LOS ANGELES — Motorcar Parts of America, Inc. (MPA) has restated results for the fiscal years ended March 31, 2004, 2003, and 2002, in accordance with the company’s new accounting policies, audited by the company’s independent auditors, Grant Thornton LLP.
Grant Thornton’s review of MPA’s results for the interim periods and the audit for the full fiscal year ended March 31, 2005 is ongoing, and the company the said it expects that the review of the interim periods will be completed in the near future. During the fiscal year 2005, the company said it experienced strong business trends and believes the results, when released, will show significant financial improvement compared to fiscal year 2004.
As previously announced, MPA has corrected its accounting policy with respect to accounting for sales to customers and the recognition of the related core revenues and costs.
MPA has also corrected both its accounting to accrue for stock adjustments and other returns and its inventory valuation policies. Results for the full fiscal years 2004, 2003 and 2002 have been prepared in accordance with these policy changes.
“While the issuance of our restated financials for fiscal year 2004 and earlier periods causes us to look back at our performance, I am pleased to note that for fiscal year 2005, the company expects to report strong financial results and is positioned to further enhance future performance,” said Selwyn Joffe, MPA’s chairman and CEO.
Sales for the fiscal year ended March 31, 2004 were $80.5 million compared to $84 million in the previous full year. Gross profit for FY 2004 was $22 million (down from $23.1 million previously reported) compared with $17.5 million in the prior year. Operating income for the year rose to $9.9 million (down from $11 million previously reported) from $7.1 million in the previous year. Net income was $5.8 million or 69 cents per diluted share (down from $6.5 million and 77 cents per diluted share, respectively) compared with $10.7 million or $1.25 per diluted share in the prior year. Significantly, the year ended March 31, 2003 had the benefit of a $5 million tax credit, while the year ended March 31, 2004 had an income tax expense of $3.1 million.
At March 31, 2004 the company reported cash generated from operating activities of $15.2 million, unchanged under these new policies. Its balance sheet showed positive working capital of $35.8 million, cash balances of $7.6 million, debt of $3 million and shareholders’ equity of $40.4 million.
In May 2005 the company commenced limited start-up production at its new manufacturing facility in Tijuana, Mexico. The company said it anticipates increasing production levels at this site over the course of fiscal 2006 as performance becomes established.
MPA said it is currently reviewing its results for the full fiscal year ended March 31, 2005. The company reported experiencing favorable business trends during this fiscal year and based on preliminary analysis of these results, and expects to report significant financial progress over the prior fiscal year.
“The solid financial performance that we are expecting to report for the full year ending March 31, 2005, has been due to growth across our customer base. Of particular note, we are now seeing revenue benefits associated with the pay-on-scan arrangement with our largest retail customer. Under this arrangement, we do not recognize revenues until the inventory is purchased by the retailer’s end customer. We have now substantially moved through the inventory cycle of our pay on scan arrangement and are seeing the positive impacts to our revenue line. We also believe that, subject of course to satisfaction of demanding customer requirements, we are in a strong position to enhance our relationships for future growth in fiscal 2006,” commented Joffe.
The company noted that it has successfully begun shipping its new automobile manufacturer customer. In this connection, the company added that its first quarter fiscal 2006 results will be adversely impacted by significant start-up expenses being incurred in connection with this contract. Based on existing contracts, the company expects a significant increase in Net Sales for fiscal 2006 over fiscal 2005.
For more information bout MPA, go to: www.motorcarparts.com.
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