☑ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
New York
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11-2153962
|
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
|
|
2929 California Street, Torrance, California
|
90503
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(Address of principal executive offices)
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Zip Code
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Large accelerated filer ☐
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Accelerated filer ☑
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Non-accelerated filer ☐
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(Do not check if a smaller reporting company)
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Smaller reporting company ☐
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Emerging growth company ☐
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PART I
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5
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10
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15
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16
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16
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16
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PART II
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17
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20
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21
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41
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41
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41
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41
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43
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PART III
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44
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44
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44
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44
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44
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PART IV
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45
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52
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· |
Grow our product lines both with existing and potential new customers.
We continue to develop and offer current and new sales programs to ensure that we are doing all we can to support our customers’ businesses. We remain dedicated to manage growth and continue to focus on enhancements to our infrastructure and making investments in resources to support our customers.
|
· |
Introduction of new product lines.
We continue to strive to expand our business by exploring new product lines including working with our existing customers to identify potential new product opportunities.
|
· |
The strategic acquisition of other companies or businesses.
We have in the past and intend to continue making strategic acquisitions to grow our business. We maintain an in-house acquisition team that continuously works to identify potential new targets.
|
· |
Creating value for our customers.
A
core part of our strategy is ensuring that we add meaningful value for our customers. We consistently support and pilot our customers’ supply management initiatives in addition to providing demand analytics, a suite of inventory management services, a library of online training guides, market share, and retail store layout information to our customers.
|
· |
Technological innovation.
We have expanded our research and development team to develop in-house technologies and advanced testing methods. This elevated level of technology ensures our customers receive the highest quality of products and support services that can be offered.
|
• |
Our customers purchase from us a remanufactured unit to be sold to their consumer.
|
• |
Our customers offer their consumers a credit to exchange their used unit (Used Core) at the time the consumer purchases a remanufactured unit.
|
• |
We, in turn, offer our customers a credit to send us these Used Cores. If the customer returns the used cores the credit reduces our accounts receivable.
|
· |
exchange controls and currency restrictions;
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· |
currency fluctuations and devaluations;
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· |
changes in local economic conditions;
|
· |
repatriation restrictions (including the imposition or increase of withholding and other taxes on remittances and other payments by foreign subsidiaries);
|
· |
global sovereign uncertainty and hyperinflation in certain foreign countries;
|
· |
laws and regulations relating to export and import restrictions;
|
· |
exposure to government actions; and
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· |
exposure to local political or social unrest including resultant acts of war, terrorism or similar events.
|
· |
the difficulty in integrating newly-acquired businesses and operations in an efficient and effective manner;
|
· |
the challenges in achieving strategic objectives, cost savings and other benefits from acquisitions;
|
· |
the potential loss of key employees of the acquired businesses;
|
· |
the risk of diverting the attention of senior management from our operations;
|
· |
risks associated with integrating financial reporting and internal control systems;
|
· |
difficulties in expanding information technology systems and other business processes to accommodate the acquired businesses; and
|
· |
future impairments of any goodwill of an acquired business.
|
● |
significant delays in the delivery of cargo due to port security considerations;
|
● |
imposition of duties, taxes, tariffs or other charges on imports;
|
● |
imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our product that may be imported into the U.S. from countries or regions where we do business;
|
● |
financial or political instability in any of the countries in which our product is manufactured;
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● |
potential recalls or cancellations of orders for any product that does not meet our quality standards;
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● |
disruption of imports by labor disputes or strikes and local business practices;
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● |
political or military conflict involving the U.S., which could cause a delay in the transportation of our products and an increase in transportation costs;
|
● |
heightened terrorism security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods;
|
● |
natural disasters, disease epidemics and health related concerns, which could result in closed factories, reduced workforces, scarcity of raw materials and scrutiny or embargoing of goods produced in infected areas;
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● |
inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and
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● |
our ability to enforce any agreements with our foreign suppliers.
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· |
raw material shortages;
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· |
work stoppages;
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· |
strikes and political unrest;
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· |
problems with oceanic shipping, including shipping container shortages;
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· |
increased customs inspections of import shipments or other factors causing delays in shipments;
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· |
economic crises;
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· |
international disputes and wars;
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· |
loss of “most favored nation” trading status by the U. S. in relations to a particular foreign country;
|
· |
import duties;
|
· |
import quotas and other trade sanctions; and
|
· |
increases in shipping rates.
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Location
|
Type of Facility
|
Approx.
Square
Feet
|
Leased
or
Owned
|
Expiration
|
||||
Torrance, CA
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Remanufacturing, Warehouse, Administrative, and Office
|
231,000
|
Leased
|
March 2022
|
||||
Tijuana, Mexico (1)
|
Remanufacturing, Warehouse, and Office
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312,000
|
Leased
|
April 2018
|
||||
Singapore & Malaysia
|
Remanufacturing, Warehouse, and Office
|
74,000
|
Leased
|
Various through December 2021
|
||||
Shanghai, China
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Warehouse and Office
|
54,000
|
Leased
|
March 2019
|
||||
North Dighton, MA (2)
|
Warehouse and Office
|
65,000
|
Leased
|
May 2017
|
||||
Winchester, VA
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Warehouse and Office
|
13,000
|
Leased
|
February 2021
|
(1) |
All renewal options for our current lease for our remanufacturing, warehouse, and office space in Tijuana, Mexico expiring in April 15, 2018 have been fully exercised. We would have to enter into a new agreement to extend this lease further. We can request an extension of the lease by sending a written notice to the landlord at least 150 days prior to the expiration date; however, there can be no assurance that the landlord would agree to the requested extension. In addition, we have entered into a lease for a new 410,000 square foot distribution center in Tijuana, Mexico, that will ship all products to our customers. We expect the shell building and ancillary improvements to be completed during the latter part of fiscal 2018. This lease has an initial term of 15 years and two five-year renewal options. Our contractual obligations table includes expected lease payments in connection with this lease.
|
(2) |
The lease for warehouse and office space located in North Dighton, MA was not renewed as the functions performed at this facility were merged with our existing operations.
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Fiscal 2017
|
Fiscal 2016
|
|||||||||||||||
High
|
Low
|
High
|
Low
|
|||||||||||||
1st Quarter
|
$
|
37.70
|
$
|
25.50
|
$
|
33.33
|
$
|
25.86
|
||||||||
2nd Quarter
|
$
|
34.73
|
$
|
25.78
|
$
|
36.62
|
$
|
27.37
|
||||||||
3rd Quarter
|
$
|
29.41
|
$
|
21.75
|
$
|
41.03
|
$
|
30.76
|
||||||||
4th Quarter
|
$
|
30.87
|
$
|
25.09
|
$
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38.78
|
$
|
28.52
|
Periods
|
Total Number of
Shares Purchased
|
Average Price
Paid Per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans
or Programs (1)
|
||||||||||||
January 1 - January 31, 2017:
|
||||||||||||||||
Open market and privately negotiated purchases
|
-
|
$
|
-
|
-
|
$
|
9,611,000
|
||||||||||
February 1 - February 28, 2017:
|
||||||||||||||||
Open market and privately negotiated purchases
|
33,900
|
$
|
29.41
|
33,900
|
8,614,000
|
|||||||||||
March 1 - March 31, 2017:
|
||||||||||||||||
Open market and privately negotiated purchases
|
35,759
|
$
|
27.75
|
35,759
|
12,621,000
|
|||||||||||
Total
|
69,659
|
69,659
|
$
|
12,621,000
|
(1) |
On March 27, 2017, our board of directors increased our share repurchase program authorization from $10,000,000 to $15,000,000 of our common stock. As of March 31, 2017, $2,379,000 of the $15,000,000 had been utilized and $12,621,000 remained available to repurchase shares under the authorized share repurchase program. We retired the 69,659 shares repurchased under this program during fiscal 2017. Our share repurchase program does not obligate us to acquire any specific number of shares and shares may be repurchased in privately negotiated and/or open market transactions.
|
Plan Category
|
Number of securities to
be issued upon
exercise of outstanding
options, warrants and
rights
(a) |
Weighted-average
exercise price of
outstanding options
warrants and rights
(b) |
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c ) |
|||||||||
Equity compensation plans approved by securities holders
|
1,162,636
|
(1)
|
$
|
14.92
|
(2)
|
951,843
|
(3)
|
|||||
Equity compensation plans not approved by security holders
|
N/A
|
N/A
|
N/A
|
|||||||||
Total
|
1,162,636
|
$
|
14.92
|
951,843
|
(1) |
Consists of (i) options issued pursuant to our 2003 Long-Term Incentive Plan, 2004 Non-Employee Director Stock Option Plan, and Second Amended and Restated 2010 Incentive Award Plan (the “2010 Plan”) and (ii) restricted stock units (“RSUs”) issued under our 2010 Plan and 2014 Non-Employee Director Incentive Award Plan (the “2014 Plan”).
|
(2) |
The weighted average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs, since RSUs have no exercise price.
|
(3) |
Consists of shares available for issuance under our 2010 Plan and 2014 Plan.
|
Fiscal Years Ended March 31,
|
||||||||||||||||||||
Income Statement Data
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Net sales
|
$
|
421,253,000
|
$
|
368,970,000
|
$
|
301,711,000
|
$
|
258,669,000
|
$
|
213,151,000
|
||||||||||
Operating income
|
67,972,000
|
38,286,000
|
33,586,000
|
32,104,000
|
34,314,000
|
|||||||||||||||
Net income
|
37,573,000
|
10,563,000
|
11,453,000
|
6,482,000
|
14,558,000
|
|||||||||||||||
Basic net income per share
|
$
|
2.02
|
$
|
0.58
|
$
|
0.68
|
$
|
0.45
|
$
|
1.01
|
||||||||||
Diluted net income per share
|
$
|
1.93
|
$
|
0.55
|
$
|
0.65
|
$
|
0.42
|
$
|
1.01
|
March 31,
|
||||||||||||||||||||
Balance Sheet Data
|
2017
|
2016
|
2015
|
2014
|
2013
|
|||||||||||||||
Total assets (1)
|
$
|
436,139,000
|
$
|
399,057,000
|
$
|
413,078,000
|
$
|
318,853,000
|
$
|
364,969,000
|
||||||||||
Working capital (1) (2)
|
(20,651,000
|
)
|
(24,449,000
|
)
|
43,863,000
|
3,447,000
|
2,871,000
|
|||||||||||||
Revolving loan
|
11,000,000
|
7,000,000
|
-
|
10,000,000
|
-
|
|||||||||||||||
Term loan
|
19,999,000
|
23,047,000
|
79,222,000
|
87,277,000
|
81,905,000
|
|||||||||||||||
Capital lease obligations
|
2,512,000
|
2,608,000
|
528,000
|
318,000
|
214,000
|
|||||||||||||||
Other long term liabilities (1)
|
25,986,000
|
35,066,000
|
36,049,000
|
26,477,000
|
15,609,000
|
|||||||||||||||
Shareholders’ equity (deficit)
|
$
|
248,681,000
|
$
|
210,808,000
|
$
|
190,203,000
|
$
|
109,636,000
|
$
|
(3,514,000
|
)
|
(1) |
Effective March 31, 2017, we retrospectively adopted newly issued accounting guidance that required deferred tax assets and liabilities to be classified as noncurrent in the consolidated balance sheets (see Note 2 of the notes to consolidated financial statements).
|
(2) |
The calculation of working capital excludes the impact of the discontinued subsidiary between the acquisition in May 2011 and its bankruptcy in June 2013. Our working capital is calculated as current assets less current liabilities. We carry our core inventory as a long-term asset in our consolidated balance sheets.
|
• |
Non-core raw materials are recorded at average cost, which is based on the actual purchase price of raw materials on hand. The average cost is updated quarterly. This average cost is used in the inventory costing process and is the basis for allocation of materials to finished goods during the production process.
|
• |
Non-core work in process is in various stages of production and is valued at the average cost of materials issued to the open work orders. Historically, non-core work in process inventory has not been material compared to the total non-core inventory balance.
|
• |
The cost of remanufactured finished goods includes the average cost of non-core raw materials and allocations of labor and variable and fixed overhead costs. The allocations of labor and variable and fixed overhead costs are determined based on the average actual use of the production facilities over the prior twelve months which approximates normal capacity. This method prevents the distortion in allocated labor and overhead costs that would occur during short periods of abnormally low or high production. In addition, we exclude certain unallocated overhead such as severance costs, duplicative facility overhead costs, start-up costs, training, and spoilage from the calculation and expense these unallocated overhead as period costs.
|
• |
Used Cores purchased from core brokers and held in inventory at our facilities,
|
• |
Used Cores returned by our customers and held in inventory at our facilities,
|
• |
Used Cores returned by end-users to customers but not yet returned to us which are classified as Remanufactured Cores until they are physically received by us,
|
• |
Remanufactured Cores held in finished goods inventory at our facilities; and
|
• |
Remanufactured Cores held at customer locations as a part of the finished goods sold to the customer. For these Remanufactured Cores, we expect the finished good containing the Remanufactured Core to be returned under our general right of return policy or a similar Used Core to be returned to us by the customer, in each case, for credit.
|
2017
|
2016
|
|||||||
Non-core inventory
|
||||||||
Raw materials
|
$
|
21,515,000
|
$
|
17,394,000
|
||||
Work in process
|
641,000
|
135,000
|
||||||
Finished goods
|
48,337,000
|
42,982,000
|
||||||
70,493,000
|
60,511,000
|
|||||||
Less allowance for excess and obsolete inventory
|
(2,977,000
|
)
|
(2,451,000
|
)
|
||||
Total
|
$
|
67,516,000
|
$
|
58,060,000
|
||||
Inventory unreturned
|
$
|
7,581,000
|
$
|
10,520,000
|
||||
Long-term core inventory
|
||||||||
Used cores held at the Company's facilities
|
$
|
38,713,000
|
$
|
34,405,000
|
||||
Used cores expected to be returned by customers
|
11,752,000
|
10,781,000
|
||||||
Remanufactured cores held in finished goods
|
27,667,000
|
24,489,000
|
||||||
Remanufactured cores held at customers' locations (1)
|
185,938,000
|
172,600,000
|
||||||
264,070,000
|
242,275,000
|
|||||||
Less allowance for excess and obsolete inventory
|
(1,148,000
|
)
|
(1,175,000
|
)
|
||||
Total
|
$
|
262,922,000
|
$
|
241,100,000
|
||||
Long-term core inventory deposits
|
$
|
5,569,000
|
$
|
5,569,000
|
(1) |
Remanufactured cores held at customers’ locations represent the core portion of our customers’ finished goods at our customers’ locations.
|
• |
Persuasive evidence of an arrangement exists,
|
• |
Delivery has occurred or services have been rendered,
|
• |
The seller’s price to the buyer is fixed or determinable, and
|
• |
Collectability is reasonably assured.
|
• |
We have a signed agreement with the customer covering the nominally priced Remanufactured Cores not expected to be sent back under the core exchange program, and the agreement must specify the number of Remanufactured Cores our customer will pay cash for in lieu of sending back a similar Used Core under our core exchange program and the basis on which the nominally priced Remanufactured Cores are to be valued (normally the average price per Remanufactured Core stipulated in the agreement).
|
• |
The contractual date for reconciling our records and customer’s records of the number of nominally priced Remanufactured Cores not expected to be replaced by similar Used Cores sent back under our core exchange program must be in the current or a prior period.
|
• |
The reconciliation must be completed and agreed to by the customer.
|
• |
The amount must be billed to the customer.
|
Fiscal Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Gross profit percentage
|
27.3
|
%
|
27.4
|
%
|
27.0
|
%
|
||||||
Cash flow (used in) provided by operations
|
$
|
(5,269,000
|
)
|
$
|
15,334,000
|
$
|
(9,457,000
|
)
|
||||
Finished goods turnover (1)
|
6.7
|
6.5
|
6.3
|
(1) |
Finished goods turnover is calculated by dividing the cost of goods sold for the year by the average between beginning and ending non-core finished goods inventory values, for each fiscal year. We believe that this provides a useful measure of our ability to turn our inventory into revenues.
|
Fiscal Years Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Net sales
|
$
|
421,253,000
|
$
|
368,970,000
|
||||
Cost of goods sold
|
306,207,000
|
268,046,000
|
||||||
Gross profit
|
115,046,000
|
100,924,000
|
||||||
Gross profit percentage
|
27.3
|
%
|
27.4
|
%
|
Fiscal Years Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
General and administrative
|
$
|
31,124,000
|
$
|
49,665,000
|
||||
Sales and marketing
|
12,126,000
|
9,965,000
|
||||||
Research and development
|
3,824,000
|
3,008,000
|
||||||
Percent of net sales
|
||||||||
General and administrative
|
7.4
|
%
|
13.5
|
%
|
||||
Sales and marketing
|
2.9
|
%
|
2.7
|
%
|
||||
Research and development
|
0.9
|
%
|
0.8
|
%
|
Fiscal Years Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
Net sales
|
$
|
368,970,000
|
$
|
301,711,000
|
||||
Cost of goods sold
|
268,046,000
|
220,138,000
|
||||||
Gross profit
|
100,924,000
|
81,573,000
|
||||||
Gross profit percentage
|
27.4
|
%
|
27.0
|
%
|
Fiscal Years Ended March 31,
|
||||||||
2016
|
2015
|
|||||||
General and administrative
|
$
|
49,665,000
|
$
|
37,863,000
|
||||
Sales and marketing
|
9,965,000
|
7,851,000
|
||||||
Research and development
|
3,008,000
|
2,273,000
|
||||||
Percent of net sales
|
||||||||
General and administrative
|
13.5
|
%
|
12.5
|
%
|
||||
Sales and marketing
|
2.7
|
%
|
2.6
|
%
|
||||
Research and development
|
0.8
|
%
|
0.8
|
%
|
Fiscal Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Cash provided by (used in):
|
||||||||||||
Operating activities
|
$
|
(5,269,000
|
)
|
$
|
15,334,000
|
$
|
(9,457,000
|
)
|
||||
Investing activities
|
(5,683,000
|
)
|
(7,582,000
|
)
|
(3,868,000
|
)
|
||||||
Financing activities
|
(1,849,000
|
)
|
(46,982,000
|
)
|
50,081,000
|
|||||||
Effect of exchange rates on cash and cash equivalents
|
(67,000
|
)
|
(103,000
|
)
|
(125,000
|
)
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(12,868,000
|
)
|
(39,333,000
|
)
|
36,631,000
|
|||||||
Additional selected cash flow data:
|
||||||||||||
Depreciation and amortization
|
$
|
3,714,000
|
$
|
2,936,000
|
$
|
2,521,000
|
||||||
Capital expenditures
|
4,929,000
|
3,747,000
|
3,734,000
|
Calculation as of
March 31, 2017 |
Financial covenants
required per the Credit
Facility
|
|||||||
Maximum senior leverage ratio
|
0.29
|
2.50
|
||||||
Minimum fixed charge coverage ratio
|
1.56
|
1.05
|
Years Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Receivables discounted
|
$
|
352,369,000
|
$
|
331,176,000
|
||||
Weighted average days
|
342
|
341
|
||||||
Weighted average discount rate
|
2.9
|
%
|
2.3
|
%
|
||||
Amount of discount as interest expense
|
$
|
9,724,000
|
$
|
7,257,000
|
Payments Due by Period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less than
1 year
|
2 to 3
years
|
4 to 5
years
|
More than 5
years
|
|||||||||||||||
Capital lease obligations (1)
|
$
|
2,720,000
|
$
|
860,000
|
$
|
1,500,000
|
$
|
360,000
|
-
|
|||||||||||
Operating lease obligations (2)
|
40,831,000
|
3,918,000
|
6,726,000
|
6,500,000
|
$
|
23,687,000
|
||||||||||||||
Revolving loan
|
11,000,000
|
11,000,000
|
-
|
-
|
-
|
|||||||||||||||
Term loan (3)
|
21,955,000
|
3,747,000
|
7,181,000
|
11,027,000
|
-
|
|||||||||||||||
Accrued core payment (4)
|
24,770,000
|
12,185,000
|
12,231,000
|
354,000
|
-
|
|||||||||||||||
Unrecognized tax benefits (5)
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Other long-term obligations (6)
|
39,255,000
|
19,965,000
|
13,953,000
|
5,337,000
|
-
|
|||||||||||||||
Total
|
$
|
140,531,000
|
$
|
51,675,000
|
$
|
41,591,000
|
$
|
23,578,000
|
$
|
23,687,000
|
(1) |
Capital lease obligations represent amounts due under capital leases for various types of equipment.
|
(2) |
Operating lease obligations represent amounts due for rent under our leases for all our facilities, certain equipment, and our Company automobile. We have included the operating lease obligations in connection with the lease for a new 410,000 square foot distribution center in Tijuana, Mexico, in the above table through December 2032. This lease has an initial term of 15 years and two five-year renewal options. We expect the shell building and ancillary improvements to be completed during the latter part of fiscal 2018.
|
(3) |
Term loan obligations represent the amounts due for principal payments as well as interest payments to be made. Interest payments were calculated based upon the interest rate for our term loan using the LIBOR option at March 31, 2017 which was 3.29%.
|
(4) |
Accrued core payment represents the amounts due for principal and interest payments to be made in connection with the purchases of Remanufactured Cores from our customers, which are held by these customers and remain on their premises.
|
(5) |
We are unable to reliably estimate the timing of future payments related to uncertain tax position liabilities at March 31, 2017 in the amount of $1,092,000; therefore, this amount has been excluded from the table above. However, future tax payment accruals related to uncertain tax positions are included in our consolidated balance sheets, reduced by the associated federal deduction for state taxes.
|
(6) |
Other long-term obligations represent commitments we have with certain customers to provide marketing allowances in consideration for long-term agreements to provide products over a defined period. We are not obligated to provide these marketing allowances should our business relationships end with these customers.
|
1. |
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
2. |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
3. |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
|
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
a. |
Documents filed as part of this report:
|
(1) |
Index to Consolidated Financial Statements:
|
Reports of Independent Registered Public Accounting Firm
|
54
|
Consolidated Balance Sheets
|
F-1
|
Consolidated Statements of Income
|
F-2
|
Consolidated Statements of Comprehensive Income
|
F-3
|
Consolidated Statements of Shareholders’ Equity
|
F-4
|
Consolidated Statements of Cash Flows
|
F-5
|
Notes to Consolidated Financial Statements
|
F-6
|
(2)
|
Schedules.
|
Schedule II — Valuation and Qualifying Accounts
|
S-1
|
(3) |
Exhibits:
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
3.1
|
Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 declared effective on March 22, 1994 (the “1994 Registration Statement”).
|
||
3.2
|
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to 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
|
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.3 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1997 (the “1997 Form 10-K”).
|
||
3.4
|
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 1998 (the “1998 Form 10-K”).
|
||
3.5
|
Amendment to Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit C to the Company’s proxy statement on Schedule 14A filed with the SEC on November 25, 2003.
|
||
3.6
|
Amended and Restated By-Laws of the Company
|
Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on August 24, 2010.
|
||
3.7
|
Certificate of Amendment of the Certificate of Incorporation of the Company
|
Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on April 17, 2014.
|
||
3.8
|
Amendment to the Amended and Restated By-Laws of the Company
|
Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on June 14, 2016.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
3.9
|
Amendment to the Amended and Restated By-Laws of the Company
|
Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on February 22, 2017.
|
||
4.1
|
2003 Long Term Incentive Plan
|
Incorporated by reference to Exhibit 4.9 to the Company’s Registration Statement on Form S-8 filed with the SEC on April 2, 2004.
|
||
4.2
|
2004 Non-Employee Director Stock Option Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A for the 2004 Annual Shareholders Meeting.
|
||
4.3
|
2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on December 15, 2010.
|
||
4.4
|
Amended and Restated 2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on March 5, 2013.
|
||
4.5
|
Second Amended and Restated 2010 Incentive Award Plan
|
Incorporated by reference to Appendix A to the Proxy Statement on Schedule 14A filed on March 3, 2014.
|
||
4.6
|
2014 Non-Employee Director Incentive Award Plan
|
Incorporated by reference to Appendix B to the Proxy Statement on Schedule 14A filed on March 3, 2014.
|
||
10.1
|
Amendment to Lease, dated October 3, 1996, by and between the Company and Golkar Enterprises, Ltd. relating to additional property in Torrance, California
|
Incorporated by reference to Exhibit 10.17 to the December 31, 1996 Form 10-Q.
|
||
10.2
|
Lease Agreement, dated September 19, 1995, by and between Golkar Enterprises, Ltd. and the Company relating to the Company’s facility located in Torrance, California
|
Incorporated by reference to Exhibit 10.18 to the 1995 Registration Statement.
|
||
10.3
|
Form of Indemnification Agreement for officers and directors
|
Incorporated by reference to Exhibit 10.25 to the 1997 Registration Statement.
|
||
10.4
|
Second Amendment to Lease, dated March 15, 2002, between Golkar Enterprises, Ltd. and the Company relating to property in Torrance, California
|
Incorporated by reference to Exhibit 10.44 to the 2003 10-K.
|
||
10.5*
|
Addendum to Vendor Agreement, dated May 8, 2004, between AutoZone Parts, Inc. and the Company
|
Incorporated by reference to Exhibit 10.15 to the 2004 10-K.
|
||
10.6
|
Form of Orbian Discount Agreement between the Company and Orbian Corp.
|
Incorporated by reference to Exhibit 10.17 to the 2004 10-K.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
10.7
|
Form of Standard Industrial/Commercial Multi-Tenant Lease, dated May 25, 2004, between the Company and Golkar Enterprises, Ltd for property located at 530 Maple Avenue, Torrance, California
|
Incorporated by reference to Exhibit 10.18 to the 2004 10-K.
|
||
10.8
|
Build to Suit Lease Agreement, dated October 28, 2004, among Motorcar Parts de Mexico, S.A. de CV, the Company and Beatrix Flourie Geoffroy
|
Incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed on November 2, 2004.
|
||
10.9
|
Amendment No. 3 to Pay-On-Scan Addendum, dated August 22, 2006, between AutoZone Parts, Inc. and the Company
|
Incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed on August 30, 2006.
|
||
10.10*
|
Amendment No. 1 to Vendor Agreement, dated August 22, 2006, between AutoZone Parts, Inc. and Motorcar Parts of America, Inc.
|
Incorporated by reference to Exhibit 99.2 to Current Report on Form 8-K filed on August 30, 2006.
|
||
10.11
|
Lease Agreement Amendment, dated October 12, 2006, between the Company and Beatrix Flourie Geffroy
|
Incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed on October 20, 2006.
|
||
10.12
|
Third Amendment to Lease Agreement, dated as of November 20, 2006, between Motorcar Parts of America, Inc. and Golkar Enterprises, Ltd.
|
Incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K filed on November 27, 2006.
|
||
10.13
|
Amended and Restated Employment Agreement, dated as of December 31, 2008, by and between the Company and Selwyn Joffe
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed January 7, 2009.
|
||
10.14*
|
Vendor Agreement dated as of March 31, 2009, between the Company and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed May 5, 2009.
|
||
10.15*
|
Core Amendment to Vendor Agreement, dated as of March 31, 2009, between the Company and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed May 5, 2009.
|
||
10.16*
|
Vendor Agreement Addendum, dated as of March 31, 2009, between the Company and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K/A filed on December 23, 2009.
|
||
10.17*
|
Core Amendment to Vendor Agreement Addendum, dated as of March 31, 2009, between the Company and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K/A filed on December 23, 2009.
|
||
10.18*
|
Master Vendor Agreement, dated as of April 1, 2009, between the Company and O’Reilly Automotive, Inc.
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on January 13, 2010.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
10.19*
|
Letter Agreement, dated as of April 1, 2009, between the Company and O’Reilly Automotive, Inc.
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on January 13, 2010.
|
||
10.20*
|
Vendor Agreement Addendum, dated as of April 1, 2009 between the Company and O’Reilly Automotive, Inc.
|
Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on January 13, 2010.
|
||
10.21
|
Core Amendment No. 3 to Vendor Agreement, dated as of May 31, 2011, by and between Motorcar Parts of America, Inc. and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on June 16, 2011.
|
||
10.22
|
Core Amendment No. 4 to Vendor Agreement, dated as of May 31, 2011, by and between Motorcar Parts of America, Inc. and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on June 16, 2011.
|
||
10.23
|
Addendum No. 2 to Amendment No. 1 to Vendor Agreement, dated as of May 31, 2011, by and between Motorcar Parts of America, Inc. and AutoZone Parts, Inc.
|
Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on June 16, 2011.
|
||
10.24
|
Fifth Amendment, dated as of November 17, 2011, to that certain Standard Industrial Commercial Single Tenant Lease-Gross, dated as of September 19, 1995, between Golkar Enterprises, Ltd and Motorcar Parts of America, Inc., as amended
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on November 25, 2011.
|
||
10.25
|
Right of First Refusal Agreement, dated May 3, 2012
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on May 7, 2012.
|
||
10.26
|
Employment Agreement, dated as of May 18, 2012, between Motorcar Parts of America, Inc., and Selwyn Joffe
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on May 24, 2012.
|
||
10.27
|
Revolving Credit/Strategic Cooperation Agreement, dated as of August 22, 2012, by and among Motorcar Parts of America, Inc. (solely for purposes of provisions specified thereto), Fenwick Automotive Products Limited and Wanxiang America Corporation
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 28, 2012.
|
||
10.28
|
Guaranty, dated as of August 22, 2012, by Motorcar Parts of America, Inc. for the benefit of Wanxiang America Corporation
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on August 28, 2012.
|
||
10.29
|
Warrant to Purchase Common Stock, dated as of August 22, 2012, issued by Motorcar Parts of America, Inc. to Wanxiang America Corporation
|
Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed on August 28, 2012.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
10.30
|
Form of Stock Option Notice for use in connection with stock options granted to Selwyn Joffe pursuant to the Motorcar Parts of America, Inc. 2010 Incentive Award Plan
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on August 12, 2013.
|
||
10.31
|
Form of Stock Option Agreement for use in connection with stock options granted to Selwyn Joffe pursuant to the Motorcar Parts of America, Inc. 2010 Incentive Award Plan
|
Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on August 12, 2013.
|
||
10.32
|
Amended and Restated Financing Agreement, dated as of November 6, 2013, among Motorcar Parts of America, Inc., each lender from time to time party thereto, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to Amended Quarterly Report on Form 10-Q/A filed on February 10, 2014.
|
||
10.33
|
Third Amendment to Amended and Restated Financing Agreement, dated as of December 11, 2014, among Motorcar Parts of America, Inc., each lender from time to time party thereto, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on December 12, 2014.
|
||
10.34
|
Fourth Amendment to Amended and Restated Financing Agreement, dated as of April 30, 2015, among Motorcar Parts of America, Inc., each lender from time to time party thereto, Cerberus Business Finance, LLC, as collateral agent, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on May 1, 2015.
|
||
10.35*
|
Revolving Credit, Term Loan and Security Agreement, dated as of June 3, 2015, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on June 8, 2015.
|
||
10.36
|
First Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of November 5, 2015, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on November 9, 2015.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
10.37
|
Consent and Second Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of May 19, 2016, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q filed on August 9, 2016.
|
||
Third Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of March 24, 2017, among Motorcar Parts of America, Inc., each lender from time to time party thereto, and PNC Bank, National Association, as administrative agent
|
Filed herewith.
|
|||
10.39
|
Fourth Amendment to Revolving Credit, Term Loan and Security Agreement, dated as of April 24, 2017, among Motorcar Parts of America, Inc., each lender from time to time party thereto and PNC Bank, National Association, as administrative agent
|
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on April 27, 2017.
|
||
14.1
|
Motorcar Parts of America, Inc., Code of Business Conduct and Ethics, as amended, effective January 15, 2015
|
Incorporated by reference to Exhibit 14.1 to Current Report on Form 8-K filed on January 20, 2015.
|
||
List of Subsidiaries
|
Filed herewith.
|
|||
Consent of Independent Registered Public Accounting Firm Ernst & Young LLP
|
Filed herewith.
|
|||
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
|||
Certifications of Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002
|
Filed herewith.
|
Number
|
Description of Exhibit
|
Method of Filing
|
||
101.1
|
The following financial information from Motorcar Parts of America, Inc.’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017, formatted in Extensible Business Reporting Language (“XBRL”) and furnished electronically herewith: (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income; (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity; (v) the Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements
|
Filed herewith.
|
*
|
Portions of this exhibit have been granted confidential treatment by the SEC.
|
MOTORCAR PARTS OF AMERICA, INC.
|
||
Dated: June 14, 2017
|
By:
|
/s/ David Lee
|
David Lee
|
||
Chief Financial Officer
|
||
Dated: June 14, 2017
|
By:
|
/s/ Kevin Daly
|
Kevin Daly
|
||
Chief Accounting Officer
|
/s/ Selwyn Joffe
|
Chief Executive Officer and Director
|
June 14, 2017
|
Selwyn Joffe
|
(Principal Executive Officer)
|
|
/s/ David Lee
|
Chief Financial Officer
|
June 14, 2017
|
David Lee
|
(Principal Financial Officer)
|
|
/s/ Kevin Daly
|
Chief Accounting Officer
|
June 14, 2017
|
Kevin Daly
|
(Principal Accounting Officer)
|
|
/s/ Scott Adelson
|
Director
|
June 14, 2017
|
Scott Adelson
|
||
/s/ Rudolph Borneo
|
Director
|
June 14, 2017
|
Rudolph Borneo
|
||
/s/ Philip Gay
|
Director
|
June 14, 2017
|
Philip Gay
|
||
/s/ Duane Miller
|
Director
|
June 14, 2017
|
Duane Miller
|
||
/s/ Jeffrey Mirvis
|
Director
|
June 14, 2017
|
Jeffrey Mirvis
|
||
/s/ David Bryan
|
Director
|
June 14, 2017
|
David Bryan
|
||
/s/ Joseph Ferguson
|
Director
|
June 14, 2017
|
Joseph Ferguson
|
||
/s/ Barbara Whittaker
|
Director
|
June 14, 2017
|
Barbara Whittaker
|
||
/s/ Timothy Vargo
|
Director
|
June 14, 2017
|
Timothy Vargo
|
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
54
|
Consolidated Balance Sheets
|
F-1
|
Consolidated Statements of Income
|
F-2
|
Consolidated Statements of Comprehensive Income
|
F-3
|
Consolidated Statements of Shareholders’ Equity
|
F-4
|
Consolidated Statements of Cash Flows
|
F-5
|
Notes to Consolidated Financial Statements
|
F-6
|
Schedule II — Valuation and Qualifying Accounts
|
S-1
|
/s/ Ernst & Young LLP
|
|
Los Angeles, California
|
|
June 14, 2017
|
/s/ Ernst & Young LLP
|
|
Los Angeles, California
|
|
June 14, 2017
|
2017
|
2016
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
9,029,000
|
$
|
21,897,000
|
||||
Short-term investments
|
2,140,000
|
1,813,000
|
||||||
Accounts receivable — net
|
26,017,000
|
8,548,000
|
||||||
Inventory— net
|
67,516,000
|
58,060,000
|
||||||
Inventory unreturned
|
7,581,000
|
10,520,000
|
||||||
Prepaid expenses and other current assets
|
9,848,000
|
5,900,000
|
||||||
Total current assets
|
122,131,000
|
106,738,000
|
||||||
Plant and equipment — net
|
18,437,000
|
16,099,000
|
||||||
Long-term core inventory — net
|
262,922,000
|
241,100,000
|
||||||
Long-term core inventory deposits
|
5,569,000
|
5,569,000
|
||||||
Long-term deferred income taxes (Note 2)
|
13,546,000
|
19,268,000
|
||||||
Goodwill
|
2,551,000
|
2,053,000
|
||||||
Intangible assets — net
|
3,993,000
|
4,573,000
|
||||||
Other assets
|
6,990,000
|
3,657,000
|
||||||
TOTAL ASSETS
|
$
|
436,139,000
|
$
|
399,057,000
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
85,960,000
|
$
|
72,152,000
|
||||
Accrued liabilities
|
10,077,000
|
9,101,000
|
||||||
Customer finished goods returns accrual
|
17,667,000
|
26,376,000
|
||||||
Accrued core payment
|
11,714,000
|
8,989,000
|
||||||
Revolving loan
|
11,000,000
|
7,000,000
|
||||||
Other current liabilities
|
3,300,000
|
4,502,000
|
||||||
Current portion of term loan
|
3,064,000
|
3,067,000
|
||||||
Total current liabilities
|
142,782,000
|
131,187,000
|
||||||
Term loan, less current portion
|
16,935,000
|
19,980,000
|
||||||
Long-term accrued core payment
|
12,349,000
|
17,550,000
|
||||||
Long-term deferred income taxes
|
180,000
|
196,000
|
||||||
Other liabilities
|
15,212,000
|
19,336,000
|
||||||
Total liabilities
|
187,458,000
|
188,249,000
|
||||||
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, 50,000,000 shares authorized; 18,648,854 and 18,531,751 shares issued and outstanding at March 31, 2017 and 2016, respectively
|
186,000
|
185,000
|
||||||
Additional paid-in capital
|
205,646,000
|
203,650,000
|
||||||
Retained earnings
|
50,290,000
|
11,825,000
|
||||||
Accumulated other comprehensive loss
|
(7,441,000
|
)
|
(4,852,000
|
)
|
||||
Total shareholders' equity
|
248,681,000
|
210,808,000
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
436,139,000
|
$
|
399,057,000
|
2017
|
2016
|
2015
|
||||||||||
Net sales
|
$
|
421,253,000
|
$
|
368,970,000
|
$
|
301,711,000
|
||||||
Cost of goods sold
|
306,207,000
|
268,046,000
|
220,138,000
|
|||||||||
Gross profit
|
115,046,000
|
100,924,000
|
81,573,000
|
|||||||||
Operating expenses:
|
||||||||||||
General and administrative
|
31,124,000
|
49,665,000
|
37,863,000
|
|||||||||
Sales and marketing
|
12,126,000
|
9,965,000
|
7,851,000
|
|||||||||
Research and development
|
3,824,000
|
3,008,000
|
2,273,000
|
|||||||||
Total operating expenses
|
47,074,000
|
62,638,000
|
47,987,000
|
|||||||||
Operating income
|
67,972,000
|
38,286,000
|
33,586,000
|
|||||||||
Interest expense, net
|
13,094,000
|
16,244,000
|
13,065,000
|
|||||||||
Income before income tax expense
|
54,878,000
|
22,042,000
|
20,521,000
|
|||||||||
Income tax expense
|
17,305,000
|
11,479,000
|
9,068,000
|
|||||||||
Net income
|
$
|
37,573,000
|
$
|
10,563,000
|
$
|
11,453,000
|
||||||
Basic net income per share
|
$
|
2.02
|
$
|
0.58
|
$
|
0.68
|
||||||
Diluted net income per share
|
$
|
1.93
|
$
|
0.55
|
$
|
0.65
|
||||||
Weighted average number of shares outstanding:
|
||||||||||||
Basic
|
18,608,812
|
18,233,163
|
16,734,539
|
|||||||||
Diluted
|
19,418,706
|
19,066,093
|
17,605,940
|
2017
|
2016
|
2015
|
||||||||||
Net income
|
$
|
37,573,000
|
$
|
10,563,000
|
$
|
11,453,000
|
||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized gain (loss) on short-term investments (net of tax of $111,000, $(8,000), and $16,000, respectively).
|
196,000
|
(13,000
|
)
|
24,000
|
||||||||
Foreign currency translation loss
|
(2,785,000
|
)
|
(2,321,000
|
)
|
(1,665,000
|
)
|
||||||
Total other comprehensive loss, net of tax
|
(2,589,000
|
)
|
(2,334,000
|
)
|
(1,641,000
|
)
|
||||||
Comprehensive income
|
$
|
34,984,000
|
$
|
8,229,000
|
$
|
9,812,000
|
Common Stock
|
||||||||||||||||||||||||
Shares
|
Amount
|
Additional
Paid-in
Capital
Common
Stock
|
Retained
Earnings
(Accumulated
Deficit)
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
|
|||||||||||||||||||
Balance at March 31, 2014
|
15,067,645
|
$
|
151,000
|
$
|
120,553,000
|
$
|
(10,191,000
|
)
|
$
|
(877,000
|
)
|
$
|
109,636,000
|
|||||||||||
Compensation recognized under employee stock plans
|
-
|
-
|
2,210,000
|
-
|
-
|
2,210,000
|
||||||||||||||||||
Exercise of stock options
|
123,734
|
1,000
|
1,246,000
|
1,247,000
|
||||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
23,219
|
-
|
(806,000
|
)
|
(806,000
|
)
|
||||||||||||||||||
Tax benefit from employee stock options exercised
|
-
|
-
|
1,131,000
|
-
|
-
|
1,131,000
|
||||||||||||||||||
Common stock issued in connection with public offering
|
2,760,000
|
28,000
|
71,732,000
|
-
|
-
|
71,760,000
|
||||||||||||||||||
Stock issuance costs
|
-
|
-
|
(4,787,000
|
)
|
(4,787,000
|
)
|
||||||||||||||||||
Unrealized gain (loss) on investments, net of tax
|
-
|
-
|
-
|
-
|
24,000
|
24,000
|
||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
(1,665,000
|
)
|
(1,665,000
|
)
|
||||||||||||||||
Net income
|
-
|
-
|
-
|
11,453,000
|
-
|
11,453,000
|
||||||||||||||||||
Balance at March 31, 2015
|
17,974,598
|
$
|
180,000
|
$
|
191,279,000
|
$
|
1,262,000
|
$
|
(2,518,000
|
)
|
$
|
190,203,000
|
||||||||||||
Compensation recognized under employee stock plans
|
-
|
-
|
2,584,000
|
-
|
-
|
2,584,000
|
||||||||||||||||||
Exercise of stock options
|
510,637
|
5,000
|
5,387,000
|
-
|
-
|
5,392,000
|
||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
46,516
|
-
|
(913,000
|
)
|
-
|
-
|
(913,000
|
)
|
||||||||||||||||
Tax benefit from employee stock options exercised
|
-
|
-
|
5,313,000
|
-
|
-
|
5,313,000
|
||||||||||||||||||
Unrealized gain (loss) on investments, net of tax
|
-
|
-
|
-
|
-
|
(13,000
|
)
|
(13,000
|
)
|
||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
(2,321,000
|
)
|
(2,321,000
|
)
|
||||||||||||||||
Net income
|
-
|
-
|
-
|
10,563,000
|
-
|
10,563,000
|
||||||||||||||||||
Balance at March 31, 2016
|
18,531,751
|
$
|
185,000
|
$
|
203,650,000
|
$
|
11,825,000
|
$
|
(4,852,000
|
)
|
$
|
210,808,000
|
||||||||||||
Cumulative-effect adjustment (Note 2)
|
-
|
-
|
-
|
892,000
|
-
|
892,000
|
||||||||||||||||||
Balance at April 1, 2016
|
18,531,751
|
$
|
185,000
|
$
|
203,650,000
|
$
|
12,717,000
|
$
|
(4,852,000
|
)
|
$
|
211,700,000
|
||||||||||||
Compensation recognized under employee stock plans
|
-
|
-
|
3,383,000
|
-
|
-
|
3,383,000
|
||||||||||||||||||
Exercise of stock options
|
133,731
|
1,000
|
1,661,000
|
-
|
-
|
1,662,000
|
||||||||||||||||||
Issuance of common stock upon vesting of RSUs, net of shares withheld for employee taxes
|
53,031
|
1,000
|
(1,059,000
|
)
|
-
|
-
|
(1,058,000
|
)
|
||||||||||||||||
Repurchase and cancellation of treasury stock, including fees
|
(69,659
|
)
|
(1,000
|
)
|
(1,989,000
|
)
|
-
|
-
|
(1,990,000
|
)
|
||||||||||||||
Unrealized gain (loss) on investments, net of tax
|
-
|
-
|
-
|
-
|
196,000
|
196,000
|
||||||||||||||||||
Foreign currency translation
|
-
|
-
|
-
|
-
|
(2,785,000
|
)
|
(2,785,000
|
)
|
||||||||||||||||
Net income
|
-
|
-
|
-
|
37,573,000
|
-
|
37,573,000
|
||||||||||||||||||
Balance at March 31, 2017
|
18,648,854
|
$
|
186,000
|
$
|
205,646,000
|
$
|
50,290,000
|
$
|
(7,441,000
|
)
|
$
|
248,681,000
|
2017
|
2016
|
2015
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$
|
37,573,000
|
$
|
10,563,000
|
$
|
11,453,000
|
||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
|
||||||||||||
Depreciation
|
3,101,000
|
2,315,000
|
1,851,000
|
|||||||||
Amortization of intangible assets
|
613,000
|
621,000
|
670,000
|
|||||||||
Amortization of debt issuance costs
|
716,000
|
790,000
|
1,702,000
|
|||||||||
Write-off of debt issuance costs
|
-
|
5,108,000
|
-
|
|||||||||
Amortization of interest on accrued core payment
|
704,000
|
736,000
|
-
|
|||||||||
(Gain) loss due to the change in the fair value of the warrant liability
|
(3,764,000
|
)
|
5,137,000
|
459,000
|
||||||||
Gain due to the change in the fair value of the contingent consideration
|
(16,000
|
)
|
(990,000
|
)
|
-
|
|||||||
Gain on redemption of short term investment
|
-
|
-
|
(4,000
|
)
|
||||||||
Net provision for inventory reserves
|
3,864,000
|
4,518,000
|
1,635,000
|
|||||||||
Net provision for (recovery of) customer payment discrepancies
|
718,000
|
(299,000
|
)
|
91,000
|
||||||||
Net provision for doubtful accounts
|
3,000
|
4,404,000
|
184,000
|
|||||||||
Deferred income taxes
|
6,510,000
|
(3,781,000
|
)
|
5,831,000
|
||||||||
Share-based compensation expense
|
3,383,000
|
2,584,000
|
2,209,000
|
|||||||||
Loss on disposal of plant and equipment
|
13,000
|
7,000
|
16,000
|
|||||||||
Change in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(18,145,000
|
)
|
4,647,000
|
(2,790,000
|
)
|
|||||||
Inventory
|
(10,058,000
|
)
|
3,054,000
|
(10,239,000
|
)
|
|||||||
Inventory unreturned
|
2,939,000
|
(2,687,000
|
)
|
(299,000
|
)
|
|||||||
Prepaid expenses and other current assets
|
(4,333,000
|
)
|
2,765,000
|
(3,451,000
|
)
|
|||||||
Other assets
|
(3,339,000
|
)
|
(477,000
|
)
|
(491,000
|
)
|
||||||
Accounts payable and accrued liabilities
|
12,446,000
|
6,620,000
|
3,621,000
|
|||||||||
Customer finished goods returns accrual
|
(8,709,000
|
)
|
6,698,000
|
3,427,000
|
||||||||
Deferred core revenue
|
-
|
-
|
(15,065,000
|
)
|
||||||||
Long-term core inventory
|
(24,964,000
|
)
|
(53,408,000
|
)
|
(46,466,000
|
)
|
||||||
Long-term core inventory deposits
|
-
|
26,002,000
|
(2,196,000
|
)
|
||||||||
Accrued core payment
|
(3,180,000
|
)
|
(11,266,000
|
)
|
37,070,000
|
|||||||
Other liabilities
|
(1,344,000
|
)
|
1,673,000
|
1,325,000
|
||||||||
Net cash (used in) provided by operating activities
|
(5,269,000
|
)
|
15,334,000
|
(9,457,000
|
)
|
|||||||
Cash flows from investing activities:
|
||||||||||||
Purchase of plant and equipment
|
(4,929,000
|
)
|
(3,747,000
|
)
|
(3,734,000
|
)
|
||||||
Purchase of business
|
(705,000
|
)
|
(2,701,000
|
)
|
-
|
|||||||
Additions to short term investments
|
(49,000
|
)
|
(1,134,000
|
)
|
(134,000
|
)
|
||||||
Net cash used in investing activities
|
(5,683,000
|
)
|
(7,582,000
|
)
|
(3,868,000
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Borrowings under revolving loan
|
65,001,000
|
29,000,000
|
-
|
|||||||||
Repayments under revolving loan
|
(61,001,000
|
)
|
(22,000,000
|
)
|
(10,000,000
|
)
|
||||||
Borrowings under term loan
|
-
|
25,000,000
|
-
|
|||||||||
Repayments of term loan
|
(3,125,000
|
)
|
(86,063,000
|
)
|
(8,400,000
|
)
|
||||||
Payments for debt issuance costs
|
(433,000
|
)
|
(2,337,000
|
)
|
-
|
|||||||
Payments on capital lease obligations
|
(591,000
|
)
|
(374,000
|
)
|
(64,000
|
)
|
||||||
Payment of contingent consideration
|
(314,000
|
)
|
-
|
-
|
||||||||
Exercise of stock options
|
1,662,000
|
5,392,000
|
1,247,000
|
|||||||||
Excess tax benefits from stock-based compensation
|
-
|
5,313,000
|
1,131,000
|
|||||||||
Cash used to net share settle equity awards
|
(1,058,000
|
)
|
(913,000
|
)
|
(806,000
|
)
|
||||||
Repurchase of common stock, including fees
|
(1,990,000
|
)
|
-
|
-
|
||||||||
Proceeds from issuance of common stock
|
-
|
-
|
71,760,000
|
|||||||||
Stock issuance costs
|
-
|
-
|
(4,787,000
|
)
|
||||||||
Net cash (used in) provided by financing activities
|
(1,849,000
|
)
|
(46,982,000
|
)
|
50,081,000
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
(67,000
|
)
|
(103,000
|
)
|
(125,000
|
)
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(12,868,000
|
)
|
(39,333,000
|
)
|
36,631,000
|
|||||||
Cash and cash equivalents — Beginning of period
|
21,897,000
|
61,230,000
|
24,599,000
|
|||||||||
Cash and cash equivalents — End of period
|
$
|
9,029,000
|
$
|
21,897,000
|
$
|
61,230,000
|
||||||
Supplemental disclosures of cash flow information:
|
||||||||||||
Cash paid during the period for:
|
||||||||||||
Interest, net
|
$
|
11,674,000
|
$
|
9,812,000
|
$
|
11,369,000
|
||||||
Income taxes, net of refunds
|
12,378,000
|
3,762,000
|
4,918,000
|
|||||||||
Non-cash investing and financing activities:
|
||||||||||||
Property acquired under capital lease
|
$
|
802,000
|
$
|
2,454,000
|
$
|
274,000
|
||||||
Contingent consideration
|
-
|
1,320,000
|
-
|
• |
Non-core raw materials are recorded at average cost, which is based on the actual purchase price of raw materials on hand. The average cost is updated quarterly. This average cost is used in the inventory costing process and is the basis for allocation of materials to finished goods during the production process.
|
• |
Non-core work in process is in various stages of production and is valued at the average cost of materials issued to open work orders. Historically, non-core work in process inventory has not been material compared to the total non-core inventory balance.
|
• |
The cost of remanufactured finished goods includes the average cost of non-core raw materials and allocations of labor and variable and fixed overhead costs. The allocations of labor and variable and fixed overhead costs are determined based on the average actual use of the production facilities over the prior twelve months which approximates normal capacity. This method prevents the distortion in allocated labor and overhead costs that would occur during short periods of abnormally low or high production. In addition, the Company excludes certain unallocated overhead such as severance costs, duplicative facility overhead costs, start-up costs, training, and spoilage from the calculation and expenses these unallocated overhead as period costs.
|
• |
Used Cores purchased from core brokers and held in inventory at the Company’s facilities,
|
• |
Used Cores returned by the Company’s customers and held in inventory at the Company’s facilities,
|
• |
Used Cores returned by end-users to customers but not yet returned to the Company are classified as Remanufactured Cores until they are physically received by the Company,
|
• |
Remanufactured Cores held in finished goods inventory at the Company’s facilities; and
|
• |
Remanufactured Cores held at customer locations as a part of the finished goods sold to the customer. For these Remanufactured Cores, the Company expects the finished good containing the Remanufactured Core to be returned under the Company’s general right of return policy or a similar Used Core to be returned to the Company by the customer, in each case, for credit.
|
• |
Persuasive evidence of an arrangement exists,
|
• |
Delivery has occurred or services have been rendered,
|
• |
The seller’s price to the buyer is fixed or determinable, and
|
• |
Collectability is reasonably assured.
|
• |
The Company has a signed agreement with the customer covering the nominally priced Remanufactured Cores not expected to be replaced by a similar Used Core sent back under the core exchange program. This agreement must specify the number of Remanufactured Cores its customer will pay cash for in lieu of sending back a similar Used Core and the basis on which the nominally priced Remanufactured Cores are to be valued (normally the average price per Remanufactured Core stipulated in the agreement).
|
• |
The contractual date for reconciling the Company’s records and customer’s records of the number of nominally priced Remanufactured Cores not expected to be replaced by a similar Used Core sent back under the core exchange program must be in the current or a prior period.
|
• |
The reconciliation of the nominally priced Remanufactured Cores must be completed and agreed to by the customer.
|
• |
The amount must be billed to the customer.
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Net income
|
$
|
37,573,000
|
$
|
10,563,000
|
$
|
11,453,000
|
||||||
Basic shares
|
18,608,812
|
18,233,163
|
16,734,539
|
|||||||||
Effect of dilutive stock options and warrants
|
809,894
|
832,930
|
871,401
|
|||||||||
Diluted shares
|
19,418,706
|
19,066,093
|
17,605,940
|
|||||||||
Net income per share:
|
||||||||||||
Basic net income per share
|
$
|
2.02
|
$
|
0.58
|
$
|
0.68
|
||||||
Diluted net income per share
|
$
|
1.93
|
$
|
0.55
|
$
|
0.65
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Weighted average risk free interest rate
|
1.39
|
%
|
1.73
|
%
|
1.75
|
%
|
||||||
Weighted average expected holding period (years)
|
5.84
|
5.76
|
5.01
|
|||||||||
Weighted average expected volatility
|
47.42
|
%
|
46.84
|
%
|
46.02
|
%
|
||||||
Weighted average expected dividend yield
|
-
|
-
|
-
|
|||||||||
Weighted average fair value of options granted
|
$
|
13.09
|
$
|
14.14
|
$
|
9.65
|
Years Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Balance at beginning of period
|
$
|
2,053,000
|
$
|
-
|
||||
Goodwill acquired
|
498,000
|
2,053,000
|
||||||
Translation adjustment
|
-
|
-
|
||||||
Impairment
|
-
|
-
|
||||||
Balance at end of period
|
$
|
2,551,000
|
$
|
2,053,000
|
2017
|
2016
|
||||||||||||||||
Weighted Average
Amortization
Period
|
Gross Carrying
Value
|
Accumulated
Amortization
|
Gross Carrying
Value
|
Accumulated
Amortization
|
|||||||||||||
Intangible assets subject to amortization
|
|||||||||||||||||
Trademarks
|
11 years
|
$
|
705,000
|
$
|
191,000
|
$
|
705,000
|
$
|
127,000
|
||||||||
Customer relationships
|
13 years
|
5,900,000
|
2,421,000
|
5,900,000
|
1,905,000
|
||||||||||||
Total
|
$
|
6,605,000
|
$
|
2,612,000
|
$
|
6,605,000
|
$
|
2,032,000
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Amortization expense
|
$
|
613,000
|
$
|
621,000
|
$
|
670,000
|
Year Ending March 31,
|
||||
2018
|
$
|
580,000
|
||
2019
|
580,000
|
|||
2020
|
580,000
|
|||
2021
|
580,000
|
|||
2022
|
580,000
|
|||
Thereafter
|
1,093,000
|
|||
Total
|
$
|
3,993,000
|
2017
|
2016
|
|||||||
Accounts receivable — trade
|
$
|
76,902,000
|
$
|
62,206,000
|
||||
Allowance for bad debts
|
(4,140,000
|
)
|
(4,284,000
|
)
|
||||
Customer allowances earned
|
(7,880,000
|
)
|
(12,029,000
|
)
|
||||
Customer payment discrepancies
|
(751,000
|
)
|
(703,000
|
)
|
||||
Customer returns RGA issued
|
(12,710,000
|
)
|
(6,561,000
|
)
|
||||
Customer core returns accruals
|
(25,404,000
|
)
|
(30,081,000
|
)
|
||||
Less: total accounts receivable offset accounts
|
(50,885,000
|
)
|
(53,658,000
|
)
|
||||
Total accounts receivable — net
|
$
|
26,017,000
|
$
|
8,548,000
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Balance at beginning of period
|
$
|
10,845,000
|
$
|
10,904,000
|
$
|
8,039,000
|
||||||
Charged to expense
|
99,673,000
|
80,099,000
|
65,469,000
|
|||||||||
Amounts processed
|
(96,232,000
|
)
|
(80,158,000
|
)
|
(62,604,000
|
)
|
||||||
Balance at end of period
|
$
|
14,286,000
|
$
|
10,845,000
|
$
|
10,904,000
|
2017
|
2016
|
|||||||
Non-core inventory
|
||||||||
Raw materials
|
$
|
21,515,000
|
$
|
17,394,000
|
||||
Work in process
|
641,000
|
135,000
|
||||||
Finished goods
|
48,337,000
|
42,982,000
|
||||||
70,493,000
|
60,511,000
|
|||||||
Less allowance for excess and obsolete inventory
|
(2,977,000
|
)
|
(2,451,000
|
)
|
||||
Total
|
$
|
67,516,000
|
$
|
58,060,000
|
||||
Inventory unreturned
|
$
|
7,581,000
|
$
|
10,520,000
|
||||
Long-term core inventory
|
||||||||
Used cores held at the Company's facilities
|
$
|
38,713,000
|
$
|
34,405,000
|
||||
Used cores expected to be returned by customers
|
11,752,000
|
10,781,000
|
||||||
Remanufactured cores held in finished goods
|
27,667,000
|
24,489,000
|
||||||
Remanufactured cores held at customers' locations (1)
|
185,938,000
|
172,600,000
|
||||||
264,070,000
|
242,275,000
|
|||||||
Less allowance for excess and obsolete inventory
|
(1,148,000
|
)
|
(1,175,000
|
)
|
||||
Total
|
$
|
262,922,000
|
$
|
241,100,000
|
||||
Long-term core inventory deposits
|
$
|
5,569,000
|
$
|
5,569,000
|
(1) |
Remanufactured cores held at customers’ locations represent the core portion of the Company’s customers’ finished goods at the Company’s customers’ locations.
|
2017
|
2016
|
|||||||
Machinery and equipment
|
$
|
32,589,000
|
$
|
29,340,000
|
||||
Office equipment and fixtures
|
11,806,000
|
10,527,000
|
||||||
Leasehold improvements
|
7,641,000
|
7,391,000
|
||||||
52,036,000
|
47,258,000
|
|||||||
Less accumulated depreciation
|
(33,599,000
|
)
|
(31,159,000
|
)
|
||||
Total
|
$
|
18,437,000
|
$
|
16,099,000
|
2017
|
2016
|
|||||||
Cost
|
$
|
3,663,000
|
$
|
2,764,000
|
||||
Less: accumulated depreciation
|
(893,000
|
)
|
(370,000
|
)
|
||||
Total
|
$
|
2,770,000
|
$
|
2,394,000
|
Year Ending March 31,
|
||||
2018
|
$
|
860,000
|
||
2019
|
823,000
|
|||
2020
|
677,000
|
|||
2021
|
275,000
|
|||
2022
|
85,000
|
|||
Total minimum lease payments
|
2,720,000
|
|||
Less amount representing interest
|
(208,000
|
)
|
||
Present value of future minimum lease payments
|
2,512,000
|
|||
Less current portion of lease payments
|
(757,000
|
)
|
||
Long-term portion of lease payments
|
$
|
1,755,000
|
Year Ending March 31,
|
||||
2018
|
$
|
12,185,000
|
||
2019
|
10,821,000
|
|||
2020
|
1,410,000
|
|||
2021
|
354,000
|
|||
Total accrued core payment
|
24,770,000
|
|||
Less amount representing interest
|
(707,000
|
)
|
||
Present value of accrued core payment
|
24,063,000
|
|||
Less current portion of accrued core payment
|
(11,714,000
|
)
|
||
Long-term portion of accrued core payment
|
$
|
12,349,000
|
2017
|
2016
|
|||||||
Principal amount of term loan
|
$
|
20,312,000
|
$
|
23,438,000
|
||||
Unamortized financing fees
|
(313,000
|
)
|
(391,000
|
)
|
||||
Net carrying amount of term loan
|
19,999,000
|
23,047,000
|
||||||
Less current portion of term loan
|
(3,064,000
|
)
|
(3,067,000
|
)
|
||||
Long-term portion of term loan
|
$
|
16,935,000
|
$
|
19,980,000
|
Year Ending March 31,
|
||||
2018
|
3,125,000
|
|||
2019
|
3,125,000
|
|||
2020
|
3,125,000
|
|||
2021
|
10,937,000
|
|||
Total payments
|
$
|
20,312,000
|
Years Ended March 31,
|
||||||||
2017
|
2016
|
|||||||
Receivables discounted
|
$
|
352,369,000
|
$
|
331,176,000
|
||||
Weighted average days
|
342
|
341
|
||||||
Weighted average discount rate
|
2.9
|
%
|
2.3
|
%
|
||||
Amount of discount as interest expense
|
$
|
9,724,000
|
$
|
7,257,000
|
Gain (Loss) Recognized within General and Administrative Expenses
|
||||||||||||
Derivatives Not Designated as
|
Years Ended March 31,
|
|||||||||||
Hedging Instruments
|
2017
|
2016
|
2015
|
|||||||||
Forward foreign currency exchange contracts
|
$
|
843,000
|
$
|
777,000
|
$
|
(1,034,000
|
)
|
• |
Level 1 — Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
• |
Level 2 — Valuation is based upon quoted prices for similar assets and liabilities in active markets, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
• |
Level 3 — Valuation is based upon unobservable inputs that are significant to the fair value measurement.
|
March 31, 2017
|
March 31, 2016
|
|||||||||||||||||||||||||||||||
Fair Value Measurements
Using Inputs Considered as
|
Fair Value Measurements
Using Inputs Considered as
|
|||||||||||||||||||||||||||||||
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||||||||||
Short-term investments
|
||||||||||||||||||||||||||||||||
Mutual funds
|
$
|
2,140,000
|
$
|
2,140,000
|
-
|
-
|
$
|
1,813,000
|
$
|
1,813,000
|
-
|
-
|
||||||||||||||||||||
Prepaid expenses and other current assets
|
||||||||||||||||||||||||||||||||
Forward foreign currency exchange contracts
|
427,000
|
-
|
$
|
427,000
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Liabilities
|
||||||||||||||||||||||||||||||||
Accrued liabilities
|
||||||||||||||||||||||||||||||||
Contingent consideration
|
-
|
-
|
-
|
-
|
224,000
|
-
|
-
|
$
|
224,000
|
|||||||||||||||||||||||
Other current liabilities
|
||||||||||||||||||||||||||||||||
Deferred compensation
|
2,140,000
|
2,140,000
|
-
|
-
|
1,813,000
|
1,813,000
|
-
|
-
|
||||||||||||||||||||||||
Forward foreign currency exchange contracts
|
-
|
-
|
-
|
-
|
416,000
|
-
|
$
|
416,000
|
-
|
|||||||||||||||||||||||
Other liabilities
|
||||||||||||||||||||||||||||||||
Warrant liability
|
11,879,000
|
-
|
-
|
$
|
11,879,000
|
15,643,000
|
-
|
-
|
15,643,000
|
|||||||||||||||||||||||
Contingent consideration
|
-
|
-
|
-
|
-
|
106,000
|
-
|
-
|
106,000
|
March 31, 2017
|
||||
Risk free interest rate
|
0.91
|
%
|
||
Expected life in years
|
0.50
|
|||
Expected volatility
|
39.00
|
%
|
||
Dividend yield
|
-
|
|||
Probability of future financing
|
0
|
%
|
Years Ended March 31,
|
||||||||||||||||
2017
|
2016
|
|||||||||||||||
Supplier
Warrant
|
Contingent
Consideration
|
Supplier
Warrant
|
Contingent
Consideration
|
|||||||||||||
Beginning balance
|
$
|
15,643,000
|
$
|
330,000
|
$
|
10,506,000
|
$
|
-
|
||||||||
Newly issued
|
-
|
-
|
-
|
1,320,000
|
||||||||||||
Total (gain) loss included in net income
|
(3,764,000
|
)
|
(16,000
|
)
|
5,137,000
|
(990,000
|
)
|
|||||||||
Exercises/settlements
|
-
|
(314,000
|
)
|
-
|
-
|
|||||||||||
Net transfers in (out) of Level 3
|
-
|
-
|
-
|
-
|
||||||||||||
Ending balance
|
$
|
11,879,000
|
$
|
-
|
$
|
15,643,000
|
$
|
330,000
|
Year Ending March 31,
|
||||
2018
|
$
|
3,918,000
|
||
2019
|
3,496,000
|
|||
2020
|
3,230,000
|
|||
2021
|
3,300,000
|
|||
2022
|
3,200,000
|
|||
Thereafter
|
23,687,000
|
|||
Total minimum lease payments
|
$
|
40,831,000
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Allowances incurred under long-term customer contracts
|
$
|
23,684,000
|
$
|
29,845,000
|
$
|
18,358,000
|
||||||
Allowances related to a single exchange of product
|
67,262,000
|
47,451,000
|
36,112,000
|
|||||||||
Allowances related to core inventory purchase obligations
|
5,470,000
|
2,268,000
|
15,540,000
|
|||||||||
Total customer allowances recorded as a reduction of revenues
|
$
|
96,416,000
|
$
|
79,564,000
|
$
|
70,010,000
|
Year Ending March 31,
|
||||
2018
|
$
|
19,965,000
|
||
2019
|
8,729,000
|
|||
2020
|
5,224,000
|
|||
2021
|
5,224,000
|
|||
2022
|
113,000
|
|||
Total marketing allowances
|
$
|
39,255,000
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Customer A
|
44
|
%
|
48
|
%
|
56
|
%
|
||||||
Customer B
|
20
|
%
|
18
|
%
|
19
|
%
|
||||||
Customer C
|
19
|
%
|
21
|
%
|
11
|
%
|
||||||
Customer D
|
4
|
%
|
3
|
%
|
3
|
%
|
2017
|
2016
|
|||||||
Customer A
|
33
|
%
|
37
|
%
|
||||
Customer B
|
18
|
%
|
17
|
%
|
||||
Customer C
|
12
|
%
|
15
|
%
|
||||
Customer D
|
16
|
%
|
9
|
%
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Rotating electrical products
|
78
|
%
|
78
|
%
|
82
|
%
|
||||||
Wheel hub products
|
19
|
%
|
20
|
%
|
17
|
%
|
||||||
Brake master cylinders products
|
3
|
%
|
2
|
%
|
1
|
%
|
||||||
100
|
%
|
100
|
%
|
100
|
%
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Current tax expense
|
||||||||||||
Federal
|
$
|
9,451,000
|
$
|
12,400,000
|
$
|
1,523,000
|
||||||
State
|
318,000
|
1,995,000
|
1,100,000
|
|||||||||
Foreign
|
1,455,000
|
803,000
|
527,000
|
|||||||||
Total current tax expense
|
11,224,000
|
15,198,000
|
3,150,000
|
|||||||||
Deferred tax expense (benefit)
|
||||||||||||
Federal
|
4,291,000
|
(2,929,000
|
)
|
5,553,000
|
||||||||
State
|
2,174,000
|
(757,000
|
)
|
93,000
|
||||||||
Foreign
|
(384,000
|
)
|
(33,000
|
)
|
272,000
|
|||||||
Total deferred tax expense (benefit)
|
6,081,000
|
(3,719,000
|
)
|
5,918,000
|
||||||||
Total income tax expense
|
$
|
17,305,000
|
$
|
11,479,000
|
$
|
9,068,000
|
2017
|
2016
|
|||||||
Assets
|
||||||||
Accounts receivable valuation
|
$
|
4,697,000
|
$
|
6,438,000
|
||||
Allowance for customer incentives
|
2,894,000
|
769,000
|
||||||
Inventory obsolescence reserve
|
1,608,000
|
1,431,000
|
||||||
Stock options
|
1,971,000
|
1,714,000
|
||||||
Intangibles, net
|
339,000
|
380,000
|
||||||
Estimate for returns
|
3,191,000
|
7,938,000
|
||||||
Accrued compensation
|
1,785,000
|
1,485,000
|
||||||
Net operating losses
|
834,000
|
2,070,000
|
||||||
Tax credits
|
-
|
1,660,000
|
||||||
Other
|
2,065,000
|
2,583,000
|
||||||
Total deferred tax assets
|
$
|
19,384,000
|
$
|
26,468,000
|
||||
Liabilities
|
||||||||
Property and equipment, net
|
(1,605,000
|
)
|
(1,119,000
|
)
|
||||
Other
|
(4,413,000
|
)
|
(6,277,000
|
)
|
||||
Total deferred tax liabilities
|
$
|
(6,018,000
|
)
|
$
|
(7,396,000
|
)
|
||
Less valuation allowance
|
$
|
-
|
$
|
-
|
||||
Net deferred tax assets
|
$
|
13,366,000
|
$
|
19,072,000
|
||||
Net long-term deferred income tax liability
|
(180,000
|
)
|
(196,000
|
)
|
||||
Net long-term deferred income tax asset
|
13,546,000
|
19,268,000
|
||||||
Total
|
$
|
13,366,000
|
$
|
19,072,000
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Statutory federal income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
||||||
State income tax rate, net of federal benefit
|
2.2
|
%
|
4.0
|
%
|
2.2
|
%
|
||||||
Change in deferred tax rate
|
-
|
%
|
-
|
%
|
(0.2
|
)%
|
||||||
Excess tax benefit from stock compensation
|
(1.4
|
)%
|
-
|
%
|
-
|
%
|
||||||
Foreign income taxed at different rates
|
(0.7
|
)%
|
(0.8
|
)%
|
(0.9
|
)%
|
||||||
Warrants
|
(2.4
|
)%
|
8.2
|
%
|
0.8
|
%
|
||||||
Non-deductible executive compensation
|
0.8
|
%
|
2.2
|
%
|
3.4
|
%
|
||||||
Uncertain Tax Positions
|
(0.2
|
)%
|
0.4
|
%
|
2.5
|
%
|
||||||
Other income tax
|
(1.8
|
)%
|
3.1
|
%
|
1.4
|
%
|
||||||
31.5
|
%
|
52.1
|
%
|
44.2
|
%
|
Years Ended March 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Balance at beginning of period
|
$
|
1,181,000
|
$
|
1,117,000
|
$
|
540,000
|
||||||
Additions based on tax positions related to the current year
|
141,000
|
57,000
|
359,000
|
|||||||||
Additions for tax positions of prior year
|
106,000
|
217,000
|
336,000
|
|||||||||
Reductions for tax positions of prior year
|
-
|
(210,000
|
)
|
(118,000
|
)
|
|||||||
Settlements
|
(336,000
|
)
|
-
|
-
|
||||||||
Balance at end of period
|
$
|
1,092,000
|
$
|
1,181,000
|
$
|
1,117,000
|
Number of
Shares
|
Weighted Average
Exercise Price
|
|||||||
Outstanding at March 31, 2016
|
984,066
|
$
|
11.98
|
|||||
Granted
|
186,924
|
$
|
28.70
|
|||||
Exercised
|
(133,731
|
)
|
$
|
12.43
|
||||
Forfeited
|
(900
|
)
|
$
|
29.50
|
||||
Outstanding at March 31, 2017
|
1,036,359
|
$
|
14.92
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||||||||||||||||
Range of
Exercise price
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Life
In Years
|
Aggregate
Intrinsic
Value
|
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic
Value
|
|||||||||||||||||||||||
$
|
4.17 to $6.25
|
74,000
|
$
|
5.29
|
1.90
|
$
|
1,883,000
|
74,000
|
$
|
5.29
|
$
|
1,883,000
|
||||||||||||||||||
$
|
6.46 to $7.43
|
359,167
|
6.48
|
5.69
|
8,710,000
|
359,167
|
6.48
|
8,710,000
|
||||||||||||||||||||||
$
|
9.32 to $19.94
|
235,450
|
9.96
|
5.83
|
4,891,000
|
235,450
|
9.96
|
4,891,000
|
||||||||||||||||||||||
$
|
22.93 to $34.17
|
367,742
|
28.28
|
8.60
|
900,000
|
83,129
|
26.55
|
348,000
|
||||||||||||||||||||||
1,036,359
|
$
|
14.92
|
6.48
|
$
|
16,384,000
|
751,746
|
$
|
9.67
|
$
|
15,832,000
|
Number of Shares
|
Weighted Average
Grant Date Fair
Value
|
|||||||
Non-vested at March 31, 2016
|
153,527
|
$
|
22.28
|
|||||
Granted
|
62,367
|
$
|
28.44
|
|||||
Vested
|
(89,617
|
)
|
$
|
18.14
|
||||
Forfeited
|
-
|
$
|
-
|
|||||
Non-vested at March 31, 2017
|
126,277
|
$
|
28.26
|
2017
|
2016
|
|||||||||||||||||||||||
Unrealized
Gain (Loss)
on Short-Term
Investments
|
Foreign
Currency
Translation
|
Total
|
Unrealized
Gain
on Short-Term
Investments
|
Foreign
Currency
Translation
|
Total
|
|||||||||||||||||||
Beginning balance
|
$
|
332,000
|
$
|
(5,184,000
|
)
|
$
|
(4,852,000
|
)
|
$
|
345,000
|
$
|
(2,863,000
|
)
|
$
|
(2,518,000
|
)
|
||||||||
Other comprehensive income (loss), net of tax
|
196,000
|
(2,785,000
|
)
|
(2,589,000
|
)
|
(13,000
|
)
|
(2,321,000
|
)
|
(2,334,000
|
)
|
|||||||||||||
Amounts reclassified from other comprehensive income (loss), net of tax
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Ending balance
|
$
|
528,000
|
$
|
(7,969,000
|
)
|
$
|
(7,441,000
|
)
|
$
|
332,000
|
$
|
(5,184,000
|
)
|
$
|
(4,852,000
|
)
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
Net sales
|
$
|
85,412,000
|
$
|
108,836,000
|
$
|
112,595,000
|
$
|
114,410,000
|
||||||||
Cost of goods sold
|
65,021,000
|
78,178,000
|
80,225,000
|
82,783,000
|
||||||||||||
Gross profit
|
20,391,000
|
30,658,000
|
32,370,000
|
31,627,000
|
||||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
3,625,000
|
9,869,000
|
7,952,000
|
9,678,000
|
||||||||||||
Sales and marketing
|
2,634,000
|
2,707,000
|
3,234,000
|
3,551,000
|
||||||||||||
Research and development
|
869,000
|
905,000
|
1,039,000
|
1,011,000
|
||||||||||||
Total operating expenses
|
7,128,000
|
13,481,000
|
12,225,000
|
14,240,000
|
||||||||||||
Operating income
|
13,263,000
|
17,177,000
|
20,145,000
|
17,387,000
|
||||||||||||
Other expense:
|
||||||||||||||||
Interest expense, net
|
2,819,000
|
3,189,000
|
3,357,000
|
3,729,000
|
||||||||||||
Income before income tax expense
|
10,444,000
|
13,988,000
|
16,788,000
|
13,658,000
|
||||||||||||
Income tax expense
|
2,936,000
|
4,845,000
|
5,678,000
|
3,846,000
|
||||||||||||
Net income
|
$
|
7,508,000
|
$
|
9,143,000
|
$
|
11,110,000
|
$
|
9,812,000
|
||||||||
Basic net income per share
|
$
|
0.40
|
$
|
0.49
|
$
|
0.59
|
$
|
0.53
|
||||||||
Diluted net income per share
|
$
|
0.39
|
$
|
0.47
|
$
|
0.57
|
$
|
0.50
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
Net sales
|
$
|
85,835,000
|
$
|
91,670,000
|
$
|
94,022,000
|
$
|
97,443,000
|
||||||||
Cost of goods sold
|
59,844,000
|
69,850,000
|
65,123,000
|
73,229,000
|
||||||||||||
Gross profit
|
25,991,000
|
21,820,000
|
28,899,000
|
24,214,000
|
||||||||||||
Operating expenses:
|
||||||||||||||||
General and administrative
|
11,360,000
|
18,219,000
|
8,802,000
|
11,284,000
|
||||||||||||
Sales and marketing
|
2,280,000
|
2,632,000
|
2,671,000
|
2,382,000
|
||||||||||||
Research and development
|
736,000
|
646,000
|
711,000
|
915,000
|
||||||||||||
Total operating expenses
|
14,376,000
|
21,497,000
|
12,184,000
|
14,581,000
|
||||||||||||
Operating income
|
11,615,000
|
323,000
|
16,715,000
|
9,633,000
|
||||||||||||
Other expense:
|
||||||||||||||||
Interest expense, net
|
8,437,000
|
2,613,000
|
2,516,000
|
2,678,000
|
||||||||||||
Income (loss) before income tax expense (benefit)
|
3,178,000
|
(2,290,000
|
)
|
14,199,000
|
6,955,000
|
|||||||||||
Income tax expense (benefit)
|
1,268,000
|
(898,000
|
)
|
6,451,000
|
4,658,000
|
|||||||||||
Net income (loss)
|
$
|
1,910,000
|
$
|
(1,392,000
|
)
|
$
|
7,748,000
|
$
|
2,297,000
|
|||||||
Basic net income (loss) per share
|
$
|
0.11
|
$
|
(0.08
|
)
|
$
|
0.42
|
$
|
0.12
|
|||||||
Diluted net income (loss) per share
|
$
|
0.10
|
$
|
(0.08
|
)
|
$
|
0.41
|
$
|
0.12
|
Years Ended
March 31,
|
Description
|
Balance at
beginning of
period
|
Charge to
(recovery of)
bad debts
expense
|
Amounts
written off
|
Balance at
end of
period
|
|||||||||||||
2017
|
Allowance for doubtful accounts
|
$
|
4,284,000
|
$
|
3,000
|
$
|
147,000
|
$
|
4,140,000
|
|||||||||
2016
|
Allowance for doubtful accounts
|
$
|
629,000
|
$
|
4,404,000
|
$
|
749,000
|
$
|
4,284,000
|
|||||||||
2015
|
Allowance for doubtful accounts
|
$
|
854,000
|
$
|
184,000
|
$
|
409,000
|
$
|
629,000
|
Years Ended
March 31,
|
Description
|
Balance at
beginning of
period
|
Charge to
(recovery of)
discrepancies
expense
|
Amounts
Processed
|
Balance at
end of
period
|
|||||||||||||
2017
|
Allowance for customer-payment discrepancies
|
$
|
703,000
|
$
|
718,000
|
$
|
670,000
|
$
|
751,000
|
|||||||||
2016
|
Allowance for customer-payment discrepancies
|
$
|
852,000
|
$
|
(299,000
|
)
|
$
|
(150,000
|
)
|
$
|
703,000
|
|||||||
2015
|
Allowance for customer-payment discrepancies
|
$
|
577,000
|
$
|
91,000
|
$
|
(184,000
|
)
|
$
|
852,000
|
Years Ended
March 31,
|
Description
|
Balance at
beginning of
period
|
Provision for
excess and
obsolete
inventory
|
Amounts
written off
|
Balance at
end of
period
|
|||||||||||||
2017
|
Allowance for excess and obsolete inventory
|
$
|
3,626,000
|
$
|
3,864,000
|
$
|
3,365,000
|
$
|
4,125,000
|
|||||||||
2016
|
Allowance for excess and obsolete inventory
|
$
|
2,675,000
|
$
|
4,518,000
|
$
|
3,567,000
|
$
|
3,626,000
|
|||||||||
2015
|
Allowance for excess and obsolete inventory
|
$
|
2,708,000
|
$
|
1,635,000
|
$
|
1,668,000
|
$
|
2,675,000
|
BORROWER
:
|
|||
MOTORCAR PARTS OF AMERICA, INC.
|
|||
By:
|
/s/ Selwyn Joffe
|
||
Name:
|
Selwyn Joffe
|
||
Title:
|
Chairman, President and Chief Executive Officer
|
AGENT AND LENDER
:
|
|||
PNC BANK, NATIONAL ASSOCIATION
|
|||
By:
|
/s/ Albert Sarkis
|
||
Name:
|
Albert Sarkis
|
||
Title:
|
Senior Vice President
|
LENDERS
:
|
|||
EVERBANK
|
|||
By:
|
/s/ Christopher Norrito
|
||
Name:
|
Christopher Norrito
|
||
Title:
|
Credit Officer
|
ISRAEL DISCOUNT BANK OF NEW YORK
|
|||
By:
|
/s/ Richard Miller
|
||
Name:Richard Miller
|
|||
Title:
|
Senior Vice President
|
||
By:
|
/s/ Dionne Rice
|
||
Name:
|
Dionne Rice
|
||
Title:
|
First Vice President
|
SCOTTRADE BANK
|
|||
By:
|
/s/ Ann M. Sutter
|
||
Name:
|
Ann M. Sutter
|
||
Title:
|
Senior Vice President
|
1. |
Registration Statement (Form S-8 No. 333-114169) pertaining to the Long Term Incentive Plan,
|
2. |
Registration Statement (Form S-8 No. 333-144883) pertaining to the 2004 Non-Employee Director Stock Option Plan,
|
3. |
Registration Statement (Form S-8 No. 333-185691) pertaining to the 2010 Incentive Award Plan, and
|
4. |
Registration Statement (Form S-3 No. 333-195585) of Motorcar Parts of America, Inc.,
|
5. |
Registration Statement (Form S-8 No. 333-205910) pertaining to the 2014 Non-Employee Director Incentive Award Plan and Second Amended and Restated 2010 Incentive Award Plan.
|
Date: June 14, 2017
|
/s/ Selwyn Joffe
|
|
Selwyn Joffe
|
||
Chief Executive Officer
|
Date: June 14, 2017
|
/s/ David Lee
|
|
David Lee
|
||
Chief Financial Officer
|
Date: June 14, 2017
|
/s/ Kevin Daly
|
|
Kevin Daly
|
||
Chief Accounting Officer
|
/s/ Selwyn Joffe
|
||
Selwyn Joffe
|
||
Chief Executive Officer
|
||
June 14, 2017
|
/s/ David Lee
|
||
David Lee
|
||
Chief Financial Officer
|
||
June 14, 2017
|
/s/ Kevin Daly
|
||
Kevin Daly
|
||
Chief Accounting Officer
|
||
June 14, 2017
|