<PAGE>
EXHIBIT 99.3
INTERIM FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 2000
(Unaudited)
MOTORCAR PARTS & ACCESSORIES, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS September 30, March 31,
2000 2000
---------------- ----------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 0 $ 1,123,000
Short term investments - Deferred compensation plan assets 213,000 224,000
Accounts receivable - net 13,039,000 15,263,000
Inventory - net 33,952,000 36,246,000
Income tax refund receivable 1,167,000 1,173,000
Prepaid expenses and other current assets 512,000 313,000
---------------- ----------------
Total current assets 48,883,000 54,342,000
Plant and equipment - net 10,061,000 11,375,000
Deferred tax asset 3,250,000 3,250,000
Income tax refund receivable 2,484,000 2,486,000
Other assets 206,000 348,000
---------------- ----------------
TOTAL $ 64,884,000 $ 71,801,000
================ ================
LIABILITIES
Current liabilities:
Accounts payable $ 7,776,000 $ 9,502,000
Accrued liabilities 3,167,000 3,843,000
Line of credit 31,827,000 36,661,000
Deferred compensation 222,000 234,000
Current portion of capital lease obligations 1,106,000 1,106,000
---------------- ----------------
Total current liabilities 44,098,000 51,346,000
Capitalized lease obligations, less current portion 2,540,000 3,062,000
SHAREHOLDERS' EQUITY
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issues - -
Common stock; par value $.01 per share, 20,000,000 shares authorized;
6,460,455 shares issued and outstanding at September 30, 2000 and March 31, 2000 65,000 65,000
Additional paid-in capital 51,281,000 51,281,000
Accumulated other comprehensive loss (86,000) (95,000)
Accumulated deficit (33,014,000) (33,858,000)
---------------- ----------------
Total shareholders' equity 18,246,000 17,393,000
---------------- ----------------
TOTAL $ 64,884,000 $ 71,801,000
================ ================
</TABLE>
The accompanying condensed notes to financial statements are an integral part
hereof.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months Three Months
Ended Ended
September 30, September 30,
2000 2000
----------------- -----------------
<S> <C> <C>
Net sales $ 85,365,000 $ 43,964,000
Cost of goods sold 77,832,000 40,263,000
----------------- -----------------
Gross profit 7,533,000 3,701,000
Operating expenses:
General and administrative 3,810,000 1,724,000
Research and development 266,000 118,000
Sales and marketing 594,000 276,000
----------------- -----------------
Total operating expenses 4,670,000 2,118,000
----------------- -----------------
Operating income 2,863,000 1,583,000
Interest expense - net 2,019,000 1,017,000
----------------- -----------------
Net income $ 844,000 $ 566,000
================= =================
Basic net income per share $ 0.13 $ 0.09
================= =================
Weighted average number of shares outstanding
Basic 6,460,455 6,460,455
</TABLE>
The accompanying condensed notes to financial statements are an integral part
hereof.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
September 30,
2000
-----------------
<S> <C>
Cash flows from operating activities:
Net income $ 844,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 1,481,000
(Increase) decrease in:
Accounts receivable 2,224,000
Inventory 2,294,000
Prepaid expenses and other current assets (199,000)
Income tax receivable 8,000
Other assets 142,000
Increase (decrease) in:
Accounts payable and accrued expenses (2,402,000)
Deferred compensation 11,000
-----------------
Net cash provided by operating activities 4,403,000
-----------------
Cash flows from investing activities:
Purchase of property, plant and equipment (167,000)
Change in investments (12,000)
-----------------
Net cash used by investing activities (179,000)
-----------------
Cash flows from financing activities:
Net repayments under line of credit (4,834,000)
Payments on capital lease obligation (522,000)
-----------------
Net cash used by financing activities (5,356,000)
-----------------
EFFECT OF EXCHANGE RATE ON CASH 9,000
-----------------
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,123,000)
Cash and cash equivalents - beginning of period 1,123,000
-----------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 0
-----------------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,882,411
=================
</TABLE>
The accompanying condensed notes to financial statements are an integral part
hereof.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Condensed Notes to Financial Statements
September 30, 2000
(Unaudited)
NOTE 1 - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
Motorcar Parts & Accessories, Inc., and its subsidiaries (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). These automotive parts are sold to automotive chain stores
servicing the Do-it-for-me (DIFM) and Do-it-yourself (DIY) markets throughout
the United States and in Canada as well as aftermarket alternators and
starters to a major automotive manufacturer.
[1] Principles of consolidation:
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries as of September 30,
2000. All significant intercompany accounts and transactions have been
eliminated in consolidation.
[2] Basis of presentation:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion
of Management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month period(s) ended
September 30, 2000 are not necessarily indicative of the results that
may be expected for the year ending March 31, 2001. For further
information, refer to the audited financial statements and notes
thereto for the year ended March 31, 2000 attached as Exhibit 99.1 to
this Form 8-K.
[3] Seasonality of business:
Due to the nature and design as well as the current limits of
technology, alternators and starters traditionally fail when operating
in extreme conditions. That is, during summer months, when the
temperature typically increase over a sustained period of time,
alternators and starters are more apt to fail and thus, an increase in
demand for the Company's products occurs. Similarly, during winter
months, when the temperature is colder, alternators and starters tend
to fail and require replacing immediately, since these parts are
mandatory for the operation of the vehicle. As such, summer months tend
to show an increase in overall volume with a few spikes in the winter.
NOTE 2 - INVENTORY
Effective April 1, 1999, management adopted a new methodology for
accounting for inventory. Management believes that the new methodology better
reflects the economics of its business while providing a better measurement
under generally accepted accounting principles. Under the Company's new
accounting methodology, in recording core inventory at the lower of cost or
market, the Company determines the market value based on comparisons to
current core broker prices. Such values are normally less than the core value
credited to customers' accounts when cores are returned to the Company as
trade-ins. In prior years when the Company valued its inventory at the lower
of cost or market, cost was determined using an average weighted cost method
and the market value of cores was determined by the weighted average of the
repurchase price of cores acquired from the Company's customers and the price
of cores purchased from core brokers. Additionally, management reviews core
inventory to identify excess quantities and maturing product lines. An
allowance for obsolescence is provided to reduce the carrying (market) value
of inventory to its estimated market value. Because several of the Company's
competitors filed for bankruptcy protection in the late 1990s, the supply of
cores has increased considerably. This has tended to reduce the carrying
value of the Company's inventory.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Notes to Financial Statements
(Unaudited)
NOTE 2 - INVENTORY (Continued)
Inventory is comprised of the following:
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
---------------- -----------------
(Unaudited)
<S> <C> <C>
Raw materials and cores $ 26,988,000 $ 24,393,000
Work-in-process 2,093,000 1,758,000
Finished goods 9,833,000 15,351,000
Less allowance for excess and obsolete inventory (4,962,000) (5,256,000)
---------------- -----------------
Total $ 34,092,000 $ 36,246,000
================ =================
</TABLE>
NOTE 3 - LINE OF CREDIT
Pursuant to an agreement dated August 1, 1998, as amended on April
15, 1999 and restated on April 20, 2000 and amended September 15, 2000, the
Company has a revolving line of credit with a bank for a credit facility in
an aggregate principal amount not exceeding $36.25 million as of September
30, 2000. The maximum credit facility is reduced to $35.75 million as of
October 31, 2000, $35.25 million as of November 30, 2000, $34.75 million as
of December 31, 2000, $34.25 as of January 31, 2001, $33.75 million as of
February 28, 2001 and $33 million as of March 31, 20001. Additional permanent
reductions shall be made for 100 percent of the net proceeds from (i) the
sale of assets outside the ordinary course of business, (ii) the issuance of
any debt or equity issued by the Company, (iii) any insurance payments
received (exclusive of Director's and officers' insurance) in connection with
that certain litigation pending against the Company identified as JOSEPH L.
SHALANT, IRA ON BEHALF OF HIMSELF AND OTHERS SIMILARLY SITUATED, PLAINTIFF
VS. MOTORCAR PARTS AND ACCESSORIES, INC. ET AL, DEFENDANTS (SEE NOTE N), and
(iv) all local, state or federal tax refunds received. The agreement is
collateralized by a lien on substantially all of the Company's assets.
The agreement expires on April 30, 2001 and provides for interest on
borrowings at the bank's prime rate (9.5% at September 30, 2000) plus 1%. An
annual commitment fee of .5% is due monthly on the unused portion of the line
of credit. The agreement allows the Company to obtain from the bank letters
of credit and banker's acceptances in an aggregate amount not exceeding
$1,000,000.
In connection with the restated credit agreement, the Company
granted to the bank warrants to purchase 400,000 shares of the Company's
common stock at $2.045 per share, subject to adjustment as defined in the
warrant agreement.
The credit agreement requires the Company to meet certain financial
conditions, including maintenance of certain minimum tangible net worth, cash
flow and profitability measures. In addition, the Company is required to
comply with various non-financial covenants. The Company was not in
compliance with various financial and non-financial covenants at March 31,
2000 as explained in Note H to the 2000 Financial Statements. The Company has
also agreed to provide the bank by January 26, 2001 with a letter of intent
by a third party lender for refinancing the loan.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Notes to Financial Statements
(Unaudited)
NOTE 4 -LITIGATION
The Company is a defendant in a class action lawsuit pending in the
United States District Court, Central District of California. The complaint
in the class action alleges that, over a three year period, the Company
misstated earnings in violation of the securities laws. The complaint seeks
damages on behalf of all investors who purchased common stock of the Company
from August 1, 1996 to July 30, 1999. The Company's Directors and Officers
insurance carrier has also filed a claim against the Company and certain of
its officers that seeks to rescind coverage for the claims made against the
Company and certain of its officers in the class action lawsuit. See Note O
to the 2000 Financial Statements. The Company, counsel for the class action
plaintiffs and counsel for the insurance carrier are currently engaged in
discussions to determine whether the class action lawsuit can be settled.
While management is hopeful that settlement can be reached, there can be no
assurances that settlement will be reached or that such a settlement would be
approved by the court. In the absence of final resolution of the litigation
and in view of the position articulated by the Directors and Officers
insurance carrier, continued litigation of the class action lawsuit could
have a material adverse effect on the Company.
The Company is subject to an investigation by the Securities and
Exchange Commission (SEC) relating to the same issues involved in the
above-mentioned lawsuit. The outcome of these investigations cannot presently
be determined.
The Company is subject to various other lawsuits and claims in the
normal course of business. Management does not believe that the outcome of
these matters will have a material adverse effect on its financial position
or future results of operations.
