ 51,903,000               $ 51,903,000  
Cost of goods sold
    35,054,000                 35,054,000  
Gross profit
    16,849,000       -           16,849,000  
Gross margin
    32.5 %                 32.5 %
Operating expenses:
                           
General and administrative
    3,812,000       1,253,000   (1 )     5,065,000  
Sales and marketing
    1,870,000                   1,870,000  
Research and development
    495,000       -           495,000  
Total operating expenses
    6,177,000       1,253,000           7,430,000  
Operating income
    10,672,000       (1,253,000 )         9,419,000  
Interest expense, net
    2,569,000       802,000   (2 )     3,371,000   (B)
Income before income tax expense
    8,103,000       (2,055,000 )         6,048,000  
Income tax expense
    2,083,000       276,000   (3 )     2,359,000   (B)
Net income
  $ 6,020,000     $ (2,331,000 )       $ 3,689,000    (A)
                             
Diluted net income per share
                      $ 0.30  
Weighted average number of shares outstanding:
                           
Diluted
                        12,278,948  (4)
Depreciation and amortization
                        832,000   (B)
Adjusted EBITDA - Sum of (A) and (B)
                      $ 10,251,000  
                             
(1)   Fenco, financing, professional and other fees
    (330,000 )                    
Mark-to-market (gain)/loss
    (923,000 )                    
Total
    (1,253,000 )                    
(2)   Intersegment interest income from the Undercar product line segment is $802,000.
(3)   Tax effected for Rotating Electrical at 39% tax rate.
(4)   Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
 
 
 

 
 
Reconciliation of Non-GAAP Financial Measures
Exhibit 8

   
Twelve months ended March 31, 2012 (Unaudited)
 
                   
Adjusted
 
   
As Reported
             
Rotating
 
   
Rotating
   
Adjustment
       
Electrical
 
Income statement
 
Electrical
   
(Non-GAAP)
       
(Non-GAAP)
 
                       
Net sales
  $ 180,404,000     $ (1,853,000 ) (1 )   $ 178,551,000  
Cost of goods sold
    123,072,000       -           123,072,000  
Gross profit
    57,332,000       (1,853,000 )         55,479,000  
Gross margin
    31.8 %                 31.1 %
Operating expenses:
                           
General and administrative
    20,621,000       (2,970,000 ) (2 )     17,651,000  
Sales and marketing
    7,659,000       (238,000 ) (3 )     7,421,000  
Research and development
    1,765,000       -           1,765,000  
Acquisition costs
    713,000       (713,000 ) (4 )     -  
Total operating expenses
    30,758,000       (3,921,000 )         26,837,000  
Operating income
    26,574,000       2,068,000           28,642,000  
Interest expense, net
    4,841,000       2,529,000   (5 )     7,370,000   (B)
Income before income tax expense
    21,733,000       (461,000 )         21,272,000  
Income tax expense
    7,433,000       864,000   (6 )     8,296,000   (B)
Net income
  $ 14,300,000     $ (1,325,000 )       $ 12,976,000   (A)
                             
Diluted net income per share
                      $ 1.04  
Weighted average number of shares outstanding:
                           
Diluted
                        12,429,756  (7)
Depreciation and amortization
                        3,466,000   (B)
Adjusted EBITDA - Sum of (A) and (B)
                      $ 32,108,000  
                             
(1)   Intersegment revenue, net of cost of goods sold
    1,853,000                      
                             
(2)   Fenco, financing, professional and other fees
    2,494,000                      
Mark-to-market (gain)/loss
    476,000                      
Total
    2,970,000                      
                             
(3)   Fenco related sales and marketing expenses
    238,000                      
                             
(4)   Fenco related acquisition costs
    713,000                      
(5)   Intersegment interest income from the Undercar product line segment is $2,529,000
(6)   Tax effected for Rotating Electrical at 39% tax rate.
(7)   Excludes the impact of 324,590 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.