Motorcar Parts of America Reports Fiscal 2013 Second Quarter
Acquisition Transition on Track; Record Sales and Profits for Rotating Electrical Segment

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

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

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

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

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

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

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

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

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

Use of EBITDA

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

Teleconference and Web Cast

Selwyn Joffe, chairman, president and chief executive officer, and David Lee, chief financial officer, will host an investor conference call today at 10:00 a.m. Pacific time to discuss the company's financial results and operations.

The call will be open to all interested investors either through a live audio Web broadcast at www.motorcarparts.com or live by calling (877)-776-4016 (domestic) or (973)-638-3231 (international). For those who are not available to listen to the live broadcast, the call will be archived for seven days on Motorcar Parts of America's website www.motorcarparts.com. A telephone playback of the conference call will also be available from approximately 1:00 p.m. Pacific time today through 8:59 p.m. Pacific time on Tuesday, December 25, 2012 by calling (855)-859-2056 (domestic) or (404)-537-3406 (international) and using access code: 78053906.

About Motorcar Parts of America

Motorcar Parts of America, Inc. is a remanufacturer of alternators and starters utilized in imported and domestic passenger vehicles, light trucks and heavy duty applications. The company also offers a broad line of under-the-car products – including brake, steering and clutch components. Motorcar Parts of America's products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with remanufacturing facilities located in California, Mexico and Malaysia, and administrative offices located in California, Tennessee, Mexico, Canada, Singapore and Malaysia. Additional information is available at www.motorcarparts.com.

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

(Financial tables follow)

MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Three Months EndedSix Months Ended
September 30, September 30, 
 2012201120122011
Net sales  $ 111,632,000  $ 107,616,000  $ 200,655,000  $ 178,126,000
Cost of goods sold  94,911,000  92,637,000  171,820,000  156,114,000
Gross profit  16,721,000  14,979,000  28,835,000  22,012,000
Operating expenses:
General and administrative  11,193,000  11,309,000  22,757,000  19,618,000
Sales and marketing  3,904,000  3,197,000  7,443,000  5,650,000
Research and development  461,000  401,000  897,000  817,000
Acquisition costs  --   309,000  --   713,000
Total operating expenses  15,558,000  15,216,000  31,097,000  26,798,000
Operating income (loss)  1,163,000  (237,000)  (2,262,000)  (4,786,000)
Interest expense, net  6,162,000  3,389,000  11,246,000  5,303,000
Loss before income tax expense  (4,999,000)  (3,626,000)  (13,508,000)  (10,089,000)
Income tax expense  3,934,000  1,813,000  5,287,000  3,655,000
Net loss  $ (8,933,000)  $ (5,439,000)  $ (18,795,000)  $ (13,744,000)
Basic net loss per share  $ (0.62)  $ (0.44)  $ (1.32)  $ (1.11)
Diluted net loss per share  $ (0.62)  $ (0.44)  $ (1.32)  $ (1.11)
Weighted average number of shares outstanding:
Basic 14,456,921 12,451,600 14,192,235 12,367,030
Diluted 14,456,921 12,451,600 14,192,235 12,367,030
MOTORCAR PARTS OF AMERICA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
September 30, 2012March 31, 2012
ASSETS(Unaudited)
Current assets:
Cash  $ 32,328,000  $ 32,617,000
Short-term investments   368,000  342,000
Accounts receivable — net   21,829,000  20,036,000
Inventory— net  82,731,000  95,071,000
Inventory unreturned   9,318,000  9,819,000
Deferred income taxes  3,638,000  3,793,000
Prepaid expenses and other current assets   5,596,000  6,553,000
Total current assets   155,808,000  168,231,000
Plant and equipment — net   12,892,000  12,738,000
Long-term core inventory — net   192,902,000  194,406,000
Long-term core inventory deposit   27,226,000  26,939,000
Long-term deferred income taxes  2,147,000  1,857,000
Goodwill   68,356,000  68,356,000
Intangible assets — net   21,399,000  22,484,000
Other assets   8,217,000  6,887,000
TOTAL ASSETS   $ 488,947,000  $ 501,898,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: 
Accounts payable   $ 116,830,000  $ 126,100,000
Accrued liabilities   23,749,000  19,379,000
Customer finished goods returns accrual   22,647,000  21,695,000
Other current liabilities   4,831,000  2,331,000
Current portion of term loan   1,700,000  500,000
Current portion of capital lease obligations   306,000  414,000
Total current liabilities   170,063,000  170,419,000
Term loan, less current portion   92,746,000  84,500,000
Revolving loan   42,089,000  48,884,000
Deferred core revenue   10,226,000  9,775,000
Customer core returns accrual   102,445,000  113,702,000
Other liabilities   2,779,000  751,000
Capital lease obligations, less current portion   124,000  248,000
Total liabilities   420,472,000  428,279,000
Commitments and contingencies 
Shareholders' equity: 
Preferred stock; par value $.01 per share, 5,000,000 shares authorized; none issued   --  --
Series A junior participating preferred stock; par value $.01 per share,  20,000 shares authorized; none issued   --  --
Common stock; par value $.01 per share, 20,000,000 shares authorized; 14,471,321 and 12,533,821 shares issued; 14,456,921 and 12,519,421 outstanding at September 30, 2012 and March 31, 2012, respectively   145,000  125,000
Treasury stock, at cost, 14,400 shares of common stock at September 30, 2012 and March 31, 2012, respectively   (89,000)  (89,000)
Additional paid-in capital   114,489,000  98,627,000
Additional paid-in capital-warrant  --   1,879,000
Accumulated other comprehensive loss   (1,236,000)  (884,000)
Accumulated deficit   (44,834,000)  (26,039,000)
Total shareholders' equity  68,475,000  73,619,000
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $ 488,947,000  $ 501,898,000

Reconciliation of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has included the following non-GAAP adjusted financial measures in this press release or in the webcast to discuss the Company's financial results for the second quarter of fiscal year 2013. Each of these non-GAAP adjusted financial measures is adjusted from results based on GAAP to exclude certain expenses and gains.  Among other things, the Company uses such non-GAAP adjusted financial measures in addition to and in conjunction with corresponding GAAP measures to help analyze the performance of its business. 

These non-GAAP adjusted financial measures reflect an additional way of viewing aspects of the Company's operations that, when viewed with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company's results of operations and the factors and trends affecting the Company's business. However, these non-GAAP adjusted financial measures should be considered as a supplement to, and not as a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Beginning with the first quarter of fiscal year 2012, the Company has begun providing segment information. The two segments are defined as rotating electrical and acquired Fenco products now referred to as the undercar segment. Currently all corporate expenses are included under the rotating electrical segment.  Income statement information relating to the Company's reportable segments for the three months and six months ended September 30, 2012 is as follows:

Reconciliation of Non-GAAP Financial MeasuresExhibit 1
Three months ended September 30, 2012 (Unaudited)
Adjusted
RotatingUndercarAs Reported Adjustment Consolidated
Income statementElectricalProduct Line  (1) EliminationsConsolidated (Non-GAAP)   (3)  (Non-GAAP) 
Net sales  $ 57,652,000  $ 53,980,000  $ --   $ 111,632,000  $ 1,317,000  (4)   $ 112,949,000
Cost of goods sold  37,556,000  57,355,000  --   94,911,000  (2,754,000)  (5)   92,157,000
Gross profit (loss)  20,096,000  (3,375,000)  --   16,721,000  4,071,000  20,792,000
Gross margin 34.9% -6.3%  (2)  15.0% 18.4%
Operating expenses:
General and administrative  4,392,000  6,801,000  --   11,193,000  (3,247,000)  (6)   7,946,000
Sales and marketing  1,724,000  2,180,000  --   3,904,000  (747,000)  (7)   3,157,000
Research and development  461,000  --   --   461,000  461,000
Total operating expenses  6,577,000  8,981,000  --   15,558,000  (3,994,000)  11,564,000
Operating income (loss)  13,519,000  (12,356,000)  --   1,163,000  8,065,000  9,228,000
Interest expense  3,093,000  3,069,000  --   6,162,000  --   (8)   6,162,000 (B)
Income (loss) before income tax expense  10,426,000  (15,425,000)  --   (4,999,000)  8,065,000  3,066,000
Income tax expense  3,923,000  11,000  --   3,934,000  (431,000)  (9)   3,503,000 (B)
Net income (loss)  $ 6,503,000  $ (15,436,000)  $ --   $ (8,933,000)  $ 8,496,000  $ (437,000) (A)
Undercar product lines not supported 795,000  (10)  795,000
Net income (loss) - Adjusted  $ 9,291,000  $ 358,000
Diluted net income (loss) per share  $ (0.62)  $ 0.59  $ (0.03)
Undercar product lines not supported  $ 0.05  (10)   $ 0.05
Diluted net income (loss) per share - Adjusted  $ 0.64  $ 0.02
Weighted average number of shares outstanding:
Diluted 14,456,921 14,456,921 14,456,921
Depreciation and amortization  1,342,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ 10,570,000
Undercar product lines not supported  795,000
Adjusted EBITDA total  $ 11,365,000
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $0.71 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 7.6% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 2.8% for the Undercar product line segment.
(3) See following Exhibits for detailed segment analysis of results of operations.
RotatingUndercar
ElectricalProduct LineTotal
(4) Contractual customer penalties/unique customer allowances   1,317,000  1,317,000
(5) Third-party warehouse exit termination fees  1,402,000  1,402,000
Severance  1,272,000  1,272,000
Unusual freight expenses  80,000  80,000
Total  2,754,000  2,754,000
(6) Financing, severance, professional and other fees  300,000  3,445,000  3,745,000
Mark-to-market (gain)/loss  (498,000)  (498,000)
Total  (198,000)  3,445,000  3,247,000
(7) Severance  747,000  747,000
(8) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $1,273,000.
(9) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense.
(10) Certain Undercar product lines not supported resulted in a loss for the period from July 1, 2012 to September 30, 2012 of $795,000 - ($0.05) per share.
Reconciliation of Non-GAAP Financial MeasuresExhibit 2
Six months ended September 30, 2012 (Unaudited)
Adjusted
RotatingUndercarAs Reported Adjustment Consolidated
Income statementElectricalProduct Line  (1) EliminationsConsolidated (Non-GAAP)   (3)  (Non-GAAP) 
Net sales  $ 104,451,000  $ 96,204,000  $ --   $ 200,655,000  $ 3,382,000  (4)   $ 204,037,000
Cost of goods sold  69,536,000  102,284,000  --   171,820,000  (2,799,000)  (5)   169,021,000
Gross profit (loss)  34,915,000  (6,080,000)  --   28,835,000  6,181,000  35,016,000
Gross margin 33.4% -6.3%  (2)  14.4% 17.2%
Operating expenses:
General and administrative  10,306,000  12,451,000  --   22,757,000  (5,972,000)  (6)   16,785,000
Sales and marketing  3,496,000  3,947,000  --   7,443,000  (747,000)  (7)   6,696,000
Research and development  897,000  --   --   897,000  --   897,000
Total operating expenses  14,699,000  16,398,000  --   31,097,000  (6,719,000)  24,378,000
Operating income (loss)  20,216,000  (22,478,000)  --   (2,262,000)  12,900,000  10,638,000
Interest expense  5,989,000  5,257,000  --   11,246,000  --   (8)   11,246,000 (B)
Income (loss) before income tax expense  14,227,000  (27,735,000)  --   (13,508,000)  12,900,000  (608,000)
Income tax expense  5,357,000  (70,000)  --   5,287,000  (599,000)  (9)   4,688,000 (B)
Net income (loss)  $ 8,870,000  $ (27,665,000)  $ --   $ (18,795,000)  $ 13,499,000  $ (5,296,000) (A)
Undercar product lines not supported  1,506,000  (10)  1,506,000
Net income (loss) - Adjusted  $ 15,005,000  $ (3,790,000)
Diluted net income (loss) per share  $ (1.32)  $ 0.95  $ (0.37)
Undercar product lines not supported  $ 0.11  (10)   $ 0.11
Diluted net income (loss) per share - Adjusted  $ 1.06  $ (0.27)
Weighted average number of shares outstanding:
Diluted 14,192,235 14,192,235 14,192,235
Depreciation and amortization.  2,728,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ 13,366,000
Undercar product lines not supported  1,506,000
Adjusted EBITDA total  $ 14,872,000
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $1.16 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 6.4% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 1.6% for the Undercar product line segment.
(3) See following Exhibits for detailed segment analysis of results of operations.
RotatingUndercar
ElectricalProduct LineTotal
(4) Contractual customer penalties/unique customer allowances   --   3,382,000  3,382,000
(5) Third-party warehouse exit termination fees  --   1,402,000  1,402,000
Severance  --   1,272,000  1,272,000
Unusual freight expenses  --   125,000  125,000
Total  --   2,799,000  2,799,000
(6) Financing, severance, professional and other fees  539,000  5,831,000  6,370,000
Mark-to-market (gain)/loss  (398,000)  --   (398,000)
Total  141,000  5,831,000  5,972,000
(7) Severance  --   747,000  747,000
(8) Intersegment interest income for the rotating electrical segment and intersegment interest expense for the Undercar product line segment is $2,168,000.
(9) Tax effected for Rotating Electrical at 39% tax rate and Undercar product line at 0% tax rate after further adjusting for intercompany interest income and expense.
(10) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to September 30, 2012 of $1,506,000 - ($0.11) per share.
Reconciliation of Non-GAAP Financial MeasuresExhibit 3
Three months ended September 30, 2012 (Unaudited)
Adjusted
As ReportedUndercar
UndercarAdjustmentProduct Line
Income statementProduct Line(Non-GAAP)  (1) (Non-GAAP)
Net sales  $ 53,980,000  $ 1,317,000  (3)   $ 55,297,000
Cost of goods sold  57,355,000  (2,754,000)  (4)   54,601,000
Gross profit (loss)  (3,375,000)  4,071,000  696,000
Gross margin -6.3% 1.3% (2) 
Operating expenses:
General and administrative  6,801,000  (3,445,000)  (5)   3,356,000
Sales and marketing  2,180,000  (747,000)  (6)   1,433,000
Total operating expenses  8,981,000  (4,192,000)  4,789,000
Operating income (loss)  (12,356,000)  8,263,000  (4,093,000)
Interest expense  3,069,000  (1,273,000)  (7)   1,796,000 (B)
Income (loss) before income tax expense  (15,425,000)  9,536,000  (5,889,000)
Income tax expense  11,000  --   (8)   11,000 (B)
Net income (loss)  $ (15,436,000)  $ 9,536,000  $ (5,900,000) (A)
Undercar product lines not supported  795,000 (9) 
Net income (loss) - Adjusted  $ (5,105,000)
Diluted net income (loss) per share  $ (0.41)
Undercar product lines not supported  $ 0.05 (9) 
Diluted net income (loss) per share - Adjusted  $ (0.35)
Weighted average number of shares outstanding:
Diluted 14,456,921
Depreciation and amortization  638,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ (3,455,000)
Undercar product lines not supported  795,000
Adjusted EBITDA total  $ (2,660,000)
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $0.71 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 7.6% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 2.8% for the Undercar product line segment.
(3) Contractual customer penalties/unique customer allowances   1,317,000
(4) Third-party warehouse exit termination fees  1,402,000
Severance  1,272,000
Unusual freight expenses  80,000
Total  2,754,000
(5) Financing, severance, professional and other fees  3,445,000
(6) Severance  747,000
(7) Intersegment interest expense for the Undercar product line segment is $1,273,000.
(8) Tax effected for Undercar product line at 0% tax rate.
(9) Certain Undercar product lines not supported resulted in a loss for the period from July 1, 2012 to September 30, 2012 of $795,000 - ($0.05) per share.
Reconciliation of Non-GAAP Financial MeasuresExhibit 4
Six months ended September 30, 2012 (Unaudited)
Adjusted
As ReportedUndercar
UndercarAdjustmentProduct Line
Income statementProduct Line(Non-GAAP)  (1) (Non-GAAP)
Net sales  $ 96,204,000  $ 3,382,000  (3)   $ 99,586,000
Cost of goods sold  102,284,000  (2,799,000)  (4)   99,485,000
Gross profit (loss)  (6,080,000)  6,181,000  101,000
Gross margin -6.3% 0.1% (2) 
Operating expenses:
General and administrative  12,451,000  (5,831,000)  (5)   6,620,000
Sales and marketing  3,947,000  (747,000)  (6)   3,200,000
Total operating expenses  16,398,000  (6,578,000)  9,820,000
Operating income (loss)  (22,478,000)  12,759,000  (9,719,000)
Interest expense  5,257,000  (2,168,000)  (7)   3,089,000 (B)
Income (loss) before income tax expense  (27,735,000)  14,927,000  (12,808,000)
Income tax expense  (70,000)  --   (8)   (70,000) (B)
Net income (loss)  $ (27,665,000)  $ 14,927,000  $ (12,738,000) (A)
Undercar product lines not supported  1,506,000 (9) 
Net income (loss) - Adjusted  $ (11,232,000)
Diluted net income (loss) per share  $ (0.90)
Undercar product lines not supported  $ 0.11 (9) 
Diluted net income (loss) per share - Adjusted  $ (0.79)
Weighted average number of shares outstanding:
Diluted 14,192,235
Depreciation and amortization  1,289,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ (8,430,000)
Undercar product lines not supported  1,506,000
Adjusted EBITDA total  $ (6,924,000)
(1) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance, unusual freight expenses, acquisition-related general and administrative expenses including financing and other professional fees, intersegment interest expense and product lines not supported has an EPS impact of $1.16 for the Undercar product line segment.
(2) The total of contractual customer penalties/unique customer allowances, third-party warehouse exit termination fees, severance and unusual freight expenses has a gross profit margin impact of 6.4% for the Undercar product line segment. Adjusted further for the impact on gross margins from the loss from Undercar product lines not supported of 1.5%, total gross margin would have been 1.6% for the Undercar product line segment.
(3) Contractual customer penalties/unique customer allowances   3,382,000
(4) Third-party warehouse exit termination fees  1,402,000
Severance  1,272,000
Unusual freight expenses  125,000
Total  2,799,000
(5) Financing, severance, professional and other fees  5,813,000
(6) Severance  747,000
(7) Intersegment interest expense for the Undercar product line segment is $2,168,000.
(8) Tax effected for Undercar product line at 0% tax rate.
(9) Certain Undercar product lines not supported resulted in a loss for the period from April 1, 2012 to September 30, 2012 of $1,506,000 - ($0.11) per share.
Reconciliation of Non-GAAP Financial MeasuresExhibit 5
Three months ended September 30, 2012 (Unaudited)
Adjusted
As ReportedRotating
RotatingAdjustmentElectrical
Income statementElectrical(Non-GAAP)(Non-GAAP)
Net sales  $ 57,652,000  $ --   $ 57,652,000
Cost of goods sold  37,556,000  --   37,556,000
Gross profit  20,096,000  --   20,096,000
Gross margin 34.9% 34.9%
Operating expenses:
General and administrative  4,392,000  198,000  (1)   4,590,000
Sales and marketing  1,724,000  --   1,724,000
Research and development  461,000  --   461,000
Total operating expenses  6,577,000  198,000  6,775,000
Operating income  13,519,000  (198,000)  13,321,000
Interest expense  3,093,000  1,273,000  (2)   4,366,000 (B)
Income before income tax expense  10,426,000  (1,471,000)  8,955,000
Income tax expense  3,923,000  (431,000)  (3)   3,492,000 (B)
Net income  $ 6,503,000  $ (1,040,000)  $ 5,463,000 (A)
Diluted net income per share  $ 0.39
Weighted average number of shares outstanding:
Diluted 14,139,628 (4) 
Depreciation and amortization  704,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ 14,025,000
(1) Financing and other fees  300,000
Mark-to-market (gain)/loss  (498,000)
Total  (198,000)
(2) Intersegment interest expense for the Undercar product line segment is $1,273,000.
(3) Tax effected for Rotating Electrical at 39% tax rate.
(4) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
Reconciliation of Non-GAAP Financial MeasuresExhibit 6
Six months ended September 30, 2012 (Unaudited)
Adjusted
As ReportedRotating
RotatingAdjustmentElectrical
Income statementElectrical(Non-GAAP)(Non-GAAP)
Net sales  $ 104,451,000  $ --   $ 104,451,000
Cost of goods sold  69,536,000  --   69,536,000
Gross profit  34,915,000  --   34,915,000
Gross margin 33.4% 33.4%
Operating expenses:
General and administrative  10,306,000  (141,000)  (1)   10,165,000
Sales and marketing  3,496,000  --   3,496,000
Research and development  897,000  --   897,000
Total operating expenses  14,699,000  (141,000)  14,558,000
Operating income  20,216,000  141,000  20,357,000
Interest expense  5,989,000  2,168,000  (2)   8,157,000 (B)
Income before income tax expense  14,227,000  (2,027,000)  12,200,000
Income tax expense  5,357,000  (599,000)  (3)   4,758,000 (B)
Net income  $ 8,870,000  $ (1,428,000)  $ 7,442,000 (A)
Diluted net income per share  $ 0.54
Weighted average number of shares outstanding:
Diluted 13,888,715 (4) 
Depreciation and amortization  1,439,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ 21,796,000
(1) Financing and other fees  539,000
Mark-to-market (gain)/loss  (398,000)
Total  141,000
(2) Intersegment interest expense for the Undercar product line segment is $2,168,000.
(3) Tax effected for Rotating Electrical at 39% tax rate.
(4) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
Reconciliation of Non-GAAP Financial MeasuresExhibit 7
Three months ended September 30, 2011 (Unaudited)
Adjusted
As ReportedRotating
RotatingAdjustmentElectrical
Income statementElectrical(Non-GAAP)(Non-GAAP)
Net sales  $ 46,573,000  $ (836,000)  (1)   $ 45,737,000
Cost of goods sold  31,482,000  --   31,482,000
Gross profit  15,091,000  (836,000)  14,255,000
Gross margin 32.4% 31.2%
Operating expenses:
General and administrative  7,004,000  (2,911,000)  (2)   4,093,000
Sales and marketing  1,897,000  (96,000)  (3)   1,801,000
Research and development  401,000  --   401,000
Acquisition costs  309,000  (309,000)  (4)   -- 
Total operating expenses  9,611,000  (3,316,000)  6,295,000
Operating income  5,480,000  2,480,000  7,960,000
Interest expense  734,000  676,000  (5)   1,410,000 (B)
Income before income tax expense  4,746,000  1,804,000  6,550,000
Income tax expense  1,720,000  835,000  (6)   2,555,000 (B)
Net income  $ 3,026,000  $ 969,000  $ 3,995,000 (A)
Diluted net income per share  $ 0.32
Weighted average number of shares outstanding:
Diluted 12,452,770 (7) 
Depreciation and amortization  889,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ 8,849,000
(1) Intersegment revenue, net of cost of goods sold  836,000
(2) Fenco, financing, professional and other fees  1,112,000
Mark-to-market (gain)/loss  1,799,000
Total  2,911,000
(3) Fenco related sales and marketing expenses  96,000
(4) Fenco related acquisition costs  309,000
(5) Intersegment interest expense for the Undercar product line segment is $676,000.
(6) Tax effected for Rotating Electrical at 39% tax rate.
(7) Excludes the impact of 360,000 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
Reconciliation of Non-GAAP Financial MeasuresExhibit 8
Six months ended September 30, 2011 (Unaudited)
Adjusted
As ReportedRotating
RotatingAdjustmentElectrical
Income statementElectrical(Non-GAAP)(Non-GAAP)
Net sales  $ 86,365,000  $ (1,612,000)  (1)   $ 84,753,000
Cost of goods sold  58,518,000  --   58,518,000
Gross profit  27,847,000  (1,612,000)  26,235,000
Gross margin 32.2% 31.0%
Operating expenses:
General and administrative  12,314,000  (4,087,000)  (2)   8,227,000
Sales and marketing  3,731,000  (126,000)  (3)   3,605,000
Research and development  817,000  --   817,000
Acquisition costs  713,000  (713,000)  (4)   -- 
Total operating expenses  17,575,000  (4,926,000)  12,649,000
Operating income  10,272,000  3,314,000  13,586,000
Interest expense  1,505,000  945,000  (5)   2,450,000 (B)
Income before income tax expense  8,767,000  2,369,000  11,136,000
Income tax expense  3,515,000  829,000  (6)   4,343,000 (B)
Net income  $ 5,252,000  $ 1,540,000  $ 6,793,000 (A)
Diluted net income per share  $ 0.54
Weighted average number of shares outstanding:
Diluted 12,573,725 (7) 
Depreciation and amortization  1,777,000 (B)
Adjusted EBITDA - Sum of (A) and (B)  $ 15,363,000
(1) Intersegment revenue, net of cost of goods sold  1,612,000
(2) Fenco, financing, professional and other fees  2,200,000
Mark-to-market (gain)/loss  1,887,000
Total  4,087,000
(3) Fenco related sales and marketing expenses  126,000
(4) Fenco related acquisition costs  713,000
(5) Intersegment interest expense for the Undercar product line segment is $945,000.
(6) Tax effected for Rotating Electrical at 39% tax rate.
(7) Excludes the impact of 289,180 shares in connection with the consideration for the May 6, 2011 Fenco acquisition.
CONTACT: Gary S. Maier
         Maier & Company, Inc.
         (310) 471-1288
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