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Motorcar Parts of America Reports Fiscal 2013 Second Quarter

LOS ANGELES, Dec. 18, 2012 (GLOBE NEWSWIRE) -- Motorcar Parts of America, Inc. (Nasdaq:MPAA) today reported results for its fiscal 2013 second quarter ended September 30, 2012 – reflecting record results for its rotating electrical business and continued progress in the undercar product line transition, which is expected to be completed by May 2013.

Net sales for the fiscal 2013 second quarter increased to $111.6 million from $107.6 million for the same period last year. As anticipated, due to the operating losses of the company's undercar product line segment as the transition and turnaround continues, the company reported a consolidated net loss for the fiscal 2013 second quarter of $8.9 million, or $0.62 per share, compared with a consolidated net loss of $5.4 million, or $0.44 per share, for the comparable period a year earlier. Excluding certain undercar-related transition and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, results for the fiscal 2013 second quarter on a consolidated basis would have been a net income of $358,000, or $0.02 per share.

For the fiscal 2013 second quarter, net income for the rotating electrical segment more than doubled to $6.5 million from $3.0 million for the prior year second quarter. Operating income for the rotating electrical segment increased to $13.5 million for the fiscal 2013 second quarter compared with $5.5 million a year ago. On a non-GAAP adjusted basis, EBITDA for the company's rotating electrical segment was $14.0 million compared with $8.8 million for the same period a year earlier.

Consolidated gross profit for the fiscal 2013 second quarter was $16.7 million compared with $15.0 million for the same period a year ago. Gross profit as a percentage of net sales for the fiscal 2013 second quarter was 15.0 percent compared with 13.9 percent in the same quarter a year ago.

Net sales for the fiscal 2013 six-month period increased 12.6 percent to $200.7 million from $178.1 million for the same period last year. As anticipated, due to the operating losses of the company's undercar product line segment as the transition and turnaround continues, the company reported a consolidated net loss for the fiscal 2013 six-month period of $18.8 million, or $1.32 per share, compared with a consolidated net loss of $13.7 million, or $1.11 per share, for the comparable period a year earlier. Excluding certain undercar-related transition and non-cash expenses noted in the Reconciliation of Non-GAAP Financial Measures tables below, results for the fiscal 2013 six-month period on a consolidated basis would have been a net loss of $3.8 million, or $0.27 per share.

For the fiscal 2013 six-month period, net income for the rotating electrical segment was $8.9 million compared to $5.3 million for the prior year period. Operating income for the rotating electrical segment almost doubled to $20.2 million for the fiscal 2013 six-month period compared with $10.3 million a year ago. On a non-GAAP adjusted basis, EBITDA for the company's rotating electrical segment was $21.8 million compared with $15.4 million for the same period a year earlier.

Consolidated gross profit for the fiscal 2013 six months was $28.8 million compared with $22.0 million for the same period a year ago. Gross profit as a percentage of net sales for the same period was 14.4 percent compared with 12.4 percent in the same quarter a year ago.

"Results for the quarter and six months reflect continued progress in our transition of the company's undercar segment, highlighted by exiting the third-party operated distribution center, significant cost reductions and the successful integration of accounting to the ERP system located at corporate headquarters in Torrance, California to enhance timely financial reporting moving forward," said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts.

"Customer service and product quality remain the cornerstone of our organization, and we are gratified by the extraordinary commitment and contributions of our employees," Joffe emphasized.

Use of EBITDA

EBITDA does not reflect the impact of a number of items that affect the company's net income, including financing and acquisition-related costs. EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to net income or income from operations as a measure of performance, nor as alternative to net cash from operating activities as a measure of liquidity. EBITDA has significant limitations as an analytical tool, 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) attributable to common shareholders to EBITDA, see the financial tables included in this press release.

Teleconference and Web Cast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today 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 today through 8:59 p.m. Pacific time on Tuesday, December 25, 2012 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 78053906.

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. The company also offers a broad line of under-the-car products – including brake, steering and clutch components. 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, Canada, 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 Income
(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
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

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 or in the webcast to discuss the Company's financial results for the second quarter of fiscal year 2013. 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 now referred to as the undercar segment. Currently all corporate expenses are included under the rotating electrical segment. Income statement information relating to the Company's reportable segments for the three months and six months ended September 30, 2012 is as follows:

Reconciliation of Non-GAAP Financial Measures Exhibit 1
Three months ended September 30, 2012 (Unaudited)
Adjusted
Rotating Undercar As Reported Adjustment Consolidated
Income statement Electrical Product Line (1) Eliminations Consolidated (Non-GAAP) (3) (Non-GAAP)
Net sales $ 57,652,000 $ 53,980,000 $ -- $ 111,632,000 $ 1,317,000 (4) $ 112,949,000
Cost of goods sold 37,556,000 57,355,000 -- 94,911,000 (2,754,000) (5) 92,157,000
Gross profit (loss) 20,096,000 (3,375,000) -- 16,721,000 4,071,000 20,792,000
Gross margin 34.9% -6.3% (2) 15.0% 18.4%
Operating expenses:
General and administrative 4,392,000 6,801,000 -- 11,193,000 (3,247,000) (6) 7,946,000
Sales and marketing 1,724,000 2,180,000 -- 3,904,000 (747,000) (7) 3,157,000
Research and development 461,000 -- -- 461,000 461,000
Total operating expenses 6,577,000 8,981,000 -- 15,558,000 (3,994,000) 11,564,000
Operating income (loss) 13,519,000 (12,356,000) -- 1,163,000 8,065,000 9,228,000
Interest expense 3,093,000 3,069,000 -- 6,162,000 -- (8) 6,162,000 (B)
Income (loss) before income tax expense 10,426,000 (15,425,000) -- (4,999,000) 8,065,000 3,066,000
Income tax expense 3,923,000 11,000 -- 3,934,000 (431,000) (9) 3,503,000 (B)
Net income (loss) $ 6,503,000 $ (15,436,000) $ -- $ (8,933,000) $ 8,496,000 $ (437,000) (A)
Undercar product lines not supported 795,000 (10) 795,000
Net income (loss) - Adjusted $ 9,291,000 $ 358,000
Diluted net income (loss) per share $ (0.62) $ 0.59 $ (0.03)
Undercar product lines not supported $ 0.05 (10) $ 0.05
Diluted net income (loss) per share - Adjusted $ 0.64 $ 0.02
Weighted average number of shares outstanding:
Diluted 14,456,921 14,456,921 14,456,921
Depreciation and amortization 1,342,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 10,570,000
Undercar product lines not supported 795,000
Adjusted EBITDA total $ 11,365,000
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $0.71 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 7.6% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 2.8% for the Undercar product line segment.
(3) See following Exhibits for detailed segment analysis of results of operations.
Rotating Undercar
Electrical Product Line Total
(4) Contractual customer penalties/unique customer allowances 1,317,000 1,317,000
(5) Third-party warehouse exit termination fees 1,402,000 1,402,000
Severance 1,272,000 1,272,000
Unusual freight expenses 80,000 80,000
Total 2,754,000 2,754,000
(6) Financing, severance, professional and other fees 300,000 3,445,000 3,745,000
Mark-to-market (gain)/loss (498,000) (498,000)
Total (198,000) 3,445,000 3,247,000
(7) Severance 747,000 747,000
(8) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $1,273,000.
(9) 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.
(10) Certain Undercar product lines not supported resulted in a loss for the period from July 1, 2012 to September 30, 2012 of $795,000 - ($0.05) per share.
Reconciliation of Non-GAAP Financial Measures Exhibit 2
Six months ended September 30, 2012 (Unaudited)
Adjusted
Rotating Undercar As Reported Adjustment Consolidated
Income statement Electrical Product Line (1) Eliminations Consolidated (Non-GAAP) (3) (Non-GAAP)
Net sales $ 104,451,000 $ 96,204,000 $ -- $ 200,655,000 $ 3,382,000 (4) $ 204,037,000
Cost of goods sold 69,536,000 102,284,000 -- 171,820,000 (2,799,000) (5) 169,021,000
Gross profit (loss) 34,915,000 (6,080,000) -- 28,835,000 6,181,000 35,016,000
Gross margin 33.4% -6.3% (2) 14.4% 17.2%
Operating expenses:
General and administrative 10,306,000 12,451,000 -- 22,757,000 (5,972,000) (6) 16,785,000
Sales and marketing 3,496,000 3,947,000 -- 7,443,000 (747,000) (7) 6,696,000
Research and development 897,000 -- -- 897,000 -- 897,000
Total operating expenses 14,699,000 16,398,000 -- 31,097,000 (6,719,000) 24,378,000
Operating income (loss) 20,216,000 (22,478,000) -- (2,262,000) 12,900,000 10,638,000
Interest expense 5,989,000 5,257,000 -- 11,246,000 -- (8) 11,246,000 (B)
Income (loss) before income tax expense 14,227,000 (27,735,000) -- (13,508,000) 12,900,000 (608,000)
Income tax expense 5,357,000 (70,000) -- 5,287,000 (599,000) (9) 4,688,000 (B)
Net income (loss) $ 8,870,000 $ (27,665,000) $ -- $ (18,795,000) $ 13,499,000 $ (5,296,000) (A)
Undercar product lines not supported 1,506,000 (10) 1,506,000
Net income (loss) - Adjusted $ 15,005,000 $ (3,790,000)
Diluted net income (loss) per share $ (1.32) $ 0.95 $ (0.37)
Undercar product lines not supported $ 0.11 (10) $ 0.11
Diluted net income (loss) per share - Adjusted $ 1.06 $ (0.27)
Weighted average number of shares outstanding:
Diluted 14,192,235 14,192,235 14,192,235
Depreciation and amortization. 2,728,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 13,366,000
Undercar product lines not supported 1,506,000
Adjusted EBITDA total $ 14,872,000
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $1.16 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 6.4% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 1.6% for the Undercar product line segment.
(3) See following Exhibits for detailed segment analysis of results of operations.
Rotating Undercar
Electrical Product Line Total
(4) Contractual customer penalties/unique customer allowances -- 3,382,000 3,382,000
(5) Third-party warehouse exit termination fees -- 1,402,000 1,402,000
Severance -- 1,272,000 1,272,000
Unusual freight expenses -- 125,000 125,000
Total -- 2,799,000 2,799,000
(6) Financing, severance, professional and other fees 539,000 5,831,000 6,370,000
Mark-to-market (gain)/loss (398,000) -- (398,000)
Total 141,000 5,831,000 5,972,000
(7) Severance -- 747,000 747,000
(8) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $2,168,000.
(9) 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.
(10) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to September 30, 2012 of $1,506,000 - ($0.11) per share.
Reconciliation of Non-GAAP Financial Measures Exhibit 3
Three months ended September 30, 2012 (Unaudited)
Adjusted
As Reported Undercar
Undercar Adjustment Product Line
Income statement Product Line (Non-GAAP) (1) (Non-GAAP)
Net sales $ 53,980,000 $ 1,317,000 (3) $ 55,297,000
Cost of goods sold 57,355,000 (2,754,000) (4) 54,601,000
Gross profit (loss) (3,375,000) 4,071,000 696,000
Gross margin -6.3% 1.3% (2)
Operating expenses:
General and administrative 6,801,000 (3,445,000) (5) 3,356,000
Sales and marketing 2,180,000 (747,000) (6) 1,433,000
Total operating expenses 8,981,000 (4,192,000) 4,789,000
Operating income (loss) (12,356,000) 8,263,000 (4,093,000)
Interest expense 3,069,000 (1,273,000) (7) 1,796,000 (B)
Income (loss) before income tax expense (15,425,000) 9,536,000 (5,889,000)
Income tax expense 11,000 -- (8) 11,000 (B)
Net income (loss) $ (15,436,000) $ 9,536,000 $ (5,900,000) (A)
Undercar product lines not supported 795,000 (9)
Net income (loss) - Adjusted $ (5,105,000)
Diluted net income (loss) per share $ (0.41)
Undercar product lines not supported $ 0.05 (9)
Diluted net income (loss) per share - Adjusted $ (0.35)
Weighted average number of shares outstanding:
Diluted 14,456,921
Depreciation and amortization 638,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ (3,455,000)
Undercar product lines not supported 795,000
Adjusted EBITDA total $ (2,660,000)
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $0.71 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 7.6% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 2.8% for the Undercar product line segment.
(3) Contractual customer penalties/unique customer allowances 1,317,000
(4) Third-party warehouse exit termination fees 1,402,000
Severance 1,272,000
Unusual freight expenses 80,000
Total 2,754,000
(5) Financing, severance, professional and other fees 3,445,000
(6) Severance 747,000
(7) Intersegment interest expense for the Undercar product line segment is $1,273,000.
(8) Tax effected for Undercar product line at 0% tax rate.
(9) Certain Undercar product lines not supported resulted in a loss for the period from July 1, 2012 to September 30, 2012 of $795,000 - ($0.05) per share.
Reconciliation of Non-GAAP Financial Measures Exhibit 4
Six months ended September 30, 2012 (Unaudited)
Adjusted
As Reported Undercar
Undercar Adjustment Product Line
Income statement Product Line (Non-GAAP) (1) (Non-GAAP)
Net sales $ 96,204,000 $ 3,382,000 (3) $ 99,586,000
Cost of goods sold 102,284,000 (2,799,000) (4) 99,485,000
Gross profit (loss) (6,080,000) 6,181,000 101,000
Gross margin -6.3% 0.1% (2)
Operating expenses:
General and administrative 12,451,000 (5,831,000) (5) 6,620,000
Sales and marketing 3,947,000 (747,000) (6) 3,200,000
Total operating expenses 16,398,000 (6,578,000) 9,820,000
Operating income (loss) (22,478,000) 12,759,000 (9,719,000)
Interest expense 5,257,000 (2,168,000) (7) 3,089,000 (B)
Income (loss) before income tax expense (27,735,000) 14,927,000 (12,808,000)
Income tax expense (70,000) -- (8) (70,000) (B)
Net income (loss) $ (27,665,000) $ 14,927,000 $ (12,738,000) (A)
Undercar product lines not supported 1,506,000 (9)
Net income (loss) - Adjusted $ (11,232,000)
Diluted net income (loss) per share $ (0.90)
Undercar product lines not supported $ 0.11 (9)
Diluted net income (loss) per share - Adjusted $ (0.79)
Weighted average number of shares outstanding:
Diluted 14,192,235
Depreciation and amortization 1,289,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ (8,430,000)
Undercar product lines not supported 1,506,000
Adjusted EBITDA total $ (6,924,000)
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $1.16 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 6.4% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 1.6% for the Undercar product line segment.
(3) Contractual customer penalties/unique customer allowances 3,382,000
(4) Third-party warehouse exit termination fees 1,402,000
Severance 1,272,000
Unusual freight expenses 125,000
Total 2,799,000
(5) Financing, severance, professional and other fees 5,813,000
(6) Severance 747,000
(7) Intersegment interest expense for the Undercar product line segment is $2,168,000.
(8) Tax effected for Undercar product line at 0% tax rate.
(9) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to September 30, 2012 of $1,506,000 - ($0.11) per share.
Reconciliation of Non-GAAP Financial Measures Exhibit 5
Three months ended September 30, 2012 (Unaudited)
Adjusted
As Reported Rotating
Rotating Adjustment Electrical
Income statement Electrical (Non-GAAP) (Non-GAAP)
Net sales $ 57,652,000 $ -- $ 57,652,000
Cost of goods sold 37,556,000 -- 37,556,000
Gross profit 20,096,000 -- 20,096,000
Gross margin 34.9% 34.9%
Operating expenses:
General and administrative 4,392,000 198,000 (1) 4,590,000
Sales and marketing 1,724,000 -- 1,724,000
Research and development 461,000 -- 461,000
Total operating expenses 6,577,000 198,000 6,775,000
Operating income 13,519,000 (198,000) 13,321,000
Interest expense 3,093,000 1,273,000 (2) 4,366,000 (B)
Income before income tax expense 10,426,000 (1,471,000) 8,955,000
Income tax expense 3,923,000 (431,000) (3) 3,492,000 (B)
Net income $ 6,503,000 $ (1,040,000) $ 5,463,000 (A)
Diluted net income per share $ 0.39
Weighted average number of shares outstanding:
Diluted 14,139,628 (4)
Depreciation and amortization 704,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 14,025,000
(1) Financing and other fees 300,000
Mark-to-market (gain)/loss (498,000)
Total (198,000)
(2) Intersegment interest expense for the Undercar product line segment is $1,273,000.
(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 6
Six months ended September 30, 2012 (Unaudited)
Adjusted
As Reported Rotating
Rotating Adjustment Electrical
Income statement Electrical (Non-GAAP) (Non-GAAP)
Net sales $ 104,451,000 $ -- $ 104,451,000
Cost of goods sold 69,536,000 -- 69,536,000
Gross profit 34,915,000 -- 34,915,000
Gross margin 33.4% 33.4%
Operating expenses:
General and administrative 10,306,000 (141,000) (1) 10,165,000
Sales and marketing 3,496,000 -- 3,496,000
Research and development 897,000 -- 897,000
Total operating expenses 14,699,000 (141,000) 14,558,000
Operating income 20,216,000 141,000 20,357,000
Interest expense 5,989,000 2,168,000 (2) 8,157,000 (B)
Income before income tax expense 14,227,000 (2,027,000) 12,200,000
Income tax expense 5,357,000 (599,000) (3) 4,758,000 (B)
Net income $ 8,870,000 $ (1,428,000) $ 7,442,000 (A)
Diluted net income per share $ 0.54
Weighted average number of shares outstanding:
Diluted 13,888,715 (4)
Depreciation and amortization 1,439,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 21,796,000
(1) Financing and other fees 539,000
Mark-to-market (gain)/loss (398,000)
Total 141,000
(2) Intersegment interest expense for the Undercar product line segment is $2,168,000.
(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 7
Three months ended September 30, 2011 (Unaudited)
Adjusted
As Reported Rotating
Rotating Adjustment Electrical
Income statement Electrical (Non-GAAP) (Non-GAAP)
Net sales $ 46,573,000 $ (836,000) (1) $ 45,737,000
Cost of goods sold 31,482,000 -- 31,482,000
Gross profit 15,091,000 (836,000) 14,255,000
Gross margin 32.4% 31.2%
Operating expenses:
General and administrative 7,004,000 (2,911,000) (2) 4,093,000
Sales and marketing 1,897,000 (96,000) (3) 1,801,000
Research and development 401,000 -- 401,000
Acquisition costs 309,000 (309,000) (4) --
Total operating expenses 9,611,000 (3,316,000) 6,295,000
Operating income 5,480,000 2,480,000 7,960,000
Interest expense 734,000 676,000 (5) 1,410,000 (B)
Income before income tax expense 4,746,000 1,804,000 6,550,000
Income tax expense 1,720,000 835,000 (6) 2,555,000 (B)
Net income $ 3,026,000 $ 969,000 $ 3,995,000 (A)
Diluted net income per share $ 0.32
Weighted average number of shares outstanding:
Diluted 12,452,770 (7)
Depreciation and amortization 889,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 8,849,000
(1) Intersegment revenue, net of cost of goods sold 836,000
(2) Fenco, financing, professional and other fees 1,112,000
Mark-to-market (gain)/loss 1,799,000
Total 2,911,000
(3) Fenco related sales and marketing expenses 96,000
(4) Fenco related acquisition costs 309,000
(5) Intersegment interest expense for the Undercar product line segment is $676,000.
(6) Tax effected for Rotating Electrical at 39% tax rate.
(7) 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
Six months ended September 30, 2011 (Unaudited)
Adjusted
As Reported Rotating
Rotating Adjustment Electrical
Income statement Electrical (Non-GAAP) (Non-GAAP)
Net sales $ 86,365,000 $ (1,612,000) (1) $ 84,753,000
Cost of goods sold 58,518,000 -- 58,518,000
Gross profit 27,847,000 (1,612,000) 26,235,000
Gross margin 32.2% 31.0%
Operating expenses:
General and administrative 12,314,000 (4,087,000) (2) 8,227,000
Sales and marketing 3,731,000 (126,000) (3) 3,605,000
Research and development 817,000 -- 817,000
Acquisition costs 713,000 (713,000) (4) --
Total operating expenses 17,575,000 (4,926,000) 12,649,000
Operating income 10,272,000 3,314,000 13,586,000
Interest expense 1,505,000 945,000 (5) 2,450,000 (B)
Income before income tax expense 8,767,000 2,369,000 11,136,000
Income tax expense 3,515,000 829,000 (6) 4,343,000 (B)
Net income $ 5,252,000 $ 1,540,000 $ 6,793,000 (A)
Diluted net income per share $ 0.54
Weighted average number of shares outstanding:
Diluted 12,573,725 (7)
Depreciation and amortization 1,777,000 (B)
Adjusted EBITDA - Sum of (A) and (B) $ 15,363,000
(1) Intersegment revenue, net of cost of goods sold 1,612,000
(2) Fenco, financing, professional and other fees 2,200,000
Mark-to-market (gain)/loss 1,887,000
Total 4,087,000
(3) Fenco related sales and marketing expenses 126,000
(4) Fenco related acquisition costs 713,000
(5) Intersegment interest expense for the Undercar product line segment is $945,000.
(6) Tax effected for Rotating Electrical at 39% tax rate.
(7) Excludes the impact of 289,180 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.

CONTACT: Gary S. Maier Maier & Company, Inc. (310) 471-1288Source:Motorcar Parts of America