SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
|X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 31, 1996
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO
_________
Commission File No. 0-23538
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MOTORCAR PARTS & ACCESSORIES, INC.
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(Name of small business issuer in its charter)
NEW YORK 11-2153962
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2727 MARICOPA STREET, TORRANCE, CALIFORNIA 90503
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(Address of principal executive offices) Zip Code
Issuer's telephone number: (310) 212-7910
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Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: Common Stock, $.01 par
value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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 [X] No [_]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year: $44,913,000.
The aggregate market value, calculated on the basis of the average bid and asked
prices of such stock on the National Association of Securities Dealers Automated
Quotation System, of the voting stock held by non-affiliates of the Registrant
at June 25, 1996 was approximately $53,854,000.
There were 4,879,500 shares of Common Stock outstanding at June 25, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of the Registrant's Proxy Statement relating to its 1996 Annual
Meeting of Shareholders is incorporated by reference herein
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
The Company is a leading remanufacturer and distributor of
replacement alternators and starters for imported cars and light trucks in the
United States. The Company's alternators and starters are remanufactured for
vehicles imported from Japan, Germany, Sweden, England, France, Italy and Korea.
The imported vehicles for which the Company remanufactures alternators and
starters also include (i) "world cars," which are produced by General Motors,
Chrysler and Ford and originally equipped with components produced by foreign
manufacturers, and (ii) "transplants," which are manufactured in the United
States by Toyota, Nissan, Honda, Mazda and others. The Company also assembles
and distributes ignition wire sets for imported and domestic cars and light
trucks.
The Company's products are sold throughout the United States to many
of the nation's largest chains of retail automotive stores, including Northern
Automotive, AutoZone, The Pep Boys, Hi-Lo Automotive, Trak Automotive and
O'Reilly Automotive. The Company also sells its alternators and starters
throughout Canada as a supplier to that country's largest chain of retail
automotive stores, Canadian Tire. During the last several years, the Company has
concentrated on sales to retail automotive chains, which the Company believes is
the fastest growing segment of the automotive after-market industry. As a result
of these efforts, the Company commenced shipments to AutoZone and The Pep Boys
in fiscal 1995 and to Canadian Tire in fiscal 1996. For fiscal 1996,
approximately 72% of the Company's sales were to retail automotive chains
comprised of approximately 3,700 stores, with the balance of sales primarily
to large warehouse distributors, such as Parts, Inc. and Hahn Automotive.
In fiscal 1996, Delphi selected the Company to supply remanufactured
alternators and starters for imported vehicles for distribution through Service
Parts Operations (SPO). In September 1995, the Company commenced shipment of
products under this new arrangement. The units supplied by the Company under its
arrangement with Delphi will be sold under General Motors' private label, AC
Delco.
THE AUTOMOTIVE AFTER-MARKET INDUSTRY
The Company's market, the import automotive after-market industry for
alternators and starters, which is comprised almost exclusively of
remanufacturers and rebuilders, has experienced significant growth during recent
years. The Company expects this growth to continue as a result of several
trends. These trends include the proliferation of imported cars and light trucks
(including world cars and transplants) in use, the growth in the number of miles
driven each year and the growth in the number of imported vehicles at the prime
repair age of four years and older.
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Two distinct groups of end-users buy replacement automotive parts:
(i) individual consumers, who purchase parts to perform "do-it-yourself" repairs
on their own vehicles; and (ii) professional installers, which include
automotive repair shops and the service departments of automobile dealers. The
individual consumer market is typically supplied through retailers and through
the retail arms of warehouse distributors. Automotive repair shops generally
purchase parts through local independent parts wholesalers and through national
warehouse distributors. Automobile dealer service departments generally obtain
parts through the distribution systems of automobile manufacturers. In recent
years, chains of retail stores in the automotive after-market industry have
become an increasingly important channel for the distribution of the Company's
products. In addition, the Company also believes that significant consolidation
among distributors of automotive replacement parts has resulted in fewer and
larger distributors.
Remanufacturing of operational replacement parts is a significant
component of the automotive aftermarket industry. Sales by chains of retail
automotive stores and by automotive wholesalers of remanufactured alternators
and starters are believed by the Company to comprise the vast majority of the
Company's market. Only a portion of that market is supplied by the sale of
similar new replacement parts. Remanufacturing, which involves the re-use of
parts which might otherwise be discarded, creates a supply of parts at a
significantly lower cost to the user than newly-manufactured parts, and makes
available automotive parts which are no longer being manufactured. By making
readily available parts for automotive general use, remanufacturing benefits
automotive repair shops by relieving them of the need to rebuild worn parts on
an individual basis and conserves materials which would otherwise be used to
manufacture new replacement parts. Most importantly, however, the Company's
remanufactured parts are sold at significantly lower prices than competitive new
replacement parts. These features also enable retail customers themselves to
engage in cost-saving repairs.
COMPANY PRODUCTS
The Company's primary products are remanufactured replacement
alternators and starters for imported cars and light trucks. The Company also
assembles and distributes ignition wire sets for the automotive after-market for
use in a wide variety of makes and models of foreign automobiles. Alternators,
starters and ignition wire sets are essential components in all makes and models
of automobiles. These products constitute non-elective replacement parts, which
are required for a vehicle to operate. Approximately 13% of the Company's
products are sold under its brand name, including the use of its registered
trademark "MPA," and the remainder are sold for resale under customer private
labels. Customers that sell the Company's products under private label include
Northern Automotive, The Pep Boys, AutoZone, Parts, Inc. and Delphi.
The Company's alternators and starters are produced to meet or exceed
automobile manufacturer specifications depending upon the make and model of the
automobile. The Company remanufactures a broad assortment of starters and
alternators in order to accommodate the numerous and increasing varieties of
these products currently in use. The Company currently provides approximately
750 different alternators and 525 different starters. The Company's alternators
and
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starters are provided for virtually all Japanese manufacturers, including
Toyota, Honda, Nissan, Mazda and Mitsubishi, certain European manufacturers,
including Mercedes Benz, BMW, Volvo and Volkswagen, manufacturers of world cars,
including Chrysler, General Motors and Ford, and foreign manufacturers of
transplant cars.
CUSTOMERS
GENERAL
The Company's products are marketed throughout the United States and
Canada. The Company's customers consist of many of the United States' largest
chains of retail automotive stores and automotive warehouse distributors. The
Company also sells its products to Canada's largest chain of retail automotive
stores, Canadian Tire.
A significant percentage of the Company's sales has been concentrated
among a relatively small number of customers. The Company's four largest
customers accounted for approximately 21%, 11%, 20% and 18%, respectively, of
net sales during fiscal 1996. The Company's three largest customers accounted
for approximately 27%, 14% and 12%, respectively, of the Company's net sales
during fiscal 1995. There can be no assurance that this concentration of sales
among customers will not continue in the future. The loss of a significant
customer or a substantial decrease in sales to such a customer would have a
material adverse effect on the Company's sales and operating results. In
addition, customers may demand price concessions from the Company that could
adversely affect profit margins. The Company's arrangements with most of its
customers are based on the receipt of purchase orders and otherwise are not
subject to long-term written contracts and generally may be terminated upon
short notice.
OPERATIONS OF THE COMPANY
CORES
In its remanufacturing operations, the Company obtains used
alternators and starters, commonly known as "cores," which are sorted by make
and model and stored until needed. When needed for remanufacturing, the cores
are completely disassembled into component parts. Components which can be
incorporated into the remanufactured product are thoroughly cleaned, tested and
refinished. All components known to be subject to major wear, and those
components determined not to be reusable or repairable, are replaced by new
components. The unit is then reassembled on an assembly line into a finished
product. Inspection and testing are conducted at various stages of the
remanufacturing process, and each finished product is inspected and tested on
equipment designed to simulate performance under operating conditions.
Components of cores which are not used by the Company in its remanufacturing
process are sold as scrap.
The majority of the cores remanufactured by the Company are obtained
from customers as trade-ins, which are credited against future purchases. The
Company's customers encourage
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consumers to exchange their used units at the time of purchase through the use
of credits. To a lesser extent, the Company also purchases cores in the open
market from core brokers, who are dealers specializing in buying and selling
cores. Although the Company believes that the open market does not and will
continue not to represent a primary source of cores, this market offers a
reliable source for maintaining stock balance. Other materials and components
used in remanufacturing are also purchased in the open market. The ability to
obtain cores of the types and quantities required by the Company is essential to
the Company's ability to meet demand and expand production.
The price of a finished product generally is comprised of a
separately invoiced amount for the core included in the product ("core value")
and an amount for remanufacturing. Although, upon receipt of a core as a
trade-in, credit generally is given to the customer for the full current core
value of the unit traded in. The Company believes it may be informative to
indicate the effects of presenting core trade-ins as a purchase of materials as
opposed to a reduction in sales. The Company limits trade-ins to cores for units
included in its sales catalogs and in condition able to be remanufactured, and
credit for cores is allowed only against purchases by a customer of similar
remanufactured products within a specified time period. A customer's total
allowable credit for core trade-ins is further limited by the dollar volume of
the customer's purchases of similar products within such time period.
The Company's reported sales reflect the deduction of the core value
of cores returned for credit as well as other customary industry allowances and
trade-ins. Consequently, variations in the rate of core trade-ins affect sales
and cash receipts, and, in periods of relatively heavy core trade-ins, sales may
show smaller increases (or greater decreases) than unit sales. Core values
fluctuate on the basis of several economic factors, including market
availability and demand and core prices then being paid by other remanufacturers
and core brokers.
PRODUCTION PROCESS
The initial step in the Company's remanufacturing process begins with
the receipt in boxed quantities of cores from various sources, including
trade-ins from customers and purchases in the open market. The cores are
assessed and evaluated for inventory control purposes and then sorted by part
number. Each core is then completely disassembled into all of its fundamental
components. The components are cleaned in a process that employs customized
equipment, detergents and other chemicals. The cleaning process is accomplished
in accordance with the required specifications of the particular units.
After the cleaning process is complete, the components are then
inspected and tested as prescribed by the Company's rigorous quality control
program. This program, which is implemented throughout the operational process,
is known as statistical process control. Upon passage of all tests, the
components are placed on an automatic conveyor for assembly into the required
units. The assembly process is monitored by designated quality control
personnel. Each fully assembled unit is then subjected to additional testing to
ensure performance and quality. Finished products are then either stored in the
Company's warehouse facility or packaged for immediate delivery. In addition, to
maximize efficiency, the Company stores in its warehousing facilities component
parts ready for
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assembly. The Company's management information systems, including hardware and
software, facilitate the remanufacturing process from cores to finished
products. In general, this process takes approximately four days.
The Company currently conducts business with an affiliated entity,
MVR Products Pte Limited ("MVR"), which is 70%-owned by Mel and Richard Marks
and 30%-owned by Vincent Quek, a resident of Singapore, who is not an affiliate
of the Company. MVR operates a shipping warehouse and testing facility,
maintains office space and remanufacturing capability in Singapore and does
business with Unijoh Sdn, Bhd ("Unijoh"), which is an affiliated Malaysian
entity. Unijoh is 70%-owned by Mel and Richard Marks and is 30%-owned by Mr.
Quek. Unijoh conducts remanufacturing operations similar to those conducted by
the Company at its remanufacturing facility. All of the products remanufactured
by Unijoh are processed for the Company on an independent contract
remanufacturing basis. The Company provides Unijoh with raw materials, which are
included in the Company's inventory. Although Unijoh's remanufacturing
operations are not part of the Company's efforts to achieve ISO 9001
certification, these operations are conducted with quality control standards and
other internal controls similar to those currently implemented at the Company's
remanufacturing facility. The facilities of MVR and Unijoh are located
approximately one hour drive apart. As of March 31, 1996, the inventory located
at MVR's and Unijoh's facilities represented approximately 3.2% of all of the
Company's inventory. The Company believes that its relationship with its
operating affiliates is important because of the lower labor costs experienced
by these affiliates in the same remanufacturing process.
PRODUCT TRADE-INS
The Company has a trade-in policy that it believes is typical for the
remanufactured automotive replacement parts industry. A manufacturer typically
provides a product warranty that is honored whether or not the purchaser
continues to do business with the manufacturer. As the Company believes is the
practice in its industry, however, the Company accepts product trade-ins only if
the purchaser makes future purchases from the Company within a specified time
period. Product trade-ins to the Company result only in credits against future
purchases. If a customer ceases doing business with the Company, the Company
recognizes no further obligations to that customer with respect to product
trade-ins and no additional product returns would be accepted by the Company.
The customer would return any returnable products to a new remanufacturer
maintaining the same policy, which remanufacturer would accept the product
trade-ins and grant appropriate credits regardless of whether the units were
originally purchased from that new remanufacturer.
As a result of the product trade-in policy in the Company's industry,
the Company accounts for product trade-ins on a current basis. No reserve is
made for future product trade-ins since there is no on-going obligation to
accept such trade-ins in the absence of continuing sales to the returning
customer. The Company believes that its return rate has been consistent with the
return rates generally experienced in its industry. In addition, the obligation
to accept trade-ins is only recognized as a credit against future sales in the
form of a reduction in the purchase price for those sales. The Company's product
trade-in policy encompasses all product trade-ins, including cores,
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true warranty trade-ins, alleged warranty trade-ins and any other product
adjustments. The amount of the credit given in connection with a returned unit
is equal to the sum of the unit price and the core price.
COMPETITION
The Company's segment of the automotive after-market industry,
composed of remanufacturers and rebuilders of alternators and starters for
imported cars and light trucks, is highly competitive. The Company's competitors
include several other relatively large sources of remanufactured units and
numerous smaller, regional rebuilders. Certain of the Company's competitors sell
a wide variety of other automotive parts, thereby establishing broader name
recognition in the entire automotive after-market, including the Company's
market. In addition, certain of the Company's competitors are divisions or
subsidiaries of entities also engaged in other businesses which have
substantially greater financial resources than those of the Company. The Company
also competes with several large regional remanufacturers and with
remanufacturers which are franchised by certain original equipment manufacturers
to remanufacture their products for regional distribution. Alternators and
starters produced by regional and other small rebuilders typically are not
processed and finished to the same extent as, and do not compete directly with,
the Company's products. The Company also competes with numerous rebuilders which
serve comparatively local areas.
The Company's products have not been patented nor does the Company
believe that its products are patentable. The Company will continue to attempt
to protect its proprietary processes and other information by relying on trade
secret laws and non-disclosure and confidentiality agreements with certain of
its employees and other persons who have access to its proprietary processes and
other information.
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<PAGE>
GOVERNMENTAL REGULATION
The Company's operations are subject to federal, state and local laws
and regulations governing, among other things, emissions to air, discharge to
waters and the generation, handling, storage, transportation, treatment and
disposal of waste and other materials. The Company is not subject to any such
laws and regulations which are specific to the automotive after-market industry.
The Company believes that its business, operations and facilities have been and
are being operated in compliance in all material respects with applicable
environmental and health and safety laws and regulations, many of which provide
for substantial fines and criminal sanctions for violations. The operation of
automotive parts remanufacturing plants, however, entails risks in these areas,
and there can be no assurance that the Company will not incur material costs or
liabilities. In addition, potentially significant expenditures could be required
in order to comply with evolving environmental and health and safety laws,
regulations or requirements that may be adopted or imposed in the future. The
Company believes, although there can be no assurance, that the overall impact of
compliance with regulations and legislation protecting the environment will not
have a material effect on its future financial position or results of
operations.
EMPLOYEES
The Company has approximately 540 full time employees. Of the
Company's employees, 18 are considered administrative personnel and three are
sales personnel. None of the Company's employees is a party to any collective
bargaining agreement. The Company has not experienced any work stoppages and
considers its employee relations to be satisfactory.
ITEM 2. DESCRIPTION OF PROPERTIES.
The Company maintains facilities in Torrance, California, Woodbury,
New York and Nashville, Tennessee. The Torrance facility contains approximately
125,000 square feet and accommodates the Company's corporate headquarters and
remanufacturing, warehousing and other office requirements. The Company moved
into this facility during September 1993. The five-year lease for the facility
provides for a monthly rental of $36,900 and terminates on December 31, 1998.
This facility was designed and equipped according to specifications generated by
the Company in order to accommodate the Company's current and projected needs.
The facility is anticipated to be sufficient to satisfy the Company's
foreseeable production requirements. In order to permit increased production at
its remanufacturing facility, in October 1995 the Company leased an additional
79,708 square feet of warehouse space nearby. The lease for this facility
provides for a base monthly rental of $19,000 and terminates on December 31,
1998. The Company also maintains an East Coast administrative and sales office
in Woodbury, New York. This site contains approximately 1,500 square feet of
office space. The Company believes that, in the event that the Woodbury lease is
not renewed, adequate alternative space is available in the same area at
comparable rates. On May 1, 1995, the Company opened a 31,000-square foot
warehouse and distribution facility in Nashville, Tennessee to service the
Company's growing East Coast and Southern market. The lease for this facility
expires
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on October 31, 1998 and provides for a monthly rental of $9,331. In addition,
the Company has minor office facilities at its affiliate's location in Malaysia.
ITEM 3. LEGAL PROCEEDINGS.
There are no pending material legal proceedings to which the Company
or any of its properties is subject nor, to the knowledge of the Company, are
any legal proceedings threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock, par value $0.01 per share (the "Common
Stock"), commenced trading on March 23, 1994 on the over-the-counter market and
is quoted on the National Association of Securities Dealers' Automated Quotation
("NASDAQ") National Market under the symbol MPAA. The following table sets forth
the high and low bid prices for the Common Stock during each quarter of fiscal
1995 and fiscal 1996 as reported by NASDAQ. The prices reported reflect
inter-dealer quotations, may not represent actual transactions and do not
include retail mark-ups, mark-downs or commissions.
FISCAL 1996 FISCAL 1995
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HIGH LOW HIGH LOW
---- --- ---- ---
First Quarter 11 8 1/2 9 1/8 7
Second Quarter 15 10 3/8 8 1/2 7 1/2
Third Quarter 15 7/8 12 3/4 9 3/8 7
Fourth Quarter 15 7/8 11 3/8 10 5/8 7 1/8
As of June 25, 1996, there were 4,879,500 shares of Common Stock
outstanding held by 35 holders of record.
The Company has not declared or paid dividends on the Common Stock
during the last two fiscal years.
The declaration of dividends in the future will be at the election of
the Board of Directors and will depend upon the earnings, capital requirements
and financial position of the Company, general economic conditions, state law
requirements and other relevant factors. In addition, the Company's agreement
with its bank lender prohibits payment of dividends without the bank's prior
consent, except dividends payable in Common Stock.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
GENERAL
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto appearing elsewhere herein.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
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1996 1995 1994
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<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 70.2 69.8 65.0
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Gross profit (1) 29.8 30.2 35.0
Selling expenses 4.4 5.3 10.3
General and administrative expenses 10.2 13.1 12.6
Moving expenses 0.0 0.0 1.2
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Operating income 15.2 11.8 10.9
Interest expense - net 1.9 1.9 2.2
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Income before income taxes 13.3 9.9 8.7
Provision for income taxes
(pro forma for fiscal 1994) 5.2 4.2 3.5
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Net income 8.1% 5.7% 5.2%
======== ======== ========
</TABLE>
In its remanufacturing operations, the Company obtains used
alternators and starters, commonly known as "cores," from various sources,
principally the Company's existing customers, as trade-ins. Net sales are
reduced to reflect deductions for cores returned for credit and other deductions
for trade-ins and allowances, and cost of goods sold is reduced by the credit
given to customers for the cores returned. Such trade-ins are recorded when
cores are received from customers. Credits for cores are allowed only against
purchases of similar remanufactured products and are generally used within sixty
days of issuance by the customer. Due to this trade-in policy, the Company does
not reserve for trade-ins. In addition, since it is unlikely that a customer
will not utilize its trade-in credits, the credit is recorded when the core is
returned as opposed to when the customer purchases new products. The Company
believes that this policy is consistent throughout the remanufacturing and
rebuilding industry. Product and core trade-ins reducing net sales were
approximately $28.9 million, $17.0 million and $13.1 million for fiscal 1996,
1995 and 1994, respectively. Core trade-ins reducing cost of goods sold were
approximately $19.4 million, $11.0 million and $8.4 million for fiscal 1996,
1995 and 1994, respectively.
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(1) The Company believes it may be informative to indicate the
effects of presenting core trade-ins as a purchase of materials as opposed to a
reduction in sales (i.e. present the information in a manner similar to
traditional manufacturers) and portray gross profit percentage as the following:
YEAR ENDED MARCH 31,
--------------------
1996 1995 1994
---- ---- ----
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 79.2 78.2 75.2
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Gross profit 20.8% 21.8% 24.8%
====== ====== ======
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FISCAL 1996 COMPARED TO FISCAL 1995
Net sales for fiscal 1996 increased $16,656,000 or 58.9% from
$28,257,000 to $44,913,000. The increase in net sales is attributable to sales
to new customers, the general growth of business with existing customers and,
indirectly, to, the Company believes, the continued aging of the import vehicle
fleet. During fiscal 1996, the Company began shipping products to two
significant new customers, Delphi Energy & Engine Management Systems, a division
of General Motors, and Canadian Tire. The number of units shipped to all
customers was approximately 1,074,000 during fiscal 1996 as compared with
approximately 689,000 during fiscal 1995, representing an increase of
approximately 55.9%.
Cost of goods sold over the periods increased $11,808,000 or 59.9%
from $19,712,000 to $31,520,000. The increases are attributable to additional
costs during the recent year in connection with increased production. As a
percentage of net sales these expenses increased to 70.2% for the recent fiscal
year from 69.8% for the prior fiscal year. This relatively small percentage
increase is primarily attributable to increased direct production costs, which
were partially offset by benefits the Company experienced from leveraging
indirect production costs over increased net sales. In February 1996, the
Company began experiencing pricing pressures on certain of its alternators and
starters, which may affect gross profit to a limited extent in the future. The
Company also anticipates lowering its manufacturing costs to help offset price
decreases in response to these pricing pressures.
Selling expenses over the periods increased $486,000 or 32.4% from
$1,498,000 to $1,984,000. This increase was the result of an increase of
approximately $433,000 in advertising and other allowances to customers during
fiscal 1996. The balance of the increase was primarily attributable to increased
salaries of the Company's sales force. Advertising allowances accounted for
57.5% of the Company's total selling expenses for fiscal 1996 as compared to
47.3% for fiscal 1995. Despite these increases, selling expenses as a percentage
of net sales decreased to 4.4% from 5.3% over the periods reflecting leveraging
of these expenses over increased net sales.
General and administrative expenses over the periods increased
$873,000 or 23.6% from $3,704,000 to $4,577,000. Approximately 69.2% of the
increase was due to costs incurred under
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the Company's new incentive bonus plan which was implemented in September 1995.
The additional increase is primarily attributable to increased insurance
coverage, computer expenses and professional fees. As a percentage of net sales,
general and administrative expenses decreased from 13.1% to 10.2% over the
periods reflecting leveraging of these expenses over increased net sales.
Interest expense net of interest income of $219,000 for fiscal 1996
was $833,000, an increase of 54.3% from $540,000 in fiscal 1995. Interest
expense is comprised principally of interest on the Company's revolving credit
facility. The significantly increased interest expense over the prior year was
due to the Company's increased borrowing under this facility. Interest income is
derived from short-term investments principally from the Company's second public
offering in November 1995.
FISCAL 1995 COMPARED TO FISCAL 1994
Net sales over the periods increased $7,682,000 or 37.3% from
$20,575,000 to $28,257,000. The increase in net sales is due to the addition
during fiscal 1995 of two automotive retail chain customers, The Pep Boys and
AutoZone, as well as increased sales to existing customers. In addition, the
segment of the automotive after-market to which the Company sells its products
continued to grow during fiscal 1995. The Company believes that this industry
growth reflects the increased number of imported cars in the prime repair age, a
trend that the Company believes will continue for the foreseeable future. Units
shipped were approximately 456,000 during fiscal 1994 and approximately 689,000
during fiscal 1995, representing an increase of approximately 51.1%.
Cost of goods sold over the periods increased $6,339,000 or 47.4%
from $13,373,000 to $19,712,000. As a percentage of net sales, these expenses
increased to 69.8% for the recent fiscal year from 65.0% for the prior fiscal
year. The increase in cost of goods as a percentage of net sales sold primarily
is attributable to the Company's decision at the beginning of fiscal 1995 to
lower sales prices on most of its products. Although the Company's decision, in
light of competitive pressures, led to higher cost of goods sold as a percentage
of net sales, the Company believes that the decision led to additional sales to
existing accounts and the addition of new customers. During fiscal 1995, the
Company increased its monthly unit production by approximately 25,000 units per
month from 27,000 to 52,000 units. Direct and indirect labor costs increased
56.1% from $2,194,000 in fiscal 1994 to $3,424,000 in fiscal 1995. Despite this
increase, the Company believes that its direct labor costs per unit decreased in
fiscal 1995 as a result of the increased volume of production. This reduction in
direct labor costs per unit helped to offset the lower prices for which the
Company sold its alternators and starters. The Company attributes 1.3% of the
total 4.8% increase over the periods in cost of goods sold as a percentage of
net sales to a change in advertising arrangements with certain of its customers
in fiscal 1995, which had the effect of lowering net sales in fiscal 1995 with a
concurrent reduction in selling expenses.
Selling expenses over the periods decreased $619,000 or 29.2% from
$2,117,000 to $1,498,000. As a result of the Company's change in advertising
arrangements with certain of its customers, advertising allowances decreased by
approximately $400,000. Advertising allowances
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accounted for 47.3% of the Company's total selling expenses for fiscal 1995 as
compared with 52.4% for fiscal 1994. During fiscal 1994, the Company incurred
approximately $90,000 of expenses in connection with the production of its
bi-annual product catalog. The remainder of selling expenses in both periods was
commissions to outside sales agents, as well as salaries and related expenses
for the Company's sales personnel.
General and administrative expenses over the periods increased
$1,111,000 or 42.8% from $2,593,000 to $3,704,000. In response to present and
anticipated future growth and the Company's new public status, the Company
incurred increased salary expense as a result of hiring a new Chief Financial
Officer and various other administrative personnel. In addition, general and
administrative expenses increased as a result of the depreciation of new
administrative computer equipment added during fiscal 1995, directors' and
officers' insurance premiums and professional fees incurred commencing in fiscal
1995 relating to the Company's public status, as well as other expenses incurred
in connection with present and anticipated future growth. The remainder of the
Company's general and administrative expenses remained relatively constant in
total dollar amount from fiscal 1994 to fiscal 1995.
Interest expense (net of interest income of $73,000 for fiscal 1995)
increased 19.2% or $87,000 over the periods. Interest expense is comprised
principally of interest on the Company's revolving credit facility. Interest
expense increased as a result of both higher interest rates as well as increased
borrowings under the credit facility. Over the periods, the Company's borrowings
increased from $4.3 million to $9.0 million and the effective interest rate
increased from 6.5% to 9.0%, which resulted from general increases in market
interest rates. The other component of interest expense is interest paid on
capital leases, which was $65,000 in fiscal 1995 and $39,000 in fiscal 1994.
During fiscal 1995, the provision for income taxes was $1,197,000 as
compared with $728,000, on a pro forma basis, during fiscal 1994. The Company
elected, effective January 1, 1994, to change its status from an "S" corporation
to a "C" corporation.
During fiscal 1994, the Company incurred a non-recurring charge of
approximately $256,000 consisting primarily of the abandonment of leasehold
improvements and moving expenses in connection with the relocation of its
remanufacturing and warehouse operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations have been financed principally from the net
proceeds of the Company's initial public offering in March 1994, the net
proceeds of the Company's second public offering in November 1995, borrowings
under a revolving credit facility and cash flows from operations. As of March
31, 1996 the Company's working capital was $44,254,000, including $8,500,000 of
cash and cash equivalents.
-14-
<PAGE>
Net cash used in operating activities during fiscal 1996 and fiscal
1995 was $15,344,000 and $6,721,000, respectively. The increase in fiscal 1996
was due primarily to an increase in inventory of $16,434,000. This increase is
due in large part to the Company's increased sales volume, anticipation of
future growth, as well as additional SKUs offered by the Company. As of March
31, 1996, the current portion of capitalized lease obligations was $554,000.
Net cash used in investing activities during fiscal 1996 and 1995 was
$10,770,000 and $991,000, respectively. During fiscal 1996 the Company invested
an additional $10,113,000 in short-term investments and purchased $657,000 of
property, plant and equipment. During fiscal 1995, the Company purchased an
additional $616,000 in short-term investments and $375,000 of property, plant
and equipment. In fiscal 1996 the short-term investments were purchased with
proceeds from the Company's 1996 public offering.
Net cash provided by financing activities was $25,667,000 in fiscal
1996 and $4,525,000 in fiscal 1995. The increase in fiscal 1996 was primarily
attributable to the proceeds from the second public offering and, to a much
lesser extent, the exercise of warrants and options. Proceeds from the second
public offering and the exercise of options and warrants totaled $20,369,000 in
fiscal 1996. The balance of cash provided by financing activities in fiscal 1996
was from an increase in the Company's revolving line of credit. The increase in
fiscal 1995 was due primarily to an increase in the Company's revolving line of
credit.
In September 1995, the Company amended its credit agreement with
Wells Fargo Bank, National Association (the "Bank"). The credit agreement
provides for a revolving credit facility in an aggregate principal amount not
exceeding $15,000,000, which credit facility is secured by a lien on
substantially all of the assets of the Company. The credit facility, which
expires on June 1, 1997, provides for an interest rate on borrowings at the
lower of the Bank's prime rate and LIBOR plus 1.75%. Under the terms of the
credit facility and included in the maximum amount thereunder, the Bank will
issue letters of credit and banker's acceptances for the account of the Company
in an aggregate amount not exceeding $2,500,000. At June 19, 1996, the
outstanding balance on the credit facility was approximately $12,300,000.
The Company's accounts receivable as of March 31, 1996 was
$17,264,000. This represents an increase of $6,589,000 or 61.7% over accounts
receivable on March 31, 1995. This is in line with sales increasing in fiscal
1996 by 58.9% over fiscal 1995. During the year, the Company increased its
normal aging of its receivables with some of its customers. In addition, there
are times when the Company extends payment terms with certain customers in order
to help them finance an increase in their product line variety. The Company
insures collection of certain of its accounts receivable through an insurance
policy with an independent credit insurance company at an annual premium of
approximately $70,000. The Company's policy generally has been to issue credit
to new customers only after the customers have been included under the coverage
of its accounts receivable insurance policy.
-15-
<PAGE>
The Company's inventory as of March 31, 1996 was $28,551,000, which
represents an increase of $16,434,000 or 135.6% over inventory as of March 31,
1995. The increase reflects the Company's growth in sales through the addition
in fiscal 1996 of Delphi and other new customers, increased business from
existing customers and the need to have sufficient inventory to support shorter
lead times for deliveries to customers. Also, the Company continues to increase
the number of SKUs sold requiring the Company to carry raw materials for this
wider variety of parts. The Company also increased its finished goods inventory
(by approximately $1,400,000 as of March 31, 1996) in connection with the
opening of its Nashville warehouse facility in November 1995.
ITEM 7. FINANCIAL STATEMENTS.
The information required by this item is set forth in the Financial
Statements, commencing on page F-1 included herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
-16-
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT.
The information required by this item is incorporated by reference
herein in the "Election of Directors" section of the Company's Proxy Statement
to be filed pursuant to Regulation 14A.
ITEM 10. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference
herein in the "Executive Compensation" section of the Company's Proxy Statement
to be filed pursuant to Regulation 14A.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated by reference
herein in the "Security Ownership of Management" section of the Company's Proxy
Statement to be filed pursuant to Regulation 14A.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated by reference
herein in the "Certain Transactions" section of the Company's Proxy Statement to
be filed pursuant to Regulation 14A.
-17-
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
a. EXHIBITS:
Number Description Of Exhibit Method Of Filing
- ------ ---------------------- ----------------
3.1 Certificate of Incorporation of the Incorporated by reference to
Company Exhibit 3.1 to the Company's
Registration Statement on
Form SB-2 (No. 33-74528)
declared effective on March
22, 1994 (the "1994 Regist-
ration Statement").
3.2 Amendment to Certificate of Incorporated by reference to
Incorporation of the Company Exhibit 3.2 to the Company's
Registration Statement on
Form S-1 (No. 33-97498)
declared effective on
November 14, 1995 (the
"1995 Registration
Statement").
3.3 By-Laws of the Company. Incorporated by reference to
Exhibit 3.2 to the 1994
Registration Statement.
4.1 Specimen Certificate of the Incorporated by reference to
Company's Common Stock. Exhibit 4.1 to the 1994
Registration Statement.
4.2 Form of Underwriter's Common Stock Incorporated by reference to
Purchase Warrant. 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 Incorporated by reference to
Agreement. Exhibit 4.4 to the 1994
Registration Statement.
-18-
<PAGE>
Number Description Of Exhibit Method Of Filing
- ------ ---------------------- ----------------
4.5 1994 Non-Employee Director Stock Incorporated by reference to
Option Plan Exhibit 4.5 to the Company's
Annual Report on Form 10-KSB
for the fiscal year ended
March 31, 1995.
4.6 Executive and Key Employee Incentive Incorporated by reference to
Bonus Plan Exhibit 4.6 to the 1995
Registration Statement.
10.1 Credit Agreement, dated as of April Incorporated by reference to
15, 1994 by and between the Company Exhibit 10.1 to the Com-
and Wells Fargo Bank, N.A. pany's Current Report on
Form 8-K filed May 19, 1994.
10.2 Fourth Amendment to Credit Incorporated by reference to
Agreement, dated as of July 7, 1995 Exhibit 10.2 to the 1995
by and between the Company and Wells Registration Statement.
Fargo Bank, N.A.
10.3 Sixth Amendment to Credit Agreement Incorporated by reference to
dated as of September 20, 1995 by Exhibit 10.3 to the 1995
and between the Company and Wells Registration Statement.
Fargo Bank, N.A.
10.4 Lease Agreement, dated March 9, Incorporated by reference to
1993, by and between the Company and Exhibit 10.3 to the 1994
Maricopa Enterprises, Ltd., relating Registration Statement.
to the Company's facility located in
Torrance, California.
10.5 Lease Agreement, dated October 7, Incorporated by reference to
1993, relating to the Company's Exhibit 10.4 to the
offices located in Woodbury, New 1994 Registration Statement.
York, by and among the Company and
Jay Davis, as receiver.
-19-
<PAGE>
Number Description Of Exhibit Method Of Filing
- ------ ---------------------- ----------------
10.6 Amended and Restated Employment Incorporated by reference to
Agreement, dated as of September 1, Exhibit 10.7 to the 1995
1995, by and between the Company and Registration Statement.
Mel Marks.
10.7 Amended and Restated Employment Incorporated by reference to
Agreement, dated as of September 1, Exhibit 10.8 to the 1995
1995, by and between the Company and Registration Statement.
Richard Marks.
10.8 Employment Agreement, dated as of Incorporated by reference to
February 1, 1994, by and between the Exhibit 10.7 to the 1994
Company and Steven Kratz. Registration Statement.
10.9 Employment Agreement, dated as of Incorporated by reference to
March 1, 1994, by and between the Exhibit 10.12 to the 1994
Company and Peter Bromberg. Registration Statement.
10.10 Amendment No. 1 to Employment Incorporated by reference to
Agreement, dated as of September 1, Exhibit 10.12 to the 1995
1995, by and between the Company Registration Statement.
and Peter Bromberg.
10.11 Employment Agreement dated as of Incorporated by reference to
September 1, 1995, by and between Exhibit 10.13 to the 1995
the Company and Eli Markowitz. Registration Statement.
10.12 Form of Consulting Agreement dated Incorporated by reference to
as of September 1, 1995, by and Exhibit 10.14 to the 1995
between the Company and Selwyn Registration Statement.
Joffe.
10.13 Agency Agreement, dated May 12, Incorporated by reference to
1990, by and between the Company and Exhibit 10.8 to the 1994
Kinoshita Company Limited. Registration Statement.
10.14 Agreement, dated as of February 2, Incorporated by reference to
1990, by and between the Company and Exhibit 10.11 to the 1994
Northern Automotive Corporation. Registration Statement.
-20-
<PAGE>
Number Description Of Exhibit Method Of Filing
- ------ ---------------------- ----------------
10.15 Lease Agreement, dated March 28, Incorporated by reference to
1995, by and between the Company and Exhibit 10.11 to the Com-
Equitable Life Assurance Society of pany's Annual Report on Form
the United States, relating to the 10-KSB for the fiscal year
Company's facility located in ended March 31, 1995.
Nashville, Tennessee.
10.16 Lease Agreement, dated September 19, Incorporated by reference to
1995, by and between Golkar Exhibit 10.18 to the 1995
Enterprises, Ltd. and the Company Registration Statement.
relating to the Company's facility
located in Nashville, Tennessee.
23.1 Consent of Richard A. Eisner & Filed herewith
Company, LLP
27.1 Financial Data Schedule Filed herewith
b. REPORTS ON FORM 8-K:
No reports on Form 8-K were filed by the Company during the fiscal
quarter ended March 31, 1996.
-21-
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
- I N D E X -
PAGE
NUMBER
REPORT OF INDEPENDENT AUDITORS F-2
BALANCE SHEETS AS AT MARCH 31, 1996
AND MARCH 31, 1995 F-3
STATEMENTS OF OPERATIONS FOR EACH OF
THE YEARS IN THE THREE-YEAR PERIOD
ENDED MARCH 31, 1996 F-4
STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY FOR EACH OF THE YEARS IN THE
THREE-YEAR PERIOD ENDED MARCH 31, 1996 F-5
STATEMENTS OF CASH FLOWS FOR EACH OF
THE YEARS IN THE THREE-YEAR PERIOD
ENDED MARCH 31, 1996 F-6
NOTES TO FINANCIAL STATEMENTS F-7
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Motorcar Parts & Accessories, Inc.
Torrance, California
We have audited the accompanying balance sheets of Motorcar Parts &
Accessories, Inc. as at March 31, 1996 and March 31, 1995 and the related
statements of operations, changes in shareholders' equity and cash flows for
each of the three years in the period ended March 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements enumerated above present
fairly, in all material respects, the financial position of Motorcar Parts &
Accessories, Inc. at March 31, 1996 and March 31, 1995 and the results of its
operations, and its cash flows for each of the three years in the period ended
March 31, 1996, in conformity with generally accepted accounting principles.
/s/ Richard A. Eisner & Company, LLP
New York, New York
May 17, 1996
F-2
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
A S S E T S MARCH 31,
----------- -------------------------
(Note E) 1996 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note A[1]) ..................... $ 164,000 $ 611,000
Short-term investments (Notes A[2] and B) ................. 8,336,000 616,000
Accounts receivable - net of allowance
for doubtful accounts (Notes A[3] and J) ................. 17,264,000 10,675,000
Inventory (Notes A[4] and C) ............................... 28,551,000 12,117,000
Prepaid expenses and other current assets .................. 637,000 337,000
Deferred income tax asset (Notes A[5]
and K) ................................................... 226,000 45,000
----------- -----------
Total current assets ................................ 55,178,000 24,401,000
Long-term investments (Notes A[2] and B) ..................... 2,393,000
Plant and equipment - net (Notes A[6] and D) ................. 2,469,000 1,323,000
Other assets .................................................. 149,000 99,000
----------- -----------
T O T A L ........................................... $60,189,000 $25,823,000
=========== ===========
L I A B I L I T I E S
---------------------
Current liabilities:
Current portion of capital lease
obligations (Note E) ..................................... $ 554,000 $ 183,000
Accounts payable and accrued expenses ...................... 8,855,000 5,549,000
Income taxes payable (Notes A[5] and K) ................... 1,331,000 546,000
Due to affiliate (Note G) ................................. 184,000 27,000
----------- -----------
Total current liabilities ........................... 10,924,000 6,305,000
Long-term debt (Note F) ....................................... 14,541,000 8,989,000
Capitalized lease obligations - less current
portion (Note E) ........................................... 594,000 513,000
Deferred income tax liability (Notes A[5]
and K) ..................................................... 99,000
-----------
T o t a l ........................................... 26,158,000 15,807,000
----------- -----------
Commitments and other matters
(Notes H, I and J)
SHAREHOLDERS' EQUITY
--------------------
(Note L)
Preferred stock; par value $.01 per share,
5,000,000 shares authorized; none issued
Common stock; par value $.01 per share,
10,000,000 shares authorized;
4,819,750 and 3,207,500 shares issued and
outstanding ................................................ 48,000 32,000
Additional paid-in capital .................................... 28,431,000 8,078,000
Retained earnings ............................................. 5,552,000 1,906,000
----------- -----------
Total shareholders' equity .......................... 34,031,000 10,016,000
----------- -----------
T O T A L ........................................... $60,189,000 $25,823,000
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
F-3
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Net sales (Note A[7]) ... $ 44,913,000 $ 28,257,000 $ 20,575,000
------------ ------------ ------------
Operating expenses:
Cost of goods sold ...... 31,520,000 19,712,000 13,373,000
Selling expenses ........ 1,984,000 1,498,000 2,117,000
General and
administrative expenses 4,577,000 3,704,000 2,593,000
Moving expenses including
abandonment of leases . 256,000
------------ ------------ ------------
Total operating
expenses ....... 38,081,000 24,914,000 18,339,000
------------ ------------ ------------
Operating income ........... 6,832,000 3,343,000 2,236,000
Interest expense (net of
interest income of
$219,000 and $73,000 for
1996 and 1995) ........... (833,000) (540,000) (453,000)
------------ ------------ ------------
Income before income taxes . 5,999,000 2,803,000 1,783,000
Provision for income taxes
(Notes A[5] and K) ..... 2,353,000 1,197,000 251,000
------------ ------------ ------------
Net income - historical .... $ 3,646,000 $ 1,606,000 1,532,000
============ ============
Pro forma:
Pro forma additional
income taxes
(Notes A[5] and K) ... 477,000
------------
Pro forma net income .... $ 1,055,000
============
Weighted average common
shares outstanding
(Note A[8]) ............. 3,939,000 3,295,000 2,018,000
============ ============ ============
Net income per common share
(pro forma for 1994) ..... $ .93 $ .49 $ .52
============ ============ ============
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
F-4
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Note L)
<TABLE>
<CAPTION>
Common Stock
--------------------------
Additional
Number of Paid-in Retained
Shares Amount Capital Earnings Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance - March 31, 1993 ......................... 2,000,000 $ 20,000 $ 803,000 $ 1,451,000 $ 2,274,000
Net income ....................................... 1,532,000 1,532,000
Distribution to shareholders ..................... (1,165,000) (1,165,000)
Transfer of undistributed S corporation retained
earnings to additional paid-in capital 1,518,000 (1,518,000) - 0 -
(Note A[5]) ......................................
Proceeds from public offering (net of costs of
$1,476,000) ................................... 1,207,500 12,000 5,757,000 5,769,000
----------- ----------- ----------- ----------- -----------
Balance - March 31, 1994 ......................... 3,207,500 32,000 8,078,000 300,000 8,410,000
Net income ....................................... - 0 - - 0 - - 0 - 1,606,000 1,606,000
----------- ----------- ----------- ----------- -----------
Balance - March 31, 1995 ......................... 3,207,500 32,000 8,078,000 1,906,000 10,016,000
Proceeds from exercise of warrants and options ... 112,250 1,000 867,000 868,000
Proceeds from public offering (net of costs of
$1,874,000) ................................... 1,500,000 15,000 19,486,000 19,501,000
Net income ....................................... - 0 - - 0 - - 0 - 3,646,000 3,646,000
----------- ----------- ----------- ----------- -----------
BALANCE - MARCH 31, 1996 ......................... 4,819,750 $ 48,000 $28,431,000 $ 5,552,000 $34,031,000
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
F-5
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------
1996 1995 1994
------ ------ -----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ........................................................... $ 3,646,000 $ 1,606,000 $ 1,532,000
Adjustments to reconcile net income to net cash (used in) operating
activities:
Loss on abandonment and disposal of assets ....................... 159,000
Depreciation and amortization .................................... 429,000 306,000 160,000
(Increase) decrease in:
Accounts receivable ............................................ (6,589,000) (6,409,000) (566,000)
Inventory ...................................................... (16,434,000) (4,886,000) (2,625,000)
Prepaid expenses and other assets .............................. (300,000) (115,000) (91,000)
Other assets ................................................... (50,000) 29,000 (15,000)
Deferred income taxes .......................................... (82,000) 20,000 (65,000)
Increase (decrease) in:
Accounts payable and accrued expenses .......................... 3,094,000 2,486,000 69,000
Income taxes payable ........................................... 785,000 290,000 256,000
Due to affiliate ............................................... 157,000 (48,000)
------------ ------------
Net cash (used in) operating activities .................... (15,344,000) (6,721,000) (1,186,000)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment ............................ (657,000) (375,000) (293,000)
Investments .......................................................... (10,113,000) (616,000)
------------ ------------
Net cash (used in) investing activities .................... (10,770,000) (991,000) (293,000)
------------ ------------ ------------
Cash flows from financing activities:
Net increase in line of credit ....................................... 5,552,000 4,683,000 951,000
Payments of long-term debt ........................................... (254,000) (278,000)
Payments on capital lease obligation ................................. (158,000) (91,000)
Distributions to shareholders ........................................ (1,165,000)
Proceeds from public offerings ....................................... 19,501,000 5,769,000
Proceeds from exercise of warrants and options ....................... 868,000
------------ ------------ ------------
Net cash provided by financing activities .................. 25,667,000 4,525,000 5,186,000
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................... (447,000) (3,187,000) 3,707,000
Cash and cash equivalents - beginning of year ........................... 611,000 3,798,000 91,000
------------ ------------ ------------
CASH AND CASH EQUIVALENTS - END OF YEAR ................................. $ 164,000 $ 611,000 $ 3,798,000
============ ============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ........................................................... $ 1,035,000 $ 572,000 $ 447,000
Income taxes ....................................................... 1,590,000 862,000 67,000
Noncash investing and financing activities:
Property acquired under capital lease .............................. 707,000 93,000 834,000
Property acquired included in accounts payable and accrued
expenses subsequently financed through a capitalizable lease ..... 212,000
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
F-6
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------------------
Motorcar Parts & Accessories, Inc. (the "Company"), remanufactures
and distributes alternators and starters and assembles and distributes spark
plug wire sets for the automotive after-market industry (replacement parts sold
for use on vehicles after initial purchase). The Company's alternators and
starters are produced principally for use in imported cars. The spark plug wire
sets are produced for use in imported as well as domestic cars. These automotive
parts are sold to automotive retail chains and warehouse distributors throughout
the United States.
[1] CASH EQUIVALENTS:
-----------------
The Company considers all highly liquid short-term investments with a
maturity of three months or less to be cash equivalents.
[2] INVESTMENTS:
------------
The Company's marketable securities are classified as available for
sale and reported at fair value which approximates amortized cost. Any
unrealized gains or losses are classified as a separate component of
shareholders' equity.
[3] ACCOUNTS RECEIVABLE - ALLOWANCE:
--------------------------------
The Company protects itself from losses due to uncollectible accounts
receivable through the purchase of credit insurance except for receivables due
from a limited number of accounts due from leading automotive parts retailers,
which exceed the insurance coverage and certain small balances. Beginning in
fiscal year 1996 an allowance for estimated uncollectible accounts receivable is
provided.
[4] INVENTORY:
----------
Inventory is stated at the lower of cost or market, cost being
determined by the average cost method.
(continued)
F-7
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
[5] INCOME TAXES:
-------------
Prior to the Company's initial public offering, the Company had
elected to be treated as an S corporation pursuant to Section 1362(a) of the
Internal Revenue Code for federal and state income tax purposes. As a result of
this election, the income of the Company was generally taxed directly to the
individual shareholders, and, when withdrawn, could be done so without any
further tax consequences. Except for certain states which require a minimum tax
payment for S corporations, the historical financial statements do not include a
provision for income taxes for the period prior to the
(continued)
F-8
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------------------
(continued)
[5] INCOME TAXES: (continued)
-------------
termination of the S election on January 1, 1994. A pro forma provision for
income taxes has been reflected which represents taxes which would have been
provided had the business operated as a C corporation for the entire year ended
March 31, 1994 (Note K).
Effective on January 1, 1994, provisions for taxes have been
calculated as a C corporation. The Company has adopted Statement of Financial
Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes" which
requires the use of the liability method of accounting for income taxes. The
liability method measures deferred income taxes by applying enacted statutory
rates in effect at the balance sheet date to the differences between the tax
bases of assets and liabilities and their reported amounts in the financial
statements. The resulting asset or liability is adjusted to reflect changes in
the tax laws as they occur.
Upon termination of the S corporation election, the retained earnings
balance as of the date of termination, approximately $1,518,000, was transferred
to additional paid-in capital.
[6] DEPRECIATION AND AMORTIZATION:
------------------------------
Property and equipment are depreciated on the straight-line method
over their estimated useful lives. Leasehold improvements are amortized by the
straight-line method over the shorter of their estimated useful life or the term
of the lease.
[7] REVENUE RECOGNITION:
--------------------
The Company recognizes sales when products are shipped. The Company
obtains used alternator and starter units, commonly known as cores, principally
from its customers as trade-ins. Cores are an essential material need for
remanufacturing operations. Net sales are reduced to reflect deductions for
cores returned for credit and other deductions for trade-ins and allowances, and
cost of goods sold is reduced by the cost of the cores returned. Such trade-ins
are recorded upon receipt of cores from customers. Credits for cores and
(continued)
F-9
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
product trade-ins are allowed only against purchases of similar remanufactured
products and are generally used within sixty days of issuance by the customer.
(continued)
F-10
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------------------
(continued)
[7] REVENUE RECOGNITION: (continued)
--------------------
Due to this existing trade-in policy, the Company does not reserve for
trade-ins. In addition, since it is remote that a customer will not utilize its
trade-in credits, the credit is recorded when the core is returned as opposed to
when the customer purchases new products. This policy is consistent throughout
the remanufacturing and rebuilding industry.
The effect of this policy is as follows:
March 31,
-------------------------------------------
1996 1995 1994
------------- ------------- -------------
Sales net of product
trade-in. . . . . . $ 64,358,000 $ 39,235,000 $ 29,018,000
Core - trade-in. . . . (19,445,000) (10,978,000) (8,443,000)
------------- ------------- -------------
Sales as reported. . . $ 44,913,000 $ 28,257,000 $ 20,575,000
============= ============= ============
Cost of sales - gross. $ 50,965,000 $ 30,690,000 $ 21,816,000
Core - trade-in. . . . (19,445,000) (10,978,000) (8,443,000)
------------- ------------- -------------
Cost of sales as
reported. . . . . . $ 31,520,000 $ 19,712,000 $ 13,373,000
============= ============= ============
Included as a reduction of sales are product trade-ins of $9,468,000,
$6,037,000, and $4,608,000 for the years ended March 31, 1996, March 31, 1995
and March 31, 1994, respectively. Product trade-in represents the value of
credits issued in excess of core inventory values.
[8] EARNINGS PER SHARE:
-------------------
For March 31, 1996 and March 31, 1995 earnings per share is computed
using the weighted average number of shares outstanding during each year, which
include the effect of common stock equivalents consisting of stock options.
For March 31, 1994, pro forma net income per share is computed using
the weighted average number of shares outstanding
(continued)
F-11
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
during the year. Common stock equivalents consisting of stock options are not
reflected as the effect is not material.
(continued)
F-12
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES:
- ---------------------------------------------------------------
(continued)
[9] USE OF ESTIMATES:
-----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
[10] CHANGE IN ACCOUNTING PRINCIPLE AND RECENTLY ISSUED
--------------------------------------------------
ACCOUNTING PRONOUNCEMENTS:
--------------------------
In 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"), and
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 121 requires, among other things, that entities
identify events or changes in circumstances which indicate that the carrying
amount of an asset may not be recoverable. SFAS 123 requires, among other
things, that companies establish a fair value based method of accounting or
disclosure for stock-based compensation plans. The Company believes that
adoption of SFAS 121 and SFAS 123 will not have a material impact on its
financial statements. The Company expects to continue to account for employee
stock based compensation in accordance with Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees", using intrinsic values with
appropriate disclosures using the fair value based method. The Company has not
elected to adopt SFAS 123 early.
[11] FINANCIAL INSTRUMENTS:
----------------------
The carrying amounts of accounts receivable, accounts payable,
accrued expenses, capitalized lease obligations and long-term debt approximate
their fair value.
Estimated fair value of these financial instruments, some of which
are for short durations, have been determined using available
(continued)
F-13
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
market information. In evaluating the fair value information, considerable
judgment is required to interpret the market data used to develop the estimates.
The use of different market assumptions and/or different valuation techniques
may have a material effect on the estimated fair value amounts. Accordingly, the
estimates of fair value presented herein may not be indicative of the amounts
that could be realized in a current market exchange.
(continued)
F-14
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE B) - INVESTMENTS:
The fair value of investments at March 31, were as follows:
1996 1995
---- ----
U.S. Treasury bills due in
one year or less . . . . . . $ 2,272,000 $616,000
Municipal bonds due in one
year or less . . . . . . . . 4,492,000 - 0 -
U.S. Treasury notes due in
one year or less . . . . . . 1,572,000 - 0 -
------------ -------
8,336,000 616,000
Municipal bonds due within two
years . . . . . . . . . . . 2,393,000 - 0 -
------------ -------
T O T A L. . . . . . . $10,729,000 $616,000
============ ========
(NOTE C) - INVENTORY:
Inventory is comprised of the following:
MARCH 31,
------------------
1996 1995
---- ----
Raw materials . . . . . . . . . $17,568,000 $ 8,299,000
Work-in-process . . . . . . . . 3,466,000 1,397,000
Finished goods. . . . . . . . . 7,517,000 2,421,000
------------ -----------
T o t a l . . . . . . $28,551,000 $12,117,000
============ ===========
(continued)
F-15
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE D) - PLANT AND EQUIPMENT:
- -------------------------------
Plant and equipment, at cost, are summarized as follows:
MARCH 31,
-----------------
1996 1995
---- ----
Machinery and equipment . . . . $ 2,311,000 $ 892,000
Office equipment and fixtures . 891,000 785,000
Leasehold improvements. . . . . 365,000 315,000
------------ ----------
3,567,000 1,992,000
Less accumulated depreciation
and amortization (including
assets held under capital
lease) . . . . . . . . . . . (1,098,000) (669,000)
------------ -----------
T o t a l . . . . . . $ 2,469,000 $1,323,000
============ ==========
(NOTE E) - OBLIGATIONS UNDER CAPITAL LEASES:
- --------------------------------------------
The Company has various capital leases for machinery and computer
equipment. Assets aggregating approximately $1,652,000 have been capitalized.
Future minimum lease payments at March 31, 1996 for the capitalized
leases are as follows:
1997 . . . . . . . . . . . . . . . . . $ 647,000
1998 . . . . . . . . . . . . . . . . . 532,000
1999 . . . . . . . . . . . . . . . . . 95,000
2000 . . . . . . . . . . . . . . . . . 4,000
----------
1,278,000
Amount representing imputed interest . 130,000
Present value of future minimum
lease payments. . . . . . . . . . . 1,148,000
Less current maturities. . . . . . . . 554,000
----------
Long-term obligation at March 31, 1996 $ 594,000
==========
(continued)
F-16
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE F) - LONG-TERM DEBT:
- --------------------------
In September 1995, the Company amended its revolving line of credit
agreement. The agreement provides for a credit facility in an aggregate
principal amount not exceeding $15,000,000 and is secured by a lien on
substantially all of the assets of the Company. The agreement expires on June 1,
1997 and provides for interest on borrowings at the lower of the bank's prime
rate or LIBOR plus 1.75%. The agreement allows the Company to obtain from the
bank letters of credit, and banker's acceptances in an aggregate amount not
exceeding $2,500,000 and requires the Company to maintain certain financial
ratios. As of March 31, 1996 balances due under this agreement amounted to
$14,541,000.
The Company previously had a $10,000,000 revolving line of credit
agreement with the same bank. Balances due under this agreement amounted to
$8,989,000 as of March 31, 1995.
(NOTE G) - RELATED PARTIES:
- ---------------------------
The Company conducts business with MVR Products Co. PTE, Ltd.
("MVR"). MVR operates a shipping warehouse which conducts business with Unijoh
Sdn, Bhd ("Unijoh"). Unijoh operates a remanufacturing facility similar to the
Company. MVR's warehouse is located in Singapore and Unijoh's factory is located
in Malaysia. Two shareholders/officers/directors of the Company own 70% of both
MVR and Unijoh, with the remaining 30% owned by an unrelated third party. All of
the cores processed by Unijoh are produced for the Company on a contract
remanufacturing basis. The cores and other raw materials used in production by
Unijoh are supplied by the Company and are included in the Company's inventory.
Inventory owned by the Company and held by MVR and Unijoh was $920,000 and
$1,002,000 as at March 31, 1996 and March 31, 1995, respectively. The Company
incurred costs of approximately $1,432,000, $1,349,000 and $1,814,000 from the
affiliates for the years ended March 31, 1996, March 31, 1995 and March 31,
1994, respectively. The amount due to affiliate as at March 31, 1996 and March
31, 1995 was due to MVR.
(continued)
F-17
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE H) - EMPLOYMENT AGREEMENT AND BONUS PLAN:
- -----------------------------------------------
The Company has employment agreements with five officers, expiring
from September 30, 1996 through September 30, 2000, which provide for annual
base salaries aggregating $865,000. In addition, three of the officers were
granted options pursuant to the Company's Stock Option Plan (Note L[2]) for the
purchase of 225,000 shares of common stock (90,000 and 135,000 granted in fiscal
year 1996 and 1995, respectively). At March 31, 1996, 10,000 of these options
were exercised.
(continued)
F-18
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE H) - EMPLOYMENT AGREEMENT AND BONUS PLAN: (continued)
- ----------------------------------------------- -----------
The Company has established a bonus plan for the benefit of
executives and certain key employees. The bonus is calculated as a percentage of
the base salary ranging from 18% to 50%. The bonus percentage varies according
to the percentage increase in earnings before income taxes and other
predetermined parameters.
(NOTE I) - COMMITMENTS:
- -----------------------
The Company leases offices and warehouse facilities in New York,
California and Tennessee under operating leases expiring through 1998. The
aggregate rentals under these leases and leases which have been terminated was
$609,000, $435,000 and $380,000 for the years ended March 31, 1996, March 31,
1995 and March 31, 1994, respectively. Certain leases contain escalation clauses
for real estate taxes and operating expenses.
The Company also leases office equipment and machinery under
noncancellable operating leases having remaining terms in excess of one year.
At March 31, 1996, the future minimum rental payments under the above
operating leases are as follows:
Real
Total Estate Machinery
----- ------ ---------
1997. . . . . . . . . $ 967,000 $ 801,000 $166,000
1998. . . . . . . . . 946,000 819,000 127,000
1999. . . . . . . . . 686,000 604,000 82,000
2000. . . . . . . . . 33,000 33,000
2001. . . . . . . . . 5,000 5,000
----------- ----------- --------
T o t a l . $2,637,000 $2,224,000 $413,000
=========== =========== ========
(continued)
F-19
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE J) - MAJOR CUSTOMERS:
- ---------------------------
The Company's six largest customers accounted for the following
percentage of net sales:
Year Ended
March 31,
--------------------------------
CUSTOMER 1996 1995 1994
-------- ---- ---- ----
A......................... 21% 27% 30%
B......................... 11 14
C......................... 20 12
D......................... 18
E......................... 10
F......................... 10
Customer A accounted for approximately 25% and 50% of the accounts
receivable at March 31, 1996 and March 31, 1995. In addition, Customer C
accounted for approximately 35% of the accounts receivable at March 31, 1996.
(NOTE K) - INCOME TAXES:
- ------------------------
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
Year Ended March 31,
-----------------------------------------
1996 1995 1994
-----------------------------------------
<S> <C> <C> <C>
Current:
Federal .......................... $ 1,913,000 $ 900,000 $ 207,000
State ............................ 522,000 277,000 109,000
Deferred tax benefit applicable
to temporary differences
upon becoming a C
corporation (Note A[5]) .......... (65,000)
Deferred tax ........................... (82,000) 20,000
----------- ----------- -----------
Provision for income taxes -
historical .................. 2,353,000 1,197,000 251,000
Pro forma income taxes ... 477,000
----------- ----------- -----------
T o t a l....... $ 2,353,000 $ 1,197,000 $ 728,000
=========== =========== ===========
</TABLE>
(continued)
F-20
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE K) - INCOME TAXES: (continued)
- ------------------------ -----------
The difference between the tax provision and the amount that would be
computed by applying the statutory federal income tax rate to income before
taxes is attributable to the following:
YEAR ENDED MARCH 31,
------------------------------
1996 1995 1994
---- ---- ----
(Pro Forma)
Income tax provision at 34% . . . . $2,040,000 $ 953,000 $606,000
State and local taxes, net of
federal benefit . . . . . . . . . 345,000 183,000 122,000
Permanent differences . . . . . . . 18,000 11,000
Other . . . . . . . . . . . . . (50,000) 50,000
----------- ---------- --------
T o t a l . . . . $2,353,000 $1,197,000 $ 728,000
========== ========== ========
Deferred income tax asset of $226,000 and $45,000 at March 31, 1996
and March 31, 1995, respectively, is comprised of temporary differences in tax
and financial reporting resulting primarily from capitalization of certain
inventory costs for tax purposes. Deferred tax liability of $99,000 at March 31,
1996 is comprised of differences resulting from using accelerated depreciation
rates for tax purposes.
(NOTE L) - SHAREHOLDERS' EQUITY:
- --------------------------------
[1] CAPITAL STOCK:
-------------
In January 1994, the Company effected a 36,803.403 to 1 stock split
of the outstanding common stock resulting in 2,000,000 common shares
outstanding. The stock split has been reflected retroactively in the
accompanying financial statements for all periods presented.
In November 1995, the Company effected a public offering of its
securities. The Company issued 1,500,000 shares for $14.25 a share, yielding net
proceeds of approximately $19,501,000 after underwriting commissions and
expenses totalling approximately $1,874,000. Also, two principal shareholders
sold an aggregate of 344,500 shares in connection with this offering.
(continued)
F-21
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(NOTE L) - SHAREHOLDERS' EQUITY: (continued)
- --------------------------------
[2] STOCK OPTION PLAN:
------------------
In December 1993, the shareholders approved a Stock Option Plan (the
"Plan") which provides for the granting of options to purchase 450,000 common
shares to employees and directors. Options granted may be either "incentive
stock options" within the meaning of Section 422A of the Internal Revenue Code
or nonqualified options. The Plan is administered by the Board of Directors,
which determines the terms of options exercised, including the exercise price,
the number of shares subject to the option and the terms and conditions of
exercise.
In August of 1995, the shareholders approved a Nonemployee Director
Stock Option Plan which provides for the granting of options to purchase 15,000
common shares to directors. The Plan is administered by the Board of Directors.
The following table summarizes the activity under these
Plans:
Exercise
Price Exercisable
--------- -----------
Options outstanding. . . 4/1/94 85,000 $6.00 27,000
=======
Granted. . . . . . . . . 165,000 $8.00-$8.125
--------
Options outstanding. . . 3/31/95 250,000 $6.00-$8.125 173,000
=======
Exercised. . . . . . . . (23,000) $6.00-$8.125
Forfeited. . . . . . . . (1,000) $8.125
Granted. . . . . . . . . 109,000 $9.00-$13.125
--------
Options outstanding. . . 3/31/96 335,000 $6.00-$13.125 278,000
======== =======
[3] WARRANTS:
---------
In connection with the Company's initial public offering the Company
issued to the underwriter 105,000 warrants to purchase common stock at an
exercise price of $7.20. In connection with a public offering in November 1995,
90,000 warrants were exercised.
F-22
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: June 26, 1996
MOTORCAR PARTS & ACCESSORIES, INC.
By: /S/ MEL MARKS
---------------------------
Mel Marks,
Chairman of the Board and
Chief Executive Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ MEL MARKS Chairman of the Board, June 26, 1996
- --------------------------- Chief Executive Officer
Mel Marks and Director (principal
executive officer)
/S/ RICHARD MARKS President, Chief Operating June 28, 1996
- --------------------------- Officer and Director
Richard Marks
/S/ MURRAY ROSENZWEIG Director June 25, 1996
- ---------------------------
Murray Rosenzweig
/S/ MEL MOSKOWITZ Director June 26, 1996
- ---------------------------
Mel Moskowitz
/S/ SELWYN JOFFE Director June 26, 1996
- ---------------------------
Selwyn Joffe
/S/ PETER BROMBERG Chief Financial Officer June 26, 1996
- --------------------------- (principal financial officer
Peter Bromberg and principal accounting officer)
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description Page Number
- ------ ----------- -----------
23.1 Consent of Richard A. Eisner & Company, LLP
27.1 Financial Data Schedule
<PAGE>
COMMISSION FILE NO. 0-23538
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
to
FORM 10-KSB
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1996
MOTORCAR PARTS & ACCESSORIES, INC.
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the
Registration Statement pertaining to the 1994 stock option plan of Motorcar
Parts & Accessories, Inc. on Form S-8 of our report dated May 17, 1996 which is
included in the annual report on Form 10-KSB for the year ended March 31, 1996.
/s/ Richard A. Eisner & Company, LLP
New York, New York
June 27, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000918251
<NAME> MOTORCAR PARTS & ACCESSORIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 164,000
<SECURITIES> 0
<RECEIVABLES> 17,264,000
<ALLOWANCES> 100,000
<INVENTORY> 28,551,000
<CURRENT-ASSETS> 55,178,000
<PP&E> 2,469,000
<DEPRECIATION> 1,098,000
<TOTAL-ASSETS> 60,189,000
<CURRENT-LIABILITIES> 10,924,000
<BONDS> 0
0
0
<COMMON> 48,000
<OTHER-SE> 33,983,000
<TOTAL-LIABILITY-AND-EQUITY> 60,189,000
<SALES> 44,913,000
<TOTAL-REVENUES> 44,913,000
<CGS> 31,520,000
<TOTAL-COSTS> 38,081,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 833,000
<INCOME-PRETAX> 5,999,000
<INCOME-TAX> 2,353,000
<INCOME-CONTINUING> 3,646,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,646,000
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.93
</TABLE>
