<PAGE>
EXHIBIT 99.2
INTERIM FINANCIAL INFORMATION FOR THE THREE MONTHS ENDED
JUNE 30, 2000
(Unaudited)
MOTORCAR PARTS & ACCESSORIES, INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS June 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 208,000 224,000
Accounts receivable - net 19,267,000 15,263,000
Inventory - net 35,789,000 36,246,000
Income tax refund receivable 1,167,000 1,173,000
Prepaid expenses and other current assets 507,000 313,000
---------------- ----------------
Total current assets 56,938,000 54,342,000
Plant and equipment - net 10,747,000 11,375,000
Deferred tax asset 3,250,000 3,250,000
Income tax refund receivable 2,486,000 2,486,000
Other assets 259,000 348,000
---------------- ----------------
TOTAL $73,680,000 $71,801,000
================ ================
LIABILITIES
Current liabilities:
Accounts payable $11,399,000 $ 9,502,000
Accrued liabilities 3,077,000 3,843,000
Line of credit 37,381,000 36,661,000
Deferred compensation 218,000 234,000
Current portion of capital lease obligations 1,106,000 1,106,000
---------------- ----------------
Total current liabilities 53,181,000 51,346,000
Capitalized lease obligations less current portion 2,808,000 3,062,000
SHAREHOLDERS' EQUITY
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued - -
Common stock; par value $.01 per share, 20,000,000 shares authorized;
6,460,455 shares issued and outstanding at June 30, 2000 and March 31, 2000 65,000 65,000
Additional paid-in capital 51,281,000 51,281,000
Accumulated other comprehensive loss (75,000) (95,000)
Accumulated deficit (33,580,000) (33,858,000)
---------------- ----------------
Total shareholders' equity 17,691,000 17,393,000
---------------- ----------------
TOTAL $73,680,000 $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>
Three Months
Ended
June 30,
2000
----------------
<S> <C>
Net sales $41,401,000
Cost of goods sold 37,569,000
----------------
Gross profit 3,832,000
Operating expenses:
General and administrative 2,086,000
Research and development 148,000
Sales and marketing 318,000
----------------
Total operating expenses 2,552,000
----------------
Operating income 1,280,000
Interest expense - net 1,002,000
----------------
Net income $ 278,000
================
Basic net income per share $0.04
================
Weighted average number of shares outstanding - basic 6,460,455
</TABLE>
The accompanying condensed notes to financial statements are
an integral part hereof.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
June 30,
2000
----------------
<S> <C>
Cash flows from operating activities:
Net income $ 278,000
Adjustments to reconcile net income to net cash used by operating activities:
Depreciation and amortization 744,000
(Increase) decrease in:
Accounts receivable (4,004,000)
Inventory 457,000
Prepaid expenses and other current assets (194,000)
Other assets 89,000
Increase (decrease) in:
Accounts payable and accrued expenses 1,131,000
Deferred compensation (16,000)
Income taxes receivable 6,000
----------------
Net cash used by operating activities (1,509,000)
----------------
Cash flows from investing activities:
Purchase of property, plant and equipment (116,000)
Change in investments 16,000
----------------
Net cash used by investing activities (100,000)
----------------
Cash flows from financing activities:
Net borrowings under line of credit 720,000
Payments on capital lease obligations (254,000)
----------------
Net cash provided by financial activities 466,000
----------------
EFFECT OF EXCHANGE RATE ON CASH 20,000
----------------
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 $ 922,871
================
</TABLE>
The accompanying condensed notes to financial statements are
an integral part hereof.
<PAGE>
MOTORCAR PARTS & ACCESSORIES, INC.
Condensed Notes to Consolidated Financial Statements
June 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. 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 month period ended June 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 the summer months, when the
temperature typically increases over a sustained period of time,
alternators and starters are more apt to fail and thus increase demand
for the Company's products. 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.
Condensed Notes to Financial Statements
(Unaudited)
NOTE 2 - INVENTORY (continued)
Inventory is comprised of the following:
<TABLE>
<CAPTION>
June 30, March 31,
2000 2000
---------------- ----------------
(Unaudited)
<S> <C> <C>
Raw materials and cores $ 25,107,000 $ 24,393,000
Work-in-process 2,197,000 1,758,000
Finished goods 14,023,000 15,351,000
Less allowance for excess and obsolete inventory (5,538,000) (5,256,000)
---------------- ----------------
Total $ 35,789,000 $ 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.
Condensed 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.
